Thursday, June 18, 2015
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JUN 18 DIGEST: Elliptic Announces Breakthrough in Bitcoin AML Compliance, Ex-US Agent to Plead Guilty to Silk Road BTC Theft
Inside Bitcoins Chicago Announces Blockchain Agenda, Speakers
BitPay Shifts Focus from Payments and Merchants to Large Banks
Wednesday, June 17, 2015
JoyStream: a BitTorrent Client that Incentivizes Seeders with Bitcoin
JoyStream, the world’s first bitcoin-based BitTorrent client is set to have an alpha release for a limited amount of pre-signed users on the Bitcoin Testnet soon.
Founded by Dr. Bedeho Mender, JoyStream attempts to improve the levels of bandwidth contribution and the lack of incentives for content providers known as seeders in the original BitTorrent client, by rewarding JoyStream’s seeders with micropayments using multiway payment channels in bitcoin.
Users who choose to download content in the JoyStream client are known as leechers, and are required to pay the seeders directly in bitcoin, in exchange for downloading files or streaming large HD audio or video files.
The unique feature and payment system of JoyStream provides the seeders with an opportunity to charge higher prices for rare and highly demanded content, thus providing a more competitive market and a more equitable system for seeders than the original BitTorrent client.
“I think the seeding market is very close to a perfectly competitive market, which means that seeders will compete the price down to the marginal cost of supplying the content, which is quite low,” Mender told Bitcoin Magazine. “Getting to that sort of situation does, however, take some time, and in the initial stages the first seeders will be able to charge somewhat monopolistic prices. This is temporary, and will give people an incentive to go through the trouble of preparing content and creating torrent files. It is hard to come up with an exact number, but I think the very low monthly prices of VPNs could be taken as an indication of how cheap bandwidth really is.”
As the seeders’ contribution of bandwidth is incentivized directly from its leechers, users are able to download torrents and files at much higher speeds, and stream HD movies or audio without interruptions. Furthermore, users may skip or rewind the HD videos while streaming without having to reload the whole file as required in other commercially available torrent clients.
JoyStream will be released on the bitcoin testnet, where pre-signed-up users can use the client without any risk.
“The alpha release will be on testnet, where everyone can try it out without risking any of their bitcoins, after that the goal is to get to a stable and secure version running on mainnet with real bitcoins,” Mender told Bitcoin Magazine.
The highly anticipated bitcoin-based torrent client JoyStream may integrate micropayment platforms for digital currency such as Strawpay or the Bitcoin Lightning Network, in which transactions are “sent over a network of micropayment channels whose transfer of value occurs off-blockchain.”
The integration of the aforementioned network of micropayment channels will enable the client to run flawlessly, disregarding the maximum blocksize of the bitcoin blockchain.
JoyStream has been receiving a significant number of suggestions from the bitcoin community, including those which propose that the leechers or content downloaders should be able to torrent for free, and upgrade the client only if the torrent fails to sustain its high-speed.
Grexit’s Significant Impact on Digital Currencies
In March/April 2013, the exchange rate of bitcoin soared as a consequence of harsh capital controls introduced in Cyprus. Many people came to the conclusion that governments and banks couldn’t be trusted with their hard-earned savings, and started looking for alternative ways to store value, out of reach of predatory central banks. Bitcoin came to the rescue, and its price shot up as many people rushed to take money out of their saving accounts and buy bitcoin instead.
The recent spike in the exchange rate of bitcoin, which went up 10 percent in the last 24 hours – something unheard of in the last few months of relative stability – has been linked by many analysts to the more and more frequent rumors of Grexit – the spectrum of the possible exit of Greece from the eurozone and perhaps from the European Union (EU) itself.
Before a meeting of eurozone finance ministers, seen as the last realistic chance to reach a deal before Greece has to pay the International Monetary Fund (IMF) at the end of June, Greek PM Alexis Tsipras showed no sign of bowing to demands for cuts in pensions and increases in VAT, The Guardian reports. Instead, Tsipras accused the fund of “criminal responsibility” for the situation and said lenders were seeking to “humiliate” his country.
Yanis Varoufakis, the Greek finance minister, challenged the EU leaders. “Greece will only commit to [spending cuts and reforms] if Europe agrees to a debt restructuring, investments and an end to the liquidity crisis,” he said. The EU leaders, especially Germany’s Merkel, do not want next week’s summit hijacked by Greece, notes The Guardian, but that appears inevitable without a breakthrough.
Joshua Scigala, co-founder of Vaultoro, a firm that holds bitcoin for its customers and allows them to exchange it for gold and vice versa, told Reuters that Greeks are buying the currency as they lose their trust in the authorities. Over the past two months, Vaultoro has seen a 124 percent increase in business from Greeks.
Reuters notes that, though bitcoin’s value has previously been highly volatile, it has stabilized over the past six months and is increasingly treated as a legitimate and potentially valuable asset by major financial institutions, and even by governments such as Britain’s.
“You have people worrying about their families’ wealth or their life savings, and worrying that their money might be locked up in banks,” said Scigala. “They’d rather hold money in a private asset like gold or bitcoin. Some people aren’t waiting for the government to figure out an exit plan and are doing it for themselves.”
If the Greek situation isn’t solved soon, more and more Greeks concerned about capital controls can be expected to take their money out of the country’s banks and move it into bitcoin.
Reuters notes that a bitcoin-like digital currency, backed either by Greece’s assets or future tax revenues, could conceivably be introduced as a parallel currency in Greece. Varoufakis wrote a blog post in February proposing a similar IOU-based currency, which he dubbed Future Tax Coin (FT-Coin). Though he is not impressed by bitcoin as a currency, Varoufakis is persuaded that its underlying blockchain technology could be put to effective use in troubled economies. Recently, CNBC contributor Brian Kelly, the author of “The Bitcoin Big Bang: How Alternative Currencies Are About to Change the World,” proposed a similar bitcoin-like solution for Greece’s troubled economy.
Ledger Hardware Wallet Integrates Biometric Authentication
Coinbase Launches Instant Exchange to Help Users Avoid Bitcoin Volatility
Coinbase users can now send bitcoin payments without being exposed to the digital currency’s volatility
Users with a fiat wallet (must be verified in order to get it) allows use of Bitcoin’s global payment network without being exposed to the price of the digital currency. Coinbase’s Instant Exchange deducts an equal amount to the bitcoin the user wants to send, effectively exchanging the two. The service is similar to one offered by Coinbase to bitcoin-accepting merchants.
As of today, Instant Exchange is available for users with a USD, EUR, or GBP wallet. After typing the bitcoin address and chosing a fiat wallet, users can hit the “Instant Exchange” button, and then send. A bitcoin amount equal to the fiat selected will be sent instantly, without exposing the user to bitcoin’s notorious volatility. The startup’s standard conversion fee of 15 cents will be deducted from each conversion, but sending payments to other Coinbase users is free.
The bitcoin is deducted from the user’s fiat wallet and not his or her digital currency wallet, meaning it can also serve as a way for users to instantly sell their bitcoin.
A different model
Volatility is a problem all too well-known in Bitcoin and is a chief complaint among people interested in using the technology’s payment network. Many services have looked to solve this problem by offering the ability to “lock” bitcoin to the price of the American dollar, British pound, and various other fiat currencies. Users can then unlock their bitcoin when they want to send them or be exposed to the digital currency’s price.
Latin American bitcoin startup Coinapult was first to launch such a service, but now many bitcoin businesses offer it, including Bitreserve, which designed its whole service around the concept.
One issue with these services is that though it makes storing the currency safer, it does not solve the problem when sending the digital currency. Also, if bitcoin’s price goes down, these businesses offering the ability to peg bitcoin will lose money. And though the price has been more stable in recent months, bitcoin’s price has declined dramatically over the last year, meaning that many “lock” services could be feeling some pain.
Coinbase’s model avoids the potential risk of being on the strong side of a price swing by exchanging bitcoin for dollars instantly, and not operating a one-to-one reserve (peg).
Image via Coinbase
Bitcoin Tracker One ETN Now Trading Worldwide via Interactive Brokers
Last month Bitcoin Magazine reported that Bitcoin Tracker One, the first Bitcoin-based security available on a regulated exchange, started trading on Nasdaq Stockholm. Now, Bitcoin Tracker One, a product launched by the Swedish company XBT Provider AB, is available to investors in 179 countries via Interactive Brokers.
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.
Interactive Brokers LLC (IB) is a U.S.-based online discount brokerage firm. It is the largest U.S. online brokerage firm by number of daily average revenue trades, as well as the leading foreign exchange broker. The company is a provider of fully disclosed and nondisclosed broker accounts and provides correspondent clearing services to 200 introducing brokers worldwide. The company allows account holders to trade on more than 100 market centers in 24 countries, with direct market access to stocks, options, futures, forex, bonds, exchange traded funds (ETFs) and contracts for difference (CFDs) from a single IB Universal Account.
“We are very proud to be the second-most traded ETN on Nasdaq Nordic today, and more interest is coming every day and I believe that people are very happy to finally be able to invest in Bitcoin (i.e the ETN) through a regulated exchange,” Alexander Marsh, chief executive officer of XBT Provider, told Bitcoin Magazine. “The fact that a world-famous broker like Interactive Brokers has added the instrument to their offering is really great. Ticker code COINXBT.”
Bitcoin Tracker One could become an attractive investment option for those traditional investors who want to speculate on the 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.
“We are proud to offer the world’s first ‘Bitcoin tracker’ to be traded on a regulated exchange,” said Marsh when Bitcoin Tracker One was first announced. “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.”
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, which will be available to investors on Nadaq with the ticker COIN.
XBT Provider AB (publ) is a public limited liability company formed in Sweden and incorporated under Swedish law, with its 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.
Photo bifshadow / Flickr
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