Quote:A federal judge in New York has ruled that bitcoin constitutes a form of money.
The ruling comes from the ongoing case involving the now-defunct Florida bitcoin exchange Coin.mx and one of its former operators, Anthony Murgio.
Murgio, who was indicted on alleged money laundering charges in July of last year, had sought to dismiss two of the charges against him in part by arguing that bitcoins don't count as "funds" in the context of US law.
According to Reuters, Judge Alison Nathan of the Southern District Court of New York rejected that bid, writing that bitcoin is money by virtue of how it is used.
Nathan wrote in her ruling:
"Bitcoins are funds within the plain meaning of that term. Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment."
The ruling comes on the heels of a court decision in Florida in which a Miami judge ruled that, according to state statutes, bitcoin doesn’t qualify as a form of money. That decision sparked debate amongst observers and has sparked renewed effort in the state legislature to develop regulations around the digital currency.
The Coin.mx case is connected to a broader investigation by the US government into an alleged cybercrime ring tied to a series of hacks on major companies and financial institutions, including Wall Street giant JPMorgan Chase. According to prosecutors, Coin.mx was used as a conduit for laundering proceeds from the purported operation.
(09-26-2016 12:53 PM)pants Wrote: i am all fiat now.
Needed the cash, cause i bought an apartment.
Bought 31 BTC for 1000 USD.
Bought some shit, and had 17 BTC left which i sold off today for 10 000 USD.
I'll buy back in when my finances are a bit stronger.
I forgot my bitcoin wallet password. Lucky i kept an offline cold copy.
Always keep a backup if its some big cash.
(09-26-2016 12:53 PM)pants Wrote: i am all fiat now.
Needed the cash, cause i bought an apartment.
Bought 31 BTC for 1000 USD.
Bought some shit, and had 17 BTC left which i sold off today for 10 000 USD.
I'll buy back in when my finances are a bit stronger.
I forgot my bitcoin wallet password. Lucky i kept an offline cold copy.
Always keep a backup if its some big cash.
(09-27-2016 07:34 PM)JayJuanGee Wrote: The below linked article, from yesterday, describes some recent successful testing of the lightning network by Bitfury.
https:[email protected]/bitfury....l6yeji8rk
(09-26-2016 12:53 PM)pants Wrote: i am all fiat now.
Needed the cash, cause i bought an apartment.
Bought 31 BTC for 1000 USD.
Bought some shit, and had 17 BTC left which i sold off today for 10 000 USD.
I'll buy back in when my finances are a bit stronger.
I forgot my bitcoin wallet password. Lucky i kept an offline cold copy.
Always keep a backup if its some big cash.
(09-28-2016 06:41 AM)SunW Wrote:(09-26-2016 12:53 PM)pants Wrote: i am all fiat now.
Needed the cash, cause i bought an apartment.
Bought 31 BTC for 1000 USD.
Bought some shit, and had 17 BTC left which i sold off today for 10 000 USD.
I'll buy back in when my finances are a bit stronger.
I forgot my bitcoin wallet password. Lucky i kept an offline cold copy.
Always keep a backup if its some big cash.
Good stuff. Anyone here have experience with paper wallets?
(09-28-2016 08:04 AM)DaveR Wrote:(09-28-2016 06:41 AM)SunW Wrote:(09-26-2016 12:53 PM)pants Wrote: i am all fiat now.
Needed the cash, cause i bought an apartment.
Bought 31 BTC for 1000 USD.
Bought some shit, and had 17 BTC left which i sold off today for 10 000 USD.
I'll buy back in when my finances are a bit stronger.
I forgot my bitcoin wallet password. Lucky i kept an offline cold copy.
Always keep a backup if its some big cash.
Good stuff. Anyone here have experience with paper wallets?
Armory's fragmented paper backup scheme is a good option. It uses a Shamir* 2 of 3 scheme, so there will be three fragments and you need at least two of them to restore your wallet. You can also use 3 of 5, 3 of 6, or any other combination.
* in case anyone is interested, the math behind this backup scheme is very sold: https://en.wikipedia.org/wiki/Shamir%27s_Secret_Sharing
Keep one fragment yourself, give one copy to a close friend for safe keeping and the third to another friend or relative. Remember that two fragments will provide full access to your wallet, so it's best if the two trusted people don't know each other and also don't know where you keep your fragment of the wallet.
The scheme is resistant to fire/theft/loss, and a single fragment is useless to law enforcement, so you can keep your copy in a bank safe without any risk.
If you're in the US or UK, try to avoid discussing your paper backups via electronic channels, because there are issues with civil forfeiture in those countries. Basically, Police can confiscate cash and cash derivatives if they think it may be related to a crime, and it's your problem to prove otherwise. Because of that, it's important to keep the location of your backup fragments secret. As a last resort, use something secure like Wire, Telegram secret chats, or Signal messenger if you need to discuss it with your trusted people.
If you have a high-value wallet, you should use Armory's cold storage scheme as well. You'll need an offline computer (maybe an old laptop) to generate your wallet, export a watching-only version of it to a USB stick, and print paper backups. Then you're supposed to keep that computer completely offline - the only connection to the outside world should be via USB stick. If you're worried about viruses, you can use USB sticks with write-only switches or use QR codes to completely isolate it.
This explains how it works: https://www.bitcoinarmory.com/tutorials/...ne-wallet/
(09-27-2016 07:29 PM)JayJuanGee Wrote: I watched the below linked video presentation titled Bitcoin, Brexit and The big decentralisation trend.
https://www.youtube.com/watch?v=IagNESpFd7o
It seems that the guy gives a very decent one hour bullish overview concerning the present and future value of bitcoin, and maybe even wonder if he is trying to sell bitcoin on folks.. hahahaha
Quote:The pressure is building for Deutsche Bank.
Germany's largest and most financially leveraged bank continues to see its stock price languish as other firms distance themselves from the beleaguered financial institution.
Indications that the bank may pay billions of dollars to the US government in order to settle charges related to mortgage lending practices have sent markets reeling amidst an environment already on the edge.
Should the bank fail, it could have devastating implications for the financial services industry.
And, since market participants have often flocked to bitcoin in times of market distress, turmoil of this magnitude could prove highly bullish for the digital currency.
"The capital markets have awakened to bitcoin as a disaster hedge," analyst Chris Burniske told CoinDesk. The digital currency doesn’t correlate with other asset classes, an aspect that may make it more attractive in times of uncertainty, said Burniske, blockchain products lead for investment manager ARK Invest.
"Depending on how people feel about Deutsche Bank's future prospects, they may choose to hedge themselves from the more traditional markets by using bitcoin," he went on to say.
Potential bailout
Safe haven assets like bitcoin may come in handy soon enough, as Deutsche Bank's rapidly deteriorating situation has many wondering whether the financial institution will need a bailout from the German government or the European Central Bank.
The company has been been on rocky ground for some time, and if they don’t do something to fix it, Deutsche Bank could go belly up, economist Chris Martenson told CoinDesk.
"The DOJ is coming after them for $14b, and if they pay even $3b or $4b, it will still be too much for them to bear," he said.
While securing a bailout may prove unpopular, the political pressure to make this happen could be enormous. Discussions involving the possibility of a obtaining such financial assistance intensified on 29th September, when certain hedge funds cut their derivatives exposure to Deutsche Bank and the major financial institution’s shares fell more than 6.5%, CNBC reported.
Deutsche Bank would go on to release a statement assuring global market participants of its financial stability, but the numbers remain a grim reminder about the hurdles the bank faces.
It has roughly $16b in equity compared to $160b in debt, according to a separate CNBC report. Company shares have dropped upwards of 70% since July 2015, falling from a highly of roughly $35 to approximately $11.50 on September 29, Google Finance data reveals.
Possible ‘global contagion’
Should the organization’s financial position continue to deteriorate, a failure to secure a bailout could "spark global contagion," stated Arthur Hayes, co-founder and CEO of leveraged bitcoin trading platform BitMEX. More specifically, a situation of unchecked financial weakness could result in numerous consequences, including depositor flight and the collapse of credit lines, he told CoinDesk.
Deutsche Bank is the largest derivatives counterparty in the world. The financial institution has been offloading some of these contracts, selling roughly two-thirds of a portfolio of uncleared credit default swaps.
Because Deutsche Bank has derivatives contracts with so many institutions, any bank it owes money to will be affected, noted Hayes. While the magnitude of the fallout from Deutsche Bank’s failure remains unknown until it happens, contagion could result in central banks around the world being forces to shore up vulnerable financial institutions.
Market expert Petar Zivkovksi told CoinDesk that, should Deutsche Bank fail, it could impact “dozens of systemically important banks around Europe and the globe.” He also spoke to the key role played by the DOJ fine, emphasizing that the final amount Deutsche Bank would pay was thus far undetermined.
"The US justice department fine tipped the situation into a crisis, although recent news indicates that fine may be reduced to allow Deutsche Bank to find a way to restructure and save itself," said Zivkovksi, director of operations for leveraged bitcoin trading platform Whaleclub, highlighting the reluctance thus far of the German government to step in.
Impact on bitcoin
Bitcoin’s price and volatility could be impacted by the Deutsche Bank situation, depending on how the situation plays out – and how markets react accordingly.
Volatility was been very low in September, with The BitMEX 30 day Historical Volatility Index measuring 24.72% during the first 29 days of the month, down from 49.97% in August and 69.42% in July.
"Bitcoin prices may be impacted as the situation unfolds, but I believe only an extremely negative resolution, such as a domino-effect euro bank failure, could bring high volatility back to BTC prices," Zivkovski speculated, adding that it would take an extreme case scenario to spark a major flight to cryptocurrencies.
“The world is not quite ready yet to pour large amounts into cryptocurrencies in times of fiat distress," he added.
Hayes offered a different point of view, asserting that central banks will engage in robust money printing whether Deutsche Bank receives a bailout or not.
Any such money printing will provide tailwinds for bitcoin and “result in more financial repression as central banks once again must prevent assets from fleeing the banking system", he said – a situation that might ultimately favor currencies like bitcoin.
Quote:The weeks of speculation about whether JPMorgan Chase & Co. Chairman and Chief Executive Officer Jamie Dimon would be forced to give up one of his titles has ended. I didn't take a side in the battle, if only because I couldn't get beyond the threshold questions: "Why does anyone even care, and why do we believe we are still beholden to people like this?"
Since the 2008 financial crisis, we have seen a massive decline in trust in the financial services industry: Lehman Brother, Bear Stearns, American International Group, the "London Whale," Cyprus and a host of lesser scandals have prompted consumers to say one thing loud and clear: "I don't trust you." Or "You're only in it for yourself." Or "Who made you king?" Or some very reasonable variant thereof. It seems the financial services industry's best response is, "Trust me, I went to Harvard Business School."
The point is that this fundamental trust no longer exists; in its place, rises Bitcoin.
Bitcoin was launched in 2008 during the depths of the financial crisis. It is a growing phenomenon that you can find out more about here, here and here. In short, it's a crypto-currency that is completely electronic, peer-to-peer, unregulated (or unregulate-able) and uncontrolled (or uncontrollable) by any government or agency. Each Bitcoin is simply a long string of numbers and letters that can identify itself within the Bitcoin economy to be unique and legitimate. Bitcoins can't be copied or tampered with; they don't exist in the real world -- only on your phone, computer or tablet -- but they have the same value as physical currency.
There are 11 million of these coins in existence today, and there will only be 21 million ever created. Similar to gold, Bitcoins are made by mining. But while gold is mined from the ground by bulldozers, Bitcoins are mined by computers solving complex mathematical equations. Each time you get a correct answer, you unlock a coin which can then enter the Bitcoin economy. These quirky characteristics may all seem like reasons to question, dislike or fear this new currency. Instead these are a few of the reasons why everyone should hope it becomes a lasting part of the fabric of financial services.
Why?
When the Defense Advanced Research Projects Agency first implemented a working version of the Internet in the 1960s it seemed like a fringe experiment not dissimilar to Bitcoin today. It wasn't until a protocol called TCP/IP emerged in the 1970s and was commercialized that the Internet was positioned to take off. In short, this protocol allowed every website and service built on it to have its own "address" and a way to communicate information. This averted chaos, allowing users to find what they were looking for, allowing websites to work together and enabling networks to do the hard lifting of directing traffic in an orderly and predictable way. Without TCP/IP, the Internet as we know it would not exist.
Bitcoin today is in roughly the same development phase that TCP/IP was back then. Instead of IP addresses and websites, Bitcoin has unique strings that represent money and a mechanism to send these strings securely and safely wherever you want. It is a protocol that is allowing money to flow around the world much like TCP/IP allows information to flow -- in an orderly, predictable way.
This is not a theory; it happens every day. The Bitcoin economy, while still in its infancy, is about $2 billion (meaning, the value of all Bitcoins) and rising. New services appear daily -- exchanges, digital wallets, payment processors, along with companies that accept Bitcoin alongside dollars, euros and yen for traditional services. In addition, a small and growing group of technologists are getting behind the currency, allocating time and capital to building a robust ecosystem.
Bitcoin is being used all over the world in a wide range of ways already: to avoid the high fees of using a Visa card in San Paulo; to settle the purchase of a million dollar home in Buenos Aires; to pay a mechanic for services in Lagos; to provide Egyptians access to a liquid currency. The list goes on.
Bitcoin provides a safe way for anyone, anywhere to send, receive or store his or her money. By contrast, consumers are realizing that the traditional banking system shouldn't be trusted. Why store my money with strangers who may make crazy bets on derivatives (JPMorgan)? Why keep my money in a bank that could threaten to seize it (Cyprus)? Why keep my hard-earned savings in a currency that could be devalued because of an incompetent government (Argentina)?
All of this said, the emergence of a robust Bitcoin economy won't all be positive. Bad actors will use Bitcoin for drug dealing, porn and financing terrorism. However, this already happens every day with gold, dollars and other currencies; it's not a reason to shut Bitcoin down. Which -- did I mention this? -- is not actually possible anyway.
There is no central server, no central authority and no owner. Bitcoin can be slowed but not shuttered. And even if the U.S. Government decides it is anti-Bitcoin, many other countries will either tacitly or explicitly support it. China. Russia. Switzerland. Iceland. Singapore. Suffice it to say that the geopolitical ramifications of a robust Bitcoin economy are mind-boggling, beginning with a completely peer-to-peer banking system that works by and between people and ending with a world that no longer relies on the U.S. dollar as the reserve currency of all assets.
The opportunity here is to think constructively about a world in which money flows are more transparent (Bitcoin), easy (Bitcoin), cheap (Bitcoin) and secure (Bitcoin). Does the Bitcoin economy need regulation? Possibly. Much like virtual guardrails enabled the Internet to thrive, the Bitcoin ecosystem may need something similar to begin rebalancing the financial services landscape.
The current price of Bitcoin is about $130. Some people think that Bitcoin will never become a useful currency but rather a better version of gold or a replacement to gold entirely (Gold 2.0). If this is all Bitcoin becomes, a good question is: "What would that make each Bitcoin worth?" Well, the value of all of the gold in the world isroughly $8 trillion. Assuming that Bitcoin can replace gold as a more useful store of value, then the upper bound of each Bitcoin would be almost $400,000 ($8 trillion/21 million bitcoins).
If Bitcoin grows into something bigger -- a useful reserve currency, then watch out: Its value will far exceed $400,000. I personally think that Bitcoin is already superior to gold. Its role as currency is yet to be determined, but over the next decade, being Gold 2.0 will suffice considering that it would represent a more than 3,000 times return.
I've told my friends that it is entirely rational to allocate one percent of your assets to Bitcoin -- as I have. Call it schmuck insurance. As the 2008 crisis proved, schmucks can cause a world of damage.
There is a famous scene in the Matrix where Morpheus asks Neo if he wants to take the blue pill and go back to life as he knows it or take the red pill and see life as it is. Neo takes the red pill and begins a period of exploration about humanity, hierarchy, rules, etc. Bitcoin is a red pill. There will be some bad and awkward moments, but lots of good, useful and powerful things will also ensue. It will reallocate financial strength and power to the people versus keeping it within a few centralized authorities.
I am hopeful that Bitcoin prevails. The world needs more red pills.