By Jon Matonis
American Banker
Friday, June 21, 2013
http://www.americanbanker.com/bankthink/in-person-bitcoin-exchanges-are-thriving-1060061-1.html
Call it a sign of the times, but something is definitely changing as face-to-face purchases of bitcoin are booming worldwide.
In addition to avoiding a sometimes cumbersome registration process with traditional exchangers, in-person bitcoin transactions allow you to meet interesting new people in your area – and discuss bitcoin.
Business colleagues and friends usually ask me the best way to buy and sell bitcoin. With the constantly changing regulatory landscape and the inconsistency of available payment methods, there is not always a straightforward answer. For the serious traders, I recommend both a U.S.-based exchange and an international exchange for diversification. Many choices are available with varying degrees of identification required. For the casual traders seeking more privacy, I recommend in-person trading through LocalBitcoins.com.
Established by Finnish software developer Jeremias Kangas, LocalBitcoins is the leading person-to-person matching service for people in various locales to meet and conduct bitcoin business. LocalBitcoins has steadily added new cities and market depth. “We currently have 142 countries and 1700 cities,” Kangas recently told Bitcoin Magazine, “but that most definitely isn’t enough. We want to expand to at least 170,000 cities, and have LocalBitcoins.com-branded franchise exchange shops popping up here and there.”
Including the capability to purchase and sell bitcoin online in addition to the in-person model, the company’s statistics web page lists 244 countries with 2,004 different cities. The online option tends to support payment methods that are popular and available in that local region. Also, once you make an in-person exchange with someone, you might be more comfortable engaging online with them for subsequent trades.
LocalBitcoins offers an escrow facility and a rating system both of which can be extremely valuable for the first-time trader. The fees range from nothing to 1% for listing and a flat fee of 0.003 bitcoins (about 34 cents as of Friday morning) for wallet transfers.
According to the company, current trading volume is approximately 1,000-1,500 bitcoins per day, with 300 new users per day. Overall user count is now 45,000 and about 15,000 of those are active.
Given the robustness of trade in some large urban areas, it is entirely possible to earn a living from buying and selling bitcoin using the LocalBitcoins matching platform. The bitcoin provider sets the price markup and types of payment that will be accepted. After that is determined, the business elements include focusing on inventory and adhering to a convenient meeting timetable.
It will be interesting to watch how this business model unfolds, because it is also possible to be an in-person exchanger if bitcoin is given back as change during a regular purchase of goods or services. A gourmet food merchant in San Francisco currently offers two unique bitcoin services: “bitcoin back” from cash purchases and “cash back from bitcoin purchases,” both integrated with the point of sale system. While the limits on these services are one bitcoin and $200 respectively, it serves as a great incentive to sample the merchant’s product and smartly acquire some bitcoin at the same time.
Bitcoin’s price can exhibit extreme volatility and its value is not supported by any government’s legal decree. It is admittedly still beta software. With a crippling “fork” of the block chain – the public transaction ledger maintained by a decentralized network of computers around the world – it could all be gone tomorrow. So, do regulatory bodies like the Financial Crimes Enforcement Network believe that virtual bitcoin sufficiently resembles real money for its exchange to be regulated under Money Services Business guidelines or money transmitter rules? Would Fincen also want to regulate the commodity-based exchange of rare gems and Tide detergent?
Bitcoin falls most appropriately into the property category of commodity, although it is an intangible commodity supported by mathematics and a distributed computing network driven by social consensus. Regulating an intangible commodity with unprovable existence places the burden of proof on the regulator since there is sufficient plausible deniability in the system for someone to deny holding bitcoin or even access to the private key required to send them from a given address on the network.
It remains to be seen whether the latest regulatory interest extends beyond the mere entry or exit point into the U.S. financial system. As exchange endpoints tighten up and authorities attempt to treat virtual objects as monetary instruments, the virtual objects might not re-enter the national fiat environment. Therefore, crypto-key disclosure laws may become the next battlefield for cryptographic financial products.
Treating bitcoin as a monetary instrument for purposes of regulation fails to understand the nature of math-based commodities that rely on reusable “proof-of-work” to verify and record transfers of ownership. In the general classification of commodity, bitcoin’s trade is similar to any other collectible item, such as antique diamonds, celebrity autographs, moon rocks, Buddha figurines, and baseball cards.
People have even sold air guitars online (without the cases, presumably). Just like air guitars, person-to-person sales of bitcoin “transfer rights” will continue. Ultimately, until physical paper cash is outlawed, bitcoin will still be bought and sold in person just like any other commodity.
By Jon Matonis
American Banker
Friday, June 21, 2013
http://www.americanbanker.com/bankthink/in-person-bitcoin-exchanges-are-thriving-1060061-1.html
Call it a sign of the times, but something is definitely changing as face-to-face purchases of bitcoin are booming worldwide.
In addition to avoiding a sometimes cumbersome registration process with traditional exchangers, in-person bitcoin transactions allow you to meet interesting new people in your area – and discuss bitcoin.
Business colleagues and friends usually ask me the best way to buy and sell bitcoin. With the constantly changing regulatory landscape and the inconsistency of available payment methods, there is not always a straightforward answer. For the serious traders, I recommend both a U.S.-based exchange and an international exchange for diversification. Many choices are available with varying degrees of identification required. For the casual traders seeking more privacy, I recommend in-person trading through LocalBitcoins.com.
Established by Finnish software developer Jeremias Kangas, LocalBitcoins is the leading person-to-person matching service for people in various locales to meet and conduct bitcoin business. LocalBitcoins has steadily added new cities and market depth. “We currently have 142 countries and 1700 cities,” Kangas recently told Bitcoin Magazine, “but that most definitely isn’t enough. We want to expand to at least 170,000 cities, and have LocalBitcoins.com-branded franchise exchange shops popping up here and there.”
Including the capability to purchase and sell bitcoin online in addition to the in-person model, the company’s statistics web page lists 244 countries with 2,004 different cities. The online option tends to support payment methods that are popular and available in that local region. Also, once you make an in-person exchange with someone, you might be more comfortable engaging online with them for subsequent trades.
LocalBitcoins offers an escrow facility and a rating system both of which can be extremely valuable for the first-time trader. The fees range from nothing to 1% for listing and a flat fee of 0.003 bitcoins (about 34 cents as of Friday morning) for wallet transfers.
According to the company, current trading volume is approximately 1,000-1,500 bitcoins per day, with 300 new users per day. Overall user count is now 45,000 and about 15,000 of those are active.
Given the robustness of trade in some large urban areas, it is entirely possible to earn a living from buying and selling bitcoin using the LocalBitcoins matching platform. The bitcoin provider sets the price markup and types of payment that will be accepted. After that is determined, the business elements include focusing on inventory and adhering to a convenient meeting timetable.
It will be interesting to watch how this business model unfolds, because it is also possible to be an in-person exchanger if bitcoin is given back as change during a regular purchase of goods or services. A gourmet food merchant in San Francisco currently offers two unique bitcoin services: “bitcoin back” from cash purchases and “cash back from bitcoin purchases,” both integrated with the point of sale system. While the limits on these services are one bitcoin and $200 respectively, it serves as a great incentive to sample the merchant’s product and smartly acquire some bitcoin at the same time.
Bitcoin’s price can exhibit extreme volatility and its value is not supported by any government’s legal decree. It is admittedly still beta software. With a crippling “fork” of the block chain – the public transaction ledger maintained by a decentralized network of computers around the world – it could all be gone tomorrow. So, do regulatory bodies like the Financial Crimes Enforcement Network believe that virtual bitcoin sufficiently resembles real money for its exchange to be regulated under Money Services Business guidelines or money transmitter rules? Would Fincen also want to regulate the commodity-based exchange of rare gems and Tide detergent?
Bitcoin falls most appropriately into the property category of commodity, although it is an intangible commodity supported by mathematics and a distributed computing network driven by social consensus. Regulating an intangible commodity with unprovable existence places the burden of proof on the regulator since there is sufficient plausible deniability in the system for someone to deny holding bitcoin or even access to the private key required to send them from a given address on the network.
It remains to be seen whether the latest regulatory interest extends beyond the mere entry or exit point into the U.S. financial system. As exchange endpoints tighten up and authorities attempt to treat virtual objects as monetary instruments, the virtual objects might not re-enter the national fiat environment. Therefore, crypto-key disclosure laws may become the next battlefield for cryptographic financial products.
Treating bitcoin as a monetary instrument for purposes of regulation fails to understand the nature of math-based commodities that rely on reusable “proof-of-work” to verify and record transfers of ownership. In the general classification of commodity, bitcoin’s trade is similar to any other collectible item, such as antique diamonds, celebrity autographs, moon rocks, Buddha figurines, and baseball cards.
People have even sold air guitars online (without the cases, presumably). Just like air guitars, person-to-person sales of bitcoin “transfer rights” will continue. Ultimately, until physical paper cash is outlawed, bitcoin will still be bought and sold in person just like any other commodity.
Many of us are already familiar with Bitcointip, the bot that allows anyone to easily …The post PikaPay: Microfunding Over Twitter appeared first on Bitcoin Magazine.
Many of us are already familiar with Bitcointip, the bot that allows anyone to easily …
The post PikaPay: Microfunding Over Twitter appeared first on Bitcoin Magazine.
Conference
Late Monday I returned from the 2nd International Conference on Complementary Currency Systems (CCS) that took place in The Hague, Netherlands. I met with many researchers and practitioners, several of them I quote in my thesis (such as Thomas Greco or Hugo Godschalk). Almost everyone knew about Bitcoin and I took the opportunity to explain how it can be used benficially for the people normally involved in CCS. My impression was that most didn’t like the inelastic money supply. They do not like that banks are privileged to create money and would prefer that everyone can create money, including credit forms. Some even didn’t like that the control over the balance is with the end user, arguing that this promotes crime. Both during my panel and the rest of the time (the conference took five days) I tried my best to explain that Bitcoin is a voluntary system and the technology can be used to construct other monetary systems (indeed, my co-panelists were Marco Sachy from freecoin and Jorge Timón from freicoin) and even for other areas which have to do with property rights, such as finance, banking, legal and property rights enforcement. And, of course, that it makes it more difficult for the banks to create money.
One thing however that I must say that I was pleasantly surprised about was that there appeared to be a unanimous support for a easy regulation and displeasure with the treatment Bitcoin has received. The legal troubles that have affected Liberty Reserve, or before that Liberty Dollar, and the recent public announcements from the regulators are not specific to “libertarian” alternatives. Many of the complementary currencies have suffered from regulatory pressure too, one of them being Bangla Pesa, which was recently shut down in Kenya. The conference organised a petition for the ending of the prosecution of people involved with Bangla Pesa.
I also was able to attend the Utrecht Bitcoin meeting as it was nearby, and finally meet Koen Swinkels in person. Koen is similarly as me interested in deep fundamental economic questions related to Bitcoin and we discussed the topic online several times.
Donations
As I now conduct Bitcoin research full time, and am accepting donations for my research, I decided to make my research more open. First of all, I opened my research bibliography and notes. Zotero is a collaborative tool for helping in research, I’ve been using it since I started my research, now I just made the data public. It contains over 400 entries (books, articles, lectures, …), notes I made for them, such as quotations that are interesting from the point of view of Bitcoin. You can directly export a Zotero library into bibtex, and plugins are available for MS Office or Libre Office.
Last but not least, I want to make the spending of the donations also publicly auditable. So far I haven’t spent anything, but it’s difficult to finance my research just from savings. So here is a list of intended uses for the donations:
- Server hosting. I rent a dedicated server that gathers data from the blockchain (it runs a full node and I recently added several altcoins) and Mt Gox. I plan to add other data sources in the future. The server doesn’t do anything else and costs 32 EUR per month
- Zotero storage plan. I mentioned Zotero above, I have an extensive bibliography (now public) and the storage required exceeds the free hosting plan. I currently pay 20 USD per year.
- Books and articles. I am not affiliated with any research institution and need to pay full price for any publication that I want to read. Of course I try to get them for free but this is sometimes difficult. I also created a separate Amazon wishlist which includes items I find relevant for my Bitcoin research, so you can “donate” also by directly gifting me a book from that wishlist. I prefer kindle editions to paper books but not all are available in electronic form.
- Potentially also travel and accommodation costs for conferences. Even though I take part on conferences that I find relevant for Bitcoin, not always do the organisers cover my costs. The Bitcoin 2013: The Future of Payments in San Jose cost me about 1100 EUR for travel and accommodation and the CCS 2013 about 600 EUR. I’m not counting other costs associated with the conferences such as food as I eat regardless of whether I am at a conference or at home. These two conferences already happened so I am not going to use the donations to cover the cost for these two. The other two conferences that I’ve been invited this year (Cryptocurrencycon and Future of Money 2.0) will cover my costs so it’s less of a problem there, but there could be other conferences in the future.
I’ll publish the expenditures on a separate page once they occur.
Let me know what you think, and if you have any comments on the donation spending.
Conference
Late Monday I returned from the 2nd International Conference on Complementary Currency Systems (CCS) that took place in The Hague, Netherlands. I met with many researchers and practitioners, several of them I quote in my thesis (such as Thomas Greco or Hugo Godschalk). Almost everyone knew about Bitcoin and I took the opportunity to explain how it can be used benficially for the people normally involved in CCS. My impression was that most didn’t like the inelastic money supply. They do not like that banks are privileged to create money and would prefer that everyone can create money, including credit forms. Some even didn’t like that the control over the balance is with the end user, arguing that this promotes crime. Both during my panel and the rest of the time (the conference took five days) I tried my best to explain that Bitcoin is a voluntary system and the technology can be used to construct other monetary systems (indeed, my co-panelists were Marco Sachy from freecoin and Jorge Timón from freicoin) and even for other areas which have to do with property rights, such as finance, banking, legal and property rights enforcement. And, of course, that it makes it more difficult for the banks to create money.
One thing however that I must say that I was pleasantly surprised about was that there appeared to be a unanimous support for a easy regulation and displeasure with the treatment Bitcoin has received. The legal troubles that have affected Liberty Reserve, or before that Liberty Dollar, and the recent public announcements from the regulators are not specific to “libertarian” alternatives. Many of the complementary currencies have suffered from regulatory pressure too, one of them being Bangla Pesa, which was recently shut down in Kenya. The conference organised a petition for the ending of the prosecution of people involved with Bangla Pesa.
I also was able to attend the Utrecht Bitcoin meeting as it was nearby, and finally meet Koen Swinkels in person. Koen is similarly as me interested in deep fundamental economic questions related to Bitcoin and we discussed the topic online several times.
Donations
As I now conduct Bitcoin research full time, and am accepting donations for my research, I decided to make my research more open. First of all, I opened my research bibliography and notes. Zotero is a collaborative tool for helping in research, I’ve been using it since I started my research, now I just made the data public. It contains over 400 entries (books, articles, lectures, …), notes I made for them, such as quotations that are interesting from the point of view of Bitcoin. You can directly export a Zotero library into bibtex, and plugins are available for MS Office or Libre Office.
Last but not least, I want to make the spending of the donations also publicly auditable. So far I haven’t spent anything, but it’s difficult to finance my research just from savings. So here is a list of intended uses for the donations:
- Server hosting. I rent a dedicated server that gathers data from the blockchain (it runs a full node and I recently added several altcoins) and Mt Gox. I plan to add other data sources in the future. The server doesn’t do anything else and costs 32 EUR per month
- Zotero storage plan. I mentioned Zotero above, I have an extensive bibliography (now public) and the storage required exceeds the free hosting plan. I currently pay 20 USD per year.
- Books and articles. I am not affiliated with any research institution and need to pay full price for any publication that I want to read. Of course I try to get them for free but this is sometimes difficult. I also created a separate Amazon wishlist which includes items I find relevant for my Bitcoin research, so you can “donate” also by directly gifting me a book from that wishlist. I prefer kindle editions to paper books but not all are available in electronic form.
- Potentially also travel and accommodation costs for conferences. Even though I take part on conferences that I find relevant for Bitcoin, not always do the organisers cover my costs. The Bitcoin 2013: The Future of Payments in San Jose cost me about 1100 EUR for travel and accommodation and the CCS 2013 about 600 EUR. I’m not counting other costs associated with the conferences such as food as I eat regardless of whether I am at a conference or at home. These two conferences already happened so I am not going to use the donations to cover the cost for these two. The other two conferences that I’ve been invited this year (Cryptocurrencycon and Future of Money 2.0) will cover my costs so it’s less of a problem there, but there could be other conferences in the future.
I’ll publish the expenditures on a separate page once they occur.
Let me know what you think, and if you have any comments on the donation spending.
Compliance, and Raising the FBAR. How to get your way, by giving in. Compliance regimes, …The post Real Compliance: Getting your way by giving in. appeared first on Bitcoin Magazine.
Compliance, and Raising the FBAR. How to get your way, by giving in. Compliance regimes, …
The post Real Compliance: Getting your way by giving in. appeared first on Bitcoin Magazine.
States Put Heat on BitcoinWall Street Journal- IndiaState regulators are warning virtual-currency exchanges and other companies that deal with bitcoin that they could be closed down if their activities run afoul of state money-transmission laws, accord…
One of the crucial features for a digital transaction medium to be viable for payments …The post Solving the Slow In-Person Transaction Problem appeared first on Bitcoin Magazine.
One of the crucial features for a digital transaction medium to be viable for payments …
The post Solving the Slow In-Person Transaction Problem appeared first on Bitcoin Magazine.
Alec Ross and Jonathan Luff – Why Bitcoin Is On The Money:
The Telegraph (UK) published an essay by Alec Ross (@AlecJRoss) and Jonathan Luff (@JILuff) on the geopolitics of Bitcoin. Excerpts:
“An interesting advert appeared in a handbook accompanying [last week’s G8 meeting], placed by a company that was until recently known only to a small number of technology entrepreneurs and early adopters. The advertiser was Mt Gox.”
–
“Alternative currencies are, of course, nothing new. Many Londoners carry an Oyster Card, which they load with traditional currency and then exchange for travel.”
–
“In the developing world, value transfer via SMS is already replacing cash. With virtual currencies like BitCoin now operable without the need for a bank account, why would you open one?”
–
“The rise of digital currencies like BitCoin threatens to render obsolete even the modest progress made by the G8. BitCoin’s distributed network structure makes it hard for any one country or group of countries to regulate its activities.”
–
“Unless the issues that BitCoin raises are addressed in a thoughtful and proactive manner by existing authorities, the disintermediating power of technology is likely to have a disruptive impact on currency systems and those that regulate and rely on them.”
– http://bit.ly/145sz0P
– http://bitcointalk.org/index.php?topic=242385.0
All News – Daily E-mail Subscription – Twitter: @BitcoinNews
Alec Ross and Jonathan Luff – Why Bitcoin Is On The Money:
The Telegraph (UK) published an essay by Alec Ross (@AlecJRoss) and Jonathan Luff (@JILuff) on the geopolitics of Bitcoin. Excerpts:
“An interesting advert appeared in a handbook accompanying [last week’s G8 meeting], placed by a company that was until recently known only to a small number of technology entrepreneurs and early adopters. The advertiser was Mt Gox.”
–
“Alternative currencies are, of course, nothing new. Many Londoners carry an Oyster Card, which they load with traditional currency and then exchange for travel.”
–
“In the developing world, value transfer via SMS is already replacing cash. With virtual currencies like BitCoin now operable without the need for a bank account, why would you open one?”
–
“The rise of digital currencies like BitCoin threatens to render obsolete even the modest progress made by the G8. BitCoin’s distributed network structure makes it hard for any one country or group of countries to regulate its activities.”
–
“Unless the issues that BitCoin raises are addressed in a thoughtful and proactive manner by existing authorities, the disintermediating power of technology is likely to have a disruptive impact on currency systems and those that regulate and rely on them.”
– http://bit.ly/145sz0P
– http://bitcointalk.org/index.php?topic=242385.0
All News – Daily E-mail Subscription – Twitter: @BitcoinNews
