Monday, August 31, 2015
AUG 31 DIGEST: Barclays to Enable Charitable Bitcoin Donations; BTC Businesses Prepare for Next 'Stress Test'
Gok!llo: Kickstarter & Indiegogo ‘No Longer Suitable for Modern Crowdfunding’
Sunday, August 30, 2015
FinTech Digest: Bitcoin Transactions In Cuba, The Debut Of Coin 2.0, Coinbase Tests New Service In Europe
Bitmain Announces Launch of Next-Generation Antminer S7 Bitcoin Miner
Bitmain, the Bitcoin mining ASIC provider, Sunday announced the release of its next-generation Bitcoin miner, the Antminer S7, using the recently announced BM1385 ASIC.
The company argues that “this machine is not only our most efficient ever, using less than half the energy per gigahash of the S5, but it is also our most powerful miner to enter mass production.” It had released the S5+ in limited supply, which offers nearly 3,000 more GH/s than the announced S7.
“It’s true that the S5+ had a greater overall hashrate, but the S7 squeezes more juice from a smaller, more power efficient package,” said Jake Smith, Bitmain’s head of North America, in an interview with Bitcoin Magazine. “When comparing hashrate to weight, size, or power consumption, the S7 comes out ahead.”
The Antminer S7 is a denser mining rig than previous models. Whereas the S5 used 60 chips per miner, the Antminer S7 uses 162 of the BM1385 chips. Each S7 will be able to generate upwards of 4,850 GH/s while only needing approximately 0.25 J/GH of power.
Part of the reason the chip is so much stronger is because the company went away from using standard design flow methods. “From the BM1385 onwards, we’ll be using full-custom design flow,” Smith explained. While full-custom design flow is more work intensive and does have a greater margin of error, it results in greater efficiency, which is where profit can be found.
“It’s difficult to predict the how long our new chip will take to bring to market, but development on our next chip began almost as soon as this one was completed. Our next chip, the BM1387, will be our second full-custom chip, and our first chip built on a 16-nanometer process node,” Smith said.
With each new chip released miners have to weigh their options on whether to upgrade. Smith said that there has been considerable interest in the S7 by current Bitmain miners, in particular because older hardware may become obsolete. “The inevitable large deployment of S7s will cause network hashrate to rise and some older hardware to be forced offline. More recent hardware like the S5 will still be profitable, but to a lower degree than at present,” Smith said.
‘We’ll continue to make our machines available to Joe Miner …’
Bitmain has deployed a different strategy than other Bitcoin hardware companies has. Other companies have focused their development efforts on creating miners for internal use rather than widespread adoption. For example, Bitcoin Shop (BTCS) announced that it would be merging with Spondoolies-Tech, which would give BTCS access to Spondoolies’ latest miner to give it a competitive advantage. Bitmain, on the other hand, continues to sell its hardware to the general population.
“We’re very strong believers in keeping Bitcoin decentralized. Until recently, most mining was done by so-called average users and not by large mining operations,” Smith said. “It would be a real shame to see this dedicated group left without options for supporting the network in their own way, and perhaps even present a dangerous situation for the network to be secured only by large and well-capitalized firms.”
As mining does continue to get more expensive, only those companies that have the resources to create large operations will be able to survive. The fewer operations that are mining, the more likely it is that one, single source could take a majority of the hashrate, creating potential security problems.
“We will continue to make our machines available to Joe Miner for as long as we are making hardware,” Smith said. “It’s an unfortunate situation that we’re the only big ASIC manufacturer selling directly to consumers right now; we’d love to see more competition in this space and for the miners themselves to have more options available.”
Jacob Donnelly is a full-time product manager and journalist covering finance and bitcoin. He runs a weekly newsletter all about bitcoin and digital currency called Crypto Brief.
BitPay: ‘Silicon Valley is Becoming a Bitcoin Hub’
Saturday, August 29, 2015
Bitcoin Block Battle: Top Corporations Support BIP 101 as Debate Rages On
Andreas Antonopoulos Thinks Bitcoin ATMs Need to Be Completely Redesigned
Mastering Bitcoin Author Andreas Antonopoulos recently gave at talk at Harvard’s i-lab, spending much of his time in front of a small audience describing the various issues with Bitcoin as a brand. He noted many problems with the terminology[add link to bitcoin terminology is broken and wrong piece] used in Bitcoin, and he also focused on specific products or services in the Bitcoin space that seem to be doing a disservice to potential users.
At one point during the presentation, Antonopoulos turned his attention to Bitcoin ATMs, asking the audience how many of them had used one of the machines in the past. While a few people raised their hands, those hands went down when Antonopoulos then asked how many of them enjoyed their experience with the Bitcoin ATM.
How Traditional ATMs Work
To explain the user experience issues with Bitcoin ATMs, Antonopoulos first talked about the setup of traditional bank ATMs:
“When you interact as a person with an ATM, 1. you have a pre-existing relationship with the bank or financial institution; 2. you have a pre-existing balance; 3. your primary objective is to get in, get cash, [and] get out. Twenty seconds is too long. Three clicks is too long.”
In other words, there is no need for long explanations or user-onboarding with traditional ATMs. Everyone who uses them already has a debit card, and they’ve already interacted with the corresponding bank in the past. The process can be simple because the user already has his or her bank account setup.
Bitcoin ATMs Have Nothing in Common with Traditional ATMs
According to Antonopoulos, many Bitcoin ATM developers have been looking too closely at how traditional bank ATMs work when designing their own machines. He noted that Bitcoin ATMs have “absolutely nothing” in common with the ATMs that are currently used by banks, and he went on to describe the experience an average person has when attempting to use a Bitcoin ATM for the first time:
“The average user of Bitcoin ATM is someone who has never seen bitcoin before. It is a person who doesn’t understand what bitcoin is, and the ATM is their first introduction to this currency. It is a person who does not have a pre-existing relationship with anyone in the Bitcoin space. It is a person who does not currently have a wallet because they didn’t know they needed one – because they don’t know what a wallet is (it’s a keychain). And so they walk up to this machine, and this machine has been designed by engineers to simulate the experience of an ATM, even though the experience shares absolutely nothing with the use case we’re putting it to. So you walk up and the ATM tries to give you bitcoin in as few clicks as possible with a minimum amount of interaction. Is that a way to build brand loyalty? Is that a way to build user experience? Is that a way to introduce new users? I mean, it just throws it at you, and you’re not ready for that. But, ‘Please open your phone and display your QR code.’ Like, what? What’s a QR code?”
In an effort to solidify the point that Bitcoin ATMs should not be operating in the same manner as traditional bank ATMs, Antonopoulos then went through a long list of questions that a user would likely have while attempting to use a Bitcoin ATM for the first time.
The Right Model for a Bitcoin ATM
After describing the problems with currently available Bitcoin ATMs, Antonopoulos explained how he would design such a device:
“If I was designing a Bitcoin ATM, first of all, I’d put it in bodegas. Secondly, it wouldn’t have a lick of English on it. It’d be all-Spanish because I’m going to really push the remittance model. Thirdly, the first function on the ATM would be ‘Send money to Mexico City.’ That’s it. Because I want people to use the bitcoin for something. [Fourthly], I’d have a big button on the front that says ‘Talk to a human.’ I’ve got an Internet-connected device with a forward-facing camera and a tablet screen, and I’m not using it to do video customer service? Are you kidding me?”
It’s clear that the device Andreas Antonopoulos is imagining is completely different from a traditional ATM. In addition to the focus on international remittances, Antonopoulos also expanded on the idea that the Bitcoin device needs to teach the user about the peer-to-peer digital cash system:
“I don’t want to interact for fifteen seconds. I want to interact for two hours . . . And it tells me where I can spend [bitcoin]. It gives me suggestions on wallets, and it can send them directly to my phone. It’s building loyalty, brand and experience. That’s not a 15-second interaction.”
This is a perfect example of how sometimes simply applying the old ways of doing things to Bitcoin will not work. The most impactful innovations in the Bitcoin space have been the ones that created something completely new rather than thinking about how things worked in the past. Developers and entrepreneurs should try to avoid simply replacing the carriage with an automobile. It’s time to get rid of the horse.
Photo BTC Keychain / Flickr (CC)
BIP 100 Support Grows; 21% Attack Worries Remain
Friday, August 28, 2015
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).
Bitcoin Market Aimed at College Students, CoinBase Bitcoin Give Away
The San Francisco-based bitcoin wallet provider has successfully given away free bitcoin to more than 20,000 college students.
CyptoCoins News reported that any student signing up for Coinbase would receive $10 worth of bitcoin. Students were required to verify enrollment by signing up with an email domain ending in “edu.”
At the time Coinbase founder, Fred Ehrsam, announced the limited time offer on Twitter, it was only available to a handful of “edus.”
Now the international digital wallet has posted a list of the top 10 schools with the most signups. The University of Michigan led the way with 941 signups. The University of California, Berkeley wasn’t far behind with 939 signups, the University of Illinois had 873 and the University of Texas ranked number four with 698 signups.
Some users complained via Reddit that they were having trouble signing up. But Ehrsam quickly replied, “It’s because so many people have signed up from Berkeley today (seriously).”
@choi_kl @Berkeley it’s because so many people have signed up from Berkeley today
(seriously)
— Fred Ehrsam (@FEhrsam) May 8, 2014
Students at other colleges including Notre Dame and UCLA reported success in signing up.
Coinbase went the extra mile to ensure security by requesting students provide a phone number that could be verified.
“This extra check has greatly reduced scammers trying to take advantage of this promotion. So it allows us to keep this promotion going,” said Coinbase.
College investors
Giving away free bitcoin to college students in order to encourage investment is clever, but not new. Earlier this month, more than 4,000 MIT students enrolled in the 2014 fall semester will receive $100 worth of bitcoin.
The brains behind the program, Jeremy Rubin and Dan Elitzer, were able to launch the program after receiving nearly half a million dollars in donations from MIT alumni and the bitcoin community.
“Giving students access to cryptocurrencies is analogous to providing them with internet access at the dawn of the internet era,” said Rubin.
While many are excited about the giveaway, some are curious about what will happen if they try signing up with a school that’s not yet listed.
Others say the promotion could be taken advantage of by non-students creating an email account with the domain “edu,” which some experts say is relatively easy to do. Drew Cordell of CyptoCoins News wrote, “If the promotion is meant to have a long duration, it will need to be refined significantly in order to prevent abuse and provide full access.”
Despite Ehrsam’s reassurance that abuse will be prevented, Cordell argued, “It is very simple to create an .edu email address for free in minutes. Creating false email accounts could allow users to abuse the system and continually claim the $10 bonus if the system is not well regulated.”
By offering young people a chance to invest in Bitcoin, companies like Coinbase could be key players in expanding the market for digital currencies. This could potentially ensure monetary freedom for the future by allowing bitcoin into the hands of our youth.
Coinbase currently has over one million consumer wallets, 30,000 merchants, 5,000 API applications and U.S. bank integration. They also have a remote team consisting of 35 contractors.
CardCash Adds Bitcoin Payments for Gift Cards at Thousands of US Retail Stores
CardCash, an American online company that buys and sells discounted gift cards from thousands of national retailers, has begun to accept bitcoin payments. CardCash joins companies like Gyft and Fold that provide ways for Bitcoin users to interact with the massive gift card industry.
“We saw that bitcoin was getting a lot of traction and growing in legitimacy,” CardCash CEO Elliot Bohm said in an interview with Bitcoin Magazine, “but it was slow in getting acceptance in popular brands.” He pointed out that while consumers could use bitcoin to shop at Overstock and Dell, they couldn’t spend their bitcoin at Macy’s, for example.
“We can easily be the bridge,” said Bohm. “People can use bitcoin and save money at the same time.”
In September, CardCash expects to roll out its mobile app that will allow people with a bitcoin wallet to buy gift cards online instantly. “You’ll be able to walk into Wal-Mart, go shopping, go on the app while you’re in line, and buy a gift card right there on your phone,” said Bohm. “When you get to the checkout, you just show them the barcode.”
In a press statement, Steven Weldler, VP of Online Marketing for CardCash, said, “CardCash.com is always looking to bring our service to as many people as possible, especially to the unbanked and people who can use help financially.”
Bohm noted that the Bitcoin community is very savvy when it comes to saving money and is always mindful of conversion rates. Since CardCash customers can get a discount of between 5 and 20 percent on their purchases, he said that connecting CardCash and bitcoiners made a lot of sense.
“We’ve been looking into bitcoin for a long time now,” said Bohm, “but we wanted to do it properly.” CardCash has stringent AML-compliance polices and fraud-prevention measures. Every card is verified and comes with a 45-day balance guarantee. Seller identities are authenticated, and a $10,000 per day purchase limit is in place to prevent money laundering. The company uses BitPay to process their bitcoin transactions and immediately converts to fiat; they also wanted to be sure that their banking partners were comfortable with them allowing bitcoin transactions.
So far, CardCash serves only U.S-.based customers, buying and selling gift cards that can be redeemed in the United States. But there are plans currently in the works, thanks to bitcoin, that will allow international customers to tap into the discounted gift-card scene.
Founded in 2008, CardCash has been included in the Forbes’ list of America’s Most Promising Companies for the last three years, as well as in the Inc. 500 list of the fastest growing private companies in America for the past four years.
Photo LaniElderts / Flickr (CC)
Investors Weight Bitcoin’s Prospects as Fear Levels Rise Across Global Markets
As weak economic data from China hit asset prices globally, Bitcoin Magazine spoke to a number of experts to assess the impact on the price of bitcoin.
Since its introduction in 2009, soon after the outbreak of the Great Recession, bitcoin has been championed as a more reliable store of long-term value than fiat money given bitcoin’s capped supply and the continued printing of fiat currencies by various central banks, which many fear will continue to cause financial crises across the globe.
However as the CBOE Volatility Index (VIX), often referred to as the ‘Fear Index’, recently trebled from 13.02 to 40.74, and global markets posted their worst week of the year, the U.S. dollar price of a bitcoin fell almost 20 percent from $256.98 to $209.13, suggesting investors are yet to be convinced of the investment case for bitcoin in times of economic turmoil.
“World markets are in commotion with the next leg in The Great Credit Contraction coming from Greece, Puerto Rico, China and anticipated Fed rate hikes despite a strengthening dollar,” Bitcoin investor Trace Mayer explained in an email to Bitcoin Magazine. Mayer believes that while it offers “a potential solution to this intractable global problem … (bitcoin) is not currently viewed as such by the majority of the investment community.
P. Bart Stephens, co-founder and managing partner of Blockchain Capital LLC, believes it is too early in the evolution of Bitcoin for it to be considered a safe haven for investors in times of panic.
“The recent drop in global stock prices is being driven by macro-economic factors … namely, the slowing Chinese economy and Chinese policymakers’ quixotic responses stock market volatility,” he said. “This puts investors in ‘risk off’ mode and causes a flight to safety”.
Furthermore, Stephens argued, at roughly $3 billion, the entire Bitcoin market is about the size of one small cap tech stock and therefore a small amount of selling in the Bitcoin market can cause dramatic moves in price. As a result, “Bitcoin is still seen as a high-risk investment,” he said.
David Ripley at digital wallet provider Glidera believes it is difficult to predict how weakening markets might affect the Bitcoin ecosystem: “On one hand, a downturn may lead individuals to feel they have less money available to obtain an alternative investment such as Bitcoin. On the other hand, some individuals may actually view Bitcoin as a better alternative investment to the traditional economic system, which could be facing challenging times”, he said
Prominent Bitcoin investor Roger Ver believes that the fall in the price of Bitcoin might even be a symptom of improving adoption.
“I think the price has dropped because people can now spend bitcoins at tens of thousands of locations, but most of the merchants are converting it to their local currency”, Ver told Bitcoin Magazine. “Bitcoin wasn’t (previously) spendable at many places, but more people were just holding it as a speculative instrument.”
Ver’s comments echoed those made by Tim Draper of Draper Fisher Jurvetson that the bitcoin price was bound to come under short-term pressure as miners get more bitcoin, causing selling pressure and less demand to buy as the use cases evolve.
Stephens agrees that the near-term might see further weakness in the bitcoin price.
“Bitcoin is in a bear market and has been for almost two years. … More recently this summer, the weakness in the price is due to the divisions in the Bitcoin development community”, he said. “Markets, and this includes bitcoin, dislike uncertainty”.
However, looking further ahead, Stephens is more buoyant.
“Over the intermediate to long term, we think bitcoin will perform very well, especially in a macro-economic environment characterized by fiat currency wars and currency volatility”, he said.
Despite the concerns around the short-term outlook, the Bitcoin community appears unanimous in its optimism for the longer-term prospects for the digital currency.
“Every time we are reminded of the difficulty of central banks and governments trying to manage currencies, economies or markets, we are reminded of the potential value of an alternative, truly free-market approach to currency and financial transactions,” said Ed Boyle, CEO at payments processing platform Blade Payments.
“Large negative stock market swings remind everyone that volatility is not limited to bitcoin,” Boyle continued. “To the extent that Bitcoin transactions continue to grow as strongly as they have been … bitcoin itself will become more and more stable and more and more valuable.”
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