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.