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Government Scoop on Bitcoin
Bitcoin exchange operator Robert Faiella was sentenced to four years in prison last week for exchanging $1 million in digital currency for customers purchasing illegal drugs on Silk Road. Faiella pled guilty to operating an unlicensed money transmission business last September. The judge in the case took into account that Faiella has a previous conviction for a tax-related case. Charlie Shrem, the co-defendant in the case, was sentenced to 2 years in prison in December.
The first licensed bitcoin exchange in the United States opened today. The startup, Coinbase Inc., has money transmission licenses in 25 states in the US and will only operate in those states, which took nearly half of a year to secure. Coinbase raised over $100 million in venture funding, including from traditional financial outlets like the New York Stock Exchange, USAA and BBVA, and from the former heads of Citigroup and Thomson Reuters.
Cameron and Tyler Winklevoss of Facebook fame, are also attempting to create a regulated bitcoin exchange in the United States. The brothers reportedly have a bank and engineers from several hedge funds on board, and are in talks with regulators. “Gemini” will be similar to the Nasdaq exchange and it’s slated to open in the next few months.
A crowdfunding application powered by bitcoin is now available for download. Lighthouse, a free open source desktop app similar to Kickstarter and Indiegogo, uses “advanced smart contracts features of the bitcoin protocol.” Anyone can start a campaign and donations can only be made using bitcoins. Medic Mobile, a nonprofit healthcare company, is the only project currently available on Lighthouse.
In an interview with Backchannel, Microsoft’s founder said he doesn’t think bitcoin will be the main system that moves money across international borders. He believes blockchain technology will reduce transaction costs associated with traditional banking but pointed to price volatility and irreversible transactions as flaws. He said, “We need things that draw on the revolution of Bitcoin, but Bitcoin alone is not good enough.”
PayPal is exploring the pluses and minuses of bitcoin. The company hosted several speakers on the virtual currency as part of its monthly TechXploration series in San Jose, California. Lorne Lantz , developer and contributor to Andreas Antonopoulos’ book “Mastering Bitcoin”, gave a presentation on the subject. Lantz said the technology behind Bitcoin is where its potential lies, and compared it to the beginnings of the Internet. PayPal already offers online bitcoin payments using its Payments Hub.
In the promised follow-up post on the subject, Bitcoin Foundation Chief Scientist Gavin Andresen revealed the results of testing 20MB blocks on the Bitcoin block chain. Andresen stated in his post, “if we increased the maximum block size to 20 megabytes tomorrow, and every single miner decided to start creating 20MB blocks and there was a sudden increase in the number of transactions on the network to fill up those blocks, the 0.10.0 version of the reference implementation would run just fine.” A 1MB block size limit was implemented, likely by bitcoin creator Satoshi Nakamoto, early in the currency’s life, but Andresen believes the limit is artificial and can be lifted. Currently the 1 MB limit allows for 7 transactions per second, but that speed would increase if that limit could be lifted.
“The Age of Cryptocurrency: How Bitcoin and Cybermoney are Overturning the Global Economic Order,” written by Wall Street Journal Columnist Paul Vigna and Michael Casey is set to release on Tuesday. “We think it’s a great primer for mainstream readers on why, despite the volatility and noise around bitcoin, blockchain technology is here to stay.” The authors call Bitcoin “one of the most powerful innovations in finance in 500 years.”
— Coinbase (@coinbase) January 26, 2015
Bill Gates-“There’s a lot that bitcoin or Ripple and variants can do to make moving money between countries easier and getting fees down pretty dramatically. But bitcoin won’t be the dominant system.”
Cameron and Tyler Winklevoss in the offices of Winklevoss Capital
Boring Bitcoin Calendar
January 29 – 30, 2015
Inside Bitcoins Conference and Expo will be launching in Singapore on January 29-30, 2015 at the Suntec Singapore Convention & Exhibition Centre. The line-up of local and international speakers come from diverse backgrounds and include Aurélien Menant, Co-Founder and CEO of Gatecoin; So Saito, Counsel, Nishimura & Asahi, Legal Advisor of Japan Authority of Digital Assets; Arthur Hayes, Co-Founder & CEO, BitMEX; and many more. Interested in attending? Get 10% OFF Full Conference Passes when you register using the discount code CHAMBER! Register now!