Category Archives: Observations

Bitcoin News for the week – Overstock, Ghash, and ATM in New York

If you’re keeping up with Bitcoin news, this week has been huge! Here’s a few of the stories, and my take on each:

Overstock now accepts bitcoin

The news over accepting bitcoin is a surprise, not because they are accepting it, but because it’s 6 months sooner than they had announced. Somehow they were able to work out the details with Coinbase very rapidly. It was well worth the effort as bitcoiners bought from Overstock and gave them a huge amount of exposure online.

There are rumors about NewEgg accepting bitcoin as well. Let’s see how soon that happens.

As more companies adopt bitcoin we should see higher rates of adoption among the educated and risk tolerant people. 51% attack averted had reached a critical threshold of over 40% of the computing power in the bitcoin network. If Ghash reached 51% they would have the capability of spoofing transactions in the blockchain, allowing for double spending, or charge backs. The community rallied together to make sure this didn’t happen. The question now is, how will the development community deal with this threat of centralized mining operations potentially gaining control of the network? Will it require continued vigilance of the community, or will there be a code change that prevents this from happening? Don’t know yet, but we may be hearing about this again if another mining pool gets close to 40%.

Bitcoin ATM in New York

First was Canada, then Singapore, now (maybe) New York. There is a bitcoin ATM waiting in a New York apartment for an opinion from financial regulators. There should be an update on the status of the bitcoin ATM by February.

The Singapore government provides tax guidance on bitcoin

It’s amazing that the Singapore government has provided tax guidance to Singapore businesses. They don’t treat it as money, but as a digital asset that only is taxed when traded for ‘real’ goods and services. The great news is that for the sale of virtual goods there is no tax, until the bitcoin is traded for government recognized money.

I hope this point of view is common for many more governments. This could help with adoption as businesses will be weary to adopt bitcoin if they don’t know what the regulatory landscape is for bitcoin.

This seems to be in line with the Chinese government reasoning as they don’t recognize bitcoin as money, but as an asset. Check out Bobby Lee from BTC China to learn more about this point of view.

Canadian HR software company leading in Bitcoin payroll race

I was thinking that Bitcoin could be a great way for employers to send money to employees with reduced fees, and faster and easier than ACH.

Using Bitcoin as a payment network for small businesses makes a lot of sense if they can see lower fees for paying their employees. Small business need to cut expenses, and all the better if they can save money on frequent transactions, such as paying employees.

One way that employees could benefit from Bitcoin payroll is if they were paid on a daily basis instead of the standard 2-week pay period, or sometimes monthly. If you could be paid on a daily basis, you would be getting the value of your work on the day you earned it!

It seems Wagepoint is the first in the game for Canadian companies. Hopefully it will be coming to the US soon.

Check out the press release.

Review of Ultimate Bitcoin Showdown: Schiff vs. Voorhees

I first watched this video by searching for recent Bitcoin videos on YouTube. Bitcoin has been an interest of mine recently, and it’s captured my imagination based on all the new potential it has to change society.

I’ve watched Peter Schiff on interviews on RT and other web shows, as I shared some of his views on economics, however I think he’s stuck in a framework that’s worked for him for years, but the foundations are changing. I think he senses it, but doesn’t like it, and definitely doesn’t trust it.

This video totally changed the way I view Peter, and I was very happy to learn more about Bitcoin from Erik Voorhees.

First Peter explores how Erik is using Bitcoin as a payment network. Peter expresses concern in using Bitcoin as a currency due to it’s daily volatility. Jason responds that all assets are volatile, however Bitcoin has reduced in volatility over the past four years of usage.

Peter poses several questions to Erik that are inherently flawed, and Erik attempts to answer the questions, and does so with deep understanding of the situation, however I don’t think Eric made a dent in Peter’s dense perception of the new reality that Bitcoin exposes.

Best part of the show:

Peter, you’ve got that backwards

This quote is in regard to who had the higher level of risk in Bitcoin; investors back in 2009-2010, or investors now in 2013-2014.

Peter’s thought process on the concept of risk is totally flawed.

Here’s a breakdown of Peter’s view of risk based on the examples he used in this video:

Peter repeats the mantra “Risk vs Reward”. He changes his argument from who had more risk, or potential for losing a lot of money, to the argument of who has more upside potential. He’s trying to argue one point for another, and his points are based on faulty reasoning.

Peter says that there is higher risk now than there was 4 years ago because there is less upside potential now. This doesn’t make any sense to me. Peter uses the example of someone investing $50 four years ago that is now worth a million dollars, that the risk of losing $50 four years ago is comparable to someone investing a million dollars now in Bitcoin.

The only way to make this argument logical is to use equal values of risks at the different time periods. So to properly expand on Peter’s example let’s say someone invested one million dollars four years ago in Bitcoin. There was significant risk of that person losing all of their money very quickly as Erik cited daily fluctuations in price of 100 to 300 percent. This means someone could have 99% of their investment if they sold at the wrong time four years ago. If someone were to invest one million dollars today, the fluctuations are only 5 to 25% on a daily basis, which to Erik’s point is less risky than it was back in 2009 – 2010. Peter doesn’t seem to understand this very basic concept, or he’s posing this argument to illuminate the listener on the finer points of Erik’s thoughts.

Peter’s Agenda: Gold-backed currency

Peter exposes his agenda, which is a gold-backed currency, which is flawed as demonstrated in our history. If a gold-backed currency was so great, why did the US government get away from it? Obviously a gold-backed currency didn’t serve the government’s agenda, and they had the power to get rid of the gold standard.

Centralization is the flaw

Erik exposes the weakness that gold is another form of centralization. Centralization is the inherent weakness in the current economic system. The reason that centralization is a weakness in a monetary system is that is can be confiscated by force. Governments reserve the right of force for their own benefit. This means a monetary system that seeks to be free from Government force requires decentralization so that there is no target for Government to pursue. This means that any sort of centrally-backed currency has an inherent weakness. This is not to say that Bitcoin is flawless, but it does lack the flaw of the current Government-backed monetary system, or any private physical commodity backed monetary system.

Peter misses the whole concept of value in Bitcoin. Peter, the value is in the network, and the network affect of adoption. Bitcoins can be stolen just like gold, however if Bitcoins are stolen it doesn’t compromise the value of the currency. If there was a gold-backed digital currency, and the gold is stolen, it means the digital currency loses it’s value. This is why a gold-backed digital currency is less secure than Bitcoin.

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