Bitcoin Exchange Coinbase Vault is Now Available to All

Earlier in July, the popular Bitcoin exchange, wallet, and payments processor – Coinbase, announced Coinbase Vault, a free, optional service for safer long-term Bitcoin storage. The Vault wasn’t immediately available to all users, and was instead gradually rolled out. General availability was targeted for July 16th, and although Coinbase seems to have missed their target by a few days, the Vault is now available to all users worldwide.

Features

The general recommendation for Bitcoin wallets is to store a small percentage of one’s bitcoins in a hot wallet for day-to-day use, while keeping the majority of one’s coins in cold storage. This is safer than keeping all of one’s coins in one hot wallet, because in the event that the wallet is stolen (physically or hacked), only a small portion of one’s bitcoins are lost. However, creating and managing a cold wallet isn’t always easy, especially for Bitcoiners who may not be as tech-savvy. That’s why Coinbase has created the Vault as a secure cold storage solution for the average Bitcoin user.

Ease of Use

Using the Vault is as easy as using a regular Coinbase account. Unlike traditional cold storage, Vaults don’t require users to generate paper wallets, store them safely, manage private keys and backups, etc. More advanced users may scoff at the thought of a third party controlling one’s private keys, but the Vault was designed with the average user in mind.

“We’ve seen non-technical people struggle with storing their own keys (and it can be quite dangerous without careful diligence) so we think our vault product (which handles all security and backups for you) is going to be the safer option for most people.”

Multiple Layers of Verification

Since Coinbase Vault is more of a savings account than a typical wallet, it has many security features. Along with SSL encryption, the account password, and two-step verification from regular wallets, Vaults can have multiple co-signers for withdrawals and require verification from two email addresses.

Time Delayed Withdrawals

Once a withdrawal is initiated, the Vault owner can cancel the withdrawal within a 48 hour window. This intentional delay makes up for the fact that normal Bitcoin transactions are instant and irreversible. So even if an unauthorised person somehow gets access to the Vault, the Vault owner has a 2-day safety net to cancel the withdrawal, change passwords, and take any other necessary actions.

Offline Storage

Coinbase claims to store 97% of bitcoins offline (in cold storage) in various safe places across the globe. This makes the bitcoins almost invulnerable to hackers.

Multi-Sig Technology

Although not currently available, Coinbase plans to offer multi-signature technology to the Vault. This means that one Vault Bitcoin address would be associated with multiple private keys, and withdrawing would require signatures from at least m of n keys.

Reception

Many have praised Coinbase’s efforts to make safe Bitcoin practices more accessible to the everyday person.

“More near computer illiterate people like be are going to be buying BTC, and Coinbase seems like the safer and simpler option.”
-TDBit on “Why I will store on Coinbase”
“This is a fantastic option for the majority of the public, who do not have the technical expertise (nor should) to generate a paper wallet.”
-Atheose

However, one of the key issues (no pun intended) that keeps popping up is Coinbase’s policy of managing private keys. Unlike services such as Blockchain, Coinbase doesn’t give the user control over his/her private keys. As a result, many Bitcoiners are speculating what would happen in situations such as Coinbase collapsing like Mt. Gox or the U.S. banning Bitcoin altogether.

“What I Have Learned From Having Coins On Mtgox:
If you, and you alone, don’t own the private keys, you don’t own the coins.”
-Introshine

While trusted members of the Bitcoin community such as Andreas Antonopoulos have independently audited Coinbase’s security and solvency, the lack of direct control over one’s private keys is still something to consider. However, Coinbase appears to be making continuous efforts to balance security and convenience, and overall, Coinbase Vault seems like a great way to bring safe Bitcoin storage to the everyday person.

 Source : http://www.cryptocoinsnews.com

Austria Offers ‘Contradictory’ Guidance on Bitcoin’s Financial Status

 

Two Austrian cabinet ministers have given guidance on bitcoin’s status as a financial instrument and tax treatment by answering parliamentary questions submitted by a member of the legislature.

Perhaps most notably, the federal minister for finance and vice chancellor, Michael Spindelegger, reiterated that bitcoin is not a financial instrument (that is, a tradable asset), echoing the position of the country’s markets regulator, the Financial Market Authority.

The finance minister also gave guidance on how capital gains taxes from bitcoin investments would be applied. Individuals who sell bitcoin holdings within a year of purchasing them would be subject to capital gains tax, but if the digital currency assets are held beyond a year, proceeds from a sale are not subject to CGT.

The finance minister also outlined accounting rules for businesses dealing in bitcoin. Digital currency assets have to be declared as either fixed assets or working capital. Digital currency held for the long term can be depreciated.

Spindelegger classed bitcoin mining as a kind of ‘industrial’ activity, according to a translation by Austrian bitcoin consulting firm Coinfinity. This would make mining profits subject to value-added tax (VAT).

The federal minister for science, research and economy, Reinhold Mitterlehner, also responded to parliamentary questions. Mitterlehner’s ministry holds a broad portfolio and oversees economic policy and technology and innovation, among other areas.

Financial instrument ambiguity

Mitterlehner, however, appeared to contradict the finance minister’s assertion that bitcoin should not be treated as a financial instrument. Mitterlehner made reference to a German policy recognising bitcoin as a ‘unit of account’ and requiring commercial bitcoin transactions to gain permission from the German financial markets regulator.

“The two ministries contradict each other, so there is no [clear] way to interpret [the guidance],” said Peter Šurda, an Austrian economist who studies bitcoin.

Another area of ambiguity centred on bitcoin and VAT. According to Šurda, the statements given by the ministers are vague about how companies dealing bitcoin should have Austria’s VAT of 20% applied to transactions.

He gave the example of a brokerage that charged a commission for exchanging bitcoin. The tax could be applied just to the commissions, or the brokerage could be liable for VAT on the transacted amount, which would be a significantly heavier tax burden. Surda said the ambiguity could pose a risk for operators of bitcoin ATMs, for example.

Coinfinity operates a Lamassu ATM in the city of Graz. However, its founders remain unconcerned about the latest guidance on VAT, noting that an EU-wide standardised treatment of VAT for bitcoin is due in the coming months.

“Operationally, it doesn’t change much. We’re currently charging commission for the ATM, and treating that as subject to VAT,” said Stefan Kliment, a co-founder of Coinfinity.

Parliamentary questions

The written parliamentary questions on bitcoin were submitted by Niko Alm, a member of parliament and liberal NEOS party. Written questions must be answered within two months of being submitted. Alm is also a journalist, and the editor of the Austrian edition of Vice magazine.

An unconventional politician, Alm made international headlines in 2011 when he won the right to use a photo of himself wearing a pasta-strainer as headgear on his driver’s licence. Alm’s rationale was that the strainer qualified as ‘religious headgear’ because he is a committed ‘pastafarian’.

Source : http://www.coindesk.com

Barry Silbert Resigns SecondMarket CEO Position

 

Noted bitcoin investor Barry Silbert has resigned from his position as CEO of SecondMarket, the New York-based illiquid assets marketplace he founded in 2004 and that in 2013 made a $2m investment in the Bitcoin Investment Trust (BIT), a private trust of which Silbert remains CEO.

In a company blog post, Silbert stated that he is confident that SecondMarket has a bright future continuing its current successful business model, but that the decision is meant to allow him the freedom to focus his full energies on bitcoin.

Silbert said:

“I have chosen to move on from day-to-day management of the private company/fund business so that I can focus 100% of my energy on our digital currency business. My passion for bitcoin is no secret and I feel it is the right time to make this transition.”

Silbert added that the move will help formally separate SecondMarket from BIT, a decision he first announced earlier this year when he indicated that BIT would seek to build a regulated, New York-based bitcoin exchange.

The move will find Bill Siegel taking over day-to-day leadership of SecondMarket as the company’s interim CEO.

In addition to serving as the head of both companies, Silbert is also an active VC, investing in more than 30 bitcoin companies through Bitcoin Opportunity Corp, a fund that most recently invested in Mexico-based digital currency company Volabit.

Source : http://www.coindesk.com 

High-Performance PC Maker Alienware Adds Bitcoin Payments

 

Gaming computer specialist Alienware has announced that it is now accepting bitcoin payments.

The company, a subsidiary of Dell, Inc., announced the move on its official Twitter account today. In addition to the bitcoin integration, Alienware is offering a promotional discount worth up to $150 on orders purchased with bitcoin.

The decision by Alienware to take digital currency represents yet another high-profile bitcoin integration by a technology company. Alienware specializes in high-performance gaming hardware, including desktops and laptops. Originally founded in 1996, Dell later purchased Alienware in 2006.

Despite the ownership, Alienware functions with relative autonomy and focuses on a more narrow market segment.

Owing to its owner-company’s adoption of bitcoin, it makes sense that the popular gaming computer maker would tap the digital currency for payments of its own.

As the company said on Twitter:

Bitcoin’s merchant ranks swell

As with Dell, California-based bitcoin payments company Coinbase acts as Alienware’s processing partner.

Earlier this month, Dell became the largest company to date to accept digital currency payments. Like Alienware, Dell is aiming to give its new integration a boost with a 10% discount on bitcoin payments.

At the time, Dell told CoinDesk that bitcoin integration is part of the company’s commitment to responding to consumer demands. Dell sees digital currency adoption as a means of providing additional avenues to do so, saying:

“The first thing to provide a payment method for our business and bitcoin is a great example of how we can show some innovation. We’re always going to be looking for new, innovative ways to ensure we’re driving the right experience.”

For more on Dell’s decision to accept bitcoin, read our most recent interview with the company.

Source : http://www.coindesk.com 

Gallery: Bitcoin Community Spirit Shines at TNABC Chicago

The North American Bitcoin Conference brought the full range of the international bitcoin community to Chicago’s McCormick Place convention center this weekend for two days of discussion on all things digital currency.

Though it was perhaps the major announcements by Blockchain, the Chamber of Digital Commerce and OKCoin, as well as discussion of New York’s new bitcoin regulation, that reverberated most widely online, the conference itself was focused on engendering community spirit.

The array of panels and booths showcased the wide variety of businesses not only serving the space, but sharing ideas in an open and friendly setting. Further, the addition of companies such as Germany’s BitXatm and China’s Huobi and OKCoin ensured that new voices were able to add to the ongoing dialogue in the US.

Whether it was PayPal and Blockchain coming to the stage for a discussion on bitcoin’s future, or bitcoin wallet provider Pheeva and block-chain API maker Chain holding an impromptu photo session, the event succeeded at showcasing the strong sense of unity and community spirit that still pervades the budding industry, perhaps owing to bitcoin’s open-source roots.

As organiser Moe Levin quipped at the show, “It’s hard to get people that are so interested in the future of technology in the same room to speak.”

However, as Levin proved with his event, once together, there’s no limit to the kinds of conversations that can be generated. He added:

“We did an hour-and-a-half on bitcoin 2.0 and it was amazing. That was just throwing things together, matching people who were already here at the conference. This environment is so busy and fast-paced, so we need to be able to move things around.”

Organisers are now working on a follow-up conference to be held this January, with a website for the event reportedly coming online soon.

Read our full recap of both day one and day two of the event for more coverage.

Source : http://www.coindesk.com 

Coinsetter Exits Beta to Target Institutional Traders

 

New York-based bitcoin exchange Coinsetter has officially exited beta, ending the trial stage of its product that began in November of last year.

To promote the launch, Coinsetter is lowering exchange commission fees to 0.10% for most active users, down from 0.25-0.50%. Furthermore, the exchange now offers both email and live phone support.

Speaking to CoinDesk, Coinsetter CEO Jaron Lukasiewicz explained that he feels the exchange is now ready to launch because its liquidity has finally caught up to the quality of its trading tools – a development that allows it to now expand its customer base into new verticals.

He said:

“One of the biggest shifts [has been] moving from a trading platform, which is what a lot of people know us as, to really focus on being a bitcoin exchange. We still do have a focus on people who are trading bitcoin, but we’ve widening our customer focus to bitcoin ATM operators, payment processors – really anyone who’s building a business that needs bitcoin liquidity.”

Lukasiewicz went on to suggest that active bitcoin traders should consider the platform due to its easy deposit and withdraw options, and industry-leading trading fees.

To date, Coinsetter has raised $1.5m from investors including Barry Silbert and Tribeca Venture Partners.

Evolving company

Lukasiewicz indicated that the launch follows what he described as a successful beta that helped the company expand on its concept ideas to deliver a more nuanced and full-featured product to the market.

In particular, he cited the quality of Coinsetter’s API as one example of this growth, saying:

“Back then, it was a very basic product. [...] Now, we’ve been able to cut a lot of latency on it. Now, we’re going as low as 40 milliseconds. I would expect in the next six months to be down at 10 to 20 milliseconds latency, that really puts us on part with major forex platforms.”

Lukasiewicz further noted the company’s price alert offerings and LaunchKey product – the latter allowing customers to log in by swiping their mobile phone – as examples of features customers are unlikely to find on other exchanges and added that more advancements are on the way:

“I think you’ll see us announce a number of institutional features over the next four weeks. There are a lot of exciting things we offer that we’re differentiating from other exchanges.”

Regulatory clarity needed

The launch also notably coincides with the ongoing debate over New York’s proposed bitcoin regulations, published last week.

When asked how the measures could affect Coinsetter, Lukasiewicz suggested that he feels that the action is positive in principle, but that he would like more clarity regarding how companies like Coinsetter would be affected:

“We were really hoping to see it have a focus on bitcoin exchanges. [...] These regulations only focus on bitcoin, and briefly mentioned buying and selling, and it was very vague about it. We fall in a category that gets constantly left out, which is the three party order-book exchange that does hold customer funds.”

The rules are unclear on whether Coinsetter is subject to money transmitting money licenses and whether they have the ability to hold custody of customer funds, he said.

Committed to New York

Coinsetter is now submitting its comments to the New York Department of Financial Services  in the hopes of receiving more clarity, and Lukasiewicz is optimistic about its prospects in the location long-term:

“If we want to be an international exchange, we can do it from New York. The problem is not our company location.”

He went on to laud New York as a great testing ground for the company, one that allowed it to make key connections with the state’s existing financial industry.

Lukasiewicz concluded:

“We’re going to stay here, but we hope that New York is friendly to bitcoin companies.”

 Source : http://www.coindesk.com 

 Newegg begins accepting Bitcoin

This morning, Newegg announced that they’ve started accepting Bitcoin on their website (via BitPay), making them one of the largest and most popular internet retailers to jump on the cryptocurrency bandwagon to date. Newegg’s homepage is currently prominently featuring Bitcoin, and they’ve created a helpful “about Bitcoin” page on their site to help educate those that want to learn more about it. Bitcoin is even currently appearing at the top of the “payment options” list during Newegg’s checkout process—ahead of credit cards, Paypal, and other methods.

I’m surprised it took Newegg this long, but it’s nice to finally see them embrace cryptocurrency. I’m curious to see what kind of impact this will have on their business—Newegg really seems like an ideal candidate for Bitcoin adoption, given the nature of their products and techno-enthusiast customer base. Hopefully this turns into a major success story for them.

Source: CryptoBadger 

Coin Congress Day 2: Bitcoin Industry Bullish in Face of Obstacles

The second day of Coin Congress in San Francisco focused less on recent US regulatory developments, instead placing a heightened emphasis on the promise of bitcoin’s underlying technology.

Held at the Union Square Hilton this week, the event featured a variety of speakers and panels. Experts offered unique perspectives on the bitcoin and cryptocurrency economy, and with their remarks succeeded at framing the industry as a fast-developing space worthy of its early accolades.

Despite the promise and excitement surrounding the industry, however, event commentators were keen to point out the obstacles that bitcoin needs to overcome in order to bring its full capabilities to market.

The mainstream portrayal of bitcoin in the media appears to be one issue, according to Michael Terpin, who founded the PR service Marketwired in the early 1990s. He says negative headlines sell, and that bitcoin is paying a heavy price because of this.

Terpin said:

“The media is like a sponge, waiting for the loudest click-bait to happen.”

Perception and adoption

Discussion on the perception of bitcoin continued through the day, with one specific panel addressing the issue directly. There, George Gilder, an author, investor and moderator of the perception panel, called cryptocurrency, “a new category of information on the Internet that fulfills the real promise of the Internet”.

Due to this type of praise, speakers were emboldened about the currency and its prospects.

Tim Parsa, CEO of BitReserve, said:

“Anything you fight, you make stronger.”

Bradley Rotter, co-chair of hardware startup Rivetz, echoed this positive sentiment, saying that digital currencies were inevitable with the advent of the web.

“Does the internet deserve its own currency? Of course it does,” Rotter noted.

Lee Fox, founder of Peerspring, said that demographic shifts will foster distributed systems adoption no matter what. She said she sees this in a younger generations that is, “already circumventing what was once centralized”.

Venture capitalists still positive

The Coin Congress venture capital panel offered similarly positive opinions on the long-term opportunities that bitcoin presents, as commentators were optimistic bitcoin could overcome its perception issues.

The VCs were perhaps unsurprisingly bullish on investing in bitcoin businesses.

Bart Stephens, managing partner of Stephens Investment Management, said there is “massive opportunity to connect the financial world to bitcoin”.

VC Panel. [L-R] Matthew Roszak, Jonathan Teo, James Robinson, Steve Waterhouse, Bart Stephens

Elsewhere, Pantera Capital’s Steve Waterhouse compared bitcoin technology to a popular underlying digital technology, the IP address.

Waterhouse said:

“[The] IP address is not a consumer technology. The question is whether [bitcoin] is a consumer technology or an infrastructure technology. It’s likely an infrastructure technology.”

RRE Ventures’ James Robinson, offered a different assessment, saying that he believes consumers will continue to choose banks over BTC.

Robinson added:

 “You may not like [banks], but you know that your money will be there tomorrow.”

Jonathan Teo, managing director of Binary Capital, said that the amount of VC flowing into bitcoin companies is only going to increase, a promising statement for entrepreneurs, as many were in attendance at the conference for industry networking and knowledge sharing.

“There will be a lot more venture dollars flowing into the digital currency space,” Teo said.

Mergers and acquisitions

Despite optimism from VCs, even this segment of the industry faces pressing issues.

For example, there have not been any significant financial exits in the bitcoin space to date. William Quigley, managing director of Clearstone Venture Partners, presented on the possibilities of merger and acquisition (M&A) activity in bitcoin, basing his assessments on historical observations from the early Internet days.

“[That] bubble really was about 18 months,” he said.

Quigley told the Coin Congress audience that he expects a similar situation to unfold in the digital currency space, adding:

“With respect to bitcoin, I see lots of acquisitions happening quickly.”

Quigley estimated that there are about 700- 800 bitcoin startups in total right now, and with only 100 venture-backed companies that go public every year, mergers and acquisitions (M&A) might be the way many bitcoin-related ventures will likely see a financial exit.

“A lot companies are going to be acquired,” he said.

However, bitcoin-related companies with the potential to be purchased for $1bn or more will need to be what Quigley called an “operating business” – not just an idea or play on bitcoin, but something with substantial customer numbers.

And in order to get to that level, VC money will be needed to deal with regulatory matters.

Quigley said:

“Compliance cannot be ignored, especially in the United States. This is why bitcoin startups will have to raise capital.”

Technology advancing

Technology was yet another major theme, with speakers touching on the latest developments in the space.

Bitcoin entrepreneur and former Tradehill co-founder Ryan Singer encouraged developers to use technologies such as multisig in order to avoid actually hosting cryptocurrency for users.

Ryan Singer during his “Stop Holding Other People’s Coins” presentation.

“I think it’s getting more uncomfortable,” to hold other people’s coins, he said. Because of new regulation possibly on the horizon, hosting features like wallets might end up being prohibitively expensive for a startup.

“If you hold other people’s money, you are going to have to bond and insure it,” Singer said.

Multisig technology like the sort BitGo offers requires several keys in to manage bitcoin funds, reducing possible risks associated with controlling funds the way that many hosted wallets currently do.

Singer noted:

“It is possible to do full transactions without being in the business of holding bitcoin.”

Another idea along these lines was presented called Rivetz, a hardware technology for financial independence outside of the existing banking system.

“I want to build [bitcoin functionality] into the device I have at the time,” said Rivetz CEO Stephen Sprague during his talk titled ‘Building a Hardware Wallet into the Device You Have’.

The startup is building a digital currency storage system that harnesses existing technological capabilities inside consumer electronics devices such as a PCs, phones and tablets.

Source : http://www.coindesk.com 

Review : Antminer S3 450 gh/s Bitcoin ASIC Miner By Bitmain

The Bitmain Antminer S3 Bitcoin ASIC Miner is their next step in the evolution of their ASIC chips as well as going back to the basics with the blade design that started it all. There are some changes that have been made along the way though. First is the cowled dual fan enclosure that the S3 has is a new twist on the first-blade design. They also made overclocking easier as well. The Antminer S3 was initially announced to run at a 478 gh/s and then revised down to 440 gh/s.

Specifications: Chips 32x Bitmain BM1382Gen2 Hash Rate: 440 GH/s±5% Power Consumption: 366 Watt at the wall Power Efficiency: 0.77 J/GH on wall Power Supply: 12V DC Size: 331 mm x 137 mm x 160 mm Fans: Two 14038 fans mounted on both front and back Operating Temperature: 0 °C to 35-°C Complied with: FCC / CE Network Connection: Ethernet

S3 Status Page

The shipping gods were good to me yet again.  The S3 arrived safe and secure thanks to simple yet effective foam and bubble wrap packing.  For those familiar with the S1 and S2s the interface is the same with a few tweaks. You log in as usual to 192.168.1.99 through your web browser and the default password is “root.” Change it immediately. If you are going to have more than one S3, i suggest you change it to something else as well. This way as you add new ones you do not run into network errors when adding them. Once done, you can go to the miner config page and set your pools. You can also set the S3 to failover or to perform load balancing for pool management. The setting is convenient as you can use multiple pools at once. I tried it on NastyPool and BTCGuild. Both sites reported 200 gh/s to 230 gh/s. My S3 has been great running at 260 gh/s with no overclocking and pulling in 340 watts at the wall. If you want to OC, you can plug in the extra set of PCIe cables to provide extra power. These extra power connections make overclocking much easier as you have the power on hand to OC.

The Antminer S3′s Cowl

Bitmain listened to many in the mining community that mention the S1 could be better cooled with a cowl on it. The S3 has a cowl over the blades and dual fans. The cowl allows for very efficient cooling. The fans, despite there being two of them, were actually not as loud as my S1. My S3 ran at 42 to 44-degree Celsius. In contrast, my S1 runs between 47 and 50 Celsius. Bitmain has focused on making the S3 as efficient as possible. Accuracy has been tweaked so hardware error rates are as low as .01%. On my units, the hardware errors hovered between .01 and .02. The low-error rate can be hundreds of times better than many of the competition’s miners currently.

BTCGuild Pool Stats

The S3 is super easy to use as usual. Bitmain did not cut any corners. The new design helps show off the new chips. I have overclocked it only mildly, I was able to hit 502 gh/s and 374 watts at the wall and the temp was 48 degrees. I am sure that the OC masters in the community will be able to push it even further. I have to stress the build quality again is amazing. It is light yet built solid. Each blade has an aluminum heatsink on the front that is large also one on the backside of the board this is all set in the cowl in such a way as to promote the best heat exchange.

Source : http://www.cryptocoinsnews.com

 Ecuador Bans Bitcoin, Plans State Cryptocurrency 

 

The National Assembly of Ecuador has effectively banned bitcoin and decentralized digital currencies while establishing guidelines for the creation of a new, state-run currency.

With 91 votes in favor of the amendments to the country’s existing monetary and financial laws, the National Assembly approved a bill that now goes to President Rafael Correa for signature.

The law gives the government permission to make payments in ‘electronic money’, but decentralized digital currencies like bitcoin will now be prohibited.

The proposed national digital currency is to be backed by the assets of the Banco Central del Ecuador, the nation’s central bank. The National Assembly will oversee the new currency while the central bank will develop and integrate it into the broader financial system. The currency will operate in tandem with the US dollar, Ecuador’s official currency, although it is not certain what exchange rate will be established.

Following the final tally, the National Assembly issued a statement declaring that the digital currency stipulations would offer benefits to both the underbanked and the broader economy, saying:

“Electronic money will stimulate the economy, it will be possible to attract more Ecuadorian citizens, especially those who do not have checking or savings accounts and credit cards alone. The electronic currency will be backed by the assets of the Central Bank of Ecuador.”

Community voices concern prior to vote

Prior to the debate on amendments that instituted the decentralized digital currency prohibition, members of the local bitcoin community sought to shape the final outcome.

In an open letter from La Comunidad Bitcoin Ecuador, the country’s largest bitcoin organization, members urged the legislature to allow for transparency and respect for the rights of consumers when creating a new digital currency, saying:

“Ecuador, as a pioneer in the creation of a digital state-run currency, must use methodologies that respect fundamental rights. The digital-currency system must be verifiable, and its code must be published as free software, to ensure the system’s privacy through algorithms.”

CoinDesk reached out to the organization for comment but did not receive an immediate response.

Impact on industry immediate

With the bill passed and sent to President Correa’s desk for what is expected to be a speedy approval, the impact on the bitcoin industry in Ecuador is now clear.

Companies offering digital currency services will have to withdraw from operations or cease entirely, as the bill prohibits the “emission, production, initiation, falsifications, or any other type of [digital currency] simulation, and its circulation through any channel or way of representation” of non-sanctioned digital currencies, according to the PanAm Post. This includes BitPagos, which recently raised $600,000 and had plans to grow in Ecuador’s bitcoin market.

The amendments laid out the legal framework for those who violate the ban, which establishes the power to confiscate bitcoins or similar holdings. Those who operate businesses using prohibited digital currencies face the risk of prosecution as well.

What remains to be seen is how the Ecuadorian public, including those who had already begun using bitcoin, will respond to the new digital currency. Its final form and level of transparency will no doubt have an impact, given the concerns stated in La Comunidad Bitcoin Ecuador’s letter.

Source : http://www.coindesk.com