Mt. Gox found 200,000 Bitcoin ($116 million) in an old wallet, should check its pockets

In a bit of news that's familiar to anyone who ever put on an old jacket and found $20 in the pocket, embattled Bitcoin exchange Mt. Gox has made a fortuitous discovery. The company announced (PDF) in Japan that it found 200,000 Bitcoin (worth nearly $116 million at the moment) in a wallet from 2011 that it no longer used. That's less than a quarter of the 850,000 Bitcoins CEO Mark Karpeles reported were missing, but at the moment, at least it's something. According to its statement, the coins were moved to online wallets on the 7th, and then to offline wallets on the 14th and 15th. The mystery of what happened to Mt. Gox's funds is still far from solved, but between this news and reports of updated balances for account holders, it seems possible that there's something to be recovered from the shuttered exchange. Next up, removing all of the cushions from the sofa and pulling it away from the wall.

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Source: Yahoo Japan, Wall Street Journal, Coindesk, Mt. Gox (PDF)

Tags: bankruptcy, bitcoin, japan, mt. gox, mt.gox, mtgox Next: Medium's new iPhone app helps you read (but not write) long articles .fyre .fyre-comment-divider

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Goldman Sachs: Bitcoin Is Not A Currency

Goldman Sachs thinks that Bitcoin believers need to take a cold shower, drink some coffee, and sober up.

In the wake of Mt. Gox’s collapse, the supposed outing of Bitcoin’s creator, and some high-profile arrests, the financial services firm has put together an exhaustive survey of “Bitcoin” and “bitcoin” and ultimately finds the technology promising but the currency wanting.

The key takeaway: Bitcoin likely can’t work as a currency, but … the ledger-based technology that underlies it could hold promise.

For those still unfamiliar with the concept Bitcoin is a peer-to-peer network that allows for the proof and transfer of ownership without the need of a trusted third party, the Goldman Sachs report explains. The unit of the network is bitcoin.

Goldman Sachs’ analysts consider bitcoin — the unit of exchange — more like a commodity than a currency, according to the report.

“We would argue that Bitcoin, and other digital currencies, lie somewhere on the boundary between currency, commodity and financial asset,” write Dominic Wilson, chief markets economist at Goldman Sachs, and Jose Ursua, a  global economist with the firm. “Our best definition would be that it is currently a speculative financial asset that can be used as a medium of exchange.”

A successful cyber-currency needs a fixed exchange rate to succeed, according to the economists, and the difficulties Bitcoin faces as a store of value are significant obstacle to its adoption.

“On net, more than taking off as a widely-used alternative currency, it is much more plausible that Bitcoin eventually has a significant impact in terms of its innovation on payments technology, by forcing existing players to adapt or coopt it,” the authors write.

If Bitcoin is, in fact, a commodity, Goldman’s head of commodities research, Jeff Currie, argues that it still won’t hold a candle to the gold-standard of commodities — gold.

“A commodity is  any item that ‘accomodates’ our physical wants and needs. And one of these physical wants is the need for a store of value,” writes Currie. Currencies, by contrast, are instruments that are secured by either a commodity or a government’s ability to tax and defend.

By Currie’s reasoning, commodities become supplanted when a better commodity comes along, so, for him, the question is whether Bitcoin solves an economic problem that currently exists with gold.

“The short answer is no,” Currie writes. “Gold is not failing as a store of value as wood failed as a sources of energy in steam engines. Steam locomotives could go farther and faster on coal. But Bitcoin does not improve upon gold.”

Despite Goldman’s bearishness on the currency, the financial services firm does see promise in the technology platform itself, and other firms like the commodities trader Global Advisers are already actively trading Bitcoin directly on a proprietary basis.

Global Advisers’ founding co-principal Daniel Masters likens Bitcoin’s tumultuous trading to the spike in silver prices from 2005 to 2011.

“In my view there is voracious demand for new Bitcoin, and, similar to silver, prices will have to rise dramatically to meet it. Specifically I think the call on Bitcoin could very reasonably be $150 billion, which places it, ironically, in the same ballpark as the valuation of Amazon and of Greece’s M1 money supply,” Masters said.

Entrepreneurs and investors still see promise in the currency (or commodity) and the technology. As we’ve written previously, a new wave of startups are already launching services around Bitcoin and bitcoin that could provide the stability that the industry needs.

“We are seeing the amateur enthusiasts get weaned out and winnowed out,” said Jeremy Allaire, a serial entrepreneur and the founder of Circle – a Bitcoin startup backed by Accel and General Catalyst.

“Bitcoin has achieved real network effects on a global basis,” said Allaire. “The number of new projects and entities and companies being formed on a worldwide basis are legion… there are thousands of them.”

The critical component that’s missing for the adoption and use of Bitcoin is regulation, according to Allaire. “Ultimately what’s going to be necessary is common supervision. There need to be common rules for how digital currency exchanges, wallet services, etc. operate that are consistent around the world.”

Allaire also said that financial institutions like Goldman Sachs are going to have to step up. “All of the very top firms are very interested in the U.S. based trading exchange space,” Allaire said.

Goldman Sachs maintains that it does not yet have an institutional perspective on Bitcoin, but that several initiatives are underway to get a handle on the phenomenon.

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Illustration by Bryce Durbin

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Overstock’s Bitcoin Purchases Account For Less Than 1% Of Revenue, But It’s Growing

Since Overstock.com started to accept Bitcoin as a purchase currency, the company has received a good press for its efforts to support the nascent cryptocurrency. Working with Coinbase to process Bitcoin, Overstock.com announced that it crossed the million-dollar sale mark in the currency earlier this month.

A report out this morning better details how Overstock.com is faring with Bitcoin now that the novelty of its acceptance of the digital payment method has cooled. After the day one sales number, according to Overstock.com CEO Patrick Byrne, Bitcoin has settled in the “$20k to $30k” range, and is “gradually increasing from there.”

Let’s use the $30,000 sum, given that the company is seeing a ramp in the numbers, and if we are going to predict revenue we might as well give ourselves some room to wiggle. Let’s find out if Bitcoin is moving the needle for the company.

For calendar 2013, Overstock.com had revenue of $1.304 billion. Given that the company’s revenue is quite seasonal, we don’t want to use a fourth-quarter number to compare current Bitcoin sales run rates. So let’s take the quarterly average for the company as a starting point. That gives us a 90-day figure of $326 million, or $3.6 million per day.

$30,000 next to $3.6 million is a very small drop in the bucket. In fact, it works out to 0.83 percent. After the Sturm und Drang of the Bitcoin integration, the dollar amount is somewhat minor.

Now, its early days for both Bitcoin itself and even Overstock.com’s integration thereof, so don’t take the above as indicative of failure. More that the network for Bitcoin purchases remains modest, despite Bitcoin itself having a very high market cap.

I’ve been looking at Bitcoin volume for some time. Food for thought: Total Bitcoin in circulation is worth $7.9 billion. In the past 24 hours, Bitcoin had volume of only $18.5 million. That’s about 0.23 percent daily turnover. Picking a random stock, say, Groupon, we see that its volume as a percentage of its similar market cap is 3.7 percent daily. That’s about 16 times as much as Bitcoin sees. I think this is the impact of having around half of all Bitcoin owned by fewer than 1,000 people.

That wealth concentration means that the number of people who have enough Bitcoin to purchase items at Overstock.com is smaller than you might expect. That said, the larger Bitcoin network — so far as I can tell — is growing daily. So, expect to see Overstock.com move six figures a day in Bitcoin sales by the holiday season.

IMAGE BY FLICKR USER MARCEL GRIEDER UNDER CC BY 2.0 LICENSE (IMAGE HAS BEEN CROPPED) 

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Police officers in Newsweek Bitcoin story confirm Nakamoto quote

The officers who witnessed a key verbal exchange between a Newsweek writer and the alleged Bitcoin founder have confirmed the accuracy of the account.

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Overstock.com Exceeds $1M In Bitcoin Transactions In Two Months

Surprise! People have bitcoins and want to spend them, a fact that Overstock.com quickly discovered after they started accepting bitcoin payments.

“We did not expect to hit this milestone so quickly,” states Overstock.com Chairman and CEO Patrick M. Byrne. “Bitcoin customers are good customers, and we’re pleased to provide them this service.”

Overstock.com started accepting Bitcoin in early January by partnering with Coinbase to process the payments and handle the conversion of Bitcoin into U.S. dollars. Since then, Overstock.com reports 4,300 customers paid for over $1 million worth of goods with Bitcoin. The retailer estimates almost 60% of those are new customers to Overstock.com.

Bitcoin will likely remain a small part of Overstock.com’s sales. The retailer’s most recent financial statement indicates that it saw $397.6 million in revenue during its fourth quarter. Bitcoin transactions have a long way to go.

Overstock.com’s stock price jumped on this news and is currently trading 4% up on the day.

Up until Overstock.com started accepting Bitcoin, only small retailers and services were accepting the currency. It was originally an experiment for the retailer but today’s press release clearly shows that Overstock.com is happy with the results.

So who’s next? Newegg? Zappos? Maybe even Amazon?

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Bitcoin losses spur Mt. Gox to bankruptcy filing

Mt. Gox chief Mark Karpeles (second from right) speaks at a press conference in Tokyo on February 28, 2014.

(Credit:Jiji Press/AFP/Getty Images)

Mt. Gox, the embattled Bitcoin exchange, has filed for bankruptcy protection after falling into a state of disarray earlier this month in the wake of a security lapse that led to fraudulent withdrawals.

The exchange's CEO, Mark Karpeles, announced the news in Tokyo on Friday, saying that Mt. Gox lost nearly 750,000 customer bitcoins, as well as 100,000 of the exchange's own bitcoins. The total number of lost bitcoins translates to nearly $500 million at the current exchange rate, the Wall Street Journal reported Friday.

At the Tokyo press conference, Karpeles expressed contrition about Mt. Gox's crash, and sought to separate that development from the larger Bitcoin movement. "First of all, I'm very sorry," he said, according to Reuters. "The bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point."

Related storiesFriday Poll: Should Bitcoin be banned?Fed chief Yellen: No power to regulate BitcoinBitcoin exchanges reportedly served with subpoenasSen. Manchin demands complete US ban on BitcoinMt. Gox CEO: I'm working to find fixes for our Bitcoin exchange

The massive loss of bitcoins had been rumored all week. Due to the currency's encryption technology, it might be difficult, if not impossible, for the stolen bitcoins to be restored to their owners' accounts, leaving people across the globe with significant losses.

At its height, Mt. Gox was one of the most popular Bitcoin exchanges. It was often cited in news stories discussing the startling rise of the Bitcoin phenomenon, which at one time, flirted with a bitcoin value of $1,000.

Mt. Gox's Karpeles acknowledged that the bitcoins were stolen through a weakness in his company's system that allowed hackers to slowly withdraw the currency.

According to Karpeles' lawyer, Mt. Gox has $63.6 million in debt, and about half that in assets. Even with the filing for bankruptcy protection, Karpeles would like to see Mt. Gox live on and come back, though it's not clear whether that will happen or whether customers would come back and use the exchange. In the meantime, Mt. Gox has been shuttered.

Topics: Cybercrime Tags: Mt. Gox, Bitcoin, security, currency

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Friday Poll: Should Bitcoin be banned?

A senator calls for a US ban on Bitcoin, calling the currency "disruptive." Would you like to see a cryptocurrency crackdown, or are you on the Bitcoin bandwagon?

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Federal Reserve has no authority to regulate Bitcoin, according to Chairwoman

Well, it doesn't appear that the Federal Reserve will be stepping in to regulate the volatile virtual currency Bitcoin any time soon. According to the new Fed Chairwoman Janet Yellen, the central banking system has no authority over Bitcoin. In testimony before the Senate Banking Committee she said that, "this is a payment innovation that is taking place entirely outside the banking industry." Without a central issuer or operator it's incredibly difficult to successfully regulate and supervise these types of currencies. Don't think that Bitcoin is untouchable, however. Yellen went on to say that, "it certainly would be appropriate, I think, for Congress to ask questions about what the right legal structure would be for virtual currencies that involve nontraditional players."

Legal efforts to restrict Bitcoin have already taken off in other countries, and Senator Joe Manchin (a Democrat from West Virginia) has suggested banning the crypto-currency in the US. While an outright ban of Bitcoin seems unlikely given its growing acceptance, Japan's Ministry of Finance has indicated that it could work with other nations to establish a set of international regulations. If a set of rules could be agreed upon at an international level, it could prevent people from taking advantage of loopholes that only serve to encourage instability and abuse.

The public posturing and legal wrangling is hardly surprising following the shutdown of Mt. Gox, the largest Bitcoin exchange in the world. The firm currently holds 744,000 Bitcoins (roughly $423 million), and the future of those funds is shaky at best. Whether or not the currency continues its ascension to legitimacy may rest on the results of the Fed's investigation into Mt. Gox. But it seems increasingly likely that the government will step in to put some restrictions on Bitcoin, sooner rather than later.

(Photo by George Frey/Getty Images)

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Via: TechCrunch

Source: Wall Street Journal, Reuters

Tags: bitcoin, currency, Federal Reserve, government, Janet Yellen, japan, regulation Next: SugarSync for Android gets more offline features, full-resolution media uploads .fyre .fyre-comment-divider

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Popular Bitcoin exchange Mt. Gox files for bankruptcy protection

When the lights went out on Mt.Gox earlier this week, it wasn't entirely clear what was going on. Was the exchange about to be straightened out by another backer? What would happen to customers' coins? There were some big questions that needed answering. Today, according to the Wall Street Journal, we're at least enlightened to one of them, as it's reporting Mt.Gox is filing for bankruptcy protection. The news came from one of the firm's lawyers, speaking at a news conference in Tokyo. It was also revealed that Mt.Gox has debts currently to the tune of debt of about ¥6.5 billion ($63.6 million). The exchange had been pulled offline earlier this month amidst fears that is was possible to carry out fraudulent transactions. Understandably, this caused a great deal of frustration and anxiety for those with money and currency invested in the system. What this new development means for those customers still remains unclear, but for now at least, it's in the hands of official process.

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Source: Twitter (WSJ), WSJ

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UPDATED: Mt.Gox Files For Bankruptcy Protection, Says 850,000 Bitcoin Lost

Mt.Gox has filed for bankruptcy protection and has outstanding debt of about $63.6 million, a lawyer for the Bitcoin exchange said today during a press conference at the Tokyo District Court, reports the WSJ.

The company also disclosed that it had lost 850,000 units of Bitcoin, including 750,000 belonging to customers. That amount is worth about $477 million, based on current exchange rates.  

Founder Mark Karpeles later appeared and apologized with a bow, saying in Japanese that the Bitcoin was lost “due to weaknesses in the system.”

On Japanese TV. Subtitles read: “The 750,000 bitcoins we kept for users, (37,000 million yen), almost all gone.” pic.twitter.com/HZcx5lFsVI

— Jonathan Waller (

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Feedback Loop: 30 years of Mac, mechanical keyboards, Bitcoin alternatives and more!

BYDave Schumaker25 minutes ago 0

Welcome to Feedback Loop, a weekly roundup of the most interesting discussions happening within the Engadget community. There's so much technology to talk about and so little time to enjoy it, but you have a lot of great ideas and opinions that need to be shared! Join us every Saturday as we highlight some of the most interesting discussions that happened during the past week.

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Zynga adds Bitcoin to payment options, Bitcoin value soars

byEarnest Cavallion Jan 6th 2014 5:00PM

0Casual games publisher Zynga is now testing the use of Bitcoin in its games, a decision that has had a drastic (if temporary) impact on the overall value of the virtual currency.

"In response to Bitcoin's rise in popularity around the world, Zynga, with help from BitPay, is testing expanded payment options for players to make in-game purchases using Bitcoin," Zynga representatives wrote on Reddit. "The Bitcoin test is only available to Zynga.com players playing FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille." Despite that relatively short list, the games mentioned are Zynga's most popular, flagship offerings, demonstrating that the company has quite a bit of faith in Bitcoin, an open-source, peer-to-peer substitute for real-world cash that has achieved impressive fame in the wake of numerous international economic catastrophes.

Following Zynga's announcement, the value of Bitcoin immediately jumped to a high of $1,093 per Bitcoin, according to the Los Angeles Times. It has since receded to $955.60, and continues to drop, though overall Bitcoin value remains about $50 higher than it was immediately prior to Zynga's revelation.

(Image: Coin Desk)Reddit, LA TimesShareTags: android, bitcoin, casual-games, farmville, ios, ipad, iphone, mac, mobile, money, pc, zynga.fyre .fyre-comment-media-expanded{display:none!important}.fyre-notifier-container{display:none}.fyre .fyre-comment-divider>span.fyre-comment-reply-wrapper{top:18px}.fyre .fyre-comment-divider>a,.fyre .fyre-comment-divider>a:hover{top:20px}Farmville InfoDescription

Grow fruits and veggies and raise animals on your very own farm.

Show moreMSRP

0.00 USD

Release Date

Available Now

Genre

Simulation

Developer

Zynga

Publisher

Zynga

Rating

E (Everyone)

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EngadgetKindle for iOS updated with flashcards, notebook ...Equil JOT nabs Evernote integration for easy ...meMini's wearable camera gives you the gift of ...TUAWEvening news roundup for January 6, 2013 ...Cut the Rope 2 perfects the art of having in-app ...8 Time Machine excuses that don't make sense ...MassivelyNot So Massively: LoL downed by DDoS attack, Star ...The Stream Team: Heroics continue in World of ...DayZ destroys Hall's early sales expectations ...WoWThe WoW Insider Show LIVE! ...How to PvP ...WoW Moviewatch: Brief History of WoW ...AOL TechJoystiq

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Zynga is testing Bitcoin payments for its Web games

Zynga has revealed that it is testing a partnership with Bitpay to accept Bitcoins for in-game purchases on some of its Web-based games.

I guess it’s only natural for you to use your virtual currency to purchase virtual goods. The Zynga crowd doesn’t really strike me as the type to amass Bitcoins, but there’s bound to be some overlap.

If you want to give it a try, the test is active on Zynga.com for FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille.

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Zynga begins testing Bitcoin payments for some online games

Zynga has begun accepting virtual currency Bitcoin as payment for virtual goods in some of its games.

The social-gaming company has partnered with Bitcoin payment processor BitPay to test the cryptocurrency in a handful of its Web-based games, Zynga announced late Friday in a Reddit post. Players of FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows, and CityVille will be able to use Bitcoin to make in-game purchases, according to the post, which was confirmed by CNET.

"In response to Bitcoin's rise in popularity around the world, Zynga, with help from BitPay, is testing expanded payment options for players to make in-game purchases using Bitcoin," the company said in its post. "We look forward to hearing from our players about the Bitcoin test so we can continue in our efforts to provide the best possible gaming experience."

Related storiesLost Dogecoins: Cryptocurrency goes missingBuy this $7.85 million mansion with BitcoinEuropean banking officials: Bitcoin may not be your friend

TechCrunch, which first noted Zynga's statement, notes that Bitcoin's comparatively lower transaction fees make the virtual currency an attractive option for the struggling social-gaming company. While beating Wall Street estimates for its third-quarter earnings in October, Zynga recorded continuing declines in revenue and active user numbers.

Bitcoin has grown in acceptance in recent months, with some observers believing the digital currency could be the currency of the future. A Bank of America research report last month indicated that the decentralized currency could become a major contender to other types of online money-transfer providers.

However, the decentralized nature of Bitcoin and other virtual currencies has also raised concerns in the banking industry. The European Banking Authority in December warned against the buying, holding, or trading virtual currencies, noting that there are currently no regulations to protect consumers from financial losses in the event exchanges fail or go out of business.

Topics: Games Tags: Bitcoin, Zynga

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Zynga Links Up With BitPay For A Bitcoin Payment Test In FarmVille 2, CityVille And Other Web Games

Gaming giant Zynga has started to accept the cryptocurrency as a payment option for those buying tokens for virtual goods on the web versions of FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille. It makes Zynga the first major gaming company to accept Bitcoin.

Zynga posted the news first on Reddit rather than release an official announcement. It is calling this a “test” being run in partnership with BitPay — the startup backed by the likes of the Founders Fund and Li Ka-shing that is vying to be the “PayPal of the Bitcoin world.”

“We wanted to share with the r/bitcoin community that Zynga Inc. (NASDAQ: ZNGA) is now conducting a Bitcoin test with BitPay (https://bitpay.com/), a leading Bitcoin service provider, in select Zynga.com web games,” Zynga wrote in a post on Reddit.

“In response to Bitcoin’s rise in popularity around the world, Zynga, with help from BitPay, is testing expanded payment options for players to make in-game purchases using Bitcoin. The Bitcoin test is only available to Zynga.com players playing FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille. The games can be accessed at http://zynga.com.

“Zynga is always working to improve our customer experience by incorporating player feedback into our games. We look forward to hearing from our players about the Bitcoin test so we can continue in our efforts to provide the best possible gaming experience.”

We have tried buying tokens for the games ourselves and confirm that Bitcoin is coming up as an option in the UK — meaning that it’s likely that this is a global rollout.

We have reached out to Zynga to ask whether it plans to extend this to other games — namely those on mobile and its real-money gambling effort, currently live in the UK.

On the mobile front, considering that Zynga has a huge business on iOS devices, extending Bitcoin acceptance there could prove problematic, considering that Apple has recently shown that it does not support Bitcoin transactions.

Up to now, Bitcoin has not made much headway in the world of gaming, although it is seeing some traction in online gambling, where one Bitcoin-wielding player netted a $1.3 million win on one Bitcoin-based gambling site.

One of the attractive points about Bitcoin compared to more established currencies and payment platforms is that transaction fees tend to be lower than those of platforms that transact in more established currencies like dollars.

The deal is a nice coup for BitPay, which in December said it had processed $100 million in transactions in 2013. The startup has largely grown on the back of partnerships with merchants to process payments for things like electronics, precious metals, “and other low-margin products.” These merchants, the company has said, see “a large increase in profitability by accepting Bitcoin payments.”

That should come as good news for Zynga, which is focused on cutting costs while it grows revenues. The company was once a rising star with big social gaming hits like Farmville that people played via Facebook.

More recently, it’s fallen on harder times with a massive drop in users — its last quarterly report noted that daily active users were halved to 30 million compared to a year ago, with falling sales alongside that — as consumers flock to newer casual games and newer experiences from other publishers like King.com and Supercell.

The company has been trying hard to shore up its business and recover, appointing Microsoft veteran Don Mattrick as its CEO to replace founder Mark Pincus, laying off staff, and shuttering unprofitable games. In that vein, adding Bitcoin acceptance may not translate into billions more in sales, but it could give the company a little burnish of good PR among investors for being an early mover and innovator, as well as a boost of credibility among Bitcoiners who might come to play on the platform as a result.

(With thanks and H/T to Daniel Z.)

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Robocoin, The Bitcoin ATM, Is Heading To Hong Kong And Taiwan

The first shipping bitcoin ATM, Robocoin, is landing in Hong Kong and Taiwan as the company expands its reach this January. They are planning further releases in Europe, Canada, and the US but, given Asia’s clout in the BTC markets, this is definitely an interesting development. The first Robocoin landed in Vancouver where it’s been a big hit and we wanted to see how things have been going for the company since launch in October.

“Bitcoin demand in Asia is amazing,” said Robocoin CEO Jordan Kelley. “We have many Asian countries seeking to enhance consumer capability to buy and sell bitcoin securely and safely.” I asked Robocoin’s Growth guru, Sam Glaser, to talk to us a little bit about the company and plans for the future.

TC: So ATMs, huh? How’s that working out?
Sam Glaser: The world seems to pretty excited. We sold over 50 machines within the first 50 days of accepting orders. Since we launched on October 29th in Vancouver we’ve had over 1900 people and companies around the world inquire to purchase. Robocoin ATM’s are the best in the game; they provide individuals the easiest way to buy and sell bitcoin while simultaneously providing operators the most exciting business opportunity in all of bitcoin–our operators in Vancouver broke even in two weeks.

TC: Tell me about yourselves.
SG: We are a small team of hungry, dedicated and determined technologists based in Las Vegas. Our team of 4: Jordan Kelley is CEO, John Russell is CTO, Chris Yoder (previously CTO

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Why I Lost Faith In Bitcoin As A Money Transfer Protocol

As 2013 came to an end, many reflected on last year’s biggest tech news — and Bitcoin was a serious contender. But the main question remains: why are people interested in Bitcoin?

This whole debate reappeared when Charlie Stross stated that “Bitcoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind — to damage states ability to collect tax and monitor their citizens financial transactions.” Paul Krugman then quoted his post, neither denying nor approving this thought.

But Chris Dixon (and Fred Wilson in the comment section) reiterated their strong interest in Bitcoin while sharing that they are both Democrats.

If major Bitcoin enthusiasts don’t have any political agenda in mind, then what is the future of Bitcoin? At its heart, Bitcoin is a cryptocurrency that doesn’t rely on any central bank. Bitcoins are just a chain of characters defined by algorithmic rules, and transactions are handled by the network of miners.

Yet, in a month’s time, the value of a bitcoin went from $200 to more than $1,000 on all the exchanges. In other words, it is as volatile as it can get. Right now, there are only around 12 million of bitcoins in circulation, and many Bitcoin holders are recent converts that buy and sell every day. So how could you think about using bitcoins to pay the rent? You could simply hold your bitcoins and expect to triple your wallet value in a couple of weeks instead.

That’s why I believe Bitcoin isn’t the next world currency. Bitcoin’s true purpose is not what everyone originally expected — you won’t buy a pizza in bitcoins anytime soon. Moreover, Bitcoin won’t be able to remain an unregulated currency for long.

So Bitcoin’s true purpose lies somewhere else. As Bitcoin is a peer-to-peer payment network, you don’t need any banking institution to make large transfers. Bitcoin could become the first meta-currency that sits on top of traditional currencies, the common language between USD and EUR. That’s what Dixon finds interesting, Bitcoin is as much a money transfer protocol as a currency. And it has the potential of disrupting the traditional banking system.

Replacing Forex Transactions With Bitcoin

As I live in France and work for an American company, I thought I would be the perfect candidate for this particular use case. I tried to use Bitcoin to transfer a small amount of money between the U.S. and France. At first, I purchased bitcoins using Coinbase and my U.S. bank account (no fee). The process was very easy, but because I don’t meet the requirements to make instant purchases, I had to wait about a week before I could actually do anything with my bitcoins. Coinbase had to verify the transaction first.

In that period of time, bitcoins went from about $850 a bitcoin to more than $1,000, then back to $700 — all I could do was sitting back and enjoying the ride. Then, when I finally got my bitcoins, I transfered them to Bitstamp in a couple of hours (no fee) — it was flawless and a great example of the beauty of Bitcoin. Finally, I transfered my bitcoins to my French account ($1.24 fee to convert into EUR with a very good conversion rate). I had to wait a few days before getting my money because of the traditional banking system.

Overall, it was a painful experience, even more painful than using traditional foreign exchange services. But more importantly, I don’t see how I could trust Bitcoin as a money transfer protocol with such a high volatility. Fees were much lower, but it doesn’t matter if you don’t know how much money you will get on your bank account in the end.

A couple of weeks ago, Bitcoin’s value went from more than $1,100 to around $650 in a few hours, because of a new rule in China. You can’t use Bitcoin for serious amounts of money if there is a chance of losing 40 percent of your money overnight.

As long as Bitcoin remains a young and volatile currency, Bitcoin’s mechanisms will remain beautiful on paper. Using it for real world transactions would be crazy, and I think we are still a couple of years away from getting a stable Bitcoin that can be trusted. Until then, using Bitcoin will remain a wild ride — it’s definitely fun, but don’t take Bitcoin seriously just yet.

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Bitcoin exchanges shut down after threat from India's central bank

Bitcoin is quickly beginning to attract the attention of regulators in a number of countries. After a flat-out ban in Thailand and restrictions on banks in China, now several Indian Bitcoin exchanges have suspended operations following a warning from the Reserve Bank of India concerning digital currencies. Issued December 24th, the statement outlines the risks of a purely electronic wallet, unregulated transactions and value fluctuations. It also contains what could be considered a threat, however, stating that virtual currency users could be breaking money laundering and terrorism financing laws -- one report from the subcontinent suggests the government has carried out the first raid on a Bitcoin exchange, too. Thus, some sites have decided to close for the time-being, leaving notes on their homepages expressing the need for clear legal guidelines before trading can resume. Undoubtedly we'll see more countries take steps towards regulation, especially as the price of currencies rise. Nothing decreases something's worth like outlawing it, after all.

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Via: The Next Web

Source: Economic Times, dna, buysellbitco.in, IRNBTC

Tags: bitcoin, currency, DigitalCurrency, india, ReserveBankOfIndia, VirtualCurrency Next: Nokia Lumia 1320 lands in China first .fyre .fyre-comment-divider

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Overstock.com Reportedly Plans To Accept Bitcoin In 2014

Overstock.com is moving to accept Bitcoin as payment in 2014, the CEO told The Financial Times. Apparently the retailer has the ambition to become the first major online retailer to accept the digital currency. And it very well could be. No other major retailer has announced a similar plan yet. However, put away your digital wallet for the time being. The retailer doesn’t expect to start accepting Bitcoin until the second half of 2014, by which time, Dogecoin could eclipse its popularity.

This announcement comes just days after a major shakeup in the Bitcoin ecosystem as China’s largest BTC exchange stopped accepting deposits in Chinese yuan, causing Bitcoin’s monetary value to drop 50% in a few hours.

Overstock saw just over $1 billion in revenue last year. The company trades on NASDAQ and its stock price is up 109.29% on the year. The news about accepting Bitcoin caused the shares to jump 7.77% on the day.

Overstock CEO Patrick Byrne stated that a healthy monetary system isn’t based off of an upside pyramid or the whim of a government official. Bitcoin fits that bill. Byrne stated that when Overstock starts accepting Bitcoin, the retailer would bank the digital currency in the event derivatives (such as Dogecoin) are increasing in popularity. If offshoots fail to gain steam, Overstock would transfer the Bitcoins into dollars on a daily basis, essentially day trading the Bitcoin income.

In the latter half of 2013, a number of retailers have moved to accept Bitcoin as payment with OkCupid, Namecheap and Humble Bundle among the list. Charities are also latching onto the digital currency since it lacks fees usually associated with monetary donations. If Overstock follows through with its plan, it would be come the largest U.S.-based retailer to accept Bitcoins. That is, of course, if Amazon or the like doesn’t beat them to the punch.

View the Original article

Overstock.com Reportedly Plans To Accept Bitcoin In 2014

Overstock.com is moving to accept Bitcoin as payment in 2014, the CEO told The Financial Times. Apparently the retailer has the ambition to become the first major online retailer to accept the digital currency. And it very well could be. No other major retailer has announced a similar plan yet. However, put away your digital wallet for the time being. The retailer doesn’t expect to start accepting Bitcoin until the second half of 2014, by which time, Dogecoin could eclipse its popularity.

This announcement comes just days after a major shakeup in the Bitcoin ecosystem as China’s largest BTC exchange stopped accepting deposits in Chinese yuan, causing Bitcoin’s monetary value to drop 50% in a few hours.

Overstock saw just over $1 billion in revenue last year. The company trades on NASDAQ and its stock price is up 109.29% on the year. The news about accepting Bitcoin caused the shares to jump 7.77% on the day.

Overstock CEO Patrick Byrne stated that a healthy monetary system isn’t based off of an upside pyramid or the whim of a government official. Bitcoin fits that bill. Byrne stated that when Overstock starts accepting Bitcoin, the retailer would bank the digital currency in the event derivatives (such as Dogecoin) are increasing in popularity. If offshoots fail to gain steam, Overstock would transfer the Bitcoins into dollars on a daily basis, essentially day trading the Bitcoin income.

In the latter half of 2013, a number of retailers have moved to accept Bitcoin as payment with OkCupid, Namecheap and Humble Bundle among the list. Charities are also latching onto the digital currency since it lacks fees usually associated with monetary donations. If Overstock follows through with its plan, it would be come the largest U.S.-based retailer to accept Bitcoins. That is, of course, if Amazon or the like doesn’t beat them to the punch.

View the Original article