Day: December 1, 2017

Physical bitcoins that can be exchanged like cash have been discussed for years. In 2010, Gavin Andresen himself started a Bitcoin Forum discussion on possible ways to “print out bitcoins to function as user-created paper money.” Physical bitcoins have been often implemented, but there are several challenges. Many physical bitcoin operators active a few years ago have either disappeared or don’t show signs of recent activity. Others are just novelty collectibles that don’t store actual bitcoins. But there are still some interesting options both on the horizon and on the market in the physical bitcoin space.

Physical bitcoins are a real killer app for many reasons, first and foremost because they can be exchanged privately and anonymously without leaving any trace whatsoever, just like cash. Of course, this is exactly the reason regulators hate the idea and will do anything to stop physical bitcoins from spreading. Also, designing physical bitcoins with both high security and high usability is difficult.

In an ideal world, simple paper wallets could be used as physical bitcoins. In fact, anyone can make a paper wallet, load it with any amount of BTC, print it out and give it to anyone. The recipient can easily check the balance before accepting the paper wallet and folding it in their physical wallet for further use, just like cash.

Of course, in the real world the chain will be broken very soon. Since both the public and the private keys are nicely printed on a paper wallet, anyone can empty the paper wallet after having passed it on. This forces the very first recipient to empty the wallet themselves immediately after receiving it, but then the transaction isn’t more private than a normal bitcoin transaction between the first and the second (last) owner.

It’s worth noting, in passing, that this simple chain of trust would only work among people who really trust each other. For example, members of a closed club with strong entry vetting could use bitcoin paper wallets as internal currency for goods and services exchanged within the club.

In practice, physical bitcoins must have private keys (or equivalent) hidden in a tamper-proof way. One possibility is to use scratch cards like Crypto Scratch Cards (now discontinued). One of the first attempts at developing physical bitcoins, dubbed Bitbills, announced in May 2011, used a credit card-like form with an anti-counterfeiting hologram and a QR code embedded within the card, which could not be read without the card showing evidence of tampering. The project was abandoned a few months after being announced.

Another possibility is to manufacture physical bitcoins with the public key visible on the outside, but the private key (or equivalent) hidden inside or by a tamper-evident seal. This method was used by late lamented Casascius Physical Bitcoins, which were discontinued in November 2013 after the Financial Crimes Enforcement Network (FinCEN), a branch of the Treasury Department, informed developer Mike Caldwell that minting physical bitcoins qualified him as a money transmitter business with heavy compliance requirements.

Today, there are a few options that seems to have worked out most of these difficulties.

The physical bitcoins sold by Denarium, headquartered in Finland, have a private key inside the coin and use a hologram as an anti-counterfeiting measure. “The hologram has a ‘window’ where a portion of the public Bitcoin address of the coin can be read for checking balance and loading bitcoins to the coin,” states the Denarium website. Denarium coins come in two versions, one loaded with a predefined amount, and an “empty” version that must be loaded by the users themselves by sending bitcoins to the coin’s address. Due to regulations, only empty coins can be sold to U.S. residents.

All Denarium coins, including pre-loaded ones, can be reloaded by sending bitcoins to the coin’s address. A Denarium coin can be redeemed “by opening the hologram sticker and importing the private key underneath to the wallet of your choice,” reads the Denarium user guide. “Please note that an opened hologram sticker implies that the coin has been spent. The hologram sticker cannot be put back after opening so it should not be removed without the intent to spend the bitcoins.”

Opendime, a tiny USB flash drive that can be loaded with bitcoin by the first user and passed along, is more of a light hardware wallet than a heavy paper wallet. Unlike most other options, the private key attached to each Opendime is generated by the device at the time of setup by the user: It is not known by anyone, not even by the first owner. Opendimes can be passed along multiple times to other users and verified; however, it can only be redeemed by the last user, who must break the device to access the private key and import it into any bitcoin wallet.

A pack of three Opendimes can be ordered for $37.50. Though perhaps too technically demanding for casual Bitcoin users and too expensive for small values (the device is useless after getting the funds out), Opendimes are certainly usable as physical bitcoins.

Earlier this month Fintech Select, a provider of prepaid card programs, mobile banking solutions, announced that it will be launching a test pilot project for physical bitcoins associated with the company’s Selectcoin product line.

Another interesting idea, which has been discussed a few times on Bitcoin Forum (e.g. 1, 2, 3), is that of “hijacking” physical banknotes to carry a value in bitcoin. A physical bill (say a $1 bill) identified by a serial number would be assigned a value in bitcoin (say 0.1 BTC) and used as a physical bitcoin bill, with robust anti-counterfeiting measures automatically provided courtesy of the state.

The idea was presented in a recent tweet by Andreas Antonopoulos. Cryptographer and Bitcoin developer Sergio Demian Lerner replied: “Not a bad idea: I proposed this seriously in 2013.”

“I found one of those powerful ideas that are so simple, but so odd at first sight, that can go unnoticed,” said Lerner in his 2013 post, inspired by a Bitcoin Forum discussion. “The idea is that people could use fiat banknotes as a medium to transfer bitcoins, for offline Bitcoin payments.”

Binding a value in bitcoin to the serial number of a banknote, in such a way as to permit the last bearer to redeem it, seems impossible to do in a watertight and decentralized way, but perhaps a central operator could implement a similar scheme.

Lerner’s solution is simpler: “[If] we transfer some BTC to a [unspendable] output which describes the banknote (e.g. country, denomination and serial number), we could bind the BTC to the banknote forever, as long as people believe the banknote represents those ‘destroyed’ BTC,” he said. “[For] the system to work, everyone must agree that those BitBanknotes really hold the BTC value. But you can count on me: I would agree! Why not?”

Lerner’s own project to develop physical bitcoins, dubbed “Firmcoin,” seems to have disappeared. But it’s plausible that new implementations of untraceable electronic cash, powered by strong cryptography and NFC-enabled smartphone apps, could resurface at any time to pose a very strong challenge to state monopolies and regulators.

Cryptocurrency has opened up a new world in the financial sector that was primarily owned by banks, namely the borrowing and lending of capital.

While peer-to-peer borrowing and lending has developed in recent years in the fiat currency space, it is only recently that companies have been finding methods of replicating these ideas in the cryptocurrency space. What follows is a short evaluation of several available options.

SALT

SALT is a lending platform for blockchain-backed loans. No credit check is required: Users purchase  ERC20 SALT tokens to become a member and then put up bitcoin or other blockchain-backed assets as collateral. They can then borrow money from the platform’s network of lenders. Once the loan is paid back, borrowers get their crypto back: There are no prepayment penalties.

SALT makes no guarantee that a sufficient pool of liquidity is available to fulfill every loan request right away, however, even for approved borrowers. If the pool of money provided by the lenders is all lent out, then prospective borrowers will have to wait for more lenders to enter the system or for funds to be paid back into it.

The cost of one SALT token is set at $25. Tokens are currently sold within the SALT system; however, the token is also available on several exchanges where it is currently trading at about $4. SALT is used to pay for your membership in the SALT system; it is a tiered annual fee that varies based on the size of the loan. At the bottom is 1 SALT that covers up to $10,000 and at the top it is 100 SALT to borrow over $1,000,000 with various tiers in between.

Interest rates on the loans themselves will vary between 10 percent and 15 percent, depending on the terms of the individual loans. When borrowers apply for a loan, the available options are then presented and they can choose among them.

All of the member lenders at SALT are Accredited Investors under Regulation D of 17 CFR § 230.501 et seq., who have passed the SALT Lending Suitability Test. The loans are not transferable via blockchain; they are themselves securities that are transferable through existing financial channels.

Unchained Capital

Unchained Capital is very similar to SALT in that it provides loans against your bitcoin capital. Their details are easier to find on their website than SALT, namely the following:

• Interest rate is 10 –14 percent APR inclusive of all interest and fees

• Terms are 3 – 24 months with options to renew

• Loan to value ratio is 50 percent. Borrow $1 for each $2 you deposit as capital

• Borrow up to $1 million without a credit check

• Make monthly payments on the interest. Due in full on the final payment

CEO Joe Kelly told Bitcoin Magazine that Unchained Capital is working with accredited investors and small institutions. They are specifically reaching out to partners to work with them and do not have any public call for investors. Interested investors, however, can contact them and see about working with them. Their current lending fund is over $10 million at the time of this writing.

EthLend

EthLend has more of a full free-market approach as a facilitating platform. Borrowers and lenders can use their system to connect and negotiate everything from interest rate to duration. The platform is entirely based on Ethereum, any other ERC20 tokens are admissible as collateral on the loan. If borrowers fail to abide the terms of the smart contract, then all collateral is forfeit.

This setup is similar to what is currently available with many peer-to-peer fiat lending options. The price of the LEND token is not clear because of various discounts and the highly fluctuating price of ether right now, but the purpose of the token is to provide discounts on the fees charged to use their system.

Othera

Othera says they use blockchain technology to facilitate digital loan contracts, manage their risk and tokenize the repayment cashflow. There has been news going around about the company since the middle of 2016, but their website offers no demonstrations and very few details. A recent partnership announced with London-based commercial real estate lending company Lendhaus indicates big things are in the works, but the Lendhaus website itself is very slim on details and their Twitter profile was only recently created and has no tweets. It isn’t clear if the platform is currently available. Bitcoin Magazine reached out to Othera reps for more information but has not yet received a response.

Everex

Everex has been in the press for over a year and touts a number of products and services, such as the ability to transfer, borrow and trade in any fiat currency around the world. One aspect is their EVX token which provides a multitude of utility functions in their microfinance and payment program. EVX token ownership is required to access the system and can also be earned as an incentive or reward based on terms the lenders can specify. Those same EVX tokens can then be used as collateral for secured lending. To use their platform you need to either install their mobile wallet or use their Everex web service.

There is a lot of activity in other parts of the financial market with regard to cryptocurrency as well, such as tokenizing real world assets as investment vehicles. What this tells us is that there is a lot of interest and activity in this space that is certainly going to change the face of banking.

Note: This article is for informational purposes only. Bitcoin Magazine does not necessarily endorse any of the above platforms. Readers are encouraged to perform their own due diligence.

The promise of a new economy built upon a decentralized government can offer a number of benefits to millions of people across the globe. More and more cryptocurrency platforms are being created to ensure faster, more secure payments, data protection, lower transaction fees and other advantages accessible to anyone who wishes to participate.  

And as crypto platforms get more creative to offer individuals a number of rewards via tokens, a new “proof of time” protocol is emerging to help users monetize every minute of their day. Just imagine living in a society where people get rewarded for their time spent playing video games or reading articles online.

This concept is exactly what three emerging cryptocurrency platforms aim to achieve. Mytime, Stream and Brave Browser are all offering tokens for the time people spend using services, creating video content and even browsing the internet. Rather than feeling like time is being wasted, these platforms are helping users — and service providers — make the most of every minute of their days.

Mytime

YouTube recently revealed that a billion hours are spent on its video streaming site daily. Users are also using on-demand service apps more than ever before. As a result, users spend thousands of hours each day on various apps and services. And while these platforms are benefiting greatly, users never see any tangible profits.

A new cryptocurrency platform called mytime aims to change this business model. Recently launched on October 31, the open-source blockchain-based platform operates by converting time spent using a service to cryptocurrency tokens called MYTC. Users are able to spend these tokens on additional service time or on services provided by other companies participating on the mytime platform. Alternatively, users will also be able to convert these tokens to fiat currency.  

As with most blockchain platforms, both parties end up benefiting. With mytime, users will earn MYTC cryptocurrency based on the time they spend using a service. The service providers partnering with mytime also have the opportunity to simultaneously earn MYTC by attracting loyal users to their platforms.

Mytime’s system functions on two parallel blockchains to ensure accurate proof of time. One is used to confirm the elapsed time a user spends on a platform for a service. This cannot exceed 24 hours a day and automatically prevents users from logging the same time period for more than one service. The second records the participating company’s MYTC reward dispensation. Token transfer will then occur in users’ and service partners’ applications on the MYTC online wallet. Users can spend earned MYTC rewards on any other mytime participating sites, or the rewards can be exchanged for other cryptocurrencies on the mytime exchange.

Stream

The most-followed YouTubers — those with 7 million subscribers or more — are able to earn about $300,000 for a video partnership. However, this isn’t always the case for all video content creators; even some major YouTube influencers are still unable to successfully monetize their content. This is especially disappointing considering how much time and effort goes into making YouTube video that generate millions of views.

YouTube continues to reign supreme in terms of revenue though, while their users often get paid very little for their time. A new decentralized, blockchain-based token called Stream aims to change this, allowing video content creators to be fairly rewarded for their time.

Launched this past September, Stream incentivizes new and existing video creators to make great content by automatically distributing newly minted tokens (directly exchangeable for any global currency) to creators based on their contributions to the ecosystem. This creates a system where, for the first time ever, video content creators are able to get paid directly for their work, without cost to viewers and without the need to rely on brand endorsements.

Stream also allows livestreamers to easily and anonymously accept payments from their global audience members with extremely low transaction fees, without platform lock-in. These innovations enable a fully decentralized system where content creators earn more, viewers pay less, and the industry is no longer dependent on advertising and big-brand partnerships to survive.

Brave Browser and the BAT

Overall, browsing the internet is one of the most time-consuming activities individuals partake in. And while millions of users spend endless hours online, even more time is spent due to the amount of ads that pop up during a browsing session.

In order to solve this problem, the co-founder of Mozilla, Brendan Eich, created a niche browser called Brave. Brave’s initial business model gained much attention, as it was known for blocking all ads, as well as ad trackers shown by website publishers.

This business model relied on scrubbing websites of ads and ad tracking, then replacing those ads with its own. This model was not aimed at individuals but at the anonymous aggregate of the browser’s user base. If enough people used the browser, Brave would share its ad revenue with users and content creators. Known as “Brave Payments,” this would replace existing ad revenue.

Brave Payments were made with bitcoin and funded by users. Website publishers were paid from users’ virtual wallets and Brave took a 5 percent cut from each wallet. However, several complaints were issued by various online publishers around this business model, noting that this practice violated federal laws.

Brave looked toward blockchain technology as an alternative to replace Brave Payments and recently launched a cryptocurrency project called BAT, which stands for “Basic Attention Token.” In order to solve the problems associated with digital advertising, Brave’s BAT aims to put a price on online users’ attention with blockchain-based tokens that will be traded among publishers, advertisers and those willing to view ads.

Through this model, advertisers can provide publishers with BATs based on the measured attention on ads from users. In turn, users will also receive some BATs for participating, which can be donated back to publishers or used on the platform. In a nutshell, users are essentially being rewarded for the time they spend viewing ads online.

Cryptocurrency platforms such as mytime, Stream and Brave Browser’s BAT are just a few examples of new ways digital currency is being applied to help us make the most of our time. Other similar models, like Vezt, are also starting to emerge as this concept gains traction. Finally, content creators, internet users, service providers and more are able to earn currency for time spent doing what they enjoy.