Bitcoin Rings in New Year with 18% Pop - Threatens 3-Month High

Bitcoin trading continues to be very bullish, with $4.995 USD/BTC hit on the Mt.Gox USD market at approximately 1300 GMT thanks to a couple of very large trades.

The market has since consolidated in the $4.65-$4.70 range, but looks primed for another push to break through the psychologically important $5.00 mark, last seen in early October.

Seemingly in response to this renewed market optimism, a new exchange was launched today. Geared toward the European market, BitcoinMarket24 promises nearly-instant SEPA deposits. Premiums to use this service appear to be on the order of 12% (3.99 EUR/BTC) when compared to the Mt.Gox EUR market (3.55 EUR/BTC), though the convenience is likely to be highly attractive to Bitcoin users.

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Kiva Bitcoin Project on Hold Due to Legal Concerns

On October 11th, I reported to you that some of Kiva's engineers were planning to push forward with a proposal to senior management regarding the implementation of a Bitcoin donation option for Kiva.

More than two months later, we've now heard back from "mrchilly," and it doesn't sound promising:

Basically, as we talked to many people in the organization, it became clear we wouldn't have widespread support to start, so we thought we'd just go ahead and build something and ask forgiveness later. However, we did want to at least do some good due diligence on how to proceed. Thus, we started by talking to many people about their experiences with Bitcoin. We talked to some fellow non-profits, and the lawyer from one particular organization gave us some strong reasons to not move forward. We then talked some with our lawyer, who cautioned against doing anything that could distract from Kiva's core mission by bringing about controversy.

So, we shelved the project for now, out of respect for our colleagues wishes. We'd still like to proceed, but we would have to find a way to do so while knowing that everything we do will meet our mission and not place us in a position of legal questionability.

What exactly were the legal concerns? Likely they had to do with donor identification and compliance with Anti-Money Laundering regulations. Hopefully "mrchilly" will provide a little more insight in the Bitcointalk Forum thread.

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Monetizing A Blog with Bitcoin

If Louis C.K. proved anything this month, it's that you can provide DRM-free content to users for a small fee and still receive substantial compensation for your work without depending on corporations to produce your content. Today, we're going to take that one step further and handle our own payment processing as well.

With Bitcoin and some nifty code from StrongCoin, it's fairly straight-forward to sell any digital good or service that you have to offer. In this case, it will be a password to some hidden content on this page.

After a small payment, I will guide you through how you can monetize your own content. All proceeds will go to the Bitcoin Faucet.

There have already been payments!

Click this link to make your payment. A pop-up window will appear, so you may have to disable your pop-up blocker to see it work. Once your payment is made, click the "show encrypted text" link, below, and enter the password that you received in the text file that was sent to you.

Show encrypted text

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The 10 Most Anticipated Bitcoin Projects for 2012

I'm not so sure that Satoshi Nakamoto could have anticipated the wave of projects that have been and continue to be inspired by his creation. At this very moment, one can only imagine the development progressing in secrecy among the hundreds, if not thousands of computer programmers, investors, financial types, marketing gurus, or otherwise, that have found their second wind thanks to the possibilities of Bitcoin.

Unfortunately, I'm not privy to the closely-guarded secrets behind most of Bitcoin's projects, however many there may be. Many developers, however, are more than happy to share their ongoing work with the community, enough to definitely get us excited about Bitcoin's prospects for next year. So, without further adieu, these are The 10 Most Anticipated Bitcoin Projects for 2012:

10) BitSynCom and the MeshNet

Though somewhat mysterious about their plans, BitSynCom recently announced a massive project to assist the growing effort to launch what can only be described as "the peoples' Internet." Called MeshNet, it would be a peer-to-peer version of the Internet, dependent on its users for owning and operating the supporting infrastructure.

BitSynCom hopes to integrate Bitcoin with MeshNet to act as a payment system to reward those who maintain the infrastructure and provide bandwidth, and to charge those who use it. The development time for such an ambitious project will likely extend well past 2012, but we may see it get legs next year, especially if SOPA comes to pass in its current form. For more information, you can watch an interview with Yifu Guo of BitSynCom, here.

9) The Bitcoin Bond

"JackH" first mentioned the concept of a Bitcoin Bond back on October 25th of this year. The idea is that a publicly traded entity could be used as a vehicle through which investors could buy a piece of the Bitcoin pie while not directly purchasing any Bitcoins. The Bitcoin buying would be the responsibility of an agent associated with the "company." It's an arrangement that would sound familiar to anyone who dabbles in gold and silver ETFs.

The main driver of the project is to mitigate the fragility of the current relationship between banks and Bitcoin exchanges, as there were several instances of banks suspending their accounts with Mt.Gox, Tradehill, and Intersango over the last few months (though it's been quiet as of late).

The latest hurdle facing "JackH" is the cost of developing the legal framework for the company, which was quoted at over 200,000 British Pounds. Yikes! Apparently Mr. H. does have interested investors, though their pockets aren't quite deep enough to come up with that chunk of change. He continues to look for cheaper lawyers...

8) Bitcoin Browser Extensions

Though several attempts have been made at a browser extension, none have really proven effective nor have caught on with Bitcoin users, and most of the development in this field came to a grinding halt when the bubble burst in June. At the moment, it does not appear that anyone in the community is working on an extension, but with the pending implementation of the URI scheme and release of a thin version of the Satoshi client, a browser extension would be the next logical step and would make Bitcoin incredibly user-friendly. Hopefully we'll see one develop in 2012.

7) Bitcoin Options and Futures Trading on the Major Exchanges

2011 will no doubt be remembered as the year that Bitcoinica took Bitcoin by storm. With leveraged trading, playing the Bitcoin markets went from tee-ball to the big leagues, seemingly overnight. 2012, however, will take things to a whole new level. Mt.Gox and Tradehill have both hinted at the fact that they will be unveiling futures and options markets as part of their development plan, with Mt.Gox possibly bringing the features online as early as next month when they are set to unveil... well, something.

6) ICBIT Stock Exchange

Giving Mt.Gox, Tradehill, and Bitcoinica a run for their money will be the ICBIT Stock Exchange. Currently in alpha testing, the exchange promises options and futures trading, as well as the ability to buy traditional stocks using Bitcoins, all of the above on margin, of course.

Having access to derivatives will help to smooth out the volatility that we currently see in Bitcoin trading, and will also give merchants and miners the ability to hedge their holdings (or future holdings). These are key components to establishing a respectable currency market, and will surely generate a lot of interest outside of the Bitcoin community.

5) Electrum Overlay Network

Still looking for an official name to distinguish itself from the Electrum client (I like Overbit, myself), the Electrum Overlay Network is looking to integrate many of the services that are currently found elsewhere, as well as some that do not already exist, and bring them under the umbrella of a single platform. Features will include:

• Client integration of BTC/fiat exchanges;
• Wallet storage for diskless or extremely low-resource clients;
• Server-side escrows (sending bitcoins to an email address);
• Integration of bitcoin laundry;
• Exchange calculators (to display the “fiat” equivalent value of BTC in clients);
• Firstbits support;
• Mining support for clients; and
• Various transport protocols (especially HTTP Push, which allows PHP websites to integrate easily with Bitcoin).

This feature-rich software will be extremely popular and likely catapult Electrum to the front of the client-race, though you never know what the next guy has in his back pocket. Speaking of which:

4) Bitcoin Client Upgrades

Though not scheduled for the 0.6 version of Bitcoin, Gavin Andresen has hinted several times at his increasingly urgent desire to release a thin version of the standard client. Motivated primarily by the poor first-time user experience that comes with the full blockchain download, Gavin's dev team will likely deliver a thin version of the client in 2012. The blockchain is already topping out at 1.2 GB, and we'd hate to see what it will look like by the end of next year. In fact, most of us would rather never see it again as long as we know the friendly miner community is keeping tabs on it. Please Gavin, make the blockchain go away!

Also sorely needed is the implementation of the Bitcoin URI scheme. Currently, most Bitcoin transactions happen through the copying and pasting of ugly-looking strings of numbers and letters (i.e. public keys) that have to be manually checked and re-checked before a transaction can take place. With the URI Scheme, the click of a link in a browser will automatically launch the client and incorporate the address into a transaction. It's much needed, and we hope to see it next year.

3) New Bitcoin Transaction Types

I touched on this topic with my post about Bitcoin 0.6, but it's important enough that it needs to be repeated. The upcoming version of Bitcoin, and there will no doubt be more than one iteration in 2012, will support new transaction types. Essentially, the new version will allow for transactions with multiple signatures, thus allowing for escrow-type contracts with third-parties involved.

Having the option for multiple signatures will also add a new layer of security to Bitcoin, where you will be able to require that your transactions be signed by two different private keys, stored in physically separated devices. This added level of security will stop potential hackers and wallet thieves in their tracks, and make credit cards look downright irresponsible. It's the reason why new transactions types are number three on our list.

2) Open-Transactions (OT)

Already in private alpha-testing on a live server, OT, the brain-child of Fellow Traveler, is going to be extremely important in 2012. Really, its relationship with Bitcoin only tells part of the story, but it's an important relationship nonetheless. Bitcoin is the oil lubricating an OT machine that will enable such a vast array of financial instruments and contracts that lawyers everywhere will beg for retirement packages before they are inevitably smacked in the face with pink-slips as their jobs are made redundant.

OT will allow for truly anonymous, off-the-blockchain, instantaneous transactions, thus silencing some of Bitcoin's harshest critics. This will be a capability so powerful that integration with TOR will almost be a necessity. Multi-asset trading and smart contracts will be OT's killer apps, though the power of OT will only be limited by the imagination.

1) Max Keiser and the LoveBitcoins.org Campaign

Announced at the European Bitcoin Conference, Max Keiser is teaming up with lovebitcoins.org with the goal of bringing 1,000,000 new users to Bitcoin in 2012.

In addition to his radio and web presence, Max (I'm assuming we're on a first-name basis) has his own segment on Russia Today called the Keiser Report, with a huge audience that is sympathetic to the Bitcoin cause.

Equally important here is the structured marketing organization starting to develop within the Bitcoin community that will be extremely important to promoting the technology in 2012.

---

2011 was a year of growing pains for Bitcoin. It was both loved and hated by the media and subject to a huge bubble that topped out with a market cap of over $200 million. Hackers and miscreants took shots at exchanges and Bitcoin users alike, yet the currency and the community proved their resilience.

Bitcoin is positioned better than ever to prove to the world its significance and utility. These incredible projects only hint at some of what's to come in 2012, which will no doubt be the year that Bitcoin comes of age.

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18% Premium for Bitcoins on the 4th Largest Exchange

The best offer on the Virtual World Exchange (VirWoX), the 4th largest Bitcoin exchange by volume, is currently 1324 SLL (Second Life Linden Dollars) per Bitcoin.

SLLs are going for 268 per USD.

That means Bitcoins are selling for 1324/268 = $4.94 USD or 18% higher than the $4.20 rate on Mt.Gox.

You can also sell your Bitcoins for $4.77 on VirWox (currently 28 BTC on that bid). Arbitrage anyone?

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How to Explain Bitcoin to Anyone

There have been numerous attempts at this, but I'm going to give it a shot, anyway. Feel free to pass this around or make suggestions as to how it can be improved.

Thanks to the Internet, 2.1 billion people are now connected to each other, all around the world. As a result, the Internet makes it easier and cheaper to send mail or make phone calls, especially when compared to the old postal and telephone systems.

The system that we depend upon to send money, however, does not yet take advantage of the Internet. It still consists of a closed network of banks and credit card companies that manage those transactions for us, and it is slow, expensive, or both. Isn't it amazing, that in this day and age, we still can't pay our bills on weekends?

PayPal, like your credit card, also uses that same old banking network, and it's the reason why they charge two to three percent, or more, to let you send money through their system.

But if we're all connected to each other by the Internet, why do we still have to go through the slow and expensive banks to send money to each other?

Thankfully, someone invented a system that lets us send money to each other without using banks, and it's called Bitcoin. The Bitcoin network is part of the Internet and it works so well, in fact, that it has transferred hundreds of millions of dollars around the world over the last three years, and not a single mistake has ever been made. It's also the most powerful computer network in the world, because it's made up of all of its users, connected together.

To start using Bitcoin, all you have to do is buy Bitcoins from anyone who already has some. They can be easily exchanged for whichever currency you already use, and once you have Bitcoins, they can be sent to anyone, anywhere, for almost no fee.

Just like the postal service and telephone companies, Bitcoin makes the old ways of banking seem ancient. Best of all, like the Internet, nobody owns the Bitcoin network; it's for everyone to use as they wish.

To get started, just talk to any Bitcoin user; they would be more than happy to help you out. You can also check out weusecoins.com.

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The Bitcoin Brief - 29 Dec 2011

Some quick snippets from the world of Bitcoin:

• Ogrr.com, Bitcoin's highly anticipated virtual goods marketplace, has exited from its invite-only phase. Anyone is now free to join. There will also be some new feature announcements coming shortly.
• BitPing is now alive and running, a service which provides merchants (or anyone) with payment notifications. BitPing replaces the old Bitcoin Notify service that was sold on November 13th.
• There is ongoing discussion that the code scheduled to be implemented in Bitcoin 0.6 may require more testing than previously anticipated. Gavin also briefly mentioned eventually allowing for Bitcoin to support a quantum-computing-resistant signature algorithm; nice to know it's in the back of their minds.
• Open Transactions is now running a server for alpha testing. Between Open Transactions, Bitcoin, and Ripple, one cannot even begin to fathom the potential applications. If you have any interest at all in the potential of digital currencies and open-source, anonymous banking, I highly recommend keeping an eye on these developments. 

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Imminent Long Squeeze?

There has been an interesting development over at Bitcoinica, everyone's favourite broker for leveraged trading in Bitcoin land.

Several users reported errors when trying to cover their short positions or establish long positions. Zhou Tong, Bitcoinica's founder and lead developer, responded to the unusual occurrence with the explanation that the brokerage had run out of funds in their Mt.Gox account, thus preventing any further purchases of Bitcoins:

We seriously apologize for any inconvenience.

When Bitcoinica was first built, we included a circuit breaker feature to stop trading at one direction when we are out of USD or BTC. However, it has almost never been triggered until today.

Unfortunately, we have a lot of long positions are we're currently unable to fulfill everyone's request to buy. Even though we do not want to interrupt regular market trading activity, we have no case because we don't want to be trading against our customers in this extreme situation.

Liquidation of short positions is also affected but we had no choice. Withdrawal in USD is obviously, also affected. When some more people decided to liquidate their long positions or go short, or more USD funds are deposited, we will adjust the redflag accordingly to allow buying trades.

TL;DR: Bitcoinica can only sell for you at the moment.

Zhou Tong also suggested that a long squeeze was imminent, due to the large number of long positions which would be liquidated in the event of a large sell order hitting the market. Whether there is actually anyone out there with enough Bitcoins to test that theory, remains to be seen, as there is currently $250,000 ready to gobble up 65,000 Bitcoins on Mt.Gox between $3.80 and $4.20.

In a nutshell, leveraged or not, no one appears willing to let go of their Bitcoins.

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A Tough Day for Silver and the Euro

Silver was absolutely obliterated today, and is continuing to drop on the Hong Kong market, now down more than six percent in the last 24 hours. The drop is partly a result of a strengthening US dollar, as capital continues to seek shelter in the world's reserve currency.

The Euro is now flirting with new 52 week lows, dropping through the 1.30 USD level for the first time since last January as the reality of the pan-Eurozone sovereign debt crisis begins to hit home.

Bitcoin, meanwhile, continues to gain strength on the Mt.Gox USD market, up nearly 2.5% over the last 24 hours on relatively light trading.

Market depth on the bid side has grown substantially over the last few hours, indicating that further gains on the Bitcoin market are imminent.

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The Bitcoin Better Business Bureau is No More

The Bitcoin Better Business Bureau (BBBB) has been made redundant by the vastly superior Bitcoin Review. I have therefore deleted the BBBB and replaced the link with a link to The Bitcoin Review. I recommend you check it out if you're looking for any Bitcoin-related website. While you're over there, feel free to rate The Bitcoin Trader (five stars, of course)!

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Bitcoin Building Substantial Support Above 4.00 USD

Over the last 24 hours of Bitcoin trading, support above the $4.00 mark on the Mt.Gox USD market has grown from being non-existent to over 8,000 BTC and is continuing to climb. Selling pressure is proportionally minuscule, although there is still a bounty of offers in the $4.15 to $4.30 range, totaling nearly 12,000 BTC.

Resistance on the way up to $5.00 remains substantial. The last foray into these prices lasted over a month, between September 8th and October 15th, on the way down to an eventual low of $1.94 on November 19th.

The spike to $4.50 on December 20th, followed by the dive down to $3.50 on December 22nd and subsequent rise back into the $4.00 range is very bullish, indicating that we are becoming less and less likely to re-visit the $3.xx range.

I suspect that the recent slew of "maybe there's something to this Bitcoin thing after all" press is likely partially responsible for this change in market sentiment.

Edit: Only two hours later, there is now 13,000 BTC support above $4.00.

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NYC Chapter of Wikimedia Foundation Now Accepting Bitcoin Donations

There has been a concerted effort on the part of the Bitcoin community to encourage Wikipedia to accept Bitcoin donations. Wikipedia is, of course, a project of the Wikimedia Foundation. Wikimedia's current stance on the matter was stated back in November:

The Wikimedia Foundation, as a donor-driven organization, has a fiduciary duty to be responsible and prudent with its money. This has been interpreted to mean that we do not accept "artificial" currencies - that is, those not backed by the full faith and credit of an issuing government. We do, however, strive to provide as many methods of donating as possible and continue to monitor Bitcoin with interest and may revisit this position should circumstances change.

There was a breakthrough today, however, as the NYC Chapter of the Wikimedia Foundation has begun accepting Bitcoin donations. Whether this translates to an organization-wide policy change remains to be seen. Regardless, conversions such as these show that Bitcoin continues to gain broader acceptance as a real currency.

Bitcoins have been donated to the NYC Chapter of the Wikimedia Foundation, thus far (this is a live counter). Click here to get their donation address.

You can read more about this on the Bitcointalk Forums.

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A Relevant Quote

You never change things
by fighting to change the existing reality.
To change something,
build a new model
that makes the existing model obsolete.

--R. Buckminster Fuller (1895-1983)

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Read This

If you don't understand why Bitcoin is important, then read this.

If after reading that, you still don't understand why Bitcoin is important, then go ahead and buy yourself some Facebook credits; we're probably not going to be able to convince you.

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New Poker Site, Infiniti Poker, to Accept Bitcoin

It looks like start-ups with deep pockets are starting to get into the Bitcoin business.

Infiniti Poker, launching next spring, will be accepting Bitcoin alongside the usual payment processors, and also appears to be incorporating a social networking feature; something new for online poker.

Regarding Bitcoin, they say:

We are pleased to announce to players across the planet that YES! We do accept Bitcoin! At InfinitiPoker.com, the world's most interactive and entertaining poker site, we guarantee the easiest, most efficient and secure way to play cash games.

For years, players have frequently expressed their dissatisfaction with the inconvenient deposit and withdrawal methods of many other sites. Infiniti Poker has taken a cutting-edge approach to the overall improvement of the efficiency and expediency of your deposits and withdrawals through the accepting of Bitcoin as an option along side the traditional means of fund transactions you are already familiar with.

As the premier online currency in the market, Bitcoins can be sent instantly and Internationally, be converted to and from other currencies and is not subject to being handled and/or processed through intermediaries such as banks and credit card processors.

Convenient, safe and easy!

Benefit from our belief in serving you. Benefit from Bitcoin technology at Infiniti Poker. Subscribe to our newsletter to learn more about Infiniti Poker and Bitcoin.

It remains to be seen whether their game-play will be as appealing as their promotional site.

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Interview: Jay from Coinabul

Jay is the founder of Coinabul.com, the premiere Bitcoin gold and silver bullion store. In an effort to learn more about this treasure-hoarding Bitcoiner, I caught up with him on Skype where he was forced to choose between answering my questions or walking the plank! Fortunately for him, he chose to answer my questions.

BT: One thing I like to ask members of the community is how they first heard about Bitcoin. What's your story?

CB: I heard about Bitcoin in very early 2010, around January or Febuary if memory serves. I've had to develop a lot of e-commerce type applications for USD-based websites and Bitcoin is much nicer to work with, so it caught my interest pretty quickly.

BT: Wow, so you've been involved almost since the genesis block was created. Was Coinabul your first project? When was it launched?

CB: Heh, I guess it was pretty early in the Bitcoin project's life. Coinabul is my first major Bitcoin project so far. We opened our doors publicly on 10-10-2011. I've quietly developed a good many things behind the scenes but never really launched any publicly. Although I can't remember where I originally heard about it, one of the things that piqued my interest about Bitcoin early on was automated trading. I spent a majority of my coding-time on trade-bots up until Coinabul became my full-time project.

BT: So, were you previously a gold and silver dealer?

CB: I've never been a dealer before Coinabul, just a long time fan of precious metal. I can remember asking my parents to help me invest in palladium when I was just a young teen: it's a natural fit.

BT: So, hypothetically, I'm a gold or silver bug and I have several options when it comes to buying bullion online. Why should I do business with Coinabul vs. another dealer, like Kitco, for example?

CB: It's an incredibly difficult process to convert Bitcoins into precious metal, frankly. I was speaking with a Coinabul client today, and he was describing the issues he had with turning fiat money into Bitcoins and vice versa. In essence, we're cutting out half of the difficulty he experienced for everyone who'd be doing the same in order to hold precious metal. Not to mention the big problem for most would-be metal holders: the long latency period between selling Bitcoins and being able to use fiat to purchase gold.

BT: Would you say, then, that your primary clients are miners, or merchants who are looking to reduce their Bitcoin holdings but still hedge themselves against fiat-currency risk?

CB: My goal with the Coinabul product offering is to reach as large of a client-base as possible so there really isn't a barrier to entry. Clients could be miners, merchants, successful traders, early adopters, service operators, et cetera. Some of the products in our silver marketplace are going for as little as 5 BTC, so nearly anyone can participate in metal based asset diversification.

BT: Clearly, your business model makes sense, as you aren't the only member of the Bitcoin community with precious metal offerings. I can see how someone who is looking to invest in Bitcoin would be the same type of person who would be interested in investing in PMs (you're looking at one). Do you mind telling us about some of your other projects that you have on the go?

CB: Well, Coinabul is really my primary focus at the moment. There are a ton of things that I want to do with the business, but mainly I'd like to grow to the point of being the industry standard for Bitcoin-PM exchange. A service offering like we've developed is based on trust and reputability, so my goal at present is to really build our community awareness as well as gain the collective Bitcoin user's trust. I should mention that we've had quite a few rave reviews, and repeat customers...so it seems like we're well on the way!

BT: Any Bitcoin-related predictions for 2012?

CB: Nothing too prophetic, aside from an inevitable scarcity-driven bull market. To what degree of extremeism I have no idea, but I wouldn't be that surprised to see a slow crawl back up to $10 within the next 3-6 months. The market 'bottomed out' and has been creeping up since, so I think that trend will probably hold for a while.

BT: Last question: who's that Jon guy?

CB: Jon is my head of marketing, and he's a sharp fellow. I'm happy to have him on my team!

BT: Thanks for taking my questions, Jay. Good luck with the business!

Jay joined us via Skype from his secret island pirate hideout, though he can often be found on IRC in #bitcoin under the alias "coingenuity."

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Maltese Customs Office Recognizes Bitcoin as Legitimate Currency

Spotted on the Bitcointalk forums:

So I went to the customs office (in Malta) to get the merchandise I bought online with Bitcoin. They ask for a Paypal receipt (?!) or an invoice. I don't have either of them, but they say they'd accept a printout from the web site's order page. In a hurry I get a print out and hand it [to them]. They ask me what BTC is. I blabber something unintelligible to get it over with, but they go and check anyway. They tell me it's Bitcoin and the exchange rate is ~2.99. I pay my customs tax and get my box.

I'm pretty excited about this, and interested in others' similar experiences. Also, I don't know from which source they checked the exchange rate, so what do you think should be the authoritative source for government entities? Which generic sources publish BTC exchange rates?

Source.

When I started reading, I expected there would be more handcuffs and pepper spray involved, and maybe even a deportation, especially after what happened to Nefario. Perhaps some governments are willing to accept that Bitcoin is going to be a part of our future? Stay tuned!

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Bitcoin 0.6 Will Blow You Away

Gavin Andresen and team are aiming to have Bitcoin 0.6 Release Candidate 1 ready for testing within a couple of weeks.

0.6 will be the first version of the client that truly starts to leverage Bitcoin's higher-level capabilities, with Bitcoin Improvement Proposals (BIPs) 11, 12 and 13 on the list for inclusion, among other upgrades.

Implementation of BIPs 11, 12, and 13 will allow for multi-signature transactions, but what does that mean for you and I?

It means that even if your wallet is compromised, you can have a third-party service contact you for your permission before your Bitcoins are spent. For example, a text message could be sent to your phone, asking for a second authorization.

Casascius describes another approach with a similar goal:

Joe wants a secure bitcoin address, but is rightly afraid of viruses and keyloggers. He need not fear, since he will use two virus-infested devices to securely generate an address [editor's note: he's being funny, sort of].

He generates one ECDSA keypair on his virus-infested PC with a keylogger and remote viewing trojan monitored by someone in Romania.

He generates a second ECDSA keypair on his Blackberry that has been rooted by his wireless carrier at the behest of his government, via an online website that secretly keeps a copy of all the private keys it produces.

He writes down both private keys.

With either of these computers, he creates a single Bitcoin address by hashing his two public keys together. Unless he uses two machines both pwned by the same attacker, or the two attackers have some way to find one another and do a "show you mine if you show me yours", he is pretty much safe from attacks because neither of his adversaries knows the other private key and both are needed to spend the funds. Heaven forbid he generate one of these keys using a device that has no internet connection, and there's no way he'll be able to get his bitcoins stolen.

The new client will also have a built-in escrow service that will allow you to generate transactions requiring three signatures, with a trusted third-party acting as the agent in the event that dispute resolution is required.

Equally exciting, this upcoming version of Bitcoin will have a new 'standard' transaction type that will enable the receiver of Bitcoins to specify the transaction type needed to re-spend them.

A good example of a use case would be where a business can be set up such that received coins cannot be further spent without the permission of specific individuals (i.e. a higher-level manager or the CEO).

Finally, Bitcoin version 0.6 will have the ability to import and export private keys, though the functionality won't be within the GUI, just yet.

With these features implemented, Bitcoin will be even more secure than your credit card and possess more functionality than any payment processor, all while maintaining almost zero fees. Well done, dev team!

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Iranian Currency Approaching Toilet Paper Status

In one month, the Iranian rial has lost 15% of its value on concerns over the ability of the government to maintain economic stability in the face of sanctions. By March of 2012, it is anticipated that the annual inflation rate in Iran will have hit 21.6%.

Iranians are rushing to convert their rials to gold or US dollars.

There are, however, at least eight Iranians currently sitting comfortably at home, counting their Bitcoins (this number represents currently-connected users of the standard client):

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Bitcoin User's Bank Account Hacked

A prominent member of the Bitcoin community had his bank account hacked, today.

After $500 was stolen from the account, his bank called him to report suspicious activity. Authorities believe his ATM card was likely cloned and his PIN recorded at a compromised ATM or merchant location.

"Thankfully they didn't take more," he remarked in an interview over Skype while asking to remain anonymous, as he uses his real name within the community.

"At least, with Bitcoin, the security of my account is completely within my own hands. It's up to me how secure I want it to be. When I transact with Bitcoin, I don't have to hand over any personal information or passwords that could compromise my account."

While there have been some high profile website hacks in the Bitcoin community, all related to "e-wallets" and exchanges, there have not been any reported for several months now, as website operators appear to have successfully closed the holes in their security.

One type of crime that has never been tied to a Bitcoin transaction, however, is identity theft. It has taken several years for Internet users to grow comfortable with the idea that they can provide all of their personal details and credit card information to a website, even though there have been many high profile database hacks, resulting in gigabytes of personal data entering the hands of criminals.

Bitcoin users never provide any personal information to a website, as transactions are essentially similar to using cash in the physical world. As a result, no Bitcoin merchant has ever been hacked, as there would be no useful information to obtain.

At the end of our interview, the Bitcoin user we spoke with remained on hold with the bank, "due to a high number of calls."

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SOPA and Bitcoin

I'm going to blatantly steal from this thread.

From the proposed the Stop Online Piracy Act (SOPA):

(b) Denying U.S. Financial Support of Sites Dedicated to Theft of U.S. Property-

(1) PAYMENT NETWORK PROVIDERS- Except in the case of an effective counter notification pursuant to paragraph (5), a payment network provider shall take technically feasible and reasonable measures, as expeditiously as possible, but in any case within 5 days after delivery of a notification under paragraph (4), that are designed to prevent, prohibit, or suspend its service from completing payment transactions involving customers located within the United States and the Internet site, or portion thereof, that is specified in the notification under paragraph (4).

3) DESIGNATED AGENT-

(A) IN GENERAL- Each payment network provider and each Internet advertising service shall designate an agent to receive notifications described in paragraph (4), by making available through its service, including on its Web site in a location accessible to the public, and by providing to the Copyright Office, substantially the following:

(i) The name, address, phone number, and electronic mail address of the agent.

(ii) Other contact information that the Register of Copyrights considers appropriate.

(B) DIRECTORY OF AGENTS- The Register of Copyrights shall maintain and make available to the public for inspection, including through the Internet, in electronic format, a current directory of agents designated under subparagraph (A).

If you were running a website served by PayPal, and PayPal received a notification that you were somehow in violation of copyright in accordance with SOPA, an "agent" would be contacted at PayPal and all payments to your site would be blocked.

So, the question becomes, what would happen if your payment processor was Bitcoin?

It would not be possible to stop Bitcoin payments to your site. Even if it was possible, most Bitcoin e-businesses already generate a new address for each payment. With such a setup, it would not even be possible to associate your site with a Bitcoin address.

There would be no "agent" for the authorities to contact, as Bitcoin isn't run by any organization and has no employees.

Could they have the site shut down instead? That's a whole other problem, but technologies like Namecoin, TOR, and Meshnet will help in that regard.

So, if you're running an online business and you're worried that you could be affected by SOPA, you should probably start reading up on how to begin accepting Bitcoin payments. It's quite simple, really, and with the assistance of applications like Bit-Pay, you wouldn't have to worry about currency risk, either.

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2012: The Year of the Great Media Correction

Dear Mr. and Mrs. Media,

I understand, you know, where you're coming from, but if you could just do us a favour and wait a few more years before making anymore bold statements about Bitcoin, it would be good for all of us, and hey, it might make you look a little more credible.

It's harder and harder to come by people who still value patience. We've gone from hand-written letters and phone calls to emails, status updates, and tweets. More information, compacted, faster, and now. So, Mr. and Mrs. Media, I understand. You're now working in an era where your audience isn't going to wait for the cameraman to record and edit the footage and for the reporter to produce his piece. By the time that's done, we've already seen the footage on YouTube and read 100 tweets from eye-witnesses. The old way of doing things is just too slow.

It's the reason why television is going the way of the dinosaur. At first, we covered up our impatience with the television by using PVRs that cut out the commercials and allowed us to fast-forward to get to the point; now, we don't even have patience for that. Why would we listen to a news anchor ramble on when we can read the story online, twice as fast?

We don't have patience for anything, anymore. We no longer cook or eat meals together. Worker productivity is higher than it's ever been, and we work longer hours than ever. We also don't give anyone a chance to prove themselves before moving on to the next big thing. Roll it out now, make it work, or you're going to be steam-rolled by the next idea. The whole world is one giant gong show, and *GONNNNNGG*, oops, guess I was too slow.

Unfortunately, you, the impatient media, egged on by its impatient audience was forced, in 2011, to make a call. It couldn't wait any longer. Bitcoin rolled out in late 2009 and by mid-2011 with its valuation popping through the roof, the doctor had to make it official, with the consensus being, "dead."

There's a reason why Satoshi Nakamoto coded Bitcoin the way he did - he's a smart guy, and he got it right. Ironically, even some of Bitcoin's proponents don't have the patience for Bitcoin; that's why they "invented" their own currencies:

- "Ixcoin will reach its 21 million IXC maturity in 2015, ~18 years before Bitcoin does;"

- I0coin is equally as fast as Ixcoin;

- Solidcoin is based on the premise of quicker difficulty adjustments (within hours instead of weeks);

- Litecoin generates its blocks four times faster than Bitcoin;

These "alternative" cryptocurrencies are all about doing things faster than Bitcoin, yet, they have all either failed or will fail, because the speed of Bitcoin's evolution is not a flaw, it's a virtue.

To judge Bitcoin now is to judge the Internet in 1995; nothing more than a pre-mature, uneducated guess.

Unlike the "Flooz" and "Beenz" that you enjoy comparing to Bitcoin, Bitcoin isn't subject to the fallibility of humans - it is governed by mathematics and has already proven itself useful. At best, Bitcoin will thrive as a new currency on the world-stage, responsible for hundreds of billions of dollars worth of transactions. At worst, it will live as an underground currency for the black market.

Either way, it will not die; by design, it cannot. There is no company to go bankrupt, no employees to fire, nor any loans to pay back. If would take the tens of thousands of globally-distributed Bitcoin miners to suddenly decide to simultaneously turn off their machines. That's tens of thousands of people deciding to throw away their hardware investments and their hope for a new kind of payment processor. Mr. and Mrs. Media, if you're paying any attention at all, then you will realize that the one thing people want right now is the ability to control their own money supply. Many of us have lost faith in our governments to do it on our behalf. These machines are not going to be turned off.

Inevitably, in 2012, as Bitcoin adoption marches on, its applications will expand, and its value will increase. One-by-one, those of you in the media who spoke of Bitcoin's demise will be forced to reverse your opinions - it will be the Year of the Great Media Correction.

Reuters: "Bitcoins are appealing but probably doomed." (May 27, 2011)

NY Times: "Bitcoins could be doomed after bubble pops." (May 30, 2011)

Forbes: "It's difficult to see what the currency has going for it." (Oct 18, 2011)

Wall Street Journal: "Things have gone wrong." (Nov 28, 2011)

It's okay, everyone makes mistakes. You don't have to apologize, but you will have to report the truth. That truth will inevitably be that Bitcoin has succeeded.

Sincerely,

GoWest

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Off-Topic: The American Slave Trade

How is this possibly acceptable?

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Bitcoin Media Trends

I'm a self-admitted media junkie; perhaps that's why I enjoy blogging so much. Since I was first turned onto Bitcoin, the most exciting moments for me have been when I've discovered new articles about Bitcoin - I'm always curious to hear what others have to say.

There has been a lot of press, actually. Most of it's been directly related to Silk Road or to the hacks and coin thefts of the past summer, but there have also been a lot of stories written about Bitcoin itself, and whether or not it will succeed.

I decided to compile a list of every English-language Bitcoin article I could find that discussed the currency's potential and had an obvious opinion, even if it was neutral. I then pulled out the author's general opinion and compared it to the closing price of Bitcoin on the day the article was published.

One interesting result was that the media was for the most-part friendly toward Bitcoin until the end of May 2011 when Bitcoin's valuation took off like a rocket and the mainstream media got a little more interested. Since then, positive opinions of Bitcoin have been hard to come by, though that trend might be changing as we speak.

If you're interested in reading the articles, click the image below for links to each of them. I ignored articles that were focused on Silk Road or the Mt.Gox hack.

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Bitcoin is Severely Undervalued

As of today, the entire Bitcoin market is worth $31 million USD. When you consider how many potential applications there are for Bitcoin, that is a shockingly low valuation.

What if, for example, the Team Fortress 2 hat economy was Bitcoin-driven (which it should be, to save people from PayPal and credit card fees). You might find this incredible, but the Team Fortress 2 hat economy, alone, is worth $52.7 million.

If it was purely Bitcoin-driven, Bitcoins would be worth $6.64 a piece. Don't even get me started on pants...

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Mt.Gox Foreign Currency Markets

In case some of you do not understand how Mt.Gox's foreign currency markets work, I will provide a brief explanation.

On September 2nd, Mt.Gox announced the opening of 15 new currency markets:

EUR - Euro
CAD - Canadian Dollar
GBP - British Pound
CHF - Swiss Francs
RUB - Russian Rubles
AUD - Australian Dollars
SEK - Swedish Krona
DKK - Danish Krona
HKD - Hong Kong Dollars
PLN - Polish Zloty
CNY - Chinese Yuan
SGD - Singapore Dollars
THB - Thai Baht
NZD - New Zealand Dollars
JPY - Japanese Yen

What should be clarified, however, is that you do not always trade on a separate market, unless there are Bitcoins already available for sale in your currency. Instead, when you trade in a currency other than USD, you are more than likely still trading on the USD market, except there is a premium added to the asking price.

Example:

The current USD/CAD exchange rate is 1.029 (Yahoo Finance). The Mt.Gox lowest ask is 3.92 USD, which should be 4.03 CAD when converted at the going exchange rate, but the lowest ask on the Mt.Gox CAD market is actually 4.19 CAD, which is 4% higher. On average, when I've traded on the Mt.Gox CAD market, I've paid 2.5% more than what would be expected from converting the USD market rate to CAD. That 2.5% fee turns out to be exactly the same fee you would pay for converting your currency to USD in the first place.

I hope that makes things a little clearer for any of you looking to buy Bitcoin with a non-USD currency on Mt.Gox.

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Yet Another Phishing Email

Just got this one in my Inbox this morning. Recommend you click "delete," as the links go to "mthox.tk."

Dear Mt.Gox user,

Your account is currently pending review, please visit https://mtgox.com/forms/verification
For those users who have had their accounts marked for review, an explanation of why were are implementing these security measures can be found here:

Security Measures Explained

“Verified” Accounts are eligible for monthly/daily transaction limits of up to 5 times the monthly limit and 10 times the daily limit.

In order to apply for the “Verified” account status please attach a copy of the following documents:

- Your government issued photo ID (passport, permanent residence card or driver’s license) and

- A scan of either your monthly utility bill (power, phone, TV, gas, water, etc.) or a certificate of residency issued by your local government.

Thanks,
The Mt.Gox team

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GoldMoney is No Longer... Money

In yet another example of a business being strangled by regulation, GoldMoney has been forced to remove the ability of its Full Holding customers to send and receive payments in precious metals. In other words, GoldMoney is officially no longer a competitor to Bitcoin.

Unfortunately, Edwin Vieira will have to recommend a different alternative currency (linked to an earlier part of the video for context. "GoldMoney" is mentioned at 49:38).

This email was sent out to GoldMoney customers, today:

Dear Customer,

We are writing to advise you of a change of services we currently offer to our customers with a Full Holding. Since the launch of GoldMoney in 2001, we have continued to change and adapt to the global increase of compliance requirements for payment service providers. Due to this growing trend of regulation we have decided to suspend the following services until further notice with an effective date of the 21st January 2012:

* The facility to make and receive payments in precious metals to or from other GoldMoney Full Holding customers.

* The facility to convert directly between the various currencies.

Basic Holding owners do not have access to these features and are therefore not affected by this change.

Our research has proven that our customers' use of the metal payments and currency exchange services is not significant and we trust that the suspension of these services will not be inconvenient for the majority of our customers.

In accordance with our Customer Agreement, we are providing advance notice of this change to our services that will take effect on the 21st January 2012 at 12am local London time (GMT). You will be able to make metal payments and currency exchanges up to this date.

We continue to provide a secure and reliable platform for the purchase, sale and storage of your precious metals. This includes enhancing our systems, introducing and adjusting our products and services, and making our website the most effective tool for managing your precious metals portfolio.

With this in mind, we have prepared a brief survey to gauge your interest in current products and also possible future products we may introduce, depending on the feedback we receive from you. The survey can be completed at the link below. All feedback received is anonymous unless you choose to provide us with your contact details.

https://www.surveymonkey.com/s/goldmoney

We thank you for your continued business, and we will sincerely appreciate any feedback to help us determine the products and services that are of most interest to you.

Kind regards
Your Relationship Management Team

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Guest Post: We Ain't Got No Government Loans...

The Trader here asked me to be a guest columnist and, I guess, I haven't been a very good one. We've all -- everyone in this community -- got so many projects going on, sometimes it's hard to focus. The entrepreneurs I've met in the last six months since I started working with Bitcoin are, by far, the most dynamic and multi-talented people I've come across in the last 15 years of IT work. Not to mention scrappy and ambitious. There's not a single merchant, blogger or far-seeing engineer I know, working with this stuff, who doesn't have at least two projects already launched and another half-dozen in the oven. We make the people at hacker news look lazy. We're not bathing in Paul Graham's questionable and reflected glory; we're just trying to make a fortune. And I like that.

There's a good reason for it too, I think. Not for the last 15 years have we had a similar dynamic, where a new technology opened up with no restraints and no prior art, to expose a vast landscape of entrepreneurial options for anyone who could see. Look at the businesses spawned so far by Bitcoin's existence; this is an astonishing array of original work, going in every direction, and built around one thing -- the freedom to build and sell whatever you want again. Just like it was at the beginning of the web. Suddenly, again, people with a great idea have no bar to entry and no limits on what can be accomplished if they're smart enough to adopt the technology first. The last time it happened, I was a teenage dropout, building some of the first big e-commerce sites up on Green Street in San Francisco. Now I'm an entrepreneur, just as inexperienced as my unfortunate former bosses were. But I did learn a few things in the last decade.

As the web progressed from being a pond to an ocean, it became more and more important to launch big. It became increasingly difficult for someone with a great idea and some basic HTML skills to launch, market and maintain something that could turn into an immensely popular, infinitely scalable website. The rise and fall of Web VC 1.0, 1996-99, and version 2 which is still dying a slow, hideous death, showed not just how gullible is a young, technically inept business grad in his late twenties, but how money is the origin of prior restraint. What the VCs were feeding off of was the fearlessness of hackers who'd figured out how to do something no one else had done, with whatever they had to work with at the time; and who didn't give a damn what the business model was or who sponsored it, as long as the software worked and the idea was cool. 

More than anything else that's constrained the web since 1998 have been the business models which came into focus as being the only ones that were sustainable. These were ad-driven, subscription-driven and sales-driven. In some cases, gambling-driven, but they were largely shut down or regulated to a subsistence level by 2005. The one notably absent business model was the micropayment; brilliant, tried and mostly abandoned, it was the victim of the greed of the payment processors, and the existing power structures that came to superimpose themselves on the web. The web: a thing they hadn't created and added no value to, which had fallen into their laps and by excessive regulation and corrupt gerrymandering was now their largest market. The costs imposed by the card companies and existing mega-corporations became an overriding constraint, a brake against new ideas and investment, and with the likes of UIGEA and now SOPA, a death-blow to the hacker in his basement with a nickel and a great idea.

We had our little algae bloom; nothing we had or built back then -- Zmodem, WWIV, the Well, Lycos, AltaVista, Napster, Nutella -- is still around now. You could forgive a 17-year-old with a smartphone for not even knowing what any of those things are, and yet every technology she uses springs from them, only now it's mediated by the exact same corporate bastards we were trying to destroy.

Our mistake then was that we worked for those bastards; they paid our bills. And we took mediocrity and a paycheck over absolute liberty.

Will Bitcoin rescue us from this? Will it fall prey to the same forces? I don't know, except to say that what we're seeing emerge here is -- at best -- a self-financed TAZ, a temporary autonomous zone -- for the first time since I was a kid. When Mao said politics comes from the barrel of a gun, he wasn't making a suggestion; he was stating a fact. Ayn Rand said basically the same thing. It's a fair observation about sovereignty that it flows from force. Finally, with Bitcoin, we've caught up with addressing the root of what we're actually dealing with on the other side.

What does it mean to undermine sovereignty? How far can you build a structure that permits wild, incredible creativity and growth before the totalitarians, vote-riggers and general-no-goodniks of the world use guns and knives to smother it in its cradle? 

If the web is a clue, then only soft power can be used against something so dispersed and powerful. And yet they've done a good enough job with that. It's the biggest question facing Bitcoin today, and it's the reason we're not seeing a $30 exchange rate.

But it doesn't matter. What matters is that we were here, in this time and place, making it happen. There isn't a single business model that can't be done better with Bitcoin; and the incredible thing is, it's still there for the taking. Want to start a site selling insurance? Omaha steaks? A better social media model? You can still make it in your basement and, if it's any good, you'll be the first one to ever launch that site with no transaction costs. If anything, it makes the original web revolution look tepid. I doubt I'll ever see anything like it again in my lifetime... and I want it to succeed. The ideas and dreams that come to me on a daily basis are fantastic and, finally, realizable. I only want to have enough time to invest in and pursue all of them, while the energy and the intelligence is still there, concentrated so much in one place.

Every time, every place has its dreamers. They're the people who change the world. The question is whether they live in the right time, and the right place, to be recognized for their genius and to let them thrive; or whether they can make it happen for themselves against the odds. Do we have those qualities? I don't know, but Bitcoin seems to have brought these people together in one place. I'm privileged to know them, to do business with them, and to learn from them. The naysayers don't realize what they're missing. Let's hope that when they do, it won't have been reduced to a corporate sludge like it was by the time they got their first iPhone.

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Canadian Lawyer Magazine: "Bitcoin has jumped the shark."

Canadian Lawyer Magazine's IT Girl has Bitcoin on her Christmas wish list, but I think she's being sarcastic:

"This nifty technology looks to have jumped the shark, but it sparked a lot of interest, not to mention controversy, and the future may yet be in virtual e-currency. I wouldn’t go spending a lot of time or money trying to mine Bitcoin any time soon though; you would probably be better off alongside the stock brokers of late, selling Bre-X shares on Bay Street for $1 apiece as novelty items. Actually, that might not be such a bad idea."

Ms. Harris, you do realize that your words are now immortalized on the Internet, don't you? I think you may have just joined the rarefied company of the Slashdot commenter that dismissed the iPod in 2001. Don't worry, you also get to hang out with Forbes and Wired. I hear they throw awesome parties.

Speaking of being immortalized on the Internet, let's see what you had to say about Bitcoin back in August:

"In the case of Bitcoin, its value appears to be based upon scarcity in much the same way that commodities like oil and coal might be."

I'm not sure where to start with that one. Personally, I think oil and coal get their value from being sources of stored energy that we can convert to useful work and heat, but that's just me. Please, go on...

"Scarcity in the case of Bitcoin exists because the process of mining becomes exponentially more onerous as doing so becomes more popular. At the same time, it is said that there’s an intention for there to be a cap on the number of Bitcoins in circulation."

Yes, you could say there is an intention to cap the number of Bitcoins in circulation. In fact, it is hard-coded, and the number is 21 million, in case you're wondering.

"In some ways, the notion of scarcity makes sense given that the more Bitcoins that are in circulation, the lower its value will be assuming that the law of supply and demand applies. If there is a low ceiling on how many Bitcoins can be created and they have value based on scarcity and demand, its existence as a form of currency — except in very limited circumstances — may ultimately be extinguished."

I think that paragraph just jumped the shark, or maybe a dog ate some of it, because it cannot be deciphered.

"Do you remember the days when you could go to the corner store and pay 25 cents for a pack of sports cards that came with a cheap piece of gum? I’m sure if my brother dug around, he could probably mine some really valuable hockey and baseball cards. O-Pee-Chee, for instance, issued Wayne Gretzky cards in 1979 that are now worth about $50,000. So at the risk of antagonizing a number of people, are Bitcoins really that different from the situation of trading cards where only a limited number are issued, they’re accessible only to a narrowly defined market, and they’re very much subject to trends?"

Gahhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhaaaaaaaaaaaahhhhhhhhhhhhhhhhhhhhhhhhhhaaaaaaaaaaaa!!!!!!!!!!!!!!!!!!!!!

Okay, I'm better now. I'm going to focus on the part of your statement that I've highlighted in bold.

Let's stop for a second and discuss how Bitcoins are different from trading cards.

Actually, nevermind, I will leave that to the reader as an exercise.

Ms. Harris, my Christmas wish list consists of two things: 1) a lump of scarce coal; and 2) that you stop writing IT articles for Canadian Lawyer Magazine. Thanks.

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Next Leg Up: Potentially $80/Bitcoin - RunToGold.com

"BitCoin makes... payment efficiency possible because it is based on cryptographic protocol where its security is grounded in the laws of mathematics not laws of men which may or may not be enforced profitably."

"Taking the current price of $4.00, the 200 day moving average of about $8.50 and extrapolating this upleg with a 12x 200dma top we could see a price of around $80.00 per BitCoin. Is this speculative? Yes. Would I bet on seeing $80 per BitCoin by around June or July? Maybe if the odds are around 5%. But I would take a bet for BitCoins to hit $7.50 by June or July at around a 50-70% probability."

Solid BitCoin Consolidation Finally Bears A BitCoin Breakout - RunToGold.com

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Stop Feeding at the Trough

WikiLeaks: The Great Visa Escape from WikiLeaks on Vimeo.

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Bitcoin Posts Most Winning Month in its History

Between November 19th and December 19th of this year, Bitcoin has had 22 up days, 8 down days, and one flat day on the Mt.Gox USD market, better than in any previous month of trading.

Chart courtesy of BitcoinCharts.com

The second best month of trading was from April 5th to May 5th, when a record of 22-9 was posted, which eventually led to a 900% increase in Bitcoin's value by June 8th when the peak of $32 was hit. Interestingly, on May 5th, Bitcoin had a weighted trading price $3.41, exactly the same as on Dec 19th, to the penny!

Will this current winning streak lead to another record run? Unlikely, but trading is undoubtedly bullish and should be exciting to watch for anyone holding a long position.

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IBM: "It's cheaper to have a cell phone than to open a bank account."

"Growing communities will be able to use mobile technology to better serve people with new solutions and business models such as mobile commerce..."

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Bitcoin to be Exposed to 13 Million TV Viewers

Bitcoinmedia brings us the exciting news that an episode of "The Good Wife" airing on January 15th will be centered around Bitcoin. The title of the Episode is actually "Bitcoin for Dummies."

The first two seasons of the show brought in 13 million viewers per episode. That will be a lot of exposure to a demographic that probably hasn't yet heard of Bitcoin, which continues to approach the mainstream...

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Exter's Pyramid

John Exter was an American economist and central banker who believed in sound money.

He had a theory that in a period of debt deflation, capital would flow from the riskiest of asset classes down to that which, by its very nature, is sound money. Take a look at Exter's Pyramid, below. As the global debt crisis continues to spiral out of control, the credit instruments at the top of the pyramid will begin to collapse until the bottom of the pyramid is reached. Where do you think Bitcoin would fit into this pyramid?

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New Site Launched: Bitcoin Cigarettes

It was just a matter of time, of course, before Bitcoin found this application. The site offers shipping to the United States, Canada, United Kingdom, Belgium, Portugal, Sweden, Ireland, and the Netherlands.

There is a huge market for this sort of thing, which is especially obvious when we look at what people currently pay for cigarettes around the world (prices are in USD for a pack of 20 Marlboro cigarettes):

Country/State	Price
Australia	$14.90
Norway	$13.80
Ireland	$12.10
Canada	$10.30
New York	$10.00
New Zealand	$9.90
United Kingdom	$9.60
France	$7.90
Iceland	$7.70
Netherlands	$7.40
Sweden	$7.30
Finland	$7.30
Denmark	$6.70
Germany	$6.70
Belgium	$6.50
Italy	$6.40
Austria	$6.00
California	$6.00
Portugal	$5.20
Spain	$5.20
Hong Kong	$5.10
Japan	$3.90
South Korea	$3.00
Bitcoin Cigarettes	$2.59
Mexico	$2.50
Brazil	$2.40
China	$2.10
Russia	$1.60
Saudi Arabia	$1.60

Of course, this site is illegal, though laws may vary from country to country. In Canada, it is illegal to import cigarettes, save for the usual duty free entitlement when returning from abroad.

Edit: I have been corrected in the comments. It is not illegal to import cigarettes into Canada, only to do so without paying the appropriate taxes (i.e. smuggle).

As I said in my recent post about Bitcoin adoption, the illegal and international markets will be two of the five prime drivers of Bitcoin adoption. Bitcoin Cigarettes takes advantage of two of these at the same time.

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All the Cheap Bitcoins are Gone

Chart courtesy of BitcoinCharts.com

This has got to be one of the most lopsided Bitcoin depth charts I have ever seen. Relatively speaking, there are almost no Bitcoins for sale beyond $3.50!

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Bitcoin Christmas Rally in Full Effect

After spending a week in the $3.10 to $3.30 range, Bitcoin has made a strong 12% move to the upside on the Mt.Gox USD market, hitting $3.70 and threatening to take out the seven-week high of $3.82 previously hit on October 29th.

Chart courtesy of BitcoinCharts.com

The month-long bull market has been confirmed in a big way. Pay attention, stock markets, this is what a Christmas rally is supposed to look like.

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Bitcoin and Conventional Business do not Mix

It's time to be truly honest about what we're up against in terms of motivating the adoption of Bitcoin.

Imagine the best-case scenario where Bitcoin exchanges accept credit cards, directly. There is absolutely no way they will be able to drop a credit card deposit fee below a very generous 2%, and that's assuming that chargebacks won't happen, which they will.

Add the additional 0.5%, or so, that you would have to pay for actually buying the Bitcoins on the exchange, and you're looking at a minimum of 2.5% in fees from the get-go. That 2.5% already negates any savings that a merchant could offer for someone willing to pay with Bitcoin. Right there, we know it makes absolutely no sense to offer a product or service for Bitcoin when the same thing can already be acquired with credit cards or PayPal. Now you understand why Cheaper-in-Bitcoins made almost no sales whatsoever, and why you'll never see Amazon adopt Bitcoin.

We also talk a lot around here about charities or non-profits that accept Bitcoin donations. Again, no one is going to go out of their way to acquire Bitcoins in order to make a donation; it just adds an unnecessary extra step. Nor are people going to acquire Bitcoins to be able to buy indy-music, make micro-donations to blogs (too bad!), or pay for shareware. Independent artists, writers, and software developers should accept Bitcoin as a secondary source of income, but it will never make up more than a small percentage of their revenue. Bitcoins will eventually trickle into their pockets, but they won't spur the actual adoption of Bitcoin.

So, if conventional online businesses and charities are out the window as motivators for Bitcoin adoption, then what will actually do the trick?

1) Illegal markets. Where there is a desire to maintain as much anonymity as possible, Bitcoin will thrive. Silk Road is what put Bitcoin on the map, and it continues to operate successfully to this day. There is no denying that Bitcoin will become the preferred method of transacting in illegal markets, because it gives an obvious advantage to both clients and merchants.

2) Virtual markets. Virtual currencies could always be purchased with credit cards, but then the user was constrained to one platform. With Bitcoin, users can move their money between different virtual worlds, assuming they eventually support Bitcoin. This is a multi-billion dollar market that can be exploited.

3) International markets. There's never been an easier way to move money across borders. Any business that can take advantage of the agility of Bitcoin will do so.

4) Online gambling. The reason why online gambling and Bitcoin make a great match is because of the ability to easily withdraw Bitcoins from a casino. Until now, it's usually been a pain in the ass to retrieve your winnings. Being able to get your money out of a casino as quickly as you got it in is sufficient motivation to go out to the bank and wire some money to an exchange.

5) Investing. If 1, 2, 3, and 4 begin to catch on, then Bitcoin will continue to be a viable investment for those looking to move their money out of fiat currencies and maybe diversify their precious metal portfolios. Given the ever-worsening sovereign debt crises, Bitcoin will become an even more attractive investment.

Between these five motivators, we're still looking at the possibility of a multi-billion dollar Bitcoin economy. Therefore, at the end of the day, we shouldn't get too worked up about whether or not Amazon or Wikipedia will eventually accept Bitcoin. Bitcoin's strength is not in the conventional.

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BC Casino is a Fraud

(Edit: I have been contacted by the owner of BC-Casino in response to this post. While this assessment of his software is not off the mark, he assures me that he wishes to stick around for the long-run and that all players will have a fair and enjoyable gaming experience.)

"If it looks too good to be true, it probably is."
-Some smart guy.

BC-Casino.com is a fraud.

Indications that something is amiss:

- The rampant grammar errors on the front page. No one puts that much money into a website without hiring someone to check their English;

- There is no Playtech logo or 'Powered by Playtech' which is on all legit sites;

- There is no licensing around the contact info;

- The name they list, "Global Entertainment Services Limited," is close to the name of a Kahnawake commission permit holder, but not the same entity;

- Not the normal login field, in the Flash or the download version;

- The installer is not the one Playtech uses. Playtech uses a branded installer with the logo from the casino, and not a standard installer like BC-Casino uses;

- The number keypad where you have to type your username and password is not from Playtech;

- If you look at this slotgame preview, the video is hosted on Class1casino, not BC-Casino.com. This means Class1casino (recently closed) silently opened a new outfit, or they sold the sourcecode. It is also possible that BC-Casino ripped off the code and forgot to change the domain name to their own.

Be cautious if you decide to deposit money to this site - you may never see it again. Playtech has been contacted for further investigation.

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Meshnet, Bitcoin, and BitSyncom: Creating the New Internet

As the SOPA debate rages on in Congress, the brightest minds of the Internet are already taking decisive steps toward building a new, alternative Internet which would remain untouchable by the corporations currently threatening to tear apart the fabric and soul of the Internet we know and love. For more on SOPA and the threat it represents, have a read of one of my older articles, here.

This new, decentralized (sound familiar?) Internet would not rely on corporate-controlled Internet Service Providers or be subject to the whims of increasingly undemocratic US government regulation, but would depend on its worldwide userbase for maintaining its infrastructure.

The key to the implementation of the so-called "Meshnet" is the establishment of a sufficiently powerful network of nodes. While a completely voluntary system would be ideal, the costs associated with the construction and operation of these nodes would be non-trivial; an incentivized system would be far more effective.

Enter Bitcoin and BitSyncom.

BitSyncom announced yesterday that it has launched the "BitSyncom Initiative," consisting of Bitcoin-enabled tablet computers that would connect to the Meshnet through super-node towers that act as hosted Bitcoin wallets. Tablets (or any other Bitcoin-enabled device) would pay for access using Bitcoin, but the Meshnet would also pay other users Bitcoin for supplying bandwidth to the network. The end result, a peer-to-peer, user-driven, incentivized Internet, free from biased corporate-controlled and undemocratic government regulation, or centrally controlled payment processors.

Given the current atmosphere of global financial uncertainty, the ever-growing library of freedom-reducing legislation being passed by governments, and the increasing momentum behind the Occupy movement, this is definitely an idea whose time has come - one that is very, very exciting. The last thing we need is another country with the ability to shut down all private communications, Iran-style. The quicker the Meshnet is implemented, the better.

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An Ode to Satoshi Nakamoto

This is not my work, but the work of a poetic genius named "coretechs" who posted this poem on the Bitcointalk forums.

To honor the anniversary of Satoshi Nakamoto's last post on the forums, December 12th has been declared "Satoshi Nakamoto Day." To commemorate this day, I present to you, "An Ode to Satoshi Nakamoto."

In the year of the bailouts, 2008,
The bankers were printing more debt for the state
The dollar grew weaker, the big picture clear
As they fed the hangover more Keynesian beer


World leaders debated, directing the blame
But with no real solutions, just more of the same
Regulation, mark-to-market, housing costs for the poor
Or maybe just our pure desire for more


Who's to blame, is this caused by desire for wealth?
When perhaps the real problem is money itself!
The idea isn't new, maybe everything's tanking
'Cause society is built on fractional reserve banking


And so called "investment" and attempted control
May soon spiral fiat into a death roll
As elected officials looked dumber and dumber
Others started to put their faith into numbers...


On one cold winter day, a crypto-genius arrived
With some rock solid code, picked up by the hive
Audited and improved, then released to the wild
Bitcoin had been born, Satoshi's brain-child


One day bankers and fascists may look back with scorn
On the day when the genesis block was born
Like a clock set in motion, with springs that are wound
By the hackers who joined, mining blocks to be found


Securing transactions of those who believe
That middle-men shouldn't be there to receive
More than a small fee to perform a transaction
Or invade privacy of those taking the action


This idea is fantastic and easy to spread
Through incentives devised in the crypto-man's head
The ball started rolling, but Satoshi grew quiet
Soon thereafter began the first speculative riot


Had he lost faith, become scared, or retired?
Maybe he was a banker himself but got fired?
AI from the future or a corporate plot?
Or was "he" a "them", or had he been shot?


The answers to these, may never be known
So we'll make it a feast, so that you can be shown
How thankful we are for what you have built
As we sew our transactions on this open-source quilt


And we hope that you're lurking, with smile and a glow
As your world-changing software continues to grow
If you need some advice on this day, what to do?
Please dump some some of your coins, I have buy orders at $2

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"[insert anything here] is a Ponzi Scheme"

First, the definition:

"A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation."

Just for fun, I ran a Google search for "is a Ponzi scheme." Let's take a look at the results, for science:

1) "Social Security" is a Ponzi scheme.
2) "Facebook" is a Ponzi scheme.
3) "Suburban Sprawl" is a Ponzi scheme.
4) "Medicare" is a Ponzi scheme.
5) "Full Tilt Poker" is a Ponzi scheme.
6) "The American Dream" is a Ponzi scheme.
7) "The US" is a Ponzi scheme.
8) "Gold" is a Ponzi scheme.
9) "Real-Estate" is a Ponzi scheme.
10) "Greek Bonds" [are] a Ponzi scheme.

In short, the definition of a Ponzi scheme has grown to become "anything that acquires value only through the participation and acceptance of many," which covers basically everything except food, water, air, sunlight, and the company of others (except mothers-in-law).

All monetary systems, by definition, require the participation and acceptance of many, yet we need monetary systems to have a functioning economy. Bitcoin is just a more efficient and fair monetary system. Using this new, looser, definition of Ponzi scheme, yes Bitcoin is a Ponzi scheme, but this looser definition is neither incriminating nor offensive.

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Bitcoin is Approaching the Mainstream

On December 12th, the Internet Archive announced they would be accepting Bitcoin donations. For starters, the Internet Archive is ranked 224th among all websites in the US and 213th worldwide. Let that sink in for a second.

In the two days that the site has been accepting donations, they've received over $1,000 in Bitcoins. Bitcoin users came through in a way that guarantees that other sites, possibly even bigger sites, will take notice that accepting Bitcoins is an extremely easy and effective method of collecting donations.

A comment from "apeterson", on Reddit, summed it up best:

"If you already have Bitcoins, the necessary steps are:

1) Copy the address;
2) Paste it to your wallet;
3) Enter amount; and
4) Press send.

(editor's note: two of these steps will go away when the URI scheme is implemented)

If you already have a credit card the necessary steps are:

1) Choose from one amount in the options (25, 50, 100, 250, 1000 or other);
2) Select additional options and optionally sign the donation with your name;
3) Add to basket;
4) Review your basket, and untick the hidden option to donate an extra $2.00 to justgive;
5) Proceed to checkout;
6) Login as donor, either by your existing account or by creating a new account;
7) Create an account;
8) Enter email, first name, last name, birth year (chose between 4 options: 1979 or later, 1965-1978, 1946-1964, 1945 and earlier), gender, and how you heard about the site;
9) Untick "I would like to get spam";
10) Enter billing info (full address);
11) Enter credit card info; and...
12) [this is where apeterson surrendered]

The pain alone to complete [these steps hurts more than just giving them] the 5 BTC I sent them."

One other turn of events that will push Bitcoin closer to the mainstream is that you can now sell your Bitcoins on either Mt.Gox or Tradehill and withdraw your cash to PayPal. The significance of this should not be understated.

You now have some serious ammunition to help you convince someone that Bitcoins are actually worth something. Many an argument about the legitimacy of Bitcoin can be put to bed simply by telling someone they can sell their Bitcoins, right now, and withdraw the cash to their PayPal account, right now. You could even offer someone Bitcoins in lieu of cash and not feel like an eccentric Internet geek; the divide between Bitcoin and fiat currency has grown smaller.

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