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New York sidewalk
Xapo has announced that it will exclude customers residing in New York should the state’s BitLicense proposal pass in its current form. Penned by founder and CEO Wences Casares, Xapo’s blog post joins a growing chorus of bitcoin companies that have issued public statements on the matter. In August, on behalf of bitcoin services startup Circle, CEO Jeremy Allaire criticised issues in the proposal that he said could “discourage innovation”. Casares builds on Allaire’s arguments throughout, stating that while Xapo is not against smart regulation, New York’s proposal overreaches. As a result, he argues, it threatens not just the wider digital currency ecosystem and its potential to grow and innovate, but consumers as well. The CEO said: “New York’s proposed BitLicense in its current form is the wrong form of regulation and in fact poses a threat to New York and New York consumers. [...] We believe that at this early stage in bitcoin’s history, investing the time needed to arrive at the right regulation is time well spent.” Regulation that hurts the industry will also harm consumers, who may be forced to use inferior financial services, Casares added, stating: “The provision of services simply will not be up to the standards that we aim to provide, and New York consumers will suffer the consequences.” Casares went on to criticize New York’s BitLicense proposal as anti-competitive, given that it would favor well-capitalized companies. The comments are notable as Xapo now leads the bitcoin industry in total VC funding. Launched in March, Xapo has raised $40m to date. The company offers bitcoin wallet, storage, and most recently, brokerage services. Timely and deliberate action Like many of his peers, Casares praised New York’s regulators for their willingness to engage with the industry on crafting regulations. He lauded New York’s decision to extend the comment period for the regulation in light of feedback for the industry. New York, Casares said, would be wise to continue to adopt this collaborative approach: “We are at a pivotal time in the bitcoin industry and New York has an opportunity to achieve a leadership role in the space. To do so, however, we believe NYDFS should carefully consider the concerns of the broader bitcoin community regarding the substance of the BitLicense and consider a more orderly timeline for its adoption.” Casares further offered the assistance of his legal and compliance teams to New York regulations. Still, he said that he believes regulators have much of the tools they need to police bad actors in the bitcoin industry, adding: “We believe the existing regulatory landscape, such as regulations applicable to money transmitters, are sufficient for purposes of consumer protection.” Self-regulation with assistance While Casares was critical of New York’s proposal, he emphasised that the right regulation will benefit the bitcoin industry and empower it to serve consumers with more robust offerings. In particular, Casares cited bitcoin’s use in illegal marketplaces such as Silk Road and the collapse of the market’s once-leading exchange Mt Gox as obstacles the industry has met and overcome. Casares praised the work of the entire bitcoin ecosystem, naming companies such as BitGo, BitPay, Bitstamp, Circle and Coinbase as those leading the way for the industry to embrace new solutions that make owning and using bitcoin safer, stating: “The goal is to boost customer protection and confidence – and we as an industry have done so because our customers, not regulators, demand it.” Casares concluded by stating that Xapo intends to file formal comment on the NYDFS proposal and that it will alert the bitcoin community through its blog when it does so. New York sidewalk via Shutterstock BitLicenseNYDFSXapo
Original author: Pete Rizzo

DigitalTangible DigitalTangible has announced the formal launch of its crypto 2.0-powered, decentralized marketplace for gold and bitcoin traders. While existing services allow bitcoin users to buy gold with bitcoin, DigitalTangible offers a novel innovation for the market, using an underlying crypto 2.0 protocol that issues tokens representing physical gold and attaches them to bitcoin addresses, thereby allowing traders to seamlessly move between bitcoin and gold. Speaking to CoinDesk, DigitalTangible founder Taariq Lewis framed his service as one that will better cater to the needs of bitcoin’s existing gold enthusiasts, while attracting members of the wider precious-metals community who may have yet to participate in digital currency markets. Lewis told CoinDesk: “If you look at our homepage, you’re looking at the price of bitcoin and the price of gold. If gold is going down and you own gold, and bitcoin is going up and you want to own bitcoin, you want to be able to move out of gold into bitcoin quickly and we’re going to be the only platform for you to do that.” While existing gold-buying services do cater to the community, Lewis painted these solutions as ill-equipped to handle the needs of his target investors. A veteran of the crypto 2.0 community, Lewis previously worked for Mastercoin prior to starting DigitalTangible earlier this year. The formal unveiling follows DigitalTangible’s soft launch on 23rd July. DigitalTangible’s gold tokens are currently being issued on the Counterparty and NXT protocols, though it supports a number of different alternatives. Gold dealer support DigitalTangible counts two of the more visible gold-buying services that cater to bitcoin users as partners – Amagi Metals, which recently announced it would cease to accept fiat currency by 2017, and Agora Commodities, which has sold more than $10m-worth of gold and silver for bitcoin to date. The launch coincides with the formal unveiling of the firm’s partnership with Amagi, and to mark the occasion, the companies are offering all customers free overnight shipping on select gold products for a limited time. Lewis explained that both Agora and Amagi will sell gold on the DigitalTangible platform, competing for customers and thereby driving down costs for users. As the project’s lead vendors, Lewis added that the partnership is attractive for Agora and Amagi as they can increase sales and drive down marketing costs. digitaltangible Agora Commodities president and CEO Joseph Castillo framed DigitalTangible as a way to bring gold trading into the 21st century, telling CoinDesk: “Traders don’t want to wait for gold to have to get to someplace or anything like that. The thing that [DigitalTangible] can do is it’s a platform where gold and bitcoin can go between each other, instantly, and that’s where I see the value in what they’re doing.” Castillo praised the project while also framing the partnership with DigitalTangible as another way his company is catering to gold buyers, many of whom, he indicated, still want to hold physical gold. He added: “I like what they’re doing, I would like to have it for my own.” Proof of custody DigitalTangible is built on three layers of technology, with the topmost part being its e-commerce-inspired gold and bitcoin marketplace. The platform is then supported by its crypto 2.0 protocol, which allows for trading between gold and bitcoin, and its custodian network that provides the gold listed on the platform and stores the holdings. Agora and Amagi ship the gold they sell to a depository service, where the third-party will verify that the shipment has been made for customers. To encourage trading, DigitalTangible’s website features a ‘proof of custody‘ section that aims to ease the potential anxieties of prospective buyers. The page shows a list of the platform’s top asset holders, along with detailed listings of their precious metals holdings and their estimated value in bitcoin. DigitalTangible Lewis explained that his company does not act as a custodian of any of the assets that users purchase on the marketplace. He noted that all gold is stored in third-party depositories and that customers retain the private keys for any bitcoins purchased on the platform. DigitalTangible uses three services to store its gold on behalf of its customers, and added that the platform offers custody in Asia, Europe and the US. Attracting gold buyers Still, Lewis acknowledged that security alone is not enough to entice the market of buyers DigitalTangible is looking to attract, suggesting that his platform will also seek to provide a cost savings to traders. Lewis said that while low premiums are a luxury usually only afforded to large gold buyers, his platform will remove this restrictive cost while retaining high-quality offerings: “We’re selling the highest-quality gold at essentially zero premium, since we are now bringing Amagi and Agora to a platform where they can try to get customers onboard with us. So, the premiums for gold on our site are the lowest you’ll find.” Of course, while bitcoin enjoys some support from the gold community, not all gold investors are enthusiastic about alternative digital stores of value. As such, DigitalTangible and its partners are investing in a marketing push that aims to fight against any negative perceptions of bitcoin. Lewis suggested that DigitalTangible will target the gold market through traditional digital marketing strategies, while its partners, Agora and Amagi advertise their services through popular bitcoin websites. He added that the company is also “trying to reach out to people who are managing their own retirement accounts, doing their own retirement planning”. Evaluating opportunities Given that DigitalTangible is a decentralized marketplace, Lewis also addressed the possibility that his service would expand beyond gold. However, he suggested that, as of now, his team wants to specialize in gold in order to provide the best user experience. Lewis cited the sheer size of the gold market as a reason that this specialization is a long-term businesses advantage, noting that it’s a more than $5tn annual market. Still, he says he has been approached by a number of altcoin developers that want to add their offerings to the service, as such, Lewis indicated the opportunities for expansion are being considered, concluding: “If we can do gold really well, then any asset is open to us. Don’t be surprised if you see cocoa beans here. We’ve seen a lot of scams, people pre-announce stuff that’s not ready, so we’ve been really trying to navigate that properly to launch an amazing product to do something that was previously costly and impossible.” Gold scale image via Shutterstock DigitalTangibleGold
Original author: Pete Rizzo

london
More than 150 startups and venture capitalists have backed a new manifesto outlining a number of recommendations for the UK’s FinTech industry that include bitcoin-friendly legislation. The ‘Startup Manifesto’, as it is called, was published by the Coalition for a Digital Economy (Coadec) this week, and was authored by Guy Levin, the coalition’s executive director. Notable investment firms backing the proposal include Index Ventures, King and Seedcamp. Coadec is sponsored by Google, Intuit, TechHub and iHorizon. FinTech recommendations The document urges the British government to enact a number of new laws and adopt several business-friendly policies, ranging from tax cuts to visa reforms, but much of the focus is on the financial technology industry. The manifesto notes that the government has already made adopted a number of policies designed to foster innovation, citing Project Innovate as an example. Notably, however, another of the FinTech recommendations is for the creation of a new legal framework for digital currencies: “The next government should continue this support, including reviewing the major barriers around fintech innovation. This should include looking at the regulation of cryptocurrencies such as bitcoin. HMRC should take the lead in being one of the first tax authorities to establish a framework relating to tax, VAT and other compliance requirements related to cryptocurrency.” Other measures that could potentially affect bitcoin in Britain involve a proposed review of anti-money laundering (AML) and know your customer (KYC) rules. The manifesto suggests Britain should discard analogue identity technology and move to a new digital system for documents such as birth certificates, exam and degree certificates, driving licences and other documents. “Moving towards secure online identity assurance will unlock innovation for startups. For example, FinTech companies who are required to conduct Anti-Money laundering (AML) and Know Your Customer (KYC) checks on their users would benefit from using digital identity checks,” the manifesto states. Government support The government is already working with five identity providers to create a new system for identity assurance for government services. Coadec argues digitalisation should be expanded beyond government services, as it would help all businesses, but startups in particular. Last month saw the launch of a new initiative designed to support innovation in the financial sector in the UK. Innovate Finance aims to establish the country as a market leader in the FinTech sector. The high-profile launch was attended by Chancellor George Osbourne who used the opportunity to buy some bitcoin on a Robocoin ATM. Project Innovate is another example of Britain’s eagerness to foster innovation in FinTech. The initiative was announced by the Financial Conduct Authority last June. The regulator said it wants to ensure innovative developments like bitcoin are supported by Britain’s regulatory environment. London Image via Shutterstock CoadecUK
Original author: Nermin Hajdarbegovic

Residents of Indonesia can now buy and receive bitcoin over the counter at over 10,000 ‘Indomaret’ convenience stores around the country. The project was developed on the initiative of Bitcoin Indonesia and will run through its exchange Bitcoin.co.id in partnership with payment processor iPaymu. Indonesians can buy bitcoins at 10,000 convenience storesbitcoin.co.id’s promotional posterAccording to Bitcoin Indonesia founder Oscar Darmawan, this now puts bitcoin within easier reach of the country’s large unbanked population, estimated at over 200 million. According to the World Bank’s Financial Inclusion Data from 2011, only 20% of Indonesians aged 15 years or over have an account with a formal financial institution. Given that Indonesia is the world’s fourth most populous country with a population of 250 million, that is a huge number of people in need of a better payments network. A system for the unbanked Users of the service will first need to create an account with Bitcoin.co.id, then select ‘Top-up via Indomaret’. They are then provided with a code to take to their nearest Indomaret convenience store, along with some cash, before returning to their online account where they will find their bitcoin waiting. To those living in a world of electronic bank transfers, this payment method may seem a little time consuming. However, it is not a lot different than a trip to a bitcoin ATM and, if the only method of making payments available to you is the cash in your hand, it may be the easiest onramp to bitcoin’s international network. The only ‘catch’ with the system is that to use the convenience store option, customers currently must have Internet access to use the exchange. Darmawan indicated that another product is in the pipeline to enable those without even web resources to source the digital currency. Bitcoin’s rise in Indonesia Bitcoin.co.id has grown markedly since it began operations last December. At that time, bitcoin was little-known in Indonesia and the exchange traded only about 5 BTC per day. By the time it launched a full open-order exchange in May, it was processing about 30 BTC in trades daily, indicating bitcoin’s growth in popularity. Bitcoin’s public prominence in Indonesia is thanks to the advocacy efforts of local enthusiasts like Darmawan, meeting with regulators and signing up merchants. Bitcoin Indonesia has also played a key role in the Bali-based BitIslands project, a campaign to promote bitcoin use and acceptance in the popular tourist destination. That project has also been successful so far: its latest addition is the BitTour travel services agency, which allows tourists to pay for flights, trains, tours and hotel accommodation. AsiaBitcoin IndonesiaIndonesiaPayments
Original author: Jon Southurst

knc cloud KnCMiner has unveiled a new cloud mining service, offering six-month contracts out of its Arctic bitcoin mine. KnC Cloud, launched on 2nd September, leverages the company’s existing data center space in northern Sweden. The so-called Clear Sky mine boasts more than 7 petahashes per second in estimated mining power. KnCMiner said the program will benefit from the cheap cooling and local renewable energy sources afforded by the Arctic Circle. These geographical advantages have led many companies in the bitcoin mining space to look to the Arctic, potentially establishing the region as a key battleground in the race to generate bitcoins. KnCMiner director of marketing and public relations Nanok Bie told CoinDesk that the launch reflects a demographic shift taking place among the bitcoin community, with more miners opting to outsource their hashing power rather than operate home mining rigs. He noted: “We’re launching cloud services because of shifts in the market and demand from would-be customers. Home mining is becoming more and more difficult because of energy costs etc. Having your mining in the cloud has obvious advantages  – we can source green electricity cheaper for instance, and have other bulk advantages.” Next-generation services The KnC Cloud service consists of three different packages between 1 and 3 TH/s, with the cost averaging between $1.99 per GH/s to $1.79 per GH/s, respectively. According to the company, the hosting costs account for any mining-related fees and reflect the actual price of the service. Bie explained that the service is indicative of how next-generation mining services may evolve in the months and years ahead, with offerings including more sophisticated resources and value-added services driven by demand. He told CoinDesk: “We think our offerings will stand out over the long run, as customers don’t have to stand in line in an auction, don’t have to worry about the Chinese renminbi currency exchange versus USD or BTC to calculate costs going forward and we’re also not offering strange products where the users don’t know where they are mining, if they are mining at all etc. Our fees can not rise over time as there are no fees.” Like other cloud hosting solutions in the mining space, KnC Cloud offers a proprietary user interface that provides tools for miner configuration and balance management, as well as data for performance analysis. Product expansion continues The launch of its new cloud hosting follows a string of announcements from the Sweden-based mining company. Earlier this month, the company said that its Titan line of scrypt miners had entered the final stages of production and that it was moving to the testing phase at its facilities. At the time, KnCMiner clarified the unit’s final projected hashing power as well as its expected power requirements. KnCMiner’s software offerings also received an update this week. Joining a growing list of companies that opt to use the denomination, KnCMiner announced on 27th August that its mobile wallet app would use “bits” instead of BTC. The summer hasn’t been entirely rosy for the company, however. In June, KnCMiner took to social media to defend itself against a rising customer backlash regarding its policies. Customers accused the company of reneging on earlier promises related to its then-delayed Neptune line of bitcoin miners. Image via Shutterstock Arctic CircleKnC CloudKnCMiner
Original author: Stan Higgins

dollars
Bitcoin holds potential to act as “the Internet of money” if regulated correctly, according to a new report from Google policy advisor Andy Yee. In an article for Internet Policy Review, Yee, who works as an analyst for Google’s Asia-Pacific division, argues that certain sectors of the bitcoin economy should be targeted with regulation modelled on existing digital frameworks. Breaking the bitcoin ecosystem down into layers, Yee concluded that businesses that connect investors and consumers with digital currency should be subject to regulation. In contrast, users and developers are a poor target, he added, because of the broader nature of the Internet. Yee wrote: “The logical and user layers are populated by private actors from the bitcoin community and real economy respectively. These actors are small and can easily escape from regulation and enforcement. At the information layer, intermediaries of various kinds have emerged to bridge the two networks. Their position in the Internet architecture enables them to capture information flows and identify wrongdoers. In addition, they are larger and more established actors, making them more amenable to state regulation.” The paper goes on to advocate for a regulatory approach that allows innovation to take place while addressing the concerns of consumer safety advocates, financial regulators and law enforcement agencies. Restrictions not needed A concern often voiced by politicians and policy makers is that bitcoin, as a technology, is too opaque to allow for relaxed legal boundaries. This is why Yee and others suggest that any proposed rules should target services that actually handle people’s money rather than those creating cryptocurrency software. Yee added that the block chain actually provides regulators with a trove of useful information. As bitcoin is a pseudonymous transaction network – and research has shown that network identity has the potential to be deduced through pattern analysis – regulation shouldn’t be crafted with the mindset that digital currencies are too far in the digital shadow, he said. Yee concluded that many of the same rules that apply to financial companies could be used to regulate bitcoin, but only after finding a happy medium that allows companies to thrive, saying: “These laws and regulations of general applicability can in theory be applied to the emerging non-financial, information-based companies in the bitcoin economy. But a balance needs to be struck between eliminating instances of gatekeeper-aided wrongdoings and avoiding excessive burdens on gatekeepers.” Illicit use a non-issue Yee addressed bitcoin’s use in global narcotics markets, as well as other illegal activities, saying that regulators are right to target drug dealers but need to refrain from harming law abiding members of the nascent industry unnecessarily. The debate shouldn’t be contentious, he adds, because criminals using bitcoin are likely to redeem it for fiat currency. At this point, those persons must interact with service-level companies that would fall under any proposed bitcoin regulation. Yee stated: “Criminals need to go through intermediaries in this layer to exchange between the bitcoin and real economies. As a result, these exchange mediums collect and retain significant amounts of information, which can be utilised by law enforcement to detect money laundering and the underlying criminal activity.” He concluded by saying that any legal framework targeting digital currency need to be founded on an “adaptive” approach. By doing so, financial regulators can “ensure that illicit activities can be deterred while ensuring that society can fully benefit from the innovation and creativity on the bitcoin network.” Google’s bitcoin exploration Notably, Yee is not the first Google official to go on the record and speak about the possible applications of both bitcoin and block chain technology. For example, the company’s director of ideas, Jared Cohen, termed digital currencies “inevitable” at this year’s SXSW conference. Bitcoin has been on Google’s radar as far back as 2011, when embattled Wikileaks founder Julian Assange advocated for the technology in a wide-ranging conversation with Cohen and Google chairman and then-CEO Eric Schmidt. Further, Google itself now offers bitcoin price and conversion information. Googlereport
Original author: Stan Higgins

hal finney Armory Technologies has extended its ongoing donation drive in honor of late bitcoin developer Hal Finney. Finney, a pioneer in the field of cryptography and the first person to receive a bitcoin transaction, passed away last Tuesday at the age of 58 after a long battle with amyotrophic lateral sclerosis (ALS). In his honor, the open-source bitcoin wallet management platform announced today that it would match up to 10 BTC in donations made to the Hal Finney Bitcoin Fund for ALS Research through its simulfunding platform. Originally scheduled to end 1st September, the donation drive is aimed at highlighting the bitcoin contract capabilities of its version 0.92 Armory client. Armory lauded Finney and his contributions to the wider bitcoin ecosystem in its blog post announcing the expansion of its funding drive, saying: “[Finney] was a true crypto pioneer whose ideals were completely in line with Armory’s and we’re happy to do anything we can to support ALS research.” Launched on 30th August, the fund is accepting donations through Thanksgiving (27th November) in the US with the goal of contributing the final total to the ALS Association, a US-based non-profit that raises money for research and patient services. At press time, 7.5 BTC (or roughly $3,352) has been raised through contributions made to Armory’s bitcoin donation matching initiative, meaning 15 BTC in total has been collected for its original recipient projects. Simulfunding in action The donation drive provides Armory with its latest opportunity to showcase its simultaneous funding (simulfunding) interface, a feature of its latest client that allows users to create a simple bitcoin contract for use in crowdfunding, donation drives and personal agreements. Armory’s platform allows users to create or claim promissory notes and add them to their wallet management system. The promissory note, in turn, provides the conditions under which both parties will make a certain transaction – in this case, a contribution to a funding effort. When the specified amount of funds is raised, the contract executes and all funds are transferred as described in the contract. Further, contract terms that are not met are not executed. The news also follows the formal unveiling of the Hal Finney Bitcoin Fund for ALS Research last weekend. The fund was created through a joint effort by Coinapult co-founder Erik Voorhees; Sean’s Outpost founder Jason King; venture capitalist Roger Ver; BitPay; and the Bitcoin Foundation Armory’s drive continues Launched on 29th July, Armory’s simulfunding demo aimed to highlight one of the platform’s newest capabilities. Armory also recently released Lockbox, a multi-signature interface for bitcoin, in the same update. At the outset, the initiative offered up to 20 BTC to a list of charities selected for promoting “open-source and digital freedoms”, including the Free Software Foundation; Electronic Frontier Foundation; College Cryptocurrency Network; OpenSSL; the Chamber of Digital Commerce; and the Bitcoin Foundation. There, users can find a list of the available promissory notes being offered by Amory users, along with those that have been matched by the community. Armory Technologies Simulfunding To access simulfunding, users need to install Armory version 0.92. More detailed instructions on signing up for the service or updating an existing Armory wallet can be found on Armory’s donation matching page. Image via Fran’s Fragments and WNYC.org ArmoryHal Finney
Original author: Pete Rizzo

Bitcoin gambling
Gambling is big business, and online gambling represents a significant and growing proportion of that business – about 8% currently. Research company H2 Gambling Capital, which values the online gambling market in terms of gross winnings, put the global market value at €21.73bn ($28.54bn) in 2012. Furthermore, the firm expects a 9.13% compound annual growth rate through 2015. Right now bitcoin gambling only accounts for a tiny percentage of the total of online gambling revenues. However, it is clear that the opportunity exists to make significant income within the industry and, with bitcoin’s advantages in terms of low-cost, speedy payments, cryptocurrency-based gambling firms are doing their best to do just that. CoinDesk spoke to some of the bitcoin gambling community’s experts to see what challenges they’re encountering along the way. Wide-open market The bitcoin world loves to gamble, in one form or another. In his book, The Anatomy of a Money-like Informational Commodity, Tim Swanson points out that half the transactions on the bitcoin network were being used to transmit bets to SatoshiDice, one of the earliest bitcoin betting sites, created by Eric Voorhees. Further, an analysis in August 2013 showed that roughly 5% of the value of all bitcoin transactions in June that year were flowing through SatoshiDice. That means lots of very small transactions, which is, after all, one thing that cryptocurrencies are very good at. Ivan Montik, CEO at SoftSwiss, provides online casino software for entrepreneurs, and its solutions support fiat and bitcoin gambling. “We’ve got about 400 requests for the launch of a bitcoin casino in the last six months,” he said. “We constantly have three to five casinos in the set-up phase, and could have had more if we had more resources.” Not all bitcoin bets are low in value. Montik said that there are some high rollers in crypto-land: “On one client website, launched just about a year ago, there are single wagers reaching 200–400 BTC. The total amount of bitcoins wagered on all of the sites operating with the SoftSwiss platform is equal to $10m per month.” The regulation challenge Cryptocurrency’s success in this market depends on several factors. One of the most important is regulation and, notably, SatoshiDice doesn’t operate in the US market, because of the strict gambling laws encountered there. In 2006, the US Justice Department introduced the Unlawful Internet Gaming Enforcement Act (UIGEA), designed to quell the rising tide of Internet gambling sites. It made it illegal for US players to process payments using US banks. In April 2011, the US government raided the three most popular online poker sites operating there, in an event known as ‘Black Friday’. This had a chilling effect on online poker sites in the country. Bitcoin, however, has emboldened some entrepreneurs, who are openly allowing US players to gamble using the cryptocurrency. One of these is Seals with Clubs, managed by seasoned poker player Byron Micon. “It would be trivial to circumvent some ban. Seals is open to the world. There’s no banking at all done on the site. It’s a pure bitcoin poker site, so this is a totally brand new thing,” said Micon. ”It’s only been a few years for the legal world and there’s nothing at all that says anything about this protocol.” There are also signs that individual states are softening their approaches to online gambling, in any case. Delaware has allowed online gambling, as have New Jersey and Nevada. The latter state has also passed a law enabling it to form partnerships with other states to let their residents gamble in its online casinos. Slowly, then, things seem to be opening up in the US, which is creating a more positive environment for cryptocurrency gambling sites that are already operating there, anyway. The importance of innovation Another thing working in cryptocurrency’s favour is the innovative nature of its community. The cryptocurrency concept is itself entirely new, built on the cryptography–based decentralised autonomous networking principles introduced by Satoshi. In such an innovative environment, is not surprising that new technologies and gaming models have sprung up. Adrian Scholz, founder of SatoshiBet.com, argued that the ‘dice’ gaming model on which sites like SatoshiDice were built is an example of such an innovation. He said “This game did not exist in online casinos before bitcoin, yet it turns out to be more popular then games like roulette and blackjack.” There are other breakthroughs that came from the crypto gambling community. “Take Provably Fair, which created a trustless shuffling system,” he said. “Take HTML5. Most of the classic online casinos run games still require Flash or Java plugins.” “Take investing! Just-dice introduced the concept of allowing players to be part of the bank, which turned out to be pretty much the ultimate marketing vehicle,” he concluded. There are other areas of innovation, too. In particular, mobile gaming is becoming increasingly important. Cloudbet, formed in 2013, is a sportsbook and casino environment where players can deposit instantly, bet, and withdraw again as soon as bets are graded. The firm recently launched a mobile casino, and is preparing a mobile sportsbook. “We’re now seeing that a lot of gaming industry experts are coming in with a wealth of gaming industry knowledge and experience,” said Cloudbet spokesperson Leandro Rossi, in an indication that the industry is maturing. Challenges to overcome There are still challenges for those wishing to start bitcoin casinos, however, and different experts see different threats. Scholz singled out legislation as the biggest issue. “We saw major operators that were willing to introduce bitcoin (for example Vera&John held out because of the unclear state bitcoin is in,” he said. Although now, that casino has taken the taken the plunge. Mitonik pointed to marketing as another significant problem. Effectively, as the space begins to fill out, it could become difficult for new entrants to make themselves heard above the noise. He said: “If you’ve never dealt with marketing before, you’d better prepare the budget and let professionals work on it.” Mike Hadjuk, founder of Infiniti Poker, argued that security is the biggest problem. “Nobody is impermeable. Even the Pentagon can get hacked. To me that’s our number one concern,” he said. Hadjuk is another example of an innovator in the cryptocurrency gambling space, having created a service that would allow players to view each other using live web cams. The soft launch of his service was compromised by players creating multiple accounts and using them in combination to steal no-deposit credits. He is now preparing for a Q4 full launch. Micon also highlighted security as an issue: “It’s about keeping the bitcoin safe. That’s not just about securing cold storage – it goes beyond that. It’s about looking after issues such as automated cash-outs, to help sites scale without allowing criminals to take advantage of poorly configured scripts. Seals with Clubs was hacked last December, and lost 42,000 passwords in the process. Micon explained that the team behind the site learned a lot from a security perspective. “No one lost their coins. We were able to drastically improve up to and beyond industry standards for our password table,” he said. Educating users Perhaps the biggest challenge for cryptocurrency gambling sites, though, is the uptake of bitcoin itself. Cloudbet’s Rossi said: “There is still a high educational barrier to entry. People can transact with Visa and MasterCard without understanding how the payment network works, but to transact with bitcoin there is still a requirement of technical knowledge.” The company has launched mainstream campaigns to educate potential players about bitcoin, but this is something that the bitcoin community has to broach collectively, he indicated. The good news for bitcoin gambling sites is that they are still early in the process, meaning that there is lots of room for disruption, said Micon: “Some kid is going to come up with some bitcoin gambling game. They will be 12 years old and they’ll make $480,000. That’s just what’s possible.” Possible, for sure. But with a few challenges along the way. Gambling image via Shutterstock. Gambling
Original author: Danny Bradbury
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