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czwartek, 14 sierpnia 2014

Bitcoin gets bit by a summertime swoon


Bitcoin gets bit by a summertime swoon

Bitcoin fell sharply Wednesday, touching lows against the dollar not seen since May.
The drop comes after a stable July for the cryptocurrency, and a strong run that has seen bitcoin hold above $560 since May 26. The slide began on Monday-the same day the Consumer Financial Protection Bureau announced new warnings about the digital currency-and accelerated Wednesday morning, according topricing data from CoinDesk.
According to CoinDesk, the currency has only once finished the day on more than a 5 percent change since May: Bitcoin rose almost 7 percent on June 30. Its last drop of over 5 percent was on June 12.
At its lows on Wednesday, CoinDesk's price index had fallen more than 6 percent on the day.
Still, some argue that the fall is part of an orderly correction for the notoriously volatile cryptocurrency.
In a blog post for CryptoCoinsNews, Venzen Khaosan argued that technical analysis predicted the current fall, with $525 as an expected bottom. News events, such as the CFPB announcement, he added, have not typically moved the market.

Cryptocurrency Round-Up: Argentina Embraces Altcoins, Bitcoin Boosts Overstock Shares and Bitbond Funding


bitcoin cryptocurrency news

The price of bitcoin has continued to slide, dropping in value by a further 5% over the last 24 hours. This takes its price down to $525 (£315), around $100 less than it was one month ago.
Bitcoin's misfortunes have been mirrored by most other major cryptocurrencies, with litecoin, peercoin and darkcoin all experiencing similar drops.
Bucking the trend, but in the opposite direction for a change, is dogecoin. The meme-inspired cryptocurrency saw its price rise by just over 3% since yesterday, taking its market capitalisation up above $13 million once more.

Argentina embraces altcoin

A new bitcoin brokerage service based in Argentina has been launched, allowing consumers to buy the cryptocurrency at more than 8,000 convenience stores.
bitcoin ripio
Ripio, launched by bitcoin merchant processor BitPagos, aims to provide an easy method of acquiring bitcoins to underbanked consumers and existing bitcoin users.
"You can go to any location, give them your account in Ripio and the amount of pesos you want to get in bitcoins. Boom: You have some bitcoins," Sebastian Serrano, CEO of BitPagos, told CoinDesk.
"It's going to be extremely easy to use and to buy bitcoins easily, securely and near you, even if you don't have a bank account. We think that this is going to push adoption."

Bitcoin adds 4 cents to each Overstock shares

Overstock CEO Patrick Byrne has attributed the introduction of bitcoin infrastructure into the online retailer's payment structure to an expected rise of four cents per share.
overstock
Overstock began accepting bitcoin payments in January and has since made more than $2 million in sales through the cryptocurrency. That accounts for around 0.25% of total sales.
"I think the world expects us to make 75-80 cents per share this year. And four cents of that would be attributable to bitcoin," Byrne toldReuters.
"When technology comes along like cryptocurrency, which can replace at a far lower cost, I'm all for supporting it."

Bitcoin lending platform secures seed funding

Peer-to-peer bitcoin lending platform Bitbond has received €200,000 (£160,000) in a seed funding round led by VC Point Nine Capital.
The Berlin-based company provides individuals and small businesses a way to raise funds through cryptocurrency rather than traditional means.
CEO and co-founder Radoslav Albrecht said: "Our main target borrowers are small businesses that have been operating for two or three years, or maybe longer and cannot get finance from a bank, possibly because they simply don't have access to a bank account, or they are a type of business that the banks typically do not lend to."

8,000 Convenience Stores in Argentina Now Sell Bitcoin


Ripio

BitPagos has launched Ripio, a new bitcoin brokerage service that allows consumers in Argentina to buy small amounts of bitcoin at more than 8,000 convenience stores.
To achieve this goal, Ripio will integrate with TeleRecargas, a popular mobile phone service that allows consumers to prepay for cell phone plans at a network of partner convenience stores across Argentina.
Argentina and Palo Alto-based bitcoin merchant processor BitPagos raised $600,000from prominent bitcoin angel investors earlier this year. The company’s CEO Sebastian Serrano told CoinDesk that Ripio aims to target underbanked consumers as well as existing bitcoin users who want an easy way to buy bitcoins at a physical location.
He explained:
“You can go to any location, give them your account in Ripio and the amount of pesos you want to get in bitcoins. Boom: you have some bitcoins. It’s going be extremely easy to use and to buy bitcoins easily, securely and near you, even if you don’t have a bank account. We think that this is going to push adoption.”
For now, the service will only be available in Argentina, though Serrano sees the service as broadly appealing to consumers in other Latin American markets that could benefit from an easy bitcoin-buying solution.
In particular, Serrano said BitPagos is looking to expand Ripio to Venezuela, but that this program expansion will take time to achieve.

How Ripio works

While Ripio works primarily at physical locations, Serrano indicated that users must first complete an initial registration on the platform’s website.
Users next print their Ripio ID and search the service’s map for available stores. Still, Serrano is confident that these elements of the service will be convenient for on-the-go users or those still learning the basics of bitcoin management.
Serrano explained:
“You can do the registration on your cell phone, you get your account number, you look at the map with places near you, you walk in and say you want to buy some bitcoins with Ripio and you say the amount in pesos you want to buy, that’s it.”

A new consumer offering

In the interview, Serrano sought to frame Ripio as a novel service that was different from the other offerings currently available in what has increasingly become a fertile area for bitcoin adoption due to lingering economic uncertainty.
Serrano suggested that because of Argentina’s unique needs, his competitors in the ecosystem may face challenges modeling their services after existing platforms available internationally.
“So far, most of the bitcoin services in Argentina have been trying to replicate models that work in other countries,” Serrano said. “Trying to build exchanges or do an exchange where you deposit bitcoins for doing trading. We think there is a need for this to expand the market.”
Notably, Ripio will use Brazil-based bitcoin exchange Mercado Bitcoin to determine the price at which it sells bitcoin to consumers.

Spreading awareness

Of course, Serrano is also conscious of the fact that Ripio will need promotion in order to resonate with one of its key demographics: underbanked consumers.
However, he suggested that Ripio’s launch will also coincide with the release of marketing materials that will increase general awareness of bitcoin.
He noted that Ripio will send out marketing materials to TeleRecargas’ partner stores in conjunction with the launch, but that the service is also seeking to leverage Argentina’s passionate bitcoin user base.
Serrano concluded:
“We’re also going to focus on the bitcoin community to deliver us the existing bitcoin users. But, I think this is also going to get more awareness just by being in high traffic locations.”
Ricardo Minicucci, president for TeleRecargas, echoed this sentiment in a statement, saying:
“For us this represents the possibility of providing a link between the offline and online world efficiently, plus the customer intimacy that characterizes Telerecargas will enable a natural adoption to the bitcoin system”

Who's Got Your Back On Bitcoin Deals?

You know there are problems out there when a government watchdog agency says it’s “accepting complaints” on digital currencies.
That’s government speak for “we think this is a huge problem and we ought to investigate it.” That means digital currencies are still on the fringe of legitimacy and you need to be careful, according to latest consumer advisory from the Consumer Financial Protection Bureau.
The CFPB is concerned about Bitcoin and other digital currencies. As more and more vendors accept it, this unregulated currency has come under scrutiny. Who controls the supply of it? Can hackers steal it easily — as they’ve done in the past two years? Who’s policing it? What about people who hide assets in Bitcoins during a divorce? Can you do that? These are all unanswered questions.
While I’m all for the emergence of digital currencies, they won’t work without independent regulation. Here’s what the CFPB had to say:
“Virtual currency companies are springing up around the world to offer products and services to consumers. There are virtual currency exchanges, which are companies that help consumers buy or sell virtual currencies. They are designed to be an alternative to current payment systems. Better-known virtual currencies include Bitcoin, XRP, and Dogecoin. They are a way for people to track, store, and send payments over the Internet, and they may have the potential to make payment processing cheaper or faster.
But they are not backed by any government or central bank. In addition, because virtual currency accounts are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, if a virtual currency company fails – and many have – the government will not cover the loss.”

Warnings About Digital Currencies
English: Total Bitcoin supply over time. Start...
Total Bitcoin supply over time. (Photo credit: Wikipedia)
  • Exchange rates are volatile and costs unclear: The exchange rate of Bitcoins to U.S. dollars in 2013 fell as much as 61 percent in a single day. In 2014, the value of Bitcoins has dropped by as much as 80 percent in a single day. Consumers who buy virtual currencies should be prepared to weather this kind of volatility.
  • The Federal Reserve doesn’t back Bitcoins. Nor does the U.S. Treasury, since this is not a government-issued currency. They are worth whatever the online exchange says they’re worth.
  • Consumers should also consider whether there are mark-ups or other fees when using an exchange or digital wallet provider. Companies may be charging consumers to buy, spend, or accept virtual currencies.
  • Hackers and scammers pose serious security threats: Virtual currencies are targets for highly sophisticated hackers and scammers. Individuals, digital wallet providers, and exchanges are all at risk. For example, if a hacker gains access to a consumer’s Bitcoin “private keys,” which are 64-character codes that unlock the consumer’s funds, the consumer can lose all their virtual currency.
  • Fraudsters are also taking advantage of the hype surrounding virtual currencies to pose as Bitcoin exchanges, Bitcoin intermediaries, and Bitcoin traders in an effort to lure consumers to send money, which is then stolen.
  • Companies may not offer help or refunds for lost or stolen funds: Some virtual currency companies do not identify their owners, provide phone numbers and addresses, or even specify the country in which they are located. Before using a company’s products or services, consumers should carefully consider if they know how to contact the company in question, and if they know their contractual rights.
  • Who’s Got Your Back on Bitcoin? If a consumer trusts a company to hold their virtual currencies and something goes wrong, the company may not offer the kind of help the consumer would expect from a bank, debit card, or credit card provider. In fact, some virtual currency companies disclaim responsibility for consumer losses if funds are lost or stolen.
As you can see, there are far too many unknowns in digital currencies. Some day they might prove to be a viable alternative to cash, but not before there’s some oversight on how they are circulated and created. In the interim, if you have a problem with them,contact the CFPB. They are the only cop on this beat at the moment.

The Great Bitcoin Divide

Midsummer is a time for young love, lightning storms and states sticking their nose into cryptocurrency regulation. Last July, as the price of bitcoin hovered around $70, California subpoenaed the Bitcoin Foundation, a nonprofit that exists to update the protocol and promote Bitcoin’s importance, to prove that it did not require a money transmitter license (despite the fact that it never transmitted money; it accepts dues, like any other professional trade organization). That controversy kept the price of bitcoin low all summer, but was forgotten as California never even responded to the Foundation’s well-crafted response.
This summer, the price of bitcoin has also been dropping (albeit still in the high $500s, way up from this time last year) and the state making threats this time around is New York, which recently released its extensive (many would say over-reaching) proposed regulation for buying or selling bitcoin in the state of New York (or to a New York resident anywhere in the world). The response from the bitcoin community was quick, yet bifurcated, with large players like the Winklevoss twins and Barry Silbert hailing it as a good start and many rank-and-file bitcoiners reacting with anger, horror, even near-panic.
I’ve seen this day coming for quite some time, but now it would appear to have arrived: the Great Bitcoin Divide. If there has been, as several writers have suggested, a Civil War brewing between the libertarian/crypto-anarchist early adapters and architects of Bitcoin and the Johnny-come-bit-lately crowd that rode into town in the past 18 months with cash and a desire for clarity and compliance in hand, then the proposed New York State regulations which are now in a 45-day comment period may well be bitcoin’s Fort Sumter.
I’m calling this the Great Divide rather than a civil war because the sides aren’t so much fighting each other but arming themselves with vastly different tools to combat a common foe: the old guard banking and government titans who stand in their way of varying visions of changing the world. The new guard (for simplicity’s sake, let’s call the group the Pacifiers) are simply trying to figure out, as Rodney King once put it, why we can’t all get along. They testify in Congress, raise millions of dollars from large VCs (and soon from Wall Street), hire lobbyists and look for a middle ground that reads something like “of course, we need to be highly regulated; just put us on a level playing field with the banks and we’ll be able to IPO on NASDAQ, create jobs and everyone will be happy.”
On the other side of the Divide are the people who actually built bitcoin and feel they’ve gotten along just fine without regulation for the first four years of the cryptocurrency’s existence (during which time, they might note, they oversaw what is on track to be one of the greatest creations of wealth in human history that was open to anyone with access to the Internet), so they adamantly resist regulation and hearken back to the early days of the Internet when it was said that “the Internet sees censorship as a form of damage and simply routes around it.” We’ll call them the Anarchists (indeed, many of them cherish the badge of “crypto-anarchy” as a superior way of governing).
This concept of a “divide” is actually quite literal, as November 28, 2012 is when mining rewards were cut in half, leaving 10 million low-cost coins (more than half were mined or sold at less than a dollar, often much less) in the hands of the earliest adopters. We can probably call this date the cut-off to be officially be considered a Bitcoin old-timer.
Of course, not all old-timers resist regulation and seek only math-based answers. CoinBase (started in June, 2012) and BitPay (May, 2011) both now have large, prominent VCs on their boards and sizeable cash hoards and market capitalizations to go with their large, growing revenues. On the other side of the spectrum (for the moment), Blockchain.info is completely funded in and operates completely through bitcoin. As CEO Nic Carey likes to point out, they don’t even have a bank account.
Both sides do agree on a few things: that bitcoin is a once-in-a-generation leap forward along the same lines as the Internet, telephone and automobile; that everyone has the right to create and own their own digital assets and currency, even if there are disagreements about financial privacy; and that sustainable innovation is the key driver of a thriving economy, with digital currency and blockchain technologies having the potential to create more than a trillion dollars of wealth in the coming decade or two (as has the Internet and personal computer before it).
Both sides should also take advantage of the 45-day period to comment – or protest. Shortly after the BitLicense news broke, I spoke on two panels at the North American Bitcoin Conference (which seems to be on the calendar of the regulators, given that this pronouncement came out less than 48 hours before the start of its gathering – and the arrest of early bitcoin pioneer and Bitcoin Foundation co-founder Charlie Shrem on alleged regulation violations came as he stepped off the plane from the first NABC in Miami this past January). Nearly every panel and keynote touched upon the New York situation, with opinions ranging from the regulatory panels advising on the constitutionality of certain aspects of the regulation to early adopter Bruce Fenton angrily telling the crowd that they should simply not engage with regulators. Three days later, I spoke on two panels at Coin Congress in San Francisco, moderating one on Bitcoin 2.0 and speaking on a panel moderated by author/futurist George Gilder on Bitcoin’s perception issues.
The stakes for bitcoin are incredibly high around the New York BitLicense regulations, which, if enacted exactly as proposed, shatters the foundation of bitcoin for anyone globally doing business in New York or with a resident of New York anywhere in the world, with incredible provisions like 10 years of record-keeping and a prohibition on bitcoin businesses keeping any of their profits in bitcoin – which given that bitcoin is legal to own is almost certainly unconstitutional.
At Coin Congress, I noted spoke about two aspects of this divide that have been little discussed:
(1) there is a fundamental difference between bitcoin, the currency, and the blockchain (much of which has been diverted to alternative blockchains that have very little use as a currency and were created to improve upon bitcoin’s functionality in making smart contracts, escrow, etc.), therefore, they need to be regulated quite differently, with the currency regulated like a form of currency or commodity – and software perhaps not needing much regulation at all; and
(2) just as the wild, hairy Internet of 1991 bears little resemblance to the corporate-controlled “stacks” that most users place between them and the technology (do you really use the Internet? Or do you use Google, Facebook, Amazon and Netflix, which in turn serve up their flavor of the Internet to you?), we are already seeing the beginning of corporate “stacks” of centralized companies coming between the user and the native blockchain. BitPay and GoCoin turn bitcoins into dollars for merchants; CoinBase and Expresscoin let Americans buy bitcoins without opening a foreign account; Blockchain.info and Mycelium let users store their coins themselves, then access them from a cloud-like wallet.
Who wins the Great Divide? Both sides certainly survive, and it should be the job of everyone who cares about bitcoin to make the divide as narrow as possible, so that stacked and stackless experiences are still possible and that innovation in the blockchain is not driven to other nations (as it’s been thus far, with the current financial center of bitcoin activity technically in Slovenia, home of the leading Bitcoin exchange for the western world, BitStamp). Just like the Internet and social media before it (remember state attorneys general coming after MySpace to make sure that child predators were blocked from coming online in order to be legal in their state?), the general rule of thumb in history is that mass adoption trumps regulation, as it becomes clear that the vast majority of users are not breaking any laws.
Michael Terpin is the co-founder of BitAngels, the world’s first angel network for digital currency startups, and CEO of digital PR agency, Transform (formerly Terpin Communications). Terpin also founded Marketwire (originally Internet Wire), one of the world’s largest and most technologically sophisticated company newswires.

środa, 13 sierpnia 2014

New Internet toothache: unstoppable bitcoin thieves


The Dell computer corporation's SecureWorks Counter Threat Unit recently discovered an unknown hacker quietly "hijacking networks belonging to Amazon, Digital Ocean, OVH, and other large hosting companies between February and May 2014."  During that period of time, the hijacker used a complicated but time-tested "redirection" technique to steal $83,000 of profits from the currency miners.  ("Cryptocurrency" refers to virtual online currency, the most famous example being Bitcoin.  The miners were basically using automated programs to engage in sophisticated high-speed currency speculation.)

As noted in an article by MIT cyber-security student Josephine Wolff at Slate, what's alarming about this little heist is that the redirection tools used by the hacker have been around for nearly two decades, and security professionals have no idea how to stop them, because they're perverting one of the core features of the Internet:
When we go online we take for granted that we’ll be able to reach content and communicate with people regardless of the Internet service provider they use. My home Internet connection comes via Comcast, but I can use that connection to email friends with Verizon or Time Warner, or any other service provider. Eventually, that email will have to make its way from my provider, where it originated, to the recipient’s. This is what the Border Gateway Protocol, or BGP, is for—to help autonomous networks like Comcast and Verizon connect and direct traffic between each other.
Using BGP routers, service providers announce which IP addresses they can easily deliver traffic to, so that other providers know which traffic to send them. If multiple providers advertise that they can deliver traffic to the same IP address, then whichever one serves a smaller set of addresses will receive traffic intended for that address. So networks are constantly updating and broadcasting these announcements to one another via BGP routers, letting their peers know which addresses they can deliver traffic to, and allowing the rest of us to ignore the question of which service providers everyone else is using.
Without BGP, there is no Internet as we know it. But that doesn’t mean it can’t cause problems—our reliance on the accuracy of the information provided by BGP routers means that anyone who can gain access to one can redirect some portion of online traffic by advertising a sufficiently small set of addresses whose traffic it wants to target. In other words, if you want access to some piece of online traffic directed to someone else, you can use BGP to announce that you will deliver it to its intended recipients—in the same way that Comcast announces it can deliver traffic to me—and the rest of the Internet will believe you. So this is probably what happened in the bitcoin theft incidents investigated by SecureWorks—the thief used the credentials of someone who worked at a Canadian ISP to send out false routing announcements. Using those announcements, the thief redirected the traffic of groups dedicated to bitcoin mining and was able to retain the bitcoins harvested by those groups’ machines rather than paying them out to the owners of the mining computers.
It's sort of like dressing up as a mailman, helping yourself to sacks of mail at the post office, and stealing every letter that contains money.  The thieves can operate from nearly anywhere in the world - a previous redirection scare from a couple of years back was caused by a Russian gang that had quietly insinuated a bit of viral code into millions of web browsers, routing Internet address requests to servers under their control.  They originally did this to hijack the in-line ad spaces on web pages, a relatively subtle and innocuous crime in which they would quietly replace, say, an ad for Amazon.com with ads provided by their illicit clients.  The big problem is that once the gang got busted, infected web browsers around the world would keep hitting those sleazy Russian servers to get Internet addresses... and if the servers were abruptly yanked offline, a sizable portion of the Internet wouldcrash.  The solution involved keeping the gang's servers up and running until the virus could be thoroughly purged from the planet's computer systems.  It went off quite well, but cybersecurity experts were very nervous for a while there.
As Wolff notes, these redirection shenanigans are extremely difficult to detect and nearly impossible to prevent, because the fluid nature of the Internet is one of its great strengths.  You didn't have to type in a long string of 16-digit numbers to read this article; you just pointed your computer at Breitbart.com, and a fairly long string of computers located hundreds or thousands of miles apart swiftly resolved that request.  Virtual real estate moves around, but the process is wonderfully transparent to end users.  It's as though your home or business can hoist itself onto wheels and roll to a less expensive or more convenient location at the drop of a hat, but everyone can still effortlessly find you just by using your name.
There have been many other examples of the Internet's strength being turned against it by miscreants - spam email, for instance, which peaked into such a menace during the mid-2000s that companies were taking themselves offline to escape the from the tidal wave of Canadian pharmacy ads and requests for assistance from deposed Nigerian princes, which threatened to bring corporate mail networks to their knees.  Spam exploits the astonishing ease of sending mail across the Internet.  The early spam kings were using beat-up old computers from spare rooms in their houses, pumping out thousands of emails per hour.
And look at all the Obama Administration scandals in which inconvenient emails have been made to disappear, with muttered excuses about freak hard-drive crashes and bouts of amnesia concerning federal record-keeping requirements.  It didn't take our political class long to figure out how it could use the ease and power of online communication to digitally enhance its cover-ups, did it?
In many ways, the swift growth of the Internet has served as an unprecedented sociological experiment, hurling people into a new world where there weren't many rules at first.  Parts of that virtual frontier will never be tamed.  In a state of online anarchy, some people saw wondrous opportunities for communication and collaboration... while others set to work figuring out how they could pillage the high-speed traffic, or ruin the hard work of others for their amusement.  It's a tough lesson for those who believe human nature can be perfected.