Thursday, August 20, 2015
Donald Trump Vows to Clamp Down on Mexican Remittances
Factom Launches Release Candidate 2 in Preparation for Beta
On July 6, 2015, Bitcoin Magazine reported that the Factom Foundation had launched Release Candidate 1 (RC1), a crucial step for launching the Factom network. Over the ensuing 5 weeks, community developers and programmers have been testing and debugging the network in order to reach all the goals set out in Factom’s Milestone 1.
Today in a blog post, Factom has announced the launch of the Release Candidate 2 (RC2) version of the Factom Beta. Again, it is asking for developer input as it works toward its next milestone: Factom Genesis.
According to Factom’s post, RC2 includes the following:
- Better Factom block syncing & downloading
- Tested for high numbers of entries
- Improved server to client messaging and error handling
- Some limited code refactoring and reorganization
Once Milestone 1 is achieved, funding from the software sale will be released. At this point, holders of Factoids will be able to utilize their tokens on the network and to exchange them on Cryptsy and ShapeShift.
To celebrate the network’s progress, Factom will be hosting a launch party in Austin, Texas on Tuesday, September 1, featuring speeches from Peter Kirby and Paul Snow which will be broadcast to the community, along with a Q&A on Zapchain.
Earlier this year, Tatiana Moroz caught up with Tiana Laurence, chief marketing officer at Factom, to learn more about the project.
Bank of England: Bitcoin is “Harder Money” than Gold Due to Deflation
During a presentation on digital currencies entitled “Old Money, New Money,” Andy Haldane, Chief Economist and the Executive Director of Monetary Analysis and Statistics of the Bank of England and his team stated that “Digital currencies are ‘harder money’ than a gold standard” because “sustained adoption [of bitcoin] would see ongoing deflation.”
Haldane began by explaining the basics of bitcoin and its “advantages and disadvantages” as a peer to peer payment system. Haldane and his team described bitcoin in 4 main aspects:
- Distributed: greater resilience, no central control, a coordination problem
- Pseudonymous (and possibly anonymous)
- Push-only (no ‘direct debits’): payments are final and cannot be imposed
- Individually cheap, but socially expensive (but this could be fixed)
Haldane continued to expound that bitcoin could disrupt the traditional financial industry, due to the world’s severely underbanked regions and the surge of increase in smart phone usages.
2 million UK adults do not have bank accounts and 2.5 billion people in the world have no access to financial services, said Haldane. However, given the estimate that 80% of the world’s population will own a smartphone within 5 years, Haldane believes that many could turn toward digital currency to store their savings.
Despite his positive comments and presentation on bitcoin, Haldane brought a closure to his talk by saying, “The least interesting thing about Bitcoin, and other distributed ledger systems, is that they are digital. Digital currencies are important for how they deploy the available technology in a new way.”
Photo Katie Chan / Wikimedia (CC)
Bitcoin Product of the Week: MunchPak Delivers Delicious Snacks for Bitcoin
The Bitcoin product of the week series from Bitcoin Magazine highlights some of the cool, interesting, or funny things you can buy with bitcoin. What should we cover next week? Let us know at hello@bitcoinmagazine.com.
The Bitcoin Magazine team recently had the opportunity to review MunchPak, a monthly subscription service that curates snack foods from all over the world and ships them to your doorstep – all for bitcoin. Whether you’re a junk food aficionado, an explorer of exotic tastes, or simply bored with your usual snacking options, the MunchPak is designed to entertain and satisfy an adventurous palette.
Our one box included twelve random treats from all around the globe – which meant that we often had to guess at what was it was we were given.
For example, the Sweet Potato Shaped Snacks from Korea turned out to be a sweet and crunchy Korean cookie snack reminiscent of French Toast Crunch in flavor.
This candy had the chewy texture of lime-flavored Starburst, but with a thin layer of creme filling on the inside. We’re not sure what it was called or where it came from, but it was definitely a hit.
Other staff favorites included the Japanese soda pop candies and the chocolate-filled cookies (probably – someone ate them all before we had a chance to try them!) The only snack we unanimously disliked was an allegedly mango-flavored gummy, shaped like a turkey leg and covered in cayenne pepper.
MunchPak boxes come in three different sizes (Mini, Original and Family Pak) and are customizable. There is an option to send them as a gift, which could be a fun treat for students going away to college.
Boxes ship worldwide within 72 hours (with free shipping within the US), though they can take around 5 business days to arrive once they ship, depending on customs. MunchPak accepts payment by PayPal, credit card or bitcoin.
World Wide Web Creator Tim Berners-Lee Leads W3C to Establish Online Payment Standards Including Bitcoin
The World Wide Web Consortium (W3C) started review of a draft Web Payments Working Group Charter. The Web Payments Working Group will launch by the end of September after the end of the review on September 15, start working on an overall Web payments architecture, and prepare key topics for discussion at the next Technical Plenary/Advisory Committee meeting (TPAC 2015) in October.
The W3C, led by World Wide Web inventor Tim Berners-Lee, is an international body that develops open standards to ensure the long-term growth of the Web. The Web Payments Interest Group acts as the overall coordinator at W3C of a vision for Web Payments.
“The Web Payments Working Group is not creating any new digital payment schemes, but rather integrating existing and emerging schemes more efficiently and securely into Web applications,” states the W3C announcement. “A standardized message flow should make it easier to automate payments, which will improve the overall security and user experience of making payments on the Web.”
The Web Payments Interest Group recently updated its Web Payments Use Cases 1.0 working draft. The Group also published a FAQ with more information about the anticipated benefits of the future standards, a diagram illustrating the high-level message flow, and some examples of different Web payment approaches.
The W3C Web Payments documentation makes only sparse references to bitcoin and cryptocurrencies, which are only mentioned as possible options alongside other online payment means such as Google Wallet, Apple Pay, PayPal and iDEAL, a payment method that enables consumers to pay online through their own banks. The Use Cases draft includes a short section dedicated to cryptocurrency payments with bitcoin and ripple, with a scenario that outlines an ideal payment experience using bitcoin, or a bitcoin-like cryptocurrency.
Internet pioneers such as Ted Nelson, Marc Andreessen and Berners-Lee himself thought that the Internet should have a built-in framework for micropayments. Berners-Lee tried to include micropayments in Web protocols, but the idea hasn’t been implemented so far.
“In the late 1990s Berners-Lee tried to develop a micropayments system for the Web through the World Wide Web Consortium (W3C),” reported Walter Isaacson in his 2014 book “The Innovators: How a Group of Inventors, Hackers, Geniuses, and Geeks Created the Digital Revolution.” The idea was to devise a way to embed in a Web page the information needed to handle a small payment, which would allow different electronic wallet services to be created by banks or entrepreneurs. “It was never implemented, partly because of the changing complexity of banking regulations,” noted Isaacson.
The preparatory work of the Web Payments Interest Group and the forthcoming work of the Web Payments Working Group can be seen as gradual steps to implement Berners-Lee’s vision. However, it’s surprising that the official W3C documents produced to date make only incidental mentions of bitcoin, which is the only form of Internet money and “Internet native” payment system that exists, works, effectively implements one-click Internet payments, and is rapidly gaining recognition and partial acceptance from the financial system.
Isaacson reports that Andreessen mentioned bitcoin as a good model for standard Internet payment systems. “If I had a time machine and could go back to 1993, one thing I’d do for sure would be to build in bitcoin or some similar form of cryptocurrency,” Andreessen said.
A possible explanation for the more timid approach of the W3C is that the organization prefers to distance itself from the more controversial aspects of bitcoin, including the possibility of private and semi-anonymous transactions, and wait for “sanitized” versions of bitcoin.
Photo Southbank Centre / Flickr (CC)
Coinbase CEO Brian Armstrong on the 3 Categories Where Bitcoin is Most Useful
There are many reasons why someone may become interested in Bitcoin. Some are mesmerized by the technology’s pseudonymous creator, while others simply like the idea of having a completely open payment network for the entire globe. Although it’s easy to become captivated by what Bitcoin has to offer, it is difficult for many individuals to fully understand the specific areas of daily life where Bitcoin may be useful.
Coinbase has been one of the main drivers behind the adoption of Bitcoin in the mainstream, and CEO Brian Armstrong sees three areas where Bitcoin can be most useful right now. For Armstrong, disrupting traditional financial services, bringing digital financial services to people who don’t already have them, and enabling completely new Internet applications are the three areas where the cryptocurrency can be the most useful right now. The Coinbase CEO expanded on these thoughts in a recent episode of the a16z Podcast with Wall Street Journal Columnist Christopher Mims.
Disrupting Traditional Financial Services
Armstrong’s first area of focus when discussing Bitcoin’s usefulness had to do with traditional financial services. Although many Bitcoin businesses have decided to focus on the developing world or industries that operate in a legal gray area, Armstrong also sees value in using Bitcoin to disrupt the financial services that people already use in the developed world:
“One of them is . . . distributing traditional financial services and products. In [one] case, remittance. It might allow it to be faster or cheaper, right? Other examples of traditional financial products it might disrupt would be things like credit card payments where now those fees are less, or instead of going to get a loan at a bank, you might be able to get a peer-to-peer loan through something like BTCJam, which is a startup out there.”
Bringing Financial Services to the Developing World
Armstrong’s second area of focus was the developing world where there is more than a bit of cell phone penetration but a lack of access to traditional bank accounts. The Coinbase CEO believes that Bitcoin can bring financial services to people in the developing world who otherwise would have no access to digital commerce:
“The second major category in my mind would be developing world use cases where people don’t actually have financial services today. These are the unbanked of the world, and there’s something like two to three billion people in the world who have a cell phone but do not have a bank account or credit card. So, they’re living, essentially, with cash or they’re using some kind of primitive digital currency — like a lot of people actually send cell phone minutes or cell phone credit. They can SMS it to each other in the developing world.”
Armstrong expanded on how something like cell phone minutes could be seen as a precursor to a digital currency such as Bitcoin:
“There’s actually some places where you can go in the Philippines and buy dinner with cell phone minutes and things like that. You text it to the person across the counter, and so those are all early precursors of digital currency – types of digital currency that people are using there. We think that a whole generation of kids and people in the developing world will actually grow up, and their first ‘bank account’ will actually be a digital currency wallet on their cell phone.”
Enabling New Internet Applications
Armstrong’s third area of usefulness is perhaps the most interesting. With Bitcoin, certain Internet applications that did not make sense in the past are now possible:
“The third one would be what I call brand new Internet applications that are uniquely enabled by Bitcoin. By that I mean it’s not disrupting the traditional financial services industry or something like that. It’s actually creating something [where] the only way it works is with Bitcoin. These are very small today, but I think in the future some of these will end up being multi-billion dollar companies and systems. Some of these are things like distributed crowdfunding, like the Lighthouse project is an example of that. There are prediction markets where you can use the wisdom of crowds to predict the outcome of certain events.”
Armstrong also explained that many of these new applications made possible through Bitcoin usually have something to do with microtransactions:
“A lot of them have to do with microtransactions, actually, which is something Bitcoin uniquely enables. So, there are things like tipping on the Internet with things like ChangeTip. These are examples of, kind of, very new use cases that are uniquely enabled by Bitcoin, which are not big yet but could actually grow — more of like a greenfields idea.”
When you combine these three areas of usefulness for Bitcoin, it’s easy to see why so many people are bullish on the technology’s potential rate of adoption. As Armstrong alluded to later in the conversation, it is these sorts of use cases that attack pain points in people’s financial lives that will drive more adoption over the long term.
Photo TechCrunch / Flickr (CC)
AUG 20 DIGEST: Bank of England Says Digital Currency is ‘Harder Money’ than Gold; Nigeria’s Bank Calls for Bitcoin Regulation
Bitcoin XT Fork Can 'Blacklist' Tor Exits, May Reveal Users’ IP Addresses
Wednesday, August 19, 2015
An Open Letter: To Argentina’s New 26-Year-Old Head of Banco Nacion (Op-Ed)
Token Sale Exceeds $1.7M, but Augur’s ‘Reputation’ Isn’t All About the Money
It’s been a wild couple of days for the team at Augur. Just 48 hours into their crowdsale, which launched at noon EST on August 17, they have raised in excess of 4200 BTC and 549000 ETH.
“Unfortunately, the ether and BTC price keep falling, so the buys can’t keep up with the (USD) price,” said Augur’s marketing director, Tony Sakich. Bitcoin has dropped from $253 USD to around the $232 mark since the Augur sale began.
It’s a remarkable feat for a company that has a somewhat esoteric product, built on Ethereum, arguably an as-yet unproven blockchain platform. Ethereum’s Frontier stage was released just last month, making Augur the first major platform to stake its claim there.
Augur is an open-source, decentralized prediction market. It uses “the wisdom of the crowd” to project and confirm the outcome of future events. People set up events and buy shares in the possible outcomes of those events. Once the event is concluded, the funds associated with shares of the correct outcome are distributed among the shareholders, the Augur Foundation, and the “oracles” — people who contributed to verifying the outcome of the event.
“Reputation” (REP) is the token that fuels the network; the more REP a user has, the more value or trust is assigned to that person’s input. After an event occurs, the consensus of Augur “oracles” defines its outcome. People who report truthfully earn REP tokens and are also awarded a portion of the winnings. People who report against the consensus (untruthfully) lose REP tokens and earn nothing.
Jeremy Gardner, Augur’s Director of Operations, told Bitcoin Magazine that the purpose of the Augur token sale is to distribute reputation tokens as widely as possible, not necessarily “to raise tens of millions of dollars,” thereby creating a decentralized and accurate network of oracles.
“The point is to create a distributed consensus maintained by reporters all over the world,” said Gardner. “It has been extraordinary to speak to folks from all over the globe looking to participate in our system. Hundreds of individuals have already bought in, guaranteeing a robust, global consensus network. Whether we raise a million dollars or 10, what we want is thousands of unique participants, each willing to help maintain this truly revolutionary system.”
Thus far, the distribution of Augur accounts seems to be meeting that goal. More than 2,400 accounts have been created on the Augur crowdsale site with approximately 1,000 users already buying in. The global distribution of those accounts, according to Augur’s data, is widespread, although higher concentrations of activity seem to be in the United States, along with Brazil, Italy, China, and Japan.
Distribution of Augur accounts worldwide – courtesy of Augur
Spreading the Word
In a conversation with Bitcoin Magazine, Sakich discussed some of the factors that have contributed to Augur’s initial appeal.
He emphasized the company’s commitment to making Augur approachable and easy to understand. They developed an entertaining animated explanatory video (featuring the voice-over talents of country star Shooter Jennings) and a user-friendly platform.
“Our platform will be designed so the user will be able to create a market and place wagers on it without even knowing about what’s going on “in the background” of the app,” said Sakich. “More than a few participants in the REP crowdsale have been impressed by how simple it has been to generate an Ether address via our sale site and purchase Reputation Tokens with bitcoin.”
Augur has also invested a lot of time and energy over the past few months spreading the word both within and outside of the Bitcoin community — with a good measure of success. Gardner admits he’s probably been to “about two dozen” events and conferences, promoting the platform in the months leading up to the crowdsale.
Augur also was a finalist in the CNBC & Singularity University’s Exponential Finance XCS Challenge — the only blockchain-related technology to make it that far. According to Sakich, the applications committee was so impressed by the technology that “they decided to put us in the ‘Breakthrough Technology’ category rather than ‘Finance.’”
Sakich pointed out that the most valuable part of being invited to the Exponential Finance conference was the opportunity to meet with “an amazingly influential and important list of attendees. …The interest we had was fantastic and it exposed us to many important people, which undoubtedly [has] helped the crowdsale performance.”
If early results of Augur’s reputation sale are any indication, the team seems to be well on that road to success
Bitcoin’s Path to Adoption in India: Serving an Underbanked Population
Awareness for Bitcoin has been steadily increasing in India, as online e-commerce merchants and small businesses have begun to understand the benefits of bitcoin as an international currency and as billion dollar tech giants such as Microsoft, IBM and VISA have begun to sponsor Bitcoin- and blockchain-related conferences, hackathons and meetups throughout the country.
India has an Internet user base of about 243.2 million people and the country’s e-commerce industry is worth $12.6 billion USD. India has the potential to become one of the largest Bitcoin markets in the world, given the country’s extraordinarily large remittance market, which currently is worth more than $50 billion USD.
Despite the growing remittance demands, much of India’s population is underbanked, suffers from poor payment infrastructures and lacks access to traditional financial services.
With the help of local bitcoin exchanges such as Bitcoin India and UnoCoin and tech giants such as Microsoft and IBM, many merchants and entrepreneurs are finally shifting toward bitcoin and beginning to recognize its advantages.
“From publicly available sources that diplay data transparently, like LocalBitcoins and Coinsecure, we see about $4 million to $5 million USD moving in Bitcoin in India every month,” Samuel Benson, CEO of Bitcoin India told Bitcoin Magazine. “Apart from that, the forums see few 100 BTC being traded as well. This is still early days, as a lot of businesses in India in this space are relatively new.”
Benson added that achieving mainstream Bitcoin adoption in India is not a hard task. He believes that as more Bitcoin startups continue to emerge, more merchants and businesses will turn to bitcoin.
“Bitcoin has to be simplified a lot more for viral growth,” Benson said. “When we look at numbers in India which point to the current distribution of payments, wherin 90 percent is cash, 7 percent is via checks and 3 percent is electronic, the cash part of this shows that it is a fairly decentralized system as it is.”
Making the switch to Bitcoin is not a tough one for India, he said. “In order for Bitcoin to quickly reach mass adoption, we need more Bitcoin-related business building up and working on this as a technology that needs to be polished and spread rather than a golden goose.”
A majority of Indian merchants accept payments on e-commerce platforms such as FlipKart using PayPal or credit cards. PayPal, known for its tendency to freeze payments and its high transaction fees, is extremely inefficient for merchants, especially for those required to pay their suppliers outside of India.
As a temporary solution, Bitcoin exchange and wallet service provider Unocoin launched a Bitcoin merchant processing platform, which any merchant can use to accept bitcoin on e-commerce platform sites. The company also has been working with the HighKart team to develop India’s first bitcoin-only e-commerce site.
Unocoin also has partnered with eTravelSmart, an online bus ticket booking portal, to allow Indian citizens to purchase bus tickets with bitcoin.
“The Bitcoin community in India is maturing, and people started understanding it now,” an eTravelTeam spokesperson told Bitcoin Magazine. “I see many bitcoin meetups happening in India. Now we are doing sales around five transactions, worth less than one bitcoin per month. We expect the sales to double month on month in coming days.”
Hackathons and Research
Microsoft and IBM have sponsored bitcoin- and blockchain-related hackathons in India. The most recent event was “HackCoin Mumbai,” which was joined by more than a hundred developers looking to build blockchain-based applications for payments, big data and digital experience.
The hackathon is sponsored by Microsoft, IBM and Citruspay, and the executives of these companies will participate in the event as mentors and panelists, Bitcoin Magazine reported previously.
“We were fortunate to be a part of these events as title sponsors as well. We had given out challenges with Bitcoin-related builds and got many entries from participants,” Benson told Bitcoin Magazine.
“This is heartening, because it is a huge change in the ecosystem compared to what India has been doing with Bitcoin over the past few years,” he said. “Larger companies are exploring the blockchain, and as they understand it better they will turn to Bitcoin as well. Almost eveyone at these events had heard about Bitcoin and were curious to know and build more.”
While Other Companies Leave NY, Coinbase Submits BitLicense Application
While the BitLicense has caused many companies to leave New York, those that intend to stay are progressing though the regulatory process. This week, one of the world’s largest Bitcoin services and wallet providers Coinbase became the 25th company to file for a BitLicense, which is expected to cost more than $100,000 in legal and compliance fees, according to Bitstamp Executive Vice President and chief legal officer George Frost.
Since February, Coinbase has continued to work with the New York Department of Financial Services (NYDFS) to improve the regulations and restrictions set on digital currencies such as bitcoin. Today, Coinbase is trying to engage with NYDFS in other states to become a fully licensed bitcoin exchange across the United States.
“Plenty of attention has been placed on New York, but the BitLicense application process is just one part of a larger multi-state licensing strategy that Coinbase has been executing for nearly two years and at significant expense,” a Coinbase spokesperson told Bitcoin Magazine. “Our plan has always been to work with the [NY]DFS, as we have with other states, to get fully licensed and continue to serve consumers, merchants and developers across the U.S.”
Real Cost
Depending on the size and nature of the business, the total cost required to become licensed in New York and to be fully compliant with BitLicense varies. The total cost for Bitstamp, the third-largest bitcoin exchange by trading volume, was around $100,000 including all fees, legal costs, and labor. This does not include the ongoing costs of compliance or future filings with the NYDFS.
In contrast, medium-sized bitcoin exchange Coinsetter has spent around $50,000, according to Jaron Lukasiewicz, Coinsetter CEO and founder. “I think its bigger cost, though, has been in the uncertainty it created for investors looking to invest in our space – hopefully that will begin to reverse itself now,” he said.
Although a Coinbase spokesperson declined to disclose the total amount of money the company has spent to comply with the BitLicense, he told Bitcoin Magazine, “The process was a significant undertaking … and we’re fortunate to have the internal resources and competent team to get this done. Our plan has always been to obtain the licensing required to operate in the state of New York, and we applied for the BitLicense as soon as it had been finalized by the [NY]DFS.”
Coinbase’s Contribution to BitLicense
Coinbase is one of the companies that submitted comments on initial drafts of the BitLicense to the NYDFS. Feedback from the Bitcoin industry was responsible for many of the changes and improvements made to the initial drafts of the BitLicense.
In one of the early versions drafted by the NYDFS, there was significant overlap between existing money transmitter regulations and the provisions of the BitLicense. Coinbase submitted a formal response to the NYDFS, asking for this duplication to be removed.
Coinbase said “the Financial Crimes Enforcement Network put a powerful anti-money laundering policy in place,” and that some of the provisions of the BitLicense could compel licensees to manage proprietary payment networks, thus removing the open protocol attribute of bitcoin. Coinbase said the BitLicense should just apply to businesses that hold funds on behalf of their customers.
This marks the start of Coinbase’s ambitious mission to become the first fully compliant bitcoin exchange throughout U.S. The firm has secured $75 million USD in its latest funding round in January, and plans to allocate a big part of its fund to become licensed in as many states as possible, to keep the title of the largest bitcoin exchange in the country.
Subscribe to:
Comments (Atom)