Here are the basic facts:

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 ...]]>
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 of the commentators are missing.

Yes as a currency I may not be able to buy groceries with it yet? There are lots of problems to solve. But none of that matters. Startups, programmers and regular users will solve all of these problems. What does matter is that if you don’t get some now, it’s going to be expensive in the future.

Get any group of Bitcoin nerds together and you’ll start hearing all sorts of ideas floating around for services and uses of Bitcoin that would have seemed completely outlandish just a couple of years ago. This is the future value.

AOL was by far a better on-line service for most consumers in 1994 than your nacent mom and pop ISP if you could even find one. AOL lost that battle and the internet won. The banking systems secretive darknets (SWIFT/ACH/VISA/MC) will loose and Bitcoin’s open and transparent platform will win.

Prof. Evans calls it This Decade’s Gold Rush. He argues:

Approximately once per decade, the market experiences a Gold Rush, a once-in-a-lifetime opportunity that, once missed, is gone forever.

Examples include the introduction of competitive long-distance telephone service in the USA in the 1980s and mobile telephones after that; two- and three-letter domain names in the late 1990s; privatization in newly democratized countries; etc.

I agree with this. The next rush will almost certainly be built ontop of this one, just as Bitcoin builds on top of the Internet rush of the 90s.

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 ...]]> 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 from foreign locations.

So what constitutes doing business in the US? That is more complicated. In theory it could be any of the following:

The following are more serious and may require MSB:

• Are any of your clients located in the US?
• Are your servers hosted in the US?
• Do you advertise in the US?
• Are you providing an exchange between buyers and sellers both in the US?
• Are you providing merchant services to US merchants with customers in the US?

The first may not count on their own, but together they may. The others are more serious. If you’re advertising in the US (eg. targeting US customers with Google AdWords) you are at risk of being a US MSB. The final 2 can obviously be interpreted as offering MSB services in the US.

MtGox are already registering in the US. Other non US businesses should start evaluating what to do.

Under the radar

My guess is that many smaller businesses will ignore the rules as they can slide under the radar.

I’d say if you run an exchange like my friend Lasse’s Bitcoin Nordic with a clear geographical target market outside the US that there isn’t too much to worried about.

Resident agent

If you do register one of the major hassles will be assigning an agent in the US.

The Final Rule requires each foreign-located MSB to appoint a person residing in the United States as an agent for service of legal process with respect to compliance with the BSA and its implementing regulations.

I’m not sure how to solve this. My guess is a US law firm can handle it.

Hard choices

For most non VC funded foreign Bitcoin exchangers it may be too expensive to register.

It may be worthwhile looking at how non-US banks are dealing with an even more intrusive law the Foreign Account Tax Compliance Act or FATCA.

FATCA requires non US banks to report bank accounts of US citizens abroad to the US Treasury department. This was originally cretaed targeting US residents hiding money in offshore jurisdictions. It is also affecting regular US expats working abroad. There are significant costs involved with this for banks, so many are just deciding not to offer banking services to anyone with a US passport.

FATCA is a lot more clear about the responsibilities of non US banks than FinCEN’s guidelines about non US MSB’s. However if it is obvious you would be covered by the rules I can see non US MSB’s not allow US residents to use their service. I know thats harsh. But you don’t wan’t to be snapped up on the way to a family holiday at Disney World or changing planes as has happened to several On-line Casino executives.

What to do?

This is a complex issue. I also don’t think there is a need to rush making a decission. But here are some unsubstantiated paranoid suggestions from a non lawyer programmer who doesn’t want to see anyone get in trouble.

Are you currently advertising in the US using Google AdWords or other geo targeted advertising networks? I would turn that off until there is better information/understanding about this.

Do you connect to the US banking system, through ACH/Dwolla or other US specific methods? If this is an important part of your business, you should start looking into getting a MSB license.

Do you have a large amount of exchange transactions between US customers? If this is important to you, you should start investigating getting a MSB license. If you don’t advertise in the US and host in the US you probably can wing it for a while.

Are your servers in the US? If you have any significant amount of customers in the US look into registering or moving hosting outside the US.

Are you paranoid and risk averse? You may want to implement IP address restrictions on the US. I hate seeing those kinds of things as they break the internet, but if it makes you sleep at night it may be an option.

Are you a small fish? You can probably carry on as usual.

Do you want to make a political stand? If you plan on doing civil disobediance on this and in a public way like Wiki Leaks and Piratebay have done? Good for you, we need brave people to fight unfair rules.

But it’s up to you to decide how important vacation/business trips are to the US for you (and your loved ones).

My guess is you will have to have a combination of a very good business and an extremely big mouth to worry about international arrest warrants.

Disclaimer

None of this should be taken as legal advice. If you take legal advice from a computer nerd you are just as dumb as if you take advice on picking a deployment platform for your latest web app from the law offices of Bendini, Lambert & Locke. If you have any doubt, try to find a lawyer with experience in these things.

Yes this I think is generally bad news for the Bitcoin world as a whole? Am I for these rules? Not at all. I think it’s bad to impose extra burden on startups in the US but in particularly outside.

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 ...]]> 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 enough has nothing to do with secrecy and everything to do with Anti-Money Laundering.

These are just guidelines and only concern themselves with registration as an MSB

Firstly these are only guidelines meant to explain their interpretation of the existing MSB rules on who needs to register as a Money Service Business (MSB).

This is not law, it is not a rule, it doesn’t legalize Bitcoin, regulate Bitcoin, it also doesn’t make Bitcoin illegal. It has nothing to do with taxation either. Keep all of that in mind.

They don’t cover specific rules for what MSB’s have to do as those are already defined.

Briefly if you are deemed an MSB you must:

• Register as such
• Know Your Customer
• Keep records
• Report both suspicious and large transactions.

I’m sure there is a lot more to do. Welcome to the wonderful world of being regulated.

What constitutes a Virtual Currency.

First they have this to say about what they call “real” currency:

FinCEN’s regulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.”

So a “real” currency is a national currency that is accepted as legal tender.

In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction.

So the lack of legal tender is the main identifying factor they mention. I wonder what would happen if a country decides to make Bitcoin legal tender. It is not outside the realm of possibilities.

This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.

The convertible bit here is important. This excludes internal closed loop currencies such as game currencies from these rules. Basically if the currency is designed to be only issued and used at the same business it is not convertible. I wonder if this affects game currencies with liquid black markets such as World of Warcraft gold etc. (I’m not an expert in that).

Types of Virtual Currencies

There are 3 types of currencies mentioned

• E-Currencies and E-Precious Metals
• Centralized Virtual Currencies
• Decentralized Virtual Currencies

My main focus in this post is Decentralized Virtual Currencies aka. Bitcoin. I think operators of Centralized Virtual Currencies are in particularly affected by these rules, but time permitting that shall be another article in the future.

Decentralized Virtual Currencies

FinCEN defines this as follows:

… a de-centralized convertible virtual currency that has no central repository and no single administrator, and that persons may obtain by their own computing or manufacturing effort.

So basically Bitcoin, LiteCoin, NameCoin etc. Ripple I’m not sure about. Open Transactions is centralized.

Are you a User or an Exchanger?

The guidelines differentiate between User, Exchange and Administrators. Administrators are not relevant to De-Centralized Virtual Currencies for FinCEN purposes.

That doesn’t mean lead developers like Gavin Andresen are completely out of risk of Julian Assange or Aaron Schwartz like treatment in the future by another branch of the US government. Not saying it will happen either.

Users

If you own Bitcoin you’re probably a user. The general rule for all Virtual Currencies is:

A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN’s regulations. Such activity, in and of itself, does not fit within the definition of “money transmission services” and therefore is not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs.

For distributed virtual currencies they also add the concept of creating units of currency:

A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter.

There was some fear in the community that this would force miners to register as MSB’s. I read the above as contradicting this completely.

My big worry here is that they don’t specifically mention merchants. I would assume that they are covered as Users, but further clarification would be useful. Attacking merchants would be an interesting attack vector for those that believe in black helicopters.

If you are a User you don’t have to do anything. Rest assured you don’t have to register as money service business.

Exchangers

The guidelines are fairly clear for most Mom and Pop Bitcoin exchangers:

An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.

Miners who sell direct to users in exchange for “real” currencies are also covered:

a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter.

The final kind of exchangers I take to be Mt Gox like exchanges that are intermediaries between buyers and sellers.

a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.

You may wonder what about if you sell your Bitcoin to an exchange. Aren’t you an exchanger? Not really. While they rules may have been deliberately vague about that issue, I don’t any reasonable person would interpret them as such. This is not a monolithic document, it has to be seen as part of the whole of their guidelines, rulings, BSA as well as common industry practices.

Also remember that these are just explanations of FinCEN’s current interpretations of the Banking Secrecy Act as applied to Virtual Currencies. No one accuses you of being a Money Service Business for sending money to someone with Western Union.

Bitcoin merchant services

Merchant services such as BitPay are not mentioned.

My interpretation of the rules are that merchant services who as part of their service convert to USD or another “real” currency are covered as an Exchanger and are as such a Money Service Business.

However if you run a Bitcoin merchant service that is stricly Bitcoin such as Block Chain’s API Receive you should be fine.

Who should BitPay etc. report to FinCen? I doubt they will have to take ID’s and addresses for their merchants customers. However they will likely have a duty to do so for their merchants. This is also true for Stripe and other such merchant services.

State laws

I’m not going into this in detail. But if you’re classified as a MSB on the federal level you can expect to have to deal with at least the state you operate out of, but maybe even all 40 that have some sort of MSB regulation. See this list MSB Licensing by State

This is probably the largest issue for any startup offering Bitcoin services in the US today.

Advice

None of this should be taken as legal advice. If you take legal advice from a computer nerd you are just as dumb as if you take advice on picking a deployment platform for your latest web app from the law offices of Bendini, Lambert & Locke. If you have any doubt, try to find a lawyer with experience in these things.

Monomi is a product my company is developing. We’ve been working on it for about a year now.

We are a software agency and we had a lot of clients who wanted to open shops. We offered them open source solutions and the option for building it for them. But as years passed we had more and more requests for stores.

There wasn’t really a good option available in Latin America for building stores, so we thought lets build one.

So we started working on it May last year. We launched our private beta in November and public beta in December and have around 800 stores. We’re focused on making it super easy for everyone to start a shop.

Yes mainly in Colombia, but we have some in Argentina, Mexico, Venezuela and ...]]>

Tell us a bit about Monomi

Monomi is a product my company is developing. We’ve been working on it for about a year now.

We are a software agency and we had a lot of clients who wanted to open shops. We offered them open source solutions and the option for building it for them. But as years passed we had more and more requests for stores.

There wasn’t really a good option available in Latin America for building stores, so we thought lets build one.

So we started working on it May last year. We launched our private beta in November and public beta in December and have around 800 stores. We’re focused on making it super easy for everyone to start a shop.

Are your customers mainly in Colombia right now?

Yes mainly in Colombia, but we have some in Argentina, Mexico, Venezuela and some in Spain. We’re in Spanish so mainly where people speak Spanish.

Tell us a bit about your self?

Julián Amaya

I started Monoku 3 years ago, which is our software development house. When we started 3 years ago we wanted to make web sites and web applications. But we always wanted to create a product. That product is Monomi.

Are you the only founder?

No, there are 2 of us. Me and David Avellaneda.

What else can I tell you. I’m very technical. I give a lot of talks in Colombia about software development. Mainly Python and Django right now.

I used to be the leader of the Google technology group here in Colombia. I’m a big Google fan boy.

We’re both friends from college, both software engineers. 3 years ago when we started we decided we wanted to create very user centric development. Very focused on design. So we’ve studied a lot and hired very good designers to make that happen.

What is the typical customer?

Well we have a broad range of customers. We’ve done widgets for Google, software for Sony. A local chain called Exito here in Colombia. Lots of local businesses. Lots of restaurants. Don’t know why? Maybe because I like to eat. We’ve created open data sites for the Colombian government and local councils as well.

When we started 3 years ago we created 2 food delivery web sites. Thats how we started thinking about how users should order stuff online. We have thousands and thousands of users ordering through these sites. At first we thought not many people wanted to buy online here, but we saw hundreds of people ordering food online every day.

Do they pay for the food online?

No. We’ve tried and even offered on-line payments integration for free for the restaurants, but they didn’t want it, as they would have to pay an extra fee to the banks. So they weren’t too happy about it.

Monomi actually also has the option for not handling payments online. You can just talk to your customer and have them deposit the money in your bank account.

We do have online payments, but they are not very widespread yet. Unfortunately that is a sore subject here.

So if a Colombian merchant wants to use Monomi, what would they have to do to accept credit cards?

Right now we only have one integration with PagosOnline which is the largest provider here in Colombia. They were bought by BuscaPe a few years ago.

They are growing, but the problem is that merchants pay us US$10 per month. But to open an account with PagosOnline they have to pay an upfront fee of COP 800,000 (US$450) just to sign up. So they have to pay 40 times more to PagosOnline than to Monomi. That is a huge problem for us. We’re partnering with someone else now Interpagos to solve it.

Himallineishon - one of the 800 stores using Monomi

That fee is normally for support to help you get setup. But we’ve talked to them letting them know that they don’t need to do any setup support as we have already done this. But they just doubled the rates instead from last year to this year. I really think they don’t want to work with us anymore, because they’re not responsive.

So now I’m working with Interpagos to offer a better service. We’re also working on PayPal integration, but here in Latin America it just doesn’t work. It is not very requested as not many people can use it. You need an account in the US for it to work.

So what do your customers do who don’t have merchant accounts?

They have to tell their customers to deposit the money in their bank accounts or something like that.

So in Colombia are people used to buying things online?

Kind of. Somethings they are used to buying online and somethings not. Here the travel industry sells alot online. Not so much in on-line stores. But we do see our stores selling. We can see it growing and that is good.

Compared to the US we’re 10 years behind, but we’re growing so thats good.

I know some countries like Chile and Argentina paying through agencies is quite popular. Is that true for Colombia?

No, not really. We do have the option through PagosOnline where you can go to the Loto agency and pay there, but it’s not very common.

What we do have is bank payments. We can provide you with a barcode that you can go into the bank and pay.

Is that a standard system here in Colombia?

More or less. PagosOnline and Interpago offer this system. Not everyone has credit cards in Colombia. In the US you pay for anything with a credit card. Not here.

One problem here is that debit card go through a different system than credit cards here called BSE.

Are the debit cards using Visa/Mastercard branding or a local system?

They are mainly Maestro but still go through a separate system. It is kind of complicated to do this here.

If you want to do this on your own you need to go negotiate and apply for a unique merchant number for each bank. It can take a month or two to get it. Depending on how much money you have. It is a very complicated process to sell online.

Do most people have a debit card here?

Yes pretty much. Not so much credit cards, but that is growing.

Do you know if you can buy things internationally with a Colombian debit card?

I don’t think so.

What about shipping? Is that an issue here?

Yes, its a very big issue here. Not a single shipping company here has an API. We’re trying start talks with the largest shipping company here about it, but we haven’t been able to talk to them yet.

The local mail is worthless. You can try with them, but it won’t get anywhere. So yes shipping is a really hard problem that we haven’t really even tried to solve yet.

We’d love something like UPS or Fedex here and work with their API.

So the merchant really has to handle the process manually?

Yes. It’s aweful, but thats the way it is here.

What are they primary challenges for payments here?

There are many, but it is improving. People are trusting the online payment providers, so our main challenge is convincing them that they have to be more open and lower their fees in order to have more merchants. Right now they are only focused on big companies. More and more smaller and medium sized companies need e-commerce too.

Is the Colombian Peso fairly stable here? Does it present any challenges for merchants?

It’s very stable. Sometime it goes up a bit when there are elections in the US and then goes down a bit afterwards. So no realy problems.

The Monoku team

Whats it like starting a business in Colombia?

It’s cool because there aren’t many on-line startups here, so you get to have a pretty high profile in the community.

I guess we have many of the same issues as elsewhere, that there aren’t enough people available to hire? So that makes it hard. But what is good is that it is pretty inexpensive here, so you don’t need a lot of money to survive.

We haven’t taken any funding and don’t see a need for it. We’ve been doing it by our selves. Thats good.

Engineers here are very cheep compared to the US and there are alot of good people here. Also as more and more people start their own startups it will get easier to hire people into them.

The startup world is growing here. Each month I see new startups. We have the Founder Institute here, Startup Weekend and all sorts of stuff. Colombia is a nice country you’ll see.

Do you have any hopes for Monomi?

While we want to be rich, thats not our only motivation. We want Colombia and Latin America to have many more online shops. So our real goal and a dream of mine is to allow more and more people to have startups here.

Many people think we aren’t as good as in the US and other parts of the world. But we’re really just as good here.

When I went to the first Google IO conference I noticed that all these people are just like me. So I can do the exact same things as they do in the US. Why not.

In a part of the world just starting to open up to e-commerce OmbuShop is one of the first online shop platforms in Latin America.

I spoke with co-founder Ernesto Tagwerker over coffee in Buenos Aires over the challenges and opportunities facing them. In particular with an interest in payments.

OmbuShop allows people in Latin America for the first time to create a simple on-line store and easily accept payments for their products.

Designers love us as our shops are fully customizable down to the pixel level.

We are currently targeting Argentina, Chile and Mexico. Future markets are Colombia and Brazil. We would also like to eventually expand outside Latin America.

My partner is Lucas Mourelle who is a very respected graphic designer here in Buenos Aires. He designs both ...]]>

In a part of the world just starting to open up to e-commerce OmbuShop is one of the first online shop platforms in Latin America.

I spoke with co-founder Ernesto Tagwerker over coffee in Buenos Aires over the challenges and opportunities facing them. In particular with an interest in payments.

Tell us briefly what OmbuShop is?

OmbuShop allows people in Latin America for the first time to create a simple on-line store and easily accept payments for their products.

Designers love us as our shops are fully customizable down to the pixel level.

Which countries are your primary focus?

We are currently targeting Argentina, Chile and Mexico. Future markets are Colombia and Brazil. We would also like to eventually expand outside Latin America.

Who are the partners and background?

My partner is Lucas Mourelle who is a very respected graphic designer here in Buenos Aires. He designs both our site and the various pre-designed themes we offer our customers. He is also working on our designer partner program.

I am a software engineer, programmer and lean practitioner. I primarily work with Ruby on Rails and Javascript and like to contribute to the Ruby and Lean Startup communities in Buenos Aires. I co-organize Rubyconf Argentina and the Lean Startup meetup BA.

Are people in Argentina used to buying on-line?

Consumers here have been buying on-line for years, but primarily through Mercado Libre which is Latin America’s answer to Ebay. This has meant going to the sellers place to pick up the goods and pay in cash.

People are not really used to the Amazon like shopping system, where you pay on-line and have the goods delivered.

Thanks to the daily deal sites and online private sales clubs though people are starting to change their habits. People are now starting to buy more online.

Shipping is actually also somewhat of a problem here. We only have one private courier company OCA with an API. The national postal service is also not trustworthy enough to be used for shipping.

What challenges do merchants face in Argentina charging on-line?

The biggest challenge is that most people don’t have or use credit cards.

Instead the most popular form of payment are through agency based systems such as RapiPago and PagoFacil.

When you buy with these systems you receive an invoice number from the shopping site. You take this and go to the agency which could be a news stand or a counter in your local supermarket and pay with cash there.

It is pretty easy for merchants to start charging using these kinds of systems through DineroMail our primary payment gateway. To accept international credit cards though through them, you need to complete a second step.

Alternatives in Argentina are MercadoPago, the payment arm of Mercado Libre and PayPal. PayPal is not very popular here. MercadoPago is more expensive, but some merchants feel they have better tools.

MercadoPago charges 5.99% per transaction, while DineroMail charges between 3.99% and 4.99% + AR$1.50 (~US$0.34).

MercadoPago and DineroMail both operate through either an embedded iframe or a PayPal like redirect to their site.

If you need to have customers enter payment details directly on your site or get better rates there are a few traditional Credit Card payment gateways but you need to make your own agreements with MasterCard, VISA etc. It is a very long procedure. You also will need to be PCI compliant.

Do you partner with a payment gateway?

While we don’t partner specifically with a payment gateway, we currently integrate with DineroMail. Customers are asking for MercadoPago and PayPal so we will be adding them soon.

What are the most common ways that consumers pay in your shops in Argentina?

RapiPago and PagoFacil are by far the most popular way that consumers buy through our shops. We have noted though a steady growth in Credit Card payments over the last year.

Are Argentina’s currency controls affecting your business?

Not really. Our merchants haven’t experienced major problems buying merchandise from abroad. People here are still buying and like being able to buy through local on-line shops.

What is it like starting a new internet business in Argentina?

Buenos Aires has really good infrastructure. The city government are doing a lot to make it attractive to start businesses here.

The startup community is strong and growing, we have lots of meetups where we exchange ideas and experiences. There is also a strong community of both designers and developers here that we can count on.

There are so many opportunities here. I love the challenge of starting a new kind of business here. It’s really exciting to be able to help so many people start businesses.

We’re not only helping the merchants get started, but also creating new revenue streams for our talented design community.

Through our partner program we are offering designers a large commision and a much easier way for them to help their clients.

Are you funded or bootstrapped?

We are 100% bootstrapped through my savings and our sales. We are not yet ramen profitable but should be soon. We are seeing good steady growth month by month.

We would be interested in funding, if we feel it would help us serve our customers more. But we are doing fine as is.

I thought it would be interesting to ask him a few questions.

Software for mutual social currencies, therefore LETS style currencies but fairly adaptable to other models.

About 2005 but it’s off/on depending on the rest of my life

Encyclopedia of Social Inventions which opened my eyes to other ways of doing currencies. Then I met Michael Linton in about 2005 and started cclite.

10 that I know about, it’s GPL so I don’t really know my users.

Downloaded from everywhere but that doesn’t, of course, imply use. That’s why I’ve been machine translating foreign ...]]>
CCLite is an open source application for managing community currencies. Hugh Barnard just released 0.9.0.

I thought it would be interesting to ask him a few questions.

What is CCLite?

Software for mutual social currencies, therefore LETS style currencies but fairly adaptable to other models.

When did you start work on it originally?

About 2005 but it’s off/on depending on the rest of my life

How did you get into the Community Currency world?

Encyclopedia of Social Inventions which opened my eyes to other ways of doing currencies. Then I met Michael Linton in about 2005 and started cclite.

How many currencies do you estimate are currently using it?

10 that I know about, it’s GPL so I don’t really know my users.

Is it mainly used in the UK or elsewhere as well?

Downloaded from everywhere but that doesn’t, of course, imply use. That’s why I’ve been machine translating foreign language templates recently. Thought I’d give nonenglish use a head start.

What kind of currencies are supported?

Good question, mutual social certainly but I ‘think’ [because it has cash facilities and system accounts, for example] that it can be used for something more broadly

Tell us about a particular success story?

All the current user groups are pretty small.

Tell us a bit about the UK community currency world

Again this is a mixed story because there are timebanks [which I don't consider to be genuine attempts at currency], backed ‘conventional’ local [again not really currency because it's backed by national currency, so it's an extension], LETS [local currency but not very successful] all small scale and a certain amount of internal division between the actors. There must be other things going on that I don’t know about too..

How is the uptake of Community Currencies doing in the UK?

Can’t answer, need an academic like UEA’s Dr. Gil Seyfang for example, one of the problems is fragmentary knowledge and limited ‘conversation’

In light of the Euro crisis, how do you see the future of Community Currencies in the UK

Good, especially as there are big regio systems in Germany, but we ‘believers’ have to carry on anyway…stupid eh?

Is there anything in particularly unique that we should know about CCLite?

There are bits of design in cclite that are probably ‘unusual’:

• a trading group can have multiple currencies in parallel, something I believe in and discussed with Michael Linton.
• a trading group can transfer value to another trading group using the same [semantics rather simple] currency. this is very controversial in community currency world though. It’s one reason why cclite had SOAP and now REST built in. Also my interest in MQ etc. is centered here.
• because of the SOAP and REST, cclite aims to be part of an ‘ecology’ rather than a stand-alone, a lot of the current work points in that direction
• I [we] are doing quite a lot of SMS work because [obviously] of the success in Africa and the need for ‘network’ that is not banking-owned.

To much fanfare MasterCard just launched their new PayPass Online not to be confused with their PayPass Wallet NFC offering.

We’ve packed a whole lot of choice into one ingenious, little button. You see, the PayPass checkout button not only lets you use our PayPass Wallet to checkout quickly and securely, it lets you use any digital wallet offered by a PayPass partner.

I applaud them for trying but unfortunately it is flawed on many different levels. They missed a great opportunity, but they don’t even seem to fix the fundamental security issues in the existing network.

First the good:

Now the very bad:

Coinapult launched on Apr. 12th, and by Apr. 16th, BitInstant had integrated with us.

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 ...]]> 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 as easy as possible for anyone to send coin with only an email address. Instawallet’s single page interface was a great example of how easy it can be.

How has it been received by people in the bitcoin community?

The response has been overwhelmingly positive. The most common comment has been that Coinapult will greatly reduce the learning curve for new users. Even grandma has an email address, after all.

Did you actually partner with BitInstant or are they just using your api?

We are partnering with BitInstant. Their cash deposit system is a natural fit for beginners. Together, we can provide unparalleled ease of entry into the Bitcoin market.

Have you seen other people using the API?

We’ve been up for less than two weeks, so no one else has fully integrated it yet. I am in the process of integrating Coinapult refunds into all paysius.com cart plugins, as well as Feed Ze Birds for easy withdrawals. Some third parties have expressed an interest, but I don’t have their permission to publicly comment, at the moment.

Do you think BitCoin is still mainly about speculating or are we starting to see real commerce happen?

I have always been of the opinion that Bitcoin’s value could not be driven by speculation. Speculation is always healthy, but the only value Bitcoin has is derived from its utility as cash. If Bitcoin isn’t a real commerce/payment solution, speculation could never sustain its value. No, the recent price stability we’ve seen at ~$5/btc is a clear indicator of its use as money.

What other projects do you have coming along soon?

Coinapult is the last new service I’ll be releasing for a while. Between Feed Ze Birds, Paysius, and Coinapult, I’ve got a ton of updates make. There are so many openings in this fledgling economy, it is hard to stop. I think this is about as much as we can chew without some serious hiring!

As an independent developer how does BitCoins openness affect you?

Bitcoin is gloriously easy to work with. Nothing frustrates me more than a closed system. Closed systems and closed source code put you at the mercy of some team half a world away. Maybe they’re good engineers, but bad at documentation. Maybe they’re great engineers with good documentation, but you need something 10% different than their system provides. Too bad. You’re SOL. Compare to Bitcoin, where half a world away means nothing, and help is always a mouse click away. Open source has been growing in adoption since it was first introduced, and this trend will only continue.

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 ...]]> 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?

Enter Coinapult

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 your BitCoin wallet.

Once Coinapult can confirm the payment they immediately send an email to your recipient. Who can follow a link and accept the payment. They provide a few handy links to new BitCoin users to make it easy to get started.

Once you follow the link you reach this screen, which allows you to transfer the funds to your own wallet.

API

Coinapult offers a simple API which makes it easy to send bitcoin to users of your site who don’t use BitCoin yet. This could be useful for a marketplace style application receiving payment in Bitcoin from one user and sending it to someone else who doesn’t necessarily have a bitcoin account yet.

You perform a HTTP request and receive the address to send to in return:

curl http://coinapult.com/api/send -F to=pelleb@gmail.com -F from=pelle@picomoney.com -F message=Hello

1HWnQULQXq2kCnKH5gdLrSfXxNwTFCViQJ±

They make money by charging 1% transaction fee for all api payments.

One thing to realize is that coinapult never has access to your own wallet, so if you integrate with them you do need some sort of server side wallet for sending funds.

His proposal is to use an iframe to a third party payment site similar to how Facebook embeds it’s widgets. This would allow you to pay very quickly as well as selectively share address, email etc. with the merchant.

We in the OpenTransact actually proposed something very similar last year at the Internet and Identity Workshop.

OpenTransact is a new very simple standard for performing amongst other things payments. It is designed to be extremely simple to use and embed. It is already being used in my startup PicoMoney as well as various other sites such as Austin Time Exchange.

OpenTransact allows anyone to create very simple payment links that we call TransferRequests. This allows you to format a link very easily ...]]> Thomas Baekdal posted a great article we need to drastically simplify payments online that has received quite a bit of attention today.

His proposal is to use an iframe to a third party payment site similar to how Facebook embeds it’s widgets. This would allow you to pay very quickly as well as selectively share address, email etc. with the merchant.

We in the OpenTransact actually proposed something very similar last year at the Internet and Identity Workshop.

OpenTransact is a new very simple standard for performing amongst other things payments. It is designed to be extremely simple to use and embed. It is already being used in my startup PicoMoney as well as various other sites such as Austin Time Exchange.

OpenTransact allows anyone to create very simple payment links that we call TransferRequests. This allows you to format a link very easily and use it to accept payments.

Here is an example:

<a href="https://picomoney.com/picopoints?amount=2&to=pelle@stakeventures.com&note=test%20payment">Pay me</a>

And here is the actual link:

Pay me

Reading Thomas’ article I realized it would very simple to embed that same link in an iframe using an additional parameter display=embed. This embed parameter tells the payment provider to format the page in such as way that it would work well in an iframe.

<iframe src="https://picomoney.com/picopoints?display=embed&amount=2&to=pelle@stakeventures.com&note=For%20testing&redirect_uri=http://payglo.be/2012/04/23/embedded-payment-widgets/" width="100%" height="60" style="border:1px solid #ddd;padding:1px"></iframe>

Here is how it would look

This shows the power of OpenTransact and also how we can really improve things a lot by thinking outside the normal credit card gateway approach.