Regulators are exploring ways to regulate these digital currencies, and some have flexed their muscles in recent months. Earlier this year, the People's Bank of China stepped up its efforts to regulate the market, including setting up a task force to carry out inspections and ensure bitcoin exchanges had implemented anti-money laundering systems, and warned several exchanges against violating rules.

Some saw the moves from the PBOC as an attempt to crackdown on bitcoin and part of Beijing's broader attempts to stem capital outflows. But Lee disagreed.

"It's not really a crackdown," he said. "The central bank previously was not very aware of the details of how bitcoin is utilized, how bitcoin is traded."

He explained that the surge in bitcoin prices coincided with the massive capital outflows from China and the exchange rate changes of the renminbi against the dollar.

"There was a causation and correlation issue. People thought bitcoin was causing it but after studying it more, I think the central bank has realized that bitcoin is not the cause of the change in exchange rate, nor is it the cause of the capital outflows."

Even then, some key voices in China are skeptical about the future of cryptocurrencies in the mainland. Earlier this month, reports said an adviser to the PBOC said virtual currencies like bitcoin are assets, but they do not have the attributes needed to be a currency that can meet modern economic development needs.

Lee said central banks need to embrace the fact that bitcoin is a new digital currency that's being traded actively in China and around the world.

"It's a new thing the central banks should pay attention to and figure out what the rules and regulations should be."

Link:

Cryptocurrencies need regulation, says CEO of Chinese bitcoin exchange BTCC - CNBC

Tomohiro Ohsumi | Bloomberg | Getty Images

Mark Karpeles, chief executive officer of Mt. Gox, in February, 2014.

The 32-year-old chief executive of defunct Mt. Gox pleaded not guilty on Tuesday to charges relating to the loss of hundreds of millions of dollars worth of bitcoins and cash from what was once the world's biggest bitcoin exchange.

French national Mark Karpeles filed the plea in response to charges of embezzlement and data manipulation at the Tokyo District Court, according to a pool report for foreign journalists.

Mt. Gox once handled 80 percent of the world's bitcoin trades but filed for bankruptcy in 2014 after losing some 850,000 bitcoins - then worth around half a billion U.S. dollars - and $28 million in cash from its Japanese bank accounts.

In its bankruptcy filing, Tokyo-based Mt. Gox blamed hackers for the lost bitcoins, pointing to a software security flaw. Mt. Gox subsequently said it had found 200,000 of the missing bitcoins.

Karpeles was indicted for transferring 341 million yen ($3 million) from a Mt. Gox account holding customer funds to an account in his name during September to December 2013. He also allegedly boosted the balance of an account in his name in Mt. Gox's trading system.

Karpeles' defense had told a pre-trial consultation that the remittance was within the scope of the firm's revenue and not the embezzlement of customer funds, the Nikkei business daily reported on Tuesday.

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Chief of bitcoin exchange Mt. Gox denies embezzlement as trial opens - CNBC

Ah, those were the days, when you could steal a bit of a companys server power and mine some valuable bitcoin all for yourself.

During a presentation at a conference last week, British cybersecurity experts had some tales to tell of surreptitious and sometimes illegal bitcoin mining in the time before huge computing power was required to turn a profit at the activity. In January 2015 the British cybersecurity firm Darktrace was called to investigate a possible intrusion in the systems of an Italian bank. Darktrace uses artificial intelligence techniques to detect aberrations in computer systems.

The firm discovered streams of data were being transmitted from one of the banks servers to a European crime syndicate, Dave Palmer, director of technology at Darktrace, told the Research and Applied AI Summit in London July 30. It was a fairly well known European criminal botnet, said Palmer, director of technology at Darktrace. The data was not customer data; it turned out to be a fairly buggy implementation of bitcoin mining software.

The hijacked Italian bank server was discovered rapidly, Palmer told Quartz, and it was disabled within less than an hour of it beginning to mine bitcoin. I dont think they made very much money out of it, he says.

2014 was the heyday of criminal bitcoin mining activity. It was super fashionable to have coin mining going on alongside sending spam from botnets, he says. The case of the banking server was rare because it was usually laptops or desktop computers that were hit by this type of malware, Palmer said.

Darktrace didnt have data for the number of bitcoin mining malware cases from that period, but Palmer says it felt like it was a daily occurrence. By contrast, the firm has only detected 24 such cases in the last six months, across the 24,000 sites it monitors. It has really dropped off, he says.

While sophisticated cyber criminals did steal computing power for bitcoin mining in those days, it was far less common than employees casually mining from their standard-issue corporate laptops. Weve seen normal employees running these services on their workstations overnight, Palmer says. No surprise; people do all sorts of things like peer-to-peer file sharing and hosting Tor nodes [infrastructure for the anonymized network thats part of the dark web], so I bet there are a load of coin mining stories all over the place.

But some employees took their cryptocurrency enthusiasm a step too far. Darktrace has found servers concealed by staff in corporate data centers mining bitcoin non-stop. The servers benefit from the special cooling systems and reliable power supply at the data centers. We found employees had procured some servers, [and] had hidden them under the data center false flooring, Palmer says. They were off-the-record servers that no one recognized, mining coins 24/7.

The days of such secret bitcoin mining are now over. Too much computing power is required to profitably mine bitcoins; the scene is now dominated by professional outfits with thousands of servers stored in giant, purpose-built warehouses. Processing power devoted to bitcoin mining has risen by 770-fold since 2014, leaving little chance of profit for servers hidden in data centers or laptops churning away after work. I think we have seen the last of successful coin mining, Palmer says.

Correction: An earlier version of this post mistakenly said Darktrace investigated the Italian banks server in 2014.

Read more here:

An Italian bank's server was hijacked to mine bitcoin - Quartz

Wall Street Journal (subscription)

Why Bitcoin Is Booming Wall Street Journal (subscription) Who says only the government can make money? This year the value of the private currency bitcoin has climbed to unprecedented levels, while at the same time becoming far less volatile than in previous periods of rapidly increasing demand. Bitcoin has ... and more »

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Why Bitcoin Is Booming - Wall Street Journal (subscription)

Roque Solis never imagined the bitcoin mining equipment he bought in Februarywould have already paid for itself. And on top of that, made him money.

Solis is the president of SoliSYSTEMS Corp, a company that developed an EMV smart card for electronic benefit transfer for the federal assistance program, Women, Infants, and Children (WIC). While attending several conferences last year, Solis was unable to ignore bitcoin. So, he decided to experiment with the technology via mining to get a better handle on whether the technology could be used within his company.

Solis bought aBitmain Antminer S9 on eBay for $2,400.

As of this weekend, Solis has mined 1.01 BTC, worth a little more than $2,584 in his bitcoin wallet.

Solis said:

"When I bought the miner, the price per bitcoin was around $1,200. I thought Id break even in one year, but actually its been about five months."

These gains, though, are particularly interesting in that, even last year, individual hobby mining wasn't profitable anymore. Individuals with just one or two miners couldn't compete with the companiesmining bitcoin using large warehouses full of servers dedicated tothe task (and seeing lucrative returns as the price rose).

But that was with the price below $600, which, with electricity costs and mining pool fees, would take a person more than 500 days to break even on their bitcoin miner investment.

With an increased awareness and usage of mining pools,and the price now farhigher, hobby miners as Solis' experience shows can break even in several months.

According to Solis, the amount of money hes making per day with the miner jumped from $7 to $16 recently, as the price shot up.

And to bitcoin's enthusiasts this is evidence that the increase really does benefit the network more broadly.

According to Sean Walsh, a partner at Redwood City Ventures, a bitcoin and blockchain consulting and investment firm. Walsh said, the rising bitcoin price has done more than reinvigorate investors, it's also led to increased interest in bitcoin mining, a key process that supports the network by securing its ledger.

Walshtold CoinDesk:

"There are a lot of metrics that actually matter, like the number of people that own at least one bitcoin, but nobody cares about that. It's just price. It's the one score that wakes people up, and when The Wall Street Journal and other financial publications write about bitcoin."

And the Google Trends for "bitcoin" and "bitcoin mining" tell a similar story. Many of the peaks in the chart for both terms coincide with spikes in price.

Yet, it's not only the price per bitcoin that's luring in new bitcoin mining hobbyists. According to Walsh, while bitcoin transaction fees were relatively stable for a long time, in the past couple years, those fees have seen an uptick.

"This has to do with the block size debate, because the network is a bit congested, and people are having to pay more to get their transactions confirmed," he said.

Whereas only a few years ago, around 100 bitcoins per day was paid in transaction fees, in the past couple months, transaction fees have equaled around 350 bitcoins a day, Walsh said, pointing to stats on bitcoin data website Blockchain.info.

And with 1,800 bitcoins produced daily, 350 bitcoins is close to 20% of that. This is in stark contrast to a year ago when only 60 bitcoins were paid in transaction fees and 3,600 bitcoins were being produced daily (before the halving), making the percentage paid in fees around 1.6%.

"That's a huge boost," Walsh said.

He continued:

"I don't know that [increasing transaction fees] are affecting people's interest in getting into mining. People may not realize why it's more lucrative to mine bitcoins now, but when they run the numbers, the payback period looks better than it used to."

But those who have been in the cryptocurrency space for a while know this story, and would likely caution against Solis and others thinking that the upward momentum will continue.

Warning of future corrections, Walsh said:

"Its very important for people entering bitcoin mining that they really understand how to calculate their revenue and expenses. They need to make sure their cost basis and operating costs are very low."

For example, if new miners overspend on hosting servers, when there's a correction, they're over-leveraged. And that's a cardinal sin in any investment, said Walsh.

Bitcoin was down about 20% over the last couple weeks of June.

Walsh called the downswings just "normal respiration of an asset class," yet others not so versed in investing might be unaware of these fluctuations and get themselves in trouble.

For Solis, though, it's all about learning through experience.

The Antminer S9 is running in SoliSYSTEMs server room in the companys office in Allen, Texas. Solis isn't able to identify just how much electricity the miner is using, though, since theres clusters of servers there already.

"It is noisy, though," Solis said. "Compared to the other servers, its very noisy."

And that's because it's a machine with two specialized ASIC boards, crunching numbers with a fan that rotates at 5,4007,000 revolutions per minute, he said.

Solis isn't only interested in bitcoin. Having been introduced to ethereum's ether token and the network's smart contract architecture, he had one of his employees buy some immediately viaan online exchangeseveral weeks ago. And he plans to start mining ether soon.

He's also researching Hyperledger and other private blockchain systems.

All this, so he can better envision the use cases for his company. According to Solis, the company islooking into how blockchain could underpin a mobile, closed-loop electronic benefits transfer system.

Miner image courtesy ofRoque Solis

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at [emailprotected].

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Bitcoin's Price Surge is Making Hobby Mining Profitable Again - CoinDesk

Bitcoin has essentially remained flat for the week, and it is no coincidence that price action has slowed as a protocol altering event, UASF/BIP148 approaches. The spot price appears stuck in heavy triangular consolidation. Traders will note the descending volume profile, and expect a heavy spike in volume upon resolution of the consolidation.

The Bitcoin network hash rate briefly spiked above 6 trillion GH/s after the last difficulty adjustment on July 2nd, and has moved lower in recent days. There has been a subsequent -0.43% difficulty adjustment, the first negative adjustment since October 22nd, 2016.

The number of nodes signaling support for a UASF continues to rise. Currently, 17% of core nodes are signaling their support, leading up to activation on August 1st.

The SegWit2x beta was released on June 30th by Jeff Garzik. Luke DashJr, a bitcoin core developer who did not contribute to SegWit2x, described the entire project as a tactic to try to stall SegWit longer in his recent Medium post. The other core developers remain staunchly opposed to SegWit2x. Mining pools continue to strongly support SegWit2x. The code itself remains largely untested, and the community largely unprepared for a hard fork, but ready for SegWit.

Symmetrical triangular consolidations, in an already established trend, typically represent continuation via re-accumulation, and are known as pennants. This is a key pillar of Wyckoffian logic known as mark up.

However, until the direction of the breakout is clear, and due to the proximity of the UASF on August 1st, it is important to have a road map for various outcomes. Consolidation of this duration does not resolve in slow small moves, it typically resolves in large explosive moves. Below, I present evidence for both a bullish and bearish resolution.

I use Bollinger Bands to help determine when a post-consolidation move will happen, not necessarily the direction. The Bands represent one standard above and below the average price over the selected period, with the default being 20. A squeeze in the Bands represents price compression.

Typically, if price remains above the median during the squeeze, this forecasts a bullish resolution, and if price remains below the median during the squeeze, this forecasts a bearish resolution. As was the case prior to the Bitfinex hack.

There are also scenarios which Bollinger calls Head Fakes, which are essentially fake breakouts in the opposite direction of the eventual resolution. One such head fake occurred after the 200+ day consolidation in May 2016, on low volume.

I mention this because it is something to watch for in the current triangle consolidation. The Bands on the daily timeframe, with the current price and using the same settings as the two above examples, are not nearly as compressed. This suggests further compression may be needed until resolution. There is however a definite bearish bias due to the position of price relative to the median line (red).

The Ichimoku Cloud is a constant, auto-drawn indicator which quickly offers an immense amount of valuable information on any time frame. The Cloud is best used at higher time frames as more data generally provides more accurate signals and less false positives.

The indicator uses moving averages and dynamic support and resistance to make projections of key zones, as well as capturing 80% of any given trend. As long as the price remains above the Cloud, sentiment remains bullish. Price in the Cloud indicates a neutral trend, and below the Cloud indicates a bearish trend.

When the Tenkan (T) is over the Kijun (K) sentiment is bullish. K over T would indicate bearish sentiment. When the Lagging Span (LS) is above the Cloud and above the price sentiment is bullish, below the Cloud and price would indicate bearish sentiment.

The best entry signals for the Cloud occur when the trend is obvious, but 1 or 2 of the signals have yet to become confluent with a higher time frame trend. The current bullish entry signal Im watching is the TK recross on the daily timeframe Ichimoku Cloud using the 10/20/60/30 settings. I typically use 20/60/120/30, but if price volatility has creeped to a halt I prefer faster signals.

The prior TK recrosses using these settings have been near the relative bottom of their respective trends. However, the TK recross prior to the Bitfinex hack, during a triangular consolidation period, did not resolve bullish.

The first target for any TA setup should always include Fibonacci Extensions 1.272 and 1.618. From high to extreme low, this yields targets of $3550 and $4300.

Should the current consolidation resolve as a bull pennant, targets would be the measured move of the pole upwards as well as the 1.618 Fib Extension of the consolidation. This yields a resistance zone of $3400-3600. Note the the pole measurement and fibs here are conservative in contrast to the large capture Fib Extension zones on the above chart.

Unlikely, but worth mentioning, is a long standing Cup and Handle with targets of $4800-5100 based on the fib extension and measured move respectively.

Although the resolved Inverted Head and Shoulders never materialized, the target remains at $3200.

The Pitchfork is showing strong support at the 0.75 diagonal. The median line (red) of the Pitchfork gives the expected mean of the trend. Price will continually attempt to return to this diagonal. Each diagonal of the Pitchfork can be thought of as a potential reversal zone or support/resistance line. The upper yellow diagonal zone being most overbought, or the top bounds of the trend, and lower yellow diagonal zone being most oversold, or the bottom bounds of the trend.

A rise to the median line would yield a target between $2900-3100, which is essentially the current all-time high.

Besides the above mentioned Bollinger Band break down, there is also a bearish entry signal known as an Edge to Edge trade (yellow). Should price close in the cloud, there is a high likelihood that price reaches the other end of the cloud at the very minimum.

There was a similar setup for this prior to the Bitfinex hack which resulted in a touch of the 200EMA.

While the following signals are not outright bearish, they do represent support targets. Firstly, price has never closed below the weekly timeframe Kijun or the daily 200EMA for the entire trend.

Secondly, price has also not touched the Median Line of the longstanding bullish Pitchfork for quite some time. A dip this low, back to previous All Time Highs, would be considered mean reversion and is currently unlikely. This would likely be the ultimate bearish destination should price be unable to recover higher.

Lastly, the yearly Pivots will also be important support zones with the R3 pivot being a likely immediate target should price break down.

Price is nearing the end of a heavy period of consolidation just as SegWit is to be activated on August 1st. I expect heavy volatility for both of these reasons. The technical indicators are showing several resistance targets above $3200. Further analysis shows a confluence of support around $1700-1800.

See original here:

Bitcoin Price Analysis - consolidation ending - Brave New Coin

Thorsten Polleit; image taken from authors website

While many mainstream media personalities and analysts remain skeptical about bitcoin (and often rehash misinformation), others are beginning to give cryptocurrency an honest appraisal.

The latest comes from leading German business magazine Wirtschafts Woche, which recentlypublished an article praising bitcoin.The Revolution of Cryptocurrency, written by economist Thorsten Polleit, argues that the advent of cryptocurrency set off a monetary revolution that could eventually supplant fiat national currencies.

Public fiat money, he explains, possesses four inherent flaws:

Polleit states that cryptocurrencies avoid these and other flaws due to market competition. As long as no currency has a state-mandated economic monopoly, consumer demand should favor better coins.

However, it should be noted that not all cryptocurrencies resist the flaws Polleit finds in fiat money. Many cryptocurrencies are inflationary, although their rate of inflation is generally fixed rather than variable. Cryptocurrency distribution models can also exhibit inequality, and there is much debate about what constitutes a fair coin/token dissemination method. That said, by divorcing monetary policy from the national government, one will avoid the final two flaws of public money.

Polleit believes consumer demand for bitcoin will likely increase as fiat money loses purchasing power and national governments reduce or even eliminate cash transactions. He foresees the potential for blockchain-based currencies to makeFiat money worthless.

Despite this bullish tone, Polleit urges investors to approach cryptocurrency speculation with caution. As he states (translated into English):

Whoever obtains [cryptocurrency] should know that he does not invest, but speculates. Unlike in the case of shares or bonds, they do not have a recognized and tested valuation formula the same also applies to raw materials or art objects. You can not even estimate whether the price you pay is justified with regard to the intrinsic value of the [coins].

For this reason, he seems to favor colored coins tied to physical assets, such as gold.

Diverging from other pro-bitcoin analysts, Polleit encourages investors to avoid currency speculation. The sensible investor, he says, should instead continue to invest in great companies and take a long-term approach to the markets. The monetary revolution may cause economic upheaval, but he explains that solid companies will continue to bring positive returns no matter what currencyor cryptocurrencythey use to transact business.

Featured image from Shutterstock.

Original post:

Bitcoin is Permanently Superior to Paper Money in Ways: German Business Magazine - CryptoCoinsNews

Fundstrat's Tom Lee on Friday became the first major Wall Street strategist to formally lay out his views on bitcoin.

The digital currency could be worth as much as $55,000 by 2022, Lee said in a report titled "A framework for valuing bitcoin as a substitute for gold."

"We believe one of the drivers [of bitcoin] is crypto-currencies are cannibalizing demand for gold," Lee said in the report. "Based on this premise, we take a stab at establishing valuation framework for bitcoin. Based on our model, we estimate that bitcoin's value per unit could be $20,000 to $55,000 by 2022."

Bitcoin traded near $2,540 on Friday. The digital currency has more than doubled in value for the year, and high interest prompted a Goldman Sachs technical analyst, a team of Morgan Stanley analysts and Citi researchers to issue reports on bitcoin or the blockchain technology behind it in the last few months.

However, Lee is the first widely followed market strategist to issue a report dedicated to predicting bitcoin's price. Lee also happens to be the most bearish strategist on U.S. stocks currently. He was JPMorgan Chase's chief equity strategist from 2007 to 2014 before co-founding Fundstrat Global Advisors, where he is managing partner and head of research.

The strategist's case for bitcoin is a basic supply-and-demand story, similar to the argument other proponents of bitcoin use when playing up its future as "digital gold."

Gold's market value of $7.5 trillion is exponentially greater than bitcoin's $41 billion. But Lee pointed out the precious metal's supply "is surging as mining soars to all-time highs," while the number of available bitcoins is rapidly approaching its inherent 21 million-coin limit.

"A simulation shows that this will slow even further to less than 1.5% growth by ~2020, meaning bitcoin supply will grow even slower than gold," Lee said.

Bitcoin is also theoretically a better way to store value, proponents contend, since governments can easily decrease a currency's worth by printing more of it.

The constraints on bitcoin's supply and the potential worth of the digital currency mean there will be high demand for a limited product, driving up the price. Bitcoin has already surged from below $1,000 on Dec. 31 to briefly top $3,000 in June.

Lee also expects investors could look at bitcoin as a substitute for gold, and his model shows the digital currency could be valued at $20,300 by 2022. Adding more variables to the model puts the value of bitcoin in five years in a potential range of $12,000 to $55,000.

"In other words, substantial upside exists in owning cryptocurrencies here," Lee said.

He also expects central banks will consider buying the digital currencies if the total market value tops $500 billion. Including bitcoin and its rival ethereum, the value of all cryptocurrencies hovers around $100 billion, according to CoinMarketCap.

"In our view, this is a game changer, enhancing the legitimacy of the currency and likely accelerating the substitution for gold (by investors)," he said.

Lee noted a Bloomberg news report that central banks have looked into the possibility of owning digital currencies.

In March, Federal Reserve Governor Jerome Powell cautioned in a speech about the potential challenges for a central bank to issue a digital currency, including privacy.

To be sure, digital currencies such as bitcoin often swing wildly and operate in unregulated markets. While the lack of regulation is what has attracted many buyers, many consider bitcoin the "Wild West." Three years ago, Mt.Gox, the largest bitcoin exchange then, filed for bankruptcy and said it lost 750,000 of its users bitcoins and 100,000 of the exchange's own.

The future of bitcoin is also in question. This summer, the digital currency could split if developers don't agree on the same system to upgrade bitcoin.

Lee acknowledged bitcoin's volatility in his report, noting that annualized bitcoin volatility is 75 percent, "substantially higher than gold's 10%. But as noted, gold's volatility approached 90% from 1971 to 1980 as the U.S. abandoned the gold standard hence, we expect this to improve over time."

View original post here:

Top Wall Street strategist sees bitcoin 'cannibalizing' gold, worth as much as $55000 - CNBC

Bitcoins price could be in for a big drop, and thats because the cryptocurrency is facing a potentially contentious upgrade to its core software in August. If you havent heard about the impending deadline for a user-activated soft fork, heres the story:

For close to six years, the Bitcoin community has struggled to arrive at a consensus on how to scale the 1MB block size to meet growing popularity and adoption. A proposed user-activated soft fork (UASF) is an attempt to nudge the Bitcoin network to embrace and activate segregated witness (SegWit) which some believe to be one of the most promising scaling solutions by August 1.

In 2012, the network confirmed a daily average of 8,000 transactions. Today, that figure is around 350,000. Transaction overflow has resulted in high fees as users compete every 10 minutes for limited space in the Bitcoin block. The time it takes the network to confirm payments has also grown longer, at times going into hours.

Choosing and implementing a scaling solution for a decentralized platform is difficult. Having no central decision-making body is a good thing, for the most part. It makes Bitcoin less susceptible to censorship or takeover.

Several Bitcoin improvement proposals (BIPs) have been developed to fix the scaling problem. They all require a slow consensus-building process within the community.

Bitcoin core developer Pieter Wuille first proposed SegWit in 2015 to solve issues unrelated to scaling. He wanted to fix transaction malleability, or the possibility of an attacker changing the identification details of a transaction before it confirmed.

It turned out that SegWit could also create about 60 percent more room in the Bitcoin block to accommodate more transactions. It would achieve this by storing signatures separately from other transaction data.

Developers, business leaders, and miners present at the December 6, 2015 Hong Kong Bitcoin Scaling Conference signed a statement declaring a pursuit of SegWit as the first layer of scaling.

A team of developers selected at the Hong Kong meeting released the SegWit code in October 2016. To activate, the code requires at least 95 percent of nodes to signal their support. Miners and nodes owners, however, have not been enthusiastic about SegWit. So far only 33 percent of about 7,500 nodes in the network are signalling support for it.

On February 25, an anonymous core developer who goes by the pseudonym Shaolinfry published the UASF as BIP148 on the Bitcoin-developer mailing list. He or she also released the corresponding code. The mission of the UASF was to nudge more miners and nodes to embrace SegWit and hasten its activation.

Many who agree with Shaolinfry take the view that miners in particular lack the incentive to adopt SegWit. A full Bitcoin block guarantees them increased revenue in the form of the high fees users pay to speed transactions. It is therefore users who have the interest in pushing for a more efficient system.

Indeed, some users are setting up new nodes specifically so they can use them to signal support for SegWit.

Even though UASF carries the name soft fork, meaning a software upgrade that is compatible with the preceding version, it could turn into what is known as a hard fork. If half or more of the miners refuse to meet the demands of soft fork supporters, the upgrade could fail to recognize nodes that continue to run the older version. In the words of Cornell University computer science professor Emin Gn Sirer, UASF is just the face saving name for a hard fork.

Indeed, any change to the core software is a hard fork if it alienates those in the network who dont accept it, and it could therefore lead Bitcoin to split into two independent coins.

Those who oppose a UASF believe SegWit provides only short-term relief. With fast-growing Bitcoin adoption, they believe the capacity created will soon fill up again and the problem will return.

They also believe those pushing for UASF and SegWit prefer a smaller block size so they can implement their own second-layer solutions.

To a majority of those who oppose UASF and SegWit, increasing or removing the cap on the block size is the only way to solve the scaling problem. Some also think UASF poses security risks to the network. Bitcoin core developer Gregory Maxwell, for example, has said, I do not think it is a horrible proposal: it is better engineered than many things that many altcoins do, but just not up to our normal standards.

In the run-up to the potential fork in August, experts are advising users to protect their coins by making sure they use wallet services that support the UASF. A user could also set up a full node and signal for UASF as a way to protect their coins. Developer and blogger Jimmy Song:

[Users] supporting BIP-148 means they can support both forks when the UASF happens. There are really only economic benefits, not really economic penalties for supporting a BIP-148 fork other than some fixed costs. [Users] do not have to choose which software they run, they can run both and really, they should if they want to maximize their value.

On June 17, Chinese miners representing 80 percent of the Bitcoin hash power issued a statement declaring support for SegWit. Theyve also expressed their intent to have the upgrade implemented in July. If the Bitcoin community can agree to adopt SegWit before August 1, there will be no need for UASF.

The Bitcoin price may drop because of possible contentious forks ahead, but if it does, it will likely recover once the deadline for the UASF passes and a resolution to the present uncertainty becomes more clear. And since investors will want to buy in prior to the recovery, it is also possible a drop wont happen at all.

Rupert Hackett is general manager of Bitcoin.com.au, Bitcoin.co.uk (subsidiary of Bitcoin.com.au), and BuyaBitcoin.com.au. He specializes in the digital currency and digital payment space and holds the worlds first Masters degree in digital currencies. He writes for multiple Bitcoin and tech websites and is an acting Board Director for the Australian Digital Currency Commerce Association (ADCCA).

Excerpt from:

Why Bitcoin's value could get even more volatile - VentureBeat

China's central bank adviser considers Bitcoin to be a financial asset and not money, calls for the government to create its own digital currency. Read more...

The widespread adoption of Bitcoin among the masses has made it part of the global economic system. While the number of Bitcoin users continue to grow, there is still a lack of clarity about the cryptocurrencys status in the financial system. Countries like Japan have already assigned a legal position to Bitcoin as a currency, and there are others that are mulling regulations to bring the digital currency within the purview of the countrys legal structure.

By design Bitcoin shares similarities with different financial instruments. The cryptocurrency can be classified as both money and asset. However, many governments fear that by calling the virtual currency money, they will be undermining the countrys monetary system. At the same time, they cant simply ignore Bitcoin either, thereby forcing them to call it an asset instead of money.

A recent comment by one of the advisers at the Peoples Bank of China perfectly matches the observation. In an interview Sheng Songcheng mentioned,

Bitcoin does not have the strong fundamental attributes needed to be a currency as it is a string of code generated by complex algorithms But I do not deny that virtual currencies have technical value and are a type of asset.

Sheng went on to further explain the reason behind it by stating that the finite supply of Bitcoin, set to be fulfilled by the year 2140 will create a mismatch between the economic needs of the future and the actual capabilities of the cryptocurrency.

However, Sheng accepts the superiority of the cryptocurrencies over traditional currencies, thanks to their qualities. He believes that a cryptocurrency with more government control over it might be the next step towards creating the future monetary system that is more consistent with the evolving needs.

Currently, Bitcoin holds the status of a virtual good, similar to game tokens, downloadable content, etc. However, new regulations in the near future might soon change it.

Originally posted here:

Bitcoin Can't Be Considered as Money, Says PBOC Adviser - newsBTC

"Bitcoin does not have the fundamental attributes needed to be a currency as it is a string of code generated by complex algorithms...But I do not deny that virtual currencies have technical value and are a type of asset," he said.

His comments come after the Chinese central bank increased scrutiny of the country's bitcoin exchanges earlier this year, a move that prompted the companies to stop margin lending, introduced trading fees and issue rules to rein in users.

Many governments around the world are still mulling how to regulate and classify bitcoin, whose value surged in June to hit a record just shy of $3,000. China has classified it as a "virtual good".

Squaring in on bitcoin, Sheng said expectations that bitcoin supply would be capped in the year 2140 would make it difficult for it to become a medium of exchange that could meet modern economic development needs as money supply should be related to economic needs.

He also said that Chinese monetary authorities should study issuing a central bank virtual currency that it could regulate and run properly.

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Bitcoin can be an asset but not a currency, says China central bank adviser - CNBC

July 7, 2017 by Corina Sas, The Conversation Credit: Shutterstock

Bitcoin reached a huge new peak in value in June 2017, when one unit of the virtual currency was worth US$2,851 (2,208), up from around US$600 just a year earlier. More than 10m people worldwide are now thought to own bitcoin and more than 100,000 merchants accept it for goods (not counting all those using it to sell drugs and other illegal items on the black market).

Part of bitcoin's appeal for many of its users is the lack of centralised control or regulation by any government or bank. Instead it relies on a technology known as blockchain to underpin and secure transactions. But research my colleagues and I have conducted suggests that the lack of any social trust in the way blockchain operates poses a challenge for bitcoin's further spread.

Blockchain is a public database that records digital transactions. These are validated by computers working within a worldwide network that solve complex coded problems. Whereas traditional bank transactions are authorised by financial institutions and controlled by governments through taxation and contracts between parties with known identities, blockchain is decentralised, unregulated and anonymous.

In our studies of blockchain's users we found that these features appeal to bitcoin users because of increasing distrust of financial institutions and governments. The technology empowers people to regain control over their money, with no restrictions over where and when they can send it.

But our findings also indicate that two core aspects of blockchain's design the fact that transactions are anonymous and irreversible pose significant challenges to the social trust among its users. Anonymity has an obvious appeal for people looking to avoid government control. And irreversible transactions were built into blockchain's original design as a positive feature to address banks' privilege of reversing transactions, even when the contract states that they were final.

But in practice, these features are a problem for many people. Most people are used to relying on the reputation of a seller to decide whether or not to buy from them and the ability of the financial and legal system to help them if something goes wrong. But neither of these things are possible through blockchain.

Paper trails have their advantages

Most transactions don't just involve moving bitcoin from one electronic wallet to another. In practice, they are often part of a larger, two-way transactions where both parties send and receive assets such as bitcoins, real world currency or physical goods.

The issue is that the blockchain only records the movement of bitcoin, not the movement of other currencies or goods. Because there is no authority to complain to, this raises a major risk that users could fall prey to dishonest traders who fail to deliver their side of the deal.

In our latest study, we interviewed 20 bitcoin users recruited from five online groups from Malaysia, most of them with more than two years experience of using bitcoins. Our research indicates that more than 50% of participants would prefer blockchain's transactions to be regulated and identifiable, so that transactions can be either reversed or the dishonest trader legally sanctioned.

This shows there is a tension between the freedom and empowerment of blockchain's unregulated nature, and the lack of security that most people are accustomed to receiving from traditional financial institutions. If this is not addressed, such tension may limit the spread of bitcoin beyond its current base. It could even reduce the number of bitcoin users involved in such two-way transactions, as more people become aware of the risks of dishonest traders. In contrast, the use of blockchain for one-way transactions such as remittance payments will continue to grow, as they are less affected by dishonest traders.

What can be done?

Even bitcoin's current users still operate largely under the traditional mindset of centralised and regulated currencies. Bitcoin advocates may need to find ways to encourage users to develop a new mental approach to unregulated blockchain technology.

But developers could also build tools to address some of bitcoin users' concerns. For example, there may be a way to record whether the real-world elements of bitcoin transactions are also verified, authorised and stored on the public ledger. Electronic wallets could be linked to a reputation file that users could view before agreeing to a deal, much like sites such as eBay allow consumers to rate sellers. And new mechanisms built on top of the irreversible blockchain protocol could enable individual two-way transactions to be reversed.

Without doing something to tackle these challenges, the very thing that caught people's attention about bitcoin in the first place could end up stifling its growth and eventually consigning it to history.

Explore further: Bitcoin's popular design is being exploited for theft and fraud

This article was originally published on The Conversation. Read the original article.

Elon Musk's Tesla will build what the maverick entrepreneur claims is the world's largest lithium ion battery within 100 days, making good on a Twitter promise to ease South Australia's energy woes.

Qualcomm on Thursday escalated its legal battle with Apple, filing a patent infringement lawsuit and requesting a ban on the importation of some iPhones, claiming unlawful and unfair use of the chipmaker's technology.

France will end sales of petrol and diesel vehicles by 2040 as part of an ambitious plan to meet its targets under the Paris climate accord, new Ecology Minister Nicolas Hulot announced Thursday.

Japanese designer Yuima Nakazato claimed Wednesday that he has cracked a digital technique which could revolutionise fashion with mass made-to-measure clothes.

Volvo plans to build only electric and hybrid vehicles starting in 2019, making it the first major automaker to abandon cars and SUVs powered solely by the internal combustion engine.

The first Tesla Model 3 electric car for the masses should come off the assembly line on Friday with the first deliveries in late July, the company's CEO says.

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Bitcoin's central appeal could also be its biggest weakness - Phys.Org

Stock research analyst Ronnie Moas said he bought bitcoin this weekend and thinks it could reach $5,000 within a year.

"$5,000 could happen in a few months. It's only starting to gain traction right now," Moas, founder of Standpoint Research, told CNBC in a phone interview Wednesday. "It's starting to spread like wildfire right now."

He pointed out that since only 21 million bitcoin can ever exist, increasing demand for the digital currency will naturally drive its price up.

Bitcoin briefly tripled in value this year, hitting a record $3,025.47 on June 11, according to CoinDesk. The digital currency traded Wednesday near $2,600, still more than double its Dec. 31 price of $968.

"This is not something I could keep my hands off of," Moas said. "What would be more painful than losing [money in cryptocurrencies] is not acting."

The research analyst said he invested a few hundred U.S. dollars each in bitcoin, ethereum and another digital currency called litecoin through Coinbase.com. After he releases a 40-page report on cryptocurrencies in the next few weeks, Moas said he plans to invest more in them.

The research analyst's view on bitcoin joins the optimistic views of others on Wall Street. On Sunday, Goldman Sachs' technical analyst Sheba Jafari said in a note that bitcoin could rise as high as $3,915.

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Bitcoin could nearly double and reach $5000 soon, says Standpoint Research - CNBC

Scaling Bitcoin will happen sooner or later. The only question right now is how different teams of developers plan to accomplish this. There are different camps trying to make this happen, either through a softor a hard fork. One of the latest proposals trying to push for a Bitcoin hard fork goes by the name of Bitcoin ABC. It is an interesting proposal, which suggestsan adjustable blocksize cap.

Introducing a Bitcoin hard fork solution is always a contentious proposal. There are quite a few differences between a hard fork and asoft fork. In most cases a hard fork has a greaterchance of causing a network split, which is the last thing Bitcoin needs right now. Despite the risk, we currentlyhave a few Bitcoin UAHF proposals competing for community traction.

The latest project to gain some momentumis Bitcoin ABC. The ABC part stands for Adjustable Blocksize Cap, which indicates users can determine their preferred blocksize accordingly. This feature will be appreciated by both miners and users alike. However, this maycause issues for people dealing with slower internet connections or internet data caps. It appears the maximum block size of this proposal is 16MB, although that is only a temporary placeholder.

Certain aspects about Bitcoin ABC will interest some people and infuriate others. For example, Bitcoin ABC will not support replace-by-fee, whichhas been a popular solution to avoiding Bitcoin network congestion. In theory, a larger block size will be a more effective way to avoid paying high fees, but it may still warrant the use of replace-by-fee. Not supporting this solution is rather strange.

Additionally, Bitcoin ABC has no plans to activate Segregated Witness whatsoever. That should not come as a big surprise to many people. A large part of the Bitcoin community is in favor of seeing SegWit activate, but stillwant nothing to do with it. Moving away from SegWit is also in line with Bitmains contingency plan, which was introduced several weeks ago. A user-activated hard fork without SegWit makes sense for this particular part of the community.

It is possible Bitcoin ABC is one of the three UAHF implementations that Bitmainreferred to in their infamous blog post. This has not been officially confirmed by either party, although many suspect this is the case. The Bitcoin ABC developers are in contact with miners, as well as Jihan Wu and Haipo Yang. This seems to virtually confirm Bitcoin ABC is endorsed by them, evenwithout all the specifics of the program being available.

It appears Bitcoin ABC has the support of various mining pools, but the group behind the proposalseems hesitant to confirm or deny which pools. According to a recent Reddit post, it is up to the pools to publicly announce their intentions. It will be interesting to see which if any pools come forward in support of Bitcoin ABC. We can expect more specifications over the coming weeks and it will be interesting to see if this UAHF solution can truly contend with other proposed solutions.

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What is Bitcoin ABC? - The Merkle

transferred to a second wallet on Tuesday night. Photograph: Bloomberg/Bloomberg via Getty Images

The hackers behind the NotPetya ransomware, which wiped computers in more than 60 countries in late June, have moved more than 8,000 worth of bitcoins out of the account used to receive the ransoms.

The transfer has added credence to messages purporting to be from the attackers offering to decrypt every single infected computer for a one-off payment of 200,000, after security researchers suggested they may be state-sponsored actors.

It is possible to see the movement of the ransom payments thanks to the public nature of the bitcoin currency: all transfers are recorded on the public blockchain, although the real-world identities of the individuals or organisations behind a particular payment address can be near-impossible to discern.

Currently, the blockchain records that the bulk of the ransom money, 7,872 worth of bitcoin, was simply transferred to a second wallet on Tuesday night, but two smaller payments, of 200 each, went to accounts used by two text-sharing websites, Pastebin and DeepPaste.

Around 10 minutes before the payments were made, someone made posts on both those sites claiming to be able to decrypt hard disks infected with the malware in exchange for a payment of 100 bitcoins.

The 200,000 offer has created more uncertainty about the motivations behind the ransomware. While it originally appeared to be created with the intention of earning a lot of money through ransom payments, researchers quickly pointed out that a number of features of the software made it appear that the ransom element was a smokescreen, with the real goal being widespread damage.

Significantly, the majority of infections occurred in Ukraine, due to the main attack vector being a compromised version of an accounting program, ME Doc, used to file taxes in the nation. That has led to many, including the Ukrainian government, suspecting Russian involvement as part of the ongoing cyberwar between the two countries.

Hackers offering to decrypt files for money suggests that the cash motivation may be more significant than thought but that too could be misdirection.

While the hackers continue to play games, the Ukrainian cybercrime unit is continuing its investigation. On Wednesday, it announced that it had seized ME Docs servers after new activity was detected there, and said it had acted to immediately stop the uncontrolled proliferation of malware.

Cyber police spokeswoman Yulia Kvitko suggested that ME Doc had sent or was preparing to send a new update and added that swift action had prevented any further damage. Our experts stopped (it) on time, she said.

It wasnt immediately clear how or why hackers might still have access to ME Docs servers. The company has not returned messages from reporters, but in several statements took to Facebook to dispute allegations that its poor security helped seed the malware epidemic.

Cyber police chief Coonel Serhiy Demydiuk previously said that ME Docs owners would be brought to justice, but Kvitko said there had been no arrests.

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Hackers who targeted Ukraine clean out bitcoin ransom wallet ... - The Guardian

Seven years ago, the value of a single bitcoin was worth a quarter-of-a-cent. Today, that single bitcoin is worth upwards of $2,200 .

Monday marked the seventh anniversary of what is said to be the first recorded instance of bitcoin used in a real world transaction. Over the course of seven years, bitcoin's value has multiplied 879,999 times over since 2010. If an investor had decided to spend five dollars back then on about 2,000 bitcoins, that stake would be worth $4.4 million today. With $1,200 spent on some 480,000 bitcoins, the investor would be worth at least $1.1 billion today.

The early months of 2017 have been particularly heady days for bitcoin. Since the beginning of the year, the value of the cryptocurrency has surged as it gains legitimacy in countries like Japan . Investors have also come to see the currency as something of a safe haven asset amid geopolitical turmoil and there's been plenty of that in recent months, in both Europe and the United States.

And that first transaction? A software programmer on " Bitcoin Talk " known as Lazlo Hanyecz offered to 10,000 bitcoins for a couple of pizzas. For a least three days, no one took bite of the offer, with Hanyecz writing: "So nobody wants to buy me pizza? Is the bitcoin amount I'm offering too low?"

A user eventually paid about $25 for two pizzas. In today's bitcoins, those pizzas cost Hanyecz $22 million.

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If You Bought $5 in Bitcoin 7 Years Ago, You'd Be $4.4 ...

Bitcoin has its challenges, such as concerns about its possibly overinflated price and questions about how it will scale to accommodate more users, but one things for sure: its use is expanding at a rapid clip. Two of the largest bitcoin wallets, Coinbase and Blockchain, have posted major user growth in the last month.

Alistair Milne, an entrepreneur, investor and bitcoin evangelist, recently tweeted that Coinbase has added about 1 million new users in 30 days. He presented a chart showing the number of users jumped from 5 million on Nov. 28, 2016 to 8.4 million at the end of June. Coinbases website also noted it had 8.4 million users, 27.6 million wallets, 46,000 merchants and 10,000 developer apps.

When asked to provide his source for the growth in Coinbase users, Milne cited a link to a source called The Wayback Machine that gives historicsnapshots of Coinbase user activity. That link shows that on May 30, Coinbase had 7.3 million users, which confirms Milnes claim that about 1 million new users joined in the last 30 days.

In February, Coinbase announced it hit its 6 million user milestone. It was around this time the company received the New Yorks BitLicense, making it one of the largest bitcoin companies to gain the approval of New Yorks department of financial services.

Blockchain.info reported a total of more than 15 million users as of July 2, which also marks around a 1 million user increase in the last 30 days and nearly a 10 million increase from a year ago, according to the company website.

Last month, Blockchain.inforaised $40 million in a fresh round of funding,securing the largest Series B by a bitcoin firm in 2017. The investment, the company claims, is also the single biggest investment in the fintech space in the post-Brexit economy. The second round of Blockchains institutional funding was led by European venture capital firm Lakestar and GV, formerly Google Ventures, the venture capital arm of Alphabet Inc., Googles parent company. Industry investor DCG (Digital Currency Group) and Nokota Management participated. As did existing investors in billionaire Richard Branson, Lightspeed, Mosaic and Virgin, among others.

No doubt the meteoric rise in bitcoins price is drawing more attention, which is likely encouraging more users.Bitcoin has been on a historic tear in 2017. After ringing in the year at $1,000 on Jan. 1, the price reached an all-time high of $3,000 in mid-June.

The growth in user interest can also be explained by Donald Trumps election, and Brexit. After these two events, many people decided to turn to bitcoin in order to hedge against economic instability.

The remarkable rise amid an overall boom period for cryptocurrencies has drawn skepticism from some observers who have pointed to inflated values amid accusations of a bubble. Others are looking at more bullish gains.

Also read: Bitcoin could hit near $4,000: Goldman Sachs chief analyst

In a note sent to clients, Sheba Jafari Goldman Sachs head of technical strategy predicted bitcoin to climb higher, ultimately getting near $4,000.

Jafari, who was persuaded into covering bitcoin by Goldman Sachs clients recently, sees the current corrective course to tread longer with upward gains to be the ultimate outcome.

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Bitcoin is Growing in Value and Users ; Factors toward $4000? - CryptoCoinsNews

No Regulations, No Problem. Colombia Looking to Tax Bitcoin Users

As previously reported by CCN, the Superintendencia de Sociedades, an organization associated with the Colombian Ministry of Commerce, has in the past announced that digital currencies arent allowed in Colombia, including bitcoin. The only valid currency in the country is the peso.

The announcement was made by Francisco Reyes Villamizar, who assured Colombians that the only entity allowed to issue money in Colombia is the Banco de la Repblica, the countrys central bank.

Now, thanks to bitcoins growing popularity, the Colombian government seemingly wants something to do with the cryptocurrency, as trading volume keeps growing, according to data from Coin.Dance,despite it lacking a legal framework in the country.

Those who invest in bitcoins, according to Colombian publication La Rpublica, need to declare their earnings because its a high-risk investment in the governments eyes. Being an investment, its taxable. Analysts the publication polled claim that the fact the government didnt release an official statement on these investments, doesnt exempt investors from declaring their earnings.

Attorney Juan Sebastin, according to PanAm post, stated that people need to report their cryptocurrency investment profits on their tax returns. Since bitcoins are a part of peoples assets, the attorney stated, they need to follow corresponding tax rules. He also claimed that the cryptocurrency raised concerns among tax authorities in other countries because its semi-anonymous nature allows people to evade paying taxes.

Moreover, bitcoin expert Johnathan Alexander Higuera, stated:

Currently, in Colombia, people are not required to report their investments or transactions in Bitcoins or any other cryptocurrency, so it can be used to evade taxes. Users can invest in this virtual currency through platforms such as Kraken, Bitstamp, Localbitcoins and Poloniex

On the other hand, director of the Colombian Bitcoin Foundation Carlos Mesa, pointed out that the Dian (Direccin de Impuestos y Aduanas Nacionales de Colombia) hasnt clarified anything and, as such, bitcoiners who do want to declare their earnings dont know how to proceed.

Nevertheless, reports suggest the Financial Superintendence of Colombia is planning on implementing tax rules over earnings generated through the sale of cryptocurrencies, despite the lack of regulations.

The Colombian government isnt the only one trying to cash in on bitcoins growing popularity, after warning people not to invest in the cryptocurrency a few years ago. As reported by CCN, the Portuguese government also wants to tax bitcoins, despite a lack of regulations in the country.

According to the countrys Ministry of Finance, as long as cryptocurrency earnings come from a professional or business activity, these should be declared and taxed. On the other hand Japan, a country that decided to legalize bitcoins, recently ended an 8% consumption tax on the cryptocurrency.

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No Regulations, No Problem. Colombia Wants to Tax Bitcoin Users - CryptoCoinsNews

When the U.S Treasury Department declared in March 2013 that exchangers and administrators of virtual currencies like Bitcoin were "money service businesses" subject to regulation under the Bank Secrecy Act, Reason's Brian Doherty issued a prescient warning.

"What the government cannot stop (and ought not try to stop) it can still interfere with, and ruin lives in the process," he wrote that May. "Those who think it necessary that Bitcoin be regulated, even if they want to be in on making the regulations as sane and harmless as possible, need to remember that every regulation has a punishment attached for violating it."

On Friday, the Treasury's Financial Crimes Enforcement Network charged Phoenix-area neurologist Peter Steinmetz with operating an unlicensed bitcoin exchange.

FinCEN alleges that Steinmetz, along with co-defendant Thomas Costanzo, "enabled their customers to exchange cash for 'virtual currencies' charging a fee for their service" without a federal or state money transmitting license in violation of the Bank Secrecy Act.

Costanzo, whose internet alias is Morpheus Titania, established a localbitcoins.com account to conduct in-person exchanges of cash for bitcoin a month after FinCEN made such exchanges without a money transmitters license a crime, according to the indictment.

While Steinmetz and Costanzo's business failed to attract federal attention for several years, Steinmetz had received $10,000 in Bitcoin funding from an anonymous donor to continue his work researching memory for the Arizona-based Barrow Neurological Institute (BNI).

"It's almost appropriate actually, that a cutting-edge method of funding is used to fund cutting-edge research," he told the Arizona Republic at the time of the donation.

A month later security arrested Steinmetz for carrying a loaded AR-15 into the Phoenix Sky Harbor airport as a protest against the TSA. BNI cut ties with him soon after.

Undercover federal agents in 2015 initiated a series of transactions with Costanzo, paying him roughly $160,000 in cash in exchange for bitcoin over two years. Agents arrested Costanzo on April 20 and got an indictment issued for Steinmetz two months later.

The indictment does not make clear what role Steinmetz played in the bitcoin-for-cash business.

Several men have already been convicted of similar offenses. In April, a New York man pleaded guilty to operating an unlicensed money transmitting business after an undercover federal agent paid him $37,000 for 37 Bitcoins. In May, Missouri tech entrepreneur Jason Klein pleaded guilty to the same crime after making several in-person cash-for-bitcoin transfers with an undercover federal agent.

There has been some legal pushback to these prosecutions.

In 2016, Florida State Circuit Judge Teresa Pooler dismissed state-level charges against Michell Espinoza for selling $1,500 worth of bitcoin to an undercover cop he met via localbitcoins.com, ruling that bitcoin did not count as a "payment instrument" under Florida law.

"Attempting to fit the sale of Bitcoin into a statutory scheme regulating money services businesses is like fitting a square peg in a round hole," Pooler wrote at the time.

Pooler's interpretation of a Florida statute is unlikely to help Steinmetz.

Making the square bitcoin peg fit into the round financial regulation hole could mean as much as five years in prison for Steinmetz. An associated conspiracy charge could cost him even more.

If convicted, Steinmetz could join the "ruined lives" of which Doherty warned.

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Phoenix Neurologist is Charged With Selling Bitcoin Without a License - Reason (blog)

Goldman Sachs is out with a call on bitcoin, and chart analyst Sheba Jafari expects the digital currency could rise as high as $3,915.

That would be 52 percent above Monday's price of about $2,567.

"The market is in wave [four] of a sequence that started in the late-'10/early-'11 lows," Jafari wrote in a Sunday report on charts for the week ahead. We are "eventually expecting one more leg higher; a 5th wave."

"From current levels, this has a minimum target that goes out to 3,212 (if equal to the length of wave I)," Jafari said. "There's potential to extend as far as 3,915 (if 1.618 times the length of wave I). It just might take time to get there."

Bitcoin three-month performance

Source: CoinDesk

Bitcoin has traded in a range between about $2,100 and $3,000 ever since hitting a record high of $3,025.47 on June 11, according to CoinDesk.

Uncertainty about the future of bitcoin itself has kept prices in check lately. Updates to the bitcoin network scheduled for release in the next several weeks could split the digital currency in two if developers don't agree on how to make the updates compatible with each other.

To be sure, Jafari said, "fourth waves tend to be messy/complex," meaning bitcoin could continue trading in a range and potentially fall close to $1,857 before recovering.

On June 12, Jafari said in a note written "due to popular demand" that she was "wary of a near-term top ahead of $3,134." She said traders should "consider re-establishing bullish exposure between $2,330 and no lower than $1,915."

After topping $3,000 for the first time on June 11, bitcoin prices fell more than $800 to a low of $2,185.96 less than a week later. However, bitcoin recovered to end the month at $2,499.98, up 7.2 percent for June and having risen 158 percent for the year so far.

The Goldman reports illustrate how mainstream Wall Street is paying much closer attention to bitcoin, despite high volatility and lack of regulation in the digital currency world. This week, bitcoin and the blockchain technology behind it made the cover of a well-respected investing magazine, Barron's.

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Goldman Sachs says bitcoin could rise another 50% - CNBC.com - CNBC