Tag: Ask Dr. Bitcoin

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How to Securely Liquidate Your Bitcoin Cash

The Roger Wilco Agency has issued a report titled How to Obtain & Convert Your “Bitcoin Cash”, commissioned by bitqyck, Inc, which reveals that there is “an overbearing elephant in the room of this amazing technology called Bitcoin: ridiculously long transaction resolution times.” The decentralized nature of Bitcoin makes it attractive to a global audience and creates greater financial security because the value of the tokens is not susceptible to the stability of any particular political or economic entity – but the shared ownership can also have its challenges. Software developers who work on Bitcoin’s core code have spent considerable effort in an attempt to find a solution for the long transaction resolution times.

Bitcoin is based on mathematical proof rather than the characteristics defined by a political entity, and the code is open source, providing transparency. The ability to create alternative groups, called pools, allows for participants known as miners to create a permanent divergence in the blockchain, known as a fork. The original Bitcoin software client will likely be the most valuable and stable for some time to come, and any new fork will succeed or fail based on widespread acceptance by participants or their decision not to use that client. As the software developers politicked in reaching a fix for the issues with transaction resolution, a small group called the User Activated Hard Fork (UAHF) rejected the solution and created a hard fork known as Bitcoin Cash.

On August 1, 2017, the Bitcoin blockchain split, creating a second set of tokens, with Bitcoin (BTC) as the original and Bitcoin Cash (BCC or BCH) as the new blockchain, according to Bitcoin Cash 101: What Users Need to Know Before the Fork published by Coindesk. This split resulted in the doubling of coins possessed by anyone who controlled their private keys. The Roger Wilco report indicates that the value of the coins in this new blockchain may be at risk, because “as many predicted, the tools, mining, support and code around ‘Bitcoin Cash’ are very weak and unreliable.” This report further advises that any BCC held should be “immediately liquidated.”

The Roger Wilco report was created to facilitate a secure and expedient method to liquidate newly acquired Bitcoin Cash. While there are multiple methods that can work, the report details and illustrates a specific method that is the most secure and least likely to end up with a compromised wallet. The report includes step-by-step instructions on how to claim control of these new tokens as well as how to sell them and transfer their value to your regular wallet. Bitcoin value was $4,601.10 and Bitcoin Cash value was $633.17 as of August 6, 2017.

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Ask Doctor Bitcoin: What are the implications of Sandtander’s new cryptocurrency?

DrBitcoinHeader800x465According to a report in the Financial Times this morning, Santander’s long promised foray into blockchain technology was finally disclosed upon.

UBS, the Swiss bank, pioneered the “utility settlement coin” and has now joined forces with Deutsche Bank, Santander and BNY Mellon — as well as the broker ICAP — to pitch the idea to central banks, aiming for its first commercial launch by early 2018.

Bitcoin and related crypto-currencies primarily promise to cater to the so-called “un-banked,” so why would a major bank attempt to leverage blockchain technologies?

Simply put – it saves tons in administrative fees. Those who are regular users of Bitcoin (particularly for large-scale and/or international transactions) may not realize how much of a value they’re attaining at the expense of the banks. According to the report by Santander Innoventures that heralded today’s announcement, blockchain technologies could reduce banks’ infrastructural costs by $15-20bn a year by 2022. Simply put, there are enormous administrative staffing and technology requirements to reconcile international and inter-bank transfers.That’s why there’s been a number of coin, blockchain and crypto startups created to tackle this issue specifically (Setl and Ripple being two prime examples).

So what is Santander and the other banks using for this application?

One might imagine that they would try to use an already in-market solution, or even Bitcoin itself, but instead they’ve deigned to create a custom implementation of Ripple, a digital currency solution that’s been around for quite some time. Details on the banks’ implementation of Ripple are scant at this time, but from what we do know about Ripple, we can make a few sets of assumptions on how their system will work.

Ripple is a fundamentally different system of value exchange than Bitcoin or most other cryptos. Adam Levine of Let’s Talk Bitcoin summarized it neatly back in 2013. Some parts of Ripple have changed since then, but it’s essentially still an apt description of how value exchange compares and contrasts with traditional crypto:

For those of you not familiar with the Ripple system, it can be thought of as a parallel development to Bitcoin that tries to solve many of the same problems; trustless, bankless money transmission to anywhere in the internet connected world.   Ripple goes about solving the problems slightly differently.

There are no miners; transaction validity is determined by a cascading consensus engine.  Ripples themselves (XRP) were fully pre-mined and initially owned by Ripple Labs. They aren’t really traded as currency themselves, instead they are intended as an anti-spam mechanism – Like a stamp on an envelope with a check inside.

Where Bitcoin is an ownership based person-to-person system, Ripple is built on interconnected networks of p2p credit. Bitcoins are wholly owned with no risk of the redeeming party defaulting.

The Bitcoin system transfers ownership of one thing – Bitcoins.  People can build layers on top of it to do other things, but at a protocol level it’s just bitcoins on the Bitcoin network.

What if you don’t want to send Bitcoins?  Ripple is a good option.  When you send US dollars through the Ripple system, you’re really sending IOUs that will be redeemed somewhere else in the system. Depending on your need to transact in non-Bitcoin terms, this might be important- or you might prefer instead the wholly-owned nature of cryptocurrency.

In some situations, Ripple sounds like it could work – and in the case of banks that don’t want to transfer vast sums of value onto a blockchain, perhaps a Ripple-like IOU approach is the way to go.

In my opinion, though, Ripple has some fundamental flaws that must be examined and weighed both for the benefit of banks looking to move to this new technology as well as folks looking to innovate on blockchain technology in the crypto-sector. A report commissioned by distributed ledger consulting group R3CEV and authored by bitcoin developer Peter Todd has raised questions about Ripple and it’s ability to withstand the rigorous security demands of high-finance.

“Ripple still holds the majority of XRP, and it is in their favor for its value to increase,” says the report. “Ripple justifies XRP as an ‘anti-spam mechanism’ to deter transactions… However, as the volume of transactions increases the server load, transaction speed is slowed while the cost of the transaction and the amount of required XRP continues to increase.”

Todd next walks readers through a number of theoretical attacks that could take place against the Ripple protocol, discussing his estimates of the cost, scope, duration and probability of the scenarios.

Perhaps the most glaring, Todd’s writing infers, is the damage that could be done due to a “software backdoor”, as he finds that Ripple “does not provide a secure way to download any of their software”.

“This is a serious omission that has lead to significant monetary losses in the past. Ripple Labs should be following industry best-practice by signing git commits and tags as well as PGP signing their Ubuntu packages,” Todd added.

Todd ends by highlighting the potential real-world implications of these attacks in an elaborate scenario involving a dispute between the Russian government and Shell Oil, forecasting how these parties might attempt to achieve their aims through coercion on the network.

This is a common flaw in some implementations of cryptos as well – those looking to launch a new cryptocurrency and looking to avoid being 51% attacked during the nascent moments of the life of the coin may look to private mining or some other form of centralization, but in these cases, they’re creating honeypots for hackers as well as the key thing blockchain technology was designed to mitigate: central points of failure. As we discussed in the Bitfinex post a couple weeks ago, the common key component to every major loss, theft or hack in cryptocurrency history has been central points of failure.

My prediction is that this group of banks will move forward with their implementation of Ripple, and see some gains from using this new technology, and likely use it as a stepping stone to more open versions of the technology in the future.

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Ask Dr. Bitcoin: Is Bitcoin Anonymous?

DrBitcoinHeader800x465A 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

 

darkwalletSo 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

 

Bitcoin-Image2778935760Since 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.

Mcnealyemcworld2012Sun 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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Ask Dr. Bitcoin: Can I donate Bitcoin to politicians?

DrBitcoinHeader800x465As 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

 

fecWhen 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.

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

Dr Bitcoin at EMC WorldI’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.

DrBitcoinHeader800x465Many 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.

Money laundering 1-13-14Yes, 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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Ask Dr. Bitcoin: Does Bitcoin Need Banks?

DrBitcoinHeader800x465Whether 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?

 

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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