Bitcoin News

Forbes contributor and Bitcoin Foundation (@BTCFoundation) board member Jon Matonis (@JonMatonis) considers the impact a government ban on Bitcoin would have on the fledgling currency.  Excerpts:

“The demand for an item, in this case digital cash with user-defined levels of privacy, does not simply evaporate in the face of a jurisdictional ban.”
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“Ironically, the ban would create something like the Streisand effect for Bitcoin generating an awareness for entire new demographic groups and new classes of society.”
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“[Bitcoin is] a bet that career mobility and independent contractor businesses will eventually outstrip the growth of the corporate wage-slave population.”
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“[The government’s] best response to Bitcoin is irrelevancy, or failing that, extreme gold-like market manipulation for as long as possible. The end game for the State is perpetuating the fiat myth — their fiat myth not the populace’s cryptographic Bitcoin myth. They have always known that faith in money is a mass illusion, however they never considered that they wouldn’t be in charge of the illusion.”

 - http://onforb.es/112nF0u
 - http://bitcointalk.org/index.php?topic=139516.0 (Further discussion of this article)

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Today’s CHART OF THE DAY covers Bitcoin’s increase in the exchange rate.  Excerpts from a corresponding article by Max Raskin (@MaxRaskin) on Bloomberg:

“Bitcoin has more than doubled in the past 12 months, strengthening to $16.37 from $5.88.”
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“Greater demand for virtual currencies could have a negative impact on the reputation of central banks, according to a report published by the European Central Bank in October last year.”
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“Steve Hanke, a professor at Johns Hopkins University in Baltimore who helped to establish new currency regimes in countries such as Argentina and Bulgaria [said about Bitcoin] ‘I think it’s a competitive threat. Maybe virtual currencies will be so convenient that they will pose a threat because of their ease of use.’”

 - http://bloom.bg/WIzQOZ
 - http://i.imgur.com/AMLYAXs.png (CHART OF THE DAY)
 - http://bit.ly/VjfyKM (Related post on ZeroHedge about the COTD)
 - http://bitcointalk.org/index.php?topic=139515.0 (Further discussion of the Bloomberg article)
 - http://bitcointalk.org/index.php?topic=139552.0 (Further discussion of the ZeroHedge post)

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Douglas E. French, senior editor of the Laissez Faire Club (@LaissezFaireBks) is the latest to take notice of the ECB policy brief Virtual Currency Schemes and describes good reasons Bitcoin deserves the attention it is getting.  Excerpts:

“The answer to the currency question may not be to reform government in a way that it can’t reasonably be reformed, but to turn loose entrepreneurial genius to solve the problem. […] This is a particularly risky area. There are currency entrepreneurs sitting in jail for competing with the government.”
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“Not all individuals gain [knowledge of a currency’s worth] all at once. A small number of people recognize the marketability of certain goods before most others.  These might be considered currency entrepreneurs.”
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“While people contend that money must be this or must be that, or come from here, or evolve from there, Menger, the father of the Austrian school, seems to leave it up to the market. When a money becomes uneconomic to use, it loses its marketability and ceases to be money. Other marketable goods emerge as money.”
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“Governments are destroying their currencies, and businesses know it. Entrepreneurs won’t just stand by and theorize. They’re doing something. They recognize a market opportunity. The banking industry realizes it.”
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“We’re rooting for enterprising entrepreneurs to give the government a run for their money in the money business. Watch this space.”

 - http://lfb.org/today/currencies-of-the-future
 - http://bitcointalk.org/index.php?topic=124141.0 (Further discussion of the article)
 - http://www.bitcoinmoney.com/post/35010292565  (ECB Report and Response Roundup)

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There’s been quite a flurry of responses to last week’s policy brief on “Virtual Currency Schemes” published by the ECB. A list of these, compiled by Bitcoin Money, includes posts on ZeroHedge, a post by Jon Matonis on Forbes.com, BitInstant’s Erik Voorhees, and others.

 - http://www.bitcoinmoney.com/post/35010292565

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Bitcoin Money blog (@BitcoinMoney) gives a monthly wrapup on Bitcoin for the month of October, 2012. Excerpts:

“The closing price of $11.20 USD was down more than a dollar from the previous month’s close resulting in a nearly 10% drop for the month. For 2012, where the price opened at a $4.72 level, the price rise from January 1st is now at the level of 137%.”
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“What might be surprising is that the month ended down just 10% after the disaster that October 2012 essentially was for the Bitcoin ecosystem as a whole.”
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“A promise of relief arrived with the announcement of Bitcoin-Central’s BTC/GBP market. Further relief arrived with Blockchain.info/wallet’s Instant Online Bank Transfer which is now available in the UK and elsewhere in the EU.”
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“Emerging during the darkest part of the shutdown storm was Coinbase’s launch of its BTC/USD exchange. This allows a Coinbase user to make bitcoin purchases paid for with funds drawn from the user’s bank account.”
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“Banking issues were just one challenge for the exchanges as heavy distributed denial-of-service (DDoS) attacks took many exchanges down at one point or another during the month.”
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“The current development focus is on resolving the immediate scalability issues that exist when running a full Bitcoin.org client node. Significant progress with this occurred in October when the ultraprune capability was merged into mainline — a prerequisite to it being included in a future release.”
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“The 230,400 bitcoins issued which Bitcoin miners took in during the month is valued at $2.70 million using the average daily valuation for the month of $11.72. Miners fared less well in October as the result of a rising difficulty — 15% higher at the end of the month versus the level at the beginning as well as the decline in the exchange rate.”
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“Later this month, at block 210,000, the block reward mining subsidy drops by half. This halving of the amount of currency issued means miner’s revenues will drop in half as well.”
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“The herd-like mentality of speculators means that demand can disappear in an instant and a deep selloff can result. Twice during October were cliff dives of 15% or more.”
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“A significant indicator that Bitcoin has the potential to become much more widely used surfaced with the ECB’s policy brief on Virtual Currency Schemes. The 55-page brief describes Bitcoin as having the potential to have a negative impact on central banks.”

- http://www.bitcoinmoney.com/post/34853623626

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The European Central Bank (@ECB) published a 55 page report on virtual currencies, primarily on Bitcoin and Second Life Lindens (SLL).  Excerpts:

[There are a number of articles and blog posts that were written in response.]

- http://bit.ly/XL53Dd (PDF of report)
- http://bit.ly/RjbKGU (in a PDF viewer)

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