How Digital Currency Could Transform Our Lives

Laura ShinLaura ShinContributor


Susan Athey On How Digital Currency Could Transform Our Lives

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This article is the first installment in a three-part series on digital currencies, such as Bitcoin, Litecoin, Ripple and others. Part 2 covers the security advantages and disadvantages of cryptocurrencies, as well as the obstacles to their adoption, and Part 3 explains how MIT students, the poor and criminals will all benefit from Bitcoin.

Insofar as this is possible, Susan Athey is a rockstar economist.

At age 36, the Stanford Graduate School of Business professor became the first woman to receive the prestigious John Bates Clark Medal, awarded to an American economist under age 40 who has made the most significant contribution to economic thought and knowledge. The former MIT and Harvard professor has a whole host of other accolades to her name: member of the National Academy of Sciences, member of the American Academy of Arts and Sciences, plus many more. She also was the first chief economist hired at Microsoft MSFT +0.59%, as a consultant, and she now serves on the board of Ripple Labs, the creator of the Ripple protocol, a more bank-friendly alternative to Bitcoin.

Her work has focused on the cutting edge of technology. One theme in particular has been how complex platforms and marketplaces, such as internet search advertising and online advertising auctions, can be designed to make them work more efficiently — for instance, using big data to predict how advertisers would react if online ad prices were changed and how that would change the users’ experience of and interaction with ads.

She also has concentrated on how technology enables the creation of new platforms, and how that affects the industries involved — for instance, how the internet has affected news media. “This is a new frontier of statistics and econometrics — the statistics of economics: to try to combine tools that are geared toward large data sets with lots and lots of covariates and not a lot of structure with the ability to answer very structured questions,” she says.

Stanford business school professor Susan Athey (Peter Tenzer)

Because of her interest in the effect technology has on our lives, cryptocurrency immediately piqued her interest for its potential to disrupt financial services. I recently met with her at her office at Stanford GSB to talk about what digital currency is, its potential, the hurdles it faces and other related issues, including an exciting new project involving Bitcoin. Because of the length of our interview, I’ve separated them into individual stories in a series. In this first installment, we discuss what Bitcoin is and applications for digital currencies.

What is digital currency?

At its core, the new technology that’s been invented in the last few years is a way to maintain a ledger or spreadsheet that keeps track of who has what. So if there’s an entry in that spreadsheet that says a certain address has 10 bitcoins and you know that address and the password, you can authorize a new entry on the spreadsheet that moves that digital currency to someone else. So Bitcoin is just a big spreadsheet that keeps track of who owns what,  and what’s really innovative about it is that, first, it is secure. It uses decentralized maintenance of that spreadsheet, so there are copies all over the world. There’s not just one computer that can be hacked.

Second, the fact that it’s purely electronic means that if the spreadsheet says I have some bitcoins, and I have the key for those bitcoins, I can authorize a movement to someone else simply by entering my security code, which then immediately makes another entry on the spreadsheet and allows someone else to control this thing of value without any banks or companies or other types of middlemen. With just a password, I can almost instantly transfer something of value to someone else, purely digitally and without any promises from companies to honor it. It’s a piece of open-source software.

So digital currencies are a technological innovation for moving value digitally and securely and quickly, just like the internet was a fundamental technology for moving information somewhat securely and quickly.

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How might digital currencies change our everyday lives?

Like the internet, digital currency is a technology that enables lots of applications to sit on top of it. One thing that’s hard to do today is to move money internationally, especially quickly. If you useWestern Union WU -0.05%, there’s a large fee, and if you want to move money between two banks internationally, it costs you $60 or $70. For regular consumers doing small transactions, it’s often too expensive. So digital money makes it easy to move money at the speed of information rather than a week or longer.

Digital currency also makes it easy for anybody to move money between one person to another. There are applications today that allow you to do that, like Venmo, but there are fees to getting money in and out of applications, and these apps are not that broadly adopted. So I expect that either people will directly use applications built on top of digital currency to move money, or that competition from digital currency might induce banks and other financial institutions to lower their fees. There are actually a lot of countries in the world, where, if two consumers want to send money to one another, that money becomes immediately available to the receiver, and there’s no fee. But that’s not the case in the United States.

Where is this available?

Europe, Australia. Person-to-person bank transfers are free and instant in a lot of the world. So when you talk about the benefits of digital currencies to people in other parts of the world, they are surprised that they are not available to us already in the U.S.

Why not?

The backend system that banks use to send money to one another, ACH, is an old system coordinated by the federal government. It takes time for the banks to actually receive the money. There’s a delay built in. The cost the banks are charged is very low but the banks charge the fees to the consumers and they don’t always make the money available to consumers as soon as they receive it.

The banks still have a delay in Europe but they just go ahead and make the money available to consumers even before the money moves between the banks once they know that it’s coming. You might wonder, can’t Chase and Bank of America work something out between them? Can’t Bank of America check you have the money in Chase and Chase says they’re sending it and then make the money available to you? They could but they don’t.

Digital currency, by its very nature, makes that very easy, so if the banks don’t provide those services to us, we expect that services built on top of digital currency will provide those services, and that would hasten the arrival of those services. It’s just basic nuts and bolts competition.

Do you see it already happening?

What brings down prices is competition. Currently, all the banks charge these fees and impose these delays, so competition doesn’t seem to be working to bring the price down to cost. Competition from outside services might have that effect, but so far it’s been too small. Digital currencies haven’t been large enough to put price pressure on the banks, and the banks are making a lot of money from those fees. Fees are charged to consumers and businesses — even large companies. These fees are problematic for the efficiency of society because they make certain kinds of transactions cost-prohibitive or less productive.

It might be easier to just move money electronically but since you can’t do it instantly, instead you use cash. There might be small transactions, like in-app purchases or charges in an app store, where the credit card fee might be very large in proportion to the value of the transaction, so those just get priced out. If a newspaper wanted to do micropayment for content, then the credit card charges might be cost-prohibitive because there’s a fixed fee for every credit card transaction, so we see lots of types of transactions not possible in a system when you have to pay credit card fees or bank fees to process the transaction. What digital currencies do is remove a lot of these minimum fees and make it easier and cheaper to move small amounts of money.

What are some other ways digital currency will change our lives?

We’ve talked about sending money internationally, which could include person-to-person payments and remittances. Formal and informal remittances are maybe $1 trillion, so that’s a big application. We’ve talked about digital currency putting pressure on person-to-person transfers within a country, which today could happen quickly but don’t. And we’ve talked about a payment system, so a merchant could accept bitcoins for payment, bypassing applications.  So that’s four applications we’ve talked about.

People can also use the digital currency technology to create more complex contracts or instruments. For example, today people use escrow accounts when buying a house: You put money into escrow, but it only goes to the seller when the seller hands the title to the property to you. We use escrow accounts when we have trust issues around a big important transaction and we want the money to move at the exact same time the property moves.

But we only use that for big transactions because escrow is expensive. With digital money, you can write costless computer programs that create escrow services,  so I can put digital currency in an escrow account and have a computer program only release that money to a seller when certain conditions are met. You can call it programmable money: It’s money that we can write computer programs on, and these computer programs check when certain conditions are met. In situation one, the money gets sent to one person. In situation two, the money gets sent back to the original holder of the money. In situation three, it might go to someone else. We can write contracts that are enforced by a computer, instead of a relying on an escrow agent and paper signing and these horribly old-fashioned things. We can use escrow for goods of much smaller value and without interacting physically across borders.

People are also investigating using programmable money for financial contracts, like for instance, financial contracts in derivatives which involve multiple parties. You might put some money in a financial contract which will pay out according to what happens to certain stock prices. So you could have a computer program that took in as an input stock prices from the Bloomberg terminal feed and then, depending on what happens to certain stocks or certain combinations of stocks, certain individuals get paid back.

Like a buy or sell order?

Yes, but you could set up more complex derivatives that might pay out to certain people, as a complicated function of what happens to multiple stock prices. Derivatives are financial instruments that pay investors according to complicated functions of what happens to stock prices. For example, it might be a lot if the stock falls by more than a certain percentage, or not at all if it goes up.

People have proposed to create more complicated derivatives where any individual could make up a contract, and people all over the world could invest in them and the people would know a computer program would follow the rules of who gets paid when. So they could be complex multi-person derivatives, financial instruments, and instead of trusting an individual or an institution to make the payments according to the rules, the computer program would spit out the money to the right people.

A little more abstractly, smart contracts with digital money allow you to write a set of rules that tell you in what circumstances different people get paid. These could be very complicated contracts that could depend on lots and lots of prices and lots and lots of information and could involve people who don’t know each other or trust each other and live in different countries all over the world. All these people could read the rules of the transaction, participate and trust that the computer program would carry out the rules. So as long as everybody put their money in, it could be held in escrow by this computer program and they would know that it would get spit out according to the rules.

So it’s a substitute for people you paid like escrow agents and title companies or services that would be provided by a financial institution, where the financial institution would create an instrument, but you’d have to trust them to follow the rules and so only certain trusted institutions could convince people to give them money and trust they would give it out according to the instructions. Now this can all be done in a computerized way.

People are very excited about this possibility, but part of the reason this sounds abstract is that we haven’t seen a really productive use case. It’s just a possibility now. This is just like beginning of the internet. When I was in college, I’d say, wow, you could send information all over the world. I can write a message to my boyfriend. People would say, you’re sending email to your boyfriend? Why don’t you just call him?  People couldn’t understand why it would be so much more useful to email information than use traditional methods. In the early days of the Internet, people would say, yes, I can send messages through text and files, but they couldn’t envision YouTube or Twitter or Google. The applications that were going to come later weren’t completely clear.

Digital money is similar. The first thing you do with technology is do what you were already doing better and faster, like sending money internationally, sending money to our friends, paying for things on the Internet. Many people believe that the best is yet to come, and new things are possible, but we’re not sure which of those possibilities have the most value. We have this new technology that allows money to be allocated with computer programs according to specified rules. We haven’t quite figured out what to do with it, but it seems like a powerful technology.

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BitcoinEXPO 2015 in London


BitcoinEXPO 2015 in London to Focus on Startups and Investors


by Allen Scott 

BitcoinEXPO 2015 London will take place in the UK capital on January 24-25, 2015.

After the previous successes of the Central European Bitcoin Expo Vienna, the BitcoinExpo 2014 Shanghai, and the Bitcoin 2 Business Congress Brussels, the CryptoEvents team is now bringing you BitcoinExpo London 2015.

“The year of 2015 will begin in a grand style in London!”

—CryptoEvents team

CoinTelegraph is also proud to announce that it will be the official media sponsor of BitcoinEXPO 2015.

BitcoinExpo London

The conference will take place in the capital of the United Kingdom, London, on January 24–25, 2015.

The event will serve as a launch pad for speeches, debates, networking and exhibitions, as well as the first ever startups show.

Commenting on his experience at previous events, Bastian Brand of the Pathfinder Cryptocurrency Fund remarked:

“The organizers did a very good job to bring together the most important Bitcoin experts and entrepreneurs from Continental Europe.”

The BitcoinExpo 2015 will be particularly focused on startups and new technologies, which makes it the perfect venue not just for crypto users, professionals, startups, and investors, but also for anyone else who wants to discover and learn about the burgeoning Bitcoin economy and the rapidly expanding world of cryptocurrency.

The speakers confirmed so far include:

Startups at any stage of development are welcome, as the event will  offer an opportunity to showcase the ideas behind new startup companies, as well as to discuss and find potential opportunities for your business to get the funding you need.

Speakers of BitcoinEXPO 2015 London


The £99 startup ticket will give you the opportunity to present your project to investors during the BitcoinExpo 2015’s Startup Show. Venture capitalists, investors, entrepreneurs, and big businesses are also encouraged to attend.

It is free to attend the conference. Early-bird registration is required, which will grant you full access to the exhibitors’ floor. You can also buy an attendee VIP ticket, which will guarantee you the best seats in the house. The price for a one-day VIP ticket is £109; a two-day ticket costs £129.

All attendees can register for free. Purchase tickets if you are a startup or investor here.

Tickets can be purchased with either Bitcoin (via BitPay) or credit card.

Don’t miss your chance to be a part of this conference. See you all in London!

For more information, go to: and

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Agora Commodities Will Rebrand to Focus on Bitcoin

Bullion Dealer Agora Commodities Will Rebrand to Focus on Bitcoin


Agora Commodities

Precious metals dealer Agora Commodities has announced that it will rebrand to emphasize its increasing interest in digital currency.

The company expects to adopt the name Crypto Bullion Group, a process that will include the launch of a new online platform. Crypto Bullion Group will continue serving precious metals customers that want access to bitcoin.

The move continues Agora’s long-standing involvement in the digital currency industry, which in recent weeks has inspired the company to forge partnerships with other precious metals-focused startups like crypto 2.0-powered bitcoin-to-gold exchange DigitalTangible.

CEO Joseph Castillo told CoinDesk that rebranding affirms what he called the company’s growing focus on bitcoin. This process, he said, grew out of the grassroots support of customers and advocates.

Beyond rebranding to demonstrate what he called the company’s “philosophical grounding in bitcoin”, Castillo said that Crypto Bullion Group is actively moving to utilize the technology not just as a currency but as a mechanism for smart contracts and transactions.

He added:

“We’re committed to the idea of the implementation of bitcoin beyond just a source of revenue.”

According to the company, the platform is still underdevelopment, and while there is no set date in place, Crypto Bullion Group hopes to launch before the end of the year.

Focus on cryptocurrency

Castillo said that the rebranding will allow the company to provide a resource for precious metals collectors and investors who want access to bitcoin while, in turn, enabling broader adoption of the technology in general.

Commenting that many other companies are tapping bitcoin as “just another revenue source”, Castillo said that an increased focus on digital currency would enable Agora to more directly support the bitcoin ecosystem as a whole.

He told CoinDesk:

“Rebranding is just a reaffirmation to our commitment to bitcoin, and a thank you. This new technology has created wealth for us and a new service, and we just want to make that our focus.”

“Not that we are going to stop taking US dollars,” he added, referencing competitor Amagi Metals’expected transition to take place by 2017.

Interest in crypto 2.0 capabilities

Notably, Crypto Bullion Group is looking into advanced bitcoin protocol applications in the form of smart contracts. While this process is still in the conceptual stage, Castillo shared insights into how crypto 2.0 processes could be integrated into the precious metals business.

Castillo said that he and his team are looking at how the bitcoin blockchain can be leveraged to both build greater trust among investors and create decentralized contractual mechanisms that reduce costs and reinforce agreements through the use of bitcoin’s globally distributed ledger.

He cited the colored coins project as one concept his team is looking at, noting that a recent meeting with that development team was promising. Ultimately, the company’s goal is to build new tools to make their business run more efficiently, which he sees as a key promise in bitcoin itself.

“I don’t think people are looking at the protocol and thinking, wait a second, there’s more at work here. We can do many more things with it,” he said.

Image via Shutterstock

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BitFury Group



Samsung Electronics President and CSO Young Sohn Joins BitFury’s Strategic Advisory Board

by Diana Ngo @ 2014-11-25 12:01 PM

Bitcoin infrastructure provider and Bitcoin transaction processing startup BitFury Group adds Samsung Electronics President and Chief Strategy Officer to its strategic advisory board.

BitFury CEO Valery Vavilov stated in an official announcement:

“We are excited to welcome Young Sohn to our strategic advisory board which is composed of some of the most distinguished technology and venture industry leaders.”

Sohn is joining BitFury’s advisors board, which was initially composed of semiconductor industry veteran Dr. Jackson Hu and Binary Capital founder Jonathan Teo. Vavilov also noted that:

“Young’s extensive experience in semiconductors and consumer electronics will enable us to explore business opportunities in the consumer electronic devices market.”

Sohn has been working as President and Chief Strategy Officer for South Korean multinational electronics company Samsung Electronics since mid-2012. Previously, the executive had served as CEO and President for multiple enterprises including public companies Quantum Corporation, Oak Technologies, Agilent Semiconductor, and Inphi Corporation.

Young Sohn

Sohn shared his excitement in joining BitFury’s team and in supporting the startup’s ambitious goals. He stated:

“BitFury is well positioned with its custom design chip and data center technology. The company’s commitment to delivering results through strong and consistent execution of its business and growth strategy has not only allowed BitFury to become a highly respected global Bitcoin company, but to also see new opportunities.”

Founded in 2011, BitFury Group is a leading provider of semiconductors, servers and datacenter solutions to the cryptocurrency industry. The startup is currently constituted of an international team of 70 professionals located in San Francisco, Amsterdam and Riga.

In May, BitFury Group closed a US$20 million funding round from VC firms, which included Binary Financial, Crypto Currency Partners, Georgian Co-Investment Fund (GCF), Queensbridge Venture Partners and ZAD Investment Company, as well as renowned angel investors Bill Tai and Jonathan Teo. The investment was said to build out its facilities in strategic international locations and accelerate its production of next generation semiconductors, or ASICs and servers.

In early September, the startup announced a partnership with Bitcoin security and multisig leader BitGo. The partnership included a significant undisclosed investment into BitGo. Last month, BitFury made another similarstrategic investment into payment platform GoCoin, which was then selected to process digital currency payments for BitFury’s vendors.

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Blockchain Factory


Blockchain Factory

Blockchain Factory Is Creating The Tools For Today And Governance Services For Tomorrow

by Ian DeMartino @ 2014-11-24 06:51 PM



Art by: Jing Jin

Last month we brought you an interview with Nathan Wosnack, David Mondrus and Matt McKibbin, who had left the crowdfunded Bitnation days before the launch of its crowdsale due to concerns over transparency, customer/investor protection and potential regulatory issues. Last week, we caught up with two of the former Bitnation members, Nathan Wosnack and David Mondrus, to talk about what they are doing now.

While they never came out and said it, their current projects seem to have been born directly from their experiences at Bitnation. Wosnack has started a company, uBitquity, that focuses on “PR/Media, Advisory/Development, and Compliance Services (AML/KYC manual dev and consulting).” Which shouldn’t be surprising considering his concerns over the potential legal issues he fears Bitcoin 2.0 projects may be running headlong into.

Of more interest to Bitcoin users is what he is working with Mondrus on, Blockchain Factory. Blockchain Factory is a company that, along with various tools designed to make navigating and using the Blockchain more accessible, also is building some projects that are very much in line with what Bitnation is offering.

But, it is also no mere imitation. Blockchain Factory isn’t trying to be the “other” Bitnation, and their short term goals with government services are less lofty and more lighthearted. Blockchain Factory doesn’t so much plant to replace your current government as much as it gives people the tools to add supplementary services using the Blockchain. That is essentially the same goal of Bitnation, but the feeling isn’t that they are coming to create “Governance 2.0” or at least not right away. They are both borderless, decentralized and voluntary services, but the difference is in tone and Blockchain Factory seems willing to take it one step at a time.

The feeling I got speaking with them was that the Blockchain Factory’s governance services, at least in the early stages, aren’t designed to make Bitcoin-citizens, but simply offer up alternatives for services that may or may not be offered by their current government. Citizens in the U.K. are used to supplementary health insurance. Why not supplement marriage or pass ports or notaries with the verifiable security of the blockchain?

A particular point of pride with them is how Blockchain Factory is being funded. As of now, there is no Blockchain Factory coin (although a coin is coming, it isn’t a share or pay any kind of dividend and details are scarce at this point), no IPO or ITO or ICO or whatever people want to call it today. Instead, they are going to traditional route, self-funding the project and bringing in select outside investors. They don’t hate the idea of crowdfunding or even crowdinvesting, but they do have concerns about the legal ramifications and how distributing a company, regardless of what you call it and the reaction of U.S. regulatory bodies.

We spoke about their upcoming projects, their concerns about crowdfunding and the future of governance services on the blockchain.

Why don’t you start with telling our readers about what you offer.

Nathan Wosnack: We offer Blockchain Development, Crypto Consulting, Crypto Project Management, Identity Management. Our main products are: Mining Slicer, BTC2MySQL, BitzME. And in the near future; BitMarriage, BitDeeds, [and] BitNotary.

Our unofficial slogan is “Let the Crypto Revolution Begin…” I do believe we are in the midst of a crypto revolution, and I’m happy to be part of it with Blockchain Factory, and with my partnership via uBITquity (my company out of Vancouver BC, Canada)

David Mondrus: Except, we’re not calling them BitMarriage, we are still working on the branding. But the idea is a cohesive set of governance services on top of an extensible framework. But, this is a long term goal and will depend of course on financing.

Nathan Wosnack: And with real proof of concept code to go along with it and no crowdfunding.

Perhaps we should go through each of the features one at a time. I’d like to start with BTC2MySQL.

Nathan Wosnack: As you know traditional tracking of a transaction on the blockchain requires digging through a plethora of addresses, keys and identifiers (i.e. transaction id, sender/receiver, change addresses) which can be arduous and very time consuming for people.

BTC2MySQL takes blockchain transactions and arranges them in an easy to query relational table. Now you no longer need to map out an entire transaction in your mind as it is all done for you on screen on our web-site with simply using SQL commands.

Who do you see as the target market for it? It seems like journalists and criminal investigators (private and public) would have a huge use for it, but are there other markets you hope to tap?

David Mondrus: There are two I guess. Forensic research is one, so that’s investigators both professional and amateur. The second is hobbyists and researchers. At the moment, we have a 100 row limit, but when we develop the premium version of the site we’ll do larger downloads, exports, etc. to make it easy to get the data out in a format more people are comfortable with.

Yeah, I can see how that could make my job easier when I’m trying to look into things.

David Mondrus: I was talking about it on FB one day and people expressed an interest, so we wrote it.

Nathan Wosnack: Definitely. And to be clear, we’re neutral about who uses our service. So long as they’re lawful in their activities.

Any other major features for BTC2MySQL [other than following a transaction]?

David Mondrus: Select * from join on … etc. That’s it for now, we’re moving on to BitzMe next and we’ll circle back to premium features when there is demand/funds.

Nathan Wosnack: For anyone who comes to our site and is confused about what to do, if they check the FAQ there is a link to SQL command help.

Speaking of BitzMe, that is really interesting too. It forwards all your cryptopayments to one address. The first question I have is: What are the “major” cryptos that will be supported? Do you have any that you can confirm at this time?

David Mondrus: so this isn’t a “crypto” specific product. So, we’ll support as many crypto currencies as we can, likely the Cryptsy set. But we’ll also support Paypal, FB Credits, Visa, Checking account. BUT, this is not integrated with a wallet, so don’t get excited. It’s a dir service, a payment page to rule them all (although the wallet integration is a good idea).

Nathan Wosnack: With traditional addresses people find them hard to remember, they expire very often, and they’re impossible to change once the address is posted. BitzME are easy to remember, it never expires, and you can change the payment methods as often as you need to.

So, let’s say someone sends me an obscure coin, when I want to collect that, how would I do it?

David Mondrus: well, when you set it uip, you have to tell us your wallet address, so at that point you’ve [already] got the wallet.

Nathan Wosnack: BitzME is an address shortcut for Bitcoin and crypto currencies (think When your wallet address changes, it is recommended as a good rule of thumb that you change your address on every single transaction – resulting in a link that is no longer valid. By simply using Bitzme you can leave your tip information on the Internet and not worry about it becoming obsolete and then losing payments. Since crypto currencies are irrevocable you can count on those payments being lost forever. So instead of “3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy,” you will be

Can you use an exchange wallet addresses?

David Mondrus: Sure, we don’t care.

Nathan Wosnack: In fact we welcome it!

Awesome, so someone could use that to open up donations to pretty much everything, without having to download or find a web wallet?

David Mondrus: Well, it does rely on the wallet actually being there, but you can certainly populate from all your Cryptsy wallets and manage it all from one panel.

It’s launching November 28nd, will that be a full release to a private or public beta or something along those lines?

David Mondrus: Hopefully, the 29th. But it’ll be a public beta.

Nathan Wosnack: It was the 22nd and we postponed it until the 29th due to being busy with paying clients for the Mining Slicer and other contracts, and also we want to make sure that Bitzme is working in the way we want by that date. Hence the slight delay.

Will most of the features be available?

David Mondrus: The first subset will. Cryptsy integration won’t be there and no wallets either, it’s an MVP.

Nathan Wosnack: Early beta release, but we’ll have many updates as we progress. We’re a small team, and we do have some volunteers for beta testing, and outsourced staff available to help with our development, along with contractors for design. Under promise, over deliver. That will be our motto.

What about the Mining Slicer?

David Mondrus: The mining slicer is a fork of the CGMiner code that allows you to break up a large ASIC into smaller components. So, say you ahve a 2T (Th/s) machine. You can point that entire 2T to the BTC blockchain and make some money, or you can point it to something like Mazacoin and run a 51% attack; not a lot of good choices. But mining slicer allows you to take that 2T and turn it into 2000G (Gh/s), and you can point each of those 2000G’s independently. So, 1 here, 50 there, 200 over there, etc … They will all work on their respective jobs, and they are all statistically independent.

Obviously, that has some great uses. I am wondering though if someone would be able to break up their 2T, but then still point it at one network and perform a 51% attack without people noticing that one party has most of the hashing power?

David Mondrus: Sure, but that’s not really something we can control. Hypothetically, you can take a little BFL mini and run a 51% on a very tiny coin.

Nathan Wosnack: We definitely condemn that behavior. 51% attacks are unethical and generally frowned upon in the community.

Nathan Wosnack: So our clients and interested clients for licensing have obviously been cloud mining companies.

David Mondrus: But, it also works well for large independent installs.

I noticed your site doesn’t list pricing. I assume there is a reason for that, but would you want to reveal a rough idea on what customers can expect? Would it significantly impact their ROI?

David Mondrus: No, we aim to always stay within the profitability window. For that reason our pricing is client specific

Nathan Wosnack: We do a call, and try to figure out the customer’s size and needs before giving a proposal based on our pricing. As David pointed out, it is client specific. We want to be flexible and fair so we scale with each mining operation.

You are planning some government services stuff. Obviously this is going to compete on some level with your former employer/company Bitnation. Do you think we will see several technologies offering governmental services and do you think that is a good thing or a bad thing?

David Mondrus: Yes, I do and I think it’s a great thing. The problem is monopoly and a monopoly leads to bad customer service. So, the more companies there are in this space the better. As a matter of fact, the idea is that we’re a platform offering basic “core” services and an API and allowing others to build on top of that.

Nathan Wosnack: I think it’s a good thing. So long as it’s consensual, someone can opt-out of it or in it at their leisure, and any use of “governance 2.0″ services are without the use of force or taxes being used to facilitate it.

David Mondrus: You know in the same way that you used to have just one job most of your life, you also used to have one government, but these days that’s not really true. Aside from all of the border changes people migrate more and more. If you could have the same data, in the same format, recognized world wide, that would be a plus and there are many use/cases where it becomes obvious how useful this is, from Nathan’s passport debacle to Joyce and mine deed ownership to our “official” marriage records. They would all benefit from an world wide available, immediate recognition veracity guaranteed storage.

Could it potentially help solve the problems that cause those aforementioned inconveniences? Like, if passports were done on the blockchain, it would be easier for security institutions to prevent terrorists from traveling.

David Mondrus: Well, it’s more like if they’re on the blockchain then if you lose your passport it’s easier to recreate one. Hypothetically it could be in your phone (although of course that’s a long ways away due to recognition issues).

Nathan Wosnack: I lost my business stamped Canadian passport at the hotel at Coins in the Kingdom, then the lovely staff found it. But in between then I was told I would have to fly to Miami and wait a minimum of 3 days in order to get this cleared up. With services like “BitPassport” (name pending) one could utilize the power of the blockchain to verify who I am, based on my WoT (Web of Trust). IDCoin by David Duccini (“The Little Duke”) has a great whitepaper on Web of Trust and reputation and ID systems.

David Mondrus: so we’re going to start by making fun, “gamefied’ experiences based around for example Bitmarriage to generate excitement and traction. Then over time we’ll try to influence existing law similar to how Uber and AirBnB are doing.

Nathan Wosnack: I could see institutions integrating PEP (Politically Exposed Persons) and Anti Terrorist databases to reference a bitpassport type system with existing software like WorldCheck. AML/KYC firms could definitely take advantage of this as part of their services. I know I would with uBITquity and my partners at BitComply would likely enjoy that extra functionality.

What different government functions do you think could be handled in this way? And could high level functions, like Healthcare, be done on the blockchain?

David Mondrus: So, the idea of medical records on the block chain is an obvious one. The trick is in integrating with existing laws, regulations and systems.

So, what turned you away from crowdfunding / crowdinvesting in general and do you think its something you may utilize in the future?

Nathan Wosnack: We are strong believers in traditional fund raising. Having a prospectus, a pitch deck, reasonable projections. And a solid foundation so we can give a good ROI for our investors and shareholders.

David Mondrus: Investors, esp early investors, bring more to the table than just money. Their connections, networks, experience, all play a key role, especially early. Also, many of the successful ICO’s this year were directed towards the industry (Bitnation being an exception). Since we’re trying to bridge that gap between the crypto and the RL world, an ICO would be less successful IMHO.

We want to avoid stepping on the toes of regulators, and following the letter of the law. Crowdfunding at this point is not the best direction to go.

David Mondrus: We won’t rule it out in the future, but we want to make sure its’ 100% legal, and that takes time, traction, and etc …

Do you think the legal problems will be an issue for IPO/ICO/ITOs in the future?

David Mondrus: Yes

Nathan Wosnack: Yes.

David Mondrus: In the past, the model has been to pretend, or act as if the regulations don’t matter. But, while “you can avoid reality, you can’t avoid the consequences of reality” (Ayn Rand), as I’m afraid many people in this space will find out in 2015. The arm of US law is very long and has a very old memory. I have no intention of being on the wrong side of that line

Nathan Wosnack: The song “No where to run” by Martha And The Vandellas comes to mind.

The FEDS love making examples of people. And they have unlimited funds backed by taxes the hard working men and women of the United States of America. The SEC definitely considers that a security. And if someone is selling unregistered securities to unsophisticated investors, they should expect to be held accountable for that behavior. Know the risks, uncertainties before investing. The same goes for anyone in the space looking to do an offering of this type. Get legal counsel and look before you leap.

That said, we’re not saying be overly conservative. The crypto space is about innovation and taking risks. Just know that the risks you take won’t have negative consequences that could land someone in prison or fined.

Final question: You are working on BitMarriage, what about BitDivorce? 

David Mondrus: I prefer not to handle “bitdivorce”. As I say, a marriage is a promise. A divorce is a contract. So, I can see divorce contracts happening when assets are on the blockchain, but that’s still a bit of ways away.

Nathan Wosnack: I’ll handle BitDivorce. I’m jaded about relationships right now anyway!

We want to thank Nathan and David for taking the time to talk to us. You can find more out about uBITquity and Blockchain Factory and their official sites.

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What Is Digital (Crypto) Currency-How Does It Work

What is digital money? It is specified as: cash stored and also transferred in electronic kind. May sound straightforward enough, but just how does it all job?

This sort of money is thought to excel to make use of for making purchases on the internet due to the fact that if it functions the method it was indicated to, transactions need to be rather confidential and untraceable back to the payer or individual.

This indicates that cyberpunks would no more have the ability to collect individual information from people that utilize their credit cards to make online acquisitions. This would clearly lessen the variety of taken identifications that take place each day.

To assist you recognize more of, “just what is electronic money?” I have done a fair bit of research on the subject as well as have located that there are many different types out there, each with it’s very own special high qualities.

Right here are just a few with their descriptions complying with:

Digital Gold Money– This type is supported by gold kept in safes. The gold offers an extra measure of safety as well as if you hold this type of money, you might possibly straight exchange it for solid gold bullion.
Central Money Systems– these are like PayPal and these business permit you to send money all over the world as long as you have money in the account. For some services provided by these sorts of firms, you obtain charged a fee on the receivers end of the purchase.

Decentralized Currency Equipments– Like Bitcoin are all based upon cryptography and/or trust networks. Additionally called Hard Electronic Currency, it is meant to be more like utilizing cash money to make your deal but your purchase is non-refundable when made. This kind of system simply works in one direction.

The E-cash idea has developed together with the advancement of the Net. Individuals simply do not feel comfortable with offering their individual credit card information over the Internet when buying.

A lot of bad things can happen like identity theft. No person desires their identification swiped.

So, many companies have actually attempted to create this kind of repayment or financial system to minimize the threats of shopping online.

Lots of countries have actually effectively created systems for “internal” usage such as Hong Kong’s Octopus card. This card functions similar to a kind of debit card where the customer loads cash into the card and then all the money is placed right into a financial institution. They could then make use of the card for anything they have to use it for.

Some nations are working with or have systems that permit the user to transfer cash through cell phones. I believe this is rather like what Chase permits their customers do. Their consumers could take a photo of their check, front as well as back, with their phone and make their down payment online.

I do wish that this provides you some suggestion of just what is digital money and how it is attempting to take it’s area on the planet of e-commerce. There might be a bit more to it compared to I could explain in merely one little article yet I assume you can acquire a great idea.

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The Ever-Changing Atmosphere of Bitcoin Mining 2.0

The Ever-Changing Atmosphere of Bitcoin Mining 2.0

Boost VC Is Going Full Bitcoin


We are going full Bitcoin!

After spending time at the Inside Bitcoin seminars in both Hong Kong and also Melbourne, we realised that out of all the excellent firms existing, a large section originated from makers of mining hardware and also the entire Bitcoin Mining room. The large number of manufacturers and teams of Bitcoin miners made it apparent that this component of the Bitcoin neighborhood is in an Arms Race. It was very appealing to talk with these business as we at Coinarch are taking advantage of a room that is not as saturated as that of Mining.

Many surprisingly, the business we spoke to forward market their rigs for months in advance as well as totally admit that their aged rigs would be enormously obsoleted hereafter interval. This hanging around duration in anticipation for excellent quality tools makes the entire Bitcoin Mining procedure appear a little bit tough without the appropriate sources as well as encounter.

One firm that struck our interest was that of Genesis Mining, a German cloud mining service provider who charges a fixed yearly rate to rent its hash power. Though the idea is not foreign, Genesis does an incredible work of making their service very easy for any individual to make use of, from newbie to expert. From an option of 9 altcoins, the user earns each day based after the particular mining result on the address they chose. Below is a screenshot of their interface; we were so pleased that we registered right away!

In addition to Genesis, we were very intrigued by the Cloud Broker design, which gives a web link between people that are interested in acquiring cloud mining power and also the people marketing it. For a person trying to choose in between the huge quantities of alternatives around, this design is an interesting concept to link the right people with each other.

Among the essential takeaways from our experiences at Hong Kong and Melbourne was the tremendous quantity of Mining companies and the quality at which their work is done. Moving on, this has to mean that their devices as well as solution will certainly begin to reduce but not without a correct balance in the mining difficulty also. Even though we at Coinarch are not included with Bitcoin mining, this encounter has opened our eyes as well as informed us on the future of Bitcoin mining as well as the effect it carries Coinarch as well as the whole Bitcoin neighborhood.

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Overstock CEO Patrick Byrne:


Lamenting on Missed opportunities in Innovative Tech

Overstock CEO Patrick Byrne: ‘That’s Not Going to Happen with Bitcoin’

by Kenny Spotz 

In a Quarter 3 conference call with investors, CEO of Overstock Patrick Byrne expanded on his plans to team up with Counterparty to create a decentralized stock exchange called Medici. Once developed, Byrne says Medici will be a “tollbooth” between the worlds of traditional finance and crypto finance.

Plans for this project go back to Byrne’s keynote speech at Bitcoin 2014 in Amsterdam, where he first mentioned the possibility of using the Blockchain to replace traditional methods of issuing securities. In the conference call, it was revealed that that speech was a strategic move to attract interested parties that could help Overstock achieve this goal. Following the speech, “thirteen different groups around the world” offered their services, with Counterparty being chosen after a vetting process.

Byrne said that Counterparty was selected for multiple reasons:

“It’s an open-source movement that stays true to the bitcoin philosophy. It is transparent. It is built within Bitcoin rather than being a proprietary alternative to bitcoin. There’s just all these aspects of it that made me think these were the right fellas to go with.”

The decision to develop Medici should come as no surprise to those who have follow Byrne’s career. As the man behind Deep Capture, he has long been railing against corruption on Wall Street and what he believes have been targeted attacks against his company’s stock using a strategy called naked short-selling. The team from Counterparty involved with Medici’s development told the Wall Street Journal in a conference call that the system’s design will prevent that specific tactic.

Unfortunately for those hoping to use Medici, there is no planned date for when it will be up and running. During the conference call Byrne said that “in the absence of there being a government,” the system could be up and running in three to four months, but because of the need for regulatory approval there is no way to predict the true timetable.

Mark Griffin, General Counsel for Overstock, chimed in to say that “initial discussions” with agencies have yet to take place and that, since this is a “paradigm shift” for regulatory agencies, it is hard to predict what the framework for implementation will look like. One thing is certain, current regulations necessitate that Medici feature a centralized clearing house. Merging this requirement with the project’s decentralized nature will be a key challenge.

CEO of Overstock Patrick Byrne

During the conference call, the man who once told Wired that Bitcoin is the solution to our oncoming zombie problem also dropped some insight into why he is so passionate about capitalizing on Blockchain technology (beyond it’s ability to fight corruption and the undead).

It seems Byrne has regrets about missing out on previous trends:

“We were early in the game in mobile, so early that around 2002 nobody adopted and we eventually discontinued it. We had a great social media platform very early on. Again, the same story. So I kick myself about some — about having stood just a foot away from some of the great technological innovations of the last 15 years and not really seized them correctly. That’s not going to happen here. We, through some fluke, have ended up right in the crossroads of this emerging technology.”

While he hopes that Overstock is hopping on Bitcoin at the right time, there have been signs that they could be too far ahead of the curve once again. Commenting on international Bitcoin purchases, which were opened up about a month ago, Byrne commented that consumer response has been “quite a bit slower than (the) domestic program when it launched. I had expected something much bigger, but the international purchases — I mean, they are happening, but they’re — it’s de minimis.”

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How Bitcoin Companies Keep Your Funds Safe

How Bitcoin Companies Keep Your Funds Safe

How bitcoin companies keep your funds safe

When you store your bitcoins on an exchange, a gambling site, or in an investment site, you’re placing a lot of trust in the company.

Personal wallet security with a relatively small amount of coins is one thing, but these sites store many more bitcoins than the average user, and are therefore prime targets for attack. So how do they protect your money?

Some, like the gambling site Seals With Clubs, use their own proprietary wallet technology, while others work with third-party services.

There are a variety of techniques and tools that companies can use to try and keep customers’ cherished coins safe.

Cold storage

Cold storage is an obvious candidate, and this is what wallet provider and merchant payment gateway Coinbase does.

The company, which claims to store more bitcoin than anyone in the world, holds 97% of it offline, on a combination of USB keys and paper backups. The private keys on the USB drives are encrypted and stored in safe deposit boxes around the world.

Exchanges, too, rely on cold storage for their security. “All of the funds held on Coinsetter are currently in cold storage,” said the New York-based exchange’s founder, Jaron Lukasiewicz. “We have multiple tiers of cold storage, depending on a number of factors.”

A firm can manage its own cold storage, or it can get someone else to do it. Coinsetter stores around 50% of its funds in Xapo‘s bitcoin vault.

Xapo charges around 0.12% of the amount stored to look after enterprise bitcoins in its bitcoin vault, which consists of offline servers held in three locations in Asia, South America and the US.

The geographic distribution isn’t just for physical site redundancy. It focuses on governments as an attack vector too. If the authorities in one jurisdiction try to seize bitcoins in a vault, then there would be two other locations still with their bitcoins intact.

Insuring against loss

Now, some cold storage services are complementing the technical advances in enterprise bitcoin storage with a financial one: cyber-insurance.

“We were the first bitcoin company to obtain a cyber-crime insurance policy,” said Coinbase co-founder and CEO Brian Armstrong. “This covers the bitcoin we store live on servers, and covers things like hacking, internal theft and accidental loss due to software bugs.”

Xapo’s vault is insured by Meridian Insurance.

Another wallet supporting cold storage is Armory, an enterprise-class storage wallet developed by Alan Reiner.

John Velissarios, who recently joined Armory as chief information security officer (CISO), explained that the wallet has a special cold storage version designed not to connect to the blockchain, meaning that it doesn’t publish transactions.

“You can have a cold storage machine where it’s completely disconnected, with no connectivity to the outside world. You use that to release funds from your wallet,” he said.

To take advantage of cold storage, enterprise users can prepare their bitcoin transaction on an Internet-connected computer, and then copy it to a USB drive and transfer the transaction to the offline cold storage computer, where they are signed.

“You then copy it back onto the online computer and publish it,” Velissarios continued.

Hardware security modules

Not everyone is enamoured by cold storage, however. Getting the funds out of that storage into a hot wallet can be time consuming, point out the method’s critics.

“People in a business need controlled access to funds,” said Rodolfo Novak, co-founder ofCoinKite. “Every time you do cold storage you are mandatorily adding a human to the mix, so there is capacity for human error.”

In February, CoinKite launched a service storing private keys securely in hardware security modules (HSMs), which are not directly connected to the Internet, but instead function through a proxy that makes requests to the system. This provides what Novak calls ‘warm’ storage – securely-held keys that are accessible via an API.

“The HSM is walled out of the standard Internet and it doesn’t ever expose its keys. So you can’t really practically get hacked,” he said.

The HSM, which CoinKite built itself, has no web server. All it can do is support API requests from CoinKite’s own web server. The module has to electronically sign that server before it starts up, which according to CoinKite co-founder Peter Gray means that there can be no malicious processes running on the server.

Users access the system using their CoinKite login credentials, which the company encrypts using a hashing algorithm, and can further protect themselves from being compromised using two factor authentication (2FA), via Google Authenticator, SMS, or even paper-based authentication.

When the user is authenticated, they can then access their cold storage via an API, which can be set to follow certain constraints, such as only allowing access from certain IP addresses, or limiting withdrawals to a set amount over a specified time period.

Multisignature storage

Multi-signature (‘multisig’) storage is one of the biggest developments in enterprise bitcoin security to date.

BitGo, which CEO and co-founder Will O’Brien says focuses on solutions for enterprises and institutions, eschews cold storage altogether in favour of multisig.

O’Brien said:

“Single-key cold storage is a dangerous, outdated practice. As an industry we need to end the cold storage ice age and adopt multisig, where you can make any number of keys ‘cold’ and have much stronger protections.”

Standardised a couple of years ago as part of BIP 16 (it was previously a non-standard feature in the protocol), multisig enables a sender to require more than one signature to confirm a transaction in what is known as ‘m of n‘ signing.

In an m of n multisig transaction, there are a total of n available private keys to sign a transaction, and the wallet can be set up to require m of those keys to sign the transaction for the transaction to be executed.

The idea is to stop a single person from being able to compromise a wallet, by requiring another known party to co-sign that transaction.

BitGo, which claimed to be the first provider of multisig wallet functionality, features ‘2 of 3′ signature confirmation, meaning that two private keys must be used to sign a transaction from a total of three available.

One of the signers in the scenario is the private local wallet, and one of them is the bitcoin private key. The third key is a backup key held on the Bitgo server.

Armory also announced fully decentralised mutisig capability in July. The firm offers multisig combinations up to m of 7, via independently-managed Armory wallets, without the use of a centralised site.

“Banks typically have 2 of 3, or 3 of 6, but they generally won’t go past 7,” said Velissarios, formerly a senior principal in Accenture’s security consulting arm, with similar experience at PricewaterhouseCoopers. “That’s why the enterprise space is very well suited for doing that kind of segregation of duties and providing those capabilities.”

Decentralised private key storage

Dencentralised offline multisig key storage is a significant advantage for some, including the CEO of one VC-backed bitcoin enterprise that has raised several million dollars.

“I can make m of n structures, where all n of the private keys are created offline,” said the CEO, who asked not to be named. “Then, how I treat those is up to me. I could put one of them online, but the point is that the choice is mine.”

The CEO said:

“There are also situations in which, for very small amounts of coin, I have a small hot wallet, where I keep $50 [in bitcoins]. That has its place.”

For those enterprises that do want more ms for their ns, on 18th November, CoinKite introduced multisig for its hardware security module. The system offers m-of-15 transactions, and like Armory, doesn’t require any of the keys to be stored on a central server, although it does offer five different options.

In the simplest storage option, CoinKite stores all keys centrally. Passphrase storage keeps the keys in the HSM, but encrypts them using the user’s unique password.

The third option, ‘invite others’, enables users to invite other CoinKite users to be cosignees, who can then choose which option they want to store their key.

The fourth option, offline, uses an open-source tool created by CoinKite, which runs in the browser and generates multisig keys.

“Some of the people who are cosigning on an account may want to use the HSM, so we support storing the multisig keys in the HSM,” said CoinKite’s Gray. “At the same time, we also give them Javascript code to generate a key offline, on a computer that doesn’t do anything else. So they can generate a key totally outside CoinKite.”

Finally, a fifth option lets users import keys from other wallets.

What’s next for enterprise bitcoin security?

Wallet companies are specifically tailoring their solutions to enterprises. BitGo has an enterprise service with features like spending limits, alerts, and round-the-clock wallet monitoring. Over at Armory, Velissarios heads up the consulting services division.

What would really help bitcoin enterprises, though, is a standard for auditing security, that goes beyond classic datacentre security and PCI security standards, to reflect the unique nature of bitcoin storage and usage.

Nothing like this exists yet. Will an existing security standards body, or an independent institution in the bitcoin world, step up?

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What Is Digital (Crypto) Currency-How Does It Work

What is digital money? It is defined as: cash kept as well as transferred in electronic kind. May sound simple sufficient, however how does it all work?

This kind of money is believed to excel to make use of for making investments on the net since if it functions the means it was meant to, deals ought to be rather confidential as well as untraceable back to the payer or customer.

This indicates that cyberpunks would no longer manage to acquire individual details from individuals which use their credit cards to make on-line acquisitions. This would clearly minimize the number of stolen identities that happen every day.

To assist you understand more of, “exactly what is electronic money?” I have done a fair bit of research on the subject as well as have found that there are a number of various kinds out there, each with it’s own special top qualities.

Right here are merely a couple of with their descriptions complying with:

Digital Gold Currency– This kind is supported by gold kept in vaults. The gold provides an added measure of protection and if you hold this type of currency, you could perhaps directly trade it for solid gold bullion.
Centralized Currency Systems– these resemble PayPal and also these companies permit you to send out cash throughout the world as long as you have cash in the account. For some solutions supplied by these sorts of business, you obtain billed a charge on the receivers end of the purchase.

Decentralized Currency Equipments– Like Bitcoin are all based upon cryptography and/or depend on networks. Additionally called Hard Electronic Currency, it is planned to be much more like utilizing money to make your purchase yet your deal is non-refundable as soon as made. This kind of system only works in one direction.

The E-cash idea has actually advanced together with the development of the Web. People just do not really feel comfy with offering their personal bank card information over the Internet when making a purchase.

Way too many bad factors can take place like identification burglary. No one wants their identification swiped.

So, many firms have attempted to create this type of settlement or monetary system to lessen the dangers of purchasing online.

Many nations have actually efficiently produced systems for “in-house” usage such as Hong Kong’s Octopus card. This card functions just like a form of debit card where the individual lots money onto the card and after that all the money is transferred right into a financial institution. They can then make use of the card for anything they have to use it for.

Some nations are working with or have systems that enable the customer to move money through cell phones. I believe this is rather like what Chase lets their customers do. Their customers could take a picture of their check, front and also back, with their phone as well as make their down payment digitally.

I do hope that this gives you some suggestion of what is electronic money and also how it is attempting to take it’s place on the planet of e-commerce. There might be a bit more to it than I can describe in simply one small write-up however I think you can acquire a smart idea.

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