Category Archives: BitCoin

5.20.14 Bitcoin will be bigger than Facebook


Winklevoss twins: Bitcoin will be bigger than Facebook

The brothers, two of the most influential players in a new generation of investors, say bitcoin will encourage financial openness

Tyler (R) and Cameron (L) Winklevoss.
Tyler and Cameron Winklevoss. Photograph: Kimihiro Hoshino/AFP/Getty Images


It was on a very hot day in July 2012 that the Winklevoss twins discovered bitcoin, while partying in Ibiza. At 32 years old, the enviably athletic pair have both Harvard and Oxford on their CVs, and seem predestined for success. They famously won a $65m settlement from Facebook after claiming Mark Zuckerberg had stolen their idea for a Harvard social network, and rowed in the 2008 Olympics.

Yet their chance encounter with bitcoin in the Mediterranean was rather more serendipitous. “We were on vacation, and happened to bump into a guy who is mutual friend and he started to tell us about bitcoin,” Tyler Winklevoss explains. “We were fascinated from day one,” he says, hinting that having just abandoned five years of chasing Facebook through the courts, the time was right to start something new. “At the time we were just re-immersing ourselves inside the tech world, getting into the trenches again.”

Facebook’s soaring value has been good news for the Winklevoss brothers and their investment business, and the pair are now two of the most influential players in a new generation of investors. Yet bitcoin, Winklevoss insists, has the potential to be even bigger than Facebook – currently riding a market value of $151bn.

“Bitcoin potentially could be more impactful because being able to donate 50 cents to someone across the world has more impact than potentially sharing a picture,” he explains. “But they’re very different. Facebook is like the internet – a large company and an application.

“Bitcoin is a protocol for decentralisation, so you could build a decentralised company on top of it, a stock market. It’s an internet of ownership, so it’s not quite a direct comparison.” In the same way Facebook encouraged us to be socially open, bitcoin encourages us to be financially open, he argues. The Winklevoss vision is of a kind of decentralised financial utopia, where payments cannot be intercepted by middlemen and where developing countries have an equal stab at the global markets.

Winklevoss twins own 1% of $5.7bn market

Bitcoin already has a market capitalisation equivalent to $5.7bn – the approximate total of all bitcoin in existence – and feels far more than a novelty. The Winklevoss twins own an estimated 1% of all bitcoin, so have a real interest in making sure bitcoin is explored, exploited – and that it succeeds.

But Tyler’s glowing optimism about Bitcoin’s prospects is not shared by all in Silicon Valley. Veteran investor Marc Andreessen might be one of them, but Goldman Sachs recently reported that Bitcoin was too volatile to be viable.

“Calling bitcoin volatile – it’s a non-statement. Unregulated assets with unclear regulatory landscapes are always going to be volatile. That’s what unregulated assets do,” said Winklevoss. “I can make the same argument about the internet in the early days. But sure enough, technologists came and worked hard at the problem, and it’s getting better.”

For Tyler, the bitcoin critics can be divided into two categories; those like the kind of Luddite who protested against new labour-saving machinery from 1811 to 1817, and today’s teenagers who don’t have the ability to imagine the early days of the internet. “Bitcoin is going through growing pains,” he says.

As we spoke, I came to discover that Tyler spends most of his time preaching the gospel of bitcoin, including at Oxford University this year. “It’s the only thing people want to know. The promise of the internet is being held back by Visa, Master Card, American Express,” he explains. “You can’t buy stuff in the majority of the world – the majority of the world doesn’t have the financial inclusion we take for granted, which is a bank account and a way to save money.”

Mt Gox failed because of poor service

But if that’s the case, what happened with MtGox? At one point it was the largest bitcoin exchange, but lost half a billion dollars to by hackers and was forced to close.

“Everybody was shocked at the magnitude of loss, but when you look, the writing was really on the wall for a long time”. Tyler and other active investors avoided the whole mess altogether, he explains, because they stopped using Gox when it became too slow to withdraw money.

He describes the loss as “painful”, yet says ultimately the untimely death of Gox had been good for bitcoin. “Gox was a pattern of poor operations, poor customer service, poor PR. You can’t just take bitcoin and hide.” He’s promoting his new venture – the bitcoin exchange Winxdex. “Right now bitcoin is priced differently depending on where you look, depending on what exchange, depending on who’s trading, he says. “We essentially came up with a method which we think is the most accurate way to price bitcoin at that moment in time, and we’ll use that price to help create price discovery and stability in the bitcoin ecosystem.”

This year, the Winklevoss twins predict, will be the year that Wall Street will get involved. “If a new technology comes out and the incumbent doesn’t evolve, then they generally lose,” he says, comparing bitcoin with the internet in 1994. He thinks he knows how this will end. “When it gets to tipping point it’s usually not a long fight. It’s a category killer.”

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4.3.14 Bitcoin Could Strengthen The World Economy If Washington Doesn’t Destroy It


Bitcoin Could Strengthen The World Economy If Washington Doesn’t Destroy It

The beauty is they can’t destroy it and true Bitcoin users know this.   They can give Bitcoin negative press but they can never destroy its core reason for existing which gives it appeal to those that understand.  Wish the RV would happen so I can stick a couple Mill in it – great time to buy.

“You can avoid reality, but you cannot avoid the consequences of avoiding reality.” Ayn Rand

Sometimes our greatest strengths are also our greatest weaknesses.  In the case of Bitcoin, the decentralized nature of the network plays to both sides, creating great freedoms, which in turn create great opportunities for rogue players.  If you’re one of the “76 percenters” who don’t have a clue what Bitcoin is, you can read my introduction to Bitcoin Basics here.  In short, Bitcoin is a disruptive technology that has the potential to transform the global financial services industry and raise the standard of living for all.  Through decentralized cryptography, Bitcoin eliminates the need for banking intermediaries, significantly lowering transaction costs and could liberate poverty stricken economies around the globe by providing access to capital to the one-third of humanity that is excluded from the financial world.  However, some of the most transformational innovations of Bitcoin have been exploited by bad actors.  These nefarious players give Bitcoin a negative reputation.  This reputation leads to perception and perception becomes reality, especially in the nation’s capital and among regulators.

With decentralization at the core of the Bitcoin culture, there are few leaders in the industry providing any explanation to the regulators or the public about the scandals that have plagued Bitcoin, how Bitcoin works, and how it can benefit consumers. Additionally, Bitcoin faces a highly uncertain regulatory environment in the U.S., with multiple government departments and agencies working in an uncoordinated fashion. The regulatory risk Washington could impose on Bitcoin threatens the seamless payment system of those it could benefit most, people who don’t have access to banks and small businesses. The recent guidelines published by the IRS on digital currencies that contradict the FinCEN guidelines on virtual exchanges are a perfect case in point.

IRS Says Bitcoin Is Property

According to the IRS, bitcoin is considered “property,” therefore capital gains must be recorded and reported.  Since the IRS doesn’t recognize bitcoin as a currency, although it operates as such, bitcoin owners are responsible for recording the market price in USD of their bitcoins the day they are obtained, then reporting the difference in the market price the day the bitcoins are used.  The gain is considered capital gains and is taxed.

When you take a look at how the IRS treats foreign currency, bitcoin doesn’t have the same taxation regime.  Foreign currency gains and losses generally are taxed as ordinary income.  Gains or losses from the sale of “property,” such as bitcoin, are taxed as capital.  Capital losses can only be used to offset capital gains, so bitcoin losses take a greater hit than foreign currency losses.  There is also a de minimis provision for foreign currency.

Andreas Antonopoulos, the Chief Security Officer ofBlockchain.info and one of the few leaders in the Bitcoin community, says in an interview with Money & Tech that “reporting capital gains is ridiculous and it’s going to cause a mountain of paperwork.”

FinCEN Says Bitcoin is Currency

Conversely, the U.S. Treasury Financial Crimes Enforcement Network or “FinCEN,” says that although bitcoin is not legal tender, bitcoin exchangers are money transmitters, thus subject to the Bank Secrecy Act, which was first passed in 1970 before the internet existed, and a global digital currency was decades into the future.  Unlike a traditional money transmitter like PayPal or Western Union, transmitting bitcoin is a two-party transaction that doesn’t require an intermediary.  The money service regulations bitcoin exchanges must comply with, even though the IRS doesn’t recognize bitcoin as “money,” are not practical and are contributing to the closing of dozens of exchanges.

This dual and competing regulation of bitcoin is confusing, and has a negative effect on the growth of bitcoin as a world currency, thus taking away from the promising services Bitcoin has to offer some of the most disenfranchised members of financial society.  This is just the beginning of the regulatory challenges for Bitcoin, as multiple regulatory agencies are looking to oversee digital currencies including the Department of Justice, FINRA, CFTC, and the SEC.  Although Bitcoiners don’t like the idea of concentration, a clear voice from the Bitcoin community is needed to unify regulatory goals.

The Bitcoin Community Must Stand To Meet The Challenges Of Affirming The Legitimacy Of This Global Currency

BitGo and BitPay are two industry leaders that are ahead of the curve in innovation and regulatory compliance.  Despite the IRS classifying Bitcoin as “property” and not currency, Will O’Brien, the CEO of BitGo, the company that pioneered multi-signature wallet security says they were complying all along with the IRS guidelines.

“Our tax accountants had recommended the “property” method as that was the most logical first step the IRS would take in providing guidance. Sure, it does come with its share of accounting headaches but it’s nothing more than is required of any other business.”

BitPay, a Bitcoin leading payment processor, also said their “merchants accepting bitcoin through BitPay are fully prepared to meet their tax obligations as outlined in the IRS Notice.”

While these industry leaders are eager to contribute to the U.S. regulatory regime, Bitcoin can regulate itself, as Will O’Brien points out, “the nice thing about the Blockchain is that you can easily get a record of every transaction you’ve ever made.”

Bitcoin was created with security in mind.  The Blockchain is Bitcoin’s public ledger that records EVERY transaction in the Bitcoin economy.  Analog channels, such as cash, provide greater anonymity for criminals to route illicit activity than Bitcoin. Additionally, the industry already created a self-regulating organization, Digital Asset Transfer Authority or “DATA,” which establishes best practices and consumer protection initiatives for digital asset companies.

Bad Actors Have Defamed Bitcoin’s Reputation 

Bitcoin has the potential to globally raise the standard of living if Washington doesn’t over regulate it.  Criminals that have used Bitcoin for illegal activities in conjunction with a lack of industry representation in the media and Washington, have caused a failure in recognizing the benefits of Bitcoin.  One misconception about Bitcoin is that it is anonymous.  Technically it’s pseudonymous.  While every transaction is recorded on the Blockchain, Bitcoin user’s identities are private.  As Jerry Brito and Andrea Castillo points out in a primer published by the Center for Independent Studies, the level of privacy in using Bitcoin protects individuals against capital controls and censorship, and ensures financial privacy for oppressed groups.  At the same time the pseudonymous nature of Bitcoin has attracted drug dealers, money launderers, and other criminals.  However, these bad actors are quickly being weeded out, and going down in a highly publicized fashion.  As Silk Road, Liberty Reserve and Mt. GOX all created a stir in the media, the Bitcoin community was put on defense, leaving another misconception that bitcoin ‘is dead as we know it.’

The central banking system has excluded nearly 3.5 billion people from the financial industry around the world.  A decentralized monetary system, such as Bitcoin, could bring financial services to these currently unreachable people.  It’s shameful that Bitcoin has been exploited by criminals, but this doesn’t represent a failure of Bitcoin.  As the Bitcoin community continues to build and improve the Bitcoin infrastructure, security loopholes are being patched.  While some regulation may be necessary to ensure the safety and soundness of digital commerce, the power of self-regulating organizations, such as DATA shouldn’t be overlooked.  In addition, the Bitcoin network would be wise to proactively foster confidence in Bitcoin by engaging in meaningful dialogue with Washington and all stakeholders.

3.9.14 Bitcoin: Public Rejects The Few False Flag Exchange Attacks…


Some have asked if I still stand by Bitcoin and the answer is a resounding YES!  All they can do is make it look bad or buy it themselves and manipulate the market up and down but they cant make Bitcoin.  Once you understand who is making these dips and rises happen – you play those gaps and make money.  It will always come back as the Bitcoin community understands this.  Again, if you understand what Bitcoin is, you will be a believer also.  Good article here and here is a direct link should the page pan wider than my blog page:

 http://politicalvelcraft.org/2014/03/09/bitcoin-currency-stays-strong-by-cutting-out-the-bankers-public-rejects-the-few-false-flag-exchange-attacks/

BITCOIN Currency Stays Strong By Cutting Out The Bankers: Public Rejects The Few False Flag Exchange Attacks…

MARCH 9, 2014 BY VOLUBRJOTR 0 COMMENTS

Bitcoin

Bitcoin is virtual money that cuts out banks and credit card companies, and has gotten more popular recently. Here’s what you need to know about the original cryptocurrency.

Overstock.com is now accepting payments in bitcoin, making it the first major online retailer to embrace the increasingly popular but controversial digital currency.

‘We want a money that some government mandarin can’t just whisk into existence with a pen stroke. Bitcoin is that.’

— CEO Overstock Patrick Byrne

 

Future generations of Bitcoin billionaires may someday look back on 2014 with knowing smiles. Here was a year when [a few] thefts spread, [a few] exchanges collapsed, rates gyrated like a teenager’s moods. And yet the buying of bitcoins showed no signs of abating.

Dead Bakers vs Dead Bitcoin Manager

dead bankers

The past week was particularly extreme. The apparent suicide of an American business executive in Singapore was investigated for possible ties to her Bitcoin investments.

A California man fingered as the currency’s mysterious inventor reacted to his sudden fame by asking that journalists buy him lunch. After finishing his meal at a sushi restaurant, he went on to deny any role whatsoever in Bitcoin.

Orchestrated balloon printed with a dollar bills about to be popped.

Orchestrated balloon caused by printed fiat dollar bills about to be popped.

Perhaps the most surprising development was that the virtual currency, despite wild fluctuations in value, continued to weather the mayhem. As the humans involved in the adventure looked increasingly vulnerable, Bitcoin looked comparatively solid, trading nearly 10 percent higher Saturday than a week before. Each bitcoin is worth more than $600 in recent trading.

“Bitcoin works really well,” said Matthew Green, a Johns Hopkins University cryptographer who is working to develop a different virtual currency. “All this craziness around Bitcoin isn’t around Bitcoin itself. It’s around the people.”

Bitcoin, first issued in 2009, has gradually gained acceptance as a digital currency that, unlike dollars or euros, can move through the global trade system with low fees, relative privacy and no regulation.

That has helped it flourish among [Free Market] technology enthusiasts and libertarians, as well as on marketplaces for illicit drugs and weapons. [The illicit bitcoin is DWARFED by the illicit USD currency marketplaces]

“It’s completely Wild West,” said Garth Bruen, a security fellow at the Digital Citizens Alliance, a Washington-based advocacy group that combats online crime. “There are a lot of people getting rich, and there are a lot of people stealing.” [USD currency Banker crimes DWARF Bitcoin crime]

Bitcoin enthusiasts like to point out that the currency has proved resistant to tampering. The total number in circulation can never go beyond a set amount, and each bitcoin is protected by a distinct cryptographic code. If that code is lost, as has sometimes happened, the bitcoin disappears forever.

red flag

Mt Gox Exchange False Flag

“Mt. Gox [exchange] was simply a single bad actor”

But criminals have targeted the computers that store bitcoins in encrypted code, in depositories known as “hot wallets.” Over the past two weeks, it has become clear they have succeeded spectacularly in breaking those systems.

The most famous example is Mt. Gox, the Tokyo-based exchange that filed for bankruptcy Feb. 28. It started as a site to trade cards for a popular game but shifted very profitably to Bitcoin, at one point becoming the biggest site for buying the virtual currency.

Mt. Gox relied on technology that experts consider easy to use but hard to secure against hackers. When the exchange declared bankruptcy, it reported having lost more $400 million from theft.

Bitcoin's Super Computer

Bitcoin’s Super Computer

“The [Bitcoin] system and protocol itself was and is still sound,” Dustin D. Trammell, a Bitcoin investor and security expert, said in an e-mail exchange after the Mt. Gox bankruptcy.

“The currency exchange rate is holding stable during the fallout and it really goes to articulate that Mt. Gox was simply a single bad actor, whether it be intentionally or just incompetence, in an otherwise solid fledgling financial industry.”

Jefferson Banks Armies Debt

Flexcoin exchange service vs International banking services.

Gerald Celente ~ Bankers From Rooftops: Moral Might vs Military Might.

Dead Bankers & You: The Coup Against The United States Of America!

red flagFlexcoin, a Bitcoin exchange based in Canada, followed with its own bankruptcy this past week, again reportedly because of losses to hackers. Criminals apparently relied on an old trick — once popular against ATMs — of trying to withdraw money faster than a bank can rectify accounts, allowing what amounts to a double-dipping of available funds.

Hobbyists and speculators built the first generation of systems for storing and exchanging Bitcoin, despite having little of the expertise needed to run financial institutions, Green said. “Look at it like somebody built a skyscraper out of wood,” he said. “That’s what happened.”

Amid the bankruptcies, news reports said that the suicide of a 28-year-old American woman in Singapore may have been related to her job as chief executive of a company that traded virtual currencies, and to her personal investment in bitcoins.

China Executes Bankers

China Executes Bankers

The currency was created by a man who called himself Satoshi Nakamoto. Though the name was long thought to be a pseudonym, a Newsweek reporter found the California home of a Japanese American computer engineer who once went by that name before changing it several years ago.

Presented with evidence that he was the Bitcoin inventor, the man appeared to confirm the discovery in an article posted online Thursday. But he recanted — after asking for lunch — when a mob of journalists appeared at his home.

Newsweek has said it is standing by its story, which included other evidence and interviews with several of the man’s relatives.

obama-i-told-them-they-could-keep-their-health-plan-doctors-obamacare-laughing

Rising interest in Bitcoin has brought a flood of investments from venture capitalists, allowing for the development of exchanges that, experts say, are more likely to survive the attacks of hackers and other threats to the currency’s stability. The number of merchants accepting bitcoins, meanwhile, has steadily grown, and several cities now have ATMs that trade in them, making exchanges easier.

Bitcoins are traded directly between individuals, without a bank to act as an intermediary. The transactions are recorded on a Web-based public ledger, called a “block chain,” that provides a measure of transparency but also allows governments and others to potentially analyze transfers to determine who owns bitcoins and how they are being used. The exchanges are required by laws in the countries where they operate to record who buys bitcoins.

The block chain is scrutinized so carefully that it may be difficult for those who have stolen bitcoins to trade them without being discovered. Experts say it also would be impossible for Nakamoto, the inventor, to cash in any of his personal trove of bitcoins — rumored to be worth hundreds of millions of dollars — without finally and definitively revealing his identity.