Saturday, May 16, 2015
‘Mycelium Gear Is Not a Payment Processor, but a Blockchain Notifier’
In Victory for Crypto Community, Russian Court Lifts Ban on Bitcoin Sites
Friday, May 15, 2015
DerbyJackpot Becomes First US Regulated Online Gambling Company to Accept Bitcoin
Through a partnership with Bitcoin merchant payment processor GoCoin, the United States-based gambling website DerbyJackpot will now accept Bitcoin for betting on horse races around the country.
DerbyJackpot becomes the first US regulated gambling company to accept the digital currency. Bitcoin gambling websites have existed for a long time but have mostly remained in the underground economy or have blocked US customers. DerbyJackpot will be the first place US citizens can legally gamble with Bitcoin.
“Having spent the last 18 months circling the globe educating gaming and financial regulators in Europe and South East Asia, I’m thrilled to see the US be the first to market with a legal regulated real money gaming site with DerbyJackpot,” said Steve Beauregard, Founder and CEO of GoCoin, “And being from Maryland, I’m especially proud to see the launch on the eve of the Preakness Stakes.”
“As a bitcoin company, compliance needs to be top of mind. Our compliance team was uber impressed with the thoughtfulness and thoroughness of the Derby Jackpot compliance program, that they were a natural fit for GoCoin,” he added.
High Demand for Bitcoin Integration
Derby Jackpot told Bitcoin Magazine they chose to accept Bitcoin due to frequent requests from customers. The integration comes during the height of the Triple Crown of Thoroughbred Racing season, one of the most active parts of the year for the sport. DerbyJackpot users will be able to bet bitcoin on races at the Preakness this weekend, the Belmont Stakes, and hundreds of other horse races.
Launched in 2012, the gambling startup has pioneered the growing industry of online betting for horse races. According to DerbyJackpot’s CrunchBase profile, the company has raised over $6.5 in capital and includes Reddit co-founder Alexis Ohanian and Bullpen Capital Managing Director Paul Martino among its advisors and investors.
GoCoin also provided bitcoin payments for the first regulated Bitcoin gambling website in the United Kingdom. In October of last year, the company partnered with iGaming operator Cozy Games to enable Dogecoin, Litecoin and Bitcoin payments for the mobile gambling company’s apps. Cozy was the first regulated gambling company to accept Bitcoin in the UK and the world.
527 US Banks Have Failed Since Late 2008, but the Bitcoin Protocol ‘Still Hasn’t Been Hacked’
MIT and Coin Center Speak up against Critical Flaws in the Proposed BitLicense
A few weeks 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.
Soon afterward, lead Bitcoin developer Gavin Andresen announced that he and other Bitcoin Core developers were joining the MIT Digital Currency Initiative, which gives MIT the roles of leadership, funding and co-ordination of Bitcoin technical development. In parallel, Bitcoin policy think tank Coin Center claimed the role of interface to policy makers and regulators, with the publication of a framework for state digital currency regulation.
Now, MIT and Coin Center are beginning to act jointly as Bitcoin representatives in policy and regulatory discussions, and expressing the concerns voiced by the Bitcoin community about the initiative of the superintendent of the New York Department of Financial Services (NYDFS) Benjamin Lawsky, who is expected to issue this month a new regulation called BitLicense, much stricter than the agile framework proposed by Coin Center.
On March 27, Coin Center issued a detailed commentary to the current BitLicense text, in the hopes that some further adjustments may ensure that New York State becomes a leader in the financial technology of the future.
In a recent Medium post titled “How to Prevent New York from Becoming the Bitcoin Backwater of the U.S.,” MIT Digital Currency Initiative lead Brian Forde praises the Coin Center commentary, and, in particular, the idea that regulations should strike a middle ground in such a way as to protect both consumers and digital innovators.
“If done right, along the lines of what has been proposed by Coin Center, [regulation] will increase investment in digital currency startups, create jobs and allow consumers to receive cutting-edge financial services of the future, faster and safer,” says Forde. “And it’s challenging to balance consumer protection, competition and prevent money laundering while also enabling innovative new industries to grow and prosper.”
Similar arguments have been used to justify agile and enlightened Bitcoin regulatory frameworks, for example by the Isle of Man government, which wants to offer “Freedom to Flourish” to digital innovators while protecting consumers and keeping crime out.
Forde welcomes the initiative of Lawsky and his team to provide regulatory clarity for the emerging technology of digital currencies, but issues a clear warning that the current BitLicense text has four fundamental flaws:
- The NYDFS would like to review and approve all software updates for Bitcoin apps;
- NYDFS approval would be required to raise a round of financing if any new investor provides an investment for more than 10 percent of a Bitcoin company;
- BitLicense proposal requires Bitcoin companies to get both a money transmitter license and a BitLicense – even though they have substantial overlapping requirements;
- The NYDFS would like to regulate Bitcoin wallet applications – even open source software that doesn’t control users’ funds – instead of specific illegal behaviors, which would be like trying to regulate Internet browsers instead of fighting online crime.
Regarding the last point, it’s worth noting that the framework proposed by Coin Center emphasizes that only operators with unilateral control of customer funds should be subject to a license requirement.
Forde is persuaded that, if the current BitLicense proposal is not significantly amended, New York would become a digital fintech backwater.
It’s easy to see what would happen in that case: Innovative companies would leave New York and move elsewhere, resulting in loss of jobs and technology leadership. If similar, unnecessarily restrictive regulations were to be adopted in the rest of the United States, innovative companies would just move abroad. The recent decision of Xapo to move its corporate headquarters to Zurich, Switzerland, should be a wake-up call for U.S. regulators.
Photo: no telling where the money went / CC BY 2.0
BitNational Unveils Canada's Largest ATM Network, Offering BTC Below Market Price
XAPO Relocates Corporate Headquarters to Privacy-Friendly Switzerland
Xapo, a provider of secure bitcoin wallet and vault storage solutions deemed “the Fort Knox of bitcoin,” announced that it is relocating its corporate headquarters to Zurich, Switzerland. The company will retain a small presence in its previous home base in Palo Alto, California to serve U.S. customers, but its main operations will move to the new home base.
Xapo’s primary deep cold storage vault is already located in Switzerland (the precise location hasn’t been disclosed), with additional secure sites deployed around the globe.
“[A]t the request of our expanding global customer base, now is the time to bring our center of operations closer to the heart of our security infrastructure,” the announcement reads. “The country’s regulatory stability, international neutrality and its deep-seated tradition in global finance also factored into the decision.”
Xapo’s deep cold storage servers are housed in radio wave-blocking Faraday cages and secured behind military-grade security controls deep within reinforced underground bunkers. All vaults utilize multi-signature transaction authorization, and withdrawals must be signed by at least three of five deep cold storage sites around the world. For extra physical security, Xapo has partnered with satellite surveillance service provider Satellogic.
In August 2014, Xapo became the first Bitcoin services company to complete a Service Organization Control 2 (SOC2) Type I audit, a widely recognized auditing standard against which service providers are able to report and validate their internal security controls. Customers’ funds are covered by two separate insurance policies against cyber-theft, hacking attacks, physical break-ins and employee dishonesty.
That shows how Xapo wants to take all measures to protect its current and future customers’ funds from all risks and threats.
“[O]ur fiduciaries are protected by our vault, which uses private keys that never touch the client or the Internet and are buried deep within geographically dispersed, heavily guarded locations with multi-signature technology for transaction signing,” notes the announcement. “We have customized security protocols to reduce the likelihood of theft through social engineering, phishing or brute force hacks, and offer full insurance in the unlikely event that these systems are compromised.”
Though not explicitly stated in the announcement, it seems evident that Xapo needs to protect its key customers from the possibility that the political climate in the United States might become unfriendly to crypto-currencies, and therefore decided to move to a country with strong privacy and banking secrecy traditions. The linked page “Why Switzerland?” is more explicit:
“Switzerland has a long tradition of protecting both personal and financial privacy. The fundamental right to personal privacy is established as part of Article 13 of the Swiss Federal Constitution, and the protection of personal financial information is still maintained today by the provisions of the Swiss Banking Law of 1934.”
The page also notes that the Swiss spirit of independence endures, with Switzerland remaining apart from the European Union, and deciding participation in any non-governmental organization by popular referendum. The country protects its multiple borders, and national sovereignty, with an active military force of professional soldiers and civilian reservists.
“This is not to facilitate crime, this is to protect privacy,” Xapo CEO Wences Casares told CoinDesk. “There are some customers that will bring more balances if we do this and there are some customers who have said we will work with you if you do this.”
ChangeTip Brings Bitcoin Tipping to SoundCloud Amid Privacy Concerns
Social media has been around since the infancy of the internet, beginning with BBS and CompuServe in the ‘80s and ‘90s which allowed members to share files and access news and events.
Now, Facebook and Twitter are arguably the kings of social media, but ChangeTip wants to lead a new era of social media where you can share more than cat pictures.
ChangeTip aims to transform social networking forever by introducing “the money layer of social media.” Recent integration with the social sound platform, SoundCloud, is evidence of ChangeTip’s commitment to becoming the biggest platform dedicated to the exchange of money in the digital universe.
“It’s the transformative nature of where technology is taking us,” says ChangeTip’s Kyle Kemper.
The heavily requested integration is good news for users and producers of music. Now for the first time, supporters of indie artists can tip their favorite musicians and directly express appreciation for their content. But ChangeTip is not stopping there. Future plans include integration with other music platforms like Spotify, as well as Meetup.
“The demand can get pretty overwhelming,” Kemper states. “The most effective way to handle [the demand] is through a robust API. That way other platforms like Meetup and Spotify can just do their own native integration using our API.”
ChangeTip’s technology can be used for more than supporting indie artists and sending your friend’s payment for beer. Recent integration with the Red Cross has allowed people from all over the world to donate over 28 bitcoins to Nepalese victims struggling after the earthquakes.
Value Transfer Competition
Sending money over the internet is not new. Online payment platforms like Paypal and Venmo have existed for years. Kemper explains what separates ChangeTip from the rest of the pack, saying, “ChangeTip is international, bitcoin is international and with ChangeTip sending money can all done with no fees – instantly.” ChangeTip is also able to process microtransactions, transactions with a value of less than a dollar, which are typically cost prohibitive for traditional payment methods.
Coinbase had also developed a tipping service similar to ChangeTip but deferred to ChangeTip’s platform, stating, “ChangeTip is an excellent example of a company which uses our APIs, and we’d like to support them instead of competing with them.”
With seemingly no competition in the “money layer of social media,” the ultimate goal for ChangeTip, according to Kemper, is for people to, “understand they can become their own bank with bitcoin. What makes it feel like real money is that they offer to buy $20 USD worth of bitcoin, and you send them $20 USD worth of bitcoin on ChangeTip.”
Critics Speak Out
But not everybody is happy with ChangeTip. Some criticize the company for its centralized practices and off-chain transactions. In off-chain transactions a claim is made on an amount of bitcoin and sent from one person to another – no actual bitcoins get exchanged, and the transactions are not recorded on the blockchain. In this case, ChangeTip also controls the private keys for all bitcoin addresses associated with the service.
While no transactions are recorded on the blockchain, off-chain transactions are beneficial because transactions can be made instantly without waiting for confirmations. Kemper comments,“ChangeTip is a transitional wallet for fast spending. We don’t encourage people to keep a lot of money on their account.”
Some users have raised concerns about the amount of personal and social data that ChangeTip is collecting. For example, ChangeTip collects information about every social network where its users send tips. This means that ChangeTip could potentially be able to link a private Facebook profile to a Reddit account or a withdrawal bitcoin address for a user. Others have reported that ChangeTip may be making some user data publicly available unintentionally.
Despite these concerns, ChangeTip continues to grow its presence across the popular social platforms and spread awareness about bitcoin.
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