By Vancouver based Dutch Venture Capitalist Marc van der Chijs.
Bitcoin exchange/wallet/service provider Coinbase announced that it closed a $75 million round. Among all the major funding announcement of other tech companies $75M may not seem like a lot of money, but it’s actually quite significant. Not only is this a record funding for a Bitcoin company (one that puts total funding for Coinbase at $106 million), but even more important are the investors that put their money into Coinbase. They are not just venture capital funds, but for the first time also top financial institutions.
Among the investors in this round are the New York Stock Exchange, Spanish banking giant BBVA, US military insurance company USAA and Japanese telecom operator DoCoMo. Also the former CEOs of Citi and Thomson Reuters both invested privately in this round. I think this is a game changer for Bitcoin that shows that the crypto currency is no longer dismissed in the board rooms of the largest financial institutions in the world. Now that the first banks are on board the rest will have to take Bitcoin more serious as well.
Why would the NYSE invest in a Bitcoin exchange? I believe they want to better understand how the blockchain works and how they could potentially integrate it into their own systems. Investing in Coinbase will give them access to doing this with the market leader. NASDAQ was for a long time seen as more innovative by tech start-ups that wanted to list (that changed a bit after the Facebook IPO), but with this investment NYSE shows that they are not as traditional as many people used to think.
Having a mega bank like BBVA invest is also significant, because this is the first time that such a bank invests in a Bitcoin company. Banks actually have a lot to lose if they invest in Bitcoin technology: they make their money mainly through fractional reserve banking (basically creating new money) which is not possible on the blockchain, because you can see exactly where each Bitcoin is. The blockchain is the ledger that banks provide for their customers and many of the bank functions are not needed anymore if Bitcoin would start to take over the financial industry. I am aware that you can of course circumvent this by creating money through off-blockchain transactions, and that might happen eventually, but I don’t think that’s why they would invest.
Probably BBVA’s thinking is that it’s better to be the first to embrace Bitcoin banking than to be a follower. Now they are able to buy a share in the leading Bitcoin company in the world for what may turn out to be a low valuation. Normally a $75M round implies an approximate $400M valuation of the company, but if Coinbase would really become the first Bitcoin bank that’s peanuts (BBVA itself already has a $50+ billion valuation, 125 times that of Coinbase).
Many might not know this, but BBVA is a very innovative bank. Last year they bought Simple, a debit card ‘bank’ that was on its way to disrupt the banking industry. I loved Simple and was a bit disappointed that they sold out, but at least BBVA seems to be a good parent company (Simple is still around, but I have no idea how they are doing).
Having former Wall Street CEOs on board as investors may not seem to be a big thing. However, even though these guys don’t have the power anymore that they used to have, but they are still extremely well connected and will spread the word about Bitcoin in the right circles. The fact that they see Coinbase as an investment opportunity means they understand that the financial world is going to change.
I don’t think this is the last big Bitcoin funding announcement that we’ll see, it may actually open the floodgates for even bigger investments in companies like Circle, Bitpay or Blockchain. Or we may see more M&A activity in this field, with $75 million in the bank you can do some interesting acquisitions. Good times in Bitcoinland!
Repost from: http://www.marc.cn/2015/01/coinbase-75-million-round-is-a-game-changer.html
Coinbase announced that it has raised a serious $75 million growth round led by DFJ. Other participants include USAA Bank and NYSE, while existing investors including Andreessen Horowitz, Union Square Ventures, and Ribbit Capital also participated.
It’s the largest funding round to date for a Bitcoin-focused company, and comes amid the cryptocurrency’s recent slide to fresh lows. The currency is trading at around $212 today, down from above $1,000 more than a year ago.
“The timing reminds me of the post dot-com bust,” said CEO Brian Armstrong. “Google was started in 1998 and people were saying that the Internet bubble was over. But these massive companies get built over long time periods of time. It’s not really about the price. It’s about building something useful and I think people are missing the bigger picture.”
The company also attracted the participation of several Wall Street institutions including The New York Stock Exchange, which Armstrong touted as a sign of Bitcoin’s increasing legitimacy in the financial world. Former Citigroup CEO Vikram Pandit and former Thomson Reuters CEO Tom Glocer also made personal investments in the company. Armstrong said the company’s new strategic investors all put in at least $1 million.
While the bulk of transactions in the Coinbase network are still for day-trading and investment, a growing share is devoted to transactions for goods and services. Armstrong says the company tracks a metric called “non-trading transaction volume,” and it’s at least tripled over the past year to about 12 percent of all activity on the network. One of the things that has helped has been the growing number of merchants adopting Bitcoin like Expedia and Intuit. Now there are at least a dozen merchants doing over $1 billion in annual transactions accepting Bitcoin.
Armstrong said the funding will go toward building more of a mobile presence this year. He said that many would-be users of Bitcoin live in the developing world, where mobile access to services is much more paramount. Currently, Coinbase is available in 19 countries and Armstrong would like the company to reach 30 by the end of the year.
They also want to build out the developer platform; the company already has the most popular API for Bitcoin available and there are a handful of services like peer-to-peer lender BTCJam, which have broken out.
The company currently has 56 full-time employees.
IBM has unveiled its proof of concept for ADEPT, a system developed in partnership with Samsung that uses elements of bitcoin’s underlying design to build a distributed network of devices – a decentralized Internet of Things.
The ADEPT concept, or Autonomous Decentralized Peer-to-Peer Telemetry, taps blockchains to provide the backbone of the system, utilizing a mix of proof-of-work and proof-of-stake to secure transactions.
IBM and Samsung chose three protocols – BitTorrent (file sharing), Ethereum (smart contracts) and TeleHash (peer-to-peer messaging) – to underpin the ADEPT concept. ADEPT was formally unveiled at CES 2015 in Las Vegas.
According to the draft paper, blockchains deployed within the ADEPT system would serve as a ledger of existence for billions of devices that would autonomously broadcast transactions between peers in a three-tier system of peer devices and architecture. By using an implementation of the bitcoin protocol, ADEPT could serve as a bridge between many devices at low cost.
“Applying the blockchain concept to the world of [Internet of Things] offers fascinating possibilities. Right from the time a product completes final assembly, it can be registered by the manufacturer into a universal blockchain representing its beginning of life. Once sold, a dealer or end customer can register it to a regional blockchain (a community, city or state).”
Blockchains in the homeIBM and Samsung envision networks of devices that are capable of autonomously maintaining themselves. In theory, the paper states, appliances in the home would be able to signal operational problems and retrieve software updates on their own. Devices could also use ADEPT to communicate with other nearby devices in order to facilitate power bartering and energy efficiency.
The authors explain:
“We demonstrate how, using ADEPT, a humble washer can become a semi-autonomous device capable of managing its own consumables supply, performing self-service and maintenance, and even negotiating with other peer devices both in the home and outside to optimize its environment.”
“All this is achieved without a central controller orchestrating or mediating between these devices,” the paper adds.
According to the paper, a Samsung W9000 washing machine reconfigured to work within the ADEPT system uses smart contracts to issue commands to a detergent retailer in order to receive new supplies. These contracts give the device the ability to pay for the order itself and later receive word from the retailer that the detergent has been paid for and shipped.
This information would be broadcast to the smartphone of the washer’s owner, a device that would also be connected to that home’s network.
This is a repost from http://www.wired.com/2015/01/block-chain-2-0 approved by the author: Kariappa Bheemaiah, Quantitative Research Analyst at Grenoble Ecole de Management.
From 2008 to date, no other technology has been the subject of such fervent debate. Irrespective of your opinion, the rise in popularity of cryptocurrencies cannot be ignored. Today, there are a number of billion dollar businesses that accept Bitcoin as a form of payment. These include Dell, Reddit, Expedia, PayPal, and most recently, Microsoft. So for the uninitiated who have not yet grasped what Bitcoin and other cryptocurrencies are, you ought to catch up. This is not something that should be ignored and there is a vast array of resources that explain the concept. In this post I’ll try to make sense of the Block Chain Protocol and the emerging ecosystem that is growing on it.Elements of Protocol Commonality: TCP/IP and the Block ChainIn December 1974, Vint Cerf and Robert Kahn designed something revolutionary: the TCP/IP Internet network protocol.
A protocol is like manners. When we say “Thank you’ to someone, the normal response we expect to hear is “You’re welcome.” There is no actual rule that states that someone has to do this. But it remains a formal protocol of communication that is commonly followed.
In a similar way, TCP/IP was first developed as a way for any computer to connect and communicate with the ARPANET. Since then, the project mutated exponentially to allow any computer to communicate with any other computer, finally metamorphosing today into the Internet of Everything.
But the base technologies have remained unchanged. The IP address still acts like a unique postal address that enables any phone, tablet or computer to identify itself on the internet, while the TCP technology guarantees delivery of the data packets by dividing them into segments. TCP and IP are used in conjunction to increase the probability of the data packet to get from origin to destination.
Leveraging on this mode of functioning, Tim Berners-Lee created the Hyper Text Transfer Protocol or HTTP, which became a way for Web browsers to communicate with Web Servers. Today, along with HTTP, a whole suite of protocols like DNS and ARP, work together to provide us with the network experience we are used to. Email, Search Engines, Web pages, API’s and other Internet Services (SaaS, PaaS, IaaS) are all products that have evolved on this framework giving us today’s digital economy.
Just as the TCP/IP-based internet led to a revolution in the way businesses functioned, the Block Chain protocol is repeating the same process all over again. Pundits even go so far as to say it is like watching the birth of the internet all over again.
So how does this all work? A Bitcoin network is a decentralized network. Hence, every time a transaction occurs between the members of this network, it needs to be verified and validated so as to ensure that every transaction occurring within the network is between two individual accounts and that there is no risk of double spending.
This process of verification is carried out by some members of the network called miners. The miners use specialized and easily available software along with the processing power of their computers to verify the transactions. This sounds simple enough, but the processing power required to do so is quite herculean. And since the miners are using their bandwidth and electricity to do the verification process, they need to be compensated.
This is where the Block Chain begin to take shape. Every few minutes a ‘block’ of all the transactions occurring over the Bitcoin network is created by a miner. Essentially the miner has created a verified transaction file which holds a copied record of all the transactions that have occurred in the network over the past 10 minutes. The word to highlight here is verified. The miner uses the computational power of his computer to assure all members of the network that each transaction is between 2 parties only and that there is no problem of double spending.
For his efforts, the miner is compensated in Bitcoins. This is where the math’s of the currency and the way that it differs from the normal fractional banking system kicks in. The total amount of Bitcoins that can ever exist is fixed at 21 million. As the quantity of money is fixed, the payment made to the miner is much like mining currency out of a reservoir.
As each transaction in every block is made at a specific time, each block is linked to the previous block of transactions. By grouping these blocks we get what is referred to as the Block Chain. And since this grouping of blocks occurs as per the protocol dictated by the algorithm underpinning the creation of Bitcoins, this protocol is defined as the Block Chain protocol.
This is where the TCP/IP and Block Chain protocols differ: TCP/IP is a COMMUNICATIONS protocol, whilst the Block Chain is a VALUE-EXCHANGE protocol.
Bitcoin, Altcoin, Dodgecoin… Who Cares? Only the Block Chain MattersSince Satoshi’s White paper came online, other cryptocurrenies have proliferated the market. But irrespective of the currency and the frequently debated deflation issues, the underlying Block Chain protocol and the distributed computing architecture used to achieve its value remain the same.
Just as the open communications protocol created profitable business services by catapulting innovation, the Block-chain protocol offers a similar foundation on which businesses can create value-added chains. Using the integrity lattice of the transactions, a whole suite of value trading innovations are beginning to enter the market.
The payments systems used today were designed in the 1950’s and there’s a fixed minimum cost for every transaction. As a result sending small payments of say, $5, is not feasible using this system. (Although companies like DWOLLA have begun offering such services). The reason this hasn’t changed is quite simple; Remittances in 2013 were made at an average rate of 8.9% resulting in $48 billion in revenue. That’s a tidy revenue stream.
Just as TCP/IP allowed information to be transmitted instantly, today, the Block Chain Protocol allows the instant transfer of value irrespective of size. One company that is making use of this concept is ChangeCoin.
ChangeCoin offers a micropayment Infrastructure for the Web. Say you read an article on a popular website, but the freemium version only lets you read quarter of the article and requires a minimum subscription to access the entire article. With micropayments, the user can now pay just a few cents to read the entire article without engaging in an à la carte form of subscription. A good way forward based on this concept would be to cable TV subscriptions, where consumers can pay for the 4 or 5 channels that they regularly watch rather than paying for a suite of 200. Another application is for WiFi hotspots where users pay exactly their data consumption. A user could pre-allocate a connectivity budget and micropayment software could take care of paying for the data connection with no user intervention.
ChangeCoin has also created a boon for content creators and bloggers in the form of ChangeTip. Consumers can now use Bitcoin to tip a content creator with a small sum (even 5 cents) instead of just liking an article. Not only is this an innovative way to show appreciation but it will change the business model of content creation and curation.
Block Chain APIs
Companies such as CHAIN, now allow developers to build API’s on the Block Chain Protocol such as:API’s to allocate digital resources such as energy, bandwidth, storage, and computation to the connected devices / services that need them.Eg; FileCoinAPI’s for Oculus Rift- With access to the virtual world now becoming TROM-esque, developers are looking at creating API’s that can be used in the virtual space to make transactions, blurring the lines between virtual and real economies.Micropayment API’s tailored to the type of transaction being undertaken. i.e: Tipping a blog versus Tipping a car share driver. Very useful in a shared economy where consumers increasingly become prosumers.
Smart Contracts and Programmable Money
This relatively new concept involves the development of programs that can be entrusted with money. Smart contracts are programs that encode certain conditions and outcomes. When a transaction between 2 parties occurs, the program can verify if the product/service has been sent by the supplier. Only after verification is the sum transmitted to the suppliers account. By developing ready to use programs that function on predetermined conditions between the supplier and the client, smart programs ensure a secure escrow service in real time at near zero marginal cost. One company that is making dramatic foray here is Codius which offers an ecosystem for Smart Contracts.
Apart from Financial transactions, smart contracts are now entering the Legal System. Companies like Empowered Law use the public distributed ledger of transactions that makes up the Block Chain to provide Multi-Signature account services for asset protection, estate planning, dispute resolution, leasing and corporate governance. A prime example of this transition is seen ins a procedure referred to as ‘Coloring’ a Coin, in which a house can be sold in the form of a Bitcoin payment with the same ease and speed.
Digital Assets and Smart Property
Building up on colored coins, digital assets are assets whose ownership is recorded digitally. Bitcoins are of digital assets, but since the Block Chain is a decentralized asset registry, it can also be used to register ownership and transfer of any digital asset besides bitcoins. In this way, a digital bond could pay coupons and redeem the principal to the address holding the digital bond, without the need of custodians.
Taking this concept one step further is in the form of Smart Properties. A Smart Property is a property that has access to the Block Chain, and can take actions based on the information published there. Another way to look at it is that smart property can be controlled via the Block Chain. Eg: A car whose ownership is represented by a digital asset in the Block Chain. The physical car is connected to the internet and can read the Block Chain. Therefore it can keep track of the status of the digital asset representing it. As the digital asset is transferred from one address to another, the physical car can see this status update in the Block Chain and take necessary actions, i.e. change its owner… It’s a way of Automating the Internet of Everything.What to Keep Your Eyes Peeled For in 2015Ethereum and the MIST browser – Ethereum intends to bring together both a crypto ledger and a Turing-complete programming language, which is a language can be used to simulate any other computer language (not just its own). They intend to make a browser that is a Swiss-army knife of Block Chain and encryption tools that allow non-technical users to truly leverage the web.
Parallel block chains and side chains – Some developers have begun looking at the creation of different Block Chains as they do not believe on depending on a single Block Chain. Parallel Block Chains and Side Chains allow for tradeoffs and improved scalability using alternative, completely independent Block Chains thus allowing for more innovation.
The Philippines intends to put its Peso put on the block chain – Just as Africa leapfrogged wired telecommunications and skipped right to wireless, the Philippines intends to improve its financial services by integrating the Peso to the Block Chain. A dramatic initiative.
In Dec 2014, Don Tapscott, a leading authority on technology and innovation as well as a LinkedIn Influencer, did something characteristic of great men. He admitted he was wrong, noting: “Bitcoin… I used to think it would never fly. Now I think not only will it fly as a currency, but the underlying Block Chain technology of crypto currencies is a core part of the next generation of the internet that is radically going to transform not just commerce and the nature of the corporation, but many of our institutions in society and everyone needs to pay attention to this.”
For those who remain apprehensive, this could be partly due to my poor scribbling’s. But could it also be our innate resistance to change? After all, to quote Thomas R. Lounsbury: “We must view with profound respect the infinite capacity of the human mind to resist the introduction of useful knowledge.”
Representative Kimi Cojuangco, a member of the Filipino House of Representatives, is pushing for an “e-Peso,” the Phil Star reports. House Bill 4914 would create the “e-Peso” as an online medium of exchange for Filipinos. The proposed bill would have the Filipino Central Bank research Bitcoin and other cryptocurrencies and decide what the best course of action would be. The e-Peso would be officially granted electronic legal tender status, according to Cojuangco:
What exists is a patchwork of methods using traditional credit systems, which act in place of money on the Internet. The E-peso is the electronic equivalent to the paper peso.
Central Bank of Philippines Will Research Bitcoin and Cryptocurrency
The bill mandates that the Filipino Central Bank, Bangko Sentral ng Pilipinas (BSP), study the technology of Bitcoin and “post Bitcoin cryptocurrencies.” According to the bill:
The BSP will also choose a system that uses peer to peer processing of the log chain and shall exert its utmost to leverage existing hardware being used by the other leading cryptocurrencies such as bitcoin.
‘Existing hardware’ is an interesting term. As most Bitcoin enthusiasts, but few average folk, know, the Bitcoin network is currently being secured by expensive, energy consuming, Bitcoin ASIC miners. It has been this way for years now and many cryptocurrency experts agree that perhaps there is a more efficient way to achieve consensus than PoW. In contrast, the existing hardware that hosts Bitcoin nodes, or stakes post Bitcoin cryptocurrencies that use PoS, is a simple computer. It seems that the bill author was referring to regular computers, not ASICs, when referring to existing hardware. The Bill would mandate that every bank branch feature a computer that has the technical specifications to be used as a “local peer.” Given the current wording of the bill, it is not clear whether the e-Peso will be centralized or decentralized. It is possible that the Filipino government is seeking to create something that is distributed, at the very least. Though, the access to the e-Peso network is going to be limited to bank branches.
E-Peso Distribution Schedule
The bill plans to release an amount of e-Peso equal to 1% of the total supply of Philippine currency in circulation within one year. Additionally, the bill proposes that the amount of e-Peso in circulation should not ever exceed 1P million within the first two years.
Bitcoin can be accepted and used for transactions in the US state of California as of yesterday, following the ratification of a new finance bill. Previously, only US Dollars were officially recognized, but the new bill allows for the use of other national and digital currencies.
Among a raft of new legislation coming into force for 2015 in California is the bill AB129 passed by Governor Jerry Brown in mid-2014. Aimed at ending a prohibition against using any alternative to US dollars for commerce in the state, the bill recognizes and permits the use of alternate currencies for transactions, including digital currencies such as Bitcoin, at the legislative level.
This newly accepting stance makes California one of the more Bitcoin friendly states in a country where political opinion about the rise of digital currencies is heavily polarized. New York made headlines in July 2014 when its plans for far-reaching legislation around the control and monitoring of Bitcoin companies caused outrage in the digital currency and startup communities. Often termed the ‘BitLicense,’ the measures were aimed at making the decentralized, often-anonymous world of Bitcoin into a financial market more similar to the established financial market, through increased record keeping and registration hurdles around all transactions.
Bitcoin developer Mike Hearn, who also spoke at the Dutch National Bitcoin Conference takes a look at how bitcoin’s technology has advanced this year and predicts where things will go in 2015.
Originally published at: http://www.coindesk.com/mike-hearn-bitcoins-technology-advanced-2014/
In just a few days, bitcoin will have been in development for six years.
For those of us who watched it grow from a humble Windows-only desktop application to today’s global infrastructure, bitcoin’s technology is simultaneously astonishing and frustrating. We marvel at how far it’s come, and yet are impatient with how far it still has to go.
Most media stories reviewing bitcoin’s 2014 focus exclusively on the price. So, instead, let’s take a look at what we achieved as a community this year, and take a look ahead at where things might go in 2015.Nailing the basicsBitcoin 0.1 was a prototype designed to show Satoshi’s new algorithm could work. It didn’t have any security features, there wasn’t any convenient way to back up your wallet and, even though preventing double spends was fundamental to what bitcoin did, the app wouldn’t actually tell you if a double spend had occurred.
A lot of the time since has been spent on making the basics of being your own bank easy and safe. An attack on the peer-to-peer network in February prompted wallet developers to upgrade their support for showing double spends in their user interfaces.
Mainstream wallets signiﬁcantly reduced the quantity of random numbers they need – although this change may seem obscure, such wallets are easier to back up, safer and tend to give users better privacy.
This year also saw massive progress on one of the most pressing issues facing bitcoin technology: security. Seeds planted in previous years started to bear fruit.
SatoshiLabs successfully launched the ambitious Trezor project, bringing better-than-banking-grade security to bitcoiners who are willing to buy the keyring-attachable device. Wider support from more wallet apps should arrive in 2015.
Bitpay’s Copay project developed a multisig wallet for desktop, web and mobile that supports money controlled by social groups, like a board of directors, or parties in a dispute mediated transaction.
And a new wallet simply called Bitcoin Authenticator entered developer testing; it provides decentralised two-factor authentication between desktops/laptops and Android smartphones.Reinforcing the coreOne theme I’ve talked about constantly in the last 18 months was the lack of resources being put into development of Bitcoin Core, and shared infrastructure more generally. Luckily the community rallied around, and in 2014 things got signiﬁcantly better.
The Bitcoin Foundation announced a pivot towards core development and hired two extra developers who now handle the daily tasks of running the Core project. This allows Gavin Andresen to focus on longer-term planning and research.
The foundation is funding Sergio Damien Lerner to do security audits, Saïvann Carignan to continue his independent development of bitcoin.org and Addy Yeow to run a network metrics service. And most of the remaining core developers who weren’t already working on bitcoin full time joined Blockstream, a company that raised $21 million from investors with an explicit mandate to focus on building the ecosystem and infrastructure.
At the start of 2014, our problem was that we were running a multi-billion dollar ﬁnancial infrastructure on top of software that had fewer full time developers than Google’s April Fool jokes. The Foundation was (very reasonably) splitting its effort between development and defending bitcoin in Washington. At the end of 2014, there are now dedicated groups lobbying for us all around the world, and all the people who worked on the protocol and software in previous years can keep doing so.
Our challenge now is using our newfound resources wisely. Most Silicon Valley companies have product managers: people who tell the developers what to do and (in theory) ensure they focus on the real needs of real users instead of things that are fun to implement. Bitcoin doesn’t have anything like that – so we’ll have to make sure we stay focused on mainstream success ourselves.Getting ready for a great 2015Bitcoin is a long-term project, so the theme of plans being laid years in advance is common. What might we see next year? Here are a few things already in development that I’m hoping to see in the next 12 months (though I can offer no guarantees):
New cross-platform and decentralised wallets
• Bitcoin Authenticator with Android-based two-factor authentication
• MultiBit HD, the followup to the popular MultiBit Classic. A new UI, wallet words, Trezor support and fully deterministic.A better core protocol: more scalable and with the annoying malleability quirks ﬁnally removed.StrawPay, a new ‘hub and spoke’ method of routing micropayments that builds on the payment channel implementation work done in 2013 by myself and Matt Corallo. Payment channel networks provide a way to rapidly route tiny micropayments around in a fast and secure way that is off the blockchain, but still uses the bitcoin protocol.… and ﬁnally, of course, the launch of my own project for the last eight months: Lighthouse, an open-source app for all-or-nothing bitcoin crowdfunding.
Ultimately, people will buy bitcoins for the useful things they can do. If the last ﬁve years were about putting the basics in place, let’s make the next ﬁve about solving real problems for the person on the street.
Global computing giant Microsoft has added bitcoin as a payment option for a variety of digital content across its online platforms.
According to the company’s payments information page, US-based customers can now use bitcoin to add money to their accounts, which can then be used to purchase content like apps, games and videos from its Windows, Windows Phone and Xbox platforms.
The surprise announcement, which is the result of an integration with Georgia-based bitcoin processor BitPay, adds yet another major tech player to the bitcoin ecosystem – Microsoft boasts a market cap of more than $380bn and annual revenue in excess of $86.8bn in 2014.
By Coindesk: Last month, the United Kingdom parliament debated an arcane topic that hasn’t been raised in the legislative chamber in 170 years: money creation.
The last time the subject was discussed in the House of Commons was when the Bank Charter Act of 1844 was passed. That historic act put an end to British commercial banks’ ability to issue banknotes, transferring those powers exclusively to the Bank of England.
The member of parliament who revived the topic in the House was Steve Baker, who was recently elected to a seat on the Treasury Select Committee. The committee is responsible for scrutinising the Treasury, the Bank of England, the tax authority and the financial regulator.
Bitcoin believers who heard the debate would have been pleased to discover that Baker is also a bitcoin user. During the debate, the MP called on the government to move away from creating new regulations specifically for alternative currencies, including bitcoin. Instead, he said, the state should do everything possible to regulate bitcoin under ordinary commercial law.
Speaking to CoinDesk exclusively at the House of Commons, Baker explained his view, conceding that it was a strong position for a politician to adopt.
“Bitcoin should be regulated by the ordinary commercial business laws with no additional regulation. It is a big ask. It is saying to people, you can buy bitcoin, but don’t come running to us if the exchange does down or you lost your wallet [private key].”
Read the full story:
http://www.coindesk.com/uk-treasury-committee-mp-bitcoin-doesnt-need-new-laws/The less intervention the betterFor Baker, the less government intervention in the digital currency world, the better. Bureaucratic attempts to invent a new regulatory framework for bitcoin would only stifle entrepreneurialism and innovation, he said, adding:
“The government should get out of the way of innovation – as long as it is lawful.”
In Baker’s view, the UK government has already been largely supportive of bitcoin. He pointed to the Bank of England’s recent research into cryptocurrencies and the Treasury’s public call for information about digital currencies as evidence of this.
“It is a remarkable fact that the UK Treasury is interested in cryptocurrencies at all,” he said.
When asked if UK banks should adopt a more open posture towards dealing with bitcoin businesses, however, Baker declined to take a stronger stand.
“The actual risk [for banks] is regulatory, not commercial … I would not presume to tell the banks how to cope with regulatory risk. I would just implore the government to create conditions that minimise that risk,” he said.
Baker believes consumers should be allowed to use digital currencies without being encumbered by a new set of laws.
“I’m a great believer in personal responsibility. I would say cryptocurrencies right now are accessible to a tiny portion of the population who are both technically competent and sufficiently willing to take risks and so forth.”
Three Dutch banks have announced that they are experimenting with blockchain technology as a way of improving their payments systems.
That ING, ABN Amro and Rabobank are all testing the technology was aired last Monday in a segment on the Netherland’s popular RTL evening news.
ING’s global head of transaction services Mark Buitenhek (pictured) told RTN that his bank has been improving on technology that was built in the ’70s and ’80s, explaining:
“We have improved the speed of transactions since then, up to where we are today,” he said. “As such, we are always looking out for the latest technological breakthroughs to improve this even further. This is why ING is testing blockchain technology.”
“By using bitcoin technology, banks might be able to update customer accounts within seconds. The question now is whether this would indeed be possible, and if so, at what risks. Apart from the functionality, our focus will always be on security as well.”
Menno van Leeuwen, the team leader at the bank’s Innovation Centre, was quoted as saying: “Banks are faced with competitors from outside of the traditional financial sector, who come up with new solutions. If we ignore these developments, that might lead to surprises, which is undesirable … As banks, we have a lot experience in the field of providing customers with security, and we’re currently testing the combination with bitcoin.”
RTL confirmed that Rabobank is testing blockchain technology, including bitcoin, although a spokesperson told CoinDesk that the bank is not interested in using bitcoin directly – either its currency or network – but is interested in researching how the technology works.
Additionally, at SWIFT’s InnoTRIBE conference (see a video), a Rabobank official stated that the institution is also experimenting with the Ripple payments network.
Limited Central Bank Approval:
While reaffirming the DNB’s stance on bitcoin, central bank spokesman Martijn Pols indicated it does approve of experimentation with blockchain technology.
“We are not in charge of everything banks do, and we are happy to let them experiment with any technology that might innovate their payment services,” he said. “Dutch banks are allowed to learn from bitcoin, are free to experiment with blockchain technology and are even encouraged to integrate similar technologies into their own payment services.”