The market price of bitcoin took a big hit this past week – decreasing over 15 percent. In addition, the US Securities and Exchange Commission successfully prosecuted a man in Texas for allegedly running a bitcoin ponzi scheme. In Washington, DC, the industry has provided an additional one million dollars to launch a new public policy organization for bitcoin, a sign of market maturity; and a small British Crown dependency is poised to become the Bitcoin capitol of the world. The details are in the descriptions below.
Click on the headlines for links to the full stories.
Summary of Government Related Initiatives
SEC Prosecutes Trendon Shavers For Running ‘Ponzi Scheme’ And Fines $40m
While the Securities and Exchange Commission has yet to provide any guidance regarding digital currencies, they did manage to prosecute a second bitcoin related case. On Friday, a US federal judge issued a summary judgment against Trendon Shavers to pay a $40.7 million fine to the SEC for allegedly running a ponzi scheme. Trendon will be remembered as a bitcoin scammer, but truth be told, Shavers was not given a chance to plead his case and the industry will never hear the full story.
According the Jason Seibert, of F. J. Seibert, LLC “the SEC brought their heavy-handed playbook against Shavers. Before he had a chance to mount an adequate defense the SEC froze every asset… What the SEC did, and what the court allowed, wasn’t equitable, was a contravention to the law, and potentially denied Shavers his constitutional protections.”
Federal Reserve Bank of Boston Issues Paper Outlining Bitcoin’s Potential
In a research report written by a Boston Fed senior economist and Harvard economist, the bank tipped a hat to the disruptive power of block chain technology. In summary, the report states “the lasting legacy of Bitcoin most likely lies in the technological advances made possible by its protocol for computation and communication.” This is not the first time Fed officials have publically showed support for bitcoin – a positive sign that the government recognizes the potential digital currencies could bring to monetary and fiscal policy.
Coin Center Launches In Washington, DC
Last week a new public policy organization for Bitcoin launched in Washington, DC. Coin Center’s mission is “to build a better understanding of these technologies and to promote a regulatory climate that preserves maximum freedom of action for digital currency innovation.” Coin Center’s executive director, Jerry Brito, is the former senior research director of the Mercatus Institute of George Mason University. The Chamber of Digital Commerce “is delighted to welcome an additional voice for Bitcoin to Washington.”
Louisiana Republican Party Accepts Bitcoin Donations
The Louisiana Republican Party began accepting bitcoin donations on their website last week. A representative of the party stated that a public announcement of the decision will be released in the near future. Louisiana’s Libertarian Party also accepts bitcoin; however, the Louisiana Democratic Party does not.
Summary of Industry Initiatives
Market Price Of Bitcoin Drops Over 9 Percent
According to Winkdex.com, the market price of bitcoin dropped 15.78% last week from $477.32 on Sunday, September 14 to $401.98 Sunday, September 21. The authors behind the Wall Street Journal’s Bitbeat offer a few explanations. One theory says that there have been less “big buyers” on exchanges in the past few months, “which has given sellers an excessive impact on price,” driving prices downward. Another more elaborate theory argues that Chinese bitcoin miners are dumping mined bitcoins for US dollars to acquire more foreign assets (see Alibaba story below). Two of the largest bitcoin exchanges, BitStamp and BTC China, saw significant increases in trading volume, which also helped push Bitcoin’s price down more than $40 on Friday.
Alibaba IPO Might Have Affected Bitcoin Price
Alibaba Group Holding Limited (BABA), China’s largest e-commerce company (think Amazon, EBay, PayPal, and FedEx all in one), issued an initial public offering (IPO) on the New York Stock Exchange this past Friday, which turned into the largest IPO in US history. Starting at $68 per share, reaching a high of $100 and closing at $93.89, BABA’s valuation closed at over $231 billion.
Although no one knows for sure, this contributed to the declining price of bitcoin last week because investors were freeing up capital in bitcoin to invest in Alibaba.
Coinbase Launches Toshi – An Open Source Bitcoin Node
Coinbase announced the launch of Toshi, an open-source full Bitcoin node that aims to make it easier for developers to build web applications using blockchain data. Toshi allows developers to access information on addresses and transactions, broadcast new transactions, and get stats on the blockchain like confirmation time and block height. In that sense, Toshi is similar to several blockchain APIs like BitPay’s Bitcore, Chain’s API and Block.io’s APIs. Toshi was written in Ruby and developers can contribute to the project via GitHub if they notice any issues.
BitPay’s New API Has String Of Features
BitPay has released their new open-source Application Programming Interface (API) built on top of Bitcore. The API has merchant features that have the ability to implement refunds to any bitcoin wallet. In addition, the new API automates the submission of Bitcoin Bills through the API and can send requests for payments via email. The new API is available in several coding languages for developers: Node.js, C#, Java and PHP. BitPay also announced that they have made BitAuth, their decentralized authentication API for security, open-source.
Digital Currency Council Launches, Offering First Digital Currency Certifications
The Digital Currency Council launched last week, which is a professional association for attorneys, accountants, and finance professionals wishing to broaden their knowledge of digital currencies with certified coursework. DCC CEO, David Berger states that
“The mission of our organization is to educate and set a standard for attorneys, accountants, and financial professionals – those who advise others in exchange for fees – in the digital currency economy.”
Barry Silbert’s Bitcoin Opportunity Fund provided funding for the organization’s launch. The DDC offers four levels of membership, the basic “Explorer” membership is free and you can join .
Isle of Man Vying To Become Bitcoin Capitol
The Isle of Man is vying to become the Bitcoin capitol of the world by incorporating business friendly regulations. The country does not have any capital gains or corporate taxes and has low income taxes, which is attractive to financial services businesses. Other countries, such as Bangladesh and Bolivia, have banned the use of Bitcoin and with jurisdictions like New York proposing heavy regulations, the Isle of Man is posing as a safe haven for the emerging digital currency industry. The island nation has employed this strategy with the online gambling industry, and hopes to achieve the same level of success with Bitcoin.
Scotcoin Survives After Scotland Fails to Secede From Britain
When Scotland was considering seceding from the United Kingdom, some digital currency advocates suggested that the potential new country should adopt Bitcoin, or another digital currency like Scotcoin. Scotcoin was created by Scottish venture capitalist, Derek Nisbi, in hopes that it would become the currency of a newly independent Scotland. Derek Nisbit even gave 1,000 Scotcoins to every Scottish citizen to entice people to use the currency. Although the referendum to secede from the UK failed, the digital coin survived and currently has a market cap of roughly $150,000.
Picture of the Week
Our Picture of the Week was submitted by fellow bitcoiner who captured this sign at Burning Man.
Quote of the Week
“US startups are facing sever difficulties gaining access to banking partnership”
Our Quote of the Week comes from Pete Rizzo of CoinDesk in an article outlining one of the biggest challenges to bitcoin companies – getting a bank account. Many companies have had their accounts closed without explanation or warning.
Tweet of the Week
Bitcoin Tanks, Is Alibaba to Blame? Who cares about blame…sounds like a buying opportunity to me. via @YahooFinancehttp://t.co/iWdUshrZUQ
— Edmund Moy (@EdmundCMoy) September 20, 2014
Plug of the Week
Support John Scianna for Draper University of Heroes
John Scianna is currently a student at the University of Florida studying business and will be attending Draper University next week. Draper University is an entrepreneurship program founded by venture capitalist and bitcoin enthusiast Tim Draper.
John was first introduced to Bitcoin in 2012 during a study abroad program and followed bitcoin through the Cyprus banking crisis. He has since been a bitcoin miner, investor, contributor to Bitcoin Magazine and intern at the Chamber of Digital Commerce.
You can support John to take his fledgling bitcoin career to the next level by donating to his cause here.
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