Microsoft: Bitcoin Regulation Will Influence Expansion Plans

Global tech giant and Internet pioneer Microsoft ignited a new wave of interest in both bitcoin and its brand with its surprise December announcement that it had integrated the digital currency as a payment option for digital goods.

While widely lauded by the bitcoin community as a small but forward-thinking step, optimism about the move arguably reached fever pitch when just a day later its partner BitPay suggested Microsoft was already considering ways to expand the payment option globally.

Speaking to Bitcoin News, however, Microsoft offered a somewhat different take on its internal conversation regarding bitcoin. While the company did not deny that discussions about the technology were ongoing, the company sought to frame such conversation as typical for any of its products and services.

Markets Weekly: 2014 Closes on Bearish Note for Bitcoin

The bitcoin price has been in the doldrums in the last week, closing out a month of persistent losses. It's now trading at the lowest levels of the year.

Bitcoin opened the week at $330.67 and closed at $316.80, according to the Bitcoin News Bitcoin Price Index. That represented a loss of $13.87 in the bitcoin price over the last seven days, or 4.2%.

Over the week, the price hit a high of $335.88 on the 23rd December, only to fall to a low of $312.40 four days later. That was a drop of some $23.

Safello Co-Founder Moves to Tokyo to Start New Bitcoin Security Firm

WizSec Founding Team: Kim Nilsson, J. Maurice, Emil Oldenburg

The co-founder of Swedish exchange Safello has left the company to join a team of bitcoin security experts in establishing a new Tokyo-based consulting firm.

The move should also see him assisting the investigation into Mt Gox's missing bitcoins.

Emil Oldenburg, who was also Safello's chief technology officer, left Sweden just last month and is now an official co-founder at WizSec, a new startup that has been performing unofficial analysis of Gox's transaction records.

Oldenburg told Bitcoin News he was looking for something different after launching Safello in August 2013. A love of Japanese pop culture and a desire to return to his infosec roots drove him to make a quick decision on a chance offer.

He said:

"I saw an opportunity in Japan and decided I needed to act now, as it wouldn't be there forever."

Oldenburg met Wizsec's chief hacking officer J. Maurice at the Tokyo Bitcoin Meetup while on vacation in spring. The two got talking about security issues, and Oldenburg received an offer almost immediately.

Maurice said the engineer, who had racked up more than two years as a systems security specialist at NASDAQ in Europe, was a catch for his fledgling company.

"Our goal is to recruit the most elite hackers from all over the world, so we're honored to have Emil come join us to co-found our bitcoin security firm."

Safello in Europe

Safello operates a Europe-wide exchange serving all countries of the European Union plus Norway and Switzerland, leveraging Swedish banks' comparatively liberal attitude towards cryptocurrency businesses, and Europe's SOFORT instant payments system to serve its clients.

The company received its initial $600,000 backing from bitcoin veterans Erik Voorhees, Roger Ver and Blockchain CEO Nicolas Cary. A further $250,000 investment came in July via Barry Silbert's Bitcoin Opportunity Corp.

Seeing Japan up close

Despite the long-distance relocation, Oldenburg remains a shareholder in Safello and still has a keen interest in the exchange business.

A manga and Japanophile since his teenage years, Oldenburg had helped organize Japan-themed conventions in his native land, festivals that attracted thousands of cosplaying Swedes to peruse Japanese merchandise, games, and other cultural exports.

"I'd studied the language in school and wanted to learn the language for real," Oldenburg added.

WizSec and the Gox connection

In November, San Francisco-based Kraken launched its local Japanese exchange, announcing immediately after that it had been selected by bankruptcy trustee Nobuaki Kobayashi to assist him and the Tokyo Metropolitan police in their investigation into what became of Mt Gox's 650,000 still unaccounted-for bitcoins.

WizSec has since signed a non-disclosure agreement (NDA) with Kraken, which prevents the company from discussing its current work, though it can be assumed it will involve Mt Gox somehow.

The founding team, which then consisted of Maurice and colleague Kim Nilsson, earlier this year took the personal challenge of analyzing the "ticker-tape" of Gox transaction information that had become publicly available through hacks, leaks and IRC chats.

This was despite the fact that the Japanese police were keeping all official Mt Gox transaction and customer data behind closed doors, unavailable for public examination.

Rising demand for bitcoin security

WizSec, which spun off from existing IT firm Wiz Technologies to focus exclusively on bitcoin business, used its reconstructed Gox data to form new theories on what may have happened to the funds.

While the Mt Gox investigation looks likely to be WizSec's primary task, the company is also busy signing up other clients for security-related jobs involving audits and pen-testing.

Maurice, who also played a part in battling Roger Ver's would-be hacker/blackmailer in May, said these incidents had all led to a big increase in demand for security consulting in the cryptocurrency field.

"As Mt Gox taught us, the most important thing in bitcoin is to not get hacked, or to build systems that don't require such trust in the first place, and that's what our firm will help new bitcoin startups with."

"We're building secure infrastructure from the beginning, so we can prevent another epic failure like Gox from ever happening again," he said.

WizSec team image by Jon Southurst

AsiaJapanSafelloSecuritySweden

E-Commerce Software Developer Ziftr Raises $600K in Altcoin Crowdsale

One of the big questions about digital currency is whether or not the technology will be utilized on a broader scale by the spending public. Those who foresee a rise in use by consumers argue that it’s only a matter of time before existing payment mechanisms are supplanted by bitcoin or another coin, while those more critical of this area of adoption counter that many spenders will be loath to give up their cash and credit cards in favor of digital currencies.

The nature of this debate hasn’t stopped some from betting on the embrace of digital currency by consumers. Over the past two weeks, Ziftr, a New Hampshire-based e-commerce solutions provider, has raised more than $600,000 during a crowdsale of its own altcoin, ziftrcoin, which the company is pitching as a user-friendly alternative to bitcoin.

ChangeTip CEO Nick Sullivan: We Won't Sell User Data

"I feel like we're a charity getting yelled at."

That was the initial, emotional reaction of founder and CEO Nick Sullivan to a wave of criticism launched yesterday against his micropayments startup, ChangeTip, a company that has emerged as one of bitcoin's most buzzed-about businesses for its efforts to promote bitcoin as a force for fun and social good.

In just a few short weeks, ChangeTip has raised $3.5m in seed funding, hired a former product manager from Blockchain and reported a surprising surge in user metrics as high as 10,000 transactions in a single day. The developments were seen as not only a validation of ChangeTip, but as the startup contends, proof that online tipping could become a powerful use case that helps propel the technology out of the early adopter phase.

GAW Miners Altcoin Launch Sparks Speculative Frenzy

The weekend launch of GAW Miners’ new altcoin, paycoin, led to a speculative boom in mining rig rental prices and a rarely seen boost in altcoin trading.

Paycoin launched on 12th December, kickstarting both a sharp jump in hosted mining prices and a period of sustained trading on several altcoin exchanges. The coin has attracted attention due to the ongoing discussion surrounding GAW Miners, promises of crypto 2.0 functionality and a commitment to shore up its price at $20.

US State Bank Supervisors Issue Model Regulation for Digital Currencies

The Conference of State Bank Supervisors (CSBS) has released a draft proposal for regulating digital currency businesses.

The membership group, which represents bank regulators from US state agencies but does not play a direct role in how states craft new financial rules, outlined a number of areas in which it believes companies that work with digital currencies should be supervised, including approaches to consumer protection, licensing, and security.

LibertyX Brings Bitcoin Buying to 2,500 US Retail Stores

Liberty Teller, the bitcoin ATM operator that manages machines in high-profile locations near US universities like Harvard and MIT, has officially rebranded as LibertyX, expanding its network with 2,500 new bitcoin buying locations in 33 US states.

The announcement marks a dramatic expansion for the Boston-based company, which has partnered with transaction processing specialist Qpay to launch cash-for-bitcoin buying services at mobile phone and convenience stores around the country. LibertyX manages four ATM machines, but sees this new partnership as a way to expand and innovate its business.

LibertyX co-founder Chris Yim explained that his company, which was accepted into the MassChallenge startup accelerator this summer, will now seek to shift away from bitcoin ATMs, more broadly embracing a variety of cash-for-bitcoin channels.

Yim told Bitcoin News:

"If you look at our Harvard [bitcoin ATM] location, it's very high volume, high traffic, it makes sense because you have a lot of people coming in and out. But, the US is extremely large geographically, and we want to make sure that you can buy bitcoin as conveniently as you can go to your local bank."

Yim went on to suggest that the new partnership would allow LibertyX to offer the lowest-cost cash option for bitcoin buying, as the involvement of retail stores limits the overhead that can come with leasing space for a dedicated bitcoin ATM.

He added that the service with be fee-free for new users at launch to encourage enrollment.

Making a purchase

To buy bitcion at LibertyX's new retail partner locations, consumers must set up a user account online, linking their phone number and providing details such as their name and date of birth.

Users who want to purchase bitcoin can then enter their zip code, which will in turn bring up an interactive map of LibertyX's nearby locations.

The website features a step-by-step tutorial advising new users on how to interact at the point of sale. Purchases can be made in increments of $50, $100, $200 or $300. In return, users receive a PIN number that they then enter into the LibertyX website, at which time LibertyX sends this amount of bitcoin to the user's wallet.

Yim further downplayed the notion that retail employee confusion could occur at checkout.

"In terms of what the dealer actually does, they're providing the cash channel, accepting the cash," he said. "Bitcoin redemption, user signup – that all happens on our site."

Embracing traditional finance

More broadly, Yim explained that he sees bitcoin's ATM sector as providing a necessary onramp to bitcoin today, though he suggested he sees this importance diminishing over time.

"I think that bitcoin is a great add-on and should be integrated into all ATMs. It doesn't make sense to have a new machine when all that's required is additional lines of code," he said.

Yim went on to suggest that ATM providers that embrace bitcoin may gain a new way to increase their revenue streams, an idea that has been proposed by trade groups such as the Electronic Funds Transfer Association (EFTA) and the ATM Industry Association (ATMIA).

Yim concluded that LibertyX aims to position itself to capitalize on this transition, concluding:

"I for one would love to work with any ATM or banking partners that are looking to deploy this."

Checkout image via Shutterstock

Bitcoin ATMsLiberty Teller

Amazon, Walmart and Western Union BitLicense Comments Revealed in NYDFS Release

The New York Department of Financial Services (NYDFS) made all of the more than 3,700 comments it received regarding its BitLicense proposal available to the general public today, a move that provides new insight into the organisations and individuals that have taken an interest in the proposed regulation.

Perhaps most notably, the full release included submissions from some of the largest businesses in the US, including e-commerce giant Amazon, retail juggernaut Walmart and global remittance specialist Western Union.

The filings suggest that the BitLicense is being interpreted broadly by the legal representatives of these companies, and that greater clarity is needed by the NYDFS to indicate the entities and financial products covered under the measure.

Gems Crowdsale Raises Over $111k for Crypto Social Messaging Service

Gems, the recently announced bitcoin-powered, decentralized social network, ended the invite-only portion of its public crowdsale today, raising roughly $111,000 over the two-week period.

The Gems presale is the first crowdsale to be held on Koinify, the decentralized application development platform that raised $1m from investors including IDG Capital Partners, Brock Pierce's AngelList syndicate and zPark Ventures in September. As such, the crowdsale, which has now opened to the public, is being billed as one of the best supported effort by the bitcoin community to launch a viable crowdfunding platform.

Gems Crowdsale Raises $111k and Counting for Crypto Social Messaging Service

Gems, the recently announced bitcoin-powered, decentralized social network, ended the invite-only portion of its public crowdsale today, raising roughly $111,000 over the two-week period.

The Gems presale is the first crowdsale to be held on Koinify, the decentralized application development platform that raised $1m from investors including IDG Capital Partners, Brock Pierce's AngelList syndicate and zPark Ventures in September. As such, the crowdsale, which has now opened to the public, is being billed as one of the best supported effort by the bitcoin community to launch a viable crowdfunding platform.

Bitcoin: New Plumbing for Financial Services

Jonathan Levin is a digital currency consultant and entrepreneur. He previously co-founded and served as CEO of Coinometrics.

Payment systems are systems of pipes and valves that allow monetary transfers between people all over the world. To most, they sit insulated from view. Even when in plain sight they evade comprehension. With large responsibility for errors and lack of acknowledgement for progress, there has been little innovation and construction of new pipes. Bitcoin represents a new way to re-plumb the financial system on a decentralised architecture. However, much like the existing financial system, few people understand the consequences of the layout and design of its pipes.

The plumbing analogy fits far closer to bitcoin than normal financial markets. Bitcoins are not coins, indeed there is no concept of identifiable currency units. Bitcoin should be considered a type of monetary fluid with a unit of account: bitcoin. The monetary fluid – bitcoins – flows through a system of pipes (transaction outputs) and fittings (transactions).

Constructing bitcoin’s pipes

Transactions are constructed using previous transactions as inputs to fund transaction outputs. Each output can be thought as a pipe with some capacity of bitcoin. Each transaction is a fitting, connecting one or more of the existing pipes. The pipe or pipes that are the result of a fitting can at most carry the same capacity of the sum of the pipes that led into the transaction.

Bitcoin is neither an account based payment system or a tokenised banking system. The protocol uses the history of all past transactions to generate a state of unspent bitcoins. When we say there are 13 million bitcoins in circulation, what we actually mean is that the system recognises that there are 13 million bitcoins in unspent outputs that can be reassigned according to the rules of the payment system. The reassignment is irreversible and hence new transactions are additions to the growing complex system of pipes.

Analysing bitcoin’s pipes

The graph of pipes or transactions is largely immutable and therefore makes it amenable to analysis. Pipes are only destroyed if there is a reorganisation on the consensus of the network. The system of pipes is appended only and therefore the complexity and size of the transaction graph grows over time. Bitcoin’s history can be evaluated by looking at the state of the pipes on 1st January 2014 or any block height.

One problem in any analysis is the lack of mapping from inputs to outputs. When warm water comes out of a tap, there is no separation between the hot and the cold. In bitcoin, if two transaction outputs are both inputs in the same transaction, the protocol makes no attempts to map inputs to outputs. Bitcoin retains the information that can reveal the capacity of the individual pipes that were feeding into the fitting. In this way, bitcoin is not a token system but something far more fluid and complex.

In the diagram below each node is a transaction or an unspent output. The green nodes are transactions and the white node indicates unspent outputs. The number contained within the circle represents the sum of the outputs of that transaction or transaction output. Each edge is the link of output to the subsequent transaction. We cannot say in which proportion the inputs of the transaction are funding the outputs.

Imagine this transaction was the purchase of a new iPhone 6 costing 1.5 BTC. Now assume that one of the funding transactions used to fund the purchase was a theft. The theft is marked as the orange transaction. Now the difficult question becomes how much of the stolen bitcoin remains in the thief’s possession? Bitcoin the protocol does not have the answer to this. Instead we would have to rely on our legal principles to establish that all of the 0.5 BTC remaining in the possession of the thief was actually the stolen bitcoins.

As the blockchain is a public set of transactions, the analysis could be performed on an arbitrarily large scale. For example, we could ask the question: are the bitcoins that you are holding the same as the ones that I once had? The analogue is pouring water into the pipes at a source transaction and analysing how much of the same water collects at the target transaction. To perform such analysis, two types of algorithm are used – minimum flow and maximum flow. Minimum flow asks the question: “what is the minimum number of bitcoins that went from the source to the target?” The maximum flow asks the question: “what is the maximum number of bitcoins that could have gone from the source to the target?” If minimum flow returns a positive answer, X, then the target is at least holding X amount of bitcoins that were once held at the source. The water that flowed through the source is the same as the water that we found at the target.

However, usually the minimum flow quickly goes to zero because we need to combine transactions in order to pay our debts. So if I make the payment of 1.5 BTC for the iPhone 6. The minimum flow from each of the inputs to the expenditure is 0.5 BTC. The algorithm places the maximum number of bitcoins, 0.5 BTC, in the change and leaves 0.5 BTC to pay for the good. In the maximum flow case, the amount would be 1 BTC in both cases since the output is larger than 1 BTC. After only a few transactions, it is likely that the minimum flow falls to zero.

In the instance of minimum flow being greater than zero, we can prove that the bitcoins went from the source to the target and we have full traceability. But where minimum flow is equal to zero for all potential outputs, as is often the case, we have no traceability. Even though we can show the connections between all the different transactions or pipes in bitcoin’s history, we cannot say a lot about the flows of funds or monetary fluid. We get transparency but hardly any traceability. The parties that cause the obfuscation can also be identified by their bitcoin addresses and could be subject to adverse claims.

In light of this, perhaps it is a red herring to even think of bitcoins as units of currency and we should be rethinking the way that we speak of “my bitcoins”. Perhaps flows of currency as I have described them should be thought of as simultaneous creation and destruction of interests that are not necessarily tied together (as is the case with some US securities). These issues must be understood in order to develop private law frameworks for bitcoin as well as appropriate anti-money laundering guidelines. One thing is for sure – there are no coins in bitcoin.

This article has been republished here with permission from the author. Originally published on Jonathan's bitcoin blog.

Disclaimer : The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Bitcoin News.

Image via Bitcoin News

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Decentral Launches Bitcoin Talk Show and Video Channel

Decentral TV dashboard page

Toronto-based co-working space Decentral has rebranded, dropping 'bitcoin' from its name and launching two new sites including a 24-hour bitcoin video news service.

This will include the new Bloomberg-like information dashboard site Decentral TV, and a redesigned version of the original Decentral.ca site, which itself has a new focus on news updates and informational content.

Co-founder Anthony Di Iorio told Bitcoin News Decentral's aim is to be "a home for decentralized and disruptive technologies", whatever form they may take, providing quality and in-depth reports from its Spadina Avenue studio and around the world.

Bitspark Enters Hong Kong's Remittance Market With Bitcoin-Powered Solution

Joseph Joel Bayaua is employed as a private driver by a family in Hong Kong. He has worked in the special administrative region for four years.

When Bayaua sends part of his earnings back to his family in Santiago, a city of 132,000 people in the Philippines' northern Isabela province, he selects either a Western Union money transfer or an inter-bank transfer. He usually ends up choosing Western Union.

How Bitcoin Companies Keep Your Funds Safe

When you store your bitcoins on an exchange, a gambling site, or in an investment site, you're placing a lot of trust in the company.

Personal wallet security with a relatively small amount of coins is one thing, but these sites store many more bitcoins than the average user, and are therefore prime targets for attack. So how do they protect your money?

Some, like the gambling site Seals With Clubs, use their own proprietary wallet technology, while others work with third-party services.

Why Bitcoin Needs an Aggressive Legal Defense

Across the board, bitcoin requires forceful and aggressive legal defense, not complicity with governments in crafting policy and regulations. It's going to get a lot rougher for bitcoin in the months and years ahead. We have to be prepared.

As Rick Falkvinge, author of Swarmwise, states, "The copyright monopoly war wasn't the war, it was the tutorial mission. The Internet generation is using technology to assert its values and its place in society, the old industrial generation is pushing back hard against irrelevance. Things are about to get much worse."

It is a superb analogy. Legal tender is essentially an unearned copyright privilege over the production of money. It is unlikely to be easily disrupted.

Australian Senate Hearings into Digital Currencies to Start Wednesday

The Australian Senate will hold its first hearing into digital currencies this Wednesday morning (local time) from 8:30am–12:30pm, part of the Digital Currency Inquiry (DCI).

Representing the international community at the hearing will be Perianne Boring of the US Chamber of Digital Commerce (CDC), the trade association which has made a name for itself lobbying to educate and promote digital currency issues among US policy makers.

A live audio/video feed of proceedings will be available on the parliament's website, and the Senate has invited members of the public to submit their own questions via twitter (using hashtags #AusPolDCI, #DCIQA) for a special Q&A panel session featuring all witnesses from 11:30–12:30.

Dutch Exchange CleverCoin Expands Internationally, Adds Card Deposits

CleverCoin opened its bitcoin exchange to the wider European market today, while adding MasterCard and Visa credit and debit cards to its list of available payment options.

Founded in January, CleverCoin had been serving customers solely in the Netherlands for two months prior to the announcement. The company notably garnered more international notice for its attempts to help relaunch troubled Norwegian bitcoin exchange Justcoin, though it is no longer involved in the effort.

Markets Weekly: Trading Volumes More than Double Amid Price Surge

The bitcoin markets were frothing last week as the price soared to a high of $458 on Thursday. Trading volumes more than doubled as markets were stimulated by the surging price.

Volumes rose by 2.3 times to nearly 6m BTC traded over the last seven days, compared to a week earlier. The stage was set for a price surge a week ago, as the markets digested the news of the inter-continental dark markets bust called Operation Onymous.

In the last week, prices swung a massive $97.57 from a trough on 11th November to a peak two days later. The price rose from $360.58 at the week's bottom to $458.15 at its top, according to the Bitcoin News Bitcoin Price Index.

How Kraken is Seeking to Solve Bitcoin's Banking Dilemma

When Fidor Bank's Michael Maier spoke to Bitcoin News in June, the Internet bank COO framed his industry as one that bitcoin would grow to challenge directly, suggesting at the time that its partnership with Kraken demonstrated its intent to accept this future and even cooperate with it.

However passive these statements may have seemed at the time, they came into sharper focus on 31st October, when Fidor announced it would team with its San Francisco-based bitcoin exchange partner to launch "the world's first cryptocurrency bank".

The unnamed project seeks to build a regulated financial institution that would help bitcoin startups that have struggled to secure and maintain accounts even for day-to-day business.

The Tipping Point of Bitcoin Micropayments

Jose Pagliery writes about technology for CNNMoney. He has covered the growth of bitcoin, penning dozens of articles on digital currency, writing for the Atlanta Journal-Constitution, the Daily Business Review and the Miami Herald. He is also the author of 'Bitcoin and the Future of Money'. In this excerpt from the book, Pagliery looks at the advantages and use cases of micropayments.

The first major newspaper to venture into uncharted terri­tory was the Chicago Sun-Times, which erected a bitcoin pay­wall in April 2014. A careful look at the company’s decision shows that the paper is merely dipping its toes into the water. For instance, the Sun-Times partnered with the bitcoin transac­tion processer Coinbase, allowing the newspaper to vastly min­imize its risk of exposure to volatile bitcoins because it never has to actually hold them.

Australian Government: Welfare Applicants Must Declare Bitcoin Assets

A small addition to a pension application form provoked interest in Australia yesterday, with its request that applicants declare their "cyber currency" assets such as bitcoin.

A printed reference to bitcoin value in a government-issed document such as this, according to a digital currency legal expert, "legitimizes the concept of digital wealth beyond a niche area".

On page 14 of the application form published by the Department of Human Services (DHS), bitcoin is listed alongside other potentially valuable assets: "taxi plates, time shares, racehorses, greyhounds, travellers cheques" and collectables such as stamps, wine, art and fishing licences.

OneName Raises Seed Funding to Fuel Decentralized Identity Protocol

Open-source identity protocol provider OneName announced a forward-looking roadmap this week that will see it extend more open-source software to developers as it bids to disrupt the existing online authentication process.

The blog post follows a relative period of quiet for the project, which debuted its social solution for bitcoin addresses this March. Though the Openname tool garnered widespread use in the community, OneName said it now intends to move beyond simply providing a domain name system for bitcoin toward offering an entire suite of tools for online identity.

Counterparty Ignites Debate With Ethereum Software Integration

Counterparty sparked debate in the bitcoin community yesterday when it announced it had successfully ported open-source software from the Ethereum project to its platform, equipping it with new functionality.

The decentralized peer-to-peer exchange provider framed the announcement as one that would soon bring all the potential of Ethereum's as-yet-unlaunched smart contract system to its platform, while providing the added security of the bitcoin blockchain and its established global mining network.

BitPay Partners With Trucoin to Bring Bitcoin ATMs to Bitcoin Bowl

BitPay has confirmed there will be at least five bitcoin ATMs installed either at or around Tropicana Field for the upcoming Bitcoin St Petersburg Bowl to be held this December.

Trucoin will debut a custom bitcoin ATM solution and serve as the "preferred provider" of bitcoin ATMs for the event. The Georgia-based bitcoin brokerage indicated it would showcase five units manufactured by Genmega (which also supplies ATM hardware to Genesis Coin) and retooled with the company’s custom software and compliance features.

Payments Giant NCR to Integrate Bitcoin into Small Business Service

Global payments conglomerate NCR has announced that one of its merchant point-of-sale (POS) systems will soon offer bitcoin support.

The integration of bitcoin into the NCR Silver POS is expected to happen sometime before the end of this year. The system will also support mobile bitcoin wallet payments and will be a free service attached to its POS platform.

NCR is one of the world’s largest payments companies. Founded in 1884 as a cash register maker, NCR offers a number of hardware and software solutions and reported more than $6bn in revenue in 2013.

Asian Exchanges Adopt Controversial Counting Method For Futures Trades

Trading volumes reported by exchanges in Asia became a talking point again over the past weekend, after some companies altered the way trades are counted on bitcoin futures markets.

The latest issue arose last week when OKCoin's manager of foreign operations Zane Tackett posted a thread on reddit's 'Bitcoin Markets' page, titled "You might have noticed OKCoin futures volume experienced a sudden rise (doubled) over night, here's why".

OKCoin, Tackett wrote, had noticed competitors 796.com and BitVC (a subsidiary of Huobi) were employing a counting method that regards a single bitcoin traded as two units: one bought and one sold.

All Things Alt: Feathercoin Forks and a Collaborative Crowdfund for Charity

What's happening in the altcoin community this week? Though the market volume doldrums of the past few months don't seem to be clearing away too quickly, development on many projects continues to move forward and the ecosystem diversifies even further.

Read on to see some of the latest happenings from around the altcoin space.

Litecoin and dogecoin team up for charity

A joint effort to raise money ahead of the holiday season is currently underway, combining the crowdfunding capabilities of both the litecoin and dogecoin communities.

The LiteShibes 4 Christmas campaign follows previous efforts to raise money to provide holiday gifts to impoverished children in the Philippines. Organized by several moderators of the dogecoin subreddit, the group – comprised of both dogecoin and litecoin donors and supporters – has raised roughly 290,000 DOGE and 267 LTC. Combined, this amounts to nearly $1,000 that has been raised at press time.

The project represents the latest crowdfunding initiative from the digital currency community. Previous efforts to raise funds for African well projects have been successful, although the debate over using the technology as a vehicle for donations continues today.

The organizers said in a message on the dogecoin subreddit that the effort is the first joint donation drive since dogecoin instituted auxiliary proof-of-work and merge mining with litecoin began.

“This is a milestone in crypto history, to show that we can bridge the gap between communities to really make a difference and help those less fortunate,” the organizers wrote.

Feathercoin hardforks to new mining algorithm

Late last month, feathercoin officially switched over to NeoScrypt, a new type of memory-intensive hashing algorithm that supporters say will protect the coin from the influence of ASIC miners.

The move, announced at the beginning of the summer, comes amid both the broadening deployment of second-generation scrypt ASICs and a shift away from coin projects based on litecoin’s approach. According to a post on the official feathercoin forum, founder Peter Bushnell outlined why the team wanted to push out the new algorithm.

Beyond the risk of network disruption by big mining players with ASICs, Bushnell noted that the project benefits in the long-run by taking proactive steps to stem future issues:

“As the majority of people buying Scrypt ASICs are not doing so to mine feathercoin and the fact that some very large ASIC suppliers will be releasing products soon it seems sensible to move algorithm now before we face the challenges that hit many SHA-256 alts when the SHA-256 ASICs hit. We are moving to a new tier of hashing where feathercoin can be the leading coin.”

As outlined in the NeoScrypt white paper, the algorithm seeks to make it economically impractical to develop mining products that can generate large hash rates. Other algorithms like X11 and Scrypt-N seek similar aims, although some reports indicate that ASICs for these algorithms are in the process of being developed and built.

Strange alt of the week

The rising tide of scamcoins and pump-and-dump schemes has led to suggestions that altcoin investors need to be more proactive in their research, scrutinizing of new coin launches and, in general, more careful about what they do.

Despite the risks, some continue to invest in coin launches and initial coin offerings that carry all the warning signs, including inflated returns and unrealistic expectations of public acceptance. Other initiatives that can be seen, like rektcoin, go in the opposite direction and make no bones about the risks involved.

With the slogan “Got rekt? Get rekt!”, rektcoin previously sought to serve as an example of why investors need to be better at what they do. After an initial hype period, the price of rektcoin has collapsed, with the developer suggesting on The Bitcoin Talk Forum that such an outcome was not only expected, but intended.

Claiming they lost money in the process, which began with a high-volume mining launch that saw as much as 35 GH/s in hashing power, the developer said that those who bought in were likely aware that they might be left holding the bag, so to speak:

“All bagholders just bought rektcoin and hoping for a pump and quick profit, just like all other shitcoins you are buying: it doesn't matter what the coin brings....you are just hoping for a whale who will pump it and you can make a quick profit. I guess no whale pumped rekt so you all got rekt! Including us!”

At press time, the price of REKT is down roughly 75% from 24-hour highs. Some investors have taken to social media, noting wryly that the project, for better or for worse, has at least lived up to its name.

$Rekt keeps rekking people, lol. Finally a coin that delivers as promised.

— Dennis (@Dennahz) November 8, 2014

Have a tip about a notable happening in the altcoin world? Email Bitcoin News at stan@coindesk.com.

Disclaimer: This article should not be viewed as an endorsement. Please do your own extensive research before you consider investing in the altcoin space.

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Robocoin Now Requires All ATM Operators to Collect Customer Information

Robocoin has announced that it will now require all of its bitcoin ATM operators to collect customer information in an effort to comply with know-your-customer (KYC) regulations.

The Las Vegas-based company reported the decision was made under the direction of its legal team, which advised the startup that as a registered money services business (MSB) it could no longer process anonymous financial transactions.

In its full remarks, Robocoin asserted that while it had hoped to allow its ATM operators to continue to choose whether to meet KYC standards, recent actions from the US Financial Crimes Enforcement Network (FinCEN), along with the shutdown of allegedly non-compliant ATMs, signal that bitcoin companies that fail to adhere to regulations will face repercussions.

Speaking to Bitcoin News, Robocoin CEO Jordan Kelley framed the announcement as a necessity should the startup want to achieve its goal of bringing bitcoin ATMs to the wider global market. In this light, he argued, the ideological preferences of individual operators shouldn't outweigh the good that the company could achieve by reaching the global underbanked.

When asked whether he believed there would be customer backlash over the decision, Kelley sought to keep the company's larger goals at the forefront. He said:

"Let's ask this question. How many bitcoin ATMs do we want in the world? Do we want 30? Do we want 100? Do we want 200? Or do we want 1,000, 10,000, 100,000? Our logic is it's all about providing scalability and consistency to the customer. Whether or not we wind up having to part ways with a few guys that lack alignment with us, that's just the way it goes."

Kelley added that Robocoin would help any operator unwilling to meet the company's directive broker or resell their machines.

The news notably comes on the heels of a wave of community backlash against Robocoin for alleged difficulties it caused operators in connection with the delivery of its units.

No links to money laundering

As part of the decision, Robocoin operators will need to upgrade to the Robocoin 2.0 platform, which mandates that bitcoin ATM customers use the company's new proprietary wallet.

At least one Robocoin operator, Jonathan James Harrison, has taken issue with the change, reporting that he will resist the upgrade to the company's new platform. Harrison aims to hold a launch party tomorrow for his latest bitcoin ATM, whether the machine is operational with its existing Robocoin 1.0 software or not.

Further, he has suggested he will attempt to galvanize sentiment against the company should it not continue support for its Robocoin 1.0 platform, which he alleges the company had previously suggested he could keep.

"Friday will be a very bad PR day for you," he wrote in an email to Robocoin.

Kelley stressed in an interview, however, that he doesn't see the strategy shift as a contradiction or redefinition of any understandings between Robocoin and its operators.

Rather, he said Robocoin's relationship with operators remains unchanged. Operators, he said, continue to be in the business of buying cash for bitcoin and selling bitcoin for cash, and that persuant to this goal, all parties in the transaction should resist becoming enablers of money laundering.

"We do not want to be associated with any kind of money laundering," Kelley said. "Any machine that doesn't collect customer ID, it gives the money launderer the ability to convert cash that was earned illicitly into bitcoin and to do it without any kind of customer information. We cannot be a part of that, we can't be associated with it. If it's something that somebody wants to do, I don't want to be involved with it."

Eye on larger goals

To Kelley, the decision was a tough-but-necessary move that he feels will send a positive signal to the wider public about how his company is looking to extend the benefits of bitcoin more broadly.

"We're listening to the world," Kelley said. "The world says we demand more access to bitcoin. We want to provide that, but we cannot provide that with a few machines with our brand on them that are engaging in non-compliant activity."

Kelley framed the Robocoin 2.0 upgrades as a way to better bring bitcoin to the world. For example, he cited the improved ease of use of the platform compared to the original iteration.

"With our new software, customers walk up to the machine for the first time, put in cash, get a bitcoin wallet made right there and then have the ability to send that bitcoin to another person anywhere else in the world, or send it to their own wallet," Kelley said, emphasizing how this improves on the company's original approach.

Harrison, however, alleges that he felt Robocoin's 2.0 software had so far underdelivered, a claim that Kelley also countered by taking a long-term view on his product.

"That's the beauty of developing on a new platform, at launch it may have a few little glitches the same way you might have with a new Apple update, but over time it gets stable, it improves, we get feedback," he said.

Courting business partnerships

In statements, the company sought to portray the step as one that is vital to the company's continued operation, and therefore in the best interest of its operators and customers.

"There are some guys in some markets who want to be the only one and they want to own that machine," he said. "Our logic is that we want a machine on every corner to make sure we can deliver on the promise of bitcoin."

Kelley went on to state the he feels the change is necessary should Robocoin seek to appeal to new business partners in accordance with its goals, just as Coinbase and other companies in the ecosystem have done in the past.

"Big companies do not want to do business with guys who have machines that are non-compliant," Kelley said.

The post concluded by noting how Robocoin has evolved in the year since it launched, reading:

"Bitcoin and the bitcoin ATM industry have matured. As the legal landscape becomes clearer, Robocoin evolves and so do the requirements with which we must comply."

Images via Robocoin; Shutterstock

Bitcoin ATMsKYCRobocoin

FTC Granted Approval to Sell Off Butterfly Labs’ Bitcoins

The Federal Trade Commission (FTC) has secured the authority to begin converting Butterfly Labs’ bitcoin holdings into cash reserves.

The motion was granted by the US District Court for the Western District of Missouri on 29th October and marks the latest update in the case that began when the FTC filed a lawsuit against the company for fraud and misrepresentation this September.

At the time, Butterfly Labs was closed pending trial, although it has resumed limited business operations under court receivership. The designation means that a court-appointed receiver has been in control of the business, and that this individual will now be able to “manage and administer” the company’s finances.