Boring Bitcoin Report

For daily updates and breaking news, visit: BoringBitcoinReport.com, follow us on Twitter @BoringBitcoin, and Facebook: Boring Bitcoin Report.

Click on the headlines below for links to the full story.

Government Scoop on Bitcoin

Faiella Gets Jailtime For Role In Silk Road

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.

Industry Scoop

First Licensed US Bitcoin Exchange to Open

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.

Winklevoss Twins Aim To Launch Bitcoin Exchange

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.

Crowdfunding App For Bitcoin Launches

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.

Bill Gates Doesn’t Think Bitcoin Will Be “The Dominant System”

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 Explores the Future of Bitcoin

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.

Gavin Andresen Tests Limits of Bitcoin Blocksize

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.

WSJ Columnist To Release Bitcoin Book On Tuesday

“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.”

Tweet of the Week

Coinbase Exchange open for trading http://t.co/nG1zriOBjz #bitcoin pic.twitter.com/r2qLQTxoyc

— Coinbase (@coinbase) January 26, 2015

Quote of the week

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.”

Pic of the week

Cameron and Tyler Winklevoss in the offices of Winklevoss Capital

 Boring Bitcoin Calendar

Inside Bitcoins Singapore

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!

 

For daily updates and breaking news, visit: BoringBitcoinReport.com, follow us on Twitter @BoringBitcoin, and Facebook: Boring Bitcoin Report.

Click on the headlines below for links to the full story.

Government Related Initiatives

DHS Once Thought Mt Gox Leader to be Head of Silk Road

A surprising theory on the innocence of alleged Silk Road mastermind Ross Ulbricht was presented at the start of his trial last week in New York. A Department of Homeland Security (DHS) agent who was undercover at the time revealed under cross examination by Ulbricht’s attorney that the government once thought the CEO of Mt. Gox was the true head of the illicit online marketplace. Special Agent Jared Der-Yeghiayan stated under oath that in the beginning of the initial investigation into Silk Road, evidence pointed towards Mark Karpeles, the owner of the Tokyo-based bitcoin exchange, as being Dread Pirate Roberts, the pseudonym used by Silk Road’s head. Karpeles has denied that claim.

Russia Blocks Bitcoin Websites

The Russian government agency equivalent to the Federal Communications Commission (FCC) is starting to ban bitcoin related websites. Despite the fact that bitcoin is currently legal in the country, Roskomnadzor, the telecommunications regulator for the Kremlin, issued a ruling in September to block several sites over fears of a “shadow economy.” The blocking came to light after Coinspot, a Russian-based site, was blocked, and quickly switched to a different domain, and wrote about it on their blog. Among the banned sites, are the main Bitcoin foundation website, bitcoin wiki, and Indacoin, a UK-based bitcoin exchange.

Spanish Party Rallies for Bitcoin Regulation

One of Spain’s political parties is calling for more regulation on bitcoin. Unión Progreso y Democracia (UPyD) wants more controls on the cryptocurrency to “improve security and prevent criminal activity.” The party cites research from the European Central Bank, concluding that the semi-anonymous nature of digital currencies leads to illegal activities and money laundering. The move comes after Spain’s department of finance and taxation ruled that bitcoin should be regulated as an electronic payment system. The UPyD will discuss their proposal in Spain’s Congress at the end of the month.

PayPal Lobbies for Regulatory Distinctions in Australia

PayPal has petitioned the government in Australia on future regulations dealing with bitcoin in the country. The company, in a letter to the Australian Senate dated at the end of December, wants distinctions to be drawn between digital currencies and digital wallets. While PayPal does support certain aspects of bitcoin, it has yet to come out with a public opinion on others. The letter was likely intended to sway the government against pursuing future licensing requirements similar to those proposed in New York that could impact the company’s bottom line.

Industry Initiatives 

Coinbase Raises $75 Million

 Coinbase, a bitcoin wallet and exchange startup, has raised $75 million in funding. According to the company, this is the first time “traditional” financial outlets have invested heavily in bitcoin. Some of the biggest donors include the New York Stock Exchange, USAA, BBVA and the former CEO’s of Citigroup and Thomson Reuters. This brings the total amount raised for Coinbase to over $100 million.

ChangeTip Now Available on Facebook

ChangeTip, an online service for sending and receiving money, has now made it possible to tip your friends on Facebook, using bitcoin. The company is already integrated with other social media platforms, such as Reddit and Twitter. To activate the service, users need to link their Facebook account with? ChangeTip, which accepts fiat currencies as well. The company says it hopes to encourage more users of the service to try bitcoin. A ChangeTip app is also available on Facebook as an option for users.

Factom Announces Crowdsale

Factom, a Bitcoin 2.0 project that offers blockchain-based record keeping has announced they will be doing a crowdsale of their digital tokens on Koinify, a crypto funding platform at the North American Bitcoin Conference. Factom helps users store large amounts of data on the blockchain without exceeding bitcoins blocksize limit. Founder Paul Snow says that in addition to the crowdsale, the company will release an Alpha API for developers and businesses and a consensus paper.

Vogogo Offers Lower Fraud Protection Costs

The $5 million hack of Bitcoin exchange Bitstamp has led Vogogo, a payment processing platform, to offer its fraud and risk management as a stand-alone service. Vogogo will also waive initial costs of integrating its fraud prevention service onto their platforms. Chief Security Officer Rodney Thompson hopes that by offering lower costs to the industry, they can ensure the vitality of the digital currency community. Vogogo offers live and automated protection for its client companies, and hopes to expand to businesses outside of Canada, thanks to a $8.5m venture capital fundraising round.

Bitcoin Giftcards Will Soon Be Available In South Korea

Coinplug, a South Korean bitcoin exchange, wallet, and payment processor is coming out with bitcoin gift cards, which will soon be available at convenience stores across South Korea. The cards will be called OKBitcard. According to a post from Coinplug on Reddit, the company is in the process of rolling out the cards to 24,000 7-Eleven stores but they aren’t available yet. But, in the meantime, those looking to purchase an OKBitcard can do so in the form of a printed receipt. The company also said customers will not need a bank account to redeem the bitcoins, just a smartphone or the internet.
Digital Currency Council Conducts Bitcoin Readiness Survey

The Digital Currency Council is conducting a survey on “bitcoin readiness” and professionals. The DCCC’s mission is to develop “professional practices in the digital currency economy” through various methods of training. Anyone who takes the survey will be entered to win a $100 giftcard from Gyft.com.

Take the survey here: http://www.digitalcurrencycouncil.com/media/bitcoin-readiness-survey/

Tweet of the week

Pleased to share we’ve raised $75M led by @dfjgrowth @USAA @nyse @bbva @docomo and others. Focused on helping #bitcoin grow in 2015 & beyond

— Coinbase (@coinbase) January 20, 2015

Pic of the week

As late as August 2013, the DHS suspected at Mt. Gox’s CEO might be operating Silk Road

Quote of the week

Gavin Andresen, chief scientist for the Bitcoin Foundation said, “I don’t see any mass exodus of miners… I think the system can adapt fast enough.”

Book of the Week

Bit by Bit: How P2P Is Freeing the World, by Jeffrey Tucker

Foreword by bitcoin angel investor Roger Ver and introduction by Patrick Byrne, CEO of Overstock.com. Bit by Bit dissects the peer-to-peer digital revolution and how breakthroughs like bitcoin, Uber, Airbnb, Feastly and countless others are driving and enabling entrepreneurialism apart from, and often in spite of, government regulation. It’s about more than new and cool apps; peer-to-peer technology is forging a brighter social, economic, and political future for everyone.

 Boring Bitcoin Calendar

Inside Bitcoins Singapore

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!

2015 has arrived! Are you prepared for the fast-paced changes emerging within the digital currency community?

For daily updates and breaking news, visit: BoringBitcoinReport.com, follow us on Twitter @BoringBitcoin, and Facebook: Boring Bitcoin Report.

Click on the headlines below for links to the full story.

Government Related Initiatives:

Digital Chamber to Attend Treasury Roundtable on Financial Access for MSBs

The Chamber of Digital Commerce has a seat at the US Treasury’s Roundtable and is actively seeking input from the community to prepare for the event. On January 13 the U.S. Treasury is hosting a Roundtable Discussion on Financial Access for Money Service Businesses. The Chamber formed the Financial Access Task Force to prepare comments, and is calling on the industry to participate in an important survey to present data to the Treasury.

Take the survey here: http://www.surveytool.com/s/SFFEBC4331

CSBS Seeks Public Comment on State Regulatory Framework

The Conference of State Bank Supervisors (CSBS) published a draft state model regulatory framework and is seeking public comment. The goal of the proposed framework is to enable state banks to adopt regulations for an ever-changing digital currency industry, without stifling innovation. Among the proposals are licensing systems, procedures for consumer protection and cyber security protocols. To submit comments for the CSBS, click here. The deadline is February 16, 2015.

California Legalizes Bitcoin Transactions

As of the first of this year, a new finance bill went into effect reversing an old law that banned businesses in the state from accepting anything but US currency. Governor Jerry Brown signed the bill into law in June of 2014. The Silicon Valley area has at least 32 venture capital financed Bitcoin companies, more than the other 49 states combined, and in 2014, California had the highest amount of google searches for the word “bitcoin.”

BitInstant CEO Charlie Shrem Sentenced To 2 Years In Prison

Charlie Shrem, founder and CEO of the bitcoin exchange BitInstant, will serve a two-year prison sentence for his role in Silk Road, an illicit online market that used bitcoin for payment. Silk Road has since been shut down. Shrem was originally charged with participating in a money laundering conspiracy AND operating an unlicensed money transmission business (even though his company was registered with FinCEN as an MSB.) Shrem ultimately pled guilty to “aiding and abetting” his partner’s company, Mr. Fiella, in “the operation of an unlicensed money transmitting business”. As part of the terms of his plea agreement, he forfeited nearly a million dollars and will also serve 3 years of supervised release following his prison term. Shrem admitted, “I have no excuses for what I did. I broke the law and I broke it badly.”

Industry Related Initiatives

BitStamp Relaunches with New Security System

BitStamp has announced its systems are back up and running with new security features after a hack that cost the company almost 19,000 bitcoins, or about 5 million dollars. The bitcoin exchange site was taken offline on January 4^th to allow the new security measures, including Amazon Web Services cloud infrastructure and new hardware to be installed. BitStamp says user balances will not be affected and all accounts will be honored. They are also offering commission-free trades until midnight on January 17^th.

Free Bitcoin Course Offered In California

The Bitcoin community in California is sharing their expertise by offering free courses to blockchain developers. The classes, which are taught by domain experts through Blockchain University, began last week and will be held Saturdays in Mountain View for the next two months. The classes are focused on bitcoin basics, protocol and transactions, with the end goal of helping developers create blockchain applications. Demo day will be held at the end of the course and is open to the public. “Blockchain University is providing, quite possibly, the most impressive and awesome opportunity to accelerate developer growth in the area of digital currency,” said Marshall Hayner, CMO of Block.io and Blockchain University organizer.

 Tweet of the Week

I’ve been sentenced to 2 years, to self surrender in 90 days. Considering I was facing 30 years, justice has been served. #Bitcoin

— Charlie Shrem (@CharlieShrem) December 19, 2014

Picture of the Week

KnCMiner mining operation in Sweden

Quote of the week

“If you’re not safe to keep your money in a Slovenian bitcoin exchange, where can you keep your money?” – Jimmy Fallon

Boring Bitcoin Calendar

Anti-Money Laundering Compliance Bootcamp for Digital Currency

January 15-16, Miami Beach, FL

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 ACAMS certified faculty from the AML Training Institute.  Gain attendance certification for continuing education credits for the Digital Currency Council, ACAMS, and others!  BBR readers receive 10% off when registering with the promo code “BoringBitcoin”.

The North American Bitcoin Conference, Miami Beach, FL

January 16 – 18, 2015

The world’s largest bitcoin conference will take place at the historic Fillmore Theatre. Speakers include an impressive list of the founders behind groundbreaking and industry-leading bitcoin companies including Vinny Lingham, Roger Ver, Tony Gallippi, Perianne Boring, Nicolas Cary and Matthew Roszak amongst many other CEOs and founders.

Save 15% off of your conference hotel bookings. The Clevelander The Clevelander Hotel Booking and The Essex House, a Clevelander property The Essex House Hotel Booking are offering special rates to conference attendees.

Inside Bitcoins Singapore

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!

Don’t forget to take the Chamber of Digital Commerce’s survey on Financial Access: http://www.surveytool.com/s/SFFEBC4331