http://www.bitcoinbulls.net//2021-04-11T20:55:59-04:00David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//understanding-bitcoin-wallets/2016-05-12T00:00:00-04:002016-05-12T00:00:00-04:00Understanding Bitcoin Wallets<p>For a lot of people who are just getting into Bitcoin, the idea of wallets sounds a little bit confusing. After all, the whole idea of Bitcoin is to take advantage of a currency that’s not stored or traded in a physical sense, but instead exists only in a digital sense. Many might simply imagine Bitcoin as something of an online bank account facilitating digital transactions similar to when you input your credit card information to allow a money withdrawal while online shopping.</p>
<p>In practice that’s not unlike what happens when a Bitcoin transaction is made. However, storage is not as simple as having a single overarching account. Rather, it comes down to using a Bitcoin wallet, and where those are concerned there are a lot of details to learn and understand.</p>
<p>##What Are Bitcoin Wallets?</p>
<p>To some extent I’ve covered this by saying that a Bitcoin wallet is not unlike a bank account, at least in its functionality. But <a href="https://www.gambling.com/bitcoin-gambling/knowledge/an-overview-of-bitcoin-wallet-options-38600">Gambling.com</a> provides one of the more comprehensive definitions of Bitcoin wallets by explaining that they let users receive, store, and send Bitcoins to other parties, and do so by operating on several platforms. The definition goes on to explain that there are two main types of Bitcoin wallets available (though within these types there are a lot of independent options). The first type is a software wallet, which is essentially a program you can use on a computer or mobile device, providing ease of use but, some worry, a little less security. The second type is a hardware wallet, which is typically a USB device that contains the access keys you need to spend the Bitcoins you have.</p>
<p>There is actually a third type as well, commonly called a paper wallet, and essentially consisting of actual slips of paper with your address and private key printed on them (so that they’re not exposed digitally anywhere). However, it’s primarily different types of software and hardware wallets that dominate the market. And ultimately, they all work the same. Bitcoin wallets don’t so much store your actual Bitcoin as store the address and code you need to access and use it.</p>
<p>##Are Wallets Safe & Secure?</p>
<p>This is really up to each individual Bitcoin user to decide, as we all have different needs and perceptions regarding security. Speaking broadly, however, there is a great deal of security and anonymity to enjoy using Bitcoin wallets. <a href="http://www.coindesk.com/information/how-to-store-your-bitcoins/">Coindesk.com</a> delved into these issues, asking if Bitcoin wallets are safe, if they’re anonymous, and how they can best be secured. In a way, the answer to each question depends on user activity.</p>
<p>Bitcoin wallets keep your money safe in that they protect your Bitcoin stash absolutely, so long as you don’t lose your private key and address. They’re anonymous insofar as certain software apps have been designed to allow users as high a degree of anonymity as they choose (though with all Bitcoin transactions the amount exchanged is logged publicly, and your identity is not). And they’re secure if you want them to be, in that you can back them up, encrypt them, or avoid software connections altogether and trust yourself with a hardware or paper wallet. <br /></p>
<p>##What Are The Best Wallets?</p>
<p>As stated, we all have different needs and perceptions about security when it comes to finances, so declaring a best Bitcoin wallet would be entirely subjective. There are some that may seem more reliable than others simply because of which company designed them or how actively used they are, but there are none that are definitively “better” than the competition.</p>
<p>That said, there are plenty of choices to look through if you’re considering getting into Bitcoin and wondering about your wallet solutions. Toward the end of last year, <a href="http://www.newsbtc.com/2015/11/30/most-secure-bitcoin-wallets-2016/">NewsBTC</a> took a look ahead at the top options for 2016, and pointed out three in particular that tend to check off a lot of the boxes people are looking for (Carbon Wallet, Armory, and Mycelium). Other similar lists point to dozens more worth considering. The best way to choose a wallet is to make sure you have a firm grasp on the function of a wallet and then spend some time researching to see which one best addresses that function from your own perspective.</p>
<p>That covers some of the basics of Bitcoin wallets. It’s a strange technology to a lot of new users, and it can’t fully be understood until you’re engaging with one yourself. But the wallets aren’t actually that complicated once you start using them.</p>
John Woodardhttps://plus.google.com/http://www.bitcoinbulls.net//magnr-review-a-bitcoin-savings-account/2016-01-31T00:00:00-05:002016-01-31T00:00:00-05:00Magnr Review: A Bitcoin Savings Account<p>Since I was in the 7th grade I’ve been dreaming of passive income. Back then I didn’t know about the many investment vehicles available.</p>
<p>However I did know every time I went to the bank, the teller would write in my bankbook the few dollars of interest I’d earned since my last visit.</p>
<p>I thought it was the coolest thing and my dream of earning passive income was to have $1,000,000 in the bank earning 6% interest. I liked that :)</p>
<p>I realize now that 6% from savings accounts is unrealistic, but hey I was in the 7th grade :)</p>
<p>Fast forward to today, I’m excited about Magnr! They pay interest on a currency with no inflation, they have slick software, and great reporting!</p>
<blockquote>
<p>Magnr is breaking down barriers to the world of banking. We are making it simple, affordable and accessible to anyone, anywhere. With Bitcoin Investments we can help people achieve their financial freedom and build thriving communities. <a href="http://ctt.ec/34SME">Tweet this</a></p>
</blockquote>
<p>After getting my own bank account in 2000 I’ve seen interest rates on savings deposits drop and drop - and when I didn’t think they could drop any further they have been near 0% for the past 5 years or so.</p>
<p>Factoring inflation in and I’ve felt pressure for a long time to have my money in higher-risk higher-reward investments.</p>
<p>Investments that seem passive often have work attached. Renting houses, selecting stocks, investing in businesses, etc.</p>
<p>One of the nice features about savings accounts is their simplicity. You put money in and you make a return on that money, even if you are relaxing.</p>
<p><img src="/images/posts/2016-01-31-magnr-review-a-bitcoin-savings-account/relaxing.jpg" alt="Earning money while relaxing" title="Earning money while relaxing" /></p>
<p>When I decided to passively invest bitcoin to earn bitcoin, <a href="https://magnr.com/learn-more-savings">Magnr Savings Accounts</a> were the type of service I had in mind.</p>
<p>For investors looking for a passive non-volatile, relatively low-risk bitcoin investment option, Magnr is ideal.</p>
<p>Magnr is 100% passive and I trust the team running Magnr. If they were an insured institution I would probably have 100 BTC (their limit) on deposit with them.</p>
<p>##100% Passive</p>
<p>Magnr works like a bank savings account. Investors deposit bitcoin and earn interest monthly.</p>
<p>Interest is paid on the first of the month and bitcoins can be withdrawn at any time.</p>
<p>##Trust</p>
<p>I trust the Magnr team.</p>
<p>They have been operating since 2013, formerly as btc.sx. Their investors at <a href="http://coinsilium.com/">Coinsilium</a> are great guys who I met in Singapore in 2014. I’ve also <a href="/what-will-trigger-a-bitcoin-investment-surge.html">hung out with George Samman</a>, one of the btc.sx founders.</p>
<p><a href="https://magnr.com/secure-storage">Magnr is secured</a> with BitGo Multi-Sig technology and they manually review all withdrawal attempts. They have full reserve, perform transaction audits.</p>
<p>Since opening in 2013, Magnr has never lost a single satoshi of any customer funds.</p>
<p>After the Mt. Gox collapse Magnr voluntarily assumed the losses and refunded customer deposits.</p>
<p>Magnr takes their fiduciary responsibility to their customers seriously.</p>
<h2 id="software">Software</h2>
<p>The Magnr team did a great job on their software.</p>
<p>I have 0 complaints in that department.</p>
<p>The site is fast, supports two-factor authentication, and has an easy to use captcha.</p>
<p>Magnr also has clear reporting making it easy for me to see how my investment is performing. Reporting sounds like basic functionality. I’ve learned I get cranky when investment products have <a href="/bitfinex-pays-bitcoin-interest.html#bitfinex-was-a-bad-experience">confusing reports</a>.</p>
<p>##How Can Magnr Pay Interest?</p>
<p>Magnr borrows bitcoin from lenders so they can lend it to short sellers. When investors borrow this is called <a href="http://www.investopedia.com/terms/m/margin.asp">margin trading</a>.</p>
<p>Magnr currently offers 2% as a fixed rate of interest (2.35%) until June of 2016 when the rate will begin floating.</p>
<p>The rate calculation when it floats will be: the fees Magnr gets from lending the bitcoin - their profit margin = the rate they pay savings account customers.</p>
<p>Some bitcoin investors <a href="https://www.reddit.com/r/Bitcoin/comments/2u2hze/bitcoin_lending_price_drops_and_a_little/">claim lending is a bad idea</a> because lending to short sellers depresses the price of bitcoin.</p>
<p>Margin trading has even caused flash crashes in the past.</p>
<p>I believe in free markets and think lending is OK.</p>
<h2 id="less-than-2-btc-invested-wtf">Less than 2 BTC invested, WTF?</h2>
<p>Everything sounds great right? This is the service I imagined when I started investing right? Sit on a beach somewhere and let the coins roll in right?</p>
<p>There is one area of concern and it is a big one - Magnr isn’t insured.</p>
<p>Every company in the bitcoin space is under attack by hackers, thieves, and fraudsters.</p>
<p>Some companies like Mt. Gox and Cryptsy have been wiped out by hackers.</p>
<p>Other companies like BitPay and Coinbase have <a href="http://www.coindesk.com/bitpay-sues-insurer-after-losing-1-8-million-in-phishing-attack/">survived thefts</a>. They do this through a combination of secure engineering, keeping customers unaffected by losses, and being insured.</p>
<p>Insurance is the key missing ingredient from Magnr. With our bitcoins insured we could sleep easy while having large amounts of bitcoin on deposit.</p>
<p>Unfortunately there are no offerings currently available allowing bitcoin investors to earn interest while having our funds insured.</p>
<p>This means if we want to earn interest we have to take on added risks.</p>
<p>At 2% it will take 34 years to double my investment.</p>
<p>So I ask myself - do I think it is more likely I’ll double my investment or the investment will go to 0 in 34 years?</p>
<p>Based on bitcoin companies history of difficulty in holding other people’s bitcoin I think it is more likely I’ll lose my investment due to theft / hack / fraud / etc.</p>
<p>This means I’ll put a small amount of bitcoin into Magnr. To put more in I would need to see a higher return to offset the absence of insurance.</p>
<h2 id="why-put-any-in-at-all">Why put any in at all?</h2>
<p>I think it is important to support early companies in the space. That shows demand for the service, helps me learn, and helps other people learn from my experiences.</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//instructional-guide-buying-bitcoins-bitcoin-investing-bit-coin-prices-values/2015-10-13T00:00:00-04:002015-10-13T00:00:00-04:00Buying Bitcoins: A Step-by-Step guide to Understanding Bitcoin Investing, Bit Coin Prices and Values.<p>Buying bitcoin has been one of the best decisions I’ve made in my life.</p>
<p>Bitcoin has opened my mind up to new ideas, I’ve met tons of <a href="/satoshi-roundtable-scheme-exposed.html#lucky-me">cool people</a>, and taken me to <a href="http://www.bitcoinbulls.net/bitcoin-expert/educator/#bitcoin-speaking-experience">amazing places</a>.</p>
<p>I’m not saying it is going to change your life, but buying bitcoin changed mine forever.</p>
<p>Who knows what can happen when you try something so revolutionary?</p>
<p>A stumbling block for many people is figuring out how to get a few dollars worth of bitcoin in the first place.</p>
<p>In this complete tutorial, you’re going to learn, step-by-step, how to buy bitcoin.</p>
<p>Since buying my first bitcoins in 2013 I’ve used bitcoin to:</p>
<ul>
<li>Donate to charities.</li>
<li>Give bitcoin to new users.</li>
<li>Get <a href="/how-to-make-money-arbitraging-bitcoin-amazon-gold/">discounts on Amazon</a></li>
<li>Make investments around the globe.</li>
<li>Just plain buy stuff (conference tickets, books, toys, etc.)</li>
</ul>
<p>While sharing how cool bitcoin is, I’ve helped dozens (maybe hundreds?) of people get their first bitcoin.</p>
<h2 id="the-one-thing-you-must-know-before-buying-bitcoin">The One Thing you Must Know Before Buying Bitcoin</h2>
<p>Don’t buy bitcoin if you are looking for a get rich quick scheme.</p>
<p>Bitcoin will not make you rich overnight.</p>
<p>In fact I’ve invested more money than most in bitcoin for the past 2 years and I’m not rich yet.. :)</p>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/bitcoin-will-not-make-you-rich-overnight.jpg" alt="Bitcoin will not make you rich overnight." title="Bitcoin will not make you rich overnight" /></p>
<p>Unfortunately many bitcoin buyers have dreams of overnight riches and those dreams do not come true in my experience.</p>
<p>Google Trends illustrates this trend perfectly. Google search volume for bitcoin hit an all-time high at the same time the price went up 10x in November 2013.</p>
<p><a href="https://www.google.com/trends/explore#q=bitcoin&date=2%2F2011%2056m&cmpt=q&tz=Etc%2FGMT%2B4"><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/bicoin-search-volume-february-2011-through-september-2015.gif" alt="Bitcoin search volume February 2011 through September 2015" title="Bitcoin search volume February 2011 through September 2015" /></a></p>
<p>As the price declined so did search volume, <strong>despite</strong> the fact that the bitcoin industry is much farther along than it was in 2013.</p>
<p>If bitcoin drops in price over the next six months they sell. If bitcoin doubles in price they sell. In neither case do they become rich.</p>
<p>No one knows where the bitcoin price will go and bitcoin’s price fluctuates a lot. This can make it a dangerous place for inexperienced investors putting thousands of dollars on the line.</p>
<p>OK I’m sure you get it - bitcoin’s price swings a lot.</p>
<p>Start off buying a small amount ($5) or so and use bitcoin on <a href="https://purse.io/?_r=exsgIJ">purse.io</a> for an Amazon discount or use <a href="https://www.changetip.com">ChangeTip</a> to help your favorite redditor / Tweeter who made you smile for the day.</p>
<h2 id="how-bitcoin-works-an-overview">How Bitcoin Works (An Overview)</h2>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/how-bitcoin-works.jpg" alt="How Bitcoin Works" title="How Bitcoin Works" /></p>
<p>Bitcoin makes money work like email.</p>
<p>Bitcoin users can quickly zip money off to anyone anywhere in the world and receive money from anyone anywhere in the world.</p>
<p>It is empowering, fast, efficient, and secure.</p>
<p>The technology underpinning bitcoin is complicated (just like the tech that makes email work) fortunately just like with email there are lots of service providers that make bitcoin easy to buy and to use.</p>
<p>Today I’m going to show you step-by-step how to quickly buy bitcoin.</p>
<p>I’ll cover:</p>
<ul>
<li><a href="#buy-bitcoin-with-coinbase">Coinbase</a> - the option most people want.</li>
<li><a href="#buy-bitcoin-with-localbitcoins">LocalBitcoins</a> - if you NEED bitcoins today.</li>
<li><a href="#buying-bitcoin-with-your-brokerage-account">Buying bitcoin with a brokerage account</a> (IRA, 401K, etc.)</li>
<li><a href="#buying-bitcoin-with-your-paycheck">BitWage</a> - how to get a portion - or all - of your salary in bitcoin.</li>
<li><a href="#how-to-buy-bitcoin-on-an-exchange">Exchanges</a> - for bitcoin traders and experienced investors.</li>
<li><a href="#why-bitcoin-mining-is-a-bad-way-to-get-bitcoins">Why Bitcoin Mining is a bad way to get bitcoins.</a></li>
</ul>
<h2 id="buy-bitcoin-with-coinbase">Buy Bitcoin with Coinbase</h2>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/how-to-buy-bitcoin-with-coinbase.jpg" alt="How to buy bitcoin with Coinbase" title="How to buy bitcoin with Coinbase" /></p>
<p>Coinbase is the way 99% of people should buy bitcoin.</p>
<p>It is fast, safe, and convenient.</p>
<p>This is the way I acquire most of my bitcoin. I have purchased hundreds of bitcoins from them since 2013.</p>
<p>There are a couple of reasons not to use Coinbase.</p>
<ol>
<li>
<p>Coinbase won’t allow people who don’t have a bank account to purchase bitcoin.</p>
<p>For users without bank accounts I recommend LocalBitcoins (covered below).</p>
</li>
<li>
<p>For a small number of you who have stock investment experience you might prefer using your brokerage or an exchange to purchase bitcoin. I’ll cover those scenarios as well.</p>
</li>
</ol>
<p>The reason I recommend most people use Coinbase is because it is fast, safe, and convenient.</p>
<h3 id="coinbase-is-fast">Coinbase is fast.</h3>
<p>After a 24 hour straightforward setup process, bitcoins are credited to your account instantly.</p>
<figure class="image">
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/fred-wilson.jpg" alt="Fred Wilson says Coinbase is fast." title="Fred Wilson at Techcrunch Disrupt" /></p>
<figcaption>
<p>Photo Credit: <a href="https://flic.kr/p/efvYEf">TechCrunch Disrupt NY 2013 Day Two</a> by Techcrunch is licensed under <a href="https://creativecommons.org/licenses/by/2.0/">CC BY 2.0</a></p>
</figcaption>
<blockquote>
<p>“I just bought some bitcoin on my phone with the coinbase app. It took me about two seconds. It’s an awesome experience “
– Fred Wilson, American businessman, venture capitalist, and blogger</p>
</blockquote>
</figure>
<h3 id="coinbase-is-safe">Coinbase is safe</h3>
<p>Why am I telling you Coinbase is safe? To get bitcoin from Coinbase you will need to confirm your identity with them. With identity theft being so common this worries some people.</p>
<p>Why does Coinbase need your identify?</p>
<p>The reason is legal compliance, specifically State and Federal Anti-money laundering regulations. Reputable bitcoin companies all need to collect their customer’s information to comply with these laws.</p>
<p>If you are put off by the need to verify your identity, I get it. Yes it sucks. If giving your ID is a showstopper then LocalBitcoins is a better option for you.</p>
<p>Back to safety. Coinbase has $106 million in investment from notable companies like the New York Stock Exchange, and USAA. Top-notch venture capital firms like <a href="https://www.crunchbase.com/organization/coinbase">Andreessen Horowitz, Union Square Ventures, and Y Combinator have put their trust in Coinbase</a>.</p>
<p>Not enough? Remember how Coinbase needs your ID? Well that is because Coinbase is regulated by FinCen pursuant to the Bank Secrecy Act (BSA) regulations at 31 CFR 1022.380(a)-(f), administered by the Financial Crimes Enforcement Network (FinCEN).</p>
<p>Here is their <a href="http://www.fincen.gov/financial_institutions/msb/msb.registration.letter.html?ID=11270521">registration status</a> on FinCen’s website.</p>
<h3 id="coinbase-is-convenient">Coinbase is Convenient</h3>
<p>I can buy bitcoin 24/7/365 through Coinbase. I can be laying on my bed in my pajamas and get bitcoin, or I can be out on a beach in the Dominican Republic and get bitcoins from my iPhone.</p>
<h3 id="the-downside-of-convenience">The Downside of Convenience</h3>
<p>Coinbase makes bitcoin easy for non-technical people, just like gmail makes email easy for people.</p>
<p>This comes at a cost. To do this they must maintain control of your bitcoin.</p>
<p>They can freeze / suspend / confiscate your funds. They are subject to Anti Money Laundering Laws and Know Your Customer regulations.</p>
<p>I’ve read about accounts being suspended with no warning given. Personally I’ve received an email letting me know about my violations of their policy including the corrective actions. I expect this won’t concern many people (my warning was for using localbitcoins).</p>
<p>To maintain full control of your bitcoins after purchase you can use a service like <a href="https://blockchain.info/">Blockchain.info</a> to maintain most of the conveniences and maintain all of the control. In fact I show how to download and install the Blockchain.info wallet in the section on localbitcoins.</p>
<h3 id="how-to-do-it">How to do it</h3>
<p>Instead of walking you through the steps I’m going to do one better and show you the steps in this 4 minute video.</p>
<p>Be prepared to follow along and if you find this article useful, I’d appreciate you using this referral link: <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">Coinbase</a> when you make your first purchase.</p>
<iframe width="560" height="315" src="https://www.youtube.com/embed/uv-MyY4olPA?rel=0" frameborder="0" allowfullscreen=""></iframe>
<h3 id="ensure-you-setup-sensible-security">Ensure you setup sensible Security</h3>
<p>Depending on how much money you have in bitcoin on Coinbase you can increase your security. If you have life changing amounts of money on Coinbase I recommend setting up a Coinbase vault.</p>
<p>The vault will prevent anyone (including you) from immediately accessing your ‘vaulted’ bitcoins, even with the correct username and password.</p>
<p>Vaults can be configured with time delayed withdrawals and / or multiple approvers.</p>
<p>These security mechanisms help prevent the case where a criminal tries to steal your bitcoins.</p>
<h2 id="buy-bitcoin-with-localbitcoins">Buy Bitcoin with LocalBitcoins</h2>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/how-to-buy-bitcoin-with-localbitcoins.jpg" alt="How to buy bitcoin with LocalBitcoins" title="How to buy bitcoin with LocalBitcoins" /></p>
<p>Like anything else, sometimes when people decide to buy they want them TODAY.</p>
<p>If you want bitcoins today or don’t want to provide identifying information to a company, LocalBitcoins is a good way to go.</p>
<p>Getting anything today is more expensive / less convenient / etc, than being able to wait, but a lot of people pay extra for next day shipping, etc.</p>
<p>Buying on LocalBitcoins is less convenient, more risky, and more expensive than Coinbase.</p>
<p>I recommend signing up for Coinbase today so in the off chance you do need bitcoin someday you aren’t putting yourself in a bad situation.</p>
<p>LocalBitcoins is like Craigslist. Instead of dealing with a company you will be dealing with an individual.</p>
<p>Typically this means taking cash to exchange with someone you’ve never met to get your bitcoins.</p>
<p>This method is less convenient and safe than Coinbase, but it does enable people to get bitcoin into their digital wallets today.</p>
<h3 id="watch-out-for-scams">Watch out for Scams!</h3>
<p>Just like Craigslist there are unscrupulous people out there who are trying to con and fraud people out of their money. Be careful, meet in crowded areas, and if it sounds too good to be true it probably is.</p>
<h3 id="how-to-do-it-1">How to do it</h3>
<iframe width="560" height="315" src="https://www.youtube.com/embed/wMqYQB5pbGg?rel=0" frameborder="0" allowfullscreen=""></iframe>
<h2 id="buying-bitcoin-with-your-brokerage-account">Buying Bitcoin with Your Brokerage Account</h2>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/buying-bitcoin-with-your-brokerage-account.jpg" alt="" /></p>
<p>Investors with a brokerage account will find it more convenient to get access to bitcoin as an asset class without owning bitcoin directly.</p>
<p>Beginning in May this year, investors have that option through <a href="http://grayscale.co/">Grayscale’s</a> Bitcoin Investment Trust <a href="http://www.otcmarkets.com/stock/GBTC/chart">$GBTC</a>.</p>
<blockquote>
<p>Investing in bitcoin can be a complex experience for investors. Oftentimes, investors aren’t sure who to trust as a counterparty to purchase bitcoin from, what price they should pay, and finally, how they can safely and securely store their bitcoin. In contrast, investing in bitcoin through purchasing shares of the Bitcoin Investment Trust offers investors the ability to get exposed to bitcoin without the aforementioned challenges. Since the Bitcoin Investment Trust is a titled security, it is eligible to passed on to beneficiaries under estate laws, is eligible to be held in tax-advantaged accounts (IRAs, 401Ks, etc.) as well as investment/brokerage accounts, and is a familiar structure that not only investors can understand, but as can their lawyers, accountants, and financial advisors. By purchasing shares of the Bitcoin Investment Trust, investors have transparency around pricing, know that the Trust is offered through a SEC and FINRA-regulated broker-dealer, and that the Trust’s assets are safeguarded by a robust third-party custodian.</p>
<p>– Michael Sonnenshein Director Sales & Business Development, Grayscale</p>
</blockquote>
<p>GTBC is like an ETF for bitcoin. It trades on the OTC markets.</p>
<p>When looking at the price of GBTC (currently $29.50) and the price of bitcoin ($233) one might wonder why the big price difference?</p>
<p>Again I’ll let Michael explain:</p>
<blockquote>
<p>Shares of the Bitcoin Investment Trust are offered to eligible accredited investors on a daily basis at the NAV price, however, these shares are restricted. Following a one year hold period, investors’ shares become unencumbered and eligible for resale on the public markets under the symbol: GBTC. So, the quantity of shares available to be traded in GBTC is dependent on existing investors who have passed their one year mark electing to sell. As a result, GBTC carries some scarcity value. Additionally, it is likely that shares of GBTC carry a premium pricing in the public markets (versus their NAV) since the Bitcoin Investment Trust is the first publicly traded bitcoin investment vehicle and there are those investors who are excited by the novelty of the vehicle and bitcoin and have been waiting to for vehicles like GBTC to debut to get involved. Finally, there are also investors who would like to put tax-advantaged money to work in bitcoin and to the best of my knowledge, bitcoin cannot be purchased with IRA, Roth IRA, or 401K funds, whereas GBTC is eligible to be held in those types of accounts.
– Michael Sonnenshein Director Sales & Business Development, Grayscale</p>
</blockquote>
<h3 id="how-to-do-it-2">How to do it</h3>
<p>I recorded a video showing the steps I take to buy 90 shares of GBTC for my Roth IRA through Fidelity.</p>
<iframe width="560" height="315" src="https://www.youtube.com/embed/OKBc7wDeUdY?rel=0" frameborder="0" allowfullscreen=""></iframe>
<h2 id="buying-bitcoin-with-your-paycheck">Buying Bitcoin with your Paycheck</h2>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/buying-bitcoin-with-your-paycheck.gif" alt="" /></p>
<p>Bitcoin is volatile. It goes up and it goes down.</p>
<p>One way to hedge against the volatility is to <a href="http://www.investopedia.com/terms/d/dollarcostaveraging.asp">dollar cost average</a> bitcoin buys.</p>
<p>BItwage is a service that allows people to buy bitcoins every time they receive a paycheck. This helps people dollar cost average since it happens automatically.</p>
<p>I have been using Bitwage since March 2015 to receive my Startup Grind Lansing reimbursements.</p>
<p>These reimbursements work just like a salary payment from an employer who does direct deposit / ACH function.</p>
<h3 id="how-to-do-it-3">How to do it:</h3>
<ol>
<li>Sign up for <a href="https://www.bitwage.co/referral/QMT91I9ALB11">BItWage</a></li>
<li>Get the payroll information from Bitwage for your employer (you’ll need to go through your HR process to change your direct deposits)
<img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/bitwage-get-deposit-information.gif" alt="Bitwage-get deposit information." title="Bitwage-get deposit information." />
<img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/bitwage-bitwage-deposit-information.gif" alt="Bitwage deposit information screen" title="Bitwage deposit information screen" /></li>
<li>Use the outputs button to set the bitcoin address where you want your bitcoin salary payments to go.
<a href="https://blockchain.info/address/1BNBmmomQ5AauuzQMF7E4PBAwop4Z9RibV"><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/bitwage-set-bitcoin-address.gif" alt="Bitwage - set bitcoin address screen." title="Bitwage - set bitcoin address screen" /></a></li>
</ol>
<h2 id="how-to-buy-bitcoin-on-an-exchange">How to Buy Bitcoin on an Exchange</h2>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/how-to-buy-bitcoin-on-an-exchange.jpg" alt="How to buy bitcoin on an exchange." title="How to buy bitcoin on an exchange." /></p>
<p><em>For those unfamiliar with buying traditional stocks, an exchange is probably overkill. Companies like Coinbase are designed for bitcoin users or infrequent purchasers. Exchanges are designed for investors, day traders, application builders, etc. On the plus side if you want to learn a bit, exchanges typically have the lowest fees.</em></p>
<p>U.S. Bitcoin traders don’t have a lot of great options.</p>
<p>Bitcoin’s price swings create a lot of volatility, risk, and opportunity. Unless traders are <a href="/how-to-earn-bitcoins-through-arbitrage-software-aka-bot/">arbitraging between exchanges</a>.</p>
<p>Unfortunately it has been hard for U.S. based investors to trade because the big volume exchanges have been overseas.</p>
<p>However that is changing starting this year. U.S. based exchanges like <a href="https://gemini.com/">Gemini</a> and <a href="https://exchange.coinbase.com/">Coinbase</a> have come online and will soon be available in all 50 states.</p>
<p>I expect a U.S. exchange will dominate trading volume within the next 3 years.</p>
<h2 id="how-can-you-get-started-today">How can you get started today?</h2>
<p>This video shows you step-by-step how to register for the Gemini exchange.</p>
<iframe width="560" height="315" src="https://www.youtube.com/embed/oQwmTRg6o9s?rel=0" frameborder="0" allowfullscreen=""></iframe>
<h2 id="why-bitcoin-mining-is-a-bad-way-to-get-bitcoins">Why Bitcoin Mining is a bad way to get bitcoins</h2>
<p><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/bitcoin-mining-is-a-bad-way-to-get-bitcoins.gif" alt="Bitcoin mining is a bad way to get bitcoins" title="Bitcoin mining is a bad way to get bitcoins" /></p>
<p>I know the idea of bitcoin mining sounds great.</p>
<p>Plug in a computer, run a program, and watch the money come in.</p>
<p>What is better than the thought of having our computer whirring away earning us cash?</p>
<p>Unfortunately the truth is mining bitcoins <em>profitably</em> is hard.</p>
<p>In fact my first exposure to bitcoin was in December 2011 when <a href="http://bitcoin.stackexchange.com/questions/2371/how-do-i-fix-gui-miner-stuck-at-connecting">I tried to mine bitcoin</a> on my MacBook Pro.</p>
<p>At that time I ran into some tech challenges and gave up. I should have bought bitcoin instead. That would have returned about a 40x increase in my investment.</p>
<p>Today it still makes sense for me to buy bitcoins instead of mining them. One of the biggest challenges is the ever increasing difficulty of mining bitcoins.</p>
<p>Over the past year bitcoin mining difficulty has doubled. That means the same bitcoin mining equipment from a year ago is producing half as many bitcoins.</p>
<p><a href="https://blockchain.info/charts/difficulty?timespan=1year&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address="><img src="/images/posts/2015-10-13-how-to-buy-bitcoin-the-complete-step-by-step-tutorial/difficulty-has-increased-2x-in-the-past-year.gif" alt="Difficulty has increased 2x in the past year" title="Difficulty has increased 2x in the past year" /></a></p>
<p>Are some people mining profitably? Absolutely.</p>
<p>There are also people profitably mining gold. That isn’t me :)</p>
<p>There are miners out there who have advantages over me:</p>
<ul>
<li>advantages of scale</li>
<li>more experience</li>
<li>advantages of power rates</li>
<li>access to advanced equipment</li>
<li>more capital</li>
</ul>
<p>It is cutthroat competition with lots of smart, well funded, experienced miners fighting tooth and nail for the 25 bitcoins released every ten minutes.</p>
<p>How do I compete? I don’t.</p>
<p>But what I can do instead is buy bitcoins.</p>
<p>Unfortunately I didn’t buy bitcoins in 2011 (they were under $5 back then) but I’m not making that mistake anymore.</p>
<p>Since 2013 I’ve been acquiring bitcoins the same way I would acquire gold, by purchasing - not buying - bitcoins.</p>
<p>Mining gold is hard and I would not be able to do it profitably. Instead if I want gold I can just buy it.</p>
<p>Summary
I’ve provided four ways to buy bitcoin and one way to get bitcoin I recommend avoiding.</p>
<p>I recommend:</p>
<ul>
<li>Coinbase for day to day buys,</li>
<li>GBTC for brokerage buying,</li>
<li>LocalBitcoins for getting bitcoins if you need them today or don’t want to provide identifying information.</li>
<li>BitWage for buying through your paycheck.</li>
<li>AVOIDING bitcoin mining - unless you have a way to beat the competition (free power, next generation hardware, etc.)</li>
</ul>
<p>Enjoy!</p>
<p>–dave</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//how-to-make-money-arbitraging-bitcoin-amazon-gold/2015-09-08T00:00:00-04:002015-09-08T00:00:00-04:00How to Make Money Arbitraging: Bitcoin, Amazon, & Gold
<p>What if I said you could buy something for less than what you could sell it for? Instant easy profit right?</p>
<p>Too good to be true - right?</p>
<p>Today I’m going to tell you <strong>exactly</strong> how I save 30% buying gold with bitcoins and exactly how I sell the gold to earn 9% profit.</p>
<p>I know when I hear something that I think is too good to be true I ignore it.</p>
<p>Usually this serves me well, but once or twice that attitude has cost me.</p>
<p>Today I promise you <strong>this method works.</strong></p>
<p>This particular process won’t make anyone rich overnight, and I’ll explain why, but maybe you’ll identify some tweaks to really make it fly.</p>
<p>Arbitrage is a <a href="https://en.wikipedia.org/wiki/Arbitrage">well-known area of investment</a>. As you might expect, many investors get excited about arbitrage because of the low risk.</p>
<p>If you are like me, we both want profitable low-risk investments. If there were no-risk investments, you and I would all borrow everything we could get our hands on and invest it :)</p>
<p>Of course there is no such thing as a no risk investment. The closest I’ve come to finding a no risk investment was in 2013 when I was running my <a href="/how-to-earn-bitcoins-through-arbitrage.html">bitcoin arbitrage bot</a>.</p>
<p>Since then I have been keeping an eye out for additional bitcoin arbitrage opportunities.</p>
<p>Today I’m going to share everything I’ve found with you.</p>
<h2 id="why-im-sharing-the-pursearb-technique">Why I’m Sharing the PurseArb Technique.</h2>
<p>What I’m about share took me many hours to learn over the past 5 months. I’m going to share it with you for two reasons:</p>
<ol>
<li>
<p>Bitcoin is the most empowering force since the Internet. The sooner it gains traction the better for everyone in the world.</p>
<blockquote>
<p><a href="http://ctt.ec/U97H3">Purse.io creates new financial incentives for people all over the world to start using Bitcoin - Roger Ver [Tweet This]</a></p>
</blockquote>
<blockquote>
<p><a href="http://ctt.ec/j3Y8i">Purse is currently the best valuation proposition for US-based bitcoin customers (excluding speculation). Applying this same model to other asset classes such as gold should accelerate usage of the Purse platform. - Brock Pierce [Tweet This]</a></p>
</blockquote>
</li>
<li>
<p>This purseArb technique has a lot of room for improvement. Maybe you can figure out a way to make serious money using purseArb and let me know in the comments. I will take a look and try it out for you if it makes sense.</p>
</li>
</ol>
<p>First, why did it take so long for me to make this work?</p>
<ul>
<li>Understanding how purse worked</li>
<li>I made a calculation error in my first arb attempt</li>
<li>I unnecessarily exposed myself to asset price fluctuations</li>
<li>Purse had some bad UX that hurt my planning and exposed me to additional risk.</li>
</ul>
<h2 id="what-you-need">What You Need:</h2>
<ul>
<li>A way to buy bitcoin (I recommend <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">Coinbase</a>.)</li>
<li>A <a href="https://purse.io/?_r=exsgIJ">Purse</a> account</li>
<li>~$300 in bitcoin</li>
</ul>
<h2 id="step-1-find-what-to-buy-on-amazon">Step 1: Find what to buy on Amazon.</h2>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/what-to-buy.jpg" alt=""What to buy?" title="What to buy?" /></p>
<p>I had never bought gold in my life. I had no clue what it went for or if I could even afford to buy gold.</p>
<p>I started my research by searching for ‘gold’ on Amazon. I had no idea there would be so much.</p>
<p>Amazon returned about 12.5 <strong>million</strong> results for the keyword gold.
<img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/amazon-gold-search-results.jpg" alt="Amazon gold search results" title="Amazon gold search results" /></p>
<p>From those 12.5 million results I decided to focus on gold coins figuring they would be in my price range and easy to sell.
<img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/amazon-gold-coins-search-results.jpg" alt="Amazon gold coins search results" title="Amazon gold coins search results" /></p>
<p>From there I narrowed it to US mint coins.</p>
<p>And finally I now only buy the <a target="_blank" href="http://www.amazon.com/gp/search?ie=UTF8&camp=1789&creative=9325&index=aps&keywords=gold%20eagle%201%2F4%20oz&linkCode=ur2&tag=davsilsmi-20&linkId=F2MMZ45ZW5I55CIM">‘gold eagle 1/4 oz’</a><img src="http://ir-na.amazon-adsystem.com/e/ir?t=davsilsmi-20&l=ur2&o=1" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" /></p>
<p>I only buy the American Gold Eagle Coin 1/4 Oz <a href="http://ctt.ec/eaJcY">[Tweet This]</a> because I was unable to get larger dollar sized orders filled through purse.</p>
<p>Lowering the dollar amount gets my orders filled. To get the discount someone else is buying the coins for me in exchange for bitcoin. On the downside the spread is higher when selling the smaller coins. That is important to know because if you do this you’ll need to strike a balance between getting a high discount to sell it profitably and a low discount to get the order filled.</p>
<h2 id="step-2-understand-the-sell">Step 2: Understand the sell</h2>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/understand-the-sell.jpg" alt="Understand the sell" title="Understand the sell" /></p>
<p>Buying gold coins is no good if they can’t be sold. I had to find somewhere I could quickly sell the gold coins profitably and safely (no fraud, robberies, etc.).</p>
<p>I found three potential candidates searching for “Lansing sell gold.”
<img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/lansing-sell-gold.jpg" alt="" /></p>
<p>I had done business with <a href="https://libertycoinservice.com/">Liberty Coin</a> and decided to call them to understand what price they would buy gold from me at. Knowing how much they’ll pay for gold let me know the percent discount I would need to get when buying the gold coins on Purse.</p>
<p>When I called Liberty I found out the prices for gold coins on Amazon are HIGH. To make a profit I need a STEEP discount on Amazon. To profit I need to place my Purse orders at a 30%-32% discount.</p>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/liberty-coin-service-daily-price-quote.gif" alt="Liberty Coin Daily Price Quote" title="Liberty Coin Daily Price Quote" /></p>
<p>Here are the good things about selling to a private business (like Liberty Coin):</p>
<ol>
<li>They will buy as much gold as I can get.</li>
<li>I don’t need to worry about them trying to defraud me.</li>
<li>I can go in and sell anytime they are open.</li>
</ol>
<p><strong>The one downside:</strong></p>
<p>They need to make a profit when selling the gold to their customers. With the 1/4 oz coin’s high price on Amazon, by the time I sell it at Liberty that has erased the margin. In fact on my first sale I had a loss of $16.29 (6%).</p>
<p>I bought the gold coin for $291.41 and sold it for $275.12. Not a good business move :)</p>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/trading-gold-for-dollars.jpg" alt="Trading Gold for Dollars" title="Trading Gold for Dollars" /></p>
<p>To improve my profitability I’ve begun contacting private gold buyers I know through email and Facebook.</p>
<p>Selling to private gold buyers at $300 per coin and taking a 30% discount through Purse is how I’m enjoying a 9% profit.</p>
<p>The downside of this method is scalability. I don’t expect to ever be able to unload 4-6 coins per day to private buyers.</p>
<p>My next attempt is to try and find another sales channel (maybe Craigslist, but increased risk, and my initial search doesn’t look promising).</p>
<p>My other thought is to connect with people in the gold community, maybe they have tradeshows, etc. where I’ll be able to sell the coins.</p>
<p>##Step 3: Understand Purse</p>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/understand-purse.jpg" alt="Understand Purse" title="Understand Purse" /></p>
<p>The key to getting the a high return on available capital when arbitraging is a quick cycle time.</p>
<p>It is more profitable to cycle $1K every day at 1% than $10K twice a month at 10%. It is also less risky and requires less capital. Bottom line: you want fast cycle times. <a href="http://ctt.ec/Qmpg3">[Tweet this]</a></p>
<p>Purse lets us shorten the cycle time by lowering the discount we are asking for.</p>
<p>Purse tries to give delivery estimates to help customers understand that trade-off. However they don’t give reliable timeframes today.</p>
<p>Since my <a href="https://storify.com/DavidSilvaSmith/purse-io-filltimes-are-wildly-innacurate">tweetrant</a> they’ve updated their UX so it IS better now, but I still don’t trust their estimates 100%. I expect they will get even better with more customers and more data.</p>
<p>###Three tips to using Purse profitably:</p>
<ol>
<li>
<p>Lower dollar purchases get filled faster than larger purchases.</p>
<p>For example a 1/4 Oz coin for $374.95 gets filled in a week or two, whereas a 1 Oz Coin for $1,380.95 didn’t get filled in 5 months.</p>
</li>
<li>
<p>Mitigate risk properly</p>
<p>Initially I was looking for a net increase in dollars. This is hard to do with purse (unless the bitcoin price goes up) because I’m exposed to bitcoin’s volatility the entire time the order is unfilled (days or even months).</p>
<p>By instead looking for a net increase in bitcoin, I am able to remain unconcerned with bitcoin’s volatility by buying bitcoin’s with dollars at the time the Purse order is filled.</p>
<p><strong>Caution: if you aren’t already holding bitcoins this exposes you to risk through bitcoin’s price volatility.</strong></p>
</li>
<li>
<p>When reloading the Purse wallet use Coinbase transfers to avoid confirmation time delays. I know I hate to start something and then have to make a reminder to come back 10 - 60 minutes later. Using Coinbase gives me instant access to my coins on Purse.</p>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/deposit-to-purse-with-coinbase-wallet.gif" alt="Deposit to purse with Coinbase wallet" title="Deposit to purse with Coinbase wallet" /></p>
</li>
</ol>
<h2 id="step-4-putting-it-all-together">Step 4: Putting it all Together</h2>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/pursearb-process.jpg" alt="PurseArb Process" title="PurseArb Process" />
The final action (if the calculations show it will be profitable) is to go ahead and make the buy through Purse.</p>
<p>Here are the steps:</p>
<ol>
<li>
<p>Find the gold on Amazon.</p>
</li>
<li>
<p>Add it to a new Amazon wishlist (I tried reusing wishlists, it didn’t work)</p>
<p>Wishlist Settings:</p>
<ol>
<li>
<p>Select your address carefully: My first shipment took a few extra days (remember fast times are critical to profitable arb) to arrive because the shipper required that someone over 21 sign the package.</p>
<p>I now have my packages shipped to my office.
<img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/ups-signature-required.jpg" alt="UPS Adult Signature Required" title="UPS Adult Signature Required" /></p>
</li>
<li>Ensure the list is public.</li>
<li>Uncheck spoil my surprises.</li>
</ol>
</li>
<li>
<p>Copy and past the Amazon wishlist URL into purse to execute the buy.</p>
</li>
<li>
<p>Wait patiently for the buy to be filled :)</p>
</li>
</ol>
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<h2 id="the-backstory---how-did-i-get-this-idea">The Backstory - How did I get this idea?</h2>
<p>February at the <a href="/satoshi-roundtable-scheme-exposed.html">Satoshi Roundtable</a> Jason King and Roger Ver put the idea into my head while we were walking together.</p>
<p>I am an Amazon novice (just buy books sometimes) and had never used Purse at that point.</p>
<p>For those who don’t know, Purse lets bitcoin holders get a discount on Amazon.com purchases.</p>
<p>It does this by taking advantage of the billions in dollars worth of Amazon credits that holders are looking to liquidate. Mechanical Turk workers outside of the U.S. and India are <a href="https://www.mturk.com/mturk/help?helpPage=worker#how_paid">required to transfer their earnings to an Amazon.com gift card.</a></p>
<p>When I got back home I tried out Purse. Appropriately, my first purchase was The Age of Cryptocurrency. I saved a whopping $1.47 :)</p>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/my-first-purse-purchase-age-of-cryptocurrency.jpg" alt="My first Purse purchase: Age of Cryptocurrency" title="My first Purse purchase: Age of Cryptocurrency" /></p>
<p>My second test was a purchase for a Pokeball for my son Colin (he is cute and just turned 8 last week. You’ll like him if you ever meet him :))</p>
<p>I also had to research gold buying and selling. I had never even held a gold coin in my hand.</p>
<p>My initial purchase attempts were to buy the 1 oz gold coins. The reason is because Liberty Coin has lower spreads on higher priced items.</p>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/liberty-coin-higher-prices-lower-premium.gif" alt="Liberty Coin higher prices lower premium" title="Liberty Coin higher prices lower premium" /></p>
<p>Unfortunately my Purse order for the 1 oz American Gold Eagle went unfilled from March through the beginning of August so I gave up.</p>
<p>Switching to the 1/4 oz American Gold Eagle gets my orders filled within a week.</p>
<h2 id="closing-thoughts-on-pursearb">Closing thoughts on PurseArb</h2>
<p><img src="/images/posts/2015-09-08-how-to-make-money-arbitraging-bitcoin-amazon-gold/me-holding-a-gold-coin-purchased-from-amazon.jpg" alt="Me holding a gold coin purchased from Amzaon" title="Me holding a gold coin purchased from Amzaon" /></p>
<p>Arbitraging gold using Purse has been a fun experiment. I have a good feeling there are ways to scale pursearb up (different products with faster cycle times or higher margins). <a href="http://ctt.ec/6dzY6">[Tweet This]</a></p>
<p>Write your ideas for scaling and your questions in the comments below.</p>
<p>P.S. If you are a software developer you may find my post on <a href="/how-to-earn-bitcoins-through-arbitrage.html">bitcoin arbitrage software</a> interesting.</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//4-steps-to-collect-btcjam-arbitration-awards.html2015-08-30T00:00:00-04:002015-08-30T00:00:00-04:004 Steps to Collect BTCJam Arbitration Awards
<p>If you are like me you get excited about the 10%-13% expected APY on <a href="https://btcjam.com/?r=37cad203-f110-4bcb-bd1e-bd31035bf238&utm_source=referral_url&utm_campaign=user_referral">BTCJam</a> (a peer to peer lending company).</p>
<p>If you are like me then you also know about the importance of diversification.</p>
<p>If you are like me then you also know it is important not to loan to friends.</p>
<p>If you are headstrong like me you are also likely to ignore sound advice :)</p>
<p>If you are headstrong like me you might even ignore a warning like the one BTCJam put on the loan page in bright red letters:</p>
<blockquote>
<p>“The interest rate for this listing is below the recommended amount for this risk profile, invest with care.”</p>
</blockquote>
<p>This post will explain what I learned about collecting arbitration awards when ignoring sound diversification advice :)</p>
<p>##Backstory</p>
<p>The Good:</p>
<ol>
<li>The debtor is returning my communications.</li>
<li>The debtor and I live in the same city.</li>
<li>The debtor has an income.</li>
<li>The debtor didn’t dispute my arbitration award.</li>
</ol>
<p>The bad:</p>
<ol>
<li>The debtor is unable to pay me.</li>
<li>We are friends.</li>
<li>I don’t like being a loan collection agent.</li>
</ol>
<p>February 28, 2015 I loaned a friend 14.63453902 bitcoins for 90 days through <a href="https://btcjam.com/?r=37cad203-f110-4bcb-bd1e-bd31035bf238&utm_source=referral_url&utm_campaign=user_referral">BTCJam</a>. I planned on loaning more, but because of my personal security procedures and bank slowness I couldn’t (lucky me).</p>
<p><img src="/images/posts/2015-08-30-4-steps-to-collect-btcjam-arbitration-awards/loan-application.gif" alt="Loan Application" title="Loan Application" /></p>
<p>When considering the loan, my biggest concern was the ability of my friend (the borrower) to repay in the face of a massive bitcoin price run-up. (I am a Bull right?) We live in the same city and he is a software developer.</p>
<p>To mitigate that concern I planned on purchasing additional bitcoins to cover the loan. This would peg my cost basis to dollars instead of bitcoin. Unfortunately I didn’t make the purchase in time and loaned my friend bitcoins from my bitcoin savings.</p>
<p>Life was looking good when the borrower made his first payment (April 2015) on time!</p>
<p>Unfortunately that was the last timely payment. Actually it was the last payment at all.</p>
<p>At some point (I believe near the end of May) I received an email that the loan was in default or late. I might have also received another email stating the loan was in default. I believe I remember getting those, but I can’t find them. I have also turned off almost all BTCJam emails.</p>
<p>August 3rd I received <a href="#Addendum">an email</a> from net-arb.com titled: “BTCJAM Loan Arbitration Award - Creditor42”</p>
<p>It contained this key document: “Binding Arbitration Award”</p>
<p><img src="/images/posts/2015-08-30-4-steps-to-collect-btcjam-arbitration-awards/arbitration-letter.gif" alt="NetArb Arbitration award letter" title="NetArb Arbitration award letter" /></p>
<p>As I understand this document it is documentation of an irreversible (nearly - hence the term ‘binding’) arbitration decision that can be used in a court of law to enforce the arbitration award.</p>
<h2 id="missing-piece---how-to-enforce">Missing Piece - How to Enforce</h2>
<p>The email explained the arbitration award and discussed enforcing the award.</p>
<p>Unfortunately the links to enforcement on net-arb’s site in the email were broken.</p>
<p>Off to Google I go…</p>
<h2 id="enforcing-arbitration-summarized-from-lectlaw">Enforcing Arbitration (<a href="http://www.lectlaw.com/files/adr15.htm">summarized from lectlaw</a>)</h2>
<p>Here is the process of enforcing arbitration as I understand it right now.</p>
<ol>
<li>Identify the appropriate court
(yes <a href="http://arstechnica.com/tech-policy/2015/06/after-bitcoin-loan-goes-south-judge-rules-man-must-repay-over-67000/">international awards have been enforced</a>)</li>
<li>File a motion for confirmation with that court (ASAP, but within one year)</li>
<li>Obtain Judgment on the arbitration award</li>
<li>Seek an order of execution from the court (if the judgment debtor doesn’t voluntarily comply).
The order of execution directs a sheriff to seize the debtor’s property.</li>
</ol>
<p>I’m at the beginning of this process. I will keep you updated as I learn more…</p>
<p>If you are going through arbitration and have any questions let me know in the comments and I’ll do what I can to help you.</p>
<p>#Addendum</p>
<p>As promised here is the arbitration award email text so you know exactly what to expect:</p>
<div style="background-color:#ffc; outline: 1px solid #333333; ">
<img src="/images/posts/2015-08-30-4-steps-to-collect-btcjam-arbitration-awards/internet-arbitration-logo.gif" /><div style="padding-top:20px"><big><big><b><br />Attached is a copy of the Arbitration Award pertaining to BTCjam Loan No. 36131<br /><br /><br /></b></big></big>NOTE: Copies of this award have been sent to all parties involved. The Debtor's copy identifies Creditors only by their BTCjam member numbers. Creditor copies are personalized, separating the total loan into its separately funded parts so that each award can stand on its own.<br /><br /><big><b>Here is some information about the Arbitration Award.</b></big><br /><br />The Award resulted from a <i>pro forma</i> arbitration hearing held under the terms of a contract between BTCJam and net-ARB whereby BTCJam loans that are 90 days or more in arrears are referred for arbitration. The debtor is given the opportunity to appear in an online arbitration hearing to argue against default. Had the debtor for your loan chosen that option, you along with any other co-creditors would have been notified to appear as well.<br /><br />When the debtor declines the opportunity or does not respond, BTCJam sends the loan information to net-ARB certifying that the debtor is in default and has not chosen to contest a default decision in the creditors' favor. The PDF document you received is the final Arbitration Award in your favor from that process.<br /><br /><b><u>What can I do with the Award?</u></b><br />That's the question everyone is asking. I have a document - now what? How do I get paid?<br /><br />The mechanics are straightforward and explained here on our website: <a href="http://www.net-arb.com/FAQ.php#Enforcement" target="_blank">http://www.net-arb.com/FAQ.<wbr />php#Enforcement</a>. However there are costs involved in that process that may make it impractical. The costs vary depending on several factors including geography as a main factor since court action must be filed in the debtor's jurisdiction.<br /><br />It may be possible for co-creditors on a particular loan to join together to pursue collection, but you will have to contact BTCJam Support for information about possible co-creditors since the rules of arbitration prevent us from sharing personal information. We advise you to consult an attorney regarding the feasibility of undertaking any collection action before embarking on that path.<br /><br />BTCJam views arbitration as another step toward global acceptance and respect for bitcoin. In the future BTCJam hopes to couple these arbitration awards with a network of collection agencies to facilitate recovery of bad debts for their users.<br /><br />We hope you found this information helpful.<br /><br /><br /><big><b>Here is more information you may find helpful in answering any questions. </b></big><br /><br />ENFORCING THE AWARD - COLLECTION<br />Unfortunately, receiving an arbitration award is only the first step toward being paid what you are owed. It is the biggest step however, with the remaining steps being just routine but necessary paperwork & filing. The process is described <a href="http://www.net-ARB.com/FAQ.php#Enforcement" target="_blank">here</a> on our FAQ page. The court action generally must be filed in the jurisdiction where the debtor resides. While we know this is not an ideal solution for collecting your loan, it is the best solution possible.<br /><br />BTCjam.com PRESS RELEASE<br />[BTCJam] - Arbitration Announcement, Legally binding loan contracts<br />June 27, 2013, 12:16:17 PM<br /><br />Greetings,<br /><br />Today we are announcing a major improvement in our service, provided by our new partnership with net-ARB.com, the oldest and most reliable international internet-ARBitration firm.<br /><br />Over the past few months, many of you have expressed the need of a regulation that would reduce the chances of default. Even though, you continued to use BTCJam platform, diversifying your investments as a way to maintain good profits. We appreciate your confidence.<br /><br />However, we understand that the service can and must be improved. Aiming to ensure that defaults are reduced to a minimum, our partnership with net-ARB will allow unpaid loans to be claimed legally.<br /><br />What does this mean?<br />It means that all the defaulted loans will be subject to arbitration. The arbitration process is available to all loans serviced after 03/30/2013, free of charge.<br /><br />What is arbitration?<br />Arbitration is a faster, more efficient, legal alternative to the court system. It is interesting to note that arbitration was the only means of resolving disputes for thousands of years before there were courts. Courts actually embrace arbitration to resolve civil disputes since it reduces the size of court dockets.<br /> <br />Arbitrators are neutral third-parties to whom the parties yield the power to decide the dispute and render an arbitration award similar to a court judgment while avoiding the cost and delays common in court litigation. Arbitration is binding (cannot be appealed) and is recognized and enforced in nearly 150 countries under The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).<br /><br />The benefits we expect from this partnership:<br />- Safer investments<br />- Debt renegotiation <br />- Enforcement<br /><br />More detailed information about the international arbitration process on <a href="https://btcjam.com/partners" target="_blank">https://btcjam.com/partners</a><br /><br />Thank you for your continued support. <br /><br />Sincerely,<br />Celso<br /><br /><br />BTCJAM - Peer to Peer Bitcoin Lending<br /><a href="https://btcjam.com" target="_blank">https://btcjam.com</a><br /><br />Arbitration FAQ<br /><br />Q: What is International Arbitration? <br />A: Arbitration is a faster, more efficient, legal alternative to the court system. It is interesting to note that arbitration was the only means of resolving disputes for thousands of years before there were courts. Courts actually embrace arbitration to resolve civil disputes since it reduces the size of court dockets. <br /><br />Arbitrators are neutral third-parties to whom the parties yield the power to decide the dispute and render an arbitration award similar to a court judgment while avoiding the cost and delays common in court litigation. Arbitration is binding (cannot be appealed) and is recognized and enforced in nearly 150 countries under The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). <br /><br />Q: What are the benefits of International Arbitration? <br />A: Safer investments and debt renegotiation. <br /><br />Q: Which loans are susceptible to arbitration? <br />A: All loans made after 03/30/2013. <br /><br />Q: When is a loan sent to arbitration? <br />A: When it is overdue for more than 90 days. <br /><br />Q: Do I need to submit the loan to arbitration myself? <br />A: No, the loans are sent to arbitration automatically. The borrower and all the investors will be notified if it happens. <br /><br /><br />BTCJam Rules - International Arbitration <br />Any controversy or claim arising out of or relating to this contract, or the breach of this contract, shall be settled by binding internet arbitration by net-ARB.com. The arbitrator's decision shall be final and legally binding and judgment may be entered thereon. <br /><br /><br />ABOUT BITCOINS <i>by <a href="http://bitcoin.org" target="_blank">bitcoin.org</a></i><br /><br />A Bit of History<br /><br />Bitcoin is one of the first implementations of a concept called crypto-currency, which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of a new form of money that uses cryptography to control its creation and transactions, rather than relying on central authorities.<br /><br />In 2009, the first Bitcoin specification and proof of concept was published in a cryptography mailing list by a member under the pseudonym of Satoshi Nakamoto. Towards the end of 2010 Satoshi left the project, saying he had moved on to other things. The creator of Bitcoin never revealed his identity and simply left his invention to the world. The origin and the motivation behind Bitcoin are still today a great source of mystery.<br /><br />Since 2010, the Bitcoin community has grown with many developers working on the project. During June and July 2011, Bitcoin suddenly gained media attention leading to a massive buy rally. The resulting bubble slowly deflated through the latter part of 2011, and since then the value of Bitcoin has slowly climbed once again back to its 2011 heights.<br /><br />On September 27th 2012, the Bitcoin Foundation was created in an effort to standardize, protect, and promote Bitcoin. Today, the Bitcoin economy is developing quickly with new users joining every day.<br /><br /><u>Technical features</u><br />These are the basic features of any Bitcoin-like network.<br /><br />- Bitcoins can be transferred between arbitrary nodes on the network.<br />- Transactions are irreversible.<br />- Double spending is prevented by using a block chain.<br />- Transactions are broadcast within seconds and verified within 10 to 60 minutes.<br />- Transaction processing and money issuance are carried out collectively through mining.<br />- Transactions can be received at any time, regardless of whether your computer is turned on or off.<br /><br /><u>Statistics</u><br />The Bitcoin network has been running continuously for more than 48 months, yielded impressive security features and grown significantly in the past year. As of April 2013:<br /><br />- Long block chain with more than 232,000 blocks.<br />- One of the largest distributed computing networks in the world with more than 65 terahashes/s.<br />- Millions of US dollars in daily trade volume distributed across 50,000 transactions.<br />- Total value of all bitcoins in circulation is over US 1.3 billion dollars.<br />- Only one major security incident in the protocol which was fixed in August 2010.<br /><br />
</div>
##Questions?
If you are going through arbitration and have any questions let me know in the comments and I'll do what I can to help you.
</div>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//how-to-use-btcjam-autoinvest.html2015-07-13T00:00:00-04:002015-07-13T00:00:00-04:00How to Use BTCJam AutoInvest<p>#BTCJam AutoInvest</p>
<p><a href="https://btcjam.com/?r=37cad203-f110-4bcb-bd1e-bd31035bf238&utm_source=referral_url&utm_campaign=user_referral">BTCJam</a> is the bitcoin investment I’ve been most excited about. They provide a high rate of return and have been promising AutoInvest since I <a href="https://www.youtube.com/watch?v=p9fvxhVH1pc">interviewed their Chief Marketing Officer Flavio Rump</a> last year.</p>
<h2 id="about-btcjam">About BTCJam</h2>
<p>For those who don’t know BTCJam is a peer-to-peer lending market place. BTCJam is like Uber it connects lenders with borrowers but does not lend it’s own funds.</p>
<h2 id="welcome-btcjam-autoinvest">Welcome BTCJam AutoInvest!</h2>
<p>I’ve been waiting for BTCJam auto invest since I <a href="http://www.bitcoinbulls.net/can-btc-jam-grow-your-bitcoins.html">began lending on BTCJam</a> in August 2014.</p>
<p>As soon as I saw the <a href="http://blog.btcjam.com/2015/05/20/btcjam-presents-autoinvest-the-easiest-way-to-grow-your-coins/">AutoInvest announcement</a> I jumped on the chance to try it!</p>
<h2 id="why-im-excited">Why I’m Excited?</h2>
<p>AutoInvest solves one of the key BTCJam issues: investment passivity.</p>
<p>Investing in BTCJam loans is time consuming. It is important to invest in lots of loans (diversification) and to avoid loans that are too risky.</p>
<p>BTCJam AutoInvest promises to make lending on BTCJam a more passive activity. This is key. How can I sit on a beach watching my son play in the beautiful Caribbean waves if I’ve got to be managing my investments? Passivity is key to retirement :)</p>
<p>It took me <strong>one hour</strong> from clicking invest to finish to invest 1.2 BTC through BTCJam’s AutoInvest. All but 60 seconds of that time was because I didn’t have 1 BTC available (their minimum investment size) on BTCJam.</p>
<p>Why only 1.2 BTC? I recommend trying new investments with a small amount of bitcoin first. I can always add on to a good investment later if things go well. I had .2 BTC in my account ready to invest, but BTCJam required a minimum investment of 1 BTC.</p>
<p>##Here are the 4 investment steps:</p>
<ol>
<li>Navigate to the BTCJam <a href="https://btcjam.com/automatic_plans">AutoInvest tab</a>.</li>
<li>Select your allocation profile. The more conservative profiles have a lower risk of default, but BTCJam expects an overall higher rate of return for more aggressive portfolios. For my first investment I selected Moderate.</li>
<li>Specify your investment amount.</li>
<li>Click Activate</li>
</ol>
<p>As long as you have over 1 bitcoin in your account to AutoInvest with the whole process will take a minute or two.</p>
<p><img src="images/2015-07-13-how-to-use-btcjam-autoinvest/btc-jam-autoinvest-4-steps.jpg" alt="How to use BTCJam AutoInvest 4 Steps" title="How to use BTCJam AutoInvest 4 Steps" /></p>
<p><img src="images/2015-07-13-how-to-use-btcjam-autoinvest/btcjam-autoinvest-success.jpg" alt="How to use BTCJam Investment success" title="How to use BTCJam Investment success" /></p>
<p>##7 Weeks later…</p>
<p>The first investment is working out great! My current APY is 14.06%, just over the estimated 13.24% and I’ve spent no time managing this investment. Woohoo!</p>
<p>I learned three things:</p>
<ol>
<li>I turned off BTCJam emails. The way AutoInvest works is it spreads your investment over a lot of loans. This means you will get a lot of emails for comments, payments, etc. Initially I set these to daily summaries, then weekly summaries, and then I turned them off altogether.</li>
<li>I wish I would have selected a shorter investment timeframe (see advanced settings below). The investment I selected filled quickly (I think a few days). I should have been selective about having shorter loan terms (more on that below) so I could cycle my bitcoins more quickly. The faster loans get paid off (and some borrowers pay early), the faster the capital can be re-invested.</li>
<li>When I invested there was no checkbox to reinvest returns. This is available now. With this new information, maybe point #2 is moot.</li>
</ol>
<h2 id="advanced-autoinvest-options">Advanced AutoInvest Options</h2>
<p>BTCJam gives a great baseline for selecting a risk profile. It then allows you to tweak what investments it will fund.</p>
<p>Here are the options:</p>
<ol>
<li><strong>Number of Investments.</strong> My feeling on this is the higher the better. You get more diversification.</li>
<li><strong>Type of Investments.</strong> By eliminating types of investments (fiat or bitcoin) this is a crude way to change risk by type of asset and geography.</li>
<li><strong>Loan Term.</strong> The length of the loan</li>
<li><strong>Reinvest returns.</strong> This is an option I would have checked if it had been available when I created my investment plan. I’m going to try it with my next one so my returns can be put right back to work.</li>
</ol>
<p>If you are lending on BTCJam I highly recommend using AutoInvest. It takes the hassle out of managing your investments. The only time I plan on doing direct loans now that BTCJam has AutoInvest is if one of my friends wants me to fund a loan.</p>
<h2 id="is-autoinvest-perfect">Is AutoInvest Perfect?</h2>
<p>No AutoInvest is not perfect. There are two risks I still see: default rates and site security.</p>
<ol>
<li>This feature is new. There isn’t a long history to know what the rates of return will be. The current rates seem reasonable and are in line with other peer-to-peer lending sites like Prosper and Lending Club.</li>
<li>Many bitcoin sites have been hacked. I’m not aware of any security breaches at BTCJam. However I’m also not aware of the funds they hold for lenders being insured. Until the bitcoin industry figures out how to make theft extremely difficult or insurance is widespread it is going to be hard for me to trust bitcoin companies with life changing amounts of money.</li>
</ol>
<h2 id="your-thoughts">Your Thoughts?</h2>
<p>What do you think? Are you excited about AutoInvest? Is it safe enough? Are the returns high enough? Let me know in the comments!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//is-regulation-relevant-to-bitcoin.html2015-05-07T00:00:00-04:002015-05-07T00:00:00-04:00Is Regulation Even Relevant to Bitcoin?<p><img src="/images/is-regulation-relevant-to-bitcoin.jpg" alt="Is regulation Relevant to Bitcoin?" title="Is regulation Relevant to Bitcoin?" /></p>
<p>There once was a website, with 50 million unique visitors per day. Hosting 12 billion files, it was the 13th most visited site on the internet, accounting for 4% of all internet traffic. Do you know what site I’m talking about?</p>
<p>It’s not Google, nor is it Yahoo or YouTube; in fact, it’s none of the large established businesses you would expect it to be. Have you guessed the answer yet? It’s the money laundering, racketeering, copyright infringing site everyone used to know and love: Megauploads.</p>
<p>Megauploads were once an established business dominating the cloud computing service’s industry. It was legitimate, had global recognition and overwhelming success, being endorsed by prominent artists such as Kanye West, Puff daddy, Snoop Dog and many more.</p>
<p>Megauploads generated over $175 million in profits over 7 years of operation, but this came at the ultimate price, 500 million in damages and 7 arrests. So how did this seemingly legitimate business accounting for 4% of all internet traffic one day become the nefarious culprit responsible for illegal activity? Where was the regulation to stop this? Why had it failed to stop this disaster?</p>
<p>Megauploads were deemed responsible for allowing mass copyright infringement, but doesn’t YouTube do the exact same thing? How did one site land on the wrong side of the law whilst the other still legitimately operates today?</p>
<p>This example raises interesting parallels towards bitcoin, seemingly everyone is waiting for bitcoin regulation like it will determine its future in a very profound way. But what exactly can regulation actually provide for bitcoin?</p>
<p>Regulation is “A rule or directive made and maintained by an authority”, it’s not law, it’s ‘guidelines’ which provide a code of practice. Regulation does not change the legality of something nor the consequences of non-compliance, ‘ignorance of the law is not is not an excuse’, nor is regulation.</p>
<p>##The current state of Bitcoin regulation</p>
<p>One thing that needs to be distinguished is the difference between the regulation of ‘Bitcoin the protocol’ vs. the regulation of ‘bitcoin companies’. For Bitcoin the protocol, it represents a new paradigm within finance, regulators are unsure about how to classify it; trying to label bitcoin with any pre-existing definition represents a complete lack of understanding.</p>
<blockquote>
<p>[Bitcoin appears to be a decentralized account based payment system without an issuer or central counterparty. It involves the circulation of valuable rights but not rights to cash as such. The valuable rights are a form of intangible property, transferred irrevocably and immediately (albeit with delayed confirmation) by electronic order.</p>
<ul>
<li>Rhys Bollen, Monash University.](http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2285247)</li>
</ul>
</blockquote>
<p>Currently there is a lack of consensus about what bitcoin even is! Each country has its own interpretation, leading to an ambiguous regulatory environment for Bitcoin.</p>
<p>As you can see from Wikipedia’s <a href="https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country#Chart_of_legal_status_by_country">Legality of bitcoin by country</a> (screenshot below), different countries have incredibly different interpretations of ‘what is bitcoin’. If countries can’t even agree upon a definition of bitcoin, what benefit can we really expect from regulation?</p>
<p><img src="/images/wikipedia-legality-of-bitcoin-by-country.png" alt="Wikipedia legality of bitcoin by country" title="Wikipedia legality of bitcoin by country" /></p>
<p>But separate from ‘Bitcoin the protocol’, surly there’s benefit in clarifying AML/KYC regulations for ‘bitcoin companies’? Clear and concise rules for such matters will promote and establish a healthy industry, free of hiccups like MT GOX.</p>
<p>One of the best case studies of this is The Isle of Man. Which has not only released its regulation for Bitcoin Business, but also has an existing permissive financial and gambling regulation.</p>
<blockquote>
<p><a href="http://www.coindesk.com/isle-of-man-introduces-regulation-for-bitcoin-businesses/">[Those in] the business of issuing, transmitting, transferring, providing safe custody or storage of, administering, managing, lending, buying, selling, exchanging or otherwise trading or intermediating convertible virtual currencies, including crypto-currencies or similar concepts where the concept is accepted by persons as a means of payment for goods or services, a unit of account, a store of value or a commodity.
– Isle of Man Proceeds of Crime Act 2008 Amendment</a></p>
</blockquote>
<p>Any Bitcoin related business in the Isle of Man has to comply with existing AML requirements, collecting ID information and assisting to identify suspects of money laundering. Businesses also have to register with, and be overseen by the Financial Services Committee (FSC). This approach is not necessarily good for Bitcoin; it boxes it in with existing financial instruments and gives poor insight into other use cases.</p>
<blockquote>
<p>[The extra hassles/costs will put many startups off and seems unnecessary”…“I can’t help feeling it will have every major scam in crypto all over the world looking to come to the island in order to get a license as well.</p>
<ul>
<li>Adrian Forbes, co-founder of TGBEX](http://www.coindesk.com/isle-of-man-introduces-regulation-for-bitcoin-businesses/)</li>
</ul>
</blockquote>
<p>This supposedly ‘game changing’ regulation from the Isle of Man known for its permissive regulation has resulted in two things:</p>
<ol>
<li>Higher cost of entry for startups.</li>
<li>Stricter KYC information collection requirements, lowering the minimum reporting requirement from €12 000 to €1000.</li>
</ol>
<p>So what exactly has this regulation provided except raising the barrier to entry?</p>
<p>Alternatively, countries such as Canada and Australia have refrained from releasing any official regulation, viewing Bitcoin as an entity of too small size to be worthy of specific regulation. This decision was made to prevent stifling innovation during bitcoin’s infancy.</p>
<p>Other countries like Russia and Ecuador have outlawed this new technology all together, preventing business or even individuals from participating in this new industry. This type of ‘regulation’ effectively makes using bitcoin illegal but not impossible; as long as the internet is accessible bitcoins can be transferred.</p>
<p>Another great example of regulation and bitcoin is the Bitliscence, New York’s Department of Financial Service’s (NYDFS) answer to these regulatory ambiguities. The cost of the license starts at $5,000 USD.</p>
<p>The license requires: the name, address, personal history and fingerprints of ‘key employees’, submission of written plans describing any new products or services as well as material changes to existing offerings, valid for two years and subject to review. Any business which exchanges fiat currency for virtual currency will require a license.</p>
<blockquote>
<p>[The framework [BitLiscence] now indicates that digital currency businesses will need to keep “a general ledger containing all asset, liability, ownership equity, income and expense accounts”, as well as identifying information for “any parties to the transaction” in addition to the names, account numbers and physical addresses of all those involved.</p>
<ul>
<li>Coindesk](http://www.coindesk.com/breaking-down-new-york-bitlicense-revision/)</li>
</ul>
</blockquote>
<p>These types of regulatory requirements are double edged. As they try to promote the growth of bitcoin through safe practice, but they simultaneously raise the barrier to entry and stifle the innovative potential. Is this really what bitcoin needs to succeed? I doubt that collecting information on the owners of bitcoin companies and their employees (which have access to funds) will affect the probability of malpractice.</p>
<p>Recently Ripple Labs (San Fransisco, CA) was fined $700,000 recently for failing to register with FinCEN as a money service business and failing to implement an adequate anti-money laundering program.</p>
<blockquote>
<p><a href="http://www.fincen.gov/news_room/nr/html/20150505.html">Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.</a></p>
<ul>
<li>FinCEN</li>
</ul>
</blockquote>
<p>This perfectly highlights the problem with existing regulation aimed at bitcoin business. It uses an umbrella approach towards bitcoin business, viewing it as a financial tool and missing the larger point. Focusing on the smaller risk of money laundering will not prevent another huge loss of funds through poor practice (<a href="http://www.bloomberg.com/news/articles/2014-02-28/mt-gox-exchange-files-for-bankruptcy">MT GOX</a>).</p>
<p>Bitcoin is not foremost a financial instrument, it is a technology. Focusing on bitcoin as a financial instrument is ‘not seeing the forest from the trees’, any type of AML/KYC centric regulation fails to address the real problem, the $700 million of consumer fund losses. It shouldn’t be focusing on money laundering; it should be focusing on safe ‘bitcoin business’ practice.</p>
<p>##Bitcoin and Regulation: What it should be addressing</p>
<p>###Security Guidelines</p>
<p>What would benefit bitcoin and its related companies would be code of practice towards securely storing bitcoins. Although bitcoin the protocol is inherently safe, USD $700 million worth of Bitcoin has been lost or stolen, the majority of which has been the result of poor security measures (MT GOX is responsible for $450 million in losses alone). The method each bitcoin company uses to store bitcoins is entirely arbitrary, without regulation addressing this specific point, there’s no way to tell who has your funds and who is just pretending. This is the number one issue that Regulators should be addressing.</p>
<h3 id="bitcoin-as-a-money-transmission-vehicle">Bitcoin as a money transmission vehicle</h3>
<p>This point seems to be covered by all regulatory guidelines so far. The majority of regulation already released covers this topic, specifically AMC/KYC requirements. All bitcoin exchange transactions involve similar practices to opening a bank account.</p>
<p>This type of regulation should not be so draconic; after all, bitcoin is not only used as a payment vehicle. Defining regulation to specifically address the laundering of money should not be a major concern in any case; after all, any business which effectively promotes this type of conduct will be fined and shut down by law enforcement agencies. Not to mention there is no incentive for ‘terrorists’ to use bitcoin over fiat currencies, it’s much more traceable and harder to exchange than cash.</p>
<h3 id="bitcoin-taxation-requirements">Bitcoin Taxation requirements</h3>
<p>Bitcoin needs to be viewed as a foreign currency; this decision has issues due to existing laws defining a currency to need government backing. These types of opinions have resulted in bitcoin being viewed as “goods” subject to 10% tax in <a href="http://www.afr.com/technology/australia-risks-destroying-competition-with-bitcoin-regulation-20141125-11tfst">certain countries</a>. This type of regulatory decision demonstrates trying to fit bitcoin into existing definitions, something which ultimately will not work.</p>
<p>###Smart Contracts</p>
<p>The conditions of smart contracts and their legal precedences is a major issue lying underneath the surface of bitcoin. One of the largest areas for innovative potential within bitcoin is smart contracts, but there is little discussion about whether a smart contract is legally binding. This area needs addressing immediately, as delays will heighten the probability of future issues much greater than anything we have seen so far. To what degree will the law recognize smart contracts as being legally binding, this is the iceberg of bitcoin regulation.</p>
<p>###Blockchain</p>
<p>The final area that needs regulatory discussion is the Blockchain. The Distributed consensus ledger needs to be understood as an entity not specific for financial transactions or permissible to control. This type of instrument is a new concept to the world, the sooner governments articulate their recognition of its existence and implications the sooner bitcoin will develop.</p>
<p>These concepts may seem abstract, but these are the questions that need discussion now, they are pertinent to bitcoins success. Waiting another 12 months to determine whether John Doe needs to provide a copy of his identification for a $500 purchase is another 12 months spent in vein. It will provide nothing beneficial to the users nor prevent any major future problems.</p>
<p>###Self-Regulation and the Blockchain</p>
<p>Can regulators really help bitcoin? The regulators know less about bitcoin than the people within the industry. Can we actually expect any decision to be beneficial for the future of Bitcoin as a technology? I believe that bitcoin could be effectively self-regulated, as market forces will ultimately decide what is successful.</p>
<p>Bitcoin is still in the ‘wild-west’, there are varying levels of ‘regulation’ being implemented by companies in different countries. I believe that the people who own these businesses are effectively better equipped at making decision regarding best practice than any regulators. Just watch this video if you don’t believe me:</p>
<iframe width="420" height="315" src="https://www.youtube.com/embed/vApr2pOBHbk?start=166" frameborder="0" allowfullscreen=""></iframe>
<p>This is ultimately what bitcoin needs at this point in time, it has to cease believing in an oversight committee as being capable of giving it the support and encouragement it requires, they lack the understanding of what bitcoin is to offer that kind of meaningful supervision. Even with regulation you will still see <a href="https://www.google.com/search?hl=en&gl=us&tbm=nws&authuser=0&q=malpractice">malpractice</a>, <a href="https://www.google.com/search?hl=en&gl=us&tbm=nws&authuser=0&q=bank+fined+billion">fines</a>, and <a href="https://www.google.com/search?hl=en&gl=us&tbm=nws&authuser=0&q=bank+failed+fdic">closures</a>.</p>
<p>As we have seen in other industries, businesses will come and go, survival is not a guarantee. Ultimately, who survives is determined by a free market. Regulation will aim to cease bad conduct but will not change a thing; it can only address a problem in retrospect.</p>
<p>As we saw with Megauploads, a business always complies with the law until the law stops complying with the business. Regulation is not going to change a thing in bitcoin; it’s up to its users to be responsible, but then again, who would you rather trust with its future?</p>
Rupert Hacketthttps://plus.google.com/http://www.bitcoinbulls.net//rebuttal-3-reasons-why-bitcoin-wont-be-the-new-internet.html2015-03-04T00:00:00-05:002015-03-04T00:00:00-05:00Rebuttal: 3 reasons why Bitcoin won’t be the new Internet<p><img src="/images/bitcoin-the-new-internet.jpg" alt="bitcoin the new Internet" title="bitcoin the new Internet" /></p>
<p>Sidney Sida Zhang did a nice sounding write up on <a href="http://sidazhang.com/3-reasons-why-bitcoin-wont-be-the-new-internet/">3 reasons why Bitcoin won’t be the new Internet</a>. As good as they sound to some, Sidney’s arguments don’t make sense to me. For context I’ve been a big bitcoin supporter since 2013 and I’ve used bitcoin for hundreds of transactions</p>
<h2 id="has-sidney-used-bitcoin-much">Has Sidney used bitcoin much?</h2>
<p>I suspect Sidney has not used bitcoin much. Why is that? Sidney makes the mistake of thinking bitcoin is only useful for illegal transactions. Update: Sidney and I had some <a href="https://twitter.com/sidazhang/status/573488971214360576">Twitter correspondence</a>. He has used bitcoin more than I thought.</p>
<p>Bitcoin has more utility than paper currency in the same way email has more utility than paper mail. In my opinion anyone who doesn’t see that either hasn’t used bitcoin much or is blind. Literally every week I see financial use-cases that bitcoin technology can improve.</p>
<p>My latest example: this week an electronic check I sent cleared. When did I issue it? 12 days prior. Oh and this:</p>
<blockquote class="twitter-tweet" lang="en"><p>Wanted to send a check today. Found out that checking account had closed due to inactivity. Can't wait for a <a href="https://twitter.com/hashtag/bitcoin?src=hash">#bitcoin</a> world!</p>— David Silva Smith (@DavidSilvaSmith) <a href="https://twitter.com/DavidSilvaSmith/status/568824116561604609">February 20, 2015</a></blockquote>
<script async="" src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<p>How long did it take me to reopen a checking account with a bank I already had a relationship with? <strong>2 hours</strong>. How long does it take to add new account with a company like <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">Coinbase</a>? <strong>2 minutes</strong>? Less? Maybe 10 if you are really slow.</p>
<p>Oh you want to open that account during non-banking hours. Good luck with a traditional bank. Not a problem in bitcoin land.</p>
<h2 id="disclosures">Disclosures:</h2>
<ul>
<li>I have a <a href="/bitcoin-investment-portfolio/">financial interest</a> in bitcoin’s success (this is posted on bitcoin bulls after all)</li>
<li>I’m not a blind bitcoin zealot. Yes I have concerns about bitcoin’s success and I’ll share them next week.</li>
</ul>
<h2 id="rebuttals">Rebuttals</h2>
<p>Sidney I appreciate you sharing your thoughts on why bitcoin won’t succeed. However I disagree with each point you make. Here are my rebuttals:</p>
<h3 id="reason-1-bitcoin-will-not-replace-retail-payment-systems">Reason 1: Bitcoin will not replace retail payment systems</h3>
<p><img src="/images/bitcoin-retail-payments.jpg" alt="Bitcoin retail payments" title="Bitcoin retail payments" /></p>
<h4 id="bitcoin-is-not-cheap-proof-of-work-network-is-intentionally-expensive">Bitcoin is not cheap! Proof-of-work network is intentionally expensive.</h4>
<p>First Visa spent <a href="https://www.google.com/finance?q=NYSE:V&fstype=ii">$5 billion</a> on their payment-processing network in 2014. The Federal Reserve has budgeted <a href="http://www.federalreserve.gov/foia/2015currency.htm">$717.9 million for 2015 currency production</a>. Monetary systems and payment processing systems have costs. Bitcoin will never be free.</p>
<p>I believe at scale bitcoin will be cheaper than processing networks: Visa, MasterCard, Western Union, PayPal, etc. I expect it will still be <em>expensive</em> in the sense that billions of dollars will be spent processing payments and securing the network. It will be cheap in the sense that tens of billions in fees will be taken out of the financial system.</p>
<p>Bitcoin is built to be an efficient self-adjusting system. Miners receive a financial reward for processing payments and securing the network. If the block reward + fees goes down, mining costs should go down as miners become unprofitable and turn off, making the cost of securing the network less expensive (and also making the network less secure).</p>
<p>Today many people see the block reward as a subsidy (Sidney calls it seigniorage). It is not either. It is a stated distribution mechanism. If I start a company and give people shares over a 5-year period for helping start the company I am not subsidizing them or minting new shares. I am compensating them for helping me start a company.</p>
<p>Bitcoin block rewards are not subsidies. They are serve compensation to miners for securing a nascent payment processing network. The rewards also help distribute bitcoins. One problem with digital currencies is who gets them (21 million of them in bitcoin’s case)? No one has developed a more successful distribution mechanism than Satoshi’s seemingly prescient block reward system.</p>
<p>By design bitcoin miners will eventually be only compensated by fees. Will the network shut down at that point because it will be ‘too expensive’? Sidney says yes, bitcoin is intentionally expensive. Lets dig into that.</p>
<p>In the future if bitcoin processes 2K transactions per second (<a href="https://en.bitcoin.it/wiki/Scalability#Scalability_targets">Visa scale</a>) that equates to 1,200,000 transactions per block. A transaction fee of 1 cent would generate $12K revenue per block. At that scale a 1-penny fee per transaction would provide more revenue than the current block reward (25 BTC ~ $7K).</p>
<p>Further Visa has about <a href="http://www.cardhub.com/edu/number-of-credit-cards/">300 million users</a>. Bulls like me envision billions of people using bitcoin, so in the future bitcoin TPS may dwarf Visa’s current volume.</p>
<p>Lastly credit cards can’t serve sub-dollar transactions well. In the future perhaps micro transactions will be the majority of network transactions. Who knows?</p>
<p>Yes in the scenario I outlined bitcoin needs scale to compete with Visa, but that’s why the blockreward is ingenious. The block reward provides a way to bootstrap the network to profitability. Without the block reward (subsidy, seigniorage) who would lose money by mining? Would the network be <a href="http://www.extremetech.com/extreme/155636-the-bitcoin-network-outperforms-the-top-500-supercomputers-combined">more powerful than the worlds 500 super computers?</a></p>
<h4 id="fiat-conversion-makes-bitcoin-transactions-even-more-expensive">Fiat conversion makes Bitcoin transactions even more expensive.</h4>
<p>Yes converting adds costs (which are dropping by the way), but by eliminating fraud it is already cheaper.</p>
<p>It is cheaper for me to convert dollars to bitcoin (.5%) then pay Dell who converts it to dollars (1% yes I know many merchants charge 0% for conversion, but lets help Sidney’s case) than it is to pay credit card companies 2% or more. It looks more expensive because .5% of that cost is born by consumers but actually it is a cheaper transaction to the overall ecosystem (fraud, marketing, processing, etc. are expensive for Visa & MasterCard) It is also an unfair comparison. What if your users never convert to fiat? If bitcoin is successful on a large-scale conversions will be unnecessary. Today a few million people use bitcoin and only 100K merchants accept bitcoin. The more people who use bitcoin and the more merchants who accept bitcoin the less the need to convert.</p>
<h4 id="the-entire-bitcoin-industry-is-subsidized-by-vc-investment">The entire Bitcoin industry is subsidized by VC investment</h4>
<p>Yes <a href="https://bitpay.com?oid=860830">BitPay</a>, <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">Coinbase</a>, etc. have VC investment. Subsidies no. Investment yes. Smart investors like Andreessen Horowitz, Fred Wilson, etc. see bitcoin as the biggest opportunity since the Internet, unlike Sidney.</p>
<p>Back to the subsidies for merchant processors (I’m not sure if Sidney knows there are other areas investors are putting money into) whereill they be able to continue with 0% processing? Sidney says no. I say maybe. Ever heard of companies like Google, Facebook, Mint.com, or Discover? As a consumer I pay nothing for those products. However each one earns billions in revenue. Can BitPay do the same sans subsidies? I think so.</p>
<h3 id="reason-2-bitcoin-will-not-end-the-need-for-trusted-central-parties">Reason 2: Bitcoin will not end the need for trusted central parties</h3>
<p><img src="/images/bitcoin-replacing-trusted-3rd-parties.jpg" alt="Bitcoin replacing trusted 3rd parties" title="Bitcoin replacing trusted 3rd parties" /></p>
<h4 id="crypto-will-not-replace-fiduciary-duties">Crypto will not replace fiduciary duties</h4>
<p>I think Sidney is trying to say there are more scams in crypto than in regulated industries. Please google <a href="https://www.google.com/?gws_rd=ssl#safe=off&q=billion+dollar+scam+sec"><em>billion dollar scam sec</em></a>. See a page full of bitcoin scams?</p>
<p>Sidney is right, bitcoin will not eliminate scams, but it will do what regulations cannot do: it will prevent the possibility of some types of scams (one can’t forge bitcoins for example). Sidney fails to realize bitcoin has attributes that can eliminate scam attack vectors (provable reserves, transparency, trustless escrow, etc.)</p>
<p>Getting back to Sidney’s earlier point about bitcoin being ‘expensive’ fraud is a big reason why traditional financial systems are slow and expensive, to counteract fraud. Bitcoin is faster than the existing financial system (minutes vs. days) because there is no possibility of payment reversals, forgeries, etc.</p>
<h4 id="intermediaries-provide-more-value-than-just-handling-payment">Intermediaries provide more value than just handling payment.</h4>
<p>True. Bitcoin gives intermediaries new tools to support use cases that are impossible with today’s technologies while lowering costs and increasing settlement speed. Direct mail companies didn’t disappear when email appeared (well some did :)), but the smart ones took advantage of email’s efficiencies to trounce their slower moving competitors. I expect we will see the same thing in bitcoin, intermediaries using bitcoin to provide better services to customers using the new capabilities.</p>
<h4 id="full-decentralization-and-trustlessness-are-important-for-illegal-transactions">Full decentralization and trustlessness are important for illegal transactions</h4>
<p>This isn’t an area I have much knowledge in. I’m not sure if criminals keep detailed receipts of their illegal transactions and make those receipts available to law enforcement, but I suspect they do not. I have read drug dealers prefer cash (no electronic records) to bitcoin since transactions are stored in an immutable public ledger. The Verge’s article: <a href="http://www.theverge.com/2015/1/14/7546669/silk-road-trial-bitcoin-tracking">In the Silk Road trial, Bitcoin is a cop’s best friend</a> supports this line of thinking.</p>
<p>This article excerpt probably says enough:</p>
<blockquote>
<p><a href="http://www.theverge.com/2015/1/14/7546669/silk-road-trial-bitcoin-tracking">BITCOIN IS INSANELY TRACEABLE.</a></p>
</blockquote>
<h3 id="reason-3-internet-is-not-a-good-analogy-for-bitcoin">Reason 3: Internet is not a good analogy for Bitcoin</h3>
<p><img src="/images/bitcoin-to-internet.jpg" alt="Bitcoin to Internet" title="bitcoin to Internet" /></p>
<h4 id="bitcoin-provides-no-utility">Bitcoin provides no utility</h4>
<p>No chargebacks or forgeries, immutable public ledger, 10 minute settlement anywhere in the world, censorship resistant, immune to inflation, low storage costs, only predictable money supply, permission-less innovation, etc. Not useful?</p>
<p>I’ve invested in <a href="/delta-financial-pays-bitcoin-interest.html">BTCDelta</a>, <a href="http://www.bitfinex.com/">Bitfinex</a>, and <a href="/can-btc-jam-grow-your-bitcoins.html">BTCJam</a>. Were the returns I got not useful? Did the counter-parties borrowing my money do so out of charity? When I was in the Dominican Republic and gave someone $5 of bitcoin through <a href="/circle-is-amazing.html">Circle</a> with no fees was that not useful? What about the remittance markets like <a href="/37coins-in-detroit.html">37Coins</a> that save consumers 80% on transaction fees?</p>
<p>Bitcoin is orders of magnitude faster and cheaper for many types of financial transactions. It’s slew of useful attributes also enable new business models like <a href="http://factom.org/">Factom</a>. The utility at this nascent stage and the almost unlimited expected future utility is <strong>precisely</strong> why people compare bitcoin to the Internet.</p>
<p>I see it as the <a href="/bitcoin-empowers/">most empowering force since the Internet</a>. Utility? Yeah in spades.</p>
<h4 id="bitcoin-is-primarily-a-speculative-asset-yes-most-bitcoin-holders-are-speculating-on-future-value-however-if-most-domain-name-owners-in-the-90s-were-holding-speculating-the-value-would-increase-that-does-not-mean-the-internet-was-not-going-to-succeed-another-example-today-tesla-and-amazon-stockholders-own-those-stocks-based-on-expected-future-earnings-that-does-not-mean-those-companies-are-worthless">Bitcoin is primarily a speculative asset. Yes most bitcoin holders are speculating on future value. However if most domain name owners in the 90s were holding speculating the value would increase that does not mean the Internet was not going to succeed. Another example. Today Tesla and Amazon stockholders own those stocks based on expected future earnings. That does not mean those companies are worthless.</h4>
<h4 id="internet-did-not-make-design-trade-offs-to-primarily-focus-on-censorship-resistance-at-the-expense-of-other-qualities-such-as-speed">Internet did not make design trade-offs to primarily focus on censorship resistance at the expense of other qualities (such as speed).</h4>
<p>I don’t know enough about the Internet’s design to comment. I do know that bitcoin dramatically increases settlement speed (10 minutes vs. days for credit cards, wire transfers, checks, etc.) so even if it wasn’t a design goal it did a nice job of dramatically increasing speed.</p>
<h4 id="the-primary-use-of-bitcoin-is-illegal-transactions">the primary use of bitcoin is illegal transactions.</h4>
<p>I’m not sure where he is getting this data. I don’t think the <a href="http://www.coindesk.com/state-of-bitcoin-q2-2014-report-expanding-bitcoin-economy/">100K merchants</a> using bitcoin are using it for illegal transactions. I know I have used bitcoin 0 times for illegal transactions in the 700+ transactions I’ve performed.</p>
<h4 id="if-online-gambling-became-legal-there-would-be-no-use-for-bitcoin">If online gambling became legal there would be no use for bitcoin.</h4>
<p>Being able to take customer payments from all over the world in minutes without fear of fraud not useful? Sidney should write Overstock, Microsoft, Dell, Dish, Time, Newegg, Expedia, etc. and tell them to stop accepting bitcoins. Apparently eliminating fraud, reducing payment processing fees, and being able to service new markets are not good reasons for merchants to accept bitcoin.</p>
<h4 id="blockchain-technology-is-useful-just-not-bitcoin">Blockchain technology is useful just not bitcoin</h4>
<p>Also known as: CPUs are useful, just not computers.</p>
<p>How does one make a secure blockchain (remember that ‘expensive’ thing Sidney mentioned earlier?) without mining fees and block rewards? There is no blockchain on earth that has the security of the bitcoin blockchain. Thousands of other cryptocurrencies exist that have tried and failed to overthrow bitcoin. Canada even gave up on <a href="http://www.coindesk.com/canadian-government-end-mintchip-digital-currency-program/">MintChip</a>, their attempted digital currency. This line of thinking is flawed. The blockchain is useful because it is secure. For less secure applications we have databases :) It is secure because it is ‘expensive’. Maybe someone smarter than me can create a useful blockchain sans the currency.</p>
<h4 id="frequent-value-fluctuations">frequent value fluctuations</h4>
<p>Sidney doesn’t draw attention to it (casually mentioned in the last sentence), but these three words are the most compelling argument in the essay. Value fluctuations are a problem bitcoin has to work around to gain an overwhelming network effect (when it does the fluctuations will be gone) but more on that next week :)</p>
<h2 id="what-problems-do-i-see">What problems do I see?</h2>
<p>As someone who has used bitcoin for over 700 transactions totaling over $100K I’ll discuss what I worry about in a post next week.</p>
<h2 id="am-i-wrong">Am I wrong?</h2>
<p>If I’m wrong let me know in the comments. If you agree, got something wrong, or missed something, you can let me know too :)</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//buying-bitcoin-through-a-brokerage-account.html2015-03-02T00:00:00-05:002015-03-02T00:00:00-05:00Buying Bitcoin Through a Brokerage Account
<p><img src="/images/buying-bitcoin-through-a-brokerage-account.jpg" alt="Buying Bitcoin Through a Brokerage Account" title="Buying Bitcoin Through a Brokerage Account" /></p>
<p>Many investors have asked me How do I buy bitcoin? or Where do I buy bitcoin? They also ask can I buy bitcoins for my IRA, 401K or Roth IRA? I didn’t have a great answer for them.</p>
<p>Investors have had a number of poor options like:</p>
<ul>
<li>get indirect exposure through publicly traded companies like <a href="https://www.google.com/finance?q=OTCMKTS%3ABTCS">BTCS</a></li>
<li>buy through <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">Coinbase</a> or <a href="/circle-is-amazing.html">Circle</a></li>
<li>through <a href="https://bitcoin-investment-trust.secondmarket.com/signup">SecondMarket’s BIT</a>(Accredited, 25K minimum)</li>
<li>buy through overseas exchanges</li>
</ul>
<p>Beginning today, bitcoin can be purchased through an online brokerage! I’m going to show you how to buy bitcoin with a brokerage account. Yes you will be able to buy through online brokers like Charles Schwab, Fidelity, E*Trade or TD Ameritrade.</p>
<ol>
<li>Login to your online brokerage</li>
<li>Search for ticker GBTC</li>
<li>Trade or buy.</li>
</ol>
<p>Here is a video showing how to buy GBTC for a ROTH IRA.</p>
<iframe width="560" height="315" src="https://www.youtube.com/embed/OKBc7wDeUdY?rel=0" frameborder="0" allowfullscreen=""></iframe>
<p>Yes this will work through your IRA, Roth IRA, 401K, and other self-managed accounts.</p>
<p>Here is what that process looks like through Fidelity.</p>
<p><img src="/images/gbtc-on-fidelity.gif" alt="GBTC on Fidelity" title="GBTC on Fidelity" /></p>
<p>And here on TradeMonster</p>
<p><img src="/images/gbtc-on-trademonster.gif" alt="GBTC on TradeMonster" title="GBTC on TradeMonster" /></p>
<p>GBTC (managed by SecondMarket) holds bitcoins and is designed to mirror the performance of directly holding bitcoins. For details read <a href="/bitcoin-etfs-are-coming.html">bitcoin ETFs are coming</a>.</p>
<p>It is great that retail investors can now easily and safely purchase bitcoin through their online brokerage.</p>
<p>Do you plan on buying bitcoin through your broker? Let me know in the comments!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//satoshi-roundtable-scheme-exposed.html2015-02-12T00:00:00-05:002015-02-12T00:00:00-05:00Satoshi Roundtable Scheme Exposed
<p><img src="/images/satoshi-roundtable-scheme-exposed.jpg" alt="Satoshi Roundtable Scheme Exposed" title="Satoshi Roundtable Scheme Exposed" /></p>
<p>Despite the conspiracy theorists concerns, there were no evil plans discussed. Quite the opposite actually. For those who don’t know, organizer Bruce Fenton took some undeserved criticism for hosting the meeting. Coindesk called it “<a href="http://www.coindesk.com/bitcoin-elite-meet-secret-island-bilderberg-style-retreat/">a secretive, closed-door gathering of elite bitcoin CEOs and luminaries this weekend.</a>”</p>
<p>This was a group of about 60 people who are all dedicated to making the world a better place.</p>
<p>That makes sense when you consider many (but certainly not all) of the attendees hold libertarian and voluntaryist philosophies. Never heard of a voluntaryist?</p>
<blockquote>
<p><a href="http://voluntaryist.com/">Voluntaryists are advocates of non-political, non-violent strategies to achieve a free society.</a></p>
</blockquote>
<p>C’mon, does this look like a group of evildoers?</p>
<p><img src="/images/satoshi-roundtable-everyone.jpg" alt="Everyone at Satoshi Roundtable." title="Everyone at Satoshi Roundtable." /></p>
<h2 id="more-secrets">More secrets</h2>
<p>Feeding the homeless, giving people discounts on Amazon purchases, providing financial services to the developing world, reducing fraud in worldwide aid, stopping financial crisis, and introducing people bitcoin.</p>
<blockquote class="twitter-tweet" lang="en"><p>Currency for the Internet Age MT <a href="https://twitter.com/niccary">@niccary</a>: Setting <a href="https://twitter.com/joshrushing">@joshrushing</a> w/<a href="https://twitter.com/blockchain">@blockchain</a> wallet. <a href="https://twitter.com/rogerkver">@rogerkver</a> <a href="https://twitter.com/TraceMayer">@TraceMayer</a> <a href="http://t.co/Q6MkSWQ3Iy">pic.twitter.com/Q6MkSWQ3Iy</a> <a href="https://twitter.com/hashtag/bitcoin?src=hash">#bitcoin</a></p>— Josh Rushing (@joshrushing) <a href="https://twitter.com/joshrushing/status/564746811919699968">February 9, 2015</a></blockquote>
<script async="" src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<h2 id="lucky-me">Lucky Me</h2>
<p>I was fortunate to attend last weekend’s Satoshi Roundtable.</p>
<p>Bruce did a great job of putting on a high end event.</p>
<p><img src="/images/satoshi-roundtable-flowers.jpg" alt="Satoshi roundtable welcome flowers." title="Satoshi roundtable welcome flowers." /></p>
<p>It is awesome getting to hang out with smart, modest, interesting people. The meeting was an off the record-meeting so I won’t disclose any non-public information, but here are some of the people I met.</p>
<ul>
<li><a href="https://twitter.com/ristopietilaa">Risto Pietilä</a> - <a href="http://cointelegraph.com/news/112411/finnish-investor-plans-to-turn-estonian-castle-into-a-bitcoin-center">purchased an Estonian castle</a> with bitcoin.</li>
</ul>
<p><img src="/images/david-silva-smith-risto-pietila.jpg" alt="David Silva Smith and Risto Pietilä." title="David Silva Smith and Risto Pietilä." /></p>
<ul>
<li><a href="https://www.linkedin.com/in/justinnewton">Justin Newton</a>, CEO at <a href="https://netki.com/">Netki</a> - helped build the Internet and is now laser focused on making bitcoin easy to use with his first product <a href="https://netki.com/">focused on hiding wallet addresses</a> while retaining security and privacy.</li>
<li><a href="https://twitter.com/buzzdavefx">Dave Carlson</a>, CEO <a href="https://megabigpower.com/">Mega Big Power</a> - runs one of the largest single-operator mines in the world. Dave taught me a lot about the mining world (which I know almost nothing about)</li>
<li><a href="https://twitter.com/niccary">Nic Cary</a>, CEO <a href="https://www.blockchain.info">Blockchain</a> - Don’t like bank fees, limitations, and slow speed? Blockchain is building a viable alternative to the existing (legacy?) banking infrastructure.</li>
<li>Michael Cao, CEO <a href="http://zoomhash.com/">Zoom Hash</a> - Counts among his mentors people like Mark Cuban, Arianna Huffington, Daymond John and Tim Ferriss.</li>
<li><a href="https://twitter.com/tuurdemeester">Tuur Demeester</a>, <a href="http://www.adamantresearch.com/">Adamant Research</a> - smart Austrian economist specializing in the study of boom-and-bust cycles in the economy. Check out <a href="http://www.coindesk.com/author/tuur-demeester/">Tuur’s Coindesk bitcoin articles</a>.</li>
<li><a href="https://twitter.com/bitonbit">Dan Held</a>, <a href="https://www.changetip.com">ChangeTip</a> VP of Product - it was cool meeting the creator of <a href="http://mobile.zeroblock.com/">ZeroBlock</a>, an app I use daily. Ironically I didn’t use the app at all at the Roundtable because of the limited onsite Internet.</li>
</ul>
<blockquote class="twitter-tweet" lang="en"><p>Satoshi Roundtable Dronie! <a href="https://twitter.com/ErikVoorhees">@ErikVoorhees</a> <a href="https://twitter.com/rogerkver">@rogerkver</a> <a href="https://twitter.com/brockpierce">@brockpierce</a> <a href="https://twitter.com/gorillamania">@gorillamania</a> <a href="https://twitter.com/melshapiro">@melshapiro</a> <a href="https://twitter.com/adamludwin">@adamludwin</a> <a href="https://twitter.com/niccary">@niccary</a> <a href="http://t.co/bZsUtfTTzY">pic.twitter.com/bZsUtfTTzY</a></p>— Dan Held (@bitonbit) <a href="https://twitter.com/bitonbit/status/564473830157320193">February 8, 2015</a></blockquote>
<script async="" src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<ul>
<li><a href="https://twitter.com/iravagecoins">Ira Miller</a>, CEO, <a href="https://coinapult.com/">Coinapult</a> and <a href="https://twitter.com/jpblincoe">Justin Blincoe</a>, COO Coinapult - it was awesome hanging out with these guys and hearing how they want to help the people of countries being ravaged by hyperinflation.</li>
<li><a href="https://twitter.com/mperklin">Michael Perklin</a>, co-founder <a href="http://bitcoinsultants.ca/"> Bitcoinsultants Inc.</a> - is working to eliminate security incidents and hacks (aka. getting Goxxed). Check out the <a href="http://www.securityweek.com/c4-bitgo-publish-draft-cryptocurrency-security-standard">draft standard</a> he helped create.</li>
<li><a href="https://twitter.com/e_rossiello">Elizabeth Rossiello</a>, CEO <a href="https://www.bitpesa.co/">BitPesa</a> - speaks 5 languages, has 2 kids, lives and works in Kenya. Elizabeth is working to put more money in customer’s pockets when they send money to Africa.</li>
<li><a href="https://twitter.com/petertoddbtc">Peter Todd</a>, Bitcoin Core Developer - it was awesome being able to pick Peter’s brain. He cleared up some of my confusions around mining and shared new (to me) scalability ideas, and his proof chains project.</li>
<li><a href="https://twitter.com/joshrushing">Josh Rushing</a>, Host of <a href="http://www.aljazeera.com/programmes/faultlines/">Fault Lines</a> – an engaging speaker with a unique perspective on events that shaped history.</li>
<li><a href="https://twitter.com/erikvoorhees">Erik Voorhees</a>, Entrepreneur - brought a historical perspective to some of the bitcoin discussions.</li>
</ul>
<p>I also got to further connect with colleagues like:</p>
<ul>
<li><a href="https://twitter.com/brucefenton">Bruce Fenton</a>, Atlantic Financial / Bitcoin Association - a fantastic host. Bruce was a fantastic host. I appreciate him organizing this conference and I appreciate the sense of humor he had regarding the criticisms of his conference.</li>
</ul>
<blockquote class="twitter-tweet" lang="en"><p>Leaked photo: Satoshi Roundtable agenda. <a href="https://twitter.com/ErikVoorhees">@ErikVoorhees</a> <a href="https://twitter.com/petertoddbtc">@petertoddbtc</a> <a href="https://twitter.com/maxkeiser">@maxkeiser</a> Governments agree: Privacy is bad <a href="http://t.co/quoaL1pgo3">http://t.co/quoaL1pgo3</a></p>— Bruce Fenton (@brucefenton) <a href="https://twitter.com/brucefenton/status/562739481007357954">February 3, 2015</a></blockquote>
<script async="" src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<ul>
<li><a href="https://twitter.com/gocoinceo">Steve Beauregard</a>, CEO, <a href="http://www.gocoin.com/">GoCoin</a> - it is always great to see and hangout with Steve. It is amazing what an awesome 2014 he and his company had. The man works hard to help merchants save money through cryptocurrencies.</li>
<li><a href="https://twitter.com/vitalikbuterin">Vitalik Buterin</a>, Founder <a href="https://www.ethereum.org/">Ethereum</a> - very cool to talk with one of the key people building out one of the most highly anticipated bitcoin 2.0 platforms.</li>
<li><a href="https://twitter.com/diiorioanthony">Anthony Di Iorio</a>, co-founder <a href="http://kryptokit.com/">KrytpoKit</a>, <a href="https://www.ethereum.org/">Ethereum</a> - he has done a LOT in the bitcoin space and I’m sure will continue that streak as most prolific entrepreneurs in 2015. Plus he wears cool hats :)</li>
<li><a href="https://www.linkedin.com/in/marshalllong">Marshall Long</a>, CEO <a href="http://finalhash.com/">Final Hash</a> - fun guy. He also puts up with my dumb mining questions as I try to understand what remains a big mystery to me. :)</li>
<li><a href="https://twitter.com/ReeveC">Reeve Collins</a>, CEO, [Tether] - inventor of the Internet pop-up ad, one of the first aQuantive employees, and founder of multiple companies (Traffic Marketplace, RedLever, Pala Interactive.) Reeve is bringing some serious experience growing companies that solve real problems to the bitcoin space.</li>
<li>
<p><a href="https://twitter.com/michaeldupreejr">Michael Dupree</a>, Owner <a href="http://easybitllc.com/">EasyBit</a> - a good friend of mine from Michigan. Not only is Mike killing it with bitcoin ATMs he is a community builder always looking to help people out.</p>
</li>
<li><a href="https://twitter.com/paigefreeman">Paige Freeman</a>, VP of Sales for <a href="https://www.bitnet.io/">Bitnet</a> - she works with select partners across international trade, air travel and finance, enabling them to accept bitcoin, at scale, and without risk.</li>
<li><a href="https://twitter.com/DJohnstonEC">David Johnston</a>, Chairman of the Board at <a href="http://factom.org/">Factom Foundation</a> - one of the first bitcoin people I met. David is like Wayne Gretzky, always skating where the puck is going to be. He is part of the all-star Factom team. If you haven’t heard of them yet, you will. :)</li>
<li>Jason King, <a href="http://www.seansoutpost.com/">Sean’s Outpost</a> - has fed 147K meals to homeless people. In addition to that I learned he has quite a history as an entrepreneur and many interesting stories about his life.</li>
<li><a href="https://twitter.com/satoshilite">Charlie Lee</a>, <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">Coinbase</a> Engineer Manager & LiteCoin Creator - Charlie is a very nice guy. He and his Coinbase team are focused on making it easy to securely buy, use, and accept bitcoin currency. You may have heard of them :)</li>
<li><a href="https://twitter.com/tracemayer">Trace Mayer</a>, Author, investor, and early adopter - he has funded core infrastructure build out. It was awesome talking with Trace and learning more about the history of money. I is something I used to think I knew a lot about, but now realize I know almost nothing about.</li>
<li><a href="http://en.wikipedia.org/wiki/Brock_Pierce">Brock Pierce</a>, <a href="http://www.cryptocurrencypartners.com/">Crypto Currency Partners</a> - one of the best connectors I’ve ever met. If you have a ‘mission impossible’ brock is your best shot at achieving it.</li>
<li><a href="https://twitter.com/msantoriesq">Marco Santori</a>, <a href="http://www.pillsburylaw.com/">Pillsbury Winthrop</a> - one of the few lawyers recognized as an authority in the law of digital currencies. He counsels exchanges, payment processors, institutional miners, and other companies making new and exciting uses of distributed finance technology. In this highly regulated industry he helps founders comply with the morass of regulations (my words not his).</li>
<li><a href="https://twitter.com/ryan_singer">Ryan Singer</a>, Entrepreneur - Working to save us $400 billion in annual financial transaction clearing costs at <a href="http://domustower.com/">Domus Tower</a></li>
</ul>
<p><a class="twitter-timeline" href="https://twitter.com/DavidSilvaSmith/timelines/565938150279622656" data-widget-id="565939342653149184">Domus Tower</a>
<script>!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+"://platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs");</script></p>
<ul>
<li><a href="https://www.linkedin.com/in/craigcsellars">Craig Sellars</a>, Co-Founder & CTO at <a href="https://tether.to/">Tether</a> - leading the development of one of the most practical bitcoin 2.0 technologies, Tether. Craig is one of the rare people who can talk to an audience but also dive deep on the technology. I’ll never forget he become involved with Mastercoin because he while reading raw bitcoin transactions (channel the Matrix scene where they are reading green text) he saw Mastercoin data.</li>
</ul>
<blockquote class="twitter-tweet" lang="en"><p>Lot's of excitement about Tether at the Satoshi Roundtable on the weekend. <a href="https://twitter.com/hashtag/craigsellars?src=hash">#craigsellars</a> <a href="https://twitter.com/hashtag/bitcoin?src=hash">#bitcoin</a> <a href="http://t.co/VxKuoodhFA">pic.twitter.com/VxKuoodhFA</a></p>— Tether (@Tether_to) <a href="https://twitter.com/Tether_to/status/564840686210801664">February 9, 2015</a></blockquote>
<script async="" src="//platform.twitter.com/widgets.js" charset="utf-8"></script>
<ul>
<li><a href="https://twitter.com/paulsnx2">Paul Snow</a>, Texas Bitcoin Alliance and <a href="http://factom.org/">Factom</a> - he has forgotten more about the history of money than I’ll ever know. Paul is the creator and founder of Factom, letting developers build safer and more secure record keeping on a global scale.</li>
<li><a href="https://twitter.com/gorillamania">Nick Sullivan</a>, CEO <a href="https://www.changetip.com">ChangeTip</a> - a startup mentor, bitcoin investor, and very nice guy. Nick has built ChangeTip which many are calling the first bitcoin ‘killer app.’</li>
<li><a href="https://twitter.com/michaelterpin">Michael Terpin</a>, Founder and CEO <a href="http://transform.pr/">Transform PR</a> - one of the few bitcoiners with a Public Relations background. Michael helps bitcoin companies accelerate their progress. Clients include Bitcoin Shop, Gyft, Kraken, KnCMIner, KryptoKit, MaidSafe, and Mastercoin. Michael also runs the high-end <a href="http://www.bitcoinbulls.net/Coin-Agenda-Vegas-2014.html">Coin Agenda</a> bitcoin conference.</li>
<li><a href="https://twitter.com/jeffreyatucker">Jeffrey Tucker</a>, <a href="http://liberty.me/">Liberty.me</a> - another one of the people who have forgotten more about history than I’ll ever know. Jeffrey is an engaging person to talk with. Always a kid at heart and always interested in what you have to say. However he has an amazing historical perspective and every time I listen to him talk I seem to learn a ‘shocking’ fact about history.</li>
<li><a href="https://twitter.com/alysekilleen">Alyse Killeen</a>, <a href="http://www.marchcp.com/">March Capital Partners</a> - an expert on peer-to-peer networks and the Internet of Things. Alyse is one of the people helping to identify early stage companies that can use a capital infusion to create ‘tomorrow’s’ great companies.</li>
<li><a href="https://twitter.com/willobrien">Will O’Brien</a>, <a href="https://www.bitgo.com/">BitGo</a> - working to make the bitcoin world a safer world. Will is working to make the bitcoin services we rely on everyday: wallets, exchanges, etc. safe.</li>
<li><a href="https://twitter.com/super3">Shawn Wilkinson</a>, Founder <a href="http://storj.io/">Storj</a> - super smart dude working on a ‘decentralized Dropbox.’ Many people think that means a cheaper solution, but Storj will also be more secure and private. Say bye-bye to scandals like the <a href="https://en.wikipedia.org/wiki/2014_celebrity_photo_hack">2014 celebrity photo leak</a></li>
<li><a href="https://twitter.com/vadimt">Vadim Telyatnikov</a>, CEO <a href="https://alphapoint.com/">AlphaPoint</a> - every country needs an exchange, Vadim is helping them get one. Vadim provides a white label exchange platform for digital currency businesses. Bitcoin and altcoin exchanges all over the world have launched leveraging the AlphaPoint platform, helping people globally adopt digital currencies.</li>
<li><a href="https://twitter.com/rogerkver">Roger Ver</a>, <a href="http://memorydealers.com/">Memory Dealers</a> - one of the friendliest people I’ve ever met. Roger or ‘bitcoin Jesus’ is one of the most famous bitcoiners. He works tirelessly to help the world see how bitcoin can benefit them.</li>
</ul>
<p><img src="/images/david-silva-smith-and-roger-ver-ocean.jpg" alt="David Silva Smith and Roger Ver" title="David Silva Smith and Roger Ver" /></p>
<h2 id="want-more">Want more?</h2>
<p>Unfortunately the event wasn’t public or open to reporters, but here are some Twitter highlights:</p>
<p><a class="twitter-timeline" href="https://twitter.com/search?q=satoshi%20roundtable" data-widget-id="565940116602892288">Tweets about satoshi roundtable</a>
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<h2 id="what-do-you-think">What do you think?</h2>
<p>Was this a secretive meeting that unfairly excluded people? Share your thoughts in the comments!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//earn-bitcoins-through-the-house-edge.html2015-02-09T00:00:00-05:002015-02-09T00:00:00-05:00Earn Bitcoins Through The House Edge
<p><img src="/images/earn-bitcoins-through-the-house-edge.jpg" alt="Earn bitcoins through the house edge." title="Earn bitcoins through the house edge." /></p>
<p>In 2013 I made two very profitable investments with bitcoin:</p>
<ol>
<li>Through Arbitrage (<a href="how-to-earn-bitcoins-through-arbitrage.html">read my story here</a>)</li>
<li>Investing in bitcoin gambling site JustDice.</li>
</ol>
<p>My <a href="https://diggit.io/">Diggit.io</a> investment began just like my JustDice investment, through a news article (which I can’t seem to find now).</p>
<p>Fortunately having had the JustDice experience I knew the key factor determining the profitability of this investment: <em>is Diggit.io trustworthy?</em></p>
<p>If the site is honest, doesn’t get hacked, and doesn’t run afoul of the law I know it will provide high returns.</p>
<h2 id="a-passive-cash-cow">A Passive Cash Cow</h2>
<p>I knew this investment would be a passive cash cow. In gambling the house always wins. The investment model is simple. Deposit bitcoins and earn weekly interest. Absolutely <em>no</em> work required.</p>
<h2 id="site-success-increases-risk">Site Success Increases Risk</h2>
<p>However I also knew that there would be strong incentives working against my investment and the more successful the site the more risky the investment would become.</p>
<ol>
<li>The owner could be running a scam</li>
<li>The owner could be scammed, hacked, or robbed.</li>
<li>The site could be operating illegally and could be shut down.</li>
</ol>
<p>The risk increases as the site is successful because as the site is more successful there is more money involved. More money for the owner to fraud or long con with, more money to be stolen, and more press / political pressure for a successful law enforcement action.</p>
<h2 id="bottom-line">Bottom Line</h2>
<p>I don’t have a large amount of trust in this site and probably never will. If the site operated in a reputable jurisdiction and the owner was clearly identified I would feel more comfortable.</p>
<h2 id="what-does-the-investing-experience-look-like">What does the investing experience look like?</h2>
<h3 id="proving-trust">Proving Trust</h3>
<ul>
<li>The site owner has published a proof of cold storage at bitcoin address <a href="https://blockchain.info/address/1AqGXXoFRRa27ThqVLfsiPykkp2NC4i7QU">1AqGXXoFRRa27ThqVLfsiPykkp2NC4i7QU</a>. However when I looked the transaction history didn’t engender trust from me. The initial deposits were large and later deposits were relatively small. In my mind this increases the likelihood the owners are scammers. My thinking is scammers would probably seed a site with bitcoins to make it look like lots of customers trust the site with their bitcoins.</li>
<li>Online Since 12/1/2014. Not a lot of history. In general the longer a site has been honest, unhacked, and successful, the safer it is. However there are long cons and whatever happened at Mt. Gox so one can never feel too safe.</li>
<li>The owner <a href="https://bitcointalk.org/index.php?topic=879161.0;all">announced the launch</a> on the bitcointalk talk forum. The owner seems like a decent guy. He was responsive to customers and did a good job handling an attempted blackmailer early on.</li>
</ul>
<p>I decided to send a small amount of bitcoin to test out the site and report back to you :)</p>
<p>I have read in forums that sites like <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">Coinbase</a> and <a href="/circle-is-amazing.html">Circle</a> have terms of service that prohibit using gambling sites. I didn’t want my Circle or Coinbase account cancelled so I decided to use <a href="https://www.blockchain.info">Blockchain</a> to perform the transfer. Blockchain works differently from Circle and Coinbase in that it doesn’t have or want custodial control of customer’s bitcoins. Instead it wants to give customers full control (and responsibility) of managing their money.</p>
<p>Before sending any money I googled around a little bit to look for obvious signs of scam. Usually this would be forum posts from users complaining of withdrawal problems. I planned on only putting in a small amount of bitcoin so I didn’t spend a huge amount of time googling. I recommend googling before investing and also starting small. I can always start with a small investment and increase it. However there is no recovering funds from a successful bitcoin scam.</p>
<p>Here is the first look at Digit.io
<img src="/images/diggit-io-first-look.jpg" alt="First look at diggit.io" title="First look at diggit.io" /></p>
<p>One weird thing about Diggit.io is that accounts are created without passwords.</p>
<p><img src="/images/diggit-io-no-password.jpg" alt=""Diggit.io no password"" title="Diggit.io no password" /></p>
<p>Since I’ll be depositing bitcoins into the site and don’t want to lose access to the coins I created a password. I did this by clicking the ‘Set Password’ button.</p>
<p><img src="/images/diggit-io-changing-password.jpg" alt=""Changing Diggit.io password"" title="Changing diggit.io password" /></p>
<p>To teach players how to use the site, Diggit.io gives free bitcoins through their RainBot. Periodically the RainBot will post in the chat “Im bringing the rain! Click here get some free bits.” Players who are quick enough to click the link get some free bits.</p>
<p><img src="/images/diggit-io-registering-for-free-bits.jpg" alt="Registering for free bits on Diggit.io" title="Registering for free bits on Diggit.io" /></p>
<p>After registering I received the free bitcoins (0.00001666) as promised.</p>
<p><img src="/images/diggit-io-receiving-free-bits.jpg" alt="Receiving free bits on Diggit.io" title="Receiving free bits on Diggit.io" /></p>
<p>I tried to withdraw the bits, but there is a minimum withdrawal amount (0.0002) and a withdrawal fee (0.0001). I saw I was going to need a lot more free wins to make a withdrawal.</p>
<p>I’m not here for fractions of pennies so I moved on to depositing bitcoins.</p>
<p><img src="/images/diggit-io-depositing-bitcoins.jpg" alt="Depositing bitcoins into Diggit.io" title="Depositing bitcoins into Diggit.io" /></p>
<p>I know <a href="https://coinbase.com/?r=5273a742c8a9350188000027&utm_campaign=user-referral&src=referral-link">coinbase</a> analyzes where customers send bitcoins and can cancel accounts that violate their terms of service, for example sending bitcoins to gambling sites. I decided to use <a href="https://www.blockchain.info">blockchain</a> to make the deposit.</p>
<p><img src="/images/diggit-io-depositing-bitcoins-with-blockchain.jpg" alt="Depositing bitcoins into Diggit.io with Blockchain.info" title="Depositing bitcoins into Diggit.io with Blockchain.info" /></p>
<p>Diggit.io beeped as soon as I sent the bitcoins (.1) to let me know the funds were sent. The user interface also popped an overlay stating .1 bitoins are pending and there are 0/1 confirmations. I know exactly what’s going on, very cool!</p>
<p><img src="/images/diggit-io-shows-pending-deposit.jpg" alt="Diggit.io shows pending deposits." title="Diggit.io shows pending deposits." /></p>
<p>Diggit.io lets investors increase their risk level up to 2.5 times. This increases volatility but gives investors more power for the amount of coins listed. In my case of investing .1 bitcoins it has the effect of performing as if I’d invested .25 bitcoins. This is a very cool feature and I took advantage of it.</p>
<p>From my JustDice experience I know some investors don’t like the variance. In fact on JustDice some investors would pull out their bitcoins when they saw whales (large gamblers) make deposits or start gambling. It can be harrowing to watch hard earned profits evaporate or even go into negative territory. My thinking is as long as the odds are on my side I want as much exposure as possible.</p>
<p>Winnings and losings start immediately after my .1 deposit is invested.</p>
<p>After 1 hour my account earned 0.00001252 bitcoins!</p>
<p><img src="/images/diggit-io-earning-bits.jpg" alt="Earning bits on Diggit.io after one hour." title="Earning bits on Diggit.io after one hour." /></p>
<p>After one week my initial deposit of .1 plus some free bits had turned into 0.10086714 bitcoins, a gain of .41% in a week!</p>
<p><img src="/images/diggit-io-week-one-profit.jpg" alt="Diggit.io week one profit." title="Diggit.io week one profit." /></p>
<h2 id="final-thoughts">Final Thoughts</h2>
<p>Diggit.io has a great user interface and the potential to provide large (26%+) returns to investors. However these sites typically lose customer coins. Either the site operator runs off with the coins, the bitcoins are stolen, or the site is shut down by law enforcement.</p>
<p>I don’t plan on investing anymore coins with Diggit.io.</p>
<h2 id="additional-resources">Additional Resources</h2>
<ul>
<li><a href="https://thebitcoinstrip.com/diggit.io.html">The Bitcoin Strip</a> - discussed how Diggit.io works from a gameplay perspective.</li>
<li><a href="https://bitcointalk.org/index.php?topic=879161.0;all">Diggit.io launch announcement</a></li>
<li><a href="https://diggit.io/">Diggit.io</a> - the Diggit.io website.</li>
</ul>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//hellofuture-the-ultimate-currency.html2015-02-05T00:00:00-05:002015-02-05T00:00:00-05:00HelloFuture The Ultimate Currency
<p><img src="/images/hellofuture-the-ultimate-currency.jpg" alt="HelloFuture The Ultimate Currency" title="HelloFuture The Ultimate Currency" /></p>
<p>I was working through emails while casually watching Super Bowl 49 (crazy ending by the way). I became interested in the game because of the McDonald’s tease about taking a digital currency. Wow, wouldn’t it be awesome if there were something bitcoin related?</p>
<p>Focused on my computer I hear Bryant Gumbel’s voice from a clip we bitcoiners know <a href="https://www.youtube.com/watch?v=UlJku_CSyNg&src_vid=eAV2Gjkhztg">all too well</a>. Wow! This is amazing! A bitcoin company bought a bitcoin super bowl ad!</p>
<h2 id="30-seconds-later">30 Seconds later…</h2>
<p>I hear Katie Couric and Bryant Gumbel speculating about how an electric car works.</p>
<p>Big ideas take getting used to? An electric car?! BmW’s i3 isn’t what I’d call a Newfangled Idea. Seems like more of an incremental change over the gas engines we’ve been using for over 100 years to me.</p>
<h2 id="it-should-have-been-bitcoin">It should have been bitcoin…</h2>
<p>It should have been a bitcoin ad not an electric car! Bitcoin is the only technology as revolutionary and empowering as the Internet was.</p>
<p>We all thought we were going to get it and were let down.</p>
<p>I’ve stretched my amateurish editing skills past their limit (sorry for the poor audio clips), but I’ve succeeded in parodying the BMW i3 – “Newfangled Idea” ad into what it should have been: A bitcoin ad.</p>
<h3 id="hellofuture-the-ultimate-currency">#HelloFuture the Ultimate Currency</h3>
<iframe width="854" height="510" src="https://www.youtube.com/embed/y3PbdRRkyWs" frameborder="0" allowfullscreen=""></iframe>
<p>Was this where you thought the ad was going too? Let me know in the comments!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//bitcoin-etfs-are-coming.html2015-01-10T00:00:00-05:002015-02-03T00:00:00-05:00Bitcoin ETFs are Coming
<p><img src="/images/bitcoin-etfs-are-coming.jpg" alt="Bitcoin ETFs are Coming" title="Bitcoin ETFs are Coming" />
There has been a lot of buzz about the upcoming Winklevoss bitcoin ETF. This article explains what an ETF is, provide details on the bitcoin ETFs (yes there are TWO coming!), and discusses the potential impact of these ETFs.</p>
<p><em><strong>Edit 3/2/2015:</strong> The BIT was <a href="http://www.wsj.com/articles/bitcoin-investment-trust-gets-finras-ok-to-become-public-bitcoin-fund-1425242094">assigned an OTC ticker</a> yesterday.</em></p>
<h1 id="what-is-an-etf">What is an ETF?</h1>
<p>ETF stands for exchange-traded fund (ETF). Investment funds are a supply of capital from multiple investors for the purpose of buying securities where investors retain ownership of their shares. Exchange traded means the fund will trade in a marketplace such as NYSE (where Wal-Mart shares trade), NASDAQ (where Facebook shares trade), or OTCQX (where Volkswagen shares trade).</p>
<p>Investopedia defines an ETF as:</p>
<blockquote>
<p><a href="http://www.investopedia.com/terms/i/investment-fund.asp">A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.</a></p>
</blockquote>
<p>This means after the Bitcoin ETF launches, investors who are used to buying stock with their Charles Schwab, Fidelity, E*Trade or TD Ameritrade accounts will have an easy familiar process to invest in bitcoin.</p>
<p>Most investors, like my dad, are used to buying stocks through their online brokerage. The idea of buying bitcoin through <a href="/circle-is-amazing.html">Circle</a> or Coinbase, who they have never heard of, is inconvenient, foreign, and scary.</p>
<p>Don’t believe me? I created a 3-minute video showing <a href="https://www.youtube.com/watch?v=fAbWcpmeZXE">how to buy your first bitcoins</a> with Coinbase. One of my family members, an investor with 30+ years experience, was unable to complete a Coinbase purchase after spending 4 hours with support staff. The user experience was too different from what she was used to. If the bitcoin ETF had existed she would have opened her bitcoin position in a matter of minutes.</p>
<h1 id="etf-details">ETF Details</h1>
<p>There are two ETFs in the works. COIN, which will be listed on the NASDAQ exchange, and BIT, which will be listed on the OTCQX marketplace.</p>
<p>The NASDAQ listing will be on a premier exchange. Companies like Apple, Microsoft, Google, Facebook and Intel list on NASDAQ. The Winklevoss ETF will list alongside those marquee brands under the ticker COIN.</p>
<p>The OTCQX listing will be in a market with lower prestige than NASDAQ. Companies like Volkswagen, Heineken, Walmart de Mexico, and Yamaha are listed there. The reason for going with an OTCQX listing is to bring the fund to market faster.</p>
<h2 id="coin-etf-details">COIN ETF details</h2>
<p>The COIN ETF is the more well known of the two ETFs. Generally it is the bitcoin ETF people are talking about. It has gotten a lot of press already and will get even more if it launches.</p>
<h3 id="coin---what">COIN - What</h3>
<p>Officially called the WINKLEVOSS BITCOIN TRUST, it is sponsored by Math-Based Asset Services, LLC. Math-Based Asset Services is wholly owned by Winklevoss Capital. Winklevoss Capital is headquartered in New York and was founded by Cameron and Tyler Winklevoss in 2012. The initial SEC filing was submitted July 1st 2013. This process takes years, but it looks like the process is almost over.</p>
<p>The Winklevoss Bitcoin Trust will be listed and trade on the NASDAQ exchange using the ticker COIN.</p>
<blockquote>
<p>The Shares are intended to offer investors an opportunity to participate in bitcoin markets through an investment in securities. On the first day of trading, each Share in the initial Baskets was comprised of [0.20] bitcoins. The logistics of accepting, transferring and safekeeping of actual bitcoins are dealt with by the Custodian using the Security System, and the related expenses are built into the price of the Shares. Therefore, the investor does not have any additional tasks or costs over and above those associated with dealing in any other publicly traded security.</p>
</blockquote>
<p>Each COIN share will be worth 1/5 (.20) of a bitcoin. The price of a share is designed to track the price of the <a href="https://winkdex.com/">Winkdex.</a> The Winkdex is designed to come up with a market price for bitcoin. There are hundreds of exchanges across the world so this is a complex task.</p>
<p>Here is the formula:</p>
<blockquote>
<p><a href="https://winkdex.com/formula">Winklevoss IndexSM (also known as WinkDexSM) provides a blended price for bitcoins. WinkDex is calculated by blending the trading prices in U.S. dollars for the top three (by volume) qualified Bitcoin Exchanges during the previous two hour period using a volume-weighted exponential moving average. This proprietary formula weights transactions proportionally by volume as well as exponentially by time to give greater weight both to higher volume transactions and more recent transactions.</a></p>
</blockquote>
<p>The NAV of the COIN ETF will be calculated daily and is the total value of the Trust’s assets minus its liabilities. The Trust Administrator will use the Winkdex (“Winkdex® spot price”) 4:00 p.m. spot price of the previous day to calculate the NAV.</p>
<h3 id="coin---who">COIN - Who</h3>
<figure class="image">
<p><img src="/images/winklevoss-twins-techcrunch-disrupt.jpg" alt="Cameron and Tyler Winklevoss at Techcrunch Disrupt" title="Cameron and Tyler Winklevoss Techcrunch Disrupt" /></p>
<figcaption>
<p>Photo Credit: <a href="https://flic.kr/p/fNVDa3">TechCrunch Disrupt SF 2013: Day 2</a> by Techcrunch is licensed under <a href="https://creativecommons.org/licenses/by/2.0/">CC BY 2.0</a></p>
</figcaption>
<blockquote>
<p>Bitcoin brings the promise of email to the finance sector. Now it’s instant and effectively free to send money anywhere,</p>
<ul>
<li>Cameron and Tyler Winklevoss</li>
</ul>
</blockquote>
</figure>
<p>Cameron and Tyler Winklevoss (of Facebook fame) are the faces behind the bitcoin ETF. They were early bitcoin investors, buying the currency directly and investing in companies like BitInstant.</p>
<p>Kathleen Moriarty is another key player behind the Trust. Ms. Moriarty is a titan in the ETF industry. She helped create the first (and largest - $125 B) ETF ever (SPY) and the first ETF to provide investors ownership in physical gold (GLD).</p>
<blockquote>
<p>She brings instant credibility to a less-than-credible investment product. – Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ.</p>
</blockquote>
<p>With the millions in bitcoin provided by the Winklevii and the regulatory expertise provided by Ms. Moriarty the bitcoin ETF has a good shot at being approved by the SEC. That leads to the next question, when is this coming?</p>
<h3 id="coin---when">COIN - When</h3>
<p>This is the big question. No one knows when the SEC will approve the bitcoin ETF or even if it will happen. Bloomberg’s Eric Balchunas thinks it has a 50/50 chance of going public in 2015. He says if it does launch it will probably ‘steal the show.’ Meaning he believes it will get a LOT of press coverage. Listen to his own words in the Bloomberg segment:</p>
<iframe width="640" height="360" scrolling="no" frameborder="0" src="http://finance.yahoo.com/video/etf-launches-watch-2015-151134467.html?format=embed" allowfullscreen="true" mozallowfullscreen="true" webkitallowfullscreen="true" allowtransparency="true"></iframe>
<h3 id="coin---why">COIN - Why</h3>
<p>It is easy to buy bitcoins through Circle and Coinbase, who needs a bitcoin ETF?</p>
<p>It turns out there are a few reasons: fear, opportunity, legality, convenience, and safety.</p>
<blockquote>
<p>The investment objective of the Trust is for the Shares to reflect the performance of the value of a bitcoin as represented by Winkdex, less the Trust’s expenses. The Shares are intended to constitute a cost-effective and convenient means of gaining investment exposure to bitcoins. A substantial direct investment in bitcoins may require expensive and sometimes complicated arrangements in connection with the acquisition, security and safekeeping of the bitcoins and may involve the payment of substantial fees to acquire such bitcoins from third-party facilitators through cash payments of US Dollars. Although the Shares will not be the exact equivalent of a direct investment in bitcoins, they provide investors with an alternative that allows a level of participation in bitcoin markets through the securities market.</p>
</blockquote>
<p>It will appeal to “technologically challenged folks” as well investors and investment funds (hedge funds, pension funds, etc.) who are unable to directly hold bitcoins based on their subscription agreements, but can buy/sell equities listed on the NASDAQ stock exchange.</p>
<p>Investors historically have chosen to offload the friction of directly buying and securing assets such as gold for a reasonable fee. We believe investors will behave the same with regard to bitcoin. Also, since the ETF will be listed on the NASDAQ, investors will be able to trade their shares in the ETF like they would any other stock in a public company.</p>
<h2 id="bit-details">BIT Details</h2>
<h3 id="bit---what">BIT - WHAT</h3>
<p>Bitcoin Investment Trust (BIT) is a private, open-ended trust, that is invested exclusively in bitcoin and derives its value solely from those bitcoins. It enables investors to gain exposure to the price movement of bitcoin without the challenges of buying, storing, and safekeeping bitcoins.</p>
<p>This means investors purchase shares from the BIT fund directly (in closed-funds investors purchase from existing holders). The BIT has expertise sourcing and selling bitcoin to meet purchases and redemptions (sells) of shares.</p>
<p>The BIT is modeled after the SPDR Gold ETF, but functions similarly to a private fund. The BIT was created for sophisticated investors looking for exposure to bitcoin through an investment vehicle.</p>
<p>Grayscale investments, LLC, the BIT’s sponsor is a wholly owned subsidiary of SecondMarket Holdings, Inc. The fund is audited by Ernst & Young.</p>
<p><a href="http://imgur.com/Y1oqYTY"><img src="http://i.imgur.com/Y1oqYTY.png?1" title="source: imgur.com" /></a></p>
<h3 id="bit---who">BIT - WHO</h3>
<figure class="image">
<p><img src="/images/barry-silbert-secondmarket-bitcoin-etf.jpg" alt="Barry Silbert SecondMarket Bitcoin ETF" title="Barry Silbert SecondMarket Bitcoin ETF" /></p>
<figcaption>
<p>Photo Credit: <a href="https://flic.kr/p/8q1WnH">TechCrunch Disrupt SF 2013: Day 2</a> by Doc Searls is licensed under <a href="https://creativecommons.org/licenses/by/2.0/">CC BY 2.0</a></p>
</figcaption>
<blockquote>
<p>We’re probably just a few months away from Wall Street banks starting to trade bitcoin, starting to invest in bitcoin, and starting to create investment products for bitcoin,</p>
<ul>
<li>Barry Silbert</li>
</ul>
</blockquote>
</figure>
<p>Barry Silbert is the Founder & Chairman of SecondMarket and the founder of the Bitcoin Investment Trust. In 2004 Mr. Silbert founded SecondMarket to create an online marketplace for trading illiquid assets like bankruptcy claims, limited partnership interests, private company stock, etc. SecondMarket processed over $2.5 billion worth of transactions from 2012-2014.</p>
<p>In July 2014 Mr. Silbert resigned from SecondMarket to focus exclusively on bitcoin through the Bitcoin Investment Trust and the Bitcoin Opportunity Corp (40+ investments), a seed fund headquarters in New York.</p>
<h3 id="bit---when">BIT - WHEN</h3>
<p>Scheduled to be taken public in the fourth quarter of 2014, BIT is a bit behind schedule.</p>
<p>However I expect it will launch in the first quarter of 2015. Why is that? Redemptions were <a href="https://twitter.com/barrysilbert/status/551553942745006080">suspended October 28th.</a> I expect redemptions were suspended for the shares to be publicly quoted on the OTCQX marketplace.</p>
<h3 id="bit---why">BIT - WHY</h3>
<p>BIT is already an investment fund. Why take it public?</p>
<p>Currently to invest in BIT requires being an accredited investor (<a href="http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8edfd12967d69c024485029d968ee737&r=SECTION&n=17y3.0.1.1.12.0.46.176">over $200K in income or $1M net worth</a>) and a minimum investment of $25,000.</p>
<p>Additionally it is inconvenient to purchase shares for an IRA. It requires brokers talking to each other and special considerations being made.</p>
<p>Today the people purchasing BIT shares are typically tech entrepreneurs, family offices (financial professionals advising families with large amounts of wealth), and Wall Street executives.</p>
<p>Once the BIT trades on the OTCQX marketplace investors will be able to login to Charles Schwab, Fidelity, E*Trade, TD Ameritrade, etc. account and purchase BIT shares. That is more convenient, more accessible (no need for accreditation), and has lower minimum investment amounts.</p>
<h4 id="why-otcqx">Why OTCQX?</h4>
<p>Listing on the OTCQX marketplace instead of the NASDAQ has lower regulatory requirements, lower disclosure requirements, and lower costs. This should enable the BIT ETF to get to be publicly available sooner than COIN.</p>
<h1 id="bitcoin-etf-impact">Bitcoin ETF Impact</h1>
<p>When either the COIN or BIT go public many new investors will have access to conveniently and securely invest in bitcoin.</p>
<p>Some analysts equate the bitcoin ETF to the launch of the gold ETFs in 2003 in Australia and the US in 2004.</p>
<blockquote>
<p><a href="http://www.marketwatch.com/story/how-gold-etfs-have-transformed-market-in-10-years-2013-03-29">Before the first gold ETF, investors could not invest in gold easily, said Rhind. They could buy coins or bars, but due to the costs of storage and acquisition, “it was really a market for specialists,” and investing in gold was “not at all liquid, transparent or efficient.”</a></p>
</blockquote>
<p>Here is an <strong>inflation adjusted</strong> 100 year gold chart from <a href="http://www.macrotrends.net/">macrotrends.net</a>:</p>
<p><img src="/images/bitcoin-etf-gold-prices_100_year_historical_chart.png" alt="Gold prices 100 year historical chart" title="Gold prices 100 year historical chart" /></p>
<p>Notice the big up-tick right around the time of the Gold ETF launches through 2012. Some analysts and investors predict a similar upswing for bitcoin when the bitcoin ETFs are publicly listed.</p>
<p>In addition to the impact on price, there will likely be more volume due to the increased accessibility. This increased volume may smooth out price volatility and reduce slippage (price movements) on bitcoin trades. Finally, investors will be able to short, take margin positions, and buy option positions.</p>
<p>How will the ETFS differ once both are public? COIN will have a bigger launch, press, and prestige by being on NASDAQ. BIT will have over a year’s experience purchasing, selling, and securely storing bitcoins.</p>
<p>Of course everything has a downside. Here are some potential negatives:</p>
<p>Potential negatives of a bitcoin ETF:</p>
<ul>
<li>As the ETFs get bigger it may be hard to trade bitcoins in and out of the fund without impacting the bitcoin market.</li>
<li>Less demand for direct purchase of bitcoins</li>
<li>Less interest in investing in bitcoin companies (investors may buy bitcoin directly instead)</li>
</ul>
<h1 id="more-resources">More Resources</h1>
<h2 id="winklevoss-bitcoin-trust-coin">Winklevoss Bitcoin Trust (COIN)</h2>
<ul>
<li>Their <a href="http://www.sec.gov/Archives/edgar/data/1579346/000119312514457552/d721187ds1a.htm">latest SEC Filing</a> (12/30/2014)</li>
<li>The <a href="http://winkdex.com/">Winkdex</a></li>
<li>Understanding the Proposed Bitcoin ETF <a href="http://www.nasdaq.com/article/understanding-the-proposed-bitcoin-etf-5-key-questions-cm412799">5 key questions</a></li>
<li><a href="http://www.bloomberg.com/news/2014-08-15/spiderwoman-brings-hope-to-winklevoss-twins-bitcoin-etf.html">Spiderwoman Brings Hope to Winklevoss Twins’ Bitcoin ETFp</a></li>
<li><a href="http://www.investopedia.com/articles/investing/041114/why-winklevoss-twins-new-bitcoin-etf-matters.asp">Why The Winklevoss Twins’ New Bitcoin ETF Matters</a></li>
</ul>
<h2 id="bitcoin-investment-trust-bit">Bitcoin Investment Trust (BIT)</h2>
<ul>
<li><a href="http://www.slideshare.net/bitcointrust/bit-deckdecember?ref=http://www.bitcointrust.co/thank-you-for-your-information/">Investor Deck</a></li>
<li><a href="http://www.coindesk.com/secondmarket-launches-bitcoin-investment-trust-invests-2-million/">BIT launch announcement</a></li>
<li><a href="http://www.coindesk.com/bitcoin-investment-trust-wins-48000-btc-us-marshals-bitcoin-auction/">Bitcoin Investment Trust Syndicate Wins 48,000 BTC in US Marshals Auction</a></li>
<li><a href="http://www.coindesk.com/secondmarket-ceo-barry-silbert-resigns/">Barry Silbert Resigns SecondMarket CEO Position</a></li>
</ul>
<p>Are there questions this article didn’t cover? Are you going to buy either of the ETFs? Let me know in the comments!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//how-to-earn-bitcoins-through-arbitrage-software-aka-bot/2015-01-05T00:00:00-05:002015-01-05T00:00:00-05:00How to Earn Bitcoin Through Arbitrage Software (AKA a bot)<p><img src="/images/how-to-earn-bitcoin-through-arbitrage.jpg" alt="How To Earn Bitcoin Through Arbitrage" title="How To Earn Bitcoin Through Arbitrage" />
I’ve never been in to day trading or forex trading. It’s actually surprising I’ve done option trading (selling) and that I’m investing in bitcoin. I used to invest exclusively in index funds and mutual funds. For those who don’t know index and mutual funds are some of the safest way to invest in stocks and they provide correspondingly low rates of return.</p>
<p>However in 2013 I was a bitcoin day trader. I used a strategy called arbitrage and wrote a bot to do it.</p>
<p>It was a relatively low risk way to earn a relatively high return.</p>
<p><strong>Arbitrage is my favorite way to earn bitcoins.</strong> Unfortunately I am not currently involved in arbitrage.</p>
<p>#What is arbitrage?</p>
<p><a href="http://www.investopedia.com/terms/a/arbitrage.asp">Investopedia’s Definition:</a></p>
<blockquote>
<p>DEFINITION OF ‘ARBITRAGE’</p>
<p>The simultaneous purchase and sale of an asset in order to profit from a difference in the price. It is a trade that profits by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. Arbitrage exists as a result of market inefficiencies; it provides a mechanism to ensure prices do not deviate substantially from fair value for long periods of time.</p>
</blockquote>
<p>Khan Academy has a nice explanation and also covers why <strong>performing arbitrage reduces the opportunity.</strong></p>
<iframe width="854" height="510" src="//www.youtube.com/embed/AuCH7fHZsZ4" frameborder="0" allowfullscreen=""></iframe>
<p>With that in mind lets look at some bitcoin markets:</p>
<p><img src="/images/bitcoin-exchange-price-differences-create-arbitrage-opportunity.jpg" alt="Bitcoin Exchange Price Differences Create Arbitrage Opportunity" title="Bitcoin Exchange Price Differences Create Arbitrage Opportunity" /></p>
<p>Notice there are different prices for bitcoin. Based on our understanding above that means there is opportunity for bitcoin arbitrage right?</p>
<p>Yes, Bitcoin Exchange Price Differences Create Arbitrage Opportunity.</p>
<h1 id="sounds-easy">Sounds Easy</h1>
<p>##Why doesn’t everyone do it?</p>
<p>Bitcoin Arbitrage sounds easy and if it were then the price differences would vanish because everyone would do it.</p>
<p>Key components for successful arbitrage:</p>
<ol>
<li>
<p><strong>Understanding total cost of entering and exiting a position.</strong> When buying bitcoin there are typically exchange fees (variable) and bank fees (fixed) or wire transfer fees.</p>
</li>
<li>
<p><strong>Being able to correctly evaluate an opportunity.</strong> - If bitcoin is selling for $1K on Coinbase and $990 on Circle it looks like there is an arbitrage opportunity. Let’s look deeper. Coinbase has a 1% with a 15-cent bank fee. Circle has no fees. This means the price difference will need to be greater than $10.15 for the arbitrage to be profitable.</p>
<p>To make things more complicated most exchanges have an order book. This means the actual price we pay or sell (fill price) is affected by how many bitcoin we are buying. The price for 1 bitcoin on Coinbase might be $1k, but for 25 bitcoins the price might be $1.1K.</p>
</li>
<li>
<p><strong>Speed</strong> After determining if our opportunity is profitable, and as you can see from taking into account the order book, we need to execute the trade. Both the determination of profitability and the execution need to happen quickly. Otherwise the market prices can change, losing us money.</p>
</li>
<li>
<p><strong>Capital</strong> It is important to have both bitcoins and cash in place at both exchange points in roughly equal amounts, or up to the daily limits at each exchange. For example if the Coinbase sell limit is $15K / day ideally one would like to arbitrage the max $15K amount. To do that one would need to have $15K worth of bitcoin sitting at Coinbase. On the other side of the trade $15K will need to be sitting at an exchange. It is also important to understand that dollars move slower than bitcoins and don’t move on weekends or bank holidays.</p>
</li>
<li>
<p><strong>Access</strong> to perform arbitrage one needs access to multiple markets trading equivalent securities. For example Bitstamp and Coinbase both buy and sell bitcoin. Being in different countries generally increases fees and transfer times of moving cash.</p>
</li>
<li>
<p><strong>Turnover</strong> If one doesn’t have enough capital to max out the daily exchange limits it is important to increase the speed dollars can be sold from one exchange and moved to the other exchange. If it takes 3 days to move money from the exchange where the bitcoins are sold for cash to the exchange where cash is used to buy bitcoins then one will need 3x the daily limit to try and max the exchange limit each of the three days the cash is en route.</p>
</li>
</ol>
<p>#How was I successful?</p>
<p>I had some advantages:</p>
<ol>
<li>
<p><strong>I automated the process.</strong> I’m a software developer. I realized the bitcoin markets moved too fast for me to compare two order books and execute a trade. Even with a spreadsheet doing most of the work it took about a minute or two to evaluate arbitrage profitability.</p>
<p>Most (all?) bitcoin exchanges have APIs (a way for computers to talk to each other) and I was able to write a piece of software (arbitrage bot) that could analyze and execute arbitrage in less than ten seconds between two markets.</p>
</li>
<li>
<p><strong>I moved cash fast.</strong> I realized with a 2-3 day ACH transfer time my working capital wasn’t going to be enough to max out my limits everyday. I found an out-of-state bank that was able to move cash same day into one of the exchanges I was using due to a special relationship. This meant I could cycle my cash every 24 hours instead of 48-72 hours except for weekends and holidays.</p>
</li>
<li>
<p><strong>One market had a pricing bug.</strong> I soon realized one of the markets I was using had a pricing bug. Typically the net (after expenses) price differences were a fraction of a percent. In the buggy market, about twice a day the net price difference would be 7%. I instructed my software to wait for those big opportunities and ignore the small opportunities.</p>
</li>
<li>
<p><strong>Access to different markets in the same country.</strong> I was fortunate that I was able to access two different markets here in the U.S. with different prices. This meant I saved a lot of time and money by not needing to move money overseas or convert it to a different currency.</p>
</li>
</ol>
<p>#Why don’t I do it anymore?</p>
<p>With my software doing all the work arbitrage was a dream come true. I could (and did) spend some days at the beach and earn a nice 7% return for the day.</p>
<p>Unfortunately my opportunity quickly dried up. One exchange stopped taking deposits and the other fixed their pricing bug. I began focusing on other ways to earn bitcoin. I haven’t looked into arbitrage since 2013.</p>
<p>Also there is no such thing as risk-free. I was aware either of the markets could go bust or getting hacked. Additionally my software could have had bugs in it. Fortunately I’m a decent coder and the software processed over 500 profitable transactions worth around $150,000 over a six-week time period.</p>
<p>#What do you think?</p>
<p>Do you see opportunities for arbitrage? Or do you think there are better ways to <a href="/bitcoin-investment-portfolio/">earn bitcoins?</a></p>
<p>Let me know in the comments!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//delta-financial-pays-bitcoin-interest.html2015-01-04T00:00:00-05:002015-01-04T00:00:00-05:00Delta Financial Pays Bitcoin Interest
<p><img src="/images/delta-financial-pays-bitcoin-interest.jpg" alt="Delta Financial Pays Bitcoin Interest" title="Delta Financial Pays Bitcoin Interest" /></p>
<p><em><strong>Update 01/10/2015:</strong> Delta Financial no longer accepts deposits.</em></p>
<p>#How I Earned Bitcoin in 2013</p>
<p>One of the keys to my 18x 2013 bitcoin investment performance was earning bitcoins through bitcoin investments. Unfortunately in 2014 investment returns were lower and the risks were higher because my portfolio value was higher. In 2015 I’ll be keeping an eye out for good opportunities to earn bitcoin interest and dividends.</p>
<p>#Delta Financial Pays Bitcoin Interest</p>
<p>Today I want to tell you Bulls about <a href="https://deltafinancial.com/">Delta Financial</a>. I’ve been a part of their beta program, earning interest, since June 20th. So far the experience has been OK. The service has worked as promised, but it has me worried. I do not recommend putting many bitcoins in Delta Financial.</p>
<p>I have 8.2 bitcoins on deposit with them earning 5% interest annually (.001 BTC daily).</p>
<p>I got my account invite on June 20th and 40 minutes later I was registered and earning 5% interest on 1 BTC. I like to try out new services with a small amount of bitcoin and increase the amount after a positive experience. Their website is fast and easy to understand. It has an easy to understand history showing all my earnings.</p>
<p><img src="/images/delta-financial-account-history.jpg" alt="Delta Financial account history" title="Delta Financial account history" /></p>
<p>My one minor usability complaint is depositing to earn interest is a two-step process when it could be a one-step process. The deposit first goes into a primary account and then needs to be transferred to the BTC Savings account. I’d prefer to have a bitcoin deposit address to transfer directly to the BTC Savings account.</p>
<p>Their documentation is also great, explaining how they work and what the risks are.</p>
<h1 id="im-excited">I’m excited</h1>
<p>Delta Financial is close to my ideal investment. They say they are insured, run by a reputable team, and pay bitcoin interest daily. Additionally their business model makes sense. They use bitcoins to loan to traders who want to borrow them on margin.</p>
<p>I like receiving bitcoin interest. Imagine if I’d had 1000 bitcoins when they were worth 3 cents a piece about five years ago. I would have had $30 worth of bitcoin. Now imagine I earned 5% interest on those coins for one year. That’s an additional 50 bitcoins. Assuming I held those 50 bitcoins for five years they would now be worth just under $14K (bitcoin is trading at $270). $14K over 5 years isn’t a bad return on a $30 investment in my book :)</p>
<h1 id="but-im-also-cautious">But I’m Also Cautious</h1>
<p>Part of investing is factoring in the risk of losing the investment principal. I rate Delta Financials risk high and the rate of return low. At 5% it is going to take 14 years for my bitcoins to double. A disaster (theft, hack) only has to happen once for me to lose all my coins.</p>
<p>My concerns:</p>
<ul>
<li>Delta Financial is based in Hong Kong.</li>
<li>Delta Financial is new.</li>
<li>The founders don’t do a good job of proving they are a safe company.</li>
<li>The founders do seem to be reputable but it takes digging. This could mean the site is a scam site using good people’s names.</li>
<li>They say they are insured but I haven’t seen any proof.</li>
<li>They don’t provide proof of reserves.</li>
<li>The site hasn’t been updated in a long time.</li>
<li>I don’t receive communications from the company (newsletter, new features, etc.)</li>
</ul>
<h1 id="bottom-line">Bottom Line</h1>
<p>I don’t recommend putting substantial amounts of bitcoin in Delta Financial. Receiving 5% annually in exchange for what I estimate to be a 30% to 60% chance of losing your bitcoins that I think are going to 10x 100x over the next 12 to 60 months isn’t a good risk reward ratio.
If this were an insured U.S. service out of New York with reputable founders I would absolutely put 100% of my bitcoins there. As it stands now I’ll be a Guinea pig so you guys don’t have to.</p>
<p><a href="/can-btc-jam-grow-your-bitcoins.html">BTCJam</a> is a more promising investment. It is also high risk, but as you can see from my <a href="/portfolio">portfolio</a> it has a higher APR. Unfortunately it also requires more work. Fear not investment opportunities will get better!</p>
<p>#What do you think?</p>
<p>Are you going to put any bitcoins in Delta Financial? Does the risk / reward tradeoff make sense? Let me know in the comments!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//global-venture-investors-are-bitcoin-bulls.html2014-12-02T00:00:00-05:002014-12-02T00:00:00-05:00Global Venture Investors Are Bitcoin Bulls<p><img src="/images/global-venture-investors-are-bitcoin-bulls.jpg" alt="Global Venture Investors are bitcoin bulls!" title="Global Venture Investors are bitcoin bulls!" /></p>
<p>I was honored to be part of the <a href="http://globalventurelabs.com/globalventureforum/">2014 Global Venture Forum</a>. I participated on the Virtual Currency Selection Committee and as a forum attendee.</p>
<p>The Global Venture Forum is an invitation-only gathering that fosters business relationships across the US-Europe technology corridor. GVF 2014 includes Senior Executives from Amazon, A16Z, Cisco, Citi Ventures, Dell, eBay Marketplaces M&A, Index Ventures, Mozilla, SAP Ventures, Software AG, Telefonica Ventures, True Global Ventures, Europe’s Angel of the Year and other industry leaders.</p>
<p>The forum focused on Internet-of-Things, Mobile, Cloud Services, Security/Privacy, eComerce, Fintech, and Virtual Currency.</p>
<h1 id="participants-bullish-on-bitcoin">Participants Bullish on Bitcoin</h1>
<p>I’m happy to report the fintech participants and participants in general were bullish on bitcoin.</p>
<p>Everyone I spoke with had heard of bitcoin. People were either excited about bitcoin’s potential or curious to learn more. It was a pleasant surprise to be in a non-bitcoin centric crowd and see people excited about bitcoin.</p>
<p>Forum attendees are people who are building the future so it was extra special to know they are excited about the promise of digital currencies.</p>
<h2 id="value-packed-day">Value Packed Day</h2>
<p>The morning kicked off with a rock star panel on “Emerging venture models for Corporates &VCs” with Jamie McGurk (Andreessen Horowitz, Frederic Hanika (Software AG) and Shardul Shah, moderated by Jack Leeney from Telefonica Ventures.</p>
<p>Next up was another fantastic panel: “Market Insight: Scaling from European tech valleys” featuring William Stevens (Europe Unlimited), Zhong Xu (Lightspeed), Andy Castonguay (Machina Research), and Steve Ebin (Optimizely).</p>
<p>There were presentations from 15 emerging and growth tech companies. Lots of great entrepreneurs working on awesome tech or delivering a lot of value. Many of these companies were looking for partners instead of investors.</p>
<p>After the company presentations Christopher Mott (Global Venture Forum) moderated the “Domain trends & global models” panel featuring Sean Bohan (Mozilla), Dusan Stajanovic (True Global Ventures), Ramneek Gupta (Citi Ventures), Peter Bershatsky (Amazon), and Justin Hwa (eBay).</p>
<h2 id="uncovering-new-investments">Uncovering New Investments</h2>
<p>The forum expands my network and the opportunity to learn about new investment opportunities. In fact I hope to be testing a new investment in 2015 that will be a direct result from this forum!</p>
<p>It was an awesome opportunity to network with people looking to get deals done. It was great to be a part of the forum this year!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//first-global-credit-ticket-to-prosperity-competition.html2014-12-01T00:00:00-05:002014-12-01T00:00:00-05:00First Global Credit Ticket To Prosperity Competition<p><img src="/images/first-global-credit-ticket-to-prosperity-competition.jpg" alt="first global credit ticket to prosperity competition" title="first global credit ticket to prosperity competition" /></p>
<p><a href="https://firstglobalcredit.com/">First Global Credit</a> is holding a <a href="http://www.firstglobalcredit.com/Competition/How-to-enter">competition</a> on their <a href="http://www.firstglobalcredit.com/Services/Active-Trader">Active Trader Service</a> beginning December 1st. The free contest will provide the winner with 10 bitcoins to use for real trading! The profits will be <a href="http://www.firstglobalcredit.com/Competition/Competition-Terms">split with First Global Credit</a>. Traders have until Friday January 16th to stack virtual profits and see who comes out on top.</p>
<p><a href="http://www.firstglobalcredit.com/Competition/How-to-enter">Enter the competition</a>.</p>
<p>Bitcoin doesn’t have a lot of practical use cases yet. However bitcoin is the fastest and safest way to move investment capital around today. I am excited to add First Global Credit to investment options like <a href="/can-btc-jam-grow-your-bitcoins.html">BTCJam</a>.</p>
<p>The competition is live! I logged in and saw the 100 synthetic bitcoins available for to me for the competition. I don’t expect to win, but who knows and I’ll get a chance to better understand how the platform works.</p>
<p>If you do sign up with <a href="https://firstglobalcredit.com/">First Global Credit</a> it would be great if you used my username <strong>smithd98</strong> for the referring user.</p>
<p>Also if you participate in the competition let me know in the comments. I hope a Bull wins!</p>
<p>Ladies and gentlemen start your trading engines!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//circle-is-amazing.html2014-10-23T00:00:00-04:002014-10-23T00:00:00-04:00Circle Is Amazing
<p><img src="/images/circle-is-amazing.jpg" alt="Circle is Amazing!" title="Circle is Amazing!" /></p>
<h1 id="circle-is-amazing"><a href="https://www.circle.com">Circle</a> is Amazing</h1>
<p>Here are four BIG reasons why:</p>
<ol>
<li>Circle lets customers use dollars for bitcoin purchases. (so customers can get discounts at places like <a href="https://purse.io/?_r=exsgIJ">Purse.io</a> and <a href="https://foldapp.com/">Starbucks (through Fold).</a></li>
<li>Circle charges NO fees to purchase or sell bitcoin (although there is a spread).</li>
<li>Circle insures customer deposits (no worries about scam).</li>
<li>Circle charges no fees to send or receive bitcoin.</li>
</ol>
<p>This is a game changer. It means someone with no desire to hold bitcoins can participate in the bitcoin economy using dollars.</p>
<p>Take my dad for example. He has no interest on holding or using bitcoins. With a Circle account he doesn’t need to hold bitcoins but can use his dollars to make bitcoin purchases. This is great for people like me who want to create companies and software that only accept bitcoin, but realize bitcoin’s market share doesn’t make that feasible (without Circle) today.</p>
<h1 id="examples">Examples:</h1>
<p>Last year I spent my bitcoins to support the ecosystem and merchants. However I would buy back my bitcoins to maintain the same amount of bitcoins. Not only was this inconvenient but it reset the purchase date on some of my bitcoin purchases for calculating capital gains.</p>
<p>So I stopped spending bitcoins. Although I still supported merchants like <a href="http://www.overstock.com">Overstock</a> and <a href="https://www.namecheap.com/?aff=66553">Namecheap</a> with my business. I use a credit card because it was (prior to Circle) more convenient.</p>
<p>Circle changes that. Now when I want to spend bitcoins I go to circle click buy then send the bitcoins to the address. It takes about as long as a PayPal checkout. Very smooth.</p>
<p>I’ve used this technique to send bitcoin to someone’s niece for her birthday, to buy a bear whale poster, and to fund a <a href="https://btcjam.com/?r=37cad203-f110-4bcb-bd1e-bd31035bf238&utm_source=referral_url&utm_campaign=user_referral">BTC Jam</a> loan.</p>
<p>I did have one bad experience when trying to buy a Casascius coin. My Casascius purchase was not instant. It may have even taken a few days to complete (like Coinbase).</p>
<p>It is already amazing and it is just going to get better.</p>
<p>The experience will improve. Circle will figure out the instant buy issue I ran into. Soon Circle or someone else will have a browser extension simplifying the process to hitting the buy button.</p>
<p>Circle’s product is a critical piece of infrastructure that makes me think the coming bitcoin explosion is closer than we think.</p>
<p>If you haven’t used <a href="https://www.circle.com">Circle</a> check it out. Already have a bitcoin wallet? Check it out anyways. The experience is a preview of where the industry is heading.</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//bitcoin-empowers-banks-control.html2014-10-22T00:00:00-04:002014-10-22T00:00:00-04:00Bitcoin Empowers Banks Control<p><img src="/images/banks-control-bitcoin-empowers.jpg" alt="Bitcoin empowers, banks control." title="Bitcoin empowers banks control." /></p>
<p>While I was at <a href="/what-will-trigger-a-bitcoin-investment-surge.html">CoinAgenda</a> I tried to help my friend out of a jam.</p>
<p>He was up big on a financial position but needed a $1,000 24 hour loan to cover an ACH transfer. He wanted me to wire him $1,000 same day to realize his gains.</p>
<p>I had never performed a same day inter-bank transfer. I called my bank to understand the available options. There was exactly one option: perform a wire transfer with a $20 fee. Wire transfers for my bank are processed at 11:00 AM Eastern Time and 4:00 PM Eastern Time. I also had to fax my request in writing.</p>
<p>I hustled over to the business center to do the fax, but did not make it before the 4:00 PM cutoff.</p>
<p>My checkbook was at home and my ATM has a withdrawal limit of $300. I offered to send my friend bitcoin so he could have the money now. He declined so I decided to try again in the morning.</p>
<p>After going to bed late I woke up early to handle the situation before 11:00 AM Eastern Time.</p>
<p>After 3 phone calls and two faxes. The bank said everything was all handled.</p>
<p>Unfortunately I received a call 2 minutes later saying the routing number lookup failed and asking for a new one. My friend spoke with his bank and they said the routing number I’d been given wouldn’t work for my bank. The number was valid, but for some reason wasn’t ‘visible’ to some (all?) banks.</p>
<p>Wow what a waste of time, effort, energy and stress. And to boot we were unable to complete the transaction!</p>
<h1 id="bitcoin-empowers">Bitcoin Empowers</h1>
<p>What does that look like in a bitcoin world?</p>
<p>Dave I need $1,000 worth of bitcoin. I would have gotten on my laptop and sent it. Boom done.</p>
<h1 id="banks-control">Banks Control</h1>
<p>This transaction needed to be done exactly how and when they said. Bitcoin empowers people. No asking how when where why or paying large fees.</p>
<p>Use cases like this make me excited about the power bitcoin will put in people’s hands.</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.nethttp://www.bitcoinbulls.net//what-will-trigger-a-bitcoin-investment-surge.html2014-10-21T00:00:00-04:002014-10-21T00:00:00-04:00What Will Trigger a Bitcoin Investment Surge?<p><img src="/images/what-will-trigger-an-investment-surge.jpg" alt="What will trigger a bitcoin investment surge?" title="What will trigger a bitcoin investment surge?" /></p>
<p>Coin Agenda has been my favorite conference this year. It mixed education, elegance, investment opportunity, and great networking.</p>
<p>Michael Terpin did a knockout job putting together a high-end conference in a short amount of time.</p>
<p><img src="/images/jacob-farber-edan-yago-perianne-boring-david-johnston-bitcoin-and-the-law.jpg" alt="Jacob Farber, Edan Yago, Perianne Boring, and David Johnston discuss bitcoin and the law." title="Jacob Farber, Edan Yago, Perianne Boring, and David Johnston discuss bitcoin and the law." /></p>
<h1 id="elegance">Elegance</h1>
<p>This conference targeted high net worth individuals and institutional investors. Michael made the conference stand out in these ways:</p>
<ul>
<li>Great venue the <a href="http://en.wikipedia.org/wiki/Palms_Casino_Resort">Palms Casino Resort</a> (from real world Las Vegas fame)</li>
<li>Kicked off with party at the <a href="http://interesting-hotel.blogspot.com/2012/02/hugh-hefner-sky-villa-palms-casino.html">Hugh Hefner suite</a>. This two-floor suite has a large patio, pool, rotating bed, massage table, living room with 3 TVs.</li>
<li>High-end breakfasts, lunches, and dinners.</li>
<li>Party at the Mike Tyson mansion. This mansion made famous in the movie Hangover has fountains, boxing mosaics, a pool, grotto, basketball court, tiger art, a large balcony for parties, and an all glass bathroom.</li>
<li>Closing party at Michael and Maxine Terpin elegant home. Their home has a deck big enough to host 60 people, a pool with a swim through, fire-pits, and a 20-person sauna.</li>
</ul>
<h1 id="networking">Networking</h1>
<p>It was great meeting new people like:</p>
<ul>
<li><a href="https://twitter.com/willobrien">Will O’Brien</a> - Will is the CEO at BitGo, one of the companies pioneering multi-sig technologies.</li>
<li><a href="https://twitter.com/quigleyreport">William Quigley</a> - Early investor in PayPal, digital currency investor, and has a wide range of financial services industry experience.
<img src="/images/william-quigley-the-bitcoin-startup-ecosystem.jpg" alt="William Quigley explains the bitcoin startup ecosystem." title="William Quigley explains the bitcoin startup ecosystem." /></li>
<li><a href="https://www.linkedin.com/in/carlhilsz">Carl Hilsz</a> - With legal, telecom, mortgage experience, Mr. Hilsz is now focused on digital currencies at eSpend.</li>
<li><a href="https://angel.co/frank-grant">Frank Grant</a> - Senior counsel at Perkins Coie, nice, and helpful guy.</li>
<li><a href="https://twitter.com/COdomainnames">Phil Maher</a> - Phil is a miner and expert online marketer.
<img src="/images/phil-maher-michael-lambert-michael-cao-mining-panel.jpg" alt="Phil Maher, Michael Lambert, and Michael Cao mining panel." title="Phil Maher, Michael Lambert, and Michael Cao mining panel." /></li>
<li><a href="https://www.linkedin.com/in/mikelambertchicago">Michael Lambert</a> - Mike is another mining expert, father, and fun guy!</li>
<li><a href="https://twitter.com/winkelspecht">Micah Winkelspecht</a> - Micah, CEO & Founder of Gem is a security expert. His company Gem, enables developers to rapidly build bitcoin apps without being experts in cryptography and security.
<img src="/images/micah-winkelspecht-will-obrien-security-panel.jpg" alt="Micah Winkelspecht and Will O'Brien security panel." title="Micah Winkelspecht and Will O'Brien security panel." /></li>
<li><a href="https://twitter.com/peaceelyse">Elyse Petersen</a> - Tea extraordinaire using bitcoin to reduce supply chain costs 10%.</li>
</ul>
<h1 id="education">Education</h1>
<p>The sessions were great. In addition to my session, <em>Bitcoin Bullishness, Especially in Slow Times</em>, I saw talks from heavy hitters like:</p>
<ul>
<li>
<p><a href="http://en.wikipedia.org/wiki/George_Gilder">George Gilder</a> - Mr. Gilder gave a great talk discussing the only resource that is truly scarce in our world, time. He explained that since bitcoin is tied to time through block times it will always be scarce.
<img src="/images/george-gilder-bitcoin-and-gold.jpg" alt="George Gilder explains bitcoin and gold." title="George Gilder explains bitcoin and gold." /></p>
</li>
<li>
<p><a href="https://twitter.com/waterhousephd">Steven Waterhouse</a> - Steven Waterhouse discussed Pantera and the bitcoin investment opportunity.
<img src="/images/steven-waterhouse-discusses-the-bitcoin-opportunity.jpg" alt="Steven Waterhouse discusses the bitcoin opportunity." title="Steven Waterhouse discusses the bitcoin opportunity." /></p>
</li>
<li>
<p><a href="https://twitter.com/brockpierce">Brock Pierce</a> - Brock discussed what he sees as the future of bitcoin. He still sees bitcoin as an asset with a 100x to 1000x potential return.
<img src="/images/brock-pierce-what-the-future-holds.jpg" alt="Brock Pierce what the future holds." title="Brock Pierce what the future holds." /></p>
</li>
<li>
<p><a href="https://twitter.com/MatthewRoszak">Mathew Roszak</a> and <a href="https://twitter.com/harryyeh">Harry Yeh</a> - Along with other venture capitalist panelists discussed where they see bitcoin taking off. An impassioned discussion over privacy vs. convenience ensued. Fortunately bitcoin gives choice to consumers regarding convenience and privacy tradeoffs.
<img src="/images/where-is-bitcoin-going-boom-or-bust.jpg" alt="Where is bitcoin going? Boom or bust?" title="Where is bitcoin going? Boom or bust?" /></p>
</li>
<li>
<p><a href="https://twitter.com/Tone_LLT">Tone Vays</a> - Mr. Vays discussed technical analysis and how to profit from bitcoin’s volatility.
<img src="/images/tone-vays-technical-analysis.jpg" alt="Tone Vays technical analysis." title="Tone Vays technical analysis." /></p>
</li>
<li>
<p><a href="https://twitter.com/jespow">Jesse Powell</a> - Mr. Powell was interviewed by <a href="https://twitter.com/TinaHui">Tina Hui</a>
<img src="/images/tina-hui-interviews-jesse-powell.jpg" alt="Tina Hui interviews Jesse Powell." title="Tina Hui interviews Jesse Powell." /></p>
</li>
<li>
<p><a href="https://twitter.com/quigleyreport">William Quigley</a> - Mr. Quigley gave his expert opinion on the bitcoin startup ecosystem. He feels bitcoin will first thrive in areas that are impossible with today’s financial system.</p>
</li>
<li>
<p><a href="https://twitter.com/fractastical">Joel Dietz</a>, <a href="https://twitter.com/super3">Shawn Wilkinson</a>, and <a href="https://www.linkedin.com/in/craigcsellars">Craig Sellars</a> - These three experts in digital currency crowdfunding discussed the future of crowdsales.
<img src="/images/craig-sellars-joel-dietz-shawn-wilkinson-crypto-crowdsales.jpg" alt="Craig Sellars, Joel Dietz, Shawn Wilkinson talk crypto crowdsales." title="Craig Sellars, Joel Dietz, Shawn Wilkinson talk crypto crowdsales." /></p>
</li>
<li>
<p><a href="https://twitter.com/BrianSantoshi">Brian Santos</a>, <a href="https://twitter.com/jkandah">Jeremy Kandah</a>, and <a href="https://twitter.com/Ryan_Singer">Ryan Singer</a> - Mr. Singer discussed the early days of bitcoin and the implications of trust being too cheap to price. Digital currencies make trust essentially free in the way the internet made communications essentially free.
<img src="/images/jeremy-kandah-ryan-singer-brian-santos-building-the-blockchain-for-business.jpg" alt="Jeremy Kandah, Ryan Singer, Brian Santos talk about building the blockchain for business." title="Jeremy Kandah, Ryan Singer, Brian Santos talk about building the blockchain for business." /></p>
</li>
<li>
<p><a href="http://investors.btcs.com/#team">Charles Allen</a> - Mr. Allen, CEO of <a href="http://www.bitcoinshop.us/">BitcoinShop</a> (NASDAQ: BTCS), explained the difficulties of a reverse merger, the credibility having a publicly traded company brings to bitcoin, and the opportunities being publicly traded provides to BitcoinShop.
<img src="/images/charles-allen-public-company-bitcoin-investing.jpg" alt="Charles Allen talks public company bitcoin investing." title="Charles Allen talks public company bitcoin investing." /></p>
</li>
<li>
<p><a href="https://twitter.com/gorillamania">Nick Sullivan</a> - Mr. Sullivan explained how syndicated angel investing works. He did a great job explaining it so even people who knew nothing (like me) were able to understand.
<img src="/images/nick-sullivan-how-syndicated-angel-investing-works.jpg" alt="Nick Sullivan explains how syndicated angel investing works." title="Nick Sullivan explains how syndicated angel investing works." /></p>
</li>
<li>
<p><a href="https://twitter.com/jordankelley">Jordan Kelley</a> - <a href="https://twitter.com/michaelterpin">Michael Terpin</a>’s interview with Jordan Kelley closed out the conference. It was great to see Mr. Kelley’s enthusiasm for bitcoin and what it will do for the world’s unbanked and under banked people!
<img src="/images/jordan-kelley-robocoin.jpg" alt="Fireside chat with Jordan Kelley from Robocoin." title="Fireside chat with Jordan Kelley from Robocoin." /></p>
</li>
<li>
<p><a href="https://twitter.com/sammantic">George Samman</a> - Mr. Samman explained bitcoin is a commodity not a currency. George is a former Wall Street Senior Portfolio Manager, Market Strategist and Technical Analyst. In addition to that he is a funny guy :)
<img src="/images/george-samman-bitcoin-is-a-commodity.jpg" alt="George Samman explains bitcoin is a commodity." title="George Samman explains bitcoin is a commodity." /></p>
</li>
</ul>
<h1 id="investment-opportunity">Investment Opportunity</h1>
<p>CoinAgenda also had opportunities for investors to learn about great investment opportunities. Unfortunately I missed most of the pitches but a few of the companies I heard about that I’m excited about are:</p>
<ul>
<li>
<p><a href="http://www.factom.org/">Factom</a> - Factom is a smaller, faster, cheaper way to extend the Bitcoin Blockchain.</p>
</li>
<li>
<p><a href="https://www.bitwage.co/">Bitwage</a> - Bitwage enables employees and contractors to have salary and invoices paid in bitcoin. In contrast to payment processors making it easy for merchants to sell bitcoin, Bitwage will make it easy for people to acquire bitcoin.</p>
</li>
<li>
<p><a href="http://hedgy.co/">Hedgy</a> - Hedgy enables customers to lock their bitcoins purchasing power or to speculate on the future price of bitcoin. This is a great service, enabling some people to eliminate volatility and others to profit from bitcoin’s volatility.</p>
</li>
<li>
<p><a href="https://rushwallet.com/">RushWallet</a> - RushWallet draws a contrast between the existing financial system and the bitcoin system. Under the existing system people can be denied access to financial services. RushWallet enables anyone using a web browser to create a bitcoin account. No documents needed, no application process, or any other fuss. I love how this project empowers people!
<img src="/images/anthony-di-lorio-rushwallet.jpg" alt="Anthony Di Lorio demos RushWallet." title="Anthony Di Lorio demos RushWallet." /></p>
</li>
</ul>
<h1 id="oh-yeah-the-conference-was-fun-too">Oh Yeah the Conference was Fun Too!</h1>
<p>Oh yeah the conference was fun too! I had a blast visiting the Palms Hugh Hefner Villa, Mike Tyson’s mansion, many great meals, and conversations.
Here are a couple of snaps from Tyson’s mansion.
<img src="/images/mike-tyson-mansion-lion.jpg" alt="David Smith with a Mike Tyson mansion lion." title="David Smith with a Mike Tyson mansion lion." /></p>
<p><img src="/images/mike-tyson-mansion-bathroom-mirrors.jpg" alt="Mike Tyson's bathroom had a lot of mirrors." title="Mike Tyson's bathroom had a lot of mirrors." /></p>
<h3 id="im-looking-forward-to-next-year">I’m Looking Forward to Next Year</h3>
<p>It was an amazing conference put together on short notice to make an entire bitcoin week. I’m looking forward to attending next year and seeing what Michael puts together!</p>
David Smithhttps://plus.google.com/109297602506769723640dave@bitcoinbulls.net