Australia to sell bitcoins confiscated as proceeds of crime

Australia to sell bitcoins confiscated as proceeds of crime

In this April 7, 2014 file photo, Bitcoin logos are displayed at the Inside Bitcoins conference and trade show in New York. About $13 million in bitcoins will be auctioned in Sydney in June after Australian police confiscated the digital currency as proceeds of crime, an official said Tuesday, May 31, 2016. (AP Photo/Mark Lennihan, File)

CANBERRA, Australia - About $13 million in bitcoins will be auctioned in Sydney in June after Australian police confiscated the digital currency as proceeds of crime, an official said Tuesday.

Ernst & Young was running the process, which is only the second such bitcoin auction in the world after the U.S. Marshals Service sold 144,000 bitcoins over a two-year period that had been confiscated from Ross Ulbricht, who founded the online drug bazaar Silk Road, the accountancy firm's transaction partner Adam Nikitins said.

Bidders can register until June 7 for the 24,518 bitcoins on offer. The 48-hour sealed auction will take place from June 20.

Based on Tuesday's bitcoin price of $533.80, the cryptocurrency is valued at almost $13.1 million.

Nikitins expects strong interest in the auction since the bitcoin price has become less volatile after the U.S. auctions. Ernst & Young has received expressions of interest from the United States, Europe and Australia, he said.

"Over the last few months, the price of bitcoins has been steadily rising and the volatility has gone out of it," said Nikitins, adding that was expected to lead to greater interest.

Nikitins would not say who the bitcoins were confiscated from, but said registered bidders would be told.

The Victoria state government has confirmed that is had seized about 24,500 bitcoins in late 2013 from a Melbourne drug dealer.

Richard Pollard, 32, was sentenced in the Melbourne County Court in October to 11 years in prison after pleading guilty to drug trafficking on the Silk Road website.

Ulbricht, 32, was sentenced in the U.S. District Court in May last year to life in prison after he was convicted of charges accusing him of operating the website for nearly three years from 2011 until his 2013 arrest.

Like the U.S. auction, the Australian bitcoins will be mostly sold in lots of 2,000. One lot will contain 2,518.

Bitcoin is a digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties. The coins are created by users who "mine" them by lending computing power to verify other users' transactions, receiving bitcoins in exchange.

Bitcoins also can be bought and sold on exchanges with U.S. dollars and other currencies. Their value has fluctuated over time. At its height in late 2013, a single bitcoin was valued above $1,100.

source: www.winnipegfreepress.com

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Why I’m buying bitcoins

Why I’m buying bitcoins

Bitcoin has already had one boom and bust – it may be about to have another

If I were to tell you that gold miners or oil producers were about to cut their production in half, would that make you more or less bullish on gold and oil? More bullish of course. That’s exactly what’s about to happen to bitcoin, the digital currency.

Currently, 25 bitcoins are created every ten minutes. On 11 July, this number will drop to 12.5. Then, four years after that, it will half again. Why is this happening? There are roughly 15.5 million bitcoins in existence and the halving process means that the total can never exceed 21 million, expected to occur roughly a century from now. That’s all locked down in the code.

Limited supply is a powerful force, and making bitcoins scarce was a key feature of its design – and a key difference between bitcoin and normal, “fiat” currency, which can be printed in unlimited amounts.

Many people buy bitcoin purely for speculation – betting on the price going up. But they’ll only be proved right if others buy it for its utility. You can almost think of bitcoin as a social media stock. The more people who use it, the more valuable it becomes. But what, for the uninitiated, exactly is bitcoin? Quite simply, it is a digital asset that can be freely transferred across the internet. It doesn’t exist in physical form, there’s just a reference to your holding stored on a public ledger known as the blockchain.

This differs from a traditional database in crucial ways. With a traditional database, you dive inside, open a drawer, change the data, and then close it again. Both the buyer and seller must do this in addition to the exchange, clearers and other intermediaries. With all those different parties involved, there’s plenty of room for error in the settlement system.

With a blockchain, on the other hand, the transaction is recorded onto a new data layer known as a block. That block will never change and a new block is created every ten minutes. The data is stored in a chain of blocks, which is why it’s known as a blockchain – a common mistake is to assume that a bitcoin has a serial number. It doesn’t. Instead, it has provenance.

When you transact, the system checks that your bitcoins haven’t already been spent. It does this by examining the blockchain, which is where a bitcoin’s transaction history is stored. There are more than 5,000 identical copies of the blockchain and anyone can download it and examine the data. It’s truly open source.

Bitcoin chart

Although bitcoin is still somewhat experimental, the digital currency has survived without a glitch since 2009. And each new day that it survives, it quashes a few more doubters. It’s growing in popularity – already there are more than 200,000 transactions a day. That’s small compared to Visa, but the bulls are betting it will go mainstream.

As the chart above shows, bitcoin has already had one boom and bust – the price rose from less than $1 to $1,000 in late 2013, then crashed to around $200 by summer 2015. But the bear has now turned and the price is challenging $500. There’s less hype this time, and the capital investment behind the scenes is huge. The network is growing and supply is falling.

So as far as I’m concerned, you should treat this as a cheap growth stock. At $450, the “network value” of bitcoin is around $7bn. If it goes mainstream, it’ll give the FANGs (Facebook, Amazon, Netflix and Google) a run for their money.


source: www.moneyweek.com

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Miami money-laundering case may define whether Bitcoin is really money

Miami money-laundering case may define whether Bitcoin is really money.

Michell Espinoza is asking a judge to throw out criminal charges against him

He argues that the virtual currency is not actual money under Florida law

The case, believed to be the first of its kind, is being closely watched

Michell Espinoza is all smiles in Miami-Dade circuit court on Friday as his lawyers sought to persuade a judge to dismiss money laundering charges against him. He is accused of illegal dealings in the virtual currency known as Bitcoin. David Ovalle Miami Herald

In a Miami money-laundering case that is being closely watched around the world, an economics professor took to the witness stand Friday to offer a tutorial on the widely known, if poorly understood, virtual currency known as Bitcoin.

The takeaway: Bitcoin isn’t really money, professor Charles Evans said.

No central government or bank backs Bitcoin, like the United States does the dollar. Government regulation of Bitcoin remains a messy hodgepodge from state to state, country to country. The IRS considers Bitcoin deals no more than bartering, he said.

“Basically, it’s poker chips that people are willing to buy from you,” said Evans, a Barry University economics professor who, yes, was paid $3,000 worth of Bitcoins for his appearance as a defense witness.

Attorney Frank Andrew Prieto held up a 1966 U.S. quarter. “Is Bitcoin an actual coin?”

“In a sense of a physical piece of base metal?” Evans said. “No.”

The hearing unfolded in the case of Michell Espinoza, who is accused of illegally selling and laundering $1,500 worth of Bitcoins to undercover detectives who claimed they wanted to use them to buy stolen credit card numbers.

His lawyers, Prieto and Rene Palomino, are asking a court to dismiss the case against him, arguing that Bitcoin isn’t technically money under Florida law so laundering charges don’t apply. Miami-Dade Circuit Judge Teresa Mary Pooler won’t decide for a few more weeks, but listened intently Friday, peppering Evans with questions and asking for more time to research.

“This is the most fascinating thing I’ve heard in this courtroom in a long time,” Pooler said.

The prosecution of Espinoza is being watched closely, especially in financial and tech circles, because it is believed to be the first money-laundering case against someone for dealing in Bitcoins. As the currency has gained in popularity, law enforcement has struggled to figure out how it fits into illegal activities.

The controversial virtual currency allows some users to spend money anonymously, and can also be bought and sold on exchanges with U.S. dollars and other currencies. The virtual currency has gained popularity with merchants selling legitimate goods and services.

n Miami, there are a few restaurants that accept the virtual currency, and so does a plastic surgeon, which means someone can get a Bitcoin butt lift.

Regulated services such as CoinBank, which operates similar to PayPal, allow people to buy, sell and use the Bitcoins. But authorities have raised concerns about the currency being used in the anonymous black market.

Most notoriously, Bitcoins were used to traffic drugs in the now shuttered Silk Road network. In an unrelated South Florida case, a Miramar man got 10 years in prison after using Bitcoins to buy Chinese-made synthetic heroin from a Canadian prisoner.

In the Miami case, prosecutors said that Espinoza — who used the moniker MichellHack — illegally sold undercover investigators $1,500 in Bitcoins. Espinoza, 32, designs websites for businesses.

The officers found him through a Bitcoin exchange site, LocalBitcoins.com, and told him they were going to use the currency to purchase stolen credit card numbers.

The detectives met with Espinoza three times in person: on Lincoln Road, at an ice-cream shop and at a hotel room.

Espinoza was arrested along with another man, Pascal Reid, who pleaded guilty to acting as an unlicensed money broker and was sentenced to probation. Under his unusual plea deal, he agreed to teach law enforcement about Bitcoin.

Evans was the one doing the teaching in court on Friday.

He said he has been involved in “virtual currencies” since they first began popping up in rudimentary forms in the 1990s, through the dot.com boom to the rise in Bitcoins several years ago. He also runs a nonprofit called Conscious Entrepreneurship Foundation, aimed at helping small businesses in developing countries.

Indeed, Bitcoin use is increasing in places such as Africa, where the “banking system is broken,” Evans said. He also said the market for Bitcoin can vary — on Friday, one Bitcoin was worth $473.

He likened Bitcoin worth to how collectors assign values to baseball cards, or comic books.

Prosecutor Tom Haggerty, trying to show that Bitcoins are essentially the same as cash, pointed out that Bitcoins can now be used at some restaurants.

“You don’t purchase a hamburger with a comic book,” Haggerty said. “You usually purchase it with cash, or in this case, a Bitcoin.”


source: www.miamiherald.com

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Dude bins hard drive containing $67,000 in bitcoins

Dude bins hard drive containing $67,000 in bitcoins.

A blunder has seen a bounty of bitcoins binned

HAVING A BAD DAY? Forget it, fool, as some chap in America has accidentally thrown away a hard drive with enough bitcoins on it to buy an extravagant car or a whole load of top-of-the-range Apple watches.

Reddit user 'me_is_idiot' told his sorry tale in a post on the site and elicited a lot of sympathy. It is no wonder. What he did is a blunder that should give anyone a sinking feeling in the tummy department.

"This FU started around six years ago when I was a poor college student. I came across this thing called bitcoin, and people were giving them away for free on some websites," he said.

"Everything I read about them said they were going to be the next big thing. Awesome, I'll get myself some of those. Over the course of one semester I'd got around 150 bitcoins, which at the time was worth around $11. What a waste of fucking time!"

Eventually he forgot about the coins, and presumably stopped reading anything about the value and status of bitcoins. He left himself a note about the existence of the virtual money, but clearly had other things on his mind.

"These bitcoins were stored on my laptop. I upgraded my laptop the following semester with more RAM and a bigger superfast 7200 HDD. I wrote a little sarcastic note to myself about the bitcoins and folded it over my old HDD," he explained.

"That was the last time I paid any attention to bitcoin. It wasn't too long before I graduated and started to earn decent(ish) money.

"Fast forward to last month and I'm moving to a smaller apartment (more expensive area), and had to be picky about what I could take. I had an old box of PC parts. I had a quick look through and marvelled at the 256MB RAM sticks, the 40GB HDDs. I even had a few floppy disks! All of it worthless with today's hardware. So in the trash it all went."

Later he found the old note and realised his mistake. "I chuckled to myself for a split second before realising bitcoins are worth a fair bit today, at which point panic set in," he said.

The poor guy has been scratching his head and searching down the back of the armchair. But short of turning over a landfill site, he does not expect to be reunited with his thousands.

"I've been Googling for several hours but it seems I'm fucked. The bitcoins are gone! At least they weren't worth the millions that my idiotic self thought when I first found the note, but that's not much consolation," he added.

"TL;DR earned $11 worth of bitcoin, five years later threw them out when they were worth $67,000!"

source: www.theinquirer.com

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Spanish Police Seize 6 Bitcoin Mines in Crackdown on Stolen TV Content

Spanish Police Seize 6 Bitcoin Mines in Crackdown on Stolen TV Content

An investigation by Spanish authorities into the illegal distribution of paid television content has resulted in the seizure and destruction of six bitcoin mines used to launder proceeds from the alleged scheme.

European law enforcement agency Europol, which took part in the investigation, said today that 30 individuals had been arrested during an operation on 18th May. Thirty-eight homes across seven Spanish cities, including Madrid, were searched during the event, according to the agency.

According to Reuters, those operating the bitcoin mines based in Spain were stealing power to fuel those efforts, citing a statement from Spanish police. Discovery of the bitcoin mines reportedly occurred as Spanish tax authorities investigated the alleged scheme.

Mining is an energy intensive process of confirming transactions on bitcoin’s public ledger, the blockchain. Money is made when the proceeds from selling bitcoins (or other cryptocurrencies) exceeds the cost of the electricity used.

Among the items seized: roughly $35,000 in bitcoin, ten luxury vehicles and a private aircraft. Authorities also seized about 184,000 euros, as well as nearly 50,000 decoders used to access otherwise restricted TV content.

Further, a photo included with Europol’s release shows several of the machines seized from one of the mines.

Europol said that the alleged effort to distribute paid-for TV content stretched across the globe, involving decoder exporters from China as well as a network of servers based throughout Europe.

"This operation shows that these types of crimes are not left unpunished,” Michael Rauschenbach, head of serious and organized crime for Europol, said in a statement.

source: www.coindesk.com

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Bitcoin Price: The Last Time This Happened

Bitcoin Price: The Last Time This Happened, Bitcoin Prices Soared 3,950%

Bitcoins Price

Something big is about to happen to the bitcoin price, and it could send bitcoin prices through the roof. You see, this digital currency has a unique monetary policy. Bitcoins are created roughly every 10 minutes, but there can only ever be 21 million of them. The rate at which bitcoins are created will drop by half every four years until all 21 million bitcoins are in circulation.

Last time the halving event happened was in November 2012, when the price of a bitcoin was around $12.00.
Since then, the bitcoin price skyrocketed. At $473.80 apiece, the price of a bitcoin has increased by 3,950%!

The next halving event is expected to happen in less than two months. This could spark a new rally in bitcoin prices.
However, there is a major concern about the event. For the Bitcoin system to function, it relies on a group known as miners to keep processing the transactions. What is the incentive for miners? They get the new bitcoins created every 10 minutes.

Now, if the number of newly created bitcoins drops by half, miners would get fewer rewards unless the price of bitcoins doubled immediately.

Should you worry about the miners who are responsible for keeping the network running?

Well, several insiders are saying that the industry will be fine. For instance, Valery Vavilov, chief executive officer of bitcoin infrastructure provider Bitfury, said that “the profit margins will be less temporarily but we are ready for this.” (Source: “Bitcoin Production Will Drop by Half in July, How Will That Affect the Price?,” Forbes, May 24, 2016.)
Also, note that just like farmers who hedge their risk using commodity futures, bitcoin miners can do the same. 

According to Bobby Lee, chief executive officer of Bitcoin mining pool and exchange BTCC, miners “know how many Bitcoins they’re going to make over the next six months, so they pre-sell the Bitcoins at today’s price so they don’t have to worry.” (Source: Ibid.)

Recently, investment bank and asset management firm Needham & Company initiated coverage on Bitcoin Investment Trust with a “Buy” rating and a price target of $62.00. The firm values bitcoins at $655.00 apiece, representing an upside of 38.2%. (Source: “Bitcoin Undervalued by over $200, Investment Bank Reports Finds,” CoinDesk, March 29, 2016.)

source: www.profitconfidential.com

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Headaches for law enforcement

The digital currency has caused any number of headaches for law enforcement.

When the digital currency Bitcoin came to life in January 2009, it was noticed by almost no one apart from the handful of programmers who followed cryptography discussion groups. Its origins were shadowy: it had been conceived the previous year by a still-mysterious person or group known only by the alias Satoshi Nakamoto1. And its purpose seemed quixotic: Bitcoin was to be a 'cryptocurrency', in which strong encryption algorithms were exploited in a new way to secure transactions. Users' identities would be shielded by pseudonyms. Records would be completely decentralized. And no one would be in charge — not governments, not banks, not even Nakamoto. Yet the idea caught on. Today, there are some 14.6 million Bitcoin units in circulation. Called bitcoins with a lowercase 'b', they have a collective market value of around US$3.4 billion. Some of this growth is attributable to criminals taking advantage of the anonymity for drug trafficking and worse. But the system is also drawing interest from financial institutions such as JP Morgan Chase, which think it could streamline their internal payment processing and cut international transaction costs. It has inspired the creation of some 700 other cryptocurrencies. And on 15 September, Bitcoin officially came of age in academia with the launch of Ledger, the first journal dedicated to cryptocurrency research. What fascinates academics and entrepreneurs alike is the innovation at Bitcoin's core. Known as the block chain, it serves as the official online ledger of every Bitcoin transaction, dating back to the beginning. It is also the data structure that allows those records to be updated with minimal risk of hacking or tampering — even though the block chain is copied across the entire network of computers running Bitcoin software, and the owners of those computers do not necessarily know or trust one another. Many people see this block-chain architecture as the template for a host of other applications, including self-enforcing contracts and secure systems for online voting and crowdfunding. This is the goal of Ethereum, a block-chain-based system launched in July by the non-profit Ethereum Foundation, based in Baar, Switzerland. And it is the research agenda of the Initiative for CryptoCurrencies and Contracts (IC3), an academic consortium also launched in July, and led by Cornell University in Ithaca, New York. DigiCash went bankrupt in 1998 — partly because it had a centralized organization akin to a traditional bank, yet never managed to fit in with the financial industry and its regulations. But aspects of its philosophy re-emerged ten years later in Nakamoto's design for Bitcoin. That design also incorporated crowdsourcing and peer-to-peer networking — both of which help to avoid centralized control. Anyone is welcome to participate: it is just a matter of going online and running the open-source Bitcoin software. Users' computers form a network in which each machine is home to one constantly updated copy of the block chain. Nakamoto's central challenge with this wide-open system was the need to make sure that no one could find a way to rewrite the ledger and spend the same bitcoins twice — in effect, stealing bitcoins. His solution was to turn the addition of new transactions to the ledger into a competition: an activity that has come to be known as mining ('The Bitcoin game').

Mining starts with incoming Bitcoin transactions, which are continuously broadcast to every computer on the network. These are collected by 'miners' — the groups or individuals who choose to participate — who start competing for the right to bundle transactions into a new block. The winner is the first to broadcast a 'proof of work' — a solution showing that he or she has solved an otherwise meaningless mathematical puzzle that involves encrypted data from the previous block, and lots of computerized trial and error. The winning block is broadcast through the Bitcoin network and added to the block chain, with the proof of work providing an all but unbreakable link. The block chain is currently almost 400,000 blocks long. 

 In principle, this competition keeps the block chain secure because the puzzle is too hard for any one miner to solve every time. This means that no one will ever gain access to the encrypted links in the block chain and the ability to rewrite the ledger. 

 Source : www.nature.com

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The future of bitcoin

The future of bitcoin

What is increasingly likely is that the future of bitcoin is bright. It is the seventh year in the development of this network. It takes years to build out a protocol, which is what bitcoin is. As Joel Spolsky says, “Good software takes 10 years. Get used to it.” “Bitcoin is comparable to the pre-web-browser 1992-era Internet. This is still the very early days of bitcoin’s life. The base layer protocol is now stable (TCP/IP). Now engineers are building the second layer (HTTP) that makes bitcoin usable for average people and machines,” Jeff Garzik, founder of Bloq and Core developer of bitcoin, told me. Once the infrastructure is built, which still has many more years ahead of it, with companies like Bloq, BitGo, 21.co, and Coinbase leading the charge, we’ll begin to see solid programs built in the application layer. But even while we wait for the infrastructure to be built, it’s clear that bitcoin is evolving. Take mining, for example. There is no doubt that bitcoin mining is enormously centralized, particularly in China with over 50% of the hash rate. However, that is going to change thanks to the efforts of companies like 21.co. According to the company’s about page, “someone needs to build the full-stack infrastructure for bitcoin, from silicon to software … that someone is us.” In November, the company released its first product, the 21 Bitcoin Computer, which was a dev kit to introduce developers to bitcoin. Yet, this is the first step. As 21.co improves the design of its chips, it’s possible that it could roll out a router that perpetually mines for you. Or, it could integrate a tiny miner into your cell phone. But this mining is not so that individuals can get rich on the block reward. Rather, the goal is for bitcoin to become the fuel for participating on the Internet. Right now, if you wanted to do a search on Google, you’d have to trade being inundated with ads and tracking cookies that follow you around the web. A developer could build a search engine over the 21 Bitcoin Computer whereby a user would have to pay a minuscule amount of bitcoin to make their search. Once you abstract away the idea of procuring bitcoin that sits within a single user’s wallet, our idea of what the Internet is and how it works begins to change. Instead of companies taking individual’s data, those same companies might have to pay a consumer for their data. Want to know that I am a 27-year-old male in New York? That’ll cost 5,000 satoshis, the smallest divisible unit of a bitcoin. In the future, this can all be automated. What about the killer application that everyone talks about? Taking away the fact that hundreds — if not thousands — of products will be built over the coming years, there are some that have the potential to be the killer app now. Fred Wilson, who I mentioned above, believes that in 2016, “Bitcoin finally finds a killer app with the emergence of Open Bazaar protocol powered zero take rate marketplaces.” And none of this even touches on the potential for bitcoin to help the underserved markets of the world. While remittance has yet to be solved, companies are attempting to make progress. Fortunately, the markets that are underserved and under-banked happen to have tremendous mobile-phone exposure. That will make remittance easier as more people learn about bitcoin. Finally, we return to what many considered bitcoin’s first, fundamental use case: digital gold. While bitcoin remains volatile today, it’s certainly not the only volatile asset in the world. And before we lament a 10% drop in the price of a still new asset, consider that the stock market has experienced 10% drops in similar time frames. What about oil? Or gold? Or coal? Even mature assets can experience price fluctuations. Consider the fact that trading volume is up in many of the same countries that are likely to benefit the most from digital gold. Argentina is experiencing some of its highest points of volume. Brazil, which is dealing with debt problems, is also at its highest point. India has had tremendous growth in the number of people using bitcoin. Even Russia, which is considering making bitcoin illegal, has seen outsized growth in volume.

Source :www.venturebeat.com

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Сoinbase expands to UK, adds pound to exchange

Сoinbase expands to UK, adds pound to exchange

The Coinbase wallet service has officially expanded to the United Kingdom. Users in this country can now use the full suite of wallet services and trade pounds for bitcoins. The company announced its success on the corporate blog: “We’re pleased to announce the expansion of Coinbase services to the United Kingdom, including the ability to trade bitcoin on Coinbase Exchange and to buy/sell bitcoin with GBP using the Coinbase Wallet” According to the press release, Coinbase clients in the UK can now credit their accounta with euros, dollars and pounds. They can also officially “trade BTC/USD, BTC/GBP, and BTC/EUR currency pairs on Coinbase Exchange” and “use [the] full suite of Coinbase Wallet services, including hosted bitcoin wallets, buy/sell service, and merchant tools”. This is yet another stage in the European expansion of one of the biggest bitcoin wallet services in the world. In the autumn of 2014, the company began to offer services in Belgium, the Netherlands, Finland, France, Italy, and Spain. Some months later, the company added Ireland, Sweden, Denmark, Switzerland and Poland to the list. The official partner of Coinbase in Europea is the Estonian bank LHV. In 2014, the bank hired specialists in blockchain technology and announced it will be researching the potential uses of the blockchain technology. In the last month, several major bitcoin projects announced partnerships with Coinbase. On March 5th, Masked Cards made it possible for Coinbase clients to pay bitcoin for anything on the Internet with a new beta service, Bitcoin Anywhere. In March clients of the company became object of phishing attack.


source: www.coinfox.info

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