Introducing the Future of Money

The Year of Bitcoin

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Investors Ride the Waves As Bitcoin Price Soars

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Antiques to Airplanes, Bitcoin Acceptance Takes Off

2013

WINTER

IN THIS ISSUE
5 WELCOME FROM THE PUBLISHER 50 LAST WORDS FROM THE EDITOR-IN-CHIEF

24

ON THE COVER

WINTER 2013

Bit Premier
BitPremier.com

Martins Classic Cars

MartinsClassicCars.com

24

GUIDES
6 WHAT IS BITCOIN?
Everything You Thought To Askand More
By Erik Voorhees

24 SPENDING YOUR BITCOINS

A Bitcoin Shopping Guide
By Alan M. Silbert

8 GLOSSARY
A Guide to Bitcoin Terms

30 ACCEPTING BITCOINS
Why Merchants Stand to Benefit
By Tony Gallippi

10 WHY BITCOIN HAS VALUE

Notes on the Network Effect
By David Perry

34 HISTORY AND EVENTS

Bitcoins Brief Historical Timeline
By Bitcoin Magazine

12 INVESTING IN BITCOINS
The Most Promising Investment Opportunity of Our Age?
By Tuur Demeester

40 HOW BITCOINS ARE MINTED

The Fascinating World of Mining
By Alexander Lawn

15 BUYING AND SELLING

The Basics to Get You Into The Market
By CoinDesk

45 GET-TO-KNOW
Leading Figures in the Bitcoin Movement

Davids Antiques
322 Royal Street New Orleans, LA davidsnola.com

21 SECURING YOUR BITCOINS

Tips on Safety and Accessibility
By Andreas M. Antonopolous

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Back Cover

FROM THE PUBLISHER

INAUGURAL ISSUE WINTER 2013

Welcome to the wonder of Bitcoin! It is with immense pride and jubilation we bring to you the inaugural issue of yBitcoin, a magazine designed to introduce Bitcoin and its promise to Main Street. I hope you will be open to discovery, and find true enjoyment in being an early participant in such an innovative technology! If anyone had told me this time last year I'd be publishing a magazine to help introduce Bitcoin to a general readership, I'd have said, "Pardon me? Bitcoin? What is Bitcoin?" Fast forward at a dizzying pace and here we are, honored to be involved in what may prove to be one of the greatest financial innovations in history. Our roller-coaster journey from magazine concept to inception has been nothing short of fascinating. It has been an honor and an education collaborating with Bitcoin's global leaders and businesses, helping to spread their story to a wider audience. And as a business owner I have experienced Bitcoin commerce at its finest! As for our name: why yBitcoin? The y addresses our mission: to answer the question of why Bitcoin is a potentially revolutionary movement that could fundamentally change the way we do commerce in the 21st century. The y is also an appeal and a salute to the changing demographic (Gen Y) of digital, financial and other commercial entrepreneurs who are busy changing our world with their imagination and ingenuity. I think youll see plentiful evidence of their impact in these pages. Long may they thrive!

F o un d er/E di t o r -in-Chief David F. Bailey Publisher Calli S. Bailey Senior Designer Jennifer M. Taylor Senior Consulting Editor Andrew Hidas We b / D e s i g n e r Scott Seeley Cir c u l a t i o n Jeoupei Rossel Adver tising Associate Zach Corbett Contributing Wr i t e r s Andreas Antonopolous Tuur Demeester Tony Gallippi Alex Lawn David Perry Alan Silbert Erik Voorhees Bitcoin Magazine CoinDesk
Downloadable Digital Edition:

yBitcoin.net

All my best,

Calli
Calli S. Bailey, Publisher calli@ybitcoin.net

yBitcoin is published quarterly by Bailey Publications, 1115 Eagletree Ln., Huntsville, AL 35801. Reproduction without the express written consent of the publisher is prohibited. yBitcoin is not responsible for unsolicited manuscripts, photography or art. yBitcoin does not endorse any advertiser or business listed in its directories, and is not responsible for errors and omissions in advertising or editorial content. The information contained herein should not be construed as an endorsement of any company or individual, nor reflect in any way upon the products/services they provide. yBitcoin does not knowingly accept false or misleading advertising or editorial content, nor does the publication or its staff assume responsibility if such advertising or editorial content appears in the publication. yBitcoin makes no warranties or representations and assumes no liability for any claims regarding services, products or claims made by advertisers. yBitcoin is not a broker, seller or buyer of Bitcoin, nor shall it be considered to be promoting or encouraging the purchase of or investment in Bitcoin. 2013, all rights reserved. Advertising Sales Office 256.539.6100 www.ybitcoin.net

yBitcoin.net

What is Bitcoin?
Welcome To Cryptocurrency
by ERIK VOORHEES

itcoin has taken the world by storm. Yet when most people hear about it, whether for the first or the tenth time, they have one simple question: What is it? Like an automobile, Bitcoin is very technically advanced, and it can be extremely complicated, depending on how much you want to know about it. But also like an automobile, you dont actually need to know much about Bitcoins technical details in order to use itand in order for it to change the way you look at the world. Heres what you need to know. Generally speaking, Bitcoin is two things: 1) A payment network (Bitcoin), 2) The currency unit used on that network (bitcoins). Thus, as both a payment network and the specific currency used on that network, you use Bitcoin to receive and send bitcoins to and from other people. To clarify this, consider a comparison to items with which youre already familiar: PayPal and U.S. dollars. PayPal is a payment network, but not a currency. On the flip side, the U.S. dollar is a currency, but not a

Bitcoin is two things: (1) A payment network (Bitcoin), (2) The currency unit used on that network (bitcoins).
payment network. You use the PayPal payment network to make transactions in U.S. dollar currency with people. Now, note that the PayPal payment network is operated and centrally controlled by one company (PayPal Inc.), and the U.S. dollar is created and centrally controlled by one organization (the U.S. federal government). Now: Heres where things get important, and revolutionaryand a little weird. With Bitcoin, the payment network is decentralized. It is not controlled by any company or organization. Think of it like filesharinga network of computers that talk to each other, but nobody controls the network itself (there is no central server). The currency unit, called bitcoins, is also not created or controlled by any central party. Bitcoins are created by the network itself over time, in a somewhat random process that distributes the new coins to those computers that are supporting and operating the network. The number of coins created in this way is limited by a clever mathematical system. As of this writing, there are roughly 12 million bitcoins in existence, and this will continually increase over time to a maximum of 21 million bitcoins many years in the future. Unless you care about how Bitcoin accomplishes this, the above is really all you need to answer the question, What is Bitcoin? Answer: Its a payment network, and a currency used on that network, which are controlled by no central party. The number of bitcoins in existence is limited by mathematics.

Bitcoin means that for the first time in human history, every person has financial sovereignty. Private property can now truly be controlled by the owner, and nobody else.
Perhaps the more important question, of course, is, Why should you care? While computer engineers and mathematicians might find Bitcoins technical details fascinating, most people dont really care about that. And while its true that Bitcoin permits financial transactions that have essentially zero cost, and which occur instantly, anywhere in the world, these consumer benefits are not really whats important, either. The real magic of Bitcoin, the reason its so newsworthy, comes from the consequences of its existence.

The real magic of Bitcoin, the reason its so newsworthy, comes from the consequences of its existence.

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The fact that Bitcoin is decentralized, with no controlling entity, has fundamental implications. Because there is no central control, the power of the currency and its payment network belong to the people who use it. And this power is tremendous indeed. Bitcoin enables any two people, anywhere on earth, to transact with each other freely. They cannot be censored. There are no rules for their exchange except those they set between themselves. With Bitcoin, there is no third party watching over the participants of economic activity, approving their conduct and charging a fee for doing so. With Bitcoin, one does not need permission to direct ones own financial life. This means people can contribute to controversial causes they believe are important, with no government agency or financial company able to cut off the payment flow. It means an entrepreneurial child can start an Internet business before he or she is 18. It means a rural African farmer can receive payment

for crops from a neighboring city, even with no bank account. It means a citizen of a tyrannical nation can hide his financial assets from seizure.

Bitcoin enables any two people, anywhere on earth, to transact with each other freely.
Bitcoin means that for the first time in human history, every person has financial sovereignty. Private property can now truly be controlled by the owner, and nobody else. The rules of finance, and our economic relationships, now become set and regulated by markets instead of politicians. By the individual, not the collective. The value of ones savings now cannot be reduced through monetary debasement (i.e. inflation). Trade between individuals is now the business of only those individuals. Certainly, some of these implications are controversial. Indeed, they will have profound consequences on human society,

just as do all great technological achievements. A good way to think of it is that Bitcoin represents the separation of money and statethe ability to practice ones own economic behavior without the permission of anyone else. It removes the power over money from governments and banks, putting it in the hands of anyone who learns how to use it. It brings privacy in an age of surveillance, and honesty in an age of manipulation. So what is Bitcoin? It is an experiment. It is a project that, if successful, will change the economic relationship between humans on a fundamental level. Its implications have just barely been explored. Like any experiment, it can fail, but the genie is now out of the bottle. While this genie goes about its business, many things you take for granted will likely change, so it may be wise for you to educate yourself on the technological, mathematical, and economic phenomenon that is Bitcoin.

Erik Voorhees

Erik Voorhees is a serial Bitcoin entrepreneur and long-time advocate of the separation of money and state. He believes Bitcoin to be one of the most important technological tools ever created by humanity. Current CEO of Panama-based Coinapult, and former head of marketing for BitInstant, Erik has been at the center of the Bitcoin movement since April, 2011. Erik has been a featured guest on BBC Radio, The Peter Schiff Show and The Tom Woods Show, discussing the economic and social implications of the rapidly evolving Bitcoin Movement.

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GLOSSARY
Address: Similar to an email address and generated at no cost, this string of 27-34 characters represents the destination for a Bitcoin payment. ASIC: Application Specific Integrated Circuit - ASICs are an integrated circuit customized for a specific use, in the BTC space they are now used for mining bitcoins. Bitcoin: A payment network (Bitcoin), the currency unit used on that network (bitcoins). As digital/virtual currency, it uses peer-to-peer technology to facilitate instant payments. Bitcoin is an alternative currency known as a cryptocurrency, which uses cryptography for security, making it difficult to counterfeit. Bitcoin issuance and transactions are carried out collectively by the network, with no central authority. The total number of bitcoins that will be issued is capped at 21 million to ensure they are not devalued by limitless supply. Users store their bitcoins in a digital wallet, while transactions are verified by a digital signature. Block: Data is permanently recorded in the Bitcoin network through files called blocks. A block is a record of some or all of the most recent Bitcoin transactions that have not yet been recorded in any prior blocks. Blocks are links in a chain of transaction verifications. Outstanding transactions get bundled into a block and are verified roughly every ten minutes on average. Each subsequent block strengthens the verification of previous blocks. Each block contains one or more transactions. Block Chain: A public record of Bitcoin transactions in chronological order. The block chain is shared between all Bitcoin users. It is used to verify the permanence of Bitcoin transactions and to prevent double spending. BTC: Most common unit representation of the Bitcoin currency, similar to USD with dollars. Cold Storage: Keeping bitcoins safely offline through a USB or other drive, paper wallets, or a physical coin. Cryptography: The branch of mathematics that creates mathematical proofs to provide high levels of security. Online commerce and banking already use cryptography. In Bitcoin, cryptography is used to make it impossible for someone to spend funds from another users wallet or to corrupt the block chain. It can also be used to encrypt a wallet, so that it cannot be used without a password. Deflation: The reduction of prices in an economy over time. It happens when the supply of a good or service increases faster than the supply of money, or when the supply of money is finite. This leads to more goods or services per unit of currency, meaning that less currency is needed to purchase them. This carries some downsides. When people expect prices to fall, it causes them to stop spending in the hope that their money will go further later. Difficulty: Every 2016 blocks, Bitcoin adjusts the difficulty of verifying blocks based on the time it took to verify the previous 2016 blocks. The difficulty is adjusted so that given the average estimated computing power of the whole Bitcoin network, only one block will be verified on average every ten minutes for the next 2016 blocks. Double Spending: When a malicious user tries to send their bitcoins to two different recipients at the same time. Bitcoin mining and the block chain are there to create a consensus on the network about which of the two transactions will be confirmed and considered valid. Escrow: Holding funds in a third-party account when two parties are engaged in a transaction. Advisable when making a transaction via a Bitcoin account with an unknown party, or when transacting high value items. Exchange: A central resource for exchanging different forms of money and other assets. Bitcoin exchanges are typically used to exchange the cryptocurrency for other, typically fiat, currencies. Fiat Currency: Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Halving: Refers to reducing reward every 210,000 blocks, approximately every four years. Due to reward halving, the total supply of bitcoins is limited. Hash Function: A computer algorithm which takes an arbitrary amount of input data and deterministically produces fixed length output, known as the data's "hash." It can be used to easily verify that data has not been altered. If you change any single bit of the original data and run the hash algorithm, the hash will completely change. Because the hash is seemingly random, it is prohibitively difficult to try to produce a specific hash by changing the data which is being hashed.

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A Guide To Bitcoin Terms

Hash Rate: Measuring unit of the processing power of the Bitcoin network. The Bitcoin network must make intensive mathematical operations for security purposes. Inflation: When the value of money drops over time, causing prices for goods to increase. The result is a drop in purchasing power. KYC: Know Your Client rules require financial institutions to vet the people they are doing business with, ensuring that they are acting in good faith and adhering to all applicable regulations. Mining: Process of using computer hardware to do mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm, along with newly created bitcoins. Mining is a specialized and competitive market where the rewards are divided up according to how much calculation is done. Paper Wallet: Method of storing bitcoins offline on a physical piece of paper that holds both the private key and the public address. Private Key: A secret piece of data that proves your right to spend bitcoins from a specific wallet through a cryptographic signature. You can think of this as your PIN number. Your private key(s) are stored in your computer if you use a software wallet; they are stored on some remote servers if you use a web wallet. Private keys must never be revealed as they allow you to spend bitcoins from their respective Bitcoin wallet. Public Key: An alphanumeric string which is publicly known, and which is hashed with another, privately held string to sign a digital communication. You can think of this as your bank routing number. In the case of Bitcoin, the public key is a Bitcoin address. QR Code: A two-dimensional graphical square containing a monochromatic pattern representing a sequence of data. QR codes are designed to be scanned by cameras, including those found in mobile phones, and are frequently used to encode Bitcoin addresses. Reward: When a block is discovered, the discoverer is awarded a certain number of bitcoins, which is agreed upon by everyone in the network. Currently this bounty is 25 bitcoins; this value will halve every 210,000 blocks. Satoshi: The smallest unit of the Bitcoin currency (1/100,000,000 BTC or 0.00000001 BTC). This unit has been named in collective homage to the founder of Bitcoin. Satoshi Nakamoto: Anonymous creator and founder of the cryptocurrency, Bitcoin. Signature: A cryptographic signature is a mathematical mechanism that allows someone to prove ownership. In the case of Bitcoin, a Bitcoin wallet and its private key(s) are linked mathematically. When your Bitcoin software signs a transaction with the appropriate private key, the whole network can see that the signature matches the bitcoins being spent. Transaction: A specific section of data that is broadcast to the network and then collected into Blocks. Transaction Fee: Possible with any transaction of bitcoins. Processed and received by the Bitcoin miner. Transaction fees are voluntary but can help speed confirmation times. Wallet: Loosely the equivalent of a physical wallet on the Bitcoin network. The wallet actually contains your private key(s) which allow you to spend the bitcoins allocated to it in the block chain. Each Bitcoin wallet can show you the total balance of all bitcoins it controls and lets you pay a specific amount to a specific person, just like a real wallet. 51% Attack: A condition in which more than half the computing power on a cryptocurrency network is controlled by a single miner or group of miners. Controlling 51% of the computational power theoretically makes them the authority on the network, allowing them to: Issue a transaction that conflicts with someone elses. Stop someone elses transaction from being confirmed. Spend the same coins multiple times. Prevent other miners from mining valid blocks. While a 51% Attack poses a theoretical threat to Bitcoin, many structural safeguards are in place to make such an occurrence highly unlikely. Chief among them is the open source nature of the network, allowing many others to quickly recognize an attack and take defensive measures.

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Why Bitcoin Has Value

Notes on the Network Effect
by DAVID PERRY

We all have what feels like an intrinsic understanding of value, In truth there is more complexity involvedsome things, like though it is actually learned as we come to know our world. A gold your fish, would make very poor money indeed. Fish dont stay bar has value, an empty soda can, not so much. When we good for very long, theyre not particularly divisible, and depending encounter new things its usually fairly easy to assess what kind of on the exchange rate you might have to carry a truly absurd value they might hold, but Bitcoin is a different beast. Bitcoin is amount of them to make your days purchases. harder to define and understand, and for many beginning On the other hand, silver coins have their inherent problems Bitcoiners the question of value is one of the most puzzling. too, at extremely large or extremely small scales. This is what is So why does Bitcoin have value? truly valuable about Bitcoin: Its better money. To begin, we really need to understand why anything has The Evolution to Bitcoin value. Fans of post-apocalyptic fiction will often point out that in Its been a long time since those first hard moneys were the end, the only things of real value are those that sustain and developed, and today we transact primarily with digital representations defend life. Perhaps theyre right on one level, but with the rise of paper currency. We imagine bank vaults filled with stacks of cash, of civilized societies things got a bit more but thats almost never the case these days Bitcoin is instead a complex, because the things that sustain most money exists merely as numbers in a and defend those societies also gain a simple, elegant and database. Theres nothing wrong with this certain degree of value. It is in this context modern replacement for type of system, either; it works fantastically that all moneys, Bitcoin included, gain their well in an age where physical presence during the entire concept value. Since our societies rely heavily on a transaction is not a given. The problem is of money. trade and commerce, anything that facilithat the system is aging and far too often tates the exchange of goods and services has some degree of value. plagued by incompetence or greed. Every IT guy knows that from time to time you have to take a From Barter to Money Imagine, for example, a pre-money marketplace where the drastic step: throw the old system in the trash and build a new one barter system is king. Perhaps youre a fisherman coming to marfrom scratch. Old systems, like our current monetary system, have ket with the days catch and youre looking to go home with some been patched so many times they are no longer functioning as eggs. Unfortunately for you, the chicken farmer has no use for fish efficiently as they should. at the moment, so you need to arrange a complex series of We previously patched our problems with gold and silver by exchanges to end up with something the egg seller actually wants. introducing paper banknotes. We patched further problems by Youll probably lose a percentage of your fishs value with each removing the precious metal backing those banknotes, then trade, and you also must know the exchange rate of everything patched them again and again to allow wire transfers, credit cards, with respect to everything else. What a mess. debit cards, direct deposit and online billpay. All the cornerstones This is where money saves the day. By agreeing on one interof modern life are just patches on this ancient system. mediate commodity, say silver coins, two is the maximum number But what would you do if you had the chance to start over? of exchanges anyone has to make. And theres only one exchange What if you could make purely digital money based on modern rate for every other commodity that matters: its cost in silver coins. technologies to solve modern needs? What if we didnt need those

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Imagine being able to invest in the concept of email back in 1965 when some clever hacker at MIT found a way to use their primitive multi-user computer system to pass messages.
dusty old systems or the people making absurd profits maintaining them? This is Bitcoin. Unfortunately, this makes Bitcoin look, on the surface, too good to be truea bit like a Ponzi or pyramid scheme. Ponzis and pyramids are distinct and different forms of fraud, but they share one thing in common: The first ones in make a lot of money while the last ones in foot the bill. Both feature initial investors being paid out directly from new investors money. The return is always too good to be true and the gains (for those who actually get gains) are exponential. Because Bitcoins value has risen so dramatically since its 2011 debut, it seems to fit this sort of a profile at first glance, but then so does every new technology. Its just not normally the case that we get to invest in this sort of technology and profit as its adopted. Imagine being able to invest in the concept of email back in 1965 when some clever hacker at MIT found a way to use primitive multi-user computer systems to pass messages. It might have seemed like a silly waste then, but owning even a tiny percentage of the rights to email today would make one wealthy beyond imagining. Technologies follow a known adoption curve, which tends to include a period of exponential rise. Bitcoin is no exception. Ponzis and pyramids both create value for their oldest investors by stealing from the new. Theres no economics involvedjust theft. Bitcoin creates value for the old investors and the new by splitting a finite currency supply more ways. Thats not trickery or theft, just good-old-fashioned supply and demand at work a basic and ancient economic principle applied to the worlds newest currency system.

Replacement, Not Repair

Bitcoin isnt another patch, another layer of abstraction added on top of an aging and over-complex system. Bitcoin isnt another bank or payment processor coming up with new ways to move old dollars. Bitcoin is instead a simple, elegant and modern replacement for the entire concept of money. It has value for exactly the same reason as the paper money in your wallet: It simplifies the exchange of goods and services, not in the antique setting of a barter system bazaar, but in the current setting of modern Internet-enabled life. But thats just why its useful I hear some of you saying. Why does it actually have value? The two-word answer is one most economists are familiar with: Network effect. The network effect is a lovely piece of jargon that refers to the quite common sense statement that networked products and services tend to have more value when more people use them. The most common example is the telephone: During its early days when few people had access to telephones their utility, and therefore their value, were minimal. Today practically everyone has a phone, so their utility and value is so high as to be unquestionable. In this way the value of Bitcoin is directly tied to the number of its users and the frequency of their use. Of course Bitcoins value stemming from the network effect is not without its own unique difficulties. When the network is still relatively small, each new groups entry or egress can create massive price fluctuations, resulting in huge profits for early adopters.

David Perry

David Perry is the chief architect for BitcoinStore and author of the popular Bitcoin blog, Coding In My Sleep. When he's not breaking (or making) Bitcoin news, he can often be found moderating the Bitcoin StackExchange Q&A site, attending Bitcoin meetups and conventions, or tending to his Bitcoin mining operation.

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1 Year: +1,900%

2 Year: +7,000%

3 Year: +80,000%

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Bitcoin: Perhaps the Most Promising Investment Opportunity of Our Age

technology is called disruptive if it creates a new market that first disturbs and then displaces an earlier technology. Bitcoin is potentially such a technology and much more. The fact that it can disrupt the largest and most interconnected market place in the worldmoney, banking, and finance makes it perhaps the most promising investment opportunity of our age. Unlike our current increasingly unstable and unpredictable financial system, Bitcoin has 21st century technologies at its very core. The digital currency and clearing network is open source, mobile, peer-to-peer, cryptographically protected, privacy oriented, and native to the Internet. The fusion of these technologies allows for a level of security and efficiency unprecedented in the world of finance. These are some of the areas in which Bitcoin-oriented technology can directly compete: $2 trillion annual market for electronic payments, $1 trillion annual e-commerce market, $514 billion annual remittance market, $2.3 trillion hedge fund market, $7 trillion gold market, $4.5 trillion cash market, $16.7 trillion offshore deposit market.

by TUUR DEMEESTER

Since inception of Bitcoin in 2009, its market cap has grown by a minimum of 10 times every year. It now stands at over $2 billion, with an annual turnover of +$10 billion.
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Indeed, Bitcoin has been noted in glowing terms by industry moguls such as: Bill Gates, (a technological tour de force), Paypal CEO David Marcus (We are considering using Bitcoin as a funding instrument), SWIFT CEO Gottfried Leibbrandt (Dont see why we could not send transactions in Bitcoin as a currency), GoldMoney chairman James Turk (Bitcoin is money and a store of value), Gmail creator Paul Buchheit (Bitcoin may be the TCP/IP of moneyimplying that Bitcoin may revolutionize money the way the Internet revolutionized information), $55 billion Fortress Investment Co-CIO Michael Novogratz (Put a little money in Bitcoin, come back in a few years and its going to be worth a lot). Apart from disrupting existing marketplaces, this honey badger of money also has the potential to develop entirely new markets. (Honey badgers have gained notoriety on the Internet in recent years as the most fearless of all animals.) Given the decentralized nature of the Bitcoin network, it can help the 2.5 billion unbanked people worldwide transact and bank internationally through their cell phones and smartphones. And because of its extremely low costs and absence of bureaucracy, Bitcoin can also help get the undeveloped market for microloans and micropayments off the ground. Another area of future growth lies in the fact that, in the words of IBM executive architect Richard Brown, Bitcoin is a very sophisticated, globally distributed asset ledger. What Brown and others hint at is that Bitcoin will in the future be able to serve not only as a currency and payment platform, but also as an Internet of money. This entails a decentralized and global platform on

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which companies and individuals can emit, buy, and sell stocks, commodities, and other financial products, thereby removing a lot of the current bureaucracy and barriers to entry. IBMs Richard Brown is so enthused by this prospect that he sees it as a whole future of innovation. So, how much of this potential is already realized? Well, since inception of Bitcoin in 2009, its market cap has grown by a minimum of 10 times every year. It now stands at over $2 billion, with an annual turnover of +$10 billion. According to the market maker Resallex, this makes the Bitcoin currency stock more valuable than that of 70 national currencies, including Jamaica, Mongolia, and Honduras. The standard open source version of the Bitcoin software (Bitcoin QT) has been downloaded 3.8 million times to date, and a combined 750,000 users now have accounts with the online wallet services of coinbase.com and blockchain.info. Payment processors Bitpay and CoinBase recently reported a combined 20,000 registered merchants accepting the digital currency. Finally, since their inception in 2011, Bitcoin-denominated stock markets have grown to over $200 million worth of shares. Furthermore, the Bitcoin price has been rising at an exponential rate of +1,000% annually. This can be explained mostly by the fact that it is a scarce commodity (maximum supply is 21 million) with a rapidly growing user base. Here are a few possible scenarios for the future value of one bitcoin:

Bitcoin does not appear to be a fad or bubble, nor merely a one-off hedge against gold.
How serious of a risk do these challenges pose? Let us examine them. A better currency is possible, but experience shows that disruptive protocolssuch as SMTP for email and TCP/IP for internethave proven to be very resilient once adopted by a critical mass of the population. An organized attack on the network is possible but expensive, and there are many potential defense mechanisms. As with any software application, the discovery of bugs may destabilize the system, but the open source nature of Bitcoin allows for many eyeballs to help track problems, and many brains to help figure out a solution. That leaves government clampdown as the most likely risk to Bitcoin. However, with many regulators implicitly or explicitly already accepting Bitcoin, and the robust, decentralized nature of its network, such a move would appear to be unlikely. The network effect is what constitutes the biggest driver for Bitcoin as a medium for exchange: the more people use it, the more useful it becomes, and the more valuable the currency will become. This makes the outcome of the Bitcoin story likely to be binary: either it will experience a spectacular downfall, or the value of bitcoins will rise dramatically over the coming years as an increasing share of the global population adopts the currency. In any case, it seems exceedingly clear that the technology of the cryptocurrencies is here to stay. Bitcoin does not appear to be a fad or bubble, nor merely a one-off hedge against gold. With a risk-reward proposition this attractive, holding a small percentage of bitcoins in ones portfolio as a speculation on increased adoption may be one of the wisest investment decisions of our age.

Scenario

Potential value of one bitcoin

$ $ $ $ $ $ $ $ $ 686 1,230 2,480 3,500 6,860 11,500 44,000 500,000 800,000

10% of remittances are done in Bitcoin1 Hedge funds allocate 1% to Bitcoin2 Argentines sell USD cash for Bitcoin3 Gold holders divest 1% into Bitcoin4 Bitcoin replaces remittance market5 Becomes global E-Commerce currency6 25% of black market transactions in Bitcoin7 Bitcoin replaces reserve currency8 Bitcoin replaces offshore deposits9

The scenarios projected above are, of course, not cast in stone. Bitcoin faces several risks going forward. These include: Compromised security of the major exchanges, The emergence of a much better digital currency that steals its market lead, An undetected bug in the system, A sustained attack by an organization with substantial computational resources, A coordinated clampdown on Bitcoin by a multi-national entity such as the G20.

1) Sources: http://tinyurl.com/remittance2012 and for volume estimates in BTC economy: http://blockchain.info/charts (the latter also for estimates in footnotes 5, 6, and 7) 2) Source: http://tinyurl.com/HFresearch2013 3) Source: http://tinyurl.com/argentine-USDcash 4) Source: http://tinyurl.com/GMabovegroundgoldstock 5) Source: http://tinyurl.com/worldbank2012remittances 6) Source: http://tinyurl.com/ecommerceglobal 7) Sources: http://tinyurl.com/VOXEUshadowecon and http://tinyurl.com/CIAworldGDP 8) Source: http://mises.org/content/nofed/chart.aspx 9) Source: http://tinyurl.com/HKMAoffshore

Tuur Demeester

Tuur Demeester is editor and owner of AdamantResearch.com, which publishes research on investing and entrepreneurship in the new economy. He has a background in Austrian economics, the school that specializes in the study of boom-and-bust cycles in the economy. Tuur first discovered Bitcoin at a research trip in Argentina, and started recommending it as an investment at $5 in January 2012.

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A Guide to

Buying Bitcoins
Provided by CoinDesk

itcoin involves amazing technology, but in order to take part in its massively expanding economy you need to own some. There are three primary ways to acquire bitcoins: buying them, earning them in exchange for goods or services, or mining them. For most of us, buying bitcoins is the most practical and convenient way to take the plunge, but as youll discover, it isnt (yet) as simple as walking into your neighborhood ice cream parlor for a cone. You can buy bitcoins in a variety of ways. Here are a few places to start.

Bitcoins can be bought through regulated exchanges, or directly from individuals selling themeither online or in person.
If youre buying, you can choose to place an instant order at the going market rate, or, if you expect a lower rate, at your designated price. As soon as the exchange matches your order with a seller, the exchange executes it, and the fiat currency in your account is converted to bitcoins. This process is exactly how traditional fiat currencies such as the yen and dollar are traded. After your purchase, if you want to spend bitcoins on goods, youll need to withdraw them from your account at the exchange and send them to a Bitcoin address so that they wind up in your wallet. For easiest access, its probably best to transfer your bitcoins from the exchanges online server to your own computer, or even store them in a safe deposit box at your local bank. The biggest strength of exchanges is that they are designed for trading, so you can speculate on bitcoins. The downside is you are dealing with an intermediary, and also have to deal with issues such as Know Your Client (KYC) and Anti-Money Laundering (AML) rules. These rules, implemented to stop terrorists and other criminals from

laundering money, can be challenging for userskind of like the shoe removal and ID rigmarole we go through at airports. As in that circumstance, patience is a virtue.

OTC Exchanges
Another option is to pursue over-thecounter (OTC) trades, in which you buy bitcoins directly from another party in fiat currency, without relying on an exchange. In these trades, you contact the other party directly via an OTC website, and in some cases may need to negotiate the specifics of the deal. The funds you use can be in the form of a PayPal transaction, cash, or even gold or silver, depending on the features offered by the site.

Traditional Bitcoin Exchanges

Traditional exchanges such as Coinbase or Bitstamp are probably the most common sources for bitcoin purchase. You start by visiting the companys website and setting up an account. Then you need to deposit fiat currency such as U.S. dollars into your account. (Fiat refers to any currency that is considered by a government to be legal tender.) How you get your local currency into your Bitcoin account is different for each exchange, but it generally requires you either to wire money to the exchange or let them perform an ACH withdrawal directly from your bank account. In most cases, the money settles in less than a week. Once the exchange credits your account, you can buy bitcoins, not from the exchange, but from other traders on the exchange. The exchange just manages the process, using what is called an order book.

There are three primary ways to acquire bitcoins: buying them, earning them in exchange for goods and services, or mining them.
Once agreements are reached, the parties selling the bitcoins deposit them in an escrow account operated by the site. All parties can see when the bitcoins have arrived. When they do, the sellers release the bitcoins from the escrow account for the buyers. The process makes it impossible for sellers to retrieve the bitcoins or buyers

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One of the great aspects of Bitcoin is that it is entirely decentralized. This means that if you happen to be near someone with a Bitcoin address, you can simply send them the money by making a direct transaction, generally over your mobile phone.
to seek a refundonce the transaction is complete, there are no redos. OTC sites offer a successful way to trade bitcoins quickly, but youll often find them trading at a premium. It is worth checking the regulations in your own country regarding KYC/AML rules, to see if the authorities officially permit such trades. It makes sense to use a dedicated account for such trades, separate from any other personal or business accounts you may use, so that you can keep track of exactly what you have bought. This may help for potential tax purposes later. As with all sites, check the reputation of these before doing business with them. exchanges want to know who you arethose KYC and AML rules again. Consequently, paying sites that adhere to regulations will generally involve a cumbersome registration process, which often entails printing out and signing forms to send to the exchange. Expect to provide copies of governmentissued photo ID as well.

In-Person Purchases
One great feature of Bitcoin is that it is entirely decentralized. This means that if you happen to know someone with a Bitcoin address, you can simply send them the money by making a direct transaction, generally over your mobile phone. But how do people meet each other? Thanks to social networking and sites such as Meetup.com, there are now groups organizing all over the world with the sole purpose of trading bitcoins, either for fiat currency, or for other goods. A growing list can be found at bitcoin.meetup.com/all/. Some OTC exchanges such as LocalBitcoins also feature local searches, enabling you to find people willing to sell you bitcoins in cash. If taking this route, be careful about when and where you meet strangers for such transactions, and check that the escrow payment has arrived first. This is often the quickest way to purchase bitcoins. Finally, Bitcoin ATMs are being installed across the globe. These allow you the convenience and speed of purchasing bitcoins without the need to do business with a stranger. Because of these advantages, Bitcoin ATMs often charge a premium.

Wire Transfers
Most exchanges accept wire transfers, although they take a few business days to clear, and involve a transaction fee (often a percentage of the transaction, above a minimum amount). If you live in the Eurozone, regulations may permit free wire transfers. Check with your exchange on this matter.

Direct Payment Sites

Sites such as Coinbase offer people the chance to buy bitcoins without exposing them to order books. These sites calls themselves Bitcoin wallets with the ability to buy bitcoins on your behalf. They are essentially an exchange with a simple online wallet. However, you will still need to follow KYC rules, and for the time being, it is open only to U.S. customers. Other companies, such as BitInstant, allow you to make bitcoin purchases through local convenience stores, but this service is not available in all areas, and sellers often charge a higher premium. Various other sites offer the chance to buy bitcoins with a credit or debit card. These typically impose strict limits on the number of bitcoins you can buy, and the transaction fees can range up to 6.5% or more. Others will ask you to make a Western Union transaction.

Credit & Debit Cards/PayPal

Many exchanges forbid payment mechanisms that allows chargebacks, such as credit cards and PayPal accounts. Accepting payments via these channels opens them to fraud, and where permitted will usually incur higher transaction fees. This often results in limiting the amount of bitcoin you can buy.

Conclusion
All the processes and challenges mentioned here are changing rapidly as Bitcoin gains increasing acceptance in the marketplace. With Bitcoin entrepreneurship in full swing, expect easier, more convenient processes to emerge with the ingenuity we have come to expect in modern economies.

The Payment Process

Paying for bitcoins can involve serious paperwork. For regulatory reasons, reputable

A leader in news, prices and information on Bitcoin and other digital currencies, CoinDesk covers news and analysis on the trends, price movements, technologies, companies and people in the Bitcoin and digital currency world. CoinDesk strives to cover news accurately, fairly, objectively and responsibly. Obtaining original comment, corroborating information from other sources, and showcasing original opinion are fundamental to this.

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Time to purchase your first bitcoins.

We're secure. We put our software through PCI-DSS tests daily as well as constantly challenging our system, doing the best we can to ensure your funds are as safe as possible.

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www.vaultofsatoshi.com
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Buy/Sell Directory

BITCOIN.DE
Germany BTC, EUR

COINBASE
San Francisco, CA USA BTC, USD

https://bitcoin.de/en

https://coinbase.com

BITINSTANT
New York City, NY USA

https://bitinstant.com info@bitinstant.com
BTC, USD

BTC, USD, EUR, XRP, LTC

KRAKEN
San Francisco, CA USA

https://kraken.com support@kraken.com

BITSTAMP
Slovenia

https://bitstamp.net info@bitstamp.net

BTC, EUR, GBP, USD, CHF

Helsinki, Finland https://localbitcoins.com support@localbitcoins.com

ALL CURRENCIES ACCEPTED

MT. GOX
https://mtgox.com
Shanghai, China BTC, CNY

BTCCHINA
https://vip.btcchina.com business@btcchina.com

Tokyo, Japan

BTC, USD, EUR, CAD, GBP, CHF, AUD, SEK, PLN, CNY, SGD, JPY

BTCe
https://btc-e.com
BTC, EUR, USD, LTC

VAULT OF SATOSHI
Ontario, Canada

Russia

https://vaultofsatoshi.com hello@vaultofsatoshi.com 888-293-5014

BTC, CAD, USD, LTC

CAMPBX
Alpharetta, GA USA BTC, USD

https://campbx.com

Canadian Virtual Exchange https://cavirtex.com support.cavirtex.com 888-812-2525

BTC, CAD

Every effort has been made to ensure accuracy of information presented here.

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How to Ensure Bitcoin Security

by ANDREAS M. ANTONOPOULOS

...Bitcoin has capabilities that cash, gold and bank accounts do not.

itcoin allows anyone to be his or her own bank. If that sounds to you like a potential scenario for chaos, its only because you havent yet heard of the great lengths to which Bitcoin users can go to ensure the security of their one-person banks. By following a handful of basic security guidelines, they can achieve a level of security for their money that is actually unavailable in the banking world as we know it. The truth is that banks are barely able to keep accounts secure. Although banks promise to have your deposited funds available for you, none of them could withstand a run in which all depositors simultaneously decide to withdraw their funds. In that respect, bank funds are just an abstract reference to value, because your money isnt really there. Its just a number in a ledger, but the actual money is out on loan to the banks borrowers. Bitcoin is not like that. Instead, it functions very much like digital cash or gold. You deposit it in your account, you maintain it, and when you want to use it

for a purchase, it is there for you yours and yours alone. With Bitcoin, possession is 10/10ths of the law. This means it comes with its own security challenges. Having the keys to unlock a bitcoin is entirely equivalent to possessing a chunk of precious metal. Which means if you misplace it, have it stolen or accidentally send the wrong amount to someone, you would have as much recourse as if you dropped cash on the sidewalk and didnt notice until you got home. However, Bitcoin has capabilities that cash, gold and bank accounts do not. A Bitcoin wallet, containing your keys, can be backed up like any file. It can be stored in multiple copies, even printed on paper for hard-copy backup. A backup of bitcoin keys is as good as possession of the original keys. You can't "backup" cash or precious metals. Banks can recover funds for you, but only at their discretion. And they can also confiscate funds, adding a risk that doesnt exist in Bitcoin. Bitcoin is different enough from anything that has come before that we need to think about its security in a novel way, too.

What should an end-user do to secure their Bitcoin wallets? Here are five guidelines. 1. Balance the risk of loss and theft. While most users are rightly concerned about theft, loss is an even bigger risk. Data files get lost all the time, but if they contain bitcoins the loss is much more painful. In the effort to secure their Bitcoin wallets, users must be very careful not to go too far and end up losing the bitcoins instead. In the summer of 2010, a well-known Bitcoin awareness and education project lost almost 7,000 bitcoins. In an effort to prevent theft, the owners had implemented a complex series of encrypted backups. In the end they accidentally lost the encryption keys, making the backups worthless and losing a fortune. Like hiding money by burying it in the desert, if you hide it too well you might not be able to find it again. 2. Use two-factor authentication. Many first-time users will use a web-based wallet or online service as their Bitcoin bank. Unfortunately, this has led to a rash of thefts from Bitcoin users,

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On Your Computer

In Your Pocket

almost all due to compromised desktop computers. Hackers will install trojans and keyloggers looking for access to well-known Bitcoin sites. As soon as users log on, their own computer will compromise the account and surreptitiously transfer all their money to another Bitcoin address. Once stolen, there is no recovery, as Bitcoin transactions are not reversible. The most effective defense against this attack is using what is known as a two-factor authentication scheme or using a smartphone application to generate one-time codes. (See Google Authenticator at http://code.google.com/p/googleauthenticator/.) 3. Spread the risk. Would you carry your entire net worth in cash in your wallet? Most people would consider that reckless, yet Bitcoin users often keep all their bitcoins in a single wallet. Instead, users should spread the risk among multiple and diverse Bitcoin wallets. The prudent user will keep only a small fractionperhaps less than 5%of their bitcoins in an online or mobile wallet as "pocket change." The rest should be split between a few different storage mechanisms, such as a desktop wallet and offline-storage as described below. 4. Use physical storage. Humans have used physical security controls for thousands of years. By comparison, our experience with digital security is less than 50 years old. Bitcoin keys are nothing more than long numbers. This means that they can be

On The Web

On Your Phone

...Bitcoin security is increasingly implemented with hardware tamper-proof wallets.

stored in a physical form, such as printed on paper or etched on a metal coin. Securing the keys then becomes as simple as physically securing the printed copy of the Bitcoin keys. A set of Bitcoin keys that is printed on paper is called a "paper wallet," and there are many free tools that can be used to create them. Users should consider keeping the vast majority of their bitcoins (95% or more) stored on paper wallets and locked in a safe. 5. Consider hardware wallets. In the longer term, Bitcoin security is increasingly implemented with hardware tamper-proof wallets. Unlike a smartphone or desktop computer, a purpose-built Bitcoin hardware wallet has only one purpose and functionholding bitcoins securely. Without general purpose software to compromise and with limited interfaces, hardware wallets can deliver an almost foolproof level of security to non-expert users. Most industry observers expect to see hardware wallets become the predominant method of Bitcoin storage, or eventually embedded in smartphones as a secure hardware module. For an example of such a hardware wallet, see the Trezor at http://www.bitcointrezor.com/. In summary, Bitcoin is a completely new, unprecedented and complex technology. Over time we will develop better security tools and practices that are easier to use by non-experts. For now, Bitcoin users can employ many of the tips above to enjoy a secure a trouble-free Bitcoin experience.

Andreas M. Antonopoulos

Andreas M. Antonopoulos is an expert in security and distributed systems, an entrepreneur, and a coder. He has founded six companies and advised hundreds more in a career spanning two continents and two decades. He lives in San Francisco, where he is writing a technical Bitcoin book for developers. He can be contacted at: http://antonopoulos.com

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Growing The Market

A Bitcoin Shopping Guide
by ALAN M. SILBERT

If years ago someone was to guess what product would help kick off Bitcoin adoption, its a good chance that alpaca socks wouldnt be among their first guesses. Fuzzy socks to launch a disruptive technology and global currency? Yet thats exactly what occurred when alpaca socks were among the very first consumer items to be purchased with bitcoins. Similar feelings were no doubt engendered when early enthusiasts were directed to make their initial Bitcoin purchases using an ominous red phone at a grocery store, speaking to an operator to route US dollars through an intermediary to a Bitcoin exchange. This was the future of currency? But just as the red phone led the way to many international exchanges, alpaca socks helped launch a burgeoning Bitcoin consumer ecosystem. With over 50,000 transactions per day and that number growing, it is evident that bitcoins are making headway in the world of consumer purchasing.

Consumer Market
As of the beginning of November, there are over $4 billion worth of bitcoins in circulation that are ripe for spending. In the evolving Bitcoin market, consumers can now buy electronics, clothing, food, precious metals, Internet services, creative services, and even luxury cars and homes.

The Growing Market

Spendbitcoins.com and the Bitcoin wiki show growing lists of merchants, and Bitcorati is developing a directory and rating system for Bitcoin businesses. BitcoinStore, BitcoinShop.us, Coingig, and Bitcoinin are constantly broadening their inventory of electronics, clothing, gifts, and other items, as they vie to be the Amazon of Bitcoin. Food take-out and delivery service Foodler accepts bitcoins from its 13,000 customers. SatoshiDICE offers gambling. Gyft offers gift cards from 200 different retailers. Wordpress, Reddit and Baidus acceptance of Bitcoin shows that more mainstream businesses are starting to adopt it. Entire communities, such as Berlins Kreuzberg neighborhood, are embracing Bitcoin and accept it in many of their local businesses. Bars and restaurants and even luxury goods purveyors are now accepting Bitcoin worldwide. Continued growth in adoption is going to be the key to a flourishing Bitcoin consumer market.

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In the evolving Bitcoin market, consumers can now buy electronics, clothing, food, precious metals, Internet services, creative services, and even luxury cars and homes.
Lower Prices and International Barriers
The frictionless, low-cost nature of Bitcoin allows for lower prices to be passed on to consumers. (The Bitcoin network is fee-free, albeit for a voluntary nominal fee that benefits the miners that support the Bitcoin network.) These economics mean that Bitcoin merchant processors offer lower fees than the VISAs and PayPals of the world, enabling merchants to deliver lower prices to consumers. Similarly, due to the borderless and peer-to-peer characteristics of Bitcoin, consumers can bypass costly middlemen altogether and go directly to the source. The Roast Station Project is but one example, as consumers can buy coffee beans directly from a grower in Bali, bypassing the barriers and costs of middlemen, and have the product shipped to them anywhere in the world. An American family renting a home in France can send bitcoins to the property owner without concern for intermediary or currency exchange fees, and without waiting for PayPal to release their funds. A foreign worker can send bitcoins back home to his or her family abroad, and avoid the 10%-20% fees traditionally charged, thus providing the family with more bitcoins to spend in their local economy. Additionally, Bitcoin can reach many countries where traditional credit cards and PayPal arent accepted, giving more reach to consumers, especially those who are unbankable by traditional banking. BitPremier, mitigate the risks of large-ticket transactions. Bitcoins can be held in escrow by a trusted third party until both parties to the transaction consider it final and binding.

Maintenance of Purchasing Power

Inflation protection is another benefit to the Bitcoin consumer. The purchasing power of the U.S. dollar has been almost halved in the last 25 years due to inflation, with a $100 basket of goods and services in 1988 costing nearly $200 today. The limitation on the number of bitcoins in circulation provides protection to consumer purchasing power.

Dangers for the Consumer

While Bitcoin may be almost perfect, it does have its challenges. As the ecosystem evolves and develops, it will naturally attract nefarious characters. Consumers should deal with trusted merchants, perform their due diligence, and use escrow services for large transactions. And while the irreversible nature of Bitcoin has its positives, it leaves little margin for error. Bitcoins should be treated like cash in that once you walk away from a transaction you and your cash have parted ways. Buying from a business that uses a trusted merchant processor like BitPay, Coinbase or BIPS is a good start toward secure shopping. So is shopping at e-commerce sites run by reputable names in the Bitcoin community, or using local brick-and-mortar merchants. As always, transactions that seem too good to be true should be viewed cautiously.

More Safety
Consumer security is another benefit of Bitcoin. Giving out a credit card number and associated information involves divulging an uncomfortable amount of personal detail while opening consumers up to future charges, possibly illegitimate, as long as the credit card is valid. In contrast, each Bitcoin transaction is a one-time, irreversible event that uses only your pseudonymous Bitcoin address. Escrow services, such as the one offered on

To the Future
While the choices for the Bitcoin consumer are growing, the Bitcoin economy is still in its infancy. With some help from the Bitcoin community, and as the benefits of Bitcoin become more well known around the globe, the consumer market for Bitcoin should grow into a thriving global merchant economy.

Alan M. Silbert

Alan Silbert is founder and CEO of BitPremier, the first-of-its-kind Bitcoin luxury marketplace, and a vice president at GE Capital. He has more than 16 years experience in commercial finance. Previously, he was a vice president at Merrill Lynch Capital and held various positions at Heller Financial, Access National Bank, and HealthCare Financial Partners. He holds a B.S. degree in finance from Towson University, and currently resides in Maryland with his wife and two children.

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EXCELLENT INVESTMENT OPPORTUNITY!

BIRMINGHAM, ALABAMA English Village Condo Minutes to Medical District, Five-Points and Downtown Fully restored in 2006 Bitcoin Accepted Offered at $200,000 (apx. 400 BTC)

in charming English Village, with an eclectic mix of French bistros, Located game day favorites, and stylish boutiques!
Courtyard Living Open Floorplan Huge Master Upgraded Kitchen Tiled Bath Security System Washer & Dryer Included Large Front Windows Overlook Courtyard Hardwood Floors Throughout Custom Wood Blinds Front & Rear Entry Common Gas Grills Private Parking Lot Air Conditioning Unit Replaced 2012

Inquiries: 2317BCondo@gmail.com
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The Uncommon Florida...ST. GEORGE ISLAND PLANTATION

ON THE MARKET
Bitcoin Preferred

NATURAL BEAUTYRelaxed, yet sophisticated Island Home

on choice 1-acre lot set amid spectacular twisted pines with sweeping panoramic ocean views!

Designed and built by renowned American architect Dahlen Ritchey for his winter residence, this south-facing, energy-efficient 4 BR, 3 BA home perfectly captures the days sunrise and sunset! Copper roof. Hardwoods and travertine. Separate guest quarters on ground level. The Plantation offers private entry with 24-hour staffed guard house; pool, fitness, tennis, clubhouse; walking/biking trails; boardwalks to beach; private air strip. The island borders the Gulf of Mexico and Appalachicola Bay, renowned for the best oysters in the world, fishing, and birdwatching! A Top-10 beach! Furnished. $990,000. (apx. 2000 BTC)

Inquiries: 1616HawthorneLane@gmail.com

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yBitcoin.net

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Should Your Business Accept Bitcoin?

by TONY GALLIPPI

B
Internet

itcoin is a virtual currency that is growing in popularity each day, offering unique advantages to businesses. But does it make sense for your business to accept Bitcoin? Lets explore some of the reasons why it may. The more sales your company makes online, the more sense it makes to accept bitcoins as payment. With Bitcoin, your customers have no risk of identity theft, and your business has no risk of payment fraud. Bitcoin is like cash, so the buyer does not need to provide any sensitive financial information to make a payment, and there is nothing for an identity thief to steal.

Bitcoin is like cash, so the buyer does not need to provide any sensitive financial information to make a payment, and there is nothing for an identity thief to steal.
Each Bitcoin payment is a push transaction, in which the customer pushes the money to you. The payment is irreversible, so once you receive the money, it stays yours. There are no chargebacks with Bitcoin, so you can safely accept a payment from a customer you dont know, without risk of payment fraud. The speed of Bitcoin payments is extremely fast. The peer-to-peer network can propagate a transaction around the world in about one second, which is faster than the round-trip time most credit card networks take to analyze a transaction for fraud detection. makes to accept Bitcoin. With Bitcoin, your money is cryptographically secure, so there is nothing an employee or a thief would gain by stealing your computer or data.

International
The more international customers your company has, the more sense it makes to accept Bitcoin. Because Bitcoin is borderless by design, you can accept a payment from someone in China just as easily as from someone sitting in the same room. If your business caters to international visitors, they can pay with Bitcoin from their mobile phones, no matter what country they are from.

There are no chargebacks with Bitcoin, so you can safely accept a payment from a customer you dont know, without risk of payment fraud.

Retail
For retail stores, the more physical cash that your company handles, the more sense it

With Bitcoin, your money is cryptographically secure

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The speed of Bitcoin payments is extremely fast. The peer-to-peer network can propagate a transaction around the world in about one second...

Commonly asked questions:

What about Bitcoins volatility? Most merchant services allow you to set your prices in your local currency. Theres no need to keep adjusting your prices in Bitcoin every few minutes. The payment gateways can easily calculate the Bitcoin price at the point of checkout. How much does it cost? Since the Bitcoin network is open source, the transaction fees are very low. Merchant service providers and payment gateways offer a tremendous value for a fraction of the cost of accepting credit cards, PayPal, or other online payment methods. What do I do with the bitcoins if I cant pay my vendors with them? Most merchant services allow you to receive a daily settlement in your local currency. If this service is important to you, check your merchant provider. How do I explain this to my accountant? This is one of the most common questions, and the answer usually lies with your local business laws. But typically, companies are allowed to keep and use foreign currency holdings, as long as they are reported correctly.

Tony Gallippi

Tony Gallippi serves as the co-founder and CEO of BitPay which was founded in 2011 and is a premier bitcoin payment processor handling millions of dollars worth of transactions per month. He has 15 years of experience in sales and marketing working in the Robotics industry, was a district sales manager for Aerotech, a regional sales manager for Industrial Devices Corporation and holds a Bachelors in Mechanical Engineering from the Georgia Institute of Technology.

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Merchant Processor Directory

BTC, DKK, EUR

Copenhagen, Denmark

BTC, USD, CAD, EUR, GBP, AUD, NZE, ZAR, MXN

Atlanta, GA

https://bips.me

1-855-4-BITPAY https://bitpay.com info@bitpay.com

San Francisco, CA USA

Hungary BTC, HUF

BTC, USD

https://coinbase.com

http://bitsofproof.com
Every effort has been made to ensure accuracy of information presented here.

BitGive is a non-profit foundation representing the Bitcoin community and providing charitable gifts to environmental and public health causes worldwide.

To support the BitGive Foundation, donations are being accepted at:

http://bitgivefoundation.org/donate.html
www.bitgivefoundation.org
501C3 Pending

Connie Gallippi
Executive Director info@bitgivefoundation.org
32

Instantly Donate Bitcoins

Scan the QR Code with any Bitcoin Wallet App.

yBitcoin.net

Donate

Our mission is to help people exchange resources and ideas more freely.
We approach that mission with Bitcoins technology and community as our focus. There is tremendous potential in Bitcoinfrom the opportunities it creates for entrepreneurs to the purchasing power it provides for citizens of countries large and small. Our goal is to help Bitcoin deliver on that potential. Join us.

2008

Genesis
Bitcoin originally appeared, first as an academic paper and then as a program, in late 2008 and early 2009. Very little is known about its original creator, Satoshi Nakamoto, as his only presence on the internet consisted of a profile on the P2P foundation listing him as 36, Male, Japan, and his posts on the Bitcoin forums and the Cryptography mailing list. He has since disappeared from the Internet entirely, and while some continue to speculate as to his physical identity, most are content to leave the legend as it is. The Bitcoin community itself grew only slowly in the first two years, picking up new members by word of mouth. Even among its early enthusiasts, many did not even imagine that it would eventually be used as a legitimate currency for making actual transactions, and quite a few users mined thousands of coins only to forget about them and, to their later regret, eventually lose them by reformatting their hard drives.

Oct. 31 describing the technical and economic foundations of the currency in detail.

Bitcoins seminal concept paper, Bitcoin: A Peer-to-Peer Electronic Cash System, was first published, Bitcoin founder Satoshi Nakamoto made his last forum post before disappearing, and Gavin Andresen An article on Bitcoin by Forbes appeared online and in print, and was translated into many languages around the world. The online release on April 20 and print release on May 9 were both immediately followed by sudden rises in the Bitcoin price of almost 50%, bringing the price up from $1.20 on April 20 to nearly $6 on May 10. bounced back up and down several times before stabilizing at $17.

2010 2011

Dec. 12 quickly assumed a more central role in Bitcoin development. April 20

June 8 The price, after peaking at an all-time high of $31.91 on June 8, dropped precipitously to $10 and Jan. 16 as measured by Google Trends search volume and causing a rapid increase in the Bitcoin price in
anticipation of the event, but unfortunately the attention did not last. Bitcoin was featured on an episode of The Good Wife, creating a threefold blip in Bitcoins prominence

2012

Bubble and Crash, Episode 2

At the beginning of June, Bitcoin finally broke out of its nearly 4-month long period of extreme stability as prices shot up past $6. News attention was once again positive, as the media once again began praising Bitcoin and seemed to have all but forgotten that the currency had been a failed experiment. But the news is not purely positive for Bitcoin; at the same time as the currency once again begins to rise, a speculation-induced bubble begins to fester, leading to another price crash in August - albeit one considerably smaller than that in 2011. However, Bitcoin survives the crash, and the summers rise brings the currency up to a permanently higher plateau. Between August and October, the consequences of the crash become clear: the Bitcoin economy saw a number of its old guard of exchanges and experimental financial services collapse, and mainstream merchant-focused businesses silently began to take over.

May 26

The volume of international Bitcoin users continued to increase, and Bitcoin made a sudden appearance in China as BTCChina became for one day the worlds second largest exchange. The Bitcoin price began rising shortly afterwards. a partial recovery.

Aug. 17 The Bitcoin price hits its 2012 high of $15.40, and then crashes suddenly back to $7.58 before making Nov. 15 WordPress, a popular online blogging platform and the 22nd most visited site in the world, became the
first major business to accept Bitcoin.

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Provided by:

2013

Full Speed Ahead, Once Again

Days after the beginning of the new year, the Bitcoin price began picking up once again. Bitcoin business also boomed; gambling sites like SatoshiDice were the first to post unprecedented returns, and merchant providers and mining companies followed soon after. Soon enough, the Bitcoin economy was right back to where it was in spring 2011 except this time with ten times the force.

Feb. 14

Reddit started accepting bitcoin for its premium Reddit Gold service, becoming the second major company to start accepting Bitcoin.

Feb. 28 The Bitcoin price broke through its all-time high of $31.91 from June 2011. Mar. 5 The domain registrar Namecheap became the third major company to accept Bitcoin. Mar. 16
Residents of Cyprus, a small island nation east of Greece, woke up to find out that their bank accounts had been frozen, and 10% of their deposited funds would be seized to pay for a bailout for a failing bank. The Bitcoin price shot past $50 for the first time two days later, and would soon breach $100.

And Then The Crash

The Bitcoin price hit an all-time high of $266, and promptly crashed back down to $50 before making a partial recovery. To many, this was the beginning of the end, and the price followed a familiar pattern as one price floor after another was broken. However, this time there was something unusual in the aftermath of the bubble: hope was not lost. At the Bitcoin conference in May, the community was as excited as ever, a feeling that continued to dominate even in the London conference at the beginning of July. The main challenge would prove to be government regulation, especially in the United States, but businesses stepped up to handle the challenge.

Apr. 17

OKCupid, a popular online dating site, started accepting Bitcoin, and one week later the Danish equivalent, Single.dk, did the same. To the average Bitcoin user, this is probably by far the most useful product that the Bitcoin economy has ever offered - even more so than alpaca socks and Silk Road. Welcome geeks and hackers' donations to the One Foundation, the largest private charity in China tells Bitcoin users. Within a day, the foundation receives over 230 BTC ($30,000) worth of donations. In other news, between April and May China became the first country to ever overtake the US in the number of Bitcoin-Qt client downloads. The Bitcoin 2013 Conference took place in San Jose, CA bringing together over 1,200 Bitcoin users

Apr. 26

May 17 from around the world to present their businesses and discuss the technical, legal and business issues
involved in using Bitcoin. Bitcoin London conference takes place, featuring a number of startups including Bitcoin wallets,

July 2 Bitcoin exchanges and, particularly interesting, a feature phone-compatible wallet for use in Africa with
the ability to buy bitcoins through the popular M-PESA system in Kenya. Winklevoss twins filed with the SEC asking for approval to create a Bitcoin investment trust. According to Bitcoin advocates, Bitcoin is now officially mainstream. According to detractors, Bitcoin has now officially sold itself out to Wall Street.

July 30 The Inside Bitcoins conference took place in New York. Aug. 14 Money Transmitters Association and including such figures as the former head of FinCEN.
The first Virtual Currencies Compliance Conference took place in New York, hosted by the National

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continued

2013

Following pressure from German member of parliament Frank Schffler, Germanys financial regulatory

Aug. 19 agency BaFin has classified Bitcoin as a unit of account, clarifying how it should be treated for
regulatory and tax purposes.

Now a Household Name Internationally

Bitcoin continues to expand around the world and leave a lasting impact. With the creation of Satoshis Forest, the first Bitcoin Foundation democratic election, various conferences, international expansion in China and beyond and all time high prices, Bitcoin proves to be a force to be reckoned with.

Sept. 23 the popular vote.

Elizabeth Ploshay became the first elected Bitcoin Foundation board member, with roughly 30% of

Sept. 26 substantial number of Bitcoin users met in mainland Europe.

The Bitcoin conference in Amsterdam took place, marking the first time since November 2011 that a

Silk Road shut down The Silk Road, the largest black market site on the Tor network, has been

Oct. 2 shut down by the United States Federal Bureau of Investigation, and its alleged owner, Ross William
Ulbrecht, arrested in San Francisco and charged with narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy. The Bitcoin price, hovering around $127 before the crash, briefly hit a low of $85 on Bitstamp amidst fears that Silk Road was responsible for a large part of the Bitcoin economy before almost immediately recovering to $110; one week later, the Bitcoin price is back exactly where it was before Silk Road went down. Cryptocurrency Conference in Atlanta. Several hundred individuals gathered in Atlanta, Georgia for the

Oct. 5 first annual Crypto-Currency Conference. Attendees spanned from various states in the US and even
nations around the world. Keynote address by Jeffrey Tucker, Executive Editor of Laissez Faire Books. Baidue Jiasule Accepts BTC Baidu Jiasule (Baidu Accelerated), a Cloudflare-like service offering a website firewall, protection against distributed denial of service attacks and other similar features, has started accepting bitcoins as payment. The Bitcoin payment option is currently manual, with the main site telling its users to contact a phone number if they need to pay with Bitcoin, but this is nevertheless the first instance of a major Chinese site accepting payments in Bitcoin. Bitcoin Breaks 1000 CNY, Rally Continues. The Bitcoin price has been shooting up quickly in the last few weeks. The price steadily picked up, and is now higher than it ever was with the exception of only three days in Bitcoins history, all during the media-fueled frenzy culminating in a spike in April this year. What has been fueling the price movements? To some, it is the rapid growth of the Chinese community, bolstered by a division of Chinese Google equivalent Baidu accepting Bitcoin for one of its services. Bitcoin Reaches All Time High Prices: Just overnight, the price of Bitcoin increased by 15+ USD.

Oct. 16

Oct. 20

Nov. 8 Starting out at around 200 USD per Bitcoin earlier in the week, Bitcoin reached all time highs. To date,
the Bitcoin ecosystem has now surpassed 4 Billion USD. What will the price be tomorrow?

Mihai Alisie
Editor-In-Chief Bitcoin Magazine is the realized vision of Mihai. From Issue #1, which was shipped from his living room in Romania, to today Bitcoin Magazine bears Mihais imprint. What started out as a team of people that didnt have any experience in the publishing industry, is now distributing a physical magazine internationally and in Barnes & Noble bookstores across the US. Online we reach more than 100,000 readers.

Vitalik Buterin
Head Writer Vitalik Buterin is a computer science student at the University of Waterloo who is currently taking some time off to pursue Bitcoin interests full-time. He first joined the Bitcoin community in March 2011, and has been actively involved in Bitcoin-related projects ever since. His main current areas of involvement include writing for Bitcoin Magazine, programming for Egora, developing Bitcoin software libraries and actively participating in the "colored coins" project.

Elizabeth T. Ploshay
Manager of Communications Having previously served as the Scheduler and Policy Assistant for a US Member of Congress, Elizabeth is thrilled to work alongside the Bitcoin Magazine team. With a background in public policy, grassroots activism, and a keen desire to promote decentralization and individual liberties, she is fascinated with Bitcoin and the multiple opportunities for this peer to peer currency and movement to flourish. Elizabeth serves on the Bitcoin Foundation Board of Directors and is the Chair of the Bitcoin Foundation Education Committee. Elizabeth holds a BA in Political Science from Wheaton College (IL).

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Donate Litecoin

Donate Bitcoin

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by ALEXANDER LAWN

Bitcoin mining is how the cryptographic information distributed within the Bitcoin network is secured, authorized, and approved. It is in essence a colloquial term to describe the processing of payments that have taken place once they occur. What makes this different than traditional electronic payment processing is that there is no need for an issuing bank, an acquiring bank, merchant accounts, or mandatory centralized clearing houses, such as Visa and MasterCard holding on to funds until they process transactions at the end of each day. Bitcoin mining is in fact reliant on individuals sharing computer hardware in a collective effort to decentralize, and streamline this process. Each piece of Bitcoin mining hardware is a supercomputer that maintains a ledger of every transaction that has ever taken place. As a consequence there is no need for many layers of intermediaries, delayed payment confirmations, and a syndicate of corporations dictating associated transaction fees. With so many people dictating a percentage of the fees incurred, and an archaic system too bloated to refine

without rebuilding itself from scratch, the resulting cost to the consumer is vastly greater than an instantaneous payment secured, authorized, and approved by Bitcoin mining.

Bitcoin mining is in fact reliant on individuals sharing computer hardware in a collective effort to decentralize, and streamline this product.
In fact the customer can currently choose to not pay any fee, or voluntarily pay an amount to facilitate a more expedited payment confirmation. What do the miners gain from dedicating the use of the hardware and electricity they have purchased? They gain a block reward equal to a predetermined amount of Bitcoins as specified within the Bitcoin protocol. The current block reward is equal to 25 bitcoins, or 3,600 coins each day distributed amongst the entire network, and this reward halves every four years. This reduction in reward is believed to behave in an inversely proportional manner to that of

Bitcoins value as its adoption increases over time to a wider audience. The cryptographic Bitcoin protocol may sound like a mouthful, but essentially it's a security related function based upon a complex mathematical algorithm that needs to be solved, and the mining hardware completes that task autonomously. It authenticates the wealth transfer as sales take place, or money is sent from one wallet to another. For all intents and purposes it is a digital signature hidden behind code that authenticates the originator and the recipient of the transaction that has taken place. The mining hardware must solve an algorithm to create a block, and that occurrence is then verified by other miners. A block is solved about every ten minutes on average, with slight variance as an increasing or decreasing amount of computational power comes online. As a result, the complexity of the problem varies with the cumulative amount of computational power of the Bitcoin network. Simply put, the larger and more widely distributed the network, the more secure it

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The cryptographic Bitcoin protocol may sound like a mouthful, but essentially it's a security related function based upon a complex mathematical algorithm that needs to be solved, and the mining hardware completes that task autonomously.
becomes for the general public to utilize as a means of payment. Unlike traditional banking, it is incredibly open, as everybody knows, and eventually confirms, every transaction that has taken place. Each transaction that occurs is recorded within a block, and each block is represented in the blockchain: a digital ledger of every transaction that has ever happened between every wallet and every bitcoin. As this ledger grows over time, so does the demand on the computational hardware responsible to maintain and update the blockchain. The hardware itself has undergone various iterations, starting with using the humble brain of your computer, the CPU. The processor found solving the complex 3D imaging algorithms within a graphics card became the subsequent evolution for miners. Aside from being able to process Bitcoin's transactions faster and more efficiently, their arrangement within desktop PCs meant more than one graphics card could be housed on a motherboard. This was already a feature of high end gaming and 3D design rigs. As such, Bitcoins popularity grew with those associated within such fraternities, as they could dedicate their machines to mine bitcoins, and thus cover the cost of their hardware. Alas, this wasnt the most power efficient option, as both CPUs and GPUs were very efficient at completing many tasks simultaneously, and consumed significant power to do so, whereas Bitcoin in essence just needed a processor that performed its cryptographic hash function ultra-efficiently. Enter the Field Programmable Gate Array (FPGA), which was capable of doing just that with vastly less power demands. There was one issue: due to the reprogrammable nature of the chip, it had a significantly high cost-per-chip outlay for something that solved blocks on par, somewhat greater than a GPU. Its real virtue was the fact the reduced power consumption meant many more of the chips once turned into mining devices could be used alongside each other on a standard household power circuit. As Bitcoins adoption and value grew, the justification to produce more powerful, power-efficient and economical per-chip devices warranted the significant non-recurring engineering costs that entail developing the final and current iteration of Bitcoin mining semiconductors: the Application Specific Integrated Circuit, or ASIC. ASICs are super-efficient chips whose hashing power is multiple orders of magnitude greater than the GPUs and FPGAs that came before it. Succinctly, its a bespoke Bitcoin engine capable of securing the network far more effectively than before.

Alexander Lawn, MSc.

Based in both London, and Stockholm, Alex holds a Masters in Engineering Design from the UKs prestigious engineering university, Loughborough. Having worked within private equity both based in London, and Monaco for Bourne Capital, as well as advertising for Londons M&C Saatchi, Alex now handles communications and works within hardware development for KnCMiner AB, Stockholm, creators of the only 28nm Bitcoin ASIC in existence and subsequently the worlds most powerful Bitcoin miner.

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The people featured in the following Get to Know section are all rigorous thinkers and planners who have helped lead their companies into the thick of the Bitcoin revolution. But behind each of their formidable intellects there also perks a restless imagination, a yearning to take hold of their world and steer it in previously uncharted directions. That spirit of entrepreneurship runs deep in the Bitcoin world, helping to define a new generation of leaders who seek to create a way of commerce and a currency system worthy of these dynamic times. We invite you to meet some of these individuals in the following pages.

Albert Einstein

Get to Know
SPONSORED PROFILES

OPPORTUNITY SEIZED
Iyengar had been occupied for nearly two decades as a titan of the tech industry, collaborating with (and competing against) the best engineering minds of the day during stints at Intel, Qualcomm, Nvidia, and most recently Samsung. He played a key role in development of the Galaxy S4, and even more notably, in the next generation Samsung mobile devices that are soon to reach market. And then he adds: Its also highly interesting, exciting and fun. And a rare opportunity for hardware to play a significant role in shaping a new financial system. Among his many goals, he says, is to take Bitcoin out to the larger world, to get more of the technical community learning about it in a more serious way. Then consumers. All the elements are in place now for CoinTerra to become the Intel of Bitcoin, and to take it to the next level. Im willing to miss a lot of sleep until that happens. Iyengar earned his undergraduate engineering degree from the National Institute of Technology in his native India, then came to the U.S. for his graduate degree in computer engineering from Wright State University in Ohio. He lives with his wife in Austin, while a sister is in Charlotte, North Carolina and parents and a brother in India. Ever the devoted engineer, he says of his CEO duties: Its a different role, but I still offer input and participate readily in the engineering conversations that go on here. Every day is different except for the intensity and excitement. Thats all day, every day.

...every week matters more than the last.

Once struck by the Bitcoin bug, it took him just weeks to make the fateful decision to leave Samsung and seek funding and talent in the race to play the dominant role in Bitcoin hardware development. It was easy to see the potential in CoinTerra and Bitcoin, and having developed many relationships with top engineers over the years, it was easy to have them see it too, so we built a great team here very quickly. But I will say this: I have been involved in many arms races in my careerwith Intel when we were going up against AMD, with Nvidia against ATI, then Samsung against Apple. But nothing has been as intense as Bitcoin. Its a faster pace, with a more intense schedule, and every week matters more than the last.

Ravi

CoinTerra IYENGAR CEO/Founder,

It was an opportunity I didnt want to miss, says Ravi Iyengar of CoinTerra, a Bitcoin mining hardware company that he founded in April of this year. Iyengar had barely heard of Bitcoin at the time, but once it got on his radar, events moved quickly as he envisioned its possibilities and his engineering mind got to work on creating one of its key products.

All the elements are in place now for CoinTerra to become the Intel of Bitcoin, and to take it to the next level. Im willing to miss a lot of sleep until that happens.

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Founder, Atlanta Bitcoin

ringing Bitcoin to Main Street. Thats the mission of Atlantas Aaron Williams: to make Bitcoins presence commonplace and convenient in the marketplace. With his new venture, Atlanta Bitcoin, Williams is dropping Bitcoin into everyday lives using the same process that people are accustomed to and trusta secure, easy-to-use, and fast ATM or Bitcoin dispenser. Atlanta Bitcoins machine allows people to insert cash and then have the equivalent amount of bitcoins added to their Bitcoin wallet. Williams vision for Atlanta Bitcoin actually grew from his own experience when he became intrigued by media reports on Bitcoin early this year and then attempted to buy some for himself. It was difficult, and Im a tech guy, he says. A little light then went off, that with my background, I could probably help make bitcoin purchases a much less intensive process. Williams sees wider mainstream acceptance ahead as Bitcoin becomes more readily available and part of the everyday consumer experience. Bitcoin is in a very interesting phase now, he says. Its just starting to bubble up to the mainstream, but that brings its own challenges. It really appeals to the problem solver in me. Williams vision for Bitcoins adoption in the marketplace draws on a decadeplus of experience in the electronic payment processing industry. This puts him in a unique position in the Bitcoin world. He knows the payment industrys rules, requirements, consumer expectations, andperhaps most importantlyhow to avoid the traps. There are definitely right ways and wrong ways to develop payment systems and point-ofsale processes, but the bottom line is you have to make it as natural as walking up to your bank teller or ATM to make a deposit or withdrawal, and then go to the restaurant next door for dinnerwhich youll pay for with bitcoins

instead of your credit card, he says. Its all about relieving friction. That will allow people to use Bitcoin as comfortably as they do all their current forms of payment. Theyll enjoy a similar process and experience, with the same expectations being met. Bitcoins integration into the current payment process is just one aspect of Williams focus. Bitcoin is a fertile business landscape with significant opportunities, he says. Ive always been drawn to collaborating with others on challenging projects. There are other points of friction to solve.

With offices in Malta, Russia, Singapore, Latvia and the Netherlands, EXANTE provides broad and extensive direct access to financial instruments and global markets. The company has experienced enormous growth since its formation in 2011, assisted in part by the 2012 launch of the Bitcoin Fund (BCF), which trades exclusively on the Exante Fund platform. BCF is the worlds first financial product based on bitcoins, which gives institutions and high-net worth individuals convenient, secure, rapid and real-time access to the vibrant Bitcoin market with a unique licensed product. Assets under management currently total $24 million. The Fund charges no performance-based fee. Charges include an annual management fee of 1.75%, and an 0.5% transaction fee, does not use leverage or derivatives for risk management, and there is no discretionary management. One Fund share is strictly equal to the value of one bitcoin, which are bought and sold as investors buy and sell Bitcoin Fund shares.

EXANTE provides a dynamic secondary market for the trading of Fund shares and, through those shares, bitcoins.
The Bitcoin Fund is now included in Bloomberg and a variety of other fund rating services. Traders on the Bloomberg terminal can thus track the Bitcoin Fund and trade in the digital currency (through EXANTEs ATP). Working through a fund structure has a clear advantage: accountants and auditors understand what fund shares are; in general, they have no idea what bitcoins are, Exante Partner Tim Enneking told the audience at Bitcoin 2013 in San Jose early this year. Furthermore, for investors buying or selling large numbers of bitcoins, EXANTE can provide assistance to reduce market disruption by buying or selling bitcoins gradually, at a target price set by the customer.

And how have prices in the Bitcoin Fund performed in the Funds inaugural year?
As of mid November, the fund was up over 5,000%, and Mr. Enneking commented, We have researched every major fund database we could find to determine what the all-time record for calendar year performance for an investment fund is. If 2013 were to end today, the Bitcoin Fund would clearly be the best performing fund in history.

Tim

ENNEKING
Partner

Ad does not constitute a solicitation of U.S. persons to open an Exante account.

SPONSORED PROFILES

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Lisa Polucci Photography

Jeffrey Tucker
Founder/CEO Liberty.me
effrey Tucker is founder and CEO of Liberty.me, distinguished fellow of the Foundation for Economic Education, executive editor of Laissez Faire Books, and research fellow of the Acton Institute. He is the founder of the CryptoCurrency Conference, serves as economic consultant to the popular podcast,

Lets Talk Bitcoin!, and writes a twice-monthly column for The Freeman and Crisis Magazine. He is author of the books Bourbon for Breakfast, Its a Jetsons World, and A Beautiful Anarchy, along with thousands of articles, introductions, and prefaces. Following his 15 years as editor and builder of the website Mises.org, he now works on building Liberty.me as a social network and publishing platform for libertarians, and curates and writes editorial introductions to the product offerings for the Laissez Faire Club.

Adam B. Levine
Editor-in-Chief Lets Talk Bitcoin!
I like to explain complicated topics in understandable terms. Thats the promise made by Adam B. Levine, editor-in-chief of Lets Talk Bitcoin!. Founded in April, LTB is a twice weekly audio show about the ideas, people and projects building Bitcoin and the new digital economy. The program is available for free at www.letstalkbitcoin.com Initially trained as an audio engineer before becoming a salesman, Adam spent the years following the global financial crisis teaching himself what money truly is in our debt-based financial systems. He founded Lets Talk Bitcoin! in the days following the spring, 2013 bitcoin buying frenzy, and except in extreme circumstances, he does not comment on the price. Bitcoin is amazing for reasons that are just as true at $1 as they are at $10,000. But it does help if theyre closer to that second number. yBitcoin.net

Much of the appeal for Adam comes from the inherent fairness of the Bitcoin system. Its about the rules he says. With networks operated by humans there tend to be distortions because those humans act in their own best interest. Bitcoin doesnt care who you are or what youre doing. If you want to use the network, youve got to follow the rules. Nothing arbitrary, nothing petty or personal. In our world, that is as revolutionary as it gets. Asked why he works full time on producing a show about Bitcoin, Adam replies, When I was learning about Bitcoin, the only way you could have a real understanding was to spend hours or days on unfriendly forums trying to sort the reliable from the scams. What Ive built with Lets Talk Bitcoin! is a platform for smart people with good ideas to share them with others who are just as excited about the future of this technology as they are. Im more interested in philosophy than finance he said, but it happens that with Bitcoin theyre basically the same thing. Adam can be reached at adam@letstalkbitcoin.com or http://www.letstalkbitcoin.com

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SPONSORED PROFILES

Jon Matonis
Executive Director / Board Member Bitcoin Foundation
on Matonis is an e-Money researcher and crypto economist who is passionate about expanding the circulation of nonpolitical digital currencies worldwide. He has over 20 years of experience in financial technology and global monetary policy. Jon currently serves as the executive director and founding board member for the Bitcoin Foundation. He was previously CEO of Hushmail and chief forex trader at VISA. He also held senior posts at Sumitomo Bank and Verisign. Over the years, he has advised startups in Bitcoin, gaming, mobile and prepaid. A highly sought speaker and author, Jon is a tech contributor to Forbes Magazine and editor of The Monetary Future economics blog. He also serves on the editorial boards of CoinDesk and Bitcoin Magazine. He is an alum of George Washington University in Washington, D.C. and recipient of the 2001 Person of the Year award for Digital Gold Currency Magazine. He answers two frequently asked questions about Bitcoin below.

As a watershed event in history, the launch of Bitcoin will be seen as the twilight of the national currency age.
What prompted your leap into Bitcoin?
My evolution into Bitcoin was not so much a leap as a slow and gradual evolution to nonpolitical digital currencies. I am a student of central banking and monetary systems and I conducted research into how governments around the world have historically appropriated the monetary unit in order to serve their own personal political agendas. By the mid-90s, it became clear that the future of value transfer was going to utilize the Internet and strong cryptography. I have edited an economics blog, The Monetary Future, on this topic for five years now. At its essence, all money is an illusion due to its subjective value for exchange, and there is no such thing as true intrinsic value. Governments and central banks already realize this. However, they abhor it when the monetary illusion supported by the populace is not their monetary illusion. When Bitcoin was released into the wild on January 3, 2009, the problem of preventing double spending without a centralized online mint was solved for digital currencies. This was a landmark achievement in both distributed consensus and cryptographic money, and the world is only beginning to see the enormous power and dignity that this restores to the individual. As a watershed event in history, the launch of Bitcoin will be seen as the twilight of the national currency age.

How do you encourage new-to-Bitcoin people to get engaged in the Bitcoin space?
I point out that government-issued money is largely inferior to cryptocurrencies like Bitcoin, which comes with a fixed and predictable supply limit. Bitcoin is not just important because it's the unit that you transact in, but it's also important because it's the unit you can maintain your assets in. For example, when you have complete control over the private keys securing your bitcoin, you immediately have peace of mind knowing that your funds are secure regardless of banking status, geographic location, or political instability. How much is that worth? New users will first need a wallet which can be a mobile wallet, client software wallet, or web-based wallet. Obtaining and using a bitcoin wallet is as easy as using PayPal or Skype. I would recommend new users to download and use Blockchain's MyWallet or Bitcoin Wallet for Android. There are also several alternatives available at Bitcoin.org. For more experienced users, I would recommend MultiBit, Armory, or Electrum. Additionally, the Bitcoin-Qt reference implementation maintains a full version of the block chain on your computer and eliminates the need for any third-party.

SPONSORED PROFILES

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THE LAST WORD

FROM FOUNDER/EDITOR-IN-CHIEF

y first encounter with Bitcoin came through an innocuous text sent to me by an old banking colleague. Have you heard of this before? he asked incredulously, linking to a now outdated 2012 story on the growing cryptocurrency phenomenon. I had not.

After reading the article I immediately produced 100 reasons why it would be impossible for this digital money to deliver on its promises: the technical challenge was too great, the competing interests too powerful, the financial and political consequences too profound. But I was intrigued. And I kept reading. A couple minutes of casual reading quickly turned into hours, hours morphed into nights, and one by one every reason I thought Bitcoin couldnt succeed was knocked off the list. Eventually, after much skepticism and research, I came to a definitive conclusion: This will work. From that moment on, I have been captivated. Ive spent almost every waking moment since that six-word text message studying, planning, and dreaming about the future of digital currency, and the ways it will one day impact every single one of our lives. The vast, real-world advantages and efficiencies of cryptocurrency ensure that one day it will be as ubiquitous as the Internet, affecting the ways we do commerce, interact with our communities, run our governments, and allocate resources across entire economies. Bitcoin doesnt just lower barriers to entry; it destroys those barriers, and it is over their remnants that the road to a 21st century commercial renaissance will be paved. It will be one where entire new business models are built upon microtransactions, and mom-and-pop businesses gain access to the same financial tools as Fortune 500 companies. Bitcoin may seem abstract today, but in time it will become as second-nature as smartphones and tablets are now, and our children and grandchildren will tease us about the antiquated money we once used as they seamlessly earn bitcents from their proverbial lemonade stands. While were still a long way from that point, we have clearly started down the path. As Ive traveled around the world attending conferences and meeting the individuals who are actively building this technology, Ive walked away with one certainty. Bitcoin is not just a commodity, or a currency, or a technology. It is instead a movement, one that will not stop until it succeeds in replacing our calcified, convoluted financial system with one that is fresh, elegant, equitable, and ideally suited for our time. If youve flipped through these pages and find yourself still reading now, it must mean you have some questions percolating. My hope is that this magazine plays the same role in starting your intellectual journey as the innocent text I received from my colleague. I encourage you to be skeptical, ask hard questions, seek sincere answers, and when satisfied, join our community and help us change the world.

David F. Bailey david@ybitcoin.net