BITCOIN HOLIC: July 2013

The Bitcoin Foundation took a decisive turn in its strategy for defending Bitcoin three weeks ago when the organization wrote its reply to a cease and desist order from California’s Department of Financial Institutions. Rather than meekly asking the government how the nonprofit advocacy group was acting as a money transmitter, the organization delivered a seven-page reply in which it laid out an argument that not only was the organization itself not doing selling bitcoins in any way, but in fact even if the organization was selling bitcoins the act does not constitute money transmission under present California law. After making this argument, the Foundation went so far as to specifically “request that your office issue an opinion that, for the reasons explained above, the sale of a bitcoin is not regulated under the California Money Transmitter Act.” Now, Foundation legal counsel Patrick Murck has made his second move.

Bitcoin Foundation Continues Legal Offensive With Request for Clarification on Liberty Reserve

Two months ago, Liberty Reserve, an alternative payment processor known for its very weak know-your-customer policies, was shut down and its owners arrested by the United States government. In a press conference following the shutdown, FinCEN attorney Prret Bharara focused heavily on “anonymity” as a major reason behind Liberty Reserve’s shutdown, and weeks later a FinCEN Notice of Finding criticized the entire category of irreversible digital payment systems. “The fact that transactions are irrevocable, meaning that they cannot be reversed or refunded in the event of fraud, makes it a highly desirable system for criminal use and a highly problematic one for any legitimate payment functions. Revocability protects users and merchants from fraud and is a common feature of legitimate payment systems,” the report claimed. Many have taken these words as a sign that, since the currency has a considerably degree of anonymity and is almost completely irreversible, Bitcoin is next. FinCEN director Jennifer Shasky Calvery came out to reassure Bitcoin users and investors, saying that legitimate businesses that follow the relevant laws “have nothing to fear from Treasury”, but even still many in the digital payments space seek a stronger reassurance.

It is under this background that Murck has sent another request for clarification, this time to US federal regulator FinCEN itself. The subject of the letter is a notice of proposed rulemaking announcing a set of steps that FinCEN intends to take in order to shut down Liberty Reserve transactions around the world. The actions are targeted around Liberty Reserve itself; the first action listed is that “Section 1010.660(b)(1) of the proposed rule imposing the special measure would prohibit covered financial institutions from establishing, maintaining, administering, or managing in the United States any correspondent account for or on behalf of a foreign bank if such correspondent account is being used to process transactions involving Liberty Reserve, including any of its branches, offices or subsidiaries.” However, especially in the context of the Notice of Finding, the Bitcoin Foundattion is concerned that “although the special measures contemplated by the Proposed Rule are explicitly targeted at Liberty Reserve, many of the statements in the Proposed Rule and Finding could be misread to apply more broadly to transactions involving virtual currencies generally.”
The core arguments that the letter makes are the following:

Maintaining consistent definitions is important. Quoting the letter: “For example, the Finding describes Liberty Reserve as a “web-based money transfer system, or ‘virtual currency.’” In doing so, FinCEN infuses virtualcurrency with a new definition – namely, a web-based money transfer system. This definition of virtual currency is inconsistent with the definition FinCEN issued in its March 18, 2013Guidance … By equating virtual currency with “web-based money transfer system” in the Finding and the Proposed Rule, FinCEN risks muddying the analysis required byits own Guidance.” The letter instead recommends that FinCEN use its own language from its own March 18 guidance, perhaps calling Liberty Reserve the administrator of a centralized virtual currency system.
Anonymity is not necessarily criminal. Once again from the letter: “The Finding and Proposed Rule broadly state that ‘Liberty Reserve’s system is structured so as to facilitate money laundering and other criminal activity,’ and cite, among other things, theanonymity of the system as evidence of that illicit structure. The Bitcoin Foundation is concerned about the broad use of the term ‘anonymous’ and about FinCEN’s generalcharacterization that all ‘anonymity’ is designed to facilitate money laundering and other criminal activity.” Here, the foundation is taking a brave turn, not taking the usual strategy of defending Bitcoin by claiming that it is not anonymous, but rather arguing that even anonymity itself is not necessarily criminal. This is a highly beneficial strategy for Bitcoin advocacy going forward; if Bitcoin becomes more anonymous in practice through developments like Zerocoin or decentralized mixers, the defense that “Bitcoin isn’t that bad” may not cut it anymore. Questioning what is bad in the first place, on the other hand, stands a solid chance no matter what the changes in technology.
Neither is irreversibility. Contrary to what the Notice of Finding implied, irreversibility is a valuable feature for a payment system to have and, as Jon Matonis argues, it is in fact necessary for a number of applications. Matonis (not quoted in the letter) writes: “As an industry that suffered a high degree of customer disputes, online gambling is instructive because when certain customers lost in the casino and ‘changed their mind,’ it became necessary for these merchants to accept only payment methods with finality.”

The letter concludes: “The Bitcoin Foundation supports a strong and vibrant financial system in the United States and isnot objecting to the imposition of special measures in this particular case. At the same time, the Bitcoin Foundation urges FinCEN to be precise when it describes the growing virtual currency industry, and when issuing findings and making rules affecting the industry, to avoid any inadvertent implication that all virtual currency related businesses (including compliant ones) are somehow more predisposed to facilitate money laundering than other money services businesses.” All in all, this is an example of the solid Bitcoin advocacy that the foundation was created for. Rather than simply acting as a sitting duck waiting for it and its member businesses to be sued, the foundation is actively, and at the same time respectfully, seeking to engage in dialogue with federal regulators and actually turn digital currency regulation in a more favorable direction. It is only recently that Jon Matonis was named the new executive director of the Bitcoin Foundation; perhaps under his influence we will see more steps like this in the months to come.

Source : http://bitcoinmagazine.com/

Saturday, July 20, 2013

Matthew Lynn - Gold Isn't Only Alternative To Paper Money

In an article on Marketwartch, writer Matthew Lynn (@MattLynnWriter) describes how gold’s role as a store of value alternative to paper money will be seeing competition from digital currencies. Excerpts:
"As the American [dollar] grows in strength — as seems likely given its relative performance compared with the rest of the world — then gold will be less valuable as an alternative."

-"Gold is nothing if not a long-term investment [however] the most important threat is the rise of alternative digital currencies such as bitcoin."

-"As a rival to paper money, gold has had the market to itself. Now it will have competition, and that always drives down the price of any product."

-"Financial sophisticates might dismiss digital currencies as a craze. But plenty of other industries have been taken apart by the Internet — there is no reason why the money market should be any different."

-"In many ways, digital currencies may be a better alternative to paper money than gold."

Source : http://bitcoinnews.com/

Ultra Light Startups Hosts Successful NYC Bitcoin Pitch Event

On Thursday, July 11, Ultra Light Startups hosted a successful NYC Bitcoin Pitch Event. Nine entrepreneurs provided two minute pitches on their Bitcoin start-up businesses. Graham Lawler and Tatiana Bakaeva of Ultralight hosted the event.

The evening was structured with nine 2 minute pitches from different Bitcoin related start ups. At the conclusion of the evening the audience selected three winners for in-kind prizes. Four panelists, including Andrew Chang (Founding Partner, Liberty City Ventures), John Frankel (Partner, ff Venture Capital), Nikhil Kalghatigi (Principal, SoftBank Capital), and Matthew Witheiler (Principal, Flybridge Capital Partners) from venture capital firms provided guidance to each start up following their presentations. Bitcoin related start-up presenters included, Divya Thakur (Developer, BTX Trader), Shawn Sloves (Co-Founder, Atlas ATS), Ayoub Naciri (Co-Founder, artaBit), Andre De Castro (Ecoincashier), Jesse Heaslip (Co-Founder, Bex.io), Aric Fedido (Founder and CTO, OpenWallet), Kingsley Edwards (LeetCoin), Shamoon Siddiqui (CEO, Crypto Street), Megan Burton (Founder and CEO, CoinX). At the conclusion of the evening, Megan Burton of CoinX was selected as the winner and runners up included Aric Fedida of Open Wallet and Shawn Sloves of Atlas ATS.

First prize went to Megan Burton who used her two minutes to discuss her new company CoinX, a digital currency exchange. CoinX serves as a virtual currency platform for the buying and selling of Bitcoin, Namecoin, Devcoin, Litecoin, Ixcoin, PPCoin, Terracoin, and additional digital currencies. CoinX specifically provides services to buy and sell digital currencies, accept payment in digital currencies and create a free Bitcoin wallet.

The overarching purpose of this first Ultra Light Bitcoin Startup event was to provide necessary tools and advice to early stage Bitcoin startups. With time allotted to sell their company, each start-up representative not only practiced their sales pitch but also then received guidance from the panel on how to refine their investor pitch. The four venture capitalists on the panel then provided insight on how investors evaluate startups. With the Bitcoin currency growing in prominence, Ultra Light Startups made a wise decision to carve out an evening to feature Bitcoin startups.

Ultra Light Startups events take place the second Thursday of each month in New York and Boston. Events on average have an audience of around 150 to 250 attendees. Ultralight Startups ventured into the world of Bitcoin on July 11 and were pleased with the results as well as the opportunities that will follow from this step.

Source : http://bitcoinmagazine.com

Thursday, July 18, 2013

Keeping Track of the Coins: All The Best Cryptocurrency Websites

Alternate cryptocurrencies are all the rage now. Over the past two years, we have seen the emergence of Namecoin, Litecoin, Freicoin, Terracoin, Devcoin, PPCoin, Worldcoin, and over thirty other coins all vying for a chance to become the next great cryptocurrency. Most recently of all, Primecoin entered the scene, offering a cryptocurrency whose mining algorithm based on locating prime number chains has attracted over seventy thousand pageviews on the Bitcointalk forums alone. With so many currencies to choose from, it can be hard to keep track of each one. Even Bitcoin data is highly disparate, with some sites offering accurate up-to-the minute market data, other sites focusing on mining statistics and still others more focused on transaction counts. Fortunately, there are a large number of sites that can help. Over the past six months, we have seen the emergence of dozens of different aggregator sites, all sharing the same goal: to keep track of the large and rapidly growing number of cryptocurrencies that are now available, and help users make sense of it all. Some of these sites offer market statistics or network data, others are mining-focused, and still others exist to help arbitrage traders. Of all the websites that have popped up to serve these new niches, here is a collection of some of the best.

The Alternate Cryptocurrencies Subforum – this section of the Bitcointalk forums (which were formerly the official Bitcoin forums) is by far the largest gathering spot for alternate cryptocurrency discussion. Nearly every new currency makes its first announcement on this subforum, and many continue to use it as their main location for posting updates. One can also find giveaways, alternate cryptocurrency-accepting websites, and if any new data aggregator appears after this article is written chances are it will find its way on there.
List of Altcoin Faucets – one particularly useful post on the alternate cryptocurrency subforum, providing a list of all of the sites you can go to to get your first few units of almost every alternate cryptocurrency available.
Coinchoose – Coinchoose provides basic data on 30 cryptocurrencies, particularly targeted toward miners. The site shows the mining algorithm (sha256 or scrypt), difficulty, reward, price (in BTC) and network hashpower of each currency, and also provides another particularly useful statistic for miners: the profitability of mining every currency relative to Bitcoin. Hence the name of the site – if you have a miner and want to decide which coin you should choose to work on, Coinchoose is the place to go. The site also offers its data in a computer-friendly JSON format at coinchoose.com/api.php.
CryptCoin Monitor – an Android application to help alternate cryptocurrency miners keep track of all of their mining pool accounts.
CrypTrader – this web application allows users to link their accounts to MtGox, BTC-E, Bter and Vircurex, and then instantly buy and sell on any of the exchanges from a single page. The basic idea behind CrypTrader has been tried before, in the form of Eun-Joo Hansch Seoung’s BTC Trader application, but Cryptrader is superior in a number of ways. First of all, unlike BTC Trader it is a web interface, making it much easier to use and requiring less trust on the user’s part than a desktop application. It is even possible, and recommended, to provide CrypTrader with API keys to your accounts without withdrawal privileges, so even if CrypTrader (or someone who hacks CrypTrader) proves to be malicious they can only move your money from one currency to another; they have no way of simply taking it for themselves. Second, CrypTrader goes beyond just Bitcoin, supporting all of the thirteen cryptocurrencies supported at the four exchanges. Altogether, if you are an arbitrage trader looking for a convenient way of looking at the price discrepancies between the various cryptocurrency markets, CrypTrader is the place to go.
Cryptsy – Cryptsy is one particular cryptocoin market, offering over thirty alternate cryptocurrencies tradable for BTC on its exchange. Coins-e is another site with a similar function.
Quandl Bitcoin Markets – Quandl is now offering a page with a large number of Bitcoin-related statistics aggregated from blockchain.info and Bitcoincharts. Statistics include the number of Bitcoin transactions, the average block size, the blockchain size, and Bitcoin prices on twenty different currency/exchange pairs. All data is also offered in a computer-readable JSON format, and for every statistic Quandl also offers a highly advanced chart interface and the ability to download historical data in a number of different formats. The only thing that the site is missing (as of the time of this writing) is mining statistics such as those from bitcoinwatch.com; once it includes that, this may well become the only Bitcoin statistics site worth visiting.
Cryptocoincharts – this site offers charts and the orderbook for over seventy cryptocurrencies, and for many currencies the site shows data for multiple exchanges and, in several cases, even data for exchanges converting directly between that currency and the USD or Euro. Altogether, the site contains 150 charts, making it one of the most detailed alternate cryptocurrency data aggregators out there.
Ripple Charts – Ripple Charts provides dozens of charts for currency markets over the Ripple network, and is the best place to get price data for Ripple’s own internal currency unit, the XRP.
Cryptocoin Explorer – the altcoin equivalent to Bitcoin’s Block Explorer, the site provides information on addresses, transactions and blocks for over 15 cryptocurrencies. The site also provides its data in a machine-readable format via an API, which also gives the site another practical application: one can use the site to query for the balance of a particular address, allowing merchants to start accepting any of these currencies without having to worry about running their own local node (although they will need to generate a few thousand addresses; creating a deterministic wallet that can generate addresses for any cryptocurrency is still an open problem).

For the cryptocurrency enthusiast, these sites are all valuable tools in a rapidly growing cryptocurrency toolbox. Multicurrency online wallets are perhaps the one application that still can be worked on; so far, every cryptocurrency has retained Bitcoin’s cryptographic relationship between private keys, public keys and addresses exactly (except possibly changing a “magic byte” to make addresses start with a different letter), so one should easily be able to make a deterministic wallet that works over all currently existing alternate cryptocurrencies at the same time. Complete alternate currency merchant tools are the next step; currently, Kojn offers Litecoin and Bitcoin support at the same time, but accepting a dozen cryptocurrencies is the next step. From there, well, let a thousand cryptocurrencies bloom.

Source : http://bitcoinmagazine.com

Bitcoin Foundation’s Legal Defense Fund and Regulatory Outlook

On July 9th, Jon Matonis accepted the position of Executive Director of the Bitcoin Foundation. Jon Matonis is a tech contributor to Forbes Magazine, editor of The Monetary Future, and also serves on our editorial board at Bitcoin Magazine. Previously Jon was the CEO of Hushmail and Chief Forex Trader at VISA.
How the Bitcoin Foundation will move forward on regulatory and legal issues is of crucial importance to the Bitcoin community. Jon announced a Legal Defense Fund and that it will be structured similarly to that of the Electronic Frontier Foundation.

The Foundation intends to file amicus curiae Briefs in decisive bitcoin-related legal cases and offer pro bono legal defense. Amicus curiae (Latin: “friend of the court”) briefs are filed with the court by someone who is not a party to the court case. Take a look at EFF’s Legal Cases to see a sample what the Foundation’s amicus brief might look like. He envisions “building a legal defense dream team…I’m talking about keeping people out of jail and pressing our case in the grey areas.”

The Foundation is only nine months old and the core list of issues are still being ironed out. However, the first “two phases” of the fund have been established. Phase I will focus around the Bitcoin exchanges while Phase II will focus on businesses that accept Bitcoin who are feeling indirect pressure to abandon adoption.

The Foundation was recently in the spotlight responding to cease and desist letter from the State of California Department of Financial Institutions for being a “money transmitter” – an act that is as humorous as requiring chef to first become a certified farmer. While this cease and desist was directed towards the Foundation, The Legal Defense Fund anticipates engaging the Bitcoin community at large.

In a podcast interview, Adam B. Levine, co-host and Editor in Chief of Let’s Talk Bitcoin! asked Jon Matonis for specific examples where the Foundation would be proactive in exploiting the Legal Defense Fund. Contemplated were two recent high profile situations interjecting themselves in Bitcoin legal grey areas (there are no known court actions in this regards): The BitBills Cold Storage Patent and the DEA Bitcoin Seizure.

The Foundation will not be involving itself in asset seizure cases such as the DEA bitcoin seizure. The BitBills situation is “still under discussion” whether or not it fits within the scope of the Fund; Gavin Andresen, the Chief Scientist and Core Developer of the Bitcoin Foundation is regarded by most as the progenitor of the cold storage paper wallet technology.

The “defensive intellectual property registration” of the fund might extend to defensively trademarking rights to names and logos. It would be “broad and sweeping but not an aggressive portfolio.”
There may be good reasons for doing this. In 2011, a New York criminal law attorney attempted to trademark the term “Bitcoin”, and similar incidents in other countries led to Mt. Gox applying for the trademark Bitcoin themselves in a number of jurisdictions as a service to the Bitcoin community to prevent others from doing the same. Max Keiser also caused a bit of a stir earlier this year when he pondered in The Huffington Post if “A Patent Lawsuit Could Take Down the Bitcoin Exchanges Like MtGox?“ Max Keiser is the former CEO of the Hollywood Stock Exchange (HSX) and inventor of the “Virtual Specialist Technology” now generally known as the “prediction market” business model. The company along with its patents were eventually sold. The plan was to have a real hollywood futures contract exchange based on box office receipts. It was initially approved by the CFTC, but was soon banned by the Dodd-Frank Wall Street Reform and Consumer Protection Act through Hollywood lobbying efforts. Mr. Keiser speculates that the HSX patents could land the Bitcoin exchanges in a legal quagmire. Shortly thereafter after we learned that the CFTC commissioner Bart Chilton announced on CNBC news state that he is interested in regulating Bitcoin. He reasoned that if it is “commodity that is used as a derivative” than the CFTC can regulate it. Showmanship? Maybe. Regardless, this is the type of legal/regulatory/lobbying environment the Bitcoin Foundation will find itself head to head with.

Jon stated that the Foundation would look at Mt. Gox’s account being seized by Federal authorities at Dwolla regardless of whether Mt. Gox was on the Board or not. LTB called compliance a moving target and it was generally agreed that the “rules get changed on you without you having enough time to react.”

“rules get changed on you without you having enough time to react.”

“Doug Jackson of e-gold knows you can have the rules changed on you at any time” cautioned Matonis. The e-gold case is a good analogy when looking at the regulatory environment. Wikipedia explains how “e-gold presaged Bitcoin as an alternative internet transaction system that operated completely outside of and independent of the legacy banking system.” Bitcoin Magazine’s Vitalik Buterin’s recent interview (“Bitcoin at Porcfest Part 3”) with James M. Ray of Omnipay (and former exchanger for e-gold) shared James’ experience with the regulatory environment at the time. “Doug Jackson of E-gold tried very very hard, I witnessed it, I was there, to cooperate with the government, he testified in front of Congress and all the various agencies, but he finally got raided anyway. If they could have raided Bitcoin they already would have, and the meme I’m trying to spread, I would love to see someone like Jeffrey Tucker say it, is that Bitcoin is karma for E-gold…”

Returning to Mt. Gox and the Bitcoin exchanges, Matonis noted the regulator concern of tax evasion vs. war on money laundering and terrorism. Without putting words in his mouth I think Jon was alluding to is that regulators might be using the potential threat of terrorism as leverage to go after Bitcoin exchanges for tax evasion.
In any case, of all the Bitcoin related stories swirling around the news these days it is curious that the Department of Homeland Security would choose to highlight on July 2nd in its daily news clippings a story by SoftPedia that the CNN Political Ticker blog was hacked: “July 1, Softpedia – (International) CNN’s Political Ticker hacked, fake Bitcoin operator story published. CNN’s Political Ticker blog was hacked and used to post a fake story about the shutdown of Bitcoin operator Btc-e.com after a user’s third party publishing platform credentials were compromised.”

Other cases that come to mind are Bitfloor and Bitspend. Bitspend has stated on its homepage since June 19th that “Bitspend is Unavailable: The TL;DR is that Bitspend has had its accounts frozen by our banks. We cannot operate without access to our funds.” and further provided updates on Reddit. BitFloor Posted on April 13th that “I am sorry to announce that due to circumstances outside of our control BitFloor must cease all trading operations indefinitely. Unfortunately, our US bank account is scheduled to be closed and we can no longer provide the same level of USD deposits and withdrawals as we have in the past. As such, I have made the decision to halt operations and return all funds.”

“Bitfloor was Bullied” said Matonis.

In the next 30 days, the Foundation is scheduled to submit comments to FinCEN’s guidance and request for industry feedback on rulemaking. They will have to submit their comments in the next few days on the NPRM or Notice of Proposed Rulemaking for “Imposition of Special Measure against Liberty Reserve S.A. as a Financial Institution of Primary Money Laundering Concern (May 28, 2013).” Additional information on the Liberty Reserve can be found in the June 6th Federal register.

On regulation, Matonis noted that “The U.S. is taking the lead on being one of the most aggressive jurisdictions towards Bitcoin regulation.” Further, “The U.S. regulatory crackdown on Bitcoin does not harm Bitcoin or the targeted companies, it harms U.S. citizens.” Just like U.S. citizens can’t do online gambling or online poker, the rest of the world doesn’t care.”

“The U.S. regulatory crackdown on Bitcoin does not harm Bitcoin or the targeted companies, it harms U.S. citizens.”

One need only look at SatoshiDice. “SatoshiDice is the most popular Bitcoin betting game in the universe.” However, attempting to access SatoshiDice from the United States will flag you with the following message: “Beginning tomorrow, Thursday May 16, SatoshiDice.com will close to US players and all US-based IP’s will be blocked from the website…” SatoshiDice posted the decision to vacate the U.S. market on Reddit on May 15th: “This decision was made on the basis of extensive legal counsel. The best way to limit legal risk for SatoshiDice, and thereby protect its stakeholders, is to block US players.”

Consensus and Education Needed

The groundwork for governmental education will come before advocacy. “The role of education is paramount and its so far behind the world of Washington when it comes to Bitcoin and virtual currencies in general” said Matonis. The Foundation has not proactively engaging anyone in a long term relationship for representation in Washington in regards to government affairs.

Moreover, the membership of foundation might not want advocacy for different regulations. The lobbying effort is an ongoing conversation within the membership and is quite active in the member forum and the main Bitcoin Forum.

Right now the Legal Board on the Bitcoin Forum has more than 6,600 post with about 350 topics. See you there?

Source : http://bitcoinmagazine.com

First Iranian Website Open to Iranians to Buy and Sell Bitcoin

Where authoritarian government control and restrictions on individual liberties appear to be the strongest, the Bitcoin community is still growing and in some cases thriving. Just this week Coin Ava launched as the first Iranian Website open for Iranians to buy and sell Bitcoins. While Iranian leadership is known for tight regulations on citizens in particular for those seeking to utilize the internet and community with the rest of the world, Iranians have found a way around onerous authoritarian restrictions through the Bitcoin currency.

Last year, Bloomberg Businessweek pushed out an article, “Dollar-Less Iranians Discover Virtual Currency” to conclude, “For now, Iranians are using bitcoins to maintain a fragile connection to the outside world.” Iranian citizens are able to use the Bitcoin currency as a gateway to purchase products around the world and through the Bitcoin currency are not confined to a devalued Rial. As the Iranian regime continues to move forward with an illicit nuclear program despite international sanctions and pleas from leaders around the world to cease uranium enrichment, Iranian citizens are put in a tough situation. In the end of the day, Iranian President, Mahmoud Ahmadinejad, and Iranian Supreme Leader, Ali Khamenei, while claiming to act in the best interest of Iranians are actually compromising the financial health and well being of all Iranian citizens. Bitcoin provides a ray of hope for many Iranians in light of Iranian Authoritarian Leadership’s blatant disregard of international standards.

As a former Foreign Policy staff member for a Member of the US Congress, I understand the hesitancy some might have to applauding the growth of Bitcoin in Iran. Whereas it is evident that the current regime in Iran has violated international law through disregarding International Atomic Energy Agency (IAEA) standards and frequently utilizing hate-filled rhetoric, it is also true that there is a sizable group of Iranian citizens who oppose the totalitarian actions of their government and are working to reform their country. The Iranian Bitcoin question is a touchy subject for most, but can be worked through if viewed through lenses centered on the purpose of the Bitcoin currency.

Whereas Bitcoin is a digital, decentralized currency, it serves as a source of empowerment for individuals around the world to take the initiative to control personal finances and become financially independent from a centralized source of control. In some nations, the desire to be independent from a central bank is not as strong as not all nations have authoritarian leadership and high inflation rates. Yet for some nations Bitcoin provides a source of financial security and promise outside of any centralized currency to citizens. Coin Ava’s launch this week has prompted dialogue once again over the many purposes of the Bitcoin currency and the intrinsic value this digital, decentralized currency holds of citizens living under the auspices of an authoritarian government. From the perspective of a former Capitol Hill staffer who ardently opposses Iranian nuclear development, hate speech, and human rights violations, I see the growth of the Bitcoin currency in Iran as a direct affront and slap in the face of the Iranian authoritarian government. Where there is a will, there is a way, and Iranian citizens have worked to combat Iranian leadership’s poor decision making with the Bitcoin currency.

First Iranian Website Open to Iranians to Buy and Sell Bitcoin

First Iranian Website Open to Iranians to Buy and Sell Bitcoin

Source : http://bitcoinmagazine.com

Wednesday, July 17, 2013

Bitcoin developer Jeff Garzik on altcoins, ASICs and bitcoin usability

Last week, CoinDesk caught up with bitcoin core developer Jeff Garzik about his perspective on Satoshi Nakamoto and the future of Bitcoin. This week, we reveal Garzik’s thoughts on alternative digital currencies, ASIC miners, and getting everyday users on board for bitcoin.

On altcoins

Some people do like the idea of including more features in the native protocol. Projects like Zerocoin have been looking for altcurrencies to adopt their technology for making a cryptocurrency truly anonymous, and when it comes to math-based currencies, Garzik is all for diversity. He’s happy to see the proliferation of other coins.

“It’s a fantastically good thing,” he says. “Experimentation is wonderful. It’s been disappointing that the overwhelming majority of altcoins have been pump and dumps or premine-type schemes.” he calls that the first generation of coins, but thinks that the landscape for altcoins is maturing.

The second generation is far more interesting, with fewer “lazy clones” and more experimentation, he argues, singling out PPCoin for its work with proof of stake, and Freicoin for its exploration of demurrage.
But, apparently, all of this has its place – and it’s underneath bitcoin. “I don’t think it’s likely that the second generation will produce any useful, viable long-term cryptocurrency, but I do think that all this experimentation will absolutely inform the Bitcoin ecosystem, and any features or really novel developments can likely just be incorporated into Bitcoin itself.” That may not sit well with the creators of other currencies, some of whom hope to establish a greater foothold in the area.

He welcomes diversity within the bitcoin community, though, pointing to other bitcoin clients such as Bitcoinj. “I wrote two – one in python, called pynode, and one in the C language, called picocoin. Gavin and I think that from that perspective it’s healthy. We’re trying to avoid a software monoculture where everyone is running the same version of the software.”

There’s a caveat to that, however. He calls Bitcoin the first protocol to solve the distributed consensus problem, and every alternative client must follow the Bitcoin protocol rules, he says, including any bugs that may have been in the Satoshi reference implementation. “If you don’t, you introduce fork risk. So it’s a real balance of engineering benefits and costs.”

Why ASICs will rule the world – and that’s no bad thing

All of the bitcoin clients that mine have to run on something, and many are starting to use ASICs.

“It’s fascinating to watch the progression of mining technology,” says Garzik, who was among the first to take delivery of an Avalon ASIC miner, and now runs it at home. He says his mining activity is more for interest, and to participate in the day-to-day operation of the network, than for profit.

Some believe that the evolution of ASICs makes the market less democratic, because it makes GPU miners less effective, and increases the cost of basic mining power. He disagrees.

“During the GPU era of mining, it was one company, ATI, which was primarily the supplier of all the mining hardware. If there was an ATI supply disruption, or a pricing problem, then that directly affected GPU mining profits,” he says. “With ASICs there are more companies selling chips, and the barrier to entry of making these chips are very low.”

That’s all relative, of course. KnCMiner has told CoinDesk that it expects its Non-Recurring Engineering (NRE) costs to be at least $3.5m. But for many large firms, that is indeed a low entry point to begin making the equivalent of a printing press for digital currency.

The point is that SHA-256 is easy to do. “Any graduate student could do it, and you have any number of companies that are competing to provide mining chips,” he maintains, adding that we’ll see more upstarts selling ASICs as the market fills out.

The more ASIC mining power the network gets, the better off it will be, Garzik adds. “You have a lot of mining power that’s being spread around many miners across the entire world,” he says, arguing that it decentralizes the mining process. “More mining power makes it more difficult to reverse bitcoin transactions. The more widely spread that is, the more difficult it is to shut down bitcoin itself.”

So no, the development of an ASIC-enabled elite isn’t an existential threat to the bitcoin network, says Garzik – quite the opposite, in fact. What does worry him is cultural inertia. People understand and trust conventional fiat currency, he points out. Part of the bitcoin community’s job is to teach them about the alternative, and why they should consider using it.

Getting everyday users on board

“Bitcoin activists and evangelists like me have a bunch of answers. It’s borderless, it’s irreversible, and there’s low risk of fraud,” he says. “Nonetheless, it’s difficult to get on the radar of your average person.”
Usability is a key issue here. Bitcoin addresses, for example, work very well technically, but can be confusing to users and also have some security vulnerabilities. There is, however, There’s a payment protocol in the works to make the whole thing easier.

“The payment protocol that Gavin [Andresen] and others have been working on uses public key cryptography,” he says. Users will use digital certificates to exchange bitcoins, in a similar way to how websites validate websites.”

Similarly, some enterprising hardware engineers are putting together physical hardware solutions to help with the distribution of bitcoin, Garzik points out. “That’s going to do a lot to bridge that usability hurdle. Bitcoin wallets on the smartphone are almost already there in terms of being a killer app.” BitPay employees pay each other back when someone makes a food run, by pointing their phones at each other and scanning QR codes.

It’s unsurprising that Garzik’s vision for Bitcoin is a grandiose one. He wants it to be a first-class, mainstream currency in its own right. The comparisons he draws speak for themselves.

“It took the nations of the Eurozone ten years or so to deploy the Euro, and that was introducing an entirely new currency,” he says. “We’re trying to do the same thing with bitcoin. We’re trying to roll out a currency from scratch. And as the experience with the Euro showed, it takes an incredible amount of time to change over POS systems and cash registers, to train end of line merchant workers with this new payment system.”

The currency came from small beginnings, but Garzik believes that this is just the start. If his vision comes true, then maybe bitcoin could be as big as the Euro. Only, you know, without centralized banking and dysfunctional national economies gumming up the works.

Source : http://www.coindesk.com

Get Bitcoins Free

If you’re looking to get free Bitcoins, we have the information that you want. We suggest you bookmark this page so that you can visit it daily, or even more frequently. While our list of websites that provide free Bitcoins is not the longest one available, we believe it is the best. Why isn’t it the longest? Simple. There are some sites we visited that do indeed give away Bitcoins for free, but while we were on those sites our security systems blocked attempts to download suspicious software onto our computer. We do not want to include any questionable websites in our list.

Additionally, there were some sites that claimed to offer free Bitcoins, but every time we visited those sites, they were “out of Bitcoins at the moment.” It’s one thing to advertise free Bitcoins, it is another to actually give them away so that they are securely in your wallet.

Some of the sites listed below are Bitcoin Faucets, which are basically sites that will provide you with free Bitcoins without requiring you to perform any action other than pasting your wallet address and verifying you’re a person by filling out a captcha. Other sites will require you to perform a simple action, such as visit a web page for a specified period of time (typically 3 to 5 minutes), watch a video, fill in a survey, or vote yes or no on a question.

We’ve provided the list below with our favorite sites listed first. When you use the link we provide, the site will open in another window. Simply follow the instructions at each site to collect your free Bitcoins. Some sites will send the Bitcoins to your wallet very quickly, while others will only send them once per day. The amount you can expect to receive from each site varies from 0.000001 Bitcoin all the way up to 0.1 Bitcoin. Remember, it’s a good idea to bookmark or save this page as a favorite so that you can use this handy list every day.

Free Bitcoin List

http://bitcointree.net
http://bitcoinforest.com
http://www.virtualfaucet.com/
http://www.srbitcoin.com/
http://www.btc4you.com/
http://www.freebitcoinlottery.com/

How to Get Bitcoin?

Bitcoin wallets & addresses

A user can have one or more bitcoin addresses from which bitcoins are sent or received using either a website or downloaded software often called a "wallet" like a digital wallet. Users can obtain new bitcoin addresses as needed. Many bitcoin services provide addresses tied to a user's individual account to hold funds on the user's behalf.

Specifically, a bitcoin address is a cryptographic public key–– human-readable strings of numbers and letters around 33 characters in length, beginning with the digit 1 or 3, as in the example of 175tWpb8K1S7NmH4Zx6rewF9WQrcZv245W. The matching private key is often stored in a digital wallet or mobile device and protected by a password or other means of authentication. Each bitcoin transaction is signed by the private key of the user initiating the transaction.

Various vendors offer banknotes and coins denominated in bitcoins; what is sold is really a bitcoin private key as part of the coin or banknote. Usually, a seal has to be broken to access the key, while the receiving address remains visible on the outside so that the balance can be verified.

Payment network & mining

The Bitcoin network protocol operates to provide solutions to the problems associated with creating a decentralized currency and a peer-to-peer payment network. Key among them is the use of a blockchain to achieve consensus and to solve the double-spending problem.

A bitcoin is defined by a chain of digitally-signed transactions that began with its creation as a block reward through bitcoin mining. Each owner transfers bitcoins to the next by digitally signing them over to the next owner in a Bitcoin transaction. A payee can then verify each previous transaction to verify the chain of ownership.

The network timestamps transactions by including them in blocks that form an ongoing chain called the blockchain. Such blocks cannot be changed without redoing the work that was required to create each block since the modified block. The longest chain serves not only as proof of the sequence of events but also records that this sequence of events was verified by a majority of the Bitcoin network's computing power. As long as a majority of computing power is controlled by nodes that are not cooperating to attack the network, they will generate the longest chain of records and outpace attackers.

The network itself requires minimal structure to share transactions. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will. Upon reconnection, a node will download and verify new blocks from other nodes to complete its local copy of the blockchain.

Source : Wikipedia

Bitcoin (sign:

; code: BTC) is a cryptocurrency where the creation and transfer of bitcoins is based on an open-source cryptographic protocol that is independent of any central authority. Bitcoins can be transferred through a computer or smartphone without an intermediate financial institution. The concept was introduced in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system.

The processing of Bitcoin transactions is secured by servers called bitcoin miners. These servers communicate over an internet-based network and confirm transactions by adding them to a ledger which is updated and archived periodically using peer-to-peer filesharing technology.^[2] In addition to archiving transactions, each new ledger update creates some newly minted bitcoins. The number of new bitcoins created in each update is halved every 4 years until the year 2140 when this number will round down to zero. At that time no more bitcoins will be added into circulation and the total number of bitcoins will have reached a maximum of 21 million bitcoins. To accommodate this limit, each bitcoin is subdivided down to eight decimal places; forming 100 million smaller units called satoshis per bitcoin.

Bitcoin is accepted in trade by merchants and individuals in many parts of the world. Like other currencies, illicit drug and gambling transactions constitute some of its commercial usage.Although the bitcoin is promoted as a digital currency, many commentators have criticized the bitcoin's volatile exchange rate, relatively inflexible supply, and minimal use in trade.

bitcoin

a History of Bitcoin

Bitcoin is the first practical implementation of a cryptocurrency, a form of money that uses cryptography to control its creation and management, rather than relying on central authorities. However, not all of the technologies and concepts that make up Bitcoin are new; Satoshi Nakamoto integrated many existing ideas from the cypherpunk community when creating Bitcoin.

Timeline

2008–2009
- In 2008, Satoshi Nakamoto posted a paper describing the Bitcoin protocol on the internet.^[1]^[10]^[21]^[22]
- In 2009, the Bitcoin network came into existence with the release of the first open source Bitcoin client and the issuance of the first bitcoins.

2010
- The prices for the first bitcoin transactions were negotiated by individuals on the bitcointalk forums. One notable transaction involved a 10,000 BTC pizza.
- On 6 August, a major vulnerability in the Bitcoin protocol was spotted. Transactions weren't properly verified before they were included in the transaction log or "block chain" which allowed for users to bypass Bitcoin's economic restrictions and create an indefinite number of bitcoins.
- On 15 August, the major vulnerability was exploited. Over 184 billion bitcoins were generated in a transaction, and sent to two addresses on the network. Within hours, the transaction was spotted and erased from the transaction log after the bug was fixed and the network forked to an updated version of the Bitcoin protocol. This was the only major security flaw found and exploited in Bitcoin's history.

2011–2012
- In June 2011, Wikileaks and other organizations began to accept the bitcoin for donations. The Electronic Frontier Foundation temporarily suspended bitcoin acceptance, citing concerns about a lack of legal precedent about new currency systems, and that they "generally don't endorse any type of product or service.". The EFF's decision was changed in 17 May 2013.
- In late-2011, the exchange rate of the bitcoin crashed from over $30 in June to below $2 in October.
- In January 2012, Bitcoin was featured as the main subject within a fictionalized trial on the CBS legal drama The Good Wife in the third season episode "Bitcoin for Dummies". The host of CNBC's Mad Money, Jim Cramer, played himself in a courtroom scene where he testifies that he doesn’t consider bitcoin a true currency, saying “There’s no central bank to regulate it; it’s digital and functions completely peer to peer.”
- In October 2012, BitPay reported having over 1000 merchants accepting Bitcoin under its payment processing service.

2013

February
- The Bitcoin-based payment processor Coinbase reported selling $1 million in bitcoins in a single month at over $22 per bitcoin.
- The Internet Archive announced that it is ready to accept donations as bitcoins and that it intends to give employees the option to receive portions of their salaries in Bitcoin currency.
March
- The Bitcoin transaction log or "block chain" temporarily forked into two independent logs with differing rules on how transactions could be accepted. The Mt.Gox exchange briefly halted Bitcoin deposits and the exchange rate briefly dipped by 23% to $37 as the event occurred before recovering to previous level of approximately $48 in the following hours.
- In the US, the Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for "decentralized virtual currencies" such as Bitcoin, classifying American "Bitcoin miners" who sell their generated bitcoins as Money Service Businesses (or MSBs), that may be subject to registration and other legal obligations.
April
- Payment processor BitInstant and Mt.Gox experienced processing delays due to insufficient capacity.
- On 10 April, the bitcoin exchange rate dropped from $266 to $76 before returning to $160 within six hours.
- Bitcoin gained greater recognition when services such as OkCupid and Foodler began accepting it for payment.
May
- On 15 May 2013, the US authorities seized accounts associated with Mt. Gox after discovering that it had not registered as a money transmitter with FinCEN in the US.
July
- A project underway in Kenya is linking Bitcoin with M-Pesa, a popular mobile payments system, in an experiment designed to spur innovative payments in Africa.

Source : wikipedia

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Wednesday, July 31, 2013

UPDATE : MORE BITCOIN FAUCET

Monday, July 22, 2013

EARN BITCOIN WITHOUT ADS

Sunday, July 21, 2013

Bitcoin Foundation Continues Legal Offensive With Request for Clarification on Liberty Reserve