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What is Bitcoin?

Bitcoin is a digital crypto-currency with no single point of failure due to its decentralized peer-to-peer architecture. The source code is publicly available and changes to the reference Bitcoin client are made via concensus within the community. Advantages of Bitcoin include irreversible transactions (i.e. no possibility of chargebacks as with credit cards), pseudo-anonymous, limited and fixed inflation, near instant transactions, multi-platform, no double-spend and little to no barriers to entry and more. It was created by an anonymous person known as Satoshi Nakamoto. Find out more at

Bitcoin Latest News

Major Magazine Publisher to Accept Bitcoin Payments

Posted on 18 December 2014 | 12:43 pm

Mozilla accepting Bitcoin

Posted on 20 November 2014 | 1:55 pm

PayPal and Virtual Currency

Posted on 23 September 2014 | 9:52 pm

German Newspaper "taz" accepts Bitcoin

Posted on 22 July 2014 | 1:32 pm

airBaltic - World’s First Airline To Accept Bitcoin

Posted on 22 July 2014 | 11:03 am

Expedia to accept Bitcoin payments for hotel bookings

Posted on 12 June 2014 | 12:41 pm

Bitcoin Core version 0.9.1 released

Posted on 8 April 2014 | 4:27 pm

Bitcoin taxfree in Denmark

Posted on 25 March 2014 | 5:46 pm

Bitcoin v0.9.0 released

Posted on 19 March 2014 | 6:44 am

Bitcoin-Qt v0.9.0rc3 released

Posted on 13 March 2014 | 3:21 am

Bitcoincharts and SSL

Posted on 4 March 2014 | 2:21 pm

Mt.Gox Statement

Posted on 3 March 2014 | 3:44 am

Bitcoin Price Advancing Steadily Towards $370 – Formulating An Atypical ... - newsBTC


Bitcoin Price Advancing Steadily Towards $370 – Formulating An Atypical ...
Bitcoin price rose to a high of around $365 earlier today, which is $5 short of yesterday's high. Despite failure to print a higher high today, bitcoin price is still advancing along the new upward sloping trend line that we spotted yesterday. If the ...

Posted on 27 November 2015 | 4:08 pm

Friedman LLP Appointed Auditor for the Bitcoin Investment Trust by its Sponsor ... - PR Newswire (press release)

Friedman LLP Appointed Auditor for the Bitcoin Investment Trust by its Sponsor ...
PR Newswire (press release)
27, 2015 /PRNewswire/ -- Grayscale Investments, LLC, the Sponsor of Bitcoin Investment Trust (the "Company") (OTCQX: GBTC), has engaged Friedman LLP ("Friedman") to be the Company's independent registered public accounting firm for fiscal year 2015 ...

and more »

Posted on 27 November 2015 | 2:33 pm

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E-Commerce Retailer Accepts Bitcoin As The Netherlands Continues To ... - CryptoCoinsNews


E-Commerce Retailer Accepts Bitcoin As The Netherlands Continues To ...
One of the most powerful forces driving the use of bitcoin as a currency is ecommerce, and one of the world's most bitcoin-progressive countries is the Netherlands. Hence, it comes as no surprise that one of the Netherlands most prominent ecommerce ...
Dutch now accepts bitcoin paymentsEcommerce News
The Netherlands' 'best department store' now accepts bitcoinBrave New Coin

all 3 news articles »

Posted on 27 November 2015 | 11:18 am

Is Bitcoin Volatility All In The Mind? - CoinDesk


Is Bitcoin Volatility All In The Mind?
The good news is that bitcoin's association with terrorism and Daesh played a somewhat smaller part in this week's coverage. Although some of the narrative spilled over from last week, and the news did travel far and wide, most mainstream outlets ...

Posted on 27 November 2015 | 10:33 am

Leading Bitcoin and Tech Firms Recovering from Bitcoin Ransom DDoS Attacks - newsBTC


Leading Bitcoin and Tech Firms Recovering from Bitcoin Ransom DDoS Attacks
Since the beginning of 2015, an increasing number of technology firms and bitcoin startups have been targeted by anonymous hackers demanding bitcoin ransoms. Leading bitcoin exchange Kraken and encrypted email service provider Protonmail are two of ...

Posted on 27 November 2015 | 9:35 am

Bitcoin Price Choppy; tread Carefully! - newsBTC


Bitcoin Price Choppy; tread Carefully!
Earlier on this morning, we published the first of our twice daily bitcoin price watch analysis. In the piece, we suggested that – as a result of the width of our predefined range – we would bring both our intrarange and our standard breakout strategy ...

and more »

Posted on 27 November 2015 | 8:35 am

Bitcoin Price Pushes Above $360 - CryptoCoinsNews


Bitcoin Price Pushes Above $360
Bitcoin price was traded above yesterday's high in energetic trade today. The size of component price waves is both larger and more volatile than what we saw earlier this year, or even earlier this month. This analysis is provided by with a ...

Posted on 27 November 2015 | 8:31 am

Bitcoin Offers 'Last Chance for Peaceful Monetary Revolution,' Says Advocate -

Bitcoin Offers 'Last Chance for Peaceful Monetary Revolution,' Says Advocate
Few have a better understanding of the deep implications of blockchain technology as Jon Matonis. As a founding Director of the Bitcoin Foundation (He resigned as the group's executive director in 2014), as well as a member of the editorial board for ...
Bitcoin Up Three Days in a RowForex Market (blog)
Bitcoin Price Soars Higher, Eyes 370.00 LevelsEconoTimes

all 3 news articles »

Posted on 27 November 2015 | 7:03 am

Airbrushing Your Bitcoin Transactions – Bitcoin Mixers and CoinJoin - newsBTC


Airbrushing Your Bitcoin Transactions – Bitcoin Mixers and CoinJoin
Although bitcoin addresses are composed of randomly generated hexadecimal characters, which are unrelated to one's id, anyone can see each and every transaction on the public ledger, so the flow of bitcoins from an address to another along the ...

Posted on 27 November 2015 | 5:23 am

Is Bitcoin Volatility All In The Mind?

CoinDesk has rounded up some of the top bitcoin and blockchain-related headlines from across the globe.

Posted on 27 November 2015 | 10:30 am

Lloyd's Sees Blockchain's Potential For Insurance Markets

Lloyd's held a seminar in London last week to highlight blockchain technology to insurance market participants as part of their modernisation plan.

Posted on 27 November 2015 | 9:00 am

Citi, Nordea Select Bitcoin Compliance Firm for Accelerators

Bitcoin compliance startup Polycoin was recently accepted into two incubators, one backed by Citi and the other by Nordea.

Posted on 27 November 2015 | 5:00 am

Bitcoin Price Surges by 12%, Setting Weekly High

The price of bitcoin increased by 12% today, reaching a weekly high of $368.51 at 12:30 (UTC).

Posted on 26 November 2015 | 10:35 am

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Kenyan High Court Hears BitPesa Case Against Safaricom

The Kenyan High Court heard a case brought by bitcoin startup BitPesa against mobile money giant Safaricom two days ago.

Posted on 26 November 2015 | 9:05 am

Where To Spend Your Bitcoin On Black Friday

Get your bitcoin wallets at the ready and prepare yourself for a day of frenzied discounted online shopping. Bitcoin Black Friday is back!

Posted on 26 November 2015 | 5:00 am

SWIFT: Bitcoin Regulation in the EU Won't Happen Soon

The European Union (EU) is years away from implementing a consistent framework for cryptocurrency regulation, according to a new report by SWIFT.

Posted on 26 November 2015 | 4:30 am

Coinsetter Blames Bitcoin Compliance Costs for New Account Fees

New York bitcoin exchange Coinsetter has instituted a new $65-per-month account fee, a move it says is aimed at offsetting its compliance costs.

Posted on 25 November 2015 | 12:31 pm

Bank of England Launches Search for Blockchain-Savvy Interns

The Bank of England has launched a blockchain challenge, offering the winning students the possibility of a six-week paid internship.

Posted on 25 November 2015 | 10:55 am

WVU Student Government Considers Blockchain Voting

West Virginia University’s Student Government Association is debating whether to use a blockchain-based voting platform for its upcoming election.

Posted on 25 November 2015 | 10:00 am

Why Visa Europe is Testing Remittances on the Bitcoin Blockchain

Visa Europe discusses why it is using the bitcoin blockchain as part of its new proof-of-concept for the remittance market.

Posted on 25 November 2015 | 7:00 am

Bitcoin Startups Face Backlash for Perceived Pivots

Bitcoin industry startups are facing backlash over a new set of articles in which they have been portrayed as pivoting away from the cryptocurrency.

Posted on 24 November 2015 | 1:40 pm

Post-Trade Tech Firm Seeks to Build Commodities Blockchain Consortium

Post-trade services firm Kynetix is seeking to assemble a consortium of commodities market stakeholders to explore the use of blockchain tech.

Posted on 24 November 2015 | 12:05 pm

Vote for 2015's Most Influential People in Bitcoin and Blockchain

CoinDesk is holding a public vote as part of its annual drive to select the most influential people in the bitcoin and blockchain industry.

Posted on 24 November 2015 | 10:00 am

Ethereum Swaps Tool Added to Microsoft's Blockchain Sandbox

Microsoft has added a new decentralized application to its Ethereum blockchain-as-a-service toolkit introduced in October.

Posted on 23 November 2015 | 3:04 pm

Bitcoin Miner Faces New Pressure from Australian Regulator

Australian bitcoin firm Bitcoin Group is hiring a bitcoin expert after the country's top regulator raised concerns about its forthcoming IPO.

Posted on 23 November 2015 | 10:51 am

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5 Insights from a Bitcoin Founder Seeking Funding

Wealthcoin founder Simon Burns discusses what he's learned trying to raise seed capital for his latest bitcoin startup.

Posted on 22 November 2015 | 8:01 am

Hands On With Linq, Nasdaq's Private Markets Blockchain Project

CoinDesk goes under the hood of Nasdaq's first blockchain product Linq, a platform for private shares trading.

Posted on 21 November 2015 | 7:57 am

Gavin Andresen: I Might Take Over Lead of Bitcoin XT

With Mike Hearn taking a step back from Bitcoin development to work for private blockchain startup R3, former Bitcoin Core lead developer Gavin Andresen indicated he might take over the lead of Bitcoin XT, the Bitcoin implementation programmed to increase the block-size limit through BIP (Bitcoin Improvement Proposal) 101.

Andresen, who shifted his efforts to Bitcoin XT earlier this year, told Bitcoin Magazine, reluctantly: “I might take over lead of XT, but I don't want to.”

It was announced last week that Hearn recently joined R3 as lead platform engineer, where the Google veteran and Bitcoin XT lead developer will work with some of the world's largest banks on distributed ledger-based protocols for global financial markets. Hearn confirmed to Bitcoin Magazine that he will do the minimum required to keep Bitcoin XT running, but won't actively develop or advocate the implementation any longer.

Hearn, a staunch advocate of a block-size increase in order to allow for more transactions on Bitcoin's network,implemented BIP 101 into Bitcoin XT this summer. With this patch, designed by Andresen, Bitcoin XT is set to increase the maximum block size to 8 megabytes if a threshold of 75 percent of mining power accepts the change. Once activated, this limit is set to double every two years.

On Reddit, Hearn detailed:

The implementation of BIP 101 in Bitcoin XT without industrywide consensus was considered controversial by many, in particular among the Bitcoin development community. Shortly after Hearn implemented the patch, however, several prominent Bitcoin companies stated their intent to upgrade their code to support BIP 101 by December of this year. As such, the timing of Hearn's departure could have been experienced as unfortunate by supporters of a rapid block-size increase. While the Bitcoin industry could still adopt Bitcoin XT, this seems unlikely with no active lead development.

Success of Bitcoin XT might therefore depend on Andresen taking over as lead developer, Hearn acknowledged when asked by Bitcoin Magazine. This idea – which was previously advocated by Coinbase CEO Brian Armstrong – was not dismissed by Andresen, though he is not keen to take such a step. Andresen, who is currently on MIT's payroll, explained:

“I might take over lead of XT, but I don't want to. I stepped back from lead of Core because I got tired of the constant trivial decision-making needed to lead an active open source software project. I want to spend my time thinking about and working on bigger, longer-term issues; like: 'What are the benefits and risks of increasing the maximum block size?'”

BIP 101 itself currently garners little support among the Bitcoin development community, and seems very unlikely to be implemented in Bitcoin Core. Regardless, Andresen does expect that BIP 101 might be adopted by the industry at large. Either through Bitcoin XT, or by miners, companies and other users implementing the patch in their own software.

“It depends on what comes out of the big Hong Kong meeting,” Andresen explained. “If the other developers can't make up their minds and reach consensus on a solution, then we'll have a messy, chaotic couple of months where companies and big mining pools or miners pick sides until a solution emerges. Though, in that case, I do expect that the most likely solution will be BIP 101, since it is the only solution with well-tested code they can download and run.”

Photo Web Summit / Flickr(CC)

The post Gavin Andresen: I Might Take Over Lead of Bitcoin XT appeared first on Bitcoin Magazine.

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Coinbase and Shift Payments Introduce a Visa-branded Bitcoin Debit Card That Works Everywhere Visa is Accepted

Coinbase has introduced the first U.S.-issued bitcoin debit card, the Shift Card, in partnership with Shift Payments. The Shift Card is a Visa debit card that currently allows Coinbase users in 24 states to spend bitcoin both online and at physical points of sale at more than 38 million merchants worldwide.

“Merchant adoption has come a long way over the past few years, but it’s still difficult for people to make regular purchases with bitcoin,” notes the Coinbase announcement. “Buying gas at a local gas station or groceries at a neighborhood grocery store with bitcoin has not been possible in most cities in the U.S. Thanks to Shift Payments, it’s now possible to use bitcoin to buy gas, groceries, and much more. With the Shift Card, you can now spend bitcoin anywhere in the world that Visa is accepted.”

Coinbase users living in the states where the service is available can order a Shift debit card for $10 and link it to a Coinbase wallet. When the Shift debit card is used to make a purchase, the equivalent value of bitcoin (based on the current spot price of bitcoin on Coinbase) is debited from the user’s Coinbase bitcoin wallet. For certain transactions, such as gas purchases and dinner bills, Shift will debit more than the purchase amount, and refund the remainder to the user when the final payment amount is settled.

There are no annual fees, no bitcoin-to-dollar conversion fees, and no domestic transaction fees. Coinbase says there are no domestic transaction fees “for a limited time,” which seems to indicate that domestic transaction fees could be added in the future. There is a $2.50 ATM fee and a 3 percent international transaction fee. The daily ATM withdrawal limit is $200, and the default daily spending limit is $1,000.

The card isn’t available to users in New York, Florida, and many other states. Coinbase and Shift Payments say that they are working through legal and regulatory matters in the states where the Shift Card is not yet available.

Shift Payments wants to integrate all payment options available to a user in one debit card. Users can connect a Shift Card to multiple accounts to seamlessly spend all supported payment means, including digital currencies, with the same card.

“The Shift Card works like any debit card today,” notes the Shift website. “Connect your existing accounts and spend Coinbase or Dwolla, immediately and directly, everywhere Visa is accepted.”

The Shift card isn’t the first bitcoin debit card, but the availability of a Visa-branded bitcoin debit card from a major bitcoin exchange and wallet operator is likely to represent a quantum leap in the space.

“At the end of the day, what we’re trying to do is make bitcoin easy to use,” Coinbase vice president of business development and strategy Adam White, told Wired. “We want to make it easy to buy and sell bitcoin, and we want to make it easy to spend. A mainstream debit card based on bitcoin is a key element.”

Of course all U.S. bitcoin users already can spend their bitcoin by converting them to dollars and sending the dollars to their bank accounts, but the process is lengthy and probably overly complex for some users.

Therefore, the Shift Card is likely to make Bitcoin much more useful in daily life.

Wired notes that existing Coinbase customers are now likely to start spending more of their bitcoin, rather than just speculating, and new customers will be attracted to the digital currency because they can more easily spend it. Then, merchants will be more motivated to start accepting bitcoin, which could start a runaway feedback loop that will boost the Bitcoin ecosystem.

The post Coinbase and Shift Payments Introduce a Visa-branded Bitcoin Debit Card That Works Everywhere Visa is Accepted appeared first on Bitcoin Magazine.

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How the Magic of IBLTs Could Boost Bitcoin's Decentralization

Bitcoin requires decentralization of miners (or mining pools) and full nodes to achieve what some consider its core property: censorship resistance. As such, the block-size dispute represents a trade-off. Bigger blocks allow for more transactions on the Bitcoin network, but take more time to propagate, favoring larger miners and pools, while the increased data transmission disincentivizes users to run full nodes.

Fortunately, there are proposals to increase Bitcoin's efficiency that reduce the risk of bigger blocks. One of the most promising innovations in this regard, are Invertible Bloom Lookup Table, or IBLTs. First introduced by Bitcoin XT and Bitcoin Core developer Gavin Andresen, this idea was picked up and is currently worked on as a side-project by Linux veteran and Blockstream's Lightning Network developer Paul “Rusty” Russell.

“If we can make this work, it means less bandwidth requirements and less block data, which should be good for network health all over,” says Russell.


So what problem do IBLTs solve?

Typically, all Bitcoin transactions are transmitted from node to node over the peer-to-peer network, to be stored by the mempools (the record of unconfirmed transactions) of individual nodes. When a miner finds a block, it includes (some of) these transactions in that block, and subsequently transmits this block over the same peer-to-peer network. Of course, this means that all transactions in the block are effectively sent over the network twice: once as a transaction, and once as part of a block.

Speaking to Bitcoin Magazine, Russell explained:

“We've got redundancy in blocks. Most nodes already know some of the content in that block; they have already seen it. If we can optimize that, we can speed up block transmission. That decreases centralization pressure because miners can get their blocks out faster, while the network works better ... it's all good.”

The Magic of IBLTs

The main problem – the reason we need IBLTs to solve this problem (rather than a straightforward compression algorithm) – is that the set of transactions included in blocks is often not exactly identical as those stored by the mempools of all individual nodes; the biggest difference being the latest transactions transmitted over the network before the block was found. Moreover, the mempools of all individual nodes usually differ from each other a bit, too. This makes it hard to know which transactions a miner included in the new block, without seeing the whole block.

That’s where IBLTs come in. IBLTs combine several mathematical tricks to enable set reconciliation. As such, they basically allow for two slightly different mempools to be compared and harmonized, without actually needing both mempools in full.

This works as follows:

At first, all transactions included in a block are written into a table, where each transaction starts at a different spot in that table. However, there are many more transactions than there is room in the table, so the result is hopelessly overlapping. This makes the IBLT very compact, but also unreadable and undecipherable for anyone who doesn't have access to any transaction data himself.

Anyone who does have transaction data, however, can compare the overlapping transaction data in the IBLT to his own transaction data by filling up an IBLT with his own transactions using similar logic. If both IBLTs end up looking exactly the same, it means all transactions match exactly.

But even if the IBLTs do not end up looking exactly the same, this can still be helpful, as long as the sets of transactions are fairly similar. In that case, the IBLTs can be compared in such a way that all identical transactions cancel each other out. The “leftovers” in the IBLT, then, can often be used to reconstruct the missing transactions.

So rather than needing to transmit full blocks over the peer-to-peer network, nodes can transmit the much smaller IBLTs instead. This requires less data to be sent around and is much faster.


And it gets better. In Russell's design, not even all of the transactions included in new blocks need to fit in the IBLTs. Instead, connected nodes on Bitcoin's peer-to-peer network fine tune which transactions to send to peers. This could increase propagation time and decrease data usage even more.

“Gavin's original idea was that the miner would produce the IBLT, and send every node on the network the same one,” Russell said. “But when we started playing with the concept, it turned out it's very fast to generate IBLTs. So why not have every node do it? Generate IBLTs per peer, because each node has a much better idea of how close its mempool has been to a peer; they're sending this stuff back and forth all the time.”

Moreover, connected nodes can continually learn to understand each other's behavior. So once a node receives an IBLT from the network, and constructs a valid block out of it, it knows how many transactions it was missing. Additionally, it learned over time how many transactions his peer typically differers from him. That difference – the transactions it had to construct plus the usual difference between the two peers – is what the node will include in the IBLT and send to its peer.

As such, the IBLT system can improve over time, limiting the amount of data to transmit over the network to the bare minimum.

“The IBLT must roughly be twice the data size of the transaction difference,” Russell explained. “So out of all the transactions one node didn't know were in a block, plus the transactions that node thought were in the block but weren't... basically double that, and that's how big the IBLT needs to be. So if the differences are small, it will work really well.

“Ideally, if we can cram this thing into two IP packets,” he said. “We are lightning fast.”

Specific details of IBLTs and Bitcoin can be found on Russell's blog and Andresen’s GitHub contribution.

The post How the Magic of IBLTs Could Boost Bitcoin's Decentralization appeared first on Bitcoin Magazine.

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Law Enforcement and Regulators Agree: Bitcoin Not Useful for Terrorists, Thoughtful Regulation and Education Needed

In the aftermath of the Paris attack on November 13, the European Union (EU) is looking to crack down on bitcoin with the hope of preventing the financing of future attacks. Regulators and advocacy groups agree, though, that kneejerk regulation is not what is needed; rather, the need is thoughtful regulation and an increase in education.

“There’s nothing wrong with Bitcoin, it just means it’s another part of our financial system,” said Dana Syracuse, managing director and a member in the Anti-Money Laundering (AML) and Regulatory Compliance Practice at K2 Intelligence, in an interview with Bitcoin Magazine.

K2 Intelligence is an investigative, compliance, and cyber defense services firm. Prior to joining K2 Intelligence, he worked in the New York State Department of Financial Services and was the author of BitLicense.

“As time goes on, Bitcoin’s place is going to grow," Syracuse said. "One of the things that I talk about is, if you look at the story of bitcoin and the kind of enforcement and prosecutorial action, it shows the evolution and growth of the space.”

“Bitcoin is not the problem, and further restrictions on it are not the solution. Criminals and terrorists are using all sorts of technology to try to hide their activities over the Internet, but those who turn to bitcoin as part of that effort are making a big mistake,” said Jason Weinstein, director of the Blockchain Alliance, in an interview with Bitcoin Magazine.

Jennifer Shasky Calvery, the director of the Financial Crimes Enforcement Network (FinCEN) explained at a Digital Currency Summit held by the Department of Justice that $4 million worth of bitcoin is circulated through regulated entities. Outside the regulated entities, $10 million worth of bitcoin is circulated. At the event, Calvery made clear that her agency didn’t regulate bitcoin; instead, it regulated the financial institutions.

Perianne Boring, the founder and president of the Chamber of Digital Commerce, echoed those thoughts. In an interview with Bitcoin Magazine , she said, “Virtual currency is already highly regulated, especially within the G7 nations. Despite the high degree of regulation, the majority of bitcoin transactions are taking place outside regulated entities, which are mostly outside the G7 nations.”

“Increasing regulation within the G7 would only increase burdens on the companies that are working hard to comply with the Bank Secrecy Act and related regulations and could potentially push more bitcoin into the unregulated entities,” Boring said.

“What is needed is rolling out regulations in a rational, thoughtful, and constructive way,” said Syracuse. “When you regulate in the face of a crisis, there is often a temptation to overcorrect, which you want to guard against. We have to be careful on the back end of a travesty like this not to overregulate.”

Regulation is not the problem; it is education

Fundamentally, it is education that is problem, not regulation. Once regulators have sufficient education, they tend to come to the same conclusion that many others do: Bitcoin is not the problem.

“I’m a little skeptical of what new regulation would exist that would help,” said Vincent D’Agostino, associate managing director in the U.S. Cyber Investigations and Incident Response practice at K2 Intelligence, in an interview with Bitcoin Magazine.

Before joining K2 Intelligence, he was the FBI’s trial agent for Silk Road 1 and the case agent for Silk Road 2.

“If more people on the counter-terrorism side took the time to educate themselves on blockchain technology, so when they did a raid and the first thing they did was take that seized data and identify the public keys so they could start to make links," he said. "They could go, we didn’t know who this linked to, but now we know everything they’ve done. It attaches that person to those wallet files."

“Every financial innovation, every new form of value transfer brings with it its own unique challenges," Syracuse explained. "Bitcoin is not unique in that. Terrorism is a major concern of major financial systems. The use of bitcoin in those kinds of activities is no different than what goes on in the traditional banking system. Education in this space is key, and that is what will lead to rational and productive regulation and communication between the regulators.”

According to a report by the U.K. Treasury, “there is little evidence to indicate that the use of digital currencies has been adopted by criminals involved in terrorist financing, whether as a means by which to raise funds (crowd funding etc.), to pay for infrastructure (e.g. server rental), or to transfer funds.”

The report also explains, “The money laundering risk associated with digital currencies is low, though if the use of digital currencies was to become more prevalent in the U.K. this risk could rise.”

That is because bitcoin is actually an inefficient method for transferring value for illicit purposes since it is a completely public ledger.

“It would be far easier to launder euros or dollars than it would be to launder a decentralized, blockchain-based currency like bitcoin,” said David Long, the principal and senior consultant at the Northern California Fraud Prevention Solutions, in an interview with Bitcoin Magazine . “Though from an initial investigative standpoint, bitcoin might present more of a challenge due to the necessity of uncovering who is actually responsible for a given transaction or transactions. However, once the actor's identity is uncovered, the blockchain makes it possible to uncover most, if not all, of a person's transactions. This capability is without parallel when the subject is dealing in euros or dollars.”

Weinstein further confirmed that point, saying, “Reports of bitcoin’s anonymity are greatly exaggerated. Criminals or terrorists who use bitcoin to facilitate their activities are foolish, because bitcoin is traceable in a way that other payment methods, including cash, are not.”

Bitcoin is pseudonymous in that all that is shown is on the public ledger is a public address. However, once a law enforcement officer is able to identify who owns that public address, he would then be able to track every transaction that went to and from that address. If the Islamic State of Iraq and the Levant (ISIL) were to transfer bitcoin, and a law enforcement officer knew that it was their address, he could track each transaction and start building a case accordingly.

Cash, on the other hand, is completely anonymous. An individual in ISIL could take envelopes of cash across state borders and easily pay for the necessary assets for committing an act of terror. A law enforcement official would have no way of verifying how the funds were used. Long gave an example where a trade-based money-laundering scheme using dollars or euros conducted by professionals could be virtually undetectable.

The problem with this is that more people don’t realize it.

“They [law enforcement] are not using existing bitcoin investigative techniques as much as they should,” D’Agostino said. “There is no doubt that when done correctly, using bitcoin can be extremely anonymous but as long as there are human beings involved in the transfer of bitcoin, the creation and maintenance of those wallets, and the movement of that digital currency, they are going to make a mistake at some point. Those mistakes are typically catastrophic from an anonymity perspective. If it’s a group of people within a terror network moving a high volume of bitcoin both directions, they’re going to make a mistake eventually. They’ll forget to encrypt their wallets or leave their abandoned keys on a piece of discarded or seized digital device. That’ll give you an opening, a crack in the door, to give law enforcement you a chance to exploit that information and connect the subject with a set of address and transactions. So what may have started as completely anonymous set of transactions now has ends up having the opposite desired affect”

The key is educating law enforcement and national security authorities about how the technology works, so they can enhance their ability to use it to follow the money and protect public safety, Weinstein said. "We need more education, not more regulation.”

Jerry Brito, the executive director of Coin Center, explained in a recent blog post why more education is needed: “Overreaction by jittery policymakers in the wake of a crisis is always a concern, which is why education before such crises is so important. We’ve been engaged in just such education for over a year, and we’re hopeful policymakers understand that an overreaction would be counterproductive, whatever the headlines may say."

Brito echoed the point made clear by Boring and Weinstein: "The fact is that regulators understand that digital currencies do not pose the greatest risk for terrorist financing, and to the extent digital currencies pose some risk, a 'crack down' on their use would likely only serve to drive out legitimate players, which in turn would only serve to limit governments’ visibility into illicit uses.”

Bitcoin financial institutions already follow many of the same money transmitter laws that traditional institutions have to follow. Creating further regulation over them will not help prevent further acts of terrorism. Instead, educating law enforcement on the ways in which it can use the blockchain to seek and capture terrorists is one way to prevent future catastrophes.

Photo / Flickr(CC)

Jacob Donnelly is a freelance journalist and a consultant in the bitcoin/blockchain space. He runs a weekly digital currency and blockchain newsletter called Crypto Brief.

The post Law Enforcement and Regulators Agree: Bitcoin Not Useful for Terrorists, Thoughtful Regulation and Education Needed appeared first on Bitcoin Magazine.

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How a Bitcoin Backbone Gives Small Miners a Leg Up: Matt Corrallo's Relay Network

Bitcoin is designed as a peer-to-peer network, where nodes randomly connect to other nodes. Transactions and blocks are transmitted over this network by these nodes, until each node receives all the latest transactions and blocks. This works quite well, as the distributed model makes Bitcoin relatively censorship-resistant; there is no central point of control to shut down or pressure into compliance.

But there are other, more centralized alternatives for transmitting transaction data, too. The best known of these is “the” relay network, introduced in 2014 and maintained by Bitcoin Core developer Matt Corallo: “It's centralizing, but, hopefully, democratizing.”

On propagation

Corallo's relay network serves two distinct purposes. First, it adds diversity to Bitcoin. Rather than just needing to rely on the peer-to-peer network, Bitcoin users can opt to receive transaction data and blocks through an alternative channel. This makes it harder to successfully attack the Bitcoin network; the relay network functions as a fallback. But the second, and more important reason, is a potential decrease of network latency.

Speaking to Bitcoin Magazine, Corallo explained:

The peer-to-peer code in Bitcoin Core is pretty gnarly. It's stable and it works, but it's not very efficient, and it's not very fast. The resulting network latency is a problem, especially for miners. It can sometimes take 10, 15 seconds before they receive newly mined blocks. If you're a miner, 10 seconds is like 1.5 percent loss in revenue. That is potentially a big deal. You don't want that.”

Some of the bigger miners (typically mining pools) have therefore come up with an alternative solution. Rather than using the peer-to-peer network to transmit new blocks, they have created an alternative – private – network. If one of these miners finds a new block, that miner immediately sends it over to the other miners on their private network, meaning all these miners can start mining on the new block immediately.

The problem, of course, is that this disadvantages all miners not using this private network. When a select group of miners starts mining on a new block faster than other miners this select group gets a head start every time one of them finds a block. This is especially worrisome because it is typically the bigger miners who have the time and resources to set up private networks. Smaller miners might, therefore, become less profitable and eventually drop off the network entirely, which centralizes mining even further.

A Leg Up

Corallo's relay network is essentially a hub-and-spoke network, which consists of servers set up in eight well-connected Internet traffic hubs: New York, Seattle, Amsterdam, Beijing, Tokyo, Singapore, Hong Kong and Novosibirsk (located in central Russia). Additionally, the relay network uses a fairly basic compression algorithm. Any Bitcoin node can connect to the nearest hub on Corallo's relay network, and send and receive transactions and blocks to and from other connected nodes.

But unlike Bitcoin's original peer-to-peer network, Corallo's relay network is centrally controlled: by Corallo. This means that users of the network need to rely on Corallo, most importantly for maintenance. (Though this doesn't stop the peer-to-peer network from propagating transactions and blocks in the mean time, of course.)

The relay network is not the most reliable thing,” Corallo acknowledged. “There is no service-level agreement ... once in a while servers go down and I don't fix it right away... sometimes I'm sleeping, or drunk.”

But absent better alternatives, the relay network can still save small miners on cost, meaning they can increase their profit, and remain competitive, Corallo hopes.

It's democratizing in the sense that larger miners do something like this already,” he said. “The relay network gives smaller miners a leg up, since they don't need to spend a proportionally large portion of their resources to establish these types of relay networks themselves. So it's centralizing in some ways, but, hopefully decentralizing, in others.”

The post How a Bitcoin Backbone Gives Small Miners a Leg Up: Matt Corrallo's Relay Network appeared first on Bitcoin Magazine.

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Align Commerce Raises $12.5 Million, Launches Blockchain-based Cross-border B2B Payment System

In April, Bitcoin Magazine reported that global payment provider Align Commerce launched a public beta of its payments platform, the first in the industry to use the Bitcoin blockchain transparently to enable faster and cheaper global payments.

Transactions appear as traditional payments at both the sending and the receiving end, but Align Commerce pipes the transfer through the blockchain instead of using several intermediate banking relays, halving both time and cost of traditional international wire transfers.

Now Align Commerce announced that it has raised a $12.5 million Series A round led by Kleiner Perkins Caufield & Byers (KPCB), The Wall Street Journal reports . This is the first investment of the renowned venture capital firm in a blockchain-based fintech company.

Align estimates that small businesses currently pay $50 billion in wire and exchange fees. Forbes notes that, while wire transfers typically incur fees from the initiating bank, intermediaries and the recipient’s bank, plus the foreign exchange fee, Align charges only a low 1.9 percent foreign-exchange rate.

“We were looking for applications of the blockchain for the last couple of years in ways that could build real businesses and add real value that weren’t at the mercy of the currency valuation which will move up and down and all over the place,” said KPCB general partner Randy Komisar, who will join Align’s board, in a statement reported by Forbes . “And of those blockchain companies, we invested in Align, because we believe it’s a market that’s underserved, with a CEO who understood it well and early traction from customers who reinforced that value.”

The Align Commerce platform is targeted at mainstream business-to-business (B2B) payments. The users on both ends don’t have to know that such things as Bitcoin or the blockchain exist; the only thing they have to know is that the platform processes payments faster and cheaper, with a single 1.9 percent fee paid by the party converting the currency.

“The Align Commerce platform is not only a creative and transformative use of the blockchain technology, but a fundamental reimagining of how global payments can and should be done,” said Komisar in an interview quoted by PYMNTS . “We see incredible potential in Align Commerce as a superior digital path to convenient, transparent cross-border transactions.”

If a company located in the United States buys from a seller located in the Eurozone, the seller invoices in Euros, and the buyer pays in U.S. dollars plus the currency conversion fee. The fact that Align Commerce can reduce transaction fees by as much as 50 percent while still making a profit is an indication of the radical change that the blockchain can bring to the financial industry.

Transparency is another important benefit of the Align Commerce platform, which permits real-time tracking of all operations.

“The $24 trillion cross-border payments market is growing at a breakneck pace, expected to eclipse $54 trillion by 2022, despite a highly inefficient and expensive system in which businesses spend over $50 billion on wire and foreign exchange fees, wait up to seven days for transactions to complete, and have no visibility into the process,” said former Western Union executive Marwan Forzley, now founder and CEO of Align Commerce, in April.

“The blockchain offers a ready alternative," Forzley said. "The Align Commerce Payments Platform is the first in the industry to use this global rail to help small and medium-sized businesses quickly collect and receive payments in their local currency while avoiding high wire fees and various hidden fees.”

TechCrunch notes that Align isn’t the only company looking to get into cross-border payments based on blockchain technology and Bitcoin. Uphold -- the re-branded Bitreserve covered by Bitcoin Magazine in October -- also plans to use the blockchain as a transparent layer for cross-border transactions.

The post Align Commerce Raises $12.5 Million, Launches Blockchain-based Cross-border B2B Payment System appeared first on Bitcoin Magazine.

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ePaisa Brings Bitcoin Payments to Merchants Across India

In 2014, Indian prime minister Narendra Modi outlined a vision for a “Digital India,” a place in which all citizens in all parts of the country are connected, informed and part of a global economy.

Other hallmarks of this new India would be a transparent government with strong ties to its citizens where government services could be accessed from mobile devices.

EPaisa, a free point-of-sale app, has become India’s first mobile point-of-sale provider to integrate bitcoin as a payment option, becoming a part of this new, Digital India.

“To digitize India, you need to digitize the point of sale,” says ePaisa’s CEO and co-founder Siddharth Arora. EPaisa was founded in 2012.

“Bitcoin is currently becoming more and more popular in India because there is no need to provide any payment information,” says Arora. “However, the issue of accepting it has become a timely question for Indian merchants.”

The ePaisa app comes with a credit-card sized card reader to securely accept chip-and-PIN card payments and has now integrated Bitcoin, prepaid wallet and invoice payments for businesses. Merchants can request a bitcoin payment by letting their customers scan a QR code and receive the funds in their bank account the next day, free of charge. EPaisa works on any smartphone or tablet in India.

In 2013, ePaisa was awarded TechCrunch’s “Most Disruptive Company” and made it to the 2014 Global Red Herring Top 100 as well as Asia’s Top 100 awards.

The app works in 32 languages, it is free and works on all smartphones and tablets running on Android and iOS. They plan on introducing Apple Pay, Android Pay and other forms of payments for the Indian business owner.

With options like contactless payments, Apple Pay and bitcoin,” says Arora, “customers expect to pay however they want. Given this trend towards cashless shopping, not able to accept these modes of payments means lost sales for Indian merchants. We do not want that. We want to empower them to conduct any form of transaction and give the buyers a satisfying experience of making a purchase. With this new feature, we hope to offer our merchants more ways to accept payments and stand true to our commitment of enabling commerce.”

EPaisa expects that the user experience will be no different for the sellers. It works as follows:

At the point of sale, when the customer wants to pay for a product with bitcoin, the ePaisa merchant taps the bitcoin icon in the ePaisa POS application. As a result, a QR code pops up with the due amount, and the customer will scan that code using his or her bitcoin wallet app.

Prime Minister Modi’s vision for a seamless digital economy is materializing because of companies like ePaisa, which continues driving bitcoin adoption in the East.

“India has had huge success with prepaid wallets for online transactions,” Arora said. “We are enabling businesses to accept these wallets even for offline in store sales. Walk into an ePaisa-enabled store and you can make a payment with one of the top 10 wallets in India. We hope to power 25,000 businesses across all major metro cities in India by end of this year.”

The post ePaisa Brings Bitcoin Payments to Merchants Across India appeared first on Bitcoin Magazine.

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November 28, 2015 -
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