Thursday, April 23, 2015
APR 23 DIGEST: BitLicense Coming in May, Bitcoin Fax Service Launches
EU Markets Authority Digs Into Digital Currency Investments
MIT to Take Over Funding of Three Bitcoin Core Developers
Wednesday, April 22, 2015
Gavin Andresen and Other Core Developers Join MIT’s Digital Currency Initiative
Lead Bitcoin developer Gavin Andresen, chief scientist of the Bitcoin Foundation, has announced that he and other Bitcoin Core developers are joining the MIT Digital Currency Initiative.
A few days ago Bitcoin Magazine reported that the prestigious Massachusetts Institute of Technology (MIT) Media Lab announced the launch of a Digital Currency Initiative, to be directed by former White House senior adviser for mobile and data innovation Brian Forde.
The MIT Digital Currency Initiative will integrate researchers across the institute and leading experts at other universities around the world to address some of the most critical challenges to creating a safe, stable and secure digital currency.
Previously, MIT Media Lab Director Joi Ito had hinted at the forthcoming initiative.
“I’m offering MIT as a neutral academic home for some of the conversations and the technical coordination,” he said, “which I think will give a lot more stability to Bitcoin, which right now is a little bit fragile.”
The Bitcoin Magazine article noted that there is an overlap between the terms of reference of the MIT Bitcoin Initiative and those of the Bitcoin Foundation, and speculated that, in view of the troubled history of the foundation, the Bitcoin community could welcome MIT as an alternative, prestigious venue for leadership and coordination of the Bitcoin ecosystem.
Recently, Bitcoin Foundation board member Olivier Janssens wrote that the foundation had been undermined by “two years of ridiculous spending and poorly thought-out decisions” and was “effectively bankrupt.”
It now appears that MIT is beginning to assume leadership in the Bitcoin development space.
“I’m pleased to announce that I’ve joined the MIT Media Lab’s newly launched Digital Currency Initiative to continue my work on the Bitcoin project,” Andresen said earlier today. “I’m looking forward to working with all the amazing people associated with the initiative,” he says. “Wladimir van der Laan and Cory Fields, both formerly of the Bitcoin Foundation, have also decided that MIT is the best place to continue their work on Bitcoin Core and have joined the Media Lab as well.”
“Over the last couple of months [it] became obvious that the foundation wouldn’t be able to raise the funds necessary to continue supporting Wladimir, Cory, and me,” notes Andresen, and adds that MIT hasn’t taken over from the foundation as the center for core development, because “the Bitcoin Foundation was never the center of development.”
Andresen concludes by thanking Ito and Forde for their leadership and support of the Bitcoin community through the Digital Currency Initiative.
Forde, MIT Digital Currency Initiative director said he hopes that the MIT initiative will provide the support needed for the digital currency community to help realizing the “tremendous opportunities to increase access to critical financial services for all, create more transparent democracies, and develop services that dramatically reduce barriers for global commerce,” and looks forward to connecting with anyone who has feedback or new research.
Bitcoin Magazine will continue to follow this story and publish updates shortly.
Image via Web Summit / CC BY 2.0
Formal Claims Process for Customers of Mt. Gox Begins
It’s been a long time coming, but Mt. Gox customers who lost their funds can finally make claims against the exchange, which filed for bankruptcy in February of 2014.
According to the Notice of Commencement of Filing of Bankruptcy Claims issued on April 22, 2015, by bankruptcy trustee Nobuaki Kobayashi, users can register their claims online under certain conditions or by mail.
Customers can choose to file the Exchange-Related Bankruptcy Claim online form via the Kraken Bitcoin Exchange system or through the bankruptcy trustee’s own system on the MtGox website. In order to file through Kraken, users are required to be verified Tier 2 account holders.
Claimants opting to use either of the two online options must know their usernames or email addresses and passwords originally registered with MtGox. They also must still be able to use that same email address. If not, they will have to fill out and mail paper claims.
By filing through Kraken, customers may be able to receive their eventual payouts in bitcoin rather than fiat, though that possibility is still under investigation by the trustee. Kraken is also offering claimants up to $1 million in free trading volume at the lowest fee tier of 0.1 percent, as well as claim and payment support via live chat and email.
“We see our involvement in this process as an opportunity to restore faith in the community by showing what we need more of in the Bitcoin space — trusted leadership,” said Kraken CEO Jesse Powell in a post on the Kraken blog.
Kraken announced in November that it would be assisting the trustee in the investigation of Mt. Gox’s missing bitcoin assets, in the creation of the system to file and investigate claims, and in the eventual disbursement of assets to creditors.
At a third creditors’ meeting held on April 22, 2015, the trustee confirmed that JPY 1,375,885,620 (USD $11,507,618) worth of MtGox’s missing user funds had been recovered thus far.
Regarding the expected timeframe going forward, Powell added in a Reddit post, “It’s expected that there will be a two month period of filing claims followed by a two month period of evaluating claims. No firm payout date has been made yet but I believe we’ll see payouts by the end of 2015.”
An FAQ document released by the trustee, however, is cautiously vague: “The timing of the bankruptcy distributions has not yet been determined, and it will be announced when a decision has been made.”
Users have until May 29, 2015 (Japan time) to file their claim. Anyone who filed a claim electronically will eventually be able to view the results of that claim online as well. Users who make paper claims will receive notices in the mail.
Bitcoin is now VAT-Exempt in Spain
Bitcoin transactions are exempt from value-added-tax (VAT) in Spain, says Spanish tax lawyer Alejandro Gómez,
The General Directorate of Taxes, a subsidiary of the Spanish taxing authorities, made the statement in a response to a request from Gómez.
According to Gómez, the consultation found that Bitcoin payments were a form of financial service and thus exempt from VAT under the Council Directive 2006/112/EC of 28 November 2006.
A translated version of the consultation concludes,
“Therefore, we can conclude from the Granton Advertising judgment, that of the concept “other negotiable instruments” under the article 135.1.d) of the Council Directive 2006/112/EC, is closely related to payment instruments, which allows the transfer of money. Consequently, those financial services shall be deemed to be VAT-exempt.
“Virtual currencies, such as bitcoin, work as means of payment and, considering its features, shall be considered under the concept ‘other negotiable instruments,’ so its transmission is both liable and exempt from Value Added Tax (VAT).”
The exemption could be huge for the country’s large Bitcoin community, as it means an end of the possibility of double taxation on Bitcoin transactions. Bitcoin payments will not be taxed as a commodity and taxed only once for related services if it is from company.
Spain’s tax authority, Agencia Estatal de Administración Tributaria, has said very little on the subject of Bitcoin and taxation in the past. Its only announcement was in May of last year, in which it said it was monitoring the use of the digital currency for its potential use by criminals.
VAT and Bitcoin around Europe
VAT and bitcoin have been a heavily dreaded subject among supporters of the digital currency because of the potential of treating bitcoin like a commodity and, thus, Bitcoin transactions being taxed twice – once for the service and once for being a commodity. And as with all things cryptocurrency and law, whether VAT should be applied twice to Bitcoin transactions has been very unclear.
The European Union has yet to make a decision, but many member countries already have. Estonia and Poland’s tax authorities both have made statements saying Bitcoin transactions are not exempt under Article 135.1.e of the directive 2006/112/EC.
However, England and Germany’s tax authorities have said Bitcoin transactions will not be treated to a VAT, stating that the digital currency is either another form of currency or a financial service. Many major European countries, including France and Sweden, have not made statements about the subject yet.
An Allen and Overy Lawyer
Gómez is the founder of lawandbitcoin.com, a website dedicated to news about how law is applied to bitcoin all over the world. He received a double Masters in Law Practice and Tax law from IE Business School in Madrid.
He previously interned with Ernst & Young and Gómez-Acebo & Pombo, but now works for the international law firm, Allen and Overy. The firm is headquartered in London, but Allen and Overy has offices in Europe, the Americas, Asia, Australia, Africa and the Middle East.
Bitspark and Clef Team Up for “Passwordless” Logins
Bitspark becomes the latest Bitcoin company to integrate Clef’s two-factor authentication to provide secure, “passwordless” logins for their users.
Why Is This Important?
Earlier this year, the Canadian Bitcoin exchange, Cavitrex, shut down temporarily due to security concerns. The exchange was hacked just weeks prior to the announcement, which caused users’ passwords and two-factor authentication secrets to be compromised.
Bitspark is a Hong Kong-based exchange and remittance company that has recently announced a new round of funding. They are the first company in the world to offer end-to-end bitcoin remittances and were recently featured in Goldman Sachs’ report The Future of Finance.
Bitspark offers two major services: an exchange and a remittance service. The exchange supports 18 currency pairs and five fiat currencies. The remittance service works in Hong Kong, the Philippines, Indonesia and Australia.
Prior scandals surrounding previous Bitcoin exchanges such as MtGox and Cavitrex make security a huge priority for Bitspark.
“When we think about the next generation of Bitcoin technology, Bitspark is exactly the kind of product that gets us excited,” said Brennen Byrne, CEO of Clef. “It is absolutely critical that we find ways to make Bitcoin useful to more people, and I’m excited that Clef can help make that happen.”
Bitspark chose Clef because of how easy it is to use. Typically, sites that offer two-factor authentication see less than 1 percent of users opt in to protect their accounts, but sites that use Clef have seen more than 50 percent of their users opt in to the safer login. Two-factor authentication – or ‘2FA’ – is a simple feature that asks for more than just a user’s password. To make login seamless, Clef recognizes a user’s phone instead of anything he or she needs to remember or type.
Instead of storing secrets in a central server like other forms of two-factor authentication, Clef is a distributed system for logging in. Private keys are generated and stored on the user’s phone. Nothing secret ever needs to be sent to Clef and therefore no 2FA secrets would be compromised.
“From the first time I saw someone log in with Clef, I knew that this was the future of logging in,” said George Harrap, CEO of Bitspark. “Our whole team got excited about the technology, and the integration was really quick.”
A New Kind of Security
Traditional 2FA requires a user to have two types of credentials before being able to log into an account. 2FA typically asks the users to confirm that it is in fact them trying to access the account.
Examples of this include:
- PIN or password sent via text
- phone call giving a code
- fingerprint
2FA security is far from 100 percent secure, as illustrated with the Cavitrex 2FA factor security breach. To hack an account protected by two-factor authentication, hackers must gain access to the physical feature being sent (PIN sent via text to mobile phone). According to CNET, the second way a hacker can gain access through 2FA is by gaining access to the “cookies or tokens placed one the device by the authenticator.”
2FA is not perfect, but it is certainly more secure than a single-factor authentication. 2FA is likely to become the norm, followed by 3FA or 4FA.
Here is how Clef security improves upon the 2FA model: Customers can log into Bitspark on any computer in the world by holding their phones up to a computer screen. Using the phone’s camera and an animation called the “Clef Wave,” the phone seamlessly syncs with the computer and logs the user in.
The process already protects about 50,000 sites and is backed by cryptography. Instead of storing secrets in a central server like other forms of two-factor authentication, Clef is a distributed system for logging in. Private keys are generated and stored on the user’s phone.
By taking advantage of the rapid spread of mobile devices, Clef has built technology that is not only much more secure than traditional logins, but also easier to use. Since 2013, Clef has spread to more than 46,000 sites and received accolades from The New York Times, Inc. Magazine and The Economist.
Clef is funded by Morado Ventures and angel investors from a broad variety of product and security backgrounds.
Social Media Site Taringa! Introduces Bitcoin Rewards in Largest Bitcoin Integration to Date
The rapidly growing Latin American social network Taringa! will start paying its content-providing members in bitcoin, offering a service that could boost Bitcoin adoption in the region, The Wall Street Journal reports.
With its 75 million users mostly located in Spanish-speaking Latin America, Taringa! (the exclamation mark is part of the name) is the second-most-popular social network after Facebook and one of the main destinations in the Latin American Web. The social network, whose slogan is “Collective Intelligence,” is a hybrid of Facebook and Reddit, offering a crowdsourced social bookmarking and commenting platform similar to Reddit.
“Today we are launching Taringa! Creators, a revolutionary program that allows Taringa! users to receive a monetary compensation for the valuable content they share in our community,” announces Taringa! (in Spanish). “This is a super innovative project, because we will pay in bitcoin: the new virtual currency that works without banks or governments and allows paying via Internet without a credit card or a bank account, instantly and without transaction costs. For that, we signed an agreement with the company Xapo, founded by Argentine entrepreneur Wenceslao Casares, based in Silicon Valley, which offers the virtual Bitcoin wallets where we will transfer the money earned by you, which you will be able to use as you prefer.”
Offering a financial compensation to those who dedicate part of their time to power the social networks that are an increasingly important part of everyone’s online life is certainly revolutionary but also overdue, and bitcoin payments are an ideal implementation. Perhaps other social networks such as Facebook, Reddit, and Twitter will follow.
“Xapo’s partnership with Taringa! implements the largest bitcoin integration the community has yet to see and is a historic moment for both bitcoin and social media,” notes the Xapo announcement. “Top content creators can now earn bitcoin through Taringa!’s Revenue Sharing Program, rewarding users who bring quality content to Taringa!. The platform is supported by a simple one-click integration with Xapo’s secure bitcoin wallet.”
The initiative is likely to will have a huge impact on Taringa!’s user base, largely under-banked despite having access to smartphones and Internet, and could introduce millions of people across the globe to the benefits of Bitcoin. According to Xapo, the partnership has the potential to quadruple the current number of bitcoin transactions worldwide.
The traditional payment infrastructure couldn’t support Taringa!’s plans to reward its loyal users for content shared on the social network, and therefore Taringa! had to look for alternatives. Latin America’s “horrendous,” underdeveloped financial system made it impossible to deliver funds, said Taringa!’s co-owner Hernán Botbol. Credit-card networks aren’t developed enough and bank account penetration isn’t deep enough for users to receive payments in their traditional currencies.
“We have had this on our mind, mainly because we think we can bring more people to create great content and also because we think that it’s fair, given that all this that we have is just because our users are creating the content,” said Botbol. “But we never were able to do that because the infrastructure is horrendous – even if you send someone a check, they don’t know what to do with that.”
The Wall Street Journal notes that the initiative, which exploits bitcoin where the traditional financial system is unable to deliver, could be an impetus for wider adoption in the developing world, where many believe digital currencies have their best chance of success.
Netki Wants to Replace Bitcoin Addresses with Wallet Names
One of the main issues that has slowed the adoption of Bitcoin as a currency and payment system has been the complexity of Bitcoin addresses.
The blockchain lacks the human-friendly names normally found with websites and email addresses, which can make sending payments a rather cumbersome process. Netki wants to help people move away from confusing Bitcoin addresses, such as 15eA82FZLogpSb8nkQ5h5qaF3QNEwSeyCm, toward human-readable names such as kyletorpey.tip.me.
Any bitcoin user would be able to send bitcoin to anyone else as easily as a Gmail user can send an email to someone using a web browser.
How Does it Work?
Netki uses a combination of the Namecoin blockchain and Secure DNS (DNSSEC) to take care of name storage and mapping between a name and an address.
“Your base records reside in the Namecoin blockchain proving ownership, and allowing for full, censor-proof control,” Netki CEO Justin Newton explained via email. “The actual wallet name-to-address lookups occur on standard DNS records secured and authenticated using DNSSEC.
“This combination of decentralized and distributed [solutions] provides the control and ownership of the blockchain along with the privacy of keeping your name to address mapping off of a public ledger,” Newton said.
The Netki CEO also explained that wallet providers will be able to hand out names in a manner similar to how email addresses are handed out to Gmail, Outlook, Yahoo and other online mail providers. He specifically mentioned ChangeTip’s use of the tip.me domain as an example of this feature.
Newton was also able to share his thoughts on the differences between Netki and another Bitcoin name system, OneName:
“We believe that a lot of what OneName is doing is really fantastic. There is a need for a decentralized way to validate your social identity, and their roadmap feature of using signatures instead of passwords for logins is excellent and long overdue. We do believe, however, that tying your identity to your wallet address on a public ledger negates the possibility of privacy on the blockchain. For us, making it easy to share your address with anyone without having to publish it to everyone is one of the keys to our service. We’d love to see OneName support Wallet Names where they currently support bitcoin addresses.”
A Problem for Privacy?
The obvious question when talking about name-mapping systems for digital currencies is what it will mean for user privacy. After all, privacy and anonymity are still desirable features for a large number of bitcoin users.
Newton said the protection of privacy was also a concern for Netki, but he added that the use of HD wallets “allows the return of a unique address every time.”
Netki also supports Payment Requests, which are sometimes referred to as the “SSL for wallet addresses.”
Newton explained that the integration of Payment Requests will allow users to see a green lock next to an address in the “To” field of a Bitcoin wallet. That lock helps users confirm that they’re sending bitcoin to the correct individual, organization, or company. This process is similar to the green lock found next to website URLs that have been secured via SSL and an HTTPS connection.
“The combination of HD Wallets and Payment Requests with Wallet Names increases the privacy and security of sending bitcoin, while at the same time making it more user friendly and reassuring to end users,” Newton said.
An example of this system can be seen in the video below:
In addition to ChangeTip, Netki has also partnered with Gem, Snapcard, Purse.io, ShapeShift, BitQuick, Coinprism, Fold App, and many other companies in the Bitcoin space.
Dr. Charles Evans: ‘My Expert Witness Fee in a Criminal Case Was Paid in Bitcoin’
Ripple Directs Bitstamp to Freeze Funds of Former Co-Founder Jed McCaleb
US Government Subpoenas Bitcointalk PMs, Affecting 600 Users
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