Brokers Minutes

Bitcoin News Mash-Up: UK Banks Teams Up Against Bitcoin; Netagio’s New Features; and More

UK Banks Treat Bitcoin as Threat
The British Bankers Association recently submitted a document to the Treasury’s consultation, mentioning the pros and cons of digital currencies. The document however seemed more inclined towards criticizing Bitcoin’s fundamentals which makes it a powerful tool in sponsoring drug trafficking and terrorism.
“The impact that digital currencies can have on monetary or financial stability currently is limited given the size of the digital currency market,” said the document. “However, if ‘convertible’ digital currencies were to reach mass adoption in the UK, there is a possibility this may have an increasing effect on sterling.”
You can read the full report here.

Netagio Introduces Bitcoin and Debit Card Services on Its Platform
Following the announcement of partnership with WalPay, UK-based Bitcoin exchange Netagio recently launched a new service in which customers will be able to load funds into their debit and credit cards to trade Bitcoins. “Our customers will always be our number one priority,” said Netagio CEO Simon Hamblin. “We recently expanded our order books to USD and EUR in response to customer feedback and now also offer a choice of payment methods, with our new credit and debit card payments in addition to the traditional banking payments.”
You can read the full report here.

KPMG: “Bitcoin is a threat and an opportunity for banks”
KPMG, a firm providing audit and advisory services worldwide, issued a report in which Bitcoin is identified as a threat and an opportunity for retail banks. The report, entitled “The Changing World of Money,” describes the various factors that threaten banks and, in turn, analyzes the potential of cryptocurrencies as a viable means of payment. The document reads: “The new payment systems – from PayPal to Bitcoin – are smaller organizations and react more quickly to changing trends. Banks, however, are unable to respond quickly to customer needs because the old systems, data management, increasing costs and regulations hinder its response speed.


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Robert Faiella Sentenced by the US Court for Operating an Unlicensed Money Transmitting Business



The judgment for the case is U.S. v. Faiella has been delivered by the US District Court, Southern District of New York. The Judge Jed Rakoff in Manhattan held Robert Faiella guilty as he pleaded guilty to operating an unlicensed money transmitting business. The judgment says that this Florida plumber operated an underground Bitcoin exchange selling the digital currency to users.

He used the black market website Silk Road which was shut down by the US authorities for providing platform to illicit drug peddling. The 55 year old was sentenced by the court after he pleaded guilty in September to operating an unlicensed money transfer business. His co-defendant, Charles Schrem has also been found guilty.

Interestingly, Robert Faiella received the sentence a year after prosecutors unveiled charges against him and Charlie Schrem. The Judge Rakoff sentenced Charlie Schrem in December to two years in prison for aiding and abetting an unlicensed money transmitting business. They have been found guilty of helping out Silk Road that was involved in peddling illicit goods.

The Rakoff though sentenced Charlie Schrem for two years, he found that Faiella also forfeit $950,000, deserved a harsher sentence, citing in part a prior conviction for a tax offence. He held, “He knew from his own criminal history the nature of the risk he was taking, and he knowingly assumed that risk.

Faiella must report to prison on March 3

The judgment from Rakoff came after prosecutors argued that from December 2011 to October 2013, Faiella sold Bitcoin for cash to users of Silk Road, a website that by the time authorities closed it had $200 million in drug sales. They informed that operating under the name BTCKing, he would fill user orders for Bitcoin through Schrem’s exchange, BitInstant.

The prosecutors believe that Faiella ultimately traded in over $1 million in cash. However, the lawyers defending Faiella claim that he was a licensed plumber and his crimes were motivated by a desperate financial situation amid job and medical problems. Faiella claimed that at the time of the offence, he saw no other way.

Informing the media assistant US Attorney Alexander Wilson said Faiella had many opportunities to stop his criminal activity; however, he continued, even after Silk Road was shut down. He said that Faiella must report to prison on March 3. Some other culprits like Ulbricht, 30, faces seven counts including narcotics trafficking conspiracy.

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Bill Gates says that if Bitcoin supporters are excited about the potential of the digital currency systems like these as a way to keep fees low and have the system work robustly in the global sense, they should know this won’t be the dominant system. He was talking at the occasion of the promotion for his Annual Letter.

Putting his views on Bitcoin Bill Gates said, “There’s a lot that Bitcoin or variants can do to make moving money between countries easier and getting fees down pretty dramatically. But Bitcoin won’t be the dominant system. When you talk about a domestic economy, you must have the idea of attributed transactions, where if you sent it to the wrong person you could actually get the transaction reversed.”

He further added, “A traditional system doesn’t have this huge fluctuation where the value of your account is going up and down by a factor of two. We need things that draw on the revolution of Bitcoin, but Bitcoin alone is not good enough.” Nonetheless, the critical views from Bill Gates have received mixed reactions from stakeholders.

Bitcoin Could be the Easiest Way to Transfer Money

Bill Gates is not new to Bitcoin. His views about the digital currency have been around for quite some time. He appreciates the revolutionary technology and says that the need to move money from place to place – the cost to do so: the overhead, as anyone puts it – makes him think, believe it or not, of Bitcoin.

According to Bill Gates he believes that some people saying that Bitcoin is the answer to those problems sound right as well. He says that Bitcoin is exciting because it shows how cheap it can be. Also, Bitcoin is better than currency in that anyone does not have to be physically in the same place and of course for large transactions currency can get pretty inconvenient.
Talking about the digital currency Bill Gates says that the customers he is talking about aren’t trying to be anonymous.

In fact, they are willing to be known, so the Bitcoin technology is key, and everyone could add to it or could build a similar technology where there’s enough attribution that people feel comfortable this is nothing to do with terrorism or any money laundering.


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BitFury to Acquire Allied Control, a top immersion cooling company




Valery Vavilov, the CEO of BitFury has announced that his company is acquiring Allied Control, a top immersion cooling company. At the occasion he said, “We are very excited about Allied Control and its founders joining our team. This acquisition will enable us to substantially increase energy efficiency of our data centers and speed up deployment of our new ASIC chip.”

He further added that this will allow to lower overall capital expenditure and provide an opportunity for BitFury to enter new markets such as HPC, using the experience of the Allied Control team. According to him the use of immersion cooling will provide BitFury with flexibility when choosing locations for its data centers.

Talking about Blockchain technology the BitFury CEO says that he sees the infrastructure that has been built up around it as amazing with endless opportunities. He admits that BitFury is making some moves to be able to make transaction processing (mining) more efficient and widespread beyond just making faster chips.

The acquisition of Allied Control according to him will enable his company to substantially increase energy efficiency of its data centers and speed up deployment of the new ASIC chip allowing to lower overall capital expenditure. Also, it provides an opportunity for the company to enter new markets such as HPC, using the experience of the Allied Control team.

The Excellent Technology Will Help BitFury Get Efficiency

Valery Vavilov says that the use of immersion cooling will provide BitFury with flexibility when choosing locations for our data centers. Currently, Allied Control uses 2 phase immersion cooling which according to experts is a viable technology for meeting the power density and energy efficiency needs of the high-performance computing market.

Here power densities up to 100 times higher than a typical air cooled server have been cooled this way with efficiency superior to direct water cooling. Nonetheless, in a two-phase immersion cooled system, electronic components are submerged in a bath of dielectric heat transfer liquids, which are much better heat conductors than air, water or oil.

Thus, with excellent cooling solution BitFury will be able to take current and next gen transaction processing ASICs and drive them to more efficient speeds. According to Valery the next generation chip was close but would not say how close or divulge theoretical specs yet but will let me know as soon as he is ready.


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Alpha 8 Released by Darkwallet, Brings Additional Features




Darkwallet, an open source Bitcoin wallet that provides a solid foundation of well designed asynchronous code for scalability, has now released Alpha 8. This makes it easier to transact with Bitcoin anonymously and real cash withdrawals into the wallet comfortable. The organization says that the new update will bring many improvements to the Darkwallet.
For instance with Alpha 8 the users will get experimental ATM tool/fast cash out module. Now on history will be cached on the wallet. Additionally, the users will get improved broadcaster feedback and overhauled general gateway status. The company informs that it brings unlimited storage for the plugin as well.

Darkwallet informs that Alpha 8 has compatibility fixes for ed25519 communications. Elaborating further the organization says the ATM Tool brings attractive features; the most popular new feature is the fast cash withdrawal module as it is expected to aid in the execution of a lot of strategies.

For instance, it will allow the users to own and hold their Bitcoin, not to hold them at exchanges, but in the user’s device. Similarly, users can now eliminate the speculation around the centralization of funds in such entities, as well as fraud and thefts and compete with traditional exchange houses.

Nonetheless, Alpha 8 has legal conditions without bindings. It has become a standard through open source so anyone can rapidly adapt to its decentralized technology. Regarding ‘Cached History’ the organization informs that the main advantage of a history cache in a Bitcoin wallet would be an increase in efficiency.

Transparency in the Transactions

According to the organization not only will the wallet be faster, there will also be finer control over unconfirmed transactions, and people will have tabs in which they can clear and rebroadcast unconfirmed transactions. It has also brought in ‘New Blockchain server’ which is a new version of the server is imminent after near a year of work.

According to Darkwallet this integrates the research and development of custom databases and a re-organization of the entire Cache Clearproject and code, so developers can better collaborate. Additionally, it says that it has also removed all OpenSSL code and reduced many external dependencies.

The organization says that the command line tool BX (formerly SX) now uses a framework for auto-generating code for sub-commands, which means easier and more consistent development. Nonetheless, it is the option for many Bitcoin users who are looking for increased security when they send Bitcoin to other people.


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Californian Regulators: “Coinbase is not regulated or licensed”



The Californian Department of Business Oversight (DBO) recently issued a press statement where it denied offering Coinbase any kind of business license status to operate in California.

The press release was in response to Coinbase website which openly proclaims itself to have been offering bitcoin trading services in California.
This particular claim was further channeled on different media reports which, as of now, seems shady. Here is an excerpt from the note:

“Numerous press accounts about Coinbase’s Jan. 26 launch of Coinbase Exchange erroneously reported the Exchange has received regulatory approval from the State of California. The California Department of Business Oversight has not decided whether to regulate virtual currency transactions, or the businesses that arrange such transactions, under the state’s Money Transmission Act. California consumers should be aware Coinbase Exchange is not regulated or licensed by the State.”

A representative from the company told coindesk.com that states like New York and California are currently working on their own Bitcoin regulations. “They exist in a regulatory grey zone”, he commented.

He further added that Coinbase is in touch with the concerned authorities.

From the way it looks, Coinbase might have received a Money Transmitter License but Bitcoin must not have been a part of it. This is by far the best case scenario.



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DigitalBTC Dissolves Supply Agreement with CloudHashing





A leading Bitcoin company in Australia, DigitalBTC says that it has dissolved a supply agreement with cloud mining service CloudHashing. The agreement according to the company was signed in March wherein CloudHashing was to run DigitalBTC hardware in data centers in Iceland and Texas to mine Bitcoin.

The abrupt decision from the company according to a source has been communicated to the Australian Securities Exchange (ASX) wherein it states that the two companies agree to dissolve the supply deal. DigitalBTC informs that under the settlement, CloudHashing’s shares in it are to be cancelled. The decision was taken unanimously by the management board of the company.
According to the announcement from DigitalBTC, “The settlement agreement stipulates that 8,276,465 ordinary shares in the company (4.9% of the issued capital) are to be cancelled for nil consideration, delivering a net benefit to all remaining shareholders by reducing the total number of ordinary shares on issue.”

The company further informs media that in addition, 3,742,520 Performance Rights issued to CloudHashing under the previous supply agreement are to be cancelled as well. Like DigitalBTC, CloudHashing too informed its customers about the buyback plan in an email sent on 29th January wherein it elaborated the issue.
CloudHashing says, “We have some important information for you about your CloudHashing service. Please visit [our website] and login to view your account message. For a limited period only CloudHashing is offering to purchase your Bitcoin mining contract. This offer expires in 10 days. Please log into your account to view this offer.”

The Partnership that could not be worked out

The latest update is that when the customers log in they are presented with a choice of keeping their contracts with an increased management fees, or selling them back to the company. On the other hand, DigitalBTC’s management board unanimously recommended that all shareholder vote in favor of the proposal.

Their decision was inspired from the fact that it would deliver an increase in value per share for remaining shareholders. The company made it clear that the buyback will not require any payments on to CloudHashing. Also, it had managed mining operations without any input from CloudHashing from mid-2014.

DigitalBTC clarified that it has not used CloudHashing for over six months, it’s just taken time to settle the agreement. The company had no choice but to terminate the partnership as key outcomes from the strategic agreement in March 2014 did not eventuate.

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Last 24 hours in the cryptocurrency market have been quite positive as Bitcoin attempted yet another rebound, thus escaping from the possible double-bottom scenario it was exposed to last week.

BTC/USD 4H BitFinex Chart

Without denying the long-term bearish trend of Bitcoin market, the price is simply reimbursing itself for now so as to recover near-term losses. For most of the weekend, it was inside a oversold area for quite a long time (below the green Bollinger band threshold around 222) and the current upswing seems nothing but price correction.

As you can see the 4H BitFinex chart above, we have drawn two pink trend lines – one indicating a downtrend from the peak, while other the uptrend from the bottom. If you zoom in, you will see them intersecting each other at 266 – an area where price consolidated sideways for a brief time before crashing to 222. We believe that any upward rally would need to break above 266 to establish a near-term bullish swing, sighting an upside risk towards 315 (notice the pink trend line towards north).
Similarly, the pink trend line to the downside is indicating a double bottom scenario toward 165-175 area. This is the same area which incited the previous rally towards 315 last month. For now, price seems to more focused on testing the double bottoms, as per the technical indicators.

The 4H chart shows price to be below the long-term SMAs, while the RSI is still below 50. At the same time, the MACD indicator is way below the normal threshold. These signals collaboratively indicate a strong, and long, bearish presence in the market.

Other Cryptocurrency

While Bitcoin is rebounding, the other cryptocurrency are still looking forward to react to it. In over the last 24 hours, altcoins including Litecoin and Peercoin have fallen 5-6% while NXT and Dogecoin by 0.5-1%. In the meantime, only Darkcoin has impressed with a whopping surge of around 10%.


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Russian Bank Suspends Money Withdrawal Process

The growing financial epidemic of Russian banking system further intensified last week when a local bank – SB Bank of Russia – stopped cash withdrawal process, barring customers from obtaining their own money. The Russian Central Bank is now deciding whether to revoke the license or create a rescue plan for SB Bank.

Austria’s Third Largest Bank Suffers Free Fall

The third largest bank in Austria is scaring investors. Following the decision of the National Bank of Switzerland to eliminate parity with the Euro, the event has brought have revived concerns for Raiffeisen Bank mortgages denominated in Swiss francs, which has resulted in the collapse of the bank bonds (have fallen from more than 95 c to 65 c during the second half of January).

UK: Falling Oil Price Cause Economy Billions

British banks, including Royal Bank of Scotland and Barclays, are on the verge of losing billions after a considerable increase in loans garbage to the oil industry. According to Chirantan Barua, Bernstein Research Analyst, it is likely that a long period of cheap oil caused widespread defaults. Now the combined losses of Barclays, RBS, HSBC and Standard Chartered would amount to US $3400 million if the drop doesn’t come to halt itself.

Singapore Dollar Weakened

After relaxing its monetary policy by manipulating the exchange rate, the monetary authorities of Singapore ended up weakening the Singapore Dollar against the US Dollar. The SGD has now dropped to a level not seen since 2010. In this way, the country joins the world’s major central banks in their effort to “stimulate the growth of the economy”.


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Payments Platform Adyen Integrates with BitPay




Adyen, the leading technology provider powering payments for global commerce in the 21st century, announces that it has integrated with the world’s leading Bitcoin payment processor BitPay. The partnership according to some observers will open up the possibility for Facebook, Spotify, Ryanair and thousands of other merchants using Adyen to accept Bitcoin.

Moreover, as more than 3,500 merchants around the world use Adyen to process transactions, including four of the five largest US internet companies, the scope for expansion of the digital currency to the new companies is possible. Also, with companies like Facebook, if decide to embrace Bitcoin, the digital currency will be extremely successful.

Talking to media professionals Sonny Singh, chief commercial officer at BitPay said that it is such a great partnership. According to him Adyen’s focus on e-commerce is perfect for Bitcoin. Nonetheless, he believes that it means firms don’t need to overcome the integration issues with Bitcoin as it will now be already included in their existing infrastructure.

Adyen says that with a seamless solution for mobile, online and in-store transactions, its technology enables merchants to accept almost any type of payment, anywhere in the world. Nonetheless, the UK-based games developer Jagex will be the first to enable Bitcoin payments for its customers through Adyen.

The company clears that BitPay integration will mean any merchant using the platform will be able to easily allow Bitcoin payments in the future. Also, as the understanding has been developed between the two companies that a major US-based firm will follow in Jagex’s lead by accepting Bitcoin in the coming months through Adyen, the digital currency will expand further.

Roelant Prins, chief commercial officer at Adyen says that interest in Bitcoin continues to grow among merchants and as a business focused on merchant needs; it is excited to give merchants the ability to securely accept Bitcoin payments, alongside over 250 payment methods and 187 transaction currencies that it currently offers.

Acceptance of Bitcoin Expanding

BitPay which has become one of the most reliable payment processor offering its services to companies like Microsoft, WordPress, Gyft and Virgin Galactic also showed its happiness about the latest partnership. When Microsoft announced the last year that it was embracing Bitcoin, it was one of the biggest news for Bitcoin ecosystem.

Tony Gallippi, BitPay’s Co-founder and Executive Chairman says that merchants choosing Adyen and BitPay will receive all the advantages of working with a stable, scalable payments platform, where Bitcoin is seamlessly integrated into the Adyen payments flow, reporting, and settlement.


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