BITCOINIACS: PIONEERS IN BITCOIN SOLUTIONS Bitcoin offers merchants transaction fees that are much lower than other payment solutions Technology is a constantly moving force. It can leave business leaders without a vision, struggling to get their bearings and instill fear in corporate curmudgeons too large to move forward at a breakneck pace. Others don’t worry about keeping up with technology because they’re too busy innovating advances. BITCOINIACS—THE BITCOIN STORE is one of these. This forward-thinking group of entrepreneurs and engineers envisioned a digital economy that would spur employment gains, create new business growth and alter the way people exchange value. Believing that Bitcoin and the world of crypto-currency would be the next big thing, the small start-up company began by dipping their toes into the Bitcoin waters with local trades at cozy coffee shops. From there, they dove headfirst into the industry by expanding into the world’s first physical Bitcoin brokerage in downtown Vancouver, British Columbia, Canada. Bitcoiniacs leaders say that Vancouver residents and Canadians in general have been very receptive to the idea of Bitcoins and responded enthusiastically to the opportunity to be part of an emerging digital cash system. The proof is in the numbers. “In less than a year, we have grown from a part-time staff of three to a full-time staff of 10 and are planning on doubling that base within a few months,” said co-founder Paul Szczesny. “The trend has been noted by national media, some even expecting Canada to become the Silicon Valley of Bitcoin.” It became clear that Bitcoiniacs was destined to pioneer a new path for the Bitcoin industry. That led company leaders Mitchell Demeter, Jackson Warren, Paul Szczesny and Cheyne Mackie to adopt a grassroots strategy that resulted in the world’s first Bitcoin ATM. Refusing to leave behind their coffee shop roots, Bitcoiniacs’ leaders located this groundbreaking Bitcoin ATM in Waves Coffee Shop, a Vancouver business that attracts a dynamic, youthful crowd. This location serves both as Bitcoiniacs headquarters and a flagship store. The coffee shop’s patrons saw the value in a Bitcoin ATM and inspired Bitcoiniacs to push the Bitcoin envelope even further. “At the time we were planning to install ATMs across Canada but that changed when we decided to launch our own global Bitcoin exchange,” said Demeter. “It made more sense to have a physical presence around the world in strategic locations and use those points to promote the online side of the business.” Following that philosophy, Bitcoiniacs has made dramatic progress in just five short months. Since January, the
SPECIAL ADVERTISING FEATURE company installed ATMs in Singapore, London and Bucharest. Its fifth unit is about to go live in Tokyo. In the meantime, Bitcoiniacs continued to work growing the Bitcoin exchange. Christened the Cointrader Exchange, it was designed as an online trading platform that would allow Bitcoins to be exchanged for traditional currency. However, Demeter and other company leaders realized that this innovation would require a powerful banking partnership to make its foundation strong and its global reach extensive. So Bitcoiniacs partnered with a payment processor that will give the business the unprecedented ability to operate in the U.S. under their MSB (Money Services Business) license. “This new payment system will be live in the U.S. within the next few weeks,” said Demeter. “We will have amazing funding and withdrawal options for clients in the U.S. and Canada and then a few weeks after that goes live we will be able to offer the same thing to clients in Europe.” Bitcoiniacs has taken great pains to make the Bitcoin exchange remarkably secure with a full 256bit SSL encryption, daily malware scanning, complete server and database backups and encrypted wallet backups in multiple physical locations. Demeter said this is an exciting time to be a start-up business. While he realizes there will be challenges to overcome in the future, he is confident that cryptocurrency will continue to force new innovations and establish a whole new way people around the world think about banking and value—and Bitcoiniacs will be right there not only watching it happen, but making it happen.
ATM Bitcoiniacs: cointrader.net email@example.com firstname.lastname@example.org toll free 877 814 7460
The Singularity of Money
The Rise of Bitcoin!
by Piotr Piasecki
by Nathan Wosnack
56 Interview with a Crypto Coin Day Trader with Yuri Yerofeyev
. . . . . . . . . . . . . . . . . . .
Expert Advisory Board . . . . . . . . . . . . . . . . . . .
Letter from the Editor
. . . . . . . . . . . . .
What Cryptøcurrencies Will Bring to the 21st Century
by Susan Fourtané
Crypto Biz Magazine Page.4 June.2014
The New Age and Language of Security by Blake Anderson
How The Missing Biography of Satoshi Nakamoto Affects the World at Large
. . . . . . . . . . .
by Nikki Olson
The Crypto World I See
by Ravindra Galhena
by Martin Kreidenweis
Global 4C—A Proposal for World Transition .
by Cameron Gray
The Misconception of Bitcoin . . . . . . . . . . . . . . . . . 30 by Lisa Cheng
Continued on page.6
Issue.01 June.2014 Published by CRYPTO BIZ MEDIA, a division of CRYPTO BIZ GROUP Editor-In-Chief SOSHI Chief Operations Advisor TRENT NELLIS Chief Financial Advisor BARRY MORGAN Chief Technical & Media Advisor JAY ADDISON Senior VP of Business Development NATHAN WOSNACK Art Director VANESSA KING Copy Editor SAM REYNOLDS COVER DESIGN Jay Addison CONTRIBUTING WRITERS Blake Anderson, Kristov Atlas, Lisa Cheng, Sean Comeau, Susan Fourtane, Ravindra Galhena, Cameron Gray, Freddie Heartline, Briony Holmes, Martin Kreidenweis, M.K. Lords, Rob Marsh, Tatiana Moroz, Nikki Olson, Jacob Payne, Piotr Piasecki, Sam Reynolds, Slade Secore, Arianna Simpson, Domenic Steil, Julia Touranski, Anthony Tsui, Nathan Wosnack CRYPTO BIZ MAGAZINE PH3507 1111 West Pender St Vancouver BC CANADA V6E2B4 TEL 1 844 CRYPTO1 (1 844 279 7861) www.cryptobizmagazine.com Crypto Biz Magazine assumes no responsibility for unsolicited material. Opinions expressed herein are those of the authors and advertisers and do necessarily reflect those of CRYPTO BIZ GROUP, editors, advisors or staff. Readers are encouraged to thoroughly investigate and consult with a crypto financial advisor before embarking on any investment, speculation or financial opportunities. Crypto Biz Magazine makes no warranties or guarantees and we assume no liability regarding advertise ments or editorial content or any claims that may arise from them. The contents of Crypto Biz Magazine are Copyright © 2014, all rights reserved. Crypto Biz Magazine may not be reproduced in whole or in part without the expressed written permission of CRYPTO BIZ GROUP. email@example.com for a FREE subscription to Crypto Biz Magazine Receive our monthly editions delivered to you in the digital format of your choice.
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I am Soshi and this is Issue #1 of Crypto Biz Magazine. I welcome you to our premier edition and I ask that you free your mind from the traditional bonds and practices that we have come to know as the global economy. Our mission at Crypto Biz Magazine is to grow the cryptocurrency industry globally and enlighten the world’s economic community with the brilliance and innovation now available in commerce. We strive to bridge the gap between the cryptocurrency world and the financial and tech sectors. We accept the fact that cryptocurrency will forever change the way the world transacts its daily business. We acknowledge that the origin of trading of goods and services was fashioned within the control of willing participants. Mankind has historically traded almost every conceivable means of matter for one another. When two or more parties can agree to an amicable scenario where all parties engaged are satisfied with the exchange of a predetermined amount of a predetermined unit for a predetermined and agreed upon quantity of goods or services, we have the elements essential for a trade to occur. If these peer-to-peer transactions are recorded and displayed for all interested parties to validate and authenticate, we now have a secure and trustworthy environment under which anyone in the world’s economic structure can function. This is still the very early introduction of the cryptocurrency movement and its adoption by the financial and technical sectors will cause it to spread like a global epidemic. The various roles we will see cryptocurrency take on in global economies are endless and the benefits unlimited. The brilliant minds behind the innovations associated with the evolution of Bitcoin, and all related cryptocurrency coins, cannot be stopped, repressed, predicted or limited. We invite you to open your mind, read our offerings and absorb the enlightening and eclectic materials we have compiled. The champions of this growing community are those who have dedicated their time to bettering the system we all exist within. Our founders, partners, advisors, supporters and contributors are all of one mind and that mind is prepared for economic change on a global scale through the adaption of improved technology. In this and our coming issues, Crypto Biz Magazine will introduce you to the leaders in the world’s crypto community. We will provide you with educational insight into what cryptocurrency is, how it works as a payment network and how it will change the way the world’s economy functions. We’ll show you how to acquire cryptocurrency, where to securely store it, where to spend it and what’s new in the ever growing market of cryptoconsumerism. We firmly believe in actively trading cryptocurrency and we’ll show you the indexes and exchanges where you too can get in on the greatest financial revolution of our time. We have confidence in social media as a means of growing our presence in this space and invite you to share this publication with a friend or colleague. We welcome your feedback on your experience reading our premier issue on whatever digital format you are viewing it now and we look forward to connecting with and stimulating your individual interests. I am Soshi and this is Issue #1 of Crypto Biz Magazine. Enjoy! —S
June.2014 Page.5 Crypto Biz Magazine
I AM SOSHI…
How to Set Up an ASIC Miner Block Erupter Cube
Taking a Closer Look at the Gridseed ASIC Miners
by Dominic Steil
by Sam Reynolds
What Makes a ‘Good’ Password Manager Good? . . . . . . . . . . by Sean Comeau
The Soul of Bitcoin by Kristov Atlas
Tatiana’s Journey Into the First Ever Artist Coin
by Tatiana Moroz
. . . . . . . . . . . 44
Make Bitcoin, Not War, of Bitcoins Not Bombs by M.K. LORDS
. . . . . . . . . . . . . . . 46
Is the U.S. Finally Getting It Right?
by Arianna Simpson Crypto Biz Magazine Page.6 June.2014
An Exclusive Q&A with Sidechains’ Austin Hill . . . . . . . . . . .
Sidechains Explained .
by Jacob Payne
Bitcoin Is… .
by Julia Tourianski
Crypto Coin Meet-Up . . . . . . . . . . . . . . . . . . .
Bitcoin As Money: Are You Asking the Right Question? . . . . . . . .
Regulations Are Not Enough: We Should Expect Complete Openness From Bitcoin Exchanges and Banks
by Freddie Heartline
by Slade Secore
by Anthony Tsui
EXPERT ADVISORY BOARD BLAKE ANDERSON BLAKE ANDERSON is an MIT educated cryptographic economist
and computer scientist. Having worked in Fortune 25 finance as a math based security project manager he now works with Bitcoin derivatives, contracts and financial products. Working full time with BTC behind the scenes for years prior to IRS direction Blake is now happiest when speaking publicly about technology empowering the individual. More about Blake at: cointelegraph.com/post/blake_anderson KRISTOV ATLAS KRISTOV ATLAS is a network security and privacy researcher
who studies crypto-currencies. He is the author of Anonymous Bitcoin: How to Keep Your Ƀ All to Yourself, a practical guide to maximizing financial privacy with Bitcoin. Kristov is also a correspondent for the World Crypto Network, appearing regularly on the weekly roundtable show The Bitcoin Group, and host of Dark News, a show about un-censorship technologies.
LISA CHENG LISA CHENG is the co-founder of Distributed.buzz and the CEO
SUSAN FOURTANÉ, BA SUSAN FOURTANÉ , Science & Technology Journalist—Susan’s
articles on diverse technology topics have appeared in various UBM Tech and UBM Electronics online publications since 2009, and on Helsinki Times and other publications since 2006. In February 2014 Susan joined CryptØMiners’ Board of Advisors as Media Advisor. Susan on Twitter: @SusanFourtane. PIOTR PIASECKI, BSc MSc PIOTR PIASECKI is a Chief Scientist at Provable Inc, a Vancouver-
based software development startup. Since discovering Bitcoin in 2011, he became a reputable member of the Bitcoin community under the nickname “ThePiachu.” Piotr wrote his Master’s thesis on the subject of Bitcoin security in Technical University of Lodz, in Poland. He is also a moderator of Bitcoin.StackExchange.com, /r/Bitcoin subreddit, runs a number of Bitcoin-focused websites, such as Vanity Pool and TestNet Faucet, as well as writes a blog on various cryptocurrencies.
June.2014 Page.7 Crypto Biz Magazine
of the Vanbex Group. She is the force behind the popular news aggregation site BitcoinRegime.com and a behind the scenes advocate of Bitcoin 2.0 and blockchain technology. She comes from an accomplished background after having worked at Fortune 500 companies and technology startups involved with Big Data, algorithmic trading, and enterprise systems. Lisa’s time is now focused on consulting and planning for new cryptocurrency projects after having worked for the Mastercoin Foundation in leading the Business Development effort. She is located in Vancouver, British Columbia, Canada and you can reach her via Twitter @lisacheng.
WHAT CRYPTØCURRENCIES WILL BRING TO THE 21ST CENTURY by SUSAN FOURTANÉ
Both the Lydian coin and Bitcoin have marked the start of a new era in how humanity uses money
Crypto Biz Magazine Page.8 June.2014
verybody talks about Bitcoin, Teacoin, and all the other alternative coins (altcoins). However, have you ever wondered how money has evolved? What the Lydian coin and the Bitcoin have in common? Or why cryptocurrencies really matter in the 21st century? To understand how we got here let’s have a quick look at the history of money. Tens of thousands of years ago humans learned about the need of barter for exchanging resources and services as a way of survival and for mutual benefit. Cattle, agricultural products, cowrie shells, and pearls among others were paid for goods and services until the 1000s BCE when the first cowrie imitations made of copper and bronze appeared in China at the end of the Stone Age. In the 500s BCE, the first coins made out of lumps of silver and stamped with gods and emperors were manufactured in Lydia, Asia Minor, which is part of today’s Turkey. This is how the world’s first coin, which today is a valuable collectable, looks like:
Lydian electrum trite (4.71g, 13x10x4mm). This coin made of a gold and silver alloy was the world’s first coin, minted by King Alyattes in Sardis, Lydia, Asia Minor (present-day Turkey) 6th century BCE. Source: A Case for the World’s Oldest Coin: Lydian Lion
What do the Lydian Lion coin and Bitcoin have in common? Money has undergone evolution for at least the last 10,000 years. The shape and materials that currencies have taken have been varied, always
responding to their time. Every change has reflected a new discovery of minerals, or a new technology. The creation of the first coin in the 6th century BCE marked a new era in the history of money and a new chapter in the evolution of human society and financial transactions. In 2009, Bitcoin, a cryptocurrency with no geographical borders, was created giving birth to a new financial system. And this is just the beginning. Bank disruptions means bank revolution The future of traditional banking is already c o l l a p s i n g . R e c e n t l y, e m e rg i n g b a n k i n g distributions have started to bloom like wild
Cryptocurrencies: The currency of the 21st century Cryptocurrencies, often called the most important invention since the Internet, are in harmony with the big changes happening in today’s use of money and the financial world. From alternative banking to the emerging of the world’s first cashless economy in Sweden, and the global acceptance of Bitcoin and the other altcoins, we can see the future of cryptocurrencies present itself as bright. These changes are aligned with the new era of banking and financial revolution; they are children of modern technology. They can’t be ignored or resisted, but accepted as a sign of evolution in the history of humanity. Cryptocurrency is the future of global finance As the Lydian coin brought change in its time, cryptocurrencies bring for the first time the existence of a currency with no borders, an inexpensive payment system that can be used by anyone, anywhere, from any device. This open source protocol allows person to person (P2P) financial transactions with no centralized control. Features that make crypto-currency an ideal money:
Scarce: There will never be more than 21 million Bitcoins
The emerging cashless society Sweden, the home of iZettle, the first mobile payments startup, used to be the first in different types of innovation; and adopting or getting rid of money is not the exception. Back in 1661, Sweden was the first European country to introduce banknotes. A few years ago, it became the world’s first nation willing to get rid of them. Since then, cash is taking the proverbial path toward the museum. The global journey from cash to cashless has begun.
Secure: It can’t be counterfeited, or multiplied at will
Privacy: As much as the user wants
Transportable: It can virtually be sent for free anywhere in the world
Steady and predictable supply It is also an opportunity to cultivate and develop freedom and trust. It is an opportunity to show human beings have improved their values over time. Who wouldn’t want to live in an emerging society where freedom and trust are part of a common currency? —S SUSAN FOURTANÉ, Science & Technology Journalist— Susan’s articles on diverse technology topics have appeared in various UBM Tech and UBM Electronics online publications since 2009, and on Helsinki Times and other publications since 2006. In February 2014 Susan joined CryptØMiners’ Board of Advisors as Media Advisor. Susan on Twitter: @SusanFourtane.
June.2014 Page.9 Crypto Biz Magazine
daisies in the summer. New banking alternatives where individuals can have a better control of their finances without having to pay high fees for services began to take shape. European Startups like Holvi, a bank replacement for SMEs and individuals, or TransferWise™, a peer-topeer online money transfer service, were some of the first starting this movement. Today, these startups and others are expanding their wings around the world, transforming the way we manage finances, make payments, and make money transfers. The 21st century also marks a banking revolution.
THE NEW AGE AND LANGUAGE OF SECURITY by BLAKE ANDERSON
BITCOIN IS MORE SECURE THAN ANY CURRENCY ON THE MARKET BUT MANY STRUGGLE TO UNDERSTAND IT
Crypto Biz Magazine Page.10 June.2014
rypto is short for cryptographic, which is now the back bone of IT security. Encryption is used to obfuscate sensitive data. In the age of information, data is extremely valuable and some people are starting to theorize that data is central to future concepts of value itself. In this new age of non-physical security we need to obscure data to retain our privacy and or value, and to avoid law battles stemming from ideas and information not being properly secured. Today, advances in mathbased security have transcended limitations on financial friction and are an elemental part of nearly all business. When new forms of value quantification and transfer arise and reach ubiquity, the impact on markets is so remarkable that it will be more or less inexplicable relative to old paradigms. Gone are the days when security could be an afterthought relative to information technology and business development. In our times, it is becoming clear that secure processes and protocols must be an elemental part of data exchange and storage. The most important role at any large company is quickly becoming that of the chief technical officer (CTO). Without competent technical security leadership, risk management becomes all but impossible as prima facie indicators of vulnerability are missed. A CEO can badly manage a company into worthlessness but a bad CTO can ruin a company financially along with the lives of those affected by data breaches or systemic vulnerability. A new language of value called Bitcoin was modeled after a nine page P2P-ECS white paper published in 2008 referencing only eight sources. This document
has transcended virtually all previous fault tolerance limitations in computer science. Using this new ultra robust language of value, a currency called Bitcoin was created which has a strongly deflationary rate of production and is default free. Currently a very small group of people globally have a true understanding of the implications that math based security brings to decentralization and risk management. Fewer people still understand the paradigm shattering effect that new forms of language and communication will have on the future. Platitude or not, we live in the most exciting times in history.
Technology changes, as will currency The first iterations of communication technology were image based and painted on cave walls. Gestures and referencing drawings created a situation where ideas could be communicated like never before. Many people hold the turn of phrase â€œa picture is worth a thousand wordsâ€? to be self evident. The ability to exchange ideas in this way was central in bringing about the next iteration, which was formal language and the writing thereof. Everything that came before we could record proper language is designated as prehistoric. Eventually through the use of language and ubiquitous communication of our ideas, we were able to create data transmission technologies. These technologies were able to send and receive organized data in layers, including interrogating for missing portions of data which had issues. New forms of communication create a situation where fault tolerance is orders of magnitude higher than it had been with all previous forms of communication.
The newest iteration of communication is one of value and security described by the 2008 white paper. A block chain was created in 2009 which hashes data into obscurity and then hashes previous hashes into new ones in a “linking” fashion. The hardware network that creates these hashes and checks them is widely distributed by the market to ensure that natural disasters or state actions cannot effect more than a portion of this system. The application specific integrated circuits that currently support the Bitcoin system are created in such a way that attempts to damage the network with non ASIC computer power are all but entirely fruitless.
The need for security Systems which reduce friction, along with having builtin security, operating as a new language sophisticated in that it was built by the fruits of TCP/IP, using the largest conversation and gathering of information in
business adoption many people feel that having a firm stance coming from the IRS will instill confidence and drive growth. In addition to having a nod from the state, client ledgers are extremely easy to submit to a CPA or tax attorney to figure out how to be square with the state. Bitcoin currently has a sub 10 billion USD market cap and the impact on currencies and commodities is in a developing stage, but more than 300 billion has been reported to be waiting to flow into Bitcoin as soon as a western Bitcoin exchange opens which is compliant with Hedge fund investment risk management strategies. —S
BLAKE ANDERSON is an MIT educated cryptographic economist and computer scientist. Having worked in Fortune 25 finance as a math based security project manager he now works with Bitcoin derivatives, contracts and financial products. Working full time with BTC behind the scenes for years prior to IRS direction Blake is now happiest when speaking publicly about technology empowering the individual. More about Blake at: cointelegraph.com/post/blake_anderson
Crypto Biz Magazine
Many economists who examine Bitcoin purely as a commodity and come to bearish conclusions have illustrated that they cannot understand the implications of a complete transcension of fault tolerance limitations in computer science. Without an understanding of the protocol and the relationship to Bitcoin, along with geopolitical pressure, pretensive speculation is
Currently the United States government, through the Internal Revenue Service, has classified Bitcoin as property relative to purposes of taxation. Some people, including Cameron and Tyler Winklevoss, predicted that the IRS would behave in this way. However many people feel strongly that classifying an entry on a decentralized ledger as “property” is the height of absurdity. With new tax implications being the biggest hurdle to US small
all of history, is mind shatteringly remarkable. Few economists understand the implications of transcending elemental road blocks in computer science. Many computer scientists don’t understand the true nature of economics and the economic benefits of decentralized autonomy. It seems that only a small group of tech savvy entrepreneurs and economists currently have the near polymathic understanding required to comprehend everything this new system of value touches and may change. Computer science and economics are and have been interacting in ways beyond NYSE and NASDAQ high speed trading operations and breakthroughs in global digital arbitrage will carry that trend into unknown territory leading to market benefits the past never would’ve imagined.
quite hollow and conclusions about Bitcoin data are starkly ill informed. Attempting to quantify the value of Bitcoin without understanding the protocol is akin to attempting to quantify the value of the internet without understanding networking and physical infrastructure. Make no mistake about the fact that the economics of Bitcoin are an absolute niche science and those not familiar with public key security are severely compromised in their ability to criticize Bitcoin in a meaningful way.
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Crypto currency enthusiasts, such as Fran Strajnar, Co-founder of Techemy Ltd, found themselves searching over 50 sites per day trying to gather information in order to make educated decisions with their Bitcoins and altcoins. Strajnar recognized a need to provide a site with comprehensive market information on cryptocurrency, taking both day traders and newbies into consideration. Inspired by Bloomberg.com and unperturbed by the limited examples to follow, the idea of BNC was born. “It was a big hurdle, not having anyone do this before,” says Strajnar. In the months after BNC’s inception, the developers behind Techemy discovered why such a project had not yet succeeded. It was a grandiose task gathering the Application Programming Interface (API) data feeds from dozens of exchanges and block-explorers, some of which, according to Techemy’s CIO James McNickel, seemed to be “powered by a bloody potato.” It took five months for BNC to reach its beta launch on April 8th 2014, due to dealing with the new technology they had developed and the arduous task of gathering the necessary APIs. In order to overcome these difficulties, Techemy decided to write their own software that could standardize these different APIs—in all their different flavours—to run through another engine. This engine would then be able to sort the trading data and average it through a true and fair methodology to offer a true global price representing over 99 percent accuracy of BNC’s listed cryptocurrencies. by B. HOLMES
BRAVE NEW COIN
THERE IS A FIRE BURNING DEEP IN THE BELLY OF TECHEMY LTD, a data mining company deriving its name from technology and alchemy in order to express magic in the digital age. Their pilot project Brave New Coin (BNC), was conceptualized in November 2013 when Bitcoin reached its record high of over $1200 (USD). The world was paying attention and the hype of the high could be felt.
“From that jumbled mess we somehow had to make it look pretty and responsive. So UI/UX specialists were consulted with.” Strajnar comments. Additional software was developed which assisted to write the
entire database into images. It was now possible for the viewer to request a detailed graph by clicking the downwards facing arrow on the far right, without running an ever-growing SQL database. However, these weren’t the only hurdles to be considered. “Clearly the site had to be blazing fast, which is a massive task when dealing with huge amounts of data.” Strajnar says. With speed being in the forefront of Techemy’s and the public’s requirements, BNC was strengthened by choosing to host on Amazon Web-services, an action which is easier said than done, according to Strajnar. “There is so much going on in the background, but the end result is the most accurate and the most stable price for any coin that we list.” With hard work underway and the site ready to roll out, it was time to get validation. With New York and Toronto hosting conferences merely days apart, Strajnar knew this would be a great opportunity to share BNC with the crypto community. The feedback was positive and continues to be so. On May 10th 2014, BNC broadcasted on Twitter, “First 31 days live—we got 15k page reviews with no advertising. I’m happy.” With these successful results, Techemy Ltd has declared their move away from beta on May 24th 2014, with new features to be announced, such as price tickers and additional indexes. More information regarding these features will be released as they come into fruition. “We want to become the home of crypto, the first place people go to for their crypto-related information.” Strajnar says.
B. HOLMES, author of The Range of Illusion and The Private Key Installments, is currently based in Toronto, Ontario, Canada. She has lived in eight countries to date, and is certain there will be more to follow. As an avid researcher, she spends much of her time on her laptop, reading books and asking questions. Her passion is writing, both fiction and non-fiction, and she has a strong need to understand all that she encounters. E-mail her at: firstname.lastname@example.org. She also takes Bitcoin tips: 1Hiio7AZSTuVNKwk1vQVKGuukNNyJDeJYy
THE SINGULARITY OF MONEY by PIOTR PIASECKI
In the future there will be competing platforms for currency, but it will all gravitate to one preferred platform It has long been a dream of many people to have a single world currency, universally acceptable by everyone; an alternative to the dollars, yuan and yen that dominate the fiat world. Gold bugs believe it would be gold, silver bugs—silver, Bitcoin proponents put their bets on Bitcoin, while some other groups hope it would be the Federal Reserve Note, euro, or some other national currency. However, all signs point to something radically different. It is very likely that in the future, the currency will not matter, only value. This idea emerges from a few basic concepts. First, any monetary transaction at its essence is an exchange of value. This value might be represented in dollars, euros, Bitcoins, gold or what have you. Next, both parties of the transaction want to use their currency of choice. If a seller is in Canada, they want to use CAD, if the buyer is in the States, they want to use USD. If there exists an efficient market for both currencies used in a transaction, those currencies are essentially interchangeable with a fixed ratio at the moment of the transaction. If one currency is more valuable in a transaction than the other, it will be used. A gift card for a given store has the face value at that store, but outside of it it’s value is diminished, for example.
It is not only possible that in the future a buyer holding currencies backed by gold, silver, oil or his own man hours of labour could walk into a store operated by a seller accepting Bitcoin, Air Miles or carbon offsets and they can transact just as easily as if both of them used dollars, such a system is technically feasible and functional right now.
In 2013, one of the first “Crypto 2.0” systems by the name of Ripple was released. It is a distributed payment system that allows anyone to create any currency they wish and easily trade between those currencies on a decentralized exchange.
Secondly, by providing a competitive market for currency exchange, the cost of exchanging between the currencies goes down. If there is a cheaper route to go from currency A to B, it will win over greedy companies charging too much for their services. Lastly, by allowing anyone to create a currency and back it by anything they wish on an even playing field, it opens up the formerly governmentcontrolled monetary system into a free market where all currencies will compete against one another. If one believes that gold beats the dollar, they can hold their savings in gold and still be able to buy their groceries just as easily. All in all, this concept is not new. It has been discussed by Paul Grignon under the name Digital Coin back in 2009. Moreover, a similar sentiment has been prevailing during a number of panels during the 2014 Toronto Bitcoin Expo. A number of speakers, including Andreas Antonopoulos, expressed a similar belief that in the future there will be many coins in circulation. Having the plurality of coins in circulation and technology permitting an efficient and instantaneous way of exchanging them for one another, the only logical outcome of the situation is that we will have a singularity of money. In the future, the currency will not matter, only the value. —S PIOTR PIASECKI is a Chief Scientist at Provable Inc, a Vancouver-based software development startup. Since discovering Bitcoin in 2011, he became a reputable member of the Bitcoin community under the nickname “ThePiachu.” Piotr wrote his Master’s thesis on the subject of Bitcoin security in Technical University of Lodz, in Poland. He is also a moderator of Bitcoin. StackExchange.com, /r/Bitcoin subreddit, runs a number of Bitcoin-focused websites, such as Vanity Pool and TestNet Faucet, as well as writes a blog on various cryptocurrencies.
Crypto Biz Magazine
The crypto alternative
A system like this, be it based on Ripple or not, provides a number of advantages to both the businesses using it and the consumers. First of all, it connects everyone into a global trade network. The solution is not centralized in an oligopoly like the credit cards or PayPal, anyone can join the system and monetize their efforts.
Based on those concepts, it is far more likely that in the future we will not have one singular world currency, but a plurality of currencies used interchangeably. With an efficient exchange allowing one to trade between any pair or series of currencies as part of a payment for goods or services, the singularity of money is closer than ever.
Since Ripple supports currency exchange on the spot during any transaction, anyone that holds a currency that is actively traded on the network can transact with anyone else, regardless of what they are accepting.
HOW THE MISSING BIOGRAPHY
OF SATOSHI NAKAMOTO
AFFECTS THE WORLD AT LARGE by NIKKI OLSON
Crypto Biz Magazine Page.16 June.2014
hen Satoshi Nakamoto cracked the code for the blockchain he altered the course of all our lives, whether one has an interest in using Bitcoin or not. The full extent to which the world is changed by this peerto-peer technology is not yet realized, but becomes more and more apparent as Bitcoin and other cryptocurrencies grow and develop, and future platforms built on top of these networks are envisioned. It is not an exaggeration to write that a major paradigm shift has occurred, one that many believe is of similar caliber to the World Wide Web. Given this revolutionary aspect, it seems natural to be curious as to the source of the change. After all, bookstores are filled with biographies of great inventors and artists, and the Internet of interviews and documentaries of people responsible for extraordinary things; but Satoshi Nakamoto does not want to be known, and all investigations thus far have come up empty-handed. What can one say is lost by this anonymity, and what does this absent biography mean to our narrative on this profound revolution in the nature of trade and trust? P e r h a p s , s u r p r i s i n g l y, t h e anonymity of the founder is largely irrelevant to orienting oneself on the “how” and “why” of cryptocurrency. It is important to keep in mind that we have a tendency to view the history of science as punctuated by the inventions
and discoveries of geniuses but in fact nearly simultaneous discoveries are common and often inventions that have large consequences are extensively dependent on ideas that are similar and/or prior to them. Similarly, social movements are often over-attributed to charismatic leaders or as reactions to particular events or phenomena, when in fact they are more accurately characterized as the result of many distinct people and causes. Bitcoin is common in this way. Bitcoin was not “out of nowhere,” socially or technologically, in spite of how it may have seemed. Rather, there have been several attempts at exchange mech anisms like Bitcoin dating back into at least the 1990s, and pre ceding social movements and Internet culture to match them. For example, the “cypherpunks,” an activist movement that pro motes the development and widespread use of strong cryp tography as a means of social and political change, organized in the early 1990s. Cypherpunk philosophy was q u i te o bv i o u s l y i n f l u e n ce d by m o re l o n g st a n d i n g a n d historical counter-cultures and ideologies, including oppo sing views of fiat currency, and evidence of illegitimate surveillance. David Chaum’s 1985 paper, Security Without I d e n t i f i c a t i o n : Tra n s a c t i o n Systems to Make Big Brother O b s o l e te, w h i c h d i s c u ss e d the prospect of and digital means to currency without government, has—correctly
or not—been characterized as a direct springboard for the movement. Reaching a broader audience, t h e C y p h e r p u n k s we re a n inspiration for popular science fiction writer Neil Stephenson’s 1999 novel Cryptonomicon, which detailed anonymous Internet banking and other cryptographic technologies. By the turn of the century, several attempts at currencies similar or foundational to Bitcoin, including
Wei Dai’s “B-money” and Nick Szabo’s “bit-gold” had been proposed and designed. For those who may be unclear on the technological significance of Bitcoin, what separates it from the rest, is that until its publication no one had yet
influence on present enthusiasm for a non-Keynesian, post-nation state economy, but to say that with proper contextualization of the white paper, the feeling of needing to know who Nakamoto is and what he is about is diminished. But one might ask, even if we were to concede that Nakamoto did not have unique or sur prising motivations within his peer group, aren’t the intentions of the creator still relevant to understanding the dynamics of Bitcoin? This is a somewhat common intuition of newcomers, and the answer is “ NO .” Full stop. When Nakamoto uploaded the finished paper to the Internet in November of 2009, the author rendered himself irrelevant to its future. How is this possible?
Nevertheless, the advent of Bitcoin, technologically, was very much a gradual and organic phenomenon. This is not to undermine the novelty of the blockchain solution, or its
Then, given the above, what could one reasonably expect to gain if personal-historical details on the Bitcoin founder are uncovered? Not surprisingly, many people are still invested in knowing the details of the creator, even if they understand the social, historical, and technical context (although there are also many w h o a re ve r y co m f o r t a b l e with the anonymity). Part of the remaining interest can b e s u m m e d u p by “ h u m a n curiosity,” and of course there is also the expected monetary or social gain that may come from the related journalism. Unfortunately, however, there is also a dark side to the search for Satoshi Nakamoto, one motivated by hegemonic, political discourse. The subject’s connection to anarchy has already spawned n e g a t i ve m o r a l a p p r a i s a l , undue psychoanalysis, and resounding rejection from some of the world’s most prominent thinkers. Paul Krugman wrote a New York Times piece entitled Bitcoin is Evil where he discusses Continued on nexxt page
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developed a robust solution to the “double spend problem” (Leslie Lamport’s Byzantine Generals’ Problem), so prior d e s i g n s e i t h e r re l i e d o n a trusted third party (b-money), or were too vulnerable to gain widespread adoption.
Furthermore, given the system’s decentralized nature, the ongoing intentions and/ or motivations of the author are irrelevant to its function. This is unprecedented when it comes to currency, and may be the most difficult aspect for newcomers to understand. All prior referents of the concept “currency” were centralized, and/ or nation-state bound, meaning that they have been issued and controlled via a central authority who can influence its behavior. In traditional exchange models, one has to care about the ideas, perspectives, and beliefs of the issuers or managers of the currency, like a government, because the issuers/managers
Grasping the Bitcoin concept, of a “diffuse authority” model, or “decentralized trust” model, where the transparent formal properties of the system itself serve the same purpose as a trusted authority, is essential to understanding that further interactions with the author o f a ny c r y p to c u r re n cy a re extraneous to understanding how the network is evolving. Therefore, as we move forward, any and all alterations in the value of Bitcoin, its popularity, and what it means to people, can only be attributed to changing social systems, and users.
First of all, the Bitcoin white paper is a clear, specific, and complete piece of work. From a technical perspective, there is no need to engage with the author for clarification. Modified versions, and layered platforms have and can be built without interacting with the original developer.
always have some hand in how the system will function. They can print more money, for example, or influence interest rates.
cont. from page 17
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the state-destructive “agenda” he sees in the design of Bitcoin, and it is common to interpret Bitcoin as intended to threaten state power and authority. The anarchy connection has been shown to be a prominent motivation in searching for the author. Leah McGrath Goodman of Newsweek, for instance, stated that she wanted to clear up whether or not Bitcoin was truly “apolitical,” as the foundation website states. Needless to say, if the
some kind of idiosyncratic villain so as to alienate natural inclinations one might have to identify with cryptocurrency ideas. In summary, the missing biography on the author of a hugely disruptive technology may seem like a major loss given human propensity for rich narrative around life altering events. But even though the majority of us were “bewildered” by the Bitcoin concept, it’s important to realize that there is no salient mystery surrounding its creation, and it is safe to say that all of t h e b e n e f i t s B i tco i n can provide are in no way hindered by the anonymity of its creator. While on the one hand, it would be nice if the mystery were resolved,
founder should be discovered, an abundance of popular press would ensue, most certainly seeking to emphasize any esoteric details they could get a hold of—something to pin the novelty and success on towards building compelling and sensational narratives. It would be foolish not to expect some depictions of the founder as unrelatable or socially lacking, and if it were a single inventor, perhaps even as an anomalous psychopath. Imagine for instance that it was discovered that the author of Bitcoin attended a high-class boarding school. Media responses might be: “Look, they had no tangible way to understand the value of the welfare system, or how the world really works.” The distortion and simplified narratives wouldn’t end there. We might also expect an exaggeration of the author’s efficacy in the emergence of cryptocurrency as a convenient means of ostracization, or holding him morally responsible for any toll the cryptocurrency movement takes on, or could take on taxation and other centralized currency functions. In general, due to the anarchy connection, a recasting would likely be in order, and possibly as
on the o t h e r, d u e to t h e anarchist connection, it might very well be preferable that it is not. —S
NIKKI OLSON is an entrepreneur, Tr a n s h u m a n i s t w r i t e r, a n d Affiliate Scholar at the Institute for Ethics and Emerging Te c h n o l o g y. S h e h a s a B A i n Sociology and Philosophy and is now a student of Computer Information Systems at the University of the Fraser Valley. Contact email@example.com. Her Bitcoin address is: 1GRxv7cuPU2P25kMR78qp6vrX5n71uCogD
THE EVOLUTION OF TRANSACTION SOLUTIONS
Bitcoin offers merchants transaction fees that are much lower than other payment solutions With the excitement of all the various cryptocurrencies currently in the space, what sometimes is under-discussed is their role in the future of transactions. As merchants learn about the benefits of accepting cryptocurrencies like Bitcoin, skepticism will be met by the numerous advantages of using this type of protocol for payment. At BitPay we currently have 30,000 merchants, including higher profile clients like Gyft, TigerDirect and the NBA’s Sacramento Kings. While these forward thinking companies immediately saw the benefit of Bitcoin and were quick to jump aboard, the mainstream acceptance of Bitcoin also requires our smaller merchants that sell specialized items or services. Once skepticism and misinformation is quelled, the facts of Bitcoin as a payment method become crystal clear to many merchants. Through BitPay merchants pay 1% or less of their transaction amount (depending on volume) as a processing fee which is significantly less than other payment processing options. It’s the P2P nature of the Bitcoin network that enables this extremely low payment processing option. It’s also important to realize that Bitcoin is still in its infancy and other payment options have had 50 plus years to build their network and infrastructure. Bitcoin has been around since 2009 and in those five years the user experience for merchants and customers has become drastically easier. This will continue to improve as the open source platform develops.
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An analogy I quite often make is to the music industry in the early 2000s. Napster forced record labels to change their business model to one that is more in line with what the consumers wanted. Some advantages that Bitcoin has over what happened with Napster include the existence of a global marketplace, venture capital investments and continued development of the protocol. The switch to digital was something that was confusing and scary for many music fans and the immediate resistance slowly faded away and business opportunities such as iTunes and Google Music came to make buying digital music easier and the preferred way to purchase a song. Bitcoin is controversial now because it’s challenging something that has been the same for a very long time. It’s more important to realize that, like any other technology, it becomes more mature and easier to use over time. Some of the smartest and most successful entrepreneurs in the world are embracing Bitcoin. These individuals see the long term potential in how it could drastically reduce payment costs as well as the global reach it has. BitPay has continued to bring credibility, excellent support and development of the platform to the community and that has resulted in being the market leader for Bitcoin Payment Processing. We also hope to continue to grow globally with new offices in San Francisco, New York City, Argentina and Amsterdam as well as a new location for our continuously growing Atlanta office.
What’s important is for other Bitcoin companies in the space to contribute development time to ensure the protocol can grow properly. At BitPay, Bitcoin Core developer Jeff Garzik is a member of our team and we continue to contribute to the platform through projects such as Bitcore. One of our biggest hopes is as other startups grow that they will be able to expand their development teams to contribute to Bitcoin. Bitcoin users currently have various reasons to use the protocol; including technological, political, financial and economic. As merchant acceptance grows and education on the subject grows, the user base will diversify and the platform will become easier to use. We aren’t close to widespread acceptability in the same vein as a credit card, but it is something that the Bitcoin community is currently developing.
THE CRYPTO WORLD I SEE The world of Cryptocurrencies is growing fast, but this does not come without its share of challenges number of countries are positively looking into these developments now, but a few countries have declared crypto-currency illegal. Some stand in the middle and observe developments taking place elsewhere. Populations from weak economies such as Argentina and Cyprus embraced Bitcoin quite early as they were stronger than their own currencies. However Bitcoin is said to be much more than a cryptocurrency. Many enthusiasts feel that Bitcoin is a complete protocol, like the Internet, that will revolutionise the globe with its maturity. It could also become a complete payment platform that facilitates international trade and reduces transaction costs. by RAVINDRA GALHENA Some time ago I heard the words “crypto-currency” and “Bitcoin” in a random Google hangout for the first time. These phrases were so novel at the time they drove me to curiosity to learn more about them.
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My research was initially rather conventional—I dug into some historic developments of concepts such as monetary policy that were nearly 100 years old. The Edison/Ford (Thomas Edison and Henry Ford) initiative was quite significant in the context of thinking of alternatives to fiat currencies although their ideas didn’t go quite that far. The global recession and economic downturn of 2008 forced people to look for alternatives to fiat and one could argue that the crypto-currency called Bitcoin was born as a result. However, there are a few differences between fiat and crypto-currencies: the decentralised (no controls of governments) nature of crypto-currencies is one of the fundamental contrasts—needless to say this characteristic itself poses many challenges to their existence. Bitcoin came into the public domain with open source technology in the first half of 2009 and at least another 275 crypto-currencies (about 75 mainstream ones) have been introduced to the global market since. Today, a considerable number of people maintain cryptocurrency ledgers on block-chains as users. However, crypto-currency mining still remains in the hands of an iota of people/companies for a number of reasons. They include the increasing levels of difficulty as time goes on (in the case of Bitcoin), the cost-benefit factor of high investments, and high maintenance costs of commercial mining rigs. By the date of this publication, Bitcoin’s market capitalisation reached well over 7 billion. The cryptocurrency enthusiasts expect this to grow exponentially in the next 5 years. However crypto-currency would need a solid legal framework to function, for the protection of all players as this concept gets widely accepted. A
Crypto-currency accounts and ledgers can be opened by anyone, without the checks a commercial bank makes during the process of opening a bank account. This makes it a great facility for the poor and for others who are unable to make transactions through traditional banks. Also, compared with bank charges, cryptocurrency transaction costs are low. These are very strong selling points for crypto-currencies, which will continue to make them popular. It’s not all smooth sailing for crypto-currencies, though. It’s a fairly new concept and will go through ups and downs in its forward march. Bitcoin saw a number of great challenges in the last six months or so. They included: the rumoured ban in China, which brought the price from $1,300 to about $700 overnight; the arrest of a senior Bitcoin executive for money laundering; and the collapse of one of the pioneer Bitcoin exchanges. All these incidents had adverse effects on Bitcoin and the price plummeted significantly. Compared to fiat currencies, Bitcoin has been rather volatile—it is up over $550 at present. This is one reason for the general public to get discouraged about using Bitcoin actively. The second most popular cryptocurrency, Litecoin, and the other top end coins are gathering momentum, although the price appreciation of those is not so significant. The business community, including Sir Richard Branson, are busy setting up over 300 crypto-currency related start-ups worldwide at present. Time will tell the success of this mammoth industry. —S RAVINDRA GALHENA, is a Cryptocurrency enthusiast based in Loughborough, United Kingdom. He is curating Crypto-currency related materials into a Flipboard magazine. He works as a Maritime Consultant and has commercial interests in IT and other areas. Contact: +44 78 2839 5061 firstname.lastname@example.org He accepts Bitcoin tips: 1aSLEC4MNQNs48ozGAf2fVxv1LzdGxGFZ
XAPO—SECURE YOUR BITCOINS SPECIAL ADVERTISING FEATURE
In the past year the world of Bitcoin has experienced all sorts of ups, downs, missteps and advances. Sure, Bitcoin has made some huge strides in a short period of time, but the fact remains that we still have a lot further to go. Namely, there are still extremely limited options for being able to actually use Bitcoin as a secure, legitimate currency. Our journey began several months ago with a commitment to Bitcoin users that digital currency does not need to be plagued by the fear that one day you will wake up and your money will be gone, as has been the case with other first generation Bitcoin companies. In short, what the Bitcoin ecosystem needed was trust—trust in the digital currency and trust in the industry’s service providers.
by ROB MARSH
The task of implementing Satoshi’s roadmap is now in the hands of two parties—individuals who truly believe in the establishment of a global, digital currency, and companies such as Xapo who are pushing forward to provide those individuals with the necessary tools to achieve those lofty, albeit necessary aspirations. After tackling the issue of secure storage, it was a natural evolution for us to focus our efforts on addressing the pressing issue of providing the public with options for convenient, practical usability. Security and convenience are the cornerstones upon which we built Xapo, and they also serve as a two way street—the Bitcoin ecosystem needed the establishment of secure storage before even beginning to address any issues of convenience.
To i n s t i l l t r u s t i n t h e b u rg e o n i n g wo r l d of Bitcoin we created our proprietary s t o r a g e p r o d u c t , t h e X a p o Va u l t . O u r team of experts, with over two decades of experience in financial and transa ctional security, developed the Vault to help transform Bitcoin from its “anything goes” beginnings to a respectable currency that realizes a p rev i o u s l y u n a t t a i n a b l e ye t i n c re a s i n g l y necessary disruption to the world of finance—the establishment of a digital currency. Enter the Xapo Debit Card—the world’s first Bitcoin debit card that will automatically link to your Bitcoin wallet. The Xapo Debit Card will start to address the issue of a lack of usability and is a big step forward in the development of the Bitcoin infrastructure. For the first time, customers will have the ability to use Bitcoin at any online or offline merchant that accepts debit or credit cards. This makes it easier for users to pay with Bitcoin in real-time and makes it easier for merchants to accept payment. Even though an increasing number of merchants big and small have begun to accept Bitcoin, the only way to actually use Bitcoin to pay for something has been to track down a business that accepts Bitcoin, and then submit payment to the business’s accompanying Bitcoin wallet. Previously, this could only be done by scanning a QR code or by using a mobile app. While neither of those two options are particularly cumbersome, they are both a far cry from the ease and convenience of swiping a card.
Our world is changing at a faster pace with each passing day and the public is more receptive to change than ever before. Despite this, people are still hesitant to adopt changes that pertain to their hard earned cash. While such hesitance is understandable, it’s important to keep in mind that in terms of the global perspective only a small percentage of people actually use Bitcoin. If Bitcoin is going to improve upon the current financial system, it’s crucial that the improvements are provided in a way that is easily adaptable and convenient for the general public. With the Xapo Debit Card, we are allowing people to use an improved currency in the same way that they use a currency which is long overdue for innovation. While the future of widespread Bitcoin adoption appears bright, a way to spend Bitcoin bridges the gap between secure storage and convenient, practical usability.
ROB MARSH is the copywriter at Xapo, a position he has held since March 2014. Prior to joining the team at Xapo, Rob spent extensive time writing in a freelance capacity for a variety of clients in the Bay Area. Always priding himself on his versatility, Rob has written content and copy across the full spectrum of media and has covered every thing from bitcoin, jazz, real estate and consumer electronics while touching upon a little bit of everything in between. His bitcoin addresss is: 1JUqaKtfq3w8CPjWEYv2J4SMqRpeK7i8go
THE RISE OF BITCOIN!
Crypto Biz Magazine
By NATHAN WOSNACK
A sizable portion of a recent Federal Advisory Council, a Federal Reserve-commissioned committee of bankers that regularly advises the Fed’s board of governors, meeting was dominated by Bitcoin. As many have previously reported, one of the big highlights of the meeting was the mention in the meeting minutes that “Bitcoin does not present a threat to economic activity by disrupting traditional channels of commerce; rather, it could serve as a boon.”
A POSITIVE RELATIONSHIP BETWEEN THE FED AND THE BITCOIN COMMUNITY WOULD BE WELCOMED BY MANY, BUT OVERZEALOUS REGULATION WOULD SOUR THAT RELATIONSHIP
But the big question is, does this represent a thawing of the sometimes chilly relationship between US regulators and the Bitcoin world? And does this mean that the Fed is looking to regulate Bitcoin?
If the Fed does an about-face and tries to introduce stringent regulation, it will inevitably kill the Bitcoin ecosystem while bolstering the ecosystem of a different crypto-coin. Many are too reliant on the benefits of Bitcoin—namely the efficient transfer of capital it offers—for the system to die entirely. A new cryptocurrency will simply grow in its place.
The answer to the former of the two is still up in the air, and the party line on the second is, for now, a resounding ‘NO!’ In late February, Janet Yellen, the Federal Reserve Chairwoman, laid out the Fed’s current policy on Bitcoin. “Bitcoin is payment innovation that’s taking place entirely out of the banking system,” she said. “The Federal Reserve simply does not have authority to supervise or regulate Bitcoin in any way.”
NATHAN WOSNACK is a serial e n t re p re n e u r a n d p i o n e e r i n cryptocurrencies; first running B i t c o i n i n N o v e m b e r, 2 0 0 9 . He is involved as an advocate, miner, trader, and community s p o k e s p e r s o n i n Va n c o u ve r, British Columbia, Canada. He is the Founder and CEO of CryptØMiners and CryptØYouth, is on the North American Advisory Board for Cryptor Trust, and has joined as partner and Senior VP of Business Development with Crypto Biz Group (parent of Crypto Biz Magazine). A former telecommunications consultant with ten years’ experience in the industry, Nathan brings a unique perspective to the cryptocurrency space. Nathan accepts Bitcoin tips to: 1iTiY4hh35AcKhiX1QA4FQBGew4xAnxuj
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But can there be a middle ground? Part of the appeal of Bitcoin to many is the fact that it’s beyond the reach of regulatory authorities. However, for Bitcoin to go “mainstream” and have financial products backed by Bitcoin, there needs to be some form of regulation. The way to do this would be regulate large financial institutions that deal in Bitcoin securities or other financial products, but take a hands off approach to other Bitcoin businesses because, as Yellen said, they are operating outside of the banking system. It’s a best of both worlds approach.
Why did the price of Bitcoin go up in the last 4 weeks? The Fed announced no threat to the US currency and in fact could actually create a boon. Bitcoin’s brief history tells us as Bitcoin goes, so goes the entire crypto coin market. Values of all the altcoins can generally be expected to increase as well. So Is it time to buy? My answer is a strong ‘YES!‘ —S
The game changer on this is if banks get in on the action. Bitcoin isn’t the Fed’s to regulate, as Yellen said, because at the time it exists outside of the traditional banking system. Bitcoin-backed financial products are on the way, but the holdup is no doubt uncertainty about a Bitcoin regulatory environment that may exist in the future. The Winklevoss Twins, most notably, are working on a Bitcoin-backed ETF and no doubt there are other financial institutions planning a debut in the Bitcoin world.
Overbearing regulation will simply push cryptocurrencies further underground. While Bitcoin is anonymous when compared to traditional fund transfers, that anonymity is not perfect. There are ways to build profiles of users of Bitcoin by tracking their transactions, and with some real-world sleuthing it would be possible to get an idea of who the person is behind the hex code. Some users are already cognizant of this and use privacyaware coins like Darkcoin, services such as Dark Wallet, or Zerocoin Project to get around this problem. But as of now these services are niche, not mainstream. A regulatory regime that’s considered overbearing and restrictive by users will simply make these high-privacy coins and services mainstream, and Bitcoin will lose the modicum of transparency it has—transparency that’s required for it to grow and become accepted by more users and businesses. Smart, not restrictive regulation, however, could prevent this problem from occurring in the first place.
RIPPLE by MARTIN KREIDENWEIS
I was hooked. This just felt right. When I first saw this in 2006 I knew this was right. I believed: this must be part of the solution. I checked the progress every few months. Nothing really happened. I almost forgot about it. Then, when I checked again in 2013, it was back. It was back big. Funded by organizations with names like Andreessen Horowitz or Google ventures. Made for a world after Bitcoin. “That’s more like it.” I said. So what is this Ripple thing all about? Nothing new, actually. It’s exactly what people have been doing for thousands of years. And yet that is exactly what makes it so fundamentally new and great. People do things for each other every day, things they are good at. And they want things in return. At some point. Not all of it at once right now. Some of it later.
Division of labour. The global economy. An exchange of goods and services is basically never just barter. Someone always goes first. Imagine you’re a skilled mechanic. I am a farmer. In spring you provide me with a handy machine that helps me farm more efficiently. In return I promise to provide you with part of my harvest in fall. Until then we have this “I owe you” relationship between us. Informal credit systems (from Latin credere: to believe, to trust) like those have existed for thousands of years, long before any kind of physical money like coinage. A lot of economists postulate though that before money there was barter. The same kind of economists who believe that money is and should be a commodity. Gold would be a perfect match for this. Or Bitcoin maybe.
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No, it wouldn’t. It totally misses the point. The money thing is just a token. It ’s all about the informational value. Money is inherently about re l a t i o n s h i p s b e t we e n p e o p l e. Somehow this insight seems to have been lost in all those years. Time to bring it back. But we can’t just go back to a time when people did favours for each other, and could remember who did them a favour, and who deserved one
in return. That works in small, local communities, not in a global economy. What we need is a tool to keep track of all that information. But who says we need a central bank for that? Ripple can be this tool. Ripple brings what has worked well for villages with up to 150 people to a global economy. Ripple is a system that is built with exactly this purpose in mind: effectively tracking who still owes what to whom. We use numbers for that today. And abstract units of account, like “USD.” That’s okay. Ripple can work with that. Imagine the machine in our little example was worth 500 dollars. You, the mechanic, got IOUs worth 500 dollars from me. I now owe you crops worth that amount. Or actually to whoever presents those IOUs back to me. S o n ow yo u c a n g o s h o p p i n g with those IOUs. Buy some wood. And stuff. That is essentially what the Ripple system can do. It provides a way to issue and transfer IOUs for whatever. Usually for units we are familiar with, like dollars. This all assumes your sellers trust me— the issuer of those IOUs. It breaks down when this trust doesn’t exist. When the wood’s seller doesn’t trust me, he won’t accept my IOUs for payment. Maybe he would trust his friend, the innkeeper, for 100 dollars. And the innkeeper would trust in my IOUs. So you could go to the innkeeper, ask him to write out an IOU for some good meals worth 100 dollars, and trade it for my IOU. Then just take the innkeeper’s IOU and get some wood for that. Easy. Not. It makes your head hurt even thinking about it. You shouldn’t need to think about it. That’s why Ripple does all that automatically. If you want it to. Having 5 USD with Bitstamp and trusting them with up to 100 USD In Ripple trust is explicit. You implicitly trust your bank when you put money in your checking account. In Ripple you say: I trust this person, or this bank, or this company for up to this exact amount. Did you notice we didn’t use any actual government-issued money for all our trading? Just lines of credit between people and organizations. No need to acquire any Bitcoins from miners. Any system that prevents this kind of economic activity, by requiring that the participants have money to start
out with, can never be a complete solution to the economic problems the world is seeing today. Ripple is so conceptually decen tralized that it makes this possible. This doesn’t mean that banks will not be necessary any more. There is still value in having a trustworthy third party that can aggregate people’s trust, and give out insurances and loans. And banks can act as interfaces to the non-Ripple financial system out there, being called “gateways” in Ripple. Some people might have to re-learn that money can just work like that. And we have a unique opportunity at the moment for this actually happening. I can already see this happening. “Isn’t Bitcoin just speculation?” —Bam! People are talking about money right now. Not just about how to earn more, what to spend it on, about never having enough of it, but actually about what money is. Changing our basic way of understanding the world is always a slow process. Why should the generation that grew up on the Internet care though. They have all the tools they need. C o m p a n i e s i n te g ra t i n g R i p p l e are popping up everywhere. New gateways in different countries seem to open up every week. Actual banks—like Fidor in Germany—are starting to use Ripple to make money transfers cheaper and faster. With it’s built-in exchange Ripple actually enables easy paying and trading with and between all the existing currencies in the world. Sending some Euro inside Ripple Say I want to pay somebody in EUR. Ripple offers me the choice of sending any currency I have in my wallet and converting it to EUR automatically. Now how does Ripple do that? Well, anybody on Ripple can trade between currencies. This decentralized exchange is built right into the network. Just create an offer stating: “I have those 10 EUR in my wallet and would like to exchange it for 15 CAD.” As soon as somebody accepts that offer either explicitly or implicitly—by making a cross-currency transfer—your trade will execute. XRP? XRP. When using Ripple you will definitely come across this. Besides being able to handle all kinds of other currencies, there is that new,
built-in currency in Ripple called XRP (also—a little confusingly maybe— called “ripples”). There are two reasons for XRP to exist inside the Ripple system: FIRST, XRP ensures the security and availability of the system: You need to keep a minimum amount of ripples (worth just a few cents) to own an account in Ripple. And a very small amount of ripples is charged for every transaction you make (currently 0.000012 XRP, equal to 0.00000008 USD). The XRP charged as transaction fees are actually being destroyed by this process; nobody gets them. So for everyday transactions Ripple is essentially free. But if somebody wanted to attack the system by flooding it with millions of bogus transactions, this would become expensive pretty soon, especially since the network will increase the fees temporarily during such an attack. SECOND, ripples play the role of a bridge currency. Imagine you are in Canada and have Canadian dollars and you want to pay somebody in Kenya with Kenyan shillings on Ripple. There might not be a big market between Canadian Dollars and Kenyan shillings in Ripple. But if Ripple is reasonably established in a currency zone, there will be a liquid market between ripples and the local currency.
XRP is the only currency in Ripple without counterparty risk. If you’re holding anything else but XRP in Ripple, you’re actually not holding the thing itself, but trust somebody else with it. You’re essentially holding an IOU. This becomes particularly obvious when you hold some gold or silver in your wallet. It’s really exactly the same as with your checking account in your bank: you trust the bank with keeping your dollars safe and making them available to you on your request. Where do those XRP come from?
The remaining XRP are being used by Ripple Labs to fund their operations. Their goal is to make Ripple a success and thus increase the value of their XRP holdings. Everything about Ripple is actually open source. This means the Ripple source code can be audited, run and improved by anybody. Ripple wallet balances —The present and future of Ripple Ripple already is a perfectly working system for payment, credit clearing and currency trading. Payments clear in two to ten seconds. Every time. No need to wait for an hour to get six confirmations on the Bitcoin blockchain. Or are you still sending checks in the mail? You can use Ripple as an universal wallet for all kinds of regular and crypto-currencies. Getting started with Ripple is really easy. Just use the web-based client on rippletrade.com. To get national currencies into Ripple, use one of the existing gateways, like SnapSwap or Bitstamp. If you already have some Bitcoin, it’s even easier. Just send some Bitcoin directly to your Ripple wallet using the btc2ripple gateway. That’s just the click of a button away in the Ripple wallet. This gateway also acts as a twoway bridge in the Ripple system: You can actually send your Bitcoins from your Ripple wallet directly to any Bitcoin address. The system will redeem your Bitcoin IOUs and makes the gateway send the Bitcoins to the address you specified.
Future, phase 1: semi-centralized use of Ripple In the next few months we will see more and more gateways in different parts of the world. Ripple gateways already exist in the USA, Canada, Mexico, Europe, Singapore, China, New Zealand, and other places. Remittance is one common real world usage Ripple is targeting now: Making it more pleasant for people to send money all over the world. Having to rely on services like Western Union for that is not exactly cheap today. Ripple is still under heavy development. It will become easier to use for all kinds of scenarios. It will soon have conveniences like recurring payments and far more advanced automation features (“smart contracts”). For the near future people will use the Ripple system in a quite centralized manner, similar to the banking system we have today. A very large percentage of all money is managed by just a few of the largest banks. The equivalent of those banks inside Ripple are the large gateways. Most users will have balances with those gateways only. Future, phase 2: real monetary decentralization Further into the future I can imagine more and more people understanding and appreciating the concept of trust relationships inside Ripple. They will start using Ripple in a more decentralized manner. This is a very powerful concept that could eliminate many of the inefficiencies we see in today’s monetary systems. Ripple might be able to replace large parts of our existing payment systems. I don’t see it completely replacing Bitcoin however. Bitcoin has found its place in the world as a trust-less money without counterparty risk. Our ancestors only had to rely on barter when dealing with less trusted partners from far away. Then as now, we can leverage far more efficient credit relationships for our day-today business with individuals and organizations we know well. —S
Crypto Biz Magazine
MARTIN KREIDENWEIS, MSc, is a software developer and Agile consultant in his day job. He has been writing software on the Internet since the late 1990s. His obsession with trying to understand systems of any kind, and making efforts to improve them, is deeply ingrained in his nature. Since 2004 he has been reading, thinking and talking about monetary systems. This involved co-founding a local community currency in southern Germany. Martin currently lives in Vancouver and is delighted by the growing crypto-currency community there. Martin also accepts tips. Bitcoin: 16EtgVpUbL7jZgcYsYxo6QmVRgX3fTsLRc, Ripple: ~martink (rpUNr3n6SdqTX2obxt78RRVQBS9ZJ3az6N)
So what the Ripple system will be able to do automatically, is convert your Canadian dollars to XRP, and then convert those XRP to Kenyan shillings, always looking for the cheapest such path that is available.
100 billion XRP were programmed into the system. There will never be more. 20 billion of those were kept by the inventors of the Ripple system. The other 80 billion XRP were given to a company called Ripple Labs. They now employ the developers that actually program the Ripple source code and ensure the Ripple system keeps running smoothly. Ripple Labs intends to give 65 billion of those ripples away to the Ripple users. Twelve percent of those have already been distributed.
Amidst these radical times of the early twentyfirst century we face complex problems. Our modern economic system is showing signs of structural instability, we’re overly dependent on fossil fuels, and experts are forecasting that global warming will be catastrophic unless mitigated. How can we transition from legacy systems to more sustainable systems without our efforts being in vain? Powerful new ideas are emerging from currency theory; known as “complementary” or “transition” currencies. It appears that currencies can be intrinsically backed by values that help maintain biodiversity and conditions for life. This is a potential new role for money, and crypto-currencies could be hugely influential in evolving this concept. It may also shine a more positive light on the platform that is all too often misrepresented.
Complementary Currencies for Climate Change (4C) On my travels to Australia I ran into Dr. Delton Chen who is developing a policy that will reward digital currencies, called 4C, to those who reduce their CO2 emissions. He argues that rather then just using taxes or carbon credits to mitigate, we need governments to establish a globalized Internet currency that will be issued upon mitigation. A lot of us need to be reminded that Global Warming does not just mean warmer summers. I t ’s wo r s e n i n g f l o o d s , d ro u g h t s , o c e a n acidification, population displacement, rising sea levels, expensive food, and ultimately economic distress and political turmoil. Upon asking Delton what Global Warming could mean for future political tensions, he replied:
by CAMERON GRAY
A PROPOSAL FOR WORLD TRANSITION
Can cryptocurrencies help stop climate change?
“It’s hard to imagine the impacts of such massive change, however it seems possible that geopolitical tensions over resources could erupt into local and regional conflicts, and eventually a breakdown of negotiations under the United Nations. The warming will continue unless we mitigate, and so without an effective plan for strong mitigation we run the risk of international goodwill completely evaporating and force becoming a default policy. Climate change is a ‘risk multiplier.’ For instance, how will Climate Change increase the risk of nuclear conflict? Such questions are a cloud over our heads— should the climate be allowed to undergo major changes this century?” —Delton Chen
Chen believes a globalized currency ‘reward’ system backed by governments may be our best chance to reduce greenhouse emissions and limit the impacts of climate change. Taxes are unpopular and carbon credits get stuck in a political quagmire. Chen said that the world needs a currency and a profit motive to exponentially reduce our carbon emissions over the coming four decades. We should take the 2008 – 2009 Global Financial Crisis as a lesson on how fiat currencies can be used by governments to cover expenses. He says that we need to think objectively about this, and focus on how we can use the power of money to solve the problem of climate change. This is what Global 4C is all about.
How does Global 4C work? The Global 4C mechanism would loosely work like this: Four of the most influential nations would each host a 4C currency, and then negotiate the rules for 4C trading with the rest of the world. These rules would only affect the way that 4C are traded after the 4C are minted into existence. The way that the 4C money will be minted is the most important concept, and this needs to be egalitarian: upon 100kg of CO2-e that is mitigated, one unit of 4C will be issued to the enterprise that did the mitigation. This reward process would be codified for all manner of mitigation technology, including energy efficiency, cleaner energy, abatement, reforestation, etc.
It appears that ‘programmable money’ may have some advantages over fiat, in terms of speed and efficiency, and this may be of interest to governments and investors in the near future. Global 4C could take advantage of the ability to program 4C currencies to greatly improve the efficiency of administration, especially for contracts and verification. Recent examples that head in this direction include Fidor, a bank in Germany that announced it will incorporate Ripple into their system, and the Canadian Government, who also attempted a digital currency, Mint Chip, but have since abandoned the project. 4C will be an international currency that could help us transition into new economic territory. The future economy needs to be linked to things like sustainable energy, climate mitigation, biodiversity, and community. There are already efforts being directed this way with digital currencies such as Permacredits and SolarCoin.
Support Global 4C Since my visit to Australia, Delton has brought me on as part of the team as Crypto Currency Public Relations. We are entering Global 4C into the MIT contest called Climate CoLab to promote the policy. The contest objective is to convince the United States Congress to put a price on carbon. If you would like to learn more about how the policy works, details can be found on: climatecolab.org.
(The author of this article is affiliated with the project) CAMERON GRAY is a Bitcoin and Cryptocurrency enthusiast w h o s e e s a b r i g h t f u t u re fo r the potential of ‘Programmable Money.’ He is the co-founder of Decentral.Bangtown, a community incubator in Vancouver, Canada f o r t h e i d e a s b e h i n d B i tco i n and Open Source. Cameron is an advocate for decentralized, and trustless systems and t h e c re a t o r o f w w w. d e c n t r l . org, a directory for disruptive technologies. BTC Donations: 18r6pd8XYDHxwP2EUUi6M89i6rB2gvo5b7
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We may be the only team in the MIT competition proposing “smart money” as an economic tool to mitigate carbon, so make sure to vote for us if you believe in the project and digital currency. We could use all the support from the crypto community as possible.
Governments and central banks will be in charge of leveraging the 4C price with currency trading. This economic power would be sufficient to transition the global economy towards decarbonization. The issuance mechanism would be limited by the world’s ability to mitigate, and governments would have a master ‘control knob,’ the 4C price, to manage this process. By increasing the market price over 40 years or so, the economy would be incentivized into transition. It’s a rational system.
The policy website is still under construction, but the link is g4cm.org, or Google search ‘Global 4C Mitigation Policy.’ —S
Politically Feasible? Chen thinks that if a leading nation, such as the United States, would legislate 4C, then other countries would come on board to negotiate a Global 4C Mitigation Protocol. The political appeal of this monetary approach may be strong, because the 4C price will start at zero dollars and there are no taxes involved (i.e. easy to find agreement).
THE MISCONCEPTION OF BITCOIN by LISA CHENG
When we talk about Bitcoin to those who are nonconverts, there is often a glazed look or sneer which follows a comment suggesting that Bitcoin is a scam, or my favorite, “didn’t that guy go to jail?” We can thank mainstream news and media for this misconception of Bitcoin and what’s at its core—a checks-and-balance payment system. This article will explain the basic fundamentals of Bitcoin, explore some of the prevailing views, and suggest a new approach for communicating what Bitcoin is really about. In following Jeff Garzik, Bitcoin core-developer who said—in Amsterdam during Bitcoin 2014—there are three fundamental aspects to Bitcoin:
1 Distributed 2 Consensus 3 Networks
Crypto Biz Magazine Page.30 June.2014
It’s interesting that you won’t find this detail in the evening news or morning newspaper. Those that seek knowledge from these sources will learn soon enough that the information and message of Bitcoin is skewed in a certain direction. This is understandably the premise of mainstream sen sationalist media. With that in mind—the societal understanding of Bitcoin is in its infancy. There is enormous potential to help shape this dynamic in what we do and how we act. By taking the approach to understand the current prevailing views of Bitcoin and explaining that the system is subject to the same weaknesses of the current banking system, we can help form a new perspective. Bitcoin, banking, and the systems we help create are reflections of our own human behaviours—inclusive of all the emotions of greed, jealousy, fear, and envy. Businesses like Mt.Gox and Silk Road are little different from the Wall Street banks and illegal marketplaces that run the world today. The only differences include the type of money they use, who’s in charge, and who benefits. The people in charge of Mt.Gox and Silk Road are human and capable of making illegal decisions. Technology and Bitcoin alone are not capable of this. So when I hear that people think Bitcoin is a scam, I try to draw a comparison and explain that the statement is the equivalent of saying the Internet is a scam. Or that e-mail is a scam… sounds crazy right? You might be surprised how little people are interested in following up their misplaced Bitcoin assumptions with time to understanding what’s really going on.
The most popular misconceptions about Bitcoin include:
1 Bitcoin is a scam 2 Bitcoin is shutdown 3 The CEO went to jail 4 Bitcoin is in decline My response when I hear misconceptions is to listen. Try the next time you hear a misplaced comment about Bitcoin to take the time to understand where it came from and who said it. This is often enough evidence of the mainstream understanding and where the greater opportunity is behind it. And if you are interested in the seeing the Bitcoin price rise, it would be to your benefit to pay attention to what the average person thinks. Stemming from this discussion, I’m often asked how someone can make money in Bitcoin— my answer is typically, what is your problem with the current financial system? The principles and promise of Bitcoin can solve most of those issues, if that message is communicated well enough and correctly. Let’s take the approach of Jason King, the founder of Sean’s Outpost who, during the Bitcoin Expo in Toronto, said it best, “The message should say Bitcoin fed 800 people and gave out 1000 blankets to the homeless.” Rather than Bitcoin is ‘crashing’—Bitcoin is a force for good. Can you think of how the message of Bitcoin can be shaped differently? I would be interested in hearing your ideas and helping them become a reality. The lesson here is a car is only as good as its driver, and the same principle applies to value in all its various forms. The correct approach is that we all have to be better drivers in Bitcoin. —S
LISA CHENG is the co-founder of Distributed.buzz and the CEO of the Vanbex Group. She is the force behind the popular news aggregation site BitcoinRegime. co m a n d a b e h i n d t h e s ce n e s advocate of Bitcoin 2.0 and blockchain technology. She comes from an accomplished background after having worked at Fortune 500 companies and technology startups involved with Big Data, algorithmic trading, and enterprise systems. Lisa’s time is now focused on consulting and planning for new cryptocurrency projects. She is located in Vancouver, British Columbia, Canada and you can reach her via Twitter @lisacheng. Lisa also accepts Bitcoin tips: 17pAnaBowKr92YcBebi6RrTJf3gogM4Fp8
Crypto Biz Magazine Page.32 June.2014
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H OW TO S E T U P A N AS I C M I N E R BLOCK ERUPTER CUBE by DOMINIC STEIL
4 Plug one ethernet cord from the Block Erupter
Cube to your Internet router and the other ethernet cord from your router to the wall.
5 You can now turn the power switch on the Corsair Power Supply. Some lights should blink and the fans on both machines should start. (If nothing happens make sure that you have the plastic electrical connector on, this took me a little bit to figure out).
Your ASICMiner Cube should be powered on.
Configuration So you got your hands on a Block Erupter Cube but can’t quite figure it out? This is the tutorial for you. The ASICMiner Block Erupter Cube machines run 3 0 – 3 8 G i g a H a s h e s /s e c . Th ey h ave f i r st generation ASIC chips, a built in cooling system, and they’re pretty awesome.
Download the bridge for the configuration here.
1 Here come all the tricky configuration steps. It will probably take you a while to troubleshoot everything but it will all be worth it when you’re mining Bitcoins at 30 – 38 Gh/s.
2 Set up your Internet router so that the
DHCP addresses range is from 192.168.1.100 – 192.168.1.254. This process varies on a number of different routers. You want to look for the DHCP range and set it to the one listed above.
Here are the steps you need to take to get the cube powered up, configured, and hashing.
Crypto Biz Magazine Page.34 June.2014
First, this is the hardware you’re going to need to buy:
Corsair Builder Series CX 500 Watt ATX/EPS 80 PLUS (CX500)
ASICMiner Block Erupter Cube 30GH/s to 38GH/s Miner
Two ethernet cords
Setup and Power on Unbox the Corsair 500x power supply and the ASICMiner Block Erupter Cube.
1 Plug the fuse into the back of the ASICMiner
Block Erupter Cube. The fuse will come in the box. It is a metal with a green casing.
The ASICMiner Block Erupter Cube default IP address for configuration is 192.168.1.254:8000
3 Type 192.168.1.254:8000 into your browser. If everything is setup properly, you will be at the cube’s blue configuration page. If you cannot get to this page you may have to troubleshoot a few things. It took me a while to figure this out. There are a lot of different variables that are in place.
Make sure the IP address of your router is 192.168.1.1
Make sure the DHCP range of your router is 192.168.1.100 – 192.168.1.254.
Update to the latest version of your Internet browser
Make sure you are connected to WiFi
2 Plug in your two 6 PCI-E connectors from the Corsair 500x power supply into the back of the ASICMiner Block Erupter Cube.
3 The miner will come with a plastic electrical connector. It should come with a green paper clip. You need this to jumpstart the miner.
If you still cannot get to the blue configuration page on your computer, try using a different computer and typing 192.168.1.254:8000 into the browser.
Your configuration page should look like: IP: YOURIPADDRESSHERE MASK: 255.255.255.0 Gateway: 192.168.1.1 Web Port: 8000 (keep the same) Primary DNS: (keep the same) Secondary DNS: (keep the same) Ports: 8332,8902 You can run the mining proxy from a Windows OS and configure it from a Mac OS. Once you get to the blue configuration page, you’ll see a number of 000’s at the top of the screen, as well as some buttons to adjust the settings of your ASICMiner Block Erupter. Almost there!
Hashing 1 The ASICMiner Block Erupter Cubes run on
the GETWORK protocol so you will need to set up a local proxy and a cloud based proxy. The local proxy can be setup using Slush’s Pool Stratum Proxy.
Go to Google and type in “Stratum Proxy.”
2 For the port, type in 8332 and your IP address
can be found by using run –> cmd –> ipconfig/ all in the Windows command line.
Underneath that you will need to put your
worker user name and password for the local pool. Create a new worker in Slush’s pool and enter the information twice in the last box. Like this:
user:password: username. worker:password,username.worker:password After your finish imputing all this information. C l i c k t h e U p d a t e b u t t o n o n t h e c u b e ’s configuration page. Go back to your configuration page with the URL: 192.168.1.254:8000 You should now start seeing your miner begin to hash. You can change between the primary/ secondary pool by clicking the pool button. You can also overclock the miner up to 38GH/s by pushing the clock button on the configuration page. The hashing output from the miner will depend on your Internet connection and how cool you keep the miner. Best of luck setting this machine up. If you have any questions about the physical setup or configuration of the cube, feel free to contact me by email: email@example.com. If you are still having trouble setting it up the cube, check out these videos on how to set it up by JonesGear.com. —S
Click on the first link and it will direct you to Slush’s Mining Proxy. The download is available for Windows OS.
Server addresses: YOURIPADDRESSSHERE,westcoastbtc. cloudapp.net
because it is for the local proxy and the cloud base proxy.
3 For the cloud base proxy you can use westcoastbtc.cloudapp.net and port 8902.
DOM STEIL is an entrepreneur from the Silicon Valley. He is well versed in a variety of technological fields and has experience as a business analyst at the international enterprise level. For more information, visit his blog at www.dominicsteil.wordpress.com. Dom also accepts Bitcoin tips to:
Yo u r I P i n f o r m a t i o n s h o u l d l o o k l i k e : YOURIPADDRESSSHERE,westcoastbtc.cloudapp.net
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You have to enter the information twice
TAKING A CLOSER LOOK AT THE GRIDSEED ASIC MINERS by SAM REYNOLDS
Crypto Biz Magazine Page.36 June.2014
Between Bloomberg’s flawed but prominent obituary of the small-scale Bitcoin mining industry, to brand name miner manufacturers facing lawsuits from unhappy customers, the prevailing attitude is things are not well in the cryptocurrency mining sector. Most people think: Mining is not profitable unless one makes a massive investment in the mid- six figures; many companies that produce Bitcoin miners can’t deliver as promised—or deliver at all. While Bitcoin commands most of the attention from media and investors, there are also other cryptocurrencies such as Litecoin, Dogecoin and Peercoin that are collectively known as altcoins. Unlike the Bitcoin market, altcoin markets do not have similar saturation levels. That means that mining is much more accessible, and doesn’t require a major investment in equipment. Fortunately there’s an alternative with the Gridseed ASIC mining kit and “altcoins.” Both CPU and GPGPU altcoin mining is much more efficient than it used to be, until the scaled up heat and power draw proves to be a problem. Until now the small altcoin mining community had to rely simply on CPUs or GPGPU (when the CPU is assisted by the GPU) computing to mine coins. Application Specific Integrated Circuits (ASICs) which are the only way to profitably mine Bitcoins were not available to mine altcoins because they are specifically designed to attack the SHA256 encryption algorithm used in Bitcoin, while altcoins use a different algorithm called SCRYPT. Like well known ASIC miners from companies like KnC or Butterfly Labs, Gridseed miners are also ASIC based. The difference is each Gridseed runs at a few hundred kilohash, making it possible to scale up or scale down depending on requirements. Users can link the Gridseeds to a host computer via USB or use a Raspberry Pi running CGMiner as a controller.
Gridseed miners require less than 400W of power, meaning that they will work with a standard PC power supply and standard wall outlet (whereas some ASIC Bitcoin miners require a specialized high voltage line). When used with a SCRYPT altcoin multipool they will still prove profitable considering the lower per-unit cost and power requirements. Entry level users looking to get into the mining business may want to consider a Gridseed miner for its low entry level cost and power requirements. —S
SAM REYNOLDS is a Canadian journalist based in Taipei. He accepts Bitcoin tips: 161c47euYYWeVuomvF7s8wrFbsaGvjvmbu
CryptØMiners The world of cryptocurrencies is an exciting and scary place. For every opportunity this dynamic world presents, there are challenges and pitfalls. Enter Vancouver’s CryptØMiners. A diversified cryptocurrency and altcoin consultancy, CryptØMiners offers a number of invaluable services such as cryptocurrency and altcoin mining hardware sales, exchange house as well as other private client services to a discrete and select roster of clients. As a preferred reseller of the Hash Master Gridseed miners, CryptØMiners allows investors that are cautiously optimistic about the future of cryptocurrencies to invest in the ecosystem with these low start-up cost and high return miners. The Gridseed miners do not have the same power requirements as other cryptocurrency miners, and are in-stock now (other miners require pre-orders with long waits), meaning that there is less risk to buyers when compared to other mining hardware. Contact CryptØMiners today to see how you can make cryptocurrencies and altcoins work for you: firstname.lastname@example.org.
WHAT MAKES A ‘GOOD’ PASSWORD MANAGER GOOD?
Crypto Biz Magazine Page.38 June.2014
by SEAN COMEAU
Before we can decide on which password manager is a good one to use, we will need to consider what “good” means for a password manager. We will describe a set of criteria that we will use in evaluating a number of password managers. The first criteria will be in the category of usability. First, the password manager must be easy to obtain and install. It should be available from the usual sources for each platform, and it should install with standard methods used by a typical user not requiring any advanced techniques. The manager should work across many platforms and browsers. Many people have several devices with various
operating systems. They need to access passwordprotected websites from all of these devices. If a change is made while using one device, the other devices should synchronize and pick up the new password without a lot of extra input. It should work on laptops, desktops, tablets, and smartphones, and require initial setup on only one device. It should work on Windows, MacOS, iOS, Android, and Linux. It should work on any of the major web browsers used on these platforms. Closely related to this is the ability to work remotely. The reality is that many of us with our multiple devices have to access passwords at home, at work, and on the road. The password manager should work seamlessly no matter where we are.
One essential requirement is that the encryption used in the manager should be strong, industry standard encryption. It is a well-known fact among security experts that proprietary or newly-invented encryption systems are often insecure. Paradoxically, well-known systems are safe. They do not rely on secrecy to be effective. These are the systems that should be used by a good password manager.
Once installed on any operating system, it should be easy to get it set up and working. If another manager has been used, a handy feature is the ability to import the database of passwords from the previous program. If the web browsers have been used to manage passwords, the new password manager should be able to import from these as well. Once operating, the manager should be able to detect new password events and capture them effectively. It should be able to auto-fill commonly used passwords and other forms. A nice feature is the ability to securely store notes as well as passwords. Ideally it would be able to handle passwords in other applications and handle passwords for decrypting files in the operating system. Does the password manager require special hardware, such as a USB key? If so, will this affect the portability? These can be effective for security but highly incon venient if forgotten at home.
The greatest scrutiny will come in the area of effectiveness. The main idea of a password manager is protection. The problem with passwords is that a good password is hard to remember. The same length and complexity that makes a password safe also makes it difficult to memorize. For maximum safety you should have a different password for each site you use. This way if any one site is compromised, no other sites will be at risk. The task of memorizing many complex passwords is too daunting for normal human beings, so they end up with the same poor passwords on all of their sites.
The encryption has to be strong and ideally, impossible to crack. Only the user with the legitimate key should be able to see the passwords. The central question for a good password manager is “is it secure?”
Cross-platform and remote operations require some form of synchronization and centralized remote access. However, this opens a major security concern. If a database is available for remote access and synching, it is also available for remote hacking. It should be very clear what methods are used to prevent unauthorized access. Web applications are extremely insecure and will not be considered to be safe for this review. The password manager should help you to enforce good password practices. If it does not forbid insecure passwords such as dictionary words, it should at least warn you and give a strength indicator. It should give the option of generating truly random passwords for you. Another good option is the ability to set expiration dates and generate reminders. It is important to remember that you are not just protecting against random attempts to log in to an account. If the password database is stolen, the crooks then have the ability to run many cracking routines. Poor encryption practices combined with poor password practices make even random passwords easy to decipher. For each password manager, we will be commenting on each of these factors. You will need to decide which ones are important to you and choose a password manager according to your needs. —S
SEAN COMEAU is a computer security and cryptography enthusiast based in Vancouver, BC, Canada.
Crypto Biz Magazine
The password manager solves this problem by storing passwords and making them available when needed. The passwords can be unique for each site and complex enough to be safe. The essential function of the password manager is to store these passwords encrypted so that only you can see them.
The major caution here is to consider who has the credentials needed for authorization. If you are giving these credentials to a company that manages authentication, there is a security risk because they may botch the encryption or other security and the credentials may be stolen. The essential condition for security is this: is the company forthright and open about what they are doing? If they are, then you as the potential customer can decide if the risks are acceptable.
Finally, some people need the ability to share sets of passwords with others. In this case, a password might be updated by another person, not the same person on another device. The manager should be able to synchronize these events well. This is typically done with record-level synching.
Another security feature is 2-factor authentication. A password is combined with a hardware key or a code sent to a mobile device. This may offer an increase in security, but also prolongs a login and can be inconvenient if the hardware is not available. Worse yet, it can be left behind in a remote computer. This is frequently offered as an option to those who don’t mind any potential inconvenience. Another option is to trigger two-factor authentication only when logging in from a given device for the first time.
THE SOUL OF BITCOIN by KRISTOV ATLAS
As long as there have been inventions, the inventors who created them have struggled with the unexpected ways that their technology would be used by the world they gifted it to. Zyklon B, originally designed as a disinfectant and
are good at cutting off the heads of centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.”
Crypto Biz Magazine Page.40 June.2014
Despite the intentions of Satoshi to help people escape the hydra heads of central bank inflation and capital controls, the habits of casual Bitcoin users have lead many to grow concerned about the possibility of widespread financial surveillance in the Bitcoin network. The same blockchain technology that liberates us from reliance on fiat currencies invites bad actors to track our finances by recording each transaction in a public ledger. This was originally addressed in Satoshi’s design by encouraging users to generate a new Bitcoin address for each transaction. However, users’ frequent address reuse and propensity to link their public identities with those addresses has permitted privacy researchers to easily tie user identities to their Bitcoin addresses. pesticide, was infamously employed by the Nazis during the Holocaust. Einstein’s revelations for physical relativity made possible nuclear attacks on Japanese civilians. The Wright brother’s endowment of mechanical flight to humanity was proceeded just 10 years later by the first aircraft bombers. The man, woman, or group of people known to us as Satoshi Nakamoto is one of the most recent and notable people to learn this lesson; There is a battle underway for the soul of Satoshi’s invention, Bitcoin. Bitcoin itself is devoid of political opinion—a mere platform for exchanging value and recording data globally—but its creator was undoubtedly motivated by the agenda of human liberty when designing the protocol. Back in 2008, when Satoshi was still writing publicly archived messages, he confessed his aspirations in a post to a cryptography mailing list. “We can win a major battle in the arms race and gain a new territory of freedom for several years.” His desire to create a censorship-resistant platform for payments beyond the reach of nation states was evidenced when he wrote: “Governments
For some in the Bitcoin space, this is not only positive news, but a trend to be continued. Political entrepreneurs Matt Mellon (of the Mellon banking family), Alex Waters, and Yifu Guo started Coin Validation in late 2013, with the intention of creating a governmentapproved list of acceptable Bitcoin addresses, implicitly blacklisting addresses not on the list. Such a move, if widely adopted, would cripple the crypto-currency’s privacy and fungibility. More recently, Jeremy Allaire launched Circle, a Bitcoin-based financial services company. The multi-million dollar-funded startup has been met with suspicion by those carrying the liberty torch for Bitcoin. Allaire’s language has featured many of the same tropes introduced by financial regulators looking to strip Bitcoin of its potential for human liberation, invoking phrases like “consumer protection,” and welcoming additional legal regulations that he asserts will “ease consumer concerns.” Even leading Bitcoin developers have come under suspicion as opponents to Satoshi’s vision. Mike Hearn, an active participant in Bitcoin Development mailing lists and lead developer of
would give Bitcoin users a little more breathing room from spy agencies, privacyunfriendly corporations, and stalkers. Other software developers have taken this pursuit a step further, splitting off from Bitcoin and creating competing crypto-currencies designed with user privacy at their core. Darkcoin, an altcurrency developed by former stock trader Evan Duffield, is o n e s u c h p ro j e c t . D raw i n g from the work of anonymous electronic cash researchers like David Chaum, Darkcoin uses its original DarkSend technology to permit users to transmit funds in secret. Th e p r i ce o f D a r kco i n h a s responded to consumers’ thirst for privacy, quadrupling in the last month.
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On the other side of the ideological divide, thought leaders such as Amir Taaki and Cody Wilson have advocated for the extension o f f i n a n c i a l p r i va cy. Ta a k i a n d Wi l s o n i n recent months have collaborated with other programmers to crowd-fund and develop Dark Wallet, a new, privacy-centric Bitcoin client. Dark Wallet allows users to mix their identities together to disrupt the record of transactions on the blockchain. Such efforts
KRISTOV ATLAS is a network security and privacy researcher who studies crypto-currencies. He is the author of Anonymous B i t c o i n : H o w t o K e e p Yo u r Ƀ All to Yourself, a practical guide to maximizing financial p r i va cy w i t h B i tco i n. K r i stov is also a correspondent for t h e Wo r l d C r y p t o N e t w o r k , appearing regularly on the weekly roundtable show “The Bitcoin Group,” and host of “Dark News,” a show about uncensorship technologies. Kristov also accepts Bitcoin tips: 1H694KgneawqRfyZzR2yJ7oTvNN2EJghxm.
the alternative Bitcoin implementation, Bitcoinj, was accused of collaborating with government officials to hunt down participants in the Bitcoinbased dark market, Silk Road, and criticized for his collaboration with Jeremy Allaire’s startup. When he learned of the arrest of alleged Silk Road administrator Ross Ulbricht, Hearn celebrated the news on the Bitcoin Talk forums and characterized Ulbricht’s views on voluntary trade as “extreme.”
The fate of Bitcoin has yet to be determined, but all parties involved are laying their sweat, te a r s , a n d ve n t u re c a p i t a l money on the line to claim victory. Despite the claims of opponents of Satoshi’s vision, ideology cannot be separated from the critical choices we will making over the coming months and years. In a recent epistle sent to the unSYSTEM mailing list, Amir Taaki wrote: “All this talk of Bitcoin as being politicallyneutral is a way of downplaying [...] values[...] You can never be politically neutral. That’s a fantasy. Technology embodies values. Satoshi had values.” —S
TATIANA’S JOURNEY INTO THE FIRST EVER ARTIST COIN
by TATIANA MOROZ
Crypto Biz Magazine Page.42 June.2014
Bitcoin has the power to take money out of the war machine. It has only started to reveal it’s potential as a liberating force in the third world. Bitcoin transactions have minimal fees—less than 1% to send money worldwide as opposed to Western Union’s 20 – 25%, in certain cases. Money is transferred instantly. For the first time, people can hold onto wealth where there is no banking system. If a government collapses, people can convert their currency quickly and easily into Bitcoin with anonymity. Microdonations have become more frequent and person to person networks grow daily. Charitable giving has become more efficient and accessible.
My name is Tatiana Moroz, and I am a singersongwriter and entrepreneur. I have been in the activist world for a few years now and have performed at countless rallies, conferences, and festivals worldwide. I believe it is my responsibility as an artist to help bring about social change, open minds, and a lot of my music reflects the times we are in. This convergence of passions is a dream come true. However, along my artist’s path, somehow I find myself in the middle of Bitcoin technology. I am creating the very first artist-based crypto-currency, with the help of some very innovative people, called “Tatiana Coin,” launching June 3. Our aim is to explore how metacoins and tokenization can change how creativity is funded. While I occasionally feel like a fish out of water, I am learning and am excited for the opportunity to be a pioneer. My activism has always been strongly rooted in the anti-war message. I have learned quite a bit about economics, and realize the damage that the central banks do to a world economy. The way that money is printed to fund the war machine is obscene. The blood that is spilt with the theft of my wealth is something that I rally against daily. I’ve spent countless hours signing petitions, writing to my representatives, promoting political campaigns, and standing in the cold with handmade signs asking the government to please stop bombing children who have the misfortune of being born in a forsaken part of the world. Not surprisingly, my efforts have yielded minimal results. Enter Bitcoin.
We don’t really hear those stories in the media, though. The Bitcoin news that gets the most press is based on fear, and biased articles run rampant through the press. If you ask people about Bitcoin, they usually respond with vague references to Mt. Gox or suspicions of it being a scam. This is really frustrating, as within the space I have found an overwhelming motivating force for good. Sure, there is speculation and selfinterest as with any business opportunity, but the folks in Bitcoin generally see it as a way to liberate enormous amounts of human potential. I see Tatiana Coin as a fun way to educate about the promise of Bitcoin, especially Bitcoin 2.0. People are already familiar with the crowdfunding concept with sites like IndieGogo and Kickstarter. With an artist’s tokenization, we offer unique ways for people to be part of the creative process that doesn’t end at the conclusion of a campaign. If you believe in my music, for example, you can buy Tatiana Coin, fund my album, and then pay with your tokens for exclusive content. The more that my fan base grows, the more valuable those tokens become. You now have a rare ticket to behind the scenes parties, sponsorship opportunities, early releases and more. I have a chance to develop stronger relationships with my fans, and they have become a critical component to my success. They have a stronger incentive to get the word out about my music, grow my reach, and this will help fund even larger projects for video content, touring, and more. Participants will see greater value in donating, because they are not limited to a certain prize structure. They can hold onto their tokens until they want to trade
them in for Bitcoin or other coins as the ecosystem expands. There are endless possibilities. My greater interest in this is to see how this model can apply to other artists as well as start-ups. I would love to be able to help tokenize some of the incredible talent I have met along my journey. Too many times have I been frustrated by the existing confines of the music industry. This can take the power back and put it into the people who matter the most: the artist and their fans.
Find out more at: www.TatianaCoin.com and www.CoinPowers.com —S
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S i n g e r - s o n g w r i t e r TAT I A N A MOROZ is a pioneer of the liberty m ove m e n t . A s a g ra d u a te o f Berklee College of Music, she has had an extensive music career managing and promoting top NY recording studios. She’s performed internationally with industry leaders like: Ron Paul, G ary Johnson, Judge Napolitano, Jesse Venture a n d a t m a n y B i t c o i n eve n t s . Tatiana has become the premier female singer-songwriter in the activist and Bitcoin community, touring the globe, speaking and singing at conferences, political conventions, and community events. Tatiana owns the activist talent and event agency Same Side Entertainment. She has independently produced and released two LPs, 2 EPs, and several singles. She is recording her 3rd LP and developing a video series on her musical journey with Cryptocurrency. BTC address: 124HCHWb5x6typ4jc2qFE5WT85d4ceUsJz
I’m really looking forward to sharing my experience of this unknown territory. I have questions of my own, and a lot more to learn. However, I see that as an opportunity to bring other people, hopefully NEW people, along on this journey with me. I am not exactly intimidating, so I think that helps. We are doing live weekly question and answer sessions, plus I will be blogging, making videos, and talking about it during my summer tour. I hope that you can join us!
MAKE BITCOIN, NOT WAR, OF BITCOINS NOT BOMBS by M.K. LORDS
Crypto Biz Magazine Page.44 June.2014
My political awakening came in 2005, but really began to blossom in 2007. A bitter socialist by then, I became disillusioned with that limited philosophy and was disgusted by the war machine vastly expanded by the Bush administration. The democratic candidates for the presidency didn’t impress me and I was yearning for something different. I soon found Ron Paul, and became involved in libertarianism. After he lost the primary and I evaluated the futility of political activism, I changed my mind once again and became a part time agorist. The system was so entrenched in corruption; I saw no way to exert influence there without moral compromises and access to large sums of money. As I became more financially independent, I also became more radical. Libertarianism had decent prescriptions for leveling the power field, but I found anarchism more effective at attacking the root of this rotting tree. As I was struggling to balance my new found agorist hobby of hoop dance and hula hoop making with my restaurant job, an opportunity came for me to work at a precious metals brokerage firm. At Roberts & Roberts Brokerage, I learned more about the diversity within the liberty movement and learned valuable information about precious metals and markets. It was here I first came across Bitcoin. I approached the idea as a skeptic at first. Most of my concerns are the usual, unoriginal ones brought up by people today—that Bitcoin wasn’t real because it couldn’t be held, that it was some kind of pyramid scheme, that the anonymity of its creator was a problem, etc. I had previously worked with Don’t Tread on Meme and Roberts & Roberts to perpetuate the idea of wallet voting with silver. By using another currency, one could limit their dependence on the war dollar. Silver seemed like a great tool because it was easily recognizable and seen as honest money by people in the know, but while older generations had an appreciation for precious metals, my peers were not interested in using this older form of money. Coins were clunky, and while we had success within the liberty movement with
educational silver dime cards, the idea didn’t catch on in my local economy. Foolishly, I dismissed Bitcoin for some time to focus on spreading the idea of using silver instead of dollars. It wasn’t until Bitcoin started increasing rapidly in price that I took a deeper interest. I had gotten a message from my brother to buy this magical internet money now because it would be cheap. Bitcoin was around $25.00— rivaling the market price for silver. The more I
looked into Bitcoin, the more I realized it wasn’t just a tool for speculators to make money off of—the technology of the blockchain itself had immeasurable value. Meanwhile, my friend Drew Phillips at Don’t Tread on Meme was starting a new project with Davi Barker called Bitcoin Not Bombs. Bitcoin Not Bombs came out of a partnership with AntiWar.com as they began accepting Bitcoin after it was revealed that the FBI was targeting AntiWar donors. Bitcoin was a way to circumvent conventional payment systems that could be stopped by the government and for donors to remain semi-anonymous if they wanted to donate to contro versial organizations. Drew asked if I would want to blog for Bitcoin Not Bombs as I was already writing on a variety of topics within libertarianism, anarchism, antiwar activism, and had begun intensely studying Bitcoin. I said sure, I’m a bit of a n00b, but why not. I had traded a small amount of blood dollars for Bitcoin, so I had already begun my own experiment with the cryptocurrency function. I started writing op-ed pieces immediately and later moved to interviews of prominent members of the Bitcoin community.
At Bitcoin Not Bombs, we tend to be more radical than other Bitcoin organizations. We encourage resistance to the thievery of the IRS, we call dollars “blood dollars,” and we want to break down arbitrary lines called borders to foster a global Bitcoin community. Bitcoin is a force for good but it is also a force for opting out of a system that destroys lives. By educating people through our Quick Start Guides and encouraging charities to accept Bitcoin, we hope to be a beacon of light in a world focused on the dark web affiliations of Bitcoin. We ’ re a l s o h o p i n g to ex p a n d o p e rat i o n s internationally. Recently, we had our Quick Start Guides translated into Spanish so they can be distributed near the U.S.-Mexico border. Remittances were recorded as an $18 billion industry as far back as 2005 and they grow every year. Payment services like Western Union charge exorbitant fees for poor people to send much needed funds back to their families. This is unacceptable when there is Bitcoin, a payment system that allows people to send funds any where in the world for around 1% or less. A freer world can come through free trade and exchange based in easy-to-use currencies and efficient, inexpensive ways to send value. Bitcoin Not Bombs is an organization, but it is also an idea; it is saying “no” to the corrupt money changers worldwide and refusing to fund war and use the currency of war. Peace is not only an ideal, it’s a possibility, and it’s our mission to show the world the financial freedom Bitcoin brings to people worldwide. —S You can follow M.K. LORDS on Twitter at @mklords, see her as a panelist on the weekly show The Bitcoin Group, and follow her writings and interviews a t b i tco i n m a g a z i n e.co m a n d bitcoinnotbombs.com. If you want to support her work, she also takes Bitcoin tips: 178o8vhje6BJTcLUH3t4eBMthSX5SEQVVK
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Bitcoin Not Bombs did our own project called Hoodie the Homeless where the proceeds from sales of BNB themed hoodies would go towards clothing homeless individuals in California. We partnered with other homeless outreach groups to get people food and supplies for the winter. The project was a success with hundreds
Bitcoin Not Bombs is also close with Fr33 Aid who did a fundraiser to get medical supplies and other necessities to the Philippines after the typhoon last year. The ability for Bitcoin to be a force for good is what drives my participation in the community the most, and already thousands of people around the world have been helped through combining Bitcoin and charity.
My first interview was with Jason King, founder of homeless outreach group Sean’s Outpost. Conveniently, Jason was located in my hometown of Pensacola, and I had seen his post on reddit saying he could feed 40 homeless people with one Bitcoin— Bitcoin was $50 at the time and the speculation on what it would do was rampant. Jason opened my eyes to the charitable possibilities of Bitcoin, and I became involved with Sean’s Outpost helping where I could. Currently, I report on local events involving the police, government officials, and other projects involving members of Sean’s Outpost.
clothed and fed, and we hope to expand it to five cities this year.
IS THE U.S. FINALLY GETTING IT RIGHT?
Crypto Biz Magazine Page.46 June.2014
by ARIANNA SIMPSON
I don’t usually feel like patting the Federal Reserve on the back, but today just might be an exception. Perhaps it’s the fact that I’ve come to expect the government to screw up, or just the fact that I am endlessly fascinated with Bitcoin’s potential, but I think there’s a great deal to feel good about in how the United States is approaching cryptocurrencies these days. The Federal Elections Commission recently a p p rove d B i tco i n d o n a t i o n s to p o l i t i c a l campaigns, and although the $100 contribution cap limits its utility, it’s an important first step. A number of U.S. state regulators are working on writing regulation that provides some clarity on the rules surrounding virtual currency and related consumer protections. Even that slowmoving monolith affectionately known as the Federal Reserve is starting to form an opinion— and astoundingly, it’s not bad at all. Let’s take a step back from domestic politics to the current international landscape. Today, the U.S. remains the uncontested world hegemon. India is the world’s largest democracy, and we’re up to
our eyeballs in debt with China, but as far as both political power and national wealth, the United States is still unparalleled. We seem to be doing our best to relinquish that position, however— our education system leaves much to be desired, particularly in the crucial STEM fields. According to a number of studies, American fifteen year olds lagged far beyond most Asian countries on an international math, science, and reading test. Although China as a whole didn’t participate, Shanghai crushed us—and everyone else—taking the top slot in all three subject areas. It’s not just China, either: Estonia is now teaching coding in its primary schools. Some will argue that many of the best programmers are self-taught, but there’s no harm in getting an early start. Much of that power and wealth that has brought the U.S. to prominence originated from innovation in STEM fields, and a lot of that talent was imported. At the moment, however, we’re also not doing terribly well in the recruiting department. If we don’t get our act together in facilitating immigration for highly skilled individuals, we risk losing access to a tremendous pool of human capital. Granted,
it’s a bit dated, but this study by the Kauffman foundation shows that in Silicon Valley, over 50% of startups were founded by immigrants, and in 2005 alone those companies generated a cool 52 billion dollars in revenue. Not bad. Stats like these only serve to highlight the urgent need for the U.S. to loosen the legislative environ ment around immigration, particularly where highly-skilled workers are concerned. Despite the clear benefits it brings, this is a painfully slow and highly politicized process, and perhaps the only reason Bitcoin hasn’t suffered the same fate todate is that it is not closely associated with one side of the aisle. Whereas the United States has great room for improvement in both its approach to education in STEM fields and its policies toward immigrants, one key driver of innovation where it hasn’t failed yet is in its approach to virtual currencies. Bitcoin is still in its nascent stages. As such, there are gains to be had from first mover advantage, not just from an entrepreneurial standpoint but from a regulatory one as well. Bitcoin’s origins are murky, and since no country can claim ownership, it truly is a global project.
The Chinese government is clearly afraid of Bitcoin, which is a testament to its potential. If it weren’t disruptive, they wouldn’t bother banning it. Even the bans to-date, however, come across as half-hearted. Perhaps Xi Jinping and the rest of the Chinese government are just trying to keep a close eye on the situation while they await developments and formulate a long-term strategy. What I find most fascinating is that other governments, particularly the Chinese, would be well-poised to capitalize on that potential rather than suffer from it if they chose to strategically guide its adoption instead of banning it altogether. Eventually these things come to a head, and it’s not often pretty when they do. As Marc Andreessen mentioned in his recent interview with the Washington Post, the Snowden revelations have seriously undermined inter national trust in American tech industry—and this is just the latest in the saga of reasons for which many countries don’t like us in the slightest. They’re friendly because it’s necessary, but there’s no love lost. Insofar as Bitcoin offers the opportunity for many governments to add a degree of separation between themselves and the U.S. by cutting out dependence on the dollar, it is a highly appealing proposition, but at the moment this is not being reflected in these countries’ legislation. By forging an environment that facilitates rather than hinders Bitcoin adoption, the United States has the opportunity to stay ahead of the international financial game. It will be interesting to see whether the U.S. is able to keep the momentum up. —S As a Bitcoin enthusiast and investor, ARIANNA SIMPSON is particularly passionate about helping women get involved in the Bitcoin community. She is now at Facebook, working out of the New York office, where she organizes the Bitcoin meetup group. In her previous lives, Arianna did ecology research for the National Science Foundation in South Africa, cofounded Tigervine, lead sales & boutique operations at Shoptiques.com, and spent several months backpacking through southern Africa. Her Bitcoin address is: 1DLBeB2NxcGNsCAFyLa6ateQqtBc1o1LJh.
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I am not advocating for a global political land scape in which China is the ruling power, or more broadly one in which Bitcoin is the means through which one country rises to dominance over another. There are few periods in history, however, in which we did not see this type of geopolitical system in action. Perhaps I read too much Kindleberger in college, but I don’t think it unreasonable to argue that a system with one clear hegemon is more stable than one in which many nations share similar levels of power. Whether in fifty years that is the U.S. or another country remains to be seen, but I would be surprised if Bitcoin didn’t play a role in determining the outcome. At an absolute minimum, widespread adoption of Bitcoin has the potential to detract from the dollar’s defacto
The other week I quipped on Twitter that China enjoys banning things I’m into (Bitcoin obviously, and I work at Facebook). What these things have in common is not that I am involved with them (although my ego would love to believe otherwise) but that they are powerful. They have the power to shift behaviors and paradigms of human interaction.
It’s becoming increasingly evident that Bitcoin, both the currency and the protocol, have the potential to significantly change the direction of the next twenty-plus years. What direction that ends up being, however, remains to be seen. And because the landscape is still largely malleable, it offers a unique opportunity for a power other than the United States to rise to dominance. Given the initial excitement of the Chinese markets toward Bitcoin, and the instrumental role they played in driving up prices dramatically at the end of 2013, it seems that China would be well-poised to assume that role.
status as global currency, and offer places like Panama and Zimbabwe, who currently use the USD, a more neutral alternative.
Crypto Biz Magazine Page.48 June.2014
AN EXCLUSIVE Q&A WITH SIDECHAINS’ AUSTIN HILL
Crypto Biz Magazine’s Editor-in-Chief Soshi sits down with Sidechain-backer Austin Hill to talk all things cryptocurrency Within the Bitcoin community, there are few names better known than AUSTIN HILL. The Montrealbased entrepreneur has quickly become a leading authority on all things Bitcoin through his backing of Sidechains and collaboration with Hashcash developer Adam Back. Earlier this year Hill sent waves through the Bitcoin community because of his critique of Bitcoin’s block chain—which one could call the machine at the heart of the cryptocurrency itself. As he told CoinDesk: “There is a practical reason why some of those things can’t operate on the block chain, and that’s because at peak, they’re doing more transactions than Bitcoin can support right now.” As an alternative, Hill proposed and became a prominent backer of Sidechains. An explanation of what Sidechains are can be read here.
Recently we got the chance to sit down with Hill to pick his mind about Sidechains, the future of the Bitcoin protocol, and all things cryptocurrency. Below is our interview. SOSHI: We were happy to see you enjoyed the Sidechains Explained article by Jacob Payne that was published on our website this month. It seemed to have struck a chord with a lot of readers. What in particular did you enjoy the most? HILL: Jacob took the time to study the concept and did some … analogies that our team found very interesting. It’s lovely to see the concept take hold. SOSHI: What do you think will happen to existing alt coins if Sidechains are implemented as an extension to the Bitcoin protocol?” HILL: I think it’s premature to predict. This is a fast moving storm, but they often say that even in a tornado that pigs can fly. Some of the altcoins, are pigs flying—supported by pump and dumpers willing
to be the cowboys of the cryptocurrency space flouting laws. Some say that it’s easier to be a pirate than an admiral in the Navy, but the danger to users who are unsuspecting victims in their artificial ponzi schemes will draw regulators and force things that are bad for the ecosystem. Hopefully there will be a maturing. The algorithms that empower sidechains allow for that maturing to happen in a healthier way, we believe, where scarcity races and innovation balance out. A friend, Alan Kay, once said that the best way to predict the future is to invent it. But invention is a collaborative process. Satoshi collaborated with the cypherpunks and Adam Back to improve as derivative software artistry. Like all art, borrowing and using open, free ideas is a key part of innovation. Hopefully the future will show that there doesn’t have to be a Faustian bargain between a single scarcity with Bitcoin and innovation. SOSHI: Have you been in contact with any existing altcoin developers, and have those developers expressed any interest in moving their altcoin onto a Sidechain? HILL: We have discussions within discussions. When we convened the blockstream project we brought together the scientists and researchers who had invented and maintained the tech.
If you look at the history of the Manhattan Project it had multiple sites, multiple collaborations between material science, math, algorithm automation and new project financing. @theBlockStream project is similar. It is a hybrid company that has adopted “Can’t do Evil” at its core because we all feel the awesome responsibility for the power for new economic systems, and we need to ensure we are responsible members of the community.
HILL: When the time is right. There is already test code being looked at on the testnet for Bitcoin. There are timelines for the easy stuff and we are readying sidechain testnets for people to test implementations before being adopted to the main
HILL: We’ve gotten some new math from Stanford that allows ZNARKS and use of well-pairing constructs to allow for levels of security that solve the 51% attack issues as well as create a new platform for programmable trust and ethical mining. We obviously believe that using the existing investment and power usage of the SHA-256 POW system makes the most sense, as the timewarp attacks and Sybil attacks that altcoins are vulnerable to need to stop (they encourage thieves, con men and pump and dumpers to game the victims of cryptocurrencies). So leverage the open hash rate of the planet for everyone’s benefit, and the increased use of Bitcoin for trust economics is critical. The scaling, decentralized model of trust and security concerns have been addressed by the @theblockstream scientists but we owe it to the community to publish the math and those findings before we start marketing ‘one coin to rule them all’ type, master-of-the-coin messages. We think that the project fund using altcoin economics are hurting the ecosystem so we won’t play that game. SOSHI: Thanks for your time. —S
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SOSHI: We read that the Bitcoin development team have given a tentative nod to Adam Back for sidechains implementation. What timeline do you see for it being added as an extension to Bitcoin?
SOSHI: What can’t be done with a Sidechain that can be done with an altcoin? How much security risk—if any—is imposed on Bitcoin’s existing block, if making the necessary changes to permit Sidechains?
It was our version of the Manhattan Project that gave birth to atomic energy and entire industries. I wanted to make sure we started with the digital cash versions of Einstein, Oppenheimer, Feynman and Fermi or Teller.
Bitcoin core. Responsible deployment with secure code development and a multi-party web of trust are still needed and that takes time.
SIDECHAINS EXPLAINED The concept of sidechains and their impact on cryptocurrencies are examined The last month has had the Bitcoin community brimming with excitement about the Sidechain concept. However, there still seems to be a lot of confusion about the topic and about the challenges and problems of sidechains in general. It was then that people such as Vitalik Buterin, the chief scientist of the Ethereum Project, stepped in and tried to dispel some of the confusion and optimistic euphoria by writing his own article on the topic.
Crypto Biz Magazine Page.50 June.2014
Even as concise as Buterin’s writing was, there still seemed to be a lot of confusion.
by JACOB PAYNE
the new Bitcoin network, I’m issued my newly minted v2 Bitcoins in a precise 1:1 ratio.
Two-way pegging What about the opposite? What if instead, I wanted to trade new Bitcoins for old Bitcoins? While one-way pegging works one way, it works only one way for a reason—it implies that the rule for issuance is encoded within the new version, without the need to change the old version. The way to do this without changing the old version is called two-way pegging.
Let’s change that. First, a little bit of history.
Instead of destroying the old coin, two-way pegging sends the old coin to a special address that only releases its coins once given a specific digital signature.
A couple of years ago—after the fiasco with the 2012 Bitcoin hard-fork, which lead to a split into 2 Bitcoin ledgers—a lot of developers started asking the question of how to more adequately respond to such a problem.
Coincidentally this “digital signature” can be a proof of burn itself, except this time the new coin is sent into the trash address, and the sender of that new coin is allowed by the network to “unlock” the old coin from its storage.
With the advent of Bitcoin 2.0, some thought it would be a good idea to come up with a way for people to transition from the older version to the newer version without the hassle of Bitcoin 1.0 and Bitcoin 2.0 challenging each other.
At the heart of the two-way pegging system is the special address script that acts as the “posterboy/ escrow” to facilitate the exchange.
How would people transition from a hard Bitcoin fork?
One-way pegging Let’s say I have Bitcoin Ve r s i o n 1 — o r “ V 1 ,” t h e old version—and a new B i t c o i n —Ve r s i o n 2 , o r “V2”—came out that was i n co m p a t i b l e w i t h t h e old version.
The new Bitcoin Version (v2) however, has a rule that states whomever destroys their old Bitcoins gets issued new version Bitcoins in return. To destroy my Bitcoin I can simply send them to an address so unique that it’s pretty much guaranteed I can’t retrieve them, nor can anyone else for that matter.
TWO-WAY PEGGED ALTCOIN (SIDECHAIN)
This destruction of Bitcoins is called a proof of burn.
So what are sidechains again?
Once a proof of burn has been verified by miners of
Everything up to this point is pretty straightforward, but what if, instead of two-way pegging new and
old versions of Bitcoin, we peg a completely other altcoin instead? By using two-way pegging for an altcoin instead, you would now have an altcoin that was pegged to the value of a Bitcoin and “borrowed” against its value, and that’s what’s called a sidechain. Instead of starting from scratch and organically raising its value from the market like all altcoins (including Bitcoin) have done to this day, a new altcoin can become a sidechain and simply peg it’s value to an already existing ledger such as Bitcoin. In traditional financial terms this can be described as a cryptographically decentralized (non-fractional) IOU. At the heart of sidechains however, the two-way peg ging mechanism, are several problems and a number of notable weaknesses.
Issuance and miner incentive In a normal cryptocurrency blockchain, the verification of transactions and coin minting are bonded together to incentivise miners to join the network, which is at the heart of Satoshi’s genius. In a sidechain however, since the value of a sidechain coin is pegged to another crypto coin, it can only mint a sidechain coin when it is pegged by an already existing crypto coin. The difference between supporting a sidechain or a crypto coin is that while a crypto coin awards miners with transaction fees and issuance of new coin, a sidechain can only award its miners with transaction fees.
One approach to the problem is merge mining.
Merge Mining? Merge mining facilitated the idea of a sidechain “piggybacking” not only on the value of a Bitcoin, but also the mining process as well. This would allow a miner to validate a sidechain transaction without having to switch its mining chain. Thereby being issued not only Bitcoins and Bitcoin transaction fees, but sidechain transaction fees as well.
With a merge mining attack in place, since mining a Bitcoin block also produces a valid sidechain block, an attacker can attack a sidechain without losing any potential gains from normal mining. This makes attacking a sidechain not just cheap, but profitable as well.
MERGE ATTACK In addition to the security implications of merge mining, it also facilitates stronger dependence and consensus from pool operators.
Conclusion: Revolutionary, but not new Sidechains are not new, but even as they currently stand, “technologically ripe for picking,” they do provide a significant allure in their possible applications. Sidechains as a practice are not practical yet, but dismissing them at this point would not be so wise. Any idea, no matter how trivial, sparks the imagination of others and sometimes brings out even better ideas. As Larry Summers noted, “To reject innovations in the cryptocurrency world with complete certainty, as flawed they presently may be, would be a decision on the wrong side of history.” —S A web developer from Vancouver, JACOB PAYNE is an avid cont ri butor to open-source projects and crypto-based startups. He often explores and discusses opportunities in varied areas of blockchain-based technologies and contributes brand and PR strategies to multiple teams of developers. Jacob accepts Bitcoin tips at: 12Fx3xCCeB8KiZjk5WSdPKDx21EF4AL9Sn
Crypto Biz Magazine
In a merge mining attack things are different.
This leaves sidechains in a weaker position, in which they simply cannot supply the incentive for miners to support their network.
NORMAL ATTACK However this presents a problem as it makes the sidechain much more vulnerable to attacks. In a normal altcoin chain, when an attacker initiates an attack he is forced to move his hashing power towards the altcoin blockchain, losing potential gains from Bitcoin mining during the time of the attack.
Crypto Biz Magazine Page.52 June.2014
When a child comes into this world, it begins to be sculpted by expectations, judgments, and preconceptions about its future, its character, its success, and its purpose. Everyone has an idea of what they want it to be. Some have an investment in that idea. If you think Bitcoin is just another currency, a stock, a speculation, a scheme, a trend, a scam, a convenience… prepare to be disappointed. If you think Bitcoin should work within our current systems, if you get excited when entities of authority acknowledge it, if you hope for its taxation and regulation, then you are thinking basic. No, you are worse; you are pandering. Satoshi’s anonymity is symbolic of Bitcoin’s spirit. Bitcoin basks in shadow. Privacy is the point. Bitcoin is meant to function outside of regulatory systems. Bitcoin does not pander to power structures, it undermines them. It is not a cog. Satoshi’s birthday falls on the same day that Roosevelt signed the 6102 executive order which forbade the hoarding of gold. Bitcoin channels economic power directly through the individual. Bitcoin is not intended to be integrated. It’s intended to be a ghost outside the machine.
by JULIA TOURIANSKI
Bitcoin undermines governments and institutions because Bitcoin is inherently humanitarian. Bitcoin is a child. It is in its critical stages of development. Its code can evolve in several di rections. It’s under threat from those who don’t understand it. It’s under threat from those who do understand it, but fear it. The voices of the people who are working to preserve the purity of Bitcoin’s ethos are being drowned out. But actions speak louder than words. Bitcoin is utility. The cypherpunks are building anonymous systems. The crypto-anarchists are making institutions arbitrary. The Internet is anarchy. And cryptocurrencies are the printless fingers of the Internet. —S JULIA TOURIANSKI (also known as Brave the World) is a promoter of anti-state mentality. She makes short films, writes articles and helps organize events such as Toronto’s Liberty Now. Julia has close ties with the Ludvig Von Mises Institute of Canada, where she is a contributor and volunteer. She’s known to say that she’s in a love affair with private property, the free-market, non-aggression, self-ownership, and freedom. If you want to support her work, she also takes Bitcoin tips: 14WPGDHE7JLsd2kRA8ko8RQr6FFmsS8NFu
CRYPTO COIN MEET-UP by FREDDIE HEARTLINE
Wednesday nights are regular yoga nights with NICKI CARBONNEAU and DEATH ROW DEMOCRACY production meetings happen here on Mondays.
Decentral.Bangtown was founded by Cameron Gray and I in February 2014. It is located under Bangtown Hair Salon at Richards and West Pender Streets in Vancouver, British Columbia, Canada.
We found out that the infamous Seamrippers/Peanut Gallery space was available and jumped on it. Cam phoned the landlord and we immediately viewed the space, and dropped a deposit on the spot. The space was hot but looked rough… as soon as we saw it we knew there was no going back. Since opening the doors, the space was properly christened by the Decentralised Dance Party and all the local crypto superstars have hacked and hung at Decentral.
Every Thursday night, Decentral hosts weekly Bitcoin 1.0 and 2.0 meet-ups (with featured guest speakers).
“It’s all about the DAOs, DACs, DASs (LOL), crypto, underground culture and Bitcoin bevvies the fridge.” says Cameron. We love what’s happening here and we are very thankful for all the community input and support. The knowledge and energy coming out of Decentral on a weekly basis really is amazing. —S
FREDDIE HEARTLINE is a founder of Carsurfing.com and Decentral. Bangtown. He is also a Director at The Bitcoin Co-op. After university he fell into the rave scene and through some of the seminal events in Vancouver in the years 1993 – 1998. He currently acts as CEO of Carsurfing, cofounder of Decentral.Bangtown and a Director of The Bitcoin Co-op. He also accepts Bitcoin tips towards the Decentral monthly rent + other costs to: 1DecentP5Q6c2woPhbSBsmYqyyfR52JZSS
Crypto Biz Magazine
VITALIK BUTERIN hung out at Decentral during his visit to Coinfest. JACKSON WARREN built the world’s first Dogecoin ATM in the space. Most recently, LIFESPAN BC held a movie night at Decentral with content aimed toward live extension theory and technology.
Future plans include incubating local crypto (fintech) startups and helping spawn more of the same sort of spaces across the globe.
Decentral was hatched in January when Cam looked around Waves Cafe on Howe and Smithe (where he was working as the famous ATM attendant) and noticed all the enthusiastic energy from people interested in Bitcoin.
People are connecting, sharing ideas and starting new ventures together.
BITCOIN AS MONEY: ARE YOU ASKING THE RIGHT QUESTION? by SLADE SECORE
Crypto Biz Magazine Page.54 June.2014
finding a buyer who desires the same commodity you have for trade. If you have eggs and want milk, you must find somebody with milk who happens to want eggs. Over time, in any particular market, people will begin to engage in indirect trade of the more saleable commodities in a geographic area, in an effort to facilitate future trades. Through these transactions, the market will eventually settle on a somewhat stable price for a specific commodity. With a proven track record of these transactions, a commodity used as a medium of exchange will eventually be recognized as money. Historically, precious metals such as silver and gold have filled this role beautifully. They are quintessential commodity monies throughout many cultures in all of recorded history. C a r l M e n g e r a n d L u d w i g Vo n M i s e s , t h e grandfathers of Austrian economics arrived at the logical conclusion that the value of money is derived—not from government decrees—but by markets. As uninspired as this conclusion may seem, it was groundbreaking for its time and shook the foundations of the economic orthodoxy. Money is the most commonly used medium of exchange within a given economy. The crucial trait to be recognized is that money is a transfer of value. To serve in that function, a commodity’s value must logically be predicated on something based in reality. Typically, the value of money is based on its saleability from yesterday, the day before that, and so on. This, however, presents a contradiction of infinite regress. In order to solve this problem, commodity money must be traced to its origin. This is what Mises coined as the “regression theorem.” So how does money originate? As explained by Menger’s earlier work and Mises’ regression theorem: within a market, money will spon taneously arise as a solution to the double coincidence of wants. The coincidence of wants describes the phenomena of “unsaleability” for a given commodity. In short, your ability to barter with a commodity is dependent on
Bitcoin violates the regression theorem in much the same way that nanostructured LithiumIon batteries “violate” early understandings of electrochemistry. They are both improvements on the previous limits of human experience and knowledge. There is no shame in a theory being supplanted. It is, in fact, the telltale mark of advancement. Further, simply because a new technology introduces fresh understanding does not always invalidate the previous under standings. In the physics of archery, elastic po tential energy is transferred to an arrow via the bowstring. While that model is perfectly valid, it provides little insight for describing the technological advancements of stored chemical energy contained in ammunition for a gun or the fuel tank of a rocket. With these examples in mind, perhaps the time has come to stop using 19th century theories to describe 21st century technology. With this understanding, can Bitcoin ever be commodity money? In short, no. Since Bitcoin is not a commodity, it can by definition, never serve as commodity money. This idea however seems a bit shortsighted. It is an egregious appeal to antiquity to assume that since Mises’ regression theorem proves that Bitcoin is not commodity
money, that Bitcoin can never serve as money. Austrian economic doctrine aside, there are already alternatives to commodity money. Albeit an utter failure, fiat money provides a perfect example of a different iteration of money. It may be time to start rethinking our questions. Perhaps a more relevant inquiry is, can Bitcoin replace commodity money? Surely, horse farmers and coachbuilders at the dawn of the automotive age knew better than to ask if automobiles were metal horses. If they didn’t know it then, they certainly do now. It did not matter that the automobile was so different in form from it’s predecessors in transportation. All that mattered was that it could perform the same functions more efficiently. We are at the cutting edge of a dawning era. Terminology is being outpaced by technology. It will b e t h e j o b o f f u t u re economists to try and decipher the crypto-rush and mint all the fresh phrases to express these new p h e n o m e n a . Fo r n ow t h o u g h , t h e p o p economists and Bitcoin detractors can argue semantics until they are blue in the face. In the meantime, cryptocurrencies and related services will continue their headlong plunge into uncharted economic territory. In the end, it may not matter what questions were asked. Bitcoin will go where market demand and software engineers lead it, regardless of what appeals to common practice we make surrounding its legitimacy as commodity money. The economic landscape of tomorrow is being terraformed by the crypto-builders of today. Just as horse farmers and coachbuilders had to adapt to the advent of the automobile, so, too, will economists have to adjust to this new reality of cryptocurrencies. Perhaps it’s time to rethink our economic vernacular and herald the opportunity for new understanding. As always, history will have the last word. But where electronic money is concerned, history is still being written. —S SLADE SECORE is a short story author, political essayist, and unrecognized poet. As a lifelong student of philosophy and economics, he spends most of his days arguing the finer points o f f re e m a r ke t a n a rc h i s m . W h e n h e ’s n o t p re a c h i n g neckbeard internet philosophy, o r p ra c t i c i n g a g o r i s m , h e enjoys the irony of taking long walks on publicly owned beaches. To support his various vices, you can send Bitcoin to the following address: 19xT9ZovYYc7hVuaoRHQudYSEPB52yaFFh
Crypto Biz Magazine’s Editor-in-Chief Soshi sits down with crypto coin day trader Yuri Yerofeyev to talk about his trade Like the traditional Forex market, or the securities market, the cryptocurrency market also has its share of day traders. Because of the nature of Bitcoin and cryptocurrencies, the market tends to swing more wildly—which means that day traders much have a high tolerance for risk, and nerves of steel.
SOSHI: Yuri, thanks for doing this interview with us at Crypto Biz Magazine. We are excited to talk with you and tell our readers exactly what your day entails as a Crypto Coin day trader. YEROFEYEV: Thank you for providing this oppor tunity! I will try to give a detailed perspective on what my trading routine looks like and, hopefully, motivate those who are interested in it! SOSHI: How does your typical day start? YEROFEYEV: It starts with quite an ordinary routine. I get up, have breakfast, go to the gym. The only advantage is that I don’t really have to wake up at a certain time. I usually take it easy, but try to be up and ready for the day before 8:30am. Sometimes there are significant market movements at night. That’s when I decide to stay up.
Crypto Biz Magazine Page.56 June.2014
SOSHI: How long have you been trading for? YEROFEYEV: I got into trading right when I learned about Bitcoin, which was around two and a half years ago. Since then it’s been a constant learning process for me, as there is no end to the valuable knowledge I can potentially acquire. SOSHI: What is your background, how did you get involved in this? Were you previously a day trader? YEROFEYEV: I come from Russia where I studied linguistics. My Canadian major is International Trade. Speaking three languages and having some business background helps a lot. I didn’t do any day trading before and, to tell the truth, never thought I would. Bitcoin changes people. SOSHI: What is the most profitable coin you’ve ever bought and what was the buy strategy? YEROFEYEV: Being one of those who like to be concentrated only on one or two things at a time, I trade Bitcoin most of the time. When I got into it the value was under $10 and its rapid growth attracted me. That was my buy strategy: I saw it going up and
INTERVIEW WITH A CRYPTO COIN DAY TRADER
Soshi, Crypto Biz Magazine’s Editor-in-Chief, had a chance to chat with one Vancouver-based crypto day trader about an average day in his life.
up, so I bought in. I do hold a little bit of Litecoin and I also bought some MaidSafeCoin during their funding campaign as I really like and support the project. SOSHI: Is your typical strategy a short buy, medium, or long term? Y E R O F E Y E V: I t ra d e in a few ways. My main activity is the “walking ATM” type of trading. I meet people in person and perform trades in a public or secure location. Having done that for a couple of years, my ratings and reviews got high enough for people to consider me one of the go-to traders for Bitcoin deals. As you can see, “safer” deals is what I prefer. However, I admire those who do day trading with multiple screens before their eyes for hours and hours. Bitcoin trading is hell of a ride! SOSHI: Where have you made the most money on the short term or long term trades? YEROFEYEV: Mostly, on short-term trades by trading locally. The demand was there and I was there to fill it.
YEROFEYEV: Doing what I do (trading locally and arbitraging) doesn’t require any particular strategy. Nevertheless, over months I came up with my own ways of doing things and I try to improve constantly. SOSHI: Are there any typical buying and selling patterns that you see and watch for?
SOSHI: Do you see an altcoin taking over the value of Bitcoin? YEROFEYEV: Bitcoin has the biggest net work effect in the cryptocurrency world. I believe it will keep its value and will continue to go mainstream unless there is a new revolutionary technology. There are several altcoins that look interesting as well. Namecoin, for example, is used to create a decentralized DNS platform which is quite an interesting feature. Mastercoin aims at creating an infrastructure that will allow users to issue assets and create subcurrencies. The team behind Ethereum want it all: they are working on a platform that may transform the world of finance and digital ownership as we know it. Innovation in the cryptocurrency world is ongoing. Who knows what developers come up with tomorrow! SOSHI: How do I become a crypto coin trader? YEROFEYEV: My main rule is to learn something well before diving into it. Educate yourself about the market, the differences between coins, how they work and—most importantly—how to protect your crypto wallets from loss or theft. Then, simply start with low amounts to test your skills, try out different approaches and, when it feels like you’re ready, go for it! We live only once! Crypto currencies are here to stay and you will definitely find something to do with them, even if it’s not trading. —S
SOSHI: Do you have a unique strategy of your own that you follow or are your practices common among the community?
overall mood. The Bitcoin market, however, has proved to be pretty unpredictable at times. Thus, my intuition is what I trust. This may seem funny, but news from China, for example, definitely produced a pattern. Depending on whether it’s good or bad news, the decision to buy or to sell would be quite obvious. But, again, China can do it only so many times.
YEROFEYEV: Reading Bitcoin-related news as well as hanging out on Reddit and Twitter is enough for me to understand the Crypto Biz Magazine
YURI YEROFEYEV is one of Vancouver’s top local Bitcoin traders. He holds a Bachelor’s degree in Linguistics, as well as a diploma in International Trade (FITT). In 2013 he co-founded The Bitcoin Co-op, a Vancouver-based organization whose goal is to promote the adoption of Bitcoin by organizing hangouts, business meetups and parties and helping merchants start accepting Bitcoin as a method of payment. Yuri is also the owner and operator of the Bitcoin ATM located in downtown Vancouver. Currently, he is involved in multiple projects, all of which have to do with cryptocurrencies and financial technology. His Bitcoin address is: 1JRBwHgnnJw9PnM1vn2SaChLSb39SBA9Es
REGULATIONS ARE NOT ENOUGH: WE SHOULD EXPECT COMPLETE OPENNESS FROM BITCOIN EXCHANGES AND BANKS by ANTHONY TSUI Bitcoin exchanges & banks should set a higher stan dard of transparency to avoid another Mt. Gox The crypto community has a large overlap with the libertarian ideologues, and some think that any regulations are excessive. What I want everyone to realize is that a lot of regulations are actually set by self-regulatory industry bodies, or by officials who go through the revolving doors between regulators and industry. So, actually, the regulations are put in place by people who are not working in your interest, but the industry’s. I remember attending conference calls with financial industry organizations, talking about vague wording in regulations and the bare minimums the industry should do to meet them. I always wondered what the regulators were thinking—are they really trying to protect everyday investors? Or simply trying to make their own jobs easier?
The Public Ledger In my view, the best idea initiated by Bitcoin is the incorruptible public ledger. Now all depositors and investors can see the proof of solvency of an exchange or company. In the new cryptocurrency world, deposit ors and investors should demand full disclosure and full auditability. The public ledger now gives companies the opportunity to go above and beyond any existing regulations.
Crypto Biz Magazine Page.58 June.2014
The Shackles The financial industry is very heavily regulated: to keep your holdings safe from theft and fraud (FDIC), to make sure there is enough reserve (BASEL), to catch tax dodgers (AML), or to track criminal activities (KYC).
Reserve Regulations In the traditional financial industry, regulations like the BASEL Accords and central banks set the reserve requirements for each financial institution, and how much risky assets they can invest your money in. With public audits, gone is the era of failed exchanges. In order for new exchanges and cryptocurrency banks to earn trust, they either have to submit to the existing model of regulations and audits, or they have to open up their books and allow public audits. Nobody should tolerate the uneasy feeling of not knowing what happened at Mt. Gox, even well-funded alternatives should have full disclosure. A lot of exchanges claim 100% reserve—they should have to prove it:
— Can you, the user, perform the audit? — If they were audited by a third party, could you see the results of the audit?
— Can you trust who did the auditing?
Exchanges and banks like Kraken and Coinkite are well ahead in the previous points. So the next time you trade cryptocurrencies, make sure your exchange has an audit statement addressing them—“it’s coming soon” and “we have smart guys” is not enough. One of the biggest features of Bitcoin bank Circle is the claim that your balances are insured: Who is insuring the balances? Up to how much? What are the reclaim procedures? Since Circle isn’t insured by FDIC (traditional bank insurance), above points must be clearly investigated.
KYC/AML Regulations The KYC/AML rules requires that a financial institution know exactly who they are dealing with, and report any suspicious activity. The rules will require the FI (Financial Institution) to traverse the complicated network of international corporations to find out the “ultimate owners” of an account to deter tax avoidance. See the global legal entity identifier database. With BIP70, it is now possible to verify the recipient’s identity using the same secure infrastructure as SSL websites—tying a real person or business to a Bitcoin address. Implementation will alleviate the obligations of the financial institutions. Because the government themselves can discover the source of funds and identity associated with Bitcoin addresses.
The Future: Public Audits on Everything It is extremely frustrating for investors not to know if they are being lied to by the company they own shares in. For example, both Nortel and Bernie Madoff had auditors sign off on their financials yearly, yet they still resulted in financial scandals. This concept of a public ledger should move into the investing world—publicly traded companies should also do it to demonstrate solvency and cash flow. No longer should CFOs bend their annual reports to suit themselves. The real numbers behind each company’s quarterly reports should be available to the investors. Public audits will cause privacy concerns—companies instinctively will want to hide financial information from their competitors. However, I believe that all investors will want access to such information, not just the rich activist investors with exclusive access to the company’s books. —S A N T H O N Y TS U I wo r ke d a s
a Senior Business Analyst and Business Architect building software for in the Banking and Securities industries. He is interested in getting Bitcoin and other decentralized technologies into the hands of everyday people. Find Anthony on Google+ google.com/+AnthonyTsui. He also accepts Bitcoin tips: 138m459fmGdjnQjWGcRvporLSUhiYpGUPs
itâ€™s that easy.
Published on Jun 2, 2014
ISSUE #1 “Digital Currencies & Crypto Innovations” Observing & Exploring All Aspects of the Crypto World Including Mining, Financial Tradin...