Bitcoin News
-
Feb 15 2014
Weeks of Bad News For Bitcoin
The last several weeks have seen nothing but bad news for bitcoin. What's been happening:
Apple Removes Bitcoin Apps - Apple, with basically no explanation, has removed legitimate bitcoin apps such as Coinbase and Blockchain. These are go to wallets that make iPhone users able to use and spend bitcoins easily. When Apple blocked these, it essentially shuts down growth in bitcoin among iPhone users, which are generally tech savvy people and those likely to be interested in bitcoin. I'm an Apple fan, and use an iPhone, but this one makes the argument for Android a lot stronger. At least the rules are not arbitrary.
Severe Bitcoin Security Flaw - Mt. Gox has disabled outgoing bitcoin transfers over the last 7 days or so, as a bitcoin vulnerability has come to light. This doesn't prevent people from cashing out bitcoins (exchanging bitcoins for regular currency), but it does prevent them from transferring money from Mt. Gox bitcoin wallets to non-Mt. Gox controlled wallets. And obviously this weakens the bitcoin greatly.
Silk Road 2.0 Shuts Down - the same bitcoin vulnerability above has led to the Silk Road 2.0 shutdown. In case you don't know, the Silk Road 2.0 is the reincarnation of the original Silk Road, the successful online drug bazaar. All of the bitcoins in the SilkRoad 2's accounts were "stolen" (unclear if it was real or the moderators running off with the coins), and the website has shut down. This follows in the footsteps of the recent (and much larger) sheep marketplace heist of 2013. Essentially, bitcoins are very useful for online drug purchases, and these shutdowns greatly reduce the usefulness of bitcoin.
All of these things show bitcoin, while promising, is still in its infancy. Problems come and go, but right now there are more problems than success stories. And I didn't even mention how Russia has banned bitcoin, which also doesn't help. These problems will get ironed out, but the sum total of these events has caused a decline in daily transaction volume of the bitcoin, which directly lowers its usefulness and therefore value. As a result, bitcoin price is dropping, and we feel it will fall for a while longer. We have updated our bitcoin recommendation from "fairly valued" to "overvalued".
-
Jan 23 2014
Will Bitcoin Hurt Google?
The utility of bitcoin goes well beyond the obvious benefits: easy money transfer, internet cash, inflation-protection. Bitcoin enables something that has never been done before, easy micropayments. That is, if I want to charge you 0.4 cents (0.004 USD) to view this website for the day, it would be virtually impossible for me to make that happen with traditional money.
One thing people just about universally hate is all the pop-up ads and flashy ads that sprinkle all over the internet. Hopefully the ads on this page aren't too offensive to you - but hey, they pay the bills. Suppose your internet bill increased about $1-3 per month, in exchange for advertisement-less internet. Your internet service provider could just automatically sned off 0.4 cents for each page you visited, and in all likelihood a lot of people would do that because they wouldn't have to click off pop-up or roll-down ads or listen to annoying jingles.
So how could this hurt google? Well google's revenue fundamentally comes from internet advertising, and if they have less places to put their ads, they have less revenue sources. As such, google's business model could potentially erode due to bitcoin's ability to provide micropayments.
You could argue that less ad-space would drive up the price of individual ads. This may be true, but I suspect more ad locations leads to higher quality ads (more targeted ads, that is) then less ad locations. Hence, there could be some surprising adverse effects of bitcoin; notably, the unexpected hit to a lot of companies revenue sources.
I know for a fact the clowns who run JPMorgan Chase are scared, particularly their CEO, who ranted against all the evils of bitcoin just today. We might not have gotten rid of Wall Street and Goldman Sachs after the 2009 financial crisis, but hopefully we can eventually get rid of them. And then one day all the bankers might have to find a way to add real value? And some people say bitcoin is evil.....
-
Jan 21 2014
Great Article On Bitcoin
After the NY Times published a not-so-intelligent article last month entitled "Bitcoin is Evil", they followed up today with a really well written article touting the benefits of bitcoin and discussing its potential for change the world.
Andreessen writes the article entitled "Why Bitcoin Matters", where he likens bitcoin's current status to the early days of the internet or personal computers. Most people couldn't see the benefit, it was too expensive and too technologically complicated; the technologies were only used by techies. This is certainly true and he brings up a quality argument: Can't everyone who dismisses bitcoin just be added to the list of the early technology haters?
I like that argument, particularly because I'm obviously pro-bitcoin. However, one also might argue that the earlier technologies were not accused of being a scam and weren't particularly controversial; the internet and personal computing was derided in the early stages as simply not particularly useful, but never produced a set of critics arguing so fervently against it.
Andreessen, who runs a venture capital firm which has invested 50 million dollars into bitcoin startups, explains the uses and advantages of the bitcoin to those who might not know. This article carries a bit more weight than that written by the average idiot, because his opinion is backed up by a significant personal investment.
What moves this article from the good to great category is some of the unique benefits of bitcoin he brings up. For example, he gives a great example on how bitcoin can counteract fraud. Giving the Target stolen credit card issue, he notes that if Target accepted bitcoin, then Target would have had no personal or confidential information about their customers. They would also be better off because they wouldn't have been paying 2-3% transaction fees to MasterCard or Visa; the consumer would be better off because they would never had have any of their personal information or identity at risk. The only losers in this situation would be the hackers who steal identities.
There were a couple more ideas I found particularly noteworthy. Since bitcoin can be broken down into extremely small amounts (down to 8 decimal places on a single bitcoin), it becomes no issue to charge people 0.001 cents to view a page on the internet, or to send an email. Users might not mind, as this would enable websites without banner ads (or ad-free email for about $1 a month or whatever the cost comes out to be). The only losers here would be those who want to spam. The quality of the internet would improve, and the reason is an easy way to send extremely small amounts of money with no fees.
All in all this article makes a fantastic case for the future of bitcoin. Read it.
Source: NY Times
-
Jan 16 2014
30,000 Bitcoins Seized from the Dread Pirate Roberts
Let's face it: one of the biggest uses for bitcoin, particularly in 2012 was the illegal and underground market known as the Silk Road. The bitcoin serves as fairly anonymous internet cash, which makes it great for people sending drugs, counterfeit money or fake passports.
The government has some propensity to make things illegal arbitrarily (think prohibition in the 1920s of the US). And one thing the silk road did that was positive is at least give people who intend to use drugs higher quality options, and choice. Which isn't all bad.
But alas, the Dread Pirate Roberts ended up making an error eventually, and law enforcement found him and swooped in. The US government has confiscated approximately 174,000 bitcoins following the arrest (which, if you're counting is more than 100 million USD). U.S. district Judge J Paul Oetken ordered in Manhattan's federal court that about 30,000 of the bitcoins be forfeited. This is the largest "bitcoin confiscation" yet.
Ross Ulbricht, the real name of the Dread Pirate Robert's, has sued the government for the return of his bitcoins. He argues that the digital currency is not subject to civil forfeiture rules. Which if he has a really good lawyer, may be arguable, as there is no way the stagnant law would have kept up in any intelligent way with regards to cryptocurrency. That case is still pending.
So why didn't the judge take all of the bitcoin? My guess is that at the time the bitcoins were confiscated, the value of all of the bitcoins he owned was worth about the value of 30,000 bitcoins now. Or at least that's the only logic I can see in it - there may very well be none.
Source: NBC News
-
Jan 15 2014
Paying the IRS in Bitcoin
Forbes published an article recently with the provocative title that essentially said "you can now pay your taxes in bitcoin". The article is actually about a San Mateo, CA startup called SnapCard.
SnapCard has an interesting business model, which is also pretty simple. Basically, it is possible to convert bitcoins to cash or US dollars through various exchanges (CoinBase, BitPay, etc). Since all companies including the IRS accept US dollars, they essentially act as a middle man that allow you to buy pretty much whatever you want (including your taxes, for a $10 fee) with bitcoin.
SnapCard is a relatively new startup, and has processed about $300,000 worth of transactions in bitcoins, mainly to Amazon and EBay. However, from my bitcoin Amazon article, I doubt we'll need a middle man to buy things from Amazon with bitcoin for very long.
The result of a company like SnapCard is that the utility of bitcoin will further increase. As we've hammered home throughout this blog, the more people use and accept bitcoin, the more valuable bitcoin becomes. Hence, the future again gets rosier for bitcoin.
Source: Forbes
-
Jan 11 2014
Overstock Does $126,000 in First Day of Sales
Wow. Overstock on its first day of accepting bitcoin reported $126,000 in sales. I expected a few hundred bitcoin enthusiasts to spend $10, so this exceeded my expectations by about a factor of 1000. This is fantastic news if you are pro-bitcoin. The value of the bitcoin is directly proportional to the dollar amount of transactions it is used in, so Overstock accepting and now using bitcoin directly adds value to a bitcoin. Wow.
Source: Wired
-
Jan 9 2014
Overstock Is Accepting Bitcoins
A while back we mentioned that Overstock.com was planning on accepting bitcoins. At the time we weren't sure if this was a gimick for publicity or what-not, but they've gone ahead and done it (about 5 months ahead of schedule).
And there you have it: another huge answer to "where could I even use a bitcoin?"
Source: Overstock.com/bitcoin
-
Jan 5 2014
Zynga To Accept Bitcoin
Bloomberg reports that the price of bitcoin briefly surpassed $1000 USD again, as Zynga said they would start accepting bitcoin for some of its online social games.
Zynga says they will use the BitPay payments service to accept bitcoin. This will initially be rolled out as a test operation to gauge user interest.
Source: Bloomberg
-
Jan 2 2014
Amazon Likely To Accept Bicoin
No one is going to beat Amazon on any margin, anywhere. Bezos and Co. are more than willing to sacrifice ten years of profits for market share. They are long-term oriented crowd. That being said, overstock.com will not be able to accept bitcoin without amazon doing it as well. And overstock.com announcement of a June-July timeframe for accepting bitcoin has been documented.
So it is no surprise when I say "Amazon is Likely to Accept Bitcoin". But I got some further confirmation today; an advertisement on my facebook page to apply for jobs within Amazon's payment department. To me, it seems highly likely that they decided to target facebook posters who have worked at Apple or Google (or both, like me) and have commented recently or often on bitcoin (like me). And so it was that I see them advertising at me for a payment related job, I knew exactly what was happening.
The big news here is that with Amazon, the overall marketplace for bitcoin would expand INCREDIBLY. This would definitely increase traffic volume, user base, etc for bitcoin, and thus raise its value. Hence, we at usethebitcoin.com labs have upp'ed our recommendation on bitcoin from overvalued to fairly valued. But looking forward, I do expect an appreciation on bitcoin over its current price.
Source link is a link to the amazon's "come check out what we are doing in payment processing" welcome screen.
Source: Amazon
-
Dec 29 2013
Krugman at NY Times: Bitcoin Is Evil
Paul Krugman over at the NY Times has written a brief article discussing how he views bitcoin as evil. This article has been referenced many times so it is worth a mention here. First, note Krugman's pedantic "I'm intelligent" tone throughout the article (linked below), which is the calling card of the moron.
The crux of his argument is that gold's value is underlied by the usefulness of gold. The dollar's value is underlied by it's ability to pay the US government's taxes, and that the federal reserve will buy the dollar back if its value syncs at more than 2% per year. But bitcoin has nothing underlying it's value.
I've written on the value of the bitcoin is that people use it - see bitcoin value analyis page. I also argue there that gold is only valuable because other people want it, and it is not just the intrinsic usefulness of gold that makes it worthwhile. In addition, the dollar does sink in value grossly; recall 1979-1981 inflationary period where the dollar eroded in value by 11.3%, 13.5% and 10.3% repsectively by year. So don't think the US government can really store the value at will.
I do not believe the US dollar is more useful than the bitcoin. I think the inflationary style of US dollars will continously erode its value, and you will most certainly be able to pay taxes with bitcoin, by converting it to the more-worthless dollar.
Hence, while this argument will convince the moron, and the staunch old conservative who lost the ability to think years ago. But really there's no meat to the argument.
Source: NY Times
-
Dec 26 2013
Overstock.com Hopes to Accept Bitcoin in June
Overstock.com is the latest online seller to come out in favor of using the bitcoin. Patrick Byrne, CEO of overstock.com, hopes to select a bitcoin "facilitator" to help with bitcoin transactions in January. By June, overstock.com hopes to begin accepting bitcoin as payment.
I have a couple thoughts on this topic. On the negative side, is the clever CEO announcing a tentative plan to accept bitcoin (as bitcoin's popularity surges) in order to get more "free press" about his site? That would certainly be possible. It is unlikely bitcoin will account for a large percentage of overstock's sales anytime soon.
However, on the other hand, these online retailers do operate with a 1-2% profit margin. By getting rid of the 3% credit card fees, you just more than doubled your profit margin. And that is huge. Hence, there is valid business sense in accepting bitcoin.
And then things could get crazy. If overstock accepts bitcoins and then has a 4-5% profit margin, and then can undermine amazon, it is clear that Amazon will no doubt be forced to accept bitcoin. At that point, the bitcoin acceptance likely will hit the avalanche effect, where people pile into it. This means that if you have some large gains from owning bitcoins you purchased a while ago, it still may not be a bad idea to hold them, as you might never need to convert them back to US dollars (or whatever).
All in all, this story is pretty huge, and I'll be following it closely. Overstock.com is currently the 644th most trafficed site in the world according to Alexa, and would be a great answer to "if I had a bitcoin, where could I even spend it?"
Source: NY Times
-
Dec 21 2013
Bitcoin Mining Article
Nice article on a bitcoin miner in Iceland. Also gives you an idea of the magnitude of the current bitcoin mining computational capacity. My favorite line from this article:
Today, all of the machines dedicated to mining Bitcoin have a computing power about 4,500 times the capacity of the United States government’s mightiest supercomputer
This in effect means the US government will lose its ability to hack or control the bitcoin world as time goes on, whether or not it wants to with NSA programs. My least favorite line of this article:
The term hashing refers to the repetitive code guessing that miners do.
Incorrect. Hashing is a function that takes some block of data and spits out some seemingly random and unpredictable result. It is easy to compute the hash of some data, but given the hash, it is virtually impossible to figure out the original input. Bitcoin miners do repetitive code guessing, but hashing itself has nothing to do with that. The repetitive code guessing is the process of determining an input that gives you a desired hash output, which you can only do by guessing. Other than that, good article.
Source: NY Times
-
Dec 19 2013
Bitcoin Bubble Article - But a Good One
Forbes put out an article that actually isn't too bad. It is showing that bitcoin is likely following the typical bubble scenario, wherein an asset rises extraordinarily quickly relative to it (or the market's) usual performance.
By comparing Bitcoin's recent run-up and drop-off to the "archetypal bubble stages", he argues that bitcoin is likely on its way down. We at usethebitcoin.com also feel this way. In addition, we feel it is a good investment, just not right now. And the author (Jesse Colombo) states that he's interested in picking up bitcoin, just not right now. So, the article is worth a read.
Here's the gist of it. Here's the "prototypical bubble" that appears over and over due to repetitious human stupidity:
And here's bitcoin's recent rise, reflecting a strong similarity to the above:
Make of it what you will, but I do think the example is correct. Bitcoin will go back up over time, but not before it falls a bit further.
Source: Forbes
-
Dec 17 2013
Denmark Won't Regulate The Bitcoin
The financial supervisory authority of Denmark (whatever that is, might be made up for all anyone knows) has issued a statement to the nice people of Denmark warning against the use of bitcoin because it is unsafe. They argue, somewhat moronically, that your bitcoins might get stolen (unless of course you know what you are doing) and that you might not be able to convert them back to regular (aka traditional) currencies at any time.
Denmark's argument is essentially this: you shouldn't own something that might get stolen. What would you do then? Never mind that your cash might get stolen too. But that's beside the point. Also, you might not be able to get your money back if you buy bitcoins. (Tell that to the people of Cyprus after their government confiscated their bank accounts).
Anyway, so that is the somewhat negative news out of Denmark, with no real intelligent argument in existence. However, the good news is that the supervisory authority (honestly if you have to call yourself the supervisory authority you have got to be at least as dumb as the people looking to you for advice) goes on to say: “Companies do not need permission to be able to establish their operation in Denmark if they want to run bitcoin Exchanges that also include exchanging real money"
That's a good thing. That means Denmark is a nice civilized country that will allow for free market operation in regards to bitcoin exchanges. That weakens the position of all the other governments who try to regulate it. So net net this is a win for the bitcoin.
Source: RT
-
Dec 17 2013
Coinality: The Website for Jobs That Pay Bitcoin
So...someone is going to figure out some big things for bitcoin and end up with a few billion dollars. Coinality.com is a jobs website with an interesting twist: all jobs pay bitcoin. While most of the jobs are tech oriented and contract work, it is interesting to see the bitcoin expand into the jobs sector.
While it sounds gimmicky, I think bitcoin has a real future (or I probably wouldn't be writing for this web site). If that turns out to be true, coinality will be leading the way in the bitcoin job market. Check the source link to see what they've got going on.
Source: Coinality
-
Dec 16 2013
The Bitcoin World Grows AgainCategory: Usage
A casino owner in Vegas has decided to sell his mansion for $7.85 USD. We wouldn't usually care about that except for one fact you can guess: he will accept bitcoin.
This isn't particularly intelligent of the man (Jack Sommer), as the value of the bitcoin does vary wildly and isn't as universally accepted as the dollar as of now. So unless the house represents less than 5% of his wealth (meaning he has on the order of $100 Million USD), the guy probably didn't think this one through.
However, this is still a big deal. The value of the bitcoin, it could be argued if someone was intelligent, is that the total value of all bitcoins should be on the order of the sum of all bitcoin transactions (kind of like the GDP for bitcoins). This statement put simply means: the more people use bitcoins, the more valuable they are. So the morale of the story is that this guy selling his house for bitcoins expands the bitcoin universe, which makes the whole thing more interesting and the bitcoin more useful.
Link Source: CBS News -
Dec 11 2013
Moronic Article on Bitcoin Deflation Category: Stupid
Another day, another mindless article on the bitcoin. In today's "I can spell bitcoin and therefore I have something intelligent to say" world, we have an article by Peter Coy over at BusinessWeek. Weak business reporting, that is.
He plots the rise of bitcoin as a way of saying that the price of everything (in Bitcoins) is plummeting. And a declining currency is bad news: think Great Depression. People hoard their money in deflationary periods; everything will be cheaper in the future so it is best not to buy. And you can imagine the toll that would take on the economy.
However, all he is doing is inverse-plotting the rise in the bitcoin. The thing is, the bitcoin universe has a market capitalization (the value of all bitcoins) on the order of 12 billion dollars. And what if the set of all commerce that wants to be done with bitcoin rises beyond that? You got it: the value of the bitcoin rises. And, because it rising, everything is deflationary, and therefore the bitcoin is bad news. Brilliant.
It is my belief that the bitcoin will serve to be ultimately more useful than the US dollar. As such, the value will need to rise to compensate for the increased usage of the bitcoin in transactions. This does not have anything to do with deflation or a Great Depression, it is just a matter of prices reaching equilibrium based on what type of currency you are currently dealing in.
Link Source: BusinessWeek -
Dec 9 2013
Apple Declines Bitcoin Apps Apple....
I like Apple. I love their products. I used to be an engineer there. They have a commitment to excellence you won't find many other places. And for full disclosure I do think Android blatantly ripped off iOS, and that Android is an inferior product.
But Apple also does some crappy stuff. I remember in 2010 I resolved to write an app as a new year's resolution, and I did an Organic Fart App. Pretty creative stuff. Anyway, I did it for iPhone and it was approved, and very arbitrarily they denied it for the iPad saying it had "limited functionality". Well, let the user decide I thought.
So in a very similar vain, Apple is arbitrarily banning bitcoin apps. Gliph was a secure messaging app that allowed users to transfer bitcoins to one another. And that was denied by our Cupertino overlords. The reason? "the bitcoin is not legal in all locations where the app is available...." which sounds somewhat nonsensical. The authors could easily restrict the countries where the app is allowed via Apple's simple iTunes Connect portal. But ultimately Apple just doesn't want to allow it, and they run the show.
A little bit disappointing, but hopefully somewhere at heart Apple is just trying to keep their users from getting ripped off....or at least they'll come around soon.
Link Source: Macrumors -
Dec 8 2013
The bitcoin "crash" of 2013? Boom!
Haters gonna hate. So after the huge run-up in bitcoin, the inevitable fall back to earth is happening now. Never mind that the value of the bitcoin is still up HUGE in the last month, the human minds at the LA Times are running a nice little article entitled "The Bitcoin Crash of 2013: Don't you feel Silly?"
Unless you are looking through the narrowest of lenses, you wouldn't be calling this a crash. What this is is the inevitable cooling off after a huge run up. I certainly agree that the value of the bitcoin went a bit unstable (which actually lessens the utility of the bitcoin, which should push it back down while we wait for stability). However, the long term value of the bitcoin, at least according to me, is going to rise as the overall bitcoin economy no doubt grows.
For now, and over the next several months there will be a lot of articles like this. I'm estimating it will take on the order of 4-8 weeks for bitcoin to return to a "fair value" price which I believe to be about $300-$400 USD.
Finally, I would like to re-quote my favorite line from the LA Times less-than-intelligent story:
$1,200 bought you an ounce of gold bullion, but on the bitcoin market it only bought you a putative claim on the outcome of a mathematical algorithm.
The outcome of an algorithm? No, moron. Your paying for a bitcoin to be assigned to your wallet. It stays there until you want to transfer it. For now, let the morons type. Link
Source: LA Times -
Dec 7 2013
Someone bought a $100,000 Tesla with Bitcoins Boom!
Well the set of things you can buy with bitcoins just got bigger. A Lamborghini dealership agreed to sell a $100,000 Model S in exchange for 91.4 Bitcoins this week. With the value of the bitcoin in decline now, this turned out to be a great move for the buyer. Precedents are being set here. Bitcoin Tesla Source: CNN