Wednesday, September 30, 2015
San Diego Employees Paid In Bitcoin ‘Never See a Paycheck’
Truthcoin's Paul Sztorc: 'Buying Predictions is Just like Buying Orange Juice'
Tuesday, September 29, 2015
Vaultoro Seeks to Provide a Store of Value to the Underbanked World Using Gold and Bitcoin
Previously reported by Bitcoin Magazine , bitcoin and gold exchange Vaultoro has reached $1 million in gold trading volume, recording an average monthly trading growth rate of 91 percent and rapid increase of its user base. Following its milestone, Vaultoro plans to expand its team and services internationally, to become the “key ingredient for the 2.6 billon under-banked” individuals all around the globe.
Gold has been the international store of value for thousands of years. Unlike bitcoin or fiat money, gold has proved to be a stable universal currency with very low volatility. Based on the five-year gold chart taken from Infomine.com , the gold price in January 1, 2010 stood at around $1,100. At this time of writing, the price of gold is around $1,130, recording a mere $30 difference over the last five years.
Brothers Joshua and Philip Scigala developed Vaultoro to allow the underbanked population to escape the volatility of bitcoin and store their wealth in physical gold.
“We built Vaultoro so people anywhere in the world can hedge the bitcoin price volatility without going back to fiat but by instantly parking any value in gold. Gold gets its value from the markets and not by government dictate. It is also globally recognized as a store of value. It has lasted more than 3,000 years, whereas no paper fiat currency has lasted more than 200 without collapsing with terrible consequences for the holder,” Joshua Scigala told Bitcoin Magazine.
“We see Vaultoro being a key ingredient for the 2.5 billion underbanked in the world to be able to accept payment from all around the world with bitcoin, hold that value in assigned gold and then spend it within seconds using bitcoin again,” added Scigala.
Currently, Vaultoro stores all of its physical gold in a Swiss high-security vault, 100 percent insured against theft, fire and other eventualities. Unlike most of fiat-to-gold bitcoin exchanges, Vaultoro will deliver gold bars in physical form to their users at any time.
Vaultoro to Launch a Point of Sales App
Online merchants, especially in Latin America and Southeast Asia have fallen victim to the highly volatile nature of bitcoin and time and time again. Today, there are very few platforms that enable users to hedge the value of bitcoin to another asset.
With an aim to serve small and medium-sized bitcoin merchants in underbanked regions, Vaultoro plans to launch a point of sales application that “will allow merchants to choose their hedge, meaning a 50/50 split or a 10/90 split between bitcoin they get in and gold they hold. We are looking at possible partnerships with ATMs and mobile payment providers in these regions so they can hook up to our system via API and use gold and bitcoin directly or indirectly through us,” Scigala told Bitcoin Magazine.
“Lock-in Service”
A few bitcoin platforms such as Coinapult offer a bitcoin “lock-in” service that allows users to lock in the price of bitcoin to the price of another asset has been popular in the United States and Latin America. The Vaultoro team found the idea of a gold-to-bitcoin lock-in service interesting, but they believe that the lock-in feature would contradict the fundamental philosophy that wealth is backed by real physical assets.
“When someone trades into gold on Vaultoro they actually buy physical gold that is secured as their property in their name. The gold is held in what’s called a bailment contract meaning we secure someone else’s property (just like self-storage facilities hold your furniture). By offering to lock in someone’s bitcoin to a certain price we would be moving away from the fundamental philosophy that wealth is backed by real physical assets and not by a promise to lock a price and deliver on that,” said Scigala.
Instead, the Vaultoro team may look into diamonds or other physical assets that are even more stable than gold.
Investments
Currently, Vaultoro is considering a funding round to maintain its services and expand its team. The Vaultoro team is exploring a few options including crowdfunding campaigns and venture capital investments.
“Any other investment we would take on would not only be to raise money but also to gain expertise and knowledge by bringing onboard people that will help us grow our vision long term,” Scigala said. “A vision of open markets, a vision where we stop taking money from poor people in rich countries and giving it to rich people in poor countries, but rather give poor people in poor countries the tools to lift themselves out of poverty by enabling them to join a global market of goods and services through a bank and state independent monetary system we all know and love as Bitcoin.”
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Monday, September 28, 2015
Bank of America Files Patent Application for Cryptocurrency-Mediated Wire Transfers
Bank of America (BoA) has filed a patent application titled “System and Method for Wire Transfers Using Cryptocurrency .” The application was filed in March and published on September 17 by the U.S. Patents and Trademarks Office.
The BoA filing describes an alternative to traditional wire transfers. The funds are first transferred to a cryptocurrency exchange, then converted to a cryptocurrency such as bitcoin, then sent to another exchange, and finally converted into another currency for the recipient. In other words, BoA wants to patent the concept of using a cryptocurrency as a transparent intermediate step for fiat currency transfers.
“A system includes a memory and a processor,” reads the abstract of the filing. “The processor is coupled to the memory and causes the system to receive an electronic request for a fund transfer and initiate a debit of a first amount of a first currency from a customer account. In response to determining using cryptocurrency is optimal, the processor can transfer the first amount of the first currency into an account associated with a first cryptocurrency exchange and initiate the purchase of a first quantity of a cryptocurrency from the first cryptocurrency exchange. The processor can transfer the first quantity of the cryptocurrency to a second cryptocurrency exchange and initiate the sale of the first quantity of the cryptocurrency at the second cryptocurrency exchange. The processor is further able to initiate the transfer of at least a portion of the resulting currency to a recipient.”
The system includes means to determine which transfer method – including cryptocurrency – is optimal in a given case. The decision strategy is based on time factors, price factors, exchange rates, fees charged by third parties, volatility and other relevant information. If using cryptocurrency is found to be optimal, the system includes means to determine which cryptocurrency or exchange should be used. For example, the system “may choose a particular cryptocurrency exchange because the cryptocurrency is priced favorably (e.g., cheap if purchasing, expensive if selling) or because the cryptocurrency exchange has a relationship with the enterprise.”
BoA claims that the system described in the patent application can reduce or eliminate disadvantages and problems associated with traditional wire transfers. The application notes that enterprises handle a large number of foreign wire transfer requests on a daily basis, and foreign transactions are becoming more common. The BoA filing is focused on making cross-border transactions faster: “It may be desirable to conduct a foreign wire transfer in less time than what current foreign wire transfer systems allow.”
The proposed BoA system can bypass traditional wire services, reduce the dependency on third party networks, and increase the reliability of fund transfers. Cryptocurrency-mediated transfers permit completing a foreign fund transfer in less time than traditional wire transfers, avoiding delays that may be caused by third party systems and services. Furthermore, transferring funds using a cryptocurrency reduces the need to transfer customer data to third-party systems, thus increasing control and security of customer data.
As usual with patents, the application tries to cover all possible technical implementations and use cases, and defines cryptocurrencies in a generic way. “A cryptocurrency is typically a peer-to-peer, decentralized, digital currency whose implementation relies on the principles of cryptography to validate transactions and generate the currency itself,” reads the filing. “Some examples of cryptocurrencies are: Bitcoin, Litecoin, Ripple, Peercoin, and Dogecoin. In some instances, a cryptocurrency, such as MintChip, may be backed by a government (e.g., Canada).”
Today, many banks and financial operators are warming up to the potential of digital currencies to reduce the time and cost of fund transfers, especially cross-border transfers. The BoA patent application tries to cover both existing and future cryptocurrencies, and all systems that use a cryptocurrency as a transparent intermediate step for fund transfers in fiat currencies. It seems likely that BoA is trying to claim ownership of cryptocurrency-mediated fund transfers, which might become commonplace soon. Of course, the move has been criticized by Bitcoin users, for example in this Bitcointalk discussion thread .
Bitcoin Tracker One ETN Offers Liquidity to European Investors
Financial disruption from the inside
Regulation makes it impossible today for most institutional investors to invest in Bitcoin. However, there are many new players trying to circumvent regulatory boundaries, or innovate from inside, instead of trying to change the regulations altogether. Innovation, instead of regulatory change, is a faster, cheaper and easier approach to change in many innovators' and entrepreneurs' eyes.
One of those companies is XBT Provider. In May, it launched the world’s first Bitcoin-based asset “Bitcoin Tracker One” and just recently announced its second product, a Euro-denominated Bitcoin-based security, Bitcoin Tracker EUR, available through Nasdaq Nordic on October 5.
"We are proud to offer a Euro-denominated instrument to meet demand from investors worldwide,” said Alexander Marsh, CEO of XBT Provider.
The demand for Bitcoin has seen very high growth since its inception in 2009 but this demand has been accessible only for private individuals or investors who have had the flexibility to invest outside of regulated exchanges. Looking at the demand from institutional investors, this might rapidly be changing and, according to Marsh, “Bitcoin Tracker One has during periods been among the top three most-traded ETNs on Nasdaq Nordic since launch.”
Attractive investment to diversify portfolio
Through the opening of Bitcoin-based assets accessible on the regular stock exchange, XBT Provider is looking to get institutional investors to understand the benefit of having Bitcoin in their portfolios, but more education is needed. “One of the advantages of diversifying your portfolio with bitcoin is that it’s still uncorrelated with other assets.” Johan Wattenström, Partner at XBT Provider explains. “Additionally, a critical number of triggers and catalysts in the Bitcoin ecosystem are now in place for a further take-off in the price.”
The volatility that has followed Bitcoin has been seen as both a blessing and a curse. For the regular investor, volatility in an asset is often seen as something negative that has to be avoided to have a stable portfolio. However, volatility for the institutional investors, and crafty traders, is instead seen as something very positive since they can capture the upward price movements and make a profit from them.
Bitcoin no longer an untouchable asset
There are a few benefits for investors to invest in ETNs instead of directly in the underlying asset or in an ETF. First, ETNs can track one unique asset without needing to diversify its holdings such as an ETF often must. Additionally, it can increase liquidity in otherwise highly illiquid assets. Lastly, it can give investors access to assets that are otherwise too hard to manage or require too much prior knowledge to maintain properly.
This makes ETNs a very common choice for investors who would like to invest in niche assets without needing to spend time and resources learning and understanding the underlying asset's technical aspects.
From Sweden to the world
Bitcoin Tracker One is denominated in Swedish krona, which, being a minor currency in the global financial markets, has led to some still being hesitant to invest. Bitcoin Tracker EUR aims at changing this by making the steps for investing in bitcoin as few as possible. Being denominated in euros, it can lower fees and make bitcoin much more accessible to the global investor.
Compared to bitcoin, Bitcoin Tracker One has seen incredible growth since its launch a few months ago and is currently holding more than 15,000 bitcoin. This opens up the question whether the next step to Bitcoin’s growth will come from the institutional side and not from the private investor. Additionally, it has followed the price of bitcoin on a 1:1 ratio consistently, which shows that, if managed properly, bitcoin can be considered as any other financial asset that institutional investors could consider investing in.
NeuCoin Launches a New Digital Currency for Online and Mobile Gaming
NeuCoin, the international digital currencies project supported by three nonprofit foundations, has launched its digital currency for online games, videos and music and has already listed the coin on two exchanges with more to come.
NeuCoin is designed for use cases such as playing freemium games online or on mobile phones without needing a wallet address or QR code – the new NeuCoin will be payable right onthe game site whether it’s on iPhone or a tablet.
NeuCoin can also be traded and exchanged for bitcoin on Bittrex and Cryptsy exchanges and more exchanges will be carrying it in the near future.
Dan Kaufman, NeuCoin project cofounder told Bitcoin Magazine:
“The key points, in my opinion, are that NeuCoin isn't just another blockchain – it's a whole ecosystem of services – all aimed at making crypto more accessible and getting NeuCoin into the hands of millions of mainstream users, through games, social media and strategic distribution.”
NeuCoin’s Top Priority is Online/Mobile Games
Kaufman told Bitcoin Magazine that the project plans to focus on developing and releasing games as it’s current priority: “NeuCoin isn't just another coin – it's a whole ecosystem of consumer-facing services – all aimed at growth and acquiring lots of mainstream users from outside the crypto world. It’s about reaching new audiences in a fun way and putting crypto in the hands of millions of regular users through games and social media.”
Kaufman added:
“Having a meaningful user base of NeuCoin-holding players will be an important leverage point as we work with leading game publishers with large existing user bases to integrate NeuCoin.”
NeuCoin is developingtwo prototype online and mobile games (based on popular games) that will demonstrate how NeuCoin can be incorporated into the gaming experience.
“The first NeuCoin-integrated game, coming very soon, is basedon one of the most popular card games in the world and will show how to engageusers by letting them earn a few NeuCoins for playing, then using them to level up or challenge their friends. Instead of having to pay 5 bucks to buy “in-game tokens,” which is the way most games monetize, the player actually wins NeuCoins,” added Kaufman.
In addition, theproject is releasing MyNeuCoin – the new online wallet that allows users to manage their NeuCoins with just an email and password to access a “super easy, intuitive interface.”
And NeuCoin “Growth Accounts” let users transfer their NeuCoins into long-term “savings” accounts and earn NeuCoin rewards on their deposits.
Behind the scenes, users contributing NeuCoins to a proof-of-stake mining pool, and keeping most of the rewards. “This will be the first time in the crypto-space that regularconsumers get to participate in mining. We think it will help convert casual NeuCoin users into long-term members of the NeuCoin community.“
The NueCoin website has a consumer onboarding area that introduces and explains the digital currency to new users.
NeuCoin is also partnering with major music and video content providersto develop micro-payment solutions for tipping, pay-per-view, ad-free and micro-subscriptions, with user acquisition fuelled by freemium distribution of NeuCoin.
Image
Lian Chang / Flickr(CC)World Leaders Meet at United Nations; Control of the Internet on the Table
Digital Currency Derivatives Exchanges Prepare for Regulation after CFTC Bitcoin Ruling
Only a week after ruling that bitcoin and other digital currencies are commodities, the U.S. Commodity Futures Trading Commission (CFTC) announced on Thursday that they have settled charges filed against TeraExchange LLC (Tera) for arranging a “non-deliverable forward contract” last October.
Neither of the parties entering the trade were looking to profit off of future bitcoin price changes, but rather to test Tera’s network. However, Tera subsequently released a press release that indicated the pre-arranged swap was a real trade, which would violate both the Swap Execution Facility (SEF) Core Principles found in the Commodity Exchange Act and CFTC regulations.
This was the first charge filed by the CFTC against a bitcoin exchange following last week’s announcement , which gave the CFTC jurisdiction over online bitcoin exchange and derivative markets.
Other digital currency platforms that offer similar services have prepared for this moment. LedgerX applied for both an SEF and Derivatives Clearing Organization license last year but has received only a temporary SEF registration at this point.
In a statement released September 10th, CEO Paul Chao said, “[LedgerX does] not intend to launch with only [an] SEF license… Only with both SEF and DCO licenses from the CFTC can we clear and physically deliver the underlying commodity, offer an order-book trading venue, and attract institutional traders.”
LedgerX has even contracted Ancoa , a surveillance technology provider in order to identify “manipulative behaviors and suspicious trading practices” on the LedgerX platform, according to a statement released earlier this year.
While this type of regulation might seem counterintuitive, as it forces exchanges to push back release dates, industry players welcome the oversight. In a private interview, Alt-Options co-founder Marco Cuesta conveyed that “[the CFTC’s] regulation does positively impact the bitcoin derivative market, since its purpose is to protect clients and their assets. As regulation for the Bitcoin derivative market becomes more aligned with that of traditional financial markets, there should be wider adoption, which is good for the industry.”
Image via CFTC
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