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Teraexchange The first financial instrument tied to bitcoin has launched following approval from the US government. TeraExchange, a swap execution facility based in Summit, New Jersey, is marketing the bitcoin derivative to large institutions looking for a way to reduce the volatility and risk associated with traditional types of bitcoin exposure. CoinDesk spoke with president and co-founder Leonard Nuara, who said that the new product can help bridge the gap between the existing bitcoin trading ecosystem and a broad landscape of investors that are genuinely interested in digital currency. Nuara told CoinDesk: “This is a major step forward for the broader bitcoin community by building out a first institutional mechanism for hedging in the bitcoin space in a regulated marketplace. This is a step toward, potentially, reducing volatility and increasing liquidity in the marketplace because people will have more safety and soundness in their trading.” TeraExchange began working on the product earlier this year, and only just received approval from the US Commodities Futures Trading Commission (CFTC), the government agency that regulates futures and options markets. Limiting exposure to market forces The bitcoin swap, like other financial products of its kind, enables parties holding the instrument to hedge against fluctuations in the digital currency’s value. No actual bitcoins are exchanged during the process. Rather, the swaps are denominated in US dollars and actual transactions between counterparties use that currency as well. The swaps give counterparties – ranging from large merchants to miners – the ability to insulate themselves from long-term changes in the price of bitcoin that may impair their ability to operate. Further, the fact that the exchange is regulated by the CFTC gives institutions governed by strict rules regarding platform usage the ability to gain exposure to bitcoin markets. Other efforts, such as the planned bitcoin ETF created by Cameron and Tyler Winklevoss currently being considered by the Securities and Exchange Commission (SEC), are still undergoing review. Swap tied to dynamic price ticker To determine the price at which the swaps will trade, TeraExchange has developed an index that draws information from a series of major exchanges worldwide. Nuara explained that in order to make the system work, the company needed to provide real-time data that was compliant with the standards put in place by US regulators. This meant constructing price indicators that would meet CFTC approval. He told CoinDesk: “What we had to build, and then prove through the documentation that we provided to the CFTC, was that our index was robust enough and diverse enough and able to act to filter out anomalous beahvior enough, that the index is not susceptible to manipulation, or the marketplace.” TeraExchange has built information-sharing relationships with the high-volume bitcoin exchanges in the world, each of which will provide real-time data to the company’s price index. Regulator response positive During the interview, Nuara commented that the perception of US regulators as a group that harbors a desire to impair bitcoin is wrong. Instead, he said agencies like the CFTC have a genuine desire to make sure they get these regulations right: “[The CFTC] are just extremely cautious with regards to what they do, so they want make sure they get it right. They were quite receptive to regulating [the bitcoin swaps], provided that all the requirements were met.” The development of a bitcoin derivative pushes the broader market into uncharted waters, opening the door to move involvement from institutions that, in many cases, are prohibited by their own policies to invest in digital currency. Image via Shutterstock CFTCTeraExchange
Original author: Stan Higgins

piggybank, investors
In the latest sign that investors remain bullish on bitcoin, a digital currency-focused AngelList investment syndicate has topped more than $1m in backing from its pool of investors. The syndicate, led by Bitcoin Foundation board member and bitcoin investor Brock Pierce, is now the eighth most popular syndicate on the platform by total investor backing. The syndicate entered the top 10 in February, and also includes other big-name investors in the bitcoin space such as SilkRoad Equity co-founder Matthew Roszak and 500 Startups partner Sean Percival. Speaking to CoinDesk, Pierce said that while he is pleased overall with the syndicate’s overall performance, it likely won’t hit its original goal of investing in 12 bitcoin startups in 2014. He said that, despite rising interest, his syndicate is currently struggling to find the right deals. Pierce told CoinDesk: “You have to find the good deals, you have to be able to get into the good deals and you have to be able to get the allocation for those good deals through crowdfunding channels. Those are obviously three big hurdles and when you get to that third rung, the bar is obviously relatively high.” Pierce further revealed that the syndicate is close to finalizing its second investment so far this year, and that the formal announcement of the funding is forthcoming. Launched toward the end of 2013, AngelList’s syndicate allows angel investors to raise capital for projects while earning on the performance of each deal. AngelList, founded by Naval Ravikant and Babak Nivi, provides a number of services to US startups and angel investors. Inclusive finance Since February, the number of investors engaged in the AngelList startup has also been on the rise. Today, the syndicate has 78 accredited backers, compared to just 23 in February. Investors can join the group with a minimum investment of $5,000. Pierce credited the popularity of the group to his notoriety in the space and past investments, which have included BitFury, ChangeTip and GoCoin, saying: “I’m obviously a very active investor in the bitcoin space, and a bunch of people said ‘Hey, I’d like the ability to participate in the deal flow’. So, people have been signing up.” He further noted the similarities between the crowdfunding and bitcoin communities, saying that both groups are attempting to make finance more inclusive. Crowdfunding Due to the distributed nature of the AngelList platform and the syndicate, Pierce estimates he has only spoken to about two-thirds of the involved investors, though he knows one-third from their more active involvement in the bitcoin community. However, he framed this fact as proof of crowdfunding’s power and its ability to help further bitcoin’s larger goals. Pierce said: “It’s exciting. [...] I think that everything happening in the world of crowdfunding is incredibly interesting and incredibly disruptive and it’s going to turbocharge innovation.” Piggybank image via Shutterstock AngelListInvestors
Original author: Pete Rizzo

Bitso Bitso has teamed up with mobile financial services company Pademobile in an effort to bring bitcoin to millions of mobile phone users in Mexico. The news marks the latest move from mainstream digital wallet provider Pademobile, which first joined the bitcoin ecosystem this February, and whose executive team members are currently involved in Fundación Satoshi Nakamoto, the country’s local Bitcoin Foundation affiliate. With Pademobile’s digital wallet users can send and receive money, make purchases or top up their cell phones using the account for their service, which they can fund with bitcoin. Users can fund it by depositing cash at numerous cash-in locations country-wide, receiving funds through any of their apps like Exchange Messenger or adding funds from their existing Pademobile account credit. Further, its system is SMS-based, which means even those without smartphones or Pademobile wallets can receive funds. Thanks to the new partnership, Pademobile users can now buy bitcoin from Bitso using credit cards and prepaid balance accounts. Bitso users simply need to set up a Pademobile account and add the balance, and then select ‘Pademobile’ as the method of payment in the ‘Fund MXN’ page. The move is also a potential boon for Bitso, which launched in August and can now gain exposure and easy access to Pademobile’s large user base, around an estimated 3 million users. The exchange says it is now one of only a handful bitcoin exchanges in the world to support credit card funding. Bitso + Pademobile: the perfecto combo. – http://t.co/jhijC8UhfS — Bitso Exchange (@BitsoEx) September 10, 2014 Integrating new users The company hopes that the new feature will expand bitcoin’s functionality in Mexico, given the it leverages more widely available SMS technology. Bitso CEO Pablo Gonzalez told CoinDesk: “It gives the unbanked an opportunity to participate in the local bitcoin exchange, meaning they can buy bitcoin at market price without the necessity of going through a broker and paying a large premium for it.” Bitso is developing the back end connections to provide a more seamless user experience with bitcoin payments, Gonzalez said. This is their first stage of integrating the Pademobile platform. In the second stage, users will be able to sell their bitcoin through Bitso and quickly pay their phone and electricity bills, among others, or send funds to their friends through Pademobile’s Exchange Messenger. Multiple payments partnerships Bitso exited beta last month and was quick to announce a number of partnerships and promotional programmes, including a 10% referral bonus. The exchange operates with a 1% commission. It is already integrated with Mexican payments service Compropago, which is available at more than 130,000 locations across Mexico, including chains like 7-Eleven and Walmart. The partnership allows Bitso users to fund their accounts from any Compropago terminal in the country. “I believe that partnerships is a good strategy in this rapidly growing [bitcoin] economy,” Gonzalez told CoinDesk. “Companies have different specialties and targets, and together we can enhance the user experience and expand bitcoin exposure more quickly.” In addition to Compropago and Pademobile partnerships, the exchange is also the first and only Ripple gateway in Mexico. Tanaya Macheel and Pete Rizzo contributed reporting. BitsoMexicoPademobile
Original author: Nermin Hajdarbegovic

charles allen, bitcoin shop
Bitcoin Shop announced today that some of its management team would waive the majority of their salaries for the next six months, and that all the company’s officers had volunteered to cancel their employment contracts. Bitcoin Shop’s chief executive Charles Allen described the efforts as part of a broader attempt to reduce the company’s fixed costs while protecting existing shareholders from dilution, because the company would not have to issue new shares at “deeply depressed” prices as compensation to executives. Allen added that he is also foregoing his salary as part of the temporary measures. “Actions like this illustrate the dedication of our team to build and launch our new platform without further shareholder dilution,” Allen said in a press release. Bitcoin Shop, which is publicly traded on the OTCQB market, is an e-commerce platform that sells everything from Bowflex workout stations to ASUS laptops, with all prices quoted in bitcoin. The firm is one of the few publicly traded companies with direct exposure to the bitcoin economy. Stock woes signal trouble The firm’s stock price has fallen in recent months, slipping from a high of $5.26 on 6th February, when Bitcoin Shop completed its reverse merger with OTCQB-quoted firm TouchIT Technologies, to $0.08 when the market closed yesterday. As a result, the company’s finances have required extraordinary actions such as those currently being taken. Bitcoin Shop management’s move to forgo its salary means it will save $575,250 a year in salaries and associated costs, the company said in its release. The company will release some members of management from lockup agreements, which would allow them to sell equity held in Bitcoin Shop immediately. At the same time, Bitcoin Shop plans to set up a 10B5-1 scheme for employees to sell equity through a broker in an ‘arm’s length’ relationship. Allen explained: “Technically we could sell our stock tomorrow [...] but realistically we don’t want to be selling stock at this level. Selling stock this early in the game is not something anyone wants to do. It was a financial engineering solution to protect our shareholders and reduce cost.” Bitcoin Shop has granted 6.2 million employee stock options, with a strike price of $0.50, according to its latest filing with the Securities and Exchange Commission. The filing shows that the options would have vested over a three year period. New platform in the works Allen says Bitcoin Shop has spent the last six months developing a platform that would incorporate a wallet and a way for users to buy bitcoins easily. He says the firm is moving away from its current e-commerce model because it’s not a “long-term business”. The firm invested $150,000 in digital currency-buying service expresscoin on 14th July. The new platform would integrate features of expresscoin and payment platform GoCoin, which it also invested in in March, Allen said. “We’re trying to wrap the components together [...] We’ve spent a lot of time developing it and the market hasn’t given us credit for it yet,” he said. Allen also addressed the unusual move of allowing its management team to work without employment contracts, calling it his “philosophy” towards management. He said no managers have quit the company, despite not having employment contracts. He added that he plans to recruit new talent to Bitcoin Shop without giving them employment contracts, and that senior management should “lead by example”. In Allen’s view, employment contracts benefit the employee, but not the company. He also noted: “I don’t think executives should have employment contracts. Everyone should deliver and if they don’t, they shouldn’t be entitled to a job.” Financial distress possible New York University finance professor David Yermack said Bitcoin Shop’s latest moves were “certainly not normal”, when asked by CoinDesk to interpret the firm’s actions. Yermack specialises in the study of executive compensation and company performance. He explained that this kind of business behavior can indicate deeper problems, adding: “You do see CEOs taking this step in companies that are distressed and nearing insolvency.” Bitcoin Shop had $722,215 in cash as of its last reporting period, which ended on 30th June. Together with its digital currency holdings, the company holds $1.1m in current assets. It reported current liabilities of $216,426, giving it a working capital buffer of roughly $880,000. Allen denied that his firm was financially distressed, reiterating that the latest management moves were simply a way of reducing fixed costs and protecting shareholders from share dilution. “We’re in this for the long run. We really want to build a phenomenal company,” he said. Bitcoin Shop
Original author: Joon Ian Wong

Peter Thiel
Peter Thiel, the notable entrepreneur and Silicon Valley venture capitalist who co-founded PayPal, has expressed his dissatisfaction with the current volume of bitcoin payments, saying a payment system to surround its technological base is “badly lacking”. Thiel made the comments while participating in a Reddit AMA (ask-me-anything) earlier today, where several questioners asked his opinion on bitcoin and other digital currencies. He responded: “PayPal built a payment system but failed in its goal in creating a ‘new world currency’ (our slogan from back in 2000). Bitcoin seems to have created a new currency (at least on the level of speculation), but the payment system is badly lacking.” “I will become more bullish on Bitcoin when I see the payment volume of Bitcoin really increase.” Thiel did not respond to follow-up questions on the matter. Given his anti-establishment political stance and past involvement with PayPal and hardcore libertarian projects like The Seasteading Institute, German-born Thiel has long been watched by the bitcoin community. As he noted himself, a key goal behind the original PayPal concept was to create an internet-based global currency. His Founders Fund was also an early investor in BitPay, to the tune of $2m. His views on bitcoin otherwise, however, have been lukewarm. While he appears to believe in its underlying principles, in 2013 he said bitcoin had a “20% chance of success”. Just a couple of months later he appeared more optimistic, telling a conference that bitcoin and encrypted money systems had the potential to change the world. He said at the time: “It is worth thinking about money as the bubble that never ends. There is this sort of potential that bitcoin could become this new phenomenon.” He also noted that many of the arguments against bitcoin, including that its value was fake or the result of a bubble, also applied to the world’s fiat currencies including the US dollar. Image via Fortune Live Media / Flickr Peter Thiel
Original author: Jon Southurst

Tim DraperDespite continued interest from major payments companies and thought leaders, the price of bitcoin has declined in recent weeks, as optimism surrounding New York’s proposed bitcoin regulation gave way to backlash and the market grappled with the widespread use of new and more complex financial tools. Both factors were recently cited by bitcoin hedge fund Pantera Capital as reason’s that bitcoin’s price has declined since July. In that time, the price of 1 BTC has fallen from close to $650 amid heightened interest from investors at the time of the US government’s auction of roughly 30,000 BTC to a value of $472 at the time of publication. Still, it’s arguable that no investor has been more exposed to this recent price decline than noted venture capitalist and Draper Fisher Jurvetson (DFJ) partner Tim Draper, who on 2nd July revealed he purchased all of the nearly 30,000 BTC seized from now-defunct online black market Silk Road and sold by the US government. In a new interview with CoinDesk, Draper revealed he has been surprised by bitcoin’s recent decline in value, though he remains optimistic in its long-term value as an asset. Draper told CoinDesk: “I guess the markets aren’t seeing what I am seeing. An entire economy is being rebuilt. I have a price target of $10,000 in three years. Even that may be pessimistic.” The remarks are notable given that, should Draper have paid market price for the BTC holdings, he would have lost roughly $5m on his investment to date. Bullish in emerging markets Draper also addressed his overall investment strategy and recent moves, most of which have targeted bitcoin startups in emerging markets. The 56-year-old investor, who has contributed to recent funding rounds raised by BitPagos, Korbit and Volabit, told CoinDesk that he believes these companies will ultimately succeed in the face of steep challenges. Draper’s remarks suggest that he foresees these companies being able to overcome any obstacles posed by regulation and a current lack of consumer awareness, stating: “These companies are making it easier for people to do business in their countries. As long as the governments realize that they are better off when their people are successful, it should be smooth sailing for our bitcoin investments.” Investors should buy bitcoin Price decline aside, Draper said he believes that investors should continue to seek opportunities in the bitcoin market, saying he would “encourage people to buy bitcoins and spend them”. When asked what advice he would provide to investors and entrepreneurs observing the market, he pointed to bitcoin’s long-term utility as well as its low-cost transaction network. Draper said: “I assume anyone who used to send money through Western Union already is familiar with how much they can save using bitcoin.” He went on to suggest that, in this view, investors should continue to seek opportunities available by both investing directly in bitcoin and its support infrastructure. “My thinking is that bitcoin is here to stay,” Draper concluded. Images via Wikipedia  InvestorsTim Draper
Original author: Pete Rizzo

Example of a RushWallet Fundraiser: Sean's OutpostExample of a RushWallet Fundraiser: Sean’s OutpostRushWallet, the browser-based platform that generates fully functional bitcoin wallets in mere seconds has added a new feature: fundraising campaigns. The RushWallet team says the ‘Fundraiser’ tools can be used to fund one-off projects of any size, including charity and startup campaigns, office pools, poker games, bets and even freelancers invoicing for jobs. Easy progress tracking Essentially the new feature gives campaign organizers a more convenient way to keep track of one or more collection projects, providing the ability to manage several campaigns from the same basic wallet address and monitoring what percentage of pre-set target amounts have been raised. All functions take place locally in the user’s browser or on the bitcoin block chain, and there is no central server. Users can also add a YouTube video to the main page, should a multimedia introduction be desired. To kick off the new service and demonstrate its features, RushWallet has teamed up with Sean’s Outpost to fund the charity’s latest project: the transformation of an 11,000 sq/ft thrift store into a skills workshop for its homeless clientele in Pensacola, Florida. How it works Users begin by creating a new wallet at RushWallet.com, or using an address/wallet created previously. Users may opt to set a password for the new wallet or keep it open for convenience. However, passwords are strongly recommended for users on public machines and wallets that may hold large amounts of bitcoin. If it’s a new wallet, note down the URL and keep it secret, as this is the ‘brain wallet’ allowing full access to the bitcoin addresses. To create a Fundraiser from the wallet, click on the ‘Settings & Tools’ icon at the top right of the screen, then select the ‘Fundraiser Manager’ icon that appears. RushWalletCreating a projectFrom there, you may either create a brand new fundraiser or import a previously created one. Complete the details including name, target amount in BTC, and other options. Also note the 10-digit ‘Fundraiser ID’ code. RushWallet: Fundraiser ManagerFundraiser projectsThe fundraiser will then launch in a new browser tab. It also provides a shortened link and buttons to automatically post the fundraiser details on Facebook and Twitter. Creators can ‘sweep’ funds from the fundraiser address into the original wallet that created it at any stage, and the total percentage raised indicator will remain unchanged. Clicking on the ‘Payment Request Manager’ button in ‘Settings & Tools’ allows you to create a request a specific amount, or in other words, an invoice. RushWallet: Creating a Payment Request screenCreating a Payment RequestBoth Fundraisers and Payment Requests have unique ID codes which can be imported into another browser if needed. Decentralized and free RushWallet comes from the same team of developers based at Toronto’s cryptocurrency co-working space Decentral, which also developed the KryptoKit instant wallet plug-in for Chrome browsers. RushWallet fundraisers, the brainchild of lead developer Steve Dakh, continue the team’s ethos of developing bitcoin services that prioritize speed, convenience and decentralization. Team leader Anthony Di Iorio told CoinDesk that since all functions are browser-based, no-one has the ability to track or control how the service is being used. “It’s decentralized. We have absolutely no say in what the funds are being raised for. We don’t know what people are doing, because it’s not stored on any server. All the information turns into the link itself.”  Images via RushWallet Anthony Di IorioCanadaKryptokit
Original author: Jon Southurst

Overstock Overstock officially launched its updated e-commerce checkout system today, a new feature that allows shoppers in 107 new countries to buy products with bitcoin via its international website, O.co. The announcement marks the first expansion of Overstock’s bitcoin payment service beyond the US, bringing the checkout option to major global markets such as Argentina, Brazil, Canada, China, France, Germany, Israel and Japan. The news comes roughly nine months after Overstock first began accepting bitcoin this January through a partnership with Coinbase. Speaking to CoinDesk, Overstock CEO Patrick Byrne framed the expansion as a way for the company to showcase bitcoin’s cross-border payments capabilities, while expanding real shopping opportunities to the digital currency’s users in new markets. Far from being a value add to the company’s new international checkout system, bitcoin will serve a pivotal role in Overstock’s larger strategy for O.co. Byrne told CoinDesk: “This is our international marketing strategy. We’re hoping that bitcoin enthusiasts around the world start shopping at O.co because they know they can spend bitcoin on more than 1 million products here and have them delivered to the whole globe.” Byrne further revealed the latest way that Overstock will seek to incentivize shoppers using both its US website and its international platform, saying that 4% of the money the company saves by using bitcoin will be donated to support groups that promote and defend bitcoin adoption. The Chamber of Digital Commerce will be the first recipient of funds from Overstock, though Byrne could not confirm if the group had yet received any funds. Supporting bitcoin worldwide Byrne told CoinDesk that Overstock is already in the process of vetting bitcoin organisations from around the globe. The goal, he said, is to create a list of groups that, like the Chamber of Digital Commerce, will be able to benefit from spending on the e-commerce website. Rather than establish any formal marketing strategy to promote the launch, Byrne said Overstock will rely on the support of the global community, who with their spending will be able to ensure that non-profit digital currency organisations can continue their work. Byrne told CoinDesk: “If all the bitcoin users around the world did their shopping at O.co in bitcoin, just the 4% of that would provide a tremendous amount of funds to be given back to bitcoin foundations. That’s all the money they would need. All the foundations would get fully funded.” Chamber of Digital Commerce president Perianne Boring told CoinDesk that her organisation was honored at the news, saying: “We are gratified that the work of the Chamber is being recognized and we pledge to use these funds to further promote the acceptance and use of digital currencies among government and the larger public.” Implementation delay Of course, the formal international bitcoin payments launch came nearly two weeks after its originally scheduled launch on 1st September, a delay that was widely discussed among Reddit users in the bitcoin community. Addressing this subject, Byrne said the delay was due to the difficulties the company experienced when integrating its new checkout process into its international website. He said that today’s launch marks the end of a six-month effort by his team, of which just one month was dedicated to bitcoin development. Representatives from the company told CoinDesk on 2nd September that the process had been held up by unforeseen development delays, and that it hoped to have the upgraded international website up and running by 4th September. However, both deadlines passed without any updates until today’s news. International ambitions Bitcoin could also prove to be a boon for Overstock, which currently sees only about 10% of its traffic from overseas. By adding bitcoin support, Byrne hopes to change this narrative, winning customers who are more likely to use bitcoin as their primary online spending tool. For example, Byrne told The New York Times in August that he believes adding bitcoin as an international payment option could bring the company as much as $2m in additional revenue this year. Notably, the move coincides with Coinbase’s own international expansion announced yesterday. The California-based bitcoin services provider and payment processor is now available in 13 European countries. Images via Overstock and Shutterstock OverstockPatrick Byrne
Original author: Pete Rizzo
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