Source: CryptoCoinsNews

Last month our family spent nearly a month living on the road while spending only Bitcoin. During the course of our travel we were invited via Twitter to make a change to our route so we could experience the cutting edge Bitcoin Boulevard, founded by Nikhil Chand and his amazing wife, Rebecca. The pair has helped dozens of restaurants and shops set up to accept Bitcoin through BitPay.

We immediately changed our route to include an overnight stop in Cleveland Heights, Ohio so we could test out the local Bitcoin scene and get to know their community. When we pulled up to their vintage 1920s house, Nikhil and Rebecca were waiting for us in their driveway. They helped us unload then took us on a stroll to Lee Road, also known as Bitcoin Boulevard.

Nikhil knew people everywhere we went. Neighbors, store owners, and folks strolling down the street all waved and greeted him with enthusiasm. I believe it is this close connection to his community that allowed him to so quickly launch this inspiring project.

Our first stop was The Tavern Company, an amazing Restaurant and Bar in the heart of Bitcoin Boulevard. I got the salmon roll salad and literally devoured every morsel. A reporter for the Sun News met us there. First she talked to my husband John Bush and I about our Uncoinventional Tour, then to Nikhil about his company, CoinNEO and the creation of Bitcoin Boulevard. Her article was also published in the Plain Times.

John made the payment via BitPay and we walked down the block to SweetieFry to try some handmade ice cream on BTC. This ice cream shop had a very unique and diverse set of flavors including French Toast! I had the dark chocolate and peanut butter flavors while my daughter enjoyed Strawberry. Once again we paid BTC directly through BitPay. Neither of these establishments had trouble accepting our payment and seemed casually accustomed to receiving payment with BTC.

While we walked back to Nikhil and Rebecca’s house, John interviewed Nikhil for his Let’s Talk Bitcoin podcast, SovereignBTC. You can listen to the interview here when it is live. That night we enjoyed the company of our hosts while our kids played with their adopted dog, Clive. John showed Nikhil his NXT wallet and they geeked out on the bidding and sales system for this thriving non-BTC crypto currency. Our friend Mark thoroughly introduced us to the currency while we attended PorcFest and John has become passionate about showing others how it works.

When we woke, Rebecca made us espresso in her French Press. They were heading off to their respective jobs and we had to depart for our long journey to Saint Louis, Missouri. They recommended a breakfast joint called the Katz Club Diner, further down Lee Drive, part of Bitcoin Boulevard.

What a great recommendation: this might have been the best meal of our trip to date. They offered local foods and had many gluten free options! Our kids got the pancakes that had local cherries and syrup on them. I had an egg scramble dish with goat cheese, black beans, and crispy tortillas underneath. I felt like I could have stayed there and ate all day. We purchased our meal easily with Bitcoin through their BitPay application on an iPad, but only after getting two gluten free cookies for the road. This was one of the most expensive meals we had on the trip, over $75 with the tip, but very much so worth it.

In review, if you are wanting to dine on BTC, Cleveland Heights is the place to go. Every bite of every meal was simply amazing. What a fabulous detour on our journey. Thank you Nikhil and Rebecca for the invitation and the hospitality!

The post Our Uncoinventional Journey to Bitcoin Boulevard US appeared first on Bitcoin Magazine.

This past month was the Bitcoin in the Beltway Conference held in Washington, D.C. The event was planned by Jason King, who recently ran 3,214 miles on a tour called “Bitcoin Across America”. The Conference took place at the Marriott Renaissance in Downtown D.C. and proceeds went to King’s organization, Sean’s Outpost, a homeless outreach and advocacy group that operates on bitcoin donations. King defies the laws of physics with the amount of energy he pours into his advocacy. In addition to literally running across the country for Bitcoin and organizing this major event in D.C., he is also a regular speaker at BTC events across the country and a dedicated philanthropist.

The event featured speakers such as Patrick Byrne, CEO of Overstock.com, Jeffrey Tucker, Founder of Liberty.me. and Davi Barker, of Bitcoin Not Bombs. I sat on a media panel with Perianne Boring of Forbes, who gave great advice on how to get coverage of Bitcoin stories in mainstream media. A few of the heavy hitter speakers on the bill did not show including Cody Wilson, infamous for 3D printing gun parts through his company, Defense Distributed, and Charlie Shrem, who was recently arrested on money laundering charges in connection with his role in the bitcoin company, BitInstant. Charlie was not able to attend as the court handling his case reversed their decision on his right to travel.

While I had a great time at the event, I do have a few critiques that are intended to help other organizers put on the most constructive experience possible for speakers and attendees. Many of these critiques are not unique to this event, and I will try to be clear about this when I mention them.

I think a common mistake of event organizers is to try and squeeze in too much programming for the scope and size of the event. This often results in a chaos of sorts as people try to shuffle from one speaker to another, all of whom are spread between various locations. I have found that events which funnel the crowd into one place with only a few break out sessions flow much better for the speakers and the attendees.

As the organizer or co-organizer of many large conferences, I have learned this lesson the hard way. I think the diversity of subject matter and quality of speakers were phenomenal at this event, but many people reported having trouble figuring out where to be and when.

For future event planners, I suggest the following daily structure for maximum attendance at each of your speeches and breakouts. Start the day with a full crowd every morning followed by a break out session before lunch. Eat lunch as a group and follow with another break out session. Finally, end the day as a large group and save the evening hours for mingling.

My second critique is that the vendor booths were in the same room as the main stage. I find this highly distracting as an event attendee and highly frustrating as a vendor. I have two small children and it is absolutely impossible for me to work our vendor booth with my children in tow if the event is in the same room as the vendors.

Inevitably you will have vendors who arrive to set up late and break down to leave early.  This creates noise in addition to the chatter that take place in every vendor area. I have attended Tenth Amendment events, Liberty events and Bitcoin events set up like this. It never works out well. Ideally you want your vendors close to the entry and exit ways so the crowd naturally forms around the booths. This keeps your vendors happy in addition to those trying to listen to the presentation.

My third critique is having the event spread out too far. The main room was large enough to accommodate the keynote and breakouts, which would have funneled everyone nicely.  When people have to wander too far away from the main stage doors, they usually turn around, confused. Our screening of Sovereign Living had the lowest turnout we have experienced at any conference, and we later heard that people could not find the room.

Overall the event was positive. The speakers were dynamic and resourceful. I was introduced to new ideas about media and met new personalities while interacting with many movers and shakers in the Bitcoin world. I felt blessed to be a part of the event and hope this article can serve as a lesson learned for those planning events in the future.

The post Constructive Reflections on Bitcoin in the Beltway appeared first on Bitcoin Magazine.

Uncoinventional: the Tour in Review

Last month, our family traveled the U.S. spending only bitcoins.  We documented our travels for Bitcoin Magazine through a live blog.  As we embarked on this journey, I had no idea what I had got myself into. Still, I felt compelled to try. For those of you who weren’t following our ups and downs in realtime, here are the highlights:

The Numbers

The trip took a total of 24 days and brought us to stops in 12 cities. We traveled a total of 4,600 miles and pumped gas 16 times. We stayed in eight hotels, crashed in three guest bedrooms and camped at one campground. We paid seven businesses directly with Bitcoin and used three gift card services to pay indirectly with Bitcoin. We stopped at three local MeetUps, attend one conference, one festival and conducted four screenings of Sovereign Living, the reality show about our lives.  It was a whirlwind trip, but we learned a lot.

The Logistics

Bitcoin is still in the days of early adoption. This means a lot of research is needed to find Bitcoin-friendly venues for smooth travel. During our trip, places that accept Bitcoin directly were rare, so we supplemented with gift card services such as Gyft and E-Gifter.

Booking Hotels

There are actually many options for booking hotels with Bitcoin. We tried them all to see how they each worked. We had a very easy time using our Gyft app to purchase gift cards for GlobalHotelCard.com. we used this method twice with no issue. We also used CheapAir to book our hotel and pay directly with BTC. This was actually the most simple service we found. Quick, easy, no complications. We even paid a Holiday inn Express in Brooklyn directly with Bitcoin.

Our major complication was using Expedia. We had a rough enough time using their service that I published an article titled, Our Nightmarish Experience Using Bitcoin on Expedia. After publishing the article they contacted us and were able to make some immediate changes to their technology. Now you can pay with both a gift card and Bitcoin, whereas you could not when we tried from the road. They are also working with CoinBase, their Bitcoin payment processor, to develop a training program for their call center.

Wait, what about gas?

For gas, our family used CoinFueled, a website that allows you to order gasoline gift cards with Bitcoin. It takes about two weeks to process orders, so this avenue required a bit more forethought on our end than a traditional road trip.

After an hour of mapping out our journey, calculating our gasoline needs, and looking at what  gas stations were in each city so we bought the right gift cards, we finally opted for $450 in Exxon Mobil and $300 in BP cards. This amount was actually short of we needed for the trip by around $300, as we forgot to account for the vendor items loaded in our trunk and roof.

When we arrived in D.C., we placed an order for another Exxon Mobil card that CoinFueled rush delivered to our campsite in Lancaster, NH. When we arrived in Kansas City my mother served as a proxy for us by purchasing a Shell gift card with her debit card that we replaced by ordering her a gift card with BTC.

A few times we had to drive slightly out of the way to get to a gas station we had a gift card for. Even though I planned out each stop, we decided to keep driving if the kids were asleep. This added an element of surprise to our gas purchases. Thankfully our in-car GPS helped us find appropriate stations on our route.

Food

Gyft, a gift card services that takes bitcoins, had most of our food covered. I ordered cards to Amazon, where I ordered healthy snacks from before the trip. At Whole Foods, our favorite meal and grocery stop, we used Gyft’s app on our phone.

The process of buying a gift card was so simple and easy that we would wait to hear our total from the cashier, open the Gyft app, order the appropriate Whole Foods gift card, scan our Bitcoin QR code, then hand our phone or tablet displaying the electronic gift card to the cashier for payment. It took about the same amount of time required to dig your debit card out of a large purse. We were also able to use Bitcoin to eat at Applebee’s, T.G.I.Fridays, T. Rex, Papa Johns, Cracker Barrel and On the Border, again with the help of Gyft as well as EGifter.

When we hit D.C., New York City, Cleveland Heights, and the Porcupine Freedom Festival, we were able to buy meals directly with bitcoins. There is a wonderful website called CoinMap.org that allows you to search for brick-and-mortar merchants that accept Bitcoin.

However, being listed on Coinmap didn’t guarantee ease of use. Some businesses had a hard time figuring out how to take our payment, resulting in long conversations and phone calls to the owner. As Bitcoin is still fairly new, I suggest calling ahead to make sure they are ready for you before you arrive.

We were also tipped off on a Bitcoin business directory called AirBitz. I heard rave reviews, but their app was incompatible with my tablet. I tweeted them about it and they quickly made an update that allowed me to download it, but it still crashes. I tweeted them the crash error, hopefully it will be dealt with soon and I can try out their service.

Summary

Our trip was full of unexpected twists and turns, but we feel it was a major success. We did use Federal Reserve Notes to pay toll roads, something the Bitcoin community will hopefully have developed a work around before our next annual trip to PorcFest.

Our obstacles and challenges will help make the Bitcoin ecosystem stronger. Restaurants with little BTC experience got to practice with us and will be more equipped the next time a Bitcoin customer arrives. AirBitz discovered a flaw in their programming and will have a stronger product when they make their next app update. Expedia learned of the user-end difficulties with their website and call centers, and are actively working to become a better and stronger part of the Bitcoin ecosystem.

Hopefully, our successes have inspired other Bitcoin fans to use it more often in their daily lives. We have already been contacted by multiple people telling us how they purchased a hotel room or bought a meal with Bitcoin.

We hope to continue the experiment on at least four more road trips to Bitcoin conferences and events this year. You can keep following our Uncoinventional blog for the latest!

The post Uncoinventional Tour in Review, Our Month on the Road Spending Bitcoin Only appeared first on Bitcoin Magazine.

Butterfly Labs anonymously buys Buttcoin.org to remove “scam article”

In an unexpected marketing move, the Bitcoin mining hardware manufacturer Butterfly Labs anonymously bought the well-known website Buttcoin.org. The domain is famous for its criticism and funny approach on serious cryptocurrency-related matters, but the situation seems to have changed with the recent acquisition.

The biggest example is the change in one of Buttcoin.org’s most famous stories: previously an online search for “butterfly labs scam” would return a very special link from Buttcoin. That link revealed an article entitled “The $22,484.00 Butterfly Labs Mini Rig Bitcoin miner is a huge, broken, unstable piece of s***”, which claimed to reveal the “truth” about Butterfly Labs’ hardware based on user reports.

Full article

Bitcoin’s first comic book: The Hunt for Satoshi Nakamoto

The world of Bitcoin is about to get its first comic book, courtesy of three Spanish artists with a penchant for the geek culture.

“Bitcoin: The Hunt for Satoshi Nakamoto” was written by Alex Preukschat and Josep Busquet and illustrated by Jose Angel Ares Garcia, who has previously illustrated and published several novels.

Source: Coindesk

Finnish project plans to use TV network to broadcast Bitcoin data

A new Finnish project is about to accomplish its ambitious mission within the Bitcoin ecosystem: the Koodilehto KryptoRadio project wants to broadcast Bitcoin-related transactional data around the world using digital television transmissions or, in other words, Digital Video Broadcasting – Terrestrial (DVB-T) networks.

According to the project’s website, the signal will transmit Bitcoin transaction data in real time, creating opportunities for innovation and also making the cryptocurrency safer. Besides, the special transmission would ensure any transactions could be traced thanks to the unilateral signal.

Full article

Silk Road Bitcoin prospective bidder loses $62,000 to phishing scheme

The steady stream of data breaches continued this week with breaches in sectors ranging from healthcare to hospitality. While one attack was a sophisticated phishing scheme, others came from insider threat and unfortunate employee errors.

Silk Road Phishing – Three weeks ago, I reported on a breach that seemed more embarrassing than actually concerning — the US Marshals Service accidentally CC’d 40 potential Silk Road Bitcoin bidders instead of BCC’ing them. Thanks to a phishing scheme that took advantage of this slipup, though, an Australian bidder lost 100 Bitcoin — worth an estimated $62,000 — according to SC Magazine.

Source: Forbes

Japanese retail giant Rakuten ready to accept Bitcoin “sooner or later”

The Japanese retail giant Rakuten might start accepting Bitcoin soon, according to an announcement made this week by the company’s CEO, Hiroshi Mikitani.

Mikitani said that his company will probably accept Bitcoin “sooner or later”. Rakuten owns Japan’s biggest and most important online retail group, working with a network composed of more than 40 businesses and brands.

Full article

8 Million vericoin hack prompts Hard Fork to recover funds

Digital currency exchange platform MintPal has suffered a successful hack attack that resulted in the loss millions of vericoins from its hot wallet. The 13th July attack targeted a vulnerability in the site’s withdrawal system. The hacker, according to an official statement from MintPal, was able to circumvent internal controls and authorize a withdrawal request for the contents of the vericoin wallet.

Notably, the site’s Bitcoin and Litecoin wallets were also targeted by those behind the attack. However, owing to MintPal’s existing cold storage procedures for those wallets, user balances were not affected during the incident.

Source: Coindesk

GHash.IO promises to establish 40% hashrate limit to prevent ’51% attack’

The popular Bitcoin mining pool GHash.IO – famous for raising concern about a possible ’51% attack’ on the Bitcoin ecosystem twice in the last year – has promised that in the future it will “not exceed more than 39.99% of the overall Bitcoin hashrate”.

The news was revealed during a recent summit organized by GHash.IO. The event, held after the last CoinSummit London conference, addressed the threat of ’51% attacks’ against the Bitcoin network. The so-called ’51% attack’ might happen if one single entity ends up controlling more than half of the computing power used to mine Bitcoin and using that power to block transactions or double spend, among other actions.

Full article

CheapAir.com tops $1.5 million in Bitcoin sales

In November, CheapAir.com began accepting Bitcoin with Coinbase. CheapAir.com decided to integrate after being introduced to the idea by an existing customer who wanted a more convenient and secure way to pay for flights.

Today, we are excited to announce that CheapAir.com has surpassed $1,500,000 in Bitcoin sales for hotels and flights. Accepting Bitcoin has connected CheapAir.com to thousands of new customers from a loyal and rapidly growing bitcoin community and the results have significantly surpassed initial expectations.

Source: Coinbase Blog

New York releases draft for unique and innovative BitLicense

The New York Department of Financial Services (NY-DFS) is changing the way the American authorities see cryptocurrency: the department released this week a draft that shows how the state’s BitLicenses will look like.

The most surprising – or maybe not – point informs that anyone using a New York-sanctioned Bitcoin or cryptocurrency service will no longer be anonymous. If the BitLicense is approved, any business that buys, sells or deals with Bitcoin in any way will have to maintain records of their customers’ names and addresses, checking their background on a regular basis.

Full article

BitPay introduces ‘Get Bits’: a Facebook Bitcoin sharing app

Georgia-based BitPay has recently introduced a new Facebook application that will allow users interested in bitcoin to get the digital currency from their very own friends over the social network.

Dubbed ‘Get Bits‘, the app is one of many solutions available for newcomers to Bitcoin to get their paws on the highly talked about digital money.

Source: NewsBTC

Dell.com is now the largest electronic merchant to accept Bitcoin

A recently established partnership with Coinbase is now allowing the giant Dell to accept Bitcoin payments through its website. All the items available on Dell.com, including the Alienware line, can now be bought with cryptocurrency.

According to Coinbase, so far Dell is the largest ecommerce company to officially accept Bitcoin. The brand makes nearly $60 billion in annual sales.

Full article

Blockchain releases new Android wallet app

Popular Bitcoin wallet provider Blockchain.info is releasing a major new version of its Android app, allowing you to store, receive and send bitcoins directly from your Android phone. The key thinking behind the update is to make Bitcoin more accessible. It hides the complexity of the protocol in order to encourage mainstream user adoption.

“Our Android app has to do with making Bitcoin so easy to use that people don’t even have to think about addresses for example”, co-founder and CEO Nicolas Cary said. “That stuff exists in bitcoin, but just like there are complicated things happening in email, they are hidden”.

Source: TechCrunch

A recently established partnership with Coinbase is now allowing the giant Dell to accept Bitcoin payments through its website. All the items available on Dell.com, including the Alienware line, can now be bought with cryptocurrency.

According to Coinbase, so far Dell is the largest ecommerce company to officially accept Bitcoin. The brand makes nearly $60 billion in annual sales.

The Bitcoin payment option was implemented on Dell’s website in just two weeks, thanks to Coinbase’s team, which worked closely with the electronic giant during this period.

“Bitcoin is a new payment option intended to offer even more flexibility for customers”, Dell published on its website. In a special support page, the company also explains the three steps that the clients must follow to pay for their items with cryptocurrency:

When you’re ready to make a purchase, just add your items to your cart, fill out your shipping details and choose Bitcoin as your payment method. When you submit your order, you’ll be taken to Coinbase.com to complete your purchase.

From here, you can choose to pay directly from your bitcoin wallet by using the generated payment address or by scanning the QR code with your smartphone. Or, if you have a Coinbase account, you can log in and send payment directly.

Once your payment has been processed, you’ll be returned to Dell.com for order confirmation. It’s as simple as that!

To celebrate the good news, Dell will soon be announcing a special offer. We are talking about a Alienware promotion where customers can save 10 percent off a new Alienware system purchase when paying with Bitcoin.

Bitcoin, a digital currency once described by critics as unusable, unreliable and even a scam, has defied those remarks as it becomes accepted by a company maintaining over 14 million subscribers and employing 34,000 workers.

DISH executive vice president and chief operating officer, Bernie Han, said beginning in July the satellite TV company will accept digital coins through the payment processor, Coinbase.

Coinbase is a bitcoin consumer wallet and merchant payment processor that powers 1.3 million consumer wallets, and supports 31,000 merchants.

The payment processor, Coinbase, will convert bitcoins to cash using their “Instant Exchange” feature, in order to prevent DISH from being affected by value fluctuations. Coinbase was chosen as the payment processor due to their significantly lower operational fees.

“We’re excited to support DISH and their current and new subscribers for their bitcoin transactions,” said Coinbase co-founder Fred Ehrsam. “This is a large step forward in the growing momentum of customers paying companies in bitcoin for things we do every day, like watching premium TV,” said Ehrsam.

Coinbase will make it extremely easy “to receive immediate credit in dollars, at an attractive cost for DISH,” said Han.

The corporation, which provides cable, internet, audio programming and interactive TV services, is the first only TV provider to accept digital currency as payment.

It’s also the largest company yet to accept bitcoin.

“The move comes amid a time of drastic change and consolidation in the pay-TV and telecommunications industries, while Dish, run by Charlie Ergen, has largely remained on the sidelines,” said The Wall Street Journal.

Customers will soon be able to pay their bills online with the bitcoin wallet of their choice, and still be able to use previous methods of payment including cash, credit card and check.

“We always want to deliver choice and convenience for our customers and that includes the method they use to pay their bills,” said Han.

The cable provider said they recognized a flourishing desire in customers to participate in the digital currency buzz, and also employed many avid bitcoin users.

“Bitcoin is becoming a preferred way for some people to transact and we want to accommodate those individuals,” said Han. Individuals that aren’t so familiar with bitcoin will have no problem learning the ropes. The Coinbase processor is expected to make the experience easy for customers.

The public seems to be quite enamored with DISH’s decision to accept bitcoin, and also supportive of using Coinbase as the payment processor. The San Francisco based company has received several positive reviews since they opened in June 2012.

Redditor user BrazenAmberite wrote: “Easily one of the most professional exchanges out there. I’ve bought a lot of coin on there all without issue.”

Coinbase even has a new feature that allows you to claim a URL and share it with your friends and family, enabling them easily to send you bitcoin.

Reddit0829 wrote: “Don’t forget they also just integrated two huge features, device authentication, and user names. They’ve also really stepped it up in the customer support category. Coinbase is doing big things.”

The relationship created between DISH and Coinbase is sure incite similar moves by other large corporations, further expanding the bitcoin market.

The post Cable TV Joins Digital Currency Network, DISH Network to Accept Bitcoin appeared first on Bitcoin Magazine.

Skilljar is used by online education instructors to deliver classes directly from their own websites, with topics ranging from yoga to computer programming.

Bitcoin Comes to Online Courseware

Instructors on Skilljar’s platform are automatically enabled for Bitcoin payments, in addition to accepting credit, debit, and PayPal. Bitcoin payments are converted to fiat currency at time of purchase, so instructors are protected from currency fluctuation risks.

“We’re really excited to accept Bitcoin for our Food Startup Branding classes,” said Danielle Gould, CEO and founder of Food+Tech Connect. “Because our goal is to decentralize and democratize learning, it’s important for us to align ourselves with innovative technologies that share our ethos. Skilljar’s platform has made it very easy.”

“The decision to accept Bitcoin as a form of payment was simple,” said Sandi Lin, CEO and co-founder of Skilljar. “It was driven by instructor requests, ease of integration, and the international nature of our business. Since we already use Stripe for payment processing, their beta program with Bitcoin made it easy to integrate while also leveraging our existing payments infrastructure.”

Skilljar Investors See Promise in Bitcoin

Skilljar’s interest in Bitcoin extends beyond the executive chambers.

Will O’Brien, CEO of leading Bitcoin security firm BitGo and also an angel investor in Skilljar, said, “Skilljar is the easiest way to deliver online courses, and by adding Bitcoin as a payment method, the company has dramatically increased its addressable market and is furthering innovation in online education.”

Skilljar was founded in 2013 by three former Amazon colleagues. The company incubated at TechStars Seattle 2013 and subsequently raised $1.1 million in financing.

The New York Department of Financial Services (NY-DFS) is changing the way the American authorities see cryptocurrency: the department released this Thursday (18th) a draft that shows how the state’s BitLicenses will look like.

The most surprising – or maybe not – point informs that anyone using a New York-sanctioned Bitcoin or cryptocurrency service will no longer be anonymous, Business Insider quotes. If the BitLicense is approved, any business that buys, sells or deals with Bitcoin in any way will have to maintain records of their customers’ names and addresses, checking their background on a regular basis.

Nevertheless, one of the most lauded measures consists of making sure these businesses have a Bitcoin reserve equal to the totality of the customers’ funds. They also have to get bonded-up “in such form and amount as is acceptable to DFS for the protection of the licensee’s customers”.

There is also good news for Bitcoin-friendly merchants: you won’t need a license if you’re a retailer accepting Bitcoin or other cryptocurrency. Below is the BitLicen’s full draft, which will be available for comment during the next 45 days.

NY DFS RELEASES PROPOSED BITLICENSE REGULATORY FRAMEWORK FOR VIRTUAL CURRENCY FIRMS 

Framework Includes Consumer Protection, Anti-Money Laundering, and Cyber Security Rules for Virtual Currency Businesses

Proposed Regulations Submitted for a 45-Day Notice and Comment Period to Solicit Public Feedback 

Benjamin M. Lawsky, Superintendent of Financial Services, today announced that the New York State Department of Financial Services (DFS) has issued for public comment a proposed “BitLicense” regulatory framework for New York virtual currency businesses. The proposed regulatory framework – which is the product of a nearly year-long DFS inquiry, including public hearings that the Department held in January 2014 – contains consumer protection, anti-money laundering compliance, and cyber security rules tailored for virtual currency firms.

Superintendent Lawsky said: “We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity – without stifling beneficial innovation. Setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets.”

In accordance with the New York State Administrative Procedures Act (SAPA), the proposed DFS rules for virtual currency firms will be published in the New York State Register’s July 23, 2014 edition, which begins a 45-day public comment period. After that public comment period, the rules are subject to additional review and revision based on that public feedback before DFS finalizes them.

Additionally, DFS is today immediately publishing a copy of the regulations on the website Reddit. Earlier this year, Superintendent Lawsky hosted an “Ask Me Anything” forum on Reddit about DFS’ work on virtual currency regulation, which generated more than 1,200 public comments. Links to the proposed rules are also being tweeted out from the DFS Twitter handle (@NYDFS) and Superintendent Lawsky’s Twitter handle (@BenLawsky).

Superintendent Lawsky said: “We recognize that – as the first state to put forward specially tailored rules for virtual currency firms – continued public feedback will be an important part of finalizing this regulatory framework. We look forward to carefully and thoughtfully reviewing public comments on our proposal.”

The new DFS BitLicenses will be required for firms engaged in the following virtual currency businesses:

• Receiving or transmitting virtual currency on behalf of consumers;
• Securing, storing, or maintaining custody or control of such virtual currency on the behalf of customers;
• Performing retail conversion services, including the conversion or exchange of Fiat Currency or other value into Virtual Currency, the conversion or exchange of Virtual Currency into Fiat Currency or other value, or the conversion or exchange of one form of Virtual Currency into another form of Virtual Currency;
• Buying and selling Virtual Currency as a customer business (as distinct from personal use); or
• Controlling, administering, or issuing a Virtual Currency. (Note: This does not refer to virtual currency miners.)

The license is not required for merchants or consumers that utilize Virtual Currency solely for the purchase or sale of goods or services; or those firms chartered under the New York Banking Law to conduct exchange services and are approved by DFS to engage in Virtual Currency business activity.

Key requirements for firms holding BitLicenses include:

• Safeguarding Consumer Assets. Each firm must hold Virtual Currency of the same type and amount as any Virtual Currency owed or obligated to a third party. Companies are also prohibited from selling, transferring, assigning, lending, pledging, or otherwise encumbering assets, including Virtual Currency, it stores on behalf of another person. Each licensee must also maintain a bond or trust account in United States dollars for the benefit of its customers in such form and amount as is acceptable to DFS for the protection of the licensee’s customers.
• Virtual Currency Receipts. Upon completion of any transaction, each firm shall provide to a customer a receipt containing the following information: (1) the name and contact information of the firm, including a telephone number established by the Licensee to answer questions and register complaints; (2) the type, value, date, and precise time of the transaction; (3) the fee charged; (4) the exchange rate, if applicable; (5) a statement of the liability of the Licensee for non-delivery or delayed delivery; (6) a statement of the refund policy of the Licensee.
• Consumer Complaint Policies. Each firm must establish and maintain written policies and procedures to resolve consumer complaints in a fair and timely manner. The company must also provide notice to consumers, in a clear and conspicuous manner, that consumers can bring complaints to DFS’s attention for further review and investigation.
• Consumer Disclosures. Companies must provide clear and concise disclosures to consumers about potential risks associated with virtual currencies, including the fact that: transactions in Virtual Currency are generally irreversible and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable; the volatility of the price of Virtual Currency relative to Fiat Currency may result in significant loss or tax liability over a short period of time; there is an increased risk of loss of virtual currency due to cyber attacks; virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to FDIC or SIPC protections; among others.
• Anti-money Laundering Compliance. As part of its anti-money laundering compliance program, each firm shall maintain the following information for all transactions involving the payment, receipt, exchange or conversion, purchase, sale, transfer, or transmission of Virtual Currency: (1) the identity and physical addresses of the parties involved; (2) the amount or value of the transaction, including in what denomination purchased, sold, or transferred, and the method of payment; (3) the date the transaction was initiated and completed, and (4) a description of the transaction.

o   Verification of Accountholders. Firms must, at a minimum, when opening accounts for customers, verify their identity, to the extent reasonable and practicable, maintain records of the information used to verify such identity, including name, physical address, and other identifying information, and check customers against the Specially Designated Nationals (“SDNs”) list maintained by the U.S. Treasury Department’s Office of Foreign Asset Control (“OFAC”). Enhanced due diligence may be required based on additional factors, such as for high-risk customers, high-volume accounts, or accounts on which a suspicious activity report has been filed. Firms are also subject to enhanced due diligence requirements for accounts involving foreign entities and a prohibition on accounts with foreign shell entities.

o   Reporting of Suspected Fraud and Illicit Activity.Each Licensee shall monitor for transactions that might signify money laundering, tax evasion, or other illegal or criminal activity and notify the Department, in a manner prescribed by the superintendent, immediately upon detection of such a transactions. When a Licensee is involved in a transaction or series of transactions for the receipt, exchange or conversion, purchase, sale, transfer, or transmission of Virtual Currency, in an aggregate amount exceeding the United States dollar value of $10,000 in one day, by one Person, the Licensee shall also notify the Department, in a manner prescribed by the superintendent, within 24 hours. In meeting its reporting requirements Licensees must utilize an approved methodology when calculating the value of Virtual Currency in Fiat Currency.

• Cyber Security Program: Each licensee must maintain a cyber security program designed to perform a set of core functions, including: identifying internal and external cyber risks; protecting systems from unauthorized access or malicious acts; detecting systems intrusions and data breaches; and responding and recovering from any breaches, disruptions, or unauthorized use of systems.  Among other safeguards, each firm shall also conduct penetration testing of its electronic systems, at least annually, and vulnerability assessment of those systems, at least quarterly.

• Chief Information Security Officer. Each Licensee shall designate a qualified employee to serve as the Licensee’s Chief Information Security Officer (“CISO”) responsible for overseeing and implementing the Licensee’s cyber security program and enforcing its cyber security policy.

• Independent DFS Examinations: Examinations of licensees will be conducted whenever the superintendent deems necessary – but no less than once every two calendar years – to determine the licensee’s financial condition, safety and soundness, management policies, and compliance with laws and regulations.
• Books and Records: Licensees are required to keep certain books and records, including transaction information, bank statements, records or minutes of the board of directors or governing body, records demonstrating compliance with applicable laws including customer identification documents, and documentation related to investigations of consumer complaints.
• Reports and Financial Disclosures, Audit Requirements. Each firm must submit to DFS quarterly financial statements within 45 days following the close of the Licensee’s fiscal quarter. Each firm must also submit audited annual financial statements, prepared in accordance with generally accepted accounting principles, together with an opinion of an independent certified public accountant and an evaluation by such accountant of the accounting procedures and internal controls of the firm within 120 days of its fiscal year end.
• Capital Requirements: Necessary capital requirements will be determined by DFS based on a variety of factors, including the composition of the licensee’s total assets and liabilities, whether the licensee is already licensed or regulated by DFS, the amount of leverage used by the firm, the liquidity position of the firm, and extent to which additional financial protection is provided for customers.
• Compliance Officer. Each Licensee shall designate a qualified individual or individuals responsible for coordinating and monitoring compliance with NYDFS’ BitLicense regulatory framework and all other applicable federal and state laws, rules, and regulations.

• Business Continuity and Disaster Recovery. Each Licensee shall establish and maintain a written business continuity and disaster recovery plan reasonably designed to ensure the availability and functionality of the Licensee’s services in the event of an emergency or other disruption to the Licensee’s normal business activities.

• Notification of Emergencies or Disruptions. Each firm must promptly notify DFS of any emergency or other disruption to its operations that may affect its ability to fulfill regulatory obligations or that may have a significant adverse effect on the Licensee, its counterparties, or the market.
• Transitional Period. Applications for the license will be accepted beginning on the date the proposed regulations become effective. Those already engaged in virtual currency business activity will have a 45-day transitional period to apply for a license from the date regulations become effective. The superintendent will issue or deny the license within 90 days of a complete application submission.

With this draft proposal, the New York department becomes the first government entity to propose complete Bitcoin-related guidelines, which will probably inspire change in other states.

According to Tim Byun, chief compliance officer at the major payment processor BitPay,the proposed framework reflects the entity’s “strong understanding of the Bitcoin ecosystem, including valuable services to consumers that would benefit from an emerging, efficient and cheaper payment system”.

Feature image: Coindesk

This article is intended as an introduction to the concepts of bitcoin that might be of interest to those people that are retired. The reader is expected to have only basic internet web browsing and email knowledge.  The questions and answers are given in “layman” terms.

What is Bitcoin ?

Bitcoin is a new kind of payment and currency system. It’s a new way to pay for things with using pre-paid credits. It’s different from credit cards because it’s not based on debt. It’s the next generation of transferring money that replaces past inventions of using checking accounts and credit cards. It allows you to pay with cash-like money over the internet, even when they are standing next to you. With this new invention, credits of value that are stored on a ledger shared and verified by everyone, everywhere, at once, all around the world. It’s the first verifiable accounting systems that doesn’t belong to any government, bank, or king. Therefore it’s the first accounting system that belongs to nobody, so it can be verified and trusted by everybody. It’s the first time in history this has been possible.

The term is bitcoin – but it’s not really a coin – it’s just a block of pieces of value now being called bits. The term of the currency called a ”bitcoin”, is just another name for one million bits: just like a dollar can be called one hundred pennies.  They have a lot of unique qualities that make them like no other currency that has come before.  One of the biggest benefits is that it acts like money and has value. To be valuable  it must remain scarce and desirable.  Bitcoin is also a money payment system maintained by a world wide community. One of the main rules of the system is that only a limited quantity can ever be created, and that law can never change. A limited supply with exploding demand makes it become valuable.

People and companies all over the world have started to accept bitcoin as an equal to cash or credit cards. Merchants are helped by companies who will convert the bitcoin payments right back to cash at the time of sale.  This is very good for the merchant because they don’t have to pay credit card fees or worry about getting stuck the bill because credit card fraud.

But what about the government…and banks?

The US government wants desperately to maintain the nation’s technology lead in creating new businesses that the world uses. Google, Facebook, and Apple are a few examples.  They are excited to see all the new businesses that are starting up and the hundreds of millions of dollars being invested.  This is new growth and jobs that the US needs.

Even the Federal Reserve Bank recently showed excitement about the new possibilities despite that fact that it can remove some of the functions that banks do.  Electronic payments and checks can be done by bitcoin automatically and almost free without a lot of banks getting in the way. One world-wide ledger that everybody can trust will handle that.  Than banks themselves will benefit because their old ways of sending money to each other hasn’t improved since the 70s. It still takes them up to five business days just to wire funds across the street. Bitcoin can transfer money all over the world in less than 10 minutes for almost free.   Understandably, some banks are nervous about change, but the need for banks won’t be going away; people will still need to get loans to start new businesses, buy cars and houses. Banks are going to have to adapt and find new ways of being useful.

Many other countries don’t understand bitcoin yet. Just like most people, some governments are a little afraid of technologies they don’t understand. A lot of countries are a little slower to catch on but tend to follow the USA’s lead when it comes to world-changing technologies. The US didn’t invent bitcoin (that we know of) but seems to be out in front of other governments right now in the race to the future.  Other countries seem to be slowly coming around. They have a duty to remind their citizens that there aren’t laws on the books yet for bitcoin technology because it never existed before.  Some have told their citizens watch out for bad businesses and criminals trying to trick people out of their bitcoin. They remind their population that bitcoin isn’t legal tender – just like all the currencies of every other country outside its borders. Just try to pay your parking fine using Mexican Pesos and you’ll see how that works.

What about bad guys – aren’t they using bitcoin?

Yes, they have. They were some of  the first to realize the benefits of  using bitcoin for transferring money.  They were one step ahead of the police and courts who didn’t know about it or understand it yet. It would be a few years before they would figure out how to stop crime with it. Some authorities around the world also continue to fear twitter and email because “bad people” can communicate.  As we have learned, not all police around the world are the good guys. These days, the police have been using it to stop thieves because bitcoin can leave a trail of breadcrumbs forever recorded on the ledger.

The US government said bitcoin hasn’t been used much for crime at all compared to regular cash because not everybody accepts bitcoin yet. Bad guys still need cash to  pay for bribes, and guns and other bad guy stuff. But big online bitcoin exchanges have gone down and taken a lot of customer’s money with them. Governments don’t have laws on the books yet to make sure big exchanges are insured and audited like regular money exchanges.  Partners in crime will likely be afraid that the money trail that might lead back to them as well. Some of the authorities have said they would rather the crooks use bitcoin because it’s easier to follow than cash.  The US officials don’t believe terrorist will be much interested.

Somebody told me it’s a scam. Is it a ponzi scheme or something?

No. Ponzi schemes wouldn’t be considered legitimate by the Federal Reserve Bank, governments around the world, or big investment companies spending hundreds of millions getting new companies formed.  The bitcoin system isn’t owned by anybody yest everybody in the world can use it. There is no “pyramid” because there is not center or middle – it is decentralized. If one studies closely, they would likely find that the only people saying that today are the same people who understand it the least. Nobody should be promising that you’ll make money with bitcoin. It is very new and that can become valuable, but it can also be risky. If this technology really is changing the paradigm of the world, it might be fair to ask…wouldn’t that to be expected?

Like any investment in a new technology or company, the people that invest early are better off than those who invest late. Just ask early Google investors, or Microsoft and Apple, or railroad companies.  That’s the nature of investing. As things become more popular, more people want to use them which creates more interest and it builds on itself. Just like the telephone wasn’t worth much when only five people in the world used it. But now how much are cellphone companies worth? We see this happen all the time with new technologies that change the world. Only this time it’s the nature and abilities of money itself that is changing.

Where do you buy bitcoin?

You can buy bitcoins from several companies on the internet. Some of them will even connect right to your regular banking account so you can trade back and forth between bitcoin and dollars whenever you want in the United States. The two easiest places right now are coinbase.com and circle.com. They will allow you to connect your bank right to their banking system to transfer dollars to bitcoins and back when you want.

They will also store it and protect it there so you don’t have to worry about people trying to steal it from you. Many companies have gone out of business and the people lost their money that trusted them. Coinbase.com has proven to be very respectable. Circle.com is brand new but is backed by very important people with good track records and reputations.

Things to know first:

The price of bitcoin goes up and down by huge amounts that make it unpredictable right now. This is common for new world-changing technologies at first. But when you take a step back and look at the price over a year’s time at every point, it has always gone up. That doesn’t mean it always will, but there are reasons to believe it will. People are learning new ways to use them and it’s creating more excitement. Sometimes the excitement gets ahead of itself and when calmer heads prevail the price adjusts downwards very quickly as people see a price drop and panic. A lot of people are still skittish about new technology but trust is growing and the price swings are getting smaller. Now big Wall Street companies are starting to invest, the huge price swings may calm down.

It’s also a good idea for seniors to leave bitcoin with these bank-like companies (Currently coinbase.com and circle.com) because they are the kind that are audited and insured. This verifies they are protecting your bitcoin and still have it in their possession and can send it back to you, or convert it back into regular dollars if you want. They protect it by storing most of it disconnected from any networks and use several secure storage locations around the world with security guards. There are also other good honest companies for more technical people. And there have been a lot of companies that have gone out of business or have been raided by thieves. For now, coinbase.com has proven to be excellent and easy. Circle.com may also be good to look into as they open for business

I Don’t plan on spending bitcoins. Why would I want any?

The technology has a way to go to become friendly and easy enough for many people that haven’t grown up using new technology all their lives. Some of the retirement population might consider buying a little as a small investment. They should be reminded that it’s still considered risky investment still because the technology is still very young. It’s possible that there could be something that breaks that nobody has thought of yet. But a lot of people have realized that if it continues to work, it could be extremely valuable over time. The price has gone up thousands of percent. If seniors think about putting a little money into bitcoin, it should be money they wouldn’t lose sleep over if the price went to zero. You can buy as little as $5.00 so there’s no need to make a big investment.

Some people consider it an investment in the future of a new kind of money system. They believe that putting a little money aside here is a bet on the prediction that the rest of the world will eventually catch on to this new invention. It has dozens of benefits over older kinds of money that have been around for centuries that couldn’t have existed until this time and place inf the world. People living on fixed incomes see that the price of what they need is going up faster and each dollar they own buys less. Owning a little bitcoin might help protect some of the value of their money. If the price and value continue to increase as many experts predict, some people may considering buying a little as an insurance policy for their money.

Sources:

https://bitcoin.org/en/development

http://www.bloomberg.com/news/2014-05-29/u-s-economy-shrank-early-this-year-for-first-time-since-2011.html

http://www.coindesk.com/federal-reserve-bitcoin-potential-boon-global-commerce/

http://www.americanbanker.com/magazine/124_02/why-bitcoin-matters-for-bankers-1065590-1.html

http://en.wikipedia.org/wiki/Legality_of_Bitcoins_by_country

http://www.coindesk.com/argentine-central-bank-issues-warning-burgeoning-bitcoin-ecosystem/

http://www.nytimes.com/2014/02/27/opinion/27iht-edlebedev27.html?_r=1

http://www.usatoday.com/story/news/nation/2013/10/21/fbi-cracks-silk-road/2984921/

http://www.bloomberg.com/news/2014-03-18/treasury-s-cohen-says-regulation-helps-virtual-currencies.html

http://www.nhregister.com/general-news/20140319/us-officials-dont-expect-terrorists-to-embrace-bitcoin-heres-why

https://coinbase.com/

https://www.circle.com/

http://www.investopedia.com/articles/investing/052014/why-bitcoins-value-so-volatile.asp

http://fortune.com/2014/04/02/secondmarket-ceo-barry-silbert-banks-cant-ignore-bitcoin-anymore/

http://support.coinbase.com/customer/portal/articles/628970-how-does-coinbase-handle-security-

http://www.marketwatch.com/story/my-risky-retirement-bet-in-bitcoins-2014-05-27

http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/

http://bitcoinmagazine.com/12846/you-say-bitcoin-has-no-intrinsic-value-twenty-two-reasons-to-think-again/

The post Bitcoin Explained to the Retired Folks appeared first on Bitcoin Magazine.