Hollywood Studio Lionsgate Films in Talks to Accept Bitcoin

Lionsgate Films, the production studio behind titles such as The Hunger Games and The Day After Tomorrow, has entered into a partnership with digital currency payments processor GoCoin.

First announced by GoCoin CEO Steve Beauregard at Inside Bitcoins New York, the deal was confirmed by Lionsgate senior vice president Peter Wilkes.

Wilkes suggested that Lionsgate is working to integrate digital currency payments into Lionsgate products, but that "no specifics" were available at this time.

Beauregard elaborated on the announcement in conversation with Follow the Coin suggesting digital currencies will be used in the company's online store.

Further, he suggested that GoCoin is seeking to appeal to other film studios as part of its customer acquisition strategy, adding:

"We're going after the big studios to help onboard them and create more places where people can spend their bitcoin."

Founded in July 2013, GoCoin allows merchants to accept payment in bitcoin, litecoin and dogecoin while mitigating price volatility risk through payouts in US dollars, euros, pounds sterling and Singapore dollars.

Image via Lionsgate

DogecoinGoCoinLifestyleLitecoin

Hedgy Raises $1.2 Million for Smart Contract-Powered Bitcoin Derivatives

Bitcoin derivatives startup Hedgy has raised $1.2m in new seed funding from a group of 10 investors that includes Draper Fisher Jurvetson partner Tim Draper, Salesforce CEO Marc Benioff and Sand Hill Ventures.

In conjunction with the announcement, Hedgy has also launched a new derivatives product aimed at commercial bitcoin miners.

Miners that use the derivative can effectively lock in a future price at which they can sell bitcoins, using a smart contract to settle the transaction on the bitcoin blockchain.

Drawing price metrics from TradeBlock, the new product is the result of a collaboration with distributed US bitcoin mining company MegaBigPower (MBP) and London-based Crypto Facilities, a bitcoin derivatives exchange founded by former executives from Goldman Sachs and BNP Paribas.

MegaBigPower is the first US mine to utilize the derivative. Crypto Facilities buys bitcoins mined by MBP, which are then sold by way of two-of-three multisig contracts.

In interview, Hedgy CEO Matt Slater said that product helps miners address the issue of price volatility as they look to sell coins on the market.

He said his startup has been working with MBP founder Dave Carlson for months on the derivative – Carlson also serves as an advisor to Hedgy – and explained that the solution can help other industrial mining companies better manage their financial risks.

Slater told Bitcoin News:

“Our core focus right now is solving this problem for miners. And Dave, being one of those most well respected and biggest miners in the space, you know, if we can solve it for Dave we can solve it for other miners as well.”

Slater added that Hedgy has fielded interest from other bitcoin miners, as well as companies in the broader digital currency space, about the use of smart contracts to alleviate concerns about price fluctuations.

When reached for comment, Tim Draper praised the Hedgy the team and predicted a significant role for blockchain-powered smart contracts to come.

"Hedgy is awesome. Great team, exciting mission. Smart contracts are going to be fundamental to contracts of any kind in the future, and bitcoin makes it all possible," he said.

The new funding includes a previously disclosed $764,000 raised by the Boost VC Tribe 4 graduate.

A hand drawing a market bar image via Shutterstock

HedgyMegaBigPowerSmart Contracts

Western Union: 'Too Early' to Discuss Ripple Labs Pilot Project

Western Union has formally responded to statements suggesting it is taking concrete steps toward using distributed ledger technologies via a partnership with Ripple Labs.

Long cited as a technology that could enable more cost-effective cross-border payments, Western Union has, as commentators have noted, what is perhaps one of the more evident vested interests in exploring digital currency offerings.

Still, representatives for the Colorado-based company remain tight-lipped about what the proposed project with Ripple Labs would entail.

A spokesperson told Bitcoin News:

"We have had preliminary discussions with Ripple regarding a pilot settlement project, but it is too early to discuss details at this time."

The revelation suggests Western Union may be looking to use a system like Ripple to move fiat payments between customers in a similar manner as Align Commerce, which uses the bitcoin blockchain as means to remit payment across borders where it is exchanged locally.

Elsewhere, prominent companies working on cross-border payments include Kenya's BitPesa and the Ghana-based startup Beam, each of which is focused on promoting the technology in select African markets.

RemittancesRipple LabsWestern Union

CEX.IO Opens Bitcoin Exchange to US Market

Bitcoin exchange CEX.IO has expanded its operations to the US enabling customers in 21 states to deposit and withdraw fiat currency.

Citing Coinbase as its main competitor stateside, Helga Danova, chief editor at CEX.IO said that she was confident that they could become a "great alternative for US citizens and broaden the possibilities of buying bitcoin and trading other cryptocurrencies."

The US launch comes amid a continued pivot away from mining services. The company halted its cloud mining operations in January citing bitcoin's declining price as a motivating factor.

Danova noted that the mining cease was a temporary measure, as the company looked to focus on developing its exchange.

"We've been developing in this direction for a long time", she said, adding:

"CEX.IO has always been a bitcoin exchange. Even though our key advantage was cloud mining, we have offered trading of the cloud mining power for bitcoins and other cryptocurrencies."

In order to access the exchange, consumers in the approved US states and jurisdictions will have to adhere to CEX.IO compliance procedures, based on know-your-customer (KYC) and anti-money laundering (AML) standards.

To register, traders must provide a form of identification, such as a national ID card or passport.

CEX.io

Bitcoin Could Impact Credit Unions, Report Says

Credit unions may one day find some of their core functions replicated by bitcoin, a new report suggests.

According to Mercator Advisory Group, a global consultancy for the payments industry, such an evolution would only occur should bitcoin's market volatility lessen and security mechanisms develop further.

The report, entitled Understanding Bitcoin’s Implications for Credit Unions, largely serves as a vehicle for understanding the fundamentals of bitcoin and its distributed ledger, the blockchain.

Not until the last page does the report turn to the implications of the technology on credit unions, noting:

"Assuming the volatility of bitcoin drops considerably to what is considered normal for currencies, and that security concerns around how best to secure private keys are resolved, we could see the proliferation of a host of new financial services backed by bitcoin, many of which are directly associated with the core businesses of credit unions today."

Mercator posits that credit unions that primarily serve the remittance market could benefit from working with bitcoin exchanges, naming CoinX and Coinbase specifically, to "explore the possibility of offering a competitive international remittance product to their customers".

However, the report stops short of saying that credit unions should jump at the chance to integrate bitcoin. According to Mercator, the benefits of operating bitcoin wallets for customers may not outweigh the costs of securing those holdings sufficiently.

Mainstream traction

The report asserts that bitcoin's primary use case is to buy and sell speculatively and, as a result, "is unlikely to find much traction among the broader mainstream of CU account holders".

Mercator also questions whether or not bitcoin can vehicle for consumers payments, and as a replacement for credit and debit cards in particular.

"[Transaction irreversibility] is undeniably beneficial to merchants (assuming they have a way to hedge away all the foreign exchange risk), but, for the most important stakeholders in the ecosystem – consumers – the benefit is unclear."

Mercator closes the report by acknowledging the impact cryptocurrency will likely have on mainstream financial services, adding that the exact impact is difficult to foresee at this time.

"Predicting what exactly these implications will be, however, is a bit like
trying to grasp the significance of the Internet would have been in 1995 – these are early days still," the report concludes.

Image via Shutterstock

CoinbaseConsumer ProtectionCredit Unions

Remove Satoshi as Founding Member, Says Bitcoin Foundation Director

As part of a newly published roadmap for the Bitcoin Foundation, executive director Bruce Fenton has suggested removing bitcoin creator Satoshi Nakamoto as a founding member.

Though he called for the removal of all founding members from the organisation, Fenton singled out Nakamoto's inclusion as "not accurate", arguing that he or she was never involved in the group's creation.

Now a largely symbolic title, the move would also strip Gavin Andresen, Peter Vessenes, Charlie Shrem, Roger Ver, Patrick Murck and Mark Karpeles of the distinction.

Fenton's remarks suggest the intent of the change would be to underscore that the Bitcoin Foundation is a decentralized network, one that he believes should work to avoid venerating individuals over collective goals.

He wrote:

"Overall, we should reduce power of individuals but work to remain effective using decentralization, crowdfunding and other means."

Notably, the presentation marks the second time that Fenton has referred to bitcoin's enigmatic creator during his tenure, following his first tweet in the position reminding Nakamoto that "she has a board seat per the bylaws, if she produces a PGP key".

The remark received a warm reception given the frequent portrayal of the unknown founder as a male and recent criticisms in the media regarding bitcoin's largely male following.

Move toward transparency

Fenton began the presentation by looking to set the record straight on the organisation, seeking to emphasize how it does not control or represent bitcoin as often portrayed in the media.

He sought to illustrate how he is seeking to make the foundation more transparent and democratic, having already released financial records for the nonprofit on 17th April and enabled a board chair to be appointed by election at the suggestion of a member.

Going forward, Fenton suggested he would seek to continue this emphasis on transparency, stating that IRS forms would be released along with items such as the organisation's executive compensation and travel policy.

Additional proposals included plans to re-use Swarm to conduct blockchain-based voting in foundation elections and using Factom to secure foundation records to the bitcoin blockchain.

A full copy of the presentation can be found below:

Bitcoin Foundation Update from Bruce Fenton
Image via Pete Rizzo for Bitcoin News

Bitcoin FoundationBruce FentonSatoshi Nakamoto

Circle Raises $50 Million With Goldman Sachs Support

Bitcoin financial services startup Circle Internet Financial has closed a $50m funding round.

The Boston-based company drew support from Goldman Sachs and China-based IDG Capital Partners, as well as all of Circle’s pool of existing investors, including Breyer Capital, General Catalyst Partners and Accel Partners.

Tom Jessop, managing director at Goldman Sachs’ Principal Strategic Investments Group, said the bank recognizes the need to invest in companies that "have the promise to transform global markets through technical innovation.”

Jessop added:

“We think that Circle’s product vision and exceptional management team present a compelling opportunity in the digital payments space.”

Quan Zhou, managing director of IDG Capital Partners and Circle board member, said that China in particular will be a major focus for the company as it looks to further internationalize its services.

“We are very excited about our investment and look forward to helping launch the company in the Chinese market where consumer adoption of innovative digital payment products is growing at a tremendous rate," he said.

Circle has also announced the launch of new account features that enable customers to hold, send and receive US dollars. Those funds, according to the company, will be insured by the Federal Deposit Insurance Corporation.

The news follows reports from earlier this week that Circle was looking to raise as much as $40m in new funding.

New feature outlined

The company’s new account features mean users can hold their funds in both bitcoin and USD.

Customers who choose to hold their funds in dollars rather than bitcoin can still make payments to people or merchants who accept bitcoin. At the time of payment, Circle will instantly convert funds from dollars into bitcoin.

Also, customers can accept bitcoin payments and Circle will convert the funds instantly into dollars in their Circle accounts, if they wish. Those who prefer to keep their funds in bitcoin can do so, CEO Jeremy Allaire explained in a new interview.

“We’re putting forward this hybrid fiat-digital currency model, which gives users the benefits of digital currency – instant settlements, global interoperability, no fees and high levels of security – but without having to use a new currency,” Allaire said.

He reiterated:

“This hybrid model allows customers to have all the benefits of digital currency, without the risks.”

Allaire went on to explain that a user can add dollars to his or her Circle account for free by way of bank transfer, then when they want to pay another Circle user, they can do so in an instant, whether the payment is denominated in bitcoin or dollars.

The company is rolling out the USD features gradually, launching them on selected customer accounts and adding new ones each week.

International outlook

Allaire said Circle’s next step is to add more currencies to the platform. He explained:

“We want to bring these benefits of bitcoin to all the major currencies in the world, including in the UK, Europe and in China.”

With these “global goals” in mind, Allaire said he believed Circle would benefit from significantly more capital and the addition of some new strategic investment partners, so he set out to raise some more funds.

“Having [Goldman Sachs and IDG Capital Partners] as strategic equity investors in the company is a big vote of confidence in Circle and in the opportunity presented by digital money,” Allaire concluded.

Dollars image via Shutterstock.

CircleFunding

Spondoolies-Tech to Merge With Bitcoin Shop in Mining Market Shake-Up

Bitcoin Shop (BTCS) and Spondoolies-Tech have signed an agreement that would find the publicly traded bitcoin services firm and the Israeli mining hardware manufacturer merging and continuing under a united brand.

The result, according to BTCS CEO Charles Allen, amounts to a "merger of equals", one that he believes positions BTCS to become a mining operation that could compete against established industrial outlets such as BitFury and KnCMiner.

In interview, Allen elaborated on the merger as well as the company's recent movements in the mining space, which have included securing an 83,000-foot facility and the prior purchase of 550 Th/s of mining hardware from Spondoolies-Tech.

Evoking a classic Baron Rothschild quote, Allen said that in his estimation, the bitcoin mining sector offers the best profit-making opportunity, one compounded by the lack of interest among new investors in contributing to transaction processing on the bitcoin network.

Allen told Bitcoin News:

"If you want to change the world and develop software for the next five years, have fun, but we're a public company and we're focused on driving revenue and building a solid business. As a combined entity, we'll be well positioned to have the cash cow in the industry."

Allen indicated his belief that Spondoolies was the best option among a limited number of mid-sized participants in the bitcoin mining hardware manufacturing space, noting the recent struggles experienced by US firms Butterfly Labs and Cointerra.

"Spondoolies never had late issues with their customers," Allen said. "In our minds, they have best product on the market. If you put it all together it really makes for a really solid offering."

The news follows BTCS' 27th April announcement that it had raised $2.3m in new capital through a private placement involving hedge funds and investors.

Though both developments were potentially positive signs for the company, Bitcoin Shop shares declined on the news, tumbling to $0.20 per share from a high of $0.28 earlier in the week.

Puzzle pieces image via Shutterstock

Bitcoin ShopSpondoolies-Tech

Raj Date-Led VC Firm Backs Align Commerce Seed Round

A diverse cast of investors has contributed to the most recent undisclosed seed funding round for blockchain-based, cross-border payments solution provider Align Commerce.

Participants included more familiar names such as entrepreneur Barry Silbert's Bitcoin Opportunity Corp, Adam Draper-led Boost VC and hedge fund Pantera Capital. The round also included traditionally payments-focused VC firms such as Bayhill Capital Management, NyCa Investment, Pivot Holding, Fenway Summer, R3 and the Whittemore Collection.

Unsurprisingly, not all participants are new to the ecosystem. Fenway Summer, for example, previously invested in bitcoin brokerage Circle's $17m Series B and boasts former deputy director of the US Consumer Financial Protection Bureau (CFPB) Raj Date as its managing partner.

Align Commerce CEO Marwan Forzley framed its diverse set of backers as evidence of the increasing interest in using both bitcoin and its underlying payments rail, the blockchain, as a tool to lower the costs of cross-border payments.

Forzley told Bitcoin News:

"When you think of the seed funding, it's an illustration of a very interesting use case, which is payment processing on the blockchain.

Forzley indicated that the total raised was not disclosed due to "internal purposes", stating that future announcements regarding fundraising were "coming up".

"I think the key thing is a lot of the investors are into the use case and attracted because this is a really interesting way to build up the ecosystem," he said.

A graduate of Boost VC's Tribe 4, Align Commerce entered beta at the beginning of this April and is now available in 34 countries. Forzley previously founded eBillme, an alternative bill payment startup that was sold to Western Union in 2011.

Enhancing processes

Forzley indicated that the funding would be used to built out the company's sales and logistical processes as it looks to market its solutions to international customers.

"We've built all the plumbing that's necessary and now this is really money that they're setting up what's necessary to scale," Forzley said.

The CEO acknowledged the relative difficulty in marketing to a range of potential clients across the globe. For example, he noted one use case in which a wine shop in California might utilize Align Commerce to reduce the cost of ordering product from Europe.

In such an instance, the company's US and German clients would send fiat payments as accustomed. Align Commerce would subsequently transfer the funds to bitcoin, using the blockchain to transmit the payment abroad.

Getting the word out, he said, would be instrumental in the face of the many industries that could potentially benefit from its approach.

"It's a new product and an elegant way to solve a really interesting problem," he continued. "The challenge now is to find ways to explain to the business community that here's a way to pay and get paid in a better cost, time and experience than you do today."

Bitcoin vs blockchain

Perhaps most interesting is Forzley's description of Align Commerce as a "blockchain company" given that, to transmit payments over the network, it must transact in bitcoin.

Commenting on this general industry trend, Forzley suggested that the term "blockchain" was simply better suited to explaining the capabilities of the bitcoin network Align Commerce is seeking to use.

"The first is a concept of a global currency and that's very different than the concept of moving money from point A to point B, and that's why you're seeing two different words used," he said.

Still, Forzley said this use case would benefit the entire bitcoin ecosystem.

Should Align Commerce be successful, he suggested, the company would create liquidity and bring new business to existing exchanges.

However, he concluded by noting his belief that the means to promote the network in this way is already available.

"We don't need to build, we can solve this problem today with technology that exists."

Raj Date image via Wikipedia

Align CommerceBoost VCCFPBPantera

Sweden's Nasdaq Exchange Approves Bitcoin-based ETN

Sweden's Nasdaq exchange has approved a bitcoin-based exchange traded note (ETN), opening up investment in the digital currency to those who do not want to directly purchase and hold bitcoins.

The Bitcoin Tracker One, launched by Stockholm-based XBT Provider AB, which is owned by the KnC Group and is expected to launch on 18th May.

In a statement, Alexander Marsh, chief executive officer of XBT Provider AB, said:

"By enabling this easy and secure way to invest in bitcoin we hope to have eliminated the boundaries that earlier prevented individuals and companies from being able to actively invest in what we believe to be the future of money."

A spokesperson for Nasdaq confirmed that XBT Provider AB had been approved as a certificate issuer and that its product was the first bitcoin-based item to be listed on the Swedish exchange.

How it works

According to XBT Provider AB's website, the bitcoin ETN is traded in the same way as all other listed instruments on the Nasdaq exchange.

In order to invest, users must have an account obtained through their bank, advisor or online broker.

XTB Provider AB will hedge all sales of the bitcoin traded note by buying an equal value in the bitcoin market.

Johan Wattenström, head of trading at KnCMiner and partner at XBT Provider AB, said:

"We are aiming to do all hedging in the open market but have the option to access bitcoin liquidity from KnC Group in case of an emergency."

When asked about its security procedures, Wattenström said the company had implemented a "secure multi-layer process for handling and safekeeping bitcoins".

He also referred to the company's safety policy, which states: "A small part of the holdings can be kept on bitcoin exchanges, if deemed necessary additional coins can be held on a multi-signature hot wallet and all holdings over a threshold must be kept in safe storage."

Community Reaction

Joakim Herlin-Ljunglof, marketing manager at Stockholm-based bitcoin exchange BTCX, commented on the approval, noting how it could impact the discussions between companies operating in the bitcoin space and traditional banks, regulators and investors. He added:

"It is really cool that my country and city is, apparently, the first in the world to do this."

The news also struck a chord with the international cryptocurrency ecosystem. Dr Timo Schlaefer, co-founder and CEO of Crypto Facillities, a London-based broker specialising in bitcoin derivatives, said:

"I think that it would be very useful for investors as it removes the need to go out and buy and store bitcoin directly, which requires a good understanding of how to handle bitcoins. It also opens up the market to investors who require exchange traded products or may not be allowed to hold bitcoins for regulatory or compliance reasons."

Wattenström said XBT Provider AB aimed to offer a range of additional investment products in the future.

Stockholm image via Shutterstock.

Bitcoin TradingNasdaqSweden

Bitcoin Custodian Elliptic Shortlisted in SWIFT Startup Competition

Bitcoin custodian Elliptic has been shortlisted to compete for a $500,000 prize in the Startup Challenge Finale at SWIFT’s Sibos conference.

Some 370 companies applied to take part in the challenge and Elliptic was one of 15 companies selected to compete in the Innotribe Startup Challenge showcase, which took place in London last week.

Elliptic was one of two finalists in the growth-stage startup category, the other being xWare42, which enables banks to give customers additional information on their bank statements about their purchases.

"We're very pleased to have been selected as finalists. Strong interest in blockchain technology from established financial players has led to growing demand for Elliptic's services, and and this has been recognised by the judges," said James Smith, CEO at Elliptic, adding:

"We took part in the Innotribe Challenge in order to engage more closely with organisations such as SWIFT, and look forward to doing so further at Sibos in Singapore."

The three finalists selected in the early-stage startup category were Pariti Technologies, which offers tools, guidance and access to low-cost loans; Revolut, which allows customers to exchange currencies at interbank rates; and Sedicii, which eliminates the transmission, storage and exposure of private data during identity verification.

Final round

Elliptic, which uses blockchain technology to transfer and manage a range of financial assets, will travel to Singapore this October to take part in the final round of the challenge at the Sibos conference.

Sibos is an annual financial services event visited by around 7,000 attendees from financial institutions and technology companies across the globe. It focuses on the future of payments, securities, cash management and trade.

Fabian Vandenreydt, head of markets management at Innotribe and the SWIFT Institute, said the London showcase was a "great kick-off to the Innotribe Startup Challenge".

"Fintech investments in Europe have been on the rise for the last couple of years, with London ranking at the top position. With many financial services companies and large banks having their headquarters in the city, London is definitely a unique innovation environment for the startup community," he added.

Further finalists will be selected at regional showcases to be held in Cape Town, Singapore and New York over the next two months.

InnoTribe image via InnoTribe/YouTube

EllipticSWIFT

Western Union 'Exploring' Pilot Program With Ripple Labs

Global remittance giant Western Union is reportedly working on a pilot program with distributed payment protocol provider Ripple Labs.

The news was first revealed in a tweet by Ripple Labs promoting CEO Chris Larsen's appearance at Global Conference 2015, an annual event held by non-profit think tank the Milken Institute.

The pilot was further confirmed by Monica Long, VP of marketing and communications at Ripple Labs, who told Bitcoin News that while Western Union is "exploring a pilot project using Ripple", no further details on the initiative were available.

Long did, however, suggest that Western Union was interested in Ripple due to its existing value propositions, stating:

"In general, financial institutions and networks use Ripple as a technology that powers real-time settlement in any currency to lower the cost of liquidity and compliance."

Representatives for Western Union did not immediately respond to requests for comment.

Bears to bulls

Should such a project come to fruition, the partnership would seem to mark a transition for Western Union, which has traditionally been dismissive of the digital currency ecosystem.

First discussed in a 2013 conference, Western Union chief information officer (CIO) John "David" Thompson would later tell Bitcoin News that the company didn't believe the technology was ready for today's market.

The comments came as part of an interview that sought to frame the technology as novel, but perhaps too fraught with regulatory challenges for the company's consideration.

Still, Thompson did admit to having mined bitcoin and to an interest in the technology's future implications for Western Union. "That doesn't mean that we aren’t looking at it, how we enable [usage] legally, what licenses we need in addition to what we have," he said at the time.

It remains to be seen whether the announcement marks a change from what Thompson characterized as the company's "watch and learn" approach.

Image credit: Thinglass / Shutterstock.com

Ripple LabsWestern Union

Coinbase Launches Bitcoin Exchange in the UK

Coinbase has launched its bitcoin wallet, exchange and merchant services in the UK.

The UK is only the second country, after the US, to gain access to the San Francisco-based company's bitcoin trading platform – Coinbase Exchange.

Coinbase co-founder and CEO Brian Armstrong said the decision to launch in the UK was partly influenced by his trip to London last year.

“The interest in the UK is at a different level than it is elsewhere in Europe. We got the sense that the demand there was really high … [and] London is a financial capital of the world, so it was a logical next step,” he explained.

Exchange access

Users in the UK can now trade bitcoin on the Coinbase Exchange in two new currency pairs – BTC/GBP and BTC/EUR.

Customers are now able to add GBP and US dollars to their Coinbase wallets via wire transfer and can add euro using SEPA. The company’s merchant tools are also available in the UK.

The exchange launched in select states in the US three months ago and Armstrong said he was more than pleased at how well it has performed to date.

“We’re already the biggest exchange by volume in the US and number three or four in the world, depending on the data you look at. I think launching in the UK will help improve on that and increase the liquidity on the platform,” he said.

Banks and regulators

Armstrong said the two major issues Coinbase has faced when trying to expand into other countries are trying to get banks to cooperate and navigating regulatory environments.

The CEO explained his company has a banking partner in the EU region (although declined to name it), which agreed to support GBP payments.

He said working with regulators in the UK was time consuming, but he gave credit to the financial regulatory body, the Financial Conduct Authority (FCA):

“The FCA has been really great to work with. I think they’re being very forward thinking in this space right now. The UK regulators were very easy to work with and I think are setting a good precedent for how other countries should look at this.”

Ongoing strategy

Coinbase is in talks with regulators and banks in a number of other countries with a view of expanding access to its exchange and wallet even further.

“One of our goals is that we want to try to be, as a wallet at least, available in 40 countries by the end of this year, which is a pretty ambitious goal – we’re in 24 right now. But I think that will certainly be possible,” said Armstrong.

His company, which has raised a total of $106m to date, currently employs 105 people across the globe, boasts 2.1 million users and provides bitcoin payment processing services to over 39,000 merchants.

Armstrong explained that Coinbase’s strategy is threefold: “Our strategy is: Launch the exchange, make it the most liquid exchange in a bunch of different countries. Launch the API, make it easier for people to build all sorts of applications, and the third thing is our consumer wallet, so we’re expanding that to a bunch of developing and first world countries.”

He added:

“If we can get all of those three things done, I think we’re going to be able to help move the bitcoin ecosystem forward.”

UK image via Shutterstock

Brian ArmstrongCoinbaseCoinbase Exchange

Bitcoin Marketplace Purse Unveils 'Instant' Amazon Shopping

Purse has announced 'Instant', a new product that aims to expand the appeal of its existing e-commerce marketplace while continuing its focus on Amazon shopping.

Launched in 2014, Purse now claims 32,000 users on its traditional 'Name Your Discount' marketplace, which matches individuals looking to buy bitcoin with a credit card and users willing to sell bitcoin in exchange for savings on Amazon purchases.

Purse co-founder Andrew Lee explained that Instant finds the company stepping in to play an active role on the formerly peer-to-peer (P2P) platform, purchasing Amazon gift cards from its market and holding a reserve of these assets for buyers.

Drawing on a more familiar product as an example, Lee told Bitcoin News:

"Our model was like Airbnb, person to person. This is like if Airbnb said let's take the 100 most popular locations in San Francisco and just contract them out and offer them to consumers."

In exchange for reduced savings, 5% as compared to as much as 20%, Lee said that Instant buyers will benefit from free shipping with Amazon Prime.

Lee went on to suggest the move was inspired by a need to improve the platform's user experience.

"In terms of the delivery time, we didn't have much of a guarantee," Lee explained. "Sometimes it would be one-two days, other times it would be two weeks. With Purse Instant we're taking out all those variables."

Lee went on to suggest that he believes the move positions Purse to be at the forefront of using bitcoin as a means to penetrate the consumer deals industry while solving what he called the liquidity issues facing owners of Amazon gift cards.

"Long-term vision, we have a unique value proposition enabled by bitcoin," Lee continued. "If you think of those people who hunt for promo codes, you can skip all that now by just having bitcoin."

The move comes amid a recent flurry of experimentation from the Roger Ver and Bobby Lee-backed team, which launched a bid to take its model into the physical world with a bitcoin-only retail shop in February.

Revisit Bitcoin News's revenue of Purse's 'Name Your Discount' marketplace here.

Image credit: Twin Design / Shutterstock.com

E-commercePurse.io

Bitcoin Community Rallies to Aid Nepal Earthquake Victims

Kathamndu - earthquake victims living outside after the biggest quake in 80 years. Image via simcsea via Flickr.

The Southeast Asian nation of Nepal has dominated the headlines this week following a devastating earthquake, which at the time of press, had already claimed the lives of more than 4,000 people.

Just as swift, however, has been the charitable response.

The Red Cross has committed an initial $300,000 of aid as well as an additional 19,000 non-food relief kits including essential items such as clothes and mosquito nets. Meanwhile, online fundraising platform Global Giving has already raised approximately $570,000 as part of an attempt to raise $1m to support victims.

Nevada Regulators Seek Bitcoin Poker Site Operator's Arrest

The Nevada Attorney General's Office is seeking the arrest of the operator of the popular bitcoin poker service Seals with Clubs.

As reported by the Las Vegas Review-Journal, Bryan Micon was charged in Nevada court on Monday with operating an unlicensed interactive gaming system. Micon is accused of failing to acquire proper licensure prior to operating Seals with Clubs, and could face as many as 10 years in prison, along with up to $50,000 in fines, if convicted.

Seals with Clubs shut down in February, a move attributed to then-unspecified operational security concerns believed to be connected with a pending crackdown by state regulators.

CoinDesk Releases Cryptocurrency 2.0 Report

Bitcoin News's latest research report, Cryptocurrency 2.0, is available to download from today.

Next-generation cryptographic applications (NGDAs), commonly grouped under the term 'cryptocurrency 2.0', are a class of emerging projects seeking to expand blockchain technology beyond the storage and transfer of money.

Bitcoin News's 56-page report provides a snapshot of the fast-changing NGDA ecosystem and a Who's Who of the diverse companies contained within it.

SEC Filing Hints at Overstock's Plan for Bitcoin-Based Securities

Overstock.com, the online retailer currently developing decentralized stock market Medici, has outlined how it might issue digital securities in a new Securities and Exchange Commission (SEC) filing.

Submitted on 24th April, the S-3 form outlines Overstock’s intention to issue new stocks or securities. The offerings, according to the company, could amount to as much as $500m.

The filing also details how Overstock may seek to issue digital securities through an alternative trading system. Under a section entitled 'Risks Applicable to Digital Securities Offerings', the company states:

"We may decide to offer securities as digital securities, meaning the securities will be uncertificated securities, the ownership and transfer of which are recorded on a cryptographically-secured distributed ledger system using technology similar to (or the same as) the distributed ledger technology used for trading digital currencies."

The prospectus goes on to identify how the digital securities would differ from traditional securities, highlighting that settlement periods would be much shorter. In terms of risk, the company also acknowledges the "novel and untested" nature of the concept.

Overstock director of communications Judd Bagley suggested the filing fits into the company's broader plans to use the technology underlying bitcoin to power a new kind of stock exchange.

"There are many parts involved in achieving this, and one of them is the Alternative Trading System we’ll be using to match buyers and sellers. In other words, an ATS is part of the Medici project," he said.

Details, risks

According to the prospectus, faster settlement times are one benefit of utilizing digitally-based securities. Overstock also pointed to the various risks associated with the concept, some of which parallel the challenges of holding digital currencies.

Notably, the prospectus outlines how, if implemented, the trading system would disclose certain types of investment information, explaining:

"The number of securities, the purchase price paid for the securities and the public keys associated with the securities involved in each transfer of the digital securities from the first issuance of the digital securities will be permanently available to the public."

The document also references the potential use of multi-signature technology, noting how "any number of [private keys] may be required in order to authorize a transfer of ownership of the digital securities."

Limited liquidity was identified as a key risk factor within a crypto-powered trading environment that could pose a risk to investors.

"You may not be able to resell your digital securities on a timely basis or at all," the filing notes.

Medici work underway

According to Bagley, Overstock's work on the Medici crypto stock exchange continues. The project dates back to last year, when the company announced it had hired several Counterparty developers to build out the concept. Some later left the project.

Bagley noted that an alpha version of the exchange is currently being tested internally. Looking ahead, he said that Overstock will continue refining and polishing the concept:

"Once we’ve demonstrated that this platform works for trading in digital equities, we’re going to continue iterating and adding functions that will make it resemble any other trading experience, except for the fact that trades will settle much more quickly and securely."

"The technology works," he added. "It’s very exciting."

Image via Shutterstock

MediciOverstock

Richard Branson to Host Bitcoin Summit on Private Island

Billionaire entrepreneur Richard Branson is set to bring "the greatest minds in cryptocurrency" together to discuss bitcoin and the blockchain on his personal private island this May.

Taking place on Necker Island in the British Virgin Islands from the 25th to 28th, Branson's event will feature discussions moderated by Hernando De Soto, president of the Institute for Liberty and Democracy, Wall Street Journal senior columnist Michael J Casey and Matthew Bishop, US business editor for The Economist.

Branson has been enthusiastic in his praise for the bitcoin, having previously invested in payment processor BitPay and accepted the digital currency for his space travel enterprise Virgin Galactic.

The event's welcome message frames the gathering in terms that emphasise the lasting impact of blockchain technologies, stating:

"Come visit with Sir Richard Branson on his private island for a set of intimate discussions highlighting critical issues and solutions and to lay out the framework for a world where the humankind is fully benefiting from the amazing technology behind the blockchain."

Besides the Virgin Group founder, the event will be hosted by BitFury CEO Valery Vavilov and venture capitalists Bill Tai, Suzi Mai and George Kikvadze.

In total, the event will include 30 luminaries from the bitcoin and larger digital currency space, including bitcoin core developer Jeff Garzik, Bitreserve's Juan Llanos, Tally Capital's Matthew Roszak and entrepreneur and Bitcoin Foundation chairman Brock Pierce.

It is the latest high-profile bitcoin conference to be held in the Caribbean following the Satoshi Roundtable in February. That event, organised by recently-elected Bitcoin Foundation executive director Bruce Fenton, sparked controversy for its exclusive guest list and "secretive" itinerary.

Prospective attendees and hosts of Branson's event declined to comment at press time.

A full list of participants can be found on the event's website.

Image credit: Prometheus72 / Shutterstock.com

BitFuryRichard Branson

Swarm Targets Blockchain Governance in Platform Pivot

Swarm is pivoting toward decentralized governance, a decision that finds the project shifting away from its original focus on distributed crowdfunding.

The move follows the release of a research paper commissioned jointly with DATA's Constance Choi and Harvard Berkman Center research fellow Primavera de Fillippi that suggested distributed collaborative organizations (DCOs), which utilize cryptographic tokens to denote membership in a decentralized organization, are among the 'crypto 2.0 models' that are unlikely to attract negative attention from US regulators.

The subject has been fiercely debated in recent months, following rumors the US Securities and Exchange Commission was seeking to crack down on projects that sell cryptographic tokens.

However, Swarm CEO Joel Dietz indicated that with this legal due diligence completed, Swarm is now focusing on encouraging other groups to create "collaborative networks" by providing a suite of end-to-end solutions that allow its users to issues tokens for organizational management.

Dietz told Bitcoin News:

"It will all be fully automated, you show up and you say here are the 100 people who I want to be a part of this organization, then they can claim their shares."

Within the DCO model, organizations can then endow certain token holders with the right to participate in decision-making processes such as approving budgets and conducting voting.

"It's not all that different from a traditional C-corp where there's like delegates, board members of the organisation and stakeholders, anyone with a token or coin," Dietz explained.

Swarm said its DCO product is expected to be live on the bitcoin blockchain by 4:00 UTC 28th April, and that a version is currently working on the testnet for Ethereum, the decentralized publishing platform for developers expected to be launched later this year.

Governance of tomorrow

The announcement coincides with new steps by the startup to adjust its own model in a way that mirrors guidance for US-based DCOs issued in its February report.

Launching today is Swarm basic income, a program that will distribute tokens for all Swarm projects to its members. Dietz categorized the new tool as one that serves as a proof of concept for how societal participation could be conducted and managed in the future.

"The idea is that everyone who is part of Swarm is constantly getting these tokens from other projects that are launching through us. That's significant in a number of ways, we have the possibility today to be doing what governments should be doing, better than how they're doing it," he explained.

In the future, Dietz envisions such models being embraced by local municipalities, wherein citizens would receive tokens they could use to partake in transparent voting on communal decisions.

Dietz said the platform is more suitable for grassroots organizations than profit-driven corporations. He cited the College Crypto Network as an example of the type of group that would be better acclimated to the concept.

Trust management within the platform, according to Dietz, is still a work in progress, adding that he anticipates a "second-tier" application resting on top of Swarm. He acknowledged that users could be vulnerable to keylogging attacks, potentially opening the door for hackers to gain access to DCO credentials.

Collaboration over reward

Dietz further indicated that Swarm will be looking to distance itself from the idea that its projects may generate a financial return for those involved.

In contrast, Dietz suggested that he encourages a broader definition of value, one that goes beyond monetization. Tokens for voting, he said, could have trading restrictions placed on them as determined by participants in the DCO.

"Allowing people to join and fund an organization is very valuable, as is the crowdsale mechanism," he continued. "In our case, I don't see the latter as necessarily wrong, but it's part of startup investing in general where people expect unrealistic returns."

Swarm categorizes its new manifesto as one that promotes "abundance for all", encouraging users to sign a pledge that they will "take into account more than profit" when joining a DCO.

Voting woes dismissed

Trust may prove to be an issue in in attracting new users given Swarm's involvement in the Bitcoin Foundation's failed attempt to conduct voting for its most recent board of directors on the blockchain.

Issues with the voting process, which was conducted through the use of bitcoin transactions to tally votes, ultimately led the foundation to revert back to its older system.

Dietz dismissed criticism of the event, suggesting that Swarm's system simply struggled to adapt to the foundation's needs, including a requirement that voters have the ability to vote for multiple prospective board members.

"Our product wasn't designed for that specific use case," Dietz said.

He added that certain aspects of the system, such as the fact that token users had to wait for their transactions to be confirmed on the bitcoin blockchain, were perhaps not clearly communicated.

Collaboration image via Shutterstock

CrowdfundingCrypto 2.0Swarm

Bitcoin Startup Circle Seeking $40 Million in New Funding, Report Says

Bitcoin brokerage Circle Internet Financial is said to be raising as much as $40m in new funding.

As reported by Fortune, Circle is raising the funds at a valuation of $200m, citing persons with knowledge of the negotiations.

A spokesperson for Circle declined to comment, according to the report, but indicated that the company would make an unspecified announcement in the coming days.

The move, if confirmed, would represent Circle's largest funding effort to date. Circle raised $17m in a Series B round last year, following an earlier $9m in Series A funding from 2013.

The funding would raise Circle's total investment to $66m.

Bitcoin News has reached out to Circle for comment but did not receive an immediate response.

Circle

Russian Exchange Leaks Source Code Amid Bitcoin Crackdown

A defunct Russian bitcoin exchange has released its source code to the bitcoin community amid the country's increasing crackdown on digital currency.

The exchange, which made the announcement via the Bitcoin Talk forum and Reddit, says it is seeking to help the global bitcoin market evolve by allowing other companies to integrate its software.

Its three founders had self-funded the platform's year-long production process, spending approximately $100,000 to reach an alpha version.

However, faced with Russia's increasingly hostile regulatory climate, the team decided to abandoned their launch – making their work public instead. Project manager Ivan Starinin told Bitcoin News:

"The bitcoin community is open source at its core and we wanted to contribute somehow. Giving away our source code turned out to be the logical step to show our love to the community. The bitcoin ecosystem needs to reunite at these times more than ever before."

Bitcoin in Russia

Bitcoin has come under increasing scrutiny by the Russian authorities.

Earlier this year, the country's media watchdog proceeded to blacklist a series of bitcoin-related websites, restricting domestic access to their domains. More recently, the censored websites – including bitcoin news website BTCsec.com and exhibition company Smile Expo – took their case before a judge in an attempt to overrule the decision.

In February 2014, the General Prosecutor's Office of Russia declared that the use of any "monetary instruments" besides the native ruble was forbidden, leading European bitcoin exchange BTC-e to discontinue support for the Russian currency.

At the time, the chairman of Crypto Currencies Foundation of Russia, Igor Chepkasov, told Bitcoin News that the ruling was part of a wider clampdown which he believed pointed to the prohibition of bitcoin in the country. He urged bitcoin enthusiasts to fight against the imposed measures, asking them to "unite and fight for their rights".

Moscow Red Square image via Shutterstock

Russia

5 Ways to Spend Bitcoin in Amsterdam

Amsterdam has always been somewhat of a bitcoin haven.

With startups seeking to make the city the "bitcoin capital of the world", it has historically attracted high-profile bitcoin events. Last spring, for example, saw the opening of Amsterdam's very own Bitcoin Boulevard, a project that signed up 10 merchants in the city to accept bitcoin.

The Bitcoin Foundation also picked Amsterdam to host its Bitcoin 2014 conference last May in what may have been the most high-profile testament to the city's pull for bitcoin aficionados.

Sander Regtuijt, business development manager at BitStraat, encouraged bitcoin users who haven't yet been to explore its offerings.

Regtuijt said:

"Visiting Amsterdam because of bitcoin-related reasons would be a good idea, because, besides all the places where you can spend your bitcoin, there is a lively bitcoin community as well."

With this in mind, Bitcoin News takes a look at five different ways in which you can fund a trip to Amsterdam.

1. Traveling with bitcoin

If you want to take in the sun whilst sipping on an ice-cold beer purchased with bitcoin, now is your chance. Did we mention you can do so by one of the city's world-famous canals?

If air travel is the only feasible option for you, then don't panic.

Paying for airplane tickets with bitcoin has never been easier with AirBaltic, Air Lituanica, BTCTrip and CheapAir accepting payments in the digital currency.

2. Accommodation with bitcoin

Now you have your transportation is sorted, but where will you stay?

If you are after a bitcoin-friendly hotel, check out the easyHotel Amsterdam City Centre - located in the “De Pijp” district. The hotel's website offers a bitcoin payment option at checkout and generates a BitPay invoice, QR code and wallet address to settle the payment.

If you are willing to spend more time researching a suitable hotel, then head over to Expedia, which also began accepting bitcoin payments for hotel bookings in June last year.

Alternatively, you can also spend your bitcoin at the Cocomama hotel, a boutique hostel.

Don't be put off by the lack of an obvious bitcoin payment option, the hotel asks you to provide credit or debit card details in guarantee of the booking. Bitcoin payments will be made upon arrival at the premises and must be stated in the comments section of the booking form to avoid your card being charged.

Image via Cocomama hotel

3.  Sightseeing with bitcoin

Amsterdam has all the advantages of a big European city: cultural and historical heritage, a lively nightlife scene, international restaurants and thanks to its extensive canal infrastructure – little road traffic, which makes it ideal for cycling.

To make the most of the city, hire a bike. You can do so with bitcoin at Starbikes, where a half-day rental will only set you back an affordable 5€.

If cycling is not for you and you are traveling in a group, why not invest in a boat tour? Amsterdam Boat Events, offers a series of bitcoin-friendly options, including the chance to enjoy a BBQ on board your very own boat.

4. Eating with bitcoin

All the cycling will inevitably work up an appetite. Head over to Cafe Kobalt, within walking distance of Amsterdam's Central Station for a bite to eat or a quick drink.

Image via Cafe Kobalt website

Barbershop, a less conventional option, is both a place to hang out and grab a drink or get a hair cut or a shave.

5. Shopping with bitcoin 

Whether you want to treat yourself or those back home to a souvenir, Amsterdam offers plenty of options.

Mensocks described by Regtuijt as a "funny place with great hosts", is home to a large variety of unique socks should you be interested in replacing your old alpacas.

Image via Mensocks website

If you are a creative type, you may also want to head over to Galerie West, on the Bitcoin Boulevard, and invest in some art.

With its thriving community, Amsterdam is one of the best places in Europe to spend your bitcoin holdings.

Amsterdam image via Shutterstock.

AmsterdamTravel

Bitcoin Paves a Way for Evolution of the Species

Nozomi Hayase PhD, is a writer covering issues of freedom of speech, transparency and decentralized movements. In this article, she looks at bitcoin in the context of Darwin's evolutionary theories.

In the six years since the inception of Satoshi Nakamoto's blockchain, many have begun to see bitcoin as a disruption force in the future of finance.

Put simply, money is a ledger – one that has now become programmable. Now anyone can create their own currency and with simple scripting language, different values can be coded to manifest values of community.

Economists try to understand this new innovation through modern monetary theory, while those who advocate economic equality tend to dismiss bitcoin as Wall Street-friendly currency with a libertarian bent.

Yet, careful examination of its design reveals how the vision of this technology transcends political ideology. In actuality, it is best understood as a representation of innate human nature and as an innovation that can foster evolution of the species.

Darwin’s vision

The vision of man put forward by naturalist Charles Darwin in the 19th century contained aspects of human nature that can appear somewhat contradictory.

Most people are familiar with Darwin’s theory of genetic mutation, natural selection and the survival of the fittest from The Origin of Species. But his second work, The Descent of Man was largely ignored. In it, Darwin argued for recognition of the higher nature of man based on innate altruism and love.

These seemingly opposing characteristics appear in two polarized images that are developing in bitcoin.

On one hand bitcoin is often associated with the dark side of humanity, seen in events such as speculators' manipulation, the Silk Road scandals and the demise of Mt Gox, while on the other hand it evokes altruistic aspirations shown in its fast growing usage for charity and tipping.

These two human tendencies are inherent in this technology’s unique architecture. Bitcoin brings a new monetary design that has never existed before.

At first glance, with its fixed supply (a total of 21 million bitcoins will be created), it can appear as a gold-like asset. This is one reason why it is attracting investors and speculators and is criticized by economists as deflationary, thereby incentivizing hoarding.

Yet, this is only half the puzzle. Unlike gold, bitcoin can be infinitely divided (into 8 decimal points and more if consensus is reached). Along with this contradictory message of scarcity (finite supply) and abundance (infinite divisibility), Darwin’s dualistic human nature is manifested in the function of mining.

The mining pools at the heart of the bitcoin network are like worker owned co-ops; they self-organize through mutual aid, competing while cooperating through sharing resources.

Digital scarcity

The foundation upon which bitcoin’s programing language is written is open source. Unlike corporate proprietary software, anyone can read it and modify the code. This makes blockchain networks open to anyone.

The concept of open source has over the last decade challenged crony capitalism. In his blog piece, Watching Open Source Destroy Capitalism, JD Moyer described how “capitalism is based on scarcity” with private production and distribution. He argued how open source challenges this scarcity by reducing or eliminating the cost of production and distribution.

With the invention of the BitTorrent file sharing protocol, communal and altruistic impulses suppressed by the dominant ownership culture found expression online.

Till now, this trend of sharing has not been associated with money and has grown separately from an individualistic and entrepreneurial spirit. The invention of the blockchain has opened up a new path to link these often conflicted aspects of human nature manifested in the ideological schism of capitalism and socialism; between on one hand an impulse for competition for healthy price discovery and on the other cooperation for sharing.

Satoshi’s perfect market

The core invention of the blockchain technology is its solving of the doublespend problem. In his creation of HashCash, cryptographer Adam Back introduced the concept of digital scarcity; a way to make an object in the digital world scarce.

IBM's Richard Gendal Brown noted how this scarcity is bitcoin’s irreducible essence, namely enabling "transfer without duplication".

Until the emergence of bitcoin, scarcity in the digital world was artificially created through enforcement of copyright law and proprietary models of access restriction. Now, bitcoin creates scarcity through algorithmic consensus.

Silicon Valley tech entrepreneur and author Andreas Antonopoulos acknowledged that the creator Satoshi Nakamoto not only invented a new currency, but he also gave us the world’s first "perfect market".

Through mathematical solutions found within the chaos of unpredictable, unrepeatable random numbers, new bitcoins are conceived and blocks created. Similar to DNA code, every bitcoin is like a unique cell that can’t be replicated. Cells do not multiply, but divide without losing intrinsic value in order to support growth and health of the larger organism.

Currency of abundance

Unlike bitcoin’s living ecosystem, in the current fiat world, central control kills the spontaneous force of the market. It turned the system into a mechanical and ruthless machine. A dead system can’t nourish itself. It becomes parasitic and sustains itself through incurring debts, stealing and extracting through rent seeking.

In this paradigm, the language of scarcity locks people in, fueling fear and rewarding those who control and exploit. The callous aspects of man have dragged the whole world into a virtual reality of an abstract Nintendo computer game, in which humanity is degraded into heartless cyborgs, engaging in drone attacks, sweatshop mass exploitation and financial colonization.

The invention of the blockchain is offering a way out of this tyrannical system of control.

Satoshi’s perfect market enables a distributed system of accountability. By rewarding those who abide by the rules, it regulates man’s fallible nature and secures the system. It channels aggressive and competitive parts of human nature and directs them to constructively serve higher ideals embedded in this technology.

The blockchain as a public asset ledger is an asset in and of itself. As the network matures, bitcoin’s scarcity that helped to develop the system and add value comes to fruition with the companion feature of expansion through infinite divisibility. Through non-inflatable solid value, abundance is created, becoming a currency that carries the innate human nature of sharing.

The evolution of our species has for so long been stagnated through religious dogma, patriarchy, as well as economic and political oppression.

As the centralization of man’s greed has held humanity down for centuries, a piece of mathematics enshrined in computer code has unleashed a new potential. As levers of control are removed, money used to coerce and enslave people is now being transformed to become a flow that can realize the innate capacity for altruism encoded in our DNA.

The path of evolution is now cleared. We no longer need permission. Each individual can freely respond to the call within to rise higher.

Evolution image via Shutterstock

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.

Andreas AntonopoulosScience

Blocked Bitcoin Websites Fight Government Censorship in Russian Court

Bitcoin websites blacklisted by the Russian government brought their case before a judge today in an attempt to overturn a decision that has restricted domestic access to their domains.

Members of bitcoin news website BTCsec.com and exhibition company Smile Expo were reportedly in attendance at the hearing. The Russian government has filed a petition to dismiss a complaint submitted by the websites, two of six that are currently being blocked by the government.

Smile Expo argued that its website was used for the dissemination of information about its conferences, not cryptocurrency generally, negating the official argument. By comparison, BTCsec took the stance that, despite a standing proposal to ban the release of information on the technology, it is still free to discuss the topic publicly.

Bitcoin Foundation Director: No Plans to Fund Core Development

Newly appointed Bitcoin Foundation executive director Bruce Fenton has indicated that the trade organization is unlikely to pursue proposed plans to support core development.

The statements come on the heels of Wednesday's announcement that bitcore core developers Gavin Andresen, Wladimir van der Laan and Cory Fields had joined MIT Media Lab's Digital Currency Initiative in a full-time capacity due in part to the financial issues facing the Bitcoin Foundation.

Fenton reported that he was "not part" of discussions about the core developers joining MIT, but that the Foundation would continue to be supportive of the developers. Further, Fenton distanced the organization from past reports that it was seeking to form a venture-funded entity as part of a plan to spin off its development efforts.

Bitcoin in the Headlines: Pundits Ignite Battle of the Sexes

Bitcoin in the Headlines is a weekly look at bitcoin news, analyzing media and its impact.

In the absence of exciting product launches or massive funding rounds, the digital currency community saw renewed scrutiny in the media this week.

Mainstream outlets are still indulging in lengthy features on the subject, however, most continued to address the technology's perceived shortcomings.

The general consensus seems to be that bitcoin is still doomed for failure, although everyone seems to have a different – and equally creative – opinion as to why.

'Male domination'

Perhaps most notably, this week saw Fusion's Felix Salmon's contribution to the debate, alleging that the digital currency would fail because the ecosystem is dominated by men.

In his piece, titled "Why Bitcoin's male domination will be its downfall", Salmon discussed Nathaniel Popper's new book, Digital Gold, noting that it was "as close as you can get to being the definitive account of the history of bitcoin". In so doing, the author talks about "misfits" and "millionaires", responsible for the building, mining and hyping of the digital currency.

The post talked about Popper's failed search for bitcoin creator Satoshi Nakamoto, but focused more on his inability to find something else – prominent women in the community whom he could interview for his work.

Salmon used the observation as a springboard to hang the cryptocurrency's success or demise on a gender-based premise.

Despite the loose connection, Salmon was not alone in taking up the narrative. Shane Ferro echoed Salmon's line of thought in a Business Insider piece, writing:

"Fusion's Felix Salmon delves into the seedy underbelly of the bitcoin world an comes up with the real problem with cryptocurrency: the community is 96% men."

Note the use of the word "seedy".

Ferro's concluding statement, "it's hard to have a currency that leaves out 50% of the population", also raises some eyebrows as it implies no women are using the digital currency.

'Cash is here to stay'

Following the debate, Forbes' contributor Arjan Schutte argued that cash is here to stay, regardless of alternative electronic payment systems that are seeking to disrupt its market.

Schutte started by saying how "everyone in the financial services industry is excited about the digitisation of money", adding "at the hand of bitcoin, or Apple Pay, or what-not – our money would be more secure, more liquid, more flexible and wield control".

Despite his admission that a like technology could potentially disrupt the world of traditional finance, Schutte continued to note that the digital currency would never reach mainstream adoption.

He said:

"Last year was clearly quite exciting for the bitcoin world, and I believe cryptocurrency technology remains incredibly important to the current financial services revolution. Bitcoin also offers most of the cash advantages, it's free, it offers control and anonymity. It is not universally accepted – and never will be, in my opinion. And because of that, it's not effectively liquid. So, no chance."

Schutte's statements mirror those of bankers, who are much more willing to talk about blockchain technology and the potential applications of open ledgers than comment on the future of bitcoin.

This ongoing linguistic battler was perhaps best illustrated by this week's FutureofMoney conference and SWIFT forum.

'Gimmicky and niche'

Credit must go to BBC News's Zoe Kleinman for attempting to throw some positivity into the mix by reporting on recent bitcoin-related events in the Isle of Man, a self-governed entity in the Irish Sea. 

The island has become increasingly prominent in the bitcoin and technology ecosystem. From the beginning of April, digital currency business in the Isle of Man now have to comply with anti-money laundering (AML) laws.

Known for its extensive e-gaming industry, Kleinman's piece exposed how the island is "now hoping to give a wholesome boost to the bad boy of digital currencies, bitcoin".

She explained her choice of words, commenting on how bitcoin often made the headlines "for all the wrong reasons", citing the now defunct Japanese exchange Mt Gox – which coincidently made the news this week – as an example of its association with illicit activities, adding:

"[Bitcoin] has also gained notoriety as the currency for choice for illegal activity because bitcoin transactions can be carried out anonymously."

At this point it is important to address that bitcoin is not wholly anonymous, as frequently misreported by some media outlets. This aside, Kleiman cites various sources who discuss issues affecting the bitcoin economy as a whole, including regulation.

Adrian Forbes, an entrepreneur whose startup TGBex sells physical bitcoin coins, told Kleinman that he was not a big fan of legislation. He continued:

"I see bitcoin as something very niche. I don't think it requires same licences as banks and stockbrokers and hedge funs that have a thousand times as much money at stake. Bitcoin will work best in the third world first. In the west, it's a novelty, niche technology, a bit of fun. It might be advantageous in terms of speed but there's no real need for it."

Kleinman then cited Nula Perryin, the female founder of an all-female cast taxi company, who said:

"We do about two or three [bitcoin payments] a week ... I think it's a bit of a gimmick ... as a new firm it's something to get us noticed."

Whether bitcoin will ever be integrated into the existing traditional financial system still remains to be seen, Perryin proves that, fad or not, women do get involved in and use the digital currency.

Newspaper image via Shutterstock.

Bitcoin in the Headlines

Dogecoin Founder Exits Crypto Community Citing 'Toxic' Culture

Dogecoin founder and Adobe senior manager Jackson Palmer has announced he is taking an "extended leave of absence" from the cryptocurrency community.

Calling the ecosystem "toxic", Palmer used the occasion to blast aspects of the industry, while encouraging users of dogecoin not to lose sight of its fun and playful roots. Launched in December 2013, dogecoin quickly became one of the more popular alternative digital currencies, though its community has recently seen a decline in enthusiasm.

In statements, Palmer suggested that the industry is in the midst of a period of stagnation due to the ideologies of the individuals it is attracting, as well as what he characterized as the poor quality of startups founded by new participants in the space.

Bitcoin Exchange ItBit Seeks Bank License With Ex-FDIC Chair

ItBit has filed an application for a state banking license in New York.

In statements to Bitcoin News, New York State Department of Financial Services (NYDFS) spokesman Matthew Anderson confirmed the filing.

ItBit may be approved within the next few weeks, according to a report by Reuters, citing individuals with knowledge of the process.

Notably, the banking license application reportedly names several well-known political and financial figures in the US, including former Federal Deposit Insurance Commission (FDIC) chair Sheila Bair and former New Jersey Senator Bill Bradley.

Bair served as chairperson for the FDIC under President George W Bush, the federal agency that oversees deposit accounts and deposit insurance coverage guidelines.

Bair and Bradley, along with ItBit CEO Charles Cascarilla, Liberty City Ventures founding partner Emil Woods and former Financial Accounting Standards Board director Robert Herz, are said to be listed as organizers on the state banking license application.

A spokesperson for itBit told Bitcoin News that the company does not comment "on rumors [or] speculation". Further, she stated that ItBit did not confirm to Reuters that it had filed for a banking license.

Image via Thatcher Cook for PopTech

BankingExchangesitBit

Barclays Data Officer Praises Blockchain Tech at SWIFT Forum

Blockchain technology is “transformative”, according to Usama Fayyad, chief data officer at Barclays.

Speaking at SWIFT Business Forum London, Fayyad explained that he believes bitcoin is interesting, but argued that it may not remain the most compelling use case in the future.

“Underneath [bitcoin] lies the technology of the blockchain and I think that will be transformative,” he added.

Fayyad took part in a panel discussion titled Harnessing disruptive technology in wholesale financial services, which featured Craig Donaldson, CEO of Metro Bank; Gottfried Leibbrandt, CEO of SWIFT; Christophe Chazot, group head of innovation at HSBC; and Daniel Marovitz, president of Earthport’s European division.

Fayyad expressed interest in the idea of a distributed and secure ledger that can facilitate the exchange of contracts and information while providing the equivalent to a digital signature. He believes the integration of such technology with traditional banking infrastructure “will happen”.

Building bridges

Marovitz echoed Fayyad’s views and explained that Earthport, which provides white-label cross-border payments services to banks, is working to figure out how exactly the distributed ledger concept can be used to improve his company’s operations.

Earthport is already working with Ripple Labs to use its distributed consensus protocol for cross-border payments.

He added:

“I think it is a very big deal and very serious and it will have transformative effects – exactly how and exactly when, I think we’re all wrestling with.”

Marovitz suggested that the main issue is finding a way to merge the compliance processes that exist in traditional banking infrastructure with this new technology.

“When we’ve built those those bridges, I think incredible things will happen,” he said.

Marovitz went on to state that the blockchain is a “major source of interest for us and major location of [our] investment and energy”.

Donaldson, CEO of Metro Bank, said he has talked with bitcoin companies and agrees with Marovitz that the current struggle seems to be fitting this new technology with the current expectations surrounding financial compliance rules.

“I think the technology is massively interesting, [but] the ability for those organisations to flourish is somewhat hampered at the moment and will continue to be,” he added.

Part of the puzzle

HSBC innovation chief Chazot stressed that, while the blockchain could indeed be useful within the traditional banking sphere, it is merely one part of the concept of a distributed database.

He suggested there are plenty of other technologies that are worth exploring, and that blockchain technology may be useful for some applications, but not for everything.

“The danger is people ... will try to apply blockchain [technology] to everything, [but] you can’t apply one solution to everything,” he concluded.

Chazot’s views mirror those of Mariano Belinky, managing director at Santander InnoVentures, who said in an interview that he doesn’t believe bitcoin is capable of eliminating all industry problems.

"Think of bitcoin as a hammer. If you are going to have people walking around with hammers to treat everything as a nail, that's a problem because you are going to break a lot of things,” he told Bitcoin News.

BarclaysEarthport

Lamassu Plans Added Cost for Bitcoin ATM Operators

Lamassu has announced it will begin charging monthly subscription fees to pay for tech support and software upgrades.

While the service is not mandatory, Lamassu said that it will no longer offer free support to customers after the start date.

The actual fees required depend on the number of machines owned by an operator. For those who own between one and four machines, the monthly cost will be $100 per unit while charges for those who own between five and nine machines will be $90 per unit. Operators who run more than 10 ATMs will pay $80 per unit.

In interview, Lamassu CEO and co-founder Zach Harvey characterized the existing support framework as unsustainable, indicating that such a move has been in the works for some time.

Harvey told Bitcoin News:

“Up until this point, we were just giving out support for free, and it’s something that’s just not sustainable. We can’t give full support for free, and it was something that was never included in the price of the machine.”

Harvey stressed that the company did not want to pursue an approach by which a percentage of transaction fees or profits would be taken out for support. According to the company, operators will still be able to access the Lamassu support desk for information, and that existing warranties will remain in place.

The move follows an operational shift at the company, during which time Lamassu reduced the size of its team and cut travel and conference expenses. The changes, according to Harvey, took place last year and were necessary in order to eliminate what had become consistent cash flow problems.

Shift to paid support model

An email sent to operators outlined the parameters of the support subscription plan, stating that a formal service level agreement will be put in place when the service goes live in June.

Harvey explained that operators will have the option to pay the fees in bitcoin, but said that the Lamassu team is still developing how that will work operationally.

He told Bitcoin News that Lamassu had been looking to begin charging for technical support for some time, but held off as the ATM software was being developed and improved upon. The company, he said, was also establishing how much its support services would cost it in the long-term.

“It was just a matter of when we thought we could implement it, and we’re at the point now where we have a pretty good idea of what the support entails, and a good idea of what it will cost,” he said.

Mixed response

Harvey suggested that operator sentiment toward the support fee structure was divided, with larger-scale operators generally in favor of the change while less business-focused operators are “not as happy about it”.

“It’s kind of what we expected,” Harvey said of the response.

He added that resources will still be available for operators that opt out of the support subscription.

However, he stated that “there’s no way we can offer free lifetime support for everyone” owing to the long-term costs, adding that he does not believe Lamassu had previously committed to doing so.

Tightening the belt

According to Harvey, Lamassu previously moved to reduce its internal headcount last year, which included firing several freelancers that were working for the company.

When asked why the company decided to consolidate, Harvey said that the company was seeing month-over-month losses, explaining:

"We were spending more money than was coming in. Which is fine for a short period of time, but when it happened for four-to-five months we had to pull back before it ate up our prior profits."

Since then, he explained, the company has seen improving financials as of the last quarter of 2014.

"We all work harder now, but we're also a healthier business," he added.

Pete Rizzo contributed reporting.

Image via Lamassu

ATMsLamassu

FinTech's Slow Embrace of Bitcoin on Display at Draper University Event

Held on 20th April at Draper University's San Mateo headquarters, the FinTech Connection Forum succeeded at illustrating how bitcoin may be best considered a niche subject of curiosity in the wider financial world.

Featuring speakers as diverse as Citi Ventures' Arvind Purushotham and CBW Bank's Suresh Ramamurthi, the FinTech Connection provided a day-long forum for discussions on the broader opportunity that could be unlocked by disrupting the financial industry, noting at times how bitcoin and blockchain technology could play a part in this societal shift.

Perhaps the most enthusiastic about the technology was Tim Draper himself, who participates in the industry as one of its most active evangelists and investors, having invested in more than 20 companies and purchased nearly 30,000 BTC at auction.

In his opening speech, Draper was effusive in his praise for bitcoin the digital currency as well as its underlying distributed ledger, the blockchain, noting the ability to change how money moves and contracts are formed.

Draper told the audience:

"There are some laggard industries that are really big and one of them is finance. Finance could easily be as transformed as the music industry when Napster came. I think it's these companies and others that are going to make that happen."

Draper went on to inform the audience he had recently completed six all-bitcoin funding rounds for startups including BlinkTrade, ChainPerks, MeGO, Leetcoin, Plus Go and SFX.io.

"We funded each one with bitcoin or stock and that transaction is going into the blockchain," he added.

Elsewhere, the subject of cryptocurrency appeared, albeit briefly, in talks given by Foundation Capital general partner Charles Moldow and CBW's Ramamurthi.

Bitcoin tsunami

The task of presenting a more concentrated conversation on the challenges and opportunities in the digital currency industry fell to Boost VC CEO Adam Draper, BlockCypher CEO Catheryne Nicholson and Yanni Giannaros, COO of SnapCard.

Together, the group presented a somewhat unorganized overview of developments in the bitcoin industry, sometimes struggling to impart the many intricacies of the nuanced topic to an audience comprised of members perhaps hearing about the subject in detail for the first time.

In the face of the challenge, Draper did his best to keep the subject light, with the former talking about his preference for referring to the coming change in the financial system as one that will amount to a "bitcoin tsunami".

"I'm seeing all the smartest minds I know working on bitcoin companies. All that brain power is going somewhere. I don't know when that hits the surface, and I don't know when that hits, but it will be an explosion," he said.

The conversation did successfully identify some of the challenges facing the ecosystem, such as the lack of specific use cases for the technology, the elaborate consensus process by which changes are made to bitcoin's core protocol and its issues competing against traditional payment methods in the developing world.

"What does bitcoin do better than cash? Sending money across borders, microtransactions, being able to send small amounts of money, and a store of value," Draper said. "You don't want to think about the US."

In contrast, the panel was more confident of bitcoin's ability to excel for machine-to-machine payments and in the developing world, areas where users may be willing to overcome the interface complexities of today.

"Explaining TCP/IP is difficult, but showing that you can send a message to anyone in the world is easy," Draper concluded.

Communication disconnect

Overall, the panel succeeded at sparking debate, with reactions to its content proving varied.

Entrepreneur in residence at Draper University Ed Kaim suggested that bitcoin still faces a consumer adoption issue, as evidenced by the virtual currency panel, making the case that such an argument helped frame the topic realistically for attendees.

"Events like this validate the fair points that need to be considered when you're looking to venture into this industry," Kaim said. "I think you have a good perspective on this on what can be done legally and how to face consumers."

Elsewhere, LibraTax interim CFO Melissa Craig suggested that the event was evidence of how innovators in Silicon Valley are struggling to communicate their message of innovation to the wider financial world.

Craig hinted at a cultural divide between the established financial epicenters on the East Coast and areas like Silicon Valley, a division that is affecting the industry more broadly.

"Accelerators bring together financial instiutions and innovators in financial technology, these two groups are talking past each other. The innovators from Silicon Valley have so much to offer, but banks do have licenses, which startups don't have. They are still trusted holders of peoples money," she said, adding:

"They have a couple things going for them that technology and enthusiasm are not going to overcome in the short term.

Middle America's challenge

This need for bitcoin to form an underlying portion of a new financial system was expressed in Ramamurthi's talk, which humorously detailed his personal journey from being an Indian immigrant to purchasing a rural Kansas bank. CBW inked a deal last fall with Ripple Labs to use its distributed payments protocol .

"Buying a bank is not fun," Ramamurthi said, a point he stressed by detailing the government oversight and technological inefficiencies that slowed his progress at bringing the bank into the 21st century.

"We launched mobile check deposit, none of the customers cared. They wanted to come to the bank and gossip about who ran off with who. Most banks can't get an API, it's not possible," he quipped.

The problem with banking, he stressed, is one of plumbing. He suggested that banks need real-time analytics engines based on technology that can scale, a transition in which he expects cryptocurrency to play an integral role.

"The most basic unit of a smartphone account is a bitcoin wallet," he said, pointing to a slide that detailed the "complex animal" that banking could become if built on its strong foundation.

While intriguing, Ramamurthi was unfortunately unable to elaborate much on the point, as his talk quickly ended due to time constraints.

Entrepreneurs on the fence

Though Ramamurthi sees promise in blockchain technologies, other FinTech entrepreneurs seemed the most hesitant to embrace bitcoin.

Attendee and software engineer Vincent Phillips reported that he is in the process of launching a FinTech company, but that bitcoin is unlikely to play a role in its development today due to what he perceived as its inability to solve pressing problems.

"Someday perhaps bitcoin will play a role, but I probably wouldn't spent a lot of time on it. I don't think it could be exploited in the way we need to today, but it's further along than I thought," he commented.

Justin Abbott Chalew, CTO of Breeze, a startup creating an RFID payments solution for gas purchases, echoed similar concerns. Though he reported being interested in seeing developments, he said that it's unlikely consumers would pay for gas with bitcoin.

"The argument is for the rails, but on my side, consumers buy gas and consumers are paying for it. They have credit cards, checking accounts, there's no way we could accept bitcoin," he said, adding that Breeze uses ACH payments to keep its costs low.

Paul Spiller, COO at investment app Acorns, called bitcoin "as interesting and intriguing as it was a year ago".

Spiller went on to note the difficulty he saw in explaining what he believes is a solution for the developing world to an audience of FinTech VCs, stating:

"If you're in a room full of VCs here, it's not top of mind, it's not solving a pain point they have."

Images via Pete Rizzo for Bitcoin News

Adam DraperBoost VCTim Draper

Santander InnoVentures Chief on Blockchain's 'Bigger Picture'

Financial innovation is the topic of the hour, so it is hardly surprising that banks are being increasingly judged on their capability – and willingness – to implement change.

Mariano Belinky, managing director at Santander InnoVentures, the megabank's venture capital fund, is familiar with this desire to innovate from within.

But what about innovations, like bitcoin, that take place beyond bank walls? Speaking on a panel at Finextra's FutureMoney conference, Belinky described how his industry could be "transformed" by distributed ledgers like the blockchain.

Spanish Bitcoin Community Celebrate Bitcoin's VAT Exemption

Spain's bitcoin community is celebrating following confirmation that the cryptocurrency is exempt from Value Added Tax (VAT) in the country.

Bitcoin had always been exempt from VAT, but a spokesperson from Spain's tax office, Ministerio de Hacienda, told Bitcoin News the decision had been clarified following a question from a bitcoin aficionado.

The confirmation is based on the interpretation of EU VAT Directive 2006/112/CE, which recognises bitcoin as "financial service".

Both bitcoin startups and legal experts in Spain are praising the administration's decision, which provides clarity in an otherwise uncertain regulatory climate.

Pablo Fernández Burgueño, an expert in e-commerce law and the co-founder of Abanlex, said the exemption seemed "logical". He told Bitcoin News:

"Bitcoin is mostly being used as a speculative tool, only a minority are using it as a payment form, because of this the tax office would find it impossible to levy VAT for every bitcoin transaction."

Daniel Diez, business development manager at bitcoin-to-cash service Bit2Me, added that bitcoin startups would now be able to plan their financial strategy more effectively. He said:

"It is great news for [bitcoin] companies because previously, the legal uncertainty around the subject was very high and it could lead to financial planning errors. We hope to see institutions giving more positive [bitcoin related] news that facilitates bitcoin's adoption."

With Spanish banks BBVA and Bankinter now investing in bitcoin companies, Alberto Gómez Toribio, CEO and co-founder of Coinffeine, said the country was "one of the best places in the world" for crypto-entrepreneurs.

Like others, he praised the Spanish government's ability to understand the challenges being faced by companies in the bitcoin space.

"The country's public institutions are aware that in order to stimulate the bitcoin sector, flexibility and being open to discussion with experts in the field is important. They [public institutions] are doing a very good job."

Ramifications of the exemption

According to Fernández, startups can now create business plans with more transparency, fully aware of what kind of taxes they are expected to pay, how much profit they can generate and how to trade in bitcoin.

"The government's decision will actively boost the Spanish bitcoin market," he added.

The lawyer also noted other ramifications of the long-awaited confirmation.

As Spanish citizens are subject to Spanish law, those purchasing the digital currency from companies in Poland or Estonia – the latter levies a 20% tax on those trading bitcoins as a service and the former imposed a 23% VAT on bitcoin mining profits – would still be exempt from paying VAT.

"Those who have previously paid VAT for bitcoin purchases can now refer to Hacienda (the Tax Office) to request a refund," Fernández added.

The application of VAT to bitcoin services has proved somewhat of a grey area in the European Union.

Notably, the tax office's definition of bitcoin as a "financial service, linked to payment methods which enable the transfer of money" and the assumption that bitcoin transfers are considered to be "special risk" activities, means that all Spanish companies operating with the digital currency will have to comply with anti-money laundering (AML) rules.

Spanish flag image via Shutterstock.

RegulationSpainVAT