Category Archives: Cryptocurrency

Trust issues plague bitcoin and other digital currencies. Licensed exchanges could change that

The U.S. has approached cryptocurrency regulation cautiously, meanwhile 80 percent of all Bitcoin volume is exchanged into and out of Chinese yuan, according to a Goldman Sachs report. Image courtesy of Zach Copley, via Flickr

Digital cryptocurrenciesincluding bitcoin and litecoin, along with dozens of othershave struggled to win mainstream acceptance in the U.S. Interest in this so-called Internet money is not going away, however, which is why regulators are developing rules that that they hope can avert a repeat of last years Mt. Gox meltdown, when the worlds largest bitcoin exchange unexpectedly shut down after losing hundreds of thousands of bitcoins in a cyber attack. The U.S. government has largely sat on the sidelines, leaving states to regulate digital cryptocurrency exchanges. The exchanges, with names such as BitPay and Coinbase, are Web sites for buying, selling and exchanging digital currency. Bitcoin and its ilk are referred to as cryptocurrencies for their use of cryptography to secure transactions and mint new virtual coins. More than a dozen states and Puerto Rico already issue licenses for bitcoin exchanges, which represent the lions share of the worlds cryptocurrency transactions. California is working out the details of its own licensing guidelines while New York States Department of Financial Services plans to finalize its BitLicense regulatory framework in the coming weeks. Other countries are likewise grappling with the legal status of such currencies. The U.K., for example, recently announced it would police digital currencies by applying antimoney laundering rules to these exchanges. Regulations are good for cryptocurrency exchanges, says Campbell Harvey, a Duke University professor of finance. The rules will lend them a sense of legitimacy that should help reduce the volatility that has kept merchants and investors out of the action. The volatility comes from people seeing virtual currency as operating just outside the law, Harvey adds. Coinbase is licensed in 16 states and claims that eight other statesincluding California and New Yorkallow access to the exchange without the need for a license. Part of Coinbases success comes from allowing investors to change U.S. dollars into bitcoins and vice versa, an important feature because of bitcoins fluctuating value. A single bitcoin is currently worth about $250; a couple of years ago they were trading at more than $1,100 apiece. Cameron and Tyler Winklevoss, venture capitalist siblings best known for their legal battle with Mark Zuckerberg over the origin of Facebook, are awaiting New Yorks licensing regulations to their Gemini Bitcoin exchange in the state. Gemini will be a place to buy and sell bitcoins, akin to the way NASDAQ lets investors trade stocks, the Winklevosses said at last months South by Southwest Interactive conference in Austin, Texas. Bitcoin is a harbinger of the cashless society that will be here by 2025, they said, adding that they believe in the cryptocurrency so much that they currently own 1 percent of the worlds more than 14 million bitcoins. Bitcoin operates on a peer-to-peer network that consists of computers run by people known as miners. Their computers are set up specifically to verify the validity of a transaction and record it in a digital public ledger system called a blockchain. The first computer to solve a cryptographic puzzle accompanying each transaction wins bitcoins for its miner. Other computers in the network check the solution, creating a redundancy designed to guard against transaction fraud. Once a transaction is entered into the blockchain ledger, it cannot be deleted or changed. The idea behind the blockchain is to prevent fraudulent transactions. And the peer-to-peer nature of the Bitcoin network means there is no bank or clearinghouse to charge a large fee per transaction. Although Apple Pay, Paypal and other digital payment services are improvements over credit cards and other online options, they are not a breakaway technology on par with the Bitcoin Network, Cameron Winklevoss said at SXSW. Regardless of such endorsements, Bitcoin exchanges continue to be a risky proposition. Start-up exchange Buttercoin will shut down on April 10 after failing to raise sufficient funding. Even high-profile financial backing from the likes of investors Y Combinator, Google Ventures and Reddit co-founder Alexis Ohanian was not enough to keep the lights on. Part of the problem is the nascent technologys history as a volatile investment as well as an enabler of anonymous cyber criminal activity, including the infamous Silk Road online market for illegal drugs. The U.S. has a lot of ground to make up if banks and businesses here want to cash in on cryptocurrency80 percent of all Bitcoin volume is exchanged into and out of Chinese yuan, according to a March 10 Goldman Sachs report. The report estimates that more than 100,000 merchants worldwideincluding Overstock.com, TigerDirect.com and Expediaaccept bitcoins as payment. A sign that these companies do not completely trust their finances to cryptocurrencies, however: many convert these payments into more stable currencies rather than hold them as bitcoins.

2015 Scientific American, a Division of Nature America, Inc.

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Cryptocurrency Exchanges Emerge as Regulators Try to Keep Up

Boston, MA (PRWEB) April 07, 2015

According to a new white paper published by New Hampshire-based e-commerce company Ziftr, merchants of all sizes can overcome common transaction problems by accepting cryptocurrency. These problems, which are often associated with credit card transactions, include:

Cryptocurrency is an emerging payment technology that benefits both consumers and merchants in many key ways, said Bob Wilkins, CEO of Ziftr. At Ziftr, were focused on bringing cryptocurrency into the mainstream with our cryptocurrency/credit card payment platform, ziftrPAY, and a suite of tools that integrate with ziftrPAY to provide the ideal shopping experience for consumers and increase profit margins for merchants.

Highlights from the Ziftr white paper:

To read the full Ziftr white paper, click here: http://bit.ly/Merchant-WP

Ziftr is currently onboarding ziftrPAY merchants, with the goal of reaching a critical mass in time for Black Friday/Cyber Monday 2015. Merchants that are interested in learning more about ziftrPAY can visit http://www.ziftrPAY.com for more information.

About Ziftr

Established in 2008 and based in Milford, New Hampshire, Ziftr is revolutionizing the online shopping experience by bringing cryptocurrency into the mainstream for both consumers and merchants. To accomplish this goal, Ziftr has developed the following tools and applications: ziftrCOIN, a digital coin that functions like a coupon; ziftrPAY, a one-stop cryptocurrency/credit card payment platform and customer loyalty program; ziftrWALLET, a multicoin digital wallet; and ziftrSHOP, a worldwide online marketplace where consumers will be able to conduct transactions using credit cards and cryptocurrency.

Ziftr is a product of myVBO, a full-service design, marketing and development company that helps businesses turn their ambitions into realities.

For more information about Ziftr, visit http://www.ziftr.com.

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Accepting Cryptocurrency Solves Common Transactions Problems for Merchants

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There are 180 internationally recognized currencies in circulation, ranging from the Samoan tala to the Burmese kyat. Just like with regular currency, there are multiple cryptocurrencies too. Because it was the first, bitcoin gets all the publicity, but it competes against dozens of aspiring alternativesone of which is litecoin.

Measured by market capitalization (or the amount of currency on the market), litecoin is the third largest cryptocurrency after bitcoin and XRP. Litecoin, like its contemporaries, functions in one sense as an online payment system. Like PayPal or a banks online network, users can use it to transfer currency to one another. Only instead of using U.S. dollars, it conducts transactions in units of litecoin. That is where litecoins similarity to most traditional currency and payment systems ends. (Related The 5 Most Important Virtual Currencies Other Than Bitcoin)

How Litecoin Is Made

Like all cryptocurrencies, litecoin is not issued by a government, which historically has been the only entity that society trusts to issue money. Instead being regulated by a Federal Reserve and coming off a press at the Bureau of Engraving and Printing, litecoins are created by the elaborate procedure called mining, which consists of processing a list of litecoin transactions. Unlike traditional currencies, the supply of litecoins is fixed. There will ultimately be only 84 million litecoins in circulation and not one more. Every 2.5 minutes (as opposed to 10 minutes for bitcoin), the litecoin network generates a what is called a blocka ledger entry of recent litecoin transactions throughout the world. And here is where litecoins inherent value derives.

The block is verified by mining software and made visible to any miner who wants to see it. Once a miner verifies it, the next block enters the chain, which is a record of every litecoin transaction, ever.

Mining for Litecoin

The incentive for mining is that the first miner to successfully verify a block is rewarded with 50 litecoins (currently valued at about $100 U.S. dollars). The number of litecoins awarded for such a task reduces with time. In October of 2015 it will be halved, and the halving will continue at regular intervals until the 84,000,000th litecoin is mined.

But could one unscrupulous miner change the block, enabling the same litecoins to be spent twice? No. The scam would be detected immediately by some other miner, anonymous to the first. The only way to truly game the system would be to get a majority of miners to agree to process the false transaction, which is practically impossible.

Mining cryptocurrency at a rate worthwhile to the miners requires ungodly processing power, courtesy of specialized hardware. To mine most cryptocurrencies, the central processing unit in your Dell Inspiron isnt anywhere near fast enough to complete the task. Which brings us to another point of differentiation for litecoins; they can be mined with ordinary off-the-shelf computers more so than other cryptocurrencies can. Although the greater a machines capacity for mining, the better the chance itll earn something of value for a miner.

What Is Litecoin Worth?

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What Is Litecoin And How Does It Work?

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