From the Front Page - General
20,931 viewsJuly 20th, 2014 by CrimsonRozeBitcoin and Family Accounting.
With the recent progress in the bitcoin evolution, particularly in regards to usability and multisignature key management, family accounting now has access to new economic tools to support a more reasonable and mindful family economy.
Lets start off with ..
For those parents who choose to have individualized economies and do not share incomes and expenses, bitcoin offers the common single key which allows both parents to retain control over their own funds just as though they had individual bank accounts or wallets. Nothing has changed in this regard.
For those parents who choose to have a shared economy however, bitcoin offers some very interesting multisignature solutions such as the one-of-two and the two-of-two keys which allows two specific use cases.
The one-of-two keys scenario indicates that both parents are capable of spending money from their shared account without the need to ask the other parent for permission. This is good for purchasing things that both parents are responsible for, like groceries.
The two-of-two keys scenario indicates that both parens are capable of spending money from their shared account, but only when both of them agree to do so. This adds an extra layer of protection against careless and/or unfair spending in a shared income environment.
Using a combination of the these two key management options, as well as the single key option, families can now set up a system in which the basic household expenses are easily paid for from a shared account while maintaining consensus on the big economical decisions and helps prevent in-family fraud, giving families a new level of economical stability.
Now lets have a look at ..
When a child comes into a family, another layer of complexity is added to the family economy. The simplest of solutions for an economy to accomodate a child is yet another single key which gives the child full access to its funds and leaves the parents with no control at all. In some cases, this might be desireable, but in other cases the parents want to shield their children from making irresponsible economic decisions.
In addition to the one-of-two and two-of-two keys we can now start looking at some very interesting multisignature scenarios involving three parties: one-of-three, two-of-three and three-of-three.
In the one-of-three keys scenario much is as expected. Any one of the parents, or the child, can spend money from the shared account. This proves useful in most of the same situations where a one-of-two key had been useful for the parents given that they trust the child not to spend needlessly.
In the two-of-three key scenario it start to get a bit more interesting. In this case the child can only spend money if at least one of the two parents agree to it. This is great for saving up for specific purposes where the child has some influence over how to spend the money but the parents want to retain enough control to make sure it is not spent for other purposes. This also allows the parents to spend the childs money should both parents agree. Depending on family situtations this might be necessary in order to sustain a functional family economy, particulary in times of economic crisis.
However, there might be cases in which it is undesireable to allow the parents to forcefully spend the child's money and for these cases another type of system is needed which is a combination of those previously discussed.
While I have not yet heard of solutions including specific keys in combination with multisignature keys I believe the programmable money that is bitcoin should be able to support the following scenario as well, we just might need to roll up our sleeves and get coding to see it happen..
Using a one + one-of-two key you can set up an account where the child retain veto against spending, but is not capable of spending itself without one of the parents approval. This is particulary useful for earmarked money, for example an education fund where the parents donate money to the child, but want to control the spending to only go to the specific purpose, while making safeguards as to the future education of the child.
In the three-of-three key scenario we have a place to save money for matters which are truly family related and both parents and the child have veto against any spending. The use is very situational and requires a family with trust and cooperation and is probably not well suited for the youngest of children.
The economic management tools above will also have some implications for ..
Statistics and Accounting.
While using the proposed key distributions above, to create a family economy suited for the particular family needs, is good in and of itself, it also comes with many statistical benefits in regards to accounting.
Since each parent and each child has their own private keys, any spending done by, or agreed to, by any of these family members is recorded into the blockchain with their signatures and this opens up for new ways of visualizing family economics on a person and family level in a fully transparent way.
Which leads us to..
I sincerely believe that there is an honest need and a real use case for this transparency and accounting as well as the various methods of restricting spending in a co-operational environment and I am glad to see that bitcoin comes with a built-in solution to all of this that doesn't require a family to sign any papers or pay any fees.
While we have no good way of knowing how these new tools will shape the families of the future, I am particularly interested in seeing this being developed. Should the tools arise I will be among the first to try them out!
Cover image courtesy of Jeffrey Tripp, licenced under creative commons. The image has been cropped to fit the LTB network requirements. Read More
2,327 viewsJuly 19th, 2014 by jratcliff63367
In today's article I am going to discuss how you can play a Bitcoin BrainWallet scavenger hunt game. My goal is to explain, as simply as possible, the basic mechanics of how to play the game assuming a target audience who does not yet know a lot about bitcoin.
2,433 viewsJuly 18th, 2014 by TronStarting editorial review: dhimmels, 2014-07-15 9:00AM Pacific Time
(minimal edits for grammar and clarity)
Finished editorial review: dhimmels, 2014-07-15 9:20AM Pacific Time
Learning about Bitcoin forces you to think about money and value. Some people who look at Bitcoin come to the erroneous conclusion that it’s like tulip mania. Tulip mania took place in the 1600s in the Netherlands when the price of a rare or unique tulip bulb could exceed the price of a nice house. It is hard to fault these armchair Bitcoin analysts for making this comparison. After all, the spectacular rise in value of something that you can’t feel, touch, or see is outside the realm of their experience.
Tulip bulbs have an interesting property that you can breed them. The folks buying the rare and unique tulip bulbs had the idea that if they purchased a valuable tulip bulb for breeding, they could make more, sell them, recoup their original investment and then continue to sell more tulip bulbs at pure profit. This seems like a pretty good idea on the face of it. Why didn’t it work? The answer lies in the geometric growth curve. I’m not a tulip expert, so I may offend the green thumbs that are reading this. Every year, you can dig up the tulip bulbs and where one was planted, you may have more than one bulb. This number is important. If the number was always exactly 1, and every tulip bulb was recovered, those tulips might still be worth the price of a home. If no new tulip bulbs were ever created, tulips would be very rare indeed . I googled it, and the number is more than 1, so you can increase your tulip bulb count holdings every year.
I had a great Junior High School math teacher. A student asked him how to get rich. After a joke about not being a math teacher, he said, “Save fifteen percent of everything you make and invest it with compound interest and start early.” He taught us how to calculate compound interest, and since it was the Jimmy Carter days of high inflation, the compound interest rate was significant. That lesson stuck with me -- the power of compound interest, not the saving part. It turns out you need both to become rich.
Let’s tiptoe back to the tulips. These tulips were breeding at a geometric rate with nothing but the requirements of land, water, and sunlight to limit the growth. The motivation was wealth and everyone wanted to sell their tulips to recoup the cost of their original tulip investment. The only possible mathematical outcome of this exponentially-increasing tulip production was that the tulips would lose value as too many of them came into existence. This was foreseeable. I don't have the stats on how many mathematicians invested in tulip bulbs, but I'd guess the answer is none.
Bitcoin has a geometric curve too. The difference is that the multiplier for bitcoin is less than 1. It is, in fact 0.5. Roughly every four years, as determined by the original Bitcoin developer Satoshi Nakamoto, the rate at which new bitcoins will be generated will drop by half. An exponential curve with a multiplier less than 1 is known as exponential decay. The number of new bitcoins doesn’t explode like the rate of new tulip bulbs. New bitcoin production decreases and trends toward zero which is the exact opposite of tulip mania.
To summarize, tulip mania was mathematically unsustainable because tulip production grew exponentially while tulip consumption was limited by the total human population size. Bitcoin has an exponential decay of the number of new units to be distributed among the holders of bitcoin. These are apples and oranges, or tulips and bitcoins. Not the same thing at all.
The tulip bulb mania is closer to the quantitative easing policies of central banks. It is mathematically unsustainable. If I thought quantitative easing was a good idea, I’d use it myself and get one credit card to pay another, and then pay that with a cash advance from another credit card. If it worked long enough, I might even convince myself that it was great idea and that it saved me from the brink of financial ruin. I don't have the stats on how many mathematicians are invested in dollars, but I would hope none. Read More
2,205 viewsJuly 18th, 2014 by William
Backup below (dhimmel):
One frequently mentioned use case for cryptocurrency is as a conduit for international remittances. Currently, more than 200 million people live outside of their birth countries and these people send home over half a trillion dollars per year to relatives and friends. Money takes circuitous routes between wallets in Atlanta and hands in Accra (or the other way around). These routes are shaped by densely interlinked networks of national and international governments, laws, organizations, corporations, technologies, currencies and human relationships. This nexus of interrelated forces and actors constantly reshapes the channels through which people working abroad send money home. This column will draw attention to interesting developments in this space that have a bearing on cryptocurrency and other decentralized technologies.
One company that is currently basking in the Bitcoin buzz is BitPesa, a startup seeking to enable BitCoin remittances to Kenya. BitPesa, which opened for service this month, charges a 3% fee to exchange BitCoin into Kenyan Shillings and deposit this money into a specified mobile money account.
BitPesa works seamlessly with its namesake M-Pesa, the viral electronic cash network owned by Safaricom, Kenya’s leading cellular provider. M-Pesa is like a privatized currency—users deposit money with Safaricom, and this balance is linked to their phone number. Users can then beam these funds to other people’s phones or spend them at an ever-expanding network of M-Pesa merchants. Currently M-Pesa can be used to buy groceries, pay bills, hire cabs, and much more. In fact, some reports argue that 31% of Kenya’s GDP passes through the M-Pesa network. SafariCom is now East Africa’s most profitable company and has expanded into markets around the world, spawning competitors like Econet’s EcoCash based in Zimbabwe.
BitPesa claims that users around the world will be able to deposit BitCoin onto their platform and designate M-Pesa accounts in Kenya to receive Shillings. The conversion is done automatically so recipients in Kenya receive the money on their cellphones within minutes. Recipients do not require a BitCoin address or need to worry about market volatility. Senders, on the other hand, must find their own ways to buy BitCoin, although BitPesa has online tutorials about how to do this. Importantly, it should be noted that the fees associated with acquiring BitCoin are not included in BitPesa’s 3% calculation.
BitPesa is not currently available in the United States, likely due to stringent American restrictions on international money transfer. It is, however, available in the United Kingdom where I will be traveling tomorrow. Is there a reader from Kenya who would be willing to help me test the BitPesa system? Please let me know ASAP in the comments section or in the forums and I will use the service to send you a small amount of BitCoin.
BitPesa is a good example of a company using BitCoin to cash in on the business of sending money from “rich” countries to “poor” countries. Kitiwa, on the other hand, is a notable BitCoin startup based in Ghana that works the other way around. Kitiwa allows people in Accra to buy BitCoin with local currency in order to make online payments and send money abroad. This service is needed in Ghana because payment networks like Visa and PayPal routinely block people living there (and in other African countries) from using their systems.
Kitiwa users begin by opening a BitCoin address, and the Kitiwa website contains a tutorial on using Blockchain.info to do this. Users then then pay for BitCoin with MPower Payments, a Ghanian mobile payments startup that allows people to fund purchase with their bank accounts, credit cards or mobile money accounts. Users can then use their BitCoin to pay for internet services like web hosting, send money to relatives living abroad or hire overseas consultants. The Kitiwa website even has a tutorial on how to use BitCoin to shop on Amazon.com through Gyft.
These developments in Africa’s BitCoin ecosystem occur just as banks in the United States are pulling out of the remittance business. Laws aimed at money laundering and the financing of terrorism have increased costs for banks, which are responding by axing services. As Michael Corkery recently reported:
“JPMorgan Chase and Bank of America have scrapped low-cost services that allowed Mexican immigrants to send money to their families across the border. The Spanish bank BBVA is reportedly exploring the sale of its unit that wires money to Mexico and across Latin America. And in perhaps the deepest retrenchment by a bank, Citigroup’s Banamex USA unit has now closed many of its branches in Texas, California and Arizona that catered to Mexicans living in the United States and stopped most remittances to Mexico as it faces a federal investigation related to money laundering controls.”
In a recent op-ed the New York Times argued that banks’ move away from the remittance business will result in migrants paying higher fees to send money home, and that a possible solution would be for the World Bank to act as a centralized remittance clearinghouse. Many BitCoin enthusiasts are probably hoping that the opposite happens—that the banks' withdrawal will create openings that can be filled by BitCoin startups like BitPesa and Kitiwa. We will see what happens.Read More
2,348 viewsJuly 17th, 2014 by rotalumis
1,931 viewsJuly 4th, 2014 by SeanM
2,152 viewsJune 29th, 2014 by xnova
June 27th, 2014 by adamUpdate: LTBCOIN Asset Drop Incoming later tonight! 6/27/2014 Hey Reader, Adam B. Levine here and happy to finally share the LTBCOIN project with you. If you’d like to dig into the more technical papers, you’ll find them here. LTBCOIN is a brand new kind of thing - a crypto-rewards system where people who help LTB to be useful are rewarded for their efforts, and it’s built on Bitcoin! Why is LTBCOIN Valuable? Effective July 1st, 2014 LetsTa... Read More
2,166 viewsJune 23rd, 2014 by johnbarrett
25,984 viewsJune 22nd, 2014 by jratcliff63367With approximataly 30% of all bitcoins in existence currently in a state of limbo it remains a nagging question, just what is happening with them and will they ever rise from the dead?
This article discusses in detail the character and quantity of these zombie bitcoins, presenting detailed graphical analysis extracted directly from the bitcoin blockchain, and highlights theories as to what their fate might be.
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