BitBrief #1

Coindesk Q3 2014 State of BTC

Potential blockchain-based innovation

  1. Record Keeping

    1. Bitcoin’s public ledger (the blockchain) has the ability to enable trusted record-keeping on the Internet while increasing overall transparency. There hasn’t been a really good way to offer a public database of information prior to this type of cryptographic ledger.

  2. Asset distribution: opposing views on regulation, Lawsky (NYDFS) v. White (SEC)


      1. “I asked [Lawsky] how the use of second generation non-currency applications would be viewed in the eyes of the BitLicense, considering that the exceptions for personal use only apply to the use case of blockchain technologies as a currency.”

      2. The regulation was not intended to capture or halt businesses working in that area, Department of Financial Services (NYDFS) superintendent Benjamin Lawsky replied. He acknowledged that small amounts of “currency” may be transmitted along with non-currency value like information and asset transfers on some crypto 2.0 platforms, but appeared to regard such amounts as insignificant and said the NYDFS was “still working out how to address that”.


      1. SEC Chair Mary Jo White doesn’t see it that way. “interests issued by entities owning virtual currencies or providing returns based on assets such as virtual currencies likely would be securities and therefore subject to our regulation.”

      2. To a certain extent a crackdown makes sense. If 2013 was the year that Federal agencies locked horns with bitcoin, the currency, 2014 is the year that they’re learning about bitcoin the fundraising mechanism. The current bitcoin fundraising bubble, began late last year when a “Mastercoin” built kind of bitcoin 2.0 system—a way of extending Bitcoin’s blockchain so it can do a whole range of new things such as issuing brand new currencies and registering bets or contracts.

      3. Mastercoin led to a range of imitators: Ethereum, MaidSafe, and Counterparty. Like Mastercoin, Ethereum and MaidSafe are essentially software startups that are pre-funded by selling their new digital currencies in advance. Ethereum raised the equivalent of $15 million via its presale this year. They say that they are not selling equities, though, but rather newfangled digital tokens that will be used to power a new generation of computing applications, whenever their new systems get off the ground.

      4. “In our viewpoint, we’re pre-selling access to the network in the same way that a computer game is pre-sold to users,” says Nick Lambert, MaidSafe’s chief operating officer, adding, “but I think, clearly, guidance is required.” MaidSafe raised the equivalent of $8 million during its April pre-sale, Lambert says.

      5. The question is whether federal regulators—the SEC in particular—will see this as an equity offering or instead something like the pre-sale of a video game. If the SEC decides that Ethers or Safecoins are equities, or if commodities regulators such as the Commodity Futures Trading Commission get involved, it could pop the bubble of the burgeoning crypto pre-sale movement.

      6. CEO Patrick Byrne recently hired two of the founders of Counterparty to build a bitcoin-like stock exchange, where anyone could issue and trade stock without going through third-parties such as NASDAQ. He wants to work with the SEC to make this happen. But he also acknowledges that there are some grey areas. “At some point, there is a very blurry line between crowd-funding and an IPO,” he says. “I think the SEC has a legitimate interest in regulating IPOs”

  3. Smart Contracts

    1. The true application of smart contacts hasn’t been fully realized yet, but bitcoin’s emergence is generating momentum for this type of [programmable, self-executing] digital agreement between parties.

  4. Mining

Current innovation for Bitcoin useability, traditional sectors
    1. Wallet Innovation

      1. Multi-signature, i.e. 2 of 3 people need to sign a transaction for it to go through.

        1. Useful example = escrow services

      2. Enhanced security, other innovative storage & security products

    2. Microtransaction providers,


        1. ChangeTip is not the first Internet tipping system, but it’s easier and faster than its predecessors, which is a critical advantage. The system lives on the social networks that we all use every day, and therefore it has a high potential to spread in viral waves anytime.


        1. The team behind dogetipbot, the popular tipping tool for the alternative digital currency dogecoin, has raised nearly $500,000 in a seed funding round. In total, $445,000 in new capital was raised for the project.

    3. bitcoin recruiting services and

      1. “It is harder to hire than raise money for bitcoin companies.” -Tim Draper

    4. charities that only accept cryptocurrencies

    5. Google Deploys BTM at London HQ with Unique Features


      2. joint venture between Google and three start-ups CallsignWyre and Bitbuddy.

Bitcoin in Africa

  1. ‘financial inclusion’ relating to cellphones and landlines in Africa:

    1. many people couldn’t get access to the basic financial services needed to get a landline. […] with the cell phone, you don’t need a bank account. You can buy the credit you need with cash. There are not the same barriers to entry. Anyone can get one – and they have.

  2. Only two billion people are ‘banked’ and participate in ecommerce. Yet about 5.5 billion have at least some access to the internet. That’s a potential 3.5 billion people who could participate in ecommerce but don’t, because they don’t have access to the necessary financial infrastructure.

Bitcoin in the black market

  • the site’s alleged operator, Blake Benthall, was arrested in San Francisco on Wednesday. He now potentially faces life in prison, the FBI says.

  • Implications on Bitcoin

    • Bitcoin UP ~4% on the news

    • This should lead to increased decentralization in these black markets and

      • An increase in interest for a decentralized market, such as OpenBazaar

New FinCEN Statement on Providing Banking Services to Money Services Businesses

  • The Financial Crimes Enforcement Network (“FinCEN”), as the agency primarily responsible for administering the Bank Secrecy Act, is issuing this Statement to reiterate expectations regarding banking institutions’ obligations under the Bank Secrecy Act for money services businesses.

  • In summary, FinCEN, as the agency primarily responsible for administering the Bank Secrecy Act, expects banking organizations that open and maintain accounts for MSBs to apply the requirements of the Bank Secrecy Act, as they do with all accountholders, based on risk.

Bitcoin business ideas

  1. University BTC ATMs

    1. Create student org

    2. Acquire space on campus

    3. ???

    4. PROFIT!

  2. Consulting group

    1. add [free?] content such as

      1. Bitcoin Briefs

      2. Chat rooms

      3. Video abstracts

    2. Easy design

    3. Target customers (be aware of demographics)

      1. Individuals interested in learning about Bitcoin

      2. Individuals wanting to invest in Bitcoin

      3. Brick-and-mortar business owners

    4. Product ideas:

      1. consultancy including basic legal and accounting information

      2. teaching how to run a bitcoin business

    5. Listen to customer’s needs to quench qualms

  3. Bitcoin IOU system/app
  4. Physical remittance location

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