Monday, November 28, 2011

Bitcoin: The Best Investment in 2012

Let's look at some of the factors at play here:

1) The hacking is over with. Between Mt.Gox, Tradehill, Intersango, Cavirtex, and the other reputable exchanges, we've seen a reliable streak. Amateur night is done.

2) There are reliable ways to store your Bitcoins. With the exchanges mentioned above, e-wallets like Stongcoin, and secure wallets like Electrum and the Satoshi client, securing your investment is no longer a crapshoot. It's incredible to think how far we've come.

Sunday, November 27, 2011

Bitcoin Discussed Live on Fox Business Network

... and it was actually positive coverage!



Note: the Howard Johnson franchise owner referred to in this video no longer accepts Bitcoin.

Europeans About to Lose Access to Their Bank Accounts

The Telegraph reports:

"There are also growing fears for Italy, whose new government was forced to pay record interest rates on new bonds issued yesterday. The yield on new six-month loans was 6.5 per cent, nearly double last month’s rate. And the yield on outstanding two-year loans was 7.8 per cent, well above the level considered unsustainable."
"If eurozone governments defaulted on their debts, the European banks that hold many of their bonds would risk collapse."
"Some analysts say the shock waves of such an event would risk the collapse of the entire financial system, leaving banks unable to return money to retail depositors and destroying companies dependent on bank credit."

This is why you're seeing the US dollar launch into the stratosphere, even though the US government has its own massive debt problems to sort out.

Anything is safer than holding Euros right now, even Bitcoins.

Is Bitcoin's Liquidity Improving?

Today, a $50,000 purchase of Bitcoins on Mt.Gox would move the price from $2.46 to $2.60, a 5.7% increase. A sale of $50,000 worth of Bitcoins would take the price down to $2.30, or a 6.5% drop.


On October 16th, a $50,000 purchase would have moved the price from $3.40 to $3.92, a 15.3% increase. A sale of $50,000 worth of Bitcoins would have taken the price down to $3.03, or a 10.9% drop.


Unfortunately this is all the data I have, but it definitely seems, from the type of trading action we've been seeing, that it's taking a lot more capital to move Bitcoin's price in either direction. Are we starting to see the realization of the second Wagner Criterion?

Bitcoin's Client is Scaring People Away

Alright folks, something needs to be done before we see anymore of this:


John Beatty is the co-founder of Clover and is obviously trying out the competition. At the moment, he's not impressed.

Bitcoin.org should point to a more user-friendly client, like MultiBit or Electrum, until the blockchain download requirement is removed from the Satoshi client. The Satoshi client should be recommended to "advanced" users only.

Twitter, Zynga, and Foursquare Investor is Considering Bitcoin

Fred Wilson of Union Square Ventures is very interested in Bitcoin. From today's blog entry:

"So it seems to me and my colleagues at USV that an alternative currency with roots in peer to peer networks and based on an algorithm that is transparent to everyone is an idea whose time has come."
"I'm confident we'll see the emergence of currencies that are not controlled by nation states in my lifetime. Whether that is a good thing or not remains to be seen. I think it is, but there are significant ramifications that will result from the decoupling of currencies from governments. And one of them is an interesting investment opportunity that we hope to participate in."

Fred Wilson is not just another blogger. He is the co-founder of Union Square Ventures, a firm with investments in Twitter, Tumblr, Foursquare, Meetup, and Zynga, among others.

His blog has 280,000 monthly readers and an Alexa traffic rank of 6060 in the US. Needless to say, this is going to get Bitcoin a lot of attention.

Saturday, November 26, 2011

Live from the European Bitcoin Conference

Watch an unofficial stream, here.

Rick Falkvinge: Bitcoin will not likely reach mass adoption until around 2019, based on the adoption rates of other technologies.

Max Keiser: We will leverage our media space with the goal of adding one million new Bitcoin users next year.

Bitcoins for Christmas Partners with PayMyAddress.com - Introducing the Bitcoin Gift Set

Users of Bitcoins for Christmas now have the option to send Bitcoins as an elegant gift set:


Roger Ver's Fantastic Bitcoin Interview

Osmosis brings us this story:

If you haven't yet heard the interview, you should definitely have a listen:



Roger Ver is the owner of Memory Dealers.

Tuesday, November 22, 2011

StrongCoin Developer Demonstrates Another Killer App for Bitcoin

After thousands of years, our financial system has finally come full circle.

Imagine being able to sell any digital good you own for any amount of money, no matter how small, in a way that was never before possible with the Internet.

The creator of StrongCoin has developed just that: a micro-payment system that will let you sell photos, artwork, music, code, documents, books, or anything else that exists in a digital form. The Internet finally has its lemonade stand.

Check out a demonstration, right here.

Suddenly, we can all be merchants and entrepreneurs that do not rise and fall at the whim of a payment processor. We will not be subject to chargebacks, fees, withheld earnings, or any other of the dozens of hurdles that Internet businesses normally face.

It's so simple, and so important.

Feedzebirds.com Brings Bitcoin Micro Advertising to Twitter

Yet another app for Bitcoin has just been launched that takes advantage of a Bitcoin property that other payment processors just can't compete with: the ability to process micro-payments.

Feedzebirds pays Twitter account holders for re-tweeting advertisements, with payments as a function of the user's follower count.

As per usual with Bitcoin, no personal information is required; all you need is a Twitter account and a Bitcoin payout address. You also have the option of providing an email address to enable payouts to your BTCinch account.

Once you're signed up, all you need to do is look for tweets with the tag #FeedZeBirds and re-tweet those tweets to get paid!

If you're new to Bitcoin, but not new to Twitter, this is a great way to start earning Bitcoins.

First "Real Money" Poker Site is Accepting Bitcoins

Switchpoker.com is now accepting Bitcoin as a deposit method, in addition to the usual deposit methods.

Switchpoker does not accept American players and asks for your full contact information before you can deposit, which might catch the average Bitcoin poker player a little off-guard. With Bitcoin, however, your deposit will validate regardless of the validity of your contact info. Since I'm not American, I can't readily verify if they're blocking Americans by IP address or simply using the honor system, though I suspect it would be the former.

At the time of this post, there were 14 real-money players online. We'll have to see how many players are online in the evenings and on the weekends.

All games are denominated in Euros.

As a test, I deposited 20 Euros to the site, using a VISA card via Moneybookers. I was then given the option of converting my Euro balance into a Bitcoin balance. The rate offered at the time was 11.09 BTC for 20 Euro (1.80 Euro/BTC). The Mt.Gox market rate is currently 1.77 Euro/BTC, which means Switchpoker is actually a very decent way of buying Bitcoins by credit card. I'll be curious to see if my credit card, however, has charged me a cash advance fee for depositing to Moneybookers.

Edit: I had mentioned that Bitcoin deposits and withdrawals had to go through Bitcoin247. Apparently that is not the case and you can deposit and withdraw directly from/to your own wallet.

Switchpoker appears to be getting around potential chargebacks by using Moneybookers' "skrill," which has a merchant-friendly chargeback policy.

Although Switchpoker is a tiny site, this event is very important for Bitcoin, as it's the first time a gambling site is accepting normal payment methods and Bitcoin side-by-side.

Saturday, November 19, 2011

Pure Monetary Freedom

It's a pleasant Sunday morning; the sun is shining through the window and you're in your pajamas, holding a warm mug of coffee and browsing the 'net on your laptop.

Up in the corner of your browser is a little box showing your Bitcoin balance.

Your first stop is the usual Facebook, and it's your friend's birthday. The latest rage is an app called Facebook Bit-Gifts, so you click the Bitcoin link associated with a gift and buy your friend a funny little icon for the Bitcoin equivalent of a quarter. Your balance immediately updates.

Bitcoins, however, are not isolated to a specific site; they're the equivalent of cash, and they're accepted everywhere. Next you check out your favourite DJ's website and see he's released a new song which you can listen to for a donation. The Bitcoin equivalent of 50 cents later, and you're grooving to some great new beats.

You continue browsing away and suddenly you see a message pop up at the top right of your screen, "yup, St.Louis won, here's your money," and your balance increases by a couple of Bitcoins.

Luckily, you have a pretty trendy Internet provider that lets you pay your bill with Bitcoin. You double click our balance and the client pops up. You click the "Bills Due" button and see that you owe 4.2561 BTC for last month's bill; you click "pay" and your balance updates.

Hmm, what to do for lunch? That coffee shop down the street sells a really great panini sandwich and dessert special. You surf over to their website, bring up their menu, and select the items you want. You then select the time you plan on showing up, enter your first name and click "pay in Bitcoin." Your balance immediately updates and you're happy to know that when you walk through the door of the coffee shop, your order will be sitting there ready for you.

No ATMs, no credit cards, no addresses, no clunky online banking, no cash or loose change. The technology is already here. Is there anyone among you who doesn't see this being the way of the future? How could it not be?

Thursday, November 17, 2011

Former Deputy Editor of the Wall Street Journal: Bitcoins are an Option if US Monetary System Fails

Comments from a panel at the Cato Institute’s 29th Annual Monetary Conference:

George Melloan
Former Deputy Editor, Wall Street Journal

- Jokes about what a nickel could buy during the (big Baby Ruth bar) Depression and now (a jellybean).

- Talks about post-WWII monetary policy in Britain, and how British Socialism led them astray. War in Vietnam did much the same thing in the US, leading Nixon to end Bretton Woods.

- Dollar’s primacy increasingly questioned.

- Inflation coming as the Fed creates credit to fund the US government.

- Doubts that multilateral currencies like the SDRs of the IMF would work. The Euro proves that.

- The US needs monetary reform, but we might need to fail before that comes. Gold, bitcoins, scrips, barter if things break down. Fiat currencies are liquid, barter is inefficient.

- If the US dollar goes, a lot else will go down as well.

Flooz | Beenz | Bitcoin

Flooz Beenz Bitcoin
Owner Flooz.com Beenz.com No One
Launched Feb 1999 1998 Jan 2009
Bankrupt Aug 2001 2001 Not Possible
Lifespan 30 Months 36 Months Ongoing
Venture Captial $35-$50 Million $100 Million $0

Tuesday, November 15, 2011

Proposed Financial Protocol Standards Could Legitimize Virtual Currencies

Payward Inc. Submits Draft Proposals to IETF for Internet-Based Financial Protocols


Payward Inc, which you might remember as the group behind Ogrr.com, has submitted two draft proposals to the IETF which, if implemented, would form the framework for the legitimization of virtual currencies like Bitcoin, and mark the first steps toward the elimination of the archaic financial framework upon which we currently depend.

Monday, November 14, 2011

The "Free to Pay" Campaign

I was recently heavily inspired by two articles that I read online:

(1) The Privatization of Copyright Lawmaking;

(2) Rick Falkvinge's response to the above article entitled, "Perhaps The Copyright Industry Deserves Some Credit For Pointing Out Our Single Points Of Failure."

If you have not yet read them, I strongly encourage you to do so. Here are some choice quotes from (1):

"Increasingly, however, copyright law is being privatized. Its meaning and application are determined not by governmental actors but by private parties, and in particular by deep-pocketed copyright owners. Increasingly, the balance between private rights and public interests is set by private lawmaking."

"The Stop Online Piracy Act (SOPA), the companion bill to the Senate’s PROTECT IP Act, would further privatize adjudication and punishment. Title I of that law (dubbed the E-PARASITE Act) creates a “market-based system to protect U.S. customers and prevent U.S. funding of sites dedicated to theft of U.S. property.” It achieves this by empowering copyright owners who have a “good faith belief” that they are being “harmed by the activities” of a website to send a notice to the site’s payment providers (e.g. PayPal) and Internet advertisers to end business with the allegedly offending site."

Sunday, November 13, 2011

Video Roundup - November 2011

Sibos TV - Future of Money - Donald Norman, Co-Founder of Bitcoin Consultancy, briefly talks about taking the oppressive controls away from the current players in finance.

Google Test Automation Conference 2011 (GTAC 2011) - During the talk on redefining security vulnerabilities, the speaker Hugh Thomas was asked for his thoughts on bitcoin. "It is a very interesting egalitarian way to disperse the coins. From a security perspective, I think we are going to need something like [bitcoin]."

Future Vision Of Banking - "Bitcoin is a decentralized alternative currency that is making huge progress. It is a completely competing currency."

Bitcoin, Summer Economics Mises Institute Seminar - A 23 minute presentation explaning bitcoin fundamentals from the Mises Institute summer economics seminar.

KOLD digital dollars, News 13, Tucson, AZ - A local news station does some basic reporting informing its viewers about bitcoin.

Bitcoin Volume Traded Hits All-Time Record

Over 250,000 BTC have now been traded on Mt.Gox within the last 24 hours, an all-time record. The scary part? The day just started.

$125,000 Waiting to Buy Bitcoins

Regardless of these price swings, there is definitely a lot of money sitting in Mt.Gox's accounts, waiting to pick up some Bitcoins.


Wait, make that $250,000:

45000 BTC Sold!

I can't imagine this was done on a whim. Will we discover the motivation behind this massive sale?


Edit: Probably 35,000 sold and 10,000 bought within that short period of time.

Bitcoin Talk Live from Penn State - TedXPSU

Click here to watch the broadcast.

Edit: it's over.

Saturday, November 12, 2011

Bitcoins for Christmas - Ongoing 5 Bitcoin Giveaway

Since today's scavenger hunt was such a success, I've decided to start an ongoing contest that will last from now until Christmas.

Below the ad on the right for Bitcoins for Christmas, I will give hints to the contest answer. Post your guesses in the comment section of this post and I will award five Bitcoins to the first correct answer!

Be sure to pay attention, because the old hint will disappear when a new hint is posted.

Every time the prize is won, I will start over with a new hint and five more Bitcoins, and I will keep going until Christmas!

Anonymous comments will not count! Only one guess allowed, per person, for each hint given!

Good luck!

"What Kind of Bitcoiner Are You?" Survey Results

After a week of voting, the results are in:


There were two things that I found interesting about the survey results:

1) The fact that there are more miners reading The Bitcoin Trader than any other segment of the community. We are still in the thick of the Distribution phase of Bitcoin's evolution, so that is definitely not shocking. I wouldn't be surprised if, at this stage, most Bitcoiners are miners, overall.

2) How few "non-Bitcoiners" are reading The Bitcoin Trader. I figured I would be drawing in quite a few newbies, but apparently not. Perhaps we should write some articles that are geared toward newbies, and perhaps I should work on our Google ranking.

Please vote in the next poll, "Which European Bitcoin Conference Speaker Are You Most Excited About?" The European Bitcoin Conference will be held in Prague from the 25th to the 27th of November.

The Bitcoin Trader Welcomes Josh Strike!

Josh Strike will be joining our writing team as of today. He will not be a regular contributor but will occasionally grace us with his presence.

Josh is the founder and brains behind Strike Sapphire Casino, but he is as much a poet as he is a programmer. His unconventional youth and varied life experience have shaped him into one interesting dude. I encourage you to read his blog over at CasinoMeister where he's been narrating his ongoing struggle to dance with the best online casinos in the industry.

Josh will be bringing his balanced point-of-view to The Bitcoin Trader, which readers will find refreshing in the face of my often Bitcoin-fanboyish writing (I admit it). He will no doubt instigate some interestng discussion on Bitcoin's future and how we get there.

Welcome, Josh!

The Bitcoin Trader's Bitcoin Scavenger Hunt!

The Scavenger Hunt is over. Thank you to all who participated!


Breaking News!

There are 10 Bitcoins hidden somewhere on the Internet.

You're going to have to locate and decipher several clues to track them down.

As I begin to lose my patience, hints will be posted right here, so watch this space!

There are no strings attached. Good luck!

Friday, November 11, 2011

Microsoft Researchers Suggest Method to Improve Bitcoin Transaction Propagation

The beauty of open-source code is that everyone can have input into its improvement. In our case, even Microsoft Research staff are sharing their two Bitcoins. From the paper's abstract:
"Bitcoin, which has been getting a large amount of public attention over the last year, represents a radical new approach to monetary systems which has appeared in policy discussions and in the popular press. Its cryptographic fundamentals have largely held up even as its usage has become increasingly widespread.

We find, however, that it exhibits a fundamental problem of a different nature, based on how its incentives are structured. We propose a modification to the protocol that can fix this problem.

Bitcoin relies on a peer-to-peer network to track transactions that are performed with the currency. For this purpose, every transaction a node learns about should be transmitted to its neighbors in the network. As the protocol is currently defined and implemented, it does not provide an incentive for nodes to broadcast transactions they are aware of. In fact, it provides a strong incentive not to do so. Our solution is to augment the protocol with a scheme that rewards information propagation."
The key issue is that nodes on the network have an incentive to keep transaction information to themselves to improve their odds of earning the transaction fee. These researchers propose a system to fix the incentive structure.

Edit: here is a simplified summary of the paper.

Bitcoin Quote of The Day

"When I buy a coffee using the anonymous payment system called ... cash, nobody thinks I am up to no good. Why should paying using Bitcoin be seen any differently?"
- koldhardcash

Foreign Transaction Fees from the Comfort of Your Own Home

Image from Finland for Thought

This latest breach of trust is brought to you by Citibank. From The Consumerist:
"...when I reviewed my credit card bill I noticed a foreign transaction fee of $11, which stood out because I haven't left the country for about a year. When I called them, they said it was for two separate charges: a design contest I'd paid for on 99 Designs, and a domain I'd purchased from Yahoo, which outsources its domain [management] to a firm in Australia. I made both purchases in US dollars, and on 99 Designs nothing even indicated that it's foreign-based until I dug around on the website."
The charges occurred because Citibank thinks doing business online with a foreign company is the same as doing it face-to-face, regardless of the currency used or whether the website is up front about the location of either their or their payment processor's offices. What's a "foreign transaction fee" anyway? Isn't a currency exchange fee enough?

Also, since when did Citibank start running ads for Bitcoin? Because, basically, that's what this is...

The Bitcoin Trader Welcomes "Osmosis!"

Over the last few months, I've had the privilege of getting to know quite a few members of the Bitcoin community. One individual that I've enjoyed discussing Bitcoin with is Osmosis, who you might know as the developer of stuffexists.com. I asked him if he would like to write for The Bitcoin Trader and he thought it would be a great idea. As a pillar of the community and a great advocate for Bitcoin, I expect he'll be providing us with some interesting pieces.

I have added a separate Tip Jar for Osmosis, on the right-hand side. If you enjoy his writing, I encourage you to let him know by leaving a tip.

Welcome, Osmosis!

Thursday, November 10, 2011

Five More Things You Could Do with Bitcoin That You Otherwise Couldn't

  1. Trial shareware through a deposit: send a deposit to a software developer to download their shareware. After the evaluation time elapses, be given an option to release the deposit or cancel the service and have the money returned. I don't know about you, but I would be far more likely to click "buy" to make a payment than to log in to a website, enter my home address and credit card info, pay a transaction fee, and wait for a registration key (or even use PayPal).

  2. Contribute to a project, but only pay after the project has been fully funded: imagine a scenario where someone is trying to raise money to produce a movie and they're soliciting contributions. Build a Bitcoin contract such that the funds aren't released until the total amount has been raised; otherwise, your money is returned to you. No lawyers, no paperwork, no fees.

  3. Create a dominance assurance contract: if the contact fails because not enough people have contributed after a certain period of time, those who contributed have their money returned and are paid an additional fee. This makes taking part to be always the correct strategy.

  4. Integrate a mediator into a transaction: should the two sides not agree that the contract was fulfilled (i.e., only one side of the contract was signed), the mediator can sign the contract to release payment to the side they agree with.

  5. Tie an external factor to a transaction: when the external factor evaluates true, payment is released. Example: pull a box score from a sports website. If a certain team has scored more goals and the game is over, the contract will release payment to the person who bet on the correct team.

Most of these ideas were pulled from https://en.bitcoin.it/wiki/Contracts. Have a look for yourself and see what else you can come up with!

Okpay Launching Bitcoin Merchant Services Next Week

These guys move quick and are obviously serious about Bitcoin. Thanks to our friend Osmosis from stuffexists.com for poking them for the info!

Wednesday, November 9, 2011

Will Mt.Gox Suddenly Become the Number Two Exchange?

The announcement from Okpay is really interesting for a number of reasons.

At the moment, Okpay is not paying very much for your Bitcoins; $2.63 USD when you can sell them on Mt.Gox for $2.95.

Okpay, however, grew its userbase to 300,000 in one year, and that was the number reported six months ago. How many accounts are there now? 500,000? By contrast, Mt.Gox had 38,000 accounts back in June. We're now staring down the barrel of a Bitcoin exchanging businesss that is over ten times the size of Mt.Gox. The only difference is, they don't sell Bitcoins; they only buy them.

What if, next month, Okpay announces that they sell Bitcoins as well? It would make good business sense, because they would avoid the fees associated with selling Bitcoins on an exchange, converting the currency, and transferring the money back to their accounts. They would also potentially become the number one Bitcoin exchange.

What would be the effect on the Bitcoin economy?

Let's say I was a regular Okpay user that carried a balance on the site, and I came across a Bitcoin merchant or service that appealed to me, like, I don't know, a casino or virtual goods marketplace and I wanted to do business with them. I'd buy Bitcoins, of course.

So, in theory, if Okpay were to sell Bitcoins, there would suddenly be tens of millions of dollars, i.e., a sum greater than the current value of the Bitcoin economy (I'm guessing here - assuming $20+/account on average), sitting in an exchange with the potential to be converted into Bitcoins. The number of potential Bitcoin users would also jump dramatically, by hundreds of thousands. At that moment, Mt.Gox would seriously find itself threatened.

Instead of money flowing towards Bitcoins, Bitcoins might now end up flowing towards the money. This would be the small-time equivalent of a bank offering Bitcoins to its customers, which would immediately remove all of the hurdles that people currently have to deal with to get their hands on Bitcoins.

All you investors and traders out there, I recommend you keep an eye on this site; it could represent the tipping point for Bitcoin.

PayPal Competitor Okpay.com Now Accepts Bitcoin


Online payment processor Okpay.com has today announced that it is accepting Bitcoin deposits.

The site came online in March 2010 and has been increasing in popularity ever since. Alexa shows a very high ranking in Russia of 1,268, 19,411 in the United States (better than Diaspora's 19,825), and 15,516 globally.

The site reported 300,000 open accounts in March of this year.

This is the first serious commercial acknowledgement of Bitcoin's legitimacy as an electronic currency, and will provide Bitcoin users with dozens of additional ways to convert their Bitcoins into cash.

Bitcoin Makes it Easier

B - Bitcoin Advocate
Z - Bitcoin Hater

B: Hey Z, have you heard of Bitcoin? It's going to change the world!

Z: Yes B, I've heard of Bitcoin, and I read that it's only useful for buying drugs.

B: But people buy drugs with cash all the time, yet no one says anything bad about cash.

Z: But Bitcoin makes it even easier to buy drugs.

B: What?

Z: Bitcoin makes it easier!

B: What?!

Z: I said Bitcoin makes it easier!!!

B: That's right! Bitcoin makes it easier... to buy anything!

Tuesday, November 8, 2011

The State of the Bitcoin Union

People of Bitcoin:
It has now been two years, ten months, and four days since the genesis block was established.

In this short period of time, the system has grown from 50 Bitcoins into an economy worth an equivalent of 23 million US dollars. Bitcoins can be bought and sold on over 20 exchanges and are traded for 22 of the world's currencies, making them accessible to hundreds of millions of people around the globe.

At 107 PetaFLOPS, the Bitcoin network is 19 times faster than the next most powerful distributed computing system. It also possesses nearly double the computing power of the 500 fastest supercomputers, combined; an incredible peer-to-peer network that ensures the validity of every Bitcoin transaction. Our money is being managed both democratically and globally; a first for human civilization.

In the past year, as entrepreneurial types took to their computers to build services and applications to take advantage of Bitcoin, nefarious types began capitalizing on weak code, poorly designed sites, and careless users. While Bitcoin is itself completely secure, the network cannot protect everyone from themselves. Unfortunately, the media has focused on these careless individuals, and has erroneously interpreted the mistakes of some of Bitcoin's users to be proof of flaws in the system. Reporting on the success of Bitcoin does not generate pageviews or sell newspapers, however, so it may remain an uphill battle to change the message in the media.

To those who wish to spend their Bitcoins, the array of goods and services that can be exchanged for Bitcoins grows daily. From art to web hosting, food to jewelry, music to games, there is not a whole lot that cannot be bought for Bitcoins.

Direct trade, however, does not even begin to describe the capabilities of Bitcoin.

Bitcoin technology can be leveraged to enforce contracts of all types, identify property holders, and count votes. Imagine if people, living under the thumb of corrupt governments, demanded a Bitcoin-based voting system that could guarantee vote anonymity and instant and perfect counting. Or if America's banks had used a Bitcoin-type contract system to identify the owners of homes; the foreclosure mess it's facing would never have happened.

Our traditional financial infrastructure depends on unlimited growth. It's a system that even a six-year old can see is doomed to fail. The boundaries of our planet are not unlimited, nor are its resources infinitely renewable, yet we manage our money under the assumption that there are no limits. Amazingly, one of the largest criticisms of Bitcoin is that it is deflationary in nature, yet it is the only financial system that addresses the reality of our existence.

To those of you building and maintaining the exchanges, markets, and applications for Bitcoin: congratulations, you will profit greatly. Your profits, however, will not come on the backs of others, rather, they will be an acknowledgement from Bitcoin's users that you are providing them with a service that benefits both sides of the transaction.

To those of you waiting for the infrastructure to be built; rest assured that it is coming. It will take time, however, as the large corporations with deep pockets and vast resources that normally support such projects are the ones who are going to lose to Bitcoin, thus it will be up to the smaller-scale talent in the community to make it happen. We have already seen what is possible, so do not lose faith.

The vision is that Bitcoin will bring every person on the planet face-to-face with each other, that any person will be able to buy or sell any good or any service for any price to and from anyone, anywhere; that no corporation will ever again find itself with the privilege of deciding who is allowed to get paid or supported; and that no bank will ever again profit from a currency exchange, ATM withdrawal, wire fee, or account charge of any type. We are well on our way towards realizing that vision.

Tomorrow, November 9th, will be three years to the day since the Bitcoin project was registered on SourceForge. It is incredible to see how far the project has come in that time. It is your talent and effort that have brought us to this stage, and it will be your talent and effort that will decide the fate of Bitcoin's next three years.

Let's get to work, shall we?

Monday, November 7, 2011

One of Three "Wagner Criteria" Met

If you remember my interview with Bruce Wagner, back in August, you'll recall that he outlined three hurdles that Bitcoin had to overcome before mass adoption could take place. While there has been much controversy surrounding Bruce Wagner, his reasoning was sound:

"I've been saying that the three major hurdles for Bitcoin are security, liquidity, and currency risk, and all three problems will be solved in three months, maximum. Once these hurdles are dealt with, Bitcoin will roll out as fast as Facebook has."

With StrongCoin, Wagner Criterion number one, "security," has now been met, though at a cost of one percent on outgoing transactions.

Bruce incorrectly used the term "liquidity" to mean the ease with which you could purchase Bitcoins (I've made the same mistake, myself). Regardless, it is still quite difficult to acquire Bitcoins. Inroads have been made on facilitating Bitcoin purchases, with services like BitInstant, but it's a symptom of the archaic financial system we live with that it may never become "easy" to purchase Bitcoins, especially in the United States. That being said, with improvements like Mt.Gox's arrangement with Chase Bank, it gets easier every day.

Currency risk to merchants has been mostly solved, with bit-pay, but again, at a price.

Each day we get closer to meeting all three Wagner Criteria. The three-month time frame might have been a little optimistic, but it is definitely safer, easier, and less risky to transact with Bitcoins, today, than it was when I spoke with Bruce.

StrongCoin Developer to Release "True" Killer App

I've received some criticism for calling StrongCoin a Bitcoin application, let alone a "killer" application. I can appreciate that, as it isn't truly an app that takes advantage of Bitcoin's properties - rather it's a Bitcoin-enabler, which is arguably even more important at this stage of the game.

Shortly after I posted the article about StrongCoin, I was contacted by its developer. Here is a snippet of the email he sent me:

"I think you're wrong though... the killer app for Bitcoin is [redacted]. I'm hoping to get a demo running in a few weeks."

The Bitcoin Trader is even more excited, especially since this is his 100th post!

Sunday, November 6, 2011

Bitcoin's Killer App is Here


What if there was an application that gave you a completely secure Bitcoin wallet, made downloading the client and blockchain a thing of the past, and required the computer skills of your average Facebook user?

Ladies and gentlemen, it's here. The app has arrived that will sweep the Bitcoin community off its feet: StrongCoin.

Features:

- Web-based e-wallet - no more client or blockchain downloads;

- Client-side private key generation and encryption - invulnerable to hackers as long as you choose a strong password for your wallet (as with your normal online banking). StrongCoin does not know your password and cannot access your wallet;

- Imports your offline-generated and encrypted private key, if you so desire;

- Printable paper wallet with encrypted private key for safe and secure backup;

- Address book;

- Send/receive Bitcoins;

- QR code generation;

- Encrypted keys are backed up every 24 hours to a fully redundant data storage infrastructure;

- Access your Bitcoins from any device, including Kindle.

What's the catch? A 1% fee, up to a maximum of 1 BTC, on all outgoing transactions. WELL worth it.

I think we all agree that downloading a client is not the way to go for most people. It's slow, difficult for grandma to install, and not secure unless you take the proper steps which can be very technically demanding.

Finally, we have an app that will open up Bitcoin to a whole new segment of society. This is exciting. The Bitcoin Trader is excited.

Edit: if you'd like to be walked through StrongCoin, click on "Simple Bitcoin Guide" at the top of the blog.

New Sites - Week of October 30th, 2011

Sports Trading Exchange - Unlike most Bitcoin gambling websites, Sports Trading Exchange was a pre-existing gambling site that decided to start accepting Bitcoin. As a result, it's a fully developed site with lots of action.

Bean BitMarket - A guy in Greece selling 2kg bags of Greek beans to anyone in Europe. I featured this site in my article, "Geeks and Greeks."

Bitcoin Community Ads - A new advertising service for Bitcoin websites. Looks like Operation Fabulous will finally have some competition. Launching in December 2011.

Bitcoin Better Business Bureau Launched

In conjunction with my "Simple Bitcoin Guide," I have launched the "Bitcoin Better Business Bureau" to provide new Bitcoin users with a list of trusted sites. Sites with good standing in the community will be listed.

Users can also post complaints about a BBBB site. Should a complaint be posted about a site that you run, I encourage you to contact the plaintiff and post a comment on the BBBB site once you have resolved the issue. I will then contact the plaintiff to confirm that the issue has been resolved and make note adjacent to the site's listing.

The Simple Bitcoin Guide

This is a simple guide to get you started with Bitcoin. This guide does not cover the technical details behind Bitcoin. There are plenty of other guides that will provide you with technical answers. This guide is designed for the Bitcoin novice that wishes to have a secure, easy to use wallet. It will show you how to:

- Create a Bitcoin Account
- Get Bitcoins
- Spend Bitcoins

1. Create a Bitcoin Account. Go to StrongCoin.com and click "Sign Up." Ensure you choose a strong password containing lower-case and upper-case letters, numbers, and other characters. Write your password down and keep it in a safe place.

Click "New Account" on the right-hand side. Enter a name for your account in the "Label" field ("savings" or "chequing," for example). Click "Launch Generator" on the right-hand side. Enter another strong password, but one that is different from the one you used earlier. Write this one down as well. Click "Generate Keys." Click "Save."

You now have a Bitcoin account which is the jumble of letters and numbers next to where it says "Public Key." This is the account number you will give to others when they want to send you Bitcoins. It is exactly the same as when you give your employer your bank account number so they can deposit your pay cheque into your account. No harm can come from giving out your Bitcoin account number; mine is on display on this blog at all times.

2. Get Bitcoins. The way to do this will depend on the country in which you live. Typically, you will buy Bitcoins through an exchange by sending money to the exchange and then buying Bitcoins once they've received your money. There are different ways to send money to an exchange, and each exchange will tell you how to send them your money. I recommend the following exchanges:

- Americans: Mt.Gox
- Canadians: Canadian Virtual Exchange
- Other: Click here for a list of options.

You might also be able to find someone in your town that is willing to sell you Bitcoins.

To get you started, you can visit the Bitcoin Faucet and/or Daily Bitcoins to receive some free Bitcoins.

Once you've purchased or obtained some Bitcoins, send them to the Public Key that you created in step 1.

3. Spend Bitcoins. When you want to send your Bitcoins to someone, click on your StrongCoin account name (savings or chequing, or whatever you called it). Click "Send Payment" on the right-hand side. Enter the second password you created. Now, copy the Bitcoin address that belongs to the person to whom you are sending Bitcoins, and paste it into the field where it says "or type an address." Enter the amount you wish to send and click "Send Payment." You will pay a transaction fee of 1%, up to no more than 1 Bitcoin.



Congratulations! You are now a Bitcoin user. Welcome to the first currency system that is not controlled by a central authority, can be spent anywhere around the world, and has extremely low fees.

Saturday, November 5, 2011

Satoshi Nakamoto is the Anti-Christ!

Revelations 13:16-17 predicts Britcoin... err... Bitcorn... err... just click the damn link.
"It also forced all people, great and small, rich and poor, free and slave, to receive a mark [public key] on their right hands or on their foreheads, so that they could not buy or sell unless they had the mark, which is the name of the beast or the number of its name [public key containing 666]."

Hugh Thompson Addresses Bitcoin at Google Conference

Thanks to RSantana on the Bitcointalk forums for this one:

At the 6th Annual Google Test Automation Conference 2011 (GTAC 2011), security consultant Hugh Thompson, of People Security, addressed a question from the audience about Bitcoin. Follow the link below to jump to the relevant segment in the video:

Highlights:

"From a security perspective... we're going to need something like [Bitcoin] on a go-forward basis."

"In the not-too-distant-future, we're going to have a privacy armageddon incident... which is going to force a legislative change... that is going to be a scary period for all of us."

"At that point, people are going to be really freaked out that there's then, traceability, from what they've spent, to the merchant, and how it was used, and it's going to spawn the use of more disruptive payment technologies that can disassociate those things electronically, which I don't think we have a good mechanism for today."

"Yeah, I would use [Bitcoin]. There looks like to be some really strong... and difficult to decipher crypto behind it."

"I think it's such a great project, to see how it's evolving, and how it's disrupting the space."

Link to Video.

Geeks and Greeks

On Wednesday, I sent out an email to the operator of bitcoinstatus.rowit.co.uk because I had noticed a spike in traffic to my blog from Greece. I wanted to know if he could provide me with historical data on the number of clients on the network that were originating from the country. He replied that he didn't have the data, but offered to begin tracking the numbers; it will take a few weeks to collect enough data for it to be useful.

Coincidentally, about 12 hours ago, a Greek national announced the opening of a "Bean BitMarket." The commentary in his blog is eye-opening, and probably typical of the feelings being felt throughout Greece at the moment:

"My friends, the economy of Greece is failling. The market are crushing. And is not just Greece, is the whole western world that has serius problem. A billionere said that this capitalist crisies and the countries that fail one after the other like domino (greece, portugal, irland, italy .......) resembles to him like the distruction of the communism an soviet union. And i am just a guy looking the armagedon coming..

However i have thought it a lot and i still like the free markets, i still like capitalism. But is this system the cause i have an enginnering digree and no job.. or is it? i am not sure. My value are in crysies also.

And then i discover bitcoin. Very very indresting! I suppose you know why too. I decided that if distruction of this system comes then bitcoin could be the first page of the new chapter.

So i will be a worker for this new revolution, like the communist or the capitalist the 1930 and 1920.. i may fail but at least i will try.

I think what is the problem of bitcoin and i believe is that real enought. Maybe you can buy some tecnology staff or service, but this is not enought. If we want this to be real we have to sell simple staff like food. Not fast food, this is still tertiary sector. Food from the source, primary sector.. we have the anker at the bottom of the market.

With this i mind i decided to start my own tiny bussiness (i am jobless any way). I will sell beans. Just bean. Greek bean at the pack of one kilo and delivery them via post. This is my plan, and i am prety excited right now."

Bitcoin is not just a hairbrained get-rich-quick scheme for geeks; it has actual real-world value and promise. For a forward-thinking person living through dire economic times, it might just be a way out.

Thursday, November 3, 2011

Bitcoin vs. Google Checkout

Since this is a Google Blogger Blog, I have quite a few options when it comes to adding "gadgets" to the site. Currently, I use the "Poll," "Recent Comments," and "Popular Posts" gadgets, among others.

While perusing through some other options, I came across the "Support My Blog" gadget, which:

"Adds a Google Checkout Support Button to your page. Use the support button to enable your readers to support your blog with contributions."


I've already got a Bitcoin Tip Jar, but it would be nice if non-Bitcoiners could leave tips too.

Let's do this!

"When you use Google Checkout to process your sales, you'll be charged rates as low as 1.9% + $0.30 per transaction. With Google Checkout, there are no monthly, setup, or gateway service fees."


That's reasonable, I guess, but if someone wants to leave a $0.10 tip, it's going to cost me $0.30. Seeing as most of the tips I receive are under $0.50, that's not very good.

But wait, what's this?

"An additional 1% fee will be assessed on transactions where the merchant's country is different from the buyer's billing country."


Well, since I'm from Canada, that's like, most of the time.

1% isn't very much though...

"With 10 days notice, we may also charge higher transaction processing fees to merchants that incur excessive chargebacks or otherwise pose financial risk to Checkout."


I'm not selling anything, so that shouldn't happen. But what if someone wants to screw with me?

"In cases where you are found liable for a chargeback, you'll be charged the full amount of the chargeback plus an additional $10 chargeback fee."


To hell with that!

Thanks for nothing, Google.

P.S. Please don't close my Blogger account. You guys are awesome, just not awesome payment processors.

Wednesday, November 2, 2011

Why They Love to Hate Bitcoin


Bitcoin's proponents have been catching flak from all directions, be it from discussion forums, bloggers, or the mainstream media. To pitch Bitcoin is to invite yourself to be called a quack, scammer, ponzi-schemer, con-artist, hacker, or druggie.

Bitcoin itself is simply a computer program. On its own, It has no function other than to facilitate the identification of individuals and allow for the transfer of a quantity of nothings using a ledger which is managed and monitored by a peer-to-peer network. Its creator, Satoshi Nakamoto, chose to call these nothings "Bitcoins," and disappeared to let the free-market decide the fate of his work.

Since the genesis block was created, intelligent, industrious types have been looking for ways to leverage Bitcoin's properties for the replacement of inefficient transaction types. Even after decades of progress in the development of computers and computer networks, the primary means of moving wealth between individuals remains the use of paper bills and coins; a system that has not changed for thousands of years. Interaction between individuals and businesses is only slightly better, as electronic transactions predominate. Fees, fraud, centralization, and a lack of a global standard, however, make wealth transfer inefficient, costly, and subject to the whims of the few who control and profit from the dominating systems.

Bitcoin Prediction Review - Day 27

Let's take another look back at "The Next 365 Days of Bitcoin" to see how we're doing.

Prediction: Day 11: A member of the Bitcointalk Forums reports that his Bitcoins have been stolen from Mt.Gox. No one cares.

Result: Mt.Gox stole their own Bitcoins, but that was on Day 24.

Status: Wrong.

Tuesday, November 1, 2011

Random Bitcoin Apps (that don't exist)

- BitGallery: A flash-based art gallery where you are shown two or three examples of the artist's portfolio at low resolution. Enter the gallery for a Bitcoin donation and see all of the artist's work at high resolution.

- BitPet: A webcam of a hamster with a food dispenser connected to a computer. Every time you send a Bitcoin, the hamster gets fed. Who would let a hamster die? You'd make milllllllllions!

- BitVids: A NetFlix-type service where you pay a Bitcoin to watch a full-HD movie. No accounts or subscriptions required (thanks to osmosis for this one).

- BitVote: Associate your voter registration (for a club/town/city/country) with a Bitcoin public key. A tiny amount of BTC sent from your wallet is your vote. Vote from home.

- BitShot: A webcam of a guy standing against a wall. Send a Bitcoin and he gets shot with a paintball. Excellent for de-stressing after a long day at work.

- BitTourist: Find someone in a city you're traveling to who wants to buy Bitcoins. Meet them at your destination and sell them your Bitcoins for the local currency. Save a ton of money on currency exchange.

- BitServant: List of people in your area who are willing to run errands or do chores. If their status indicates "available," send them Bitcoins to complete your task (groceries, shopping, lawn mowing, snow shoveling, etc).