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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.

project & construction finance banner image www.money-au.com (2)

Henry Sapiecha

 

bit coins in focus image www.acbocallcentre.com

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

BIT COINS IN BULK IMAGE www.profitcentre.netsingapore

Summary: The island will get its first Bitcoin ATM in March, but does it really need another currency which main appeal is the anonymity it offers, especially since Singapore is reportedly susceptible to money laundering?

eileenyu singapore bitcoin image www.acbocallcentre.com

It’s cool, it’s hip, and it’s virtual. Bitcoin has garnered much attention the world over, including here in Singapore where news broke this week that the island will be getting its first Bitcoin ATM. The question, however, is whether the country needs another currency, especially one that carries with it inherent risks.

Singapore-based trading platform, Bitcoin Exchange, purchased a Lamassu system and is scouting for a location to place the ATM, which will begin operation in March. The company plans to acquire more units if demand grows, according to Bitcoin Exchange’s director Zann Kwan.

She told local newspaper MyPaper that Bitcoin buyers in Singapore currently need to wait at least a day after transfering money, including service fees, to an overseas exchange before they receive their Bitcoins. “This is not cheap and defeats the concept of bitcoin… A Bitcoin vending machine makes it very easy and safe to buy Bitcoin, and avoids such additional costs and other risks,” Kwan said, pointing to the possibility sellers might default on the transaction.

She told CoinDesk.com the company had yet to decide from which exchange it would base its rates. “There are a few bars that are accepting Bitcoins now and people are talking about it, but you need a few people to start the ball rolling, then the momentum will pick up,” she added.

According to Lamassu, an ATM unit is priced from US$5,000 and can issue Bitcoins in 15 seconds. Another Bitcoin ATM manufacturer, Robocoin Technologies, last month said it was negotiating plans to bring its kiosks to Hong Kong.

While countries such as China and Thailand–and possibly India and Indonesia–have outlawed the use of the currency, Singapore has chosen a different route by choosing not to regulate it, but warning businesses and individuals they will trade with Bitcoin at their own risk. The country’s Inland Revenue Authority last month outlined tax requirements for transactions involving the digital currency.

That my government has somewhat embraced Bitcoin isn’t surprising, since it traditionally has been deemed to be business-friendly. In its annual report released last October, the World Bank again ranked Singapore the world’s easiest place in which to do business, offering the most business-friendly regulatory environment for local entrepreneurs.

Inherent risks may damage Singapore financial reputation

This friendliness, however, has brought with it global critics who say the nation has become a tax haven and hub for money laundering activities.

Add Bitcoin to the equation, and such risks may exacerbate. The currency’s biggest appeal is the anonymity it affords its users, and it is this trait that has led to the associated risks, including money laundering and funding of illegal activities.

In a risk assessment study released last month, the Singapore government said the country was

potentially susceptible to money laundering and terrorist financing, adding that some sectors needed stronger oversight to mitigate such risks. The report assessed 14 financial and 8 non-financial sectors in the country including banks, money changers, casinos, and money lenders. It noted that internationally-oriented and cash-intensive sectors, in particular, were at risk. “Full banks face higher inherent risks, owing to their large customer volumes and the international nature and the international nature of their transactions,” it said.

Bitcoin also is international by nature, as is its transactions. Furthermore, its appeal to buyers and sellers who seek anonymity has led to illegal activities and the sale of contraband goods, some of which eventually shut down sites such as Silk Road and Sheep Marketplace.

It is such risks that have led China and India to warn against the use of the digital currency. Nonetheless, this hasn’t stopped retailers and consumers from lapping up the currency of the month.

Bitcoin1-in hand image www.acbocallcentre.com

A “cool” novelty for merchants, but not compelling payment option

Some merchants in Singapore have started accepting Bitcoins, including Bartini Kitchen, Squash Passion, Artistry, and Hospoda Microbrewery. I asked fellow ZDNet blogger and restaurant owner in Singapore, Howard Lo, if he planned to follow suit. Here’s his reply:

“Bitcoin is cool and I think there’s a certain PR value for accepting Bitcoins. The geeky folks, of which there are many in Singapore, would probably come check you out just to see what it’s like to do a transaction using Bitcoins.

But is it worth training the staff and implementing the infrastructure to support Bitcoins? To be honest, I don’t know what is needed to actually accept Bitcoins. I imagine it’s just an electronic transfer into the Bitcoin account. But I’d want to figure out if it is worth the tradeoff in time to support just 1 or 2 people per week who might actually pay by Bitcoin.

The fluctuation in the value of Bitcoins is worrying. There’s the possibility of making a lot just from that fluctuation, but what if the value drops dramatically? Alternatively, do I convert the Bitcoin into Singapore dollars at the end of each night? That could be a hassle.

And how do I display my prices in Bitcoin? Let’s say a S$15 lunch set…do I change the Bitcoin price every day since the currency fluctuates so much?

I’m not concerned about someone hacking my Bitcoin account, but I will need to look into what kind of Bitcoin fraud happens. Whether it’s a customer perpetrating a fraud on me or someone pretending to be my restaurant and somehow getting money from someone else.”

Indeed, money laundering risks aside, there remains many questions about the viability of Bitcoin. Why would it appeal to Singapore consumers who already are used to cash, electronic payment NETS, credit and debit cards as payment options?

Sure, Bitcoin is universal and currency-agnostic, but purchasing in a foreign currency isn’t an issue for Singaporeans who are very familiar with e-commerce. The one attraction in this case would be the ability to transact in a currency that’s stable so online shoppers will know how much they’re spending and won’t lose out in the local-foreign exchange. But with its highly fluctuating and volatile state, Bitcoin currently is unable to offer this.

And for the merchants, as Howard pointed out, there currently are few reasons for him to want to offer it as a payment option.

In the Sheep Marketplace incident, Reddit user “kyerussell” rebuked anyone for thinking they could get their money back. “It seems that this subreddit is full of people that don’t understand the fundamentals of bitcoin and somehow think that this’ll result in people getting their money back. It won’t. That’s the point of bitcoin… You aren’t going to get anything back. None of you are going to get anything back, and it’s by design. This is EXACTLY how Bitcoin is supposed to work. Bitcoin would be fundamentally broken if you somehow got your money back.”

And unlike theft of real cash, it remains to be tested if there will be legal recourse for the loss of the digital currency. As a ZDNet reader pointed out: “Really, I would say it is exactly like black market cash.”

With all the associated potential risks, and many unanswered questions, there is little reason to choose to transact in Bitcoin over traditional payment options. If its value stabilizes, and governments start recognizing it as a legal currency with a proper framework for consumers to seek recourse, perhaps then. But, just not right now.

cash_register image www.acbocallcentre.com

Henry Sapiecha

bitcoins-image www.acbocallcentre.com

A single mystery bidder has secured the entire Bitcoin stash seized by US authorities from Silk Road during the arrest the drug market’s alleged founder Ross Ulbricht.

News of the auction’s outcome came on Monday after a US Marshals Service spokesperson confirmed to Coindesk it completed the transaction to “one winning bidder”.

The auction attracted 45 bidders, which submitted 63 bids during the 12 hour auction on 27 June. The transaction has since turned up on the Blockchain Bitcoin register.

The Bitcoin booty that went under the hammer last Friday was auctioned off in 10 blocks, with nine valued at 3,000 Bitcoin and one remaining block of 2,656.51 Bitcoin — a total of 29,656.51 Bitcoin.

While the identity of the winning bidder isn’t known, an error by the Marshals Service resulted in the leak of a list of people who were interested in participating in the auction.

One person who did make his bids public was Barry Silber, CEO of Bitcoin investment vehicles SeconMarker and Bitcoin Investment Trust. Silber rallied together a syndicate which included 42 bidders, who lodged 186 bids for a total of 48,013 Bitcoin.

The Marshals Service required bidders to make a $200,000 deposit to participate in the auction and said it wanted to exclude anyone acting on behalf of Silk Road or Ross Ulbricht.

The Bitcoin that was auctioned were those seized from Silk Road’s servers and not the currency seized from Ulbricht’s hardware. Ulbricht has filed a claim for 144,000 Bitcoins — today worth around $92m — that was also seized from his hardware during the arrest.

Bitcoin’s US dollar exchange rate continued to climb over the past week, according to Coindesk’s charts, from $600 on the day of the auction to $635 on Tuesday.

Read more on Bitcoin

Henry Sapiecha

this-canadian-gold-mine-could-be-yours-2m-in-bitcoin image www.acbocallcentre (1)

A mine located in Canada’s historic Yukon gold belt is on sale for more than 3,000 bitcoins, or $2 million at current prices —the very first offering of its kind on popular bitcoin-only online marketplace, BitPremier.

According to the listing, the small, producing gold mine located in Dawson City has the potential to produce 3,000 to 4,000 ounces of gold per year, and the price tag includes $1 million worth of actual mining equipment, the rights to one mining property and the lease agreement to another mining lot.

The unidentified current owner claims to earn $1m annually in sales and, in an effort to also attract novice bidders, it adds he is willing to stay on to manage the property for up to five years and so ensure the operation runs smoothly.

this-canadian-gold-mine-could-be-yours-2m-in-bitcoin image www.acbocallcentre (2)

“The company was founded in 1986, the President and CEO of the company has been in the mining sector for 35 years. A well respected, fully compliant and profitable company, any new buyer could recoup their initial investment in as little as two mining seasons,” the ad says.

For serious buyers, full financial statements, tax returns, profit/loss, balance sheets are available for due diligence.

Indonesian villa was sold for over $500,000 on the website image www.acbocallcentre.com

In March, an Indonesian villa was sold for over $500,000 on the website — the most expensive acquisition through the platform and the single largest bitcoin purchase ever.

If successful the sale of this gold mine would definitively beat that record.

Some background

Before 2013, Bitcoin was on few people’s radars. Designed around 2007 by someone named Satoshi Nakamoto (it’s still unclear who this person actually is), the currency’s value measured in US dollars went from about 5 cents per bitcoin (BTC) to around $13 in late 2012.

But the virtual currency hit the mainstream in 2013 and just a few months later was trading for more than $100 per BTC. It breached the $1,000 mark at its peak in November. Today it’s valued at around $600.

Bitcoins are created with extremely powerful computers that run algorithms to ‘mine’ for bitcoins. Anyone with the right equipment and know-how can become a Bitcoin ‘miner’ but there’s a predetermined number of coins that can ever be created.

The main appeal behind Bitcoin is that when you trade bitcoins you’re pseudonymous and you pay practically no fees. Most importantly, the system is safe – though this idea has been seriously challenged by the recent collapse of the currency’s largest trading platform, MtGOx. The currency is also free from central bank and government control, which is why some see it as a good store of wealth.

bitcoin-moving-market-chart image www.acbocallcentre.com

Henry Sapiecha

50 Interesting Bitcoin Facts

Henry Sapiecha

EXPERT ECONOMIST GIVES THUMBS DOWN FOR BITCOIN + OTHER STUFF

paul-krugman

It’s no secret that famed economist Paul Krugman hates Bitcoin (as a monetary system).

He’s been talking about it since back in 2011 when the cryptocurrency was on very few peoples’ radars.

“What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin,” the economics professor wrote two years ago.

In his most recent column, “Bits and Barbarism,” Krugman has even harsher words for the cryptocurrency whose valued has soared over the past few months, reaching an all-time high of $1,240 per BTC in November.

In Krugman’s piece – a “tale of monetary regress” as he puts it – the economist identifies three “money pits” – Bitcoin being the second on his list.

Bitcoin only has value because people are willing to buy it because they think other people are willing to buy it, Krugman explains.

“It is, by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers,” Krugman writes.

“A lot of real resources are being used to create virtual objects with no clear use,” he concludes.

Interestingly, the first “money pit” on Krugman’s list is Barrick Gold’s Porgera open-pit gold mine in Papua New Guinea. The economist criticizes the mine for its reputation of human rights abuses and environmental damage.

Interested in Krugman’s third “money pit”? You should probably read it in his words.

AAA

Henry Sapiecha

EXPERT ECONOMIST GIVES THUMBS DOWN FOR BITCOIN + OTHER STUFF

paul-krugman

It’s no secret that famed economist Paul Krugman hates Bitcoin (as a monetary system).

He’s been talking about it since back in 2011 when the cryptocurrency was on very few peoples’ radars.

“What we want from a monetary system isn’t to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that’s not at all what is happening in Bitcoin,” the economics professor wrote two years ago.

In his most recent column, “Bits and Barbarism,” Krugman has even harsher words for the cryptocurrency whose valued has soared over the past few months, reaching an all-time high of $1,240 per BTC in November.

In Krugman’s piece – a “tale of monetary regress” as he puts it – the economist identifies three “money pits” – Bitcoin being the second on his list.

Bitcoin only has value because people are willing to buy it because they think other people are willing to buy it, Krugman explains.

“It is, by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers,” Krugman writes.

“A lot of real resources are being used to create virtual objects with no clear use,” he concludes.

Interestingly, the first “money pit” on Krugman’s list is Barrick Gold’s Porgera open-pit gold mine in Papua New Guinea. The economist criticizes the mine for its reputation of human rights abuses and environmental damage.

Interested in Krugman’s third “money pit”? You should probably read it in his words.

AAA

Henry Sapiecha

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