Original author: Kadhim Shubber
Coin News
Original author: Danny Bradbury
For the uninitiated, Williams rose to prominence around the time of the New York Department of Financial Services hearings on virtual currencies in January. He was a late addition, not even on the original schedule.If his attendance didn’t turn heads, his statements did, when he notably claimed bitcoin to be tremendously overvalued, and predicted it would crash to the single digits in value this year.The backlash was swift, and TV networks and news outlets ate it up, rushing his comments to print.Entire reddit threads were dedicated to dissecting his subsequent articles, and calling him out on his blasphemous predictions.It’s clear what Williams adds to the conversation: he’s the one needling the balloon. What’s less clear is what’s in this for Williams, what does he get out of playing with the needle?Pete Rizzo: So, I think we were on the subject of you being a hater …Mark T Williams: In general, I think it’s easiest to put people in boxes, saying someone’s pro and someone’s con, or someone’s a hater and someone’s not.Markets don’t function well when there isn’t good information. I always felt that bitcoin had the upper hand, and that the markets weren’t transparent. I think regulation creates that transparency. I always felt consumers were disadvantaged. I don’t think I’m a hater, I think I’m an advocate for consumers who want to buy virtual currencies.In my hearing, I warned about a lot of unaddressed risks and some of those are coming true.If you read my testimony, I spent a lot of time talking about the exchanges, and what does Mt. Gox do? Blows up. So that’s it – I’m not a hater. “I think I see virtual currencies as something of the future.”Rizzo: Well, Warren Buffett seems to agree with you. Williams: Yeah, his number two guy, Charlie Munger, he was asked about bitcoin. He said it’s “rat poison“. I went on TV, or Fox or Bloomberg; I said it’s not rat poison, that’s not fair.I think people when they buy into bitcoin, they think they’re buying into a movement. It’s emotional, right? Not only is it a physical investment, but an emotional investment, and I think that’s what I’ve spurred a lot of resentment about.People just look at me, and they say “Why doesn’t this guy get it?” Rizzo: Do you read the comments? Williams: Sure, some of them are ridiculous. I get people who send me emails.If you’re a smart investor, you want to look at those who are in your camp, but also those with dissenting views, sometimes you can learn a lot from the counter argument. Rizzo: So, is your goal to make bitcoin better? Williams: I think I see virtual currencies as something of the future. Rizzo: Just not good right now? Williams: I think there are a lot of design flaws, I wrote a piece for Business Insider, and I said that bitcoin’s DNA is flawed. I’m not talking about the block chain. I describe bitcoin as the locomotive and then there’s the payment system itself. The payment system is the rails. What I think we’ve seen here is that we were told that the infrastructure was strong through January, and Mt. Gox showed us it was weak.Rizzo: It seems like they were using their own implementation of the protocol. Williams: Infrastructure is much wider. The infrastructure is not just the peer-to-peer, the infrastructure is all those people that have bolted on to the exchange. What I’m trying to articulate is that the highway itself today has a lot of third-parties.The system can only be as strong as the weakest link. Mt. Gox was weak …
Rizzo: So, let’s say you’re Mark Karpeles and you’re running a trading card exchange, and, over the course of a year, your firm becomes a multi-billion-dollar company, can you really blame the guy for not implementing enterprise-grade consumer protections? Williams: He should have. He should’ve cared about his customers. It was a black box, and it will come out – he did a lot of fraudulent stuff, because he had control of the information. As a consumer, when you bought, he not only got a fee for the transaction, but he got to see the transaction history throughout the day.I’m sure he cooked that, I’m sure he also set the price for his exchange. I did a lot of analytical studies of that exchange, and it was always 8% to 10% higher than other exchanges.Why is that? If he was having financial problems, by putting the price higher on his exchange, he’d encourage more people to come. Rizzo: It seems that by limiting the number of people who could leave, more people stayed in, and that the price became higher, so people took advantage of that. Williams: Well, if you run an exchange, and you can keep on moving the price up, then you’re encouraging more business. I call him a boiler-room broker. If you house that broker function, you’re not an exchange.Coinbase has three businesses it’s doing right now, and one of its functions is a conflict of interest. They’re trying to reduce price risk for people like Overstock, yet they’re trying to be an exchange on the other side. Rizzo: There’s a lot of opportunity in the space right now. Williams: Yeah, but there’s conflict. I think you have to have controls in place to make sure consumers can’t be taken advantage of. Rizzo: So, if you had a chance to redesign the system, what would you do? Williams: I’ll leave it to the computer geniuses, but it needs to be regulated. State banking examiners are going to regulate it. You’re going to have a national financial regulatory body, you’re just going to have standards and that’s not a bad thing.This conversation has been edited for length and clarity.mark t. williamsMt. GoxNYDFSOriginal author: Pete Rizzo
Original author: Stan Higgins
Welcome to the CoinDesk Weekly Review 6th April 2014 – a regular look at the hottest, most thought-provoking and most controversial events in the world of digital currency through the eyes of scepticism and wonder.Your host … John Law.Taxarama
No matter what Ed Snowden says, Americans don’t really fear the NSA. They don’t generally worry much about the FBI or the CIA. But every American ever born, including everyone in those three-letter agencies, fears the IRS. It nabbed Al Capone, after all, and has a reputation to match.So when it speaks, everyone listens. And it has spoken on bitcoin: it is property, not currency, and falls under capital gains tax law. John Law doesn’t propose to go into the implications of this – already very well covered by CoinDesk’s analytic masterminds – except to note that under US law, you can offset up to $3,000 capital gain losses against general taxation, which may be sadly useful just at the moment.However, the IRS ruling does bring up two intriguing points:First, that to be truly compliant under capital gains law, the degree of book-keeping for all transactions can be truly horrendous for the individual. Imagine having to keep a running tally of market rates every time you buy a burrito or tip a blogger, or receive some bitcoin from a pal.Second, because the IRS’s writ doesn’t run outside the US, bitcoin can be taxed as something quite different elsewhere: Bulgaria, for example, says it’s a financial holding, not property. Dealing with international taxation issues is quite bad enough without having the very nature of the thing you’re dealing with change across borders.One answer for the first problem is that bitcoin is the first widespread native digital currency – and it is a de-facto currency, no matter what label the taxman slaps on it for convenience. It only exists in computers, and computers make very good book-keepers. The IRS could issue guidelines, even open-source code, for wallets and other bitcoin transfer software, that automate information gathering and delivery to IRS standards. It’ll be up to people whether to use IRS-compliant software, but the impetus to do so would be very high.It would even be possible, John Law suspects eventually inevitable, for cryptocurrencies to have their own taxation regime. It is a unique invention. The tax system is set up around property and money, two things that have been around for thousands of years, so the problem of introducing an entirely new fundamental concept hasn’t arisen before. It’s a stunning opportunity, a green-field site in a system absolutely crammed with ancient and complex machinery that’s a nightmare to understand and administer.The second issue is a similar opportunity to change the ground rules. The lack of international taxation standards is a serious problem for the global economy; it’s what lets multinational organisations avoid paying a large proportion of taxes in any regime, and supports an entire industry of well-fed specialists dedicated to legally hiding money.Because bitcoin and its ilk are a unique invention that can be considered as such, the chance now exists for a standardised international taxation regime that doesn’t care – for collection purposes – where a transaction takes place. One set of world-wide rules would change everything.Such thoughts are close to heresy, especially for the libertarian persuasion and anyone else who intrinsically fears world government and the intimate insertion of state apparatus into individual lives. They raise enormous issues of privacy, accountability, international politics and state power. But these are problems already, and at some point we the people will have to sort out how to fix the current messes extant in all these areas.So, John Law proposes, now would be a very good time to start having these thoughts, and having them large. Let’s play what-if. Accountancy meets science-fiction:“Luke, I am your tax inspector …”Well, if Darth Vader was to come to life anywhere, it would be in the IRS.Paper chase
The Chicago Sun-Times now accepts subscriptions in bitcoin. It’s not that big a story as it stands – just an alternative way to pay for an old-fashioned paywalled block of access. As many have noted, the real game-changer would be with bitcoin-based micropayments, letting content providers sell pages of info for the equivalent of pennies or fractions of a penny. That could be finessed further: serve a page instantly for microcash, or let the punter see it for free after a second.For cash-strapped journals, such ideas sound a lot nicer than the current choice of giving it away and trusting to advertising, or hiding your best stuff from the punters until they pay. And advertisers might like it, paying readers to interact with their content.Social media services like Twitter and Facebook could create whole internal reward systems between readers and writers – voluntary, but if you join by putting a dollar’s worth of bitcoin in your account, you’ll get whatever rewards your readership generates. But could the bitcoin system stand up to the tsunami of tiny transactions such a system could generate?Well, yes. A protocol extension scratches that particular itch by creating a trusted channel between buyer and seller that’s purely local and doesn’t convert to a full transaction until the channel is closed or a time limit is reached. An initial agreement is set up between the two sides and then incrementally changed as whatever is being microbought is sent over. When the session’s finished, the final amount is calculated and committed. In effect, it caches the cash.You can read a more technical (OK, OK, accurate) description, and the author notes the new system has been included in bitcoinj, the standard Java implementation. It uses standard bitcoin protocols and cryptography, and copes with vanishing servers and other annoyances.Of course, a lot more work needs to be done to test this out in practice, create ways to let buyer and seller easily set up the transaction, and in adding the relevant magic to content management systems. Shouldn’t take long.Based on the hit rates to John Law’s publishing empire across blogs, social media and comments, he calculates he’ll be able to retire from paid work sometime in 2056. If he types a lot faster.And finally …
This week’s free gift is the Advanced Bitcoin Simulator. It lives up to its name, accurately charting your progression in the bitcoin world from naive newbie to – well, you’ll have to play it to find out.You’ll need a sense of humour, some experience of pointless computer games, an experimental streak, a degree of patience and the willingness to cheerfully survive catastrophe with remarkable resilience.It may well be the most lifelike simulator John Law has ever experienced.Have fun.John Law is an 18th Century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took 300 years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.Spy, Dog, and Gamer images via ShutterstockChicago Sun-TimesIRSweekly review
No matter what Ed Snowden says, Americans don’t really fear the NSA. They don’t generally worry much about the FBI or the CIA. But every American ever born, including everyone in those three-letter agencies, fears the IRS. It nabbed Al Capone, after all, and has a reputation to match.So when it speaks, everyone listens. And it has spoken on bitcoin: it is property, not currency, and falls under capital gains tax law. John Law doesn’t propose to go into the implications of this – already very well covered by CoinDesk’s analytic masterminds – except to note that under US law, you can offset up to $3,000 capital gain losses against general taxation, which may be sadly useful just at the moment.However, the IRS ruling does bring up two intriguing points:First, that to be truly compliant under capital gains law, the degree of book-keeping for all transactions can be truly horrendous for the individual. Imagine having to keep a running tally of market rates every time you buy a burrito or tip a blogger, or receive some bitcoin from a pal.Second, because the IRS’s writ doesn’t run outside the US, bitcoin can be taxed as something quite different elsewhere: Bulgaria, for example, says it’s a financial holding, not property. Dealing with international taxation issues is quite bad enough without having the very nature of the thing you’re dealing with change across borders.One answer for the first problem is that bitcoin is the first widespread native digital currency – and it is a de-facto currency, no matter what label the taxman slaps on it for convenience. It only exists in computers, and computers make very good book-keepers. The IRS could issue guidelines, even open-source code, for wallets and other bitcoin transfer software, that automate information gathering and delivery to IRS standards. It’ll be up to people whether to use IRS-compliant software, but the impetus to do so would be very high.It would even be possible, John Law suspects eventually inevitable, for cryptocurrencies to have their own taxation regime. It is a unique invention. The tax system is set up around property and money, two things that have been around for thousands of years, so the problem of introducing an entirely new fundamental concept hasn’t arisen before. It’s a stunning opportunity, a green-field site in a system absolutely crammed with ancient and complex machinery that’s a nightmare to understand and administer.The second issue is a similar opportunity to change the ground rules. The lack of international taxation standards is a serious problem for the global economy; it’s what lets multinational organisations avoid paying a large proportion of taxes in any regime, and supports an entire industry of well-fed specialists dedicated to legally hiding money.Because bitcoin and its ilk are a unique invention that can be considered as such, the chance now exists for a standardised international taxation regime that doesn’t care – for collection purposes – where a transaction takes place. One set of world-wide rules would change everything.Such thoughts are close to heresy, especially for the libertarian persuasion and anyone else who intrinsically fears world government and the intimate insertion of state apparatus into individual lives. They raise enormous issues of privacy, accountability, international politics and state power. But these are problems already, and at some point we the people will have to sort out how to fix the current messes extant in all these areas.So, John Law proposes, now would be a very good time to start having these thoughts, and having them large. Let’s play what-if. Accountancy meets science-fiction:“Luke, I am your tax inspector …”Well, if Darth Vader was to come to life anywhere, it would be in the IRS.Paper chaseThe Chicago Sun-Times now accepts subscriptions in bitcoin. It’s not that big a story as it stands – just an alternative way to pay for an old-fashioned paywalled block of access. As many have noted, the real game-changer would be with bitcoin-based micropayments, letting content providers sell pages of info for the equivalent of pennies or fractions of a penny. That could be finessed further: serve a page instantly for microcash, or let the punter see it for free after a second.For cash-strapped journals, such ideas sound a lot nicer than the current choice of giving it away and trusting to advertising, or hiding your best stuff from the punters until they pay. And advertisers might like it, paying readers to interact with their content.Social media services like Twitter and Facebook could create whole internal reward systems between readers and writers – voluntary, but if you join by putting a dollar’s worth of bitcoin in your account, you’ll get whatever rewards your readership generates. But could the bitcoin system stand up to the tsunami of tiny transactions such a system could generate?Well, yes. A protocol extension scratches that particular itch by creating a trusted channel between buyer and seller that’s purely local and doesn’t convert to a full transaction until the channel is closed or a time limit is reached. An initial agreement is set up between the two sides and then incrementally changed as whatever is being microbought is sent over. When the session’s finished, the final amount is calculated and committed. In effect, it caches the cash.You can read a more technical (OK, OK, accurate) description, and the author notes the new system has been included in bitcoinj, the standard Java implementation. It uses standard bitcoin protocols and cryptography, and copes with vanishing servers and other annoyances.Of course, a lot more work needs to be done to test this out in practice, create ways to let buyer and seller easily set up the transaction, and in adding the relevant magic to content management systems. Shouldn’t take long.Based on the hit rates to John Law’s publishing empire across blogs, social media and comments, he calculates he’ll be able to retire from paid work sometime in 2056. If he types a lot faster.And finally …This week’s free gift is the Advanced Bitcoin Simulator. It lives up to its name, accurately charting your progression in the bitcoin world from naive newbie to – well, you’ll have to play it to find out.You’ll need a sense of humour, some experience of pointless computer games, an experimental streak, a degree of patience and the willingness to cheerfully survive catastrophe with remarkable resilience.It may well be the most lifelike simulator John Law has ever experienced.Have fun.John Law is an 18th Century Scottish entrepreneur, financial engineer and gambler. Having reformed the French economy, invented paper currency, state banks, the Mississippi Bubble and other ideas essential to modern economics, he took 300 years off in a small cottage outside Bude. He has returned to write for CoinDesk on the foibles of digital currency.Spy, Dog, and Gamer images via ShutterstockChicago Sun-TimesIRSweekly reviewOriginal author: John Law
Records television shows well. Mines bitcoin not so well. Source: EngadgetBitcoin mining in the form of SHA-256 hashing requires serious processing power, and the higher the difficulty, the more power needed. That’s why it seems counterintuitive to create ARM-based bitcoin mining malware.Sure, recently discovered Linux-based bitcoin mining malware already seems like a bad enough idea, but the concept of ARM processor mining malware that can infect digital video recorders (DVRs) is just downright inefficient.There is potential for lower-powered chips to mine bitcoin in the future, but that’s only going to happen on smaller nodes of silicon that are using ASICs designed for that specific purpose. Anything else is just going to be a complete nuisance.Also to be filed under pointless mining malware is the one announced on 25th March, that gets your Android device mining for dogecoins – veeery slooowly.City-sized electricity bill for minersFreakonomics recently released a bitcoin podcast that featured venture capitalist Marc Andreessen and Stanford professor Susan Athey.If anyone ever thought that bitcoin was a resource hog, take this comment from Athey as an idea of how much energy mining might use:“So it’s just burning a lot of electricity, enough to power many, many homes. I’ve heard estimates as high as 3 million homes could be powered with the electricity that goes to bitcoin mining.”Athey’s number for bitcoin mining’s electrical consumption is just an estimate, but given ever-increasing network power, it’s likely to end up being far higher than that.As a result, technologies that can improve the efficiency of miners are going to become highly important, which brings us onto …Spondoolies Tech now shipping power efficient miners 
Spondooliestech Sp10 Dawson, still in the box. Source: MineforemanIsrael-based manufacturer Spondoolies-Tech has begun shipping units of its new power-efficient miner.Called the Sp10 Dawson, this rig should produce 2.1 TH/s per kilowatt of energy, claims the company – a figure that Spondoolies-Tech reached by reducing the toggle rate of its 40nm ASICs.However, Neil Fincham from Mineforman reviewed one of these units and found that the miner hashes at 1.49 TH/s. The SP10 Dawson does draw at less than 1 Watt per gigahash, though – adds up to 1388W while running.The unit weighs in at 14kg, which gives it the heft of a regular server and means it needs to be housed in a proper rack.Solar-powered bitcoin mining 
The unit has a battery for cloudy days. And those pesky nighttime hours. Source: Solarminer.Some people try to locate miners in places where there they can find cheap prices for all that power their miners will eat up, but if you don’t want to move to Iceland or the US’s Pacific Northwest, you could opt to go green.Solarminer is now selling a USB hardware product that the company says uses nothing more than sunlight in order to operate.The device uses three 150W solar panels and 288Wh LFP batteries to harvest and store energy, and costs $889.Solarminer customers do have to buy USB miners for the unit’s 16 slots. However, there are a lot of different USB mining options available, and using something like, for example, the BitFury RedFury USB miner you could hash at 40 GH/s from one of these, just with sweet sunlight.The ‘Bitcoin Baron’ 
Selling at every single peak. Source: WiredWired recently ran a story on a couple of data geeks, Kai Chang and Mary Becica, that took the leaked Mt. Gox data and made a bunch of visualizations from that information. One user that stood out was referred to as the ‘Bitcoin Baron’ – a Mt. Gox exchange trader that mostly sold BTC at the top of every market peak.The speculation is that the Bitcoin Baron might be a big-time miner, or perhaps a pool operator. Many (but not all) of those who operate large bitcoin mines or pools are hesitant to divulge any information regarding operations. But if this chart is true, it shows that big-time miners are always closely looking to make the best fiat profit that they can.2.5 TH/s Bitfury Razz 
BitFury’s slogan is “Extreme Performance. Source: BitfurystrikesbackBitFury, a chip manufacturer that claims it powers 20-30% of the bitcoin network, is now selling mining units.The ecommerce site Bitfurystrikesback is offing the 2.5 TH/s ‘Razz’ unit, which sucks up 3kW of power for its hashing ability.The Razz costs €7,250, or about $9,947. Interestingly, it is marked as a ‘used’ model, which would logically lead one to assume that BitFury has used these Razz units to mine prior to putting them up for sale.When CoinDesk asked Bitfurystrikesback’s CEO Niko Punin about the used status of the machines, he offered no comment.However, Punin did say that there would be another version of the Razz for sale soon with even better specs.1.2MW, liquid-cooled, bitcoin mining container 
Industrial mining evolved. Source: Allied ControlFor those inclined to study data centre architecture and design, the concept of the modular container has been considered one of the best ways to pack servers into a small area. Google did it in secret for a while, and then Facebook open-sourced it.Allied Control, which is a startup partnering with 3M on a special type of cooling fluid, has written a paper on modular bitcoin mining design.It involves immersion cooling using six 200-240kW flat-rack tanks and is designed so that ASIC boards can be easily swapped when they become obsolete.Each of these modular units can support a whopping 1.2MW of power. That is a figure that even Allied Control admits would not have seemed fathomable in bitcoin mining a year ago, but has become a harsh reality.Got a cryptocurrency mining tip for future roundups? Contact us.Disclaimer: This article should not be viewed as an endorsement of any of the companies mentioned. Please do your own extensive research before considering investing any funds in these products.Electrical lines image via ShutterstockBitfurycontainer miningminingSolarminerSponoodlies TechSusan AtheyOriginal author: Daniel Cawrey
Original author: Brian Klein
Original author: Pete Rizzo