Bitcoin operators shut shop in India amid RBI warning
A number of bitcoin operators in India have begun suspending their business following RBI's warning against use of such virtual currencies due to potential money laundering and cyber security risks.
While RBI is yet to come out with a clear regulatory framework for bitcoins, which have been gaining currency across the world over the past few months, it has issued an advisory cautioning general public against use of bitcoins and other virtual currencies.
Within days of this advisory issued on December 24, a number of entities offering bitcoin services have suspended their operations, temporarily or indefinitely, while websites of a few others have gone down.
However, some other entities continue to run their operations of offering bitcoin exchange services for rupee and other currencies.
Bitcoin is a virtual currency that can be generated through complex computer software systems with solutions shared on a network, although the process is complex and such 'mining' can be done only on very powerful servers.
Hardly three years into existence, bitcoin has already become the world's most expensive currency and its per unit value soared past USD 1,000 level or about Rs 63,000 recently, although the prices have now slipped below Rs 50,000 level.
There was a phenomenal surge in the exchange rate for bitcoin from little over USD 200 to well past USD 1,000 during November, but there has been an extreme volatility since then and the RBI's warning has further added to its woes in India.
One of the bitcoin operators in India, buysellbitco.in, has posted its website, "Post the RBI circular, we are suspending buy and sell operations until we can outline a clearer framework with which to work.
Forex-TSD is studying the idea of take Bitcoins as payment method and having our thread to discuss about pros and cons sounds as good approach.
You will find more information on the official Bitcoin page Bitcoin
As any other currency on Forex market bitcoins fluctuates against other currencies. The most know exchange is https://mtgox.com/
And there are charts and real time values at Bitcoin Charts / Markets
Some brokers started to take Bitcoins as payment method.
thanks for the info
Be careful - botcoin is going to burst
Aussie Bank Asks "Will Bitcoin Replace The Dollar?"
Bitcoin is rapidly becoming part of the everyday lexicon. Following David Woo's investigation, National Australia Bank's Emma Lawson looks at its creation, use, and quality as "currency," and find that Bitcoin meets most, but not all the conditions required to be a currency. Lawson concludes Bitcoin may not be the most efficient monetary system, given the costs to create, and that the supply set-up can be seen as both an advantage (hyperinflation is not possible) but also a disadvantage (there are conditions which may create deflation). But, if enough people believe in it, and use it, it may be here to stay as a payment system. Simply put, its success (or failure) will depend on establishing trust and adoption.
Via National Australia Bank's Emma Lawson,
The Rise In Crypto-Currency
What are Bitcoin?
Definition of a currency:
Noun: a system of money in general use in a particular country: the fact or quality of being generally accepted or in use.
“Bitcoin” has entered the popular lexicon, challenging our idea of what makes a currency, currency. The definition of currency above does not mention the physical characteristics of the same but that it must be generally accepted.
There have been different forms of currency over the centuries, but what is important is that users believe it to be currency. Banknotes themselves were introduced in China in 118BC as a promissory note. Marco Polo, in the 13th Century recorded that paper bark was used in the place of gold or silver. The first colony in New South Wales used rum for currency, in the absence of printing presses. These examples show that currency or money can be different things, they are not static and they do not have to be physically valuable in themselves (like gold).
As such, Bitcoins can indeed be currency, as could anything labelled as such. As long as you believe it is.
Firstly, what are crypto-currencies? Bitcoin is one of around 50 crypto-currencies, albeit the most well-known, traded and first established in 2009. These are de-centralised digital (or electronic) medium of exchange. They are not backed by physical assets but rather peer security.
Primary issuance of Bitcoin is determined by computer algorithms which require large amounts of computer power, to validate sequences (blocks) and proof-of-work. As more “miners” participate in calculating blocks, the required computer power and sequence of blocks increase; thus not allowing an increase in the speed of Bitcoin issuance despite more mining. Participants become Bitcoin miners to claim transaction fees and initial Bitcoin.
Indeed one claimed benefit of Bitcoin is that in a world of quantitative easing, this alternative is designed not to increase above the scheduled path. Bitcoin are created at a “decreasing and predictable rate…issuance halts completely with a total of 21 million Bitcoins in existence."
The secondary market for Bitcoin is where most participants will acquire them for their digital “wallets” i.e. accounts. The price is determined on exchange via demand and supply, similar to the broader FX market.
At present there are eight dominant exchanges but there have been more and the number changes (Chart 1). In a study of 40 Bitcoin exchanges, 18 were found to have closed and taken customer accounts. Popular exchanges were also found more likely to experience security breaches2.Prices may also vary between exchanges. The most popular in the USD market is Mt Gox, which constitutes 52% of USD volume (based on the latest month average volume); closely followed by Bitstamp at 46%.
Shares Of No-Name Tech Company Go Crazy After It Announces It's Getting Into The Bitc
Shares in a little-known tech firm are up more than 75% in pre-market trading this morning after it announced it was preparing to launch a beta version of its Bitcoin trading platform.
Pennsylvania-based WPCS says it recently acquired BTXTrader, which is developing what it says is the first trading platform allowing Bitcoin users to "access market data and execute orders on the five most popular Bitcoin exchanges in a single application."
"Obviously, we are still in development mode, but we're on schedule to release both web and mobile versions of our platform by early 2014," BTX Trader Chief Operating Officer Ilya Subkhankulov said in the release.
The firm's shares surged more than 20% to $1.81 on heavy volume in after-hours trading yesterday. We first saw the story on Marketwatch as reported by Wallace Witkowski.
Very little has been written about WPCS, which bills itself as a communications infrastructure firm. They IPO'd in 2003 at more than $140 and spent the next 10 years going to practically zero.
Bitcoin Catches Attention Of Goldman Sachs (And Walmart, And Cisco): Goldman Director
When Bitcoin fans were hoping for fast track adoption by the mainstream, catching the attention of the all-seeing eye of Sauron Goldman Sachs was probably low on their list of action items. Yet that is precisely what they got with the arrival of a Goldman Sachs board member M. Michele Burns, who recently joined the board of Boston-based Bitcoin payment processing system startup Circle Internet Financial.
As Fortune reports "Circle launched earlier this year, and was founded by Jeremy Allaire, who has led other Internet start-ups, but recently has become a Bitcoin evangelist. The company got $9 million in funding from a number of venture capitalist firms. Jim Breyer, a partner at Accel and an early backer of Facebook (FB), is also on Circle's board, as is Raj Date, who recently left a top post at the Consumer Financial Protection Bureau. Circle declined to comment about Burns. Two sources with knowledge of her move confirmed it."
Perhaps of same or greater importance is that in addition to being the chair of the audit committee at the preeminent FDIC-backed hedge fund, Burns also was a board member of the largest retailer in the world, Walmart (WMT accepting BTC?), and is currently on the board of the one company that is at the nexus of the Internet economy, Cisco (and which was punished furiously following Snowden's NSA-spying revelations after projected Chinese revenues imploded and that Cisco may or may not have been collaborating with the government in leaking private data).
In fact, when one considers that in the face of Burns, Circle's proximity to Bitcoin now allows no less than three of the preeminent companies of the old and new economy to keep a close eye on the digital currency and one must be either very excited about the future of BTC.... or very worried. Because if escape from the mainstream is the main target behind the Bitcoin movement, this could be problematic now that Goldman, Cisco and Walmart are all starting to sniff around.
Why a Bitcoin transaction processing company? Simple - these companies are the middlemen that will allow much broader acceptance of BTC by merchants. Consider this in the context of the recent announcement by Overstock that it would begin accepting Bitcoin by mid-2014:
Currently 12.1 million Bitcoin are in circulation, with a total value of about $8.8 billion. At this size, the value of Bitcoin can fluctuate violently based on actions by a few big investors or the Chinese government. This is a problem: If a retailer saves 3 percent on credit card transactions, but the value of Bitcoin loses 5 percent before the retailer can convert it back into dollars, the concept will quickly lose its luster.
Bitcoin-processing companies such as Bitpay and Coinbase take on this risk for merchants, offering to convert Bitcoin into U.S. dollars immediately. But they might not be able to handle that risk if any serious slice of Overstock’s transactions comes in Bitcoin, says Barry Silbert, the founder and chief executive of SecondMarket and an investor in both companies. “When you start talking to companies like Overstock or Amazon, they’d only be able to guarantee those rates to a certain transaction amount,” he says. Bitpay processed $100 million in transaction in 2013. “I think the system is going to expand as quickly as it needs to,” says Stephanie Yargo, the company’s vice president of marketing.
Well, maybe not Bitpay, but its competitors such as Circle might, especially if directly or indirectly backed by the balance sheet of, say, Goldman Sachs, especially if in some joint venture with Walmart. Because whereever the money is, either fiat or digital, one can be sure to find Goldman.
Everyone Who Believes In Bitcoin Should Try To Answer This Question
Economist Brad DeLong poses a great question about Bitcoin:
Underpinning the value of gold is that if all else fails you can use it to make pretty things. Underpinning the value of the dollar is a combination of (a) the fact that you can use them to pay your taxes to the U.S. government, and (b) that the Federal Reserve is a potential dollar sink and has promised to buy them back and extinguish them if their real value starts to sink at (much) more than 2%/year (yes, I know).
Placing a ceiling on the value of gold is mining technology, and the prospect that if its price gets out of whack for long on the upside a great deal more of it will be created. Placing a ceiling on the value of the dollar is the Federal Reserve’s role as actual dollar source, and its commitment not to allow deflation to happen.
Placing a ceiling on the value of bitcoins is computer technology and the form of the hash function… until the limit of 21 million bitcoins is reached. Placing a floor on the value of bitcoins is… what, exactly?
Bitcoin bulls will usually respond with something like "cryptography" or "technology" or something like that, but these aren't really satisfying answers.
Paul Krugman explains why:
I have had and am continuing to have a dialogue with smart technologists who are very high on BitCoin — but when I try to get them to explain to me why BitCoin is a reliable store of value, they always seem to come back with explanations about how it’s a terrific medium of exchange. Even if I buy this (which I don’t, entirely), it doesn’t solve my problem. And I haven’t been able to get my correspondents to recognize that these are different questions.
There's a good case to be made that Bitcoin is impressive technology for payments, but why a Bitcoin itself should be something of value is not easily answered. This isn't damning to Bitcoin but it is problematic, and those with a big belief in the durability of the digital currency (or other digital currencies) should try to think it through. One way to think about it is not that the value of a Bitcoin has value per se, but that the network of Bitcoin speculators (people willing to trade them) provide a service of value to people who want to use Bitcoins as a product.
Bitcoin Buys Burgers to Beer as Shoppers Go Virtual
What do a street-van burger, a wedding bouquet and a Beatles album have in common? They’re all on a growing list of products shoppers can buy over the counter using the virtual currency Bitcoin.
From Berlin record store Long Player to the Flower Lab, a florist in Santa Monica, California, more retailers are accepting Bitcoin as consumers increasingly buy into the money, pushing up its value. In the past month, the number of businesses on CoinMap, a website showing physical companies and vendors accepting Bitcoin, has tripled to more than 2,100.
“People come to us from all over the world because we accept Bitcoin,” Vesna Sic, co-owner of the Lekkerurlaub guest house in Berlin, said by phone. “We had one man from Texas who has nowhere at home where he can spend his Bitcoins, so he came to Berlin for a week to spend them.”
There are about 12.2 million Bitcoins in circulation, according to Bitcoincharts. While online payments for everything from university tuition fees to gummi bears aren’t unusual, over-the-counter transactions are just beginning to become popular. Now the virtual currency can buy olive oil in Spain or vodka shots in Moscow as consumers seek ways to spend the digital money.
“Our news inbox has gone crazy over the last couple of months with more and more vendors saying they are accepting Bitcoins,” said Jeremy Bonney, a project manager at CoinDesk, a website that tracks the progress of the virtual currency.
Local Perceptions And Bitcoin's Future In Singapore
I have just returned from a very enjoyable trip to Singapore, in which our goal was to determine the sentiments and level of knowledge people had about Bitcoin in order to better determine Bitcoin's future in Singapore. That journey took me to the pulsating central business district of a vibrant Singapore, traditional neighborhoods completely recast in the face of new immigration and rigorous central planning, and the newcomer immigrants and permanent residents where languages like Thai and Japanese punctuate the linguistic air of Singapore accentuated English. What we found out about Bitcoin sharply contrasted with that of what we learned about Bitcoin in Taiwan.
Bitcoin has a future here in Singapore, but it is a future that inevitably will be co-opted by central planning and control. The majority of locals who did not have the best sentiments regarding Bitcoin cited the lack of central control, ironically the reason in other countries why Bitcoin enjoyed its meteoric rise. Bitcoin is expected to be pilloried with payment gateways and other payment process implementation mechanisms to streamline the Bitcoin protocol into a fashion that the locals are familiarized to and prefer- a robust payment method with savings applications that is guaranteed by an actual organization against loss. Look no further than this lagging indicator, taken around the Promenade of the central business district overlooking the Marina Bay Sands casino, that Bitcoin's future in Singapore is a co-opted system run on the familiar rails of global multinational corporations.
Bitcoin Versus Gold
Ever since President Nixon broke the US dollar's last link to gold, the world has been set adrift on a sea of fiat currencies that have been increasingly debased, serving the interests of governments and financial elites. For the last five years, central banks have imposed near-zero rates of interest that have helped push up stock, bond, and real estate prices, but have made it nearly impossible for savers to receive meaningful returns on bank deposits.
To make matters worse, the apparatus of national security has turned financial transactions into a massive exercise in government surveillance. Under the camouflage of 'protective' measures, such as the USA PATRIOT Act, governments have invaded the privacy of citizens and compromised banking secrecy in an unprecedented and often unconstitutional manner. Despite huge potential transaction-cost reductions achievable through advances in digital technology, banks continue to charge exorbitant transaction fees while maintaining transfer delays that reflect a pre-digital age. In addition, bank regulators, led by the IMF, have shown a willingness, in the case of Cyprus, to make depositors liable for poor banking decisions. Many private citizens may naturally see the status quo as a deliberate policy to crush middle-class savers and pave the way for centralized socialism. Some have sought a way out.
Traditionally, investors have turned to precious metals such as gold to help protect and privately transfer their wealth. However, ever-increasing regulation, monitoring, and physical searches have eroded some of the key protections afforded by gold. Gold's weakness over the past 24 months has also spooked many former adherents. In such an environment, many have seen the recent arrival of digital crypto-currencies as the means to restore the monetary independence that has been co-opted by big governments. Currencies like the now-famous Bitcoin offer the potential for a store of value, low transaction costs, free movement, and anonymity. It's no wonder that Bitcoin has taken the world by storm. But all that glitters is not gold.
Wikipedia defines a crypto-currency as, "a peer-to-peer, decentralized, digital currency [or medium of exchange] whose implementation relies on the principles of cryptology to validate the transaction and the generation of the currency itself." In short, it is a virtual currency traded by private, unregulated internet exchanges. Despite the recent fame of Bitcoin, there are actually a number of other crypto-currencies that have been created in recent years. Names include Litecoin, Peercoin, Namecoin, and Primecoin. Bitcoin, established in 2009, is undoubtedly the most successful, and it became a breakout news story in 2013.
Bitcoin Pros & Cons
Bitcoin offers a few distinct advantages over conventional currencies: it allows almost instantaneous peer-to-peer transactions that completely avoid the expensive and cumbersome bank-run electronic payment systems, and it allows for fast international movement of funds outside foreign exchange controls.
Many investors are also betting that Bitcoin will offer a better store of value over time than serially printed fiat currencies. That's because the Bitcoin protocol automatically, and apparently irrevocably, limits the number of bitcoins that will be created to 21 million. In this sense, they are immeasurably more honest than US dollars. However, unlike US dollars, pounds sterling, or euros, bitcoins do not carry legal tender status, but rather rely on the network of merchants and individuals to continue to accept them as payment for goods and services.
Finally, by utilizing anonymous wallets, some users may think that crypto-currencies like Bitcoin offer increased financial privacy. I believe that this is largely an illusion. Governments have shown a great ability to crack any code no matter how well planned (just look at the British government's success against the Germans in the Second World War). I have full faith that the US Federal government can, over time, develop techniques to map all cyber transactions.
Please enable the necessary setting in your browser, otherwise you will not be able to log in.