Tag Archives: Coinsetter
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.
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.
Coinsetter, a relatively new trading platform, does not yet allow wire transfers from US customers and has trade minimums of 1 BTC.
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.
Coinsetter Launches US-Based Bitcoin Forex Trading Platform
Coinsetter Targets Active, High Volume Traders with New Capabilities
In the race among Bitcoin exchanges, there is a new player: New York City-based Coinsetter. The company introduced its forex trading platform for Bitcoin to the public today.
“With this release,traders from around the world will have access to an institutional class platform that enables customers to execute bitcoin trades on a millisecond level with more reliability than any other option in the market,” said Coinsetter in a statement. “On top of its proprietary millisecond matching engine, Coinsetter platform will soon aggregate the order books of other bitcoin exchanges to provide more liquidity than any single exchange can alone.”
The company is marketing its platform to active traders, those familiar with existing trading paradigms. It provides a maker-taker pricing model for high volume traders, and institutional margin and financing for business customers.
For the month of November, Coinsetter is offering free trading and free SEPA deposits and withdrawals to celebrate the launch.
The company raised a venture capital round earlier this year of approximately $500K from the Bitcoin Opportunity Fund and Tribeca Venture Partners.
Embracing Regulatory Requirements
Coinsetter was founded by 28-year-old Jaron Lukasiewicz, who has worked in the financial services industry since graduating from Rice University in 2008. Mr. Lukasiewicz is using this experience to understand and embrace the regulatory requirements for operating a trading platform in the U.S.
Coinsetter CEO Jaron Lukasiewicz pictured second from right.
Several Bitcoin exchanges have run into troubles with regulation. For example, earlier this year, Tradehill suspended trading and Mt.Gox halted USD withdrawals. Later in the year, 22 Bitcoin companies were subpoenaed by the New York Department of Financial Services to answer critical questions about the digital currency.
In a statement, Coinsetter reported that it has secured a compliance-approved bank account with a U.S. banking institution, which will soon support ACH transfers for U.S. customers. For its international customers, Coinsetter has secured a compliance-approved bank account from Sparkasse Bank Malta plc, a subsidiary of Erste Group, one of Europe’s largest financial services providers.
“Coinsetter believes these relationships translate into a tangible value proposition for its customers, giving users confidence in timely bank deposits and withdrawals to and from Coinsetter,” said the company.
Excerpt from related story: Finding Business Model Opportunities in Bitcoin – Coinsetter CEO
Today, he proposes, Bitcoin is the dominant virtual currency. Not simply in terms of transactions and value, but based on awareness – including awareness outside current users of the market. The first mover advantage is significant and Mr. Lukasiewicz asks us to spend time thinking about how it has the potential to become an “IP address for money.”
Learn more or start trading at www.coinsetter.com.
22 Bitcoin Companies Issued Subpoena by New York Department of Financial Services
22 Companies Called to New York to Answer Questions about Bitcoin
The New York State Department of Financial Services has subpoenaed 22 companies in an effort to better understand the uses and implications of alternative currency Bitcoin.
“If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country’s national security, but also the very existence of the virtual currency industry as a legitimate business enterprise,” said Benjamin M. Lawsky, Superintendent of Financial Services, in a release. “We believe that – for a number of reasons – putting in place appropriate regulatory safeguards for virtual currencies will be beneficial to the long-term strength of the virtual currency industry.”
Forbes published a list of 22 companies that were subpoenaed due to their involvement in Bitcoin.
- BitInstant
- BitPay
- Coinabul
- Coinbase Inc.
- CoinLab
- Coinsetter
- Dwolla
- eCoin Cashier
- Payward, Inc.
- TrustCash Holdings Inc.
- ZipZap
- Butterfly Labs
- Andreesen Horowitz
- Bitcoin Opportunity Fund
- Boost VC Bitcoin Fund
- Founders Fund
- Google Ventures
- Lightspeed Venture Partners
- Tribeca Venture Partners
- Tropos Funds
- Union Square Ventures
- Winklevoss Capital Management
Below is the full release providing context on the subpoena.
CC image by wallyg
Finding Business Model Opportunities in Bitcoin – Inside Bitcoins NYC
Trends to watch and how to think about Bitcoin as a business
At the Inside Bitcoins NYC conference, Coinsetter CEO Jaron Lukasiewicz spoke to a packed crowd. His message: the current financial system is outdated and relies on critically dated infrastructure. He believes that “people involved in Bitcoin [are saying] this is not acceptable anymore.”
Exploring the current financial system he points to three to five fund transfer times under ACH payments and drawing experience from his previous startup in ticketing, companies paying over 40% of revenues out in credit card fees. Basically, in 2013, it is still exceptionally difficult to send money to a friend and this is leading to a customer revolution.
Today, he proposes, Bitcoin is the dominant virtual currency. Not simply in terms of transactions and value, but based on awareness – including awareness outside current users of the market. The first mover advantage is significant and Mr. Lukasiewicz asks us to spend time thinking about how it has the potential to become an “IP address for money.”
Coinsetter is a leveraged forex trading platform, focused on active traders. Originally he questioned the number of exchanges being set up at the moment and why there isn’t an original business model. On reflection he thinks this is actually important. The more liquidity that comes into the Bitcoin system, the better. It will draw more users; innovation and a greater focus on customers. The latter being a key concern for Mr. Lukasiewicz, there is “room for a lot more exchanges to come online, but it is important to focus on a particular customer.”
Bitcoin Companies Working with Government and Banks
Focusing on the themes that will lead to business opportunities, he has concerns about government regulation and how banks will interact with Bitcoin. One of his theories is that anonymous financial transfer systems will not be easily integrated into the current banking system. Know Your Customer concerns and regulations will be a significant hurdle, along with security for institutions with large holdings. When challenged on these points during Q&A, Mr. Lukasiewicz clarifies that he sees this as layers added on top of the current system, rather than a change to current Bitcoin protocols – apparently to the great relief of the audience.
In conclusion, he sees the best opportunities for those companies that firstly, concentrate on Bitcoin as a payments protocol, and secondly, have a strong focus on having a strong customer proposition and delivering an appealing experience.
Authored by Michael Smouha and Ronan Murphy, Contributors to On Bitcoin
