Brunei citizens now have another reason to consider alternative currencies…

like bitcoin:

Source: Anti Money Laundering Blog:

Brunei introduces new Legislation to prevent Money Laundering

Brunei has introduced anti-money laundering laws that grant enforcement agencies extensive powers to seize businesses, freeze accounts and compel individuals to list their assets through “unexplained wealth declarations”.

The Criminal Asset Recovery Order and amendments to Anti-Terrorism Order will be created to provide authorities with stronger tools for addressing financial crime

The new legislation significantly strengthen the powers of the Financial Intelligence Unit (FIU), giving them the authority to suspend transactions, access and review information related to the government, financial institutions or non-financial businesses and professions (NFBP) such as realtors, lawyers, accountants and jewellers. All cash transactions above USD 15 000 made through these agents must be reported to FIU, failing which the individual could be jailed for up to five years and fined up to USD 50 000.

So, Know Your Customer (KYC) and Customer Due Diligence (CDD) guidelines used in banks currently become legally binding requirements.

The new rules aim to increase transparency as well as remove procedural complexities contained in previous laws. This legislation repeals the Anti-Money Laundering Act, the Drug Trafficking (Recovery of Proceeds) Act and the Criminal Conduct (Recovery of Proceeds Act) Order.

Interested in Mobile Payments: Bitcoin Is Cash at a Distance

From V3im:

Mobile payments are on the rise, so it only makes sense that new forms of digital currency are popping up, too. One kind of digital currency you may already know about is Bitcoin, a P2P cryptocurrency created by Satoshi Nakamoto.

One of the biggest questions surrounding digital currency (aside from how they work) is whether they’re a viable solution—or, whether they’ll make a splash and then be quickly forgotten. You know, kind of like QR codes.

It’s a little early to tell, but it’s something that could well be a major disruptor in the realm of mobile payments and mobile banking. Before we dive in and look at what Bitcoin has to offer, watch this intro video that will give you a crash course on Bitcoin.

What makes Bitcoin so potentially disruptive?

Bitcoin’s got two major things going for it. First, it handles like cash. That is, it’s immediate, irreversible and anonymous. In just the same way I can hand you dollar bills without you knowing or caring who I am, I can send you bitcoins without you knowing or caring who I am. As soon as they’re sent, they’re yours, just like the dollars I put in your hand are yours. There’s no exposing of my identity, third-party approval, float time, batching, 2- to 3-day delay, bounces or chargebacks. I either have the “cash” in hand to give you or I don’t. The big difference between Bitcoin and hard cash–I can hand you that Bitcoin over the Internet, including across international boundaries. Think of it as “cash at a distance.”

Second, the Bitcoin network is decentralized and distributed. There’s no central authority or server. So, any bitcoins you own can’t be confiscated, frozen or garnished by any government or banking agency because there’s no one single place to go to do it. As long as you have Internet access, your bitcoins are yours to do with as you like. Sort of like cash under your virtual mattress!

I’ve got your attention now, don’t I?

So what are the practical implications of these characteristics of Bitcoin? Let’s look a few cases where Bitcoin could make a big impact.

International payments

Making payments across international borders is a complicated affair, usually involving multiple intermediaries and currency conversions. Often, transactions aren’t fully resolved for many days, which exposes the parties to currency rate fluctuation risk. Using Bitcoin, you can effectively pay a party in another country directly and immediately with cash (no intermediaries), which results in a very short window of currency rate exposure. The receiving party can then exchange the bitcoin for their local currency through a currency exchange or keep it to use for their own payments.

A safer haven

Because Bitcoin is out of the reach of governments, it’s already being used in some countries as a safer repository for money than the local currency in local banks, which may be controlled by unstable or corrupt regimes. There are already online exchanges that will convert Bitcoin in and out of many different currencies.

Anonymity and fraud prevention

Consumers like to pay for things digitally because it’s easier and faster than hard cash—but they don’t like having to give up their account identity to do it. Credit cards (in the U.S., anyway) and checks must reveal your account information to the payee because they’re based on you giving someone else the information (your account number) necessary to withdraw money from your account. This is pretty much a security hole you can drive a truck through. Bitcoin, conversely, is based on giving money, not taking it. A Bitcoin public ID can only be used to deposit money, not withdraw it. People and organizations publicly post their Bitcoin IDs online so others can make contributions or payments to it. It’s fraud-proof by its very nature. In fact, if you’d like to make a contribution to me, my Bitcoin ID is: 1FrTHp5DR3hLAqCVmuzXLmTLkpJFKCAAgP

What’s keeping Bitcoin from becoming popular?

It’s complicated. The software for using Bitcoin is stable and secure, but it’s not yet normal person-friendly. You have to know too much to make it work. At this point, it’s also hard to get bitcoins. It usually involves a multi-step process starting with depositing cash in a bank account of a transfer company, then having that credit forwarded to a currency exchange where you can then trade it for Bitcoin. This is far too complicated and mysterious for the average consumer. What’s needed is the ability to make a direct purchase in cash at a bank or a retail store, which directly gives you bitcoins. Another drawback? Bitcoin is not yet accepted in many places, although more are starting to appear.

Not so legal or polite uses

Like any powerful tool, Bitcoin can be used for both legal as well as socially questionable activities. In fact, the application that would probably quickly propel Bitcoin into mass use would be porn. The porn industry served as a major driving force behind the maturation of on-demand video distribution technology, and it could do the same for Bitcoin. The ability to subscribe to an “adult” site without giving up your personal identity would be highly attractive to many people, even though most, of course, would never admit it.

Sure, Bitcoin has some functionality to fine-tune before the online currency becomes more widespread. That being said, Bitcoin is definitely a tool to watch, especially as mobile payment capabilities continue to become more prevalent.

Any Bitcoin users out there? I’d be interested to hear about your experience so far with the online currency.

Joe CascioJoe Cascio is a long-time friend. He’s also a semi-retired software developer who, between rounds of golf, tinkers with and consults on new technologies. He prefers to write web applications in python and can also develop Android apps. Before chucking the 9-to-5 life for the golf club, he was last employed as the Chief Technology Officer at a medical imaging software company. He comes down unflinchingly on the dog side of the dog-vs-cat question and grew up around Boston with Red Sox crimson running in his veins. I love Joe. You will, too. Find him on Twitter @joecascio. Stalk him regularly.

What this Canadian gold mining company could have done to protect their assets

They could have mined bitcoin instead. With a few simple precautions bitcoin is easier to protect and harder to steal.

From Reuters:

Dynasty Metals says armed robbery at Ecuador gold mine
Tue, Jul 24 2012

July 23 (Reuters) – Canadian miner Dynasty Metals & Mining Inc said armed robbers made off with bars containing gold and silver at its Zaruma gold project in Ecuador, and warned the incident might have an adverse effect on its near-term production plans.

Armed robbers escaped with dore bars containing about 1,300 ounces of gold and 4,000 ounces of silver from the company’s processing plant located in the El Oro province in southwestern Ecuador, the company said.

Dore bars are alloy bars of semi-pure gold and silver made at the mine site and are refined later.

Dynasty had about 1,200 ounces of gold contained in dore bars as of March 31, according to information on the company’s website.

No employees were fatally injured and the company is in the process of filing an insurance claim, it said in a statement on Monday.

If the company fails to recover the stolen dore bars or does not receive sufficient insurance proceeds in a reasonable time period, there may be an adverse impact on its liquidity and operations, Dynasty said.

Shares of Vancouver-based Dynasty were down 5 percent at C$1.33 in late-afternoon trading on the Toronto Stock Exchange.

Bitcoin price soars above $9 for the first time in almost a year

From ArsTechnica:

The currency’s value has soared 40 percent in the last month.

by – July 18 2012, 12:50pm PDT

 

The price of Bitcoins surged this week, rising above $9 for the first time in almost a year. The increase suggests growing public interest in the peer-to-peer cryptocurrency.

Last month, we marked the one-year anniversary of the Bitcoin bubble popping. We noted that after plunging for the last six months of 2011, the price of Bitcoin had begun to stabilize around $5. But almost as soon as we published that article, the currency began appreciating rapidly. Today, one Bitcoin is worth about $9.20—a 40 percent increase in a month.

Enlarge / Bitcoin price over the last four months.

The transaction volume of Bitcoins has increased dramatically since April. In April, there were rarely more than 10,000 transactions in a day. In July, there have consistently been more than 20,000 transactions each day.

What explains the newfound popularity of the cryptocurrency? We suspect the factors we identified in last month’s article—vices like pornography and gambling—continue to be a significant factor in the currency’s value.

But other new uses for the currency continue to pop up. Coinbase, a startup aiming to make Bitcoin more accessible to the masses, has been accepted by Y Combinator’s summer class. That comes with a $164,000 investment.

The Verge notes that a student in Germany has built a Bitcoin vending machine. Insert a €1 coin in the slot and it will dispense a slip of paper with a link that can be used to cash in an equivalent value of Bitcoins, currently around 0.13 BTC.

And New World Notes points out that that there has been a growing volume of transactions between Bitcoins and Linden Dollars, the official currency of Second Life. Given that exchanges that convert Bitcoins to dollars have faced legal challenges, the ability to convert Bitcoins into other virtual currencies that are more readily tradable for dollars could boost the liquidity of the cryptocurrency.

Disclosure: The author owns some Bitcoins.

 

 

Vending Machine Art Project Converts Euros Into Bitcoins

From BetaBeat:

For his summer exhibition at Bauhaus University, German art student Max F. Albrecht turned an old vending machine into a Bitcoin vending machine. You feed Euro coins into the machine and it prints out a box with an easywallet.org link in it. Navigate to that link and you’ll see your bitcoin, which you can then send to whoever you want. Mr. Albrecht helpfully offers the case of Wikileaks as a worthy Bitcoin recipient.

On a Bitcoin forum, Mr. Albrecht writes:

My dream project would be a electronic version 2.0 with the ability to also withdrawal cash for BTC. My initial research shows this would be possible using a mixture of open source software and hardware and some proprietary modules to deal with the physical money.

The Bitcoin vending machine is an interesting concept as it mashes up old school hardware–an antique vending machine–with high tech currency. Mr. Albrecht says the project is still in development, and its next phase will support TORwallet.net.

Jessica Roy is a reporter for Betabeat and the New York Observer. Follow Jessica on Twitter or via RSS. jroy@observer.com

Paypal’s Abandonment of Major Cyberlockers May Become Bitcoin’s Big Win

From SiliconAngle:

Paypal is now well known for a sort of sanctimonious attitude towards sites that they feel will damage their ability to make money and now that cyberlockers are under fire from copyright conglomerates such as the RIAA, MPAA, and BRIEN. This comes during the long-burn of Megaupload by the U.S. government at the behest of these copyright cartels and now Paypal pulling out means that many of them will lose a primary source of funding and accessibility to the general public.

According to TorrentFreak, Paypal has stopped working with cyberlockers such as MediaFire, Putlocker, DepositFiles, and many others citing concerns of piracy.

Even the newest folk hero of cyberlockers, somewhat infamous Kim Dotcom, has come out asking the community on Twitter about better payment systems than PayPal and U.S. credit companies to upkeep this advancement of Internet innovation. As we all know, the MPAA and RIAA have gone to credit transaction companies and gotten them to withdraw their support from sites that may be capable of supporting piracy (which means any and every cyberlocker out there.)

An obvious answer comes to mind from the growing population and functional use of a digital cryptocurrency we already know: Bitcoin.

The e-currency is still in its rough-start stage when it comes to technology and much of that has been because it’s been treated as a fanatic commodity by a small but extremely loyal group who keep it afloat. It also fluctuates in value too often for most people to want to store their money with it; but we have seen it used effectively for an intermediate currency and a number of services do take bitcoins as compensation—such as Bitmit.net auctions and several VPN providers who also take the currency.

Point-of-sale for service with Bitcoin could be used via a vendor taking bitcoins, instantly trading them on a platform like MtGox for their local currency, and providing access to the cyberlocker to the customer.

Paypal’s withdrawal from cyberlockers, which have proven to be extremely useful to a multitude of people, see the popularity of Megaupload before the U.S. burned it to the ground and the layout of customers who used it for legitimate means, even U.S. military servicefolk.

A growing use case that everyday people can interact with will provide stability

If Bitcoin were to become the alternative to PayPal and U.S.-based credit cards for getting cyberlocker services it would mean that there would be money flowing into outfits that exchanged and traded in bitcoins. This means that they’d have a reason to make their systems more stable, the currency itself would find a happy medium with a larger critical mass of trading going on, and we’d see innovation taking advantage of the presence of money flow.

It’s worth to note that the market for bitcoins is already extant, it functions, and it’s survived several major upheavals (including losses of bitcoins, hacking, and even market crashes) and we’ve seen it used in the real world for trading and for selling products.

If Kim Dotcom uses his celebrity to bring attention to the use of Bitcoins for cyberlocker access, welding the two together will most likely bring both out with a much bigger market than before and make both of them much more resilient to economic siege by the copyright industry.

Kim Dotcom’s Pretrial Legal Funds Would Be Safe With Bitcoin

From Forbes:

The Megaupload case may end up having a chilling effect on pretrial asset seizure. Yesterday Kim “Dotcom”Schmitz, founder of Megaupload, asked his Twitter followers for some better payment alternatives to credit cards and PayPal. The responses suggesting bitcoin came pouring in.

It’s easy to see why he asked in the first place. After successfully launching Megaupload, Kim Dotcom’s business enterprise was shut down by the FBI and his funds frozen over alleged copyright infringement, money laundering, and conspiracy. Also, PayPal has recently taken a stricter stance on file-hosting services due to piracy concerns. Kim Dotcom is launching a new online business, Megabox, in four to six months and he probably doesn’t want to bother with the likes of PayPal.

However, there are two unique aspects of the bitcoin cryptocurrency for Kim Dotcom to consider — an online payment method for customers and a reliable storage facility for his company’s monetary assets.

On the first count, bitcoin could replace PayPal and credit cards which would increase the transactional privacy of his many loyal customers as well as dramatically reduce the processing fees that his company has undoubtedly been forking over to PayPal and credit card processors. At its peak, Megaupload served about 180 million users.

Now, since his extradition hearing has been delayed until 2013, Kim Dotcom has made the extraordinary offer to go to the United States voluntarily if he and his colleagues receive a fair trial and the unfreezing of his funds to pay legal bills and pretrial living expenses. The U.S. Department of Justice has already seized $67 million. With 22 lawyers working on the case in different countries, Kim Dotcom tells the New Zealand Herald, “I have accumulated millions of dollars in legal bills and I haven’t been able to pay a single cent. They just want to hang me out to dry and wait until there is no support left.”

This is where bitcoin, on the second count, would prove even more useful as funds retained on the distributed bitcoin block chain cannot be seized in any jurisdiction. As the holder of the private key, you and only you control access and dispensation of the bitcoin value. A distribution mechanism could be set up for Kim Dotcom to transfer a certain amount of bitcoin to a third party that would handle the payment of his legal fees in various national currencies. Or, his legal team could even accept bitcoin directly as payment for legal services rendered. If he establishes a brainwallet, he could even authorize the transfer from prison.

In a Skype interview with The Hollywood Reporter, Dotcom said, “My home was raided by 72 heavily armed police arriving in helicopters. This was an Osama bin Laden-style operation on an alleged copyright infringer. I guess it’s pure luck that my family wasn’t terminated by a Predator drone.” Dotcom also believes that “dirty delay tactics instead of evidence” are being deployed by the U.S. Government and that “the [delaying] actions clearly demonstrate that they don’t have a case and that this … was about killing Megaupload and creating a chilling effect to freeze the whole file-hosting sector.”

Ruling on June 29th, U.S. District Court Judge Liam O’Grady ordered that defendants could argue for a motion to dismiss the allegations against the company but seized assets would not be unfrozen to pay attorney costs due to the fact that defendants are currently challenging extradition abroad. After this saga unfolds and given the sad and overzealous trend in pretrial asset seizure, I expect many rainy day legal defense funds to be established in bitcoin.

Alternative Currencies Rise as the Eurozone Crisis Worsens

From Reason:

The advantages of non-political innovations and cryptocurrencies

| July 6, 2012

For weeks commentators have been discussing the possibility of Greece leaving the eurozone and how a return to the drachma might be facilitated. But when it comes to currency, the drachma is not Greece’s only option. If Greece does exit the eurozone an alternative currency could emerge or an already existing one could be adopted. In some parts of Greece social entrepreneurship, technology, and skepticism of politicians have already given rise to alternate trading mechanisms and created an environment where cyrptocurrencies could become increasingly popular.

As the euro crisis worsened many Greeks began hoarding euros, and more recently there have been small runs on banks. Spending on goods has gone down and prices have been rising. In the Greek city of Volos social entrepreneurship has resulted in a modest but inspiring solution to this trend. One Volos resident started TEM, an online bartering system that allows residents to purchase groceries and other goods in exchange for services while keeping their euros to pay the rent.

With a Greek exit form the eurozone a very real possibility such examples of social entrepreneurship may well become more and more common as the crisis deepens.

Greeks have contradictory opinions on the euro. While the overwhelming majority of Greeks want to stay in the eurozone, a majority of the Greek public is also strongly against the austerity measures required in the bailout agreement. George Zarkadakis, a Greek novelist, journalist, and entrepreneur, explained the political paralysis in Greece to Reason. “The Greek idiocy was that nobody wants to reform,” he says. “Greece is a state-controlled economy, the Greek political class wants to rescue their civil service and nothing has been done in the past two years.”

The euro crisis provides an example of the kinds of situations where competitive currencies might prove useful. Modern technology has only made the development of these “currencies” easier and in many ways more desirable. Safe from the level of regulation suffered by government-issued money, cryptocurrencies are more flexible and convenient for purchases and sales.

The most prominent of these cryptocurrencies is bitcoin. Bitcoin frees those who use it from political uncertainty, fiat policies, and is less affected by international money markets than traditional currencies. Isolated from the political environment in Europe, bitcoin offers Europeans a viable alternative to the euro and to a return to traditional currencies. There have been reports of more Europeans using bitcoin as their confidence in political solutions diminishes.

(Article continues below video “Bitcoin and the End of State-Controlled Money.”)

 

Both TEM and bitcoin offer some welcome relief from the current situation in Europe. There is no government interference (yet) and transactions are free.

This is not to say that there are not concerns over bitcoin. George Selgin, professor of economics at the Terry College of Business at the University of Georgia, points out that bitcoin breaks the dichotomy of fiat vs. commodity money proposed by the pioneering Austrian economist Carl Menger. Selgin calls bitcoin a “quasi-commodity system” and argues that it is not money. Bitcoin is not widely used for transactions, and according to Selgin the euro crisis is not serious enough for bitcoin (or something similar) to spontaneously emerge with any degree of influence. Even in the Weimar Republic Germans resorted to using already existing currencies like the British Pound rather than creating a new currency. For Selgin the unorthodox status of bitcoin, the lack of historical precedent, and its mono-linguistic culture makes a mainstream bitcoin emergence in Europe unlikely.

Jerry Brito, senior researcher at the Mercatus Center, agrees that bitcoin is not a viable rescue tool for Europeans, but he does see bitcoin as money. According to Brito, one of the main advantages of bitcoin is its power to overcome regulations. There is no central bank or regulator with bitcoin, and it will exist as long as the Internet is around. It is open source and peer-to-peer. While bitcoin might not take off en-mass in Europe, Brito notes, some German and Greek companies are already using it, and there is no reason to think others will not begin to do so as well.

Greece will almost certainly leave the euro. How ordinary Greeks react will define their economic livelihood for decades to come. The use of TEM in Greece and the rising appeal of cryptocurrencies are some indication of the non-political solutions some Europeans have in mind. While cryptocurrencies have not yet been widely adopted, the euro crisis provides an ideal environment for them to flourish. With governments inflicting a huge amount of damage, currencies without central control look increasingly attractive.

At the moment it is hard to see what silver lining there might be in the current situation in Europe. While politicians are typically pushing for closer fiscal union, social entrepreneurship and peer-to-peer innovation and cooperation are producing safer and revolutionary solutions.

 Matthew Feeney is assistant editor of 24/7 News at Reason.com.