Tag Archives: media
Liberty Reserve Shut Down; What Will Happen to Bitcoin?
Liberty Reserve Shutdown; What About Bitcoin?
Online currency exchange Liberty Reserve was shut down after allegations of laundering $6 billion. The New York Times reported:
The currency exchange, Liberty Reserve, operated beyond the traditional confines of United States and international banking regulations in what prosecutors called a shadowy netherworld of cyberfinance. It traded in virtual currency and provided the kind of anonymous and easily accessible banking infrastructure increasingly sought by criminal networks, law enforcement officials said.
So, what is the impact on Bitcoin? Is Bitcoin next, some media outlets pondered. Well, there are a variety of opinions:
The New York Times reflected on the differences between Bitcoin and Liberty Reserve, commenting that Bitcoin is not anonymous yet, but could be.
Contrary to conventional wisdom, Bitcoin is not anonymous. In fact, security experts say that if prosecutions like Liberty Reserve continue, the most likely targets are major payment systems like WebMoney and eForexGold, payment systems that security experts contend allow their users to move capital anywhere in the world without verifying their identities.
The Washington Post saw more similarities between Liberty Reserve and Bitcoin.
Of course, that description could just as easily describe Bitcoin. Anyone can create a new address for accepting bitcoins and then transmit funds to other Bitcoin addresses without furnishing identifying information. This feature has raised concerns that the currency has been used for activities such as drug dealing or illegal gambling.
Forbes saw a canary in the coal mine, asking is Bitcoin next.
Will prosecutors move on to shutting down Bitcoin (BTC)? After all the parallels between BTC and LR are strong — both are virtual currencies that use an exchange to convert legitimate currencies into electronic ones.
Patrick Murck, legal counsel for the Bitcoin Foundation, wants to avoid that comparison. As he told the Journal, “I think [the Liberty Reserve indictment] is just another giant, flashing warning light to bitcoin exchanges: If you’re not compliant, there are some serious risks, both at the federal and state levels.
Bloomberg was more optimistic, pointing out that Liberty Reserve’s demise is Bitcoin’s gain.
Bitcoin users should embrace the extra scrutiny and welcome the chance to ensure more security, making the currency less accommodating to criminals. Plus, as some Reddit commenters were quick to point out, the demise of Liberty Reserve will mean less competition for Bitcoin.
That’s the round up for the major press outlets. What do you think?
Why Bitcoin Excitement is Staying Higher After Crash
After the Bitcoin Crash
Although Bitcoin crashed hard last month, there are reasons to keep excited about Bitcoin, as GigaOm reports:
- Bitcoin is becoming more liquid
Gift card site Gyft has started accepting Bitcoin as payment.
- Real investors are starting to take Bitcoin seriously
This week, the WSJ reported that Fred Wilson’s Union Square Ventures is investing $5 million in Coinbase, a service that provides an online wallet and easy conversion between BitCoin and traditional currencies.
- Bitcoin is getting easier to understand
Forbes reporter Kash Hill kept a day to day diary of how she lived on BitCoin (albeit with difficulty) in San Francisco for a week.
- The government wants a piece of Bitcoin
Commissioner Bart Chilton of the CFTC — the agency that regulates futures contracts – says he’s thinking of regulating BitCoin.
Read the full report at GigaOm.
Top Bitcoin News Last Week: Media, Disruption, Ashton Kutcher, more
Bitcoin News
A roundup of the top Bitcoin news from May 1 to May 11:
Wednesday, May 1
Saturday, May 4
Tuesday, May 7
Saturday, May 11
CC Image by jdlasica.
Arguments Why Bitcoin Will Survive Amidst Negative Media Attention
Bitcoin Media Attention
At a time when much of the media is saying Bitcoin’s best days are in the past, Barry Randall, a contributor for MarketWatch, presents a few arguments why Bitcoin will succeed.
Bitcoin screw-ups have resulted in fewer Bitcoins but never more of them
Despite huge profit motives (both legal and otherwise) the supply of Bitcoins is stable, growing in accordance with the algorithms that define the currency, and outside the control or influence of third parties.
The opportunity cost of Bitcoin is negative
Bitcoin only costs roughly the price of the transaction necessary to convert existing currency and which has appreciated considerably in the four years of its existence. In other words, instead of being penalized for being an early adopter, you’ve thus far been rewarded.
Some observers have complained that this anti-inflationary dynamic encourages hoarding, which in turn reduces Bitcoin’s ability to serve as a “medium of exchange,” one of the necessary attributes of any form of money. But this same dynamic cuts in both directions: in our new world where even the ultra-conservative Japanese feel the need to debase their own currency, there is huge utility in adopting a currency that by design can’t be debased.
Read the full commentary at MarketWatch.
CC image by zcopley.
Bitcoin Media: New York Times Profiles Bitcoins
Bitcoin Media Goes Mainstream
In a sign of growth in mainstream awareness of Bitcoin, the New York Times published a feature on the revolutionary alternative currency. In the article, topics including Bitcoin mining, trading, transactions, and economies are covered.
On the Bitcoin economy:
The price increase becomes a question of supply and demand. Unlike other currencies that can adjust the money supply depending on economic conditions, bitcoins have a supply that is fixed. The amount of new coins that can be minted was plotted at the outset with a finite number of coins at the end, roughly 21 million in the next century. Today, the rate is 25 new coins every 10 minutes; for the first four years, it was twice as many, 50 every 10 minutes.
On Bitcoin transactions:
So far, excluding investors and day traders, the main use of the currency appears to be illicit activity. There are the online gambling sites that use bitcoins. And the anonymous online marketplace Silk Road, which accepts only bitcoins, is “overwhelmingly used as a market for controlled substances and narcotics,” according to a paper on Silk Road written by Mr. Christin of Carnegie Mellon.
He used clues on the site, including buyer feedback reports, to calculate how much and what kind of business was being transacted. His conclusion, as of July 2012, was that $1.2 million in business was carried out each month, much of it for buying small amounts of narcotics that were delivered by mail. “We did see it was growing,” he said of the total value of the trades. “It pretty much doubled in the six months I followed it.”
Read the full article at the New York Times.
New York Times building photo by wallyg used under Creative Commons license.
