With MtGox effectively dead, Bitcoin can now enter the third stage of evolution, explains BitGo CEO Will O'Brien in an extensive essay. More »

Erik Voorhees, a respected Bitcoin entrepreneur who created SatoshiDice and now runs Coinapult, shares his views about MtGox and the future of Bitcoin. More »

Hollywood could learn a lot from Silk Road 2 about heightening stakes and creating suspense in this epic whodunnit thriller where 4000 bitcoins were stolen! More »

In this extensive video, Bitcoin Leah interviews Brock Pierce, Alan Meckler, Sam Cole, and companies including BitGo, GoCoin, Lamassu and more. More »

 

On Bitcoin and Inside Bitcoins Lead the Way into the Future of Money – Get 15% OFF

After an overwhelming turnout for Mediabistro’s inaugural Inside Bitcoins: the Future of Virtual Currency conference this past summer in New York, Mediabistro decided to bring the Bitcoin-focused event to MGM Grand Las Vegas from December 10-11th.

Bitcoins and cryptocurrencies continue to play a larger role in mainstream culture; and Inside Bitcoins is the perfect venue to explore the opportunities and challenges the growing bitcoin community faces. The conference will provide insight into the versatility and potential of this financial technology through sessions, such as Bitcoin & The Music Industry, Bitcoin in China, and Virtual Currency Guidance: Blaze the Trail or Get Run Over. Check out the entire conference agenda.

Inside Bitcoins

Attendees of Inside Bitcoins will have the opportunity to network and engage with the impressive roster of speakers, including Alan Reiner, the core developer of Armory Bitcoin Wallet; Pelle Braendgaard ,Co-Founder of Kipochi  and Nathan and Sam Huntzinger , the teenage visionaries of Bees Brothers.

With Bitcoin, the Bees Brothers, aged 15 years and 13 years, were able to sell honey and honey caramels all over the world by taking advantage of the absence of international currency exchange costs. In the session “Bees Brothers: Lessons from Young Bitcoin Entrepreneurs”, Nathan and Sam will share their experience using Bitcoin in turning a science project into a profitable year round operation. Read more on the Bees Brothers.

Inside Bitcoins is one of the first events of its kind to give attendees the option to pay for their ticket with either dollars or bitcoins. Each registrant will also receive a bitcoin paper wallet with a 0.01 bitcoin.

Thanks to On Bitcoin’s partnership with Inside Bitcoins, all On Bitcoin readers will receive 15% OFF admission to the innovative Las Vegas event. Register on the event website and enter code ONBC at checkout to redeem this offer!

 

Bitcoin Exchanges Plagued by Liquidity Issues and Attacks

Dramatic Changes in Bitcoin Price Affect Liquidity

Yesterday was an extremely positive day for Bitcoin. Senator Tom Carper held a Senate Committee hearing to discuss the legal and business implications of Bitcoin’s ever-growing popularity.

Overall, the tone of the session was one of open-mindedness and desire to learn more about the digital currency. The representatives from FinCEN and the Attorney General explicitly stated that digital currency, in and of itself, is not illegal.

Related: Read our full summary of the Senate Committee hearing on Bitcoin

In response, Bitcoin’s price skyrocketed to over $900, a new all-time high. Bitcoin donned the front page of the Wall Street Journal this morning, was discussed on NPR, and made its way into every mainstream media outlet.

Then, the problems started. With increased interest and positive sentiment in Bitcoin came increased trading volume, and many trading platforms just could not handle the demand. And in response, the price of Bitcoin dropped back down to $500.

Liquidity Issues at Exchanges

Coinbase, a US-based startup, suddenly announced that it was hitting its normal buy limits and warned users that, while they could place orders, these orders would not be priced for up to 5 days. At Coinbase, investors cannot buy Bitcoin reliably. Note that Coinbase is not technically an exchange, but because of its ease-of-use and trustworthiness, many investors go to Coinbase to buy Bitcoin.

Coinbase Liquidity Buy Limits Bitcoin

Mt.Gox, a Japan-based exchange, continues to have USD withdrawal liquidity issues. At Mt.Gox, investors cannot sell Bitcoin reliably.

Bitstamp, a Slovenia-based exchange, was hit with a DDOS (denial of service) attack this morning and went down just when the price dropped and investors wanted to buy.

Bitstamp DDOS Attack Liquidity Bitcoin

Coinsetter, a relatively new trading platform, does not yet allow wire transfers from US customers and has trade minimums of 1 BTC.

Coinsetter Liquidity Issues Bitcoin

Related: Coinsetter Launches US-Based Bitcoin Forex Trading Platform

These liquidity issues are a symptom of the reality that it is still early days for Bitcoin and demand is growing incredibly fast. But the problems these exchanges have experienced also highlight the risk in being a currency speculator in Bitcoin. You may be able to buy low or sell high, but perhaps not both on the same day.

Note: Other exchanges exist that were not profiled, namely BTC China (now the largest Bitcoin exchange in the world), BTC-e, and others. Read our comparison of exchanges and Bitcoin wallets to learn more.

Bitcoin Week: Coin Validation, Coinsetter, Titan Mint, Subway, More

Bitcoin News

Here is a roundup of the top Bitcoin news from last week.

Subway now sells sandwiches for Bitcoin.

Coinsetter launches trading platform.

High profile Bitcoin startup Circle added Raj Date to its Board of Directors.

Coin Validation proposal causes an uproar among Bitcoiners.

We interview new startups Titan Mint and Seventh Continent.

Coinsetter Launches Bitcoin Trading Platform

Tuesday, November 12

Wednesday, November 13

Thursday, November 14

Friday, November 15

Saturday, November 16

Sunday, November 17

Senate Committee Listens to Bitcoin Experts, Expresses Open-Mindedness

Expert Witnesses Ask Government to Enable Innovation

Today, a select group of U.S. officials and expert witnesses convened in Washington to discuss the current challenges facing law enforcement and regulatory agencies before the U.S. Senate Committee on Homeland Security and Governmental Affairs, in a hearing called “Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies”.

Senator Tom Carper, a Democrat from Delaware and Chairman of the Homeland Security and Governmental Affairs Committee, presided over the hearing.

 Senate Committee Hearing Patrick Murck Bitcoin Foundation

Bitcoin Like the Early Internet

Senator Carper opened his first question by comparing Bitcoin and digital currencies to the early days of the Internet. When the Internet was first growing in popularity, a lot of people jumped to concerns about cyber crimes, consumer protection, and privacy. But no one, at the time, could have imagined some of the achievements, from Google search to YouTube videos to connecting the world through social networks. Sen. Carper asked the first panel to comment on this comparison.

The panel, composed of representatives from FinCEN, the Attorney General, and the Secret Service, called the comparison relevant. There is a lot of innovation that can come from digital currencies. Governmental bodies need to stop crimes without stifling progress.

“We want to operate in a way that does not hinder innovation,” said Jennifer Shasky Calvery, Director of FinCEN, It’s important to “strike a balance,” she said.

Mythili Raman, Assistant Attorney General for the Criminal Division, added “virtual currency services in and of themselves are not illegal, so long as they obey laws.” She said that her group recognizes that there are legitimate uses of digital currency services.

 

Who Moves Faster? Criminals or Law Enforcement

Senator Carper also asked the panel how equipped and capable they felt in chasing digital currency criminals. “How confident are you that we will be able to deal with the potential criminal behavior in virtual currencies?” he asked. And, “What role does the legislative body have to play to make sure you have the resources you need?”

Edward Lowery of the Secret Service explained that law enforcement agencies have been successful in stopping virtual currency related crime. The Secret Service, in particular, has investigated many first-of-their-kind criminal activities.

Liberty reserve was called out as the largest money laundering case ever. Silk Road was mentioned as well.

Lowery made an important clarification that, although Bitcoin is in the spotlight, the predominant Eastern European cyber-criminals have not gravitated toward Bitcoin, but rather toward digital currency in locales with less aggressive laws.

Raman also asserted confidence. “We’re nimble and aggressive enough to keep up with the threat,” she said. But added that they are not ignorant to the challenges such as anonymity, working with other countries who have differing degrees of the law, and so on.

Bitcoin for Good

With so much emphasis on financial crimes, Sen. Carper asked for examples where digital currency has worked for the good?

Some of the examples provided included serving the unbanked or underbanked in our society through structures like stored value cards. Also online banking was called out as a way to make business more efficient and therefore better for the consumer.

Raman stated that there is “plenty of opportunity for virtual currency to operate within existing laws.” With respect to addressing financial crimes, we just need to “keep pace” and “remain vigilant.”

Bitcoin Experts Encourage Government to Build Supportive Environment for Innovation

In the second panel, Bitcoin experts from the Bitcoin Foundation, Circle, and George Mason University commented on what was needed to encourage innovation and consumer protectionism.

Patrick Murck, General Counsel for the Bitcoin Foundation, gave an overview of Bitcoin in his opening statement, calling it “like email for money” and “programmable cash.” He emphasized that while we think about Bitcoin as solely a currency now, it could have wide-spread benefits to non-financial services applications like identity verification and property management.

Murck said that Bitcoin can reduce exploitation of underbanked people, even in the U.S. where financial exclusion is a problem. “Access to financial services directly correlates to increases in dignity and self-liberation,” said Murck. Bitcoin can help move people from being unconnected to connected via the digital economy.

Law enforcement may need to develop new methodologies, Murck said while at the same time complimenting the examples of success in adapting to increasingly digital and connected world.

Murck said that the Bitcoin Foundation is “looking beyond the Silk Road,” adding that the markets (the price of Bitcoin) expressed relief when the Silk Road owner and operator was arrested.

Related: The Fall of Silk Road

 

Who is Bitcoin?

There was some confusion expressed by Sen. Carper about who originally created Bitcoin and who manages it.

“It wasn’t Al Gore, was it?” joked Carper, to which Jerry Brito from the George Mason University Mercatus Center jested back, “he hasn’t denied it!”

Fundamentally, Sen. Carper wanted to know what the risk was in that the original author of Bitcoin, Satoshi Nakimoto, has remained anonymous.

Mr. Murck explained that the Bitcoin Foundation exists to serve the Bitcoin ecosystem, but there is no Bitcoin company.

Bitcoin is decentralized and therefore is inherently transparent, making it difficult for sustained illicit behavior.

While everyone is grateful for the work of Satoshi Nakimoto, said Mr. Murck, more than half of the original codebase has been rewritten. Mr. Brito added that because the protocol is open-source, some of the top technical minds have scrutinized it.

“At the moment, whoever Satoshi is seems largely irrelevant.” said Mr. Murck, adding that maybe that was by design.

Jeremy Allaire adds the Entrepreneur’s Perspective

Jeremy Allaire, veteran entrepreneur and CEO of the newly formed Circle Internet Financial, provided a perspective on the challenges of growing new Bitcoin businesses.

Senate Committee Hearing Jeremy Allaire Circle

Mr. Allaire confidently asserted that digital currency, and Bitcoin in particular has the potential to decrease business costs, decrease fraud risk, and increase consumer privacy. In short, it’s a game-changer.

He added, “it’s important that federal authorities understand how [Bitcoin] works.”

Mr. Allaire explained that the Internet had been at the center of global innovation in recent decades, especially thanks to open platforms, but financial services have been largely insulated until now. “The same level of advancement can be achieved with Bitcoin,” said Allaire.

For his part, Mr. Allaire’s new high profile startup, Circle, intends to fully comply with all applicable laws, has registered with FinCEN and is applying for licenses with states.

Read: Circle, A High Profile Bitcoin Startup, Raises $9M with Seasoned Team

Mr. Allaire suggested that there are risks of not moving fast enough as regulators. While US regulators and law enforncement are justifyable focused on bad actors, there is “also a risk if government doesn’t enable new startups to drive financial services innovation.” The US could fall behind on innovation, he said, explaining that the largest Bitcoin exchanges are now in China and Europe.

Regulatory Tools are Sufficient

It seemed like the areas of greatest agreement were three-fold.

First, everyone on the panel agreed that Bitcoin has the potential for incredible innovation. Second, regulatory bodies must understand the digital currency in a swift manner. And third, the existing regulatory tools are sufficient to govern the use of Bitcoin.

Mr. Murck gave an example of how businesses that even have the word “Bitcoin” in their description are getting bank account applications rejected due to fear and uncertainty about a currency that is only 4 years old.

Mr. Brito compared Bitcoin to 3D printing, saying that 3D printing can be used for good, but it can also be used to create illicit guns. We must understand that the positives outweigh the risks.

With respect to the financial services regulation as it exists, Mr. Allaire acknowledged that the “bar needs to be higher for financial services in the U.S.” He compared the creation of a Bitcoin exchange to a photo sharing app like Instagram. “It’s not appropriate for it to be as easy for financial services,” said Allaire, explaining that Circle raised the appropriate capital upon launch to secure licenses and hire experts.

Mr. Murck made reference to the reciprocity framework in the EU, offering that legislators could look at that as a model. This framework allows businesses to more swiftly get licensed in an EU country if they have been licensed by at least one EU country already.

 

Wrapping Up: Quoting Einstein and Mrs. Einstein

In closing the two-panel session, Senator Tom Carper quoted Albert Einstein and his wife

Einstein was known to have said, “in adversity lies opportunity,” which Sen. Carper felt was an apt analogy to the current state of Bitcoin.

With respect to his own understanding of the digital currency, he quoted Mrs. Einstein who, when asked of her familiarity with her husband’s work on relativity, responded, “I understand the words, but not the sentences.”

Senator Carper said that he is trying to understand and wants to find solutions that minimize the bad while maximizing the good.

You can watch the 2.5 hour session in entirety on C-SPAN.

The price of Bitcoin rose sharply to $650 following the conclusion of this public hearing.

Top 10 Countdown: Most Popular Bitcoin Stories in October 2013

Baidu Accepts Bitcoin

Here are the top 10 most popular stories On Bitcoin brought you in October 2013.

10. Checkout Using Bitcoin and Google Glass with GlassPay

GlassPay is a mobile app that lets Google Glass users scan items at retail, assemble a shopping cart, and pay using Bitcoin.

9. Bitcoin: Liberating Organic Farmers (Movie)

This short documentary is about how small organic farmers are using bitcoins to reach their customers directly – with no fees and middlemen.

8. Bitcoin Wallet Goes Mobile with New Coinbase iPhone App

To the delight of its userbase, Coinbase announced the availability of the Coinbase iPhone app. Now users can buy, sell, and send Bitcoin on iOS.

7. Bitcoin Breaks $200 in Second Highest Historical Price Peak

The price of Bitcoin starting soaring over the weekend thanks to activity in China and the fall of Silk Road. The rally has continued past $200.

6. Bitcoin Coming to the Big Screen in Silk Road the Movie

The next tech mogul to be profiled by Hollywood may Ross William Ulbricht, the recently arrested founder of Bitcoin drug marketplace Silk Road.

5. Bitcoin Cloud Wallets Comparison: Security and Liquidity

Which site is best for keeping a cloud bitcoin account? Learn about the leading providers and how they compare across security and liquidity.

4. Circle, A High Profile Bitcoin Startup, Raises $9M with Seasoned Team

Jeremy Allaire has raised $9 million for his new venture called Circle, a company that is embracing the Bitcoin revolution to offer lasting services.

3. You May Have a Fortune on Your Hard Drive: Recovering Lost Bitcoin

A Norwegian man finds 5,000 Bitcoin on his hard drive worth $800,000. Do you have lost Bitcoin? Here’s how to recover it.

2. Bitcoin Price Starts Soaring Again Thanks to Chinese Activity

The price of Bitcoin rose to $165, up from $125 a week ago. The downfall of Silk Road and trading activity in China are key factors in the increase.

1. Bitcoin Flash Crash: Real-Time Report of What’s Happening

Read the latest on the Bitcoin Flash Crash of October 2013.

 

Thanks for reading in October!