Japan Considers Regulating Virtual Currencies as Conventional Currency Equivalents

Japanese legislators officially proposed handling virtual currencies as methods of payment on February 23, Nikkei reports. This would mean that virtual money, such as Bitcoin, would become the regulatory equivalent of conventional currency.

Legislators of the financial services industry believe that this move could potentially strengthen consumer protection and create growth in the virtual economy. At the moment, Bitcoin is recognized as “an object,” but it is not considered equal to more established forms of currency.

The proposed changes to the definition of virtual currencies would mean that items such as Bitcoin could be used to purchase goods and services. Additionally, they would be considered exchangeable for legal tender via trade or purchase.

However, acknowledging virtual currency as an equivalent to conventional currency would require certain institutions to register with the Financial Services Agency.

This is not the first time Japan has examined Bitcoin and its global use, as seen in apress conference held in 2014. At the time, Finance Minister Taro Aso addressed how Bitcoin has been treated in Japan, as well as around the world.

“The media may regard it as such, but it is not a currency that everyone recognizes as currency, so I don’t really know whether the Ministry of Finance or the Financial Services Agency should have jurisdiction over something that is not a currency, whether the Consumer Affairs Agency should have jurisdiction because it is used by consumers, or whether the National Police Agency should have jurisdiction because a crime may have been committed,” said Aso. “In Japan, the issue is quite advanced, so for quite some time I have thought that some actions might have to be taken in Japan, though I think that this time has come much earlier than expected.”

Currently, there are more than 600 forms of virtual currencies used around the world. As of February 24, one bitcoin holds thevalue of approximately 47,000 Japanese yen.

As the prominence of virtual currencies continues to grow, Nikkei reports that monetary authorities are attempting to institute regulations to address issues, such as money laundering.

In 2015, Aso addressed the use ofBitcoin and other virtual currencies for the purpose of funding terrorism and other crimes.

“I think it was at the G7 summit that discussions addressed the need to introduce regulations in order to prevent terrorist funding, tackle money laundering, and so on,” Aso said. “We’ve gathered a lot of information, and I think that the actual ways the currencies are used need to be properly reflected, and I think that studies need to continue concerning an approach.”

 

Bitcoin Core 0.12.0 Released: What's New?

Today marks the official release ofBitcoin Core0.12.0, the twelfth generation of Bitcoin's reference client as first launched by Satoshi Nakamoto seven years ago. Developed by close to 100 contributors over seven months, the latest version of Bitcoin Core includes more than 20 improvements, particularly regarding performance, security and usability.

These are the sixth most notable changes.

Memory Pool Limiting

Memory pools are the collections of unconfirmed transactions as stored individually by all full nodes. Memory pools fill up in between blocks as new transactions are transmitted over the Bitcoin network and are depleted when these transactions are included in blocks. But if a series of subsequent blocks remain full for an extended period – either due to legitimate transactions or spam attacks – memory pools might not deplete completely, and backlogs could build up. With no maximum limit, the backlog might even grow to the point where nodes run out of memory and crash. (This is the “crash landing” scenario former Bitcoin XT lead developer Mike Hearn feared.)

Memory pool limiting, as the name suggests, enforces a hard limit on the maximum size of memory pools to prevent this scenario. If the maximum is reached, nodes reject or clear their memory pools of transactions that offer the lowest amount of fees per byte.

Full node operators can configure their limits, but the default maximum size in Bitcoin Core 0.12.0 is set on 300 megabytes.

Blockchain Pruning for Wallet Users

One of the burdens of running a full node is the requirement to store the complete blockchain. This adds up to55 gigabytes at the time of this writing, and can grow another 50 gigabytes per year under the current 1-megabyte block size limit.

To decrease this requirement, Bitcoin Core 0.12.0 allows users to prune the blockchain, which means they can get rid of older data once their node has verified it. The amount of data to keep is configurable, though Bitcoin Core 0.12.0 will still require a minimum 2 gigabytes of disk space.

Pruning the blockchain does mean these nodes will no longer be able to share all the blockchain data with peers, such as full nodes syncing with the network for the first time.

(It should be noted that pruning the blockchain was first introduced in Bitcoin Core 0.11.0, but was not yet available for users running Bitcoin Core as a wallet.)

Upload Traffic Limiting

Full nodes continually transmit and relay transactions and blocks to each other over Bitcoin’s peer-to-peer network. This typically requires a modest amount of data to be downloaded, but sharing that same data with several peers at the same time can add up to significant upload costs.

Bitcoin Core 0.12.0 introduces a configurable data cap for upload traffic. If this cap comes within reach, the node will seize uploading blocks older than a week, typically requested by nodes first syncing with the network. Additionally, any light clients will be disconnected and no longer served any block data.

Opt-in Replace-by-fee

As the number of transactions on the Bitcoin network increases, not all transactions might fit into blocks. As such, miners will probably pick the transactions sent by users who included most fees. This means that some transactions – from users that paid too low a fee – could never confirm at all. And since many full nodes and miners currently reject conflicting transactions (sent from the same inputs as an earier transaction), low fee transactions can get “stuck” on the network.

To solve this, Bitcoin Core 0.12.0 introduces opt-in replace-by-fee. If a transaction is sent using opt-in replace-by-fee, users can replace their own transaction with a newer transaction by including a higher fee. (This also means that miners can increase their income, as they get to pick transactions that include higher fees.)

The “opt-in” part of opt-in replace-by-fee means these types of transactions will not be the default, and will be flagged as replace-by-fee transactions on the Bitcoin network. Anyone relying on zero-confirmation transactions should want to monitor for these replace-by-fee transactions, as these could very easily be reverted until they are confirmed. (Of course, zero-confirmation transactions were never secure.)

Whether opt-in replace-by-fee will actually be useful depends on Bitcoin miners; they ultimately decide which transactions to include in blocks, and under what policies.

Tor by Default

While Bitcoin is often claimed to provide anonymity to users, this is not entirely true. Bitcoin users can be de-anonymized, for example, through the peer-to-peer network. If it is determined from which IP-address a transaction originated, this information can be used to identify Bitcoin users.

To protect users' privacy, Bitcoin Core 0.12.0 automatically connects to the Bitcoin network through anonymizing tool Tor (The Onion Router) – ifTor is installed on the same computer. Tor encrypts data and routes it through several nodes all across the world before broadcasting it. This makes it hard – perhaps impossible – to trace where a Bitcoin transaction originated.

(It should be noted that using Tor in itself might not be sufficient to protect a Bitcoin user’s identity. SeeBitcoin Magazine'sBeginners Guide to Bitcoin Privacyfor more information.)

Faster Signature Validation

Signatures are the cryptographic trick where private keys are “combined” with any other data to calculate a unique string of numbers. Corresponding public keys can be used to verify that the signatures were created using the private keys. In Bitcoin's case, signatures are effectively used to prove ownership of bitcoin, and, as such, to validate transactions.

But there are several ways to conduct this cryptographic trick, which could result in different signatures – all valid in their own way. And if different Bitcoin nodes apply different methods for validation, some nodes might consider certain transactions valid while other nodes do not, which could split the Bitcoin network.

Following up on a soft fork to solve this problem last year, Bitcoin Core 0.12.0 now switches all validation from the “OpenSSL” cryptographic library to “libsecp256k1”, developed by Dr. Pieter Wuille, Gregory Maxwell and other Bitcoin Core developers.

As an added benefit, this new signature validation scheme requires less CPU-power, lowering the cost of running a full node and significantly decreasing block validation time.

For a full list of improvements, see Bitcoin Core 0.12.0's release notes onGitHub.

Thanks to Bitcoin Core lead developer Wladimir van der Laan, andCiphrexCEO and Bitcoin Core developer Eric Lombrozo for proofreading and added feedback.

The Legal Marijuana Industry Needs Bitcoin Badly

Legal marijuana has been having banner year after banner year since various states havelegalized the sale and consumption of the plant and its derivatives starting back in 2012 within Colorado and Washington. It should be noted that the process of marijuana’s status as a demonized drug has been slipping for much longer than the past 4 years.

The first medical marijuana dispensary in the United States was in California back in 1996. As a business model, it’s hard to beat being a legal seller of pot, whether in a medical capacity or fully legalized manner. It’s common to see business owners and consultants cross-pollinating across state lines to be first in line to get licensed into new states as they pass legislation to legalize. But the green-rush to get into a successful marijuana business can be a headache because of some of the highly restrictive financial laws associated with running such an operation.

So, the question must be asked – is there a potential solution to this problem with Bitcoin?

Few of us could honestly complain about being too cash rich, right? Well, many of the owners of marijuana dispensaries have this exact problem. While fantasies about being surrounded by piles of green bills might seem appealing, there are several inherent problems with this.

Marijuana Is Legal within Certain States, Not the Entire United States

Marijuana had an almost revolutionary moment when people from certain states within the U.S. stood up collectively and declared that they weren’t going to be persecuted for the cultivation, sale and use of a plant that some believe to be not only not harmful, but beneficial. Regardless where these states stand on the subject of what place marijuana has in society, the fact remains that it is still very much illegal in the eyes of the Federal Government.

Sitting within the same scheduling class as heroin, ecstasy, and LSD, being caught with and prosecuted for being involved with marijuana in anyway can land you a major jail sentence and massive fines. Untold numbers of people in the U.S. have been locked away for years for being caught with small amount of marijuana on their persons. So, that’s quite a stark contrast between what’s happening within state limits and on a national level.

No Checks, No Cash Deposits and No Credit Card Transactions

For those who have never visited a marijuana dispensary, they can range from the atmosphere of a nightclub, to almost a sort of Persian tapestry showroom. The business and branding styles of dispensaries varies greatly and depends in large part on the owners and people working there. However, if you step into the back office room, you’ll notice something similar between virtually every dispensary. Besides computers which manage inventory and transactions and some videodisplays for CCTV, you’re likely to see a massive safe.

What lies behind the doors of that safe is cash – lots and lots of it. Due to the sheer illegality of marijuana under Federal law, dispensaries and any business directly associated with the production or sale of such products cannot write checks, deposit money into financial institutions and cannot accept credit card payments.

While you may have been to a dive bar, diner or food truck that was cash only, it’s likely that most businesses you use accept some form of electronic payment via Visa, MasterCard, Etc. However, you’ll never find that at any dispensaries. This causes a huge stockpile of cash in the operations of virtually every dispensary in business and causes big logistical headaches for the owners to manage that cash.

The Dangers of an All-Cash Business

In movie scenes where you see townie Boston thugs robbing a bank and somehow losing the cops in a car chase in a major U.S. city, it’s hard to imagine how actual bank robberies realistically happen anymore. It’s no secret how guarded banks are and at this point in time, it’s hardly worth the risk to anyone who isn’t completely desperate and on the run. However, cash-only businesses like marijuana dispensaries are a prime target for crime.

Many of these operations must be hyper vigilant just to keep internal employees honest and from skimming cash every chance they get. Never mind a brazen planned robbery on an unsuspecting dispensary which could lead to financial losses in the hundreds of thousands, if not millions, or even worse, injury or death of the business people.

The Time for Bitcoin Is Now

In an industry that’s slated to reach $6.7 Billionin total revenue within this year, there needs to be a solution to this cash-rich business problem being faced by dispensaries. It’s simply not safe or practical to be managing so much physical cash within a location that is a potential target for crime. Due to cash which is associated with marijuana sales not being eligible for circulation of any kind through financial institutions or through credit cards, Bitcoin is potentially a life-saving solution for the near-term and long term.

Bitcoin has no central authority, therefore there’s no immediate way for the government from a State or Federal level to intervene with dispensaries processing their transactions or cash through Bitcoin. While in theory, dispensary owners could take their mountains of cash to local Bitcoin ATM’s and after hours or even days finally deposit their cash into Bitcoins, a better solution would be for dispensary customers to purchase their products using Bitcoin. With this, as we’ve seen before in other industries, it’s going to largely be an educational challenge for dispensary owners and their customers.

Getting people on board to knowing how to securely purchase and store their Bitcoin and then use it transactionally is a challenge, but certainly a smaller one than figuring out how to safely move huge amounts of cash. While there’s always potential for the Federal Government to get involved somehow with attempted regulation and while the price of Bitcoin has potential to be volatile, the upsides to this solution seem to be too good to ignore.

As seen in cities around the world, Bitcoin supported commerce ecosystems are certainly possible, but it requires dispensaries to be bigger stewards in their communities and put efforts in that they probably didn’t need to before. Imagine a co-working space that was sponsored by a dispensary with a cafe, small restaurant, and a few Bitcoin ATM’s where people could go, congregate and help support a movement beyond their own medicinal interests into a radically different and better local economic system around Bitcoin.

Inside Bloq's Bid to Bring Bitcoin's Code to Enterprise Businesses

Long-time bitcoin developer Jeff Garzik and industry investor Matt Roszak have teamed up to launch Bloq, a new startup ambitiously billed as a "Red Hat for blockchain", in a nod to the $1bn open-source software company.

Backed by $250,000 in capital from Roszak’s firm Tally Capital, co-founders Garzik and Roszak said that Bloqaims to provide a engagement layer for enterprises companies that may otherwise be uncertain about dedicating resources to engineering and strategy efforts that leverage open-source blockchain technology.

Though the company debuted in a high-profile article onBloomberg, the article was perhaps short on how Bloq would implement its vision, and in particular, its theses on the underlying tech for which it would offer services.

In a new interview, Garzik framed Bloq's vision as one that sees the industry evolving toward a "multi-chain, multi-token" ecosystem in which bitcoin will serve as the "root of an Internet of chains".

As such, Bloq's products take advantage of bitcoin’s features, including its secure blockchain, well-developed code base and global community.

Garzik framed Bloq as a startup aiming to emulate the tested formula created by Red Hat, which he contends was able to successfully mediate between a sometimes divided Linux community and businesses that wanted to build on the open-source operating system that ecosystem had developed.

"Red Hat stepped in," Garzik, who is himself a 10-year veteran of that company, explained. "Red Hat was the commercial enterprise that could listen to [enterprise] needs, plot them on a long term roadmap and manage the engineering and development of those features with the rough-and-tumble Linux community."

The common theme in Bloq’s products, Garzik said, is that they will come with the support that large companies require when seeking to leverage open-source tech, adding:

"Enterprise customers need more than a volunteer, ad-hoc support effort. They need contractual deadlines for responses. Professional 'this feature by X date' product management and more."

To date, Bloq has already scored high-profile partnerships with industry startups Circle and Noble Markets, and is in discussions with PwC about its offering. PwC said it is still evaluating a more formal engagement with the startup.

Roszak said that Bloq so far boasts 12 employees, and that it will seek to double its staff as it scales its operations. Apart from Garzik, notable saffers include Andreas Schildbach, who today runs the Java-based application development library Bitcoinj.

"We are just about to build out a more formal sales and marketing initiative, but it’s going to be calibrated. We're building a company for the next 20 years," Roszak said.

Product line

At launch, Bloq is billing itself as an "enterprise-grade blockchain" service, with initial products including BloqEnterprise, BloqSuite and BloqThink.

Garzik described BloqEnterprise as offering supported access to the bitcoin network, clarifying that it is best considered a "bitcoin specific" product.

Specifically, BloqEnterprise includes a supported version of the command-line interface bitcoind; libraries such as the bitcoin network’s replacement for OpenSSL, libsecp256k1; and bitcoinJ, a client library written in Java. Garzik said that a Python library is also on the way.

Additional products at launch include BloqSuite, its proof-of-concept development offering; and BloqThink, its strategic advisory and consulting service.

Both, he said, are aimed at striking a balance between high-level strategy and low-level engineering, and are more agnostic in how they will approach working with blockchain technologies other than bitcoin.

"BloqThink is 'default bitcoin'," Garzik said. "[It's] bitcoin-centric, but not bitcoin-required. We can handle Ethereum-related proofs-of-concept."

Roszak similarly said that Bloq is focused on helping enterprises build an "Internet stack" in the same way that they built e-commerce platforms in the 1990s.

"We’re seeing a world where you’re going to have a constellation of chains, whether it's Ripple, Ethereum or bitcoin, there's going to be connective tissue of common software layers," he said. "If we want that ecosystem to scale, we need to give [enterprises] those common denominator tools."

Unrivaled support

Roszak estimated that, today, Bloq has a dozen customers who see value in its model because of its ability to allow businesses to access open-source blockchains, without having to hire full-time developers to help adapt the protocol to their needs.

"They don’t want to hire five Core devs because they want to manage this wallet or a private chain, they want to build applications for vertical markets, whether it’s health records or clearing and settlement," Roszak said.

Unique to its offering is that Bloq aims to offer 24/7 support to its clients, in an effort to better assuage concerns about working with open-source tech. Bloq engineers will also implement features needed by clients into bitcoin’s code, in a similar fashion as industry startup Blockstream.

Garzik described this work as implementing the "scaffolding" that has perhaps so far led enterprise businesses to seek to create private blockchain solutions.

"Open-source projects can be of very uneven quality," Garzik said. "That's really what the Red Hat model is all about – working with the community, yet taking it up a notch, bringing enterprise clients the support that open source doesn't by default provide."

He further described private blockchains as "inevitable", but posited that using bitcoin's code for such projects may be the best way to ensure there is compatibility between all blockchain and distributed ledger systems.

Ex-factors

Of course, given the budget and experience of the Red Hat team, Garzik and Roszak also addressed the need for a company like Bloq even if Red Hat were to enter the market.

Roszak said Bloq would benefit from an imbalance in the amount of interest in the space and the amount of qualified professionals who can work with the new technologies needed to carry out this vision.

Because of the early stage of the technology, however, he said he believes companies like Oracle and Red Hat are unlikely to offer such solutions in the near-term, and that they may even become customers of Bloq given its collected expertise.

"We look at ourselves as partners to these companies in terms of our go-to market and how we view the ecosystem," he said.

Garzik also addressed why he is not concerned about building Bloq as a service focused on the bitcoin blockchain, even amidst the current turmoil in its development community.

Though Garzik is one of the developers working onBitcoin Classic, an effort seeking to scale the bitcoin network's transaction capacity through a hard fork, he sees Bloq as "policy neutral".

"We are very happy to support customers with Bitcoin Core or Bitcoin Classic consensus rules, and that is what we will do moving forward," he said.

Garzik pointed to past posts in which he stated he believes both versions of the bitcoin software suffer from governance issues, but that ultimately, Bloq's function is not to present problems to technical debate, but provide choice to customers seeking to navigate such decisions as necessary to their business

"We provide the choice, and then step back and let the customers choose," Garzik said, concluding:

"Fortune 100 customers shouldn't have to worry about all the minute details of bitcoin forking. They should have a menu of informed options, and choose from there."

Benson Samuel from Coinsecure Speaks about the Bitcoin Landscape in India

India’s Bitcoin Industry is growing at a full pace. As the second most populated country in the world, India is now one of the biggest cryptocurrency consumer industries around the globe. The country financial landscape is teeming with business opportunities and many entrepreneurs are becoming aware of the incredible potential this new technology has to offer.

With the rising interest in the bitcoin technology, along came a big wave of funding and investment made into the crypto Industry. A lot of startups have been opening its doors and up until now the government and the country banks have had a friendly approach to this recent phenomenon.

Companies like Coinsecure, Zebpay, Unocoin and many others have been trying to raise bitcoin awareness; by focusing on bringing this new technology to schools, colleges and other industries, these companies are aiming to educate and inform people about digital currency across the country.

These bitcoin industry actors are connecting the country to this new technology, and finding new solutions to enable the common masses to come on-board Bitcoin and on spreading further awareness and to reduce barriers that are an impediment forBitcoin’s progress in India.

In order to learn more about how digital currency is conquering the financial landscape in India and to know some more on the country’s current crypto panorama, NewsBTC had a chat with Benson Samuel, founder and CTO of Coinsecure, one of the oldest and most prominent bitcoin companies in India.

 NewsBTC – Coinsecure works pretty much like Coinbase, and is one of the leading exchanges in India. What can you tell us about Coinsecure?

Benson – Coinsecure is an algorithmic trading platform, and a Bitcoin Wallet. We have spent a lot of time and emphasis on functionality, ease of use and security for all our users. We are a fast growing service and have been watching and working on India’s growing Bitcoin demands.

 What can you tell us about the options Coinsecure provides?

We provide the most fluid and transparent Bitcoin Exchange in India. We are a peer to peer exchange, so our users discover their favored prices and execute their trades. Our Onchain wallet, is a hybrid system that uses accounts and addresses to help manage and store users Bitcoins for easy spending. We also have a comprehensive API, that literally allows others to build their own trading platforms, apart from several other features. We have 2 applications scheduled to launch for the Android Platform over the next few weeks which will enable users to access our wallet and exchange services from a native application rather than the web.

What can you tell us about the cryptocurrency ecosystem in the country?

The Ecosystem is in a quickened build up phase at the moment, Lots of recent positive events, such as the RBI positive note about Blockchain usage as well as the Zebpay funding, show that India is very involved with Bitcoin.

India is one of the countries where bitcoin is growing at a fast pace. What can you tell us about adoption in India?

It has been a bit slower than other countries though, but we are hoping to see adoption increase as merchants get onboard the system and start witnessing the power of Bitcoin. The numbers below should definitely give you a picture of the growth speed and prospect of Bitcoin in India:

January 2015 -> 4779600000, February 2015 -> 5775800000, march 2015 -> 1558200000, April 2015 -> 2571200000, may 2015 -> 10450200000, June 2015 -> 9484200000, July 2015 -> 8998400000, august 2015 -> 13551200000, September 2015 -> 32437800000, October 2015 -> 95154200000, November 2015 -> 153623400000, December 2015 -> 267698600000

With all this industry activity what has been the government reaction?

The government issued a cautionary note in 2013, post which, there has been little or no word from them in an official capacity. As advised by Nishith Desai Associates, most Bitcoin companies in India do follow strict KYC norms and ensure sufficient self-regulation to ensure growth and scalability.

A lot of digital currency-related business have been popping up in the country. What have been the major issues new companies have been facing regarding regulation?

Regulations have been better defined and allocated in recent times, We have noticed several new licenses coming in to enable payment banks, apart from others. These allow for a better entry into the Indian Payment Industry. The cost prohibitive nature of these licenses is a bit of a showstopper for a lot of the players who wish to get into the field.

Do you see a bright future for the digital currency in India? Will it have a great social impact?

Absolutely! Even the RBI Governer had mentioned the benefits of Digital currencies and the importance of the role that they will occupy in India. Most importantly, the large population of India and the need for redistributing currencies can be streamlined a lot more when digital currencies start to become the norm.

We would like to hear your view on the future of digital currency and the blockchain technology.

The future does lie in mass adoption and usage of digital currencies. There is still a long way to go before confidence can be invested by users. Blockchain technology is on the rise, either a fancy or a simple implementation, some of the largest names are looking into the integration of private Blockchains to simplify, and enable better transparency within their entities.

Volatility of Bitcoin Price Consistently Declined Since 2010

Since its birth in 2008, financial experts and institutional investors have criticized the viability of Bitcoin as an independent currency, due to its highly unstable volatility rate.

According to data provided by the Bitcoin Volatility Index, however, the volatility of bitcoin price against major currencies such as US Dollars have declined significantly since 2010. More importantly, the rate of volatility has decreased at a consistent pace, dropping at an average rate of 25% per year.

At the beginning of 2011, the standard deviation of daily returns (volatility rate) recorded around 8.5%. Towards the end of the year, the volatility rate of bitcoin measured by the standard deviation of daily returns in trading recorded 5.36%.

At the end of 2012, the volatility rate of bitcoin recorded a significantly lower 1.57%, showing a staggering 71% decline in volatility since the past year.

As the volatility continued its declining trend, Bitcoin surpassed the growth rate of both emerging market and dominant major currencies including Indonesian Rupiah, Malaysian Ringgit, US Dollars and Pound Sterling.

2010: US$0.07 to $0.29 (314% increase)2011: US$0.29 to US$6.18 (2031% increase)2012: US$6.18 to US$13.41 (117% increase)2013: US$13.41 to US$817 (2882% increase)2015: US$314 to US$431 (37% increase)

Bitcoin has consistently outperformed all of the world’s reserve currencies while maintaining a declining volatility trend over the past five years.

According to San Francisco-based digital currencies focused investment firm Pantera Capital, one-year volatility reached its all-time low in 2015, reaching around 52% in July and dropping to below 50% in November and December.

Furthermore, unstable reserve currencies such as the Russian Ruble had a higher volatility rate as of July 2015, with over 50% 30-day annualized volatility.

Based on the chart provided by Pantera Capital, Bitcoin has consistently maintained a low volatility rate since January of 2015, outperforming precious metals, assets, and currencies including crude oil and gold,

While gold has decreased by around 11% amid the federal reserve’s announcement of new interest rates implementation, the price of bitcoin has increased to around US$430.

“We think we are in a structural bear market, not only in gold, but across the commodity complex, as the individual commodity stories are reinforcing to one another, creating a negative feedback loop,” saidJeffrey Currie, global head of Commodities Research in the Goldman Sachs Global Investment Research (GIR) Division.

Currie further stated in an interview that gold, as a store of value has become less significant over the past few years. He explained that the number of individuals and businesses using gold as assets or trades have substantially decreased.

“With the more positive outlook on the dollar, and with debasement risk starting to fade, the demand to use gold as a diversifying asset against the U.S. dollar becomes less and less important.”

Although investors and traders have always criticized bitcoin for being too volatile as an asset or as an independent digital currency, the volatility rate of bitcoin has declined at a rapid pace since 2011. Because of the stability of bitcoin price in the past year, an increasing number of traders and investors in the public markets are purchasing Bitcoin ETFs – like Bitcoin Investment Trust – as a major part of their investment portfolio.

How A Cryptocurrency Is Created

Cryptocurrency is a buzz word for many. Most people who are already part of the bitcoin or any altcoin community have a fundamental knowledge about these digital currencies (if not in-depth technical knowledge and know-how to create or manage on their own). However, this article is apt for those who are either new to cryptocurrencies or still seeking more information about it.

Cryptocurrency — Well the name says it all! These are digital tokens built over cryptographic functions. In other words, cryptocurrencies are sequence of encrypted bits transmitted and stored over a network. Just like the way we have multiple fiat currencies in the real world (eg. USD, GBP, EUR, INR, RMB etc), there are multiple cryptocurrencies as well. These digital currencies are developed using different cryptographic functions and have different values based on its creation date, number of users, extent of the network and transaction volumes. Bitcoin is the USD of cryptocurrencies, it is the gold standard or more like the reserve currency in crypto-world. There are many other cryptocurrencies like dogecoin, litecoin etc which are valued in relation to bitcoin.

Creating a Cryptocurrency 

Creating a cryptocurrency is not a hard task for those who have an understanding of coding. They can easily build it upon existing codes, as most of theplatforms are open source and the source code is readily available for download and modification on code sharing platforms like GitHub. Developers can choose the algorithm they wish to develop upon and make use of respective source code to create a fork and develop their own altcoin. SHA-256, CryptoNightand CryptoNote are some of the algorithms used for the development. Those who are not so familiar with coding and still want to have their owncryptocurrency can always make use of services to create, host and maintain it for a fee.

Some of the cryptocurrency generating services includes Cryptolife and Wallet Builders for example. With majority of altcoins (a reference for cryptocurrency other than Bitcoin) being decentralized, it is very important to have a good network of users contributing the processing power and conducting transactions of the new altcoin.

However, the hardest part of creating a cryptocurrency is to gain adoption. Without adoption, or a network affect any cryptocurrency is worthless. Most of the altcoins are built around an idea, toencourage something, or solve some real world problems or problems associated with othercryptocurrencies itself. But without people using it, it is never going to work out. This means, a lot of time, effort and even resources have to be dedicated towards gaining traction and adoption.

Once the altcoin gains enough traction and people start making transactions with the new cryptocurrency, it can be listed on various exchanges. These cryptocurrency exchanges will allow users to sell and buy the new altcoin against a trading pair(s). These trading pairs are other cryptocurrencies or fiat currencies which others can spend to obtain the new altcoin from these exchanges.

Once all the required parameters are met, and the altcoin can be used for the purpose it was intended for. 

Indian Central Bank: Blockchain will Transform the Finance Sector

The Reserve Bank of India, one of the few central banks worldwide that has been skeptical towards the Bitcoin blockchain technology has recently shown interest in the distributed ledger technology and peer to peer financial systems, due to their strengths in settling transactions and clearing assets securely, with significantly lower costs.

“With its potential to fight counterfeiting, the ‘blockchain’ is likely to bring about a major transformation in the functioning of financial markets, collateral identification (land records for instance) and payments system,” stated the RBI.

The RBI emphasized the benefits of using the blockchain technology and its decentralized and transparent nature. Since no central authority or third party application are involved in the network, the bank believes that the implementation of the blockchain technology in the conventional finance sector could truly disrupt the industry and existing financial platforms.

“As against this, the ‘blockchain’ technology is based on a shared, secured and public ledger system, which is not controlled by any single (‘central’) user and is maintained collectively by all the participants in the system based on a set of generally agreed and strictly applied rules,” the bank added.

However, two years ago, the bank publicly warned its users against virtual currencies including bitcoin, despite the potential and benefits of the independent digital currency and it underlying technologies. Like many other established financial institutions and banking groups at the time, the Reserve Bank of India deemed bitcoin as an illegal currency, advising its users to stop exposing themselves to cryptocurrencies which hold significant risks.

“The creation, trading or usage of VCs including Bitcoins, as a medium for payment are not authorised by any central bank or monetary authority. No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities,” the bank said on December 24, 2013.

The organization also insisted that potential hacking attacks and data breaches could result in the loss of bitcoins and user funds held by bitcoin exchanges and wallet platforms, advising its customers and clients about the potential financial, operational, legal and security related risks in using bitcoin.

“VCs being in digital form are stored in digital/electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc.,” read the statement.

Bitcoin Milestone: 15 Million Bitcoins Mined and 100 Million Transactions Reached

Bitcoin has reached a new technological milestone today. Since its birth in 2008, 15 million bitcoins has been mined, more than 100 million transactions have been settled by the Bitcoin network and mining difficulty is close to reaching 100 billion.

According to the statistics provided by blockchain.info, the mining difficulty has risen by nearly 250% since January of 2015, recording the fastest annual increase of difficulty since 2008.

The number of transactions processed by the Bitcoin network have reached 100 million, as the number of daily bitcoin transactions increased by five times since January of 2015. Bitcoin experts predict that the worldwide recognition of bitcoin and established financial institutions’ growing interest towards Bitcoin and the Bitcoin blockchain technology network have played a vital role in the growth of Bitcoin as a currency and as a technological protocol.

The market cap of Bitcoin has also reached a yearly high at around US$6.34 billion and is close to recovering from its decline in 2014, amid the collapse of then the largest bitcoin exchange Mt. Gox.

Bitcoin, which has had one of its best year since 2013 also surpassed the growth of major reserve currencies and top-performing developing currencies such as the Malaysian Ringgit. Bitcoin has also performed exceptionally well against the world’s largest currencies including pound sterling, US dollars and Japanese yen, becoming the world’s best performing currency of the year.

Although financial experts argue the value of Bitcoin and criticize its independence (decentralized nature), bitcoin is beginning to be recognized as an independent currency by an increasing number of central banks and financial establishments around the world.

Bitcoin since 2014, has almost fully recovered from its slump following the Mt. Gox heist and all the negativity portrayed by media outlets and news networks around the world.

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Continuing this success, in 2016, bitcoin experts predict that bitcoin will reach another milestone as a developing currency. 

Reserve Bank of India Invites Applications for Innovative Payment Solutions

India’s central bank The Reserve Bank of India has invited applications for “Payment System Innovation Awards” to encourage innovative solutions in the field of Payment and Settlement System. With this initiative, the RBI is hoping to transform the way transactions are processed in the world’s fastest growing emerging economy.

Some broad areas which the contest will hope to cover are:

Payment security including fraud preventionCustomer convenience and cost reductionMobile paymentsAcceptance/electronic payment infrastructureUse of emerging technologies for payments

The Institute for Development and Research in Banking Technology (IDRBT), which is the technology arm of the RBI, will organize the competition. A panel of experts will shortlist the most innovative applications, and the best three will be rewarded with citations/prizes. The winners may also be given a chance to present their ideas/ technologies to the industry representatives.

Chairman of mobile payment company Novopay Srikanth Nadhamuni told Business Standard,

“I think it’s a very good idea to do that. The central bank and regulator when they show interest in innovation in the FinTech space, it sends the right message that they want innovative solutions in financial services and banking and that’s a very good message to send out to companies.”

Among the most revolutionary technologies that are disrupting the payments sector is the blockchain technology, which is the technology underpinning the cryptocurrency bitcoin. The blockchain is able to serve the crucial purpose of cutting down transaction costs while facilitating fast, reliable, and secure payments.

The initiative by the central bank will also lend confidence to the cryptocurrency businesses in India as the regulator has often maintained a cautious stance on the digital currencies.

RBI has already issued new licenses to 10 small banks and 11 payment banks that would use technology to disrupt banking. India has been lagging behind in the fintech race, but similar initiatives may catapult the nation to a higher spot.

Bitcoin Price Watch; Here’s What’s On

In this morning’s analysis, we discussed the reversal of the overarching bullish momentum we had seen in the bitcoin price overnight, and suggested that it might just be corrective and – in turn – we could see a return to the upside throughout the Friday European session. While the bitcoin price remains within the range we defined earlier, action this afternoon has brought us to trade just shy of resistance, and it looks like we may get some further upside as we head into the Friday evening session and beyond, into the weekend.

The Sunday session (as the markets open in Asia) have become notorious for generating large moves on the intraday charts in the bitcoin price over the last few months, and we expect similar this weekend. Ahead of this move, however, what do we expect will play out in the markets? Further, where are we looking to get in and out of the markets on any volatility? Take a quick look at the chart to get an idea of what’s on.

As the chart shows, since we haven’t broken this morning’s predefined range to either the upside or the downside, we are simply going to maintain its position going forward. As such, in term support holds firm at 413.92, while resistance comes in unchanged at 422 flat.

Looking at our breakout strategy, and again simply to reiterate the entries we noted this morning, if action closes above resistance we’ll enter long in expectation of a return to the overarching bullish trend that has brought us to trade in the 400s this week. We’ll target 428 and limit our downside with a stop around 419.

On the short side of things, we will enter to the downside on a correction from current levels, with a downside target of in term support. Further, on a break of support, we’ll enter a second short position towards 400 flat. Stops just the other side of both entries define our risk.

Bitcoin Price Watch; Corrective Reversal?

After a solid week of gains in the bitcoin price, we are seeing some choppy action come about as we head into the weekend. This isn’t necessarily a bad thing – the opportunity to get in on some volatility means we can pick up a decent entry – but it makes things a little more complicated than the step up approach we have been using for the past few days.

There have been a few fundamental catalysts that have added strength to bitcoin this week, and these are likely to slow down over the weekend (from a fintech and governmental perspective, at least) so action may do the same. As such, we are going to bring both our breakout and our intraday strategies to the fore, with the goal of capitalizing not just on any volatility but also on any sideways action.

So, without further ado, let’s get to the charts. Get a quick look at the one below to get an idea of today’s range.

As the chart shows, the range we are looking at today is defined by in term support at 414 flat and resistance at 422 flat. It’s a pretty wide range, so as we’ve mentioned, we’ll be looking at both strategies for today’s entries.

First, a close above in term resistance will put us in a long position towards an initial upside target of 428. A stop loss at current levels (circa 419) defines risk. To the downside, a break and close below support will signal a short entry towards 408. On this one, a stop at 415 keeps things tight from a risk management perspective.

For the intrarange strategy, a long entry on a bounce from support and a short entry on a correction from resistance, with a stop one or two dollars just the other side of the position to define our risk on the trades.

Bitcoin Price Passes $420 Mark Amid Institutional Attention

Markets Weekly is a weekly column analyzing price movements in the global digital currency markets, and the technology's use case as an asset class.

Bitcoin prices rose over the last week, pushing higher as the sentiment surrounding the digital currency strengthened.

Bitcoin was trading at $421.69 at 12:00am (UTC) on 19th February, compared to $377.82 on 12th February at 12:00am (UTC), according to the CoinDesk USD Bitcoin Price Index (BPI).

This increase represents a gain of more than 10%.

This week provided a contrast to the prior seven-day period between 4th February and 11th February, when the digital currency hovered in a range between roughly $390 and $370, additional BPI figures reveal.

The price of bitcoin increased on 12th February, rising from $377.82 at 12:00 am (UTC) to $383.10 at 23:00 (UTC), before continuing this upward climb the following day, reaching $392.34 at 23:00 (UTC). The digital currency suffered a loss on 14th February, but then continued to appreciate for the remainder of the week.

Market participants traded a total of 15.2 million bitcoins from 12th February to 19th February at 10:40 am (EST), according to data from Bitcoinity. China-based OKCoin was responsible for 47.45% of this transaction volume for the week, and 6.785 million bitcoins were traded through this bourse between 11th February and 17th February.

Huobi accounted for another 44.92% of total trading volume between 12th February and 19th February, and market participants transacted 7.412 million bitcoins through this exchange between from 11th February to 17th February.

Blockchain praise

Other developments coincided with the price appreciation that bitcoin enjoyed during the week, as it was announced that the central banks of both the eurozone and China are looking into blockchain technology.

More specifically, the European Central Bank revealed 17th February that it is delving into how this technology could either improve or hamper the infrastructure the region uses to settle securities and payments.

In addition, Zhou Xiaochuan, governor of the People’s Bank of China, stated in an interview with Caixin Weekly that the central bank is exploring blockchain, as well as other technologies, to establish and run an electronic cash network.

The Australian Securities Exchange (ASX) provided news of its own, announcing plans to use blockchain tech as part of a technology transformation program. As a result of this initiative, the bourse may develop a new method for settling equities trades.

While these developments may be uplifting, they will not solve bitcoin’s challenges, for example, its current capacity issue, which continues to add uncertainty to global markets.

Once the digital currency’s community overcomes this difficulty, sentiment could improve markedly, with Tim Enneking, the chairman of Crypto Currency Fund, a digital currency-focused hedge fund, predicting that bitcoin will enjoy a "major spike."

Sentiment improves

Bitcoin prices moved higher as the sentiment of global traders improved somewhat. In addition, markets enjoyed tailwinds as the adoption of both bitcoin and blockchain technology grew.

While bitcoin prices had responded strongly to the highly visible exit of bitcoin developer Mike Hearn, plunging roughly 15% on 15th January, the impact of this event began to fade this week.

Hearn, who was a developer of the digital currency for more than five years, declared that the bitcoin network had failed. Several major media outlets, including The New York Times, Fortune and The Guardian, all covered Hearn’s decision to move on.

Because the current bitcoin protocol limits these transactions, Hearn argued, the transaction network is currently highly unreliable at times.

Others see this as the natural growing pains of a new technology.

"Bitcoin is being challenged because it is a victim of its own success," Enneking said. "If transactions keep increasing at the current rate, bitcoin will have a hard time keeping up."

Enneking went on to predict that the bitcoin community will hold off on making decisions as long as it can, but that it "is better off reaching a decision that is suboptimal than not reaching a decision at all."

While there is still no solution to the transaction limit issue, bitcoin prices have seemingly recovered after hitting a local low of $358.77 in January.

Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.

Opinion: Here's why you have to start taking bitcoin seriously

Bitcoins have just gotten serious, and people are going to have to start paying attention to this digital currency. That means investors, governments, and those trying to fight crime as well.

This was already true even before the news out of California that criminals just used bitcoins to extort $17,000 in blackmail from a hospital and make, so far, a clean getaway.

Bitcoins are booming. They have doubled in price in the last six months. Indeed bitcoins were actually the best performing currency in the world last year. I ran an exhaustive screen on FactSet, making sure to include everything from the Afghanistan afghani (down 16% against the U.S. dollar DXY, -0.26% ) to the Zambian kwacha (down 42%). Bitcoin trounced them all. The dollar value of each bitcoin jumped 40% during 2015, from $310 to $434. (The currency in second place, the Gambian dalasi of all things, was nowhere near: It rose just 9% against the U.S. dollar.).

At current prices, the total value of bitcoins in the world now tops $6 billion. That’s quite some “fad.”

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Is the $100 bill endangered?(4:27)

The $100 bill is one of America's most popular notes, but could it be put out of circulation? WSJ's Joshua Zumbrun joins Tanya Rivero to discuss. Photo: iStock

I wrote recently about how bitcoins could allow anyone in the U.S. to make a mockery of our (admittedly ridiculous) online gambling laws. The Federal government — and its overseas counterparts — wields tight supervision over the transfer of dollars, yen USDJPY, -0.56%  , poundsGBPUSD, +0.4603%  , euros EURUSD, +0.1980%  , or even Albanian leks through the traditional banking systems. So-called “anti-terrorist” and “anti-money laundering” measures that were hustled through in the panic after 9/11 have basically ended financial privacy.

But right now, nobody controls bitcoins — and so far they haven’t been able to do much about them.

Bitcoins are hard to get your head around until you’ve used them. (Alec Ross’s new book, The Industries of the Future, contains an admirable section explaining the technology.) But in a simplistic nutshell, you can go online and exchange your dollars for bitcoins, transfer those bitcoins anonymously to anyone, anywhere in the world, and they can then exchange them back into dollars — or leks, or yen, or whatever.

The bitcoin infrastructure isn’t controlled by any entity.

The entire transaction takes place outside of the banking system. No one has to show any ID to anyone. The exchange rate for bitcoins is set by a freely traded market. And bitcoins have value for the same reason that dollar bills and gold coins have “value” — because lots of people think they do, and they know that other people do as well.

What really matters is that the bitcoin infrastructure isn’t controlled by any entity. Not one government, not one company, not even one cooperative. It uses an incredibly ingenious and complex set of programs running on a giant network of independent computers around the world.

Bitcoins are the Matrix. They are everywhere and nowhere. And they’re going to be a problem for regulators.

Because right now the world’s governments are trying to tighten their regulation, supervision and control over any and all transactions bigger than buying a pack of gum.

This week Harvard professor and establishment mouthpiece Larry Summers joined the fight with a call to scrap certain “big” denomination bills — such as the $100 bill, and maybe even the $50. The reason? They make life too easy for criminals. Cash is anonymous and portable. Summers wants to restrict its use really to small bills used for small transactions.

He is far from alone. Some of Summers’ Harvard colleagues just published some detailed research on the subject. Governments as far afield as Switzerland and Singapore have stopped printing really, really big bank notes — likeone worth about $7,000 — for the same reason. The European Union is considering scrapping the 500-euro note.

But while the establishment tries to tighten the screws on the anonymous “cash” economy and subject everything to closer and closer regulation, bitcoins are a perfect example of how things can slip through their fingers.

Hackers broke into the computer systems at Hollywood Presbyterian Medical Center earlier this month and crashedthem. The hospital said this week that it was so desperate it bowed to the hackers’ demands and paid them a ransom — of 40 bitcoins. The value was just under $17,000.

The bitcoins were transferred to an anonymous online account with a click of a mouse. No big black bags. No unmarked bills. No getaway car. No chase. No exploding blue paint. Click, and that’s it. It’s a cyberheist.

The money trail will still leave digital footprints on the web, and the FBI is surely following those right now. But if the criminals were clever the investigators will eventually reach a dead end. The criminals will be caught only if they made a mistake.

There are plenty of legitimate reasons why someone would use bitcoins for a transaction. It can, for example, be an incredibly quick and cheap way of transferring money. It can be especially useful if you are sending money to relatives in a poor country where the banking system is poor. It can allow you to do things anonymously that are legal but which you prefer to keep private. And in a free society, freedom itself should not need a justification. The burden of proof is on those who would ban something.

Yet bitcoins, like cash, can also be used for nefarious purposes.

The recent Harvard study suggests — guesses, really — that about $3 trillion changes hands each year in international money laundering, drug dealing, terrorist financing, corruption, and other crime. Most of that involves cash. If they can’t use cash, some will find another way. Some will use gold. Some will use one-carat diamonds. Some will use London real estate. And some will use bitcoins.

If bitcoins are used for just 1% of international criminal transactions that will come to $30 billion a year. The current $6 billion bitcoin monetary base would be turned over five times a year — or bitcoins would rise in price, increasing the size of the base.

No one is sympathetic to international criminals. Least of all when they are engaged in things like terrorism, human trafficking, or blackmail. You have to be especially sick to attack the computer systems of a hospital. And so this is a problem.

But the government doesn’t have clean hands either.

Governments always seize on brief panics and outrages to demand greater restrictions on civil liberties — which they then abuse to harass regular Joes and Joannas.

For example, a law passed 50 years ago specifically to tackle a small number of extremely rich criminals is now being openly abused by the Treasury to persecute millions of law-abiding middle-class Americans who live abroad. The laws passed after 9/11 to tackle the financing of “international terrists” (sic) were then abused to stop people paying $10 craps games on the Internet. Laws put on the books to stop money laundering were abused just last fall to secure criminal convictions against former U.S. House of Representatives Speaker Dennis Hastert. His “crime”? Paying a blackmailer. With his own money.

Bitcoin is going to be the next battle over financial regulation and civil liberties. And don’t be fooled. There will be arguments, and lies, on both sides.

New Hampshire: The World's Most Bitcoin-Friendly Community

When US-based online retailer, Overstock.ccom, began accepting Bitcoin at the beginning of 2014, the state of New Hampshire delivered the highest sales per capita of any state, relegating the company’s home state of Utah to second place. This was largely due to the presence in New Hampshire of the Free State Project, a political movement whose members tend to believe in decentralized and non-governmental forms of currency, making them very receptive to BitcoinCT r:  9.

Because of New Hampshire’s high concentration of tech-minded entrepreneurs, combined with its historically-high rating overall freedom ranking, the state has developed a robust Bitcoin ecosystem, allowing its residents to operate off of a 100%-cryptocurrency income.

World’s longest-running Bitcoin meetup

Manchester, New Hampshire is home to what its attendees claim to be the longest-running consecutive weekly Bitcoin meetup in the world. Zach Harvey, CEO and co-founder of BTM manufacturer Lamassu, founded the meetup with his brother and business partner Josh Harvey.

“My brother started the Manchester Bitcoin Meetup in July 2012, right after the 2012Porcfest which was a huge booster for Bitcoin.

Porcfest 2012 was one of the first times many of us got to actually use Bitcoin to buy and trade on a daily basis. For Bitcoin enthusiasts, it was a move from talking about Bitcoin and theorizing to using it in practice.

That's what led to having a weekly meeting, to experience using Bitcoin once a week. And of course talking about it as well.”

Matt Whitlock, longtime attendee of the weekly meetup, has been able to easily acquire or offload Bitcoin between private parties whenever desired.

“It's very easy to trade Bitcoins at the meetups. There's always someone looking to buy or sell. Of course, depending on recent market price movements, finding someone willing to trade at spot may be more or less difficult.”

Rent for Bitcoin

Matthew Ping, owner of Ledgeview Commercial Properties, is one of the several property owners in the Manchester area that accepts Bitcoin for rentpayments.

“To my knowledge I'm the only property management company that accepts Bitcoin in New Hampshire. I know of a few property owners who rent out rooms and would accept Bitcoin.”

A resident of the Freecoast region (another name for New Hampshire’s coast), Mike Vine, LBRY’s technology evangelist, also runs a coworking andevent space called the Praxeum, which accepts Bitcoin for membership dues.

“There has been a lot of interest. Bitcoin is a very popular means of exchange in our Freecoast community… coworking is a natural market for Bitcoiners. Both communities tend to be tech-oriented, free-spirited, and avante-garde.”

Bitcoin-friendly businesses of all types

Coinmap.org lists more businesses accepting Bitcoin in New Hampshire than in Massachusetts immediately to the south, despite having less than one-fifth the population, and lacking a major metropolitan area like Boston.

Within 20 minutes drive of downtown Manchester, Bitcoin-accepting businesses include pubs (including one of New Hampshire’s top-rated establishments), a pizza restaurant, a chocolate shop, a barber shop, a construction company, and two separate law offices. Elsewhere in the state, Bitcoin is accepted at a farm, a gas station, a silver mint, a news stand, and a firearms manufacturer. Finally, as has been publicized by CoinTelegraph before, ride-sharing service Arcade City, which officially launched earlier this month, allows drivers to accept Bitcoin payments.

The underground market

Unique to New Hampshire’s Bitcoin scene is theCommunity Market Day project, a decentralized marketplace featuring dozens of vendors, many of whom are clandestine. Jessica Love, the initiator of the project, also vends bulletproof coffee, receiving about one-third of her sales in Bitcoin.

“The vendors may vary some but typically a [Community Market Day Manchester] event has at least 10 out of the 12 - 15 vendors accepting Bitcoin. There are [Community Market Day] event hubs being opened over the next few months in 3-4 different areas around the Free State on rotating weekends where more Bitcoin users will be attracted to vending.”

Love has seen all manner of goods and services being sold for Bitcoin at the various market days around the state.

“But seriously, there are lots of products and services that you can pay for with Bitcoin at [Community Market Day] events. Farm meats, eggs, produce, honey, and such raised by friends and neighbors. Organic soaps, candles, coffee & tea, jewelry, crochet goods, household items, crafts, and more. Services too - massage, chiropractic care, and even hypnotherapy.  I believe that anything that can be brought to this market model and traded for Bitcoin should be. We are living the ultimate agorist experiment of an off the grideconomy and beginning to implement the currency.

I do see Bitcoin interest growing in the market. As more products become available in exchange for it, people seem happy to transfer more of their business to the new free market local economy that we are building here. The Community Market Day Project and Bitcoin are a winning combination.”

The world’s most Bitcoin-friendly community

It is very possible to live entirely off of Bitcoin in New Hampshire, as Whitlock has done.

“I took a cue from Erik Vorhees and cashed out early. Cashed out of dollars and into Bitcoins, that is. I only hold as much in dollars as I need to pay the current month's expenses.”

Harvey, having traveled the world for his business, LamassuCT r:  197, still finds New Hampshire to be the most Bitcoin-friendly.

“You don't get more Bitcoin-friendly than New Hampshire, specifically the Free State Project community. People are always discussing it with local businesses and now you can buy boutique chocolates, pizza and beer in Manchester. When Overstock started accepting Bitcoin, half the community bought something just to show support. I bought a towel set.”

When asked how friendly New Hampshire is to Bitcoin compared with the rest of the world, Whitlock responded without hesitation.

“That's almost an absurd question. There is no comparison. Practically everyone in this community either owns Bitcoins or wants to learn more about Bitcoin, with an eye to acquiring some. Outside of this community, people think it's something they saw referenced in a TV show once.”

 

Bitcoin Price: Compulsive Buyers Cool Down

Bitcoin price dropped below $420 yesterday and continues sideways in most exchange charts while compulsive buying at the Chinese exchanges attempts a revival of the strained, low-volume advance.

This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a member? Join now and receive a $29 discount using the code CCN29.

Bitcoin Price Analysis

Time of analysis: 14h00 UTC

OKCoin 3Month Futures 1-Hour Chart

From the analysis pages of xbt.social, earlier today:

Unusual for the strangely coordinated bitcoin chart, today saw divergence in price action across exchanges. Whereas the USD exchanges (notably BTCe, Bitfinex, Bitstamp) have held near $420 for most of the day, the Chinese exchanges (BTCC, Huobi and OKCoin amongst others) have swung strongly in the chart area below yesterday’s high.

Early trade saw price make a larger correction from yesterday’s high. Again, there was disparity between exchange charts: price hit the top of the channel trendline illustrated in yesterday’s analysis chart (light blue), while the OKCoin 3Month shown above did not hit this upper resistance level and the bulls in the exchange are throwing everything including the kitchen sink and their grandma at trying to complete the journey.

If the current correction, apparent in the majority of charts, will continue lower then price must get below the 1hr 20MA (green) and in this case it is likely that price will target the lower channel trendline (light blue) and, if decisive, the red Fibonacci trendline.

Until we see price break below that lower channel trendline we can only assume that the uptrend will continue.

Summary

Bitcoin price continues advancing without technical support and the bulls will retain control of the uptrend until the lower channel trendline is broken. Had it not been for the fundamental security threat posed by non-science, and dangerous, populist-led projects like Unlimited and Classic(TM), this uptrend would have been believable – and enjoyed more participation.

Bitfinex Depth Chart and Buy/Sell Volume

Profit-takers wait overhead.

Click here for the CCN.LA interactive bitcoin price chart.

What do readers think? Please comment below.

This analysis is provided by xbt.social with a 3-hour delay. Read the full analysis here. Not a member? Join now and receive a $29 discount using the code CCN29.

Readers can follow Bitcoin price analysis updates every day on CCN.LA. A Global Economic Outlook report is published every Monday.

Disclaimer

The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.

6 Ways Blockchain Could Change The World

Cryptocurrencies like bitcoin have seen a drop in enthusiasm over the past year as more people have become wary toward the currencies.

A spate of high profile scams and illegal transactions that involved bitcoin painted the cryptocurrency as a tool for criminals and an unsafe avenue with which to move money. While bitcoin enthusiasts continue to rework the currency's image in order to gain mainstream approval, others say the coin itself isn't what the world should be focused on.

Blockchain, the ledger-like technology that bitcoin runs on, has instead emerged as one of the most important technological advancements from the past decade. Blockchain's ability to facilitate transactions seamlessly without a third party intermediary has been driving bitcoin's popularity over the past few years.

Related Link: Ben Bernanke Sees Serious Problems With Bitcoin

While the system was developed in order to easily transfer bitcoins from party to party, many believe that supporting a bitcoin market is one of many uses blockchain could have in the future.

Some analysts believe that blockchain could significantly change the way that the financial system operates, overhauling everything from banks to exchanges. Others say the financial space is just the starting point for blockchain; the technology could be applicable to a wide range of industries and activities as it becomes more and more advanced.

Here's a look at 6 ways blockchain may be seen in the future.

1. Banks

One of the first places blockchain is likely to turn up is at banks.

As bitcoin threatened to disrupt the traditional finance system, many big banks created dedicated teams to study the cryptocurrency and experiment with its use. While the majority of banks are still wary of bitcoin itself, many have become increasingly interested in how bitcoin might improve their operations.

So far, the best use-case for blockchain within a bank has been to . At the moment, sending money from one country to another requires a great deal of time and administration, but using blockchain to run those payments could change that. For one, the system would likely make such transactions cheaper by eliminating the need for a middleman. Not only that, but blockchain would also speed up processing, a benefit to both banks and customers.

Related Link: Trading Bitcoin Binary Options

2. Exchanges

Blockchain has also been touted as a viable way to run an exchange. Using a ledger like blockchain would make trade data much more accurate by conducting the trades on a peer-to-peer basis.

Applying this technology to an exchange would cut down on the need for supervisors, a cost-saving measure that would also reduce the instances of human error. Not only that, but a blockchain-run exchange would also speed up transaction times, allowing traders to see real-time results when their trades are placed.

Nasdaq Inc (NASDAQ: NDAQ) has already begun for a blockchain-based exchange; the company has partnered with Chain, a blockchain infrastructure provider, to work on integrating blockchain into the exchange's operations.

While blockchain may be a good way to overhaul U.S. exchanges, many worry about technological problems that might arise, especially after several mishaps delayed trading on U.S. exchanges this year.

3. Legal Contracts

The legal space could also be turned on its head by blockchain, as the ledger has been suggested as a way to facilitate contracts. Dubbed "smart contracts," blockchain-supported contracts would be able to essentially enforce themselves without the need for a third party.

Computer programs would be able to set conditions laid out in a contract and when they were satisfied, the next part of the contract would be released. That means contractual obligations could be easier to enforce, as they would be automated and security surrounding such transactions would be enhanced.

One example would be the ability for a customer to pay for a package at the moment it was delivered. International Business Machines Corp. (NYSE: IBM) has a dedicated research team to investigate the possibility of creating smart contracts. The firm believes that such a system would enhance privacy for participating businesses and ensure that required conditions are met.

4. Politics

This year was the first year that a presidential candidate accepted bitcoin donations for their campaign, but many believe that blockchain will truly revolutionize politics in the years to come.

Voting has always been a hot topic among the U.S. public; each election ends with questions about accuracy and efficiency, as well as calls to reform the system and update the technology used. Blockchain supporters say that the ledger bitcoin runs on could the voting process by making it more secure. In such a voting system, blockchain would store each vote with an encrypted hash.

These encryptions are exceedingly difficult to break and would require a hacker with an impossible amount of computer power in order to change just one vote without being noticed. The Liberal Alliance, a political party in Denmark, has already to run its internal voting system using blockchain, making it the first political group in the world to integrate blockchain into its voting practices.

Related Link: Paris Attacks Weigh On Bitcoin

5. Microtransactions

Companies like Netflix, Inc. (NASDAQ: NFLX) have revolutionized the way people view content by disrupting traditional cable broadcasters and pushing more people to watch TV and movies online.

However, subscription services like that one may be under fire in the coming years if blockchain is used to facilitate . This type of system would allow users to pay per minute, or per show in a pay-as-you-go manner.

Such payment systems could benefit both customers and content providers, as it gives a more realistic view of what people are actually using. Subscription bundles often result in a great deal of unused services, which customers may be overpaying for. On the flip side, cheaper bundles or less complex bundled options could sway customers away from one subscription service to another, but a pay-as-you-go option allows customers to view and pay for exactly what they want.

5. Tipping

Another way micropayments might enhance online content is through a tipping service. Allowing users to "tip" for particularly entertaining or insightful social media posts or blogs would diminish the need for online advertising and give content creators a new source of income.

Many believe that such a system would improve the quality of online content and help eliminate some of the spam that circulates throughout the Internet. This kind of system would also be facilitated through blockchain, and many believe that a cryptocurrency like bitcoin would make such a tipping scheme possible.

6. Music

The music industry has been alight with debates over whether artists are being fairly compensated for the value of their work. Many believe that big name labels like Sonyare unfairly negotiating royalty fees with music distributors in a way that doesn't deliver that value back to the content creators themselves.

However, with the help of blockchain, some say the music industry could shift to a more artist-driven model in which blockchain makes artists' contracts more transparent, thus eliminating arguments over how royalties are distributed when their label makes a deal with a firm like Spotify.

In 2016, a company called is planning to work together with music companies and artists to see how blockchain-supported infrastructure might improve the way business is conducted within the industry.

White and Black Market Businesses Talk Bitcoin

During its early adoption phase, Bitcoin was frequently associated with black market uses, most notoriously the Silk Road. Today, CoinMap.org lists over 7,000 businesses employing BitcoinCT r:  9worldwide.

CoinTelegraph talked to several business owners, both legal and extralegal, about their use of Bitcoin.

White Market 

Dr. Darren Tapp, Ph.D., a mathematics professor who teaches mainly homeschooled children, started using bitcoin as a toy.

“As I learned more about it, I started to realize that bitcoin or something like it will change the future.”

He believes accepting Bitcoin helps him retain certain clients who pay with it exclusively.

Responding to local market demand

Matthew Ping, a property manager who manages several rental units in the Manchester, New Hampshire area, adopted Bitcoin to facilitate the rent payment process.

“There was a market demand for it in Manchester and I’m intrigued by the technology.  As a property manager I received the request to accept bitcoin because some of my residents get paid in bitcoin. I want to make it easier and less expensive for my residents to pay rent on time.”

Ability to instantly accept payments

And largely, this has helped Ping’s business, since he can receive on-time payments when residents are traveling anywhere in the world, without accruing an additional transaction cost or waiting for a check to arrive. However, he doesn’t see using Bitcoin as being without complications.

“It is sometimes difficult because the mortgage lenders and vendors don’t accept bitcoin yet. The rent payments have to be converted by using a service like Bitpay orCoinbase which make the facilitation much easier but still somewhat of a hassle.”

Compliance with all local regulations

Ping seeks to operate in complete compliance with all local governmental regulations for the security of his business.

“I operate my business above ground because I am a licensed Real Estate Broker.  I follow all rules and regulations set forth by the state and I wouldn’t do anything to jeopardize my livelihood.”

Dr. Tapp also operates above ground and reports income etc. to all applicable authorities, but admittedly faces less regulatory hurdles than Ping.

“The whole point of my project is to provide services outside of a highly regulated industry. Since I do not offer any certification,  I am not a school, and I do not claim to be accredited there are no applicable regulations to comply with.”

Black Market 

On the other side of the equation, CoinTelegraphCT r:  26 interviewed Bitcoin-using business owners who explicitly choose to avoid governmentcompliance. Ron Helwig, creator and owner of Shire Silver, an alternative currency based on precious metals, chooses not to report any of his activities to regulators.

“Well, I have no contact with government, if that's what you mean. No registration of the business, no taxes, no filings. The business isn't a corporation of any kind.”

Government cooperation as unprofitable

Amanda B. Johnson, co-founder of dailycryptocurrency and peer-to-peer network news show, has also not sought out compliance with any legal or governmental framework.

“We try to only do things that are profitable, and I wouldn’t consider a governmentpartnership to be profitable.”

Johnson, who heavily relies on Bitcoin as it makes up roughly 90% of her business, sees it as immensely practical.

“Sending and receiving payments is so fast and easy, and when they’re received they’re confirmed within 20 minutes, so it’s not days with a bank, it’s not I have to go to an ATMnow, it’s not I have to go deposit a check now. It’s I sent my client an invoice 5 minutes ago, they paid me 4 minutes ago, and now the money is right here on my computer.”

Avoiding involving third parties in Bitcoin transactions

Helwig, who runs a lean operation and whose business does just-in-time manufacturing, nonetheless stopped using BitpayCT r:  13specifically to avoid government involvement.

“When I started accepting it I was using a website plugin to use Coinapult's services. I switched after a while to a Bitpay plugin. But recently Bitpay has caved in to KYC/AML requirements (even though they shouldn't apply in my case) and I am not able to give them the information they demanded, so I stopped using their plugin. For now I've been using manual and ad-hoc processes, although I am planning on implementing my own plugin which won't rely on third parties.”

Bitcoin as a way to avoid government involvement

Bitcoin allows Helwig to operate outside of a legal structure more freely.

“When using a third party such as Bitpay, there really isn't much difference as far as legal ramifications since they will be required to behave similarly to Paypal or other more traditional money services. But if you handle things yourself then yes bitcoin can be more convenient in that you don't need to worry about things you do getting reported without your consent or knowledge. And of course bitcoin's non-legal advantages make it even more attractive.”

Bitcoin Price Fluctuation In 2015 And A Forecast For 2016

The year 2015 has ended and investors can now calculate the result of their investment activities. What has Bitcoin brought to us last year? On the first day on the year 2015, January 01, 2015, the price of BitcoinCT r:  9 moved to the level of $313, which is 59.35% less than a year before that, on January 01, 2014, when the price was $770.

During the first two weeks of 2015 the price of Bitcoin dropped sharply to $177. The price then rose gradually to $250 in September and had moved to another top of $300 by the end of October. The maximum price in 2015 we saw in December 2015, when the Bitcoin price was approaching a level of $480. However, on New Year’s Eve investors decided to take their profit and the price of Bitcoin has now dropped to $430.

As we have seen, in 2015 Bitcoin had to deal with a lot of factors that influenced the cryptocurrency’s volatility and price. However, in 2015 the daily volume of transactions reached new levels as Bitcoin approached world famous payment systems, such as Western Union and PayPal. Bitcoin’s transaction fee is relatively lower than most other payment systems. The volume of investments in USDollar in 2015 increased to $469 million. More than one hundred thousand companies worldwide are now accepting Bitcoin as payment. Therefore, despite all the difficulties that the cryptocurrencyhad to face in 2015, Bitcoin confidently holds its position and is firmly embedded in our daily lives.

The year 2016

In 2016, with some confidence we can say that Bitcoin will continue to grow. One reason for this is the two-time reduction of new Bitcoin coming into the market. According to the Bitcoin algorithm the reward for confirming one block is reduced twice every four years. And the year 2016 is one such year. In addition, the growing popularity of Bitcoin as a means of payment for goods will lead to an increase in its use. These two factors together will cause increased demand and a shortage of Bitcoin in the market.

According to Tone Vays, Head of Research at BraveNewCoinCT r:  62, the bullish trend of Bitcoin will be restored in the 3rd quarter of 2016, but has not ruled out a rollback to the level of $300. We asked Patrick Dugan from USA - CFO at Omni Foundation about when to expect a recovery of the bullish trend on Bitcoin, too. According to him:

“We're in the eye of the storm of an extremely bullish wave that will eclipse the previous one before going into an even larger triangle consolidation between $600 and $350.”

Let’s now take a look at the major competitors of Bitcoin. In our opinion, they are the US Dollar, Euro, British Pound, Japanese Yen, Chinese Yuan andGold. This time oil will not be considered due to the collapse of its price.

Dollar

The US Dollar is the strongest and the main competitor of Bitcoin. Despite December's decline, the Dollar has managed to finish the year 2015 with a growth of 9 percent against other major currencies. Last year, the dollar has shown the maximum growth of the last 10-15 years. According to experts at the big banks, the Dollar will continue to grow in 2016 as well. So, Bitcoin will always feel the pressure of the Dollar.

Euro

The second most important currency in the world and the main competitor of the Dollar is the Euro. It has a leading position as one of the major reserve currencies. The Euro is considered to be a funding currency.  This means that European banks use this currency to raise funds in order to ensure their core business. Previously, this function was performed by the Dollar. Such status has a positive effect on the Euro and makes it a sort of safe sanctuary. However, forecasts for the Euro price in 2016 are disappointing. By year end, the EUR/USD exchange rates could come close to a level of 0.95.

British Pound

Since 2006, the Pound returned itself to a status of reserve currency and became the third largest among the world's currencies. An especially noticeable rise in popularity of pounds is seen in recent years. In 2016, the British Pound will be under pressure from the Dollar, due to the reduction of the budget of England and the constant threat of the UK’s exit from the EU. Moreover, theBank of England continually postpones rate hikes, which adversely affects the Pound. Next year, we will clearly see the decrease to 1.4 and maybe even 1.3.

Yen

Japan’s national currency has a status of reserve currency. In 2016, the Yen will obviously continue to decline against the Dollar to the levels of $130. However, there is huge potential in the Yen. As it is the only one  of the world's currencies, which in 2016 will be able to provide decent resistance to the Dollar.

Yuan

In 2015, Yuan fixed its positions as the main currency in settlements with the neighboring countries, and has become one of the most popular currency in the world. In Southeast Asia the Yuan is considered to be the main currency. The global share of RMB settlements also increased. Now, the Yuan is considered to be the fourth most popular currency in the world. However, the IMF has not included Yuan as a reserve currency yet. Rising pressure of Yuan may also put pressure on the Bitcoin. In China, as we know, there are three Bitcoin exchanges, and China has the largest the population in the world. Therefore, Bitcoin traders and users should pay more attention to Yuan movements.

Gold

In recent years we have seen precious metals gradually loses their status as safe investment instruments. The attitude to Gold is set to be quite negative and by end of the year it is possible that the price will fall lower than $1,000.

To date we are not considering other cryptocurrencies as competitors. That is a topic for another article. We also believe that the factors that affect the Bitcoin price with the negative and the positive side, will also continue to influence this cryptocurrency in 2016.

This analysis and forecast are the personal opinions of the author and are not a recommendation to buy or sell Bitcoins.

 

Bitcoin Mining Firm Butterfly Labs Settles with FTC Over Customer Deception Charges

The US Federal Trade Commission (FTC) has announced that bitcoin mining hardware company Butterfly Labs and two of its operators have agreed to settle charges that pointed to the company deceiving customers.

The FTC revealed today that bitcoin mining hardware manufacturer Butterfly Labs and two of its operators: part-owner and vice president of product development, Sonny Vleisides and general manager, Darla Drake have settled charges filed against the company.

Under the terms of the settlement, Butterfly Labs must pay the FTC $38,615,161, according to the judgement ordered against the mining hardware firm and its operators. However, that figure will be suspended when the company pays $15,000 while Vleisides pays $4,000.

Additionally, a judgement against the company’s general manager, Jody Drake was put forth at $135,878. The figure will be suspended again, “once she surrenders the cash value of all Bitcoins she obtained using company machines,” the FTC revealed.

In a statement, Jessica Rich, Director of FTC’s Bureau of Consumer Protection said:

Even in the fast-moving world of virtual currencies like Bitcoin, companies can’t deceive people about their products. These settlements will prevent the defendants from misleading consumers.

The judgements were suspended due to the defendants’ inability to pay, the FTC confirmed. The Commission also added that if the defendants have been found of misrepresenting their financial condition, the full amount of over $38 million will become due.

Following the FTC’s revelation of the settlement, Butterfly Labs released astatement that claimed:

BFC continues to believe that the FTC case has no merit, but agreed to settle for $15,000 to avoid ongoing litigation expenses and conserve remaining assets for payment of refunds to consumers.

The company contends that the typing up of assets and the FTC’s initial injuction meant that Butterfly Labs was “prevented” from issuing refunds to customers as well as the testing and shipping of additional products.

The original charges were brought forth by the FTC in September 2014, when Butterfly Labs was sued and shut down. At the time, the suit by the FTC alleged Butterfly Labs had engaged in “unfair or deceptive business practices in or affecting commerce.” Butterfly Labs subsequently attempted to dismiss the FTC complaint. Eventually, the mining hardware developer saw the light of day again afterreopening in early 2015.

Bitcoin could help cut power bills

The technology behind the Bitcoin virtual currency could help cut electricity bills, suggests research.  A blockchain-based smart plug that can adjust power consumption minute-by-minute has been created by technologists at Accenture.  The blockchain is the automated ledger that underpins Bitcoin and tracks where the coins are spent and swapped.  The plug shops for different power suppliers and will sign up for a cheaper tariff if it finds one.  Accenture said the smart plug could help people on low incomes who pay directly for power. 

The smart plug modifies the basic Bitcoin blockchain technology to make it more active, said Emmanuel Viale, head of the Accenture team at the firm's French research lab that worked on the plug.  Instead of just resolving and confirming transaction records, the Accenture work has changed the blockchain to let it negotiate deals on behalf of its owner.  Image copyrightGetty ImagesImage captionThe blockchain is an open record of which coins were used in which transactions  "It's about how we put more business behaviour or logic into the blockchain," said Mr Viale, adding that this essentially embeds a "smart contract" into the digital ledger.  The smart plug prototype works with other gadgets in the house that monitor power use. When demand is high or low it searches for energy prices and then uses the modified blockchain to switch suppliers if it finds a cheaper source.  So far, said Mr Viale, the Accenture system was just a proof of concept, but it could help many people on lower incomes who pay for their power via a meter.  Being able to quickly shift suppliers could save this group more than £660m in the UK annually, suggests Accenture research.  A blockchain-based system that can act on behalf of its owner might also prove useful as the Internet of Things becomes more ubiquitous, said Mr Viale.  Managing many different gadgets might be tricky without a more centralised system, he said,  Martin Garner, a mobile services expert at analyst firm CCS Insight, said blockchains were starting to crop up in many different areas including share trading, fishing rights databases and land registry claims.  They had two chief attractions for the Internet of Things, he said.  "They avoid dependence on any one supplier or ecosystem - some users have concerns about the potential dominance of key internet players creating, for example, the Google-of-Things or the Amazon-of-Things," he said.  "The second attraction is as a way of enabling autonomous trading between things, such as the appliances in your house being set up to re-order supplies from a pre-approved list of suppliers," he added.