The current growth in Bitcoin price is quite dizzying. Today it hit $240/BTC. Many commentators call it an irrational bubble. However there are a few features of Bitcoin that may make it not quite as crazy and irrational.
Here are the basic facts:
There is a hard circulation limit of 21 million Bitcoins.
There are at time of writing roughly only 11 million of bitcoins
This is the first major digital asset that is also fungible (unlike say domain names) and not under the control of a single entity or government
1 Bitcoin is just an arbitrary unit. There is no problem owning 0.0000001 Bitcoins
There is no barrier to entry to hoarding, earning and spending Bitcoin
It’s international by default
The hard circulation limit together with the current limited amount of Bitcoin means this is pretty much a good old fashioned land rush. This is what most …
As a continuation of my coverage of the new FinCEN guidelines for Bitcoin businesses I wanted to cover how it affects non US businesses.
If your Bitcoin exchange busines is based outside the US, you may be thinking hah those damn gringos and their silly rules. You don’t need to worry about it right? You would think so, however FinCEN states in Foreign-Located Money Services Businesses.:
An entity may now qualify as a money services business (MSB) under the Bank Secrecy Act (BSA) regulations based on its activities within the United States, even if none of its agents, agencies, branches or offices are physically located in the United States. The Final Rule arose in part from the recognition that the Internet and other technological advances make it increasingly possible for persons to offer MSB services in the United States …
On March 18th this year (2013) the closest thing we have in the US to a Federal payments regulator FinCEN (Financial Crimes Enforcement Network) issued new Guidelines for Virtual Currencies.
What is FinCEN
There are a lot of misunderstandings in the reporting of these rules. FinCEN‘s job is to:
FinCEN’s mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.
Thus they are not a banking regulator. This is neither the FDIC or the Federal Reserve. This isn’t the Secret Service either whos job it is to “to safeguard the nation’s financial infrastructure and payment systems to preserve the integrity of the economy”.
FinCEN isn’t there to protect consumers either. FinCEN’s only job is to enforce the BSA which funnily …
After our review of Coinapult yesterday I thought it would be interesting to ask Ira Miller the founder a few questions.
When did you launch Coinapult?
Coinapult launched on Apr. 12th, and by Apr. 16th, BitInstant had integrated with us.
How did you get the idea?
Through my other Bitcoin businesses, I’ve often run into the issue of sending a customer Bitcoin when you don’t have an address for them. A prime example is when giving a refund. In the past, I found myself sending an extra email each time, asking the customer for an address to send the refund to. This was a hassle for both parties.
My prime design inspiration came from InstaWallet, which has long been the go to wallet for Bitcoin beginners. It was clear that a Bitcoin over email service would be widely useful, so I wanted to make it …
PayPal finally took off when they pivoted into their successful email money service. The formula is easy. You can send money to anyone all you need to know is their email address. As long as they are based in one of the blessed countries they can then either sign up for a paypal account or receive the money in an existing account.
BitCoin doesn’t rely on email addresses. Rather accounts are identified by long crypted strings known as addresses.
So what do you do if you want to send money to someone who doesn’t have a Bitcoin wallet and account yet?
With Coinapult you don’t need to sign up at all. All you do is enter the email address of you and a recipient.
Coinapult then creates a new BitCoin address. You transfer the funds you want to send to this address using …
Casascius pointed out on BitCoin Talk yesterday that BitInstant the BitCoin exchanger has received a Money Service Business (MSB) license from the US Financial Crime Regulator FinCEN. Here is the official letter from FinCEN
This is quite big news as it is yet another step in legitimizing it. From what I understand most European regulators have decided they don’t need Bitcoin exchangers to be licensed (see yesterdays story about Denmark).
Personally I don’t think they need to be regulated, but in the US this I believe will help remove some of the reluctance businesses have had to adopt BitCoin. They still have to battle their book keepers to move away from checks but this might help them to persuade their legal counsel to allow them to start experimenting.
BitInstant provides good old fashioned own account exchange services between a series of BitCoin market …