Prices in China were affected similarly, according to the CoinDesk CNY BPI, which at press time was down 7.25% from the day’s open of ¥2,861 at ¥2,653.74.Additional reporting provided by Rui Ma.Great Wall of China image via ShutterstockAsiaChinaFXBTCHuobiOKCoinregulation
A two-way Robocoin bitcoin ATM has just landed on the shores of England, thanks to the efforts of Global Bitcoin ATM, a UK-based company. Located at Worldwide Connection, an Internet cafe in Holborn, central London, it is the first Robocoin machine in Europe and the first two-way ATM in the UK capital.
Getting it here wasn’t the easiest process, though, says Global Bitcoin ATM’s co-founder Jean Paul. It took the company over four months to order, receive and ship the machine across the pond.
Said Paul:
“We thought it was a great business idea. We wondered, ‘Is anyone is doing that? No they’re not? Let’s go!’ So we scraped together some money and ordered a machine. And then we’ve had a long, long wait for delivery.”
Paul made the initial order in December, hoping to be the first team to bring a bitcoin ATM to the UK, but FutureCoin’s Joel Raziel beat them to it, launching a Lamassu machine last month. That machine was installed at a trendy bar in London’s Shoreditch area.
The Old Shoreditch Station Cafe had already been accepting bitcoin for drinks and coffee when Raziel decided it was the perfect place for his ATM.
“I wanted my ATM to be more than just a cash-taking functional machinery stuck in an exchange office or an airport,” said Raziel.
He explained:
“I wanted it to be more of an experience. The reason I chose the Old Shoreditch Station is because it’s more than just a venue for my ATM. It’s a real meeting spot for bitcoin enthusiasts who can pay for their coffee or cocktails with bitcoins and it’s a real hot bed of creativity in East London.”
Raziel’s ATM has been live since early March and sees roughly 10 transactions per day.
While the Lamassu did enjoy being the London’s lone wolf for a brief spell, it now has to contend with some serious competition from its Robocoin rival. Lamassu is a great option for those people who want their bitcoin instantly – just scan your QR code, pop in your cash and receive your bitcoin in your digital wallet.
The Robocoin machine is a little more demanding, featuring a palm scanner to identify the user and regulate their daily transaction limit. However, it’s also two-way, which could prove to be a big advantage for Paul and his team. Said Paul:
“We decided to go with RoboCoin because it’s two-way. We know there’ll be a demand for selling your bitcoin and we wanted a machine that [...] people can just know that if they are short of money they can sell their bitcoin.”
He also emphasized that the machine’s anti-money laundering (AML) and ‘know your customer’ (KYC) features attracted them to the product. The Robocoin machine was funded by Lebanese investor Antoun Toubia, who was given the honours of cutting the ribbon off the machine for his fiscal input.
An excited crowd gathered to use the machine at its launch this afternoon, although not everyone was impressed with the lengthy registration process. Simon Dixon from Bank to the Future was the first person to use the ATM. After he successfully registered, he purchased bitcoin worth £10, he said.
Global Bitcoin ATM said it will charge a 7% commission on all transactions via the Robocoin machine. Until now, Raziel had been trading at 8%, but, following the arrival of the competition, he plans to lower that rate to 5% starting next week. He is, however, excited to welcome more competition because it will be good for the entire bitcoin ecosystem.
Explained Raziel:
“We’re very excited about the new ATM competition in London. I think one ATM can slip through the public net, but with several ATMs all across the city, I think it’ll do very well for all our businesses.”
Meanwhile, a third player is going to enter this competition later this month. SatoshiPoint aims to install its first bitcoin ATM at Nin Com Soup within Old Street tube station. The restaurant itself will also start accepting bitcoin around the same time. SatoshiPoint is a UK-based bitcoin kiosk company using the Robocoin KYC and AML platform.
Top 10 trading pairs on the exchange by volume. Source: CryptsyIceland-based Auroracoin was an example of this process. Said Vernon:“Auroracoin was one of the first coins that we chose from the voting list, where people can vote on coins.”The system is a mix of incentivized voting ballots. Every user gets a free vote for a coin. Also, users can spend Cryptsy points, which are accumulated through trading on the exchange.Voting with bitcoin donations is also another method for Cryptsy’s users to voice an opinion on which altcoins should be added. User input is important to this process being open:“We have to listen to the majority; try to get a sense of what people like. I wanted to add some transparency of how we added coins.”Coins with volumeAdding new altcoins for trading can be exciting for Cryptsy’s users, but Vernon says that sometimes doing so can cause problems. 
One week DOGE/BTC trading. Source: CryptsyOne coin that unexpectedly caused issues was dogecoin, where trading volume jumped immediately on the new Cryptsy DOGE/BTC trading pair. Said Vernon:“When I initially added [dogecoin], I had no idea the kind of volume it was going to have. And I’ve actually had to swap out wallets because the wallet got so huge, like 2.5 GB.”At the time, the Cryptsy dogecoin wallet got so large so quickly that withdrawals and deposits were briefly delayed.Vernon has also noticed relatively high trading volume for something called devcoin, which is a foundation that pays developers to create things:“Devcoin gets quite a bit of volume. It’s one that’s been around for quite some time. We get people who have received the coins, and they exchange them for bitcoin.”Pre-mining principlesIn the early days of altcoins, many were pre-mined in order for the developer to reap the financial rewards if a coin should become successful.Charlie Lee’s creation of litecoin changed that. Lee believed there needed to be a silver to bitcoin’s gold, and when he created litecoin, he didn’t pre-mine it.Said Vernon:“Well, originally it was one of those kind of things that turned you off, the word ‘pre-mined’. You’re like, I don’t want anything to do with it.”Cryptsy’s stance is that, if the pre-mining is carried out not to benefit the developer, but to benefit something else, it’s acceptable.Auroracoin is an example of that, with coins being pre-mined for free distribution to Icelandic citizens, although that coin’s distribution allocation has negatively affected its price. 
One week AUR/BTC trading. Source: CryptsySaid Vernon:“Maybe we shouldn’t even call it pre-mine, just because of the word. Maybe we should call it pre-allocation.”Significant proofThe fact that Cryptsy currently has 157 cryptocurrency trading pairs means that Vernon has a lot of experience in comparing different types of cryptocurrencies.Because of this, the idea of a proof-of-work algorithm that actually works to solve a problem is of interest to him:“Primecoin is pretty cool. They’ve actually found quite a few primes that nobody knew about. But what are we going to do with those [prime numbers], I don’t know.”So far, Vernon hasn’t come across a proof-of-work system other than primecoin that does something substantial from a computational standpoint. But he has thought of something that might be useful for humanity:“Protein folding. That would be something that would be really nice to have: a proof of work where the work is really doing something, solving problems,” he said.Vernon pointed out with the hashing power that the Bitcoin network has, it could be considered, “the biggest supercomputer in the world.”Preparing for fiatCryptsy does not deal with fiat money, but it will sometime in the future. Vernon started the exchange without the use of government-backed money as a method of exchange because it was an easier business to get off the ground:“Mainly I didn’t want to get into fiat because of the regulatory issues. And so [cryptocurrency-to-cryptocurrency] seemed like a good entry point.”Crypsty has been working through a lengthy process to be in a position to accept fiat money on its platform, but it is taking a lot of time.Some of the delay is down to working with accountants that have to get used to the concept of cryptocurrencies; some of it is because Vernon wants to set an example of diligence:“It’s a long process, and we want to make sure we do it right. It’s not something I want to do without knowing that the way we do it is the right way.”With this in mind, he has sent four of his employees to become CAMS certified. This is a credential offered by the Association of Certified Anti-Money Laundering Specialists that, the associations says, “denotes proven knowledge in the detection and prevention of money laundering”.Vernon says that he expects Cryptsy to be one of the only exchanges to have that number of people with CAMS certification on its staff.Crypto-to-crypto was a way to get Cryptsy off the ground, but Vernon wants to set an example for how to do things the right way to ensure long-term stability of the exchange. 
Charlie Lee (LTC), Paul Vernon and Jackson Palmer (DOGE) answering questions at CoinSummit’s altcoin panel.He discusses this at conferences, and was a on a panel at San Francisco’s recent CoinSummit event talking about alternative cryptocurrencies.Vernon shares the government’s uneasiness about decentralized money being used in nefarious ways. As he sums it up:“Our concern is, and the government’s concern is, money laundering. So we need to kind of be the poster children of how to do [compliance] correctly. So I’m not going to launch [a fiat currency option] until I’m ready to be on the poster.”auroracoincoinsummitcomplianceCryptsydevcoindogecoinlitecoinPaul Vernon
What’s more, Fitch points out that bitcoin’s transaction volume also has to be put into perspective, due to its huge price appreciation last year. The price went up, along with the overall volume, but the actual number of transactions did not grow at nearly the same pace.“In other words, the average size of a bitcoin transaction (in dollar terms) rose significantly, while the amount of transactions per day remained much more stable. From February 2013 to February 2014, the average size of each transaction rose from about $100 to roughly $1,000,” Fitch said.Risky investmentLooking at bitcoin from an investment perspective, Fitch found that bitcoin’s price volatility resembles an investment rather than a currency.“There is no asset class the same as bitcoin, but comparing its price swings to other currencies and commodities can put the volatility in context,” Fitch concluded.“From a trading perspective, bitcoin transaction volumes relative to the stock of outstanding bitcoins resemble those of equity securities.”
Regulatory ambiguity is another risk brought up by Fitch. The firm points out that regulatory attitudes vary from country to country, but authorities in most countries have issued warnings and informed consumers and investors of the risks posed by digital currencies.In addition to the standard list of warnings which includes money laundering, tax fraud and illegal transactions, bitcoin’s tax status appears to be a much bigger concern. Taxation, in addition to regulation could quickly render bitcoin unappealing.Fitch came to an ominous and rather obvious conclusion:“The future of digital currencies will partially depend on the way public concerns are addressed. It is possible that, if the use of bitcoin were to be regulated as tightly as the use of conventional currency, bitcoin’s appeal as a low-cost means of exchange would decrease significantly.”Bitcoin as a currencyBitcoin’s market cap, or its size as a currency measured by M1 is insignificant compared to national currencies. Bitcoin is smaller than Guatemala’s Quetzal, with a capitalization of $6.75bn in late February. Bitcoin is even smaller today, with a market cap of just $5.6bn.
“So far bitcoin is mainly used between private individuals. There are, however, a number of companies that have begun to accept bitcoin as a form of payment. The majority of these companies immediately transfer their bitcoin into local conventional currency in order to avoid significant currency risk due to the price instability of bitcoin. The current price instability is a shortcoming of bitcoin as a standalone currency,” the firm pointed out.Fitch concluded that much of bitcoin’s appeal stems from its pseudo anonymity, including people interested in illicit activities and privacy-minded individuals. Another factor is bitcoin’s ease of use and it independent nature.The firm also touched on some altcoins such as litecoin and peercoin, but it concluded that most of them are based on the same principle and technology as bitcoin, but they tend to offer different features.Curiously, ‘Sizing up Bitcoin’ ends with next to no conclusion. The report outlines the basics and brings up numerous challenges, which are debated by bitcoin advocates and detractors on a daily basis.The takeaway appears to be simple: it all depends on regulators. If bitcoin operators are forced to undergo tight regulatory oversight, the regulatory burden could render bitcoin’s low-friction network less competitive compared to traditional payment systems. Bitcoin faces the same challenge when it comes to low-cost remittances.On the other hand, the added cost would to some extent be offset by more stability and long-term security which is necessary for mainstream adoption. As is the norm in the world of bitcoin, regulation it is a catch-22 and a delicate balancing act.Bitcoin charts courtesy of Fitch Ratings Why Forum.Fitchreportvisavolatility
A group of Florida residents have been accused of fraudulently selling scrypt mining ASICs as part of an altcoin pump-and-dump scheme.
Perpetrated from March 2013 through August of this year, the scheme centered on a cryptocurrency called cachecoin whose market was allegedly manipulated by the actions of the defendants.
The five individuals, which include a married couple as well as a company called Scrypted Life, are also accused of stealing funds raised for an independent mining operation. Represented by Florida-based law firm Akerman LLP, the plaintiffs are seeking loss-of-profit damages as well as legal costs, and have requested a trial by jury.
Akerman attorney Christopher Hopkins told CoinDesk that those named in the case used a variety of means to collect funds from unsuspecting investors.
By including an alleged pump-and-dump scheme in the plan, he said, the group was able to further boost its fraudulent revenues, explaining:
"They conned investors and buyers to convert their money to cachecoin, claiming a discount for any investment or purchase with Fibonacci in cachecoin. In the end, after taking money from my clients and others, we believe that the Fibonacci defendants also walked off with ‘pump-and-dump profits' from cachecoin."
The defendants have been charged with fraud, unjust enrichment, false advertising, negligence and violation of state investment statutes, according to documents filed 3rd December.
Court documents provided to CoinDesk state that the defendants allegedly used social media platforms such as Litecoin Talk to promote and sell mining units that were never developed or delivered through an organization called Fibonacci Scrypt Mining ASICs.
Fibonacci allegedly conducted a broader, multi-layer promotional campaign that resulted in several different money-generating initiatives, including the ASIC presales and the pump-and-dump scheme in the cachecoin market.
The Fibonacci ASIC – a project that followed an previously planned mining unit – was announced in December 2013. The Fibonacci group began accepting pre-orders in March 2014.
Fibonacci purportedly enticed customers to convert bitcoins for cachecoins in exchange for a discount on mining devices that were said to be in development. This led to a rise in volume and the overall price for that altcoin – an event that the documents say was planned by Fibonacci so it could profitably sell its holdings to unsuspecting customers.
Both plaintiffs involved exchanged bitcoins worth thousands of dollars at the time for cachecoins, and sent those coins to the Fibonacci group as payment for the scrypt ASICs. One plaintiff bought about $18,000 dollars in cachecoins while the other purchased roughly $30,000-worth.
The documents explain:
"Unbeknownst to plaintiffs, this was part of defendants’ scam to not only take plaintiffs’ money directly but to profit by having plaintiffs and other “buyers” and “investors” use cachecoin, which increased the value of cachecoin. This was of interest and profit to defendants, who were responsible for launching cachecoin."
Both payments were issued on 17th March. One of the plaintiffs, the court filings state, later received a partial refund worth approximately $3,500 in July.
Fibonacci told customers at the time that both the ASICs would be delivered and the mining operation started in August.
When the anticipated date arrived, however, the filings argue neither the ASICs nor the planned mining operation had materialized.
According to posts on Litecoin Talk, customers stopped hearing from Fibonacci staff. At the same time, the Fibonacci website, through which payments were being processed, went offline. Compounding the situation was the sudden drop in the price of cachecoins, which according to the plaintiffs has continued to this day.
Plaintiffs argue Fibonacci’s actions resulted in both the loss of profit from mining units that were never delivered, as well as damages through the eventual collapse in the cachecoin market.
The filing states:
"At or around August 2014, Cachecoins were essentially worthless. As of today, Cachecoins are worth less than $0.0003 cents with little interest or activity."
Hopkins said that the defendants named in the case have been served, and that ultimately, cases like this could lead to a more transparent environment for potential investors.
“These suits may just run out of town the scourges who see financial potential in the virtual currency space through ploys and scams rather than diligence and ingenuity,” he said.
A full copy of the court filing can be found below:
Crandall StrutherCrandall Struthers v Hudgins Fibonacci et al.pdfs v Hudgins Fibonacci Et Al
Legal image via Shutterstock
