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Jan 31, 2014: The Day Bitcoin Stood Still

The last day of January 2014 was built up by many into what was to be a sure-fire catastrophic day for Bitcoin; a cataclysmic decline in the exchange rate that might just kill the “magic internet money” altogether. Then, when the day finally arrived, the unthinkable happened – Nothing.

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The fixation on this date was due to regulatory guidance issued by the Chinese Central Bank (PBOC). The notice, which was released on December 5, stated primarily that Chinese financial institutions were not to deal with digital currencies after January 31 – the beginning of the Chinese New Year holiday. Soon after the announcement, several high-profile Chinese merchants who were previously accepting BTC removed that option and Chinese exchanges halted all bank transfers in anticipation of the regulatory crackdown.

The exchange rate of bitcoin fell across the board following all the bad news coming out of China, and the bears were out in force, some calling for a fall down to $100 or less. In fact, the price never even came close to testing the all-time high (ATH) of the previous mania ($262), reaching a low of only $456.

BTCChina

Shortly after BTCChina halted all bank transfer options for deposit/withdrawal, they came up with a workaround – selling BTCChina vouchers on chinese retail sites that could be purchased with Yuan and redeemed for credit to your BTCChina account. After the voucher system was implemented, BTCChina also reinstated 0.3% trading fees after months with no fees, and volume on the exchange remained low. Around this time, another competitor (one still willing to bear the risk of allowing bank transfers and having zero fees) emerged on the scene – Huobi. The newcomer exchange quickly became the largest in China by volume, but skepticism abounded as some anomalous trading activity prompted some to suspect that the exchange was faking trade volume using internal, sock-puppet accounts.

Then, in a sudden and interestingly timed announcement on the day before the fated bitcoin doomsday, Bobby Lee, the CEO of BTCChina, announced that the company would again begin allowing direct bank transfers and change its fee policy to a “maker-taker” model. As reported by CoinDesk, the impetus for this decision was the fact that, after further review of the regulatory notice, that “the main message in the memo issued by the People’s Bank of China (PBOC) on 5th December was that banks in the country aren’t allowed to set up or become a Bitcoin business.”

Huobi

Volume on BTCChina remains very low, but the timing of their decision and their interpretation of the guidance as specifically not outlawing bitcoin exchanges seemed to bolster demand in the bitcoin markets over the dreaded period. The price hovered around $800 throughout, and remains there now.

Such stability during this period was unexpected for most, and, notably, could be interpreted to mean that many large bitcoin holders are too confident in their investments to sell their stash, even in the face of seemingly crippling uncertainty. Have we shaken out the weak hands? Has everyone who wants out gotten out and, more importantly, everyone who wants in gotten in?

No one can claim to know, but this much is true: The bitcoin exchange rate withstood what many were calling insurmountable regulatory impediments, and the volume of sell orders remains exceptionally low on all exchanges. It stands to reason that more people are going to become interested in owning bitcoin, but current holders are not necessarily going to become more interested in selling theirs. In a market like bitcoin, in which the price movement is driven by pure supply and demand, the implications the aforementioned situation imposes on the exchange rate are not hard to extrapolate. Caveat Venditor

*Nothing in this post should be construed as investment advice. At no time will we make specific recommendations for a specific person and at no time is a reader or viewer justified in inferring that any such service is intended. We are publishing opinions – NOT INVESTMENT ADVICE*

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

It Never Hurts to Ask

One of the most impactful things individuals can do to spread and strengthen bitcoin is convincing merchants to accept it as payment for goods and services. Many merchants (especially those with very low margins) are more interested in accepting bitcoin than one might expect. Businesses have not had to deal with accepting a new payment method in over 25 years. However, the appeal of saving 1-3% (per sale) on transaction processing expenses and gaining free publicity can often overcome the apprehension to integrate a new currency into existing systems, especially considering bitcoin POS integration is incredibly simple and inexpensive compared to existing options (CC, Debit). I will detail one of my recent personal experiences with encouraging a business to accept bitcoin publicly.

Last week I was administering the blogs that I manage and trying to implement some more automation for posts on social networks. I wanted to add additional facebook pages to the wordpress plugin that I use for that purpose, Social Network Auto-Poster (SNAP), developed by NextScripts. When I tried to do so I was notified that I needed to upgrade to the “Multi-Account Version” of the plugin.

After going to their site and checking out the details and price of the upgrade, I was almost sold, especially considering how much use I have gotten out of the free version of the plugin so far. I checked the payment methods accepted on the site, and when I saw the myriad of icons, I optimistically hoped to see the bitcoin logo among them. I was not surprised when I found bitcoin was not one of the listed options. What I was thinking when I hoped to see that ฿ icon was “I will buy this right now if I can pay with bitcoin,” so I decided to write them an email saying as much. I explained bitcoin and its benefits for merchants, provided links to potential payment processors, and asked them to consider accepting it.

Less than half an hour later, I received a reply:

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After promptly purchasing the upgrade using the provided link, I replied letting them know I completed the purchase. I then expressed that they had nothing to lose by taking the bitcoin option live, and received another very timely response:

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It seemed their main hesitation was due to some unanswered questions, so I tried to provide some information to help alleviate that uncertainty:

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I received no response, but left with a great feeling about the experience and was happy with my purchase.

The next morning, I decided to check their payment page again, and there it was: the “Pay with bitcoin” button, right in the center of the page, dwarfing the other credit card icons I had seen the day before.

If you are a regular patron or customer of a business, ask them to accept bitcoin! The worst that can happen is they decline to look into the subject. On the other hand, they might just plaster a bitcoin button front and center on their payment page the very next day.

It never hurts to ask.

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

Using Bitcoin in Real Life: Point-of-Sale Integration

As major online retailers begin accepting bitcoin, brick-and-mortar establishmemts also spring to mind. It is important that integrating in-person bitcoin payments into existing Point of Sale (POS) systems is as inexpensive and painless as possible in order to bring bars, restaurants, and big box behemoths on board.

Several major bitcoin payment processors already exist, but they handle only the software/exchange portion of integrating bitcoin payments into a pre-existing system. The merchant is left to their own devices when it comes to providing the hardware necessary to facilitate in-person transactions (tablet, smartphone, LCD screen).

U.S. based bitcoin payment processors, BitPay and Coinbase, hold all their merchants’ funds and will automatically exchange them to the appropriate local currency at the end of each business day if desired by the merchant. Merchants can opt to exchange for fiat portionally as well, specifying a percentage of received BTC that they wish to keep each day. These companies do not, however, offer any hardware solutions for those who wish to begin accepting bitcoin at their businesses, though they have been known to offer consulting on such matters.

Coinkite is a Canadian company that seeks to provide both processing and hardware requirements for vendors to begin accepting bitcoin payments. Coinkite does not exchange bitcoins for local currencies, but they make support and security their focus. They have a paid online wallet service that can be used through a bitcoin debit card that they have developed to work in conjunction with a POS hardware device they created. The device works exactly like a standard debit card machine, but can also create bills, take payments, scan QR codes, print paper wallets, query exchange rates, and allow vendors to specify custom markup rates (over the exchange rate) to charge their customers. Here is a video demonstration of the system:

 

 

Another bitcoin POS system was unveiled recently by redditor solanoid_. This project is 100% open source, and the only hardware required is an LCD screen that communicates with the POS machine via an ethernet cable to display QR codes and indicate when the transaction is complete. With this system, the customer would use a mobile device or hardware wallet to scan the QR code and send the payment (NFC functionality is also being developed, enabling offline hardware wallets to make payments as well). The system is extremely simple, completely free (aside from the hardware), and easy to integrate into existing an POS setup. It provides no currency exchanging nor hosted wallet services, but it can be easily used in conjunction with existing payment processing services to fill the gaps. Below is a video showing the process from both the merchant and customer side:

 

 

There are also logistical complications with accepting bitcoin in certain businesses. These were highlighted by the reported shortcomings of various “Bitcoin Parties” over the 2014 holidays, some claiming that bartenders were having an extremely difficult time keeping track of whose drinks were whose and who had paid for what. Redditor ronSwansonsFriend designed out a whole system to address the issue, and it is pretty slick.

The Bitcoin community’s recent focus on reliable and easy POS integration for in-person purchases is well warranted. For Bitcoin to take off in bars, restaurants, and brick-and-mortar retailers, it needs to be just as easy as credit/debit card payments for both the merchant and the customer. This is entirely possible, but we need some killer apps with big shiny buttons and reliable merchant systems to facilitate the process.

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

Get Paid in Bitcoin: BitPay Introduces New Payroll API

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If you have ever thought about getting paid in bitcoin, you’re in luck. US-based bitcoin payment processor Bitpay has developed a new Bitcoin Payroll API for employers to easily pay a percentage of their employees’ salaries in bitcoin.

The Bitcoin API is specifically designed for employers and payroll service providers. This service allows American W-2 employees to receive a portion of their net pay in bitcoin.

Tony Gallippi, co-founder and CEO of BitPay stated: “For the longest time the hard question was ‘How do I buy bitcoin? Now the answer is easy: ‘Ask your employer.’”

At the request of its employees, BitPay first created the Bitcoin Payroll API to pay all of their employees at least a portion of their wages in bitcoin, which also served as a fertile testing ground for the system. According to Bitpay, 100% of their 20 employees still receive a portion of their net pay in Bitcoin.  Gallippi and three other employees receive 100% of their net pay in Bitcoin.

There’s no need to be worried about tax issues when you use this system.

“Since all payroll and withholding taxes are taken out first from the employee’s gross income, bitcoins can be sent from the net pay tax-free, and the employer’s gross income reporting to the IRS remains unchanged,” said Bryan Kohn, BitPay’s CFO.

This is a step towards a closed-loop economy where the cumbersome task of exchanging bitcoin for fiat is not necessary to purchase goods and cover necessary expenses.

Anonymity Meets Convenience in Bitcoin “Stealth Address” Proposal

A new proposal from Bitcoin core developer Peter Todd suggests implementing an anonymity-enhancing address generation scheme into wallet clients. Dubbed “Stealth Addresses”, the system allows an individual/merchant to provide a single address to their debtors/customers that can be used to make recurring payments without sacrificing anonymity. The payee/merchant can reuse that address forever, with vastly improved anonymity over the current (and inconvenient) best practice of manually generating a new address every time one wishes to receive a payment. Payments to the stealth address are not recorded in the blockchain because it is only used as an input to an algorithm that generates a fresh address (and private key) for every incoming transaction, saving the payer the trouble of manually inputting a new address for every payment made.

This system provides a great deal of anonymity because the one-time addresses generated from the stealth address cannot be linked to the stealth address they were derived from. Users could still compromise their anonymity if they were to dump all their coins received using their stealth address into a single, non-obfuscated address that can be linked to their identity and whose inputs/outputs are recorded plainly in the blockchain. However, if the implementation of this idea is done correctly, dumping to a single, regular address should not be necessary.

As summarized by redditor Chris_Pacia:

“If every bitcoin user is generating new addresses for each transaction, how do you link transactions to identities? There would be no need to send everything through a mixer to a single address because the stealth address would be your single address. The wallet would just handle everything else behind the scenes.”

Note that this development does not invalidate ZeroCoin, which is inherently more anonymous. While the minting of zerocoins is traceable to the bitcoin address which funded the minting, when the zerocoins are spent, there is no way to know who minted those particular zerocoins.

In any case, with the looming possibility of regulatory schemes like CoinValidation and New York State’s “BitLicense”, this proposal is a strong step in the right direction. Hopefully we continue to see the bitcoin core developers focus their efforts on this gaping vulnerability now, so they can later focus on protocol modifications that will allow the infrastructure to scale for mass adoption when that time inevitably comes.

(Here is a nice diagram of how it works and how Zerocoin is different)

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

Can Bitcoin Keep Up With the Demands of “Going Mainstream”?

Bitcoin is a revolutionary technology, and the secret is finally starting to get out. As more and more people start to use bitcoin (which we all want) there will be significant strains put on the network. Bitcoin works beautifully right now, but if we are to continue to promote it as a robust, resilient, disruptive system, it needs to be able to scale up. For bitcoin to go mainstream, it needs to support at least the same transaction processing volume, and provide the same in-store ease enabled by major payment processors, while maintaining security and eschewing centralization.

Visa, for example, processes 2000 transactions per second (TPS) on average, which dwarfs bitcoin’s current maximum of 7 TPS. The number of transactions that the bitcoin network can process in a given period of time is constrained by the block creation rate and block size. Currently, blocks are created once every ten minutes, meaning that new batches of transactions can only be added to the ledger (blockchain) once every ten minutes. This also has implications on the “confirmation” of transactions. The amount of time it takes to be certain that a payment is legitimate can be over an hour. This will not be acceptable if Bitcoin wishes to see major use in retail. Brick and mortar stores cannot expect customers to wait around for confirmations for an hour before they can leave with the product they want(ed) to purchase. After about ten minutes, a recipient of bitcoin can be reasonably sure that the transaction is good, but ten minutes is still too long, and “reasonably sure” generally doesn’t sit well with decision-makers in major firms.

These problems could be solved by including transactions in much smaller blocks that are created much more frequently. However, this would result in many more valid blocks being orphaned than in the current implementation of the protocol, reducing the overall security of the network, as orphaned blocks do not contribute to securing the ledger. In the solution proposed by Sompolinsky & Zohar, the proof-of-work in orphaned blocks can still serve to secure the blockchain.

Bandwidth could also become an issue if bitcoin usage expands to the point of other major payment processors. Currently, there is a 1MB limit on block size, and a block’s size is proportional to the number of transactions included in it. This limit (along with the block creation rate) is what imposes the maximum of 7 transactions per second possible on the current bitcoin network. If that limit was removed, and blocks could be large enough in size to enable transaction processing on the same scale as Visa, the blocks would become extremely large. They might grow so large, so quickly, that nodes and miners with slower internet connections might not be able to download the blockchain as fast as it was growing. More importantly, miners with faster internet connections could broadcast their blocks faster than those with slower connections, which malicious miners can exploit to build fraudulent chains, enabling a variety of double-spending attacks. Block propagation would be far less uniform (which also leads to many blocks being orphaned).

This issue could be alleviated by combining Sompolinsky & Zohar’s solution to the TPS limit with other proposed ideas such as this one. The idea is that miners would first have to broadcast only the block header and transaction hashes (a very small amount of data), then later send the rest of the data, which could be easily paired with the corresponding header. This would vastly reduce the amount of data that miners and nodes must download to become aware of new blocks and transactions – keeping block propagation extremely fast and uniform, and enabling quick, secure transaction confirmations.

Another (non-technical) concern for large merchants is how to handle refunds and exchanges. Given the fluctuating market value of bitcoins, refunding Bitcoin payments will heap considerable risk on either the consumer or the vendor, depending how refunds are processed. Let’s say the customer will be refunded for the amount their bitcoins were worth (denominated in USD) when they were originally sent to the merchant. If the exchange rate has gone up since the time of purchase and the user is refunded in USD, they may feel that they were robbed of the potential gains on the bitcoins they spent. If they are refunded in BTC, they are almost certain to feel robbed, as the amount of bitcoins refunded may be considerably less than the amount they paid (paid 1BTC when exchrate=$500, refunded 0.5BTC if exchrate=$1000 when refund is processed). If the amount of BTC refunds are to be equal to the original amount paid (denominated in BTC), the merchants are likely to take a hit, possibly having to purchase BTC at a premium to send to their customers. Because of these issues, businesses are forced to risk either alienating their customers, or absorbing substantial losses processing refunds – and those are two things that large, successful merchants go out of their way to avoid.

Strict wording in refund policy seems to be the only solution for now, possibly even having the customer check a box on the invoice agreeing that they will be refunded the amount (in local currency) that their BTC was worth at the time of payment. Until there are some commercial-ready hedging instruments available to large companies accepting/holding BTC, we seem to be stuck with this less-than-ideal solution. I am hopeful that the bitcoin community will be quick support developers/entrepreneurs who are working to build such tools – we need them sooner than later.

UPDATE: While writing this post, Overstock.com began accepting bitcoin as a payment option in their U.S. checkout. For an example of a highly detailed refund agreement as mentioned in the previous paragraph, see Overstock’s Bitcoin Payments page. Overstock partnered with Coinbase to process transactions, and, at the moment, is not holding any received BTC, nor are they refunding returns with cash or BTC, it will be store-credit only. However, cancelled orders do get refunded in BTC (equal to the $ amount that the bitcoin payment was worth at the time of purchase). Two hours after the option to pay with bitcoin appeared on the U.S. version of the site, Overstock had already processed over 100 orders paid for with bitcoin, totalling over $10,000.

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

Bitcoin Holiday News Recap

All of us at Digital Currency research would like to welcome you back from what we hope was a restful holiday. Bitcoin however did not take a break this season, and in fact has made many frontpage news stories over the past few weeks. Here’s a recap of some interesting Bitcoin-related developments that you may have missed:

Overstock

Over the break, Overstock.com announced that it would begin accepting Bitcoin as a payment method starting in Q3 2014.

Overstock CEO and Chairman, Patrick M. Byrne, said in his self-written CNBC article:

Overstock.com has become the first major online shopping retailer to commit to accepting the digital currency bitcoin as payment in exchange for any of our million products. We are doing this for both business and philosophical reasons.”

Zynga

Zynga teamed up with payment processor BitPay to allow users to make in-game purchases using Bitcoin. Zynga is framing this as a test and has made the feature available in FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille. Zynga made an official post on the Bitcoin subreddit this week stating:

“Zynga is always working to improve our customer experience by incorporating player feedback into our games. We look forward to hearing from our players about the Bitcoin test so we can continue in our efforts to provide the best possible gaming experience.”

Blockchain.info

Online wallet service Blockchain.info celebrated their 1 millionth wallet creation this week. Just a year ago, there were less than 100,000 wallets hosted on the site.

FinCEN & Bitcoin Mining

FinCEN, the US regulatory body that is responsible for regulating bitcoin exchanges, stated explicitly that bitcoin miners and mining pools are not regulatable as Money Service Businesses.

The official statement says the following:

“To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither “acceptance” nor “transmission” of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule. “

India

After a meeting with the head of India’s banking regulatory body, the CEO of Unocoin announced that the India-based exchange would be going back online on January 8th.

Even though Unocoin is a travesty of a website with unthinkable security vulnerabilities, their announcement to resume operation implies that (hopefully higher quality) exchanges will be able to operate in India in the future.

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

Happy New Year!

All of us here at Digital Currency Research would like to wish our readers and subscribers a happy new year! We hope 2014 brings you much joy and prosperity.

We have taken a short break to celebrate the holidays with our families and loved ones, but we will be back in action next week. Thanks for hanging with us and we can’t wait to get back to doing what we do best: Analyzing markets and bringing you the latest information on the most important developments in the digital currency ecosystem.

Cheers!

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

Bitcoin: Media’s Whipping Boy Turned Darling

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Mainstream media outlets have been covering stories on Bitcoin for the last few years, mostly discussing it’s affiliation with drugs, money laundering, and other illicit activities. However, there’s been a noticeable shift in the media coverage of Bitcoin within the last few months.

 Joe Weisenthal, the executive editor of Business Insider, was initially outright anti-Bitcoin. On April 11th, 2013 he wrote an article titled: “Bitcoin Has No Intrinsic Value, And Will Never Be A Threat To Fiat Currency”, stating: “Bitcoin has no intrinsic worth from a currency perspective (no army, no functional use, no law backing it) and its role as a disruptive medium of payment is something that needn’t involve scarcity, and is susceptible to cloning.”

On November 6th, 2013 Weisenthal wrote “Bitcoin Is A Joke” stating: “Bitcoin? Nada. There’s nothing keeping it being a thing. If people lose faith in it, it’s over. Bitcoin is fiat currency in the most literal sense of the word.”

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In one of Weisenthal’s more recent articles, “I’m Changing My Mind About Bitcoin”, He states: “The more I’ve thought about Bitcoin though, the less valid some of my earlier objections to it seem, which is why in the interest of intellectual honesty and being someone who takes into account new evidence when presented with it, I’m writing this post now.”

Matt Miller, a reporter for Bloomberg Television, is known in the bitcoin community for making a complete 180 regarding his views on cryptocurrency. In a segment filmed on March 28th, 2013  (“Bitcoin: The Anarchist Virtual Currency”) Miller jokingly asked if you earn Bitcoin by completing “certain tasks… if you get the magic pulse sword?” making a comparison with video game money. His attitude was clearly dismissive.

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 Miller is now a bitcoin enthusiast who has taken it upon himself to create “The 12 days Of Bitcoin” series that began on December 9th. He is fully immersing himself in the bitcoin economy and documenting his results over the course of two weeks. You can see all of his videos here.

Other media outlets such as CNBC have been outright contemptuous towards Bitcoin. CNBC Bitcoin aired on April 1st, 2013. Just a few days ago, traders were laughing at the idea of a “Bitcoin Black Friday” on this segment.

On December 15th, 2013 CNBC posted an article titled Bitcoin goes big: Wall Street, Silicon Valley aboard – “Bitcoin, the cryptocurrency created by online ‘miners’ who solve complex math problems, is gaining as much acceptance as skepticism these days.” While not highly informed or overtly positive, there is a clear shift in tone.

 CNN Money aired their first bitcoin segment, “Bitcoin’s Uncertain Future as Currency” on July 18th, 2011. Since then, CNN Money has published many articles on the topic of cryptocurrency. On December 9th, CNN Live aired a video “Bitcoin: Is It The Future Of Money?

Bitcoin gains many new users from positive media coverage, and the media ramps up coverage as popularity increases. In this way, it is a positive feedback loop, with one reinforcing the other cyclically. Many say this is the cause of the wild upswings in price frequently seen on bitcoin exchanges, but this is contentious among bitcoiners. One thing is for sure though, positive media coverage and price increases help to drive interest, awareness, and adoption. Obviously wild price fluctuations are not a beneficial attribute of a medium of exchange, but some say such volatility is necessary to drive adoption, and that it is an attribute of low-liquidity markets, not an attribute of Bitcoin itself.

For more information on the Bitcoin market, or any of the other markets we cover (Litecoin, Gold, Silver, S&P 500, DAX 30) please visit Digital Currency Research.  Happy trading!

Bitcoin Regulation Recap: December 2013

Quite a few central banks and regulatory committees have made announcements regarding their stance on bitcoin within the few past weeks, in some cases shaking the markets. China and Korea made vague, seemingly negative statements, while several European countries released varyingly positive statements.

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In December 5, China’s central bank expressed that financial institutions are barred from dealing directly in bitcoin, and that it is not recognized a currency by Chinese authorities. Following this statement, several prominent Chinese companies who were previously accepting bitcoin in exchange for products and services promptly removed the option and all mention of bitcoin from their sites. All exchanges were forced to begin collecting personal information from traders to comply with potential “know your customer” regulations. The announcement caused a sharp sell-off in the markets, causing the exchange rate to decline by more than 40% on some exchanges.  Although the guidance didn’t specifically state that bitcoin could not be exchanged for goods and services, Chinese companies accepting bitcoin were clearly shaken and decided to play it safe. Several days later, Hao123 (owned by Chinese internet search giant Baidu) added a bitcoin section to their finance page, which appears to be chock full of content and polls geared toward Chinese bitcoiners. Hao123 is currently ranked #16 on the internet in terms of traffic. It does not appear that the announcement will affect bitcoin’s use as a store of value and a means to skirt strict capital controls for the Chinese people, and the exchange rate has begun a volatile climb higher since the news.

Bank-of-KoreaThe Bank of Korea expressed a similar sentiment, deciding not to recognize bitcoin as a currency and vowing to increase oversight of the digital currency to prevent misuse and money laundering.

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France falls closer to Asia on the hostility spectrum, with its central bank warning that bitcoin could pose a threat to the stability of the financial system. Meanwhile, the rest of Europe seems to be taking a more positive position with regard to bitcoin. In the UK, the HMRC is rethinking its stance on the classification of bitcoin, making bitcoin purchases no longer subject to Value Added Tax. The classification of bitcoin as “taxable vouchers”, as was originally planned, would make it prohibitively expensive to acquire bitcoin within the country as the fees would be around 20% in most cases. Since the UK tax authority’s apparent shift in thinking, ZipZap has announced that it will make cash-for-bitcoin services available at 28,000 locations distributed throughout the UK.

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In Switzerland, a committee comprised 45 members of parliament signed a postulate asking that bitcoin be treated as a legal foreign currency within the country. They issued a press release stating their belief that, while bitcoin presents financial risks, it presents massive opportunity to the country’s financial sector. Switzerland has a centuries’ old reputation for excellence in banking and financial services, and if the parliament does vote to treat bitcoin as a foreign currency, it would be a big step for bitcon’s legitimacy. The swiss government making such a move might cause regulators elsewhere to do the same for fear of driving wealth outside of their borders and into Switzerland.

Flag_of_CyprusCyprus, home of the infamous “bail-ins”, has become home to the world’s first accredited university to accept bitcoin for tuition. The University of Nicosia announced in November that it would begin accepting bitcoin for tuition and launch a Master’s of Digital Currencies program. Before the end of the month, they had received their first bitcoin payment, and have since put forth a proposal that is being studied by the Cyprus’ Finance Minister. The proposal lays out an argument and plan for turning Cyprus into a hub for bitcoin business and allow it to be traded on the official Cyprus stock exchange. The CFO of the university stated that the Finance Minister has received the proposal, and claims that the FM has replied to recent questioning saying that he is very positive and will be studying the proposal over the coming days.

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In Croatia, the CNB made an official statement claiming that bitcoin was not an electronic money, but rather a “virtual currency scheme” much like Wow gold or Linden dollars. They explicitly state that it is legal to use, and not directly regulated or monitored. They do, however, add the qualifier that it may in the future come under the jurisdiction of central banks.

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Sweden received the world’s second operational bitcoin ATM this week. Only time will tell if regulators will allow the ATM to stay functional, but it certainly bodes well for bitcoin in Sweden that it exists at all.

Four months after Germany took the first clear cut position on the legal standing of bitcoin, classifying it as a “private money” and “financial instrument”, some nations are beginning to amble their way toward a similar stance. In other, more authoritarian nations, regulators are unsurprisingly showing their intent to control bitcoin trade as much as possible, but they are not expressing outright hostility toward it. Now is a time that could make or break nations, and ostensibly – make or break bitcoin. There is a long and highly uncertain road ahead of bitcoin, but it seems that more people, even including regulators, are beginning to understand its unique benefits and giving it the attention it deserves.