Why Warren Buffet and Peter Schiff are Wrong on Bitcoin
Warren Buffet is perhaps the most legendary investor of all time.
Although Warren Buffet and Peter Schiff are called out by name in the
title of this article, this piece is really aimed at anyone who claims
there is no fundamental value to a bitcoin. These two popular investors
disagree on gold and many aspects of the economy, but the one thing they
do agree on is the statement that bitcoins have no real value. The crux
of their respective arguments comes down to the idea that using Bitcoin
as a payment network does not necessarily increase the value of a
bitcoin. Money goes into the Bitcoin network and then leaves it on the
other side, so these bitcoins should be viewed as nothing more than
checks or money orders.
The Importance of the 21 Million Bitcoin Cap
While they may not agree that bitcoins can be money, both Buffet and
Schiff understand the value of Bitcoin as a protocol and payment system.
Peter Schiff even has Bitcoin as a payment option
on his precious metals company’s website. There are plenty of
situations where Bitcoin is going to be the only viable option for
someone who wants to send a digital payment. Here are just a few
examples of where Bitcoin is either the best or only option for a
digital transfer of money:
- Censorship-resistant digital payments (Silk Road, Wikileaks, online gambling, etc.)
- Digital payments where the customer’s personal information is not handed over to a merchant or 3rd party
- Cheapest, fastest form of international remittances
- Merchants offering Bitcoin-only discounts due to the low cost of processing payments
- Getting money out of a country with harsh economic restrictions (Argentina, Venezuela, etc.)
As Warren Buffet mentioned in his remarks on CNBC, he does not
believe these sorts of use cases add any value to bitcoins. The error in
his ways was pointed out by Bill Miller
on CNBC not long after Buffet’s original comments. When combining the
payments innovation with the fact that there are only 21 million
bitcoins that will ever exist, you limit access to the network. To use
Warren Buffet’s analogy against his own argument, checks and money
orders would be rather valuable if there were only 21 million of them
that would ever exist. As users enter the Bitcoin payment system, they
are increasing the value of all bitcoins in existence. In other words,
the Bitcoin market cap has to be large enough to handle all of the
transactions that are going through it at any point in time. Bitcoins
would have value even in a scenario where no one saw them as money due
to the fact that they need to be purchased in order to use the Bitcoin
payment network.
Can’t Take the Bitcoins Out of the Bitcoin
Another key point missed by both Schiff and Buffet is that you cannot
have the benefits of Bitcoin payments without the bitcoin currency.
Schiff has often claimed that a combination of Bitcoin and gold would be
interesting, but the problem there is you open yourself up to counterparty risk. As we’ve seen in the past with e-gold
and similar projects, operating any kind of digital currency where you
store a physical commodity in a vault somewhere is not something
governments want to allow. One of the main points of Bitcoin is that it
allows you to be your own bank, and you can’t really do that if the
gold, dollars, or other assets are stored on the other side of the
globe. It’s important to remember that all traditional forms of virtual
money are really nothing more than IOUs.
When you hold bitcoins, you’re holding the actual asset on your
computer. Any form of money that stores a large amount of gold or fiat
currency in a vault somewhere basically has a huge target on its back
once people start using that money for the censorship-resistant payments
mentioned above. The fact that a vault filled with gold, silver, euros,
or anything else would be seized proves that the real value is in the
protocol. Any of these “real world” forms of money would only work in a
world where financial censorship did not exist. This is why Bitcoin was
created in the first place.
Bitcoins are a Commodity
If you’re not sold on the payments argument, then there’s still
another aspect of bitcoin where you can find value. At the end of the
day, Bitcoin is a distributed ledger with no centralized entity
controlling the accounts. The bitcoins on the ledger are nothing more
than a unit of account, which means that can be “colored” to represent
anything from a house to a US dollar. This ledger is the perfect tool
for proving ownership, or even existence,
and you have to purchase some bitcoins if you plan to enter some
information into the ledger. The limited number of bitcoins on the
ledger means there is only so much space or real estate for sale. This
fact alone gives a bitcoin value as a commodity, even if no one wants to
believe that it can also be money.
What About Inflation Through Altcoins?
One last point that needs to be made when it comes to dismissing the
arguments against bitcoin’s fundamental value made by Buffet, Schiff,
and others is that altcoins
do not equal inflation for the digital currency. For this part of the
debate, it’s important to remember the power of the network effect. It’s
extremely difficult for any other altcoin to gain a large amount of
support due to the extra security and stability that is brought to
Bitcoin through network effects. The large amount of hashing power
behind Bitcoin mining makes it the most secure ledger powered by
proof-of-work on the market, and the amount of liquidity already in the
bitcoin market helps bring stability to the price of the digital
currency. In other words, people are going to use bitcoins as a
commodity on the Bitcoin blockchain because it is the most secure
ledger, and individuals are also going to use Bitcoin for payments due
to the lower amount of volatility found in the bitcoin currency.
Altcoins are half testnets for future #Bitcoin features and half casino. @WorldCryptoNet @MadBitcoins @derrickjme @MrChrisEllis
— Kyle Torpey (@kyletorpey) August 13, 2014
Unless another cryptocurrency is able to attack these two key
advantages of Bitcoin, then there is nothing to worry about when it
comes to altcoins. It’s also important to remember that Bitcoin can
always adopt the features of an altcoin if it is actually a threat to
the existing protocol. In a worst case scenario where the Bitcoin
protocol is not updated with the features of a new altcoin that would
make it more secure and less volatile, everyone can simply move over to
that new chain. Having said all that, altcoins still hold a purpose in
the cryptocurrency community. They are the perfect test environment for
new features that could be added to Bitcoin in the future, and they also
offer a casino to gamblers who want to bet on how high an altcoin can
go before it crashes back down to reality.
Source : http://www.cryptocoinsnews.com
Mark Karpeles Avoids Bitcoin, Launches Web Hosting Service
Mark Karpeles, the disgraced CEO of defunct bitcoin exchange Mt Gox, has launched a new web hosting service.
The service has been dubbed Forever.net and is registered under both
Karpeles’ name and that of Tibanne, the parent company of Mt Gox.
The company profile says:
“TIBANNE Co.Ltd. is a Tokyo, Japan-based corporation founded in 2009 by talented technopreneurs.
TIBANNE specializes in web hosting, IP transit, VoIP, software development and network administration. We are currently engaged in the reserch and development of new and existing services to produce innovative solutions for our clients.”
Notably, bitcoin is not mentioned on the website’s pages.
Free to talk
Although Mark Karpeles has managed to keep a relatively low profile following the collapse of Mt Gox, he is willing to talk about other projects.
“Unlike other subjects, I am able to discuss Forever.net,” he told NewsBTC’s Eric Calouro.
In an email exchange with Calouro, Karpeles said Tibanne has been in the web hosting business for years.
“We’ve been doing this since 2009, and even before founding Tibanne I help found a couple other hosting companies,” he said.
Going into details on his new company’s offerings, Karpeles said
Forever.net will offer cluster-backed VPS servers with RAID1 on top of
RAID 5 physical storage with hot spare drives on standby.
Karpeles considering BTC payments
Karpeles explained that Tibanne experienced a substantial loss of
revenue due to the collapse of Mt Gox, coupled with an increase in legal
costs. Now Tibanne is focusing on controlling expenses and generating
revenue in an effort to “do its part in the Mt Gox bankruptcy process”,
he said
“We are also considering accepting payments in BTC/LTC/etc.” said
Karpeles. “Tibanne’s other hosting service KalyHost.com has been
accepting BTC since Sept. 2010 and generated since then a total revenue
of over 13,000 bitcoins.”
Karpeles added that Tibanne will soon be releasing a new version of KalyHost.com as well.
The collapse of Mt Gox was caused by the alleged theft of about 850,000 BTC, although 200,000 BTC was recovered from an outdated wallet following the collapse.
Source : http://www.coindesk.com
Transport and Velocity: Could Bitcoin be a Replacement for Gold?
Gold
has been used as a store of value for eons, thanks to its beauty and
almost magical ability to never tarnish. Furthermore, despite radical
shifts in human values over the past 100 years, its worth still has not
diminished – even soaring to over $1,000 an ounce in recent times.
Now, though, there is a new, digital challenger on the scene that,
when its price chart is compared with that of gold, bears some striking
similarities
It’s no wonder, then, that companies like Netagio now allow people to trade bitcoin for precious metals like gold – it is a sign that investors want the ability to trade BTC seamlessly with other investment vehicles.
In a sense, bitcoin could be considered an upgrade from gold. Some
even consider it as gold with transformational, information-like
properties.
Digital gold with a twist
George Gilder, author of the forthcoming book Bitcoin and Gold: The Information Theory of Money, is impressed with bitcoin and has developed a well-thought argument for bitcoin as a sort of ‘next-generation gold’.
That’s because bitcoin builds upon the properties of gold and has spawned an information-based variation, he said.
Gilder told CoinDesk:
“Satoshi [Nakamoto] was right with bitcoin. That’s what amazes me. Satoshi arrived at a foundation for the value of bitcoin that’s valid.”
Gilder sees economic uncertainty as advantageous to bitcoin, a fact evidenced by the increasing interest in bitcoin observed in Argentina and other countries hampered by volatile fiat currencies.
As an example, Gilder believes that increased government control of
money, such as capital controls or quantitative easing, means more
uneasiness in terms of economic sentiment.
“The more money [governments] print, the more uncertain the people
become,” said Gilder. “Bitcoin is based on the understanding that the
money supply doesn’t really matter.”
Adrian Ash, the head of research at BullionVault, a gold storage company, pointed out:
“Digital gold currencies have been tried and failed many times in the last 20 years. They came to nothing thanks both to state resistance, but also to lack of adoption.”
However, it’s safe to say that bitcoin has progressed further than
its failed predecessors. That may be, though, because previous
electronic money alternatives like E-gold were backed by gold, and not
by cryptographic keys. As a result, bitcoin might be the first to offer a
substantial alternative that would appeal to gold enthusiasts.
Role as a currency
Another characteristic of bitcoin that makes it seem like an
upgrade over gold is its protocol that allows value to be moved quickly
around the globe. Regardless of how supportive gold enthusiasts are of
their favorite store of value, there’s no denying it has limited appeal
to mainstream consumers.
Bitcoin adoption by the average person remains a hurdle to overcome
to ensure success, but the digital currency’s combination of novel
innovations might allow it to complement existing methods of exchange.
“[The] chicken-and-egg situation [of adoption] might be resolved by
bitcoin’s most exciting aspect – zero-cost exchange of value,” said Ash.
Along with adoption as a means of exchange, bitcoin could become a
very useful currency, commodity and recording mechanism via its block
chain. According to Gilder, the problem of velocity, or how much people
spend a thing of value, is what will ultimately make bitcoin a success.
Or a failure.
Gilder said:
“Velocity is what determines value. Not just printing money. Satoshi [Nakamoto] has an absolute 21 million bitcoin limit. Bitcoin is determined by velocity, by turnover rate governed by the people holding the coins.”
Bitcoin might be an iteration of gold – a 2.0 version. People can
hold stores of it, as well as spend it – a property that gold cannot
compete with.
“It’s important to note that gold isn’t used as currency anywhere today,” said Ash.
Given that even Ash concedes this point, bitcoin’s long-term success
may lie in adoption. In other words, whether bitcoin is able to triumph
and replace gold will lie with its peer-to-peer network, and just how
large this base of bitcoin believers becomes in the years ahead.
Bitcoin believers
It’s hard to tell how many bitcoin users there really are. New
bitcoin products and services are seemingly announced every day, and
Mary Meeker’s presentation of bitcoin’s growth via the use of a chart
showing the number of wallets in use (see below) shows there is
traction.
While wallet use is growing, it’s not a one-to-one correlation – or
even if many of the newly created wallets actually have bitcoin in them.
It does show increased awareness overall, however.
However, it can be argued that gold investors will have to see the
promise of bitcoin over the precious metal not only as a store of value,
but also as a spending and transactional innovation.
The rise of consumer services continues, and energy focused on that particular sector of the bitcoin economy is notable.
For instance, in Canada,
there are a number of options for people to buy or sell bitcoin. Not
only do residents of Canada have access to an established exchange for
the Canadian dollar, there are storefronts and even bitcoin ATMs
available in most major cities.
Access to bitcoin for gold investors is the best way to prove the
value of bitcoin to this subset of the market, and this is especially
true in the US market.
In a poll conducted by Harris Interactive in December 2013, when
bitcoin prices were at their all-time pinnacle, the majority of people
still didn’t even know what bitcoin was. And, likely because of this,
they indicated that they would much rather invest in gold over bitcoin.
The key to bitcoin as a new form of gold is to improve upon the
precious metal. And that means making the most of its transport and
currency capabilities.
For this to happen, an increase in awareness is needed – and some proponents of gold already understand this fact.
Companies like the UK’s GoldMoney have been offering bitcoin as a storage option
along with gold for some time. Furthermore. investment
broker and author Peter Schiff, while making waves about his insistence
that bitcoin could become worthless, is still nevertheless accepting it at his company, Euro Pacific Precious Metals – a fact that should make gold investors take the digital currency a little more seriously.
Source : http://www.coindesk.com
Bitcoin Value Exhibits Volatility , Like Other Currencies
The Bitcoin price, or to be more precise, the value of Bitcoin in relation to a particular fiat currency, has recently been falling. This may not necessarily be a bad thing. For too long, the ability of Bitcoin to function as a currency, has been somewhat restricted by tales of its success as an investment.
The currency has, until recently, been a victim of its own success.
Investors had been coming on board with the sole intention of acquiring
bitcoins and hoarding them with the intention of selling them in the
future at a significant profit. They were encouraged to do this by the
almost exponential growth that Bitcoin value showed throughout the year
2013. Now, having watched the slow decline in Bitcoin value since last
December, many investors are choosing to reduce their exposure and this
is, of course, acting to further dampen Bitcoin value in the market.
Conversely, people are now much more likely to choose to spend their
bitcoins as the benefits of hoarding them, with the current decline in
“Bitcoin Value,” are rendered significantly less attractive.
Looking at the field of Economics, it is reasonable to say that a lot of well-educated people have spent large portions of their time looking at how people perceivably behave in the presence of money. That’s what the whole subject is about… looking at how people, that have unlimited wants and limited means, act to fulfill their wants and needs. Now, in life, there are only two things a person can do with money, they can choose to save it, or they can choose to spend it. We can also reasonably say that, unless they happen to be Wilkins Micawber, the amount they spent added to the amount they saved, will always equal 100% of the money they had.
Saving Isn’t Hoarding
Now, in economics we say that the marginal propensity to save
generally remains constant for an individual. This means that if I earn
$100 and spend $80 per week, then my propensity to save is 0.2, and by
definition my propensity to spend is 0.8. If we aggregate society then
we get an aggregate propensity to save that may be higher, or lower,
that my example, but it will, nonetheless, be generally constant. If
people in a society have a marginal propensity to save of, let’s say,
0.3, then we can say that, should their aggregate income rise by 20%
then they will, over the medium term, act to save 0.3 of that increase
and act to spend 0.7. If we accept that these rates do not generally
change, then we must ask, what causes, or has the potential to cause,
society, as a unit, to decide to save more, or indeed, to decide to
spend more? The short answer is that, people choose to save a greater
proportion of their income in the presence of economic uncertainty; in
particular, they save more when they think things are potentially
getting worse. In times of market uncertainty, people seek to save
money, and this had led to increased numbers of bitcoins ending up in
online exchanges and cold storage. People are now “selling” those
bitcoins, and this is suppressing the perceived Bitcoin value on
exchanges. It is my belief that this can be an entirely positive
development, and I will now seek to explain why.
All Currencies Are Volatile If They Are In Use
One of the most regular criticisms Bitcoin constantly faces is the
one of “volatility.” Every currency is volatile, and this can lead to
merchants charging us higher prices, as they seek to hedge their risk.
This is additionally true of any payment method, merchants need to
charge higher prices to account for credit card fraud, even though the
currency in use is fiat: It is really the value that is being
transfered. If Bitcoin value was not subject to volatility then that
would mean no use is happening. In order to reduce volatility we need to
increase the level of Bitcoin adoption and this will lead, in turn, to a
subsequent increase in the volume of transactions. As more and more
retailers accept bitcoins, it is reasonable to assume that more and more
people will choose to use the currency, demand that will counteract the
downward pressure caused by merchants accepting bitcoins. A fall in the
level of saving means an increase in the level of spending, this is
true in all markets. Bitcoin will continue, in the longer term, to grow
in value simply because of the more efficient transaction process and
the absence of credit card charge-backs. This growth will be at a slower
rate than was seen in the latter months of 2013. What we are now seeing
is the end of a long awaited adjustment in Bitcoin value. It is not
only a steadying of the ship but also an inevitable developmental stage
in the evolution of a technology. Remember the adoption of computers
also occurred in stages. As Bitcoin finds its level, we will also find
that widespread adoption leads inexorably to stability. We are seeing
the beginnings of that widespread adoption with companies such as Dell, Tiger Direct and Overstock,
as well as many others. As more companies accept bitcoins, more and
more cash in bitcoins received o a daily basis, and this also acts to
suppress Bitcoin value. Bitcoin as a transaction facilitator, has simply
been held back by the hoarders for far too long. Welcome back to
reality for what is, after all, primarily a currency.
Source : http://www.cryptocoinsnews.com
Can the Bitcoin Market Sustain so Many Altcoins ?
Altcoins
have been around for longer than you’d think, but it wasn’t until
Bitcoin started making the news, and the price skyrocketed for anyone to
start seriously considering altcoins.
Litecoin took second place and has often been referred to as the silver
to Bitcoin. Altcoins are created for any number of reasons, but are any
of them here to stay?
Even today in the world of fiat currency there is a move towards a
single currency or if not a single currency market, very limited number
of currencies. The euro, issued by the Institutions of the European
Union, is the official currency of the members states of the European
Union who are part of the eurozone. Eighteen of the twenty-eight member
states are part of the eurozone. These members include but are not
limited to Austria, France, Germany, Italy, Spain, Finland, and the
Netherlands. Lithuania is adopting the euro in 2015. Without arguing the
success or failure of the euro, we can agree that there is a desire to
move towards a single currency with some larger nations leading.
When I first heard of Bitcoin
I immediately thought it could be the new euro. A single currency,
transferable and usable in any nation. Fast, resilient to government or
independent government agencies – such as the Federal Reserve- and
offering the anonymity cash can have. Then I learned about Litecoin,
which offered a decrease in block generation time, a larger market cap,
and a hashing algorithm that was suppose to be immune to ASIC machines.
Then I began learning about hundreds of other altcoins and still I ask
the same question now as I did back then – why?
Why do so many different altcoins need to exist? There is no market
for using all the cryptocurrencies out there. Bitcoin is just gaining momentum
and you will be hard press to find places to spend your Litecoin or
Darkcoins. What are miners doing when they mine all these different
altcoins? They’re trading them instantly for Bitcoins. These coins exist
to make money fast and have no real long term future.
I’m not saying all altcoins exist to get rich quick, nor am I saying
that they exist for no good reason. Often altcoins are created to
address concerns in the community or improve on the system. However,
there just is not a market for all of them. Even though we have
thousands of credit cards, most stores only accept a handful of them.
Using that logic, as Bitcoin becomes more mainstream we can only hope
that a handful of other coins will be adopted outside of their
community. At best we can hope large companies will have their own
altcoins and accept them, just as large department stores offer
customers their own credit cards.
While I see unlimited uses for the Bitcoin system, such as Namecoin
or running an API, looking forward I can only envision a world with 3-7
true cryptocurrencies. The market simply can not support the number of
altcoins out there.
It’s easy to get caught up in the community and world of
cryptocurreny and forget about everything outside of it. The world is
littered with examples
of instances where companies worked on a product to the extent that
they completely lost any practical application for it by the time it hit
the market. In a world where people desire simplicity and information
given to them in small, easy to digest portions, do you really think
that even twenty cryptocurrencies will make it?
Admittedly I could be wrong. To quote Yogi Berra, “It’s tough to make predictions, especially about the future.”
Source : http://www.cryptocoinsnews.com
Bullion Dealer Drops Credit Card Payments After Bitcoin Success
People who knew about bitcoin prior to 2013 tend to fall into two
categories: those who had the foresight to buy the currency when it was
plentiful and cheap, and those wishing they could go back in time and do
the same.
Like many others, entrepreneur Joseph Castillo initially passed the industry over for other interests.
Castillo first learned about bitcoin in 2009 during the digital
currency’s infancy, but was initially unsure whether the concept would
actually be successful. A longtime veteran of the precious metals and
commodities sector, Castillo, like many people, initially thought
bitcoin was silly. So, he chose instead to start a precious metals
business, launching Wyoming-based Agora Commodities in 2012.
Agora Commodities found success in the industry, accepting credit
cards and cash/bank transfers for gold and silver. However, following a
conversation with a friend and fellow gold investor, Castillo decided to
add bitcoin payments at the end of 2012 to his then-new company.
It’s a decision that radically changed its future.
Revenue earner
Between that date and the beginning of 2014, Castillo’s decision to accept bitcoin generated about $10m in revenue.
“What we had to do to protect ourselves against card fraud, we no longer have to do with bitcoin.”
This success later prompted Agora Commodities to move in a more
radical direction, deciding to drop credit card payments entirely.
Castillo told CoinDesk in an interview that, on the surface, choosing
bitcoin over credit cards helped reduce payment costs and the risk of
card fraud, the latter of which forms a key concern for gold dealers in
the digital age of commerce.
Castillo also noted the overall positive reaction by his customers,
saying, “[The reaction] was generally supportive. Some customers had
questions about bitcoin, but nothing negative. This business is built
around trust, and once you have a customer, they’re willing to stay with
you because they trust you.”
Protecting the business
Castillo said that, as a small business, the dangers of credit card
acceptance, such as chargebacks and fraudulent card use – made it
relatively easy to drop the payment method entirely.
He explained:
“What we had to do to protect ourselves against card fraud, we no longer have to do with bitcoin – and that saves us on costs.”
Beyond the practical security advantages of shifting away from credit
cards, Castillo noted another curious benefit: removing a somewhat
ironic payment method. For Castillo, the purchase of gold with credit
doesn’t make sense.
By comparison, he sees digital currency’s underlying technical
characteristics and the intrinsic value as a worthwhile investment that
makes it a payment method worth accepting.
Embracing new opportunities
Castillo cited interest among his company’s customer base – and
broader enthusiasm among the precious metals community – as the driving
force behind his company’s move to go even a step beyond accepting
bitcoin and removing credit cards.
After seeing so much success with bitcoin, Castillo said Agora
Commodities now has a digital currency exchange currently in
development.
While work still continues on the project, Castillo said that the
company is collaborating with an existing exchange to build back-end
support, with a portal expected to be integrated with Agora’s online
store.
He explained:
“Bitcoin fits perfectly with gold and silver, right? So if people come to the site and want to buy gold and silver, why wouldn’t they want to buy bitcoin from us as well?”
This would build on an existing service that Agora is affiliated
with, Castillo said. By working with a third party, Agora will
soon allow its customers to exchange precious metals for bitcoin.
Castillo added that bitcoin fits well into the broader perspective
held by precious metals investors, and he foresees broader involvement
from gold investors as the digital currency continues to grow in
prominence.
Source : http://www.coindesk.com
6 Cool Machines that Accept Bitcoin
As the number of bitcoin-friendly merchants grows, so does the number of items and services users can get for bitcoin.
It can now buy you a pricey Alienware gaming laptop, some home furnishings at Overstock or lunch and a couple of drinks in a number of establishments around the world.
Here we look at unconventional and cool gadgets that accept bitcoin.
They are still few and far between, but they offer a glimpse into the
future and demonstrate that digital currencies can augment or even
replace cash in the vending machine industry and a few other niches.
Smart vending machines have been around for a while, but only a
handful of companies have decided to add bitcoin functionality to their
designs. Upstate Networks pioneered the concept with its Bitcoin Vending Machine, which was showcased in early 2012.
1. Aeguana vending machine
London-based Aeguana
is marketing a new vending machine that supports a wide range of
payment methods including bitcoin. The machine has a spec sheet that
wouldn’t look out of place in the PC of yesteryear. It measures 1000 x
400 x 250mm and weighs 38kg, which is relatively compact for a vending
machine. The device sports a 15.6-inch 1366×768 advertising display,
stereo sound, optional WiFi and 3G/GPRS connectivity.
So why is it so small? Aeguana insists coins belong in the past, so
the machine is designed from the ground up to rely on contactless chip
or swipe cards and, of course, bitcoin. Therefore, there aren’t that
many mechanical components inside and the final product can be a lot
smaller than traditional coin-operated vending machines.
2. American Green ZaZZZ marijuana vending machine
American Green
decided to integrate bitcoin support into its ZaZZZ vending machine.
What sets it apart from the rest of the field is the fact that it
dispenses marijuana rather than sodas and candy.
The ZaZZZ was designed for the US states with a liberal attitude towards marijuana. It was demonstrated in Colorado in April.
3. Bitcoin Kinetics BitWasher
California-based Bitcoin Kinetics
is developing a vending machine for cryptocurrency users. The company
already offers a number of bitcoin machines, including the Bitcoin Kinetics BitWasher, its $1,950 washing machine.
The commercial grade washing machine is based on a Samsung
washer-dryer. The brains of the operation come from Intel, in the form
of an Intel Edison board.
Bitcoin Kinetics also supplies vending machines, ticket machines,
parking meters, ATMs, payment kiosks, personal payment devices and
arcade payment devices.
4. Bitcoin Kinetics BitSwitch
While we are on the subject of DIY, Bitcoin Kinetics offers a unique
product that can transform many machines capable of accepting money into
bitcoin machines.
BitSwitch
is a self-installed bitcoin hardware payments system. It is available
on Arduino, Raspberry Pi and Intel Edison hardware. GSM, Ethernet,
Bluetooth, NFC, RF and WiFi connectivity is available, along with
touchscreens and other add-ons. The basic kit, which includes an Arduino
board, relay, wires and power supply, costs $55 plus shipping.
5. Liberty Games’ Pirates of the Caribbean pinball machine
Liberty Games’ bitcoin pinball machine, inspired by gaming company
Stern’s, is reconditioned by Liberty Games technicians with added
bitcoin support. The machine is based on a Raspberry Pi board.
Liberty Games is not new to the world of bitcoin. Earlier this year the company announced a bitcoin-operated arcade machine and last year it developed a bitcoin pool table, complete with a QR code and LCD screen.
6. BitPumper automated filling station
One potential application for bitcoin involves an industry that keeps
the world running. Some gas stations have started accepting bitcoin
this year, but there is still no dedicated hardware for this niche.
This basically means you can fill up for bitcoin in Colorado or in Malaysia, but you have to pay for your gas at the counter elsewhere.
Although a fully automated bitcoin filling station has not been deployed yet, Bitcoin Kinetics is developing one.
BitPumper
is based on the company’s BitSwitch and it can be retrofitted to
existing pumps by attaching a relay board and a controller board. When
the customer makes a transaction and it is verified the hardware starts
pumping the fuel. The system is not available commercially yet.
Source : http://www.coindesk.com
Crypto 2.0 Roundup: Counterparty Debuts Multisig, Ethereum’s Crowdsale and Comedians Go Crypto
Amidst
bitcoin’s disruption of the online payments industry, heated debates
over pending regulations and the slow and steady expansion of bitcoin
ATM locations, it can be easy to lose sight of the widespread impact
bitcoin, and more importantly, the technology behind it, is making
beyond digital money.
In yesterday’s roundup, we gave a broad-scale overview of Crypto 2.0
with insight from the emerging sector’s major players. Today, we’ll
look at the recent news in the space to illustrate how this sector of
industry is seeking to move bitcoin forward.
Counterparty launches multisig functionality
Peer-to-peer decentralized exchange Counterparty
has introduced support for multi-signature (multisig) addresses,
including 1-of-2, 2-of-2, 1-of-3, 2-of-3 and 3-of-3 multisig addresses.
Beyond adding extra security to accounts and transactions, multisig
allows any Counterparty transaction to be tied to multiple signers.
Counterparty co-founder Robby Dermody explained:
“In the real world, quite often, you don’t have one-party ownership. There are often intermediaries. This is where, up to this point with block chain technology, there’s been some isolation from real world interactions.”
With the new feature, Counterparty users can include escrow agents,
auditors or other third-party certifiers in transactions. Dermody
provides a simple example of this implementation where a gold asset
representing the physical ownership of a gold bar is traded between two
parties on Counterparty.
With multisig, a third party could serve as an escrow that will
release, the gold asset to the buyer only when its confirmed the buyer
has received the physical gold. Dermody added:
“It takes us one step closer to the holy grail of smart property. I think people in the space oftentimes think we don’t need these archaic tie-overs. But even if you did have smart property, unless there is some sort of built-in intelligence, you are still going to need the intermediary frame, and multisig makes that possible.”
Multisig is currently available on Counterpartyd (Counterparty’s
command-line input interface) and on Counterparty’s Testnet. Dermody
expects multisig will be available in Counterparty’s GUI interface
Counterwallet in one or two months.
Storj completes first round of crowdsale
Storj,
a decentralized data storage platform built on top of the bitcoin block
chain, concluded the first round of a three-phase crowdsale on Tuesday,
raising 910 BTC in exchange for 35m Storjcoin X.
Following the announcement, CoinDesk spoke to Shawn Wilkinson,
Storj’s founder, who illustrated how the money will be used, saying:
“Mostly we’ve been focused on coding and now we are beginning to focus on documentation. Our primary concern at the moment is explaining to people how we are doing things. The crowdsale allows us to do that more easily now, and also hire more people to work on the specific [Storj] applications.”
Those specific applications of the Storj platform are Metadisk,
which allows people to buy computer storage space from a decentralized
network, and DriveShare, which allows people to sell their free hardware
space to the network.
There is a prototype for Metadisk running now, which allows uploads
of images, audio, and video to the network. Wilkinson says the team is
currently working on getting payments integrated into the Metadisk
platform.
Wilkinson went on to say that there has been a lot of demand for them
to release DriveShare. The company is planning a staggered release for
DriveShare once it is ready for beta testing.
He concluded:
“Our idea is that you should build your network one step at a time instead of releasing the whole thing at once and seeing where it goes. Our process is gradual. Push something out, fix it, release it again. Push something out, fix it, release it again.”
BTER hacker returns stolen NXT
The hacker who stole 50m NXT from the China-based BTER exchange has returned approximately 85% of the stolen digital currency, according to the NXT blockchain.
CoinDesk previously reported on 15th August that approximately $1.65m (at press time) worth of NXT had been stolen from BTER by a hacker, now revealed to operate under the handle “thesircom”.
BTER did not respond to requests from CoinDesk to determine the price it paid for the returned coins.
According to earlier reports, BTER initially agreed to pay
thesircom’s ransom request, but thesircom became frustrated with how
long BTER took and stopped responding to communication. Meanwhile, the
NXT core developers gave the community the option to expunge the bad
transaction.
If 51% or more of the people running the NXT client decide to run the
update released by the core developers, the bad transaction would be
expunged from the NXT block chain. This did not happen, and BTER was
forced to pay the hacker.
NXT is a second-generation cryptocurrency built to handle large amounts of data that launched its Asset Exchange in May. Sergey Nazarov, the creator of the Secure Asset Exchange,
which allows anyone to securely trade assets on NXT’s Asset Exchange,
explained to CoinDesk that NXT is not intended to replace bitcoin, but
exist alongside it.
“NXT is really a complement to bitcoin,” Nazarov tells CoinDesk.
“Allowing us to easily put valuable data like asset ownership into a
block chain is what will lead to that data being transacted around in
bitcoin.”
MyPowers announces comedian coin
CoinPowers announced its new name MyPowers in addition to introducing a new artist coin for comedian Aries Spears at last weekend’s Cryptolina Bitcoin Expo in Raleigh, North Carolina.
MyPowers is a marketplace for premium access rights. It allows
artists, organizations and brands to create digital coins, which fans in
turn can purchase for access to an in-depth brand experience.
For example, a musician could issue a coin that gives owners early
access to new songs, backstage clearance at concerts and the ability to
vote on things like what dress he or she should wear to an upcoming
awards show.
“MyPowers wants to take brand equity and turn it into an asset,” says co-founder Aaron Gatti.
Unlike a traditional fan club, Gatti explains, this new kind of
premium access is tradable. Coins can be bought and sold like any other
digital token, meaning as a brand or artist becomes more popular and
premium access to that brand becomes more desirable, a coin’s value
could increase too.
MyPowers’ first coin, musician Tatiana Moroz’s TatianaCoin,
launched Counterparty through a 30-day crowdsale in May. Aries Spears
Coin will be MyPowers’ second release. It will be followed by a brand
coin for Canadian clothing maker Potential Apparel, a coin for the 2014 BitFilm Festival and more.
Ether crowdsale nears completion
Ethereum has raised more than 27,600 BTC since its pre-sale of its own digital currency ether began on 23rd July. At current bitcoin prices, that is equivalent to $13.2m.
“This puts the total value of ether, including the two endowments, at
slightly less than BitShares X, making us already sixth place among all
coins,” Vitalik Buterin, Ethereum’s co-founder, told CoinDesk, referencing CoinMarketCap.com for current digital currency markets.
Buterin also points out that ether is the first coin selling with its
exodus being a multisig address, which has driven up the number of
coins in multisig by 80% since ether went on sale.
Ether will be used in Ethereum’s upcoming distributed application
software platform, which will allow developers to build distributed
programs on top of Ethereum’s own block chain. On its website, Ethereum
states its block chain’s Genesis Block will be released in winter
2014/2015.
Source : http://www.coindesk.com
OKCoin has passed a Proof of Solvency/Proof of Reserves audit conducted by Stefan Thomas. The audit was announced on Weibo yesterday. Fellow Chinese Bitcoin exchanges, Huobi and BTC China, are also expected to release similar announcements soon. Stefan Thomas previously conducted the same Proof of Solvency/Proof of Reserve audits for Bitfinex and Kraken. Similarly, Bitstamp was able to pass an independent test and prove their solvency to BitcoinJ developer Mike Hearn. OKCoin, along with many other industry-leading Bitcoin exchanges around the world, all now believe that providing Proof of Reserves is a new industry standard following the ongoing Mt Gox disaster.
Previous audits by Stefan Thomas revealed ~100.5% Bitcoin reserves at
Kraken and 102.82% Bitcoin reserves. OKCoin breaks previous “records”
with 104.86% Bitcoin reserves. To put that in perspective, a 4.86%
reserve surplus is more than some banks in many countries, including the United States, have on hand to fulfill their legally required reserve ratios.
CCN
OKCoin has been making steady moves into the international market since receiving $10 million in funding. OKCoin has since implemented margin trading, p2p lending, and futures trading. Along with BTC China, a competing Chinese Bitcoin exchange, OKCoin has launched an English language website and now accepts USD deposits for its designated USD trading books.
OKCoin’s CEO, Star Xu, had this to say:
“We believe that this is a necessary
step towards financial transparency for Bitcoin businesses. We
acknowledge the fact that today’s audit is just ‘one point in time’ and
it is for this reason that we aim to perform a series of regular audits
to give confidence to our users.”
How Is Proof of Reserves Established?
The process of establishing a Bitcoin Exchange’s proof of
reserves requires two steps to verify two separate claims. The first
claim that must be verified is that (1) the Bitcoin exchange controls a
certain amount of Bitcoin. To verify this claim, the Bitcoin
exchange provides a JSON file with a list of all their Bitcoin addresses
and balances, which is then compared to the blockchain. The comparison
is made using the ‘cryptoshi audit’ command in libcoin.
The second claim that must be verified is that (2) the amount from
claim 1 is greater than the amount contained in all of the Bitcoin
exchange’s user balances. To prove this, the Bitcoin exchange provides a
JSON file containing a set of anonymized user balances. At this point,
Stefan Thomas uses his own tool, ‘easy-audit,’ to calculate the reserve
ratio using the data from claim 1 and also the root hash. The code for
Thomas’s ‘easy-audit’ can be found at his github.
OKCoin has taken the additional step of including this tool on its
website for users to verify that their balance was included in the root
hash used by Stefan Thomas in his audit.
The technical details of the process will be explained by Stefan
Thomas in a post, presumably to his site or the Bitcoin Forum, soon.
Unfortunately, no Bitcoin exchange has undergone a publicized fiat
financial audit yet, and the brave handful that have stepped forward
thus far have only proved Bitcoin reserves.
Stefan Thomas has previously stated:
“As always, an audit does not
constitute an endorsement and it does not address any risks outside of
present insolvency. It’s also not infallible, exchanges can borrow money
or ask others to sign their audit message. Finally, until we can
implement fully zero-knowledge, cryptographically provable audits, you
have to trust the auditor, i.e. me, to have done my job correctly.
Also same as last time, I did not receive any compensation for the audit and I did it in my free time.”
Source : http://www.cryptocoinsnews.com
BitPay exec sees major European merchant adoption “soon”
Image source: https://www.flickr.com/photos/105644709@N08/
Here in the U.S., major businesses like Overstock, TigerDirect, Expedia and DISH are happily adopting bitcoin. While it could be argued that this first-wave adoption is more about free publicity than it is about the future of payments, it does beg a question: If bitcoin is a global phenomenon, why are all the major merchant adopters in the U.S.? Where are all the European merchants?
In an interview with CoinDesk, BitPay’s European business development director Moe Levin
gave some much-needed perspective on that question. Noting that
Europe’s merchant sales cycle is considerably longer than comparable
decision-making processes in the U.S., Levin said that the lack of
billion-dollar Eurozone companies is mostly due to timing. He said that
major BitPay news on the topic was “soon to be announced,” but offered
no further clues.
Levin told CoinDesk that bitcoin is also a less-sensational topic in
Europe, where modern payment systems like Single Euro Payments Area
(SEPA) already provide better options than the relatively slow and
outdated U.S. banking system. Only 15 years ago, Europe switched from a
variety of local currencies to a single currency, the euro, prompting
many Europeans to see bitcoin as a worldwide version of the currency
they already use. As a result, bitcoin doesn’t have quite the same
revolutionary tint as it does in the U.S., but rather a more practical,
logistically elegant and lower cost appeal.
“There are not so many big statements from people here, but everyday
like clockwork more and more merchants are turning on BitPay’s service,
because it isn’t a stretch,” Levin said. “They don’t need to be
convinced the same way North Americans do.” Levin said that BitPay is
gaining ground, with around 200 new merchants adding their bitcoin
payment option every week.
Source : http://www.bitcoinx.com
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