September 19, 2014 - In This Issue:


Why Bitcoin Is Poised To Win Big In Las Vegas 

Las Vegas. Tremendous wagers are commonplace in this town, and have been for decades. Big bets on cryptocurrency--those are a bit more unusual.

 

This explains why a local poker player's recent investment into bitcoin ATMs has turned so many heads. The entrepreneur, 29-year-old Chris McAlary, essentially has pushed "all-in" on the virtual currency, using the entirety of his liquid assets to found Coin Cloud, a nascent company that operates ATMs for bitcoins.

 

McAlary's believes in bitcoin's future as the currency of choice for gamblers. And there is a confluence of factors that might make Las Vegas the perfect place to push bitcoin into mainstream use--if McAlary and like-minded entrepreneurs prove out its use on the Strip, casinos around the world are poised to make bitcoin its currency of choice.

 

"There's no question that cryptocurrencies such as bitcoin have the potential to be one of the most important innovations of the 21st century," says McAlary. "Las Vegas could be one of the places that really helps drive it all forward."

 

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Bitcoin moves towards mainstream with eftpos cards

Melbourne-based bitcoin exchange Coinjar is hoping to nudge the digital currency into the mainstream next month with the offer of the first eftpos card in Australia linked to a bitcoin account.

 

Coinjar co-founder Asher Tan said many of its customers had bought bitcoin as an investment and there was a growing number of companies that accepted it, but they were keen to use it for everyday transactions.

 

"Many people who have bought Bitcoin ask 'where do I spend it?'," he said. "This means anywhere that accepts eftpos accepts bitcoin now."

 

A trial of the cards will be done with about 100 people who already have bitcoin accounts over the next couple of weeks, and then they will be made available generally.


Coinjar, which has about 30,000 users and has so far processed about $50 million, makes its money by charging a 2 per cent transaction fee on exchanging bitcoin into standard currency and vice versa.

 

The exchange into Australian dollars will occur when Coinjar account holders load their cards from their bitcoin account rather than when they buy products with the card.

 

Asked why people would want to use bitcoin rather than standard currency, Mr Tan said it would expose more people to the benefits of a currency that can be instantly transferred and used outside the traditional payments network, with no cost apart from Coinjar's own fee.

 

"It is a first step, but it does open up a lot of opportunities," he said. "You could receive say $500 worth of bitcoin value from overseas for say an online job, like graphic design for [an overseas client] then you could be off spending your money in a matter of minutes."

 

Mr Tan said Coinjar didn't expect to make a lot of money out of the cards. The main game is online. "We have got a whole suite of apps coming out next month," he said. These include a new Android app and an update for the IOS 8 Apple system.


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Boston Fed: Bitcoin Could Be Reducing Online Shopping Costs

The Federal Reserve Bank of Boston has released a new report that suggests the technology underlying digital currency could reshape global payments.

 

Authors Stephanie Lo and J. Christina Wang note in their September policy perspective, Bitcoin as Money?, that while it's not certain that bitcoin will supplant traditional currencies or payment systems, bitcoin's "lasting legacy" will be the innovations it brings to payments technology.

 

In the full paper, the regional branch of the US Federal Reserve, examines whether digital currency as it exists today is a viable form of money, looking at it as a medium of exchange and a store of value. The paper echoes sentiments shared by many central banks worldwide - that bitcoin's price volatility and lack of a central authority make it a risky form of money, though its underlying technology holds great promise.

 

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Bitcoin gets an industry-backed advocacy group

 The cryptocurrency Bitcoin -- and the technologies around it -- has a newly organized group of advocates behind it, headed by someone with deep experience in translating technologies for political consumption.

 

Jerry Brito, a law professor who was until recently the head of the technology policy program at George Mason's Mercatus Center, announced in August that he was leaving for "a new adventure." On Thursday, Brito announced that he will be heading an organization called Coin Center, what he describes as a "new non-profit research and advocacy center focused on the public policy issues facing cryptocurrency technologies."

 

"Our mission is to build a better understanding of these technologies and to promote a regulatory climate that preserves maximum freedom of action for digital currency innovation," Brito writes in the shop's founding letter. "We will do this by producing and publishing policy research from respected academics and experts, educating policymakers and the media about block chain technology, and by engaging in advocacy for sound public policy." 

 

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Five Objections to Using Bitcoin We Should Finally Put to Rest

Is that all there is?  Is that all there is?  If that's all there is, my friends, then keep on dancing."     - Peggy Lee

 

This week, we received yet another in what seems to be an endless parade of warnings, from yet another central bank or government body, about the alleged dangers of "virtual currency" - the preferred term used by such groups for digital currencies such as bitcoin (perhaps because the term "virtual" makes them seem even less real, a cross between a videogame and a rewards program gone bad).  Remarkably, the report also called out cute little Dogecoin and bent-on-compliance XRP (aka Ripple).

 

The list of horrors put out by these mildly esteemed bodies is a virtual cut-and-paste effort, looking for the most damaging words without revealing any true issues.  Where were these same bodies to warn us about the dangers of toxic subprime mortgages and collateralized debt obligations a mere decade ago, of former NASDAQ regulator Bernie Madoff's true Ponzi scheme, or of investing in Fannie Mae after the government decided they would never be able to pay off their loan to the Feds because they're just too profitable now? 

 

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