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APOSTLES of blockchain, the technology behind Bitcoin, think of it as the internet of money

with implications stretching far beyond the cryptocurrency

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Henry Sapiecha

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Reinventure has taken a stake in Bitcoin company Coinbase, which has 2.3 million users and 3 million digital “wallets”. Photo: Bloomberg

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In a deal that will put Westpac Banking Corp in the box seat as cryptocurrencies develop, the bank’s venture capital fund, Reinventure Group, has invested in Coinbase, one of the world’s pre-eminent Bitcoin companies.

In the first deal involving an Australian bank and a Bitcoin company, it is understood that Reinventure joined a $US75 million raising Coinbase conducted earlier this year, which also won support by some of the world’s largest venture capital firms, the New York Stock Exchange and former Citigroup CEO Vikram Pandit.

Backers of Coinbase are making bets that blockchain technology will radically transform the movement of money around the globe’s financial system. The investment by Reinventure will allow Westpac to monitor a future world where money morphs beyond central bank-regulated currencies into a myriad of forms.

“We plan to work closely with Reinventure and share insights into the use of digital currencies globally,” the San Francisco-based Coinbase said in an announcement on its blog on Tuesday morning. A spokesman for Westpac confirmed the investment. Coinbase’s “mission is to be the most trusted bitcoin company in the world and it is investing heavily in next generation security. Reinventure’s investment will provide key insights into the use of digital currencies and associated technologies,” the Westpac spokesman said

Coinbase provides a range of services to the Bitcoin economy. These include allowing customers to exchange domestic currencies into Bitcoin and transfer payments in Bitcoin, storing Bitcoin in a digital wallet and providing merchant services to process transactions for companies dealing in Bitcoin. It also operates an exchange where speculators can bet on direction of price of bitcoin, and various anti-money laundering and security services.

The company has been seeking to legitimise Bitcoin which has been plagued by volatile moves in its price, the high-profile theft of some Bitcoin from an exchange in Japan, and its use in the blackmarket economy. Coinbase has been working with regulators in the US and the UK to create legal frameworks under which it can operate.

Earlier this month, US regulator Benjamin Lawsky released a final version of Bitcoin regulations known as a BitLicense which will require digital currencies businesses in New York state to operate with a license and report to government. The Reserve Bank of Australia has conducted detailed analysis of Bitcoin and its implications. A Senate Committee is also preparing a report on digital currencies due for release this year.

Reinventure joined in the recent “Series C” fundraising round venture capital powerhouses Draper Fisher Jurvetson, Andreessen Horowitz, Robbot Capital  and Union Square Ventures, all of which had participated in previous Coinbase raisings. As well as the NYSE, the raising was Japan’s largest mobile phone operator NTT DoCoMo, USAA Bank, the venture arm of Spain’s BBVA, Mr Pandit and former Thomson Reuters CEO Tom Glocer.

It is believed the participation of USAA, BBVA and now Westpac represents the first time any global financial institutions or their VC funds have invested in Bitcoin. No amounts were disclosed, however, it is understood that each party put in between $US1 million and $US10 million into the raising, which was completed in January.

Coinbase allows users to buy and sell Bitcoin in 25 countries and is focused on expanding to 30 by the end of the year. “We look forward to working with Reinventure and bringing bitcoin to new markets around the world,” the company said.

Reinventure Group co-founder Simon Cant said: “We’re very excited to be working with such a great management team and look forward to helping them grow their business.”

According to Coinbase’s website, it has 2.3 million users, serves 3 million digital “wallets”, is used by 40,000 merchants and has 7,000 developer applications. Wallet growth grew by 10 times in 2014, the company has said.

The deal comes after Westpac, Australia and New Zealand Banking Group and Commonwealth Bank of Australia begin testing out payment technology from US-based company Ripple Labs, an exchange for messages that is being targeted towards banks. The Ripple network uses similar blockchain-style technology to Bitcoin, which it calls a ledger, but is a distributed network rather than a decentralised one.

Westpac seeded Reinventure – which is managed independently – with $50 million in February last year. It has made four previous investments: marketplace payments provider, PromisePaybig data analytics firm Zetaris Corporation; Australian local community social network Nabo; and the peer-to-peer lender SocietyOne, which is also backed by media moguls James Packer, Lachlan Murdoch and Ryan Stokes.

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Henry Sapiecha

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AntPool, BW.com, NiceHash, CKPool and GHash.ioare among a number of bitcoin mining pools and operations that have been hit by distributed denial-of-service (DDOS) attacks in recent days.

The incidents appear to have begun in the first week of March. For example, on 11th March, AntPool ownerBitmain sent an email to customers disclosing the DDOS attacks and advising external pool users to set up failsafe pools in the event of an outage.

According to many of the companies affected by the incidents, those behind the attacks demanded payment in bitcoin in return for stopping the attacks.

BW.com alerted customers via its official blog to possible service disruptions owing to DDOS attacks, but did not say whether or not a ransom notice had been sent. Other pools took to Bitcoin Talk to warn users about the DDOS attacks.

GHash.io operator CEX.io suggested that affected pools are seeing escalating DDOS threats, and said that the source of recent attacks on its pool came with increasing ransom demands.

A spokesperson for CEX.io told CoinDesk:

“The attack has been conducted by a hacker who has already DDOSed CEX.IO in October, 2014. Previously, he demanded 2 BTC for stopping the attack. This time, the payment has been raised to 5 to 10 BTC.”

At least one other mining pool, NiceHash, also reported sustained DDOS attacks last fall.

The alleged source of the DDOS attacks, operating under the name DD4BC, is believed to be behind a number of attacks on digital currency websites and services in the past year.

Incidents tied to DD4BC include an attack last year on the digital currency exchange Bitalo that resulted in the posting of a 100 BTC bounty. Following the recent DDOS threats, Bitmain contributed an additional 10 BTC to the bounty.

Disruptions likely to continue

Affected pools say they have moved to boost in-house defense mechanisms in light of the attacks, but some have warned that future outages may likely occur. Bitmain said that its other services, including the cloud mining platform HashNest, may also be affected in the coming days.

Operators that responded to press queries say they have refused to pay the ransoms and will continue keeping their pools open despite the risk of future DDOS attacks.

Some of the pools have conceded that resolving the situation will be difficult owing to the capabilities believed to be possessed by the source of the attacks.

Bitmain’s Yoshi Goto noted that the attacks appear to be systematic and acknowledged that it remains unclear when the situation will be completely resolved.

“It is a cat and mouse game now but we will do our best,” he said.

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Henr Sapiecha

 

Regulated currencies like the US dollar could soon join Bitcoin in the virtual space.

Regulated currencies like the US dollar could soon join Bitcoin in the virtual space. Photo: AP

IBM is considering adopting the underlying technology behind bitcoin, known as the “blockchain,” to create a digital cash and payment system for major currencies, according to a person familiar with the matter.

The objective is to allow people to transfer cash or make payments instantaneously using this technology without a bank or clearing party involved, saving on transaction costs, the person said. The transactions would be in an open ledger of a specific country’s currency such as the dollar or euro, said the source, who declined to be identified because of a lack of authorisation to discuss the project in public.

The blockchain — a ledger, or list, of all of a digital currency’s transactions — is viewed as bitcoin’s main technological innovation, allowing users to make payments anonymously, instantly, and without government regulation.

Rather than stored on a separate server and controlled by an individual, company, or bank, the ledger is open and accessible to all participants in the bitcoin network.

The proposed digital currency system would work in a similar way.

“When somebody wants to transact in the system, instead of you trying to acquire a bitcoin, you simply say, here are some US dollars,” the source said. “It’s sort of a bitcoin but without the bitcoin.”

IBM is one of a number of tech companies looking to expand the use of the blockchain technology beyond bitcoin, the digital currency launched six years ago that has spurred a following among investors and tech enthusiasts.

The company has been in informal discussions about a blockchain-tied cash system with a number of central banks, including the US Federal Reserve, the source said. If central banks approve the concept, IBM will build the secure and scalable infrastructure for the project.

IBM media relations office did not respond to Reuters emails about this story and the Fed declined to comment.

However, there are signs that central banks are already thinking about the innovations that could arise through digital currency systems. The Bank of England, in a report in September 2014, described the blockchain’s open ledger as a “significant innovation” that could transform the financial system more generally.

Instead of having ledgers maintained by banks that act as a record of an individual’s transactions, this kind of open ledger would be viewable by everyone using the system, and would use an agreed-upon process for entering transactions into the system.

The project is still in the early stages and constantly evolving, the source said. It is also unclear how concerns about money-laundering and criminal activities that have hamstrung bitcoin.

Unlike bitcoin, where the network is decentralised and there is no overseer, the proposed digital currency system would be controlled by central banks, the source said.

“These coins will be part of the money supply,” the source said. “It’s the same money, just not a dollar bill with a serial number on it, but a token that sits on this blockchain.”

According to the plans, the digital currency could be linked to a person’s bank account, possibly using a wallet software that would integrate that account with the proposed digital currency ledger.

“We are at a tipping point right now. It’s making a lot more sense for some type of digital cash in the system, that not only saves our government money, but also is a lot more convenient and secure for individuals to use,” the source said.

Reuters

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Henry Sapiecha

The use of the digital cryptocurrency bitcoin is hindering police investigations.

The use of the digital cryptocurrency bitcoin is hindering police investigations. Photo: Getty Images

It’s not only outlawed motorcycle gangs and other hardened criminals using virtual cryptocurrencies such as bitcoin for illicit purposes. “Mums and dads” are also using them to buy illicit narcotics and synthetic drugs, the Australian Crime Commission has told a senate inquiry examining virtual currencies.

“…You are seeing large volumes of mums and dads purchasing illicit commodities over the internet and we’re seeing organised crime groups such as [outlaw motorcycle gangs] in recent media reporting using bitcoin as a standard way to move value,” Dr John Moss, national manager of intelligence at the Australian Crime Commission, told the senate inquiry on Wednesday.

"Mums and dads" are using digital currencies to buy drugs, according to Dr John Moss of the Australian Crime Commission.

“Mums and dads” are using digital currencies to buy drugs, according to Dr John Moss of the Australian Crime Commission.

Appearing surprised at the revelation, Nationals Senator Matthew Canavan asked Dr Moss to confirm that “mums and dads” were in fact purchasing illicit commodities using digital cryptocurrencies and the types of goods and services they were acquiring.

“The primary detection is around narcotic importation [and] new synthetic drugs,” Dr Moss said.

Responding to a Fairfax Media request for further evidence, Dr Moss said he was talking about “everyday” Australians using bitcoin for illicit purposes.

“Clear evidence of this can be seen by the nature of illicit drug purchases from illicit marketplaces on the dark-net,” Dr Moss told Fairfax Media.

“For example, small scale purchases, low in volume, sent to Australian residential properties or PO Box addresses.”

Although not all related to bitcoin, he said the Australian Crime Commission’s Illicit Drug Data Report for 2012-13 showed a record 86,918 seizures of illicit drugs — a 66 per cent increase on the previous decade.

The senate inquiry into digital currency is examining how to develop an effective regulatory system for virtual currencies in Australia, the potential impact of digital currency technology on the Australian economy and how Australia can take advantage of digital currency technology.

But law-enforcement agencies told the inquiry that digital currencies being used for illicit purposes were making their investigations into criminal matters more difficult.

“The main challenge for the [Australian Federal Police] operationally is the anonymity associated with bitcoins and the lack of regulation,” said Jarred Taggart, team leader of the AFP’s Criminal Asset Confiscation Taskforce, who added that there was a real challenge in determining the true owners of bitcoins and other digital currencies.

“So … while [that] may not be something that is a significant issue for us at the moment, it’s more in the future space where things like this, if there were predictions that say [these currencies] may become more popular and more user friendly, [then] that could become an issue if there wasn’t an ability for us to understand the true ownership behind bitcoins,” Mr Taggart added.

Hamish Hansford, national manager of strategic intelligence and strategy at the Australian Crime Commission, also told the inquiry it wasn’t only cryptocurrencies preventing investigations.

“I think it’s fair to say that across a whole range of different areas it’s becoming more and more difficult to investigate and prosecute crime and this is just another type of encryption … on a whole range of different areas,” he said, noting the use of encrypted ways of communicating and the use of “darknets” on the internet, which make it difficult to identify offenders.

“So the way in which law-enforcement responds to a digital currency issue needs to change over time and … it’s becoming more difficult to investigate with the higher levels of encryption.”

But Daniel Mossop, director of the Attorney-General’s Department’s financial crime section, told the inquiry it was important to try to regulate the currencies in a way that didn’t “stifle their growth”.

“We do realise that there is a range of useful and worthwhile purposes for digital currency,” Mr Mossop said.

“It obviously has … the ability to vastly increase the financial inclusion for people who are currently unbanked [without bank accounts]. It’s [also] a relatively cheap and effective way for people to hold and store value and move it around easily … with relatively limited fees. So it’s something that we would like to see used in a positive way but also in a way where we can try and mitigate those risks [of criminal activity occurring with their use ].”

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Henry Sapiecha

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Motherboard, a blog run through Vice Media LLC, was recently given a tour of a bitcoin mining facility in Dalian, a port city in Liaoning Province, northeast China.

The mine, located on the second floor of a repurposed factory, generates 4,050 bitcoins a month, the equivalent of around $1.5 million, according to Motherboard:

“Despite its dystopian appearance, the group’s six mining farms encompass eight petahashes per second of computing power, whose brute force, as of October, accounted for 3 percent of the entire Bitcoin network.”

Bitcoins – a digital currency that can be transferred instantly between two people anywhere in the world – are generated by “mining” them with custom-built computers. Wikipedia compares the process to “a continuous raffle draw [where] mining nodes on the network are awarded bitcoins each time they find the solution to a certain mathematical problem (and thereby create a new block). Creating a block is a proof of work with a difficulty that varies with the overall strength of the network.”

“To put it simply, we’re racing to find an answer on the Internet,” said Jin Xin, Bitcoin Mine Manager, in a video shot during a site visit. “Whoever does the correct calculation will be rewarded. The rewards are bitcoins, a virtual currency.”

At its peak, the Changcheng factory churned out 100 bitcoins a day at each of its six sites, but the group of entrepreneurs is finding that as the level of difficulty and computing power increase, the ratio is gradually changing. The process uses about 1,250 kilowatt-hours of electricity, and the group’s monthly electricity bill is about $80,000. They are currently mining from 20 to 25 bitcoins a day.

The facility has about 3,000 “miners,” which are computers that connect to the Internet and churn out algorithms whose correct queries are then generated an award in the form of a “bitcoin” – which is really just a number associated with a bitcoin address.

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Henry Sapiecha

A Bitcoin (virtual currency) paper wallet with QR codes and coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014.  REUTERS/Benoit Tessier

A Bitcoin (virtual currency) paper wallet with QR codes and coins are seen in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014.

Credit: Reuters/Benoit Tessier

(Reuters) – Elliptic, a firm that stores bitcoins for financial services clients, said it had received an accreditation from a “Big Four” accounting firm that signified it operates on the same standards as a custodian bank.

Elliptic

said the accreditation from KPMG, which followed a review of its financial controls, regulatory compliance, internal access controls and other areas, was an industry first and a significant step for the company.

The UK-based company is known for its Elliptic Vault product, a so-called deep cold storage service which allows bitcoin holders to store holdings of the digital currency in secure locations offline to shield them from hackers.

“KPMG’s accreditation is an important milestone,” James Smith, Elliptic’s chief executive officer, said in a statement on Monday.

“(It) demonstrates to our customers that we have the rigorous internal processes and controls expected of any traditional financial services provider,” he said.

The accreditation, known formally as the ISAE 3402 Type 1 review, comes after a number of scandals involving bitcoins spooked potential enthusiasts of the digital currency.

Last week, Bitstamp, one of the largest exchanges for bitcoin trading, said it had suspended its service after a security breach, resulting in the loss of about 19,000 bitcoins.

In February last year, Mt. Gox, once the world’s biggest bitcoin exchanges, lost 750,000 bitcoins held by its users and 100,000 of its own due to hacking.

According to the bitcoin price at the time, the Mt. Gox losses come to about $480 million, or 7 percent of the world’s estimated total.

Bitcoin, the best-known virtual currency, started circulating in 2009. Unlike conventional money, bitcoin is generated by computers and is independent of control or backing by any government. A bitcoin is worth $271.77.

Elliptic became the first Bitcoin firm to offer an insured storage service in January 2014, which was taken at the time as a sign the bitcoin industry was maturing.

In July last year, venture fund Octopus invested 1.2 million pounds’ ($1.8 million) in Elliptic.

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Henry Sapiecha

 

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Bitcoin: Values have fluctuated wildly this year.

What is a cryptocurrency?

A cryptocurrency is a digital medium of exchange that uses encrypted software to operate a market for transactions. That market is overseen by those using the network, based on rules coded in to algorithms. It’s a transparent, peer-to-peer operation, similar to the file-sharing protocol BitTorrent which is widely used for the illegal sharing of movies, TV shows and music.

How are cryptocurrencies propagated?

Crytocurrencies are created, or mined, based on a mathematical formula. In the mining process, computers are tasked to solve complex mathematical problems and rewarded with virtual coinage. Over time, the equations become progressively more difficult to solve, slowing down the supply of new cryptocurrency units.

Can anyone become a miner?

Theoretically it is possible to start mining at home. But as the mathematical challenge becomes harder, more computational grunt is required. For this reason, miners often pool resources to buy access to supercomputers or server farms (networked arrays of smaller computers).

How many cryptocurrencies are there?

The market for such payment instruments is dominated by bitcoin, but there are scores of other currencies including litecoin, dogecoin, megacoin and there is even a sexcoin.

What are they worth?

Values fluctuate based on supply and demand (and market sentiment). At the time of writing, one bitcoin is worth $US490. But the price topped $US1000 in early December. On the other hand, one litecoin is worth just $US4.30.

How do you buy and sell it?

A transaction is similar to a direct transfer between bank accounts. Algorithmic verification ensures that the same unit of currency can’t be owned by more than one person at the same time. In most cryptocurrencies, accounts known as wallets are stored either on hard drives or remotely in the cloud. Every transaction is recorded in a ledger called the blockchain that is accessible by every currency owner.

What can you buy with it?

Because of its widespread adoption, bitcoin is the most liquid of the alternative currencies and can be readily exchanged into US dollars. In additon to being used to pay for goods and services on a person-to-person level, a number of larger enterprises have begun accepting bitcoin as payment.

Is it safe?

The infrastructure around cryptocurrency markets is vulnerable and has attracted the attention of thieves, hackers and fraudsters.

Henry Sapiecha

Rotariu uses the first bitcoin ATM in downtown Bucharest

The interest in bitcoin in Romania stands out in a region where national currencies are widely seen as poor substitutes for the euro.

Tech-savvy and still deeply distrustful of officialdom 25 years after the end of communism, many Romanians are unfazed by warnings about the cryptocurrency.

In the western town of Oradea, 370 miles (595 km) away from the capital, the first bitcoin exchange in the country has drawn more than 2,000 clients in the seven months since it opened, with transactions totaling 5.12 million lei ($1.57 million).

But Romania ranks as the European Union’s second-poorest state and among the weakest in collecting taxes and fighting fraud, making it poorly equipped to manage the bitcoin.

Bitcoin is still an infant in Europe relative to the United States, where hundreds of start-ups backed by some Wall Street traders and venture capitalists have propelled consumer and media interest. Activity in virtual currencies around Europe is concentrated in London, Amsterdam and Berlin.

Romanian entrepreneurs envision a future where the bitcoin is as common as grocery shopping. But they say it needs a legal framework to gain credibility.

“It is an industry in its early stages,” said George Rotariu, who opened the ATM in Bucharest in collaboration with Vancouver-based Bitcoiniacs and plans to expand to more Romanian cities. “You need a legislative framework to supply services or have a business in this field,” he said.

“We groped around in the legislation and interpreted some policies,” said Horea Vuscan, a local politician who owns the Oradea bitcoin operator BTCXchange.

“We are now in talks with officials because I don’t know where we fit in, a bourse, bank, money transfer firm.”

Bitcoin is stored entirely on computers, not backed by any government or central bank. It lets owners hold, trade and move money from place to place almost as cheaply as sending email.

INSTITUTIONAL WEAKNESS

Its use has raised concerns for governments around the world, especially after Tokyo-based Mt Gox, once the world’s leading bitcoin exchange, filed for bankruptcy after saying some 850,000 bitcoins had gone missing.

A report by Bank of America last year found bitcoin showed promise as a low-cost way to do e-commerce and as an alternative to traditional money transfer services, but could also be used to evade high taxes, capital controls and confiscation.

In July, the European Banking Authority, the EU’s banking watchdog, urged national policymakers to discourage credit and payment institutions from buying, holding, or selling virtual currencies pending a regulatory framework.

“Using bitcoin in Romania is not regulated and carries very large risks,” said the Romanian Financial Supervision Authority (ASF). “The risk of fraud is also not to be ruled out.”

It said the industry “would need to have a visible economic significance in Romania, which it does not”, before regulation is considered, adding it would enforce any EU-approved rules.

Some EU states, including Finland, the United Kingdom, Germany or Poland have found ways to tax bitcoin transactions.

But Romania collects just under 60 percent of its regular tax goal. That amounts to roughly 33 percent of economic output, well below the bloc’s 46 percent average.

“There is some preoccupation with bitcoin,” one finance ministry official said. “But a legal framework is some time away and only after that will we analyze the need for a fiscal one.”

 

BITCOIN VOLATILITY

The number of Romanian service providers accepting bitcoins – which are divisible to eight decimal places – has risen slowly to a handful of coffeeshops, gyms, restaurants and beauty salons, according to service tracker coinmap.org.

“I want to bring bitcoin to street level, I want everyone to have a phone app where they keep their coins and use it everywhere, in coffee shops, restaurants, grocery shops, just like a regular wallet,” BTCXchange owner Vuscan said.

But before it can gain greater traction, bitcoin needs to address its volatility; it has swung from 1,170 lei ($370) to 3,406 lei ($1,100) this year, according to Oradea’s BTCXchange.

Vuscan’s exchange works only for Romanian leu deals, but he plans to open it to euro and dollar transactions, hoping to join larger European bitcoin exchanges such as Slovenia’s Bitstamp.

BTCXchange is registered as a standard company. Vuscan enforced some safeguards – users are required to have a bank account and there are self-imposed policies against money laundering. But there are no legal or regulatory safeguards.

Bitcoin’s rise in Romania is partially due to its status as one of Europe’s active technology hubs. The country has attracted investors including Oracle, IBM and Intel.

But while Romania boasts pockets of super-fast internet networks, only 58 percent of households have internet access, below the EU average. A 2012 Verizon report also said Romania was the world’s second-biggest hacking center after China.

Vuscan says his exchange is safe and he will reimburse clients if their bitcoins get stolen. “I can hardly wait for them to try,” he said when asked about hacker attacks.

($1 = 3.2626 Romanian lei)

Henry Sapiecha

Bitcoin pioneer calls for regulatory guidance from EU

A bitcoin sticker is seen in the window of Locali Conscious Convenience store, where one of Southern California's first two bitcoin-to-cash ATMs began operating today, in Venice

The virtual currency has come under the scrutiny of regulators in both the United States and Europe following a series of high-profile scandals such as the bankruptcy of Tokyo-based bitcoin exchange Mt. Gox.

But authorities such as the U.S. Securities and Exchange Commission have not yet taken a uniform approach to regulating the nascent digital currency, and have limited themselves to issuing warnings about its risks for investors.

“One of the challenges is that without clear guidance from the EU, from the UK, it will limit industry development,” said Jeremy Allaire, head of Circle, a bitcoin consumer finance company that allows people to use and store bitcoins online.

“Unless they have a clear view of where does this (bitcoin) fit, how do we know what the rules are?” he said in an interview with Reuters.

Launched in 2009, bitcoin offers a way for people to conduct transactions over the Internet. Its backers say its anonymity – users do not need to reveal any card or financial details when making payments – protects people from fraud. Critics say this also makes it easier to commit crimes like buying illegal drugs online.

Last October U.S. authorities seized 144,000 bitcoins online in a raid on Silk Road, an Internet black-market bazaar that authorities said had been used for illegal drug transactions. Some of those bitcoins were auctioned off last week.

Allaire said bitcoins could be regulated in the same way as other payment services such as PayPal, with strict consumer protection safeguards so people would feel safer using them.

The EU’s law regulating payment services should be updated to reflect the use of bitcoins, he added.

Bitcoin supporters maintain that digital currencies are set to expand further and that as they become more mainstream the price volatility and scams that have so far bedevilled them will decrease.

In June online travel agency Expedia began accepting bitcoins as a form of payment.

“As bigger exchanges get built and you see it move from retail and speculative investors to more traditional institutional investors … you’ll see greater price stability,” said Allaire.

Last week’s auction of almost 30,000 bitcoins by the U.S. law enforcement authorities attracted bids from several high-profile investors, such as U.S. investment firm Pantera Capital.

The auction was won by one bidder, Silicon Valley investor Tim Draper, who called it a vote of confidence by the U.S. government in the nascent crypto-currency.

Allaire said authorities on both sides of the Atlantic were starting to come to terms with the rise of digital currency after initially shunning it.

“A number of these regulatory bodies have started to analyze it and look at the risks,” he said. “Most scratched their heads at the beginning and said ‘do I need to care about this? I just want it to go away.'”

 

Henry Sapiecha

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