September 24, 2014 - In This Issue:

Top 5 Reasons why Bitcoins beat Dollars

Inflation, here, means that the amount of U.S. dollars, the "Global Reserve Currency," in circulation continues to increase. And it has, consistently, since WWII. This is a bad thing, since the more actual dollars are in circulation, the less each dollar is worth. Economic policies like Quantitative Easing, or 'QE3," lead to over $80 Billion dollars being made by the U.S. Federal Reserve per month. This leads to inflation at levels of 5% or more, per annum. This is quantified if you look at the average transaction prices for things like meat, gas and eggs over the past five years. The U.S. Government will tell you inflation is around 2% annually, but they base this on 25 items that they change conveniently to fit the numbers the want to show in their National Inflation Index. If meat is gaining 10% a year, it is simply removed and replaced with something that doesn't reflect the actual higher rate of inflation.


Bitcoin, on the other hand, is anti-inflationary, and has a set amount of bitcoins in circulation (25 new coins are added into circulation every 10 minutes), and a capped maximum amount (21 million in total). This forces the Bitcoin value to increase based on standard supply and demand economic ideology, or "sound money" principles. As more people enter the Bitcoin ecosystem, Bitcoin value per unit increases over time, a very foreign concept to anyone brought up to use a fiat (Paper) currency as they NEVER rise in value.


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PayPal Takes Baby Step Toward Bitcoin, Partners With Cryptocurrency Processors

PayPal and its parent company eBay EBAY +0.22% are warming up to Bitcoin, but they're doing it oh so carefully.


On Tuesday, PayPal announced that it was partnering with Bitcoin processors BitPay, Coinbase and GoCoin to allow its merchants to accept the cryptocurrency for digital goods like online games and downloadable songs. It's a second baby step for the payments giant toward full Bitcoin adoption after the company's Braintree unit, a mobile payments provider, said earlier this month that it was working on a feature that would let customers of businesses like Uber and Airbnb pay with Bitcoin.


While many have been waiting to see what PayPal would do with Bitcoin-especially with eBay CEO John Donahoe speaking openly about his admiration for the digital currency-Tuesday's announcement is more of a cautious tread, rather than a headlong leap into the Bitcoin realm. PayPal's announcement does not mean that it will transact the currency on its own platform or that its users will be able to store Bitcoins in their online wallets.


Instead, the payments firm is letting its three partners handle the Bitcoin processing for PayPal merchants, which for now will only include businesses like online gaming companies, which offer digital goods. Scott Ellison, senior director of corporate strategy at PayPal, likened his company's announcement to "a test" that's been five months in the making. "Merchants were asking for Bitcoin integrations," he said. "Digital goods were an easy way to do it first... People are comfortable paying online for those things."


Ellison did not say which merchants would be using the integration immediately and said that PayPal would receive a fee from the Bitcoin processors for every referral, though he did not disclose the amount per transaction. The Bitcoin feature will initially be available for North American businesses only and should be available in the coming weeks.


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Bitcoin, Not Apple Pay, Solves Two Of The Biggest Problems Merchants Face When Accepting Card Payments

Apple's new payment system is igniting interest across the payment industry, but it's important to note that it doesn't represent a major change over the legacy payment process.


Bitcoin, even as it suffers another price slump, is disruptive- particularly from the perspective of merchants. When it comes to accepting electronic payments, they have a number of pain points. The two biggest ones are paying acceptance fees and fighting chargebacks. 

Though still nascent, BI Intelligence notes in our Bitcoin report that a Bitcoin-based payments system promises to solve these problems. It's comparatively inexpensive for a merchant to accept Bitcoin payments even if they use a third-party processor like BitPay or Coinbase to process transactions. Bitcoin transactions are also irreversible. Once the transaction is completed the merchant possesses the money. So for businesses that experience lots of "friendly fraud" - when a customer buys something and then claims falsely that they never recieved it - Bitcoin is appealing

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Bitcoin fund launches

Global Advisors Bitcoin Investment Fund (GABI) completed its initial offer period in early September. We are pleased to announce that following this successful launch; we have taken the first step to deploy the Fund's assets into bitcoins. Recent price weakness has been observed and attributed to a series of factors. The withdrawal of UK banking services on the Isle of Man, issues with the NYDFS Bit-license, Russian Treasury comments and weakness in gold markets are elements which contributed to recent price weakness. We timed our entry to the bitcoin market accordingly. We believe the resulting entry point represents an opportune moment to initiate our first round of capital deployment.


Daniel Masters, Director of GABI and co-founder of GAJL commented: "We are delighted to have executed our initial over-the-counter bitcoin purchase with digitalBTC and we look forward to expanding our relationship as GABI's assets grow. digitalBTC offers GABI valuable liquidity and price discovery while being a strong counterparty."


Bill Brindise, Chief Investment Officer of digitalBTC, commented: "Our digitalX Direct platform is specifically designed to provide real time liquidity for institutional investors and large commercial operators who purchase bitcoins.  As a publicly listed company, subject to strict reporting and disclosure requirements, we are also very pleased to be dealing with GABI, given their licensing regime and look forward to being able to provide similar liquidity in future."


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