It’s Time To Take The Narrative Back
Over the past few weeks there have been a variety of stories in the mainstream media regarding digital currencies, specifically bitcoin, used for illicit financial transactions. The scariest (and they are meant to scare you) imply that bitcoin is possibly being used to fund terrorism. As a former broadcast journalist I am astutely aware of how the media creates hype to generate more viewers.
The Telegraph recently published an article titled, “Terror suspect ‘tried to buy enough ricin to poison 100 people’” which states “Mohammed Ammer Ali, 31, of Liverpool, is accused of trying to buy the poison… from a website in the US using internet currency Bitcoins.” However, of course, the article did not mention anything about the fact that because Ali attempted to use a digital and traceable currency, which is broadcast over a public ledger, this probably played a role in law enforcement’s ability to successfully arrest him and prevent the suspected terrorist attack, which would not have been as likely if Ali had elected to use cash. Bitcoin and blockchain technology can and have been used to law enforcement’s advantage. It is time to take the narrative back.
Others within the community are aware of the reputational issues the bitcoin community faces. CoinDesk contributor, Yessi Bello Perez (@yessi_kbello), published an article with similar sentiments highlighting a few negative headlines from Vice, The Daily Caller, and Forbes. My personal favorite was from Forbes contributor W. Ben Hunt who recently said,
“Bitcoin is the cautious expression of a rebellious identity. Using Bitcoin is an effete act of rebellion, a weak signifier of resistance like wearing a hoodie or getting a tattoo that’s well covered by your work clothes. Bitcoin is fashion, more than a fad but less than lasting.”
Whether you agree with Hunt or not, this article highlights much more serious reputational issues the bitcoin community faces and if not addressed, could prompt policymakers to hastily take action.
Recipe For Disaster
In Washington, the bitcoin community has a recipe for disaster: media hype, such as headlines stating, “Bitcoin funded terror attack”, coupled with regulators and legislators who feel pressured to do something about this media hype, but who do not have a full understanding of the technologies. Put this recipe in the oven and you’re likely to bake a cake that is unable to be swallowed by start-ups and small businesses. In the words of President Obama’s former Chief of Staff, Rahm Emanuel, “Never let a serious crisis go to waste”.
Boring Bitcoin Report, CEO
Chamber of Digital Commerce, Founder & President
Click on the headlines below for links to the full story.
The US Marshals Service recently announced their third bitcoin auction. 50,000 bitcoins that were seized during the Silk Road investigations will be auctioned off in two series (10 blocks of 2,000BTC, and 10 blocks of 3,000BTC). Registration closes on Monday, March 2, 2015. The USMS will contact the winners of the auction on March 6, 2015.
PYC Bitcoin, who was the operator of the only Bitcoin BTM in Vermont, received a cease and desist letter from the state’s Department of Financial Regulation requesting to shut down the BTM because they do not hold a money transmitter license in Vermont. Commissioner Susan Donegan has been quoted as saying that bitcoin/blockchain meets the state’s definition of “monetary value,” thus is regulated under existing regulations – as opposed to New York who is drafting new regulations specifically for virtual currencies. Money transmission is regulated on a state and federal level. Not one company in the entire digital currency ecosystem has been able to obtain permission to operate in all 50 states. This is a huge barrier to entry for digital currencies companies.
Dell announced they are now accepting bitcoin payments from the United Kingdom and Canada. Dell began accepting the digital currency payments in the US in July. Dell expanded the service through a partnership with Coinbase, the bitcoin payment processor and exchange, which is currently expanding in Europe. However, Coinbase doesn’t offer the ability to buy or sell bitcoin in the UK or Canada and only has a wallet that is available in those countries – an issue we expect them to overcome.
CNN’s Inside Man Morgan Spurlock took an inside look at Bitcoin last week, trying to live off of only the digital currency for one week. Spurlock journeyed around New York City buying food and groceries with bitcoin and even stopped by the NYC Bitcoin Center. He also talked with former FBI agent Chris Tarbell, who was part of the team that dismantled Silk Road, about Bitcoin’s ease of use online. Summing up his experience, Spurlock stated: “I’m still confused by Bitcoin, but I’m less confused than I was at the beginning.” Possibly because he failed to recognize Bitcoin’s biggest potentials are well beyond its use as a currency.
Payment processor Stripe announced last week it has integrated bitcoin into its platform. Stripe customers can now accept bitcoin at the cost of .5% of the transaction value (please note the average credit card processing fee is 2.5% of the transaction value). Facebook, Lyft and Kickstarter are a few of the major name brands that use Stripe. Stripe started testing Bitcoin payments in early 2014 with the help of people from 60 different countries.
The price of Bitcoin jumped up 10% last week following news that Google and Square are collaborating on a digital currency payment system. The new partnership, first reported by technology news website “The Information,” comes shortly after the Federal Government announced Apple Pay will be integrated as a payment option at National Parks around the country. Google’s closest version to Apple Pay, Google Wallet, has underperformed against the company’s expectations. Both systems offer convenience but still face large transactions costs.
Ledger Wallet, smartcard based Bitcoin hardware company located in Paris, announced they have raised nearly $1.3 million. French Venture Capital firm, XAnge Private Equity, led the round, marking a big step for the industry in France. The company, which focuses on hardware wallets, plans to develop a new integration system called LedgerOS.
Bitcoin services provider Xapo has launched several new security products aimed at bigger bitcoin businesses like bitcoin exchanges and hedge funds. The company says it launched “Xapo Institutions” to provide better security for Bitcoin companies storing a large amount of the digital currency in cold vaults and wallets. Xapo will offer the service for free and will add revenue programs “once the industry matures.”
Boring Bitcoin Calendar
Feb 26-28, 2015, San Francisco, CA
Getting compliance right is critically important to establish banking relationships, avoid fines assessed by FinCEN, and prevent jail time. Hosted by the Chamber of Digital Commerce and sponsored by IdentityMind Global, this two-day intense workshop is led by CAMS certified faculty from the AML Training Institute. Gain attendance certification for continuing education credits for the Digital Currency Council, ACAMS, and the CSBS.
March 28-29, 2015, Austin, TX
The Texas Bitcoin Conference is a bitcoin technology summit with speakers, presentations and a hackathon. Key speakers include Steve Stockman, Congressional representative and bitcoin advocate, IBM Business Analytics and Strategy Architect Sumabala Nair and Founder and Partner of the Gilder Technology Fund, George Gilder.
April 27-29, 2015, New York, NY
Inside Bitcoins will be returning to New York on April 27-29 at the Javits Convention Center. The program will cover topics including bitcoin 2.0, blockchain-based startups, institutional investing, multi-sig wallets, risk mitigation, compliance, banking and fundraising, and more. Keynotes have been confirmed from Dan Morehead, CEO, Pantera Capital and Chairman, Bitstamp; Brian Kelly, Contributor, CNBC’s Fast Money and Founder & Managing Member of Brian Kelly Capital LLC; and Perianne Boring, Founder and President, Chamber of Digital Commerce. Get 10% OFF with the discount code CHAMBER. Register at insidebitcoins.com/new-york.
Tweet of the week
— Michael Dell (@MichaelDell) February 19, 2015
Pic of the week:
Vermont Department of Financial Regulation Commissioner Susan Donegan
“We’re open and having those conversations and if going through that process is either too daunting or doesn’t fit into someone’s philosophy, they should rethink being in this business. This is money. We don’t allow folks to go without some sort of oversight.”