Bitcoin

[American Patriot]

09.23.13
by wkchild
NSA Targets Bitcoin

by Justin, GoldSilverBitcoin:

New revelations in NSA-leaked documents show that the US security agency has interest in spying on Bitcoin and other decentralized digital currencies.

The revelations from Germany’s Der Spiegel implicate the US NSA in spying on banks and credit card transactions, oftentimes in violation of national laws and global regulations. According to internal NSA documents, the European SWIFT financial transcations has been tapped.

The documents state that the agency has in-depth knowledge of the internal processes of credit card companies like Visa and MasterCard. Further, even new alternative currencies like the Internet currency Bitcoin rank among the targets of the American spies, according to Spiegel.

The documents deal with the activities of the United States in the international financial sector, and they show how comprehensively and effectively the intelligence agency can track global flows of money and the store the information in a database.

The particular branch is called “Follow the Money” and it handles these matters. The name of the branch is harkens back to the famous catchphrase by former FBI Associate Director Mark Felt, the whistleblower known as “Deep Throat” who offered the information to Bob Woodward and Carl Berstein, the Washington Post reporters investigating the Watergate scandal in 1972.

Financial transfers are the “Achilles’ heel” of terrorists as NSA analysts note in an internal report. Further fields of activity for the branch deal with tracking illegal arms deliveries and keeping tabs on the increasingly lucrative domain of cybercrime.

Detecting international flows of money could lead to revelations regarding political crimes, exposing acts of genocide and monitoring whether sanctions are respected.

The documents state that the spies’ activities primarily focus on Africa and the Middle East, and their efforts often focus on targets that fall within their legal intelligence-gathering mandate.

In the financial sector, the NSA relies on across-the-board data collection – an approach that apparently leads to conflicts with national laws and international agreements.

Read More @ goldsilverbitcoin.com

[American Patriot]

China Bans Banks From Using Bitcoin

• By Stephanie Mlot
  
• December 5, 2013 01:08pm EST

China has banned its banks from using bitcoins as currency in an effort to prevent money laundering and maintain financial stability.


The People's Bank of China and four other government agencies today issued a notice warning the country's residents of the dangers of using bitcoin.


An open-source P2P digital currency, bitcoin operates with no central bank or authority. Specific to virtual goods, it has no legal status or monetary equivalent, and therefore, according to the notice, "cannot and should not be used as currency in circulation in the market."


Introduced in 2009 by developer Satoshi Nakamoto, the digital money is created by users in their own computers with a "miner" application. In recent weeks, the price of a bitcoin has skyrocketed; as of today, the exchange rate is more than $1,000.


Still in its infancy, you can't pay with bitcoins at the local store, or even major retailers. But those with bitcoins burning a hole in their pocket last week had the chance to cash out. Bitcoin evangelist Jon Holmquist teamed with Internet freedom activists Fight for the Future and more than 250 merchants to host Bitcoin Black Friday — an online campaign that offered discounts to those who paid in the virtual currency.


Not everyone is on board with the new system, though. The People's Bank of China, for instance, cited the need to protect the legal status of the local Yuan currency by prohibiting bitcoin exchanges.


The move, according to the New York Times, comes after Beijing officials expressed support for the legitimacy of bitcoin. Deputy Governor of the People's Bank, Yi Gang said recently that while the bank should not recognize bitcoin as legal tender, he believes in the freedom for people to participate.


Still, the Chinese central bank points to concerns about the risks of a relatively small market trading 24 hours a day, with no true supervision. In a statement to the Times, the agency noted that prices can easily be controlled by speculators, "creating severe turbulence and huge risks."


"Ordinary investors who blindly follow the crowd can easily suffer major losses," the bank said.


For more, see Everything You Need to Know About Bitcoin, as well as PCMag Live in the video below, which discusses China's bitcoin decision.

[American Patriot]

Warning warning! You're getting away with money we can't control!!!!

Central Banks Warn of Bitcoin Risks

China, France Issue Stark Reports; Beijing Bars Financial Institutions From Offering Related Services






By Chao Deng in Shanghai and
William Horobin in Paris
connect

Dec. 5, 2013 4:15 a.m. ET

While the Chinese government doesn't officially recognize Bitcoin, buyers there are nonetheless helping to fuel a boom in the four-year-old virtual currency. Bobby Lee of BTC China, the country's largest Bitcoin exchange, tells Jake Lee what is fueling the high demand.






China and France on Thursday issued warnings about the use of bitcoin, saying the virtual currency didn't offer the assurances of payment that a legal currency does and flagging the risk of speculation in something with no underlying assets.


The reports from the central banks of both nations come as the price of bitcoin surges on online exchanges. Prices on BTC China, the world's largest bitcoin exchange by trading volume, jumped fourfold in November, hitting a record for the exchange of 7,395 yuan, or $1,214, on Dec. 1. On Thursday, one bitcoin was trading at about 6,100 yuan ($1,000), down after the Chinese central bank statement.


The People's Bank of China said in a statement on its website that financial institutions shouldn't provide bitcoin-related business such as deposits, custody services or collateral business. They also are barred from offering insurance services to bitcoin-related business or issuing trust and fund products invested in bitcoin.


Enlarge Image









Chinese regulators also said online bitcoin exchanges would be required to file trading records and to take measures to address money-laundering risks associated with the virtual currency. Still, it said, investors were free to buy and sell bitcoin so long as they assume the financial risk.


China has become increasingly important to the fate of bitcoin, a four-year-old virtual currency that isn't backed by any central bank and is created through a complicated computing process called mining.


Although it is difficult to measure the extent to which Chinese demand affects prices around the world, BTC China's share of total trading volume has ticked up in recent months, in conjunction with a surge in prices.


China's market "has been too hot to say the least," said Ron Cao, managing director at Lightspeed China Partners, a venture-capital firm that invested $5 million in BTC China in November. The government wants to "cool things down a bit," he added.


The PBOC said that because no Chinese financial institution is currently involved in bitcoin transactions or investment, the virtual currency isn't capable of harming the country's financial system. But the central bank said it would closely monitor bitcoin's development while also increasing public education on bitcoin-related issues.
The fact that Chinese authorities have offered a concrete stance on the currency opens the door for further regulation. The statement "provides a starting point for which a legal framework for bitcoin can be built," said Peter Ng, a 33-year old investment banker who says he began buying bitcoin two years ago.
Officials in other countries have also been monitoring developments in the bitcoin market.
The Bank of France issued a report Thursday warning of the "dangers" of using Bitcoin. The central bank noted that Bitcoin isn't legal tender and it is possible to refuse payment in the virtual currency. Neither does Bitcoin fall under the definition of a means of payment or an electronic currency because it is not issued in exchange for funds, the Bank of France argued in the report.
Its use as an investment tool is also limited because there is no underlying asset, it is highly volatile, there can be long delays in transactions with bitcoin and there are legal risks, the French central bank said.
"Even if bitcoin does not today meet the conditions to become a credible means for investment that could therefore threaten financial stability, it represents a clear financial risk for those that hold it," the report said.
The central bank warned that speculators should be wary because bitcoin holders have no legal recourse if they are victims of theft from hackers.
The convertibility of the currency also isn't guaranteed, it noted. "The system can collapse at any moment if investors want to unwind their positions but find themselves holding portfolios that have become illiquid," the report said.
The French central bank added that the risks mean retailers have little to no reason to accept the currency, apart from promoting themselves by doing so The bank also flagged the risk of using the anonymous currency for illegal activities, including money laundering and terrorism.
A spokesman from the Bank of England said Thursday that the bank didn't think bitcoin was "likely to have a material impact on its monetary or financial stability objectives in the short term," given "current levels of economic activity and payments involving bitcoin."
Regulators in Brussels are also following bitcoin closely, said Michel Barnier, the European commissioner in charge of financial regulation. "We remain vigilant and ready to act if necessary," said Mr. Barnier, adding that government penalties should apply if it emerges that unregulated currencies such as bitcoin are big used to commit fraud or other criminal activities.
Last month, the U.S. Senate held hearings on virtual currencies, including testimony from senior law-enforcement and regulatory officials.
--Grace Zhu in Beijing, Jason Douglas in London and Matthew Dalton in Brussels contributed to this article.

[American Patriot]

December 04, 2013
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Chief asks to be paid in Bitcoin, city approves
State, federal taxes will still be taken out before salary is converted into electronic currency
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By Cris Ritchie
The Hazard Herald

VICCO, Ky. — The city commission in Vicco approved a measure on Monday to begin paying the city's police chief in a virtual currency, a move officials say is likely the first of its kind in the nation.

Police Chief Tony Vaughn appeared before the commission last month to officially request that his salary be paid to him in Bitcoin, a new virtual currency which exists only on the Internet and this year has gained significant traction, with its value rising by the end of November to more than $1,000 per coin, according to USA Today. The currency was valued at less than $100 at the beginning of the year.

The city commission in Vicco opted last month to hold off on approving Vaughn's request in order to research the issue. Commissioner Claude Branson on Monday said officials did their homework, and there doesn't seem to be any logistical or legal issues to paying Vaughn in Bitcoin.

"We done a checkup on it, and that's the way he wants paid, and that's the way the city is going to pay him," Branson said.

Only Vaughn's take-home pay will be issued in Bitcoin, explained Mayor Johnny Cummings. All applicable federal and state taxes will be removed before Vaughn's salary is then converted electronically to Bitcoin and deposited in an online account for the city of Vicco. The currency then will be instantly transferred to Vaughn's own Bitcoin account.

While Bitcoin is neither regulated nor recognized as an official currency by the federal government, Cummings said there shouldn't be any legal obstacles for the city. He noted several businesses across the country are accepting Bitcoin or have plans to do so. He added Vaughn could begin receiving his salary in Bitcoin as early as this month.

"Basically his next paycheck," Cummings said. "They've set up the accounts for Vicco and for Tony, so it can be transferred."

Vaughn added, however, that the city is going to continue to check into the payment system and further ensure that no barriers exist before he receives his first Bitcoin transfer.

"The reason they wanted to pass the ordinance is this allows us greater latitude as far as finding out the legalities of it," he said.

Vaughn said during last month's meeting that the city stands to make history with this transaction, as there is no record of a government entity paying one of its employees in Bitcoin.

"I'm excited about it; it's a first for Vicco again," Vaughn said, referring to the city's fairness ordinance passed in January that prohibits discrimination based on sexual orientation. The city was the first in the region to approve such a law, and at the time only the third in Kentucky.

But Cummings added that publicity isn't necessarily the only reason for the city to take such a step. Since the city's passage of its fairness ordinance and a subsequent appearance on Comedy Central's "The Colbert Report," officials have received several donations, including several pieces of playground equipment for a new park near City Hall. And now the city's upcoming website will be set up to accept Bitcoin donations, something Cummings said could help the small town of 300 people better afford projects to improve local infrastructure.

"We just want to be on top of things, and up-and-coming and more progressive as a city," Cummings said.

[American Patriot]

Anonymous website disappears with $100M in Bitcoin

Summary: Illegal goods trading platform, Sheep Marketplace, shuts down with a Bitcoin haul estimated to be as large as US$100 million. It is unclear if hackers or the site owner absconded with the money, but signs point to a scam.

By Eileen Yu | December 5, 2013 -- 08:48 GMT (00:48 PST)


A website selling contraband goods has disappeared with a Bitcoin haul that some estimate could be worth as much as US$100 million.

Read this


Bitcoin rises as South Korea's cyber dough

• Read more

Sheep Marketplace, which emerged after the Silk Road website was taken down, shut down over the weekend claiming to be victims of a thief who took off with its cache of 96,000 Bitcoin, worth about US$107.8 million today, or about 1 percent of the world's Bitcoin pool.


The administrators of Sheep Marketplace on Sunday had posted a note on its site, stating: "We are sorry to say, but we were robbed on Saturday 11/21/2013 by vendor EBOOK101. This vendor found bug in system and stole 5400 BTC – your money, our provisions, all was stolen. We were trying to resolve this problem, but we were not successful. We are sorry for your problems and inconvenience, all of current BTC will be ditributed to users, who have filled correct BTC emergency adress. I would like to thank to all SheepMarketplace moderators by this, who were helping with this problem. I am very sorry for this situation. Thank you all."


There are doubts, however, that it was actually theft. In the days leading up to the site shutdown, vendors were unable to access Bitcoins contained in the site's wallet, while others began slashing the prices of their drugs and good. This led to suspicions the website was a scam and complaints were posted on Reddit, where most communications took place, before the site eventually shut down on Sunday.


Sheep Marketplace said it would refund the money to Bitcoin users' emergency addresses, but no one on Reddit's SheepMarketplace indicated they received any money back.
According to a report by Business Insider, two Reddit users "SheepReloaded2" and "NodManOut"--in a subreddit detailing the theft--said they were tracking the person they believed to be responsible for the heist, and who was trying to offload a Bitcoin wallet--which, at one point, contained US$220 million.


SheepReloaded2 said he had identified 96,000 Bitcoins being exchanged by the robber--through their blockchain--and was tagging all new wallets the thief was trying to create to rid his loot. Every Bitcoin generates a log, called "blockchain", which shows the history of all transactions associated with it.


It would be difficult for the thief to offload a huge haul without revealing his identity, as major Bitcoin exchanges require proof of identity--implemented specifically to avoid money laundering instances. SheepReloaded2 said: "He has 1 percent of the world's Bitcoins. It's hard to clean and sell more than 4 or 5 BTC at a time."


It would also be difficult for Sheep Marketplace victims to regain their lost money. Commenting in the subreddit, Reddit user "kyerussell" rebuked anyone for thinking they could get their money back. "It seems that this subreddit is full of people that don't understand the fundamentals of bitcoin and somehow think that this'll result in people getting their money back. It won't. That's the point of bitcoin... You aren't going to get anything back. None of you are going to get anything back, and it's by design. This is EXACTLY how Bitcoin is supposed to work. Bitcoin would be fundamentally broken if you somehow got your money back."


Probably referencing the shady business and people a website like Sheep Marketplace would be associated with, SheepReloaded2 warned: "I won't find this guy. Somebody else will. I assume he'll be jailed, blackmailed, tortured or killed."

[American Patriot]

BOOM: A Major Wall Street Bank Just Initiated Coverage On Bitcoin And Identified A Fair Value

Sam Ro

Dec. 5, 2013, 7:59 AM 27,942 19




Bank of America Merrill Lynch





The game just changed.

Bitcoin, the bizarre electronic currency that seemingly came out of nowhere and has been taking over financial market headlines, is now being covered by one of the biggest firms on Wall Street.


"We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers," wrote Bank of America currency strategist David Woo in a 14-page note to clients this morning. "As a medium of exchange, Bitcoin has clear potential for growth, in our view."


This extremely volatile "cryptocurrency" crashed from $1,240 to a low of $870 this morning after the People's Bank of China announced Bitcoin coin handling restrictions for its country's banks.


Wall Street's coverage of Bitcoin seemed inevitable considering the amount of money moving in and out of it.


Here's more from Woo:


Store of wealth for the underground economy?

It has been reported that Bitcoin may help users avoid high taxes, capital controls, and confiscation. The correlation between CNY's share of volume of all Bitcoin exchanges and price of Bitcoin is high and rising (Chart 1). That said, the fact that all Bitcoin transactions are publically available and that every Bitcoin has a unique transaction history that cannot be altered may ultimately limit its use in the black market/underworld.


"Is Bitcoin a bubble?" asked Woo. "Assuming Bitcoin becomes (1) a major player in both e- commerce and money transfer and (2) a significant store of value with a reputation close to silver, our fair value analysis implies a maximum market capitalization of Bitcoin of $15bn (1BTC = 1300 USD). This suggests that the 100 fold increase in Bitcoin prices this year is at risk of running ahead of its fundamentals."


We expect other Wall Street analysts to follow suit.

[American Patriot]

Bitcoin, Gold and Tulips

By MICHAEL KAHN | MORE ARTICLES BY AUTHOR
While gold languishes, bitcoin is shooting higher. Can the digital currency keep its momentum, or will gold recover on a bitcoin collapse?

In January, bitcoin was trading around $13. By November, it was at $200, and it had soared past $1,200 by Thanksgiving before backing down. Is bitcoin the wave of the future, or nothing more than digital tulips? One look at the chart says the present is fraught with extreme risk that cuts both ways.

While we cannot know if the next stop for bitcoin is $2,000 or $200, one thing for sure is it is a chart that none of us have ever seen live and in person (see Chart 1).

Chart 1

Bitcoin







Without getting into the details, bitcoin is a new currency traded against the dollar, yen, euro and every other currency around the world. It is not minted by any government and by extension it cannot be diluted by central bank money printing or other government policies. Bitcoin fans say that (apparent) invulnerability could help it replace gold as a store of value.


If you recall the initial public offering of Netscape two decades ago, or even of Google (ticker: GOOG) one decade ago, early trading in a true innovation can be quite frenzied. Prices increase at geometric rates. In today's marketplace, bitcoin seems to have taken that dynamic to the limit with a near-vertical ascent and a host of analysts crying "bubble."


On the charts, we do see meteoric ascents from time to time, and usually they do not end well. A good example is Sodastream (SODA) in 2011. The young stock rallied from roughly 25 to 80 in just a few months' time and just as quickly was trading back down near 30. I call it "parabolic up, parabolic down," others call it an "Eiffel Tower" pattern.
Briefly last week, the price of bitcoin exceeded the price of an ounce of gold. While it makes for great headlines, the comparison is not any more valid than comparing gold to the level of the Standard & Poor's 500, or apples to wildebeest. None of it makes sense. You cannot hold an ounce of bitcoin on your hand.


But the hoopla over the event did underscore the sentiment now surrounding this market. I am not commenting on the viability, liability, or buyability of a new system of money, but only the technicals surrounding it. Even though the public is largely unaware of this market, those investors involved with it show an extreme level of bullishness. Extreme bullishness creates an environment where any bad news can be devastating to prices.


Gold, as mentioned, has been suffering, and whether bitcoin has played a role is up for debate. The trend has been down for nearly two years and it is hard to make a case from a simple price action perspective that this market is close to turning around for the better (see Chart 2). But in a strange twist, the new love for bitcoin and its spawned additional dislike for gold may be just what will change the metal's fortunes for the better.
Chart 2

Gold







Without inflation, war, a sinking dollar, or intense demand for the commodity – traditional conditions under which precious metals flourish – gold has shed all but its most devoted fans. Sentiment is as dour as ever, so the idea that bitcoin is putting in the final nail in the coffin could create a contrarian's dream setup in the near future.
But sentiment is merely an environment. Only price action can set a buy trigger, and for now, the few remaining gold bugs will have to wait.
Chart 3

Gouda Tulip Bulbs







Perhaps bitcoin, not gold, is indeed the future of money. But given that the bitcoin parabola is similar to that of the Dutch tulip bulb mania in 1637, (See Chart 3) the dangers of buying into a bubble are the same as attempting to sell it short. It could double from here just as easily as it could fall by half. Timing must be perfect with these levels of volatility and risk.


Investors might consider waiting for a significant shakeout in bitcoin before taking the plunge. Or they can follow gold lower as they wait for a spark that triggers a massive short squeeze as bears rush to cover their bets.


On the charts, both markets seem to be at critical levels, where major reversals or major accelerations – up for bitcoin and down for gold – may be in the offing.


Getting Technical Mailbag:Send your questions on technical analysis to us at online.editors@barrons.com. We'll cover as many as we can, but please remember that we cannot give investment advice.


Michael Kahn, a longtime columnist for Barrons.com, comments on technical analysis at www.twitter.com/mnkahn. A former Chief Technical Analyst for BridgeNews and former director for the Market Technicians Association, Kahn has written three books about technical analysis.


Comments? E-mail us at online.editors@barrons.com

[American Patriot]

Citi Just Entered The Intensifying Wall Street Debate Surrounding Bitcoin

Matthew Boesler

Dec. 5, 2013, 9:45 AM 3,022





bitcoin.clarkmoody.com


The U.S. dollar price of Bitcoin surged in 2013.




Bitcoin is starting to garner attention from some of Wall Street's top currency strategists.


Today, David Woo, global head of rates and currencies research at BofA Merrill Lynch, published the bank's first report on the digital currency.


"We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers," says Woo.

"Assuming Bitcoin becomes (1) a major player in both e-commerce and money transfer and (2) a significant store of value with a reputation close to silver, our fair value analysis implies a maximum market capitalization of Bitcoin of $15bn (1BTC = 1300 USD)."



Steven Englander, global head of G-10 FX strategy at Citi, has also been mulling over Bitcoin's prospects.



"I am trying to find a framework for analyzing Bitcoin and whether it can be seen as a currency," writes Englander in a note to clients this morning. "I am still struggling for reasons that will be apparent below, but it seems to me that the developers can limited the supply of Bitcoins but they cannot limit the supply of Bitcoin-like assets that use a similar technology and have similar characteristics. We are likely to end up with a lot of Bitcoin lookalikes with little to choose between them, so pricing becomes very difficult."



Englander expands on this idea in the note:


Unlike fine art, Bitcoin can be replicated exactly or close to it. Say in response to overwhelming demand for Bitcoin, someone created Nitcoin with similar properties except that mining a Nitcoin was twice as hard, and someone else (the Fed perhaps) created Gitcoin that could be mined at a fraction of the cost. You could argue that the relative exchange rates would be driven by the marginal costs of production at any point in time, although the volatility of Bitcoin so far suggests that the speculative motive dominates marginal production costs as a driver of price. My conjecture is that we will see big speculative swings as different ‘coins’ are created and move in and out of fashion and some emerging concern that there is nothing to anchor them and nothing to stop their proliferation. At the end of the day, it seems to me that if they lose their anonymity and portability advantage, the difficulties in fundamental price determination will cause them to lose their attractiveness.



You may ask why this is different from the dollar or any other currency. The answer is that in the US you have to accept a dollar as payment for goods and services, whereas you do not have to accept a Bitcoin, and certainly not 15 Bitcoin lookalikes. The combination of legal tender status and supply anchors the value of dollars in transactions in a way that Bitcoin will never be anchored. The dollar is legal tender by decree and in the long-term the current appeal of Bitcoin as being outside the Government will end up as a disadvantage rather than advantage, if there is no way to choose among Bitcoin alternatives.



Englander acknowledges Bitcoin's early success, but he remains unconvinced that it can continue.



"As of now, the Bitcoin has no real competition and the fascination part is immense," he says. "It is not disadvantaged by the lack of yield, since no G4 currency really pays one either. I am still skeptical, as it would seemingly be easy to launch an alternative."



In fact, at least 54 Bitcoin clones have sprung up in recent months, and many of them are soaring in value.


SEE ALSO: What Is Bitcoin?

[American Patriot]

BITCOIN CRASHES AFTER WARNING FROM CHINA

Sam Ro

Dec. 5, 2013, 5:50 AM 50,676 54




Bitcoin prices fell from a high of $1,240 to a low of $870 this morning. This is according to data from Bitcoin exchange Mt. Gox.


That $370 drop can by characterized as a 30% crash.


Earlier today, the People's Bank of China warned that the controversial electronic currency carried risk. It also instructed financial institutions not to trade it.


"Is this a bubble in Bitcoin?" asked former Federal Reserve Chairman Alan Greenspan Wednesday on Bloomberg. "Yeah it's a bubble."


"This is worse than the tulip mania," said Nout Wellink, former president of the Dutch Central Bank. "At least then you got a tulip [at the end], now you get nothing."


Bitcoin has bounced back a bit and it's currently straddling the $1,000 level, which means it's down by around 20% from its high.


Here's a look at the chart from Clark Moody.


Clark Moody

[American Patriot]

• December 10, 2013, 11:44 a.m. ET

The First SaaS App Builder Platform To Accept Bitcoin


Boutique start-up company Mobihighway Ltd. announced they are accepting Bitcoins to host mobile apps built with their online, self-build app platform, www.approokie.com.


London, United Kingdom, December 10th, 2013 /MarketersMedia/ -- Approokie.com is now offering Bitcoin as a payment option for its SaaS app builder platform. It is offering Bitcoin holders, and Bitcoin merchants worldwide, the possibility to create apps for Bitcoins and to integrate Bitcoin checkout methods within their mobile apps. The launch also offers a discount on several packages exclusive to Bitcoin buyers.


App Rookie offers a relatively new way to create mobile apps. Just as the market is changing for app development, Bitcoin is disrupting e-commerce. App Rookie wanted to be a participant in the burgeoning crypto-currency market and be on the forefront of SaaS app solutions by accepting Bitcoins.


App Rookie offers a convenient 'WordPress'- like solution to building mobile apps for small to medium sized businesses. The coding architecture is done behind the scenes allowing the user to quickly develop a mobile application, or mobile website for their business, by simply adding unique content and graphics to user friendly templates. Monthly subscriptions and yearly plans are now offered in Bitcoins.


The launch of App Rookie's Bitcoin friendly website comes on the heels of a highly volatile period for Bitcoin. Since mid-October, two announcements helped the price rocket and push it out into the mainstream. An announcement by Richard Branson to start accepting Bitcoin for Virgin Galactic; and by Baidu, the Chinese equivalent to Google, that it started accepting Bitcoins for one of its divisions, Baidu Jaisule, helped propel the price from around $200 to its recent stellar heights of over $1200. However, growing concerns about Bitcoin prompted a Chinese government announcement to ban Chinese banks from transacting in Bitcoins. Baidu quickly followed suit with a turn around on acceptance, and both events caused it to lose more than half its recent gains overnight. The price has stabilised, trading around the $700 range, still above levels seen two months ago.


It is likely that Bitcoin will still remain a currency of high volatility and uncertainty for the foreseeable future. However, despite the swings, there are a growing number of Bitcoin merchant payment gateways which are beginning to flourish and compete with traditional payment processors. They offer less expensive, or zero processing fees, adding to the attraction of Bitcoin. These gateways require merchant account verification and offer to convert Bitcoin back into local currencies by daily direct deposit. "We would like to add to the viability of Bitcoin as a medium of exchange, and would like to see more retailers accepting it" said Nancy Court, Founder of Mobihighway and AppRookie.com. "Bitcoin is still in its infancy and will remain influenced by birth pangs until it is more established. Competition for crypto-currencies will also likely arise, but for now, it is still all about Bitcoin. As a business, we want to be inclusive and cater to those clients who want to transact in Bitcoin. It is simply an extra currency at our checkout and offers a cheaper alternative for transacting than the traditional payment gateways."


Visit http://www.approokie.com for more information.


Contact Info
Name: Nancy Court
Organization: Mobihighway Ltd.
Email: info@approokie.com
###

This announcement is sourced from MarketersMedia [Link].

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: MarketersMedia via Globenewswire

[American Patriot]

http://www.usatoday.com/story/tech/2...vegas/3902451/

See the link for the whole article. I am having issues posting the second paragraph. Ryan and I are working on this one.




LAS VEGAS — It's fitting the future of Bitcoins is being debated in the gambling capital of the world.

The conference — Inside Bitcoins: The Future of Virtual Currency — "is the Woodstock of Bitcoin," says Robert Brewster, CEO of Whidbey Wasabi, a farmer of wasabi outside of Seattle. "I was skeptical until a skateboarding friend of mine put his last $10,000 on Bitcoin and made $90,000. It changed his life."


"(This year), Bitcoin will be the single-biggest sector for venture capital investments," Brock Pierce, managing director of Clearstone Global Gaming, said to whoops and hollers.


Are bitcoins a super currency or super fad?
With whispers that the value of the controversial digital currency will top $10,000 by the end of 2014 — and counter arguments the whole thing will unravel soon — "risk" usually appears in the same sentence as the highly-speculative Bitcoin market.


The debate often pivots on capitalism vs. crime, and the inherent risk in so volatile a form of payment.


Consider the points and counterpoints:


POINT: PHENOMENON. "Now, it's a commodity; soon, it will be a phenomenal currency," says James Beshara, CEO of Crowdtilt, a crowd-sourcing mobile platform that accepts digital currency. (Thousands of online vendors accept Bitcoins as payment.)


"Once governments start to invest, it will take off," says Beshara. He put all of his disposable income — $2,300 — into Bitcoins this year. His investment is now worth $24,000. He predicts Bitcoin value will soar to $10,000 by the end of 2014 — making his initial investment a tidy $230,000.


Seeing Bitcoin's potential among gobsmacked investors, Bank of America Merrill Lynch last week became the first major bank to initiate coverage. It says the currency can become a "major means" of payment, and placed its value at $1,300 per Bitcoin – with a maximum market capitalization of $15 billion.


COUNTERPOINT: THE DARK SIDE. "Criminals have been using Bitcoins since Day One because of the anonymity — it is hard to trace," says Etay Maor, fraud prevention solutions manager at Trusteer, an IBM company. In a recent report, Trusteer detailed how cybercriminals are leveraging the Bitcoin boom, and how hackers target it.


This month, China warned that Bitcoin carried considerable risk and instructed its financial institutions not to trade it. At the same time, Bitcoin has become a haven for penny stock-style, pump-and-dump schemes.
Apple this month forced Gliph, a secure-messaging app, to remove the ability to send Bitcoin payments or face being booted off the iOS App Store.


Love it or hate it, Bitcoin is a craze that is stoking a national debate. As speculators line up for a piece of the virtual currency action, vocal skeptics dismiss it as a new-age Ponzi scheme.


The 4-year-old creation – unregulated and pseudonymous for users – saw its unit value pass that of an ounce of gold in late November, at $1,242, and it has big-name backers. Billionaire Sir Richard Branson says he will accept them as payment for space flights, and outgoing Federal Reserve Chairman Ben Bernanke praised the technology in a recent letter to the Senate.
The currency is based on a deflationary concept: A limited supply of no more than 21 million coins, whose value does not drop easily.
"It's how money should work in an electronic world," says Lawrence Lenihan, managing director of FirstMark Capital, which focuses on investments in e-commerce and other fields. "It removes friction, it destroys barriers, and it enables opportunity. You'll see it first disrupt remittances and money transfer and then it will move to commerce and payments. From there, the uses will explode in ways I don't think we can even fully understand at this point."
The internationally flavored two-day conference – representatives from Brazil, Sweden, South Africa and Germany were in attendance – had the feel of a revival. After he finished his panel on Bitcoin funding, Pierce was engulfed by about 20 people.
Sam Cole, co-founder of KnCMiner, which sold $8 million worth of hardware to "mine" Bitcoins in just days, drew an equally adoring mob.

[Avvakum]

From www.zerohedge.com;



Home

UK Royal Mint Working On Plans To Issue Gold-Backed Physical Bitcoins


Submitted by Tyler Durden on 12/01/2013 19:38 -0500

• Bitcoin
• Central Banks
• None
• United Kingdom

inShare29

The implicit, and ever more explicit, institutional acceptance of the dominant cryptocurrency Bitcoin (we say dominant because as we pointed out last week, there has been an unprecedented spike of digital currencies one can pick and choose from) continues when following the surge in vendors willing to transact in BTC over Thanksgiving, the latest news comes from the birthplace of the modern central bank, the UK, where we learn that none other than the UK Royal Mint has been working on plans since this summer to issue physical Bitcoins in collaboration with the Channel Island of Alderney.
But where the story gets downright surreal is that as the FT reports, the same symbolic Bitcoin token issued by the Royal Mint "would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse." In brief: a perfect, and utterly incomprehensible, fusion of (opposing) hard, soft and digital currencies all rolled into one...
From the FT:

The tiny Channel Island of Alderney is launching an audacious bid to become the first jurisdiction to mint physical Bitcoins, amid a global race to capitalise on the booming virtual currency.

The three-mile long British crown dependency has been working on plans to issue physical Bitcoins in partnership with the UK’s Royal Mint since the summer, according to documents seen by the Financial Times.

It wants to launch itself as the first international centre for Bitcoin transactions by setting up a cluster of services that are compliant with anti-money laundering rules, including exchanges, payment services and a Bitcoin storage vault.

So, convert a digital currency into fiat, issue plastic (or some other material) tokens (appropriately covered in some goldish color) representing "value" because suddenly the currency (supposedly) has the blessing of central banks, and then store them in some basement? Brilliant.
Just how is the UK Royal Mint involved?

The special Bitcoin would be part of the Royal Mint’s commemorative collection, which includes limited edition coins and stamps that are normally bought by collectors. It would have a gold content – a figure of £500-worth has been proposed – so that holders could conceivably melt and sell the metal if the exchange value of the currency were to collapse.

Wait, what: gold-backed Bitcoins? If so, that would be truly revolutionary because for the first time a Treasury (and by implication, a central bank) is effectively hinting that not only are they willing to fiat-ize Bitcoin, but also have the symbolic BTC token (after all Bitcoin is a digital currency by definition) serve as a commodity trap. Because once enough gold-backed physical Bitcoins are locked up in some basement in the UK, who has the master key? That's a rhetorical question by the way.
Naturally, the UK Mint is not quite eager to disclose full details while the plan is still being finalized:

David Janczewski, head of new business at the Royal Mint confirmed it had been approached by the finance minister of Alderney to “explore the possibility of manufacturing a physical commemorative coin with a Bitcoin theme”.

“Discussions have not progressed further and at this stage it remains nothing more than a concept,” he added.

But the controversy around Bitcoin has made the Alderney plan a sensitive subject. The Treasury, which owns the Royal Mint, declined to comment on the plans. George Osborne, the British chancellor, also holds the title of Master of the Mint.

Since there is understandably much confusion over what the minting process of a physical gold-backed token representing a digital currency, with the backing of an entity that does the bidding of an issuer that only believes in fiat currencies, here is the FT with the blow by blow.

An independent company will provide the Bitcoins. If the price plunged, neither Alderney nor the Royal Mint would lose anything.

The company would put the Bitcoins in an escrow account at an agreed price.

Meanwhile, the Royal Mint would take customers’ orders for its minted Bitcoins and receive money from those coin sales.

The virtual Bitcoins backing the physical coins would be held in digital storage facilities by Alderney.

The Mint would issue the commemorative Bitcoin, paying for the value of the gold content itself. Alderney would receive royalties from sales of the coins.

Coins could be redeemed for sterling at any point in Alderney for the price of a Bitcoin on that day.

All we can do at this point is sit back in wonder and amusement as we hit the pinnacle of monetary confusion, whereby the UK Royal Mint, willing to take full advantage of retail confusion, will mix hard, soft and digital currency, and produce a product... that is locked away on an island that belongs to the UK.
And all we can say is "brilliant", because if there is a better plan to meld the sentiment of both hard and digital-currency (and hence, anti-fiat) advocates, and to redirect it in a "fiat" pathway, we have yet to hear it.
Average:

[American Patriot]

Apparently, the government wants Bitcoin destroyed, one way or another.

Bitcoin exchange CEO arrested for money laundering

By Jose Pagliery @Jose_Pagliery January 27, 2014: 12:20 PM ET



Charlie Shrem, at center, is the CEO of BitInstant. He was arrested by federal authorities on Sunday.

NEW YORK (CNNMoney)
U.S. government agents have arrested Charlie Shrem, the CEO of Bitcoin exchange BitInstant, charging him with laundering money for customers of online drug bazaar Silk Road.

A U.S. attorney in the Southern District of New York said Shrem, along with alleged co-conspirator Robert Faiella, sold more than $1 million worth of bitcoins to Silk Road customers. Faiella, a Florida man who allegedly runs an underground Bitcoin exchanger using the alias BTCKing, was also arrested.




According to federal prosecutors, Shrem was arrested at John F. Kennedy International Airport in New York on Sunday, and Faiella was arrested at his home in Cape Coral, Fla., on Monday. Both are charged with money laundering conspiracy and operating an unlicensed money transmitting business.


Shrem is a major player in the Bitcoin world. The BitInstant exchange, based in New York City, lets people buy bitcoins locally at more than 700,000 locations in the United States, as well as Brazil, Russia and elsewhere. It received a $1.5 million investment last year from the Winklevoss twins. Shrem is also vice chairman of the Bitcoin Foundation, one of the currency's biggest supporters.


BitInstant's website was down Monday after the announcement by federal law enforcement.


Proponents of the alternative currency are likely to view the arrests as an example of the government's growing concern with bitcoins, which offer heightened privacy because they're difficult to trace to individuals.



First Published: January 27, 2014: 12:20 PM ET

[American Patriot]

Bitcoin dealers charged in US with money laundering

(AFP) – 14 minutes ago

New York — US authorities Monday filed criminal charges against two operators of a Bitcoin exchange which enabled its users to buy drugs and other illicit goods on the Silk Road underground website.

Federal prosecutors said they unsealed a criminal complaint against Robert Faiella and Charlie Shrem, who ran a company allowing people to use cash to buy Bitcoins, a virtual currency which is based on a mysterious computer algorithm.

The two are charged with conspiracy to commit money laundering and running an unlicensed money transmitting business, according to a statement from the US Attorney's office in New York.

Shrem, 24, also charged with violating the Bank Secrecy Act by failing to file any suspicious activity reports, was arrested Sunday at John F. Kennedy International Airport in New York.

Faiella, 52, was arrested at his home Monday in Cape Coral, Florida.

?As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road," said US Attorney Preet Bharara said in a statement.

"Truly innovative business models don't need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would coopt new forms of currency for illicit purposes.?

The new charges come more than three months after federal officials seized the Silk Road website used for drugs, hacker tools and other illegal goods and arrested its alleged mastermind, Ross William Ulbricht, who was said to be "Dread Pirate Roberts."

Ulbricht, who is awaiting trial in New York, has denied the charges and also claims he is not "Dread Pirate Roberts."

In November, a message appeared on the social media site Reddit claiming Silk Road had reopened weeks after it was shut down by the FBI.

Bitcoin was invented in the wake of the global financial crisis by a mysterious computer guru using the pseudonym Satoshi Nakamotoby. While Bitcoins have gained in legitimate transactions, the unregulated currency has also been linked to various kinds of criminal activity.

[American Patriot]

Two bitcoin exchange operators charged in money laundering scheme

By Emily Flitter

NEW YORK Mon Jan 27, 2014 12:36pm EST
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A mock Bitcoin is displayed on a table in an illustration picture taken in Berlin January 7, 2014. REUTERS/Pawel Kopczynski

A mock Bitcoin is displayed on a table in an illustration picture taken in Berlin January 7, 2014.

Credit: Reuters/Pawel Kopczynski

(Reuters) - Two men who operate bitcoin exchange businesses have been charged with money laundering for helping drug merchants exchange $1 million in cash for bitcoins, the digital currency, U.S. prosecutors said on Monday.

Federal prosecutors in New York announced charges against Charlie Shrem and Robert Faiella, both operators of bitcoin exchange businesses, for attempting to sell $1 million in the digital currency to users of the underground black market website Silk Road, which was shut down by authorities in September.

According to the charging document, Shrem, 24, chief executive officer of the exchange BitInstant.com, changed cash into bitcoins for Faiella, 52, who ran an underground bitcoin exchange through the username BTCKing on Silk Road's website. The criminal complaint says that Shrem, in addition to knowing that Faiella's business was funneling money into Silk Road, also used Silk Road himself to buy drugs.

The U.S. Attorney's office in Manhattan said in a statement that authorities arrested Shrem on Sunday at New York's John F. Kennedy International Airport. Faiella was arrested on Monday at his home in Cape Coral, Florida.

The tech investors Cameron and Tyler Winklevoss invested $1.5 million in BitInstant last year. A spokeswoman for their firm, Winklevoss Capital, did not immediately respond to a request for comment.

The case against Shrem is likely to deal a blow to the burgeoning community of bitcoin businesses because Shrem is a high-profile advocate for the technology. In addition to running BitInstant, he is vice president of the main bitcoin-focused trade group, the Bitcoin Foundation, according to the foundation's website and Shrem's LinkedIn profile.

A spokeswoman for the foundation declined to immediately comment on Shrem's arrest.

Shrem and Faiella were charged with conspiring to commit money laundering and operating an unlicensed money transmitting business. A spokeswoman for Preet Bharara, the U.S. attorney for Manhattan, said there was no information about legal representation available for either of the two men, who are expected to appear in court in New York and Florida. respectively.

Shrem has a home address in the Brooklyn borough of New York.

According to the charges, Faiella, going by "BTCKing" online, sold bitcoins to Silk Road users and passed on purchase orders he received from the site to Shrem, who filled them, transferring funds to Faiella's account at another bitcoin exchange service based in Japan.

The Japan-based exchange business is not named. One of the largest bitcoin exchanges in the world, MtGox, is based in Japan.

The charging document says that Shrem, who also ran BitInstant's compliance program for a little under two years, failed to report suspicious activity to regulators "with respect to numerous Bitcoin purchases" Faiella made from BitInstant.

Shrem's lawyer, Keith Miller at Perkins Coie in New York, was not immediately available for comment

Bitcoin is a digital currency whose value fluctuates according to demand by users. It is currently trading on MtGox at a level of $985 per unit. Users can transfer bitcoins to each other over the internet and store the currency in digital "wallets."

(Reporting by Emily Flitter; Editing by Leslie Adler)

[American Patriot]

Banks are Running Scared – Wells Fargo Bans Staff from P2P Loans

By wkchild on January 27, 2014 • ( 2 )
Source: Liberty Blitzkreig, by Michael Krieger
It’s extremely amusing to observe the welfare baby, bailout dependent, “Too Big to Jail,” parasitic legacy banking system squirm in the face of advancements in peer-to-peer financial technologies; whether they be Bitcoin, P2P lending or crowdfunding. It is becoming increasingly clear that humanity would do much better without this gigantic cancerous tumor on our backs, and we finally have the tools to move on.
In fact, the largest bank in the U.S. is so concerned about peer-to-peer lending, it has banned its staff from participating.
We find out from CNBC that:
Wells Fargo has banned its employees from lending their own money through peer-to-peer loan platforms, in a sign of growing tensions between new “P2P” lenders and the largest U.S. bank by market value.
“Ethics administrators” at Wells Fargo decided to forbid staff from P2P lending after concluding “that for-profit peer-to-peer lending is a competitive activity that poses a conflict of interest.”
Lending Club, the biggest P2P lender in the US, says it has provided $3.35bn worth of loans since starting the business almost seven years ago. Prosper, the second-biggest P2P lender in the country, says it has made $690 million worth of loans.
Lending Club has appointed three high-profile board members from Wall Street, including John Mack, the former Morgan Stanley chief executive, Mary Meeker, the internet analyst, and Lawrence Summers, the former US Treasury secretary.
While disappointing, it’s no surprise that former bankers are jumping on board. They see the writing on the wall.
Full article here.

[American Patriot]

Bitcoin Exchange Mt. Gox Files for U.S. Bankruptcy as Death Spiral Continues

• By Klint Finley
• 03.10.14
• 4:56 PM

• Follow @klintron

Mark Karpeles, CEO of Mt. Gox, speaks to his attorney at the Tokyo District Court. Image: The Yomiuri Shimbun via AP

The Mt. Gox death spiral continues. The big-name bitcoin exchange has now filed for bankruptcy protection here in the U.S., as well as Japan, and hackers are saying they’ve uncovered evidence of fraud at the Tokyo-based company, after allegedly breaking into a website controlled by its CEO.
Mt. Gox was once the most popular site for buying and selling the digital cryptocurrency bitcoin. But last month, after months of complains from users unable to withdraw funds, the company took its entire operation offline and filed for bankruptcy protection in Japan. The new U.S. filing, made in Texas, is meant to protect the company’s U.S.-based assets, as reported by The Wall Street Journal. Mt. Gox is facing a class-action lawsuit filed in Illinois, and it has long been involved in a $75 million lawsuit with another bitcoin company, called CoinLab.
The ongoing travails of Mt. Gox act as a metaphor for the bitcoin world as a whole. Though the digital currency is beginning to remake the way the world moves and stores money, many of the companies and individuals that first pushed the technology into the mainstream are now struggling to come to terms with government regulations and the realities of doing business.
At a press conference last month, Mt. Gox CEO Mark Karpeles admitted that the company lost around 750,000 of its customers’ bitcoins — worth around half a billion dollars. He blamed a known issue in the bitcoin protocol that enabled hackers to trick the company’s software into thinking transactions failed. Apparently, Gox’s accounting software didn’t deal with this flaw and could be tricked to send repeated bitcoin payouts to the same customers.
How Mt. Gox could have lost so many bitcoins without noticing remains a matter of speculation, and many suspect foul play on the company’s part, not just mere incompetence. Among them are the hackers that hijacked Karpeles’ personal website and published a file they claim contains data acquired from the company’s servers. Included in the file was an Excel spreadsheet showing a balance of 951,116 bitcoins.
The hackers, who also hijacked Karpeles’ Reddit account, claim the document proves that Mt. Gox is still in control of those bitcoins. But given Mt. Gox’s claim that the bitcoins were stolen without anyone at the company noticing, it would make sense that the company’s official balance sheets still show a much larger number of bitcoins. Ultimately, even if the document is authentic, it proves nothing one way or the other.
Many Reddit users claim to have found their own transaction data in the spreadsheet, suggesting that the materials are authentic. But Forbes reporter Andy Greenberg warns that the zip file may contain malware designed to steal bitcoins — and cautions people not to download the file. Neither Karpeles nor Mt. Gox responded to a request for comment about the spreadsheet’s origins or authenticity.
The alleged hack follows a number of other leaks and hacks from the company, including a leaked internal document about the missing bitcoins and supposed copies of the code used to run the exchange. Meanwhile, Bitcoin users are dealing with the bankruptcy in their own way: by creating a new currency to buy and sell rights to the lost bitcoins, should they ever be recovered.
The Tokyo office building that houses the Mt. Gox bitcoin exchange. Photo: Ariel Zambelich/WIRED

[American Patriot]

It rises from the darkness....

Darkcoin, the Shadowy Cousin of Bitcoin, Is Booming

• By Andy Greenberg
• 05.21.14 |
• 6:30 am |
• Permalink

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Illustration: WIRED

Someone out there likes anonymous money.
In only a month, the little-known bitcoin alternative known as Darkcoin has rocketed nearly tenfold in value–from around 75 cents a coin to almost seven dollars. Its selling point: Darkcoin offers far greater anonymity than bitcoin, mixing up users’ transactions so that it’s incredibly difficult to trace a payment to a person. And though few have yet to accept that more-anonymous coin for actual goods and services, the promise of Darkcoin’s privacy features seems to have sparked a miniature boom. It’s one of the fastest growing among the wave of cryptocurrencies that’s followed bitcoin’s success, with the total value of its combined coins topping out at nearly $30 million.
Darkcoin, supporters argue, serves a real privacy need. Despite its reputation for being more anonymous than traditional money, the bitcoin network actually allows anyone to see every transaction on a public accounting ledger known as the blockchain. Users often have to take extra steps, like mixing their coins in a “laundry” service, to prevent those addresses from being tied to their identity by any government or corporation that wants to snoop.
Darkcoin adds an extra layer of privacy by automatically combining any transaction its users make with those of two other users–a feature it calls Darksend–so that anyone analyzing the blockchain has a harder time figuring out where a particular user’s money ended up. “A large community believes that the way bitcoin’s blockchain is designed is a problem,” says Evan Duffield, the 32-year old Arizona-based software developer who launched Darkcoin in January. “Darkcoin has this anonymity aspect to it, which is attractive to a lot of people.”
Darkcoin’s exchange rate with the dollar and market cap over the last month. Credit: Coinmarketcap.com

Darkcoin’s uncanny growth, of course, may also be fueled by speculators who see an opportunity to jump on a hot commodity. And given how wildly it’s appreciated in its short life, there’s no guarantee it won’t crash just as fast.
But Darkcoin’s price increases may also be linked to real changes in its features, says Kristov Atlas, a bitcoin consultant and Darkcoin fan. He argues that its value comes in part from its unique properties as a payment system, not just as an investment vehicle. The currency’s first big price jump occurred in late April, for instance, when its Darksend privacy trick was initially switched on for real transactions. “It’s not purely a speculative bubble,” Atlas says. “There’s some solid indications the market price is currently based on the fundamental value of the coin.”
Darkcoin’s price may in fact be “manipulated” by investors, says Allen Price, a trader in the bitcoin alternatives known as “altcoins.” But he says it’s already outlasted his expectation that its price growth was caused by a pump-and-dump scam. “I had sort of smugly stood to the side waiting for the big, inevitable crash with an ‘I told you so’ ready,” says Price. “But no crash ever really came, and it’s been kind of an ongoing success for investors.”
Much of the currency’s more recent price increase, says Duffield, may stem from its system of financially rewarding users whose machines serve as the coordinators of its Darksend transactions. Anyone can make their computer into one of those coordinators, which Duffield calls “master nodes,” by proving that they’ve paid a thousand darkcoins. In exchange, they reap ten percent of all new coins added to the Darkcoin network, which are distributed among the master nodes as an incentive for their work. Duffield says Darkcoiners seeking those rewards created 170 master nodes in the last month, tying up 170,000 darkcoins, a number that significantly decreased the currency’s supply and has likely helped raise its price.
Darkcoin’s creator also offers another, even stranger explanation for the currency’s value increase. Like bitcoin, Darkcoin can be “mined” by anyone who repeatedly computes a certain hash function. Darkcoin’s unique hashing algorithm means it’s almost as easy to mine it with a normal CPU as it is with the hotter-running GPU chips that are better suited to mining bitcoins. As the weather gets warmer, more miners may be turning to Darkcoin to exploit cheaper chips that don’t require as much cooling, Duffield says. “You get almost as much bang for your buck with a CPU as a GPU,” he says. “That’s drawing people over because the summer’s coming.”
Of course, the simplest theory explaining Darkcoin’s growth is, well, darker: It may be becoming a convenient tool for the black market. Bitcoin, after all, has become the currency of choice for more than a dozen websites that model themselves on the now-defunct Silk Road marketplace, running on the Tor anonymity network and selling drugs, forgeries and other contraband.
Only a couple of online stores currently accept Darkcoin for their products, like a wine shop and a UK-based seller of cannabis seeds. But some users may be trading bitcoins for darkcoins and back again, using the Darkcoin network as a giant bitcoin-laundering service. Those laundry transactions may be part of what’s driven Darkcoin’s massive trade volume, which has recently reached millions of dollars a day. “It’s sort of a private on-ramp and off-ramp into bitcoin,” says Atlas.
Duffield insists–and those who see financial privacy as a fundamental value may even believe him–that the black market isn’t the main driver of his cryptocurrency’s growth. “I don’t see much chatter about using it for illegal things,” he says. “It’s a neat technology and people want to invest in it because it’s useful.”
Darkcoin is just one of the growing number of projects attempting to make cryptocurrency payments more private and untraceable, some of which have no illusions about how they’re enabling illicit commerce. Earlier this month the crypto-anarchist group unSystem launched Dark Wallet, which it explicitly describes as “money laundering software.” A group of researchers at Johns Hopkins plans to launch Zerocoin later this year, a bitcoin alternative that uses a new mathematical trick called a “zero knowledge proof” to give its users a coin that’s theoretically completely untraceable.
If Darkcoin does catch on among real sellers of goods and services–legal or not-so-legal–expect its price explosion to continue. “We’re just waiting for that,” says Duffield. “When it happens, it’ll drive a whole other level of appreciation.”
With reporting contributed by Robert McMillan.

[American Patriot]

U.S. Marshals Service to auction off $18 million in bitcoins

A motion graphic explaining what Bitcoin is and how Bitcoin works. Keith Carter and Ashley M. Williams, USA TODAY Network

Elizabeth Weise, USATODAY 7:21 a.m. EDT June 13, 2014

(Photo: Mark Lennihan, AP)

SAN FRANCISCO — The federal government plans to auction $18 million worth of virtual money for cold, hard cash later this month.


The 29,000 virtual bitcoins to be auctioned were seized from the Silk Road website last fall. The anonymous website was a major sales point for illegal drugs and other underground goods.


The U.S. Marshals Service posted an announcement of the auction on Thursday.


Bitcoins are an unregulated online currency that are not backed by gold, silver or any other commodity.


Because they do not generally exist in the real world, what is actually being auctioned are sets of numbers that have been entered in an online public ledger. The sale will take place on June 27.


The bitcoins are to be auctioned off in blocks of 3,000, each worth about $1.8 million. The auction will take place over a 12-hour period.


Still under dispute are another 144,000 bitcoins that were owned by Ross Ulbricht, 30, the man behind Silk Road.


Federal agents arrested Ulbricht on Oct. 1 in the science fiction section of the Glen Park branch of the San Francisco Public Library.


He was charged with drug trafficking, money laundering and computer hacking, and is being held without bail in New York. He is charged separately in Maryland in connection with a murder-for-hire plot.


Ulbricht has pleaded not guilty.


The Silk Road website had nearly 1 million customers and $1.2 billion in sales, according to court papers in the case. Ulbricht allegedly collected commissions worth $80 million.

[American Patriot]

2 federal agents charged with stealing Bitcoin during Silk Road probe

By Evan Perez, CNN Justice Reporter
Updated 1:11 PM ET, Mon March 30, 2015

Silk Road founder's parents speak out 04:00

Washington (CNN)The federal government became owners of one of the biggest troves of Bitcoin, thanks to seizing millions of dollars in the digital currency from criminals associated with the online black market Silk Road.

Two federal agents who led the probe allegedly decided they wanted some of the money for themselves, according to a new federal court documents.
The two now-former agents from the Drug Enforcement Administration and the U.S. Secret Service are charged with wire fraud, money laundering and other offenses for allegedly stealing Bitcoin during the federal investigation of Silk Road, an underground illicit black market federal prosecutors shut down last year.
The charges in a criminal complaint filed in San Francisco federal court paints a picture of corrupt federal agents trying to enrich themselves as they tried to bring down one of the Internet's top cybercriminals.
The charges against the agents could end up causing complications for the government's case against Ross Ulbricht, also known as "Dread Pirate Roberts", the Silk Road founder. Ulbricht was found guilty last year of aiding drug trafficking with his site.​ He is awaiting sentencing. As a result of the case against Ulbricht and others, the federal government seized bitcoin that it said at the time was valued at over $33 million.
The agents are: Carl Force, 46 years old, of Baltimore, a special agent with the Drug Enforcement Administration, and Shaun Bridges, 32, of Laurel, Maryland, a special agent with the U.S. Secret Service.
Force was a lead agent in the case and was the main investigator communicating with Ulbricht. Force is charged with wire fraud, theft of government property, money laundering and conflict of interest.
Bridges was the computer forensics expert on the case. He is charged with wire fraud and money laundering.
Force allegedly set up fake online personas and tried to extort money from Ulbricht, including once trying to get $250,000 from him in exchange for not providing information to federal investigators, the criminal complaint says.
Using the online persona "French Maid," Force did succeed in getting $100,000 in Bitcoin from Ulbricht, which Force deposited in his personal accounts, the federal complaint says. He later used a series of Bitcoin and personal U.S. dollar transactions, including a $235,000 wire transfer to an account in Panama, to launder the stolen money, prosecutors allege in the complaint.
According to prosecutors, Force also used his position as an executive at a digital currency exchange called CoinMKT, in which he was an investor, to seize accounts of customers. He transferred $297,000 in illegally-seized digital currency to his personal accounts, prosecutors allege in the criminal complaint.
Bridges allegedly stole $820,000, using a series of wire transfers to move Bitcoin that earlier had been stolen from Silk Road in early 2013 and deposited in a Japanese bitcoin exchange Mt. Gox, according to prosecutors. Two days later, Bridges signed the government's warrant to seize millions of dollars in bitcoin from Mt. Gox accounts.
Later, when he learned the FBI was investigating suspicious activity in the Silk Road investigation, transferred $250,000 from his personal account to one he shared with someone else, according to the complaint.