— Covering digital currencies, precious metals and online payments
Carl Mullan is DGC’s founder, former editor and publisher of DGCMagazine with more than 50 past issues online. His new book, The Digital Currency Challenge – Shaping Online Payment Systems through US Financial Regulations, is now available on Amazon.
Read More about DGC Founder Discusses His New Book, The Digital Currency Challenge
As cybercommerce begins it will lead inevitably to cyber-money.— James Davidson, The Sovereign Individual, 1996
The hype surrounding Bitcoin has gone off the charts in the past year. For those of us who have been involved with digital currency systems since the 1990’s, it is interesting to see how people caught up in the hype think Bitcoin is wonderful but in many cases cannot clearly see the reason why. Other enthusiasts think that Bitcoin is the ultimate solution for all payments.
Read More about Bitcoin – A Jack of All Trades is the Master of None
Although the case in question (Crawfurd v. The Royal Bank) happened in the mid-1700s, I think it is highly relevant and bears nicely on the recent controversy surrounding Coinvalidation. This post will also be of interest to anyone fascinated by the history and/or theory of money.
While this particular case involved paper banknotes (which arguably are irredeemably flawed) rather than a ‘hard currency’, it still illustrates nicely the rationale behind a decision which impacted a widely used currency at the time. Of primary consideration in this case was how its resolution would affect the usability of the currency (i.e. a facet from which currency largely derives its value).
As we’re probably all aware of by now, CoinValidation’s plan, if successfully implemented, would presumably lead to the blacklisting of some coins based on their past transfer history (e.g. having at some point been sent to/from deep web contraband marketplaces, having been paid as ransom to malware operators like those of CryptoLocker, having been stolen, having been allegedly ‘laundered’, having been associated with scams/ponzis, &c). In effect, this would destroy the fungibility of bitcoins. Some ‘clean’ coins would be easier to spend and transact with, while other ‘less clean’ or downright ‘tainted’ coins would be more difficult to use. Thus we would be left with a difficult-to-navigate and frustrating-to-use system whereby some coins are worth more than others (due to their varying spendability). And this largely defeats the purpose of a currency as a facile medium of exchange in the first place.
After series of Bitcoin businesses being dropped by their banking partners earlier this year, the Internet Archive Federal Credit Union (IAFCU) came to the rescue. The New Jersey based credit union, run by the Internet Archive, has been very friendly to the Bitcoin industry and has worked with a number of businesses who have had trouble establishing relationships with banks.
One of the businesses the credit union partnered with was the US based TradeHill exchange. Late last week Jered Kenna, Tradehill’s founder and CEO, confirmed via Reddit that the exchange had suspended trading due to “operational and regulatory issues” faced by its bank.
IAFCU posted its own statement on the matter , but was not clear on the nature of the regulatory issues.
Via Reuters…
India is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.
The RBI will ask the banks to buy back jewelry, bars and coins for rupees. Lenders will have to offer better rates than pawn shops and jewelers to lure sellers.
“We will start a pilot project among some banks where we will allow them to buy back gold from individual households,” the source, an official familiar with the central bank’s plan, said. “This will start soon, we have discussed (it) with banks.”
Two new seats are being added to the Board of Directors. One representing Individual Members and the other is representing Industry (business) Members. In order to be eligible to vote in this election, you must be a current member of the Bitcoin Foundation.
This week members of the Bitcoin Foundation had a series of meetings with regulators and law makers in DC.
On Monday 5 Foundation members, Marco Santori, Patrick Murck, Peter Vessenes, Brian Klein and Jim Harper, met with representatives from a number of US agencies including FinCEN, IRS, FDIC, Federal Reserve, OCC, FBI, DEA, Secret Service, and the Department of Homeland Security.
Read More about The Bitcoin Foundation hangs out in Washington
Frank Schaeffler, a member of German parliament’s Finance Committee has issued a statement recognizing Bitcoin as “Rechnungseinheiten,” which translates to “units of account”. Many news sources are reporting that this makes Bitcoin ‘private money’ or ‘legal tender’ in Germany.
But what exactly does the designation of “Rechnungseinheiten” mean for German Bitcoin users and businesses?
The German parliament stopped short of granting bitcoin full currency status on August 19, but recognized bitcoins as “units of account” when it formally issued regulations for the popular virtual currency.
Read More about Bitcoin is “Rechnungseinheiten” … what does that mean?
First NY, then the House and now the Senate, US regulators are turning their attention to virtual currencies.
On Monday the US Senate Committee on Homeland Security & Governmental Affairs sent a letter to Homeland Security for information on any policies, procedures or guidance they have that pertains to “virtual currencies”.
The letter states the committee has initiated an inquiry into virtual currencies, list recent legal actions involving Bitcoin and contains the usual ‘hey were all for new tech, but we need to look at the threats and risks’.
The letter, which can be read here, ask Homeland Security for 3 things to be provided by the end of the month…
The United States House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies 2014 appropriations bill recommends spending amounts for a number of government agencies including the FBI.
In their 2014 appropriations bill, the subcommittee directs the FBI to report on Bitcoin, specifically what the FBI is doing to address the “challenge” that they see from the “ersatz currency“.
The New York banking regulator has issued subpoenas to 22 companies associated with Bitcoin as part of an “Inquiry on Virtual Currencies”.
A subpoena doesn’t mean criminal activity has taken place. A person familiar with the matter says the two-year-old department wants to make sure Bitcoin isn’t a conduit for illicit activities and is gathering information in order to decide whether to issue regulation for virtual currencies. The department has the authority to create regulation if there is no other primary regulator.
Read More about New York’s Department of Financial Services initiates Inquiry on Virtual Currencies
Critical Vulnerability Found in Bitcoin Android Wallets. The Android software itself has a vulnerability in the way it generates random numbers. Long story short, if you have Bitcoin wallet on an Android phone you’ll want to upgrade your app and/or temporarily move your bitcoins off your phone. Details here.
It looks like Bloomberg is testing a Bitcoin ticker. Abbreviating Bitcoin as XBT, Bloomberg terminal users can now look up Bitcoin’s pricing history. Data comes from Bitcoin exchange service Mt. Gox as well as Tradehill. More details here.
The Bitcoin ATM is now available for pre-order. The makers of the Bitcoin machine, Lamassu, are now accepting orders for the machine. Lamassu will sell the machine with the appropriate software installed and leave regulatory compliance to those operating the ‘ATM’. Customers in the US are required to sign a due diligence questionnaire. Prices start at $5000 via Bitcoin or wire transfers. Order yours here.
Why Libbitcoin matters. Libbitcoin is an advanced alternative implementations of the Bitcoin protocol. While there are other alternative implementations, this one is unique it allows Bitcoin users with some technical skills but not necessarily experienced programmers to “work directly with the underlying [Bitcoin] building blocks.”
This may be a competitor to the current implementation, bitcoind and have the effect of limiting the influence of Bitcoin updates coming from authorities such as the Bitcoin Foundation. This may help to maintain Bitcoin’s decentralized nature and has some political implictions as explained here.
Bitcoin is officially Money. The SEC is suing Trendon Shavers for running a Ponzi scheme, the Bitcoin Savings & Trust. Part of Mr Trendon’s defence was to claim that Bitcoin investments are not securities and Bitcoin is not money; last week a judge disagreed.
