Japan to monitor Bitcoin rather than regulate it
(CoinReport) Japan’s involvement with bitcoin has taken a massive blow due to all of the negative press surrounding the Japanese failed bitcoin exchange, Mt. Gox. Since then, warnings of the risks involved with dealing in the digital currency have been spread throughout the world by regulators and critics alike.
Japan Will Monitor Bitcoin
However, rather than placing specific laws or regulations attached to how the country should be allowed to use bitcoin, it will just monitor it instead. On Tuesday, the Japanese government claimed that regulating bitcoin wasn’t under their jurisdiction. Sources say that Japan’s Ministry of Economy, Trade and Industry is devising a plan to make it easier to monitor illegal bitcoin activity. Prime Minister Shinzo Abe and his administration identify bitcoin as not being a form of currency. They do identify it as being an electronic payment method.
As most government officials and regulators do, Japan’s warn the public of bitcoin’s potential dangers, such as its uses in money laundering and drug trafficking.
Regulators Warn of Bitcoin
While Japan has no plans to enforce rules over bitcoin, other regulators feel that regulation over the digital currency is the only way for it to be safe enough for investors to get into. On the other hand, some feel bitcoin isn’t safe enough to implement into our economy, but for those that want in, they should do their homework first. Indiana Secretary of State, Connie Lawson claims that:
“The value of virtual currencies is highly volatile, and the concept behind the currency is difficult to understand even for sophisticated financial experts.”
Though this may be true in some cases, that doesn’t mean people can’t figure it out for themselves. Bitcoin was foreign to every enthusiast at one point in time. Like with all new concepts and innovations, time is needed to get acquainted with the technology. Once upon a time, even the Internet sounded dangerous and ludicrous idea. Regulators, whether in Japan or the U.S., need to stop putting fear in people and let bitcoin have an organic chance at success.
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Building a Bitcoin Economy: how to stimulate adoption
evangelist? Want to learn how to start your mission into the world of
fiat economics? Having preached the good word of Satoshi to laymen of
all kinds, I’ve made my mark and learned a lot about promoting crypto
adoption. Before you begin your journey, take a moment to read and learn
about the science of Bitcoin evangelism.
things: intellectual capital (to code the software and design the
systems that make everything work) and financial capital (to pay for
hardware, commercial space, legal fees, and intellectual capital if it
is lacking). Adoption is probably the only field of the crypto industry
that requires cultural or social capital, at least at the grassroots
level. But what does that mean in practice?
connections you already have. In my case, that was a network of notable
Vancouver Meet Up groups, and a job as a venue promoter. At first you
won’t have existing merchants to refer to as references, so you’re going
to need to find people who really trust you. Plenty of free solutions
to accept exist, and once they realize the advantages of cryptocurrency,
they’re likely to stick with it.
superiority of accepting payments via Bitcoin is meaningless if nobody
is spending their bitcoins. Even if Bitcoiners prefer to spend
fiat–maybe because the price is on an upswing–just bringing their
business to the adopting merchant provides the necessary incentive, and
there are a number of ways you can do that.
come in handy. If you’re not a member of your local cryptocurrency Meet
Up, already, become one, or start your own group if none exists.
Community pages at Facebook and Google Plus will also help. Since all of
the businesses I signed up were event venues like coffee shops,
restaurants and bars, I was able to bring them business directly by
holding Meet Ups at their locations. Even for non-venue businesses,
though, a community allows you to connect producers to consumers and get
the word out.
more businesses on board, and that network should grow. In addition to
the natural benefits of cryptocurrency, you now can now promise
additional benefits in the form of direct customers–look for businesses
likely to be open minded, like those already hosting Meet Ups or listed
on websites like GroupOn or LivinSocial. Each new adopter you post to
social media will bring more Bitcoiners into the fold, which in turn
increases the amount of business (and incentive) you can provide.
you can bring more customers indirectly via publicity than you can
directly. You should probably have a couple local reporter contacts, by
now. New crypto Meet Ups and splinter groups will form, and inevitably
the majority of events and merchant connections will be initiated by
people other than yourself. This is natural in community building, and
even moreso in a community based on techno-libertarian roots–don’t be
discouraged.
marketing power to promote those working together for the cause. If you
maintain an honest, non-profit-focused campaign, you will become the
face of this new community; forward media inquiries where appropriate,
and engage positively with the mainstream media. Soon you’ll be ready to
take Bitcoin adoption to the next level.
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“Commodity” is the right way to pitch Bitcoin
nothing like holding a stash of bitcoins and watching the price to make
you hold on for dear life (HODL – the cry of many a bitcoiner) or want
to get off. Its volatility is also a draw for people who would never
even consider such a thing to take a stab at day trading. The frequent
swings up and down make it seem like it should be easy to simply follow
the old rule of buy low and sell high. Most of those who try this,
though, soon learn that it’s not so easy to predict the market, time it
well enough to get a return, and make enough to beat the spread and the
fees.
news for Bitcoin. Price and volatility are important, of course, and the
price of a bitcoin is going to need to rise astronomically in price if
it’s going to fulfill its role as a global asset and currency. But price
is actually a feature of Bitcoin and not its make or break point. On
any given day, the fact that the price is soaring on the seeming
blessing of a hedge fund manager or crashing on some rumored meeting of
the PBOC in a back room somewhere in China is actually fairly
irrelevant.
right. Adoption is progressing, and for sure there are more and more
sellers accepting Bitcoin, but many of the sellers I’ve been in contact
with admit that they have gotten few, if any, Bitcoin sales. Merchants
have natural reasons to accept bitcoins in payment, but it isn’t nearly
as clear to consumers what the benefits to them are. The technical
difficulties, bad press, and risk of theft are great enough to easily
offset the advantages of saying bye bye to their bank accounts and
credit cards.
No,Bitcoin’s time to act as a currency has not yet arrived. Right now it’s
a commodity with an excellent appreciation outlook. And that’s how
Bitcoin should be being pitched. Purchase one or ten or twenty bitcoins,
put them in a paper wallet and forget about them; that small investment
may be the same as buying Microsoft stock or Berkshire Hathaway stock
20 or 30 years ago. Bitcoin is designed to be deflationary, and as
adoption increases, so will its value. Given the state of the political
and financial systems, for those worried about their retirement, their
kid’s university, or just the state of the economy, Bitcoin might be the
best investment there is.
in. When demand to hold Bitcoin as an investment has risen sufficiently
high that people stop looking at what a bitcoin is worth in terms of a
local currency and start pricing things directly in Bitcoin, Bitcoin POS
payments are going to take off. At this point, the fiat currency will
be valued against Bitcoin rather than the other way around. At this
point also, many of the concerns we currently have about regulation and
taxation are going to become moot as the regulators and taxmen will have
to recognize the reality on the ground and adapt or die.
an apt comparison. Bitcoin’s most famous feature is as a currency, but
the blockchain itself is a powerful development. Right now there are
companies and projects underway to create smart property (where you can
prove or transfer ownership of anything with a chip by showing
possession of a bitcoin ‘marked’ as that property), smart contracts
(where you can encode the terms of the contract to fulfill automatically
once certain conditions checkable on the Internet are met), distributed
shares in companies, anonymous, verifiable voting, and much more. It’s
possible that we are going to start to see some of these applications
gain wide adoption before most people are buying a coffee with Bitcoin.
People will come to Bitcoin, probably without meaning to, because of its
simple usefulness. This will dispel some of the myths and fears
associated with it. From there, people will start dropping their bank
accounts and credit cards in favor of saving in their own (by this point
easy and secure) wallets and paying for their coffee by keying in a PIN
on their phone.
and easily, bad press, and security are going to dog Bitcoin’s
development for the foreseeable future. But the trend lines are also
easy to see. Bitcoin is developing, expanding, and gaining in usefulness
every day. So the next time someone tells you they’re worried about
their retirement or their kid’s education, let them know that they
should do their own research and make their own choice, but that Bitcoin
might just be the best investment they could make.
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Why simplicity is best for bitcoin growth
With the many people who have boarded the bitcoin train
lately, and bitcoin acceptance growing each and every day, security is
still of paramount concern and for those new to bitcoin or wondering
about buying some, there are still many doubts and uncertainties, which
hang over them.
(BitScan) Bitcoin
is a fascinating technology and our job as users is to keep it safe. I
had a friend tell me this weekend that bitcoin was “too hard for people
to learn.” I reminded him that email is used by so many people and that
less than 10% of those who use it, understand it all. The same will go
for bitcoin.
Often these newcomers to bitcoin are overwhelmed with
- facts and figures
- hash rates
- difficulty
- brain wallets
- blockchain
- cold storage
- private keys
- the list goes on
It is not surprising it all sounds too complex to even begin to understand and get involved.
The email analogy
Imagine if I had told you when email was starting that there was this
cool electronic mail available now and I think you should check it out.
To that, you ask, “How does it work?” I could answer you in two ways:
1. “You type out a message, put in the intended recipients address, and click send.” Or
2. “To start, you go to your mail user agent, or your MUA. You
address your message to the intended recipient and click the “send”
button. This causes the MUA to format the message using Simple Mail
Transfer Protocol, or SMTP and delivers the message to a local mail
submission agent, an MSA that is located at an SMTP address that is run
by your ISP.
Your MSA looks at the destination address provided in the SMTP
protocol, starting with the part before the @ sign, which is the local
part of the address and often a username, and then the part after the @
sign, which is a domain name. The MSA resolves a domain name to
determine the fully qualified domain name of the mail server in the
Domain Name System or DNS. The DNS server responds with any MX records
that are listed as the mail exchange servers for that domain.
SMTP transfers the message and your recipient then needs to press the
“get mail” button in his MUA, which picks up the message using either
Post Office Protocol also named POP3 or the Internet Message Access
Protocol or IMAP. It’s easy as pie!”
I wonder how many of us would have forged ahead with email had the
second version been the usual explanation given. Bitcoin is still in its
infancy and products will be coming along as well as solutions to make
it easier on the user. Much like Outlook and Google made email easier,
so too will product developers and businesses make bitcoin easier.
Keep It Simple
So, when talking bitcoin, keep it simple.
Allaying Fears
One of the main worries that anybody, new to or expert in bitcoin
has, is over security and potential theft. With hackers and their tools
getting better and faster with each day, we must protect ourselves now
before it it’s too late.
First, line of defense is a secure password.
NEVER use the same password on more than one site. You may end up
giving a scammer universal access. So now they have your bitcoin, and
passwords to all your online wallets, exchanges, email and more.
An easy and free solution might be LastPass. It is a simple and
effective way to manage all of your passwords as it stores your entire
password, encrypted on your device and all you need is to remember one
master password. There are other options as well. Do a search for
password managers and make sure they are secure and reputable.
The take away here is every password you have should be unique, at
least 15 characters with some of each upper and lower case letters,
numbers and symbols, and not contain dictionary words, names or places.
There are other safety steps that can be taken including storing bitcoin offline or in a paper wallet. See what the creator of bitcoinpaperwallet.com has to say here.
All these measures can be used when greater amounts of bitcoin are
involved but for ease of use for a new user with a small amount, finding
the best bitcoin wallet or wallet app is key.
Your Bitcoin Wallet is like the wallet in your pocket – except you
have the private key for that wallet – so it is incredibly difficult for
anyone to steal your wallet and make use of the bitcoin without your
private key.
Together
The more people who are encouraged to adopt bitcoin, the stronger and
more normal it becomes. There are no regulators for bitcoin,
decentralization means that the bitcoin community has to keep its own
house in order. By sharing information and spreading the word the
community can help bitcoin in its progress. By helping each other stay
safe, the bitcoin horror stories can be kept to a minimum.
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How XRP may actually benefit Bitcoin
As it stands, Bitcoin is king of the hill. However, at least one form
is clearing its own path and may actually end up helping Bitcoin and
others.
to be the next PayPal. The difference is that Ripple will handle
multiple currencies—perhaps even all of them—and make
transactions immediate. There will be no more waiting around for days in
order for a payment to move from one party to another. To facilitate
this process, Ripple invented its own currency, XRP. Unsurprisingly,
many have seen this digital currency as a natural rival to Bitcoin and
other versions. Yet this isn’t necessarily the case. Unlike Bitcoin, XRP
has a stated purpose it’s been designed “to streamline transactions”.
Ripple really doesn’t need it to do much more than that, so it
seems unlikely they have much interest in putting resources behind
making it the number one digital currency in the world. XRP may turn out
to be the best thing that ever happened to Bitcoin. One challenge to
Bitcoin, or any other digital currency for that matter, will always be
the public’s reluctance to adopt it. As the years go by, it may dwindle,
but for the foreseeable future, this remains a hurdle.
can involve Bitcoin without one party ever even knowing about it. For
example, if you wish to buy a book from someone using Bitcoins and they
wish to be compensated with yuan, this would normally be problematic.
You might even stop using Bitcoins because so many people you purchase
from don’t accept them. With Ripple, make the purchase and they’ll
convert your Bitcoin into XRP and then into yuan. You get your book
using Bitcoins and the seller gets the yuan they desire. This highlights
XRP’s ability to extend the reach of any digital currency on the
market. So while it may be viewed as a rival, the truth is that it might
be their greatest ally.
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An Internet of Blockchains
The blockchain is a hard concept to wrap one’s head around because it describes a system for which no analog exists today, and it runs counter to everything we know about how trust works. In today’s world, trust can only be assigned or transmitted by an individual or organization. The idea that one could safely send money from point A to point B, and have that transaction fascilitated by potentially millions of agents without you knowing who those agents are, what motives they might have vis-a-vis your money, whether they are nefarious or not, is an anathoma. But that is exactly what the blockchain helps enable.
With the blockchain, trust stems not from the reputation of an actor or collection of actors, or from a process or set of controls that abstracts power and authority away from individuals. Nor does trust get transmitted through a graph of friends, or from an external auditor who can vouch for a claim. Instead, we place trust in a design pattern. But what does that mean, to trust in a design pattern? To answer that, let’s look at another decentralized system we have all grown to trust so much that it has transcended the need for trust entirely, and just is: the Internet. The Internet has no governing body or centralized authority. There is no mastermind responsible for making sure some secret collection of computers are plugged in and working. There is no facility that if compromised could “take down the Internet.” No, the Internet works because of a design pattern that dictates that data should move the same way between networks, as it does within networks. So if a network wants to take advantage of the access and opportunity afforded by the Internet, all it has to do is connect, and in so doing it begins contributing it’s own resources to the benefit of the whole, further decentralizing it, making it faster, and making it more resilient.
We take all of this for granted without knowing how this system works. But if you look back to your own history, assuming you were around when the Internet had it’s tipping point, I bet you will find a moment where you had to take a leap of faith. A moment when you had to drop AOL for a generic Internet Service Provider who provided no information services of their own. Of course, the later you made this leap of faith the easier the choice was to make because you were entering an increasingly useful and utilitarian landscape of services – companies like CNet, Excite, Yahoo!, Excite, and others. And the more companies that began building their businesses ontop of this infrastructure, the less and less people cared about the fundamentals of how it worked. The proof was in the pudding.
The blockchain today is operating in a time not that dissimilar to the Internet in the 1990’s. Consumers are baffled and confused by how a decentralized finance system could even function, while a growing number of people led by technologists, futurists and entreprenuers see the potential for ideas and companies that heretofore had been impossible due to the economics of a centralized system. But slowly, as more and more people take their own personal leap of faith, more and more people will stop caring about how it works, and just accept that it does. By then we will no longer be talking about “a blockchain,” but rather an Internet of Blockchains. And no longer will our computers simply connect to the Internet, they will contribute their computing cycles to an untold number of micro-economies that will power far more than even they are aware of.
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How we know Bitcoin is not a bubble
The Value of Money
holdouts still remain who argue that it is a bubble destined to fail. To
address this claim, I will describe a theory that describes how to
appraise Bitcoin according to the Austrian theory of money.
means that a given value of money is demanded everywhere and can easily
be traded for goods. For example, say I had enough bitcoins to buy a
100-oz gold bar. In late 2010, this would have been worth around one to
two million bitcoins and would have been impossible to sell on the open
market without drastically affecting the price. By contrast, in early
2014, 100 ounces of gold was worth about 100 bitcoins, and this amount
could easily have been traded quickly on one of the major exchanges
without affecting the price noticeably. Thus, in early 2014 Bitcoin was
more liquid than in late 2010, and was therefore a better currency.
a means of appraising it because the liquidity cannot be separated from
the price. This is kind of a problem—it sounds like a circular argument
because it says that Bitcoin’s value is caused by its price! This
allows for no way to detect whether Bitcoin is overvalued or
undervalued.
element is required. Our observations about money come from the past,
whereas our judgments about its value are about the immediate future.
This makes the value of money into a positive feedback loop. If the
network is growing, then it will tend to continue to grow, whereas if it
is shrinking, it will tend to continue to shrink.
anything like an underlying value. Any price is as good as any other—the
only thing that matters is the direction it is moving. This is not
really an appraisal after all—but it is still the right way to
understand Bitcoin’s price.
Bubbles
price is showing an upward trend if one spots the trend early enough.
In other words, if one can predict that other people are likely to
appraise a good more highly in the future, regardless of whether that
appraisal is rational or irrational, then it makes sense to buy into the
change of sentiment. If lots of people begin to think this way, then
they can create a positive feedback among one another and bid up the
good beyond any rational appraisal of it. This is a bubble.
a good for its ultimate purpose. Once it is understood that the people
who actually use the good are being bid out of the market, then the
price crashes because people stop predicting higher and higher
appraisals to the price.
passed around from person to person, without ever being consumed. A
stock is valued by the sum of its interest-adjusted dividends. A bond is
valued by its redemption value adjusted by the interest rate and the
risk of default. A commodity is valued by the value of the goods it can
be used to produce. However, for money, there is no independent quantity
to provide a reality check. All money is like a bubble that never
bursts.
Metcalfe’s Law
from computer networking. Metcalfe’s law says that the value of a
network is proportional to the square of the number of nodes. The
rationale is that the network should be valued according to the number
of connections it supports, which is approximately proportional to n2 (for large n).
Consequently, as the network grows, it presents a better and better
opportunity for new members. As new members enter, the network improves
for all its present members.
exchange because some nodes in the trade network will be more valuable
than others. Those who have a lot of the medium are potentially able to
spend more than those who have little. Therefore, use the market cap of
the medium of exchange as n instead of the number of people.
Similarly, some transactions are also worth more than others, so it
makes sense to use the transaction volume rather than the number of
transactions.
transaction volume excluding popular addresses in green. The axis on the
is the price in dollars. Exactly as Metcalfe’s law predicts, the
transaction volume increases very neatly as the square root of the size
of the network. The correspondence is beautiful. I wish I had thought to
make it first!
diagram. On the original Bitcoin Talk, thread, the green plot has been
labeled as the “Metcalfe Value”, as if it is an appraisal of the Bitcoin
that estimates what it could cost.
money I presented above. In my theory, the value causes the
transactions, whereas in the diagram, the transactions cause the value.
However, it is only potential transactions that cause the value. Past
transactions are of no value to anybody. The present size of the
network and the consequent opportunities is likely to provide tomorrow
will motivate people to buy and sell today.
effect can have serious consequences. For example, many people believe
that it is necessary to spend bitcoins and increase the transaction
volume in order to make Bitcoin more valuable. Of course this is
nonsense; all this does is fill up the network with transactions for
things that nobody actually wanted. That does not present a good value
for a newcomer because he will want a network that presents him with real
opportunities, not just ways of artificially increasing transaction
volume. The more that the Bitcoin network is focused on artificially
increasing the transaction volume to make it look good, the more it
resembles a Ponzi scheme. Rather, to make the network more valuable, we should be hoarders. This is more likely to present newcomers with lots of potential uses for Bitcoin as a medium of exchange.
Appraising Bitcoin
for electronics, but were then to acquire use as money once a network
effect formed around their price, an investor might be excused to call
the price an unsustainable bubble. However, it would turn out to be a sustainable bubble that inflates until it fills the entire economy. At least until Bitcoin came along.
rational appraisal or an investment bubble? The answer is easy, much
easier than with a commodity like gold. Bitcoins have almost no use
other than as a medium of exchange. Thus, the fact Bitcoin has any
price at all is evidence that there is a real network effect. It is
much easier to prove that Bitcoin acts like money than that gold does,
in fact.
for Bitcoin at all is enough to make it function as a medium of
exchange. If demand continues to grow, then it becomes a better medium
of exchange. There is no end to this process because the primary value
of Bitcoin is the network effect surrounding it, not any final
productive use.
prophesy: as more people believe in it as a medium of exchange and
become willing to buy it, they create the very conditions required of it
to make it more useful. There is nothing irrational, therefore, in
treating Bitcoin’s price as the cause of its value and no reason to
expect the momentum in its exponential upward trend to cease.1
Conclusion
hands, click your heels together three times, and believe in Bitcoin! It
will only take faith the size of a mustard seed.
-
This analysis leaves something to explain—if the value of a medium of
exchange is just the market cap, why does Bitcoin go through hype
cycles? Every time Bitcoin goes up in price, that is an increase in its
underlying value, so why does its price ever crash? I don’t know the
answer, but I think I have a reasonable hypothesis: the network takes
time to adjust to the enormous number of newcomers during each hype
cycle. Each member of the network adds value, but this takes time—the
members of the network must learn something about one another before the
value they add to the network is more fully realized. If this effect is
real, then the price could temporarily rise more rapidly than the
growth that the network can support.
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Third CoinSummit to be held in London
The Third CoinsSummit is to be held in London this July. San Francisco was the acting ground of the previous CoinSummit convention that was held in March; as the second convention presented, this next summit will feature a series of panel discussions and speeches from bitcoin enthusiasts, hedge fund professionals, VC and angel investors, and experienced cryptocurrency entrepreneurs.
The information posted on the CoinSummit official site:
“CoinSummit London is a two-day event connecting virtual currency entrepreneurs, angel and VC investors, hedge fund professionals and others who are looking to learn and network in the virtual currency industry. CoinSummit will take place on July 10-11 2014 at the East Wintergarden London.”
Some notable speakers include Silk Road Equity co-founder Matthew Roszak, new Bitcoin Foundation board of director Brock Pierce, angel investor Roger Ver, and Maidsafe CEO David Irvine. Some of the others participants include Megabigpower founder David Carlson, Lamassu CEO Zach Harvey, eToro CEO Yoni Assia, and many others.
This 3rd CoinSummit, organizers are presenting a new set. Besides the usual structure, a special platform is being organized for a few startup companies. Coinsummit has informed at their site, that ten startups will be given the chance to present in front of the entire CoinSummit audience and will be chosen on the basis of the size and charm of the opportunity they are designing, the strength of the team, and their traction / metrics / achievements.
The summit is organized by Pamir Gelenbe, a strongly firmed crypto currencies entrepreneur and partner at Hummingbird Ventures. After the last summit in March, Gelenbe has stated:
“We hope to bring together entrepreneurs, VC investors and folks from hedge funds who want to learn about bitcoins as an asset class…we really want to focus on the business side of Bitcoin as we don’t think there has been an event like this before.”
CoinSummit has been the leading hand on taking Bitcoin discussion to higher grounds by cementing the bonds between the Bitcoin communities around the world and relaying trustworthy information to the media and business investors.
CoinSummit London 2014, will be held at the East Wintergarden and take place on July 10-11. Entrance to the conference is invite-only. Digital currency enthusiasts and entrepreneurs who wish to attend the event can request an invitation on the summit’s official site; applying for the presentation is free and the deadline to register is June 20.
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Bitcoin 2014: Building the Digital Economy
(CoinReport) Heads up folks! Bitcoin 2014: Building the Digital Economy conference is being held in Amsterdam from May 15 to 17.
Bitcoin 2014
It will be a meeting place for investors, technologists, regulators,
executives, entrepreneurs, developers, and policymakers to gather and
discuss the future of digital currency around the world.
was held in Silicon Valley in San Jose California. The conference had a
spectacular turnout of over 1,200 attendees, speakers, and exhibitors.
It featured bitcoin investors Cameron and Tyler Winklevoss as keynote
speakers.One of the topmost fintech hubs in Europe, Amsterdam serves as a great place for this year’s momentous event to take place.
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The Declaration of Bitcoin’s Independence
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