Bitcoin News
Daily diary of what's happening with Bitcoin.
Tech journalist Mike Wheatley (@Mike_Wheatley) describes the one-two DDoS punch impacting Bitcoin exchanges yesterday. Excerpts:
“Alternative online payments provider Dwolla [saw] its website taken offline [due to a distributed denial-of-service (DDoS) attack] for a brief period of time.”
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“One recurring theme among posters is that the situation has to do with Bitcoin. […] Dwolla’s problem is that it provides one of the easiest methods of purchasing Bitcoin, but the DDoS attack has prevented many from taking advantage of this.”
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“Intriguingly, Mt. Gox reportedly suffered its own DDoS attack last night, according to the IDG News Service. The Japanese company, which is one of the world’s largest Bitcoin exchanges, said that the attack began on Thursday night and was ‘stronger than average’, although the site itself doesn’t appear to have been taken offline, reports IDG.”
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“Naturally there will be speculation that the two attacks are linked.”
- http://bit.ly/1074LY4
- http://bitcointalk.org/index.php?topic=160770.0 (Further discussion of the article)
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Patrick Murck (@VirtuallyLaw), General counsel and board member of Bitcoin Fondation posted on FinCEN’s recent guidance regarding using and exchanging virtual currencies. Excerpts:
“Upon an initial reading two things struck me:
FinCEN firmly believes that virtual currency in general, and bitcoin in particular, does not fall under the pre-paid access rules.
FinCEN seems intent on recreating and expanding the pre-paid access rules for virtual currency and bitcoin under the mantle of money transmission.”
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“Under the Administrative Procedures Act (APA), FinCEN can’t promulgate new rules without going through a notice and comment proceeding whereby the public may have their voices heard. If FinCEN would like to expand its statutory authority over “money transmitters” to include brand new categories such as ‘administrators’ and ‘exchangers’ of digital currency it must do so through proper rulemaking proceedings and not by fiat.”
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“FinCEN’s guidance implies that every person who has ever had any virtual currency and has ever exchanged that virtual currency for real currency may now be considered a money transmitter under the Bank Secrecy Act. That is, of course, an untenable position.”
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“This framework would wildly expand the reach of FinCEN and the BSA, and would be infeasable for many, if not most, members of the bitcoin community to comply with. […] The BSA was never intended to apply this broadly and reach this far into people’s everyday lives.”
- https://bitcoinfoundation.org/blog/?p=152
- http://bitcointalk.org/index.php?topic=154672.0 (Further discussion of the topic)
- http://1.usa.gov/117bnWj (FinCEN FIN-2013-G001)
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Declan McCullagh (@DeclanM), writer for CNET, covers the reveal of a new Bitcoin ATM/vending system at this past weekend’s Liberty Forum event in New Hampshire. Excerpts:
“[This ATM is] the opposite of a traditional automated teller that dispenses currency. Instead, these Bitcoin ATMs will accept dollar bills — using the same validation mechanism as vending machines — and instantly convert the amount to Bitcoins and deposit the result in your account.”
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“To obtain Bitcoins, people use an iPhone app like Blockchain or Android’s BitcoinSpinner to show the ATM a QR code with their desired address for payments. After they insert a dollar bill (denominations up to $100 are accepted), the ATM automatically credits their Bitcoin account with the proceeds. There’s a 1 percent transaction fee.”
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“‘Even people who have been in the Bitcoin world for a while and have used every type of exchange are blown away by the simplicity of this machine,’ Harvey says. ‘I am just putting in a dollar. Before they really know what’s going on, their phone tells them, ‘You have Bitcoin.””
- http://cnet.co/YNxrmU
- http://bitcointalk.org/index.php?topic=146397.0 (Further discussion of the device)
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A post on Bitcoin Money describes the recent announcement from Paymium. Excerpts:
“Paymium, operator of Bitcoin-Central exchange, will be operating that exchange following the regulations in the EU that apply to a Payment Services Provider (PSP).”
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“Bitcoin-Central will not hold customer EUR balances, and instead the funds will be held by Credit Mutuel, a major French bank. This service is made possible through Paymium’s partnership with Aqoba, a French PSP.”
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“[A statement from Paymium’s Mr. Francois] was that there would be no limitations regarding the citizenship of clients.”
- http://www.bitcoinmoney.com/post/37390563082
- http://bitcointalk.org/index.php?topic=129461.0 (Paymium’s Announcement)
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Joe Cascio (@JoeCascio) describes in a blog post reasons why Coinbase is reporting an “overwhelming response” to their wallet and exchange service. Excerpts:
“I have found it to be the simplest, lowest cost, if not the fastest alternative for online purchasing I have tried.”
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“They use convenient and very low cost ACH transfers to withdraw money from a bank account you designate to buy bitcoin, or into which to deposit money when you sell bitcoin. Because of the ACH transfer, it currently requires a US bank account.”
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“When I input an order to buy, I’m told exactly how much will be deducted from my bank and I’m notified by email when the order completes. I can monitor the progress of the order on the site and even cancel uncompleted orders if necessary. There are no flaming hoops to jump through, no other ‘surprise’ services or fees involved.”
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“I have been experiencing 3 or more business days delay between placing an order and having the bitcoin I purchased be available to me. This is due to the ACH transfer time and the old, creaky traditional banking system.”
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“‘We definitely want to raise those limits, and will most likely do so in the next 2-3 months [… but] after your first trade completes successfully you can do $100 each day, even if the previous ones have not completed yet. [quote from Coinbase CEO Brian Armstrong]”.
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Bitcoin’s progress is occurring in geographic areas where clusters of Bitcoin enthusiasts exist. A post on the Bitcoin Money blog (@BitcoinMoney) highlights some of these clustersand describes Bitcoin’s potential. Excerpts:
“While Bitcoin’s traction has primarily occurred online through exchanges and with merchants who sell online, its use as a payment method for purchases at bricks-and-mortar retailers and for in-person trade is not found that widely just yet.”
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“A growing cluster growing in Berlin is the latest (and potentially the largest) to form. Joerg Platzer, owner of bar and restaurant Room 77, announced Bitcoin Kiez. Bitcoin Kiez is a project to get a large number of businesses to accept BTC in Berlin’s Graefekiez district.”
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“Another cluster is found in New Hampshire, particularly in areas whose population includes many who have moved to the state to join the Free State Project.”
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“Finland, and in particular, Helsinki, is where another cluster exists. Staff at Vegemesta know all about Bitcoin and payments are handled in seconds.”
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“Bitcoin hotspots are also expected to form where there are many travelers though the use of bitcoins during travel is still a relatively nascent practice.”
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“Paying using a mobile and QR code is something Square, currently processing nearly a billion dollars worth of transactions each month, is driving forward.”
- http://www.bitcoinmoney.com/post/35733263353
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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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GoWest of The Bitcoin Trader (@GoWestBTC) looks at how much sway $50K USD has when buying or selling bitcoins today versus previous points in time. Excerpts:
“The market is looking considerably more stable. Today, a $50,000 purchase would only move the price from $5.11 to $5.16, a 1% increase.”
“The Bitcoin market has clearly matured significantly, making it increasingly stable and usable as a currency; something many merchants have been waiting for before deciding to accept Bitcoin.”
Jon Matonis (@JonMatonis) describes how Bitcoin can come to the rescue for Somalis in Minnesota who have been barred from making the small regular transfers to their family members in Africa. Excerpts:
“Instead of trying to comply [with regulations], [banks] are electing to opt out so as not to encounter heavy federal fines. It sure would be nice if the world had a decentralized peer-to-peer digital currency that could be transferred to mobile devices in a secure fashion.”
“If it hasn’t happened already, a savvy merchant in Somalia will start accepting bitcoin for Somali shillings. Or a traditional currency exchange dealer could get in on the action too — the spreads are certainly there.”
“As a distributed network, bitcoin possesses the capability to route around interference and disruption. In fact, this was a key design consideration as resiliency has grown to become an imperative for privacy-enhancing electronic cash.”
An article on Forbes.com by E-Money specialist Jon Matonis (@JonMatonis) expands into reasons Google might have decided against issuing its own currency — “Google Bucks”, as was disclosed by its executive chairman last week. Excerpts:
“They probably realized that Google Bucks could end up like Facebook Credits and become a virtual currency roach motel where your money checks in, but it doesn’t check out. Facebook does not provide two-way convertibility and person-to-person payments due to the potential for fraud and the emergence of a secondary market beyond Facebook’s control”.
“In March 2011, Mike Hearn, a Google engineer, released an open source java client for bitcoin called BitcoinJ so obviously the protocol did not go unnoticed at Team Google. A true, and ideal, virtual currency will have the attributes of two-way convertibility, an independent floating exchange rate, and a nonpolitical unit of account. Consequently, it is those core features that stoke direct competition against national currencies and bitcoin possesses all three”.
“Contrary to utopian social planning, free-market virtual economies will emerge spontaneously rather than through design and the ultimate victorious currency will be a market-based competitor that can move seamlessly across multiple grids. The virtual world is the perfect crucible for launching unrestricted currency competition and that competition will enable further opportunities for transporting virtual world earnings to real world value. This bridging of the two worlds could be the sought-after “killer app” for open-loop digital cash”.
The article links to a podcast of an interview with Matonis from the Virtual Policy Network.
- http://onforb.es/z5IrMT
- http://www.virtualpolicy.net/virtuallypolicy003.html (mp3)
