Bitcoin News
Daily diary of what's happening with Bitcoin.
Wired contributor Dan Kaminsky (@DaKami), the security researcher who “broke the internet” some years back, opines on Bitcoin. Excerpts:
“The internet has proven to be a pretty big deal for global society, and Bitcoin could basically be thought of as the Internet, applied to Money.”
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“Bitcoin is about as friendly to [regulation] as the rest of the internet is — not very. To put it another way: Bitcoin’s a dollar bill, with a teleporter built in. We can just poke in a few coordinates and poof, off it goes, with the ease of posting to some forum somewhere. That’s somewhat new.”
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“But its real value proposition is as a medium for transfer. It really works. And keep in mind, if we’re just holding the currency for a few minutes, we don’t care about the absolute value.”
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“Bitcoin’s resilience comes from a property I refer to as Too Big To Regulate. Put simply, it’s easier to tell ten people to behave, than ten thousand. So if we want a system that’s impossible to regulate, get the power in the hands of ten thousand rather than ten.”
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“In Bitcoin, because everything’s backed by cryptographic keys, one can actually prove s/he has access to a certain amount of Bitcoin. We are either able to sign messages linked to the private keys, or we are not.”
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“I don’t really see the volatility declining in the present model. But this is an experiment. And it continues.”
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“Short of an all out war on technological innovation, it’s just really tricky to see how to even try to stop Bitcoin. The internet was not the first time networked communication was tried, but it was the first time a major network became available that didn’t have gatekeepers everywhere.”
- http://www.wired.com/opinion/2013/05/lets-cut-through-the-bitcoin-hype
- http://bitcointalk.org/index.php?topic=194554.0 (Further discussion of the article)
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Reporters Nathaniel Popper (@nathanielpopper) and Peter Lattman (@peterlattman) share some new investments made both in Bitcoin and Bitcoin startups. Excerpts of their NY Times Dealbook article:
“Cameron and Tyler Winklevoss have been many things in a short time: Olympic rowers. Nemeses of Mark Zuckerberg. Characters on ‘The Simpsons.’ Now they can add a new label: bitcoin moguls.”
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“The Winklevii — as they are popularly known — say they own nearly 1 percent of that, or some $11 million.”
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“Now mainstream investments in the digital money are starting to emerge. On Thursday, a group of venture capitalists, including Andreessen Horowitz, announced that they were funding a bitcoin-related company, OpenCoin.”
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“But the 6-foot-5 Winklevii were unfazed by the latest tumult. Indeed, the brothers said they used the low prices to buy more. They argue that bitcoin will have much further to soar once a broader audience sees its virtues: a unit of exchange that can be moved around the world at the click of a button without requiring any payments to Western Union or American Express.”
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“‘People say it’s a Ponzi scheme, it’s a bubble,’ said Cameron Winklevoss. ‘People really don’t want to take it seriously. At some point that narrative will shift to [how] virtual currencies are here to stay.’ We’re in the early days.”
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“For their part, the Winklevoss twins have used some of their bitcoin to pay for the services of a Ukrainian computer programmer who has worked on the site of their venture capital firm.”
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“In addition to the purchase of bitcoins, they also say they have invested in a bitcoin-related company, but declined to disclose which one.”
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“’It has been four years and it has yet to be discredited as a viable alternative to fiat currency,’ said Tyler Winklevoss. ‘We could be totally wrong, but we are curious to see this play out a lot more.’”
- http://nyti.ms/151cJqg
- http://bitcointalk.org/index.php?topic=173772.0
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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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Bitcoin Money blog (@BitcoinMoney) gives a monthly wrapup on Bitcoin for the month of January, 2013. Excerpts:
“The closing price of $20.41 USD was up nearly seven dollars from the 2012 year-end close resulting in more than a 51% increase for the month — Bitcoin’s largest monthly gain since December 2011. The one-year gain, calculated from the January 2012 close of $5.48 is whopping 272%.”
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“The 111,100 bitcoins issued which Bitcoin miners took in during the month is valued at $1.72 million using the average daily valuation for the month of $15.49. Miners had been suffering ever since the block reward subsidy “halving” that occurred in November last year.”
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“A dollar’s worth of ASIC hardware performs hashing at the rate that is nearly two orders of magnitude over what a dollar’s worth of GPU hardware does so we are likely just a couple months (or less) away from seeing the end of any GPU mining that is profitable.”
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“Certainly greater demand occurring due to Bitcoin gaining traction as a payments and money transfer system is partly responsible for a higher valuation but there appeared to be no massive jump that would account for the need for an additional $75 million worth of the currency. Thus a significant portion of the rise can only be attributed to speculative interest.”
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“Most bitcoin market exchanges provide feeds with trading results in real-time and many volume records were broken in January.”
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“Early in January Bitcoin Foundation executive director Peter Vessenes published his Quarterly Update in which he describes an increasing level of interest from investors and shared his prediction that in 2013 there would be Bitcoin ‘liquidity problems’ (price increases).”
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“Bitcoin remains an experimental currency. As the software gets poked and prodded, new vulnerabilities are discovered. Some vulnerabilities will result in funds being lost.”
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“When a SatoshiDICE, BitInstant, CoinBase, or BitPay (all angel- and venture capital-backed Bitcoin-related startups) hits a home run, every person holding a bitcoin likely sees a rising valuation as a result due to increased demand for the currency from that Bitcoin startup’s success story.”
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“Without Wall Street’s participation there are few affordable methods to take a short position or to perform price hedging. Without this relief valve, wild volatility occurs as the market tries to discover Bitcoin’s price.”
- http://www.bitcoinmoney.com/post/42429739154
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Vitalik Buterin, writer for Bitcoin Magazine (@BitcoinMagazine), describes today’s rally that has taken the Bitcoin BTC/USD exchange rate above its high water mark from 2012. Excerpts:
“Today’s maximum of $15.68 at the time of this writing [is] the highest that the Bitcoin price has been since July 6, 2011.”
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“The [network data] figures, which attempt to measure Bitcoin’s actual usage rather than public opinion or interest in the currency as search volume and all market statistics inevitably do, show the same pattern: the values rose during summer 2012, dropped off in the fall, but then began to quickly pick up again in November after WordPress started accepting the currency.”
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“The 14-day average is also now as high as it ever was, and may well go even higher.”
- http://bitcoinmagazine.com/bitcoin-price-breaks-15-4-august-2012-high
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Peter Vessenes (@Vessenes), Executive Director of the The Bitcoin Foundation (@BTCFoundation) provides the organization’s first Quarterly Update. Excerpts:
“We’ve opened up a grant proposal process to anyone who wishes to apply for a grant that could further Bitcoin in some way. The deadline is February 15, 2013.”
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“Announced our first conference, Bitcoin 2013: The Future of Payments, for May 17-19 in San Jose [CA].”
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“Member Review - over 240 at last count.”
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“2012 was the year of Bitcoin Angels, 2013 seems more likely to be a Venture year. I am also starting to hear from Hedge Fund managers.”
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“We’re working to get a shark-tank style demo day for the Bitcoin 2013 conference.”
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“As larger companies figure out Bitcoin and how they can be involved, I think we’ll start to see significant adoption and exciting announcements.”
- https://bitcoinfoundation.org/blog/?p=99
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Enginner and PhD student Minorman summarizes Bitcoin developments in 2012 with a blog post on SeekingAlpha. Excerpts:
“[Bitcoin] gained 1400% against the USD last year - and this same currency is again - by far - the best performing currency.”
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“With block 210.000, 50% of all bitcoins to ever be issued are now in circulation. The next 25% will be issued over the next roughly 4 years.”
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“The bitcoin business space has also started to attract venture capital in 2012.”
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“Many, many more developments in 2012. Partial list [includes the] birth of provably fair gambling and Satoshidice, Bitzino and others.”
- http://bit.ly/WdFzdN
- http://bitcointalk.org/index.php?board=57.0 (Further discussion regarding speculation)
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While the Mexican peso and the Polish zloty had a good year, there was one currency that outperformed them all — by an order of magnitude. That’s no secret to those reading this, but it will be to reader’s of Sober Look (@SoberLook), a financial blog with a global audience Excerpts:
“It’s not issued by a country, nor is it a precious metal or a rare-earth. Bitcoin is an electronic currency that can be exchanged for some goods and services, particularly online. The currency is not controlled by a central bank.”
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“For more background on Bitcoins see this story from Wired Magazine (Wikipedia does a terrible job describing this process).”
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“Therein lies the flaw of the Bitcoin concept: transaction anonymity attracts illicit activity.”
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“So why has the currency tripled this year? A number of rumors have been circulating in the online forums trying to explain the rally.”
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“Nevertheless Bitcoin is the 2012 winner for the best performing currency against the dollar.”
- http://soberlook.com/2012/12/the-2012-winner-for-best-performing.html
- http://bitcointalk.org/index.php?topic=133101.0
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Bitcoin Money blog (@BitcoinMoney) gives a monthly wrapup on Bitcoin for the month of September, 2012. Excerpts:
“For the seventh month in a row, the BTC/USD exchange rate ended higher than the level it was at when the month had begun.”
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“The closing price of $12.40 USD was more than two dollars above the previous month’s close giving a 22% gain for the month. The second quarter had closed at $6.69 so the closing price for Q3 2012 shows a gain of 85%. For 2012, where the price opened at a $4.72 level, the price rise from January 1st now exceeds 162%.”
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“Starting the month off on the wrong foot was the security breach at the U.S. exchange BitFloor in which 24,000 bitcoins were heisted.”
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“Not only did [the Romney tax return hoax] allow the media to portray Bitcoin in a bad light, the Secret Service is now well aware of Bitcoin.”
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“That wasn’t the only interest in Bitcoin from the U.S. government this past month. It appears that the Securities and Exchange Commission (SEC) is interested in a particular high-yield investment program (HYIP) […].”
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“Additionally, Federal Reserve staff are now in possession of bitcoins.”
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“So even with these developments, why might the exchange rate be still rising? Block 210,000. […] At the moment the drop occurs (expected around November 30th) the rate of currency inflation will drop from a 25% per-year level to just 12.5%.”
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“If the block subsidy drop weren’t enough to kill off GPU mining, delivery of the order backlog from just one of these ASIC manufacturers will be enough to finish the job.”
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“In September, we heard from Digital Gold Currency (DGC) Magazine’s Julia who believes Bitcoin “opens the door” for alternatives to fiat — a sentiment echoed by GoldMoney founder James Turk.”
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“What may be a telling sign of Bitcoin’s potential is when a small Bitcoin upstart is not just seen as an attractive acquisition target but instead becomes the acquirer. This happened with Ogrr […].”
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“Bitcoin is not just some form of electronic cash. Bitcoin is the focal point of innovation that defines money on entirely new terms.”
- http://www.bitcoinmoney.com/post/32694107461
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Bitcoin Money blog (@BitcoinMoney) gives a monthly wrapup on Bitcoin for the month of August, 2012. Excerpts:
“August 2012 became the sixth month in a row that the BTC/USD exchange rate ended higher than the level it was at when the month had begun.”
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“August’s closing price of $10.16 is an 8% gain over July’s close and means that so far this quarter (Q3 2012) there has been a 51% gain.”
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“For 2012, where the price opened at a $4.72 level, the price rise from January 1st now exceeds an eye-popping 115%.”
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“The 243,950 bitcoins issued which Bitcoin miners took in during the month is valued at $2.67 million using the average daily valuation for the month of $10.94.”
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“MPEx, the largest exchange where Bitcoin options are traded, reported that in August a record 75,000 CALL and PUT option contracts were traded on its exchange platform.”
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Unlike commercial endeavors which may do phased rollouts of their offerings, one region at a time, awareness of Bitcoin is occurring organically and in numerous places across the entire globe simultaneously.”
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“This is evidenced with requests as to how bitcoins can be purchased seen for the time from Turkey, Bolivia, Iceland and elsewhere. The traffic hitting the BitcoinTalk forum has been rocketing higher recently, and several Bitcoin website owners have reported seeing the traffic growth occurring primarily from outside the U.S.”
- http://www.bitcoinmoney.com/post/30706441112
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