Crypto Currencies

Crypto currencies

 

The term ‘cryptocurrency’ refers to online or digital cash that can be traded online for goods as well as solutions.

While this might appear dangerous by itself, cryptocurrencies are called such because they are safeguarded making use of cryptography (translated into an essentially solid code) and traded over peer-to-peer networks (file-sharing straight in between celebrations).

Using public and also exclusive tricks is applied to securely move the currency from one celebration to an additional.

When you own cryptocurrency, it behaves much like gold– that is, it has value similarly physical cash does. Much like bodily money, cryptocurrencies are subject to fluctuations in value.

The very first as well as most prominent instance of cryptocurrency is Bitcoin, which was introduced in 2009. Based upon its popularity, numerous alternate cryptocurrencies have entered circulation since then.

Some of the most prominent among them consist of Namecoin, Peercoin, and Litecoin.

A lot of manufacturers will decline Bitcoin or any type of cryptocurrency as payment, nonetheless, the rise in popularity has viewed a variety of online firms start to acknowledge Bitcoin as a viable choice, such as Etsy.com, Overstock.com, and also Reddit.com.

Criticisms

Similar to the majority of internet experiences, cryptocurrencies have their doubters. Being anonymous and practically untraceable, they come to be an easy technique for criminals to make prohibited transactions, such as the purchase of illegal compounds and also hazardous services.

One of the most significant example of this was Silk Road, an online underground market that used Bitcoin as currency. When it was finally closed down in 2013, the FBI confiscated 144,000 bitcoins (worth roughly $28 million).

While cryptocurrencies themselves are intensely shielded, it’s still possible to lose your entire digital lot of money. Merely losing a password or shedding access to your online budget can result in the effective deficiency of your cryptocurrency.

Being a decentralised system of exchange, such points are not safeguarded under insurance provider; users accountable for their own security.

Benefits

Being digital money and also consequently dispersed online as opposed to in any physical kind, cryptocurrencies are not associateded with any type of one nation.

Because of this, their value could not be had an effect on by a centralised financial institution. Their worth is commonly established by supply and also demand (basically, the amount of individuals want to pay for them). Some see this as a change in power from the government as well as economic establishments, back to individuals; nevertheless, it’s not unusual for mainstream users to locate the absence of rule behind cryptocurrencies to be upsetting.

Unlike regular financial purchases, cryptocurrency does not produce deal costs, and, as it is not checked by a 3rd party, it does not have a taxation system in place. Moreover, as soon as a transaction has occurred, it can not be reversed or traced back.

The online budgets which contain Bitcoins are private: Unless one chooses to make their online pocketbook public, no-one can see the number of Bitcoins they have.

Cryptocurrency is a fast-growing means of transaction that makes it possible for customers to continue to be completely anon

ymous whilst acquiring products online. Whilst it has both advantages and also drawbacks, it’s showing no sign of decreasing and also is rapidly becoming a much more traditional method of payment.

Crypto currencies

 

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Meet SaruTobi, the flying bitcoin collecting monkey

sarutobi

In this interview, we speak to Christian Moss of indie game developers, Mandel Duck, about their upcoming game SaruTobi. This is due for release in mid/late November on iOS devices.

You are Tobi, a monkey living in a jungle. You must swing from your vine, building up momentum before releasing yourself to fly across the retro 8-bit jungle landscape, collecting power-ups to increase your distance and bitcoin tokens as you careen through the air. The game has three main goals – getting the furthest distance, collecting bitcoin tokens to be spent on items, and collecting the letters SARUTOBI to unlock a big coin boost to spend on in-game items.

The gameplay reminds me a lot of the Yeti Sports series of games, and from the videos it looks like a simple, fun game. So I had a chat on Skype with Christian about the game, to find out more about why bitcoin is in the game in the first place, and to see what other plans he has, if any, to utilise bitcoin further in the game.


Jamie McCormick (JMC): So first off, can you tell us a little about SaruTobi? Where does the name come from?

Christian Moss (CM): I have been making games for iOS for the past few years; however they have always been quite complex, in-depth games. SaruTobi was an attempt to make a very simple/addictive game in SWIFT, which I think is a good combination for the mobile platform.

The name SaruTobi is literally Japanese for “Monkey Fly,” and that pretty much sums up the game play; you need to swing a monkey on his vine, build up speed, and see how far he can fly through the air.

JMC: What can SaruTobi do with the bitcoin he collects in the game? Buy bananas?

CM: At the moment Tobi needs to collect bitcoin to buy extra power ups such as rockets and spring boots which will propel him further, but in the future hopefully we can allow the user to earn actual bitcoin.

JMC: How many levels does it have?

CM: SaruTobi is an endless game so it only has one level, and the aim of the game is to swing as far as you can, competing with friends to beat each other’s maximum distance.

JMC: What else can you collect? And what are the items in the game?

CM: The plan for the moment is to get the furthest in the game. There is a second task, which is to collect the letters SARUTOBI; I got the idea from Donkey Kong Country. You can collect them over a few gameplay sessions, as they are spread out sequentially across the map. Getting them all gives you a hefty bonus, which would let you turn off ads, and get enough rockets to last you a while! You can buy bundles of coins via an in-app purchase, though. For future updates, I’d love to try and work bitcoin into the game using donations I receive, but as far as gameplay goes, I now want to get some user feedback and take it from there.

The game does feature ads, which you can disable by earning 90 bitcoin. Each token you collect in the game is worth one bitcoin, so depending on how good you are, it won’t take you too long to do this. I want people to enjoy the game and not be stuck with ads forever, so I have made it reasonable to get rid of them in an achievable timeframe.

JMC: What’s your own high score? And how did you get it?

CM: My current high score is 3,964 meters. As Tobi flies through the air, you can catch rocket power ups mid-flight, which give you a large distance boost. In my case, he swung through the air and I got my angle right, as at the apex he caught a rocket which boosted him for miles. The positions of the rockets change randomly, and you can’t see where they are. I am interested to see how far other players can prove the limit to be, especially if they can do the same with springs or hitting a banana skin on landing.

JMC: What was the hardest thing to develop into the game?

CM: The most difficult thing to develop was getting the physics right. The physics of swinging on a rope are quite different to what you’d expect, so when you’re swinging as Tobi, getting this feeling right took some time. The first time we modeled a rope properly, but we couldn’t get any momentum up, and if you boosted at the wrong time you’d lose all your momentum. So we had to simplify this to get it right.

JMC: Why have you given Tobi the task of collecting bitcoin instead of something else?

CM: Why not? I planned to implement an in-game currency when it suddenly dawned on me to use bitcoin.

Bitcoin is a stateless currency and therefore is perfect for international use, I guess you could call it the people’s currency – a player in Africa is going to feel just as at home with it as a player in America or the UK. Although bitcoin is becoming more mainstream, the vast majority of people are still very unfamiliar with it. I’m hoping by working bitcoin into popular games, it can help raise public awareness and get people to start looking into the crypto currency.

Lastly, using bitcoin in your game can open up a range of features that is currently not possible with conventional payment systems.

JMC: Are players able to make purchases in-game with bitcoin, or earn bitcoin from playing it?

CM: This is where we would like to go. Currently Apple has been very strict with regards to bitcoin and its usage – specifically, in-app purchases must use Apple’s framework so they can receive 30%. However, this does not seem to apply to donations, and hopefully before Christmas we will implement some kind of real bitcoin transacting with the game. This may allow users to donate bitcoin to be held in the game address; the best players may be able to receive bitcoin as a reward for getting a highscore, etc.

JMC: Do you have plans to further develop the game?

CM: At the moment the game only uses bitcoin in name only, and the coins you collect are completely in-game. However, we have plans to allow the user to collect/earn actual bitcoin, which I believe is made possible with the use of micro transactions, a concept that only bitcoin allows developers to do, i.e., for every coin a user collects he can receive 1 bit to their address.

JMC: Do you have any plans to release the game on other platforms?

CM: Most definitely. Apple are very strict with bitcoin, and other platforms such as Android are completely open. However, I am a strong believer that we can’t leave iOS users behind. Earlier this year when Apple banned bitcoin wallet apps, our app “Bity” was the only Apple approved app that allowed bitcoin transactions; shortly after its release Apple opened the flood gates, retracting its restriction against such apps. We hope we can do something similar with SaruTobi.

We are currently seeking extra funding to recruit an Android and HTML 5 developer so we can bring the game to other platforms, and have the wallet 1DUuk9AvMzBbsdazNTQsyVCy1xX2GdnSK4 set up for this.

JMC: Your team is spread across the UK, Australia and Japan; how does that work out?

CM: One of the advantages with creating 2D physics games is they don’t require a big team; it’s very easy to [develop] the game with one or two people. Currently I perform the majority of the coding whilst I have a few illustrators in the UK and Japan who I can work with for design.

JMC: Do you have a personal interest in bitcoin?

CM: I have a miner in the corner of my apartment. I started out of interest because the company I work for made a bitcoin related app. I then bought some bitcoin and used this to purchase a miner from Butterfly Labs. It was a 25ghs miner, which I overclocked up to 30ghs. I ordered in December 2013 from stock. It was profitable for a while, just about made the bitcoin back I put in. I then pre-ordered a Monarch miner and cloud mining service. These never came. Butterfly Labs refunded me based on the dollar price, so I actually got refunded more bitcoin than I originally spent, as the price had changed from $ 1000 to $ 400 between the two times.

JMC: What led you to combine your interest in games with your interest in bitcoin?

CM: Bity is still doing well, and more aimed at people with paper wallets and bitcoin in cold storage. But I can’t compete with big payment players in the field. Games are how I started with iOS development, and Apple released SWIFT in September, which I had to learn for my job.  So I made a few games, and I wanted to make a simple addictive game, and was thinking I could put some sort of coin in there. And if I’m going to use any coin, why not use bitcoin.

If the app was popular and people were playing it, they could learn about bitcoin as there’s a link to send to the about bitcoin section on bitcoin.com, to help it get into the mainstream. I’m not sure how Apple will take it, but after the game is approved, I’ll see what I can get away with. At the moment in iOS apps, it’s impossible to charge anything less than about a dollar, and Apple takes 30% of this automatically. But I thought that in SaruTobi, once it’s up and running, I can take donations, and then in a later update, redistribute them by giving satoshi to do tasks and collecting coins in-game, and it potentially could open up some new features that the games scene hasn’t seen before. The whole concept of micropayments and the tipping scene is very interesting to me.

I found with Bity that I did quite well with optional donations. I was surprised by how many people sent me donations; one person even sent me about $ 2,000 dollars worth of bitcoin out of the blue!

JMC: If someone wanted to put ads for bitcoin products in the game, could they?

CM: We use iAds at the moment, but if people wanted to advertise their product in the game, it’s technically possible after discussions with the right people! I have done it for some of my older apps, and would be happy to do it again.

JMC: Finally, do you have any messages to Bitcoin Magazine readers

It’s slated for release in mid-late November. If you want to be notified of the release, you can follow us on facebook.com/mandelduck


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We are happy to announce, just in time for Giving Tuesday, that the Ronald McDonald House of the Capital Region is the first charity in Upstate NY to accept Bitcoin donations!

nybit2

PRESS RELEASE – 11/20/14

Albany, New York - Ronald McDonald House Charities of the Capital Region is making history by heading down technology lane and becoming the first local charity in Upstate New York to accept Bitcoin donations. They will partner with Bitcoin processing giant BitPay to handle their transactions, and the NY Bitcoin Group will help them get started.

“We are very excited to have our local Ronald McDonald House be the first chapter in the United States to start accepting a digital currency for donations. Bitcoin gives us the ability to send a nickel, a dime, or any other denomination, without the charity getting charged a fee, as they would using with other payment networks,” said Paul Paterakis, a member of the NY Bitcoin Group.

Elizabeth Ploshay of BitPay added, “In other words, through BitPay, they get 100% of the donation, as they would with cash, but unlike with cash, they can now receive donations from anywhere in the world, instantly.” BitPay is the lead global Bitcoin payment processor making donation functionality possible.

Currently, a few other charitable organizations in the United States and around the world accept Bitcoin, including the United Way and Greenpeace USA.

Paterakis said, “This will go down as a historic moment for Ronald McDonald House in Albany. People can be afraid to be the first when it comes to change, but sometimes the first to act are the most rewarded. I believe that will be the case here. The Bitcoin community is generous and I personally plan on matching up to $ 500 in Bitcoin donations to show my support. Any time I have a quarter or two sitting in my digital wallet, I’ll send it over.”

ABOUT THE COMPANIES

NY Bitcoin Group (www.nybitcoingroup.com) was founded in June 2014 by Bitcoin enthusiasts from different industry sectors. Their goal is to promote Bitcoin and educate businesses within the Capital Region on setting up Bitcoin as a form of payment.

BitPay (www.bitpay.com) is the largest global Bitcoin payment service provider headquartered in Atlanta, Georgia. BitPay provides payment processing services for more than 40,000 businesses and processed over $ 100 million USD worth of Bitcoin transactions in 2013. In 2014, BitPay started processing $ 1 million USD daily.


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How Koinify and also Melotic Plan to Bring Order to Crypto Crowdsales

Though the crypto 2.0 sector of the bitcoin community is developing, the part of the market primarily worrieded about non-financial or sophisticated blockchain applications has actually had a hard time to develop a stable industry for its jobs.

In the lack of strong VC interest, or perhaps in the spirit of pushing the limits of innovation, many decentralized applications (DApps) are seeking to fund themselves via what could probably be the blockchain’s most compelling use past currency, decentralized product support in the capillary of Kickstarter.

DApps seek to harness the capability of blockchains to develop tokens, which could then be dispersed and also made use of to incentivize the item’s development as well as fostering. The most noteworthy instance might be MaidSafe’s $7m crowdsale, which this summer season was welcomed with conflict as well as skepticism in both the mainstream media and also the broader neighborhood as it experienced market forces as well as liquidity problems.

Also those which are aiming to supply market solutions recognize that in the Wild West of bitcoin, DApps are still a comparatively undiscovered territory.

“If you were merely to check out the crypto 2.0 space and see all the properties individuals are providing on Counterparty or NXT or any of these 2.0 systems, the spirit of decentralization is openness and transparency,” stated Jack Wang, creator and also CEO of electronic property liquidity exchange Melotic. “The other side is there’s a great deal even more capability for folks to push unreliable items.”.

To fix this market trouble, Wang and also his firm are getting in a brand-new collaboration with DApp crowdfunding system Koinify. Together, Koinify and also Melotic are seeking to curate an industry that can enable the effective launch of new items as well as the ultimate exchange of their symbols on a free market.

“Formerly when you bought something in Kickstarter, it was merely a donation or purchase, so there was no liquidity,” Koinify CEO as well as founder Tom Ding stated. “In a token economic climate, you acquire a more lasting charity, you could assist a software program however you could additionally have exits.”.

Inevitably, both platforms think that together they could form a decentralized AngelList, one that allows communities to support as well as increase ingenious jobs, while appreciating brand-new freedoms over the cash they opt to supply.

Decreasing the signal-to-noise proportion.

Both Ding and Wang talked to CoinDesk about the collaboration, recognizing that their major desire is to bring quality to a currently dynamic crowdsale marketplace, one that they assert has been averting possibly interested participants.

“The problem is the signal-to-noise proportion is truly high,” Ding said. “There are way too many sounds and it comes to be truly hard for individuals that would like to invest or purchase excellent, top quality tasks, symbols, to distinguish a good from a bad one.”.

Ding stated that Koinify will additionally look for to add openness to the DApp financing process, guaranteeing that projects are vetted and also rightly incentivized.

“If the task markets out, makes $6m as well as obtained all of it in cash money or bitcoin, they could not have the incentive to deliver a product,” Ding proceeded. “Part of our task is that can help them establish points like multisig and create milestones-based vesting to see to it that developer rewards are in line with what they promised.”.

Wang noted that Melotic purposes to give the second component of this pipeline, guaranteeing that there is liquidity in the DApp exchange markets by searching for funding sources for jobs, including larger sources of funding.

Striving for self-regulation.

Ding also kept in mind the recent rumors that the US Stocks as well as Exchange Commission (SEC) might be taking a better take a look at the crypto 2.0 industry, claiming that till formal standards are a lot more clear, the room should try to apply its very own consumer protections.

“I believe also some of the regulative reports lately could be a positive thing in that it requires folks to assume more difficult,” he proceeded. “Is it fine to announce the concept and begin raising money? Or should developers supply something more strong?”.

Meanwhile, he said, this requirement for self-regulation means that Koinify should be discerning concerning the tasks it onboards, even if that needs it to become a more central supervisor of its platform.

“If you have a limited choice, the amount of resources that comes into those markets is excellent quality,” he claimed. “When you have a truly open market, with a truly high criterion or projects can be found in, the issue will solve itself. We wish to motivate gifted designers into decentralized applications.”.

Denting suggested that Koinify will certainly also seek to educate developers, spending time as well as sources now to help them navigate the facilities for developing DApps.

First launch announced.

Koinify as well as Melotic will certainly begin testing their market method with the launch of Koinify’s first job on First December, the token sale for decentralized social messaging solution Gems, which was unveiled at Inside Bitcoins Tel Aviv this October.

Ding made use of Treasures as an example to show how Koinify aims to sheppard projects to effective launches, keeping in mind that the project pleased an approximated 30– 40 persistance inquiries that covered every little thing from modern technology to group framework.

“We had a lot of discussion regarding what is a fair design for distributing Treasures tokens, then we worked on developing the milestones that Gems ought to deliver,” he stated, including that Koinify also flew to Israel to meet the Treasures team.

Ding showed that Gems’ initial turning point will certainly be the iOS variation of its application, the 2nd its Android variation as well as the 3rd the distribution of its advertisements platform. When reached, each turning point will certainly enable Treasures to get a brand-new part of the funds it increases in its pre-sale.

“We might have a community-based vote where unless you deliver a solid beta version, we will certainly not release the bitcoin that you have actually increased,” Ding added, guessing on exactly how Koinify could deal with criminals on its platform.

High-stakes launching.

Though both Ding and also Wang spoke in detail concerning exactly how their systems might interrupt or supplement traditional VC financing, they both acknowledged that the dangers will be high for both of their brands early on.

“The concerns are a lot higher,” Wang clarified, “because there are a lot less jobs. Yet, we’re trying to find out if companies could acquire additional worth from token sales that allow their company version to transform and also allow them to money their suggestions and also principles different from a VC model.”.

Ding took place to recommend that a few of the projects it is speaking with are seeking to increase funds both from VCs as well as from token sales, noting that there is a belief that a successful token sale can even boost VC interest.

Nevertheless, both pressured that, in the meantime, token sales offer designers with an enticing way to increase their userbase, something Ding anticipates will be a powerful reward that will certainly enable Koinify and also Melotic to grow.

“Every startup recognizes that the hardest component is no to 1,000 customers; 1,000 to 10,000 users. 10,000 users can really quickly come kind this sort of pre-sale. If you could obtain your first 10,000 users to crowdfund you, that’s probably an advantage to improve.”.



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How Digital Currency Could Transform Our Lives


Laura ShinLaura ShinContributor

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Susan Athey On How Digital Currency Could Transform Our Lives

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This article is the first installment in a three-part series on digital currencies, such as Bitcoin, Litecoin, Ripple and others. Part 2 covers the security advantages and disadvantages of cryptocurrencies, as well as the obstacles to their adoption, and Part 3 explains how MIT students, the poor and criminals will all benefit from Bitcoin.

Insofar as this is possible, Susan Athey is a rockstar economist.

At age 36, the Stanford Graduate School of Business professor became the first woman to receive the prestigious John Bates Clark Medal, awarded to an American economist under age 40 who has made the most significant contribution to economic thought and knowledge. The former MIT and Harvard professor has a whole host of other accolades to her name: member of the National Academy of Sciences, member of the American Academy of Arts and Sciences, plus many more. She also was the first chief economist hired at Microsoft MSFT +0.59%, as a consultant, and she now serves on the board of Ripple Labs, the creator of the Ripple protocol, a more bank-friendly alternative to Bitcoin.

Her work has focused on the cutting edge of technology. One theme in particular has been how complex platforms and marketplaces, such as internet search advertising and online advertising auctions, can be designed to make them work more efficiently — for instance, using big data to predict how advertisers would react if online ad prices were changed and how that would change the users’ experience of and interaction with ads.

She also has concentrated on how technology enables the creation of new platforms, and how that affects the industries involved — for instance, how the internet has affected news media. “This is a new frontier of statistics and econometrics — the statistics of economics: to try to combine tools that are geared toward large data sets with lots and lots of covariates and not a lot of structure with the ability to answer very structured questions,” she says.

Stanford business school professor Susan Athey (Peter Tenzer)

Because of her interest in the effect technology has on our lives, cryptocurrency immediately piqued her interest for its potential to disrupt financial services. I recently met with her at her office at Stanford GSB to talk about what digital currency is, its potential, the hurdles it faces and other related issues, including an exciting new project involving Bitcoin. Because of the length of our interview, I’ve separated them into individual stories in a series. In this first installment, we discuss what Bitcoin is and applications for digital currencies.

What is digital currency?

At its core, the new technology that’s been invented in the last few years is a way to maintain a ledger or spreadsheet that keeps track of who has what. So if there’s an entry in that spreadsheet that says a certain address has 10 bitcoins and you know that address and the password, you can authorize a new entry on the spreadsheet that moves that digital currency to someone else. So Bitcoin is just a big spreadsheet that keeps track of who owns what,  and what’s really innovative about it is that, first, it is secure. It uses decentralized maintenance of that spreadsheet, so there are copies all over the world. There’s not just one computer that can be hacked.

Second, the fact that it’s purely electronic means that if the spreadsheet says I have some bitcoins, and I have the key for those bitcoins, I can authorize a movement to someone else simply by entering my security code, which then immediately makes another entry on the spreadsheet and allows someone else to control this thing of value without any banks or companies or other types of middlemen. With just a password, I can almost instantly transfer something of value to someone else, purely digitally and without any promises from companies to honor it. It’s a piece of open-source software.

So digital currencies are a technological innovation for moving value digitally and securely and quickly, just like the internet was a fundamental technology for moving information somewhat securely and quickly.

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How might digital currencies change our everyday lives?

Like the internet, digital currency is a technology that enables lots of applications to sit on top of it. One thing that’s hard to do today is to move money internationally, especially quickly. If you useWestern Union WU -0.05%, there’s a large fee, and if you want to move money between two banks internationally, it costs you $60 or $70. For regular consumers doing small transactions, it’s often too expensive. So digital money makes it easy to move money at the speed of information rather than a week or longer.

Digital currency also makes it easy for anybody to move money between one person to another. There are applications today that allow you to do that, like Venmo, but there are fees to getting money in and out of applications, and these apps are not that broadly adopted. So I expect that either people will directly use applications built on top of digital currency to move money, or that competition from digital currency might induce banks and other financial institutions to lower their fees. There are actually a lot of countries in the world, where, if two consumers want to send money to one another, that money becomes immediately available to the receiver, and there’s no fee. But that’s not the case in the United States.

Where is this available?

Europe, Australia. Person-to-person bank transfers are free and instant in a lot of the world. So when you talk about the benefits of digital currencies to people in other parts of the world, they are surprised that they are not available to us already in the U.S.

Why not?

The backend system that banks use to send money to one another, ACH, is an old system coordinated by the federal government. It takes time for the banks to actually receive the money. There’s a delay built in. The cost the banks are charged is very low but the banks charge the fees to the consumers and they don’t always make the money available to consumers as soon as they receive it.

The banks still have a delay in Europe but they just go ahead and make the money available to consumers even before the money moves between the banks once they know that it’s coming. You might wonder, can’t Chase and Bank of America work something out between them? Can’t Bank of America check you have the money in Chase and Chase says they’re sending it and then make the money available to you? They could but they don’t.

Digital currency, by its very nature, makes that very easy, so if the banks don’t provide those services to us, we expect that services built on top of digital currency will provide those services, and that would hasten the arrival of those services. It’s just basic nuts and bolts competition.

Do you see it already happening?

What brings down prices is competition. Currently, all the banks charge these fees and impose these delays, so competition doesn’t seem to be working to bring the price down to cost. Competition from outside services might have that effect, but so far it’s been too small. Digital currencies haven’t been large enough to put price pressure on the banks, and the banks are making a lot of money from those fees. Fees are charged to consumers and businesses — even large companies. These fees are problematic for the efficiency of society because they make certain kinds of transactions cost-prohibitive or less productive.

It might be easier to just move money electronically but since you can’t do it instantly, instead you use cash. There might be small transactions, like in-app purchases or charges in an app store, where the credit card fee might be very large in proportion to the value of the transaction, so those just get priced out. If a newspaper wanted to do micropayment for content, then the credit card charges might be cost-prohibitive because there’s a fixed fee for every credit card transaction, so we see lots of types of transactions not possible in a system when you have to pay credit card fees or bank fees to process the transaction. What digital currencies do is remove a lot of these minimum fees and make it easier and cheaper to move small amounts of money.

What are some other ways digital currency will change our lives?

We’ve talked about sending money internationally, which could include person-to-person payments and remittances. Formal and informal remittances are maybe $1 trillion, so that’s a big application. We’ve talked about digital currency putting pressure on person-to-person transfers within a country, which today could happen quickly but don’t. And we’ve talked about a payment system, so a merchant could accept bitcoins for payment, bypassing applications.  So that’s four applications we’ve talked about.

People can also use the digital currency technology to create more complex contracts or instruments. For example, today people use escrow accounts when buying a house: You put money into escrow, but it only goes to the seller when the seller hands the title to the property to you. We use escrow accounts when we have trust issues around a big important transaction and we want the money to move at the exact same time the property moves.

But we only use that for big transactions because escrow is expensive. With digital money, you can write costless computer programs that create escrow services,  so I can put digital currency in an escrow account and have a computer program only release that money to a seller when certain conditions are met. You can call it programmable money: It’s money that we can write computer programs on, and these computer programs check when certain conditions are met. In situation one, the money gets sent to one person. In situation two, the money gets sent back to the original holder of the money. In situation three, it might go to someone else. We can write contracts that are enforced by a computer, instead of a relying on an escrow agent and paper signing and these horribly old-fashioned things. We can use escrow for goods of much smaller value and without interacting physically across borders.

People are also investigating using programmable money for financial contracts, like for instance, financial contracts in derivatives which involve multiple parties. You might put some money in a financial contract which will pay out according to what happens to certain stock prices. So you could have a computer program that took in as an input stock prices from the Bloomberg terminal feed and then, depending on what happens to certain stocks or certain combinations of stocks, certain individuals get paid back.

Like a buy or sell order?

Yes, but you could set up more complex derivatives that might pay out to certain people, as a complicated function of what happens to multiple stock prices. Derivatives are financial instruments that pay investors according to complicated functions of what happens to stock prices. For example, it might be a lot if the stock falls by more than a certain percentage, or not at all if it goes up.

People have proposed to create more complicated derivatives where any individual could make up a contract, and people all over the world could invest in them and the people would know a computer program would follow the rules of who gets paid when. So they could be complex multi-person derivatives, financial instruments, and instead of trusting an individual or an institution to make the payments according to the rules, the computer program would spit out the money to the right people.

A little more abstractly, smart contracts with digital money allow you to write a set of rules that tell you in what circumstances different people get paid. These could be very complicated contracts that could depend on lots and lots of prices and lots and lots of information and could involve people who don’t know each other or trust each other and live in different countries all over the world. All these people could read the rules of the transaction, participate and trust that the computer program would carry out the rules. So as long as everybody put their money in, it could be held in escrow by this computer program and they would know that it would get spit out according to the rules.

So it’s a substitute for people you paid like escrow agents and title companies or services that would be provided by a financial institution, where the financial institution would create an instrument, but you’d have to trust them to follow the rules and so only certain trusted institutions could convince people to give them money and trust they would give it out according to the instructions. Now this can all be done in a computerized way.

People are very excited about this possibility, but part of the reason this sounds abstract is that we haven’t seen a really productive use case. It’s just a possibility now. This is just like beginning of the internet. When I was in college, I’d say, wow, you could send information all over the world. I can write a message to my boyfriend. People would say, you’re sending email to your boyfriend? Why don’t you just call him?  People couldn’t understand why it would be so much more useful to email information than use traditional methods. In the early days of the Internet, people would say, yes, I can send messages through text and files, but they couldn’t envision YouTube or Twitter or Google. The applications that were going to come later weren’t completely clear.

Digital money is similar. The first thing you do with technology is do what you were already doing better and faster, like sending money internationally, sending money to our friends, paying for things on the Internet. Many people believe that the best is yet to come, and new things are possible, but we’re not sure which of those possibilities have the most value. We have this new technology that allows money to be allocated with computer programs according to specified rules. We haven’t quite figured out what to do with it, but it seems like a powerful technology.



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Bitcoin Volatility: Are Alt Coins Taming the Beast?

bitmapLooking at charts showing the price of bitcoin over time is like looking at a child’s crude attempt to draw the world’s craziest roller-coaster. It has certainly been a wild ride for the brave few early adopters with the courage to hold a significant portion of their money in btc.

Since its earliest days, predicting the price of bitcoin next week, let alone next month or year, has largely been a fool’s game. Whilst 10% plus swings in a day would be exceptional events for any other currency or asset, it’s virtually the norm in the cryptocurrency world, and much larger fluctuations have not exactly been uncommon. This tendency for the price to change radically in a short space of time is known in financial circles as ‘volatility’. Something with a very stable price which doesn’t change much is said to have low volatility, whereas something like bitcoin is said to have high volatility.

Although day traders may revel in high volatility, as these price swings are where they make their money, it’s generally not seen as a good thing for everyone else. Personally, I have always thought that this high volatility is one of the main barriers to mass adoption of bitcoin by the general public. The average man or woman on the street simply isn’t going to want to convert any significant part of their wages into bitcoin if there is such a high risk that their value could so easily drop dramatically overnight. With rent and bills to pay, kids to feed and clothe, and so little extra cash, most people simply can’t take a risk like that with their money, even if they may want to. Of course there are services which aim to combat this by allowing people to ‘lock in’ a certain fiat value of bitcoin in their wallet, having a balance of say $ 400 worth of BTC instead of a balance of 1 BTC. But although these services may help more people to use bitcoin, they do little to increase the number of people who own bitcoin and in any case they take away some of the natural benefits of cryptocurrency as you have to trust your coins to a centralized financial service provider and, of course, they stop you benefiting from any increases in price over time, just the same as they ameliorate any risk from any sudden falls.

Volatility is also a problem for most businesses which may want to work with bitcoin. With fixed costs in fiat and a volatile bitcoin price most businesses must avoid holding any coins. As a result of this, retailers, for example, must sell their coins instantly as soon as their customers pay with them – which again reduces the number of people holding coins. Some commentators have even speculated that this sell-off by retailers has been partly responsible for this year’s price decline.

Fortunately, it does seem that volatility is decreasing over time. For example, this chart, which shows volatility calculated using a 30-day rolling window, appears to show a long term down trend since 2010:

There are some good reasons to think that this will continue. One reason may be that as more time passes people have a clearer idea of what they think each coin should be worth, and are more confident in their valuation. In other words, as we get more and more information about the use of bitcoin, uncertainty gradually decreases, taking volatility with it. But this can only take us so far. Ultimately it is unlikely that the price will be as stable as the fiat currencies of today, because there is nothing behind the price of bitcoin – as people have often said, there are no fundamentals ‘backing’ the price.

The answer to the question of what a bitcoin is worth is the same as the question of what a dollar is worth (if we consider it to be a currency, to be used for buying things). The answer is, simply, it is worth whatever you can buy with it. If you can buy a loaf of bread for a dollar then the value of a dollar = 1 loaf of bread. Of course dollars aren’t valued exclusively in bread – the value is equal to anything which can be bought for a dollar. This may sound like I’m pointlessly stating the obvious, but this is a major part of the inertia behind the value of any currency which can be freely traded. That’s because if the value of a dollar changes against other currencies, without there being a corresponding change in the fundamentals of the US econonomy and how it interacts with the global economy, then everything priced in dollars is effectively ‘the wrong price’. If the dollar is too cheap then, unless everyone re-prices everything they sell, American products are all too cheap, and the world buys dollars to buy the products, but if the dollar is too expensive then people stop paying for American products and services so demand for the dollar declines and the price must fall. What that means is that the value of the dollar should only fluctuate with the fundamentals of the US economy, and any additional volatility coming from traders should be dampened by underlying economic forces. This is an oversimplification of course, because politicians and bankers routinely engage in practices which distort the markets (google ‘petrodollar’ for the most infamous example), but the general principle is sound and this remains a significant part of the way foreign currency markets work.

These powerful forces, which dampen a currency’s volatility, can only operate if products or services are actually priced in that currency, otherwise nothing could ever end up being ‘the wrong price’. One big reason why bitcoin is so volatile compared to, say, the dollar, or the euro, is therefore the fact that very few things are actually priced in dollars. This is becomes a vicious circle: businesses can’t price their products in BTC because of the volatility, so they price them in dollars and simply use Bitcoin as a payment solution, which in turn contributes to that same volatility.

In many ways this is a real shame, because the use of national fiat currencies by internationalized internet businesses with customers all over the world often doesn’t make much sense. Our use of these national currencies is a very real drag on the growth of successful businesses and digital currency could well be the answer. One of the great advantages of Bitcoin is that it is fundamentally an international currency, independent of national government – the Esperanto of money. The use of Bitcoin for international pricing could, therefore, one day be one of its biggest growth drivers. But for that to happen, the vicious circle needs to be broken, and volatility needs to give way to steady price growth.

Although very few things are priced in bitcoin at the moment (even the Bitcoin Foundation prices its memberships in USD) there are some things. In particular other crypto currencies, or ‘alt coins’, and tokens issued as part of crowd-funding initiatives. In many cases these things can only be bought with BTC, and as a result an increase or decrease in price is measured in BTC.

Alt coins don’t always have the best reputation amongst Bitcoin purists. They may be seen as reducing Bitcoin’s network effect before it has even had a chance to hit the big time by competing unnecessarily. They harbour many scams and often fail, leaving their supporters out of pocket and perhaps disillusioned with the whole idea of cryptocurrency. But it may be that they are actually providing Bitcoin with the most valuable service possible: they may be the beginning of a newly emerging economy priced in BTC.

Despite a slow down in the number of new alt coins being launched, this is still a growth area, too. With projects springing up every day to introduce novel uses of the blockchain using tokens that are sold for bitcoin, there is an ever growing number of things whose price or value must change whenever the bitcoin price changes if they are to avoind being ‘the wrong price’. For example, Patrick Byrne’s Medici is seeking to build a legally compliant stock market on top of the Bitcoin protocol using the Counterparty protocol (which itself hasn’t always been popular with Bitcoiners). In the future it may not only be new coins and small software projects which are priced in BTC, but also large international businesses such as Overstock. And what could be more natural than a company doing business with Bitcoin, whose success is at least partially linked to the success of Bitcoin, being valued in bitcoin?

Alt coins, then, may just be the foundation and beginning of a new economy in which Bitcoin is not just a payment technology, but a transnational unit of value – the first truly international currency.


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BitcoinEXPO 2015 in London

BitcoinEXPO

BitcoinEXPO 2015 in London to Focus on Startups and Investors

 

by Allen Scott 

BitcoinEXPO 2015 London will take place in the UK capital on January 24-25, 2015.

After the previous successes of the Central European Bitcoin Expo Vienna, the BitcoinExpo 2014 Shanghai, and the Bitcoin 2 Business Congress Brussels, the CryptoEvents team is now bringing you BitcoinExpo London 2015.

“The year of 2015 will begin in a grand style in London!”

—CryptoEvents team

CoinTelegraph is also proud to announce that it will be the official media sponsor of BitcoinEXPO 2015.

BitcoinExpo London

The conference will take place in the capital of the United Kingdom, London, on January 24–25, 2015.

The event will serve as a launch pad for speeches, debates, networking and exhibitions, as well as the first ever startups show.

Commenting on his experience at previous events, Bastian Brand of the Pathfinder Cryptocurrency Fund remarked:

“The organizers did a very good job to bring together the most important Bitcoin experts and entrepreneurs from Continental Europe.”

The BitcoinExpo 2015 will be particularly focused on startups and new technologies, which makes it the perfect venue not just for crypto users, professionals, startups, and investors, but also for anyone else who wants to discover and learn about the burgeoning Bitcoin economy and the rapidly expanding world of cryptocurrency.

The speakers confirmed so far include:

Startups at any stage of development are welcome, as the event will  offer an opportunity to showcase the ideas behind new startup companies, as well as to discuss and find potential opportunities for your business to get the funding you need.

Speakers of BitcoinEXPO 2015 London

Tickets

The £99 startup ticket will give you the opportunity to present your project to investors during the BitcoinExpo 2015’s Startup Show. Venture capitalists, investors, entrepreneurs, and big businesses are also encouraged to attend.

It is free to attend the conference. Early-bird registration is required, which will grant you full access to the exhibitors’ floor. You can also buy an attendee VIP ticket, which will guarantee you the best seats in the house. The price for a one-day VIP ticket is £109; a two-day ticket costs £129.

All attendees can register for free. Purchase tickets if you are a startup or investor here.

Tickets can be purchased with either Bitcoin (via BitPay) or credit card.

Don’t miss your chance to be a part of this conference. See you all in London!

For more information, go to: www.bitcoinexpo2015.com and www.cryptoevents.net


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