BitBuzz Daily: A roundup of the best bitcoin news

There is a lot of talk about how viable bitcoin is as an alternative form of money. Well, according to Kevin Roose on nymag.com  bitcoin's volatility prevents it from being such but he does see other uses for it, to take bitcoin mainstream. His arguments may not sit well with some of the bitcoin enthusiasts, as he states they "would have to give up on the dream of a universal currency that is treated as money and accepted at stores all over the world." He suggests bitcoin is really only useful as the intermediary for moving money across borders.

It's been a hell of a week for Bitcoin, the digital crypto-currency turned Internet punch line. First, the price of a single Bitcoin jumped up past $600, after spending months hovering in the $100 to 200 range. Then, it got an impressiveimprimatur in Washington, with Fed chairman Ben Bernanke saying that the currency may hold "long-term promise." That comment, along with a letterfrom the Federal Reserve Bank of Chicago that called Bitcoin "a remarkable conceptual and technical achievement," sent prices even higher. At one point, Bitcoins were trading for $900 apiece (meaning that if I'd held on to my one Bitcoin instead of selling it earlier this year, I'd have made enough to buy the iPad Air I've been coveting).

I agree with Timothy Lavin that the price swings of the last few weeks are a bad sign for Bitcoin's long-term viability, since no currency with such crazy volatility will ever be trusted as legitimate money. But I think there's a solution to all of this: Bitcoin needs to give up on its dream of replacing fiat currency, and focus on becoming something both much bigger and much more mundane: an invisible middle-man for the global payments system, which is currently way too expensive and outmoded.
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On a similar point, Jerry Brito looks at bitcoin's future, not just as a currency but gives a more in depth insight into many other areas of possibility. It's an excellent piece on reason.com and gives much food for thought.

On August 6, Judge Magistrate Amos Maazant of U.S. District Court for the Eastern District of Texas made many a headline when he became the first known United States government official to declare that Bitcoin-the non-government and non-bank currency, payments network, and anarchic digital phenomenon-is indeed money. In a ruling rejecting a defense argument that a certain Ponzi scheme was not in fact a Ponzi scheme because its shares were sold in Bitcoins, instead of "real" money, Maazant made this declaration: "Bitcoin is a currency or form of money, and investors wishing to invest in [the scheme] provided an investment of money."

The following week, the German Ministry of Finance also formally recognized Bitcoins as a private money. Germans can now use Bitcoins to buy bratwurst, sell lederhosen, or invest in Volkswagen. The government is developing rules to ensure Bitcoin transactions are taxed, just like those in euros.

So governments are slowly acknowledging the obvious: Bitcoins are money. But bureaucrats, like many observers since the digital currency burst on the scene in January 2009, are likely missing the larger implications. Bitcoin is much, much more than just money.

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Well, bitcoin may or may not be the future of money, but one person has found a much more grisly use for it by attempting to crowdfund murder. Yes, you heard me right. 
The article by Andy Greenberg on Forbes is a fascinating if not shocking insight into the creation of The Assassination Market by a pseudonymous character, Kuwabatake Sanjuro. Targets on his hit list include NSA director, Keith Alexander, and Chairman of the Fed, Ben Bernanke.

As Bitcoin becomes an increasingly popular form of digital cash, the cryptocurrency is being accepted in exchange for everything from socks tosushi to heroin. If one anarchist has his way, it’ll soon be used to buy murder, too.

Last month I received an encrypted email from someone calling himself by the pseudonym Kuwabatake Sanjuro, who pointed me towards his recent creation: The website Assassination Market, a crowdfunding service that lets anyone anonymously contribute bitcoins towards a bounty on the head of any government official–a kind of Kickstarter for political assassinations. According to Assassination Market’s rules, if someone on its hit list is killed–and yes, Sanjuro hopes that many targets will be–any hitman who can prove he or she was responsible receives the collected funds.

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Here's an interesting look at bitcoin's evolution from conception to (almost) present day. The timeline on WSJ goes up to November 2013, although has not included the ongoing US Senate hearings. However it is still an interesting look at the changes that have happened, and in particular how the majority have occurred within the last nine months. This has certainly, so far, been bitcoin's year in the limelight.

See it here

And finally, as US Homeland Security look at the pros and cons and risks involved with bitcoin and get their head around the regulation headache, take a look at BitPay's CEO, Tony Gallippi give his testimony at the Senate hearings.  (Shared by FreeToEvolve.)

https://www.youtube.com/watch?v=uJYBlROTswo

BitBuzz Daily: A roundup of the latest news and all things bitcoin.

There has been much talk around about the bitcoin bubble. It stems from the huge surge in value we saw from the end of last week with bitcoin spiking at about $900 at one point last night, to then fall again to around $600. In an immature market, this sort of volatility can be expected but it has already got the naysayers banging their drums.

An article by Michael Santoli on Yahoo Finance comments that these sudden swings in price are undermining bitcoin's potential as a currency, advising investors to participate with "play money," for now. In an interview with Yahoo Finance Editor-in-Chief, Aaron Task, they comment that such volatility could deter widespread adoption.  However,  Task,  says it is unlikely bitcoin will disappear anytime soon with the number of players already involved.

You can read the full article and see the video here


The dip in price, according to Tech Crunch's Alex Wilhelm is actually not as bad as it might seem. It's "not crashing", he says, "just slowly deflating".

Bitcoin! You almost have to shout it. The much ballyhooed currency has had a simply amazing last few weeks. It put on the finance nerd equivalent of a fireworks show, blasting from less than $400 per coin a week ago to a high of around $900 (Mt.Gox data).

The shot to the top was almost ludicrous in its intensity. When Bitcoin finally licked the $900 mark, it dropped in the same hour to under $600 before recovering, and dropping, and recovering, and dropping, and on and on and on.

But now, some time later, a trend is developing: Instead of Bitcoin suffering from a rapid collapse in its overheated price, the currency is experiencing a slower, if still very material decline. Currently trading just under $600, Bitcoin has shed one-third of its value in around a single day.

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And our own analysis posted this week, notes bitcoin's price could drop much lower back to around $100 and still be within the margins of a long-term steady rise in value.

Talking of bubbles, a couple of articles on Forbes have been analysing bitcoin’s performance, including this piece by Kashmir Hill, saying bitcoin could reach $1,700 before the bubble pops. Another article by Tim Worstall says we mustn’t rely on the ‘bubble’ behaviour as an indication of bitcoin’s future success.

Why do you even ask whether it is? A price gyrating like this is proof perfect of bubble behaviour. However, please do note that the existence of a bubble is not evidence that Bitcoin will either fail or succeed. There are often bubbles in things that succeed, just as much as the rubble of a bubble shows a failure.

The bubbleicious behaviour is of course the price gyrations going on.

Bitcoin’s value hit $900 on Mt. Gox exchange around 5 p.m. PST Monday, up more than 70 percent from Sunday’s close and setting an all-time high in the process. But, it also just dropped to $650 within the past 30 minutes, highlighting the current volatility of Bitcoin. The value of Bitcoin only hit $400 for the first time last week, and $500 for the first time on Sunday.

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However, one of the most interesting pieces written about the so-called bubble comes from a merchant and miner’s perspective. David Feeney in the Austrian Insider talks of his experience as a bitcoin miner and as a business owner, accepting bitcoin. He wants us to ask a few questions before we “start repeating mass media rhetoric regarding Bitcoin bubbles”. Here’s what he has to say:

My mornings are very predictable these days. Immediately after I wake up I walk to the living room to check my Butterfly Labs Easy Miner application to see what the Bitcoin market looks like for the day. Lately I have been anticipating the day that I will turn off my 30Gh/s miner and sell it to the highest bidder with access to “free” electricity. Contrary to popular belief, mining for Bitcoin is not a get-rich-scheme, but rather a calculated capital investment risk akin to any other mining market. That is why it comes as a shock to me when I keep hearing people throw around the word “bubble” when talking about the Bitcoin market. This recent activity is the sign of an extremely healthy Bitcoin mining and exchange system and, quite frankly, it’s exactly what was expected by the pioneers entering the market. It is showing that the cryptocurrency experiment is actually working.

One of the main appeals that Bitcoin has to the general public is as a tool to protect oneself from inflation and monetary manipulation by centralized governments. The way that this is done is by essentially emulating the model of mining finite precious metals (such as gold and silver) out of the ground. Bitcoin does this by requiring “miners”, such as myself, to solve algorithms (think big math puzzles for computers) to bring the initial coins into existence. As time goes on, the algorithms get more difficult and require additional computer resources to solve at the same rate; just as one would need to dig deeper over time to continue mining gold and silver. Periodical leaps in technological advancement allow miners in both industries to drastically lower their input costs which in turn allows prices to go back down once ample competition enters the market.

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The Senate hearings into the viability and associated risks of digital currency continue.

One Senator, at least, is doing his homework. Jerry Moran even reached out to the reddit community to get information, asking:  I’m one of the Senators attending today's U.S. Senate Banking Committee hearing related to bitcoin. What would you like me to know?

http://www.reddit.com/r/Bitcoin/comments/1qzwzl/im_one_of_the_senators_attending_todays_us_senate/

Overall, the first couple of days have ben regarded as positive for bitcoin, with some, such as Josh Dzieza on Technology Review, even noting a few new allies for the digital currency within the US Senate:

The crypto-currency Bitcoin gained some valuable—and surprising—new allies at a U.S. Senate hearing on Monday: financial regulators, law enforcement, and even the chairman of the Federal Reserve. The value of the currency reached a record high shortly after the hearing. 

Interested observers might have expected yesterday’s hearing on the potential risks, threats, and promises of virtual currencies to presage a regulatory crackdown: the hearing came just a month after the bust of Silk Road, a notorious online market that accepted bitcoins for guns, drugs, and other illicit goods. Though the hearing was nominally about digital currencies in general, the focus was really on Bitcoin, a currency that uses cryptographic techniques to allow money transfers directly between peers, rather than through a central authority like a bank or PayPal.

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Some bad news for BIPS and those with BIPS wallets. The company have temporarily closed its consumer wallet intitiative after it says it was the "target od a coordinated attack."

https://bips.me/press

And finally, just to end on a lighter note, you might have heard about the Word of the Year... This year The Oxford Dictionary chose SELFIE as 2013 word of the year. You might also be pleased to know that bitcoin made the shortlist of possible contenders. Maybe next year, eh.

FYI, their entry for bitcoin is:

bitcoin, noun:

a digital currency in which transactions can be performed without the need for a central bank. Also, a unit of bitcoin. [ORIGIN early 21st century: from BIT, in the computing sense of ‘a unit of information’ and COIN.]

The term first appeared in late 2008 in a research paper, and the first bitcoins were created in 2009. By 2012, the virtual currency was attracting wider attention and we began to see its steadily increasing use. A spike in usage was apparent in March – May 2013, which may be due in part to the market crash around that time.

BitBuzz Daily: Senate hearings and that price surge - A roundup of bitcoin news from around the web

If you are reading this, unless you have been hiding under a rock recently, you are probably already aware that the price of bitcoin exploded to new heights, hitting $750 overnight. That, apparently is due to a surge in trading over in Asia as reported by CNBC and also an expectation that the Senate hearings into digital currency, held by US Homeland Security, will have a favourable outcome for bitcoin.

On that note, and as expected, much of the bitcoin news around today, is related to those hearings of course and so far, according to Timothy B. Lee at The Washington Post, it has been a bit of a bitcoin love fest.

The Senate Committee on Homeland Security and Governmental Affairs, chaired by Sen. Tom Carper (D-Del.), is holding the first congressional hearing on the future of Bitcoin. The first panel features senior figures from the Obama administration. And their comments about Bitcoin have been remarkably positive.

After the officials gave their opening statements, Carper's first question drew a parallel to the Internet. He pointed out that in the early days of the Internet revolution, many people raised concerns about illicit use of Internet technologies. Yet in the long run, he argued, the Internet has had a hugely beneficial effect on peoples lives, making possible previously unimagined services like Facebook and YouTube. Carper wanted to know if the witnesses saw Bitcoin in the same light.

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One of the people testifying at this week's hearings is Jerry Brito, who believes if the US come down too harshly on bitcoin, it will go elsewhere. In his piece for The Guardian, he looks at how the debate over the growth of bitcoin hinges on US regulation and if they try to exert too much control, the States will end up losing out to countries such as China and Canada.

If the United States does not foster a reasonable regulatory environment for Bitcoin, the country might soon lose its head start in what could be the next great technological revolution. That's the message policymakers should hear today and tomorrow when the US Senate holds hearings on the virtual currency.

While Bitcoin is an international phenomenon, the United States has been central to its growth to date. Bitcoin's lead developer, Gavin Andresen, is an American based in the United States, as is the Bitcoin Foundation that employs him. The most innovative startups building out Bitcoin's infrastructure are also US-based. These include the merchant services provider Bitpay in Atlanta, backed by PayPal founder and early Facebook investor Peter Thiel, and the consumer-friendly wallet service Coinbase in Silicon Valley, backed by early Twitter funders Union Square Ventures.

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What these Senate hearings and price rise have done, if nothing else, is suddenly push bitcoin into the spotlight in mainstream press. The Telegraph in the UK published this article about the price surge and the hearings are also covered by Ryan Tracy in The Wall Street Journal here.

In Australia, the Sydney Morning Herald mentions how the Senate Committee have been told bitcoin is “a legal means of exchange.”

And, yes, all of the above, comment on the price of bitcoin, which, you will now know soared ahead of the hearings. When everyone starts talking about the new highs reached, China usually comes into the conversation. This article on CNN by Stan Stalnaker explains why China wants to dominate bitcoin.

China is quietly positioning itself to dominate the brave new world of Bitcoin.

Until recently the digital cyrptocurrency was considered a joke by the financial mainstream, but the view is starting to shift now that prices have surged above their April peak and are now hovering around $600.

Bitcoins are still being viewed cautiously by lawmakers and regulators in the United States. In fact, there are two Senate hearings this week about the risks Bitcoin poses. But that is decidedly not the case in China. There has been a steady drumbeat of positive news in the Chinese press this year, including a landmark report on CCTV, China's national television network.

China's fascination with the currency upstart resulted in an estimated 40,000 client downloads a day and a burgeoning acceptance rate from online retailers down to physical traders standing in Tiananmen Square.

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A very Senate hearing and bitcoin-price centric roundup today but it’s what the world is talking about right now and I am not sure that will change much this week!