Tag Archives: Bitcoin Leah

Alleged Silk Road Mastermind Ross Ulbricht Pleads Not Guilty

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“Silk Road is going to become a phenomenon and at least one person will tell me about it, unknowing that I was its creator.” — Journal entry from the confiscated laptop of Ross Ulbricht

On Friday, Ross Ulbricht, alleged “kingpin” behind massive online black market Silk Road, plead “not guilty” to charges of conspiring to traffic in narcotics, hack computers, and launder money.

Ulbricht has been charged under a provision typically reserved for mafia dons and cartel bosses, the “Continuing Criminal Enterprise Statute” also known as “The Kingpin Statute.” The Kingpin Statute carries a mandatory minimum sentence of 20 years imprisonment (a maximum sentence of life imprisonment), a fine of no more than $2 million, and forfeiture of profits and any interest in the enterprise.

Additionally, Assistant U.S. Attorney Serrin Turner alleged that Ulbricht spent $730,000 hiring hit men to to kill six of his enemies. However, Ulbricht will not be charged with murder as their is no evidence of any killings being carried out.

According to a recent Forbes article citing  Addiction journal, during Silk Road’s two-and-a-half-years in operation (beginning “in or about January 2011″), nearly 20 percent of drug consumers in the U.S. used narcotics bought on Silk Road. the site facilitated more than a million transactions and generated the equivalent of more than $1.2 billion in revenues and approximately $420 million in commissions.

The official indictment issued Tuesday by the U.S. Attorney for the Southern District of New York states that Silk Road included a “Bitcoin-based payment system that served to facilitate the illegal commerce conducted on the site, including by concealing the identities and locations of the users transmitting and receiving funds through the site.”

Silk Road Ross Ulbricht Fake IDs Bitcoin

Image: Ross Ulbricht used a series of fake IDs to run his Silk Road enterprise

“The idea was to create a website where people could buy anything anonymously, with no trail whatsoever that could lead back to them,” wrote Ulbricht in a journal on his confiscated laptop. Ulbricht’s plea of “not guilty” to masterminding Silk Road is surprising considering the wealth of evidence that exists against him. Prosecutors claim to have between eight and ten terabytes of evidence that can potentially be used as evidence in Ulbricht’s trial.

A man of Libertarian ideals, Ulbricht’s Linked In account contained the following passionate statement of intent:

Now, my goals have shifted. I want to use economic theory as a means to abolish the use of coercion and aggression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.

Video: the story of the Dread Pirate Roberts

Ulbricht’s “king pin” moniker of the “Dread Pirate Roberts” is a reference to an idea from the popular film The Princess BrideIn the film, the heroine Buttercup discovers that the fearsome Dread Pirate Roberts who has kidnapped her (from her original kidnappers) is actually her long lost love Wesley.

How could this be? Wesley explains that the original Dread Pirate Roberts retired rich years before and that there have been many Dread Pirate Roberts since. With the name of “Dread Pirate Roberts,” the truth isn’t essential, the idea is what changes reality. Perception is reality. Wesley tells his love Buttercup, “The name is the important thing for establishing the necessary fear. You see, no one would surrender to the Dread Pirate Wesley.”

Ulbricht is quoted as saying, “Every action you take outside the scope of government control strengthens the market and weakens the state.” Ulbricht’s trial is slated to begin in early November and run for four to six weeks.

 

@BitcoinLeah

About the author: Bitcoin Leah

Bitcoin Leah loves nerds and Bitcoin. Based in LA, she is a published author and YouTube vlogger. She is a regular contributor for On Bitcoin and tweets at @BitcoinLeah.

Follow @BitcoinLeah on Twitter!
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How 5 Influential Countries Are Regulating Bitcoin

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“As the world becomes more digital, paying physically with bills, gold or credit cards will seem archaic. Everyone will have bitcoins.” – BTC China CEO Bobby Lee.

Last week, viewers from 117 countries, commonwealths and territories watched as the New York State Department of Financial Services held hearings on the future of Bitcoin.

This viewership was indicative of a global excitement about the potential of Bitcoin, and a keen interest in how US regulators are thinking about the digital currency.

Bitcoin BRICs Regulation

Jeremy Allaire, Founder, Chairman & CEO of Circle, a financial services company developing products that make it easy for consumers and businesses to exchange, store, send and receive digital currencies, said that digital currency is one of the first major Internet-driven technology issues that will require collaboration on a world wide basis in order to take hold.

The decision of lawmakers on how to regulate digital currency is the main obstacle between Bitcoin and its preordained future as a global transaction network, offering advantages of lower transaction fees, faster international transfers, as well as a number of security advantages.

To help paint the landscape today, we took a look at how 5 influential countries are regulating Bitcoin. The United States, of course, and the BRICs (Brazil, Russia, India, China) which represent the top 4 emerging national economies.

United States

Back in November 2013, a Senate committee heard testimony from Bitcoin executives and law enforcement officials. There was a resounding message that Bitcoin, in and of itself is not illegal, and the Senate committee expressed positive sentiment.

Last week, The New York State Department of Financial Services conducted two days of hearings on virtual currencies.

Coinbase, a Bitcoin wallet and platform where merchants and consumers can transact with the new digital currency bitcoin, said that a scaling of requirements of state legislation is important in digital currency adoption.

Circle’s Allaire said that states are using outdated rules on transactions that do not account for the Internet. There was a call from the panelists for a common licensing model and examination to be established throughout the states. Allaire encouraged legislatures to have a “forward leaning posture.”

Brazil

With inflation at 6% as well as the highest tax rate of any of the emerging economies, Bitcoin is an appealing alternative for Brazilians who are mainly interested in it as an investment vehicle. Batista, a former program developer for Morgan Stanley (MS) in Brazil, believes that the volume on Mercado Bitcoin, Brazil’s largest platform for buying and selling Bitcoin, will grow to 160 million reais a month in 2014.

Presently, Brazil’s central bank isn’t regulating Bitcoin because, for now, the crypto currency isn’t significant enough to be of “systemic importance.”

Russia

“The Bank of Russia has warned that Russian legal entities providing services for the exchange of “virtual currency” in rubles and foreign currency, as well as for goods (works, services) will be considered as a potential involvement in the implementation of suspicious transactions in accordance with the legislation on counteraction to legalization (laundering) proceeds of crime and financing of terrorism.”  - Statement issued on January 27th by the Central Bank of the Russian Federation 

The Bank of Russia has warned citizens of Bitcoin’s possible ties to gangs into money laundering and the financing of terrorist organizations, and has strongly discouraged its use.

Meanwhile, German Gref, head of Sberbank, Russia’s largest bank, has been a vocal Bitcoin advocate, calling Bitcoin, “a very interesting global experiment that breaks the paradigm of currency issuance.”

While issuing strong statements against Bitcoin, Russia has yet to issue any sort of ban on digital currencies.

India

Due to fear of arrests and raids by tax officials, many Indian Bitcoin businesses have (at least temporarily) shutdown. After the Reserve Bank of India issued a warning on the risks of digital currencies, the Bitcoin community of India is seeking legal help in order to clarify the legal landscape of doing business in the country.  In the third week of February, The Bitcoin Alliance of India will be meeting with the Reserve Bank of India to discuss the future of digital currencies in India. There has been increased lobbying in India for a “clear regulatory framework on digital currencies.”

China

“Today we received notice from our 3rd party payment processor and they essentially have cut us off from allowing customer deposits into BTC China’s Bitcoin exchange,” said Bobby Lee, CEO of BTC China, the world’s largest Bitcoin exchange in December 2013.

In mid-December, The People’s Bank of China ruled that merchants were not allowed to accept Bitcoin and banks and payment processors were forbidden from coverting Bitcoin in yuan. Deposits into Chinese Bitcoin exchanges were banned, and the price of Bitcoin tumbled nearly 50% overnight.

However, there is still hope as Bitcoin wasn’t all out banned, just harder to purchase.

BTC China has since found a loophole to continue business whereby “customers can now buy bitcoins from the exchange by depositing their funds directly into the company’s account.”

Conclusion

In conclusion, regulators are still contemplating how to support the innovation that comes from digital currency while also preventing the side effects of Silk Road and Sheep Marketplace. The United States and the BRICs are all paying close attention to Bitcoin and everyone is watching the next moves carefully.

 

@BitcoinLeah

About the author: Bitcoin Leah

Bitcoin Leah loves nerds and Bitcoin. Based in LA, she is a published author and YouTube vlogger. She is a regular contributor for On Bitcoin and tweets at @BitcoinLeah.

Follow @BitcoinLeah on Twitter!
Tip Bitcoin Leah: 3NM4DLjDQ7AnQaDVjua8crWJXgdqwPwaV8

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Coinbase, Circle and Overstock Testify on Bitcoin in New York to Persuade Regulators

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“In a rapidly evolving landscape, the goal of digital currency regulation is to make sure this technology, like the Internet in the 90s, is allowed to flourish and bring all of it’s great efficiencies to the world in a safe manner.” — Fred Ehrsam, co-founder of Coinbase

The New York State Department of Financial Services conducted two days of hearings (January 28th and 29th) on virtual currencies.

The first day featured investors in Bitcoin companies and the second day heard testimony from entrepreneurs and legal experts. Video of the testimony recorded is available online for free viewing.

In this article, we recap a panel on the second day called Virtual Currency Commerce and Consumer Protections, Bitcoin’s interests were represented by entrepreneurs and industry leaders:

  • Fred Ehrsam, co-founder of Coinbase, a bitcoin wallet and platform where merchants and consumers can transact with the new digital currency bitcoin;
  • Jeremy Allaire, Founder, Chairman & CEO of Circle, a financial services company developing products that make it easy for consumers and businesses to exchange, store, send and receive digital currencies; and
  • John Johnson of Overstock.com, a discount online shopping retailer based in Salt Lake City, Utah that sells a broad range of products including furniture, rugs, bedding, electronics, clothing, jewelry and cars.

In the opening statements, Ehrsam stated that in a “rapidly evolving landscape” the goal of digital currency regulation “is to make sure this technology, like the internet in the 90s, is allowed to flourish and bring all of it’s great efficiencies to the world in a safe manner.” He referred to Bitcoin as an “extremely powerful technology” and stated that Coinbase’s goal is “to bring the efficiencies created by the Bitcoin network to the masses.” Ehrsam lauded Bitcoin’s ability to transfer and prove ownership without a third party.

Statue of Liberty

Circle Internet Financial CEO Jeremy Allaire’s opening statement listed the many benefits of digital currency: a significantly lower cost than credit card companies, a powerful open platform, global in scope, and nearly instant, verifiable transactions.

Allaire acknowledged that there are currently many risks associated with bitcoin, such as price volatility as well as a lack of consumer protections and safe guards around the theft of digital assets.

Executive Vice Chairman of Overstock.com Jonathan Johnson recounted that in early January, Overstock.com became the first major online retailer to accept bitcoin as payment for merchandise. On the first day, Overstock.com transacted 700 sales ($130,000) in bitcoin, and as of January 29th had recorded $600,000 of sales with 3000 customers, many of whom were new to Overstock.com.

What Does the Future Hold for Bitcoin?

Panelists were asked where they envision Bitcoin in a year. Eshram called Overstock.com “a great beacon” for the future adoption of Bitcoin, and he cited a demographic shift in Coinbase.com’s user base away from an early tech adopter crowd to one more representative of the mainstream.

New York Hearings Bitcoin

Pictured above: executives from Coinbase, Circle and Overstock.com testify in New York

Allaire stated that Bitcoin is entering a phase of being a commercially viable option. He anticipates that as the utility value of bitcoin increases  then people who have bought bitcoin, and are holding bitcoin, will stop holding and begin to spend more freely. Allaire stated that lack of clarity around regulation as potentially limiting to Bitcoin’s adoption. He listed potential pitfalls for Bitcoin: IRS tax issues, money laundering and anonymity issues.

Overstock.com stated that in a year, they hope that some suppliers are accepting bitcoin so as to be able to hold and spend bitcoin instead of immediately converting the crypto-currency to USD. Johnson said that, “as adoption increases, at some point we’ll reach a tipping point.

Is Bitcoin Really Anonymous?

The question of anonymity was addressed with all panelists saying that overall anonymity is not an issue. Allaire stated that Circle is heavily invested in compliance networks but emphasized the importance of a level of anonymity in order to prevent spying. Allaire explained that, without appropriate safeguards, the use of personal identifiable information could be used in ways that consumers may not want.

On the question of market volatility, all panelists envisioned that, with a shift away from speculation and towards commercial transactions, crypto-currency price stability would occur over time.

Allaire stated that for price stability, the “single most important thing we can do is get some serious exchanges established here in New York that are focused on being mature trading platforms that are able to be used both by retail investors but also by large institutional participants.” When this occurs, “We will see greater volume, greater liquidity, more sophisticated pricing tools, derivatives, hedging, etc which will allow price volatility to subsist a great deal.”

The NYDFS said that viewers from 108 different countries had watched the panel discussions on Bitcoin, and asked the panelists about the specific challenges businesses face due to the nature of a global market. The panelists said that regulation between states and countries is presently limiting the adoption of Bitcoin. Allaire said that digital currency is one of the first major Internet driven technology issues that will require collaboration on a world wide basis. Digital currency will require a degree of coordination in order to take hold. Overstock.com said they currently only accept bitcoin within the United States.

Coinbase said that a scaling of requirements of state legislation is important in digital currency adoption. Allaire said that states are using outdated rules on transactions that do not account for the Internet. There was a call from the panelists for a common licensing model and examination to be established throughout the states. Allaire encouraged legislatures to have a “forward leaning posture.”

Overstock.com said that the greatest risk in using virtual currency is presently liquidity. Johnson said that the question is “Will bitcoin be immediately exchangeable for dollars?” Right now through a partnership with Coinbase, Johnson said, the answer is yes.

Can a bank or corporation go and create their own version of Bitcoin? The panel said this is highly unlikely. Bitcoin is an open protocol, which has allowed it to be peer reviewed for years. In a way the world has never seen before, no one owns Bitcoin, and, no one controls it. An institute trying to replicate it wouldn’t have the same impact as Bitcoin.

The panel stated that they would like banks and insurance companies to become involved in Bitcoin. However, Allaire said that established banks have very little interest in Bitcoin adoption due to its murky Silk Road history, but he did not feel it was an issue of risk. The panelists predicted that it will take awhile for the risk industry to be willing to get on board.

All panelists compared Bitcoin’s potential to that of the Internet in the 90s and expressed a hope that, with a growing global awareness, regulation doesn’t inhibit the “enormous potential” of the Bitcoin network but will instead put the necessary foundations in place to prevent crime, protect consumers and allow Bitcoin to thrive. The decisions made by the New York State Department of Financial Services will influence and set precedent for the way the rest of the United States deals with regulating digital currencies.

CC image by aa7ae.

@BitcoinLeah

About the author: Bitcoin Leah

Bitcoin Leah loves nerds and Bitcoin. Based in LA, she is a published author and YouTube vlogger. She is a regular contributor for On Bitcoin and tweets at @BitcoinLeah.

Follow @BitcoinLeah on Twitter!
Tip Bitcoin Leah: 3NM4DLjDQ7AnQaDVjua8crWJXgdqwPwaV8

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Overstock.com Becomes First Major Online Retailer to Accept Bitcoin

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This week, Overstock.com became the first major retailer to accept Bitcoin for online purchases.

In December, Overstock.com CEO Patrick M. Byrne announced plans to begin accepting Bitcoin as payment in the second half of 2014. Obviously anxious to get the show on the road, less than a month later, the online retailer, which sells everything from electronics to jewelry to bedspreads, is open for Bitcoin business.

Overstock.com’s website lists the following as benefits to paying in Bitcoin:

  • Ability to send and receive any amount of money instantly, anywhere, and at any time.
  • Full control of your money. Bitcoin can be managed directly from your Bitcoin wallet.
  • Full control of transactions. With Bitcoin, you control all your transactions. No one can process unwanted or unnoticed charges.
  • Secure transactions. You are not required to provide sensitive or personal information with Bitcoin.

Overstock.com CEO Bitcoin

Still in the early adopter phase, the price of Bitcoin remains volatile. Overstock.com CEO Byrne explains, “There’s no risk for [Overstock.com]. We’re not holding [Bitcoin]. It’s not so much a bet on the value of Bitcoin and how it bounces around, it’s a bet that there’s a market there.”

The risks and rewards of Bitcoin market volatility will be assumed by Overstock.com partner Coinbase.com.

Coinbase is a Bitcoin wallet and platform where merchants and consumers can transact with the new digital currency bitcoin. Boasting a $25 million investment from Silicon Valley venture capital firm Andreessen Horowitz, 771,000 consumer wallets, and 19,000 merchants, Coinbase is helping Overstock.com make Bitcoin accessible to the mainstream.

Coinbase fixes the exchange rate for each transaction and instantly converts the buyer’s bitcoins into dollars. Overstock never actually holds Bitcoin, at this stage.

 

Presently, Overstock.com only accepts Bitcoin as payment from within the United States, but on Twitter, has stated it’s intentions of going global. They’re well on their way, as only two hours after Overstock.com’s Twitter announcement, Byrne announced that about $10,000 worth of Bitcoin from about 100 purchasers had already been spent.

@BitcoinLeah

Bitcoin Leah

Bitcoin Leah loves nerds and Bitcoin. Based in LA, she is a published author and YouTube vlogger. She is a regular contributor for On Bitcoin and tweets at @BitcoinLeah.

Follow @BitcoinLeah on Twitter!
Tip Bitcoin Leah: 3NM4DLjDQ7AnQaDVjua8crWJXgdqwPwaV8

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Day Trading Crypto: Bitcoin Leah Video Interview with Johnny Roquemore

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Johnny Roquemore trades crypto-currencies. He’ll trade Bitcoin, NameCoin, and even Dogecoin. Anything that has volatility and is purely digital.

And now he’s playing with winnings, Roquemore explains in a video interview with our contributor Bitcoin Leah.

Johnny Roquemore Bitcoin Leah

It’s not for the faint of heart, says Roquemore. He’s purchased Bitcoin at prices ranging from $400 to $950, and he’s traded alternative crypto currencies that have been targets of theft and scams.

But for Roquemore, whose primary occupation is in the adult entertainment industry, trading cryptocurrencies is addictive.

Watch the interview and if you like it, send Bitcoin Leah a tip at 3NM4DLjDQ7AnQaDVjua8crWJXgdqwPwaV8.

Also follow @BitcoinLeah on Twitter to keep up with her interviews!

 

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