You can now easily buy bitcoins with gold or silver at TradeBitcoins.com. If you don’t have gold or silver you can buy it from a local bullion dealer and then trade it in for bitcoins.
We’re excited to be selected as a media partner for the Bitcoin Investor Conference in Las Vegas, NV on October 29th & 30th. For tickets and details visit http://BitcoinInvestor.com See you there!
Money for nothing. Coinbase users need not apply.
There's some "free money" out there, but it's not available to everyone. Only those who control their Bitcoin private keys will benefit from a relatively unknown giveaway benefitting Bitcoin users.
The title for this post mentions Coinbase simply as a reference to any service that has custody of its customer's coins. These custodial services include most exchanges (e.g., BitSTAMP, Kraken, LocalBitcoins, etc.), web wallets (e.g., Coinapult), online services (e.g., ChangeTip, online gambling sites, etc.) and others.
The beneficiaries then of this giveaway are those who kept bitcoins in a wallet such as Bitcoin Core, Blockchain.info, Electrum, MultiBit, Mycelium, Armory, and others -- including cold storage (e.g., paper wallet) methods even.
The Giveaway
A little over a year ago a current top-20 altcoin, Clam (CLAM), was about to launch and wanted a wide initial distribution of the altcoin. They introduced an innnovative approach to attain this. Clam essentially did an "airdrop" that gave about $14 worth of CLAM ($14 using today's exchange rate) to the owner of each and every Bitcoin address that held a (non-trivial) balance at that time (May 12, 2014). The same airdrop, totaling nearly 15 million CLAM, hit Litecoin and Dogecoin address owners as well to gain an even wider distribution.
The airdrop giveaway amount was 4.6 CLAM per Bitcoin address. Today these 4.6 CLAM trade for about 0.06 bitcoins -- an amount worth about $14. Many Bitcoin users will be able to claim multiples of this amount if they had followed the practice of using a new Bitcoin address for each payment requested. Bitcoin clients that spend change to a new address will also result in multiple airdrop targets per-person.
Accessing this free money
The CLAMs corresponding to your Bitcoin address(es) are already sitting there on the CLAM blockchain waiting to be spent. But just like with Bitcoin, spending the funds for an address requires the private key that corresponds with that address. The procedure to claim airdropped CLAMs then requires a Bitcoin private key to be imported into the Clam client.
This need for a Bitcoin private key helps to explain why nearly 95% of the airdropped CLAMs have yet to be claimed. Sharing your Bitcoin private keys with some other software should not be something done without knowing the risks and without first taking proper preparations. The CLAM client is open source though and hasn't been found to do anything that would spend your bitcoins or leak your keys. Either way, it is recommended to only use Bitcoin wallets that have been "retired" (i.e., bitcoins completely spent and no further payments expected).
Once the CLAM client has the private keys any airdropped CLAMs will automatically and instantly be available for spending. There are a few exchanges where your CLAMs can be converted to Bitcoin: Poloniex, Bleutrade, and Shapeshift.io.
Help is available
The process to claim CLAMs may not be worth the effort for everyone -- especially if a wallet contains only one Bitcoin address that had a balance -- the result of which is CLAM worth just $14. Others find the effort to be well worth their time if their Bitcoin wallet had dozens of addresses with balances. For them, claiming the airdropped CLAMs yields hundreds of dollars worth.
But installing the CLAM client, waiting for it to pull down its blockchain (which is now over 650MB), and importing Bitcoin keys isn't a process for everyone.
That's a shame because there's literally millions of dollars worth of value currently being "left on the table". It's been over a year since the airdrop occurred and so few Bitcoin users have claimed their airdropped CLAMs. For this reason, a service is being offered to help Bitcoin users minimize the effort to collect and cash out from the CLAM airdrop.
If you had any bitcoins on May 12, 2014 and want to cash out from this airdrop then this service might be useful to you. This service will check if your private keys had earned any CLAMs. If there were any CLAMs they will be converted to bitcoin (less a 10% service fee) and those bitcoins forwarded to you. It's that simple! For further details on this service, send an e-mail message to clam@bitcoinmoney.com
[Don't send your wallet or private keys via e-mail. We'll respond with a secure method for transfer.]
[Update: The CLAM exchange rate has dropped by well more than half since this post occurred.]
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Video: Andreas Antonopoulos Presents At Disrupt in Athens
Presentation on Bitcoin at Disrupt conference in Athens, November 2013. Length: 21 minutes
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NPR Money - Why ACH (Direct Deposit) Transfers Take So Long
Ever wondered why it takes several days to get money from your bank to Dwolla or Coinbase? Those two services use the Automated Clearing House (ACH), sometimes referred to as direct deposit, network in the U.S. This NPR Money podcast by David Kestenbaum and Alex Blumberg (@abexlumberg) shows how the sausage is made for an ACH transaction.
- http://n.pr/1hrmQq1 - http://n.pr/15UQyP4 (MP3 download)
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Video: How Bitcoin Works Under The Hood, by Scott Driscoll
This 22 minute video (and accompanying Blog post) describes how bitcoin works -- transactions, blocks, hashes, cryptographic signatures, double spending, mining, and more. While these are complex technical topics, Scott uses visual aides and easy to follow explanations such that every viewer will take away a better understanding of what makes Bitcoin tick.
- http://bit.ly/13mxgUU (Scott Driscoll's blog post)
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Ruben Alexander (@BitcoinBash) created a transcript of the interviews published in a LetsTalkBitcoin podcast (@LetsTalkBitcoin) for those voting for candidates for the Individual Seat of Bitcoin Foundation board election.
- http://bitcoinmagazine.com/6823
- https://bitcoinfoundation.org/blog/?p=226
- http://bitcointalk.org/index.php?topic=255136.0 (Further discussion of the election)
Voting in the election runs until 11:59 pm PDT, September 08, 2013. A link that enables voting was sent to Bitcoin Foundation members via e-mail.
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bitcoin-blog1 reblogged
A new version of the Bitcoin-Qt and Bitcoind clients, v0.8.4, includes a fix for a bug that can be exploited as part of a denial-of-service attack against the Bitcoin network. Without this fix, Bitcoin-Qt/bitcoind nodes that receive a specific message that can cause the client to crash.
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A new version of the Bitcoin-Qt and Bitcoind clients, v0.8.3, includes a fix for a bug that can be exploited as part of a denial-of-service attack against the Bitcoin network. Without this fix, Bitcoin-Qt/bitcoind nodes that receive a specific over-size message can crash.
- http://bitcoin.org/en/release/v0.8.3
- http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.8.3
- http://bitcointalk.org/index.php?topic=242848.0
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Your Bitcoins Are Not Safe At Alt-coin Exchanges
While Bitcoin itself has no risk due to a catastrophic failure of an alternate crypto currency (alt-coin), those storing their bitcoins at an exchange where those alt-coins are traded are exposed to significiant risk.
Consider this scenario:
- Attacker sends large amounts of feathercoins to a digital currency exchange.
- At the same time the attacker (with more than 51% mining capacity for that alt-coin) begins mining but does not release the solved blocks. The rest of the network doesn't know a 51% attack is underway. Included in the attacker's first block is a double spend of the attacker's feathercoins sent to the exchange.
- Attacker waits for confirmation of those feathercoin deposits and then exchanges those feathercoins to bitcoins as well as litecoins, and whatever else is traded on the exchange -- and then the attacker withdraws those funds.
- Once those withdrawals have been processed (confirmed and possibly already mixed) the attacker releases the mined blocks. This results in a blockchain fork and the attacker's side is now the longest chain. All transactions in the attacker's side of the fork become valid with the rest of the network, and any transactions from the losing (orphaned) side of the fork that conflict (i.e., the ones sent to the exchange) are ignored as invalid.
The exchange did what it was asked. It allowed the trade of confirmed feathercoins for bitcoins and other alt-coins. But the exchange is now in trouble. The bitcoins and litecoins have already been withdrawn, but the exchange is now in debt a certain number of feathercoins to its customers. Their exchange E-Wallet accounts will show N feathercoins but the exchange no longer holds them in their physical wallet.
This would likely cause the exchange to become technically bankrupt (defined as having a sum total of liabilities greater than the sum total of assets).
In the wild, wild west of the unregulated digital currency realm there's no knowing how an exchange operator will respond to the exchange becoming technically bankrupt (whether due to a hack, a 51% attack, fiduciary mismanagement, etc.). Some exchanges keep operating (on a fractional reserve) without ever notifying their customers (creditors) that they are bankrupt. Others shut down and pay out "pennies on the dollar". Others will give preferential treatment to some creditors at the expense to others.
In nearly all instances, the exchange's customer with funds in an E-Wallet is simply a creditor to the exchange. An E-Wallet account is considered a current account with the exchange/financial company. If the organization goes bankrupt, those with any funds at the exchange simply have a claim against the assets of the exchange which include other customer's funds. The operator might try to "be fair" and return bitcoins from the E-Wallet to those having a bitcoin balance in their E-Wallet, or the operator might think fair is spreading the loss evenly to all, so losses from the feathercoin debt is shared by all customers. If bankruptcy law were to be applied, there is no preferential treatment for creditors, thus those with bitcoins would have no more of a claim against the exchange than would the feathercoin customer.
This means even if you never touched a feathercoin but had bitcoins at an exchange that trades them then in the event of the exchange suffering a loss to an alt-coin 51% attack your balance of bitcoins at the exchange is at risk. Your bitcoins at such an exchange have the same standing as every alt-coin, and even are no different from the company's other debts such as server hosting bills that are due, for instance.
The exchanges don't have their own money on the line, so if they are careless with their customer's money it doesn't hurt them (aside from business continuity and reputation should losses from an incident actually have a large impact on the organization). Exchanges make their money from trading activity and thus have more of an interest in gaining market share in the near term than protecting their customer's assets from an event that may not ever actually occur.
When Mt. Gox announced their intention to support trading of litecoins, a question about the risks due to a LItecoin 51% attack was asked. The response was that the concern would be considered and the support ticket status was changed to "closed".
Mt. Gox has delayed its introduction of a litecoin trading market but other exchanges such as VirCurEx and others do support trading of alt-coins today.
An exchange could implement and maintain contracts that would isolate funds (such as having a legal entity for trading the alt-coin be a different entity than the the trading of bitcoins) but at this time no alt-coin exchanges address the issue as far as how they would protect customer's funds in a bankruptcy or as the result of an attack.
The risk of losing bitcoins at these exchanges due to an alt-coin 51% attack are real. Please be aware of this risk when storing your bitcoins anywhere other than in a wallet that you control.
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Limitation On MSB Regulations For Infrequent Trading
[Update: The Legality of Over the Counter Bitcoin Trading in the U.S. article provides additional (and better) information than this post does.]
Thousands of individuals in the U.S. have offers to trade bitcoins through a number of online services include eBay, Craigslist, LocalBitcoins.com, the #bitcoin-otc marketplace, and more.
However, at the same time recent guidance from FinCEN (a department of the U.S. Treasury) states:
[A virtual currency] exchanger is an MSB under FinCEN's regulations [...]
The response to this guidance has been that many Bitcoin and digital currency exchanges have either shut down (or have been shut down), or they have since registered as an MSB and have implemented anti-money laundering (AML) and know-your-customer (KYC) compliance practices.
But what about these thousands of individuals in the U.S. who are buying bitcoins or cashing out their coins? Are they out of compliance with FinCEN's guidance?
After seeing trade offers on LocalBitcoins.com AML expert Carol Van Cleef, a partner at Patton Boggs, LLP, provided a warning:
You better get yourself registered, or you better get your name off the list real fast,
Is she right? Or could one ignore her advice?
The statement from the FinCEN guidance shown above also states:
unless a limitation to or exemption from the definition applies to the person.
A relevant section of FinCEN regulations describes a limitation that reads:
8) Limitation. For the purposes of this section, the term “money services business” shall not include: (iii) A natural person who engages in an activity identified in paragraphs (ff)(1) through (ff)(5) of this section on an infrequent basis and not for gain or profit.
Those regulations don't define the activity threshold for "infrequent" activity however a section on MSB compliance in an AML report from consultant McGladrey reads:
There are also exceptions for infrequent activity, which is defined as five times per year, [...]
So it would seem an individual person trading their own coins fives times a year or less, and exchanging them at the market exchange rate (i.e., not receiving a profit from a buyer paying a premium) would not be considered an MSB and thus not be burdened further with the MSB regulations.
This post is not providing legal advice. The author has no legal training and cannot provide advice on this topic. Individuals should seek legal counsel themselves should they have concerns about trading bitcoins.
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[Update: The Listen button for the audio player widget above isn't loading the audio file properly. Instead the episode's post on Capital Thinking has a flash-based audio player, or the MP3 can be downloaded directly.]
Online radio program Capital Thinking, hosted by Kevin O'Neill, interviews guest Carol Van Cleef for a conversation on the usage and implications of the digital currency Bitcoin.
Ms. Van Cleef is a Certified Anti-Money Laundering Specialist (CAMS) and licensed attorney and partner at law firm Patton Boggs, LLP. She frequently speaks on AML compliance-related issues.
- http://bit.ly/ZuduVe (mp3) Length: 30 minutes (unrelated topics follow the 30 minute mark).
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Gift Cards Serve As Bridge From Bitcoin For Retailers
While the list of methods for obtaining cash for bitcoins dwindles following recent regulatory actions that took out a number of digital currency exchanges another list is growing -- the list of retailers and online e-commerce stores whose gift cards can be purchased with bitcoins.
- Foodler accepts Bitcoin payment to buy Foodler Credits which then can be used instantly (via web or iPhone mobile) to purchase from over 12,000 restaurants in the U.S. - The exchange rate for purchasing Credits using Bitcoin is the current market exchange rate. There is even a FrequentFoodler loyalty program offered.
- Gyft is a mobile gift e-card mobile app and website which enables Bitcoins to be used for instantly purchasing e-cards that can be used at over 50,000 retail locations in the U.S. The list includes Brookstone, Lowe’s, GAP, Sephora, Gamestop, American Eagle, Nike, Marriott, Burger King and Fandango. - The exchange rate for purchasing e-cards using Bitcoin is the current market exchange rate. For those not using a smartphone the e-cards can be printed out and then scanned or entered by the clerk at the checkout counter. For those wishing for improved transaction privacy the Gyft website can be accessed using Tor. (Yes, this allows Gyft cards to be used anonymously, like cash).
- eGifter.com now accepts Bitcoin as payment for physical gift cards and e-gift cards.
- GiftCardZen now accepts Bitcoin as payment for physical gift cards and e-gift cards. They buy their inventory from gift card recipients who traded their cards in for cards from other retailers and can therefore sell them at a discount to the face value.
- GiftsForCoins.com accepts Bitcoin as payment for physical gift cards to retail merchants such as Best Buy and Home Depot, restaurants from Chilis to Del Taco, gas stations Chevron and Shell, and e-commerce site Dell. The exchange rate offered when paying with Bitcoin can vary from the market exchange rate depending on recent volatility but is oftentimes very close to the current market rate.
- GiftCardBTC.com sells Amazon gift e-cards with payment in Bitcoin. A premium is paid though as the exchange rate offered when paying with Bitcoin is about 5% below the current Bitcoin market exchange rate.
- BitcoinCodes sells Microsoft (XBox Live) Points, PSN value, Nintendo points, EVE Online, World of Warcraft (WoW) and more for Bitcoins.
- IcedMocha accepts Bitcoin payment for digital gift e-cards for Starbucks (UK only, for now).
- Lyoness sells physical gift cards for dozens of national brands in the U.S. and also sells mobile vouchers (e-cards) for instant payment at thousands of local retailers. The Lyoness brand offers merchant loyalty programs globally but the only path from Bitcoin to the gift cards is in the U.S. thanks to Dwolla, which is one of the methods to add funds to a Lyoness account. Bitcoins can be cashed out to USDs through Camp BX exchange and then withdrawn as Dwolla -- no bank account is needed. Registering for a Lyoness account requires a referrer, obtained either by visiting one of the Lyoness merchants designated as an SME Merchant or by requesting a referral from another Lyoness member such as Bitcoiner EndTheFed321. Full disclosure: Your referrer will receive cash back (commission) on each gift card you purchase from Lyoness.
- Individual retailers who already offer gift cards may accept Bitcoin as payment without formally offering it. Vancouver's Bestie Curryworks, for instance, will accept Bitcoin payment for its gift card made by customers who visit in-person but the payment method isn't offered through their website.
For online e-Commerce orders, another method becoming increasingly more popular is the payment service BitSpend.net which essentially places your order for you and then pays for the order with their own credit card (fee varies from $2 for orders $50 and under to $5 for orders over $250). A slightly similar service BTCInstant.com will let bitcoins purchase a Virtual Mastercard for use at the online merchant that you specify when placing the order (fee of $7.95 per card).
One of the benefits of purchasing a gift card denominated in fiat is that the card's purchasing power (in terms of dollars) then won't fluctuate. This allows a person who wishes to protect against any potential future drop in the Bitcoin exchange rate to lock in the purchasing power at a certain level even if the value on the card won't be spent until a later point in time.
With multiple inexpensive methods for cashing out bitcoins to gift cards there remain many ways in which no bank account is needed to be able to spend the value from your bitcoins.
Of course, it would be so much easier if more merchants were to simply begin accepting bitcoins for payment either directly or through a Bitcoin payment processor. That day will come, but the ability to exchange to gift card is a stopgap measure that is useful today.
[Update: Added eGifter.com in August, 2013]
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bitcoin-blog1 reblogged
In a post on BetaBeat by editor Jessica Roy (@JessicaKRoy) includes confirmation from Dwolla that funds held by Mt. Gox in the U.S. had been seized by the U.S. authorities. Excerpts:
“‘The Department of Homeland Security and U.S. District Court for the District of Maryland issued a ‘’Seizure Warrant’’ for the funds associated with Mutum Sigillium’s Dwolla account (a.k.a. Mt. Gox),’ [a representative from Dwolla] said. ‘Dwolla has ceased all account activities associated with Dwolla services for Mutum Sigillum.’”
[Note - Camp BX, based in the U.S., is the only other market exchange that allows accounts to be funded with Dwolla and performs withdrawal of USD balances to Dwolla. FastCash4Bitcoins performs cash-out service to Dwolla.]
- http://bit.ly/10wQRvI (Betabeat article) - http://i.imgur.com/soOTB5N.png (Dwolla notice received by Mt. Gox customer) - http://bitcointalk.org/index.php?topic=205370.0 (Further discussion on the development)
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Forbes writer, Kashmir Hill (@KashHill), invited Bitcoiners to join her for a dinner at Sake Zone in San Francisco to celebrate the conclusion of her Week Of Bitcoin series of posts. In her video she interviews some of those who joined her.
Length: ~4 minutes
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Released following the Bitcoin blockchain fork on March 11th 2013 was an updated v0.8 client (v0.8.1) that temporarily respects an undocumented limit found in all prior versions of the Bitcoin-Qt/bitcoind clients.
That temporary grace period ends and on May 15th 2013 (12:00 am / 00:00 UTC) any node that still hasn't been fixed to remove this limitation will eventually find itself rejecting valid blocks from the Bitcoin blockchain. It is possible that these unfixed nodes will see block confirmations but those blocks will not be part of the longest chain so it is critical that no commerce continue on or after May 15th using a node that hasn't been upgraded.
Release v0.8.1 of Bitcoin-Qt/bitcoind has been available since March 18th, 2013 and accommodates the May 15th 2013 hard fork properly. The fix has been backported to v0.7.3, v0.6.5, v0.5.8, and v0.4.9 clients as well.
- http://sourceforge.net/projects/bitcoin/files/Bitcoin/bitcoin-0.8.1 - http://bitcointalk.org/index.php?topic=199699.0 (Backports)
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