Tuesday, April 28, 2015
APRIL 28 DIGEST: Silk Road Judge Denies Retrial and Richard Branson Will Host Bitcoin Summit on Private Island
CoinTelegraph Launches BTC Relief Fund for Nepal Earthquake Victims
Native Startup Offers Crypto Remittance Service to Nigerians
Wall Street Left Out in Overstock's US$500M Stocks Issue
Monday, April 27, 2015
Seven Cities Leading Bitcoin Adoption in 2015
Canada Takes a Careful, Community-driven Approach to Bitcoin Regulation
Like many other countries, Canada has been wrestling with the issue of whether to regulate digital currencies and, if so, how and to what extent.
In it’s February 2014 budget, the Canadian government introduced and passed amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act of 2000, aimed at digital currencies.
But after more than a year, the amendments have yet to be published and “proclaimed” before they become law, a necessary last step.
And a public consultation paper on the new financial regulations, promised for last summer, has yet to be released, causing some angst, but mostly relief in the Bitcoin community.
“The Canadian government has taken a cautious approach to regulating digital currencies,” said digital currency regulations expert and Outlier CEO Amber Scott. “Instead of rushing in, they are looking at all the options and considering feedback from the Senate and the industry.”
While there does not seem to be an appetite for new regulation, it’s important to have a good fit with existing regulation if that’s the direction that being taken, Scott said.
Senate Committee Hearings on Digital Currencies
The Canadian government asked the Senate Committee on Banking, Trade and Commerce to investigate, hear witnesses and report back on “the use of digital currencies and the potential risks, threats and advantages of these electronic forms of exchange”.
One of the most exhaustive studies of bitcoin and other digital currencies will likely come when the committee releases its report in late May or early June.
Upcoming election, falling price of oil, terrorism on government’s mind
At the moment, the Canadian government has a lot on its plate as it goes into election campaign mode ahead of an election expected in early fall.
Also weighing on its mind is the falling price of oil, (which has made previous economic forecasts outdated), and the ongoing war against terrorism.
Behind the scenes, however, the Department of Finance has been preparing digital currencies regulations.
“The regulations are in development and the timeline for prepublication in the Canada Gazette is unknown at this time,” department official Stephanie Rubec told Bitcoin Magazine.
It has been more than one year since the regulations were announced, and the government may be in an election campaign before anything concrete is put up for consideration.
Bitcoin community testified at Senate hearings
The Senate Committee on Banking, Trade and Commerce heard from a wide range of witnesses, including digital finance experts, legal experts, academics and Bitcoin companies and advocacy groups.
Bitcoin Guru Andreas Antonopoulos was a witness, as were many of the representatives from the Bitcoin advocacy groups which included Michael Perklin and Stuart Hoegner from the Bitcoin Alliance, Jill Friedman from the Bitcoin Foundation and Guillaume Babin-Tremblay and Francis Pouliot from the Bitcoin Embassy. Other witnesses included the Bitcoin Alliance, Bitcoin Strategy Group, CAVirtex, BitAccess, and Rodger Voorhies from the Bill and Melinda Gates Foundation.
Representing the Bitcoin Foundation Canada, lawyers Jillian Friedman and Joseph Neudorfer told the senators that regulating Bitcoin was already happening with the current laws that govern fraud, money laundering and illegal purchases.
The two lawyers told the senators that existing criminal law and financial services law is sufficient to deal with fraud. And Bitcoin businesses already are subject to private contract law and consumer protection laws that deal with the sale of a good.
Francis Pouliot explained how money-laundering fears are overstated because Bitcoin is mistakenly seen as completely anonymous, when, in actuality, every transaction is recorded in a public ledger called the blockchain.
Michael Perklin of the Bitcoin Alliance summarized what other advocates were saying: “We advocate an approach that does not stifle innovation, does not discriminate against cryptocurrencies and takes careful notice of crypto’s benefits to Canadian consumers and merchants alike.”
Most witnesses made the point that the federal government has an obligation to balance any new regulations with their effect on innovation and capital flight. The government has a mandate to promote new technologies and homegrown startups, not tie them up with red tape, they said.
These Laws Currently Apply to Digital Currencies in Canada
The Bitcoin Foundation’s testimony included a list of current laws and regulations that apply to digital currencies:
- Contracts under private law: Using Bitcoin does not render parties exempt from the application of the rule of law
- Consumer protection: All of the legal obligations resulting from the sale of a good to a consumer apply to transactions with Bitcoin
- Fraud: The investing public is protected by existing criminal legislation against fraudulent Bitcoin schemes.
- Financial services law: The activities of digital currency businesses that are similar to money services businesses will soon have to play by the same rules as their fiat counterparts.
Message to Senators
One message that came through very clearly: Regulations will send promising job-creating Bitcoin businesses off to friendlier jurisdictions such as the United Kingdom, as is already happening in Australia and New York.
Canada can benefit most from encouraging digital currency innovation without tying the hands of innovators who are in new territory that doesn’t necessarily resemble past tech systems, they said.
“I highly encourage digital currency players to respond to draft regulation when it is published through the official channels,” Amber Scott said. “While there have been some cynical comments from industry players about comment periods being ‘window dressing,’ everyone that I have spoken to at the Department of Finance seems genuinely interested in getting it right and taking industry feedback seriously.”
Canada Can Be a World Leader
There was a strong argument made by witnesses that Canada is well placed with tech expertise, cheaper energy rates and a knowledge infrastructure to be the No. 1 Bitcoin country in the world.
Canada already has more ATMs and mining nodes per population than any other country. The Bitcoin Embassy’s Babin-Tremblay said that if the Canadian government provides only a “light and neutral” fiscal and regulatory framework, the economy could benefit from Bitcoin business job creation.
Read Susan’s first article in this series from Oct 19, 2014.
Coin Center Issues a Flexible Template for Bitcoin Regulation
Last week, lead Bitcoin developer Gavin Andresen and other Bitcoin Core developers joined the recently established MIT Digital Currency Initiative. This was widely interpreted as an MIT takeover of the roles of leadership, funding and co-ordination of Bitcoin technical development, previously claimed by the Bitcoin Foundation. In parallel, Bitcoin policy think tank Coin Center is claiming the role of interface to policy makers and regulators, with the publication of a framework for state digital currency regulation.
The report, titled “State Digital Currency Principles and Framework,” is a model for digital-currency-specific regulations and laws. The report provides a template with structure, definitions and language for the essential components of any digital currency law: who must be licensed, how start-ups are encouraged, how solvency is guaranteed and other necessary elements.
Recently, Bitcoin-friendly bills have been proposed in Utah, New Hampshire and New York City. Texas, Kansas, California, Pennsylvania and North Carolina also have expressed interest in Bitcoin regulations, and New York has proposed the controversial “Bitlicense” scheme, which many observers consider far too strict.
Coin Center hopes that states will use the report as a template for their own bills and regulations.
“The state that reaps the benefits of new technologies, new jobs and enhanced financial inclusion will be the state that first discovers a path worth following,” says Executive Director Jerry Brito. “We hope this report will help in that endeavor.”
Brito adds that, to be a leader in the future of financial technology, a state must carefully forge a path toward consumer protection and avoid the pitfalls of inartful and unnecessarily costly regulation.
Of course, striking an optimal balance between necessary crime prevention and consumer protection on the one hand and equally necessary innovation and technology leadership on the other is challenging. The recent initiative of the Isle of Man government to create a balanced regulatory environment that offers “freedom to flourish” to innovative fintech companies, while keeping crime and fraud out, is an important development in that respect.
The Coin Center report emphasizes that only operators with unilateral control of customer funds should be subject to a license requirement, and that anti-money laundering (AML) requirements, if absolutely necessary at all, should match, but not exceed, federal standards.
“Intermediaries who do not assume a position of trust, nonfinancial uses and individual access are digital currency innovations that should be encouraged,” the report says. “These intermediaries can benefit both consumers and businesses through improved financial privacy, financial inclusion, and vibrant technology-based economies. These uses should not be burdened by compliance costs that lack concomitant consumer protection benefits.”
Brito, who is also a professor of Law at George Mason University, co-authored the report “Bitcoin: A Primer for Policymakers.” Coin Center is a not-for-profit research and advocacy center focused on public policy issues facing cryptocurrency technologies such as Bitcoin.
“Our mission is to build a better understanding of these technologies and to promote a regulatory climate that preserves the freedom to innovate using blockchain technologies,” says the Coin Center website. “We do this by producing and publishing policy research from respected academics and experts, educating policymakers and the media about blockchain technology, and by engaging in advocacy for sound public policy.”
It’s probably too early to speculate on which organizations will co-ordinate the technical and policy-related aspects of Bitcoin development, but it seems clear that MIT and Coin Center are establishing strong leadership positions.
Lawnmower Invests Users’ Spare Change to Purchase Bitcoin
the Boost VC-backed Bitcoin startup Lawnmower tracks purchases on a user’s account, rounds them up to the nearest dollar to create spare change, and uses the change to purchase bitcoin on behalf of the user. The bitcoin purchased by Lawnmower will be deposited to a Bitcoin wallet of a user’s choice.
The minimum threshold for bitcoin deposit currently stands at $4, meaning that the accumulated spare change of the transactions must be at least $4 before bitcoins can be purchased by Lawnmower. For example, if a user buys a cup of coffee and a bagel at a local coffee shop worth $7.10, then 90 cents will be categorized as spare change and will be used to purchase bitcoin after the accumulated spare change passes the $4 threshold.
Lawnmower CEO Pieter Gorsira explained that the metaphorical definition of Lawnmower as “working backwards.
“It’s like we’re running the lawnmower over the grass and we’re clipping off a little bit of change,” he said. “So, as you go along, we slice all these little blades of grass and collect change from these transactions.”
Lawnmower uses Plaid’s API to integrate bank infrastructure and to access banking data for Wells Fargo, Bank of America, US Bank, Citibank and Chase Bank. The integration of Plaid also allows users to check bank accounts, savings accounts, credit cards and debit cards from the aforementioned banks. If the users do not want their balances from these bank accounts to be rounded off to purchase bitcoin, users can simply turn off the investment function on the app.
Lawnmower’s future revenue model
“We’re live on both platforms now and chose to launch without charging a transaction fee (on each spare change-to-bitcoin purchase, which user’s already pay through Coinbase), a monthly “management” fee, or anything along those lines,” Lawnmower told Bitcoin Magazine via email.
In the future, Lawnmower could generate money through referrals, additional customizability features for users’ spending/investing habits, and other premium features as part of a larger automated money management program, Lawnmower said.
“But we’re really focused on rapid growth now, and don’t want to bog our users down with any additional fees,” the email said.
“We have a lot longer plans once we acquire a user base,” added Gorsira.
Launch
The beta version was launched on iPhone on March 25, and several users were allowed to sign up and test the application.
“We need to see what people like or don’t like so we can start adding features,” Gorsira said at that time. “The point is to have users use it, break it and tell us if they like it. [It goes] beyond three people who live in the same room every day. We get kind of hive-minded”
Weeks later, Lawnmower was launched on Android (a few days ago) to satisfy both sets of users.
Augur Answers Tough Questions with its Blockchain-based Prediction Markets
Let’s ask a tough question: Will Hillary Clinton become president of the United States in 2016?
If you had people “bet” on the topic, and monetarily rewarded the ones who guessed correctly, you can actually get a good idea whether Hillary Clinton will become the head of state. A better idea, in fact, than virtually any alleged “expert” could give you.
It would work as follows: A market would be opened in which possible answers to the question (yes or no) are “stocks” that cost anywhere from 1 cent to $1. Automatically, the market price of the “yes” and “no” would reflect the possibility of Clinton’s election. So if a share of “yes, Clinton will be elected” costs 63 cents, then the likelihood of her being elected can be understood as 63 percent.
The option worth more (yes or no) is probably the right answer.
Since humans care about their money, this market data can provide accurate aggregated information for a myriad of purposes.
This is called a prediction market, a market where investors can buy and sell predictions about the outcome of an event.
Robin Hanson, Ph.D., professor at George Mason University, was one of the first people to start writing about prediction markets in 1988 and has been working on related projects ever since.
“Prediction markets became more popular around the dot-com boom,” says Hanson. “Presently, there’s been more activity in it.”
There’s been more enthusiasm for prediction markets in academia than in industry.
“Academics have been more willing to test the market’s claims, while businesses are less eager to adopt them – regardless of the fact that repeated trials tend to find that they are more accurate than status quo mechanisms,“ says Hanson.
“For example,” he said, “some of the most dramatic and successful prediction markets have been about deadlines. The question has been stated as: Will this project make its deadline? There are number of dramatic cases where management and officials forecast ‘yes’ and the prediction market data reveals that the answer is in fact ‘no.’ It’s not necessarily information organizations want to make publicized. This is the main barrier to widespread adoption of prediction markets: demand. Not enough people in these organizations want the product that prediction markets claim to produce.
“Prediction markets,” continues Hanson, “claim to produce uniquely accurate estimates and provide more accurate data than can be acquired from anywhere else. They’re a relatively cheap, robust manipulation; they’re timely, precise; they give you the tools necessary if you needed information and you wanted to make it known to people in an organization.”
Past implementations of prediction markets on the Internet did not succeed in the long-term. The most popular was Intrade.com.
Intrade.com, based in Ireland, was a web-based “trading exchange” where users “traded” contracts on the probabilities of various events occurring. They even allowed users to speculate on gold and oil.
In 2012, however, the U.S. Commodity Futures Trading Commission [USCFTC] filed a complaint in federal court claiming that Intrade solicited American customers to trade investment contracts that technically are options. Options can be traded only on approved, regulated exchanges.
Since Intrade was not a licensed exchange, they were forced to exclude U.S. users in 2012, and on March 10, 2013, Intrade ceased all trading.
“Intrade was a place where users got a chance to prove themselves and bet,” says Hanson. “That product, however, was limited by anti-gambling laws.”
In 2015, like many other industries, businesses and software models, prediction markets are now being implemented on blockchain technology. There is a dedicated team of individuals building what will be the world’s first decentralized prediction market platform that goes by the name Augur.
Augur plans to allow users to create their own peer-to-peer prediction markets.
“The important thing here,” says Jack Peterson, core developer at Augur, “is that it is a decentralized system. There’s no single point of failure.”
The Augur team is fully aware of past struggles of centralized prediction markets. “We’re making software,” says Peterson. “We expect the user to follow their respective jurisdiction’s laws. Our whole team has a stipulation in their employment agreement to not create, or participate in, markets on the platform.”
Regarding the upcoming software token sale, Peterson stated: “Augur’s tokens (called Reputation) occupy a unique niche. They are not used in its prediction markets; these are cash markets. Rather, the tokens are used only to report on the outcomes of events, after the events occur. Since this reporting is done after the event happens, no skill at making predictions is required. All that is required is honesty: Augur is designed so that those who report honestly will automatically gain more tokens – at the expense of lazy or dishonest reporters.”
Augur has maintained day-to-day contact with attorneys from Wilson & Sosini and Pillsbury Winthrop throughout the development of their platform. Additionally, they’ll be having a token sale in June. The team is currently finishing up the first version of their software.
“We want to launch Augur as soon as Ethereum is ready to make sure that everything is in sync with the live network,” Peterson said.
Prediction markets have a clean argument for their use and consistently pass tests of accuracy and user satisfaction. Nevertheless, most organizations are not interested in using them.
When Bitcoin Magazine asked Hanson why he thought this occurred, he replied, “It seems to be that the information that they provide is threatening and problematic, politically.”
These prediction markets can provide information that is detrimental to the status quo, and, in simpler terms, tell people/organizations things that they don’t want to hear.
“Do we really want the capability to do that?” Hanson asked. “A lot of people think they do. We’ll just have to wait and see if it’s true.”
Winner of ‘Brand me Crypto’ Campaign Announced
PALO ALTO, CALIFORNIA & CALGARY, ALBERTA – APRIL 27, 2015 – Cryptocurrency risk management and payment processing specialist Vogogo Inc. announced the winner of Brand Me Crypto, an initiative, conceptualized and sponsored by the company, its aim, to have global members of the crypto and creative community create an iconic brand to represent Cryptocurrency.
“Cryptocurrency is arguably one of the most compelling new technologies of our time and is quickly making its way into the mainstream.” said Chantel Meeley, Head of Marketing and Creative at Vogogo. “Cryptocurrency however isn’t just represented by Bitcoin. While Bitcoin has gained the greatest traction to date, there are numerous Crypto Coins in existence. Creative teams involved in the entire industry which try to visually articulate Cryptocurrency as a whole have, up to now, been presented with a very unique challenge as it has no overarching brand.”
The initiative to Brand Crypto saw entries come from designers from 90+ different countries spanning five continents. From the complete list of entries, six brands were shortlisted by a panel of crypto industry experts and these choices were then resubmitted to the global crypto and design community for input and participation in finalizing the selected brand identity.
Brand Me Crypto winner, Teresa Ledford said of her winning design, “I wanted to create a symbol that was fairly simple and would translate well to handwriting. After looking at all the existing symbols used around the world, my goal was to come up with something that was unique and descriptive, yet still had some consistency with other currency marks.”
The design, chosen by the people and endorsed by the community, has now been given creative, open brand licensing rights and made available to all at BrandMeCrypto.com.
“With the brand identity selected and brand formats becoming available for download at brandmecrypto.com we would like to encourage members in the crypto and creative community to utilize this brand when representing the overarching crypto market for global awareness, acceptance and industry-wide adoption.” said Chantel.
A small and simple ‘Supporting Brand Crypto’ icon – which links to the brand’s downloadable file – has been created for those in the industry to add to their websites and show their support. This, together with the community already beginning to adopt the chosen design to represent the wider industry, is set to fulfill the promise of a problem solved.
Bitcoin Conference Prague Planned for May 2015
Bitcoin Conference is going to make a mash on Europe. Meet the conference dedicated to the currency of the future in Prague!
Everyone has heard about a mysterious currency Bitcoin, but maybe not everyone knows where and what you can spend it on.
The world we live in does not tolerate inertness; it is in a constant process of movement and change. One of the tools changing the image of modernity is digital currencies, in particular Bitcoin.
What is Bitcoin Conference?
A thematic conference devoted to “the currency of the future”, Bitcoin Conference, which was held in 2014 in such cities as Moscow, St. Petersburg and Kiev raises awareness of what is Bitcoin and how to earn on it.
Bitcoin Conference has become the first thematic event in the CIS countries, aimed at the acquaintance of participants with the Bitcoin ecosystem and business prospects.
Bitcoin meetings held in three cities and two countries were able to bring together prominent representatives of the industry, well-known experts and gurus of the crypto currency market, lawyers, foreign experts who shared their experiences and represented the best practices for working with Bitcoin.
In 2015, Smile Expo, an organizer of the conference, is going to push the boundaries and enter the European market, conducting a thematic event in Prague.
Why Prague?
Smile Expo has deicide to expand the geography of its activities due to several important factors. In particular, one of the catalysts have been changes in the structure of the cryptocurrency market in Russia after the ban and blocking of thematic sites by the Federal Service for Supervision of Communications, Information Technology, and Mass Media. After that, many Russian companies operating in the cryptocurrency industry have moved to Europe, where there are no restrictions for Bitcoin business.
In addition, the conference organizer is in an attempt to develop and promote digital currency; and central-eastern regions of Europe are an ideal place for the realization of this ambition.
Bitcoin Conference Prague wants to serve as a unique platform for the exchange of experience between Russian companies, which have something to say and to show Europe, and their foreign counterparts.
That is why, in the heart of Europe, in the historic city of Prague, the organizers will bring together not only the Czech Bitcoin community, but also participants from Russia, Poland, Slovakia, Hungary, Germany, and in general all Bitcoin enthusiasts of Central and Eastern Europe.
Bitcoin Conference. Prague: what to expect?
- Conference covering the latest and hottest topics of the year: forecasts, analysis, best deals for work with cryptocurrencies;
- Exhibition area – an opportunity to get acquainted with the market leaders, innovative products and to obtain first-hand information. Everything that can help your business become more successful will be presented there;
- Alley of start-ups will provide you with new ideas and new offers. The most unexpected and interesting solutions that will touch your feelings;
- Buffet table – new acquaintances and experience + party in the style of the best traditions of Czech beer events.
The Bitcoin Conference Prague team invites speakers, exhibitors, sponsors and partners to participate. Become a part of the main European Bitcoin event in the spring of 2015!
Join us, as Bitcoin Conference Prague is simply impossible to miss!
To get detailed information about Bitcoin Conference Prague, please go to official event website bitcoinconf.eu.
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