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Bitcoin Is Exploding In Australia And Authorities Are Rattled

A top Australian law enforcement agency is investigating bitcoin's role in organized crime, a senior official said, just as politicians and financial regulators embrace the digital currency as a legitimate part of modern business.

The investigation into bitcoin's crime links by one authority as others embrace it highlights the crossroads governments have reached as they struggle to regulate the five-year-old "cryptocurrency", a method of making anonymous payments which has surged in popularity around the world.

Australian Crime Commission Executive Director Judy Lind revealed for the first time that investigators will monitor "misuse of virtual currencies to facilitate criminal activity" at a national and international level, under an operation named Project Longstrike.

"We know that virtual currencies including bitcoin are used as payment methods to facilitate illicit trade on the darknet," Lind told Reuters in a statement, referring to a hidden part of the Internet where information can be shared anonymously and without revealing the location of its source.

"Organized crime groups continue to make use of darknets to harbor trading in illicit commodities, including child exploitation material, illicit drugs and firearms, stolen credit card and identity data, and hacking techniques."

Project Longstrike is just the latest example of Australia's determination to crack down on bitcoin-enabled crime. Last month, Australia said it extradited to the United States the alleged primary moderator of Silk Road, a website where people bought illegal drugs like heroin using bitcoins.

In October, police seized Queensland state's first bitcoin automated teller machine five months after it opened, with media reporting police believed it was being used by a former motorcycle gang member to deal crystal methamphetamine.

Regulators around the world are wary after the Mt Gox bitcoin exchange filed for bankruptcy in Tokyo earlier this year, saying it lost some 850,000 bitcoins - worth about $300 million at current prices - in a hacking attack.

Like many countries, Japan has allowed bitcoin trading to continue without establishing a full set of rules on its legal status. U.S. authorities are yet to agree to cohesive laws, while the United Kingdom is seen as a world leader because it has classified bitcoins as a currency.

Australian authorities are also trying to facilitate legal bitcoin trades in a country where use of the currency is exploding. Between its 23.6 million people, Australia has an estimated 7 percent of the $5 billion worth of bitcoins now circulating, with reports of online retailers, real estate agents and even pubs accepting bitcoin payments.

The Australian Taxation Office has published a guide for bitcoin traders on how to declare their investments, and a parliamentary inquiry is trying to lay the groundwork for a broader regulatory approach to the digital currency.

But David Glance, director of the University of Western Australia's Centre for Software Practice, said Australia appeared to be sending mixed messages.

"Politicians singularly fail to understand what (the digital economy) is all about. They latch onto trends and buzzwords," he said, referring to the tax office guidelines and parliamentary inquiry.

"There still isn't a problem that bitcoin solves, other than buying drugs," he added.

Darknet sites including Silk Road and its successor Silk Road 2.0 did about $3 billion of turnover annually in the year to November, Glance said, equivalent to more than half the total bitcoins now in circulation.

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Actually, Bitcoin had a pretty good 2014

It hasn't exactly been a year of progress for supporters of bitcoin, the world's most popular virtual currency.

Regulators prosecuted several bitcoin-related fraud schemes, some tax authorities cracked down on the use of virtual currency, and the price of bitcoin lost more than 50% of its value, leading Quartz reporter Matt Philips to dub it the "worst investment of 2014."

But as the year draws to a close, bitcoin is still kicking amid a few glimmers of progress.

First, the number, and size, of merchants accepting bitcoin continues to grow. Just this month, Microsoft (MSFT) announced it would start accepting payments in bitcoin in the United States for apps, games and other digital content on its Windows, Windows Phone and Xbox platforms.

Microsoft's move followed similar actions by computer vendor Dell, satellite-television service Dish Network (DISH) and travel site Expedia (EXPE) earlier in the year. In September, eBay's (EBAY) PayPal said it would add bitcoin acceptance for merchants through its Braintree unit. Meanwhile, on Tuesday, Time magazine said it would start experimenting with bitcoin as well, accepting subscription payments for Fortune, Health, This Old House and Travel + Leisure.

The virtual currency also became a more serious financial instrument with the start of bitcoin-based options trading. It isn't exactly the top derivatives venue in the country, but the North American Derivatives Exchange, or Nadex, is now trading binary options on the price of bitcoin, giving financial market participants new ways to hedge or bet on the currency's moves.

Bitcoin still faced opposition from many leading finance figures -- JPMorgan Chase (JPM) CEO Jamie Dimon called it "terrible" -- but some executives started to think differently. American Express (AXP) CEO Ken Chenault, speaking at the New York Times Dealbook conference last week, sounded like a man with an open mind, comparing the rise of virtual currency to the impact Napster, and later iTunes, had on the music industry.

"The protocol of bitcoin is going to be important," he said. "I don't know how this is going to evolve," he admitted, though he added that he believes "there's room for a lot of players."

Finally, although consumer usage of bitcoin failed to take off to the degree supporters had hoped, there was slow and steady progress. Bitcoin even made into the Black Friday/Cyber Monday hype, with a reported $300 million spent on those two top holiday shopping days. That made the currency the ninth most-popular payment platform used on those days, according to merchant-services firm Bitnet.

Ultimately, the plunging price got a lot more press in 2014 than bitcoin's growing acceptance and usage as a payment alternative. Bitcoin supporters need to hope for some stabilization on the pricing side so more of the positives can get the attention in 2015.

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Bitcoin’s defects will hasten its demise in 2015

Bitcoin’s defects will hasten its demise in 2015. The leading crypto-currency’s economies of scale in mining and its transaction system’s vulnerability to subversion by a dominant miner make it unsound. As seignorage declines it will become cost-uncompetitive for transactions. These flaws will cause its price to lose further altitude.

The digital currency is controlled not by a state but by an underlying algorithm by which participants can “mine” bitcoins through solving mathematical problems. The universe of miners can then validate “blockchains” of bitcoin transactions by majority vote, weighted by their mining effort. As a reward, miners receive more bitcoins, distributed randomly.

By combining their activities, the currency’s creators can increase their probability of receiving a bitcoin, which can be shared between them. Assuming miners are risk-averse, the system slants toward monopoly. This theoretical tendency is validated by the current bitcoin setup, in which a single mine, GHash.IO, which pools the interests of individual participants, currently controls about 39 percent of mining activity, according to Blockchain.com.

If a miner came to control more than half of bitcoin creation, it could choose which blockchains to validate; the participants would then depend upon its integrity, no differently than they depend on trust in a government in a fiat money system.

Over time, the rate of bitcoin production declines and the amount of “work” required to produce one increases. By early October, 2014, the “hash rate” per bitcoin had increased 60 billion-fold since January 2010. Moore’s Law, defining the increasing power of processors, counteracts this but not sufficiently; a July 2014 study by Australian researcher Hass McCook calculated that the cost of bitcoin production including equipment was about $600 per coin and the marginal cost of power was about $57 per coin. These figures compare with the current bitcoin price of around $325, suggesting that capacity will decline over time unless the price rises sharply.

If mining bitcoins is profitable, big miners can use this seignorage to subsidize transaction fees. Once mining profits disappear, transaction fees must subsidize mining, since only active miners can validate transactions. This makes bitcoin uncompetitive with other electronic transaction systems in the long term.

Bitcoin’s flaws are becoming more evident, which may explain why prices more than halved in 2014. That trend should continue.

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Jahirul
11
Jahirul  

I have no Idea about Bit coin. Could you please help me to give some information.

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forexbangla153:
I have no Idea about Bit coin. Could you please help me to give some information.

About bitcoin : Bitcoin - Wikipedia, the free encyclopedia

seekers
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seekers  
forexbangla153:
I have no Idea about Bit coin. Could you please help me to give some information.

Check this book too : https://www.mql5.com/en/forum/180671/page56

Jenny
9
Jenny  

For me, Bitcoin has been a real confusing way to use in Forex trading, although it has seen massive popularity in recent years but there is too much complex things in Bitcoin to consider because for a newbie it is not easy to use Bitcoin as a currency and that's why it has seen a dip after that surprising rise.

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Bitcoin exchange Bitstamp says to resume trading on Friday

Bitstamp, one of the largest exchanges for the digital bitcoin currency, said it would resume trading later on Friday after suspending operations because of a security breach on Sunday.

Bitstamp had suspended its service after the breach resulted in the loss of around 19,000 bitcoins with a value of some $5 million.

"Trading will resume during the day today," Damijan Merlak, one of Bitstamp's two Slovenian founders, told Reuters in an emailed message on Friday.

On Wednesday Bitstamp had said it expected that trading could resume within 24 hours and added that customers would not lose money because of the breach and that security would be increased.

Merlak said various institutions from the European Union and the United States were investigating the security breach without naming them. The Slovenian police told Reuters it was not involved in the investigation.

Last February, Bitstamp claimed that developers had come up with a solution to thwart cyber attacks against its platform after Mt. Gox, once the world's biggest bitcoin exchanges, lost an estimated $650 million worth of the virtual currency when its computer system was hacked.

The Bitstamp breach represented a small fraction of its total bitcoin reserve and the majority was held in secure offline systems, the Slovenia-based firm posted on its website. (http://bit.ly/1eTIPEt)

Bitcoin, the best-known virtual currency, started circulating in 2009. Unlike conventional money, bitcoin is generated by computers and is independent of control or backing by any government.

A bitcoin is currently worth $276.80.

Merlak, 28, and his colleague Nejc Kodric, 25, both computer experts, founded Bitstamp in 2011. According to the Slovenian media the two had earned about 23 million euros ($27.2 million) from the enterprise which places them among the 50 richest Slovenians.

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name
992
name  

Same old story

Bitcoin is just showing why we should not trust digital currency

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Accused ‘Dread Pirate’ May Face Life for Bitcoin-Drug Bazaar

The former Eagle Scout accused of running the $1.2 billion online drug bazaar “Silk Road” may face life in prison if convicted in a trial where jurors will hear allegations he tried to arrange the murders of six people.

Prosecutors claim Ross William Ulbricht, 30, or “Dread Pirate Roberts,” as he was allegedly known online, ran “the most sophisticated and extensive criminal marketplace on the Internet,” where people used bitcoins to buy illegal drugs, guns, phony identification, computer hacking help and other illegal goods and services anonymously.

“It’s being alleged as a worldwide enterprise with folks everywhere, and the quantities that are alleged are huge,” U.S. District Judge Katherine B. Forrest, who will oversee the Manhattan trial, told lawyers in a hearing last month.

Ulbricht has pleaded not guilty to the seven counts against him, including trafficking drugs on the Internet, narcotics-trafficking conspiracy, computer-hacking conspiracy and money-laundering conspiracy. If convicted in the first-of-its-kind trial targeting the Internet’s dark side, Ulbricht could spend the rest of his life in prison.

His lawyer, Joshua Dratel, declined to comment on the charges.

Forrest, appointed to the bench by President Barack Obama in 2011, last week sentenced Abu Hamza al-Masri, a Muslim cleric who preached at a London mosque attended by Sept. 11 plotter Zacarias Moussaoui, to life in prison for his role in a deadly hostage-taking and a failed bid to start a terrorist training camp in Oregon. She ruled against Ulbricht on several key issues before the trial set to start tomorrow.

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