Tuesday, May 19, 2015
MAY 19 DIGEST: Ripple Labs Raises $28 Million, Ulbricht Defense Argues Silk Road Made Drug Use Safer
Italian NordOvest Energie Becomes EU's Second Utility Firm to Embrace Bitcoin
21 Inc. Announces Embeddable Chips to Subsidize Bitcoin Mining
Ripple Labs Raises $28 Million Series A from Chicago Mercantile Exchange and Seagate
Ripple Labs, the creator of the international payment network and digital currency Ripple (XRP), has raised a $28 million series A funding round.
The funding round featured many strategic investors including the venture arm of Chicago Mercantile Exchange & Chicago Board of Trade (CME Group Inc.), one of the largest security and future exchange operators in the United States. Other notable investors in the round are Chinese venture capital firm IDG Capital Partners and the global data storage company Seagate Technology.
Previous investors into Ripple Labs including Barry Silbert’s Bitcoin Opportunity Corp., Core Innovation Capital, Vast Ventures, and Venture 51 also participated in the series A.
This new infusion of capital and the strategic investors gained through this round will facilitate the growth of Ripple Labs’ digital currency payment system to new parts of the world. In addition, this funding round may allow Ripple Labs to experiment with using XRP for real time settlement in corporate finance, a new use case for the digital currency.
“Our mission is to modernize decades-old payments infrastructure with IP-based technology so value moves around the world as freely, easily, securely and transparently as information on the web today,” said Ripple Labs CEO and co-founder Chris Larsen in a statement. “Financial institutions, market makers and corporations are laying the foundation for this Internet of Value, contributing and providing liquidity for global payments. With investors like CME Group and Seagate joining the fold, we’re well positioned to accelerate adoption amongst these key customers.”
“Managing a global treasury operation and supply chain finances for one of the world’s largest high-tech storage technology companies puts us in a unique position to understand the frictions and pain points in funds transfer,” said Dave Morton, Senior Vice President of finance and treasury at Seagate Technology. “With its real-time settlement capabilities, we recognize the opportunity for Ripple to reduce money transfer costs, create transparency, and increase working capital in corporate treasury use cases.”
Rumi Morales, executive director of the Strategic Investment Group at CME Group, added, “Ripple is transforming global settlement architecture, and its momentum in payments will give way to an expanding portfolio of use cases in the financial markets. Joining this funding round is another example of how we are investing in technologies that impact our industry.”
Ripple Labs has already partnered with several financial institutions, including cross-border payment platform Earthport, Fidor Bank, Cross River Bank and CBW Bank.
Growing Ripple’s Presence In Asia
Last month, Ripple Labs open its first Asia Pacific offices in Sydney, Australia and hired payment industry veteran Dilip Rao, to lead the company’s effort in the region. According to the company, this move was intended to meet a “growing demand” for the payment network in Asia and marked the beginning of an increased interest in the region.
IDG Capital Ventures, which was an early investor in Chinese consumer internet giants Baidu, Tencent, Xiaomi and CreditEasel, will help the digital currency company grow its presence in China. China has been a hotbed of digital currency activity and is home to many large exchanges and mining companies. Li Feng, a partner at IDG Capital Ventures, will also join Ripple Labs’ board of directors.
“We are excited to build on our relationship with Ripple Labs, especially as they expand their presence in Asia,” said Feng. “Growing their influence in key regions like Asia will help activate new markets, further accelerating the use of Ripple as a real-time settlement protocol by the world’s leading financial institutions.”
IDG Capital Ventures recently co-led the funding round of Bitcoin financial services startup Circle along with Goldman Sachs. The venture firm will also help Circle enter the large Chinese markets.
Monday, May 18, 2015
African Bitcoin Remittance Service BitPesa Expands to Tanzania
African Bitcoin startup BitPesa launched its remittance service in Tanzania today. The service previously was available only in Kenya, where the company is headquartered. It hopes to undercut the fees charged by incumbents’ remittance services.
BitPesa launched its international money transfer in Kenya last year with the goal of expanding the service to the rest of Africa, something the company has slowly been working toward. Besides its remittance product, the company operates an exchange in Kenya and Ghana but Tanzania is the first country the startup has expanded its international money transfer service into.
Like Kenya, Tanzania is a mobile money hotspot and an ideal country for BitPesa. The nation has a population of more than 43 million people, and, according to a 2014 study by industry group Groupe Speciale Mobile Association (GSMA), has 31.8 million registered mobile money accounts. Tanzania received $317 million in remittances, $15 million of which came from Kenya, in 2012, according to a World Bank study.
BitPesa’s service allows anyone to send money to any Tanzanian phone number and charges a flat 3 percent on all its transfers. The service also promises the money will arrive instantly.
A Competitive Market
BitPesa will be joining a number of other companies that offer domestic (from city to rural) and international remittances in the country. Tanzania already has more than six mobile money operators who offer money transfer services to anyone in the country, and operators such as M-Pesa, who have partnered with Western Union, offer international mobile remittances.
Due to a lack of studies and research about remittance fees in Tanzania, it is unclear whether BitPesa will have a cost advantage, but it is certainly likely, especially for inter-Africa remittances. A 2013 World Bank press release said that Tanzania, alongside South Africa and Ghana, were the most expensive African countries to remit money to. Fees reportedly could get as high as 20 percent.
BitPesa’s low flat rate might turn out be an attractive option for Tanzanians in Kenya remitting money back home, which is a smaller corridor and usually has higher fees. The same might hold true for Tanzanians living in Uganda when the Bitcoin startup expands there later this year. The service will of course allow people from anywhere in the world (excluding the United States) to remit money to the small African country as well.
A more likely candidate for the service however, are businesses operating in Kenya, Tanzania and countries such as the United Kingdom, who have to send money to and from the African nation. BitPesa has already pivoted their service to better accommodate businesses’ needs after finding a large interest in the service from the group late last year.
Image via BitPesa.co.
Bitcoin Retailer Harborly Launches in the US and Gears Up For India Expansion
Texas-based startup Harborly launched its Bitcoin retail service in the United States today. Harborly, which was already operational in Canada, will be the first U.S. bitcoin-buying service to offer users the ability to lock their bitcoin to a fixed U.S. dollar exchange rate when it launches the feature in June.
Harborly, founded by computer programmers Connor Black and Gabriel Ferrin, will charge a one percent fee plus a 25-cent bank fee for bitcoin purchases. At launch, the retailer will be accessible to residents of Texas and California, but the startup plans on expanding to nine additional states in upcoming months.
The startup claims to have a close relationship with its U.S. banking partner, but said it was not at liberty to reveal which bank that is.
“Harborly’s goal is to make buying, selling and using digital currency as easy and attractive as possible,” Black, who is also the company’s CEO, told Bitcoin Magazine. “We’ve entered the U.S. market with a new, competitive alternative in the bitcoin retail space. As we secure a foothold and gain market share, we plan to launch additional innovative Bitcoin products, such as locked Bitcoin wallets.”
A Global Bitcoin Company
Harborly is focused on operating internationally and plans to expand to countries in Europe, Asia, Africa and Latin America within a year. The startup thinks Bitcoin will cause a “technology paradigm shift” in the next 10 years and that by operating a global Bitcoin company they will be best positioned to take advantage of the new technology.
The young startup hopes to accomplish its ambitious global vision with regional advisers who will help Harborly find banking partners and adjust its business model for each region. The advisers include AlemHealth founder Aschkan Abdul-Malek, KCP Capital Managing Director Roderik van der Graaf; Afrasia Development Corp. Chairman Pierre Gussing, ex-Deutsche Bank executive Jordan Himel and Tauil & Chequer Advogados Rio de Janeiro partner Salim Saud Neto.
“Bitcoin’s core architecture is innately borderless, but, generally speaking, it’s impractical to use in most regions across the globe. Digital currency is in a unique position right now where its success is dependent on cooperation with the current financial system, and this cooperation is shaky at best,” said Black.
“We understand this and have aligned our vision accordingly,” Black added. “First, Harborly is going to continue bridging the gap between local payment methods and the bitcoin markets. And second, we’re going to continue developing products and solutions that push past this status quo, enabling bitcoin to prosper in its own right.”
The Bitcoin retailer recently raised a small seed round from undisclosed angel investors. The funds raised will give the company capital to act as market marker, grow its operations in the United States and expand upon its business development efforts in India – a country the startup is keen on expanding to. Black said the company is in talks with several payment providers in India, so when launched, Indians will have many payment options.
Harborly, which plans on launching in the central Asian country in August, will create a remittance service from the United States to India, a nearly $12 billion remittance corridor. The startup will be the first company to offer a bitcoin remittance product between the two countries. Harborly will also operate its Bitcoin retail and price-locking service in the country.
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Hong Kong Banks Targeted By DDOS Attacks, Bitcoin Payout Demanded
On May 9, an international group of hackers launched distributed denial of service (DDoS) attacks on two of the largest financial institutions in Hong Kong. Hong Kong police confirmed that they have received reports from the Bank of China and the Bank of East Asia claiming that the hackers demanded payments in bitcoin.
“The two institutions later received emails demanding payments in bitcoins, or there would be another round of attacks,” a spokesman said.
According to The Standard Hong Kong, the hackers overwhelmed the websites of the two banks with traffic from multiple sources, causing irregular spikes in Internet traffic and forcing some of the websites’ resources to be unavailable.
However, both banks stressed that none of its data and customer accounts were compromised.
Finance Magnets reported that the Cyber Security and Technology Crime Bureau has classified the case as “blackmail” and has begun an investigation.
The attack imposed on the two banks is similar to the DDoS attacks launched on the official corporate websites of banks in China and Hong Kong, most notably the People’s Bank of China in late 2013. The investigators at the time believed that the attacks were a result of the issuance of new rules which prohibited financial institutions from dealing with bitcoin.
The State media reported that they believed “bitcoin fans” have initiated the attack, as a response to prohibiting the use of digital currencies in China.
The local media began to speculate that the recent attack initiated on the Bank of China and the Bank of East Asia might have been launched by a group of hackers known as DD4BC. The group is currently listed on Bitcoin Bounty Hunter and has attacked several websites, including Finnish Bitcoin wallet and exchange Bitalo and Bitcoin sports betting platform Nitrogensports.
“DD4BC threatens the Bitcoin Community with DDoS extortion, blackmailing and slander,” Bitcoin Bountry Hunter explained. “Famous Bitcoin services like Bitalo.com and Nitrogensports.com were attacked and blackmailed.”
The banks declined to release information of the emails received by the hackers and the amount of BTC demanded.
If the DDoS attacks are continuing, the two banks may lose up to $100,000 an hour, American Banker reports. AMR (American Banker Reports) stated that “the average bandwidth consumed by a DDoS attack increased to 7.39 gigabits per second, according to Verisign’s analysis of DDoS attacks in the fourth quarter of 2014.”
A few days have passed since the Cyber Security and Technology Crime Bureau began investigating the case, but the case hasn’t showed any progress.
IRS Fraud Victim Refunded Seized $107k – Minus Interest
Bitcoin Tracker One ETN Starts Trading on Nasdaq Stockholm
Two weeks ago XBT Provider AB announced the authorization of Bitcoin Tracker One, the first Bitcoin-based security available on a regulated exchange. Today, Bitcoin Tracker One started trading on Nasdaq Stockholm.
“NASDAQ OMX Stockholm decides to officially list 1 Exchange Traded Note issued by XBT Provider AB with effect from 2015-05-18,” announced XBT Provider AB on Friday. “We are proud to offer the world’s first “Bitcoin tracker” to be traded on a regulated exchange,” states the XBT Provider website. “By enabling this easy and secure way to invest in Bitcoin we hope to have eliminated the boundaries that earlier prevented individuals and companies from being able to actively invest in what we believe to be the future of money.”
“The world’s first Bitcoin-based security on a regulated exchange has been launched in Sweden,” notes the Swedish edition of the English language news site The Local. “The digital currency began trading on the Stockholm market on Monday.”
Bitcoin Tracker One is an “Exchange Traded Note” (ETN) designed to provide investors with convenient access to the returns of the underlying asset, U.S. dollar (USD) per bitcoin, less investor fees. The average dollar exchange rate of bitcoin from the exchanges Bitfinex, Bitstamp and OKCoin provides the underlying reference price. A detailed breakdown of the value of Bitcoin Tracker One is given here.
“Young guys will probably buy it. Bitcoin stands for a new digital world, free from the banking system. It’s almost somewhat political,” savings analyst Claes Hemberg of the Avanza bank told Swedish news wire TT.
The ETN could become an attractive investment option for those traditional investors who want to speculate on the dollar exchange rate of bitcoin with traditional investment vehicles, rather than going through the hassle of buying and holding bitcoin directly. In particular, traditional financial instruments such as Bitcoin Tracker One offer easy ways to short bitcoin and profit from price drops. However, all investments are risky, and this is no exception.
“You shouldn’t put more money towards bitcoin than you would bet on a horse race. You can win, but also lose everything,” Hemberg warned.
Other similar bitcoin investment vehicles are Barry Silbert’s Bitcoin Investment Trust (BIT), now trading on the OTC Markets Group’s OTCQX exchange with the symbol GBTC, and the upcoming Winklevoss Bitcoin Trust ETF (Exchange Traded Fund), which will be available to investors on NASDAQ with the ticker COIN.
XBT Provider AB (publ) is a public limited liability company formed in Sweden and incorporated under Swedish law, with statutory seat in Stockholm. The XBT Provider website states that the company is backed and guaranteed by bitcoin mining hardware manufacturer and service provider KnCGroup. The Local notes that KnCGroup, which had racked up $75 million in turnover in around eight months after its launch in June 2013, opened a new data hub in northern Sweden last year, just a stone’s throw from Facebook’s European data center.
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