Free Bitcoins for Playing Minecraft

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Thursday, May 30, 2013


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Enjoy! You can use these every 30 minutes, don't forget to donate so we can finally open our Faucet!

Tuesday, May 7, 2013



Yeah, a server hosted, provably fair, Minecraft server with a custo mtexture pack and BTC applicable. You can bet mBTC (using the free 5 you get) or deposit. The minimum withdrawal is 5 mBTC, so after you get it, you can just withdraw and leave. Withdraws and deposits are instant so no need to wait. The games that this server has range from Blackjack to Pig Racing bets. Please give it a try by going clicking on this banner here or at the top of the main website:  

Monday, May 6, 2013


Yes, we have achieved enough donations and with the help of my friend, lordsonkit with the coding, the faucet has finally been established. You can now input your Bitcoin Address, if you don't have one visit to create a free bitcoin address, and recieve some Bitcoins every 24 hours. The deposits are done manually, so no need to worry about exploiting the system ;). Thank you for your continued support, hopefully with enough traffic, we will have enough visitors to update the site to a more stable and professional domain. Keep on visiting the blog for more tips and trick on Bitcoins!
If you like our work, please tip any amount of Bitcoin to show your support through out Bitcoin Donation button here:

Sunday, May 5, 2013

The Craze on Mining Bitcoin


The world's first ASIC-based miner, via Avalon

With the price of bitcoins skyrocketing, mining is suddenly big business, so enticingly big that one wannabe miner was willing to pay a 1,333 percent premium to get his (or her) foot in the door of this wildly lucrative bitcoin bonanza. Ladies and gentlemen, welcome to the bitcoin gold rush.

The craziest part? This wasn’t an auction for a physical, working, ready-to-ship bitcoin mining machine from Avalon, which claims to be the first to develop turnkey, bitcoin-specific mining computers for sale. For $20,600 (bidding started at a reasonable $500), the lucky winner only received a place in line and the promise that an actual (pre-ordered) miner will be delivered sometime next month. If that sounds ridiculous, well, it’s because it quite possibly is.

But clearly there are bitcoin-savvy folks betting that paying 13 times the price of a machine will actually pay off. How did we arrive at this maniacal juncture? Was it greed? Stupidity? Or simple mathematics? For the full story, we’ll have to start from the top.

How bitcoin mining works

In order to keep a record of everything, bitcoin has a ledger known as the “block chain,” a shared database of all successful transactions. Every transaction that occurs must be broadcast to the bitcoin network and everyone connected to the bitcoin network has a copy of the block chain.

Click to enlarge: How bitcoin works, by Joshua J. Romero, Brandon Palacio & Karlssonwilker Inc.

The purpose of bitcoin miners is to verify these transactions and then add groups of transactions, called blocks, to the block chain. This process occurs roughly every 10 minutes. For every block added, the successful miner receives a certain amount of bitcoins for his troubles, plus transaction fees. The reward started out at 50 bitcoins, but it's cut in half every 4 years. Right now, you get get 25 bitcoins for every block mined.

Anyone can technically become a miner. The software is ready to download, all you have to do is contribute raw computing power, which means your main recurring costs are electricity bills. If you solve the next block, the spoils are yours. The more processing power at your disposal, the greater your mining ability.

But here’s the kicker. Built into the model is a “difficulty” metric, which is recalculated whenever 2016 blocks are added. As the speed of mining goes up (as more processing power is added to the system), the difficulty will increase proportionately to compensate in order to maintain the rate of one block every 10 minutes.

Mining difficulty increases at a predictable rate, via bitcoinX

What this means is that your ability to mine bitcoins isn’t necessarily about absolute computing power, but rather your computing power relative to other mines. Of course, in the end, that still means you’re going to want the most powerful hardware possible if you want to maximize your mining ability. But it also means that if you don’t keep pace, you’re going to be left behind. Which brings us to...

A brief history of mining hardware

Back in 2009, when Satoshi Nakamoto first birthed bitcoin, mining difficulty was relatively low, which meant that anyone could download the software and more or less start mining with only their CPU.

The next logical step was the GPU, dedicated graphics chips usually reserved for gaming. A graphics card from the likes of Nvidia or ATI offered a significant boost over Intel and AMD CPUs. For about $150, you could buy an off-the-shelf graphics card and start a fairly profitable mining business in mid-2011.

Mining profitability over time, via CoinLab

As more miners joined the party, difficulty increased, making the profit to power consumption ratio unpalatable for those used to a higher rate of return. Bitcoin's price collapse in July of 2011 only exacerbated the situation. Even if you believed in the future of bitcoin, if you spent more on your electric bill than you made from mining, you were better off just buying bitcoins.

This initiated the advent of FPGA, or field-programmable gate array, use in mining. That's a mouthful for the technical layman, but all you really need to know is that these add-on cards, which cost in the hundreds of dollars, offered comparable mining performance to GPUs while using way less power. Better energy efficiency meant higher profit margins. Eventually, any self-respecting miner was FPGA-equipped.

A mining rig hooked up with 41 Icarus FPGAs, via Xiangfu Liu

The endgame, however, was always going to be the ASIC, an application-specific integrated circuit–in other words, a chip designed from the ground up for the specific purpose of mining bitcoins. The result is a system that is not only incredibly powerful compared to anything else, it’s also exceedingly energy efficient.

ASIC also represents the theoretical limit on the hardware capabilities of mining equipment. Sure, you could keep shrinking the die-size of the chip so that it uses even less power, but even that road eventually ends. It’s simple physics: things can only get so small. Until quantum computing arrives–if it ever does–for bitcoin miners, using ASICs is the way to go.

For a while, the bitcoin ASIC was a pipe dream. Designing and manufacturing your own chip requires significant upfront investment. With bitcoin’s future still uncertain, many figured FPGAs would be the best hardware miners ever got. Then, last summer, a company called Butterfly Labsstarted taking pre-orders for fully functional ASIC systems for $1,299 and promised to ship in October. Another company, bASIC, started taking pre-orders soon after.

As with most things bitcoin in these early days, the whole ordeal was contrasted by wild enthusiasm and lingering fear, uncertainty, and doubt. The guys from bASIC ended up running with the money (although it appears they have been attempting to give partial refunds). Meanwhile, Butterfly Labs, after numerous delays, has still yet to ship anything, although it’s generally believed that they eventually will.

Avalon's ASIC chips

Only one company followed through. Avalon started taking orders in September, promising delivery sometime in February. That first batch of 300 pre-orders sold out within hours. By the end of January, Avalon shipped their first two units from China just before the new year's festivities, effectively becoming the world’s first ever company to produce an ASIC bitcoin miner. ASICminer, another major developer went online in February as well, although these units were never sold to the public (but you can buy shares in the company). A new era had begun.

Where we are today

Remember, the ability to mine bitcoins is based on relative computing power. As such, whoever got their hands on those first ASIC machines–which are roughly 50 times more powerful than the next best thing–would quite literally print money. That lucky man was Jeff Garzik, who was incidentally pushed to the front of the queue by Avalon for being a core bitcoin developer. It’s an open source project after all. (The other unit went to the Bitcoin Foundation.)

Garzik made back the cost of the $1,299 ASIC bitcoin miner in about a week. The remaining units from batch one were delivered by the end of February.

Having gained some credibility and silenced the trolls, Avalon started accepting orders for batch two, which totaled 600 units at a cost of $1,499 each. Batch two pre-orders sold out within 20 minutes. Those units are scheduled to complete shipping by the first week of April. But while miners in batch two will still do well for themselves, they’ll be doing less well than batch two over time as difficulty inevitably ramps up.

Which finally brings us back to our exuberant eBayer, the one who paid over $20,000 to cut in line and join the other batch two early birds. Is the worm really worth an $18,500 premium? Only time will tell. But if the price of bitcoin continues its meteoric rise, he too, will eventually mine his money back, sooner rather than later. Under current conditions, he'll break even in 50 days, with daily revenues of $434.12, according to BitcoinX. All things considered, not too bad. Granted, it's impossible to know how bitcoin will perform in that time.

The arrival of ASIC-miners, in graph form, via

We do know however, that he'll be in for some stiff competition and with it, the reality of diminishing returns as more ASIC units flood the system. Butterfly Labs–rumored to have sold over 20,000 pre-orders as of a month ago–is expected to start shipping in May or June. Still chugging along, Avalon revealed it would start taking orders for batch three in the next few days.

This time around, one of the 600 Avalon miners will cost ~75 BTC (the batch three price of the systems will be calculated so that break even point will be 30 days, once the difficulty resets), which comes out to over $5000 with bitcoins trading at ~$70.

If that seems pricey–it is nearly five times the price of an identical unit from batch two–it’s still only a fraction of the market value. And really, there are few other businesses whose start-up costs are designed to break even in just a month. Such is the insanity of bitcoin mania.

Saturday, May 4, 2013

Can the Bitcoin Craze Outlast Looming Hurdles?

News from Fox News suggests that Bitcoin could become the new default currency. Find out more by reading this.


Riding the Cyprus bailout wave, Bitcoin catapulted into the financial spotlight this year, but the turbulent virtual currency still faces daunting regulatory, security and infrastructure challenges.

As the debate over the future of this decentralized digital currency rages on, scary meltdowns, alarming cyber attacks and lingering skepticism have clouded its prospects.

Still, it’s clear that Bitcoin has captivated the minds of libertarians, economists and investors alike.

“We continue to believe that this phenomenon is the most provocative economic experiment since the invention of the euro and well worth watching,” Nicholas Colas, chief market strategist at ConvergEx, wrote in a recent note.

Founded in 2009 as an open-source software code, Bitcoin has exploded beyond $1 billion in value this year. Despite its young age, the cyber currency has benefited from growing doubt about the future of traditional currencies amid ultra-aggressive monetary policy and about the safety of bank deposits following the controversial “bail in” of depositors in Cyprus.

'White-Knuckle Ride'

Bitcoin users can deposit local currency and then use those funds to buy Bitcoins at a rate that fluctuates with the market.

However, unlike traditional fiat currencies that are controlled by central bankers, Bitcoin is highly decentralized as its circulation expands at a predictable and limited rate. It also markets itself as untraceable, although that feature is coming under regulatory pressure amid concerns it could be used for nefarious purposes such as to finance terrorism.

Bitcoin’s value has skyrocketed, but it has also experienced more volatility than any reliable currency should ever experience.

Since trading at just $20 at the start of the year, Bitcoin rode a wave of enthusiasm beyond $260. However, a high-profile meltdown last month caused by heavy trading and a cyber attack wiped out nearly 80% of the currency’s value, prompting a 12-hour shutdown on one major exchange.

“Investing in Bitcoin has been a white-knuckle ride so far, and nothing in its near future points to a different trajectory,” Colas said.

Could the U.S. Ban Bitcoin?

The biggest obstacle facing Bitcoin in the medium term appears to be on the legal front.

So far the U.S. has said little about Bitcoin, with only the Treasury Department indicating rules that force money-service businesses to track transactions do indeed apply to virtual currencies.

"Bitcoin is to money what Amazon is to retail or Netflix is to video content."

- Nicholas Colas of ConvergEx

Future regulation could severely restrict or even ban the use of Bitcoin in the U.S.

“National governments do not have a history of condoning unofficial currencies,” said Darrell Duffie, a finance professor at Stanford University. “If it were ever to become popular enough to begin acting like a serious alternative currency, I believe the authorities would step in.”

Duffie said Bitcoin could potentially fall under the Stamp Payments Act of 1862, which prohibits issuing notes for less than $1 that are intended to circulate as money.

“Previous case law has suggested that courts are willing to tolerate private currency so long as they do not attempt to replace the official currency. Bitcoin supporters envision Bitcoin as a global digital currency,” said Duffie.

Some feared Treasury was going to move to wipe out Bitcoin earlier this year.

“I did think there was a chance the U.S. would ban it. They chose the wiser choice: to regulate it,” said Daniel Friedberg, a financial-services attorney at Seattle law firm Graham & Dunn who has a Bitcoin client base.

Money-Laundering Concerns

Peter Dugas, director of government affairs at the law firm Clark Hill, said Bitcoin will continue to reside in a legal “gray area” until the U.S. issues further guidance.

As U.S. regulators remain bogged down with the implementation of the Dodd-Frank financial overhaul, it remains unclear whether the government will choose to regulate Bitcoin as a currency, a commodity or perhaps something in between.

While Bitcoin’s $1 billion outstanding is just a drop in the $4 trillion global currency market, Dugas said the “biggest concern” is whether the virtual currency is exploited for terrorism or money-laundering purposes.

“I can see [Bitcoin's] desire to remain faceless, but the realities of the global financial system are not such. There are entities out there that are going to use this for nefarious reasons,” said Dugas. “In my opinion, it would be smart for them to engage on that process early on to educate the regulators.”

Colas urged Bitcoin to convince global charities to use the virtual currency for donations and money transfers, giving regulators a reason to think twice about excessive regulation or a ban.

“That move alone would begin to remove the ‘Cokehead currency’ imprimatur which Bitcoin still struggles to overcome,” Colas said.

Will 'Smart Money' Now Embrace Bitcoin?

Some of Bitcoin’s security and legitimacy problems could be eased by future investment from venture-capital firms. An influx of cash could allow exchanges like Mt. Gox to upgrade their systems, limiting the number of scary meltdowns and cyber attacks.

VC cash could also be used to help finance service offerings for both individuals and businesses.

In recent weeks, Bitcoin startups like Coinsetter, which is devising a foreign exchange trading platform for the currency, have raised significant amounts of money from VC firms.

BitInstant, an online service that lets users convert dollars into Bitcoins, had been shunned by traditional investors in 2011, but is now in talks about a round of financing that would value the company in the “tens of millions,” according to tech blog Mashable.

Digital wallet startup Coinbase has also raised $600,000 from a number of VC firms, Mashable reported.

“Bitcoin is to money what Amazon (AMZN) is to retail or Netflix (NFLX) is to video content -- a much more efficient way to meet the needs of millions of people around the world," Colas said.

Competition in the Virtual Currency Space

It’s also possible that Bitcoin will be passed over by a new virtual currency just as previously popular currencies e-gold and Liberty dollar were.

One new virtual currency gaining attention is Ripple, which was created by OpenCoin and landed seed money from VC giant Andreessen Horowitz.

“I think virtual currency is here to stay. But I don’t know which of these virtual currencies will ultimately be the winner or if it will be Bitcoin,” said Friedberg.

Even some supporters of alternative currencies are skeptical about Bitcoin’s ability to thrive as a currency, especially given its lack of transparency.

“People are saying, 'We can’t trust the banks. Let’s go to the Internet.' In principle that’s a great idea, but Bitcoin may not be the best place to put your money,” said Jacqui Dunne, co-author of Rethinking Money: How New Currencies Turn Scarcity Into Prosperity.

Dunne believes Bitcoin, given its wild price swings, is more of a tool for speculation than a currency. “The trouble with Bitcoin is nobody knows what’s going on underneath the hood,” she said.

Given the looming legal challenges and persistent suspicion, it seems that the next few quarters will be critical in determining the future of Bitcoin.

“It could all still end in tears, either by regulation or mismanagement. But Bitcoin isn’t dead just yet, and it remains one of the most potentially disruptive forces in modern finance,” Colas said.

How to start Mining Bitcoins

One of the biggest problems I ran into when I was looking to start mining Bitcoin for investment and profit was most of the sites were written for the advanced user. I am not a professional coder, I have no experience with Ubuntu, Linux and minimal experience with Mac. So, this is for the individual or group that wants to get started the easy way.

First thing you need to do is get a “Bitcoin Wallet”. Because Bitcoin is an internet based currency, you need a place to keep your Bitcoins. Got to and download the Bitcoin client for your Operating System. Install it the client will begin to download the blockchain. Downloading the blockchain can take a long time and will be over 6GB of data. If you have data caps, I would recommend ordering a copy of the blockchain on DVD to keep from going over as it is growing exponentially. Click toorder the bitcoin blockchain by mail. Once the client is up to date, click “New” to get your wallet address. It will be a long sequence of letters and numbers. One of most important things you can do is make sure you have a copy of the wallet.dat file on a thumb drive and print a copy out and keep it in a safe location. You can view a tutorial on how to create a secure wallet by clicking the link on the top of the page. The reason is that if you computer crashes and you do not have a copy of your wallet.dat file, you will lose all of your Bitcoins. They won’t go to someone else, they will disappear forever. It is like burning cash.

Now that you have a wallet and the client, you are probably roaring to go, but if you actually want to make Bitcoin (money), you probably need to join a pool. A pool is a group that combines their computing power to make more Bitcoins. The reason you shouldn’t go it alone is that Bitcoins are awarded in blocks, usually 50 at a time, and unless you get extremely lucky, you will not be getting any of those coins. In a pool, you are given smaller and easier algorithms to solve and all of your combined work will make you more likely to solve the bigger algorithm and earn Bitcoins that are spread out throughout the pool based on your contribution. Basically, you will make a more consistent amount of Bitcoins and will be more likely to receive a good return on your investment.

The pool that I’m involved in is called Slush’s Pool so I will be giving instructions on how to join there but feel free to look at other options. Follow the link to go to their site and click the “Sign up here” link at the top of their site and follow their step by step instructions. After you have your account set up, you will need to add a “Worker”. Basically, for every miner that you have running, you will need to have a worker ID so the pool can keep track of your contributions.

Most of the mining programs out there are pretty complicated to setup and will frustrate your average user. Recently a great program has come out to get the most basic of users started. The program is called GUIMiner. Click the link and download the program (Be careful, some of the ads are set up to look like the file download). Install and run the program and add in your information from Slush’s Pool. Remember that the user name is actually the worker name. The worker name will be your user name, dot, worker ID (username.worker ID) and the password from that worker ID.

Now that you are set up you can start mining. If you feel like you want to make more Bitcoins, you might want to invest in mining hardware.


Friday, May 3, 2013

About this blog

I intend to host this blog to help new users admire and join us in the Bitcoin (BTC) world. I got into BTC from faucets who were kind enough to give away free small amounts, and I wish to give back to the internet! Through donations, eventually I will have enough BTC to give back. This website will also teach you about BTC, and suggest some working faucets to use like I did. If you have any questions, please feel free to contact me via Thank you for visiting and please donate if you can. I am only trying to give what I was given.

Bookmark this Page!

Thanks for visiting my FREE BTC Faucet. At the moment, we do not have the necessary funds to distribute BTC to all, and everyone that requests some. We have almost reached our goal amounts and we can reach them quicker if you turn off adblocker! If you would like to donate any amount click this counter and it will donate to our address automatically!

           Yes, you read the title correctly. You can earn free BTC just by chatting on a free online chatroom. There are no ads, and making an account is fairly simple. There is a 33% chance that you are awarded a reward of .01 mBTC. There is an even lower chance to be awarded .02 mBTC. The minimum withdrawal is 10 mBTC, which may seem like a lot, but if you enjoy the chatroom for what it is-- a chat room-- you will see the mBTC scores rise up in no time. Besides the awesome BTC reward the community is great and you have the freedom of creating your own personal rooms. If you are reading this and cannot believe your eyes, here is the link for you to finally enjoy for yourself at the CoinChat. Be weary of the rules, however, the main chat room does not allow spam, heavy cursing, NSFW links, and advertising. Advertising can be done in the #coinurl room, which you will learn more about when you join the site. Good luck and happy chatting!

What is Bitcoin?

Bitcoin (BTC) is a digital currency first described in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system. Bitcoin creation and transfer is based on an open sourcecryptographic protocol and is not managed by any central authority. Each bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places. Bitcoins can be transferred through a computer or smartphonewithout an intermediate financial institution.

The processing of bitcoin transactions is automated by servers called bitcoin miners. These servers communicate over an internet-based network and confirm transactions by adding them to a ledger which is updated and archived periodically. In addition to archiving transactions each new ledger update creates some newly-minted bitcoins. The number of new bitcoins created in each update is halved every 4 years until the year 2140 where this number will round down to zero. At that time no more bitcoins will be added into circulation and the total number of bitcoins will top out at 21 million bitcoins.

Bitcoin is accepted in trade by various merchants and individuals in many parts of the world. A large share of such commercial use is believed to be for illicit drug and gambling transactions. Although bitcoin is promoted as a digital currency, many commentators have criticized Bitcoin's volatile market value, relatively inflexible supply, and minimal use in trade.


How to run a bitcoin cash exchange for fun and profit

Why to run a cash exchange?

For extra side income, of course! There are definitely already some people earning money by exchanging bitcoins. Also if you are already invested in bitcoin in a way or other, cash exchanges make it easier for people to obtain bitcoins or get rid of them, when they need. Good liquidity helps people to trust bitcoin more, and the more people trust in bitcoin, the more they will value them.

If you work for example in an internet-enabled cafe, it is pretty easy to do bitcoin exchange as a side-job.

Also, even when you are not able to turn out profit, with cash you can probably buy or sell bitcoins directly between users, without fees.
Is there market/demand?

Depends where you live and what kind of contacts do you have. In many countries, it is really cumbersome, slow and/or expensive to send money from other countries. By starting a local cash exchange, you can basically compete with companies like Western Union by offering alternative methods for transmitting money internationally.

Some people appreciate the privacy that cash exchanges offer. Buying a small amount of bitcoins with cash is also a great way get started with bitcoins.


With, it is really easy to create profitable and competitive pricing strategy. For example, you could use pricing strategy like this:
Selling: mtgoxUSD_ask * 1.05
Buying: mtgoxUSD_bid * 0.95

More complex example:
Selling equation: (mtgoxEUR_ask + intrsngEUR_ask + EUR_24h ) / 3 * 1.05
Selling equation #2: max(max(mtgoxUSD, bitstampUSD), USD_24h)
Buying equation: (mtgoxEUR_low + intrsngEUR_low + EUR_24h ) / 3

As parameters you can use any currency averages from, for example USD_30d, EUR_24h, SEK_7d. Also market data can be used by combining the market like mtgoxUSD and a parameter like ask, bid, low, high and close.

We also have currency exchange rates for all the currencies listed (from USD): USD_in_EUR, USD_in_PHP, USD_in_RUB and so on. They are fetched from

Instant transactions

You can use the transaction service to speed up the trading process. It also nicely removes the need for devices for buyer - just confirmation code is needed.

One way for instant transactions is for both participants to use web based online wallets such as

If traders are using different wallet software, you can use for checking the confirmations. Mobile usage is cumbersome, but works.
What if I run out of bitcoins/what if I buy too much bitcoins?

You can always resort to a real exchange in a case like that! Of course, you need bank account for this, and you might need to deposit some cash into your bank account. Alternatively you can use otc marketplaces such as, and

You can also reflect the demand situation in your pricing. For example, if there is lots of demand, and less sellers, you could use buying price like USD_24h*0.99 and selling price like USD_24h*1.10.

Thursday, May 2, 2013

Unbelievable! Bitcoin blamed for drug run

The police’s economic crimes unit arrested on Tuesday 30 suspects they say ran an online drug distribution network, producing the illegal substances and selling them via “Darknet,” law enforcement officials announced.

“Darknet” is a general term used to describe file-sharing and other Internet sites where private IP addresses are not used, making it very difficult for users to be traced. Such sites have been used to share child pornography and by criminals in the drug trade as well as by dissident movements that want to prevent their online usage from being tracked by governments.

Police said that over the past few months, they’ve run an undercover investigation against the network, making purchases of drugs online.

Police said the drugs bought online were part of a network that shipped them to a kiosk in Tel Aviv, from where they were distributed around the city and beyond.

Police said that they believe the system may have made use of “bitcoins”, the peer-topeer digital currency. Bitcoins aren’t controlled or regulated by any country or company, and the difficulty in tracing their use has made them popular for online drug purchases and other illicit activities.

On Tuesday, police raided the homes of suspects who they say included those who ran the website and were responsible for the sales and supply side of the drug network.


Bitcoin from a bankers perspective

Check out what a banker has to say about Bitcoins.

"Let me know your opinion, it's your Bitcoin!
First I think Bitcoin is a great concept that is sorely needed in today’s Global – Fast moving internet economy. I am personally a true fan of Bitcoin of its openness and transparency. My family and I sit on the board of directors of 4 small – medium sized private banks. Over the past couple of months as the big hoopla over Bitcoin has garnered worldwide media attention, I decided to bring up the Bitcoin concept up for discussion.
I know that Bitcoiners everywhere believe that the Banks are scared of Bitcoin and are out to crush it; however, nothing could be further from the truth. Bankers are businessmen and run the Bank as a business and as any other business with profits being the goal while providing services for a fee to their customer’s base. The recent shutdown of accounts related to Bitcoin exchanges were not caused by the Banks not wanting competition from Bitcoin as an alternative, but by the burdensome regulation imposed by mostly western Governments that we all elected and put in place. A Bank wants to simply take your money, and provide credit to others to use your money to fund their home, car, business, etc… there is no big mystery or conspiracy behind it. They just don’t want to get fined by not complying with the AML/KYC bylaws.
HSBC was recently fined $1.9 Billion just for that. Now maybe HSBC as one of the world largest banks can handle a $1.9 Billion fine, but most banks would collapse. Bitcoin solves many issues on a global scale providing the ability to move “currency” for almost no fees, everywhere in seconds, don’t you think that’s a Bankers wet dream not being tied to the slow moving Swift system where everyone and their mother takes a cut from a simple wire. It’s not even worth it to wire anything less than $1000 due to those high fees. So people go to WU (Still expansive compared to Bitcoin) and send money that way bypassing the Banks.
I would personally love to setup a Virtual Exchange account in one of our banks and have recently discussed that options with the Board of Directors, but the same thing that happened to bitfloor and Bitcoin-24 would eventually happen to this account. Our bank will need to shut it down due to the influx of unaccounted funds. If the bank can’t have a nice and neat paper trail of the funds then they will not be in compliance with AML/KYC and face fines. So their quickest solution is to freeze the account and refund the money a.s.a.p. They can’t take the risk of fines that these relatively small account of the exchange would cost the bank and their other customers and shareholders.
So let’s cut the banks a break and really dive down to the core issue that Bitcoin is facing: Fiat to Bitcoin and back to Fiat. A real Fiat Bank from scratch should be setup by Bitcoin users, miners, merchants and developers for the purpose of doing business in Bitcoin and exclusively to Virtual Currencies. That way we eliminate the risk of your everyday bank customer from being exposed to the Bitcoin Bank. The Bank will comply with all AML/KYC regulations and open individual and corporate accounts to customers separately, not just one exchange account as we have today. If there is an issue with one account, only that account is dealt with not freezing all other accounts. Any account holder would transfer funds from their existing Bank account to their Bitcoin bank personal account. An escrow exchange clearing account can be setup to transfer funds in and out internally within the bank for executed trades between buyers and sellers of Bitcoin on the exchange open market. So your money will be in your personal private account and not in a here today gone tomorrow exchange account that has thousands of exchange customers funds tied up together with your money.
So if the Bitcoin community chooses to look at Bitcoin as a long term solution and not as a quick get rich scheme then the only viable long term solution for the success of Bitcoin is for members to join forces and form the First true Bitcoin-Fiat Bank. Serious replies only.
I would recommend opening a Bank in one of the few Bank Friendly nations like Panama. You could still receive a Banking license for a $3 Million Security Deposit. It requires Class B license to be authorized to do business with clients from all over the world, not including Panama.
The Idea of this thread is to measure the community's reaction and feedback to a such a proposal, would there be support or opposition to forming a Community Non For Profit Bank that exclusively caters to the Virtual Currency economy?
Just Revised: We could use the open Bitcoin idea, where all Bank account holders can view all other account numbers funds available and transactions, but without the Account's Holder's name.. may be an interesting new open concept in Banking. What do you think?
TLDR: Reposted from user:doyourduty below:
1) OP comes from a family of bankers
2) Banks aren't afraid of bitcoin, they love the idea of it. The KYC/AML laws are the problem.
3) Too many unaccounted for funds can cause a huge penalty
4) Main problem is bitcoin<-->fiat
5) OP's Solution: An international bitcoin bank in panama where fraudulent activity within a specific account could be dealt with individually instead of screwing everyone (i.e. bitfloor, bitcoin-24)
6) A personal bank account, with online access would be opened in your name, a debit/visa/mc would be issued and you and only you would have control and access to this account
7) Internal bank exchange from BTC to your currency would be performed instantly with other bank account holders though an escrow instant account to provide anonymity.
8) The Bank will act as any other bank as far as Fiat is concerned but will also provide you with the option to convert your Currency into BTC at any time from multiple open exchanges that will open accounts with the bank."

Wednesday, May 1, 2013

What you need to know about Bitcoin

I know a posted a similar article already, but this is interesting coming from a nother perspective.

By Sarah E. Needleman and Spencer E. Ante
Bitcoin startups are beginning to raise sizable investment capital even as industry leaders warn that hackers are abusing the Internet virtual currency for profit. Supporters of Bitcoin say it offers anonymity and a cheap way to transact business across borders. But critics say Bitcoin faces so many regulatory and technical hurdles it will never mature into a mainstream currency. Here’s what you need to know:

What is Bitcoin?

It’s a virtual form of currency that can be used to make payments over the Internet without transaction fees or involving a financial institution. Each Bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places.

Where does it come from?
Bitcoin was created in 2009 by a person or group that goes by the name Satoshi Nakamoto. A 2008 paper written by Nakamoto proposed the creation of a “peer-to-peer electronic cash system” that would allow online payments to be sent directly from one party to another without going through a financial institution. Instead of a trusted third party like a bank, Bitcoin creates trust through a cryptographic system.

How is it made?
Like gold, no central bank controls Bitcoin currency so governments can’t print or mint more of it. Using computers and complex software, people can “mine” Bitcoins by solving complex mathematical problems. If they solve the problem, they get Bitcoin. But since the process is so difficult most people just buy Bitcoin from various exchanges popping up.

How does the system work?
The problem that Bitcoin aimed to solve was that the person using a virtual currency can’t verify that one of the owners did not double spend the coin. Bitcoin’s answer involves a lot of complex math and software but the essence is that the system publicly records all transactions with a timestamp, which lets participants to agree on a single history of the order in which they were received. The first transaction is the real one.

How safe is it?
Nakamoto wrote in his paper that the system is secure “as long as the honest nodes collectively control more [computing] power than any cooperating group of attacker nodes.” In 2010, there was bug in the Bitcoin code that allowed someone to create a fake transaction. But the problem was identified and resolved. There have been reports of other incidents as well. The chief scientist of Bitcoin said that the chances of a major breach are decreasing over time as the system and software matures. The chances of the types of breaches we saw in 2010 happening again are very small, he added.

Is there an unlimited supply of Bitcoin?
No. The anonymous creator of the currency capped the number of total possible Bitcoins at 21 million. Since 2009, nearly half of them, or 11.1 million have been mined and put into circulation. The cap on Bitcoin has attracted the interest of some investors who believe that the fixed supply will lead to an increase in the price of Bitcoin over time.

What can you buy with Bitcoin?
A growing list of online merchants is accepting them, including the content-aggregation site and dating site Some bricks-and-mortar businesses are taking them, too. You can also use them as form of currency to pay people for goods and services. The relative anonymity of Bitcoin has attracted criminal elements to the system, say some experts

Where can I get Bitcoin?
You can buy Bitcoins from online exchanges like the Japanese site You can also buy them from sites like, which also allows users to store Bitcoins in a virtual wallet and pay merchants for goods or services with Bitcoins. Virtual exchanges typically charge a fee of 1% or less to convert traditional currency into Bitcoins and vice versa.

How much is it?
Since the system is new and has been vulnerable to Internet attackers, the value of the Bitcoin has been very volatile. Bitcoin rose in value from roughly $5 in June 2012 to a high of $266 in April and was down to about $108 on Tuesday, according to date from the Mt. Gox exchange.

Is Bitcoin the only virtual currency on the Web?
No. There are others, such as Ripple, a new currency from a startup called