Jon Matonis – Bitcoin Mixing Services Are The Next Frontier:
Forbes contributor and Bitcoin Foundation board member Jon Matonis (@JonMatonis) describes the growing role Bitcoin mixing services will play. Excerpts:
“If bitcoin exchange regulation becomes so effective that exchange operators are required to link specific bitcoin addresses to individual customers, then users may have few remaining choices should they want to maintain transactional privacy. […] Mixing services for bitcoin may emerge as the next frontier in the battle for financial privacy.”
–
“Also called bitcoin laundries, these web-based services charge bitcoin holders a nominal fee to receive different bitcoins than the ones initially transferred. The sites never handle national currencies like the dollar or euro so technically they are not exchanges.”
–
“Vitalik Buterin of Bitcoin Magazine argues that […] the core principles of the bitcoin protocol, such as user-defined anonymity and user-defined transactional privacy, remain intact due to optional mixing services.”
–
“When it comes to bitcoin oversight, regulators and law enforcement must comprehend that which is able to be constrained versus that which is not able to be constrained.”
– http://onforb.es/ZOQu5O
– http://bitcointalk.org/index.php?topic=226487.0 (Further discussion of the post)
All News – Daily E-mail Subscription – Twitter: @BitcoinNews
Jon Matonis – Bitcoin Mixing Services Are The Next Frontier:
Forbes contributor and Bitcoin Foundation board member Jon Matonis (@JonMatonis) describes the growing role Bitcoin mixing services will play. Excerpts:
“If bitcoin exchange regulation becomes so effective that exchange operators are required to link specific bitcoin addresses to individual customers, then users may have few remaining choices should they want to maintain transactional privacy. […] Mixing services for bitcoin may emerge as the next frontier in the battle for financial privacy.”
–
“Also called bitcoin laundries, these web-based services charge bitcoin holders a nominal fee to receive different bitcoins than the ones initially transferred. The sites never handle national currencies like the dollar or euro so technically they are not exchanges.”
–
“Vitalik Buterin of Bitcoin Magazine argues that […] the core principles of the bitcoin protocol, such as user-defined anonymity and user-defined transactional privacy, remain intact due to optional mixing services.”
–
“When it comes to bitcoin oversight, regulators and law enforcement must comprehend that which is able to be constrained versus that which is not able to be constrained.”
– http://onforb.es/ZOQu5O
– http://bitcointalk.org/index.php?topic=226487.0 (Further discussion of the post)
All News – Daily E-mail Subscription – Twitter: @BitcoinNews
Butterfly Labs claims they have shipped all Jalapeno 5 GH/s ASIC bitcoin miners ordered through July 3rd, 2012 have been shipped. ASIC miners are customized hardware used for bitcoin mining. Although Butterfly labs was one of the first companies to take pre-orders for ASIC hardware, Avalon and ASICMiner have been shipping for several months now. Butterfly Labs has been plagued with power issues for months, perpetually telling miners they are two weeks away from delivery. They missed their power target, forcing them to forfeit 1,000 bitcoins to charity after a failed wager. The size of these 5 GH/s miners is over twice as big as originally forecast to accommodate the redesigned boards. There is no word yet on expected deliveries of their 30 GH/s, 60 GH/s or 1,500 GH/s miners shipping yet. These units are expected to have similar size issues as the 5 GH/s miners and there are rumors that Butterfly Labs will ship multiple units to customers in order to achieve the expected hashing rate. Certainly, after a year of waiting,…
The post Butterfly Labs Finishes Shipping June 2012 5 GH/s Pre-orders appeared first on The Genesis Block.
Butterfly Labs claims they have shipped all Jalapeno 5 GH/s ASIC bitcoin miners ordered through July 3rd, 2012 have been shipped. ASIC miners are customized hardware used for bitcoin mining. Although Butterfly labs was one of the first companies to take pre-orders for ASIC hardware, Avalon and ASICMiner have been shipping for several months now. Butterfly Labs has been plagued with power issues for months, perpetually telling miners they are two weeks away from delivery. They missed their power target, forcing them to forfeit 1,000 bitcoins to charity after a failed wager. The size of these 5 GH/s miners is over twice as big as originally forecast to accommodate the redesigned boards. There is no word yet on expected deliveries of their 30 GH/s, 60 GH/s or 1,500 GH/s miners shipping yet. These units are expected to have similar size issues as the 5 GH/s miners and there are rumors that Butterfly Labs will ship multiple units to customers in order to achieve the expected hashing rate. Certainly, after a year of waiting,…
The post Butterfly Labs Finishes Shipping June 2012 5 GH/s Pre-orders appeared first on The Genesis Block.
Welcome to The Standard Bit – a Wall Street insider’s guide to Bitcoin and the emerging virtual currency space.
I first learned of Bitcoin in April 2011 – long before it was trading in the triple digits like it does today. I had just begun my career as a trader at one of New York’s prestigious bulge-bracket, sell-side firms. There I had the best laboratory in the world to learn how to trade. Equities, currencies, bonds, commodities, futures, options – my mind was a blur that first year as I tried to take my scientifically-trained brain and forge it into one of a trader. One morning, after helping my team fend off an aggressive fast-money seller, I stumbled across a post on Tyler Cowen’s Marginal Revolution on Bitcoin – the virtual currency was entirely new to me. There he questioned if Bitcoin was in a bubble after making new highs as it pushed toward the $2 boundary. Granted that was a 2000% appreciation from a year prior. 2000 percent! I rubbed my eyes and checked my monitor once more. There the hockey-stick of a chart remained unyielding. A return of that size in the world of finance does not make sense. It is outrageous and absurd. It stinks of penny-stock or fraud or both. It screams to any sane investor that they should run in the other direction. Luckily I was not one of those. Trusting my gut – and in the process throwing out the window nearly every piece of investing advice I had ever learned – I bought.
Buying was not as simple a task as I had hoped. On the day I read Tyler’s post, the Bitcoin-US Dollar exchange rate (BTCUSD) closed at the price of $1.7949. Four weeks later, after jumping through half-a-dozen hoops to get cash onto Mt. Gox, Bitcoin’s oldest exchange, the price had more than tripled. I held my nose and bought in for an average price of $6.3308. During that waiting period I learned an invaluable lesson: the majority of speculators had recently discovered Bitcoin and were struggling to move deposits to purchase it. Each day I checked Google Trend data for Bitcoin related search terms and saw the network effect of an infectious idea at work. In a scarce liquidity environment, media attention pushed price and the price in turn drew new eyes to this grand experiment. A week later my roommate at the time – then a trader at another bulge-bracket firm – joined the fray. $8. $10. $15. We were flabbergasted by our good fortune. Convinced we had boarded a rocketship of a bubble, we settled on an exit strategy – . On Friday July 8th, 2011 the market looked grossly overheated as it broke $30 and liquidity had become dangerously one-sided. My roommate called this the top. I on the other hand had let my emotions get the best of me. I was leaving that afternoon for a four-day vacation where I would not have access to the internet or my cell phone. When I returned to land of the internet that next Wednesday, I coolly checked the level of BTCUSD. $21. Not awful. Taking a closer look at the chart, I saw that heavy selling over the weekend had knocked the price down to $10.25. I know a dead cat bounce when I see one. I hit every bid I could find to close out my position and I was gone.
In the aftermath of the bubble of 2011, I resolved to steady my thinking on this newfangled currency. Whether or not Bitcoin would survive, I could not tell, but Satoshi Nakamoto had opened Pandora’s box. There was no putting it back.
Virtual currencies have tremendous potential to reshape our world’s political and economic landscape. To Bitcoin’s naysayers I urge them to take a look at the lessons we can draw from this innovative new stuff. The technology behind the Bitcoin protocol alone could dramatically transform clearing and settlement processes for established financial products. There is much work to be done and the financial community is just beginning to take notice. So too are the regulators. Regulation of virtual currencies in the United States is well underway with FinCEN giving its first guidance on the subject in March of this year. Even under this purview there is room for Bitcoin to survive and thrive. In the long run I welcome this oversight. With the support of venture capital funding, the second generation of Bitcoin start ups are putting down roots. More importantly it appears that many of them will be compliant with US regulation and law by FinCEN’s deadline in mid-September. Wall Street would be wise to pay attention.
In the coming weeks I will be writing about Bitcoin and the broader virtual currency space with the established financial community in mind. Topics will include:
-
trading strategy and best execution
-
market structure and exchange topology
-
asset management and portfolio diversification
-
the state of regulation within the United States and abroad
-
new technologies in clearing, settlement, and custodial services
If you have any suggestions or requests, I am all ears. Please drop me a line. In addition to writing, I provide consulting services on the topics listed above. If you think I can help advance your virtual currency related project or investment goals, I would be more than happy to chat with you. I look forward to your readership and the great discussions it will drive.
Happy Trading,
Jonathan Silverman
[email protected]
[email protected]
Welcome to The Standard Bit – a Wall Street insider’s guide to Bitcoin and the emerging virtual currency space.
I first learned of Bitcoin in April 2011 – long before it was trading in the triple digits like it does today. I had just begun my career as a trader at one of New York’s prestigious bulge-bracket, sell-side firms. There I had the best laboratory in the world to learn how to trade. Equities, currencies, bonds, commodities, futures, options – my mind was a blur that first year as I tried to take my scientifically-trained brain and forge it into one of a trader. One morning, after helping my team fend off an aggressive fast-money seller, I stumbled across a post on Tyler Cowen’s Marginal Revolution on Bitcoin – the virtual currency was entirely new to me. There he questioned if Bitcoin was in a bubble after making new highs as it pushed toward the $2 boundary. Granted that was a 2000% appreciation from a year prior. 2000 percent! I rubbed my eyes and checked my monitor once more. There the hockey-stick of a chart remained unyielding. A return of that size in the world of finance does not make sense. It is outrageous and absurd. It stinks of penny-stock or fraud or both. It screams to any sane investor that they should run in the other direction. Luckily I was not one of those. Trusting my gut – and in the process throwing out the window nearly every piece of investing advice I had ever learned – I bought.
Buying was not as simple a task as I had hoped. On the day I read Tyler’s post, the Bitcoin-US Dollar exchange rate (BTCUSD) closed at the price of $1.7949. Four weeks later, after jumping through half-a-dozen hoops to get cash onto Mt. Gox, Bitcoin’s oldest exchange, the price had more than tripled. I held my nose and bought in for an average price of $6.3308. During that waiting period I learned an invaluable lesson: the majority of speculators had recently discovered Bitcoin and were struggling to move deposits to purchase it. Each day I checked Google Trend data for Bitcoin related search terms and saw the network effect of an infectious idea at work. In a scarce liquidity environment, media attention pushed price and the price in turn drew new eyes to this grand experiment. A week later my roommate at the time – then a trader at another bulge-bracket firm – joined the fray. $8. $10. $15. We were flabbergasted by our good fortune. Convinced we had boarded a rocketship of a bubble, we settled on an exit strategy – . On Friday July 8th, 2011 the market looked grossly overheated as it broke $30 and liquidity had become dangerously one-sided. My roommate called this the top. I on the other hand had let my emotions get the best of me. I was leaving that afternoon for a four-day vacation where I would not have access to the internet or my cell phone. When I returned to land of the internet that next Wednesday, I coolly checked the level of BTCUSD. $21. Not awful. Taking a closer look at the chart, I saw that heavy selling over the weekend had knocked the price down to $10.25. I know a dead cat bounce when I see one. I hit every bid I could find to close out my position and I was gone.
In the aftermath of the bubble of 2011, I resolved to steady my thinking on this newfangled currency. Whether or not Bitcoin would survive, I could not tell, but Satoshi Nakamoto had opened Pandora’s box. There was no putting it back.
Virtual currencies have tremendous potential to reshape our world’s political and economic landscape. To Bitcoin’s naysayers I urge them to take a look at the lessons we can draw from this innovative new stuff. The technology behind the Bitcoin protocol alone could dramatically transform clearing and settlement processes for established financial products. There is much work to be done and the financial community is just beginning to take notice. So too are the regulators. Regulation of virtual currencies in the United States is well underway with FinCEN giving its first guidance on the subject in March of this year. Even under this purview there is room for Bitcoin to survive and thrive. In the long run I welcome this oversight. With the support of venture capital funding, the second generation of Bitcoin start ups are putting down roots. More importantly it appears that many of them will be compliant with US regulation and law by FinCEN’s deadline in mid-September. Wall Street would be wise to pay attention.
In the coming weeks I will be writing about Bitcoin and the broader virtual currency space with the established financial community in mind. Topics will include:
-
trading strategy and best execution
-
market structure and exchange topology
-
asset management and portfolio diversification
-
the state of regulation within the United States and abroad
-
new technologies in clearing, settlement, and custodial services
If you have any suggestions or requests, I am all ears. Please drop me a line. In addition to writing, I provide consulting services on the topics listed above. If you think I can help advance your virtual currency related project or investment goals, I would be more than happy to chat with you. I look forward to your readership and the great discussions it will drive.
Happy Trading,
Jonathan Silverman
[email protected]
[email protected]
In an apparent bid to keep pace with the regulatory restrictions surrounding Bitcoin, Mt. Gox …The post Mt. Gox, OKPAY Play Regulatory Catch-up appeared first on Bitcoin Magazine.
In an apparent bid to keep pace with the regulatory restrictions surrounding Bitcoin, Mt. Gox …
The post Mt. Gox, OKPAY Play Regulatory Catch-up appeared first on Bitcoin Magazine.
Last month we showed the initial impact after Chinese state-run broadcaster CCTV ran a piece about bitcoin. The Chinese presence in bitcoin has continued to accelerate since then, even as the rest of the world tempered its rate of adoption. In May, China surpassed the previously-dominant US in number of monthly bitcoin downloads, with 85K compared to 64K in the US. Not only did China climb it’s way to the top spot for the first time, but it was also the only country out of the top 10 highest all-time downloading nations to increase the number of monthly downloads in May. For further context, the graph below shows US and China download trends in 2013. You’ll notice that China’s downloads have so significantly increased recently that they comprised nearly 30% of global downloads in May and have almost doubled their representation in share of all-time global downloads from 5% to 9% since January. China now holds the #2 spot for most downloads of all time. The trend of increasing Chinese adoption is…
The post China Climbs To Top Spot In Monthly Bitcoin Downloads, Second Overall appeared first on The Genesis Block.
Last month we showed the initial impact after Chinese state-run broadcaster CCTV ran a piece about bitcoin. The Chinese presence in bitcoin has continued to accelerate since then, even as the rest of the world tempered its rate of adoption. In May, China surpassed the previously-dominant US in number of monthly bitcoin downloads, with 85K compared to 64K in the US. Not only did China climb it’s way to the top spot for the first time, but it was also the only country out of the top 10 highest all-time downloading nations to increase the number of monthly downloads in May. For further context, the graph below shows US and China download trends in 2013. You’ll notice that China’s downloads have so significantly increased recently that they comprised nearly 30% of global downloads in May and have almost doubled their representation in share of all-time global downloads from 5% to 9% since January. China now holds the #2 spot for most downloads of all time. The trend of increasing Chinese adoption is…
The post China Climbs To Top Spot In Monthly Bitcoin Downloads, Second Overall appeared first on The Genesis Block.
CoinDeskThe futility of regulating BitcoinCoinDeskWhen Bitcoin began, it was easy to solve the cryptographic problems involved, so much so that CPU mining was practical. As the difficulty of these problems grew, the computation was handed off to graphi…
CoinDesk |
The futility of regulating BitcoinCoinDeskWhen Bitcoin began, it was easy to solve the cryptographic problems involved, so much so that CPU mining was practical. As the difficulty of these problems grew, the computation was handed off to graphical cards (i.e. GPUs) which are better suited to ... |
By Jon Matonis
American Banker
Wednesday, May 29, 2013
http://www.americanbanker.com/bankthink/new-bitcoin-vc-fund-seeks-edge-with-regulatory-security-skills-1059453-1.html
A new investment fund dedicated to Bitcoin startups aims to bring
digital money entrepreneurs up to speed in two areas where they have
proven most vulnerable: network security and compliance.
This month Liberty City Ventures, based in New York, launched the $15 million Digital Currency Fund,
which seeks to invest in all types of firms in the Bitcoin ecosystem,
including exchanges, banks, brokerages, investment services, insurance,
infrastructure, and supporting products and services. It is the largest
Bitcoin-related investment fund to date.
As host and sponsor of the monthly NY Bitcoin Startups Meetup, Liberty City Ventures has been involved in the broader Bitcoin ecosystem through mining
and currency investing for a number of years. The team is also very
familiar with financial services and payment system startups, having
recently retained former U.S. Treasury officials and regulators and
computer engineers as advisors.
Very few computer security
professionals have crossed over into the bitcoin financial realm and the
startups have simply not had the capital to replicate the security
infrastructure and procedures of a large commercial bank. Even though
real-time access to bitcoin is similar to the handling of physical cash,
sophisticated management of multiple “hot wallets” (Bitcoin accounts
connected to the Internet) and “cold wallets” (coins stored offline,
such as in a USB drive in a bank vault) is a relatively new technical
skill set.
Hence, Bitcoin-related firms such as InstaWallet have
suffered devastating security hacks. And recent government actions
against Mt. Gox, the world’s largest exchange for trading bitcoins for
government currencies, and Liberty Reserve, which issued its own private
currency, underscore the importance of regulatory expertise to
companies in this space. (For the record, Liberty City Ventures has no
affiliation with Liberty Reserve.)
As TechCrunch said,
paraphrasing Liberty City founding partner Charles Cascarilla, “none of
the current [investment] options would live up to the type of scrutiny
that most real-world banking institutions face.” Cascarilla told
PandoDaily he sees an opportunity to bring advanced trading technology along with capital to the sector.
Liberty City was founded
about nine months ago as the early-stage venture division of Cedar Hill
Capital Partners by technology investors Cascarilla, Emil Woods, Andrew
Chang, and Dorothy Jean. The fund has already raised capital from high
net worth individuals and secured commitments from institutional
investors. Additionally, the firm plans to establish a Bitcoin incubator
in Manhattan catering to the needs of young digital currency startups.
Since
the complex nature of payment systems and surrounding regulation is
inherently capital-intensive, the fund’s founders recognized that the
initial capital required for success will much larger than a
social-media or mobile tech startup would need. “Our typical investment
size will vary based on the type of startup backed,” says Jean, 29 years
old. “For example, a currency exchange might require significantly more
capital than a wallet or eCommerce company.”
In addition to
companies that are proactive with respect to network security and
regulatory compliance, it appears that Liberty City will concentrate
initially on New York City-area companies since those are the
entrepreneurs the founders know best. However, they are not prepared to
announce any angel investments at this time.
The fund’s current largest competitor is Union Square Ventures,
which recently led the $5 million round for the exchange and wallet
service Coinbase. Other significant operators investing in the
fast-moving space include Barry Silbert’s Bitcoin Opportunity Fund, Adam Draper’s Boost Bitcoin Fund, Chris Dixon at Andreessen Horowitz, Peter Thiel’s Founders Fund, and Tyler and Cameron’s Winklevoss Capital Management.
A
large fund size and a dedicated focus certainly meet the requirements
for the emerging digital currency sector. However, the ability to think
globally as a service provider will prove critical for those Bitcoin
companies wanting to maintain a leadership role. Liberty City Ventures
would be wise to partner with similar investment efforts in other
international jurisdictions.
By Jon Matonis
American Banker
Wednesday, May 29, 2013
http://www.americanbanker.com/bankthink/new-bitcoin-vc-fund-seeks-edge-with-regulatory-security-skills-1059453-1.html
A new investment fund dedicated to Bitcoin startups aims to bring
digital money entrepreneurs up to speed in two areas where they have
proven most vulnerable: network security and compliance.
This month Liberty City Ventures, based in New York, launched the $15 million Digital Currency Fund,
which seeks to invest in all types of firms in the Bitcoin ecosystem,
including exchanges, banks, brokerages, investment services, insurance,
infrastructure, and supporting products and services. It is the largest
Bitcoin-related investment fund to date.
As host and sponsor of the monthly NY Bitcoin Startups Meetup, Liberty City Ventures has been involved in the broader Bitcoin ecosystem through mining
and currency investing for a number of years. The team is also very
familiar with financial services and payment system startups, having
recently retained former U.S. Treasury officials and regulators and
computer engineers as advisors.
Very few computer security
professionals have crossed over into the bitcoin financial realm and the
startups have simply not had the capital to replicate the security
infrastructure and procedures of a large commercial bank. Even though
real-time access to bitcoin is similar to the handling of physical cash,
sophisticated management of multiple “hot wallets” (Bitcoin accounts
connected to the Internet) and “cold wallets” (coins stored offline,
such as in a USB drive in a bank vault) is a relatively new technical
skill set.
Hence, Bitcoin-related firms such as InstaWallet have
suffered devastating security hacks. And recent government actions
against Mt. Gox, the world’s largest exchange for trading bitcoins for
government currencies, and Liberty Reserve, which issued its own private
currency, underscore the importance of regulatory expertise to
companies in this space. (For the record, Liberty City Ventures has no
affiliation with Liberty Reserve.)
As TechCrunch said,
paraphrasing Liberty City founding partner Charles Cascarilla, “none of
the current [investment] options would live up to the type of scrutiny
that most real-world banking institutions face.” Cascarilla told
PandoDaily he sees an opportunity to bring advanced trading technology along with capital to the sector.
Liberty City was founded
about nine months ago as the early-stage venture division of Cedar Hill
Capital Partners by technology investors Cascarilla, Emil Woods, Andrew
Chang, and Dorothy Jean. The fund has already raised capital from high
net worth individuals and secured commitments from institutional
investors. Additionally, the firm plans to establish a Bitcoin incubator
in Manhattan catering to the needs of young digital currency startups.
Since
the complex nature of payment systems and surrounding regulation is
inherently capital-intensive, the fund’s founders recognized that the
initial capital required for success will much larger than a
social-media or mobile tech startup would need. “Our typical investment
size will vary based on the type of startup backed,” says Jean, 29 years
old. “For example, a currency exchange might require significantly more
capital than a wallet or eCommerce company.”
In addition to
companies that are proactive with respect to network security and
regulatory compliance, it appears that Liberty City will concentrate
initially on New York City-area companies since those are the
entrepreneurs the founders know best. However, they are not prepared to
announce any angel investments at this time.
The fund’s current largest competitor is Union Square Ventures,
which recently led the $5 million round for the exchange and wallet
service Coinbase. Other significant operators investing in the
fast-moving space include Barry Silbert’s Bitcoin Opportunity Fund, Adam Draper’s Boost Bitcoin Fund, Chris Dixon at Andreessen Horowitz, Peter Thiel’s Founders Fund, and Tyler and Cameron’s Winklevoss Capital Management.
A
large fund size and a dedicated focus certainly meet the requirements
for the emerging digital currency sector. However, the ability to think
globally as a service provider will prove critical for those Bitcoin
companies wanting to maintain a leadership role. Liberty City Ventures
would be wise to partner with similar investment efforts in other
international jurisdictions.
CoinDeskBitAngels Interview With David Johnston — The Next Bitcoin StartupsCoinDeskI recently had the pleasure of sitting down with David Johnston, the executive director of BitAngels, which is a network of investors that was sporadically formed a cou…
