Monthly Archives: October 2014

BitFlyer Inc., a Japanese bitcoin exchange, raised 25 million yen ($236,000) from New York-based Bitcoin Opportunity Corp. to fund its overseas expansion.

The Tokyo-based exchange, which opened in April, plans to begin offerings abroad by the end of the year, according to its founder and chief executive officer Yuzo Kano. BitFlyer allows anyone with a Japanese bank account to buy and sell the coins, Japans first such service since Mt. Gox collapsed in February.

Singapore is a likely target, although nothing has been decided yet, Kano, a former Goldman Sachs Group Inc. trader, said in Oct. 9 telephone interview from Tokyo. It will have to be somewhere favorable to bitcoin, so probably not the U.S.

Japans ruling Liberal Democratic Party has taken a hands-off approach to the virtual currency which it sees aiding Prime Minister Shinzo Abes push to spur venture funding for innovation, a June report by the LDPs special committee on IT strategy shows. That contrasts with restrictions in China, Thailand and Iceland, while U.S. Department of the Treasury guidance makes it difficult for exchanges to get custodial bank accounts to hold customer funds.

Kano, who heads the Japan Authority of Digital Asset industry group, last month accompanied the head of the LDP committee charged with regulation of the currency on a trip to San Francisco and Washington, D.C., where they met with legislators and bitcoin entrepreneurs. JADA is seeking to set security standards and personal identification guidelines for bitcoin trading in the Asian nation.

The Monetary Authority of Singapore said in March it plans to issue regulations requiring facilitators of virtual currency exchanges to verify the identities of customers and report suspicious transactions to the police. The rules wont cover the safety and soundness of the intermediaries or the transactions, it said.

Mt. Gox, once the worlds largest exchange for digital-currency transactions, went offline in Tokyo on Feb. 25 after losing 850,000 bitcoins, then valued at about $473 million. The company later found 200,000 in an old-format digital wallet.

Bitcoin traded at $398.00 as of 10:21 a.m. in Tokyo today, according to Bitstamp data compiled by Bloomberg. While thats up 43 percent from this years low of $278 on Oct. 5, it traded as high as $1,132 in December.

Japan is way ahead of other countries when it comes to cooperation between bitcoin operators and regulators, which you dont see in the U.S., Europe or Singapore, Kano said.

Bitcoin Opportunity is a personal investment vehicle of Barry Silbert, who also heads New York-based brokerage SecondMarket Inc. The investments span more than 40 bitcoin companies including Coinbase, BitPay, Circle and Ripple Labs, Silbert said in an e-mailed answer to questions.

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BitFlyer Bitcoin Exchange Gets $236,000 to Expand Overseas

Bitcoin is often marketed as allowing people to be your own bank. The caveat, however, is that you have to take the responsibility worthy of a banker. It may sound simple; all it requires is to keep the private key safe, but the simplicity can be deceiving.

A Bitcoin private key is a long string of alphanumeric. They are all unique but look sort of like one another.While the entropy makes it hard to crack by random guessing, it is quite impractical to memorize for most.

Many people use paper wallets, which is the written or printed form of private keys. While this is a relatively secure way of storing the bitcoins, it is rather troublesome for those who need to spend their funds often. Many of them would rather use a third party online wallet service such as Blockchain.info, at the cost of increased risks.

The quest for paper wallet-grade security without compromising the convenience of online wallets led to what is known as hardware wallet.

Though nobody claims to be inventor of the Bitcoin hardware wallet, one of the pioneers who posited the concept is Clement Cap, a professor at University of Rostock in Prague.

In a 2011 speech, Prof. Gapdescribed the requirements of a Bitcoin hardware wallet as:

First Impression

My Trezor arrives in a square plastic-sealed box. Rip the wrapoff, you will see a sealing sticker. It has a warning message that reads: Make sure the sticker is intact before opening. Take this warning seriously because at stake is more than the 100 USD you paid for the device, but whatever amount of Bitcoin that you will trust it with.

Look at the Internet and it is not hard to get the impression that hardware wallets are reminiscent of mobile phones in the early days there seem no unified design language or standard to speak of. While some, with touch screens and wireless connections, look like smart phones, the plainness of Trezor reminds me of my first MP3 player bought over a decade ago.

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Meet Trezor, A Bitcoin Safe That Can Fit Into Your Pocket

Illustration: WIRED

New Yorks bitcoin regulations may not be as onerous as many have feared.

In a speech at Cardozo Law School in New York on Tuesday night, Benjamin Lawsky, superintendent of financial services for the state of New York, said that the state will not require digital-currency software developers to have a license, as it had previously proposed. To clarify, we do not intend to regulate software as software or software development, he said, according to Reuters. For example, a software developer who creates and provides wallet software to customers for their own use will not need a license.

The news marks a change of heart for New York State regulators, who previously proposed a far-reaching plan for a so-called BitLicense back in July. The regulations would have required bitcoin businesses to track their customers addresses, as well as the addresses of people who send their customers money. These rules would also have applied to a wide swath of bitcoin-related businesses, including online wallet companies like Blockchain and BitGo. As WIRED wrote when the license was first proposed in July, such a regulatory environment would undermine the fundamental value proposition of bitcoin, a digital currency poised to change the way money is handled both online and off.

But in his speech, according to the Wall Street Journal, Lawsky painted a picture of a much less stringent regulatory environment. The virtual currency industry is at a bit of a crossroads regarding whether it will become an important part of the future financial system, he said. Were committed to proceeding thoughtfully since virtual currency could ultimately have a number of benefits for our financial system.

Still, he acknowledged the very real need for regulating this new world of digital currency, which has also enabled hives of criminal activity, like the infamous Silk Road, to operate. Lawsky maintained that any business that wants to offer financial services using virtual currenciesbe it a bank or a startupwould have to deal with some regulatory oversight.

When it comes to safeguarding customer money at a financial company and unregulated world of caveat emptor has never been a sufficient answer, he said. And while he acknowledged that such regulations may become too onerous and costly for a startup to deal with, Lawsky said that is, quite literally, the cost of doing business in the financial services industry. We do not, for instance, let someone run a bank out of their garage, he said.

The open comment period on these regulations is expected to end this month, after which, the Department of Financial Services will release an updated version of its proposal. That, too, will be open to public comment. Suffice it to say, there is and will be a significant amount of time for stakeholders to provide input, Lawsky said.

The rest is here:
New Yorks Bitcoin Regulations May Not Kill Startups After All