Australian Government Tracks All Bitcoin to AUD Conversions

The Australian government is keeping a close eye on bitcoin, but not on the regulatory front. Rather, it is tracking every conversion from bitcoin intoAustralian dollars, and vice-versa.

The government agency doing the snooping is the Australian Transaction Reports and Analysis Centre (Austrac). The centre is tasked with countering money laundering and terrorist finance, so it is only logical that it would track anonymous transactions.

Tracking bitcoin-related transactions

Austrac CEO John Schmidt told lawmakers that Australia collects data on all international fund transfers, including bitcoin conversions, ZDnet reports.

“At some point, a person will be purchasing bitcoin using Australian dollars, for example, and then if they are dealing in substances or services, will want to convert those bitcoins back into the legitimate currencies of where ever they are, so they can gain the benefit of them.”

This is where it gets interesting. Because the centre gets international transfer instructions, it is possible to identify transactions made by people purchasing bitcoins.

Schmidt added that most countries have the same capability as Australia, but it is unclear whether they use it. He added that some prosecutions have already resulted from intelligence collected by the centre.

The CEO argued that bitcoin is a commodity used to transfer value rather than a legitimate currency. When bitcoins are converted into AUD, Austrac can identify those transactions.

Bitcoin is not a threat, yet

Schmidt also issued a warning that if bitcoin gains more independence from fiat currency it will become more attractive to criminal organizations that need to channel money around. In that case, international cooperation will be necessary, as Schmidt points out:

“Because they will operate on servers in jurisdictions around the world, and use very sophisticated methods to move and hide their identities. It’s when you have the international cooperation [...] that is the answer to being able to stop that criminal behaviour.”

Interestingly, Schmidt pointed out that Austrac is still not able to quantify the size of the bitcoin market in Australia, but he doesn’t see it as a major threat. He pointed out that people are gambling on the prospective value of bitcoin rather than using it for transactions.

“At this point in time, when you consider all the existing threats we face from the criminal perspective, they are not top of the list,” Schmidt concluded.

Australian 100 Dollar Bill image via Shutterstock

Post Source: http://www.coindesk.com/australian-government-tracks-all-bitcoin-aud-conversions/

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Bitcoins, other digital currencies stolen in massive 'Pony' botnet attack

Cybercriminals have infected the computers of digital currency holders, using a virus known as “Pony” to make off with account credentials, bitcoins and other digital currencies in one of the largest attacks on the technology, security services firm Trustwave said.

The attack was carried out using the “Pony” botnet, a group of infected computers that take orders from a central command-and-control server to steal private data. A small group of cybercriminals were likely behind the attack, Trustwave said.

Over 700,000 credentials, including website, email and FTP account log-ins, were stolen in the breach. The computers belonging to between 100,000 and 200,000 people were infected with the malware, Trustwave said.

The Pony botnet has been identified as the source of some other recent attacks, including the theft of some 2 million log-ins for sites like Facebook, Google and Twitter. But the latest exploit is unique due to its size and because it also targeted virtual wallets storing bitcoins and other digital currencies like Litecoins and Primecoins.

Eighty-five wallets storing the equivalent of $220,000, as of Monday, were broken into, Trustwave said. That figure is low because of the small number of people using Bitcoin now, the company said, though instances of Pony attacks against Bitcoin are likely to increase as adoption of the technology grows. The attackers behind the Pony botnet were active between last September and mid-January.

“As more people use digital currencies over time, and use digital wallets to store them, it’s likely we’ll see more attacks to capture the wallets,” said Ziv Mador, director of security research at Chicago-based Trustwave.

Most of the wallets that were broken into were unencrypted, he said.

“The motivation for stealing wallets is obviously high—they contain money,” Trustwavesaid in a blog post describing the attack. Stealing bitcoins might be appealing to criminals because exchanging them for another currency is easier than stealing money from a bank, Trustwave said.

There have been numerous cyberattacks directed at Bitcoin over the last year or so as its popularity grew. Last year, a piece of malware circulating over Skype was identified as running a Bitcoin mining application. Bitcoin mining is a process by which computers monitor the Bitcoin network to validate transactions.

“Like with many new technologies, malware can be an issue,” said a spokesman for the Bitcoin Foundation, a trade group that promotes the use of Bitcoin, via email. Wallet security should improve, the spokesman said, as more security features are introduced, like multisignature transactions, he said.

Digital currency users can go to this Trustwave site to see if their wallets and credentials have been stolen.

Post Source: http://www.pcworld.com/article/2101260/bitcoins-other-digital-currencies-stolen-in-massive-pony-botnet-attack.html

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Now Pay Cash at UK Stores

You Can Now Pay Cash For Bitcoin at 28,000 UK Stores

Bitcoiners can now pay cash for bitcoins at 28,000 shops across the UK, thanks to a new service set up by ZipZap.

The service enables people to head to their nearest ZipZap payment location, hand over cash and see bitcoins deposited in their wallets almost instantly.

Currently available via Bittylicious, BuyBitcoin.sg and BIPS Market, the service will go live with ANXBTC and ANXPRO next week, followed by Kraken, CoinMKT and BTCX.se.

Customers simply have to log into their accounts with one of these companies and select the cash payment option, they then choose the amount of bitcoins they want to purchase and head to their local ZipZap payment location to complete the transaction.

Thousands of independent local shops are registered as ZipZap locations, as are Spar, Asda, Tesco Express branches and many other stores across the country.

The minimum a user can choose to spend is £10 and the maximum per transaction is £300, but up to four transactions can be completed per customer, per day.

Lasse Birk Olesen, founder and CEO of BuyBitcoin.sg, said: “We are very excited to present the easiest and fastest way to buy bitcoins in United Kingdom! This is a key piece of infrastructure that allows bitcoin to grow further in the UK.”

He went on to say that, after a customer pays in cash, their bitcoins are delivered “within minutes”, adding:

“No more waiting for days for bank transfers – this is as fast as it gets and makes bitcoin more attractive.”

Marc Warne, CEO of Bittylicious, is equally excited by the new service he is able to offer his customers.

“This is a really neat way for people in the UK to get their hands on bitcoins,” he said.

Testing the service

I tested out the service using Bittylicious. I have to admit, I was a bit sceptical at first – why would I bother going through the effort of visiting a shop to buy bitcoins when I could do it all online? However, I found the whole process incredibly simple, and I can see why some people would prefer it and would enjoy the novelty of handing over physical cash for digital currency.

While Bittylicious currently enables unregistered users to buy small amounts of bitcoins via bank transfer and Barclays Pingit, it doesn’t allow them to use the cash payment service. This means you have to register with the company and submit identity documents (to comply with anti-money-laundering and know-your-customer rules).

Warne told me ID verification on Bittylicious currently takes 12 hours, on average, but the company is working on reducing this over the course of the next few days.

I’m already registered and verified with Bittylicious, so I just logged in, then the home page displayed the “Cash Payment” option.

After entering my bitcoin wallet address and selecting the amount in BTC or GBP I wanted to purchase, I was told I had 30 minutes to choose my payment location and confirm the trade.

I entered my postcode to find my nearest ZipZap payment location and found there were 13 shops for me to choose from within a radius of around 0.6 miles (bear in mind the CoinDesk office is in central London).

After selecting my most convenient shop, I hit the “I am ready to pay” button and was provided with a PDF document to print. This features all the order details, the address and a map of my chosen payment centre, plus the barcode required by the shopkeeper.

Bittylicious gives you a leisurely two hours to complete the payment and the PDF payment slip details the time by which the transaction must be finalised.

Once in the shop, I handed over the payment slip to the newsagent, he scanned the barcode, I handed over the cash, he printed a receipt and that was that. (You don’t actually have to print the payment slip – you can just bring the barcode up on your smartphone and have the shopkeeper scan it straight from there.)

Precisely eight minutes later, the BTC arrived in my bitcoin wallet.

The verdict

Being able to pay cash over the counter for bitcoin was pretty cool – experiencing the ultimate transition from old money to new money. But aside from that, I’m not entirely sure what the major benefits are for someone like me, who has a bank account and can use a fast bank transfer to receive their bitcoins quickly and easily, without having to venture into the great outdoors.

It’s also worth bearing in mind you pay a premium to use this service. At the time of writing, the exchange rate displayed on Bittylicious for cash payments was £537.80 per bitcoin, which is quite a bit higher than the £520 per bitcoin if paying via bank transfer, and greater still than the £517.18 displayed on the CoinDesk Bitcoin Price Index at the time.

Some say they are attracted to the service as it allows consumers to remain anonymous, because their bank accounts aren’t involved. However, given that the service can’t be used without first registering with one of the bitcoin companies listed above, customers don’t actually remain completely anonymous.

Warne said that, regardless, the service will appeal to those who want to buy bitcoins without involving their bank in any way.

He said: ”It’s not really about getting bitcoins anonymously. It’s more about getting them without needing to rely on any other institutions.”

He added:

“Some people don’t have bank accounts, have unsuitable bank accounts or simply don’t want to associate their bank account with bitcoins, so this is perfect for them.”

According to research by Social Finance, more than 1.5 million adults in the UK are unbanked (do not have access to a transactional bank account), so I can see that there is a sector of society that would find this service extremely useful.

If/when it becomes available in countries where the majority of the population is unbanked, I can see the service really starting to take off.

Upcoming developments

Currently the barcodes featured on the payment slips are single use only, however, ZipZap is working on creating a system that will produce a reusable barcode. This will enable customers to ‘top up’ their bitcoin wallet with funds without having to go online each time to confirm their payment.

“A lot of people are put off investing in or purchasing bitcoin as they see the process as too complicated. ZipZap aims to change this, making it easier and faster for people to swap their money for bitcoins,” said Eric Benz, VP of business development at ZipZap.

He went on to say his company aims to roll out the cash-for-bitcoins service globally, though ZipZap wouldn’t confirm which territories will be next, or when.

The company is also looking to expand its service so that people can exchange their funds the other way around, swapping their bitcoins for cash over the counter.

As for developments set to take place specifically here in the UK, Warne (of Bittylicious) hinted that the service could soon also be available for altcoins, such as litecoin and peercoin.

“Although not available yet, there’s no reason why the altcoins on Bittylicious shouldn’t be available for cash too in the near future,” he explained.

What do you make of the cash-for-bitcoins service? Would you use it? Let us know in the comments.

Cash image via Flickr.

Post Source: http://www.coindesk.com/can-now-pay-cash-bitcoin-28000-uk-stores/

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Apple Kills Last Bitcoin App

Bitcoin wallets are getting blocked from the App Store

Apple removed the last remaining app used to exchange the digital currency Bitcoin from its App Store on Wednesday.

Blockchain, the bitcoin wallet app, said on its blog that it had no prior warning it would be barred from the store or prompting it to make changes to that app. It said Apple’s only explanation was “unresolved issues.”

Other bitcoin-related apps like Coinbase, Gliph and CoinJar have also been removed from the store. While Bitcoin isn’t illegal, it’s also not recognized as legal currency by governments, TechCrunch notes. This could conflict with section 22.1 of the App Store’s review guidelines, which states that “apps must comply with all legal requirements in any location where they are made available to users. It is the developer’s obligation to understand and conform to all local laws.”

Google’s Android platform still allows developers to create and maintain bitcoin wallet apps.

Source: http://business.time.com/2014/02/06/apple-bitcoin-blockchain-app-store/

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These four charts suggest that Bitcoin will stabilize in the future

In recent weeks, something interesting has happened to the price of bitcoins: It hasn't changed very much. In December, Bitcoin prices gyrated wildly, but since the start of the year it's gradually gotten less volatile.

Bitcoin's declining volatility is part of a recurring cycle the Bitcoin economy has experienced repeatedly over the past three years. It starts when a wave of publicity attracts new Bitcoin speculators and pushes Bitcoin prices to unprecedented highs. That creates an unsustainable price bubble. The bubble pops, leading to plummeting prices and high volatility. But then the price gradually stabilizes, settling on a "new normal" price.

This pattern suggests that the extreme price volatility that has bedeviled Bitcoin since its inception is likely to prove a temporary phenomenon. Bitcoin prices become volatile when a wave of media attention attracts a swarm of new users. As the Bitcoin economy grows and matures, these growing pains will become less frequent and less severe.z

Mainstream media coverage of Bitcoin began in April 2011, at a time when one Bitcoin went for around $0.75. The chart above shows that by June 2011, Bitcoin's price had risen 40-fold to more than $30. Then it crashed, falling below $2 in November before stabilizing at around $5 in early 2012.

Notice that after the initial boom and bust, Bitcoin's price gradually got more stable. In January and February of 2012, Bitcoin's price ranged from $3.87 to $7.22— a significant range but not the wild fluctuations of the previous year. In March, April, and May, the price stayed between $4.30 and $5.48.

In the second half of 2012, the pattern repeated itself, albeit on a smaller scale. In June, Bitcoin prices began to rise rapidly, reaching a high of $15.40 on Aug. 13. Then the currency promptly crashed, falling to a low of $7.58 before stabilizing around $13.50 in December 2012.

The pattern repeated itself yet again in the first three quarters of 2013. From $13.50 at the start of the year, Bitcoin's value soared to $266, then crashed to $50 later that same month. As summer turned to fall, the price of one Bitcoin had stabilized around $130.

Finally, here's a chart of Bitcoin prices over the last four months. The price rose from $130 to $1,242, then crashed to $455 before stabilizing around $900.

The cycle

Each of these four periods involves the same basic pattern:

1. Bitcoin gets a wave of positive press. This attracts new Bitcoin users who begin buying Bitcoins. The process becomes self-perpetuating: new users generate higher prices, which generates more press coverage, which attracts new users.

2. The bubble pops, usually triggered by some kind of bad news. Many of the Bitcoin newbies who had flooded into the market in the preceding weeks panic. That kicks off a feedback loop of its own: falling prices generate more panic selling, which pushes the price down even more.

3. Eventually, everyone who is inclined to panic-sell has done so, and the price bottoms out. Over the following weeks or months, there are a series of "aftershocks" as each price rise triggers a new wave of profit-taking. But each rise and fall is smaller than the one that preceded it.

4. Bitcoin's price stabilizes. Most of the bitcoins are in the hands of people who intend to hold them for the long term. With no price fluctuations to report on, press attention to the currency drops off. Bitcoins prices are relatively stable until the next boom begins.

Notice that each turn of the cycle has left Bitcoin's price significantly higher than it was before. From an early 2011 price of $0.75, the price stabilized at $5 in early 2012, at $13.50 in early 2013, at $130 in late 2013, and at $900 today.

Notice also that periods of price stability have never led to sudden price drops. So far, major price drops have only come on the heels of even larger price increases. Each crash has bottomed out above the price Bitcoin was at at the start of the preceding boom. The crash in mid-2013, for example, reached a low of $50, way above the price of $13.50 at the beginning of 2013.

The obvious explanation for this pattern is that each new wave of publicity has expanded the Bitcoin economy. In each boom, some new Bitcoin users speculate for a few weeks and then cash out, creating volatility. But a significant number of the newcomers in each wave stick around, permanently expanding demand for Bitcoins.

Of course, these cycles can't continue forever. The process depends on new people being drawn into the Bitcoin economy. If Bitcoin keeps growing, it won't be long before the currency is so widely known and used that there's little room for further growth.

Once that point is reached, we should expect Bitcoin's price to behave the way it does in stage 4 of the cycle, when waves of publicity aren't drawing new people into the Bitcoin economy. These are periods of price stability, like May 2012, September 2013 and right now, when the price doesn't change very much from day to day.

Of course, it's important to acknowledge that past performance is no guarantee of future results. The fact that Bitcoin's price has never collapsed after a period of price stability, and that price declines have never wiped out the gains from a preceding boom, doesn't mean these things could never happen.

Still, the longer the Bitcoin economy grows, the greater confidence users will have in its continued stability. And that has important implications for Bitcoin users. One is that volatility doesn't strike at random. If you're thinking about doing business in Bitcoins and you want to predict whether Bitcoin's price is likely to fall tomorrow, you just need to look at what happened in the past couple of weeks. If prices were stable in the recent past, they'll probably be stable in the near future too.

Second, when thinking about Bitcoin's long-term future, it's misleading to think about the average level of volatility in the past. That volatility mostly reflects the currency's rapid growth, not something inherent in the technology. It's mathematically impossible for Bitcoin's rapid growth to continue forever. Once it slows, there's good reason to think volatility will decline with it.

Source: http://www.washingtonpost.com/blogs/the-switch/wp/2014/02/03/these-four-charts-suggest-that-bitcoin-will-stabilize-in-the-future/

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Mint personal finance tool embraces Bitcoin, but as an investment - not cash

Las Vegas may not be interested in letting gamblers use Bitcoin, but in yet another sign that the crypto currency is edging into the mainstream, Mint.com now lets you track your Bitcoin wallet. The new feature for the online personal finance tracker integrates exclusively with Coinbase—a popular web-based Bitcoin wallet hosting service.

Mint won’t treat Coinbase wallets as cash, the way it does savings and checking accounts from banks. Instead, Bitcoin is treated as an investment account, sitting alongside mutual funds and stocks.

A Mint user is more Bitcoins as a payment method than other "investments," but Bitcoin’s tendency for wild fluctuation makes it more at home among stocks and bonds. A single Bitcoin hovered around $20 last February and is now worth nearly $800, according toCoinbase.

Coinbase showing the per-Bitcoin price over the past months: That sure is a volatile "currency." 

Mint’s acceptance of Bitcoin as a legitimate part of a person’s financial picture may not have the same impact as major retailers like TigerDirect and Overstock accepting the digital currency. Nevertheless, with more than 14 million users, Mint’s integration is another positive step for wider acceptance of Bitcoin.

“We felt like it was something we couldn’t ignore anymore,” Mint product manager Vince Maniago recently told Venture Beat. “And this is a good time to go out and support the currency as it becomes more legitimate.”

Mint's new Bitcoin integration. (Click to enlarge.)

Countries around the world are split on how to handle Bitcoin. In August, Germany decided to recognize Bitcoin as a financial instrument. China has already banned the crypto currency as has Thailand. More recently, the Canadian government appeared to give Bitcoin the cold shoulder—althoughBitcoin entrepreneurs up north don’t appear to be discouraged by the government’s position.

In the U.S., Washington is still mulling how to deal with Bitcoin , while states such as New York are also grappling with the issue of regulating Bitcoin.

For now, however, Bitcoin remains something of an untamed wilderness where finance and technology meet.

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Legal Online Gambling is Next Major Bitcoin Market

The international online gambling industry is an estimated $30bn market, and growing. More importantly for Bitcoin, it’s a global market that depends on fast, irreversible payments.

Just like a ordinary casino chip in any land-based casino, digital bitcoin provides privacy, immediacy, and payment finality. Unlike most typical consumer purchases (where returns and chargebacks are usually legitimate), a wager is a one-way transaction. Of course, you may be dissatisfied with the outcome, but that does not justify a reimbursement. The online gambling industry has struggled with this fact for years.

Plagued by chargebacks and fraudulent transactions, specialized payment methods and payment companies have sprouted up around the online casino world to address the problem of payment finality.

iGaming and bitcoin

For the first time ever, the world’s largest and most comprehensive trade event in gaming, ICE Totally Gaming 2014, will feature a half-day seminar on bitcoin in the iGaming environment on 4h February. The London-based conference represents every gambling sector: betting, bingo, casino, lottery, mobile, online, and social gaming.

“We are now witnessing the long-awaited arrival of mainstream online casinos into the bitcoin universe.”

Organized by Gran Via’s Willem van Oort, the seminar features two extraordinary panels: ‘Regulatory Aspects’ and ‘Bitcoin’s Competitive Edge’. I will also be speaking on the evolution and future of bitcoin as a new monetary unit.

Moderated by iGaming attorney David Gzesh, the regulatory panel will assess the compliance challenges in dealing with bitcoin payment processing applications, including currency conversion, reduced transaction costs, payment finality, Know Your Customer rules, and coin management techniques.

Panelists include; Stuart Hoegner, managing director at Gaming Counsel PC; Steve Beauregard, CEO and founder ofGoCoin; and Michael Ellen, director of licensing and strategy at Alderney Gambling Control Commission.

The second panel of the day focuses on the competitive advantages offered by bitcoin in the iGaming industry and will explore potential for new games, new jurisdictional regions, and unique investment opportunities on the horizon.

Stellar panelists include; Esteban van Goor, indirect tax lawyer at PwC; Ivan Montik, CEO and founder of Softswiss; Erik Voorhees, founder of SatoshiDice; Brock Pierce, managing director at Clearstone Global Gaming Fund; Jiten Melwani, founder of Bitgame Labs; and Gabriel Sukenik, director at Coinapult.

Into the mainstream

We are now witnessing the long-awaited arrival of mainstream online casinos and betting establishments into the bitcoin universe. This is the beginning of the second-generation bitcoin gambling sites – the first generation exemplified by sites like SatoshiDice, BitZino, and Seals With Clubs.

CoinDesk reported on Wednesday that Malta-registered casino Vera&John has become the first of the major licensed and regulated online casinos to accept bitcoin deposits. The gaming operator accepts inbound customer payments which are then processed and converted into euros via Panama-based Coinapult service.

Following a trend common among existing online poker sites like WinPoker, Vera&John will only permit wagering in national currency units. The strategy of utilizing bitcoin only as a customer payment transfer mechanism eliminates the exchange rate risk for the operator and the player.

Alternatively, if the player uses bitcoin for deposit, betting, and withdrawal, then the exchange rate risk stays with the player. Examples of that approach include CloudBet and CoinBet.

Sports betting site Cloudbet claims to have revolutionized the online betting experience by introducing the world’s most advanced bitcoin betting platform accessible from desktop and mobile devices. Users can browse an intuitive, elegant site to place immediate and discreet bets on any world event – at zero fees.

CloudBet currently deploys 100% offline cold storage for all bitcoin assets and the site has received excellent reviews.

In addition, Costa Rica-registered CoinBet offers casino gaming, poker, and sports betting all under a simple email registration with password. CoinBet claims to be the first legitimate, licensed entity to re-enter the real money online gambling space since Full Tilt Poker, PokerStars, and Absolute Poker all had their sites shut down by the US Department of Justice in April 2011. However, that particular claim may actually go to Costa Rica-registered Infiniti Poker.

Unlike other regulated gambling jurisdictions issuing licenses, Costa Rica does not require operators to obtain and verify the identity of its players. On the policy of accepting US players, John Bauer, senior vice president of gaming at CoinBet, proudly emphasized:

“Look, to take away a person’s fundamental right to spend their money on whatever they choose is wrong, unconstitutional, and without question, an un-American thing to do.”

He continued: “We are not here to engage in a legal debate, we are here to serve up the very first legitimate workaround to the complex online gambling laws in this US market. We are returning to Americans their freedom to choose and giving them their power back!”

Internet gambling in the US operates in a legal grey area. Other gaming operators in the near future may come to appreciate Bauer’s statement because the US jurisdiction has yet to see a clarifying test case in the matter of bitcoin-only wagering without conversion.

Source: http://www.coindesk.com/legal-online-gambling-next-major-bitcoin-market/

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