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  • Disruptive Currency: Is Sound Money Too Loud? [View article]
    Want your mind blown?

    Ripple enables non-government gold-backed (or silver-backed) assets to be used.

    Here's an example: DYM
    I send to an issuer of online DYM vouchers a silver dime. In exchange I receive a 1.0 DYM (assuming the dime was the correct weight, if it was well worn, I might get 0.98 DM if it weighted 2% less, for instance.)

    Then I can spend my DYM through Ripple. It may not even be that the person I am paying accepts DYM -- my DYM could be converted to USD (or bitcoins even) with an intermediary, if needed, for example, Ultimately, someone who took the DYM as payment will want physical delivery of the silver dime, and that occurs simply by redeeming some DYM with the issuer (who then ships the silver dime, free of charge).


    Radical stuff.
    Aug 29, 2013. 10:52 AM | Likes Like |Link to Comment
  • Bitcoins: A Word Of Caution [View article]
    The current target is 144 blocks per day. If so much ASIC capacity comes online that maybe 800 blocks are mined (generating let's say 20K BTC per-day) the next difficulty adjustment period comes in less than three full days and we are right back to 144 per-day at the new higher difficulty.

    It is not easy to reach double current hashing level, nonetheless 3X, 4X or more.

    The increase will hardly even be noticeable.
    Apr 1, 2013. 10:45 AM | Likes Like |Link to Comment
  • Best Currency In 2012 [View instapost]
    Not to nitpic, but ...

    The BTC/USD exchange rate at the open of Jan 1, 2012 was $4.72, so the current $13.40 level puts the rise at 183% not 220%.

    Now at the same time the argument could be made that a person who bought bitcoins on December 31st, 2012 and held them today is up 220%. And that would be a true statement.

    But how can those two numbers, 183% and 220% be reconciled? Well, because the bitcoin exchange rate is volatile. It is seeing less fluctuations over time but it still sees large spikes are quick dips sporadically. And on December 31st, 2012 the exchange rate was sitting in the range of $4.20 before a huge buy took the exchange rate up nearly 20%.

    So both of those statistics are correct but the one using the open price on January 1st should be referenced, and since 2012 is not yet over, the December 31st closing price is not yet known -- but the increase is currently around 183%.
    Dec 30, 2012. 11:45 AM | Likes Like |Link to Comment
  • Do Bitcoins Pose A Threat To PayPal, Visa And Mastercard? [View article]
    PayPal is not the same as Visa and Mastercard, but all of them are milking a cow whose teats will run dry. Currently they add the costs of identity theft, customer defaults and running the network into the rate they everyone.

    The Dwolla cash network is already competing by offering transactions from $1 to $10 for free, and over $10 for a flat $0.25 per transaction. So merchants will prefer payment networks which have a lower fee and as a result the space will split -- cash transactions and credit transactions.

    As these low cost networks start to siphon marketshare from the payment card networks (and, more importantly, the most profitable transactions) the payment card networks will be left with the type of transactions they want the least -- fraudulent transactions and those most in need of credit and more likely to default.

    As a result those payment networks wont' be cutting their fees below 3% but instead will be raising. This already happens for "high risk" merchants (8% for travel agents is not unheard of), but that rate may have to be extended to "card not present" transactions or retail merchants in high-cost neighborhoods.

    That's the threat to payment networks, that they will keep all of their most expensive customers and transactions and lose their most profitable business to Dwolla and Bitcoin.
    Dec 18, 2012. 04:29 PM | Likes Like |Link to Comment
  • I Want My Virtual Currency [View article]
    > The biggest challenge to actualizing this enormous market opportunity, though, is legislative.

    The U.S. Treasury's FinCEN just issued a ruling that gives me pause:

    FinCEN ruling statement:

    Final ruling:

    There are a few changes of interest.

    1.) "The Prepaid Access NPRM addresses stored value issues as a separate category of MSB.
    FinCEN is excluding stored value in any form from being considered a form of money transmission."

    I've not read the Prepaid Access NPRM, but this appears to be a positive by excluding a stored value transaction from being considered a money transmission.

    2.) The term "dealer in foreign exchange" is replaced with the new term "currency dealer or exchanger," a term used to include the exchange of instruments other than currency as a category of MSB.

    I don't think virtual currencies are affected by this as virtual currencies could hardly be "similar to" the monetary instruments it refers to.

    3.) U.S. AML regulations apply to foreign-located persons who offer MSB services in the U.S. from foreign locations.

    Did the long arm of the law just get longer?

    Quote from the FinCEN statement:
    "An entity qualifies as an MSB based on its activity within the United States, not the physical presence of one or more of its agents, agencies, branches, or offices in the United States.

    "This requirement arose out of the recognition that the Internet and other technological advances make it increasingly possible for persons to offer MSB services in the United States from foreign locations.

    "FinCEN seeks to ensure that the BSA rules apply to all persons engaging in covered activities within the United States, regardless of their physical location".

    4.) It is the activities performed that cause a person to be categorized as an MSB subject to anti-money laundering rules [and not necessarily] whether the person is licensed as a business, has employees, or is engaged in a for-profit venture.

    Taken to the extreme, this would mean every virtual currency buyer and seller would be in violation unless registered as an MSB. Though, if virtual currency is classified as stored value and they are exempted from MSB rulings then this is moot.

    FinCEN extends Prepaid Access NPRM (Stored Value) comment period 30 days:

    Prepaid Access regulation (proposed):

    This topic needs more eyes.
    Jul 25, 2011. 03:01 PM | 1 Like Like |Link to Comment
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