Bitcoin News

Forbes writer, Kashmir Hill (@KashHill), invited Bitcoiners to join her for a dinner at Sake Zone in San Francisco to celebrate the conclusion of her Week Of Bitcoin series of posts. In her video she interviews some of those who joined her.

 - http://bit.ly/16mUiNA Video - Length: ~4 minutes
 - http://onforb.es/199d9Zo (Week Of Bitcoin Series Of Posts)
 - http://bitcointalk.org/index.php?topic=201343.0 (Further discussion of the video)
 - http://bitcointalk.org/index.php?topic=200458.0 (Further discussion of the series)

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Through daily posts by Forbes writer Kashmir Hill (@KashHill) we learn how far Bitcoin as a payment system has come along.  Her assignment ais to live on bitcoin for a week — without spending any  dollars.  Excerpts from Day 4:

“[Bakery owner] Jennifer Longson is there, wearing a cupcake apron, filling cupcake tins with fresh batter along with two employees. She says I’m the second customer of the day asking to pay in Bitcoin.”
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“Cups and Cakes [receives publicity] as one of the first stores to accept the currency. Her little shop has been featured in international news: on the BBC, in the Financial Times, on NPR Marketplace, and beyond.”
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“Longson is surprised that I’m able to use my Blockchain iPhone app to scan her QR code and make the payment. “When you update your iOS, you’re going to lose that,” she says. ‘Apple has blocked it.’”
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“[Market owner Adam Sah] didn’t want to take the currency risk with the Bitcoin I paid him so he paid it out the same day to Name Cheap, the company which provides their domain name services (and accepts Bitcoin). ‘I paid our fee for the year with it,’ he says. ‘More and more IT services accept Bitcoin. […] With all these new things, you have a bunch of early adopters who experiment,’ he continues. ‘Then there’s a crossing of a chasm and then it becomes mainstream.’”
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“‘As a retailer, I am salivating over the idea of having this silently competing with credit cards and their fees and the hidden cost of dealing with cash: counting it, the fee I pay to Wells Fargo for a business account, transferring it,’ [said Sah]”.
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“When I go to bed, Bitcoin is valued at $96; by Saturday, it is shooting back up in value.”

 - http://onforb.es/10eKkXe (Day 4)
 - http://onforb.es/Zszg8U (Day 3)
 - http://onforb.es/ZYlttF (Day 2)
 - http://onforb.es/10VXn6b (Day 1)

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Forbes contributor Timothy B. Lee (@BinaryBits) writes again on Bitcoin. Excerpts:

“Even if you think the current value of of more than $140 is a bubble, it’s clear that Bitcoin has some genuine applications. The number of daily Bitcoin transactions has soared from around 1000 at the beginning of 2011 to about 50,000 today. Figuring out the “fundamentals” that drive the currency’s long-term value seems like an interesting theoretical puzzle.”
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“A core part of Bitcoin’s appeal is that it’s not under anyone’s control. Supposedly, nobody has the authority to change the Bitcoin money supply, cancel or reverse transactions, or otherwise change the attributes of the protocol. But in practice that’s not really true. In the wake of last month’s fork, the elites in the Bitcoin community effectively changed the rules in a matter of hours. In principle, there’s no reason those same elites couldn’t make other changes to the Bitcoin protocol.”
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“In principle, these two pools might be able to join forces and execute a 51 percent (or 53 percent) attack on the rest of the network. But doing so might prove foolish in the long run, since that kind of power grab might undermine public confidence in the currency’s long-term viability, since a mining cartel might have the power to change the rules of the Bitcoin protocol in ways that benefit themselves at the expense of ordinary users.”

 - http://onforb.es/10yeRSe
 - http://bitcointalk.org/index.php?topic=170270.0 (Further discussion of this article)

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Forbes contributor and Bitcoin Foundation board member Jon Matonis (@JonMatonis) posts on the latest developments in Cyprus and how Bitcoin has a role.  Excerpts:

“‘Only put money in the banking system that you can afford to lose,’ advises financial commentator Max Keiser. This is no more true than last weekend in Cyprus when bank depositors had electronic transfers blocked and were initially told to prepare for a confiscatory levy of up the 9.9% of their deposit balances across the board.”
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“Capital controls are about government keeping your money within easy reach should they ever want it. A decentralized and nonpolitical currency like Bitcoin starts to look attractive by providing a safer destination for wary depositors, allowing them to store their money securely in a digital account on their own computers, away from the big governments and politicians’ reach.”
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“The emerging trend towards bitcoin as a flight to safety seems to be accelerating despite the recent regulatory guidance from FinCEN (Financial Crimes Enforcement Network).”
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“‘Gold is a great way to preserve wealth, but it is hard to move around,’ added [James Rickards, author of Currency Wars]. ‘You do need some kind of alternative and Bitcoin fits the bill.’”

 - http://onforb.es/101vGDz
 - http://bitcointalk.org/index.php?topic=157476.0 (Further discussion of the article)

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Forbes contributor and Bitcoin Foundation board member Jon Matonis (@JonMatonis) writes an update on BitcoinFund (from Malta), the first Bitcoin Hedge Fund.  Excerpts:

“Institutional investors and hedge fund managers have secretly sought a regulated investment vehicle for bitcoin placements. Malta-based Exante Ltd. has the solution with their new Bitcoin Fund.”
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“Authorized and regulated by the Malta Financial Services Authority, Exante offers the Bitcoin Fund with an initial minimum subscription of $100,000 and a 0.5% upfront subscription fee.”
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“U.S. persons and U.S. institutions will not be able to access the fund directly.”
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“The fund charges an annual management fee o.5% of Net Share Value payable monthly in order to provide the sophisticated security and wallet management that one would expect with such large amounts at stake.”
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“Using Shamir’s Secret Sharing algorithm, the container password is then split into three parts utilizing a 2-of-3 secret sharing model.”
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“Exante intends to provide a two-way secondary market for the trading of fund shares [which will] provide shorting opportunities without having to own the underlying asset.”

 - http://onforb.es/WyW6Q1
 - http://bitcointalk.org/index.php?topic=150659.0 (Further discussion of the article.)

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Forbes contributor and Bitcoin Foundation board member Jon Matonis (@JonMatonis)’s latest blog post makes an argument defending the need for cash to remain as a way to pay.  Excerpts:

“Let’s not kid ourselves, because the end of money, as we know it, really means the beginning of the transactional surveillance State, which makes this a serious debate about the boundaries of State power and the dignity of an individual.”
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“With ultimate tracking capabilities, how does Wolman decide when a government’s ‘right’ becomes a wrong?”
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“Privacy, especially user-defined privacy, sits on a sliding scale that is defined by the individual. One person’s idea of privacy may be anonymity from all and another person’s idea of sufficient privacy may be privacy from aggressive marketing companies and governments but perhaps not from banks. The point being that it is the prerogative of the individual, not book authors or digital money consultants, to determine where one sits on that personal sliding scale.”
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“As Web anthropologist Stowe Boyd proclaims, anonymous cash equals freedom and we should rejoice in that.”

 - http://onforb.es/YoqjgY
 - http://bitcointalk.org/index.php?topic=146661.0 (Further discussion of the post.)

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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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Forbes contributor and Bitcoin Foundation (@BTCFoundation) board member Jon Matonis (@JonMatonis) shares some details from leading online gaming services where bitcoins are used as the currency.  Excerpts:

“SatoshiDice reported first year earnings from wagering at an impressive ฿33,310. During the year, players bet a total of ฿1,787,470 in 2,349,882 individual bets at an average monthly growth rate of 78%. […] The odds are calculated to give the house an edge of 1.90% with full transparency because all dice rolls and earnings statistics are verifiable using the blockchain. […] SatoshiDice shares are traded on the MPEx bitcoin [cyber-equities] stock exchange […]. At the current exchange rate of $17.00 per BTC, SatoshiDice is a company valued at $8.9 million.”
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“BitZino reported first year earnings from wagering of ฿10,137. During the year, players bet a total of ฿664,192 in 3.2 million individual bets. […] [From June to December BitZino saw] a period growth rate of 894% or average monthly growth rate of 149%.”
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“Seals With Clubs is dealing about 10,000 hands of poker per day and raking only about 4,000 of them. […] The current rake is 2.5% with a cap of ฿0.10 per hand which is slightly less than half of what other poker sites would charge.”
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“With privacy, efficiency, growth, payment irreversibility, and cost savings as demonstrated by the above, it’s only a matter of time before the mainstream casino operators of Gibraltar and Malta realize the benefits of a gaming economy that leverages the ideal digital casino chip.”

 - http://onforb.es/10DVrxq
 - http://bitcointalk.org/index.php?topic=138032.0 (Further discussion of this article)
 - http://tcrn.ch/Wgetql (Related article on TechCrunch)
 - http://bit.ly/W06gXC (Related article on The Verge)
 - http://ars.to/10QcVYw (Related article on Ars Technica and Wired.co.uk)
 - http://bit.ly/10JloM3 (Related article on Boing Boing)

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Erik Voorhees (@ErikVoorhees) couldn’t let pass a flawed argument about what fiat money is, so he penned a new post.  Excerpts:

“Money is not money because of ‘common agreement.’ No common agreement ever happened.”
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“Money is money because it is specifically useful in fulfilling the function of exchange. Money is money because its specific properties make it superior in exchange to other alternatives.”
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“Governments realized that if they could force the population to use a specific arbitrary money – say instead of pink triangle paper maybe green rectangular paper – then they could create that money at whim and benefit from it. It is not hard to understand why politicians would love this scheme: they get to dish out benefits by magically creating tokens that they themselves force people to accept as ‘legal tender.’ But while it’s not hard to understand why governments approve of their own fiat tender, it is very hard to understand why the public accepts this scam…”
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“For those who learn about Bitcoin, it is not hard to understand why it is now succeeding as an amazing new form of money.”

 - http://bit.ly/11gd1b1 
 - http://bitcointalk.org/index.php?topic=135552.0 (Further discussion of the post)

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Forbes contributor and Bitcoin Foundation board member Jon Matonis (@JonMatonis) shares the argument by Austrian economists that price deflation is nothing to fear.  Excerpts:

“Deflation is not a problem in the traditional monetary system and it will not be a problem in the bitcoin economy.”
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“Although the supply of [bitcoins] will be relatively static with the exception of attrition through permanently lost coins, I will refer to the monetary phenomenon as deflation because as bitcoin’s asset value increases compared to political numéraires, its effect on price expression will be seen as deflationary.”
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“An economy with a monetary unit that increases in value over time provides significant economic benefits such as near zero interest rates and increasing demand through lower prices.”
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“‘During an inflation, you want to get rid of the money. You want to consume. You want to spend. But you don’t become wealthy by spending and consuming; you become wealthy by producing and saving’ [writes Doug Casey, of Casey Research]”.
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“‘Deflation puts a break–at the very least a temporary break–on the further concentration and consolidation of power in the hands of the federal government and in particular in the executive branch.” [writes German economist Jörg Guido Hülsmann]”.
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“Ultimately, the market will reach an equilibrium between investment and savings because in the absence of an equilibrium the benefits of a savings-only strategy would evaporate. Proper economic growth through sound investments will lead to a productivity-driven deflation.”

- http://onforb.es/V03gqW
- http://bitcointalk.org/index.php?topic=133079.0

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