Doctor Bitcoin (aka Mark Hopkins) – Page 4

August 3, 2016June 3, 2019

Ask Dr. Bitcoin: What does the Bitfinex Heist mean for cryptocurrency?

So last night, as my team was readying itself for one of the most well-attended #BigDNT presentations in memory, my attention was elsewhere, as one of the most precipitous price falls in Bitcoin history was underway. I posted to my Facebook account a quick update at the time:

So if you’re wondering why Bitcoin is dropping in price today (and why your other crypto portfolio is hurting as well), one of the leading American crypto exchanges has had a major hack, and has lost around $70-85 MM of user funds, according to reports on Reddit and Twitter.

Bitcoin will recover, but it’s unclear if Bitfinex (the affected exchange) will.

This further highlights the need for decentralized exchanges.

Technologies like Ethereum and OpenBazaar are the primary beneficiaries of today’s events (after the thieves themselves, of course).

Those are the hard facts. Here are some more:

Bitfinex was one of the highest volume crypto exchanges on the planet, and was based in Hong Kong.
They have temporarily ceased trading after the company reported a security breach that led to the theft of a large number of bitcoins.
The amount believed to have been stolen is 119,756 bitcoin, which at the time of writing is valued at $65.6 million.
Bitfinex said in a blog post that they were investigating the breach to determine what had happened, but they “know that some of our users have had their bitcoins stolen.”
Some of the blame almost undoubtedly rests with their security partner BitGo.
The theft itself is said to have been reported to legal authorities.

The market very quickly punished the Bitcoin price, dropping within hours of the news all the way to $465 per BTC before “dead cat bouncing” back well above 560. As of the time of this blog post, the price was steadily rising past $550 per coin.

What does it mean, though?

While this is certainly a highly significant event in the world of cryptocurrency, it’s not the most significant, it won’t be the last of its kind, and it will not kill cryptocurrency in general or Bitcoin in particular. The market capitalization of Bitcoin is nearly $9 billion, and $85 million only represents a small fraction of that.

There will certainly be many experts with very salient advice about what went wrong and how it could have been prevented, but the most fundamental thing to address in my opinion is the issue of centralization.

Bitcoin and most cryptocurrency was designed with many core principles in mind, and fundamentally these principles require decentralization. In the minds of the early founders of Bitcoin, decentralization represents the ability of Bitcoin to survive corruption, security threats, and “bad actors” like thieves and criminals (or more cynically, bad actors like regulators and administrators). Simply put, if you don’t have a central authority regulating and hoarding large pools of capital, you get rid of many of the existential threats that exist and threaten traditional monetary systems.

What’s interesting, though, is that while the means of decentralized transfer and maintenance of the system was built into the design of Bitcoin, one key piece was left out: the means of deriving market value or currency exchange. As such, to fill that gap, people and organizations started creating what basically look like traditional marketplaces – places where capital pools and becomes vulnerable in the typical ways that banks and other capital pools are vulnerable to bad actors and bad circumstance.

How does this benefit Ethereum?

This is why in my original post I said that this leaves Ethereum and OpenBazaar as the primary beneficiaries. Both of these technologies enable large-scale decentralized exchange. The technologies and digital organizations that enable this are still nascent and lesser known, but the concept is solid, and the outcome is real: trustless exchange of value in an environment less attractive to hackers. These large pools of capital are always going to be a honeypot for those that would like to make off with the money. In a decentralized exchange situation, you can store your own value in wallets that you control until it’s time to make an exchange, at which time the value exchange happens.

Any technology companies or cryptocurrencies that continue to adhere to the principles of openness, transparency and decentralization will be the primary beneficiaries of the natural evolution of this technology, and now is the tail end of the time to be considered a first mover in this space. It was in response to some of the large heists several years ago that OpenBazaar and other decentralized marketplaces were started. It won’t take too many more major heists like this to further push users towards experimenting and using as a natural course of things these decentralized technologies.

[Notes: A small portion of this post was quoted verbatim from a SiliconANGLE post by Duncan Riley, re-used under their published Creative Commons BY-SA license. -mrh]

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July 22, 2016April 16, 2019

Dr. Bitcoin on How to Install the Ethereum Mist wallet.

There’s been some interesting positive movement in the world of Ethereum, both locally in DFW as well as for the larger crypto markets. Just yesterday, Coinbase and GDAX announced support for Ethereum wallets and accounts on their web and mobile wallets – and last night at the weekly YoCoin meetup at Barista‘s event space, YoCoin made the announcement that they’re moving off the Scrypt algo over to an Ethereum based blockchain (the developers are doing a buy-back/swap).

As such, I was asked to do my Dr. Bitcoin thing and talk a little bit about what I knew of Ethereum and Turing-complete blockchains, which I enjoyed.

There’s a lot still not known by the general public about Ethereum and how it works tactically, so I thought I’d put together a brief tutorial for those that asked about how to download and install the Mist wallet (the name for the developer-supported wallet for Ethereum and Ethereum-based coins).

I’ll be adding a video tutorial and some additional screenshots for the YoCoin users as soon as I get the details from the developers. This step-by-step guide will get you as far as having your Mist wallet ready for action.

Update: Video walkthrough embedded below! Scroll past the video for written and illustrated instructions.

Head to the Download Page

Head to the “Github” repository. The only authorized place to currently download the Ethereum Mist wallet is right here. If someone tells you to download an Ethereum wallet, but sends you to another URL, it’s not the authorized place. The page should look like this one

Scroll Down to the Downloads

You’ll see a lot of different files listed. You’ll want to download the appropriate file that matches your operating system. Download the one labeled “Mist”, not Ethereum Wallet.

Save the File

Depending on your browser, it’ll look something like this.

Find the downloaded file

You should have a zip file in your downloads folder. Most operating systems know how to use this without any special configurations.

Extract the files on your computer

I like to create directories in my “Documents” folder to store downloaded software, but you may have a different way of doing things. You can easily do this in Windows by right-click dragging the file inside the zip file over to your Documents folder, like so. It’ll pop up a submenu to confirm – just say yes.

This might take a while.

There’s a lot of files.

Make it easy on yourself…

… and make a shortcut. Just right-click drag the Mist.EXE file in the newly created folder over to your desktop, and it’ll give you the submenu you see below. Select the option “Create Shortcuts Here.”

Click Confirm a few times.

You’ll see some pop-up windows about security and ToS acceptance. Say yes on both.

Setup and install.

You’ll a pop up window asking if you want to use the test network or the main network. Use the main network.

Password Creation

You’ll want to create a password. Use something easy to remember but hard to guess.

Wallet Import

You’ll be asked to import your old wallet. If this is your first time setting up, just ignore this screen.

Add some ETH and you’re Good to Go

Eventually you’ll need to load up a little bit of ether so that you’ll have what’s called “GAS” to cover your transaction fees (which you’ll be charged any time you send ETH or YOC. You can skip that for now.

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July 18, 2016June 3, 2019

YoCoin, a local Dallas-run cryptocurrency.

On Thursday evening, I was invited to give a brief talk at the meetup for a new cryptocurrency, YoCoin. I was first introduced to the group by happen-stance, when two locals from the marketing team for YoCoin came in to make a Bitcoin purchase. I’ve had the good fortune in the intervening time to get to know them and investigate the cryptocurrency they’ve been working on.

Initially, I wasn’t particularly interested in yet another alt-crypto. There are so many of them out there, it’s impossible for even someone who monitors the alt world full time to keep track of much more than their names. I did go and check out YoCoin after they told me a bit about their business during one of the times they came in to buy from me, and I discovered that while it was a mostly unremarkable scrypt currency algorithmically, the adoption curve was quite impressive.

YoCoin launched around the beginning of the year, and has shot up from a couple pennies per coin to a peak of over $.30 per coin a few weeks ago (it’s now around a quarter).

What piqued my interest is why it shot up so high, so I talked to Bruce and Sam, the gentlemen marketing the coin locally. The thrust of their approach has to do with focusing on merchant and user adoption outside the bubble of crypto and finance geeks who usually go in for these things. That’s interesting to me, because that’s essentially what’s been cryptocurrency’s biggest issue: they’ve usually a rock solid technology-base, but no way to market it to people who aren’t crypto-anarchists or grey-market enthusiasts.

In a world with thousands of scrypt-coin clones, what’s interesting about YoCoin is it’s team and their commitment to market smarter (read: outside the bubble) and develop better UX and UI than what cryptocurrencies are generically known for.

I’ve been hoping for local Dallas action in the crypto space, and now we have it. I’ll be watching YoCoin closely to see how it evolves.

[Disclosure: YoCoin is in talks with Barista Ventures (where I’m a Venture Partner) to execute an app development deal. YoCoin is also a frequent buyer of Bitcoin from Roger Wilco, my new content marketing startup.]

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December 21, 2015June 3, 2019

Fadi Chehade to head a new ‘authoritarian’ governance regime.

Fadhe Chehade, former CEO and President of Internet governance body ICANN, has sent ripples through the community following a recent decision to be the frontman a new Chinese government program to franchise their way of managing internet access to the world.

Chehade is probably familiar to many of you in my circles, as he was a guest on my program, theCUBE back in January of 2014, when we were attending and covering an event on Internet governance and economics.

I picked up this story over at SlashDot and The Register, who framed it in an overwhelmingly negative light. And who can blame them? Not only is China at the helm of this initiative to reformulate internet governance, so is Russia and “other authoritative governments.” This isn’t the stuff that dreams are made of. The headline from that interview was that “the way we govern the internet is not tenable.” A real cynic would say that Chehade, in our 2014 interview, was telling us ‘stop me, I’ll kill again!’

“The Internet is many many networks — what makes it one is a logical layer on top of the physical layer,” Chehade went on to say. “That logical layer includes what ICANN manages, names, numbers protocol parameters. That layer has to remain strong and in tact, in order for the physical infrastructure to be unified before we get to the application layer and content layer. If we lose that, and suddenly governments decide they will create their own numbering or naming system. A country like China, would name introduce to the world a Chinese Internet route.”

In the same interview, Fade told us that he saw the next eighteen months as critical, giving a “pinhole in a pipe analogy.” In his analogy, all it takes is a pinhole in a plumbing pipe to bring down the infrastructure of a house, and he saw the next eighteen months forward from January of 2014 as critical to maintaining the current approach to internet governance (that is to say, when you type in a thing that you’re looking for, you specifically get that thing – not a filtered or different thing that someone else wants you to see instead).

It was difficult to discern, knowing now what we do, whether he was simply emoting the sentiment of ICANN, or speaking from personal conviction as to how the internet works.

It’s somewhat disheartening, given all the excitement percolating around blockchain technologies, that Fade decided against pursuing one of those ends. NameCoin is a great proof of concept way forward for solving the perceived problems with ICANN specifically and Internet governance in general. The better angels around the world decry ICANN because of a US-centric worldview, and given the revelations by Edward Snowden in recent years, that the US has everyone’s best interests at heart is no longer the prevailing theory.

I think the true fear in Chehade’s decision to head this new organization is that every negative prediction he made to the audience at #MITECIR is now come to pass.

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July 19, 2014June 3, 2019

Dell’s move to Bitcoin reflects their philosophical core.

Michael Dell on theCUBE with John Furrier and Dave Vellante at DellWorld 2012.

Maybe I nicked this statement from someone, or maybe I come up with it, but a phrase I use a lot when I talk to people about Digital Autonomous Organizations is “.. the economy and the state are engineering problems, not political ones.”

What struck me from the Dell announcement around Bitcoin acceptance is this is reflective of a core belief in at least a version of this philosophy.

In late 2012, Michael Dell came on my show (theCUBE) to talk about the changes in the industry and at Dell, and had this to say:

“When I look at the big opportunities that exist in the world and the big unsolved problems, be they in medicine, in education, in energy or the environment, I think that these are problems that technology will solve.”

“I think about the innovation that’s occurred over the last couple decades that I’ve been in this industry where IT used to be this sort of back room activity with a couple of guys wearing pocket protectors involved in, and now you essentially can’t even run a business if technology isn’t involved.”

A few months after he said this on our show, he went on to take Dell private, a move that’s allowed them to go deep into bleeding edge technology moves like Bitcoin and 3D printing.

Dells moves in 3D printing have forced competitors to get serious about the business as well (like HP).

We might be at the knee of the curve here; Dell’s acceptance of Bitcoin just might push other major enterprise players to start thinking about Bitcoin in the same way.

[Originally posted by me to /r/bitcoin. Feel free to upvote it there if you like it.]

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May 15, 2014June 3, 2019

Ask Dr. Bitcoin: Is Bitcoin Anonymous?

A common misconception is that Bitcoin is an anonymous currency. What it offers is a kind of ‘pseudo-anonymity’ (or ‘pseudonymity’), which means that if the someone were inclined to trace Bitcoin transactions or investigate Bitcoin addresses, they can do so just by looking at Blockchain.info, BlockExplorer, or any a number of open source tools used to perform forensics on the blockchain.

The blockchain is a ledger wherein all Bitcoin transactions are recorded. It offers pseudonymity, since people’s names and addresses aren’t reflected in the ledger, but the Bitcoin addresses can still be tied to a person through good old detective work. It might entail a little digging around, but as Silk Road founder Ross Ulbricht was unfortunate enough to discover, the owner can certainly be traced.

A new Bitcoin wallet, ‘Dark Wallet’, aims to protect the identity of users by taking pseudonymity to anonymity. Dark Wallet is a project created by Cody Wilson and Amir Taaki. Wilson gained attention last year when he fired the first-ever printed gun, while Taaki is the anarchist developer behind the DarkMarket, a decentralized online black marketplace that aims to become the next Silk Road.

Wilson and Taaki launched an Indiegogo campaign last October for their Bitcoin wallet, and it was quickly funded in cash and Bitcoins. Dark Wallet can be downloaded and run with the Chrome browser.

Just go to https://github.com/darkwallet/darkwallet, click ‘Download ZIP’, unpack the ZIP file, go to ‘chrome://extensions,’ enable Developer Mode, click ‘Load unpacked extension’ and select the unzipped folder. This is a pre-alpha preview which means users can expect glitches and instability from the software.

How Dark Wallet works

So how can software protect one’s identity? Dark Wallet uses a technique known as CoinJoin, which has been around since the early days of Bitcoin. CoinJoin makes it possible to anonymize transactions by combining random Bitcoin transactions so the blockchain records two transactions as one. Before, you’d have to have coding skills or crypto-prowess to use CoinJoin, so not everyone enjoyed the anonymity it offers. Dark Wallet makes it simple for any Bitcoin user to mask their identity.

For example, Mike is buying a My Little Pony stuffed toy from an online seller, and at the same time, I could be buying a truck of weapons-grade plutonium from an online black market to power a new alternative-energy car battery I’m working on. Both Mike and I use Bitcoins to pay for our purchases. What Dark Wallet will do is combine the two transactions so it will be reflected as one on the blockchain (along with many other wallet users). This makes it impossible to determine who bought what. Dark Wallet will also allow users to run CoinJoin even when they’re not making any purchases or payments, in order to mix their Bitcoins and send them to another address owned by them. This makes it harder to determine the identity of Bitcoin owners.

The more CoinJoin is used, the harder it will be to trace who owns the Bitcoin.

“When you start to join transactions, it muddles them,” said Taaki. “As you start to go down the chain, you can only be 50 percent sure the coins belong to any one person, then 25 percent, then one out of eight and then one out of sixteen. The conditional probability drops very fast.”

Enticing for criminals

Since the inception of Dark Wallet, Wilson has been plagued with questions as to its purpose. Dozens of critics have suggested it will make money laundering even easier, encouraging more illegal activities.

By telling people you can buy things using Bitcoin and Dark Wallet anonymously, the obvious fear is it will be used to buy illicit drugs, illegal ammunition, or even fund pornographic sites catering to pedophiles.

Back in December, Jon Matonis, executive director of the Bitcoin Foundation, said in an interview that Dark Wallet’s effort is consistent with the foundation’s goal of promoting and developing Bitcoin into a private, government-free currency, but admitted that he is concerned with some of the aspects of the Bitcoin wallet. For one thing, even the name “dark wallet” has negative connotations which could cause people to assume it’s been designed for illicit activities.

Because of these concerns, some are wondering if the authorities may attempt to prevent the launch of Dark Wallet.

Stephen Hudak, spokesman for the U.S. government’s Financial Crimes Enforcement Network, declined to comment specifically on Dark Wallet, but stated that agency is “well aware of the many emerging technological efforts designed to subvert financial transparency.”

“It’s certainly our business to be interested and vigilant with respect to any activities that may assist money laundering and other financial crimes,” he added.

The ‘F’ word

Wilson knows that Dark Wallet will probably be used for illegal transactions like the purchase of drugs, but that’s not his intention.

In a previous interview, Wilson insisted there’s a need for anonymous cash online, and stated that, “It’s not that I want you to buy drugs. It’s just that I think you should have the freedom to do it.”

Yup, the ‘F’ word. Freedom. That’s what Dark Wallet is attempting to offer to Bitcoin users. Skeptics may wonder what anonymity has to do with freedom.

Sun Microsystems co-founder (and @theCube alumn) Scott McNealy famously said once that “You have zero privacy anyway. Get over it.” Much later on, Google CEO Eric Schmidt said “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place…”

The problem is that in these modern days, one never knows when one is breaking the law.

An interesting thought exercise is to attempt to imagine how many people (experts, if you will) do you think you’d have to gather into a room to understand the totality of just federally enforceable American law? How many people (again, trained experts in the law, so we can somewhat reduce the number) do you think would be required to understand the totality of federally enforceable American law that was passed for 2013? What about the totality of the tax code that was put into place in 2013?

Ignorance of the law excuses no man, as the axiom goes. I wonder if you can say that still truly applies when the number of experts required to know the totality of the law is hard to imagine, even for those with large imaginations?

When thought about in these terms, it’s not difficult to imagine how having a way to completely obfuscate one’s financial path can be handy. By providing a way to make anonymous purchases, people will be free to buy things they have longed for without worrying about being judged or prosecuted for committing a crime of ignorance.

The goodness that anonymity offers should not be overshadowed by how others can use it for wrongdoing.

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May 12, 2014June 3, 2019

Ask Dr. Bitcoin: Can I donate Bitcoin to politicians?

As someone who has a keen interest in cryptocurrency and has a history in political campaigning, I am one of those peculiar animals who knows Federal campaign finance laws and enjoys learning new things about them.

[Disclaimer: I am not a campaign finance lawyer. I’ve been a journalist for far longer than I was involved in campaign finance. My interpretation should not be taken as anything other than informed opinion. For best advice, seek an actual lawyer who specializes in campaign finance.]

As such, I’m happy to convey the news this week concerning US FEC guidelines around crypto-donations to federal campaigns. In short, the government says “OK.”

The US Federal Election Commission (which exclusively governs national election campaigns) has released a proposed draft that addresses Make Your Laws’ inquiry regarding Bitcoins.

Make Your Laws, an organization that facilitates political contributions, previously submitted a petition asking for Bitcoin contributions of up to $100 for campaign to be permitted. The decision regarding the matter was delayed as Bitcoin has raised many questions, specifically anonymous donors.

The proposed draft states that Bitcoin can now be accepted as campaign donations and the digital currency will be considered as in-kind contributions like stocks and art. This is great news for election candidates as it gives them more avenues for accepting donations, and could potentially allow them to tap into a new community of contributors. And this is even better news for politicos who are already accepting Bitcoin donations, even without the FEC’s consent, as everything becomes above board and less questionable.

But whether you’re an election candidate who’s elated by this news, or someone who wants to donate using Bitcoin, there are some things you need to know first.

Like all political donations, they won’t be anonymous

When donations are made in cash, political action committees are required to deposit that amount in a campaign depository within 10 days upon receipt. Since Bitcoin will be treated as an in-kind contribution like art or stocks, it can be held in a Bitcoin wallet indefinitely, but once it is liquidated, the amount should be put in a campaign depository.

MYL will handle Bitcoin donations and will require details like the name, physical address, occupation and employer of the Bitcoin donator. This is so it can verify that the amount being donated is legal, comes from an American citizen, and that the contributor is the owner of the digital currency being donated. MYL will then provide a one-time Bitcoin address for the candidate to accept the digital currency.

You can’t spend it, directly.

The FEC proposed draft stated that PACs can purchase Bitcoins using campaign funds for investment purposes, but the digital currency cannot be used to pay for anything campaign-related. It cannot be used to pay for services rendered by a campaign team or pay for campaign materials or ads. What they need to do is turn Bitcoins into dollars by selling them, put in the campaign depository, which can subsequently be used for disbursement.

Bitcoin price fluctuation is one of the areas where many entrepreneurs have stepped in to make cryptocurrency more user friendly.

Sai, the president of MYL, told us: “The reason for this has nothing to do with Bitcoin’s volatility, but
rather with a nuance of election law — whether it’s in-kind or
currency. The final draft (unlike drafts A & B) very carefully does
not actually say either way (though it says it should be reported like
in-kind and can be held like in-kind). If it were fully treated like
in-kind, then previous AOs create precedent that would allow it to be
used for barter, and they couldn’t come to an agreement on that, so
the opinion walks a fine line to avoid opining on it.”

For now, MYL advises contributors to keep Bitcoin donations small, about $100 worth as it is an “amount of money that is not going to raise some of the bigger issues that might accompany a Bitcoin transaction.” It should be noted that MYL is only providing their interpretation on the guidance; the $100 of crypto shouldn’t be seen as a legally binding limit, only the limit they sought approval for.

Because Bitcoin exchange markets are open 24/7, its value is constantly fluctuating. Therefore, the the FEC’s final AO suggests that PACs should value Bitcoin contributions based on the market value of the digital currency when the contribution was received.

Reporting and monitoring

Receiving Bitcoin contributions should be reported like any other in-kind contributions, and if the Bitcoins are sold, it is the PAC’s duty to report how much the Bitcoins were sold for. The same rule applies for Bitcoins purchased using campaign funds. The amount of Bitcoin purchased, how much money was used to acquire it, and how much money was received when the digital currency is once again sold, should all be reported.

It should also be noted that any transaction fees which arise from the use of Bitcoin should not be deducted from the original value of the contribution.

“The Committee must treat the full amount of the donor’s contribution as the contributed amount for purposes of the limits and reporting provisions of the Act, even though the Committee will receive a lesser amount because of [the] fees,” the proposed draft stated.

tl;dr: Accepting Bitcoin in campaigns is more complex than sending it.

It should be noted that the Federal regulations may be used as guidelines in state affairs, they do not directly apply as the Federal regulations only govern national elections (Presidential, Congressional and otherwise). I should also not that there have been several instances of politicians taking Bitcoin for political donations prior to the guidance from the FEC, and at least one who has since.

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May 6, 2014June 3, 2019

Ask Dr. Bitcoin: How big of a terrorist threat is Bitcoin?

I’m traveling out West this week, in Las Vegas for EMCworld (catch the coverage I’m producing with the team on our live channel through Wednesday!), so for folks on the East coast, I’m sleeping in a bit later than them. You can imagine why I was a little bit alarmed this morning to get a call at 6AM Pacific time from Wells Fargo asking what Bitcoin was, how I used it, and if I sold it to other people.

I was caught in a net that Wells Fargo appears to be doing of their customers who interact with popular Bitcoin transaction facilitator, Coinbase. They seemed keenly interested in my expertise around Bitcoin and exactly what I was doing with this mysterious internet stuff (“So Bitcoin is like Paypal, basically?”).

Since the September 11 terrorist attacks, the US government has put in place numerous security measures to try and prevent such a horrific event from happening again. One of these measures is the USA Patriot Act, which gives different government agencies extensive powers to counter terrorist acts, which among many other things includes “Know your customer” regulations aimed at preventing regular folks from acting as money service providers, as a way of preventing terrorists and drug dealers from proliferating.

Another outgrowth of the Patriot Act and it’s regulations around money, a division of the Department of Defense is looking into Bitcoin and other digital currencies and their potential to help finance terrorist acts.

The Combating Terrorism Technical Support Office, which identifies and develops counterterrorism abilities as well as investigating irregular warfare and evolving threats, is now looking into how virtual currency may help fund acts of terrorism.

An unclassified memo by the CTTSO was obtained by Bitcoin Magazine, which revealed concern about how virtual currencies can be used to finance threats. The memo suggested what areas should be looked at to determine the level of threat virtual currencies actually pose.

“The introduction of virtual currency will likely shape threat finance by increasing the opaqueness, transactional velocity, and overall efficiencies [sic] of terrorist attacks,” the memo read.

The memo proposes solutions to be considered, such as identifying relevant case studies from the last 20 years and exploring funding instruments that supports terrorism; determining types of “red flags” that can emerge with the introduction of virtual currencies; investigating how virtual currencies can be used to predict future attacks; and developing and deploying strategies to prevent them, among others.

The memo depicts Bitcoins and other virtual currencies as something that can be used for both funding and counteracting terrorism.

Many people believe Bitcoin is an anonymous currency. This is not entirely true, but there are measures users can put in place if they don’t want to obfuscate the path money takes.

This is obviously what concerns the authorities. Bitcoin and virtual currencies could easily be used to fund threats. Even so, that doesn’t mean Bitcoin transactions go completely under the radar – as Ross Ulbricht, founder of the notorious Silk Road website, found to his cost.

Smear campaign?

The problem is that instead of trying to understand Bitcoin before labeling it as good or bad, some people have jumped to conclusions due to the bad press its received in the past.

Pelle Braendgaard, the CEO of Bitcoin wallet Kipochi, explained in an interview that the cryptocurrency can actually help governments better understand what’s happening with their economies since every transaction is recorded on the block chain, unlike when using real money when no one has a clue where the money ends up.

Yes, cryptocurrency can be used to fund terrorism (and Overstock.com and Nascar…), but it is quite unfair to single it out for that purpose. After all, US dollars can and are used to fund terrorism all the time. All of the so-called ‘worries’ about Bitcoin could be perceived as propaganda to dissuade people from using it.

The safest bet for would be terrorist sponsors will always be cash, something that can’t easily be traced back to them. Quite unlike Bitcoin, where every transaction is recorded publicly on the Blockchain.

During the U.S. Senate hearings on Bitcoin, FinCEN director Jennifer Shasky Calvery told Congress that “…cash is probably still the best medium for laundering money.”

It should also be noted that charitable foundations have been used to accumulate funds for terrorist activities too. A case in point is the Holy Land Foundation for Relief and Development, which was convicted in 2004 by the US federal court of funding Hamas, a Palestenian Sunni Islamic organization with a military wing that doesn’t care if civilians get hurt during operations (a story I covered very closely in my online coverage at the time as well as my post 9-11 radio briefings for WABC).

At the end of the day, at this juncture, Bitcoin poses an almost inconsequential security risk to what those who seek to curb money laundering for the purposes of national security and drug prevention mostly because of the market cap for the cryptocurrency. Bitcoin is still in the early days of its life; the market cap of Bitcoin is shy of $6 billion (and the market cap of all other alt-currencies is certainly shy of $2 billion). Globally, it is estimated that there is around $5.5 billion laundered each day. While the potential disruption of Bitcoin is great, it’s barely a blip on the radar when it comes to current criminal enterprises.

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May 6, 2014April 16, 2019

Ask Dr. Bitcoin: Does Bitcoin Need Banks?

Whether or not there’s a place for banking as we know it in the world of cryptocurency is a hotly debated question among Bitcoin enthusiasts and stakeholders. “Unbank yourself,” and “Time for plan ฿,” are many of the slogans thrown about the Bitcoin world, symptoms of the sub-cultures ingrained abrasiveness to traditional banking. There is another group within Bitcoin, however, that argues loudly for the idea that for there be massive and mainstream adoption, there needs to be better tools from organizations with a vested interest in maintaining them to make the sometimes impenetrable world of cryptocurrency more accessible to the general public.

One of these essential services needed to make Bitcoin and other cryptos more widely accessible and useful is the free exchange of value between traditional fiats and cryptocurrencies. There are currently three companies that make Bitcoin ATMs: Genesis1, Lamassu, and Robocoin, which incidentally was the first one to bring these machines to the public.

Robocoin’s first Bitcoin ATM debuted in Canada last October and was soon followed by more machines in other countries. But that wasn’t enough for Robocoin, which last week launched its first Bitcoin ATM in Seattle, at the Spitfire Grill in Belltown, where users can buy Bitcoins or exchange it for real money.

The machine operates seven days a week from 11 a.m. to 10 p.m and customers can make $3,000 worth of Bitcoin exchanges per day.

Robocoin is at the forefront of making Bitcoin a household name with its ATMs, but the company is not stopping there. It wants Bitcoin to be available for everyone and to accomplish this, Robocoin aims to launch the first Bitcoin bank this summer.

Robocoin Bank

Robocoin aims to disrupt the remittance industry by launching the Robocoin Bank this summer, as part of a greater plan to solidify its lead in the Bitcoin remittance space (a multi-billion dollar market worldwide).The company will transform its existing Bitcoin ATMs to ‘Robocoin Bank local branches’, which will be integrated with the company’s online banking services.

The kiosks will allow Bitcoin users to manage their digital currency. People will be able to view their account, send Bitcoins to wherever there is a Robocoin ATM, send Bitcoins to phone numbers instead of Bitcoin addresses, while receivers will have the option to store the Bitcoin or trade it for cash, directly from the ATM.

Robocoin promises that these kiosks will be safe and secure as it employs three levels of authentication to prevent fraud or theft.

“The Robocoin Bank has been a vision since day [one],” said a company spokesperson in an interview. “We hope to alleviate Bitcoin’s major pain points and barriers to adoption.

“The goal has always been to bring Bitcoin to everyone and the Robocoin Bank is a leap in that direction.”

But do we need a Bitcoin bank?

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It’s going to be difficult to convince a lot of the early adopters in the Bitcoin community that centralization of banking services are a necessary step towards mainstream adoption, but it’s hard to argue that services like Coinbase and Robocoin haven’t moved the needle towards making Bitcoin easier to understand for the general public.

“The Bitcoin community is going to see mass adoption because of this,” Jordan Kelley, Robocoin’s CEO said. “We’re just solving problems for everyone in the game—for Bitcoin newbies, it makes it easier, and for bitcoin veterans, it makes it more useful.”

Why not? Centralizing cryptocurrency services doesn’t break the decentralization of the rest of the Bitcoin network, and may lead more individuals into becoming advanced users as their knowledge progresses.

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