Timothy C. Draper won all of the FBI SilkRoad Bitcoins

Price of Bitcoin Drops Below $400 in BTC-e Flash Crash

The price of bitcoin on the CoinDesk Bitcoin Price Index (BPI) has declined more than $60 today (by the time of publication), falling to a low of $435.60. However, a more serious decline was observed at one major bitcoin exchange.

The development is the latest blow to the price of bitcoin, which had slumped to its lowest level since May late last week. The decline has since been largely attributed to a worsening short-term news outlook, as well as the industry’s margin traders, though alternative theories have been proposed.

At press time, at least one notable industry analyst, along with a host of exchange users are suggesting that margin trading may have once again played a factor in today’s decline, as a flash crash observed on popular bitcoin trading platform BTC-e caused the price of bitcoin on its exchange to decline sharply to a low of $309.

That price was observed on BTC-e at roughly 07:36 (UTC), and was followed by similar declines across other major bitcoin trading platforms including Bitstamp, Huobi and OKCoin, market analysis shows.

Notably, this is not the first time such a large flash crash has been observed on BTC-e. For example, this February, the price on the exchange declined nearly $500 in just over one minute.

Ripple effect

Data analysis shows other major exchanges soon responded to declining prices observed on BTC-e, with a sharp drop observed across their order books at roughly 07:37 (UTC).

By 07:46, the price of bitcoin on Bitstamp began its decline, landing roughly $20 below its starting point to touch $462.01 and hitting a daily low price of $442 at roughly 08:51.

Major China-based Huobi and OKCoin also recorded less notable drops during this time. For example, Huobi’s price decline began at 07:37, dropping from ¥2880.1 to ¥2788.1 by 07:45. Likewise, OKCoin saw prices on its exchange fall from ¥2880.4 at 07:36 to ¥2785.3 by 07:45.

At press time, China’s markets were down roughly 6% for the day to reach ¥2,832.27, according to the CoinDesk Chinese yuan BPI.

Link to margin trading

In a new post on his quantitative analysis blog Matlab Trading, margin trading critic Raffael Danielli was quick to assert that the practice was chiefly behind today’s market movements. BTC-e began offering margin trading to its customers last November.

Danielli told CoinDesk:

“We have seen crashes like this before and they follow a certain pattern, namely a sharp drop followed by a swift rebound to about a bit less than the previous level.”

Danielli has been vocal in his belief that margin trading contributed to last week’s decline, and has been critical of major exchanges, which he claims have remained opaque about the internal safeguards they use to flag suspicious orders that could be influencing price.

Still, Danielli was quick to temper his comments by indicating that there is a lack of information available for the market to reach any conclusion, saying:

“Just to be clear: the only people who really know what happened are the ones operating the exchange. What we observe here is only the tip of the iceberg and we lack many pieces of information that the exchange has.”

Other market observers suggested the overall weak market contributed to the situation on the exchange. Independent investor Tuur Demeester told CoinDesk:

“I think BTC-e was the final drop, but the sell off would not have happened if the bidding on markets wasn’t weak either.”

Exchanges respond to critics

Major bitcoin exchanges have remained in favor of margin trading, suggesting they do their best to inform traders of the risks associated with the offerings and that they have internal safeguards to mitigate wider market damage that could result from the practice.

Notably, Bitfinex vice president of business development Josh Rossi took to Reddit on Friday to respond to user questions and give the exchange’s official take on the day’s events.

Speaking to CoinDesk, both Bitfinex and OKCoin responded to Danielli’s criticisms, citing competitive interests as the motivating factor behind not being fully transparent about these policies.

“If it becomes public knowledge traders can use it to their advantage and find out ways to get around our preventative measures,” said OKCoin’s manager of international operations Zane Tackett.

Source : http://www.coindesk.com

BitX to Expand Further in Emerging Markets with New Funding Deal

Emerging market-focused bitcoin services firm BitX has completed a SGD$1m ($824,000) seed funding round.

Investors include London-based Ariadne Capital, Barry Silbert’s New York-based Bitcoin Opportunity Corp (BOC) and Palo Alto-based financial innovation investor, Carol Realini.

BitX CEO Marcus Swanepoel told CoinDesk the funding would help the Singapore-based firm accelerate its business, furthering international expansion of its wallet and exchange services, assist with merchant acquisition and help the company develop some new products it has in the pipeline.

Silbert praised the BitX team’s progress, saying:

“In a very short period of time, the BitX team has successfully built a highly scalable, unique model that has enabled them to quickly grow a global footprint and demonstrate success in a number of markets […] BitX have a very strong team with a differentiated business model and a great track record.”

Expanding via emerging markets

BitX says it is building a global cryptocurrency platform that provides bitcoin products and services including wallets, exchanges, merchant integration and APIs to consumers, businesses and developers particularly in emerging markets.

Dealing with the variety of regulations and levels of infrastructure in these markets could often slow progress for bitcoin companies, Swanepoel said, adding that he had years of experience working with both authorities and financial institutions in such places, and remained confident.

Of Silbert’s Bitcoin Opportunity Corp, he said:

“They’re bullish on emerging markets, so it plays well to our investment hypothesis.”

The need for and impact of cryptocurrencies will be the biggest in those markets, he said. BOC has also recently funded Mexico’s Volabit and India’s Unocoin, both bitcoin exchanges.

BitX’s focus on emerging markets has lead to impressive momentum for the business. It now operates bitcoin wallet services across Africa, Southeast Asia, Eastern Europe and Latin America, with active exchanges in South Africa, Namibia and Kenya.

Investors praise unique strategy

Other investors involved in the deal said they were attracted to the potential of BitX’s focus on alternate markets in new areas.

Julie Meyer, CEO of Ariadne Capital, commented that the investment reinforces Ariadne’s strategy of backing talented entrepreneurs and management teams building global companies that can disrupt on a large scale.

Carol Realini added:

“BitX has the right team and the right strategy to capitalize on the enormous opportunity for bitcoin in emerging markets. It is impressive how much they have already accomplished with multiple-country implementations and a major partnership.”

BitX also recently partnered with South African payment provider PayFast to provide the largest emerging market bitcoin merchant roll-out to date, enabling over 30,000 merchants the ability to accept bitcoin, including one of the largest e-commerce companies in Africa, Takealot.

BitX says it plans to launch services in more markets soon.

Source : http://www.coindesk.com

BTCTrip Now Accepts Litecoin and Dogecoin for Travel Bookings

Travel agency BTCTrip has officially expanded its payment offerings to include litecoin and dogecoin.

The online flight and hotel booking service was one of the first in its industry to serve the bitcoin community, launching in June 2013 as a cryptocurrency-focused alternative to sites such as Expedia and Travelocity.

Speaking to CoinDesk, BTCTrip founder and CEO Martin Fernandez said that he is excited to add the popular altcoins to the company’s payment options because they allow BTCTrip to tap into growing communities in the developing digital currency industry.

In particular, Fernandez cited the high levels of enthusiasm surrounding the dogecoin community as a key motivating factor behind the decision, saying:

“I follow this community and I think they are very fresh. They are trying to do new things, so for us, it was very important to accept dogecoin. [...] For me, BTCTrip is a company, but it is also an experiment in cryptocurrency communities.”

BTCTrip will continue to accept bitcoin through its long-time merchant processing partner BitPay, however, it will integrate processing services provided by GoCoin to facilitate its litecoin and dogecoin transactions.

Diversifying demographics

Throughout the interview, Fernandez stressed his desire to appeal to new digital currency users as the impetus for adding litecoin and dogecoin payments, suggesting he sees the altcoins as a smart, long-term business strategy.

Still, he did indicate sales might have been a motivating factor, noting that his company’s bitcoin conversion levels taper off when bitcoin’s price is on the rise.

Litecoin and dogecoin payments could provide some additional support during these times, as evidenced by the strong buying power reported by at least one major merchant serving both communities.

While Fernandez talked most excitedly about the dogecoin community and its recent progress, he lauded litecoin as well, saying:

“Litecoin was, for me, always the second coin in the market.”

David vs Goliath

Fernandez also addressed how the new payment methods will help BTCTrip better compete against other major travel sites serving the bitcoin space such as CheapAir and Expedia. CheapAir now accepts bitcoin for hotels, flights and Amtrak bookings, while Expedia added bitcoin as a payment option for hotel bookings in June.

Although he evoked classic David vs Goliath imagery when referencing these companies, Fernandez said he feels his company’s emphasis on community will help it find success, saying:

“I always repeat the same sentence, we are not accepting bitcoin [and dogecoin], we are accepting bitcoiners and dogecoiners. We are accepting the cryptocurrency community.”

As a sign of its ability to compete against bigger rivals, Fernandez cited BTCTrip’s recent inclusion as part of PhoCusWright’s Travel Innovation Summit to be held this November.

Notably, BTCTrip won a scholarship to attend and speak at the leading global travel industry conference, one that required it to “demonstrate the greatest potential for success”, among other qualifications.

Source : http://www.coindesk.com

Industry Chief: Payments Firms Warming to Bitcoin Partnerships

Due to bitcoin’s perceived benefits as a more efficient and less costly alternative to traditional payment options, many in the digital currency industry view incumbent payment service providers as antiquated competitors – firms that will be disrupted out of business when the technology matures.

Now, at least one notable payments industry trade association indicates that its members may be recognizing that bitcoin possesses this disruptive potential, and that this may soon lead to a rise in partnerships between traditional electronic payments providers and bitcoin startups.

In a new interview with CoinDesk, Electronic Transactions Association (ETA) CEO Jason Oxman talked at length about his organisation, how the digital currency can better execute its agenda in Washington and bitcoin’s potential appeal to the traditional payments industry.

Notably, Oxman evoked Napster in his comments, comparing bitcoin to the controversial file sharing service that rocked the record industry. Citing it as a cautionary tale that is resonating with the payment industry, he said:

“They went all the way to the Supreme Court to shut [Napster] down. That is traditionally how incumbents react to innovation.”

Oxman, however, believes the payment industry will take a different approach to emerging technologies. In particular, he noted the recent partnership between Global Payments and BitPay as one that suggests the payment industry will not turn a blind eye to innovation. Under the terms, Global Payments has agreed to refer customers interested in bitcoin to BitPay’s service. He added:

“I think our industry has the opposite story to tell, and I think that’s embodied [by] the BitPay, Global Payments deal.”

Founded in 1990, the ETA represents more than 500 companies in the merchant-acquiring industry, fighting for its interests in Washington, DC. Notable members including Amazon, MasterCard and PayPal, along with BitPay – the ETA’s only bitcoin industry member.

Embracing innovation equally

Throughout the conversation, Oxman sought to frame his sector of the payments industry as one that is willing to work with emerging tech startups, including those in bitcoin space. He noted, however, that his support is likely to extend equally to providers of all forms of electronic transactions.

Oxman suggested the ETA itself does not advocate for bitcoin over other new and novel means of transacting, nor does it have an official position on its advantages or disadvantages when compared to other offerings.

“At bottom, our industry is in the business of facilitating electronic transactions, and those electronic transactions are going to take the form of whatever the customer or merchant of choice agrees is going to be the form of their electronic transaction,” he said.

Oxman further argued that this inclusive viewpoint could be beneficial to the bitcoin industry. As the payments industry has been broadly considering innovations in mobile payments for some time, he suggested his members may now be more inclined to embrace bitcoin and its potential through strategic partnerships:

“I think it will continue to happen going forward.”

Facilitating connections

To date, just one bitcoin company has joined the ETA, but according to Oxman, that doesn’t mean ETA members haven’t been given more exposure to bitcoin.

The Bitcoin Foundation has played a central role in educating the ETA and its members about the benefits of bitcoin, he said. As an example, Oxman recalled a 2013 ETA event at which Bitcoin Foundation general counsel Patrick Murck spoke, lauding it as a strong sign that both bitcoin and the broader electronics transaction industry can find common ground.

He explained:

“[Murck] did a good job of putting a business-focused backing to bitcoin. With that kind of introduction, our members look to bitcoin as an interesting development in the industry, and at least one of our members has seen fit to strike a deal with a bitcoin processor.”

Oxman went so far as to frame the ETA as a potential ally in the expansion of bitcoin’s use amongst consumers. Given the large number of merchants accepting electronic payments, he believes bitcoin could be expanded greatly through the reach of ETA members.

“No company, no new startup in the bitcoin world has the infrastructure to reach all those merchants to make the pitches to why they should accept bitcoin,” he said.

Promoting smart regulation

Given his expertise as a liaison to Washington, Oxman also commented on New York’s proposed bitcoin regulations, drawing on his experience educating the 20-plus federal agencies that are involved with regulating payments about industry innovations.

The ETA, Oxman noted, spends most of its time ensuring that governments don’t stifle innovations in the field of electronic transactions. In the past, this has meant his organisation has needed to pave the way for new and controversial payment options such as those offered by PayPal and prepaid card providers.

Above all, Oxman stressed that he feels it is important for the bitcoin industry to tell its story to regulators, but that he understands the initial reaction of the government. Regulators simply aren’t used to payment methods that don’t offer certain forms of protections, he said.

Oxman explained:

“In the world of new payments technologies, any regulators are going to ask questions about the level of consumer protection available through alternative payment systems. The less those systems are established and deployed, the more regulators are going to feel compelled to step in and protect consumers where those protections are not otherwise available.”

When asked for his opinion on the BitLicense proposals, Oxman also struck a balanced tone. He suggested that he sees both sides of the issue, but that he believes New York needs to conduct more research into bitcoin and its underlying technology.

“I do think that it’s important to sound a cautionary note that regulators should not apply reflexive rules just because something is new. What they should do instead – hopefully New York will undertake this, but the early signs are cause for concern – they should take a real in-depth look at how bitcoin’s systems operates, how the block chain operates, how bitcoin providers like bitcoin processors take additional steps to protect consumers, to protect merchants.”

“I’m not surprised to see that interested parties have asked for more time for comments to be filed in New York,” Oxman concluded.

Source : http://www.coindesk.com

Russian Tech Magnate’s First Bitcoin Project Launches in Beta

BlockTrail homepage

One of Russia’s newly minted technology tycoons has unveiled his first foray into the bitcoin world, a block chain visualiser called BlockTrail, that opened for public access today.

Tech magnate Lev Leviev is co-founder of VKontakte, Russia’s largest social network, which has 266 million user accounts and more active daily users than Facebook in the country.

He sold his stake in VKontakte last year in a deal that, together with larger chunk of equity from another investor, was valued at more than $1bn. With the proceeds of the sale in hand, Leviev turned his attention to bitcoin, which he discovered last year.

He said:

“We both got started with bitcoin in 2013 and almost immediately were struck by the potential of this disruptive technology. It was clear that bitcoin needed better tools for its economy to flourish.”

Leviev started what he calls a “holding company” for bitcoin projects called BlockCorp along with Boaz Bechar, a longtime friend and technology entrepreneur based in Amsterdam, who is also BlockTrail’s chief executive.

BlockCorp invested €500,000 euros in BlockTrail, its first project. The company has other projects in development too, including a mobile messaging application that relies on BitMessage – a decentralised and encrypted messaging protocol that uses a general public ledger similar to the bitcoin block chain.

A holding firm for bitcoin projects

BlockTrail promises to be the average bitcoin user’s ‘dashboard’ for keeping track of transactions. It also has a social component that links wallet addresses to websites that mention them, such as forums like Bitcoin Talk.

An example of BlockTrail’s social dimension at work is the page for a wallet used by the US Marshalls Service to hold some of the bitcoin it confiscated from online black market Silk Road. Alongside the wallet’s conducted transactions is a tab for ‘mentions’.

The mentions tab reveals a page of links to web pages that have referred to the wallet address. This includes links to pages on Bitcoin Talk, for example. This particular US Marshalls wallet has 61 mentions, according to Blocktrail. The page is also structured with a Reddit-like voting mechanism that allows users to vote for the most salient links.

Crowded analytics space

BlockTrail is entering the increasingly heated space of bitcoin data and analytics startups, where firms are raising millions in funding to turn block-chain data into profits.

Last month New York-based startup TradeBlock, for example, raised $2.8m from venture capital firm Andreessen Horowitz, SecondMarket and Bitcoin Investment Trust founder Barry Silbert, among others, announcing its mission to “focus on data” from the block chain.

Another firm, Coinalytics, is using its backing from Silicon Valley incubator 500 Startups to try to become a “Bloomberg for bitcoin“, a reference to the financial information giant’s hugely profitable data terminal business.

Bechar admits that block-chain data firms aren’t exactly an untapped market, but he believes BlockTrail addresses a niche in the market:

“It is true that quite a few data providers have emerged, but if you look closer, each one is targeting a different niche: Chain.com is building an API for developers, TradeBlock is focused on economic data for professionals, others are working on ‘institutional-level’ reports for enterprises, banks and government.”

Bechar said his firm’s focus is not on the specialised needs of other analytics startups, but on the mass market of bitcoin users. The idea is to offer free visualisation tools to make it easier for the average bitcoiner to make sense of cryptocurrency flows into his or her own wallet, or from major segments of the bitcoin economy like mining pools. This is an area that is currently dominated by Blockchain, the wallet provider that also offers a popular free block-chain explorer.

“Our approach has been far more consumer-oriented, providing a free online site that enables anyone to view and analyse a bitcoin address, transaction, or other data from the network,” he said.

Free to use

Bechar wouldn’t say how he plans to generate revenue from BlockTrail, although he said he is committed to keeping the service free. Competitors like TradeBlock, for example, have said they plan to charge its users for access. Bechar said he aims for BlockTrail to become the “authoritative” source for information on cryptocurrency networks by the year’s end.

Lev Leviev sporting a BlockTrail T-shirt

For Bechar and Leviev, the long-term promise of bitcoin lies in its technology, not its potential as a currency, Bechar said. That’s what their incubator, BlockCorp, will focus on in the coming months.

He added:

“We are both excited to build services in this industry. As the African proverb says: If you want to go fast, go alone. If you want to go far, go together.”

Source : http://www.coindesk.com

BTC Price Analysis: Mid-Week UpdateinShare1

In this week’s post we concluded with the following statement

“We are at a very critical juncture right now with the price at US$500. This major support is being heavily tested. We all want the price to stay flat or rise so a reversal here would be ideal.  If the price stays below this level for a few days or we start seeing selling into the US$470’s creating new lows, our next level of support is the US$440-450 zone.

“The odds, however, do favor a bounce right here at these levels.  The size of this bounce is hard to judge, but we are looking pretty oversold at the moment.  Let’s see if the weekend will come things down and we at least come back to the breakdown level of US$560 and re-evaluate the situation then.”

So let’s briefly review what happened and what are the possible expectations going forward. Just to mention one more time, this series is not a trading guide, which is why we do not go beyond daily charts and consider the long-term view of the weekly charts as more relevant.  We also attempt to deconstruct news to attempt to gage the long and immediate effects on Bitcoin’s price.

The higher probability was the expectation of some recovery, which started out looking very good. We closed right at the highs of the previous candle and even made a new daily high vs. the previous day for the first time in a week. Unfortunately this bounce was short lived and only made it back to the top of the US$500-530 range that we have been focused on for about a month. 

The selling resumed right after and followed the bearish possibility to the letter.  Once new lows under US$480 were made, it accelerated quickly to US$442, which we referenced as the $440-450 zone of support. You will also notice that we have perfectly completed the downside target of the descending triangle. The height of the triangle was US$120 and that is exactly how much bitcoin lost in price the last 7 days at its lowest point.

Fundamentals (aka News)

The news that was mentioned last week about leveraged Trading may still be causing an issue.  Today we saw another exchange break down and have a significantly lower price than the rest. The culprit this time was BTC-e, which is a European Bitcoin exchange famous for its creators remaining anonymous and just recently added leverage options to their platform.

While the other exchanges only saw a brief moment when price dipped into the low US$440’s, BTC-e hit a low of US$309 and not for a brief second. Those that had cash in the account had enough time to get a computer and buy reasonable quantities under US$350.  The price seems to be back in line now with the other exchanges but this is another example of how fragile these markets are.

These news events do not add confidence to those who are trying to understand Bitcoin or to businesses that are looking for stability in the medium of exchange. Having incidents at two exchanges might put some pressure on price in the near future.

Higher Overview

Here is the longer-term daily view where we are still referencing Fibonacci Retracements and a few Trend Lines.

Even though we have bounced form the US$442 mark, it is not enough to consider this a turn in the market.  US$442 is now our most crucial point for 3 reasons. It has established a short term low, it was considered a point of support as seen on the chart as that was the price prior to the big may breakout, and most importantly it represent a point below which we would consider Bitcoin to be once again in a long term downward move like the first half of the year.

Let us not forget about the most important angle, which is the Weekly chart. The trend line we drew last week connecting the bottoms of the candles has been broken and at the moment there is not much to look forward to in this chart.  If US$442 is lost, the next point of support is in the US$340-360 range to create a double bottom with the current 2014 low.

Conclusion

The price is starting to bounce back right now and might be significantly different in a blink of an eye.  For the moment we are lowering the bounce target to US$500, which has now become resistance vs. the support it was just a few days ago.

A new range has been established between US$440 and US$500. Allow some time for the markets to settle down and dictate the next move.  The long term chart is still considered healthy as long as we remain above this US$440 mark, but in case it give way, look for US$340-360 range as the next line of technical defense. Just like it was said a few days ago, unless faith in Bitcoin is being lost, nothing should go straight down so this oversold condition is due for a bounce even if just temporary, but we have lowered this expectation to US$500 before re-evaluating the situation.

Reference Point: Tuesday, Aug 19 1:30 am ET, Bitstamp Price - US$475

About the author

Tone Vays is a 10 year veteran of Wall Street working for the likes of JP Morgan Chase and Bear Sterns within their Asset Management divisions. Trading experience includes Equities, Options, Futures and more recently Crypto-Currencies. He is a Bitcoin believer who frequently helps run the live exchange (Satoshi Square) at the NYC Bitcoin Center and more recently started speaking at Bitcoin Conferences world wide. He also runs his own personal blog called LibertyLifeTrail.

Source : http://cointelegraph.com

SurBitcoin Launches First Bitcoin Exchange in Venezuela

inShare3

SurBitcoin, the first Bitcoin exchange platform in Venezuela, announced its launch on August 15 during the Impact Hub Caracas Bitcoin conference.

- Exchange's Homepage

According to the PanamPost, New-York-based brothers Kevin and Victor Charles, decided to start this project after a meeting with Rodrigo Souza, a native Brazilian software developer and entrepreneur based in NY.

Souza co-founded BlinkTrade, an open-source Bitcoin trading platform that enables anyone to create his/her own exchange with a counterparty 0.6% transaction fee.

SurBitcoin uses BlinkTrade's open-source exchange platform. The project is still at a beta version, but Venezuelans can already register on the platform. The two brothers are waiting for the member database to reach 200 users before starting trades. Kevin Charles said:

"We are very excited to move forward with this project. Bitcoin has potential to grow in Venezuela."

- The Team

In Venezuela, Bitcoin's popularity is growing, and the digital currency's volatility is not a cause for concern for its population as inflation reached 142% between 2013 and 2014, according to a study conducted by the Cato Institute called The Troubled Currencies Project. Also, the brothers estimate that 70% of Venezuelans are unbanked and believe that Bitcoin could considerably help improve living conditions.

Unlike Bolivia and Ecuador, Venezuela's government hasn't taken a position on Bitcoin, and the two brothers truly believe the future of cryptocurrencies in the country depends on the conduct of SurBitcoin:

“We have to be extremely transparent and thorough in checking users who open an account with us. We will take money-laundering regulations into account, so that drug traffickers cannot use our platform.”

The exchange requires users to provide their ID and physical address. The personal information is verified through Venezuela's electoral registry and only then the accounts are activated and ready for trading with cryptocurrency.

Source : http://cointelegraph.com

Timothy C. Draper won all of the FBI SilkRoad Bitcoins

 

It was quite possible we may have never found out who won the US Marshal Service  auction for the 30,000 Bitcoin (just under 20 Million USD at today’s rate).  It was quite possible that the next time we saw any movement from the address containing the bitcoin (1a8LDh3qtCdMFAgRXzMrdvB8w1EG4h1Xi) it would be on its way to exchanges to be dumped for a fiat currency.

However, this is not the case, well known venture capitalist and bitcoin entrepreneur Timothy C. Draper has come forward and said that he, in partnership with emerging exchange Vaurum snapped up the bitcoin as a as yet undisclosed amount in order to “provide bitcoin liquidity in emerging markets.”

Not a lot is known about Vaurum at present apart from that they recently received funding from Boost Venture Capital causing some confusion on Slashdot but their Bitme service is designed to allow the purchase  of large amounts of bitcoin in a secure, trusted environment.  While it has not been said in the press release it seems likely that Bitme will be next port of call for the 30,000 bitcoins.

Source : http://mineforeman.com

Why bitcoin buffs hate New York’s proposal to regulate bitcoins

Taking real steps towards regulating virtual currency. Reuters/Mike Segar

Global, anonymous, and free from any central authority, bitcoin and other digital currencies are not easy to regulate—by design. But a proposal released yesterday by the New York State Department of Financial Services attempts to do just that.

The proposal would create “BitLicenses” for companies doing business with bitcoins in New York. Some welcome the move to regulate virtual currencies, which could be a step toward bringing them into the mainstream. But critics say New York’s rules are too stringent and, if adopted, will sink the state’s burgeoning bitcoin business and set an unwelcome precedent as other states consider policies.
These are the main criticisms that bitcoin enthusiasts are making of the proposal:

It’s too intrusive

Under the policy, businesses would be required to maintain transaction information, including the identities and physical addresses of involved parties, on file for 10 years. This undermines one of the central tenets of virtual currencies—that they’re anonymous.

It’s too financially rigid

“Each firm must hold Virtual Currency of the same type and amount as any Virtual Currency owed or obligated to a third party,” the press release says. Moreover, companies are prohibited from doing anything with currency save for holding it stagnantly, and are required to maintain a bond or trust account—of an unspecified amount—“for the benefit of its customers.” In other words, bitcoin businesses won’t have anything like the flexibility of regular banks, which are allowed to make investments with customer cash.

It’s ignorant of the nuances of bitcoin businesses

The only companies that don’t fall under the regulation are those that accept bitcoin payments as goods and services, such as the e-commerce company Overstock.com. But the policies lump together companies that actually hold bitcoins—like Mt. Gox, the notorious Japanese exchange that saw nearly half a billion dollars disappear from under their noses—with companies like ChangeTip that just facilitate transactions.

Bitcoin is still a wild west for regulators. While the US Financial Crimes Enforcement Network broke ground last year in deciding that companies that exchanged virtual for real currency should be regulated as money transmitters, New York is the first state to broach the subject. And the state’s superintendent of financial services, Benjamin Lawsky, seems eager to engage with the bitcoin community—for the second time in the past four months, he asked for feedback in a Reddit bitcoin thread that has garnered over 1,500 comments so far.

Bitcoin buffs will have some time to register their displeasure. After the proposal is formally published in the July 23 edition of the New York State Register, there will be a 45-day comment period before the DFS revises and finalizes the rules.

Source : http://qz.com

LocalBitcoins ATM:s comes out of the oven and goes on the tour

It has been a long time since there have been any news regarding our ATM project which aims to provide automatization for converting cash to bitcoins and vice versa. Another perks of the Localbitcoins ATM:s are the moderate price and the fact that the device works completely offline. ATM:s are integrated to Localbitcoins website, and the actual bitcoin trade happens on Localbitcoins.com; the ATM only takes care about the fiat handling.

There have been two beta versions of these ATM:s in real life testing at the center of Helsinki, Finland. One of them is in a bitcoin accepting restaurant and another one in 24h kiosk. So far there haven't been any major problems, and minor ones have been carved out during the testing process. If you are visiting Helsinki, you can find those ATM:s from here, and here.

Expect to see more of these ATM:s soon, since we are getting our first production batch out soon, and we are putting one of them on the bitcoin tour, held by Finnish bitcoin company Bittiraha.fi. They will be driving around Finnish archipelago and testing how well Localbitcoins bitcoin ATM performs on the road.

Eventually you will be able to purchase these ATM:s directly from Localbitcoins website. The price is not fixed yet, but we aim to 2000 € price.

Specifications of the ATM

Buying process: Buyer feeds banknotes to the machine, and gets a secret code in return. The code is used to claim the corresponding amount of bitcoins to your localbitcoins.com account. The exchange rate is defined at the moment the code is used.

Selling process: Seller logs in to his/her localbitcoins account, and goes to the URL of the ATM he/she aims to use for withdrawal. The seller selects the amount he/she wants to withdraw from a dropdown menu. After selecting the withdrawal amount, corresponding amount of bitcoins are reduced from the seller's localbitcoins wallet and the user will receive a code, which is given to the ATM through the keyboard. After the code has been inserted, the ATM will give corresponding amount of notes to the customer.

Capacity: With the first model, note recycling unit can hold 30 bills. Next gen. models will have bigger capacity.

Accepted bills: All banknotes where the size is inside of the range (width) 60-82 millimeters, and (length) 115-150 millimeters. The device can accept 6 different kind of bills from the selected currency. The device can be programmed to handle almost any known currency, but only one can be used at the time.

Size(w/h/d): 318 x 340 x 264 millimeters

Display: 87.3 x 41.8 mm one color lcd display

Weight: 15 kg

Source : http://localbitcoins.blogspot.in