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The developer behind a program that checks for the Heartbleed vulnerability, Filippo Valsorda, has created a new tool that he says tracks down poorly secured bitcoin transactions. Insecure transactions can leak private keys, increasing the risk that a users’ bitcoin could be stolen, and Valsorda’s Blockchainr tool is designed to weed them out. According to research by Valsorda, known flaws found in some implementations of the Elliptic Curve Digital Signature Algorithm (ECDSA), which provides cryptographic protection for bitcoin transactions, render certain wallets and transactions vulnerable to attack. While the risk to funds held in wallets is very low, Valsorda claims that certain well-known bitcoin clients may be weaker than others due to the way random numbers are generated. “I applied a known attack to the real world and showed how you could use ECDSA in a safe way that doesn’t need random numbers so that it would not fail scanning the block chain,” Valsorda told Vulture South at The Register. His research findings were presented at the Hack In The Box 2014 event in Malaysia yesterday. Transaction weak spot Valsorda argues that, if poorly implemented, the ECDSA can result in weak signatures lacking randomness. If an attacker can find such transactions in the block chain, the weakness can be exploited to reveal the private keys involved in the transaction. valsorda-signature formula A poor random number generator (RNG) can create the same ‘random’ number (‘k’ in the formula above) on more than one occasion. When the transaction is hashed, this number is multiplied by the same generator point (ie: same random number) as the public key. Since one unknown has been removed from the equation, the private key can be revealed by effectively reversing the hash through additional mathematical operations. The chance of even a bad RNG producing an identical number twice is very low, but it still poses a small risk. While researching the vulnerability, Valsorda believes, he found evidence of bitcoin thefts exploiting the vulnerability dating back to 2013. According to The Register, Valsorda said he identified one attacker who stole 59 BTC in August 2013. He pinned the blame for the vulnerability on developers, as the problem could be tracked down to coding errors found in certain bitcoin clients. Valsorda said: “I found two really big events where someone probably made an error while writing their client that generated hundreds and hundreds of vulnerable transactions.” Wallets examined Valsorda has designed his Blockchainr tool to scan the block chain for vulnerable transactions. While some might fear such information could be misused, Valsorda did not manage to find any wallets that could be raided. However, he said, this may be because they have been raided already. In addition to testing old transactions, Valsorda also examined the ECDSA implementation in a number of popular wallets. He claims that some providers like Electrun, MultiBit/Bitcoinj, Bitrated/Bitcoinjs-lib and Trezor used a safer, deterministic model of signature generation. Bitcoin Core, Blockchain and Armory were found to be less safe. The use of an RNG within the browser was, in some cases, linked to reduced transaction safety. The chance of duplicate signature generation even on those wallets deemed less safe is still less than 1%, said Valsorda. Conclusion criticised Not everyone agrees with the conclusions, however. Armory’s CEO and founder Alan C Reiner told CoinDesk: “Valsorda is criticizing the globally standardized use of ECDSA, which is implemented and applied properly in our software. Since ECDSA was created, it has always required a random number generator and all software that implements it should use a random number generator. That’s part of its specification.” “The fact that people are moving to ‘deterministic signing’ is really an enhancement, to protect against weak random number generators,” he said. “But Armory doesn’t run on any platforms with weak RNGs, so our ‘unsafe’ rating should be 0%.” Reiner further said that Armory follows the NIST-approved specification for ECDSA, which has been in place for 10 years, “the same way it is used in other secure systems throughout the Internet”. Old browser issue CoinDesk also spoke to Blockchain about Valsorda’s claims. A spokesperson said: “This issue first came to our engineering team’s attention in August 2013. We took steps then to patch the vulnerability created by a small minority of users relying on old out-of-date web browser versions. Blockchain’s My-Wallet tool relies on, not one, but three sources of entropy to generate ECDSA signing keys: the browser-based RNG, mouse movement & keyboard interaction, and a server-side RNG. This protects users from out-of-date browsers with weak RNGs while maintaining the ability run a fully client-side, non-custodial wallet that is easy to use across your desktop and mobile devices.” Blockchain, the firm said, remains vigilant about potential security issues and continues to actively monitor potential threat vectors generated by common software such as web browsers. Blockchain encouraged all users to make sure they are running the most up to date software to ensure better security. Valsorda has made his code freely available to other developers by posting it on GitHub and has called on fellow developers to address the issue, taking care in their choice of random number generators. ECDSAFilippo ValsordaSecurityWallets
Original author: Nermin Hajdarbegovic

Japanese yen
Tokyo-based bitcoin exchange bitFlyer has raised $236,000 in investment that the firm says will be used to fund additional services, as well as expansion outside Japan. BitFlyer previously raised $1.6m in July with the goal of becoming the leading player in the country’s expanding bitcoin market. Notably, the latest funding was provided by Barry Silbert’s Bitcoin Opportunity Corp (BOC), which has invested in a large number of bitcoin startups including Coinbase, Circle, BitPay, Safello and others. This is the first time, however, that the BOC has invested in a Japanese company. Silbert told Bloomberg: “While bitcoin awareness and adoption is probably a couple years behind the United States, I’m highly confident that Japan will be a large market for bitcoin given the tech savvy, financially sophisticated population.” Growth plans The company hopes the new funding will help it achieve its ambitious plans in the bitcoin space. As well as allowing people to buy and sell bitcoin, bitFlyer partnered with GMO Payment Gateway to provide a bitcoin payment option to 48,000 online merchants in late September. Earlier the same month, the firm launched Japan’s first bitcoin crowdfunding platform, ‘fundFlyer’. Among other new services, the funding will allow bitFlyer to offer its first convertible bond. The company said: “This investment scheme will enable investors to convert their holdings into future issued class shares, allowing for quick and efficient fundraising.” Singapore expansion? BitFlyer CEO Yuzo Kano told Bloomberg the BOC funding would also allow the firm to expand overseas, adding: “Singapore is a likely target, although nothing has been decided yet. It will have to be somewhere favorable to bitcoin, so probably not the US.” Although Japan received something of a shock when it found itself at the centre of the Mt Gox fiasco, the country has since decided to take a hands-off approach to bitcoin, letting the industry largely regulate itself. The Authority of Digital Asset, an industry body with government backing, was recently set up with the aim of establishing standards and codes of conduct for its members. “Japan is way ahead of other countries when it comes to cooperation between bitcoin operators and regulators, which you don’t see in the US, Europe or Singapore,” Kano said. Yen image via Shutterstock AsiabitFlyerJapan
Original author: Dan Palmer

ross ulbricht, silk road
The case against alleged Silk Road creator Ross Ulbricht has been delayed until next year. Wired reporter Andy Greenberg first reported on Twitter that Ulbricht’s defense counsel sought to postpone the start of trial, which was scheduled to begin on 10th November. US District Judge Katherine Forrest adjourned the trial until early January. Ulbricht has plead not guilty to charges of drug trafficking, money laundering, hacking and criminal enterprise, and in August plead not guilty to additional drug and conspiracy charges. The prosecution is arguing that Ross Ulbricht is the mastermind of the now-defunct Silk Road marketplace, but friends, family and supporters say that Ulbricht is the target of an unfair legal inquisition. Ulbricht defense counsel Joshua Dratel said that the defense sought the delay in order to resolve several scheduling issues. He told CoinDesk: “The court did not provide its reasons for the adjournment, but we asked for it earlier this week based on a couple of factors: the danger that the trial would run into the Christmas holidays, which would affect juror availability and the continuity of the trial; some technical and logistical delays (owing to the limitations inherent in Mr. Ulbricht’s pretrial confinement) in getting Mr. Ulbricht access to some discovery; some other scheduling issues.” The move gives the Ulbricht team more time to pore over the prosecution’s case, which includes terabytes of server data that the defense says was unlawfully procured by federal authorities. The adjournment until January is notable, given prior attempts by the defense to have the case dismissed outright by the court. In July, Judge Forrest rejected a motion to dismiss filed by the Ulbricht team, which at the time contested a money laundering charge. Earlier this week, the defense suffered a key loss when it tried to contest evidence obtained from Silk Road servers hosted in Iceland. Ulbricht’s team argued that the US Federal Bureau of Investigation (FBI) violated the Fourth Amendment by illegally seizing the servers. According to court documents (hat tip newsBTC and Andy Greenberg), Judge Forrest rejected the motion because Ulbricht never claimed ownership over the servers in question. Therefore, she said, his assertion that those servers were private property was invalid. Ross UlbrichtSilk Road
Original author: Stan Higgins

Ben Lawsky
Developers, miners and individuals using bitcoin will generally not be regulated by the impending ‘BitLicense’ proposals, according to Benjamin Lawsky, superintendent of the New York Department Financial Services (NYDFS). Speaking at the Benjamin N Cardozo School of Law, New York, Lawsky clarified that many individuals and companies working within the bitcoin space will not need regulatory approval or a BitLicense to operate in New York State. “We are regulating financial intermediaries. We are not regulating software development,” he said, adding: “To clarify, we do not intend to regulate software or software development. For example, a software developer who creates and provides wallet software to customers for their own use will not need a license. Those who are innovating and developing the latest platforms for digital currencies will not need a license.” However, Lawsky stressed that companies involved in safeguarding customers’ money will not be exempt. “We do not, for example, let someone run a bank out of their garage,” he said. Banking and tech ‘collide’ According to Lawsky, the banking industry and the tech industry are starting to “collide” and create new challenges for regulators. The NYDFS was forced to operated with money transmitter regulations drafted at a time when there was no Internet or cryptocurrencies, he said, explaining that the department has an obligation to license and regulate such companies. On a positive note, Lawsky said the NYDFS quickly recognised the potential of block-chain technology:  “As we began looking at bitcoin last year and getting deeper into it, we began to see the power of the technology that underlies it.” The technology has the potential to provide cheaper fees and remittances, he said. New York residents who send money abroad usually pay fees of 8-9%, while digital currencies could operate with fees of about 1%, Lawsky pointed out. Digital currencies do not require people to disclose their credit card information and offer faster transactions, he added. Lawsky clarifies provisions The NYDFS started working on the first controversial BitLicense drafts following the fall of Mt Gox, earlier this year, said Lawsky. The comment period for the original proposal was extended following requests from industry leaders. The revised proposal will take those comments into account and, once published, a new comment period for the revised regulation will begin. He made it clear that the NYDFS does not intend to request more than once license for digital currency businesses and, in most cases, they will not have to obtain money transmitter licenses. Like developers, individual bitcoin users will not be affected by the regulation. Lawsky went on to dismiss a number of criticisms of the original proposal as unsubstantiated, saying they were the result of misunderstandings. One complaint alleged that banks would not have to comply with the new regulatory framework, but that is only true if banks do not choose do deal in digital currencies, he explained. Regulation with benefits Lawsky also addressed speculation regarding the department’s position on bitcoin mining: “Mining per se will not be regulated. To the extent the miner engages in other virtual currency activities, however – for example, hosting wallets or exchanging virtual currency – a license may be required for those activities. For mining itself, there will be no license requirement.” The NYDFS will also try to keep compliance costs down, he said, thus allowing startups to thrive. In his speech, Lawsky conceded that some companies may choose to operate from unregulated jurisdictions to avoid the state’s regulatory requirements, but if they chose to do so, such companies may end up sacrificing competitiveness. He explained: “Our hope is that companies recognize, or at least some of them do, that appropriate, effective regulation will help create a race, not to the bottom, but to the top; that it will foster greater confidence and trust from both customers and investors who want to do businesses committed to customer protection. That will spur a cycle of greater adoption of virtual currencies.” It is possible to innovate, play by the rules and make a profit at the same time, he concluded. Ben LawskyBitLicenseNew YorkNYDFS
Original author: Nermin Hajdarbegovic

Sad business Moopay LTD, the digital currency services business better known as Moolah, has announced that it is shutting its doors and filing for bankruptcy protection. The move follows the failed relaunch of the MintPal altcoin exchange, which after weeks of preparation was marred by chronic user and platform issues. According to Moolah, its closure stems from an unexpected rise operational costs and the loss of critical business partnerships in the past month. In its announcement, Moolah said that customer funds are secure and that users of its consumer and merchant money management platform can process withdrawals until 31st October, after which time Moolah will shut down. The company also said that MintPal will continue to operate as a separate business, but prior to the appointment of a new leadership team will be put offline in order to address what the company called “critical errors” in the platform’s security infrastructure. At press time, the MintPal website was not accessible and contained a message reading that the new leadership, once in place, will release a statement. Moolah CEO and founder Alex Green said that it no longer had the funds to continue functioning as a business after incurring high legal and operational costs during the past ten monhts. He told CoinDesk: “Quite simply, we ran out of cash. Rather than end up in massive amounts of debt, we made the decision to close down the business. We can no longer afford to pay our operational and staffing expenses, and we feel that we have made the best decision all around.” Moolah’s shutdown ends a long chapter for both the dogecoin and altcoin communities, as the United Kingdom-based company was a significant provider of services to the dogecoin userbase and had invested heavily in the relaunch of MintPal, which suffered a debilitating hack attack earlier this year. The startup was not without controversy though, as tensions between Moolah and members of the altcoin community often played out online for all to see. The closure itself sparked a social media firestorm, with users taking to the dogecoin subreddit, Twitter and IRC to both search for answers and weigh in on the developments. Many customers of both Moolah and MintPal expressed fear that the closure would affect withdrawals from both platforms. Canceled deals triggers crisis In its bankruptcy announcement, Moolah said that efforts were made to secure new revenue streams, which included a last-ditch attempt to build partnerships in Asia. The company said: “A number of the team have spent the past 10 days in Asia (personally funded, not company funded) attempting to secure vital contracts that would ensure the future of the company, but these attempts proved fruitless given general opposition by the businesses in question in to entering in to agreements with non-Asian companies.” According to Green, Moolah’s expenditures included $45,000 per month in labor costs, along with an additional $22,000 in legal and operational expenses. He added that the company does not hold substantial amounts of debt, but owes some of its suppliers for past payments. Green left the door open to a potential future for the company, telling CoinDesk that in the days ahead alternative options to closure will be explored. “We will be waiting until the last possible moment to fully wind down the company, in order to explore any and all avenues that may present themselves,” he said. He added that Moolah is seeking to retain a company to assist it in winding down its operations and transition to a new management team, saying that several outside parties have expressed interest in Moolah’s technological portfolio as well as the company itself. Future uncertain for Moolah investors For now, some of the biggest questions surrounding the Moolah shutdown focus on the future of those who took part in the investment initiative it ran. The company offered few details on the future of funds owed to investors in its so-called PIE program, which raised 750 BTC during three investment rounds and sparked controversy within the dogecoin community. Moolah said that it expects to liquidate its assets and pay off creditors, after which “the remaining funds will be divided accordingly between investors in the company”. Many of the investors in the PIE initiative came from the dogecoin community, and the altcoin’s subreddit has seen an influx of comments from stakeholders concerned about what, if any, restitution they might receive following bankruptcy. Dogecoin co-founder Jackson Palmer told CoinDesk that the Moolah closure demonstrates the risks of crypto crowd sales and the businesses that conduct them. Calling the practice “a legal grey area and a possible minefield”, Palmer reiterated his past opposition to Moolah’s past actions. Palmer continued: “What saddens me the most is that Moolah took their funding from random internet-goers as opposed to rich venture capitalists who can afford to take the risk and financial hit. These ‘investors’ are now in a position where they’ll never see their money again, and have minimal legal recourse.” He added that he expects incidents like the Moolah closure will trigger involvement from financial regulators, particularly securities and investment watchdogs like the US Securities Exchange Commission (SEC). However, Palmer predicted that the dogecon community will recover and “come back fighting”. “At the end of the day, it’s a stark reminder to always investigate who you’re doing business with prior to entrusting your money with them,” he said.   DogecoinMintPalMoolah
Original author: Stan Higgins

Lawyers talking
A potential class-action suit against bitcoin mining firm KnCMiner is beginning to take shape. California-based attorney Charlotte C Lin has announced that her firm is investigating unlawful activities related to the sale and distribution of KnCMiner’s Titan and Neptune mining products. These include breach of contract, false advertisement and public misrepresentation, which were detailed on the initiative’s official website. KnCMiner, which raised $14m in Series A funding last month, has faced complaints from customers regarding late shipments, defective hardware and other business practices in the past. Lin’s firm specializes in areas of personal law such as employment and immigration, and in recent months has become more directly involved in the digital currency industry. Her law firm also accepts payments in bitcoin, litecoin and dogecoin. Lin released a press statement to CoinDesk saying that the move stemmed from what she characterized as a growing chorus of dissatisfied miners. She explained: “I myself have a lot of colleagues and friends who are actively engaged in mining, trading cryptocurrencies, or own mining equipment. I have heard many complaints from them about not getting refunds back, equipment not working, or under-delivering hashing power.” Her office added that it is still determining what, if any, damages will be sought as a result of the possible class action. Notably, Lin appeared recently at the Hashers United conference in Las Vegas where miners discussed the potential suit and, in some cases, pledged their support to the effort. KnCMiner director of marketing and public relations Nanok Bie confirmed with CoinDesk that the company is aware of the potential class-action suit taking shape. Bie stated that the bitcoin mining industry, and the ecosystem as a whole, is “a high-pressure business with a lot of strong feelings”, but argued that the class action suit being explored by Lin’s office will not succeed. “There is no basis for legal action,” Bie said, later adding, “There’s a lot of these things happening in the business. We are, on the contrary, a transparent and honest company. We show journalists around our facilities, and our final accounts are public.” For now, no actual legal measures have been taken, and as Lin’s office noted in its press statement, it is reaching out to customers and building out its case. Though short on specifics, the statement said that more updates on its case against KnCMiner are pending on the potential suit’s official website. Image via Shutterstock class action suitKnCMiner
Original author: Stan Higgins

Bitcoin and Revolutionary Journalism
Despite the recent drop in bitcoin’s price, cryptocurrency startups are now attracting more investment than ever and stories about major developments in the bitcoin ecosystem are being picked up by mainstream media on a regular basis. The New York Times reported the news that popular bitcoin wallet provider Blockchain had raised $30.5m in financing. Last week, Time published an article titled How Bitcoin Can Save Journalism and the Arts, exploring bitcoin’s micropayment capability for creating a new model of content distribution that is free from advertising. Yet, long before this new interest and innovation sparked outside the tech community, WikiLeaks editor-in-chief Julian Assange was seeing the promise of the bitcoin technology beyond currency. The confluence of this stateless digital currency and the iconic whistle-blowing site first emerged when WikiLeaks faced a financial blockade by Bank of America, Visa, MasterCard, PayPal and Western Union, which reportedly blocked 95% of their revenue. Bitcoin was used to circumvent the banking blockade. Here the advocates for the free flow of decentralized currency joined the fight for free speech. The WikiLeaks-bitcoin alliance In his conversation with Google executive chairman Eric Schmidt documented in his new book When Google Met WikiLeaks, Assange described bitcoin as “something that evolved out of the cypherpunks” and explained in detail the underpinning technology that made it possible for WikiLeaks to counteract the state’s economic censorship. However, it seems this is just the tip of the iceberg of the WikiLeaks-bitcoin alliance and the revolutionary potential hidden within the encryption-based network. The ramifications of bitcoin technology go far beyond the economic domain. Appearing in the form of a hologram at The Nantucket Project conference, Assange spoke of the significance of the block chain, the underlying technology of bitcoin, particularly in relation to journalism and holding those in power to account. Assange addressed the use of the block chain to create an historical archive. Calling bitcoin “the most interesting intellectual development on the Internet in the last five years”, he described how the underlying architecture can be used for “providing proof of publishing at a certain time”. See a video of Assange’s comments below: The block chain’s premise seemed to unite with WikiLeaks’ mission. In April 2010, Assange took the stage at the Oslo Freedom Forum, where he warned of the enormous force of control and power within the Internet and increasing censorship that threatens the free flow of information. He spoke of the vital role of human intellectual content in civilization and described how, in this age of technology, everything is moving to digital. This power, often accrued by an unelected few, has increased through control of digital storage and access to information. This makes possible the erasing or altering of information that is critical to the historical record. He pointed out: “We are now approaching the state of Orwell’s dictum, perfect dictum, that ‘he who controls the present controls the past’. He who controls the Internet servers controls the intellectual record of mankind, and by controlling that, controls our perception of who we are, and by controlling that, controls what laws and regulations we make in society.” Preserving history Dismantling this force of control has been WikiLeaks’ mission. By employing its method of transparency in the form of ‘scientific journalism’, they aimed to open governments and reveal their actions behind closed doors. Through liberating the flow of information that had been stagnated by secrecy, complexity and manipulation, the organization strove to break Orwell’s dictum and bring the power to shape history into the hands of ordinary people. Four years later, WikiLeaks is still on the front lines of this battle. In his new book, Assange again addressed the escalating implementation of Orwell’s dictum. Giving an example of an incident where the Guardian pulled six articles from 2003 without explanation, he emphasized how WikiLeaks’ primary focus was to preserve “politically salient intellectual content while it is under attack” by going after information that has been suppressed or deleted. Doing away with trust Assange found a solution in the evolving block-chain technology. This provides decentralized solutions to the problems of centralized time stamping, as this requires trust in central authority, making it susceptible to third-party alteration and intervention. Bitcoin’s distributed trust network can offer immunity from central control of any historical record. Assange described the basic premise of this technology as a network of consensus where “you can prove a particular statement, particular consensus and particular contract that happened at a particular time globally and it requires the subversion of every single jurisdiction where people are running bitcoin to overturn that”. “The invention of the block chain further empowers people and challenges the insidious culture of ownership and control.” In a nutshell, he noted: “bitcoin’s underlying technology breaks Orwell’s dictum”. Some people have already used the block chain to store more than just transactions. In his blog, Ken Shirriff documented the result of his search through the block-chain ‘database’, reporting his discovery of interesting things including Satoshi Nakamoto’s white-paper, an image of Nelson Mandela and a 2.5-megabyte WikiLeaks cablegate backup. This information is now securely documented and cannot be erased or modified by anyone. Proof of Existence is an example of the application of decentralized proof. This online service provides a way for people to publicly prove the existence of documents without revealing the data or their identity through bitcoin’s decentralized trust network. It is a continuation of the earlier waves of decentralization of information seen in the last decade with the rise of Wikipedia, through its open-source collaborative production of a historical record – an online decentralized encyclopedia. Freedom from control Just as the Internet brought the everyday person the power to create their own narratives, the invention of the block chain further empowers people and challenges the insidious culture of ownership and control. With unprecedented currency crises and government corruption, people are increasingly looking for alternatives to state and corporate control. As more begin to move into bitcoin to avoid government debasement, it isn’t far-fetched to imagine how this stateless public asset ledger could also become a new safe haven for investigative journalism and whistle-blowers. A lot has happened since that day in Oslo when Assange identified the conundrum of our age. As the battle to break Orwell’s dictum intensifies, we now have in our hands a great tool to open up society. Bitcoin can not only be used to fund revolutionary journalism like WikiLeaks, but also offers a decentralized platform for anyone to directly combat state censorship of information and create transparency for those in power. The invention of bitcoin is just one crest of the continuous waves of a cryptographic revolution. As Assange said, this could free us from Orwell’s dictum. In a time of seemingly universal deceit, reclaiming our past on the block chain is quickly becoming a revolutionary act. Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk. Locked file image via Shutterstock.  Block ChainJulian AssangeWikileaks
Original author: Nozomi Hayase

Panel
This weekend private and public sector delegates convened for a panel discussion about technology’s role in achieving greater global financial inclusion as part of a four-part seminar series at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group in Washington, DC. The panelists included Standard Chartered Bank group chief executive Peter Sands; Colombian Minister of Finance and Public Credit Mauricio Cárdenas; Visa global head of strategic partnerships Bill Gajda; JPMorgan Chase global chair of technology, media and telecom and investment banking Jennifer Nason; and professor of economics at Yale University Dean Karlan. Vice chairman of the US Federal Reserve board Stanley Fischer moderated the discussion. At the outset, Sands spoke generally about the need for business model reforms to allow the operational and commercial impact of technology’s promise in the financial services industry. “What we haven’t seen is this kind of sweeping, total transformation of the business model that you’ve seen in industries like music or publishing – and the reason I talk about those is that they’re digital industries and there is nothing about banking that is inherently physical,” he said, adding: “Even notes and coins are essentially tokens and property rights; they don’t have to be physical.” Sands was also the one that later introduced the matter of “cyber currencies – bitcoin and so on” and was the only delegate to voice his position on them. He said he is unconvinced that they will be more than a niche application, but called the underpinning block chain technology “a true computational innovation that could be very powerful in the context of financial inclusion”. Interoperability issues Gajda echoed Sands’ sentiments about the business model, saying there is a lot of work required to address things like transaction costs for micropayments and issues of interoperability. While the delegates from the banking and payments industries gave favorable responses to the wave of new technology and innovation so ingrained now in financial services, he said that interoperability will be key in driving the next level of scale. To get there, Gajda concluded, would require some business model innovation from everyone. The Visa executive didn’t speak about digital currencies specifically, though one could apply many of his points on how to use technology to help financial services grow and move towards alleviating global poverty to bitcoin itself. Gajda noted: “I’m actually very confident about the rate in which technology will advance in these markets and the way it’ll be used to provide scalable and secure payments. The challenge as I see it really isn’t a technical barrier. I think there are some business model barriers and I think a lot of it has to do with consumer education.” Transforming titled property There is a counterpart to the financial aspect of financial inclusion: Fundamental property rights. Sands appeared enthusiastic about the potential of bitcoin technology and its potential to reform titled property, which he called “the most bureaucratic, inefficient mechanism there is” in Western countries as well as the developing world. He explained: “You could transfer title to the thing youre buying … If you’re buying a car or a house, your transfer of title using this kind of distributed ledger-type technology could be massively more efficient than the system at the moment.” If people are going to become economic actors, he added, they must be enabled to establish and transfer property rights, especially as they acquire entrepreneurial tools and skills and eventually become small business owners. “That’s where I think actually some of these block chain technologies could be really powerful,” Sands concluded. Infrastructure is key Cárdenas focused more on the currency aspect of digital currencies, maintaining a critical attitude toward the technology during his remarks. When discussing inclusion, he put particular importance on the need for a money transfer system in which the sender isn’t required to pay up to 10% in related transaction fees. “We need to make sure that people who are using those services that are so overpriced have access to technologies where they can take advantage of these efficiencies,” he said. “And that means using less cash.” However, he also emphasized the value of controlling money “in the broad sense”, placing a lot of weight on policy as a means of stabilizing any economy, generating the conditions for growth and low inflaton, and doing so “under the traditional payments system”. To this, Fischer responded: “There’s a very interesting line of research as to whether you actually need the physical money to be there in order to control the price of it or whether you can do it with just the interest rate so it’s clear that as long as there’s an epsilon of money you can control the price or interest rate and then the questions what’s the limit of that process which nobody knows at the moment.” Image via Shutterstock bitcoinIMFWorld Bank Group
Original author: Tanaya Macheel
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