Monthly Archives: January 2014

Bitcoin Facilitates Transactions and Brings “Web 3.0”

Since the European banking crisis unfolding, Crypto currencies such as Bitcoin, Lietcoin, Peercoin and others have become a refuge for people fleeing from the euro and striving to protect their assets and savings from confiscation.

If you lived in Cyprus and had your savings in euros, you have been fleeced by your friendly government and seen your life savings go to bureaucrats and their banker friends. Other countries throughout the PIIGS region of Europe will follow soon, in all likelihood seconded by the savings of citizens in the “richer” countries as well.

Little reason to continue trusting conventional banks or politicians. Crypto currencies such as Bitcoin and others — while having their inherent systemic risks as well — appear to be safe in comparison. The outlook on paper currencies is, indeed, as bleak as giving Bitcoin and all other Crypto coins an additional boos for this reason alone. This is further enhanced by growing use of Crypto coins in legitimate commerce, including more and more quite conventional products and services, throughout the world.

Many analysts believe that Bitcoin, which facilitates unmediated fund transfers between individuals, poses a potential threat to conventional banking. Bitcoin and other Crypto coins are certainly exposing the weakness of the US dollar as the world’s incumbent reserve currency, as well as all other similarly stricken paper currencies.

“Faster and easier than One-Click Buying on Amazon.com”, but actually for unlimited amounts of money.

Watch the following explanatory video for details about how — and why — Crypto currencies function:

Fiat Currency World: Awkward Cash Withdrawal Limits at HSBC

HSBC have changed their cash withdrawals policy, severely limiting customer ability to access their money. What’s more, HSBC didn’t even afford their customers a proper notice about it, BBC reported earlier. In many cases, withdrawals between £5,000 and £10,000 have been rejected by the bank, quoting “unusually large amounts” as an alleged reason. The bank simply tries asking their customers to “withdraw smaller amounts only” and also asks for “further information” about the planned use. In some cases, documental evidence has been required. Basically, it would be in HSBC’s sole discretion if and when the costumers may or may not withdraw their money.

Unusual about this are not the amounts to be withdrawn but the fact that HSBC came up with such an exceptional and bold measure to secure what apparently and stretched capitalisation ratio.

Unilaterally changing essential terms of contract without the consent of their costumers is outside the scope of any Terms allowing for amendments and, therefore, constitutes both a breach of contract and also of trust. The latter may turn out worse for the bank.

Even more ridiculous are HSBC’s justification attempts for their new “policy” for occasional “large” cash withdrawals: the bank wanted to make sure it is the right way to make payment and to protect the costumer against guess who? The costumer himself.

Credit Card Security Breach: Over 1m Could Be Affected by PoS Malware

A highly disguised malware program installed onto point of sale terminals at Neiman Marcus may have compromised up to 1.1 million debit cards and credit cards of customers shopping at the retailer.

The security breach appears to be the biggest in the history of the company.

Credit card issuers Visa, MasterCard and Discover have found a confirmed 2,400 Neiman Marcus and Last Call customer cards that were used fraudulently. Last Call is Neiman Marcus’ clearance chain. The total of debit cards and credit cards affected should be much higher than those 2,400 cases reported, potentially affecting more than a million customers. Effectively, everyone who shopped at the high-value retail store throughout the entire year of 2013 could be affected. Neiman Marcus say they are notifying all customers who shopped in its stores in 2013 and offering them a free year of credit monitoring and identity-theft protection. While just providing ‘more of the same’ and doing very little as far as the underlying problem is concerned, the measure must be seen as a mere communications move by the company though.

Malicious software found in Neiman Marcus’ computer system attempted to take customer card information from July 16 to Oct. 30, the company said. After the security breach was finally detected, the malicious software has been disabled.

Bitcoin Is Safe, Bitcoin Is Low-Cost, Bitcoin Is Superior to Conventional Payments

Bitcoin is usually portrayed as “high risk” by the mass media and industrial-age bureaucrat structures alike. Reports of spectacular thefts abound, the EBA (European Banking Authority), while also officially saying Bitcoin is legal to use Europe and here to stay, warned against alleged safety risks, and hyped stories about people “finding” abandoned hard drives on garbage dumps or “losing” bitcoins through an incredible variety of (usually stupid) ways are littering magazines and newspapers everywhere.

The truth is, Bitcoin is safe. The code works, and it is highly resistant against all sorts of operational concerns, including Block delays or non-syncronisation, and still works flawlessly in preventing double-spending or any kind of deliberate or involuntary subversion of the system. Also, Bitcoin is extremely low cost: there are no middlemen pocketing chunks of amounts you send, as is usual with conventional banking (SWIFT, credit cards, bankers’ drafts, Letters of Credit and other not-so-fancy ways of payment transmission from the telegraph-age).

Just note that SWIFT costs participating banks roughly $30,000 per year in “membership” dues in order to just be admitted to the club and able participate (plus a sizeable minimum amount per transfer, usually north of $6 per “wire” when you actually do). Also note that all credit card businesses pay around 41% of their total revenue for “fraud prevention” alone (this is where the total of billions from your 3% to 3.5% of “credit card usage” or “foreign card usage” and similar fees are going).

Neither credit cards nor “telegraphic” transfers have any meaningful error correction algorithms built into them. So even if no one attempt anything fishy there, money in transfer can still be lost — or delayed.

As Bitcoin is designed to be used in electronic communications and, thus, perfectly suited for worldwide transmissions, e-mail use, and immediate communications, it is clearly superior to those legacy systems that major banks desperately cling to and apparently try to “defend” using whatever means they can think of (government regulation, limiting access even further, introducing all sorts of hurdles).

Bitcoin’s other major advantage is the irreversibility of payments once sent. Chargebacks are not an issue, merchants accepting Bitcoin (or any other Crypto currency) payments need not worry about a thing. That way, there is no need for ridiculous “fraud prevention” teams, mechanisms against fraudulent chargebacks, or similar risk when using Crypto coin payments, eliminating these 41% of “security costs” (totalling billions of dollars every year) and making all transactions cheaper for everyone involved. Crypto currency payments such as Bitcoin transactions can be sent with zero or very low overall fees, therefore enabling improved integration and utilisation of all e-commerce aspects in the payments arena alone.

The arrival of Bitcoin, often praised as the biggest invention since TCP/IP (the protocol underlying the World-wide web) will likely bring about an entire new “Web 3.0” era.

South Korean Government Actively Supporting Bitcoin Ventures

South Korea actively supporting Bitcoin Crypto currencies digital money virtual currency, venture capital provided for Korbit

South Korea’s Ministry of Science, Information and Communications Technology and Future Planning has actively supported Korbit, one of the country’s leading Bitcoin companies, to participate in a conference to invite private equity investment in order to expand its business.

The bid resulted in Korbit successfully securing $400,000 seed funding by a group of private investors.

Also, established banks in South Korea have repeatedly made headlines in recent months for being generally supportive and open to Bitcoin and Crypto currency technology in general. The Korean Banks Foundation for Young Entrepreneurs, a group established by Korea’s largest banking alliance, has also participated in funding Korbit’s success.

Venture capitalists are quoted as saying, “Bitcoin’s growth in Korea is remarkable for the sophistication of the public dialog around its potential for innovation and wealth creation”, and that the country can “play a leading role in the future of global finance” by realising the importance of Bitcoin, and moving to embrace it faster than other nations.”

Apple Boycotting Bitcoin

Apple has removed a number of Bitcoin-related iOS applications from its proprietary online App Store. While in some cases, Apple failed to even give a proper reason for this measure, other app developers have received notifications from Apple that Bitcoin payment functionality, in a stricter sense, needed to be removed for their apps to stay “acceptable” for Apple’s platform.

The move has resulted in the disappearance of usable Bitcoin payment applications for Apple iOS devices such as iPhone, iPad or iPod touch. Only apps showing Bitcoin wallet balances or general prices on Bitcoin exchanges continue to be “permissible” for Apple. In effect, all truly useful Bitcoin applications for the widely used Apple devices have thus been censored out of existence by the company.

Apple’s policy has infuriated a large number of mobile device users. As a short-term result, a number of fixes for the problems caused by unavailable official App Store programs supporting Bitcoin have already appeared. These are only functional on jail-broken iOS devices though. (“Jail breaking” means removing existing and re-installing modified versions of the operating system onto original devices in order to circumvent DRM (Digital Restrictions Management) technologies present in standard Apple items.)

The reason for Apple’s fight against Bitcoin is that the company is struggling to introduce their its own payment system to Apple mobile device users. Apple’s planned system is said to be designed for PoS payments (point-of-sale payments) and to also be suitable for very small payments useful for e g music or movie downloads from Apple’s proprietary iTunes platform.

Forcing users to not use Bitcoin seems to be “okay” then for a large corporation trying to, obviously increasingly desperately, introduce something they see as the next big thing into the market predominantly for their own good, not the users’ who would certainly benefit much more from using low-cost and reliable Crypto currency payments such as Bitcoin.

Credit Card Issuers Spending 41% of Your Usage Fees on Fraud Prevention

It is a well-known fact throughout the banking and credit card industries that all credit card issuing companies are spending upward of 41% of total revenue every year on — more or less futile anyway — attempts to prevent (or at least limit) credit card fraud.

Anachronistic payment systems such as credit cards but also bank wire transfer technologies, dating from the age of the telegraph but still in use today, prove increasingly unfit for today’s Use Cases that much more frequently than in pre-internet days involve some kind of “overseas” aspect.

Despite the high extra cost thus associated with all “international” transactions, a large percentage of transactions in the consumer and B2C fields alone involve a “foreign” party in today’s world. These “overseas” transactions are particularly prone to fraud or other kinds of loss as legacy systems used by banks were not designed to process the volume of worldwide transfers they have to in this day and age.

Take to this the banks’ reckless integration of useless, and even more risky, new features into retails customer credit cards such as NFC (near-field communications) as their only “innovations”, and the unsuitability of both credit cards and banks themselves for the real world becomes even more obvious. NFC-equipped cards can be read at points of sale without card terminal contact, a fact already used for cracking and fraudulently charging to cards located in bags and wallets of passers-by.

It is, therefore, likely that these 41% are going to increase to even higher portions, unless a fundamental technology shift takes place — even with established banks seeing very little reason to finally come up with appropriate, modernised business models.

They are much more likely to continue “business as usual” and roll all their costs (and losses) over to the “stupid little customer” who, in their view, is only “there to be milked” (or slaughtered, should the need arise).

Bitcoin Boosting Overstock.com’s Numbers

bitcoinAcceptedHere

As reported earlier, the first big-name retailers in accepting crypto coin payments in Bitcoin are Overstock.com. The company’s CEO Patrick M. Byrne announced in December 2013 that all of Overstock.com’s offers would soon also be payable using Bitcoin. Sooner than expected, the corporation was reported to have signed a merchant service agreement with San Francisco-based Coinbase for clearing services. Bitcoin payments were then deployed during the first week of 2014.

Customer response seems to have made the company’s move a huge success: within just 21 hours of opening the Bitcoin portion of their business, the company had taken 780 online orders worth $1.24 million from customers paying with Bitcoin. Not at all bad for less than one day — and for some alleged “fringe technology” like Bitcoin either.