Have a question? Want to advertise? Something else? Contact us: [email protected]

Community Directory


Go back

Blog Posts

  • Posts Authored: 26
  • Posts Contributed To: 0
  • 48 Comments
    4,662 views

    Independence Bancshares Studying Virtual Currencies

    October 5th, 2014 by bcohen

    Independence Bancshares - a publicly traded (albeit thinly on the OTC:QX), FDIC-insured, community-based bank in Greenville, South Carolina - seemed poised to become the first bank in the United States to embrace Bitcoin payments, according to three patents published by the United States Patent and Trademark Office. However, after speaking with Chief Executive Officer Gordon Baird, Let's Talk Bitcoin has learned that Independence Bancshares has clearly distanced themselves from Bitcoin, but is "studying virtual currencies."

    Read More
  • 50 Comments
    7,702 views

    United States to Monitor Canadian Border for Illicit Drug-Related Bitcoin Transactions

    September 11th, 2014 by bcohen

    Recent publications by the US federal government indicate that Bitcoin will likely be used in illicit cross-border transactions, and that the Office of National Drug Control Policy (ONDCP) is ramping up efforts to detect and interdict bitcoin transactions. There is a special focus on Canada and the United States.

    Read More
  • 45 Comments
    5,247 views

    DEA Seizes Bitcoin: Seizure Points to Earlier Mistaken Identity

    August 29th, 2014 by bcohen

    Hi Brian. William Suk here. I just wanted to say that your article popped up in my feed just now -- I'm an occassional editor. Great reporting. I always like your stuff. I have one small editorial suggestion -- put your claim front and center in one or two lines at the start of the piece. (I know it's partially in the title.) You began by mustering your evidence, and it's a great narrative, but I think it would be good to tell readers immediately what the newsworthyness is. Something like "The DEA has been implicated in a case of mistaken identity during its recent bitcoin seizure." Then tell your story.

    You know, I have been interested in this idea of confiscated bitcoin. From a sociological viewpoint it is very interesting to me that the Silk Road coins makes the US government a major "stakeholder" in Bitcoin. It's one of the largest wallets if I'm not mistaken. You would know better.

    Also, the DEA's reticence to release information is not surprising. My suggestion: FOIA the heck out of them. The FBI, NSA and other agencies could have carried out bitcoin siezures as well. I've done a couple of FOIA requests with other agencies and I'd love to get my hands dirty with the DEA.

    The Drug Enforcement Agency(DEA)appears to be involved in a case of mistaken identity in regards to last year's Bitcoin seizure. A new seizure notice that was just issued with an identical wallet address which had previously been listed as belonging to "Eric Daniel Hughes" now is associated with an "Unknown" user.

    On June 23, 2013 I broke the first ever Bitcoin seizure story with Let's Talk Bitcoin Editor in Chief Adam B. Levine and his crack team of investigators Dan Roseman, David Perry, Justus Ranvier and George Ettinger.

    The article, Users Bitcoins Seized by DEA garnered international coverage and initially ran on LTBs Tumblr.

    The article began:

    The Drug Enforcement Administration posted an Official Notification that Bitcoin (i.e. property) belonging to Eric Daniel Hughes was seized for forfeiture pursuant to 21 U.S.C.

    Read More
  • 33 Comments
    4,835 views

    International Monetary Fund Asserts Bitcoin Not a Currency in Draft Report

    August 12th, 2014 by bcohen

    Original (dhimmel), accidently modified with intial edits:

    NOte From BrianL Not sure what impact the above statement has on article but I ##have made a few modification on original to 8/13

    The International Monetary Fund (IMF) is currently drafting Monetary and Financial Statistics Manual & Compilation. The document has a Draft watermark and a meta-data creation date of June 26, 2014.

    Chapter four of the manual is entitled "Classification of Financial Assets and Liabilities" (PDF) which includes in part classifications of "Monetary Gold and SDRs" and "Currency and Deposits."

    Under Currency and Deposits we find section 4.36 with Footnote 13:

    Not all electronic payments involve electronic money. For instance, credit cards or debit cards are not electronic money because no monetary value is stored on them; and store cards or internet-based currency (such as Bitcoins [13] or gaming money) are not electronic money because these are not widely accepted as a medium of exchange.

    Scrolling down to the referenced footnote 13 we find:

    Bitcoin also does not meet the definition of a currency as it is not issued or authorized by a central bank or government.

    Therefore we must assume that the IMF presently defines currency as issued or authorized by a central bank or government. Oddly at the same time, the manual states that Bitcoin is and is not a currency. The author chose the term "internet-based currency" rather than the more common terms "virtual currency" or "digital currency." Maybe the IMF is confusing Bitcoin with "Internet-based payment services" which is a commonly used term (and Bitcoin is a payment network in addition to being a virtual currency). The G7 connected FATF (Financial Action Task Force) prepared a document in June 2013 entitled "Guidance For A Risk-based Approach Prepaid Cards, Mobile Payments and Internet-Based Payment Services" (PDF).

    I was able to find reports from 2011 and 2012 from the IMF that define currency in part as "..consist{ing} of notes and coins that are of fixed nominal values and are issued or authorized by the central bank or government."

    July 27, 2012, IMF Staff Discussions Note "What Lies Beneath: The Statistical Definition of Public Sector Debt An Overview of the Coverage of Public Sector Debt for 61 Countries"(PDF) defines "Currency and deposits":

    Currency consists of notes and coins that are of fixed nominal values and are issued or authorized by the central bank or government. Although all government subsectors hold currency, generally only the central bank issues it. Deposits are all claims, represented by evidence of deposit, on the deposit-taking corporations (including the central bank) and, in some cases, general government and other institutional units.

    On May 27, 2011 "Public Sector Debt Statistics: Guide for Compilers and Users (Google Books) was issued by the IMF Inter-Agency Task Force on Finance Statistics which provided the following definition of "Currency and deposits":

    Currency consists of notes and coins that are of fixed nominal values and are issued or authorized by the central bank or government. In some countries, commercial banks are able to issue currency under the authorization of the central bank or government, Currency constitutes a liability of the issuing units. Unissued currency held by a public sector unit is not treated as a financial asset of the public sector or a liability of the central bank. Gold and commemorative coins that are not in circulation as legal tender, or as monetary gold, are classified as nonfinancial assets rather than currency."

    The IMF definition of currency appears to be a derivative work of the European System of National Accounts from the European Commission in 2008. This document (Google Books) was drafted by European Commission, IMF, United Nations, World Bank and the Organization for Economic Co-operation and Development and defined currency as follows:

    "Currency consists of notes and coins that are of fixed nominal values and are issued or authorized by the central bank or government. (Commemorative coins that are not actually in circulation should be excluded as should unissued or demonetized currency.) A distinction should be draw between domestic currency (that is, currency that is the liability of resident units, such as the central bank, other banks and central government) and foreign currencies that are liabilities of non-resident units (such as foreign central banks, other banks and governments.) All sectors may hold currency as assets, but normally only central banks and government may issue currency. In some countries, commercial banks are able to issue currency under the authorization of the central bank or government."

    The Manual provides some history on this document and states that:

    In 2000, the International Monetary Fund (IMF, or the Fund) published the Monetary and Financial Statistics Manual (MFMS), which was the first volume of its kind in the field of monetary and financial statistics.

    The IMF appears to recognize the difficulty in defining or "classifying" certain financial instruments:

    This Manual contains additional discussions on borderline cases in the classification of financial assets and liabilities.

    Further, the IMF is willing to reclassify (i.e. redefine) some of these instruments:

    An important revision concerning financial instruments is the reclassification of the special drawing rights (SDR) allocations to the Fund's member countries, from equity to long-term foreign liability. The change was introduced in August 2009 in the monetary data compiled by countries, with historical data having been revised correspondingly. Previously, SDR allocations were recorded as a unilateral transfer from the IMF to its member countries, and in monetary statistics recorded as part of equity.

    This change is particularly interesting as we have seen headlines such as "IMF Bailout for Ukraine and a New World Currency" from the New American in regards to the April 30th Announcement by the IMF "IMF Executive Board Approves 2-Year US$17.01 Billion Stand-By Arrangement for Ukraine, US$3.19 Billion for immediate Disbursement"

    Robert Wenzel of Economic Policy Journal was quoted by New American as follows:

    It signals fear on the part of U.S. government officials that the dollar is slowly losing its luster as a reserve currency. U.S. officials are trying to nudge the SDR as the alternative to the dollar because they will still maintain significant influence with regard to the SDR, as opposed to some other currency taking hold in parts of the world as a reserve currency (the [Chinese] renminbi?) or gold returning as an important reserve. China and Russia are both presently accumulating gold.

    In an IMF blog post from September 24, 2009 entitled "Reserve Currencies in the Post-Crisis International Monetary System" (brought to my attention from Bitcoin Magazine article "

    Read More
  • 36 Comments
    5,786 views

    Banks Issue Bitcoin Report: Bitcoin Community Absent

    August 11th, 2014 by bcohen

    only publish between 3PM and 4AM Pacific Time

    Recently I took out Twitter to note my surprise that only a handful of folks have bothered to watch the "Conference of State Bank Supervisors Public Hearing on Virtual Currencies" on YouTube which was part of a "CSBS Emerging Payments Task Force Public Hearing on May 16, 2014". This was a week after the Federal Advisory Council and the Board of Governors of the Federal Reserve met and discussed Bitcoin at great length at their quarterly meeting. The speakers were announced on May 5. This becomes even more surprising as the U.S. Government Accountability Office linked to the the hearing in its blog report "Risks of Virtual Currencies" in its "Watchblog: Following The Federal Dollar." I guess its a Watchblog with no one watching?

    Only 30 Views - YouTube : Conference of State Bank Supervisors Public Hearing on Virtual Currencies? https://t.co/4IdtSNSipR

    — Brian Cohen (@inthepixels) August 8, 2014

    At the public hearing, Megan Burton, Chief Executive Officer, CoinX noted the overwhelming obstacles that they encountered with banking institutions. Though you probably wouldnt know this if you read the transcription of the hearing (PDF) which erroneously credits Annemarie or Annemarie Tierney, EVP Legal and General Counsel, SecondMarket with the comments:

    ... We've actually been turned down by about 61 banks now. That's overwhelming. We never get to the word cryptocurrency. We state the word MSB and the conversation halts...

    And further,

    I wouldn't say that it's specific to this panel that you see before you today. I think it stems specifically to us being put in a category of high risk. In this meeting, what was fascinating was the fact that when I talk about the transaction flow that we could potentially have, the sheer volume of what would go through...A community bank is typically not equipped to be able to handle that level of transaction volume, nor do they have the insight into my business to know how to gather enough information at the KYC process to know who we're touching and what we're doing.

    Moreover,

    There needs to be a bridge between where we are as a MSB in a high risk category and where the banks are and how they're being regulated to be able to facilitate better communication between the two.

    Burton's comments on community banks is interesting. When larger institution are rejecting Bitcoin companies applications they are putting additional pressure on smaller banks, i.e. community banks who are being approached to fill this void.

    And what can community banks use as guidance when dealing with these newfangled Bitcoin companies?

    Well, on June 23, five weeks after the Conference of State Bank Supervisors Public Hearing on Virtual Currencies, the ICBA or Independent Community Bankers of America Clearing House and The Clearing House (TCH) issued a thorough twenty five page white paper entitled Virtual Currency: Risks and Regulation (PDF). This report is also available as a PDF through short URL at www.icba.org/virtualcurrency.cfm as well as the TCH website.

    The Independent Community Bankers of America is the nations voice for more than 6,500 community banks with nearly 5,000 members, representing more than 24,000 locations nationwide and holds $1.2 trillion in assets, $1 trillion in deposits, and $750 billion in loans to consumers, small businesses and the agricultural community.

    And further, ICBA member community banks create symbiotic relationships with the communities they serve, favor local decision-making, while adhering to the highest business practices and ethical standards, and support a democratically governed association where each member bank has a voice and a vote&

    The Clearing House according to its website was {e}stablished in 1853 by the nations leading banks, The Clearing House originally functioned as the de facto central bank for banks in the United States long before the Federal Reserve was formed&

    and as noted in the white paper,

    The Clearing House is the oldest banking association and payments company in the United States. It is owned by the worlds largest commercial banks, which employ over 2 million people and hold more than half of all U.S. deposits. The Clearing House Association L.L.C. is a nonpartisan advocacy organization representingthrough regulatory comment letters, amicus briefs and white papersthe interests of its owner banks on a variety of systemically important banking issues. The Clearing House Payments Company L.L.C. provides payment, clearing, and settlement services to its member banks and other financial institutions, clearing almost $2 trillion daily and representing nearly half of the automated clearinghouse, fundstransfer, and check image payments made in the U.S.

    The white paper also makes reference to the Conference of State Bank Supervisors:

    ...A large number of U.S. states currently participate in the Nationwide Mortgage Licensing System (NMLS), a web-based utility operated by the Conference of State Bank Supervisors State Regulatory Registry, through which participating states and the federal government ...has recently been expanded to permit states to utilize the system to administer licensing of payday lenders, money transmitters, check cashers, and other types of consumer financial service providers...The existing NMLS infrastructure could be expanded to include licensure of virtual currency market participants..

    Perhaps it is a bit surprising that ICBA was involved in drafting the report because while it was being drafted, Cary Whaley, Vice President of payments and technology policy for ICBA told Bloomberg news in Bitcoin Breakthroughs Studied by Banks the Currency Is Out to Replace that they had no interest in using Bitcoin:

    That reputation makes banks reluctant to use the digital currency directly, said Cary Whaley, a vice president at the Independent Community Bankers of America. While virtually none of the groups members are interested in using the digital money, a small number are examining its concepts, he said&

    However, the regulatory scrutiny that community banks face has been compared to that of virtual currency upstarts in Informationweek Bank Systems & Technology How New York State Is Looking to Regulate Bitcoin as well as PaymentsSource New York Sees Bitcoin as a Catalyst for Modernizing Regulation; both of which use NYDFS as a reference. And shortly after the report was released there were grumblings on BitcoinTalk about banks and in particular community banks interest in Bitcoin.

    Too big too fail doesnt mean too small to succeed. Community banks importance to the financial system became clearer during the 2008 financial crisis which illustrated what happens when banks become too big to fail. In July, the Senate approved an amendment to reserve a seat on the Federal Reserve Board of Governors for an individual with community banking experience. It is interesting to note that OTC Markets Group Inc which operates financial marketplaces for 10,000 U.S. and global securities recently announced the first banks to trade on the OTCQX marketplace under a new streamlined qualification process for U.S. community and regional banks. This also happens to be where SecondMarket (i.e. Bitcoin Investment Trust) is proposing to launch a bitcoin investment fund for ordinary investors in competition to the Winklevoss Bitcoin ETP commonly referred to as an ETF.

    A statement of purpose for Virtual Currency: Risks and Regulation succinctly explains the goal of this document:

    The purpose of this white paper is to promote consideration of how existing regulatory regimes in the U.S. may be applied to virtual currency, virtual currency system participants and products, and virtual currency transactions.

    I hand picked some additional quotes from the paper and found the footnotes particularly interesting:

    Under the current federal regulatory regime, players in the Bitcoin system are not subject to safety and soundness oversight, and no entity in the Bitcoin system is yet large enough to be subject to oversight as a systemically important institution or utility, even were such regulations applicable.

    _

    Live market capitalization of 158 convertible virtual currencies can be viewed at https://coinmarketcap.com 

    _

    Primary sources for this section {The Bitcoin System and Bitcoin Transactions.} are the Nakamoto paper cited at fn. 7, above; CoinDesks A Beginners Guide to Bitcoin (available at http://www.coindesk.com/information/); and Blockchain.info, which hosts the publicly searchable blockchain database and technical information regarding Bitcoin mining.

    _

    Given the lack of international consensus regarding classification and treatment of virtual currencies, the regulatory approach ultimately adopted by the U.S. is likely to have a significant influence on the shape of the global virtual currency economy in years to come.

    _

    Notwithstanding the use of the term wallet, it is not necessary that users store their Bitcoins in their wallets. In fact, for security reasons, users are often advised to store a list of their Bitcoin serial numbers [sic] on paper, a USB key, or a non-internet-connected hard drive (all of which are referred to as cold storage or cold wallets) rather than in an online (or hot) wallet. The user must then load the Bitcoin into the wallet prior to using it for a transaction.

    _

    ...in some cases, there will be no wallet provider associated with a Bitcoin wallet. Where there is no wallet provider, there is no entity that can be subject to regulation other than the user. Regulating the user would not likely be viewed as furthering the consumer-protection policy that motivates much of the existing payments regulatory framework.

    _

    Given the limited size of the virtual currency economy, no virtual currency exchange or wallet currently is likely to satisfy the requirements that must be met to be eligible for designation as a systemically important FMU {Financial Market Utility} or as engaging in systemically important PCS {payment, clearing, and settlement} Activities.

    _

    It is unlikely that exchanges that accept and maintain fiat currency accounts would be deemed to be taking deposits for purposes of U.S. banking laws, as (i) most exchanges that engage in such activity use a bank custodian model and (ii) most virtual currency exchanges are either located outside the U.S. and/or have established banking relationships with non-U.S. depository institutions.

    _

    ...a team of core developers, led by developers allegedly appointed by Satoshi Nakamoto, has a leadership role in proposing changes to the Bitcoin protocol. However, that team has no authority to force the Bitcoin community to accept such changes.

    _

    ...one existing unregistered virtual currency exchange advertises that it will be offering customers the ability to earn interest on the Bitcoins those customers deposit with the exchange at an attractive rate. In this regard, the exchange could be seen as offering a security (an investment contract) to its customers&

    _

    ...While virtual currency market participants may eventually develop an insurer similar to the FDIC or SIPC, or may even be able to obtain insurance coverage from private insurers in a more de-centralized fashion, in the absence of a meaningful insurance fund, regulators should ensure that consumers and others engaging in transactions on virtual currency exchanges receive adequate warnings of the risks involved in that activity (e.g., that trading in virtual currency products on an exchange is unregulated and risky, and may result in the loss of the consumers investment), similar to disclosures required for penny stocks or even the Surgeon Generals warning regarding use of tobacco products.

    The white paper in part concludes that:

    This white paper has described certain of the risks faced by consumers and others that hold or transact in convertible virtual currencies, and has evaluated certain ways in which U.S. regulatory authorities may consider regulating virtual currency transactions, products and marketplace participants based on their functional similarity to other transactions, products and marketplace participants that are regulated. The failure of Mt. Gox earlier this year, and the value that may have been irretrievably lost in connection with that failure, serves as a perfect backdrop for this white paper. The aggregate number and value of virtual currency transactions and holdings in the U.S. is small relative to most other regulated payments transactions and trading markets. However, the emerging nature of the virtual currency marketplace creates an opportunity to develop and implement a regulatory framework to mitigate risk to consumers and others without unduly burdening innovation and while the structure of the marketplace remains malleable.

    Image Credit: Cigarette Box is an altered Flickr Image

    Read More
  • 40 Comments
    4,731 views

    eBay and Microsoft Eye User-Created-Value Platforms Similar to LTB

    August 5th, 2014 by bcohen

    Original (dhimmel):

    !!!!! SENSITIVE TITLE - PASTE IN PLACE BEFORE PUBLISHING: eBay and Microsoft Eye User-Created-Value Platforms Similar to LTB !!!!!

    On July 9th, 2014, EcommerceBytes reported that eBay is considering "Compensating Users to Post on the eBay Boards. This was revealed when eBay held a Weekly Chat with the eBay Community Team on July 2nd:

    This week, the eBay Community team wants to hear your ideas about rewards & recognition for Community participation.

    EcommerceBytes noted that:

    In response to a question about what the eBay moderator meant, the moderator replied, For example, if eBay were to reward members for their Community participation, what types of participation should we consider? Number of posts? Number of correct responses?

    While EcommerceBytes said the move smacks of desperation, I will offer a different perspective. This is a paradigm shift whereby users will actually create and share value of the network and not just transfer (i.e. reallocate) value across it.

    The scope of eBays reward program eBay Bucks could expand beyond purchasing products into the realm of rewarding message board users. While eBay bucks is currently a walled garden it is possible that we could see it float through the gift token that I discussed over at Bitcoin Magazine in eBay Files Patent Application for Programmable Money. Or less likely but still possible, eBay could let Bucks be freely traded on a platform such as that proposed by IBM (see IBM Building e-Currency Platform, including Bitcoin.

    In what seems to be synchronicity, eBay posted the weekly chat announcement on June 30th which was just a couple days after Lets Talk Bitcoin! (LTB) launched LTBcoin (see the announcement at Introducing LTBCOIN, our new crypto-rewards program for LTB Creators and Community. LTBcoin according to the tokens website is a brand new kind of thing. It is a crypto-rewards system where people who help LTB to be useful are rewarded for their efforts. And its built on Bitcoin! In describing LTBcoin (LTBc), I have said Purchase not required. Participation is (Twitter). In fact, you cant buy LTBc from Lets Talk Bitcoin! However, everyone and anyone who participates in the Lets Talk Bitcoin Network (LTBn) is rewarded and distributed LTBc based on their participation in the network. Content creators receive the most amount of LTBc for their efforts but anyone can submit content (blog posts, podcasts and videos). Similar to eBays value proposition, 2.25 million LTBc were initially distributed to LTB community members with five or more forum posts and that registered a LTBcoin Compatible Address. LTBn is continually innovating and released Magic Words on July 17th in which a magic word is spoken on the podcast and listeners redeem the word on the Lets Talk Bitcoin website and are rewarded five times as many LTBc if they had read an article on the Lets Talk Bitcoin website...Yes, even reading an article on the website is worthy of an LTBc reward.

    According to the LTBcoin website, LTBcoin is a

    user-defined asset using the Counterparty protocol. Counterparty is built on Bitcoin and is secured by the Bitcoin network. Because of this, LTBcoin addresses are exactly the same as Bitcoin addresses. LTBcoin can be traded on the Counterparty distributed exchange for Bitcoin, XCP or other user-defined assets.

    Ethereum

    Ethereum is a distributed application software platform often referred to as Bitcoin 2.0. While Counterparty works on top of the Bitcoin blockchain, Ethereum is not compatible with Bitcoin (also see Overstock.coms o.info How to issue a cryptosecurity. On June 4th, prior to Ethereums ether sale, Ethereum posted a YouTube video of Chief Communications Officer Stephan Tual entitled What is Ethereum?. This video is the explainer that visitors first encounter when entering the Ethereum website. Tual explains that:

    ...another interesting application of this concept {of distributed application software} is that today on Facebook if you help identify artists that subsequently become successful by pressing the like button that value goes to Facebook advertisers not the content producers, not you. On Ethereum on the other hand both the content creator and the early adopter will be rewarded for identifying that artist. Its a brand new revenue model that never been seen before and it can completely revolutionize the way we think about revenue on the internet today.

    Reddit

    One has to wonder what Reddit has in store for their community after it was disclosed on Reddit to much fanfare (i.e. it made the Bitcoin sub-Reddit front page) that Reddit is hiring a couple of Cryptocurrency Engineers. While it is conjecture on my part, the shift towards users not just participating in the network but creating value based on their interaction with it cannot be dismissed.

    Read More
  • 18 Comments
    5,471 views
    Categories: Breaking News, Conferences

    Bitcoin Scholars to Compete for 15,000 Euro SWIFT Grant

    July 28th, 2014 by bcohen
    Only Publish
    Antime Saturday & Sunday
    Or Monday through Friday 3 PM - 4:00 AM  PST Read More
  • 16 Comments
    8,068 views
    Categories: Breaking News
  • 13 Comments
    7,355 views

    Pittsburgh Poised to Become First Municipality to Accept Bitcoin

    July 13th, 2014 by bcohen



    Update 7/17/2014: CoinDesk: Pittsburgh: Bitcoin Too Unstable for Local Tax Payments http://www.coindesk.com/pittsburgh-bitcoin-unstable-tax-payments/

    Read More

  • 19 Comments
    2,626 views
    Categories: Breaking News

    Pentagon’s Net Assessment Group Gives Marines Bitcoin Homework Assignment

    July 6th, 2014 by bcohen
    Pentagon’s Net Assessment Group Gives Marines Bitcoin Homework Assignment Read More
Pages 1 2 3