Bitcoin Money Supply and Money Creation

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Many articles mention, that the limited Bitcoin money supply is a major advantage of this digital currency. The reasoning usually goes like this. Since Bitcoins can only be created through mining and there is an upper limit of 21 million, Bitcoin is supposed to be inflation proof. This article for instance says, Bitcoin “theoretically eliminates inflation”. If this was true, Bitcoins would not lose purchasing power. The Bitcoins I own today would buy me the same amount of goods and services tomorrow. Or a larger amount in the case of deflation. These bitcoin sites can all be used on the popular adult hookup site: AdultShag.co.uk - check them out now if you are wanting a place to spend your bitcoin. These Canadian sex sites also sponsor adding crpyto currenecies, La Trame is a famous blog. It also has a sister site Domina Jade you can look at too.

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900% increase in Bitcoin merchants

Bitcoin-accepted-here-printableBitPay has announced the approval of its 10,000th merchant while at this time last year the company had just reached 1,000 merchants. That’s an increase of 900% for the leading payment processor.

While BitPay is only one option available to merchants it is the largest Bitcoin payment processor and these numbers give a glimpse into the Bitcoin economy.

BitPay’s merchants are still largely ecommerce, 90%+, but they have experienced increased growth in non-US merchants. Earlier this year 40% of BitPays merchants were located outside the US, however these latest numbers show a 10% increase to 50% of customers based outside North America.

In line with the growth in merchants, the volume of Bitcoin sales through the business has also had a dramatic increase. “The month of August was another record month for BitPay, processing over 10,000 merchant transactions worth over $6.4 million.  Year-to-date in 2013, over $34 million worth of bitcoins have been spent on goods and services through merchants using BitPay’s platform.”

The Bitcoin economy may be small, but it’s growing rapidly!

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eBay flirting with Bitcoin

It seems that the online commerce giant eBay has its eyes on Bitcoin. This is of course a bit surprising as eBay is the owner of PayPal which has a lot to loose from Bitcoin’s success. However, in the past week two indications of eBays interest in Bitcoin have popped up.

First eBay added, and then removed, ‘Virtual Currency’ to its categories of items for sale.

But even more interestingly eBay appears to have produced a video about Bitcoin which they posted to their blog.  The post is titled What’s the Deal with Bitcoins anyway? And curiously is presented without a date, seems to be only accessible directly via the URL and with this disclaimer at the top, “*This video was created for informational and educational purposes.”

The video does present Bitcoin in an unbiased and educational fashion.

The post and the video asks “What do you think? Are bitcoins the real deal?” however, comments are not allowed. … What’s the deal with eBay and Bitcoin?

 

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Bits and Pieces 4thSep2013

  • Bitcoin exchange TradeHill halts trading after its banking partner experiences “regulatory issues”.

After series of Bitcoin businesses being dropped  by their banking partners earlier this year, the Internet Archive Federal Credit Union (IAFCU)  came to the rescue. The New Jersey based credit union, run by the Internet Archive, has been very friendly to the Bitcoin industry and has worked with a number of businesses who have had trouble establishing relationships with banks.

One of the businesses the credit union partnered with was the US based TradeHill  exchange. Late last week Jered Kenna, Tradehill’s founder and CEO, confirmed via Reddit that the exchange had suspended trading due to “operational and regulatory issues” faced by its bank.

IAFCU posted its own statement on the matter , but was not clear on the nature of the regulatory issues.

  • As the rupee continues to struggle, Indian officials continue their attempts to curb demand for gold.

Via Reuters…

India is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.

The RBI will ask the banks to buy back jewelry, bars and coins for rupees. Lenders will have to offer better rates than pawn shops and jewelers to lure sellers.

“We will start a pilot project among some banks where we will allow them to buy back gold from individual households,” the source, an official familiar with the central bank’s plan, said. “This will start soon, we have discussed (it) with banks.”

  • From New York to Germany, check out a timeline of August events affecting the crypto-currency community here.
  • For those following the Bitcoin Foundation’s board elections Bitcoin Magazine has posted transcripts from Let’s Talk Bitcoin’s interviews with the Individual Seat Candidates

Two new seats are being added to the Board of Directors. One representing Individual Members and the other is representing Industry (business) Members. In order to be eligible to vote in this election, you must be a current member of the Bitcoin Foundation.

Posted in Bits and Pieces, News | Tagged Banking, Bitcoin, Gold, India, Legal, Regulation | Leave a reply

The Bitcoin Foundation hangs out in Washington

This week members of the Bitcoin Foundation had a series of meetings with regulators and law makers in DC.

On Monday 5 Foundation members, Marco Santori, Patrick Murck, Peter Vessenes, Brian Klein and Jim Harper, met with representatives from a number of US agencies including FinCEN, IRS, FDIC, Federal Reserve, OCC, FBI, DEA, Secret Service, and the Department of Homeland Security.

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Bitcoin is “Rechnungseinheiten” … what does that mean?

Frank Schaeffler, a member of German parliament’s Finance Committee has issued a statement recognizing Bitcoin as “Rechnungseinheiten,” which translates to “units of account”.  Many news sources are reporting that this makes Bitcoin ‘private money’  or ‘legal tender’   in Germany.

But what exactly does the designation of “Rechnungseinheiten” mean for German Bitcoin users and businesses?

Via Pymnts.com …

The German parliament stopped short of granting bitcoin full currency status on August 19, but recognized bitcoins as “units of account” when it formally issued regulations for the popular virtual currency.

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World Gold Council releases Q2 Demand Trends Report

Second Quarter 2013 in summary

Gold jewellery demand rises 37% in Q2 2013, led by Indian and Chinese consumers
Lower gold prices generated a surge in global jewellery demand to 575.5t, the highest volume for five years. In value terms demand was 20% higher than Q2 2012.
Sizeable ETF outflows countered by record bar and coin demand of 508t in Q2 2013
The fall in gold prices led to record demand for gold bars and coins of 507.6t, up 56% in value terms to US$23bn. However, this was mitigated by well-documented outflows from ETFs.
Technology gold demand saw a marginal increase, up 1% in Q2 2013
Demand for gold in the technology sector in Q2 2013 increased by 1% to 104.3t. Price declines and improvements in economic conditions provided a boost to demand from the electronics segment.
Central bank gold purchases slowed in Q2 2013, remain within 70-160 tonne range
Central banks added 71.1t of gold to official reserves in Q2 2013, marking the tenth consecutive quarter of net purchases but 57% down on the previous year.
Total supply shrank 62 tonnes in Q2 2013, driven by 21% decrease in recycling
While Q2 2013 mine production saw a 4% increase year-on-year, the significant reduction in recycling by consumers during the quarter led to the 6% decrease in total supply.

 

The full report can be read here.

 

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The US Senate jumps on the Bitcoin inquiry bandwagon

First NY, then the House and now the Senate, US regulators are turning their attention to virtual currencies.

On Monday the US Senate Committee on Homeland Security & Governmental Affairs sent a letter to Homeland Security for information on any policies, procedures or guidance they have that pertains to “virtual currencies”.

The letter states the committee has initiated an inquiry into virtual currencies, list recent legal actions involving Bitcoin and contains the usual ‘hey were all for new tech, but we need to look at the threats and risks’.

The letter, which can be read here, ask Homeland Security for 3 things to be provided by the end of the month…

  1. Any policies, procedures, guidance, or advisories related to the treatment or regulation of virtual currencies and any minutes of interagency working groups involved in the development of any such policies, procedures, guidance or advisories;
  2. Information related to any ongoing coordination of your agency with any other federal agencies or state and local governments related to the treatment of virtual currencies; and,
  3. Any plans or strategies regarding virtual currencies and information regarding any ongoing initiatives you have engaged in regarding virtual currencies and the name of the person most knowledgeable about any such plans, strategies or initiatives.
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Congress directs the FBI to report on Bitcoin

FBILogoThe United States House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies 2014 appropriations bill recommends spending amounts for a number of government agencies including the FBI.

In their 2014 appropriations bill, the subcommittee directs the FBI to report on Bitcoin, specifically what the FBI is doing to address the “challenge” that they see from the “ersatz currency“.

Page 45 of the bill…

Money laundering. —The Committee understands that Bitcoins and other forms of peer-to-peer digital currency are a potential means for criminal, terrorist or other illegal organizations and individuals to illegally launder and transfer money. News reports indicate that Bitcoins may have been used to help finance the flight and activity of fugitives. The Committee directs the FBI, in consultation with the Department and other Federal partners, to provide a briefing no later 120 days after the enactment of this Act on the nature and scale of the risk posed by such ersatz currency, both in financing illegal enterprises and in undermining financial institutions. The briefing should describe the FBI efforts in the context of a coordinated Federal response to this challenge, and identify staffing and other resources devoted to this effort.
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New York’s Department of Financial Services initiates Inquiry on Virtual Currencies

NY-DFSThe New York banking regulator has issued subpoenas to 22 companies associated with Bitcoin as part of an “Inquiry on Virtual Currencies”.

Via Forbes’ Kashmir Hill …

A subpoena doesn’t mean criminal activity has taken place. A person familiar with the matter says the two-year-old department wants to make sure Bitcoin isn’t a conduit for illicit activities and is gathering information in order to decide whether to issue regulation for virtual currencies. The department has the authority to create regulation if there is no other primary regulator.

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