Category: Bitcoin

Leaked Crisis Document Confirms Mt. Gox lost 744,400 Bitcoins

A leaked document(if legitimate) entitled “Crisis Strategy Draft” has surfaced across the internet confirming that troubled Bitcoin exchange Mt. Gox has entered serious financial problems.

It states that the exchange will shut its doors for one month as part of a four-step rebranding strategy, with CEO Mark Karpeles stepping down once a suitable replacement has been found.

The exchange first entered muddy waters earlier this year when an alleged transaction bug in the Bitcoin source code caused havoc. It has only now become apparent that a massive 744,408 BTC with an estimated market value of $350 million has been skimmed by an unknown 3rd parties using this exploit. The company also has fiat liabilities of around $55 million. It’s worth noting that Mt. Gox was warned about the transaction bug, as revealed in our exclusive interview with Bitcoin developer Gregory Maxwell. They chose to ignore it which resulted in the “S**t hitting the fan”.

Although the leaked document appears genuine due to the apparent in depth financial knowledge of the exchanges current situation, it is yet unclear whether it has been internally leaked or drawn up by an external crisis management firm specialising in these type of situations.

On the face of things, Mt. Gox’s future does not look good, but one thing we do know is they they still have enough assets and liabilities to launch a new exchange as part of the four-step process as outlined.

Remaining assets and liabilities include:

  • 2,000 BTC
  • $22.4 million fiat
  • 1.1 million user database
  • High volume of trading
  • Publicity in the worlds media
  • Valuable domain names such as Bitcoins.com
  • Physical Bitcoin cafe
  • Japanese Bitcoin wallet software

 

The suggested four-step plan includes:
 

1. Reduce liabilities

The stakeholders of MtGox are not the owners, but everyone in Bitcoin. This is sad but the reality. The current situation will negatively affect everyone who owns or operates in Bitcoin. We will need to inject fresh coins inside the system in order to establish a basis to eventually clear the books by running the exchange (perhaps 200,000 coins). The costs of not doing so are incalculable at this stage.

Support from Bitcoin big players and core community – long term, high leverage:

Coins for equity, coin donations, and cash injections to buy coins at the cheap MtGox price are some options among many.

Bet on future profit to refill the lost coins – Long term, low leverage:

Regardless of malleability and regulatory issues, MtGox’s main problems are massive robbery and poor bitcoin accounting. However, the business as an exchange is highly profitable and healthy when run properly.

(Please refer to the business plan draft attached)
 

2. Shut down MtGox.com, launch new branding Big focus on the future

Letter from the CEO Admitting his errors and expressing desire to fix the situation by stepping back as a CEO. Blaming the technology implementation which was not sized and designed to deal with such level of transactions or to deal with malleability.

It’s time to step up and face reality by bringing a transition of respected advisors who will run things properly. In Japan, a CEO cannot resign until a new CEO is nominated. In that case customers knows that MtGox is still around and working, but under new management. Try to reduce the impact and raise stakeholder confidence, and eventually get Mark out. New branding, means that there are future-forward plans already in the works, and customers will see that MtGox actually has a plan in motion
 

3. 1 month transition while updating the industry

In order for stakeholders to follow up on MtGox progress, we will use SNS platforms with constant positive communications.

  • Every new milestone reached will be announced: Team members, new marketing, progress on the technology implementation etc…
  • The Customer support will stay operational to deal with people who want to have access to their account/history
  • During this period, the advisory board will be created, hopefully a new CEO can be chosen and try to reset and secure the trading engine platform. Expertise to find: Analysts, top class developers (crypto), IT security expert, marketing, Bitcoin experts, economists, execs (CFO, COO, CMO, etc)

 

4. MtGox becomes Gox

To avoid a bank run from customers, the daily amount of bitcoin and cash withdrawals will be limited. With the profit, a meticulous analysis will be made over the coming years to clean the bitcoin balance sheet while running the exchange and generating revenue to pay back stakeholders.
 
New offerings such as additional currencies, low trading fees, etc will give customers a reason to stay with MtGox.
 
The new branding is already complete, and new services such as the Bitpocket wallet are already developed and ready for deployment.
 
With a new image, team, and offering we believe that it will be a challenge, but is not impossible. The risks of not acting are incredibly large and unpredictable.

Mt. Gox Bitcoin price surges 200% amidst withdrawal rumors

Withdrawal speculation has sparked a price surge on the troubled Bitcoin exchange Mt. Gox, with the BTC/USD exchange rate reaching an all time high since forgoing transaction meltability problems.

The rumour was sparked on the popular Bitcoin reddit community board which retains over 100,000 loyal subscribers resulting in a surge in the BTC/USD price. It reached an all time high of $348.

Headquartered in Tokyo, Mt. Gox was once the most popular virtual currency exchange in the world, reporting an impressive 10,000 new user registrations per month last April.
If you’ve not been keeping up with the recent news, this success was quickly reversed with prices diving to $91.50 when user accounts were suspended. Mt. Gox blamed a transaction bug in the Bitcoin source code.

Investors and account holders have yet to receive concrete evidence that their investments are safe or even timely progress of how the company is working to fix the alleged bugs.

Is the sudden price surge a sign that the troubled exchange is once again operating as normal?

All the same, we think it’s safe to say that even if withdrawals resume, customers will no longer trust such a company with their hard-earned Bitcoins.

Author crowdfunding platform now accepting Bitcoin

Unbound, a crowdfunding platform that connects budding authors with financial backers (predominantly book enthusiasts) has begun accepting pledges through Bitcoin.

Getting a book published is every author’s dream, but in today’s modern publishing environment it’s hard for aspiring writers to receive the financial backing they need unless the book is tied to a infamous celebrity or blockbuster.

Unbound makes it possible for any author to pitch their idea to future readers in the community who can can then pledge to back the book in return for a first edition and other goodies once published.

Kieran Topping, chief technical officer at Unbound explained in a blog post that whilst virtual currencies had their risks, this new technology can bring real benefits to the publishing world due to the zero risk of chargebacks and decreased transaction fees.

Our business is books. Books have the potential to change the world. So does Bitcoin.

The freedom to financially back a project can often be a problem for international residents due to various payment restrictions. Bitcoin makes it simple, fast and painless for people across the world to make this happen with the click of a button.

The platform also hosts a wide variety of topics and categories. For example, if cryptocurrencies are your cup of tea, comedian Dominic Frisby is currently seeking funds for his new book Bitcoin – the Future of Money?. The pitch has already received over 350 pledges, you can back it here.

Dogecoin versus the Crypto-Anarchy

Dogecoin has struck a chord with mainstream users in a way that focuses on charity rather than crypto-anarchy, making it so much more attractive .

The Dogecoin Foundation is a venture designed to help empower community spirit and improve the user experience… Users can donate to various causes and development projects and be sure that their coins are going to a legitimate fund.” –Dogecoin Mission Statement.

What does the future hold for Doge?  It’s too early to project whether this phenomenon will ultimately burn out as people tire of the Doge meme, but we think you will want to be along for the ride. While the community has gained incredible momentum,  for now,  the crazy growth that has developed around it cannot be ignored.  How do you ignore something who’s level of transactions has reached a number greater or equal to that of Bitcoin transactions ? (see link) The Dogecoin subreddit is 61k subscribers strong (Bitcoin is at 104k) and growing at least three times faster.  In case anyone missed it,  a strange thing that happened in mid-January was a spike in the coin, which was the direct result of the community raising $30k for a fellow group of misfits : the Jamaican bobsled team. For approximately one 24 hour period, the volume of Dogecoin actually eclipsed Bitcoin. “So amaze, Much riches” – in the words of fellow Reddit-ers.

I am sure as were many of you, the initial common reaction to the coin started with the typical “WTF, seriously?”.  But Dogecoin has proven to posses something special: a group of incredible people enthusiastic about their cause and are truly having fun with a cryptocurrency.

It is almost a foregone conclusion that Dogecoin will eclipse Litecoin in market cap by the end of this year (if not by June). A key indicator that will draw many people in and should be mentioned is the significant mining capacity has moved from LTC to Doge. If you’re interested further, I encourage you to read Tuxedage in depth analysis of the coin-  this guy moonlights as a comedian.

A question to ask is Dogecoin a threat to Bitcoin?  Not at this moment, no, and perhaps it never will be. Today, the coin has a huge community and is under-invested in developers. But these things are reflexive; developers follow users, not vice versa.

In my personal opinion on Dogecoin is the only alt-coin that is essential to have your eye on for the time being.

Pock.io fills crypto retail gap in the UK

Cryptocurrencies are currently faced with two big problems; merchant adoption and consumer trust. But one company bridging the gap is Pock.io.

Pock.io is a startup that aims to bring stability and validity to the industry by providing a service where consumers can purchase popular gift cards from stores such as Amazon and pay with Bitcoin, Litcoin, Peercoin, Dogecoin and Maxcoin.

The gift-card digital currency market is not entirely new, California based Gyft has been the market leader in the United States but has yet to provide a service to UK consumers, leaving the gates open for new businesses to capture this market place.

Currently the range of gift-cards that can be purchased through Pock.io is limited to Amazon, Apple, iTunes, Playstation, PSN Prepaid card, Xbox gifts & subscriptions but plans for getting more retailers on board are in place for 2014.

The Bank of Montreal closes it’s vault for Bitcoin Businesses

Due to government pressure The Bank of Montreal has decided to cease providing banking services for Bitcoin-related businesses.

Paul Szczesny, chief technology officer at Bitcoin exchange Cointrader was hastily informed by the bank that it’s services would no longer be provided due to a new initiative and comments made by the finance minister, Jim Fiherty. He recently stated that digital currencies could be a threat to the current financial sector in Canada.

The 2014 Canadian federal budget may be to blame for the recent change of stance on cryptocurrencies. Threats such as laundering money through Bitcoin were highlighted, although Cointrader was and still is complying with Fintrac regulations set by the bank.

The news is disheartening as The Bank of Montreal was recognised as the last Bitcoin friendly bank for businesses, but it’s safe to say it has now also crumbled under governmental pressure and has been forced to sever it’s crypto ties.

Cointrader is now seeking to relocate their operations to a non-biased financial jurisdiction to resume trading.

Thai Bitcoin exchange resumes trading

Bitcoin.co.th, Thailands leading Bitcoin exchange has resumed trading after a shakey six months.

The exchange shut its doors to customers last July due to a lack of financial legislation to govern the trading of cryptocurrencies. This resulted in government bodies deeming Bitcoin illegal.

Although the exchange has resumed trading, there’s no plain sailing just yet. The resume comes with restrictions that limit the exchange to trading Bitcoins to and from Thai Baht only.

Multiple sources have confirmed that The Bank of Thailand is liaising with Thailand’s Ministry of Information and Communication Technology, Ministry of Finance, and the Securities and Exchange Commission Thailand before deciding the fate of the digital currency.

The progress is great news for cryptocurrencies in Asia and shows that the government along with the Bank of Thailand is working to embrace new technologies.

Bitcoin incubator leading the way for startups

Cryptocurrencies have created an entirely new economy which previously didn’t exist. For this uncharted territory to prosper investment and expert guidance is crucial.

Seedco.in is one of the businesses that is at the forefront of this fiat resistance. It helps startups find their feet and is always on the prowl to incubate future leaders in this sector.

These types of technologies create a wave of new startups looking to develop, maintain and grow companies.

Digital currency is nothing new for the tech savvy, but for your average layman it’s a whole new concept, one that will soon be learning to walk into the homes of every person on the planet. This means one thing, exponential growth and prosperity for entrepreneurs.

We spoke to the co-founder of Seedco – Eddy Travia, who is currently serving as the Chief Startup Officer to clear a few of our questions.

 

What type of Bitcoin startups are you looking to invest in?

We look for Bitcoin startups we feel have the potential to deeply transform the industry it is targeting either at a local or an international level. For example, we have invested in MexBT, bitcoin exchange to launch in Mexico very soon where it has the potential to completely change a $22bn market, the remittances market between Mexican living abroad and sending money back home. CoinSimple.co will make it very easy for merchants to add bitcoin payment processors to their online platforms, it is the kind of service that can exponentially accelerate the adoption of bitcoin. zSIM enables all mobile phones (not only smartphones) to become secure bitcoin wallets, this is another Seedcoin startup whose technology could have a massive impact, specially on the unbanked.

How much money are you looking to invest in 2014?

We raise funds and invest in bitcoin in the startups through the Seedcoin Funds, we have raised BTC2,000 for seven Seedcoin Fund I startups so far (in January 2014) and hope to raise another BTC8,000 during the remaining part of the year so BTC10,000 in total for 2014.

Do they[companies] have to be US based or World Wide?

Seedcoin is based in Hong Kong with three partners, Eddy Travia in Hong Kong, Alexis Nicosia in Singapore and Hakim Mamoni in London. Among the startups incubated so far only one has a company in the US (moved from Singapore), we do not require any specific country, startups can be established anywhere but we may advise some jurisdictions based on our experience with other Bitcoin startups established there.

What Bitcoin sector do you think needs more innovators?

Bitcoin is a very young technology so Bitcoin needs innovators in all sectors. As we have seen in the past the community works together very actively as soon as there is any potential issue putting the network at risk in any way. A multitude of new applications, new models and new services will emerge in the next few years and this is why at Seedcoin we feel excited about the prospects of the current and future startups we help developing.

How are the funded companies doing?

Great. Dealcoin (www.dealco.in) the first incubated startup, an in-person Bitcoin exchange, now offers members the choice of adding a quick deal to orders they create. The Seedcoin Fund I startups are progressing very fast, Hive (www.hivewallet.com) is now live, Hive is an extremely easy way to create, manage and secure a Bitcoin wallet. Cryptopay (www.cryptopay.me) is also live, rapidly enrolling clients in Europe. Cryptopay provides merchants in the United Kingdom and the European Union with a secure, reliable and legal way to accept Bitcoins. GoCoin (www.gocoin.com) continues to garner critical and commercial acclaim, as the leading platform for merchants to accept Bitcoin and Litecoin payments at checkout. zSIM is another transformational application for all mobile phones, making these devices secure Bitcoin wallets. CoinSimple (www.coinsimple.co) facilitates the ability of e-commerce merchants to accept bitcoins by integrating existing Bitcoin payment processors into a business owner’s online store. CoinSimple is an added layer on top of these processors, with a subscription-based SaaS solution, which allows merchants to easily switch between payment processors and maintain customer analytics in one place. BTC.sx (www.btc.sx) is a powerful trading platform that allows users to make leveraged directional orders on the value of bitcoin. The company’s impressive momentum – surpassing USD $35 million of trading – and the user base expansion by 45% since November – is a testament to its success. MexBT (www.mexbt.com) is in the midst of finalizing its state-of-the-art trading exchange platform, where the company already has a substantial presence among traders in Mexico’s OTC Bitcoin market.

You can now buy Skype credit with Bitcoin via Gyft

Gyft, a digital gift card platform that lets you buy, sell and redeem gift cards has now introduced Skype credit purchases with Bitcoins.

Gift cards can be purchased in $25 dollar amounts and are redeemable online where customers can purchase premium monthly accounts, along with accessories such as headsets and webcams.

Although relatively new, Gyft are one of the hottest startups around and are rapidly growing in popularity among the Bitcoin community. They have also received a cool $6.25M in funding since their launch.

Vinny Lingham, CEO of Gyft commented:

“We are thrilled to be able to offer an iconic brand such as Skype on our platform. We are continuing to show our market leadership in the Bitcoin space by offering more opportunities to spend Bitcoin than anyone else.”

For the uninitiated, Skype is well established, Microsoft owned Voip and Instant messaging service that in 2013 alone connected a monumental 299 million users globally.

So with Bitcoin growing exponentially throughout the world it is great that users can now chat with loved ones anywhere in the world through the cryptocurrency!

It is even more exciting to see the Bitcoin ecosystem go from strength to strength as it continues to infiltrate mainstream, longstanding services as a reputable alt-currency through services such as Gyft.

The gift card provider is not stopping anytime soon either. Just last week they added Dell to their list of corporate partners which at the time of writing also included Burger King, GAP, Amazon and Nike.

Despite Bitcoin still being a young currency, a recent survey in the UK revealed that 57% of Brits are aware of the cryptocurrency. This is great news for startups like Gyft who are helping bridge the gap between UK shoppers who are aware of Bitcoin but are not sure how how to use it to buy what they want.

With success comes powerful enemies

Bitcoin is currently being attacked by a well organised and distributed denial of service attack(DDOS), which is flooding the network with mutated transactions. It is currently unconfirmed as to who is behind the this attack and why.

That said, Max Keiser — one of america’s most outspoken political pundits has now pointed the finger at global banking superpower JPMorgan Chase & Co who coincidentally filed for a patent in the United States to develop a payment system using “virtual cash”, similar to, Bitcoin.

Are JPMorgan Chase & Co attempting to cripple Bitcoin to make way for their own **shudder** digital currency?

Max Keiser said on Twitter:

JPM was never going to ‘like’ BTC. They tried and failed to file virt. currency patent 170 X’s. Now they are attacking exchanges with DDoS.

The patent filing also made mainstream news with journalist Matthew Sparkes, Deputy Head of Technology at The Telegraph recently publishing the article “JPMorgan files patent for ‘bitcoin killer’ currency”.

So whats the motive? JPMorgan Chase & Co patent requests are uncertain, but it’s unclear why due to the lack of information at the ‘United States Patent and Trademark Office’ but it’s probably due to Bitcoin being well established.

So what do you think? Are corporate superpowers now looking to hijack and introduce their own crypo-currencies that are built from the ground up to accommodate their power hungry, profiteering and corrupted ideologies?