CNN’s Morgan Spurlock Spends Week “Living on Bitcoin”

Morgan Spurlock, Academy Award nominated director of “Super Size Me,” is CNN television’s “Inside Man.” In 2014, he spent a week living on bitcoin. The resulting “Inside Man” episode aired on February 19, 2015, affording a large television audience an in-depth Bitcoin experience that was no doubt a first for many viewers.

The episode begins with a brief explanation of Bitcoin founder Satoshi’s goals, as defined by the white paper, “Bitcoin: A Peer-to-Peer Electronic Cash System”.

“[Satoshi] wanted to create a global currency that existed outside of a central bank or government,” Spurlock explains.

Starting at the Bitcoin Center in New York City, Spurlock buys his first bitcoin from the live auctioneer at the site. He then proceeds to make his first bitcoin purchase, a slice of pizza and a bottle of water. He buys groceries and later, a massage.

Morgan interviews Dan Kaminsky, a white hat hacker (ethical hacker) and Chief Scientist of White Ops Inc, about the average consumer’s number-one concern: whether or not Bitcoin is safe. Dan explains how, when he first heard about Bitcoin, he was quoted as saying: “This is going to fall immediately.”

Dan continues to explain how, like many of us, he was wrong. That although some businesses plugged into the network may have failed, Bitcoin, the core, is solid.

What Spurlock does not mention here is the open source nature of the core. Bitcoin is available for any and all to view the source code, and exactly how it works– if you understand it.

Bitcoin’s open source nature is one of the key reasons why it is a trusted system. If it had been released as closed source software, with limited transparency, there would have been far more distrust in the system. Bitcoin’s open source nature has allowed for global reading, understanding and inclusion.

The open source nature not only allows anyone to read the code, but it also allows anyone, worldwide, to contribute (via GitHub) additional changes to the core. This contribution does go through a rigorous testing and approval phase, and it allows for continual strengthening of the system’s reliability.

After making his purchases, Morgan visits a Bitcoin mining facility.

Viewers here should be aware that although the blockchain discussion in this segment is excellent, the Blockchain.info on screen is not the actual blockchain, but a third-party business that performs a variety of bitcoin-related services, one of which is watching the blockchain and reporting information for users of the site.

The blockchain can be viewed via a variety of other third party businesses, and is not limited to Blockchain.info.

Notably, the blockchain is not “stored on the Internet” as Spurlock reports. The blockchain is stored by people who provide bitcoin nodes. These are the individuals (or mining businesses) who hold full copies of the blockchain.

If the Internet went down tomorrow, the blockchain would still exist, and would simply be waiting to be used.

Spurlock goes on to try to pay his utility bills with bitcoin, make a purchase on the internet, and discuss the future stability of bitcoin compared with fiat currencies. He winds the broadcast up with a conversation with U.S. Senator Joe Manchin of West Virginia, who called for a ban on bitcoin in early 2014. Manchin mistakenly states that Bitcoin “ … has been banned in two different countries – Thailand and China – and South Korea stated that it will not recognize bitcoin as a legitimate currency.”

Bitcoin is actually thriving very well in South Korea, and there are no signs that it will not continue to do so.

Realising that Bitcoin adoption depends on each individual’s ability to teach others the merits of digital currency, Spurlock ends his show by convincing a coffee shop to accept bitcoin, and walking the shop owner through the process.

Spurlock’s final interview, with tech entrepreneur Andreas Antonopoulos, lifts the curtain on the future of Bitcoin.

Antonopoulos explains how Bitcoin investment (at that time, summer 2014) has experienced more growth than the Internet had in its dotcom boom period. Antonopoulos goes so far as to label digital currency as the “third wave” of Internet growth (dotcom was the first, social media was the second).

“It takes time, and for more regular people to be seen using bitcoin for legitimate activities,” Antonopoulos comments.

Whether you have been involved in the sector for years, are new to the ecosystem, or want to explain the subject to someone you know, this video does a very good job and is highly recommended. But keep in mind that this documentary was made more than eight months ago, and that is a long time in the Bitcoin world.

February 25, 2015 at 03:01PM

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Android-based Apple Pay Competitor Will Support Bitcoin

A new secure mobile payment solution for Android will be showcased at the Mobile World Congress, March 2 – 5 in Barcelona, Spain. The new payment app developed by Rivetz and other partners – an Android alternative to Apple Pay with Bitcoin support – will be available in the second quarter of 2015 and is compatible with over 350 million existing Android devices, including Samsung smartphones. Demonstrations on a Samsung Galaxy 4 smartphone will be held daily at the Samsung partner booth (Hall 8.1), Trustonic booth (Hall 7, Stand 7G81), and at the Intercede booth (Hall 7, Stand 7B81).

“We are very pleased to be combining trusted computing technology with the innovations in Bitcoin and blockchain technology to offer consumers the most secure bitcoin payments,” Rivetz CEO Steven Sprague told Bitcoin Magazine. “For consumers, the killer app is having money on the phone, and for the merchants, the built-in security of the system will make it easier to persuade them to accept bitcoin.

Rivetz developed this application over the last year, integrating the contributions of the partners and using the Trustonic Trusted Execution Environment (TEE) as an operating system for the application. “Our solution reflects the latest specifications for mobile payment technology by Global Platform and Trusted Computing Group,” he said.

With Apple Pay, announced at the iPhone 6 launch event last September, Apple wants to grab a big slice of the exploding – and potentially very profitable – mobile payments market. Apple Pay is compatible with a wide range of point-of-sale payment solutions used by merchants, including the terminals provided by the major credit card companies, but requires an Apple device (iPad, iPhone 5 or higher) on the consumer side. That is an important limit since only 12 percent of smartphones in use are made by Apple, and most are older iPhones that don’t support Apple Pay.

Google is not watching idly – it recently acquired Softcard technology to power its payment solution Google Wallet — and established agreements with Verizon, ATT and T-Mobile to pre-install Google Wallet on the smartphones sold by the carriers. Google Wallet is available for Android smartphones, which have an 85 percent market share. (Note, however, that not all Android devices support Google Wallet at this time.)

Besides smartphones, both Apple Pay and Google Wallet will also run on next-generation smart personal devices, such as connected watches, which will add to their appeal and ease of use. But Apple Pay and Google Wallet don’t support Bitcoin, which is an important limitation for the fast-growing community of Bitcoin users, consumers and merchants alike. The new Android payment solution, developed by Rivetz, Trustonic, Intercede and Bitcoin payment processors Coinapult and BitPay, supports bitcoin payments and can be integrated with bitcoin wallets.

“Rivetz is delivering state-of-the-art support that will help Bitcoin [become] a standard, secure capability on every handset,” said Tony Gallippi, Co-Founder and Executive Chairman of BitPay. “We look forward to enabling the Rivetz capability as an option for millions of Bitcoin users.”

The new open-source payments technology is easy to use and compatible with any Trustonic-enabled smart device. The solution is compatible with many thousands of Bitcoin merchants, offering consumers peace of mind that their Bitcoin transactions are safe, private and secure. Furthermore, the new solution meets all of the requirements of the recently implemented regulations for European payments using smart devices, which opens the way for deployment in Europe.

The new solution developed by Rivetz uses Trustonic’s Trusted Execution Environment (TEE) built into millions of smart devices to store and process Bitcoin private keys, and Trusted User Interface (TUI) technology for secure PIN entry and secure display of the users’ transaction details. Rivetz provides a software developer toolkit for secure TEE-enabled Bitcoin payment apps.

“We are pleased to be working with Rivetz to bring state-of-the-art security and ease of use to consumers,” said Trustonic CEO Ben Cade. “The Rivetz team is offering a great model for any app developer to leverage the advanced security that Trustonic TEE provides.”

Intercede’s MyTAM cloud service is used to protect the user’s bitcoin wallet and data from malware and any threats that may be present on the handset.

“Apps used for executing Bitcoin transactions are an attractive target for hackers, who are developing increasingly advanced methods to deploy their malware onto Android handsets,” said Intercede CEO Richard Parris. “By ensuring the activities of apps are kept separate and secure from the main OS, end users can be assured their Bitcoin transactions are protected.”

This development is important for the Bitcoin ecosystem, because it integrates bitcoin payments in a comprehensive, secure mobile payment solution that is technically as advanced – or more advanced – than competitors Apple Pay and Google Wallet, supported by leading smartphone manufacturers, and fully compliant with applicable regulations. It will facilitate Bitcoin adoption among consumers and merchants, reduce regulatory obstacles and bring Bitcoin closer to mainstream.

February 25, 2015 at 04:37PM

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German Fidor Bank Brings Bitcoin to Mainstream Banking, Expands Overseas

German Bitcoin exchange bitcoin.de and Fidor Bank have announced a new “Bitcoin Express” option for Fidor Bank customers to buy and sell bitcoin instantly on the exchange.

The new option addresses the delays involved in exchange transactions. Bitcoin exchanges like BitStamp, which are not licensed banks, must often wait hours or even days for a transaction to be cleared by an external bank. But because Fidor Bank is fully licensed, it is able to provide a direct interface to the mainstream banking system, eliminating transaction delays.

As a result, holders of a “Fidor Smart Giro Account” are now able to purchase bitcoin directly from a bank account and receive bitcoin immediately after the purchase. They can also sell bitcoin to another Smart Giro Account holder and have the money instantly credited to their account. Since the money is always in the user’s bank account, customers don’t have to worry about the possible insolvency – or dishonest behavior – of an external exchange operator.

The Smart Giro Account is a full bank account with all the standard features, including interest on credit balances and a low-cost credit card. The latter is, in practice, equivalent to a card that can be recharged with bitcoin.

Oliver Flaskämper, board member of bitcoin.de, said, “That is not only good news for all Bitcoin fans, but also good news for fintech companies based in Germany. “

Fidor Bank CEO Matthias Kroener commented: “The prompt conducting of [Bitcoin transactions] from one bank customer to another bank customer enhances security massively. As such Fidor Bank is setting a further milestone in digital banking.”

In related news, Fidor Bank disclosed plans to expand to the U.S. market. Kroener praised U.S. authorities’ open and pragmatic middle-of-the-road approach to Bitcoin regulation.

Kroener is persuaded that traditional U.S. banks are losing their appeal, especially among younger generations, because they don’t offer the innovative services that today’s tech-savvy consumers demand.

“The reason that a lot of very successful fintech startups are happening in the U.S. is not only because there are so many talented people setting up those businesses. It is also because there is a huge gap in innovative services.”

Fidor Bank is known as a modern Internet Bank and an early adopter of new trends in fintech with innovative services for connected consumers. Fast Company named Fidor Bank one of the world’s top 10 most innovative companies of 2015 in personal finance, and described it as a social bank that leverages cutting-edge technology to respond to customer wishes.

Fidor Bank’s fintech community website invites developers, notably dubbed “Pirates of Banking,” to become “part of reshaping the post-crisis banking industry through cutting-edge technology instead of doing the minimum to be compliant.” The deployment of innovative fintech services in the U.S. market could boost the mainstream acceptance of Bitcoin and the digital economy as a whole.

February 24, 2015 at 07:18PM

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Bitrated Unveils Reputation System and Multisig Escrow

Bitrated has announced an online reputation management system for its multi-signature (multisig) escrow service for bitcoin payments. The two innovations combined provide unprecedented consumer protection to Bitcoin users, buyers and sellers alike.

Bitrated‘s bitcoin payment service uses multisig transactions where a trusted third party (trust agent) is nominated to resolve disputes and reverse payments in case of fraud. Two out of three signatures are required to unlock a payment: the seller’s, the buyer’s and the trust agent’s. So if the buyer is happy with the purchased goods or services, the payment can be unlocked by the buyer and the seller alone, with no intervention required from the trust agent. Otherwise, the trust agent will arbitrate the dispute for a fee, and eventually take either the side of the seller, in which case the payment will proceed, or the buyer, in which case the escrowed bitcoin will go back to the buyer.

With multisig, the trust agent is not able to take the money and run, because the payment address is fixed and any decision of the trust agent must still be validated by the seller or the buyer. But as usual, the devil is in the details: a dishonest trust agent could collude with a dishonest seller – or buyer – behind the scenes. Bitrated’s reputation management system addresses this problem.

“We believe that Bitrated holds the key to the next wave of Bitcoin consumer adoption,” said Bitrated CEO Nadav Ivgi . “While disputes about e-commerce are usually settled in a fairly easy process, Bitcoin transactions still hold a major risk of fraud. The new reputation management system is a huge leap forward in consumer protection when combined with the secure payment system, and it can help bring Bitcoin one step closer to the massive numbers of users in e-commerce.”

Bitrated created a marketplace for arbitration services where trust agents can compete for customers by providing quality dispute resolution services, utilizing their domain expertise, building a reputation and offering competitive fees.

“Because trust agents never hold user funds in escrow, we can greatly reduce compliance costs, lower the entry barriers, encourage competition and allow smaller and specialized players to participate in a way that was never possible before.”

To join Bitrated, users need to create a profile like this and link their social network accounts. At this moment, reputation scores are mostly based on the various karma systems and number of friends/followers on the social networks. Later, it’s to be expected that reputation scores will be based on user reviews, successfully completed transactions and dispute resolutions on the Bitrated system itself.

To create a new trade, buyers need to specify what they are buying (a description of the product or service, delivery method and other agreed upon terms), the price in bitcoin, the user name of the seller (an external email address can also be used, in which case the seller will receive an invitation to join Bitrated), a refund bitcoin address, and the user name of the trust agent. Trust agents, who can be found in the Bitrated user database, can specify their fees: a base fee (for example 0.5%) and a dispute resolution fee (for example 2%). If the system catches on, top-rated trust agents whose services are in demand could earn significant fees.

Bitrated is a very welcome addition to the Bitcoin ecosystem, and one that meets an important need. It can be seen as an open and transparent alternative to the native escrow and reputation systems of specific Bitcoin marketplaces – where often escrow and dispute resolution are provided by the operator itself. Bitrated, which is essentially a public marketplace for arbitration services with a crowd-sourced reputation system, is a good solution to manage trust issues in the digital economy.

February 23, 2015 at 10:02PM

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This Week on Decentral Talk Live

Decentral Talk Live features a diverse collection of guests this week from all over the decentralized and disruptive technology community. Topics include security and regulatory compliance, publishing, branding, web-development, and building features on top of the Bitcoin blockchain.

Balancing security and privacy with regulatory compliance is a tricky business when it comes to digital currencies. This week, DTL talks with Amber Scott, founder and “Chief AML Ninja” of Outlier Services. Scott is a Certified Anti-Money Laundering Specialist (CAMS) and a Certified Privacy Professional (CIPP) with a degree in psychology from the University of Waterloo, where she helped develop the first applied psychology course on criminal profiling. In 2013, she founded Outlier Solutions to provide AML and CTF compliance for financial services (including casinos, insurance, accountants, real estate, securities/investments, digital currencies and more). Among other security-related topics, Scott delves into the complex world of financial regulation and gives tips on dealing with banks — always a tricky problem for Bitcoin companies.

Craig Sellars, the CTO of the Mastercoin Foundation, joins DTL to discuss its communications protocol. Mastercoin uses the Bitcoin blockchain to enable features such as smart contracts, user currencies and decentralized peer-to-peer exchanges. A common analogy used to describe the relation of the Master Protocol to Bitcoin is that of HTTP to TCP/IP. Like the Master Protocol, HTTP is the application layer for the more fundamental transport and internet layers of TCP/IP, such as Bitcoin.

As co-founder and CTO of Tether, Sellars also answers questions about this fiat currency token platform on the Bitcoin blockchain. Tether aims to provide a quick and secure way to store, send and receive real-world currency as if it were bitcoin.

Themes for this week will also include communication and marketing in the Bitcoin space.

Rik Willard, CEO of MintCombine, a think tank and product lab delivering blockchain solutions for brands and causes, will talk about the challenges of navigating the complex economic environment of emerging decentralized digital engagement ecosystems.

Mitchell Callahan, Founder and COO at Saucal, will provide insight into his Bitcoin & web application development firm.

Jeffrey Tucker, Chief Liberty Officer of Liberty.me, a subscription-based, action-focused social and publishing platform for the liberty minded, will share his enthusiasm for sharing and promoting ideas that support freedom.

Decentral Talk Live airs new episodes at 3 pm EST, Monday through Friday, on decentral.tv.

February 23, 2015 at 08:06PM

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Canadian Exchange, QuadrigaCX, Takes Spotlight After CAVIRTEX Bows Out

On Tuesday, February 17, the Canadian Bitcoin community was surprised to learn that its biggest and longest-serving exchange, CAVIRTEX, was to wind down operations by March 25. Enter QuadrigaCX, heir apparent to the title of Canada’s largest Bitcoin exchange.

An older version of the CAVIRTEX database, including 2FA secrets and hashed passwords, may have been compromised. Their website states, “We believe that damage to the company’s reputation, caused by the potential compromise, will significantly harm our ability to continue to operate successfully.” Kyle Kemper, VP of CAVIRTEX, also cited a difficult banking relationship as a contributing factor.

CAVIRTEX was the second exchange to go down in Canada this year; Vault of Satoshi also declared its intent to close as of February 5th, 2015.

“We’ve definitely seen an increase in new accounts over the past few days,” said Gerald Cotten, CEO of QuadrigaCX. He added that the closure of CAVIRTEX came as a “total surprise” to him. Like everyone else following the Bitcoin news in Canada, he knew about some of CAVIRTEX’s difficulties, but didn’t think they were serious enough to close the company. “Security and banking issues…come with the territory when one operates an exchange,” he said.

Can QuadrigaCX avoid a similar fate?

Cotten places his faith in the company’s security system. QuadrigaCX clients’ passwords are encrypted both server-side and client-side, on-site and in-browser. Even if someone managed to hack in and steal their password hashes, as in the case of CAVIRTEX, those hashes would be useless to the thief.

“Total security is incredibly hard to achieve,” Cotten said. “You make one little mistake and a hacker can and will exploit it. Banks can’t guarantee they won’t get robbed; exchanges can’t guarantee they won’t get hacked. That’s why we keep as little [bitcoin] online as possible.” The rest of the funds are kept in cold storage. Cotten added that QuadrigaCX participates in the Bug Bounty program run by Crowdcurity, so their system is continuously being tested for weak points of entry.

As for its banking relationships, QuadrigaCX appears positioned to keep legacy banks onside. When it comes to banks, said Cotten, an exchange is “always walking on eggshells.” Before its launch on December 26, 2013, QuadrigaCX registered with FINTRAC as a money services business, becoming the first exchange to do so in Canada. While it isn’t strictly required by law, such registration is perceived by banks as a sign of legitimacy, and registration has minimized the number of banking issues the exchange has had to face. QuadrigaCX was also the first Canadian exchange to integrate INTERAC^TM Online.

It also helps to have a little luck. Just before it was thrust into the spotlight, QuadrigaCX began a global marketing campaign to expand its business outside of Canada, targeting more international markets. At the moment, it carries CAD/BTC, USD/BTC and Gold/BTC order books, and accepts clients from most countries around the world. Due to regulatory complexities, however, QuadrigaCX does not accept U.S. clients.

As for the prospect of other foreign exchanges encroaching on the Canadian Bitcoin space, Cotten isn’t worried. He points out that Bitstamp and Bitfinex are already active in Canada, but he doesn’t foresee too many other companies making a push into the Canadian market. “Trading volume is still very low [here],” he says. “It’s not really worth it for them.” And Canadians who might try to migrate toward foreign exchanges are likely to find the process too complicated and expensive by comparison.

To see a recent, in-depth interview with Gerald Cotton, and learn more about QuadrigaCX, visit decentral.tv. For this episode of Decentral Talk Live, Cotten spoke with host Ethan Wilding and guest host Hai Nguyen shortly before the CAVIRTEX announcement.

February 23, 2015 at 05:59PM

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U.S. Marshals Hold Third Bitcoin Auction

The U.S. Marshals Service is holding its third Dread Pirate Roberts (DPR) bitcoin auction this March 5^th, 2015. These bitcoin were seized from Ross Ulbricht, allegedly the Dread Pirate Roberts, in relation to the Silk Road prosecution, an online black market bust primarily related to the sale of illegal drugs.

At auction are 50,000 bitcoin separated into two series. The first (series A) will consist of ten blocks of 2,000 bitcoin each, requiring a deposit of $100,000. The second series (B) will consist of ten blocks of 3,000 bitcoin each, requiring a deposit of $150,000.

Not all of the coin at auction were necessarily involved in some form of illegal transaction. There were some legitimate merchants who sold perfectly legal goods through the Silk Road platform.

Like the previous two auctions, the current one is blind, meaning that bidders will not know the value of the other bids. The first auction was held last summer for just under 30,000 bitcoin, in nine blocks of 3,000 and a partial tenth block. Participants had to deposit a minimum of $200,000 to take part.

Tim Draper won all the blocks up for sale in the first auction.

He also claimed 2,000 bitcoin from the second auction of 50,000 bitcoin that was held in early December, 2014. The remaining 48,000 bitcoin (19 of 20 blocks) were won by syndicate bidders led by SecondMarket and the Bitcoin Investment Trust (BIT).

The second, most recent auction had 11 registered bidders and 27 resulting bids.

Parties interested in the upcoming third auction should be aware that the bidder registration has opened from February 17^th, but will close at 12:00 EST on Monday, March 2^nd, 2015.

Deposits for the auction must originate from a bank located within the United States, and bidders must confirm that they have no association with Ross Ulbricht.

Registration consists of the deposit along with a manually signed pdf copy of the registration form, a copy of a government issued photo ID (of the bidder or control person) and a copy of the wire transfer receipt.

The auction starts at 08:00 EST on March 5^th and will last until 14:00 EST the same day.

For more information about the auction, visit the U.S. Marshals site here.

February 21, 2015 at 12:51AM

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Bitcoin Wallet Maker WoodWallets to Sell Business

The owners of WoodWallets.io, the makers of handcrafted, wood-carved bitcoin wallets, have announced that the business has suspended operations and is up for sale.

The full post stressed that the owners were stepping away from the business due to unspecified personal reasons, and that they were unable to approach WoodWallets with the “same level of passion and dedication”.

The post recalls the origins of the project, which began one year ago after owner Nico issued a post on Reddit, before detailing how the owners want to move forward with the sale.

Nico writes:

”We would be more than happy to leave everything we built so far in the hands of a company or an individual who is capable of running it with the same level of passion – possibly even more – that we kept during this year.”

Nico went on to speculate that the alternative would be to allow the project to become another “boring online shop”, one that would lack the community spirit that he contends led to the sale of hundreds of Woodwallets.

CoinDesk received a specialty version of the Woodwallet this summer, at the time noting its careful and artful packaging, and elegant design.

The post concluded: “Whatever happens now, we will keep a good memory.”

Images via Woodwallets.io

Wallet

February 20, 2015 at 10:40PM

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Airbitz Enables BLE-driven Wireless Payments for iPhone and Android

If you’ve ever used bitcoin currency, you know that it can be frustrating to try to send and receive money when QR codes aren’t cooperating.

Solar reflection, phones with cracked screens, and poorly focusing cameras are among the issues that are hampering widespread use of QR codes and impeding Bitcoin adoption.

Developers at Airbitz, a Bitcoin wallet and business directory, have found a solution.

In October of 2014, Airbitz unveiled technology that allowed for iPhone users in close proximity to pay each other wirelessly via Bluetooth technology on their app– all without the need to pair iPhones. No more QR codes.

This is made possible by Bluetooth Low Energy (BLE).

When compared to Classic Bluetooth, the newer BLE uses less power and lowers costs while providing a similar communication range.

But not everyone uses iPhones.

The latest android software update (Android 5.0), however, has BLE capabilities. As a result, Airbitz has recently launched wireless Bitcoin payments for Android. The Airbitz protocol is compatible between iPhone and Android devices.

The idea for wireless Bitcoin payments emerged out of dissatisfaction with the QR code method of transacting with Bitcoin.

Paul Puey, CEO of Airbitz, explained:

“The idea came about after many frustrating experiences with QR codes, and the realization that most people are not familiar with them and their scary appearance. The advance of Bluetooth Low Energy (BLE), which can work without pairing, gave us the motivation to develop this feature and protocol.”

“Android was far more difficult to implement than iPhone,” adds Paul. “Our usage of BLE requires a mode called Peripheral Mode, which allows a device to behave like a beacon, broadcasting info to receiving devices. iPhone has had this capability since the iPhone 4S, allowing it to both broadcast and receive BLE payment requests. Android only introduced this Bluetooth feature (Peripheral Mode) as of version 5.0 (Android Lollipop). We developed the early beta versions of 5.0 with the expectation that old devices would support this feature. Before release, at the last minute, Google disabled Peripheral Mode for all devices except Nexus 6 & 9. Although a bit crippled by Google, the Airbitz wallet allows full send and receive via Bluetooth on Nexus 6 & 9, but only sending capabilities on most Android 4.3 devices and higher.”

Ultimately, this initiative is a move toward making Bitcoin user-friendly, something that the cryptocurrency will need if it hopes to thrive.

“Our focus,” concludes Paul, ” is to deliver software with an amazing user experience, both visually and functionally, simplifying this advanced technology and delivering it to the masses while still retaining Bitcoin’s core principles of decentralization and privacy.”

This important innovation can potentially make the process of adopting Bitcoin less like pulling out molars, and more like learning how to tweet.

Check out Airbitz’s website here.

February 20, 2015 at 04:44PM

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Fedcoin Rising

The idea of a government-sponsored digital currency has been around for quite some time. See, for example, the unconfirmed rumors reported in a March, 2013 discussion on the Bitcointalk forum titled “Fedcoin: A centrally-issued alternative to peer-to-peer currencies .”

Now U.S. economists are taking it seriously.

On February 3, David Andolfatto , Vice President of the Federal Reserve Bank of St. Louis, wrote a blog post based on a presentation he gave at the International Workshop on P2P Financial Systems 2015. The title of the blog post is “Fedcoin: On the Desirability of a Government Cryptocurrency .”

Andolfatto’s central thesis is that the government could solve the problems of digital economies as follows:

“Imagine that the Fed, as the core developer, makes available an open-source Bitcoin-like protocol (suitably modified) called Fedcoin. The key point is this: the Fed is in the unique position to credibly fix the exchange rate between Fedcoin and the USD. [Consumers and businesses] will have all the benefits of Bitcoin – low cost, P2P transactions to anyone in the world with the appropriate wallet software and access to the internet. [I]n short, Fedcoin is essentially just like digital cash. Except in one important respect. Physical cash is still a superior technology for those who demand anonymity.”

Finextra blogger Tom Hay notes that Fedcoin contradicts the radical ideology of those Bitcoin enthusiasts who want a fully P2P economy not centrally controlled by the state. But from a government perspective it’s an interesting idea, because it links the stability of fiat currency to the speed and convenience of the Bitcoin technical platform. He adds:

“Ecuador has already launched a government-backed digital currency pegged to the U.S. dollar. [T]he Ecuadorian system is not based on the blockchain, and indeed Ecuador has banned Bitcoin and altcoins, but the Philippines are considering issuing a blockchain-based e-peso. The idea of digital fiat currency clearly has legs.”

So is the rise of FedCoin inevitable?

The film “The Rise and Rise of Bitcoin ” is a fascinating recap of the rebellious history of Bitcoin since its inception in 2009 all the way to the Mt. Gox fall and the arrest of Charlie Shrem in early 2014. The film tells a typical Internet story of idealistic hackers who want to change the world and their unstoppable rise… until the big boys take notice.

Those old enough to remember their “Internet moment” of enthusiastic awe for the newborn Internet in the early 90s – yes, it will change the world so fast – remember also the rest of the story: from a plaything of geeks and techno-libertarian anonymous dreamers (a famous 1993 New Yorker cartoon observed that “On the Internet, nobody knows you’re a dog ”), the Internet quickly became a tool of Big Capital and Big Government.

Today, old-timers use Facebook like everyone else, but know that everything we say and do online is monitored by governments and businesses all the time. We know that, short of taking pro-level privacy measures, there is no way to escape online surveillance. Today the Internet, like it or not, belongs to the establishment.

Perhaps it’s naïve to think that exactly the same thing won’t happen to Bitcoin.

The main appeal of Bitcoin for the original Libertarian and anarchist enthusiasts was the possibility of anonymous and untraceable transactions. But bitcoin transactions are traceable by-design to a bitcoin address, and anonymous only if the bitcoin address can’t be traced back to a physical person.

In practice, bitcoin transactions are easily traceable to their originators, and that’s one of the reasons governments will warm up to digital currencies. Forget using Bitcoin to escape taxes – in a state-controlled digital economy, the tax man will be able to find all your income and expenses in the blockchain.

Bitcoin transactions are faster and cheaper than traditional transactions, which is an important incentive not only for end users but for government agencies as well, as shown by the recent Bitcoin bills in Utah, New Hampshire and New York City. It seems likely that governments will try to appropriate selected aspects of digital currencies, and eliminate undesired aspects such as anonymity and volatility, to create efficient and cost-effective but fully regulated digital economies.

February 18, 2015 at 08:21PM

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