Bitcoin Weekly Recap 12-4-2015
GoPay Integrates Bitcoin Option
European payment facilitator GoPay is adding Bitcoin as an option, enabling the 2,000-plus merchants who use the service to begin accepting the cryptocurrency for payments. The company, which is based in the Czech Republic, is similar to PayPal in that it facilitates e-commerce and also provides mobile payment options for its customers. This new payment option, enabled by a partnership with BitcoinPay, should provide consumers in the region increased exposure to the real-world benefits that digital currency can provide.
Hong Kong Scaling Bitcoin Conference This Week
As the Bitcoin community continues its ongoing debate about blockchain size and other matters of critical importance, the second Scaling Bitcoin workshop is slated to begin this week in Hong Kong, December 6-7. The gathering will see thought leaders and engineers come together in the Asian city, to work on the digital currency’s scaling challenge and seek consensus on how to make progress in moving beyond the current network limitations so that transaction speed can be increased.
The conference will include presentations on the Bitcoin Improvement Proposals (BIPs) that are currently being debated, while also providing testing data on the subject. Expectations are mixed, but there is some anticipation that this gathering will prove more fruitful than the first conference in Montreal. That event was seen by many to be more of a community-building exercise, and a first opportunity for many participants to meet one another face-to-face.
The decision to hold the gathering in Hong Kong was at least partially motivated by a desire to facilitate involvement by members of the Chinese Bitcoin community, including that nation’s miners and others whose voices are not always heard in these ongoing debates. Though there is no guarantee that a consensus on either block size or scaling will be reached, organizers have high hopes that at least some progress can be made in moving toward speedy resolution of these complex problems.
SEC Files Charges against Zenminer and GAW Miners
Charges have been filed against two Bitcoin mining enterprises that the United States Securities and Exchange Commission (SEC) accuses of operating Ponzi schemes. The companies, Zenminer and GAW Miners, have been accused of receiving money from customers who believed that they were buying access to the firms’ mining hardware - with the promise of a return after the Bitcoins had been mined. While that sounds innocent enough, the SEC alleges that there was something fundamentally wrong with the arrangement: apparently, neither company had the actual hardware necessary to mine Bitcoins.
According to the government’s allegations, the two companies were using part of the roughly $19 million they received from those customers to pay their earliest investors, and simply keeping the rest for themselves. Both companies are under the control of Josh Garza, who has been a controversial figure in the Bitcoin community for some time now. The SEC is seeking civil fines, a return of investor money, and permanent injunctions on both businesses, and has requested a jury trial to resolve the matter.
Barbados Economists Recommend Central Bank Consider Bitcoin Reserves
Economist in Barbados recently released a paper in which they contemplated the viability of the nation’s Central Bank adding Bitcoin to its portfolio of foreign currency reserves. That paper - Should Cryptocurrencies be included in the Portfolio of International Reserves held by the Central Bank of Barbados? - examines the feasibility of such a move, while also attempting to forecast how such holdings would impact a central bank’s foreign reserve stability and asset returns.
While noting that most central banks are commonly required to maintain foreign currency reserves or other assets to assist with international transactions, the authors also note that such reserves can potentially be necessary for recovering from a sudden stop during an economic crisis, and to protect the nation’s own currency from speculative attack.
The paper offers an interesting look at Bitcoin’s rise from obscurity, and a critical view of its potential usefulness within the central bank system. Ultimately, the authors note that had the nation’s central bank had Bitcoin reserves during the period of 2009 to 2015, it would have realized a sizable return on its investment, while having experienced reserve balance volatility on par with what it endured with various major foreign currencies. Though no formal recommendation was made, the paper did advise that any decision to include Bitcoin within the central bank’s reserve portfolio should be made with an eye toward maintaining reserves that are in proportion to the currency’s actual use by the people of Barbados.
Estonia’s Supreme Court Seeks Help Determining Bitcoin Legality
The Supreme Court in Estonia is seeking the help of the nation’s top civil officials, regulators, and the central bank as it grapples with the issue of Bitcoin’s legal status within the country. The case involves the suspension of trading on the BTC.ee platform in the wake of alleged threats from Estonian law enforcement - threats that Estonian Police have denied. The platform’s operator, Otto de Voogd, had filed the lawsuit, and the court must now determine whether Bitcoin trading and use is subject to anti-money laundering statutes.
Barry Silbert to Jamie Dimon: Don’t Bank on Bitcoin’s Demise
In a recent interview on the Kaiser report, Digital Currency Group founder Barry Silbert was asked about recent remarks from JPMorgan’s Jamie Dimon in which the long-time Bitcoin critic once again predicted the demise of Bitcoin due to his belief that governments will eventually shut down the digital currency. After noting that he had spoken with Dimon about this very issue, Silbert explained why that view is fundamentally flawed:
“I think where Jamie is probably less informed is around the inability for governments and banks to actually do that in the case of Bitcoin. There’s no one to put in jail, there’s no company to shut down. And so ultimately, you know, if you think about the history of money, money has taken lots of different forms. It’s been rock; it’s been wampum; it’s been salt; it’s been, you know, gold arguably. If society decides that bitcoin is money, there’s nothing that JPMorgan, or the Federal Reserve, or anybody can do to stop it. But it’s still very early.”
For his part, Silbert stressed that he views banks as natural partners in the journey toward greater digital currency acceptance and development. At the same time, he urged the financial industry to focus less on the perceived threat from cryptocurrency and more on the other challenges that banks and other traditional lenders currently face. In his estimation, “Bitcoin is the least of their worries.”