Category Archives: Bitcoin

Investing In Bitcoin: A Wise Choice? NPR June 16, 20175:05 AM ET. Heard on Morning Edition. Kevin Leahy. The price of bitcoin has been soaring, leading some amateur investors to jump into the virtual currency market. But even enthusiasts are worried the price surge might be a bubble about to ...

Read more:
Investing In Bitcoin: A Wise Choice? - NPR

Definition of Bitcoin

: a digital currency created for use in peer-to-peer online transactions Introduced in 2008 by a person or group using the name Satoshi Nakamoto, Bitcoin is the most prominent of a group of virtual currenciesmoney that exists mainly as computer codethat have no central issuing authority. Carter Dougherty Bitcoin is backed by no government and has a fluctuating value linked in part to a scarcity that is mathematically predetermined. Unlike other forms of digital cash, Bitcoin is truly untraceable and therefore, like cash, cannot be recovered if lost or destroyed. Glenn Zorpette; also, usually bitcoin : a unit of this currency Commercial space venture Virgin Galacticwhich announced on Nov. 22 that it would start accepting bitcoins to reserve a refundable $250,000 seat on a future tripis just the latest of many businesses that have recently embraced the decentralized virtual payment system. (At press time, 1 bitcoin was worth roughly $879.) Time

4bit + 1coin

First Known Use: 2008

What made you want to look up Bitcoin? Please tell us where you read or heard it (including the quote, if possible).

Subscribe to America's largest dictionary and get thousands more definitions and advanced searchad free!

See original here:
Bitcoin | Definition of Bitcoin by Merriam-Webster

After surging briefly to an all-time high of $3,000, bitcoin has been undergoing a dazzling reversal of late, with the digital currency on track to post its worst weekly decline in more than two years.

Bitcoin BTCUSD, -0.81% has dropped 18.5% over the past week to a value of $2,317, which would mark its steepest weekly decline since Jan. 16, 2015, according to WSJ Market Data Group. Thursdays more-than-15% drop would represent its largest one-day plunge since Jan. 14, 2015.

Put another way, bitcoin has shed more than $10 billion in market value since the start of the week, based on data from CominMarketCap, which tracks the value of digital currencies. Thats a loss just a little under Twitter Inc.s TWTR, +0.42% market cap of $12 billion.

The retreat for bitcoin, which fell to an intraday low, down about 20% at $2,076.16, also coincides with a broad selloff in the technology sector XLK, -0.45% which has finished down for four of the past five trading sessions as some of the darlings of the spaceFacebook Inc. FB, -0.30% Apple Inc. AAPL, -0.60% Amazon.com Inc. AMZN, -1.26% Netflix Inc. NFLX, -0.29% and Google-parent Alphabet Inc. GOOG, -0.89% , GOOGL, -0.80% known colloquially on Wall Street as FAANG stocks, pullback from or near record heights.

That downshift has helped to yank the Nasdaq-100 index NDX, -0.46% representing the 100 largest tech names, the Nasdaq Composite Index COMP, -0.47% the S&P 500 index SPX, -0.22% and the Dow Jones Industrial Average DJIA, -0.07% lower.

Read: MarketWatchs snapshot of the markets

Market bears have increasingly cited the up-until-now unfettered rise of both bitcoin and tech, with the heart of the digital currency, which is based on the so-called blockchain or ledger, being rooted in the very sector that has been recently getting mauled.

As an investment, separate from other fiat currencies like the dollar DXY, -0.03% or the EURUSD, +0.0718% bitcoin has benefited from its position as a decentralized currency, which also offers commodity-like elements, similar to gold GCQ7, +0.12%

But as the asset has risen, Wall Street analysts have sounded alarm bells, with Morgan Stanley as recently as this week, making the case that the cryptocurrency, which is seen as a sort of Wild West of currencies, can justifiably rise no further until its becomes more regulated.

It is not clear why cryptocurrencies are appreciating so rapidly (apart from the appreciation itself drawing in more speculation against a potentially inefficient ability to sell), Morgan Stanley warned.

Broader acceptance so far may be a while away, given the Securities and Exchange Commission in March rejecting a pair of funds that would have been underpinned by bitcoin, citing a lack of oversight and transparency.

Bitcoin and other digital currencies, including ethereum, litecoin and others, are underpinned by the so-called blockchain, which is a peer-to-peer network, or ledger, that records and verifies transactions.

Other digital currencies have been under siege as well. Ethereum, and its currency known as ether, threatening to overtake bitcoin in market value, also experiencing a sharp daily downturn, off 10.6%, according to data from digital currency site Coindesk.com. However, over the past week, ether are up 21% and has been mounting a steady ascent.

Read: How cryptocurrency ethereum looks set to overtake bitcoinin one chart

How long this slump for bitcoin, and for that matter the broader tech sector, will last is anyones guess.

However, one bitcoin watcher, Yves Lamoureux, who also predicts that one bitcoin could be worth $25,000, is near-term bearish. He predicts that bitcoin may tumble another 22% to around $1,800.

We think Bitcoin is worth more like $1,800, according to our model at this stage, and so its time to step back and stay liquid, he said.

Brian Benner contributed to this article

Originally posted here:
Bitcoin is suddenly on pace to have its worst week since 2015 - MarketWatch

If youve ever wondered what cryptocurrencies such as bitcoin, litecoin and ethereum are for, ask one of their legions of techie-libertarian fans.

And its dollars to dogecoins (yet another one) that the conversation will go something like this:

You: So whats the purpose of bitcoin?

Fan: The technology is absolutely amazing!

You: Yes, but whats it for?

Fan: Really, the blockchain technology is a total masterpiece, way ahead of its time!

You: Yes, yes, I understand that. But what is it actually for?

Fan: You dont understand! Its a completely decentralized money system! Totally revolutionary!

You: Honestly, does it have a purpose? Any purpose at all?

Fan: Its the wave of the future!

And on it will go.

$100 billion market

Cryptocurrencies, or cyber currencies, which have been in a massive financial mania until their sudden sell-off this week, have two actual uses: online gambling and money laundering. Neither is the heart of a major business model. But thats it.

And these, preposterously, are the fundamentals behind a mania that has driven these currencies up 30-fold, so that today in aggregate the market for them is a staggering $100 billion.

None of the defenders other arguments stack up.

Online currencies are hardly a store of value when they have fallen about 30% in a week.

Are they really protections against the ravages of inflation and monetary debasement imposed by wicked governments? If so, how come people who keep their money in bitcoin and ethereum and the like have experienced Weimar Republic levels of consumer price inflation just this week?

That is, after all, what it means when the price of your currency plunges. Bitcoins arent just down 30% against the dollar in the past week. Theyre down 30% against the potato, the sack of rice, the gallon of gasoline and the new car.

Pure speculation

Admittedly, before this the price of these cyber currencies had skyrocketed. Those who got in at the start of the year have turned $1 into $30. But this looks more like a speculation than a currency. And what will tomorrow bring? I have a pretty good idea how many potatoes I can buy with my dollars next week. Bitcoins? Good luck with that.

You notice, incidentally, that these bitcoiners continue to measure the market price of their beloved new currencies in terms of, er, old-fashioned U.S. dollars.

Cyber currencies may make online purchasing and international money transfers marginally more efficient in theory, but hardly in practice. Would you risk moving your money from dollars into bitcoins just to save a few percent in transaction fees? Youve seen that wiped out many times over this week just in price fluctuations.

Competition from all sides

Bitcoin, the grandaddy of them all, might at one point have claimed value as a unique entity. If it had a monopoly of the people who wanted to use a cryptocurrency so they could play online poker or finance international crime, it had some worth. Yet in the past few years, multiple competitors have erupted. There are now 25 with individual market values above $100 million, several above $1 billion. Yet all the bitcoins in the world are still valued at around $40 billion.

Fast-growing rival ethereum was worth bupkis at the start of the year. Today its valued at $31 billion, or almost 10 times as much as the company ESRT, -0.61% that owns the Empire State Building.

Preposterous? You make the call.

Continued here:
Opinion: Stay away from bitcoin it's complete garbage - MarketWatch

Bitcoin (Pending:COIN) has more than made its entrance known to businesses and investors alike. With just over 16 million coins in circulation at a current price of about $2750 per coin, BTC currently commands a market cap of over $45 billion, on par with the likes of Ford (NYSE:F), Sony (NYSE:SNE), Barclays (NYSE:BCS), Northrop Grumman (NYSE:NOC), and Activision (NASDAQ:ATVI) to name a few. It's without a doubt that Bitcoin is on the rise and is being incorporated into the investment portfolios of the bold. Bitcoin has its strong selling points, however a large point of contention is looming quite heavily over the cryptocurrency.

Currently, Bitcoin's network can only process a maximum of 7 transactions per second. In reality, the network only handles around 2 to 3 transactions per second, as 7 transactions per second is only a theoretical maximum under optimal conditions. Compare Bitcoin's limitations to VISA or PayPal. Visa handles on average around 2,000 transactions per second, with a daily peak rate of 4,000 transactions per second. VISA has a peak capacity of 56,000 transactions per second, however they never actually use more than a third of this even during peak shopping periods. PayPal handles on average 10 million transactions per day for an average of 115 transactions per second.

Additionally, bitcoin transactions are happening at an increasingly rapid rate. The estimated Daily USD Transaction Value is a good indicator of the number of transactions that occur on a daily basis, and the Daily Transaction Value has shot up to around $2 billion per 24 hours in the 2017 year, compared to the average of under $100 million per day in 2016, an increase of 2000%.

(Image Source: Blockchain.info)

Consequently, as a result of Bitcoin's relatively low maximum transaction speed and its increasing amount of daily transactions, Bitcoin keeps a large backlog of unconfirmed transactions, at one point during the week of May 18th, 2017 reaching a backlog of over 200,000 unconfirmed transactions. This is shown in the size of the mempool, which represents the summed size of the chunks that need to be mined in order to confirm the remaining transactions. The larger the mempool, the more transactions are waiting to be confirmed.

(Image Source: Blockchain.info)

With the increase in unconfirmed transactions, the cost per transaction of bitcoin has shot up. Miners, who are the ones using their computer's processing power to confirm the transactions, need an incentive to pay for electricity and hardware costs. Currently, miners are paid through a combination of Bitcoin's block reward and transaction fees. Currently, each transaction confirmed earns the miner $23. Bitcoin currently rewards 12.5 bitcoins per block, and the average number of transactions per block hangs around 2000. meaning that $17 dollars of the miner's earning for each transaction comes from the mining reward built into the system. This leaves an average cost of around $6 per transaction that users are paying the miners out of pocket for each transaction. $6 is unbelievably high, and eliminates the option of using Bitcoin for microtransactions. Who is going to buy a cup of coffee with Bitcoin when the transaction fee is more than double the cost of the drink!

The way that bitcoin mining works, miners choose which transactions to add to each block that they mine. Transaction fees are actually optional, as in users can select to pay no fee if they so choose. However paying a fee for the transaction gives incentive to the miners to process the transaction as the miner receives the payout from the fee upon completion of the block. With such a large backlog of unconfirmed transactions, users are then incentivized to add larger transaction fees so that their transaction is chosen by miners and not left to fester in the mempool. Essentially, people are willing to pay more to get their transactions confirmed faster. This upward trend in the transaction fee will only continue if the transaction speed bottleneck isn't fixed.

(Image Source: Blockchain.info)

As usage increases, these problems will only exacerbate. If bitcoin wishes to reach widespread adoption, this issue needs to be addressed. Two of the most likely possible solutions are SegWit, which stands for Segregated Witness, and Bitcoin Unlimited.

SegWit is designed to separate signature data from Bitcoin transactions. Regarding scalability, SegWit shrinks the size of each transaction, without changing the transaction size limit of 1 megabyte. This effectively increases the block size limit to around 2 to 3 megabytes per block. However, implementing SegWit requires that 95% of current miners (as in 95% of the total hash power) signals their support for SegWit. If support for SegWit is insufficient, it may result in a contentious fork where a significant part of the network switches to the new SegWit client but some decide to keep using the old one, which results in two cryptocurrencies with different sets of rules competing with each other for users. This would have a strong negative impact on the value of both the currencies. To avoid this, the developers of SegWit have set a specific rule in the software that it will only activate if it receives over 95% support from the network. SegWit has also already been implemented in various other cryptocurrencies and has a proven track record. The problem lies in that SegWit is a temporary solution. The effective increase of each blocksize to 2 to 3 megabytes will be enough for the near future but further down the line, if bitcoin continues its growth, SegWit will not be enough to support the network and congestion in the transaction pool will arise once again.

Bitcoin Unlimited on the other hand is a full node software client for the Bitcoin network. Compared to the Bitcoin Core client (which is what is currently in use) which hard codes the block size limit to 1 megabyte, Bitcoin Unlimited removes the limit and allows users to determine the block size by consensus, allowing the block size to be configured to the preferences of the majority of the miners. Implementing Bitcoin Unlimited presents its own problems, mainly in that it requires Bitcoin to undergo a hard fork, which is irreversible. This means that if any unforeseen bugs or problems arise with Bitcoin Unlimited, the network cannot be reverted back to Bitcoin Core. Unfortunately, unforeseen bugs are a very real possibility on account of the questionable track record of Bitcoin Unlimited's small development team. Currently, around 12% of the entire Bitcoin network is running Bitcoin Unlimited, and if you have been paying attention to cryptocurrency news, Bitcoin Unlimited has been targeted with DoS attacks on more than one occasion, originating from a bug in the Bitcoin Unlimited software that left an opening for the attack.

Either way, neither solution is truly permanent. As Bitcoin continues to grow, it needs to simultaneously and continuously address its need for greater scalability. Without the necessary changes, Bitcoin will eventually fall off the main stage.

I will be covering the upcoming events of August 1st in my next article.

Disclosure: I am/we are long BTC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Visit link:
Bitcoin Faces Urgent Scalability Problems - Seeking Alpha

After both hit all-time highs earlier this week, Bitcoin and Ethereum prices plummeted as much as 25% Thursday but many investors were unable to trade for much of the selloff.

Coinbase, a leading cryptocurrency exchange, confirmed that it was completely offline by 9:35 a.m., though the outage appears to have begun several hours earlier, with investors reporting problems on Twitter throughout the night. The company blamed "sustained heavy traffic," likely caused by intense Bitcoin and Ethereum trading, for crashing the Coinbase website and mobile app, which remained completely down for at least four hours.

As has become a familiar frustration to blockchain enthusiasts in recent days, Coinbase went offline at the worst possible time, just as extreme price swings in the cryptocurrencies made investors desperate to buy or sell.

Around 10 a.m. Thursday, the Bitcoin price fell as low as $2079, a more than 30% drop since breaking the $3,000 milestone last weekend (and a 19% decline in the previous 24 hours alone).

At the same time, Ethereum, a rival cryptocurrency whose eye-popping 40-fold gain this year has far outpaced Bitcoin's returns , was down as much as 25% from its price a day earlier. The Ethereum price dipped below $274, just three days after it traded above $400 for the first time.

Coinbase had a similar outage in late May while Bitcoin was trading at record highs, illustrating that new systems for trading blockchain currencies are not yet as reliable as traditional stock market exchanges a lesson a number of investors were learning the hard way, based on their tweets. (While Coinbase initially said it had restored full access to the exchange by mid-afternoon Thursday, it was still trying to repair service for at least some users after 5 p.m., according to a status report on its website.)

Bearish comments by influential investors have triggered several recent selloffs in Bitcoin and Ethereum, such as when Mark Cuban said he thought they were "in a bubble" last week. Morgan Stanley likely contributed to this week's declines by publishing a couple of research notes casting doubt on whether the surge in cryptocurrency prices is justified. "Market likely getting ahead of itself as we have not seen exponential rise in use case yet, but value is rising exponentially," Morgan Stanley analysts wrote in a note Wednesday.

That followed an even more skeptical research report the bank released a day earlier titled "Blockchain: Unchained?" "The rapid appreciation of Bitcoin and others is somewhat surprising in light of some developments that seemingly would have put downward pressure on the currency," another group of Morgan Stanley analysts wrote, citing the SEC's rejection of a Bitcoin ETF , among other factors. "Their values are too volatile and too hard to actually use for payment for most to consider them currencies," they added.

The cryptocurrencies prices bounced back later in the day. As of 6 p.m. Thursday, Bitcoin was down less than 3% and Ethereum was down just under 8% over a 24-hour period.

See original here:
Bitcoin and Ethereum Just Crashed, Taking Coinbase Down With Them - Fortune

Major Bitcoin mining hardware producer Bitmain today announced that it may launch a hard fork in August. Labeled a contingency plan, the announcement is a response to the upcoming user activated soft fork (UASF), as defined by Bitcoin Improvement Proposal 148 (BIP148) and the wipe-out risk that comes along with it.

After an initial 8 megabyte proposal, Bitcoin Classic, the Hong Kong roundtable consensus, Bitcoin Unlimited, and SegWit2x, this marks the sixth time the Chinese mining giant has announced support for a hard fork in the space of two years.

Heres what their latest proposal looks like.

On August 1st, a segment of the Bitcoin community will activate the BIP148 UASF. These users and miners will only accept Bitcoin blocks that signal support for Segregated Witness (SegWit), the protocol upgrade proposed by the Bitcoin Core development team. If, at that point, a majority of miners (by hash power) does not signal support for SegWit through BIP148, Bitcoins blockchain and currency could split in two: a coin-split.

Now, with Bitmains hard fork announcement, it seems there could be a third part to the split sort of.

Bitmain refers to its announced hard fork as a UAHF or User Activated Hard Fork. While perhaps a clever play on UASF, this is not a very accurate term because the contingency plan will actually be very explicitly activated by Bitmain and Bitmain alone.

Moreover, use of the term hard fork is questionable in this context as well. Originally, at least, the term referred to a change to the Bitcoin protocol that makes previously invalid blocks or transactions valid. But for it to be a change to theBitcoinprotocol, it arguably at the very least requires the Bitcoin ecosystem to follow these new rules.Under Bitmains own stated condition this wouldnt be the case, at least not to the full extent.

Rather, the UAHF will only be launched in response to a successful BIP148 UASF. It is thus more or less assumed that not everyone will adopt the new rules, which indeed seems likely. Technically, at least, Bitmains hard fork would be better described as the creation of an entirely new coin that shares a common history with Bitcoin.

For purposes of this article, Bitmains version of Bitcoin will be called Bitmains Bitcoin.

So what. specifically, will Bitmains Bitcoin look like?

Bitmain announced it will create Bitmains Bitcoin exactly 12 hours and 20 minutes after the UASF activation, though this is configurable. At that specific point in time, under Bitmains new rules, a block must be included in the blockchain thats bigger than one megabyte. This will automatically split the chain or create a new chain depending on how you look at it. All existing full Bitcoin nodes would reject this block and ignore this chain, and would continue to follow the chain adhering to Bitcoins current consensus rules.

From that point on, Bitmain will first mine on Bitmains Bitcoin chain privately for three days. After these three days, Bitmain will officially launch Bitmains Bitcoin to the public if three circumstances are met.

First off, the BIP148 UASF must have been successful enough to have gained significant hash rate. Second, there must be strong market demand for Bitmains Bitcoin. And third, the non-BIP148 side of the split must not be doing great, comparatively.

Then, if launched, Bitmains Bitcoin will accept bigger blocks. The statement mentions an initial limit of up to 8 megabytes, though this is slightly ambiguous as the same blog post mentions there will be no hard-coded consensus rule at all. The hardware manufacturer does add that miners should impose a soft limit of less than 2 megabytes, which is really more like a recommendation. Additionally, Bitmain writes that there will be a new protocol limit on sigops, which, in short, should counter some potential attack vectors on bigger blocks that could otherwise significantly slow down propagation times.

For the longer term, Bitmain lays out a future roadmap that includes a version of Segregated Witness, Extension Blocks, Bitcoin NG, Lumino, Schnorr signatures, Weak Blocks, and Bitcoin Unlimited-inspired base block size increases up to almost 17 megabytes in two years. Overall, this future roadmap part of the announcement does not seem very concrete yet, however.

The good news is that anyone who holds bitcoins (meaning: their private keys) at the time of a split will receive coins on both (or all) sides of the chain. In other words, you will get free "Bitmain bitcoins", which you can keep, sell or spend as long as someone is willing to accept them as payment. Bitmain will even implement replay protection on Bitmains Bitcoin, which means that there should be no risk of accidentally spending the same (copied) coin on both chains.

From a broader Bitcoin and scaling perspective, the chances of BIP148s success may have actually increased, due to this announcement. If Bitmain follows through on their blog post, it means the company will take hash power that could have otherwise frustrated the UASF off the table, to mine on Bitmains Bitcoin chain. As a result, there is a greater chance that BIP148 miners will claim the longest chain versus non-BIP148 miners, avoiding a coin-split on the original blockchain. Additionally, Bitmains blog post seems to have angered some Bitcoin users that were so far undecided, further increasing support for BIP148.

The other scaling proposal in the running is SegWit2x, which is also supported by Bitmain. SegWit2x code should, according to its timeline, be up and running before August 1st. If that deadline is met, it may or may not prevent a coin-split in the first place, depending on its compatibility with the BIP148 UASF. But since this proposal has been mostly developed in private, the status of this project as well as its (in)compatibility with Bitmains contingency plan remains largely unclear.

And of course, in the end, it's possible that neither BIP148, nor SegWit2x, nor Bitmain's Bitcoin will gain much traction. Status quo could prevail, in which case not much would change at all.

Read more:
Bitmain Responds to UASF With Another Bitcoin Hard Fork Announcement - Bitcoin Magazine

Proponents of the digital currency bitcoin frequently cite its decentralized nature as one of the primary attributes that excites them about the technology. Meanwhile, bitcoin investors are no doubt thrilled with its rapid price appreciation, which has seen it nearly triple in 2017 alone.

According to Morgan Stanley, however, the latter group may not be able to see further gains unless the former gives up some of its autonomy.

The investment bank noted that the rapid appreciation of bitcoin and other cryptocurrencies, like ethereum, had elicited many inbound phone calls to both our banks and tech teams as the gains entice prospective investors and adopters. However, it added, governmental acceptance would be required for this to further accelerate, the price of which is regulation.

Cryptocurrencies as a category recently topped $100 billion in combined market capitalization, thanks to blindingly fast surges by bitcoin and ethereum, the two largest digital currencies.

Bitcoin BTCUSD, +1.18% rose 2.4% to $2,746.83 on Tuesday; recently, it hit an all-time high above $3,000. Ethereum fell 1.7% on Tuesday, but has seen an even bigger year-to-date rise than bitcoin. Both have seen spikes in trading volume.

Both the size and speed of bitcoins recent rally, as well as the recent pullback, has some investors wondering whether a longer-term downtrend is in store, even though one metrica kind of modified P/E ratio that has been developed by analystssuggests its valuation isnt currently at an extreme.

It is not clear why cryptocurrencies are appreciating so rapidly (apart from the appreciation itself drawing in more speculation against a potentially inefficient ability to sell), Morgan Stanley wrote, though it was skeptical that further gains could continue in the current regulatory environment.

Read: Bitcoin is up over 400% in the past yearwhats stopping it from going mainstream?

The investment bank didnt specify what types of regulation might be necessary to further push bitcoin higher, noting that the specific changes needed may be different for different cryptocurrencies, all of which use blockchain technology, the centralized ledger that records all such transactions. For blockchain overall, regulators are involved and watching closely, Morgan Stanley wrote. Some have suggested privacy could be improved. Regulators are looking to have a master key so all transactions are visible to them.

Blockchains are peer-to-peer networks that record and verify transactions, and while they were designed to be openmeaning anyone could see the history of various tradessome institutions have created private blockchains that arent publicly accessible.

Bank of New York Mellon Corp. BK, +0.96% for example, developed a blockchain-based platform for U.S. Treasury bond settlement that has been running internally since March 2016. The bank was unlikely to have involved regulators given [the] internal nature of the transaction, Morgan Stanley wrote. Bank of New York Mellon is planning to roll this service out to clients, but it will have to engage in dialogues [with regulators] if moving to commercial applications.

Bank of New York Mellon didnt immediately return requests for a comment.

Talk of regulation in bitcoin comes months after the SEC back in March rejected a proposal that would have led to the creation of bitcoin-focused exchange-traded funds, the Winklevoss Bitcoin Trust, citing a lack of. The SEC has since said they would review that decision. Meanwhile, a separate proposal Grayscale Bitcoin Investment Trust to begin trading on the New York Stock Exchanges ETF platform is still under review. Both events might provide the regulatory underpinning that could further legitimize the digital currency in the eyes of investors, as well as increase its liquidity.

Read the original here:
Bitcoin needs government regulation to rise further, Morgan Stanley says - MarketWatch

New Hampshire's governor Chris Sununu (R) signed into law this month a bill that exempts "Persons who engage in the business of selling or issuing payment instruments or stored value solely in the form of convertible virtual currency or receive convertible virtual currency for transmission to another location" from the state's existing regulations on money transmitters. (They shall still be subject to the state's general consumer protection law.)

According to one of the bill's co-sponsors, and a participant in the Free State Project, Rep. Keith Ammon (R-Hillsborough Dist. 40), their intention is that the law would cover those who exchange virtual currency for U.S. dollars, since that would constitute an act of selling "convertible virtual convertible currency" since under standard definitions, "selling" means "exchanging for dollars."

Rep. Barbara Biggie (R-Hillsborough Dist. 23), a former Western Union employee and vice chair of the House Commerce and Consumer Affairs Committee, introduced the bill, which passed the New Hampshire House 185-170, and its Senate 13-10.

Ammon admits he's a little surprised it went through so smoothly, and credits the fact that in addition to Biggie. Commerce Committee chair John Hunt (R-Cheshire Dist. 11) supported the bill through committee and beyond. Two different members of the relevant Senate committee admitted publicly to being bitcoin owners.

This new law was necessary, Ammon says, because of some clumsy legislating done previously by a body whose average age is high and tech-savvy is low. That 2015 regulation put cryptocurrency businesses under the thrall of state banking authorities, which Ammon says was not its original intention. That law caused at least one bitcoin company, Poloniex, to stop doing business in the state.

And since "our governor knows we have a lot of cryptocurrency enthusiasts in the state" his signing it followed naturally, Ammon says. "We certainly don't want to put up a signal that we are hostile to a burgeoning industry. We are having issues retaining our younger workforce here because of lack of high-tech jobs."

The fact that many involved in the Free State Project were early adopters of Bitcoinand thus, if they were cold-blooded enough to not sell most of it early, could well be shockingly wealthy nowcould have interesting repercussions for New Hampshire business and politics in the future, Ammon thinks, with their newly boosted ability to "start businesses, buy properties, and donate to political campaigns."

Andrea O'Sullivan, who studies technology policy for the Mercatus Center, says in an email that "the bill is fairly unusual, and a welcome development from the perspective of the cryptocurrency industry."

"Most states that have introduced legislation," she says, "have done so in a way that would increase regulatory discretion over cryptocurrencies, rather than eliminate cryptocurrency from regs."

The Coin Center has put together a dense but informative chart on state regulatory actions affecting cryptocurrencies.

O'Sullivan points out that "states that have not introduced legislation tend to require Bitcoin businesses to follow standard money transmitter regulations. This means that Bitcoin businesses could be required to follow a separate licensing processwith all of the fees, lawyers, and compliance costs that accruefor dozens of separate states. That adds up!"

Jerry Brito, who runs Coin Center, praises New Hampshire's law as a surprising "great step in the right direction," but points out that it's not really a national game changer since any virtual currency-related business, even if based in New Hampshire, to deal with citizens of other states would have to deal with those states' "bespoke" laws regarding bitcoin and its brethren.

Brito is working with the Uniform Law Commission (an advisory body whose Uniform Commercial Code has been adopted by every state) on what he thinks would be a good model law that other states might adopt. Many of the states that have so far not unduly hobbled bitcoin businesses (such as Texas and Illinois) have done so, he notes, via policy, not codified law.

One of Brito's goals is to get across the idea that people involved in virtual currency actions who aren't acting in a custodial rolenever possessing or controlling other people's propertydon't need any new regulations at all. He's also working on moving forward a set of federal regulations regarding cryptocurrencies that will pre-empt state attempts to regulate them more harshly. That process is currently embroiled in a lawsuit from the Conference of State Bank Supervisors.

New Hampshire's Northeast neighbor New York has taken a different tack, surrounding the trading of Bitcoin (the market leader virtual currency) with a web of regulations driving some businesses out of state.

However Bitcoin-friendly this new New Hampshire law is, last year New Hampshire's legislature declined to pass a bill allowing state taxes to be paid in the digital currency. The state shot itself in the foot slightly with that choice; had it, say, taken in bitcoin for tax bills on January 1 of this year, the U.S. dollar value of that currency would have increased by around 150 180 percent.

Read the original post:
New Hampshire Exempts Bitcoin and Other Virtual Currency Businesses from Money Transmitter Regulation - Reason (blog)

Bitcoin suddenly plummeted Monday, amid increased worries that the young digital currency system is growing too quickly.

The decline came as major U.S. technology stocks fell for a second straight day on concerns that the sector has risen to unsustainable levels.

At least two major bitcoin exchanges also had problems, while a new blockchain project raised a record high level of funds Monday.

"We are seeing greed being exhibited in the open," said William Mougayar, author of "The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology. "This is not good for the overall ecosystem. Eventually, something more normal will prevail."

Bitcoin one-day performance

Source: CoinDesk

Bitcoin climbed above the psychologically key $3,000 level Sunday to hit a record high of $3,041.36, according to CoinDesk. The gains were helped by news that several major Chinese bitcoin exchanges were allowing withdrawals of the currency after a monthslong hiatus.

However, a sharp move lower Monday afternoon ET illustrated how volatile the cryptocurrency can be.

Bitcoin suddenly dropped more than 16 percent on the day to $2,532.87 before recovering slightly, CoinDesk data showed. The digital currency was trading about 11 percent lower near $2,683 as of 4:41 p.m.

Even with Monday's decline, bitcoin remained more than 150 percent higher for the year so far. The currency first topped the $2,000 level on May 20, less than four weeks ago.

See more here:
Now bitcoin is crashing along with the drop in technology stocks - CNBC