The Case for Bitcoin in Bangladesh

US Military Command Holds Informational Meeting With Bitcoin Industry

Officials from the US Special Operations Command met with American business executives and bitcoin community leaders on Monday in Tampa, Florida, to discuss bitcoin and its role in illicit finance.

The topic is a priority for the US military as it seeks to understand how bitcoin could be used in funding anti-American forces and operations and whether it can take actions to reduce this activity.

However, the aptly named Virtual Currency Workshop was a broader learning opportunity for special ops forces, meant to dispel any misconceptions about bitcoin and digital currencies being catalysts for terrorism and illicit activity.

Bitcoin Foundation global policy counsel Jim Harper attended the meeting, and said his message to the government was that “bitcoin runs on a transparent ledger system” and that the industry is more than a “magic cloak for evil behavior”.

Harper told CoinDesk:

“The military has an interest in knowing everything it can know about how the world works, and bitcoin is a big part of how the world is going to work.”

“Demistifying bitcoin is always a good thing,” he added.

Ongoing discussions

The day was part of an ongoing series of talks planned by a group called Business Executives for National Security (BENS), a nonprofit organization of American business leaders that lend their experience and insight to threat reduction initiatives.

Notably, Amazon’s Jeff Bezos, former AIG CEO Hank Greenberg and David Koch of Koch Industries are among its distinguished members.

Attendees representing the bitcoin community comprised “between one-third and a handful” of all present, Harper estimated.

Further, he suggested that the event was a success as an educational event, as by the day’s end, the gathered attendees had begun to view bitcoin more favorably.

At press time, BENS had confirmed the meeting, but had not responded to further inquiries.

Government cooperation

Harper told CoinDesk he was impressed by the cross section of representatives present at the meeting and the solid discussion and learning that took place. It was perhaps the first time that the three widely disparate cultures have convened formally.

In statements to CNBC, Harper acknowledged the possibility of backlash from members of the bitcoin community following the news of the meeting.

Harper said:

“The bitcoin community doesn’t necessarily endorse US foreign policy, and the bitcoin community doesn’t necessarily endorse everything the US intelligence community does.”

However, he went on to say that the Bitcoin Foundation’s role should be to familiarize law enforcement and the military with bitcoin.

ISIS concerns

The meeting comes at a time when there has been much discussion about whether bitcoin and digital currency could be used to help radical and extremist organisations gain access to financial services.

In July, Sky News reported that the Islamic State in Iraq and Syria (ISIS) had proposed using bitcoin to fund global jihadist efforts, citing services like DarkWallet as ways to make transactions and payments untraceable. However, this report was later debunked.

Harper said none of the military representatives present at the event offered specific intelligence that ISIS uses bitcoin and that the amount of discourse focused on the terror group was negligible.

Source : http://www.coindesk.com

Pheeva Launches Branded Bitcoin Wallet for Georgia Tech University

Love Will, Inc, the team behind the Pheeva bitcoin wallet, has launched a branded bitcoin wallet specifically for students at Georgia Tech University.

Called ‘the Jacket Wallet’, the custom bitcoin wallet features Georgia Tech‘s signature navy blue and gold colors, and will require users to have a campus email address to enroll.

The wallet was officially unveiled at a kickoff event for the school’s first dedicated bitcoin group, Bitcoin@Tech. Held on 24th September, the Bitcoin 101 session featured representatives from Pheeva and Georgia-based payment processor BitPay, as well as about 50 university students.

Mallika Sen, the founder of Bitcoin@Tech and a former BitPay intern, said that she expects interest to grow as more students begin to use the wallet and take advantage of its gamification elements.

Sen told CoinDesk:

“There’s a wide variety of students and people who are interested in bitcoin. They’re very encouraging.”

Students who download the wallet will be able to, in turn, join the COG Cooperative, a dedicated social network that will reward users based on how they promote the network. The wallet will monetize through advertisements, but pay students a share of this revenue based on these participation points.

While unique, the project is likely to be the first of many to launch at universities across the US.

Love Will’s big merger

Love Will Inc and bitcoin outreach and charity group The Bitcoin Society announced a merger in conjunction with the wallet launch. The combined businesses, which will operate as Love Will, Inc, will aim to replicate the custom wallet launch at universities across the US this fall.

The move brings The Bitcoin Society and Love Will’s operational strengths under one roof, which will help the group continue pushing its mass rollout model.

Love Will Inc business development consultant Jeff Handler told CoinDesk that there is demand for digital currency launches of this kind, noting:

“Georgia Tech is the first one. I can’t say right now the specific colleges we’re working on, but we’re working to bring this model to every campus that wants to accept bitcoin.”

The project could gain significant traction given that grassroots support for digital currency at US colleges already exists. In addition to the increasing number of student-led bitcoin organizations, several colleges have begun offering digital currency courses, while some have started accepting bitcoin as payment for select services.

Collective vision

The Love Will approach, according to Handler, incorporates a grassroots strategy as demonstrated by the formal launch of the Jacket Wallet this week at Georgia Tech.

Handler said he made the decision to merge his operations with those of the team behind Pheeva after realizing that both companies “shared a collective vision” as young entrepreneurs in the digital currency space.

Handler explained:

“Entering the bitcoin space as recent college graduates, [The Bitcoin Society] strived to position ourselves as a community-based information hub that could cater to the growing interest in bitcoin amongst college students.”

The two companies began working together this summer, following initial discussions at The North American Bitcoin Conference in Chicago.

Path to college adoption

CoinDesk also spoke with Stephanie Wargo, vice president of marketing for BitPay, who said that the company is working closely with Georgia Tech on upcoming projects.

Wargo said that interest in the bitcoin at Georgia Tech, the former university of executive chairman Tony Gallippi and CEO Stephen Pair, is strong and that the community there has been actively assisting in the run-up to the wallet launch.

Wargo noted:

“The college has been extremely receptive. We’ve been working with them for over a year now, as far as different programs within the university. We’ve gone down to hold some talks, and we’ve been very active and they’ve been extremely receptive of bitcoin.”

Wargo indicated that BitPay hopes to have further announcements regarding the university soon.

Source : http://www.coindesk.com

Coinify Raises Millions to Build Europe’s Complete Bitcoin Solution

Coinify has announced an undisclosed venture funding round, as well as a string of strategic deals that aim to position it as the leading bitcoin services company for the European market.

Based in Denmark, Coinify acquired a portfolio of services from established market players in May, purchasing established domestic bitcoin broker Bitcoin Nordic and the merchant services formerly offered by Bitcoin Internet Payment Systems (BIPS).

Speaking to CoinDesk, Coinify CEO Hans Henrik Heming framed the new company as a natural pursuit for himself as an established entrepreneur and bitcoin advocate. Heming previously founded social software consultancy Wemind, social graph specialist Wosju and idea lab Fourmation.

Heming told CoinDesk:

“I read about bitcoin the first time in 2012 and have been looking at the industry in more detail since 2013. [Coinify] emerged from discussions, ‘How can we make an entity that could cover more of what is necessary in terms of what the marketplace in Europe has to offer?’”

Earlier this week, Coinify announced a “multimillion-dollar” investment from Denmark-based VC firm SEED Capital, which is notably supported by Denmark’s state investment fund, The Danish Growth Fund (Vækstfonden in Danish).

Neither Coinify or SEED Capital disclosed the full amount of the funding to CoinDesk, though SEED Capital wrote in its official blog post that the amount was “several million DKK“.

Following the announcement, Heming said Coinify will close down the Bitcoin Nordic site, while BIPS will continue as a separate entity specializing in bitcoin technology development.

Coinify’s services

To begin, Coinify will focus on extending its buy and sell services to consumers and processing services to merchants. Coinify allows businesses to accept bitcoin and receive next-day settlement in euros, dollars and kroner, among other currencies.

Notably, Coinify also provides a plug-in for popular merchant-facing e-commerce platforms that will allow merchants that already use BigCommerce, Magento, Shopify and WooCommerce to easily integrate bitcoin payments.

To enroll, consumers must first use an email address to create an account. From there, traders can buy bitcoin with bank deposits or via prepaid online and mobile phone payment method CASHU.

Merchants can also log into their accounts via Facebook, a feature not extended to those buying and selling on the platform.

Market focus

With the desired capital and services secured, Coinify now aims to focus on growing its presence in its key target markets Denmark, Norway, Sweden and the UK, though Heming said Coinify is keen to establish itself across Europe.

In particular, Heming cited UK and Germany as significant markets due to their position as leaders in the e-commerce space. Further, he said Coinify aims to conduct market research in these areas as it looks to become more active in its approach to the market.

Heming said:

“What we have done so far has been a reactive approach and waiting for people to sign up. What we will do now with the funds will be to be much more active at acquiring merchants.”

Evaluating the competition

Coinify will also face notable competition in the market from other brokerage services, such as those offered by Safello and Coinbase, the latter of which just recently entered 13 European markets after winning scores of merchants and consumers in the state.

Heming chooses to view these companies more as collaborators than competitors, suggesting that he believes there to be significant, untapped potential in the European market.

He told CoinDesk:

“I would like to talk to the Safello and Coinbase guys just for information. It could be interesting to discuss how we could go into the markets we want to enter.”

However, this isn’t to say that Coinify doesn’t aim to differentiate itself from these players, as Heming hinted that his company aims to launch two additional services in the coming months.

Source : http://www.coindesk.com

All Things Alt: XC Inc, Next-Gen PoS and More Waiting for MintPal

Given the relatively quiet altcoin market, it’s easy to miss the new technologies and interesting applications that are gaining ground.

Yet, as September rolls to a close and October lies just around the corner, it might be premature to assume that the altcoin world is running out of steam as some have suggested. Today’s roundup includes a chat with the developer of XCurrency, a look at I/O’s new proof-of-stake concept and an altcoin that is out of this world.

I/O preps next-gen proof-of-stake framework

The proof-of-stake (PoS) concept has expanded in recent months, including implementations such as reddcoin’s proof-of-stake velocity and proof-of-stake 2.0, developed by the creator of blackcoin.

The development team for I/0 has proposed a new approach to minting blocks that it says will help reduce potential dangers endemic to networks that utilize staking to authorize transactions.

Developer Joel Bosh told CoinDesk that “we are proposing a huge change away from the current PoS inflationary state”. He said that the development process included input and code assessemnt from blackcoin’s lead developer, and explained that the effort is aimed ultimately at improving a promising but flawed process.

The I/O white paper proposes making network fees more flexible to reflect changes in both transaction volume.

The paper explains:

“When the volume becomes insufficient to ensure the demands on the market, each coin and accordingly each transaction fee becomes more expensive. Transaction rates and eventually coin destruction rates decrease, and full volume increases.”

The proposal represents one of the latest efforts to build on existing PoS models, as well as make the technology more resistant to network threats. Past events, including the hard fork of the vericoin network, have raised concerns that proof-of-stake systems are too risky for broader adoption.

The new I/O proof-of-stake system is set to go live on 26th September beginning with the 100,000th network block.

XC developer: Coins need economies to work

 

The developmental cycle of a digital currency, as demonstrated by both bitcoin and more mature altcoins, sometimes leads to the creation of corporate structures that exist to both promote and grow the project further through product distribution or marketing.

Privacy-oriented altcoin XCurrency, or XC, has recenly begun moving to build a business around its existing development framework. CoinDesk spoke with lead developer and CEO Dan Metcalf, who said that like other existing chains, XC represents a platform on which to build new applications in a decentralized and private environment. However, without the backing of a formalized institution, he said, it makes it more difficult to realize the full potential of a project like XC.

“These applications need a business behind them to be able to sell these services and be the trusted third party or broker,” he said.

Metcalf said that the process of creating what he called XC, Inc. has only just begun, and that the idea is still in the conceptual phase. One idea being developed is an initial token offering, or ITO, with each token signifying partial ownership in XC, Inc.

This decentralized corporation concept has been explored in the past by other groups, though as Metcalf explained, the initiative seeks to reward existing XC stakeholders.

Metcalf told CoinDesk that ultimately, the focus is to build an environment for the currency in which it can be used for real purposes, noting:

“I think one of the reasons that bitcoin worked was because of Silk Road. It was an economy that kept the system fluid until it reached critical mass. In order for XC to be that consumer coin, it needs an economy or the ability to be used over the existing networks – in an user friendly manner.”

MintPal overhaul faces more delays

The much-anticipated launch of Mintpal V2 has experienced another delay.

Owner and operator Moolah LTD, which acquired the altcoin exchange in July after a hack attack, apologized to its customers on Twitter today after previously indicating that final preparations were being made for the platform.

Prior to the hacking, MintPal was one of the more popular and more established altcoin exchanges. Further, the delays come at a time when rival Cryptsy has integrated new services that aim to help it bolster its risk mitigation and compliance.

Supporters and critics of MintPal took to social media to respond to the company’s message, with some poking fun at what they called a long redesign process that began after Moolah bought the troubled exchange.

Earlier this week, Moolah wrote on its official blog that the process involved heavy data migration volume, and that many steps needed to be taken before a launch became feasible.

In that post, the exchange owner said that a previously announced two-week period of no-fee trading would be extended by an additional week.

Strange alt of the week

 

Tribute coins aren’t as in vogue as they once might have been, but every once in a while a new project emerges that takes a light-hearted approach to honoring someone or something.

Borgcoin, which launched at the end of April, is an homage to the eponymous cybernetic race that serves as one of the primary antagonists in the Star Trek universe. According to the developers, the coin is intended to be “the ultimate Star Trek collectible cryptocoin”.

The official Bitcoin Talk post shares a bit of the “inspiration” for the coin, explaining:

“The Borg Queen has noticed the propagation of altcoins in the Alpha Quadrant which will soon reach and influence the Delta Quadrant. The Borg Queen has decided to create her own hive Borg coin. This coin would be scrypt based and would then be used by all borg assimilated planets in the sector and all throughout the Delta Quadrant.”

For its unique approach to a fan currency, borgcoin has won this week’s Strange Alt of the Week award.

The altcoin has a 500m max supply limit, which the developers note is “based on the mass ton of the Borg trans warp ship with a maximum rated speed of 29.968 war factor with advanced warp drive”.

Looking ahead, the developers hope to use the altcoin as a payment product for Star Trek-related products and services, stating that real-world “assimilation” of borgcoin at local merchants are soon to come.

Source : http://www.coindesk.com

Swedish Politician Elected to Parliament on Bitcoin-Only Donations

Digital currency advocate Mathias Sundin has become a member of Sweden’s parliament after funding his election campaign solely in bitcoin.

Now, and for the next four years, Sundin will represent the constituents of Östergötland in the parliament, which has 349 members from across the country.

Outlining his political agenda on his blog, Sundin made it clear that he would oppose “knee-jerk regulation” of bitcoin and disruptive technologies in general. Taking the advice ‘put your money where your mouth is’, the politician also made a point of accepting campaign donations solely in bitcoin.

On more wide reaching topics, Sundin promised to back educational reform, defend privacy rights and work toward developing a tax system that promotes innovative, fast-growing companies.

Economies have to keep up with technological advances including bitcoin, he argued, telling CoinDesk:

“An entrepreneur who develops software could potentially reach all these billions of people, and with a simple money transferring system, like bitcoin, he or she will be able to charge for it easier.”

New view forming

Sundin told CoinDesk that he will keep promoting bitcoin in the future, although he is unsure how much backing he will get from fellow MPs.

Sundin said:

“It’s hard to say how much support I will get – all the negative headlines about bitcoin have sent the wrong signal about digital currencies, but I also think a new view is forming when you see Dell, maybe eBay, Klarna and others start accepting bitcoin.”

While his focus on bitcoin issues helped get him noticed, Sundin said he doubts that it was his bitcoin advocacy that won him the seat. Rather, it was likely to be linked to his more general policies, he said.

Although his local campaign didn’t cost much to set up, the bitcoin donations Sundin received came from all over the world, “Which I find very positive,” he said.

Sweden’s position on bitcoin

Sundin still believes that more work is necessary to explain the potential of bitcoin. In particular, to persuade banks and other financial organisations that working with bitcoin companies is ultimately a positive thing.

He said:

“We have to keep making the Swedish business climate better. We have to lower taxes for entrepreneurs and decrease regulations. There is a stronger and stronger startup scene in Sweden and Stockholm – one of the hottest in the world.”

Sweden has already managed to attract a number of prominent cryptocurrency businesses, ranging from exchanges to mining companies.

The country’s regulatory framework is relatively liberal and many suggest it will regulate bitcoin as an asset, in line with most of the EU.

However, for all its popularity in Sweden, bitcoin has not had much of an impact on the local economy.

In a recently published research paper, the Swedish Central Bank found that bitcoin trading volumes in the country were relatively low and concluded that bitcoin did not have “any measurable impact” on the country’s retail payment market or financial stability.

Source : http://www.coindesk.com

How and Why to Build an Unbanked Bitcoin ATM

Unfortunately, despite complying with all the legal requirements we have been unable to secure banking facilities. Without these the Bitcoin ATM business cannot operate long term. The negativity from the banking sector to Bitcoin also threatens the ATM owner’s other businesses. For me it is prudent to shut the ATM down. If you have any interest in purchasing a second-hand bitcoin ATM with compliance documents. Please get in touch.

This follows a trend where eager startups set out to “do things right” and follow all the rules, only to discover invisible soft censorship for which there is no appeal. Even though there is apparently no legal basis for preventing Bitcoin Central from operating, the banks (who have a government-granted monopoly) are free to act extra-legally to achieve the same effect.

This is a vulnerability to which all Bitcoin ATMs throughout the world are exposed. Cash handling is a high risk, relatively expensive activity without which a transitional ATM can not operate. If it were possible to design a Bitcoin ATM that did not require cash handling on the part of the operator, it would benefit the operators in two ways: they would no longer be forced to operation only at the whim of banks and cash handling companies, and it would save the cost of handling the cash.

Additionally, the methods which are needed to enable unbanked operation of a Bitcoin ATM would have profoundly beneficial effects on the entire Bitcoin ecosystem.

Physical requirements

In order for a Bitcoin ATM to operate in unbanked mode, it must be a bidirectional ATM – it must both accept and dispense cash.  Ideally the ATM would include a bill recycler instead of a separate bill dispenser and  bill acceptor. This is a device that can accept customer-provided cash, keep track of the individual bills, and dispense them later on command. An ATM equipped with bill recycler can accept cash for the purchase of bitcoins, and also dispense cash for those who decide to sell bitcoins.

Currently it is difficult to find high capacity recycling units capable of handling a sufficient number of denominations for a unbanked Bitcoin ATM, however several product lines in this space show promise.

Strictly speaking, a recycler is not essential. The ATM could remain unbanked by having a separate cash dispenser and cash acceptor, and this would mean that it would require manual servicing to move the cash from one receptacle to the other. An unbanked ATM operating in this mode would not benefit from as much labour cost savings as a 100% recycling ATM.

Operational requirements

Traditional Bitcoin ATMs operate as vending machines, which may optionally also buy the bitcoins back. ATM operators generally report that far more of their customers buy bitcoins than sell them. How, then, would an unbanked ATM avoid filling up with cash and running out of bitcoins?

An unbanked Bitcoin ATM (UBA) might look like a traditional ATM, but it is an entirely different beast. The UBA must operate as an independent price discovery machine which adjusts its prices until the customers wanting to buy are exactly matched by the customers who want to sell.

Imagine a UBA is rolled out with an initial load of bitcoins and dollars to sell. The cash recycler has a capacity of $30000, and it launched at half capacity ($15000) and is designed to maintain this level.

The first customer buys $750 worth of BTC. Now the machine has $15750.

The second customer sells $500 worth of BTC. Now the machine has $15250.

The third customer buys $1250 worth of BTC. Now the machine has $16500

BTC buyers are outpacing the sellers and the UBA is filling up with cash. What can it do to attract more sellers?

At this point the UBA should raise the price of bitcoins. Since it is currently holding 10% more cash than intended, perhaps it should raise prices by 10% in an attempt to attract more sellers.  If the sellers do not show up immediately, it can continue to increase the price periodically, perhaps every hour during business hours, until the sellers show up.

Once the sellers bring the cash inventory down to the target level, the UBA can stop raising the price. If the inventory begins to drop below the target level, it should reverse the process and begin lowering the price to attract more buyers and dissuade sellers. How does such an ATM generate a profit for its operator? They can charge a BTC commission, perhaps a few percent, on every trade and withdraw their profits electronically.

Anyone who is familiar with control simple theory should recognize the pricing mechanism as a simple feedback controller; a PID loop. A real example should be a bit more sophisticated, with care taken to identify the best time interval for adjustments and optimal values for P and I. In addition, a real UBA must manage two separate prices (buy and sell) and two inventory levels (bitcoin and cash), and should account for the fact that with cash there is a strict upper limit on how much can be stored, but this limit does not apply for bitcoin. A deployed algorithm should make sure the spread between the buy price and sell price does not invert under any conditions. Nevertheless, designing the pricing system is a relatively straightforward exercise in control system engineering.

UBAs and Local Trading

As the example above demonstrates, the behaviour of a UBA is radically different from the behaviour of a tranditional ATM. The operator of an ATM is not acting as a retailer supplier of bitcoins, or of cash. All the funds dispensed by the UBA are funds provided by the customers themselves. Other than the initial seed loading, the UBA has no access either to bitcoins or to cash other than what customers decide to deposit. Rather than acting as a vending machine, the UBA is a liquidity pool that facilitates the in-person trading activity of the people in it’s area of operation.

The UBA can only function in parts of the world where there is an existing in-person trading market. Fortunately this is most of the inhabited world. One of the limitations of in-person trading is that both the buyer and the seller must physically meet at the same place and time. The UBA effectively relaxes this requirement. Now traders do not need to meet at the same time, merely the same place. The only real function of the UBA is to act as a liquidity pool which enables the two halves of the trade to be temporally separated.

Each interaction a customer has with a UBA represents half of a trade. The job of the UBA is to discover and track the price at which both halves of the trade occur with equal frequency.

Price Discovery and Arbitrage

Imagine a city where several UBAs were deployed. At any given time, each ATM is likely to offer a different price for buying and selling bitcoin based on the recent supply and demand at its location. These differences in prices will attract customers who perform arbitrage between the machines. Buy bitcoins at a machine where the price is atypically low, and sell them at a machine where the price is atypically high.

If all the machines reported their live pricing to a suitable website, traders in that city might actually plan their daily route to pass by profitable arbitrage opportunities. A situation which might at first glance appear to lead to wildly divergent pricing will instead quickly converge to relative consistency. Merely by broadcasting the appropriate price signals, the network of UBAs will automatically crowdsource the work of moving funds to and from the machines in order to keep prices similar.

This arbitrage will occur even between the UBA system and other venues for buying and selling bitcoins. Price discovery on traditional exchanges is not as reliable as perhaps most people assume, and certainly far less reliable than the price discovery a UBA system can generate. Exchanges can obscure price discovery by holding fractional reserves of one or more currencies, while an ATM must deliver what it has sold in full with each transaction. (Note that at least one Bitcoin ATM company is actively trying to convince users to accept fractional reserve IOUs instead of actual bitcoins.)

If exchange prices were manipulated low, perhaps by holding a fractional bitcoin reserve, then the true price as discovered by the ATMs would rise above the exchange price and create a profitable arbitrage opportunity. Exchange users would buy cheap bitcoins on the exchanges, withdraw them, and sell them to the ATMs. If an exchange did not have enough actual bitcoins to meet its liabilities, this situation would be discovered far more quickly than if the UBA network was not operating.

The network of UBAs could co-exist peacefully with traditional Bitcoin ATMs without any problems. The traditional ATMs would simply become another potential source of arbitrage opportunity that traders could tap when and if the price was right.

Remittances

Unbanked Bitcoin ATMs solve one of the hardest problems involved with setting up remittance flows using Bitcoin – by not requiring anyone in particular to solve the problem.  This counterintuitive proposition is one of the primary ways in which the general public misunderstands market economics.

Imagine that a network of UBA were set up in a country that is a net recipient of remittances. Price discovery by the UBAs would converge to the local exchange rate at which BTC purchases by investors in the recipient country) matched BTC sales by recipients of remittances. This exchange rate might be lower or higher than the implied exchange rate might suggest. Is this a problem for the UBAs or the people using them?

Not really. If the exchange rate is lower than expected, the remittance senders might still use Bitcoin for remittances by simply sending more than they would otherwise. This might still be a win for them considering how expensive other methods of remittance can be. The low exchange rate, however would broadcast a price signal through the market that cash was undersupplied in that region. Investors and entrepreneurs would have an incentive to find ways to increase the supply the cash to that area in order to profit from the inexpensive bitcoins available there.

The same thing would happen if the exchange rate was higher than expected. The price signal would communicate the fact that bitcoins were undersupplied to that location, and market participants would respond by finding more ways to attract bitcoins to the region. This could mean asking their relatives abroad for Bitcoin remittances instead of Western Union, starting online businesses that accept Bitcoin, or any number of other strategies which the ATM operators might never imagine or anticipate.

No explicit coordination between market participants is required for this to happen – the information and incentives communicated by the price signal are all that’s required to create a self-regulating efficient market.

Operating a Bitcoin ATM in an unbanked mode completely frees the operator from needing to worry about money flows, either fiat or BTC. The ATMs only need to do one job: relentlessly act as autonomous price measuring machines. If they accurately measure the price of Bitcoin at the time and place where they are installed, and if they efficiently broadcast this information into the market, then from their perspective the problem of how to allocate and transport the bitcoins and cash they need will solve itself.'

A network of unbanked Bitcoin ATMs would provide one of the most textbook-perfect demonstrations of market economics available.

Objections

The idea of operating ATMs that handle cash which the operators never need to handle themselves can be counterintuitive until it is fully digested. Here are some of the stumbling blocks which can arise and their associated solutions:

“Customers would be confused by dynamic pricing”

Customers of other products in the economy routinely encounter location-based price differences: gasoline, groceries, or restaurants being three common examples. For the case of gasoline, they are also accustomed to relatively high temporal volatility, so seeing the price of Bitcoin change based on time and location should not be so far outside their prior experiences.

“Nobody is willing to buy Bitcoins above the market rate”

Anyone who suggests this has not seen the markup that traditional Bitcoin ATMs charge, nor could have they participated in the existing in-person exchange market. Bitcoin buyers, like the buyers of any other product, are not a homogeneous group. Some are willing to pay a certain premium for convenience, and others are willing to spend their time in search of a better deal.

This objection also relies on the fallacy of a universal market rate, which is  discussed below.

“ATM operators would lose money by selling below the market rate”

The first problem with this objection is that the UBA described here does not care about the exchange rate in terms of generating profits. Like an exchange, it’s profits are derived from transaction volume, not the price at which trades occur.

The second problem with this objection is there is no such thing as a universal, global market rate. The price of a thing is exactly the amount a willing buyer can obtain from a willing seller at the time of sale. Why does a buyer on BTC-e accept a price for a bitcoin that is different from the price that sellers are offering on Bitstamp? Because the BTC-e user’s fiat is not on Bitstamp, and neither are those other sellers’ bitcoins on BTC-e.

One common mistake in the area of market pricing is to confuse the emergent behaviour of markets with some inviolate rule of nature. In an efficient market, traders will seek arbitrage opportunities for profit, and their actions will cause prices in different venues to converge. The more efficient the market, the less divergence will appear. This creates the illusion of a single, global price, however it is just an emergent property. For the purposes of any given trade, the only price that matters is the price that a willing buyer and seller can agree on at that moment.

The price of a bitcoin on some distant exchange means nothing to an unbanked ATM. The UBA measures supply and demand in the pool of customers to which it can access, and discovers the appropriate price for its specific situation. If you need to sell bitcoins right now in Cairo, it doesn’t matter what somebody in Tokyo is willing to pay for them – for you the market price is whatever somebody in Cairo is willing to pay for them.

That being said, the best way to create the emergent property of a single exchange rate is to avoid the central planner’s fallacy. Identify the market mechanisms which work to create the emergent behaviour, use them, and the problem solves itself.

The Importance of Independent Price Discovery

One of the most important effects of building a network of autonomous price measuring machines is that such a network would provide a badly-needed second opinion regarding the exchange rate of a Bitcoin.

There are many ways in which exchanges can misbehave to tamper with price discovery, and some of the VCs in the Bitcoin space are openly plotting to rig exchange rates. The only antidote to such skulduggery is to stop depending on exchanges to discover the price of a Bitcoin.

Unbanked ATMs can not lie about supply and demand for very long before they run out of either cash or bitcoins. Therefore their price discovery process is more accurate than that of an exchange which might be running a fractional reserve. Most importantly, each individual ATM calculates price independently of every other ATM. The consensus that arises from the market they create is not like having a second opinion on price compared to the exchanges – it’s like having millions of second opinions.

The future of Bitcoin ATMs should be unbanked. Freeing them from the constraints of operator-managed cash handling would save costs for the operators, improve fiat-bitcoin liquidity, and protect the entire Bitcoin ecosystem by providing a needed countermeasure against bad behaviour by centralized exchanges.  Ask your favourite Bitcoin ATM vendor to get started on this project today.

Source : http://bitcoinism.liberty.me

The Case for Bitcoin in Bangladesh

International remittances are a major contributor to the Bangladeshi economy. As of June 2013, the World Bank reported Bangladesh to be one of the largest recipients of reported remittances at almost $14.5 billion. In a country like Bangladesh, where “one half of remittance receiving households are female headed with a very low level of education” but 96.4% of them own a mobile phone, the seemingly fractional savings by remitting in Bitcoin is the big enough difference of being a game changer for some families.

This week, the Bangladesh Central Bank issued a standard cautionary statement that spooked the Bitcoin community, particularly in Bangladesh, and those with loved ones in the country. Now, we all know how this goes — one Bitcoin story with a misleading headline is released and its message ripples across the news wire. As a result, Bitcoin’s promising social and economic benefits for the people of Bangladesh have been put on pause for the time being.

Since the release of the statement, our global team has been working in tandem with our local team to obtain more information and, to date, have determined that the statement is a standard issue of caution and not an outright ban. Meaning, the Bangladesh Central Bank is alerting consumers of the risks involved with using Bitcoin and reminding them that Bitcoin is not government issued or sanctioned.

At the same time, the statement also makes clear that, when in the use of cryptocurrencies, should you violate any terms of the Foreign Currency Control Act, 1947 or the Money Laundering Control Act, 2012, you will be subject to punishments as prescribed. However, what has been left unclear is if there are any other official statements or conditions under which transacting or even educating others on Bitcoin could be considered a punishable offense.

The foundation has always been a proponent of advising against putting your life savings in Bitcoin — at only 5.5 years old, Bitcoin is still a young technology and an experiment. We have also been proponents of fostering this neutral technology as a force for good. In the two years we have been engaged in educating and advising policymakers and regulators, we have found that sensible governments seek to maximize Bitcoin’s potential for social and economic benefits while mitigating its risks.

The sensible approach for Bangladesh is to understand and examine Bitcoin and its promise for improving lives of its citizens, creating jobs and economic opportunity. In an increasingly globalized economy, adopting Bitcoin will open doors that only technological advances can bring. Should Bangladesh choose, after careful study of the technology and its transformative potential, to close its doors, then Bitcoin will continue to thrive in countries open to innovation.

Until more information is obtained on the current situation, Bitcoin Foundation Bangladesh has temporarily suspended educational and membership efforts. In the meantime, visitors can go to bitcoinfoundation.org or follow @BTCFoundation for the latest development on this topic.

All membership dues from international affiliates are received directly by the Bitcoin Foundation, Inc. which is incorporated in the U.S.

Source : https://bitcoinfoundation.org

Bitcoin is plunging again

We’re in the midst of another sharp sell-off for everyone’s favorite crypto-currency, with the price of bitcoin falling by more than 9%—to less than $400 at moments—this morning, according to the bitcoin data site BlockChain.

Why? Who knows. Technical analysts have tried to paste some sort of paper-thin rationale on it. (Personally I can’t help but wonder if some of the people willing to make highly speculative gambles are looking to move their money into Alibaba today, in the hope that it may be the next big momentum-driven money-maker.)

Unless it’s the Argentinian peso, this is no way for a respectable currency to behave. And that’s exactly the point: Bitcoin is not a respectable currency. At the moment, it’s merely a plaything for tech-savvy gamblers with far too much money on their hands.

Still, over the long-term, the technological underpinnings of bitcoin as a payment system seem to have promise.

Source : http://qz.com

Netagio: Account Funding With Credit/Debit Cards Coming Soon

Story Highlights

• Netagio says account funding with credit/debit cards coming soon
• A number of different cards will be accepted

UK-based bitcoin, gold, and sterling exchange Netagio made news this week with the announcement they had met ISAE 3000 standards when it comes to their bitcoin holdings, and now, some positive news for their clients who are looking for another means of funding their accounts.

The exchange said they’ve partnered up with WalPay — a payments services provider based on the Isle of Man (which is quickly becoming a great place for bitcoin startups), which effectively means Netagio has secured new banking facilities that will allow clients to make deposits and receive international payments in GBP, EUR, and USD.

WalPay’s services at Netagio went live on the 25th of September, and the news comes hot on the heels of a recent story that indicated CTS would sever ties with companies working in the digital currency sector on the Isle of Man due to bank pressure.

But also of interest is news that the WalPay integration will also allow clients at Netagio to find their accounts using credit/debit cards. Specifically, cards accepted include: VISA, VISA Electron, VISA Debit, MasterCard, MasterCard Debit, or Maestro.

“Our customers have always been, and will always continue to be, our number one priority,” says Simon Hamblin, Netagio CEO. “The very day we were informed of CTS’s decision, we began assessing both our dormant and new banking relationship partners, undertaking the necessary rigorous due diligence required. We were keen to secure a partner that could not simply address our immediate need for a new banking relationship, but also could partner with us to further enhance our service for customers in the future. WalPay have certainly stepped up to the mark and we have been very impressed by their service and commitment.”

Justin Martin, head of Business Development and Sales at WalPay adds, “The appetite for Bitcoin is not waning and we are thrilled to be working with Netagio to secure new robust banking facilities for their customers today, and also to work on introducing credit and debit card payment functionality in the very near future. Our tight trading rules, card security measures and PCI compliant gateway have been specifically adapted to work harmoniously with Netagios’ state-of-the-art secure exchange and crypto vault solutions to maximise consumer confidence in Netagio. We were impressed by Simon and his team’s rigorous approach to operational controls and compliance, particularly in the important area of anti-money laundering (AML) and Know Your Customer (KYC) requirements. We can see that Netagio are entirely committed to ensuring that their customers’ interests are best protected and that Netagio will continue to play a vital and stabilising role as the industry continues to mature.”

Source : http://newsbtc.com

CFTC to Discuss Bitcoin Among Other Things At Meeting Next Month

In a news release published today, the United States Commodity Futures Trading Commission (CFTC) announced plans to hold a meeting at its headquarters in Washington, D.C. next month to discuss Non-Deliverable Forwards (NDFs) and bitcoin.

Maybe you’re asking yourself, what in the world is a NDF? I, too, had the question. Here’s what came up, according to the NASDAQ glossary:

Agreement regarding a position in a specified currency, a specified exchange rate, and a specified future settlement date, that does not result in delivery of currencies. Rather one party in the agreement makes a payment to the other party on the basis of the exchange rate at the future date.

And, of course, we all know what bitcoin is so no need to get into that. But it’s interesting that the digital currency — which is seemingly taking the financial world by storm — is a topic of discussion.
The CFTC says the meeting will be made up of two panels. Panel one will discuss whether or not a clearing mandate is appropriate for NDFs (“with a particular focus on how such a mandate would impact foreign exchange contracts,” they say), and the second panel will be discussing the CFTC’s jurisdiction when it comes to derivatives contracts that reference bitcoin.

The meeting will be taking place from 1:30 p.m. to 5 p.m. on October 9th at 1155 21st Street, NW, Washington, DC 20581. The meeting is open to members of the public on a first-come, first-served basis.

While the CFTC isn’t the first government agency to explore the topic of bitcoin and digital currencies, its interest in the topic no doubt stems from bitcoin’s increasing popularity. What will come of the meeting? Well, we’ll just have to wait and see.

Source : http://newsbtc.com