10 Men Armed With Guns Raid Home Over Bitcoin Poker Website

bitcoin money

After Seals With Clubs, a now defunct Bitcoin poker website, recently ceased operations, Bryan Micon released a video regarding what happened. On February 11, 10 men armed with guns “broke down [his] door, put [him] in handcuffs, serving a warrant from the Nevada Gaming Commission, regarding Seals With Clubs and Bitcoin Poker.”

Over the course of 8 hours they proceeded to seize “most of his electronics”, which he reports as “severely hindering” to his ability communicate. Micon believes the usage of guns and force was unnecessary, as not only is he non-violent, but his 2 year old daughter was also in the home, who witnessed the raid.

After previous concerns over potential hacking arose, Micon assures users that the Bitcoins are safe, and users will be able to cash out their funds. While the servers in Romania malfunctioned resulting in issues, Micon believes that it was not a software issue or security exploit.

While Seals With Clubs has shut down, due to staff and management not wanting to continue, he plans to reboot it in the future, and has made progress in doing so.

Source: https://www.youtube.com/watch?v=BaD8ion8iGI

 

 

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US Marshall To Auction 50,000 Seized Bitcoins

After seizing over 50,000 Bitcoins from Silk Road Founder Ross William Ulbricht in 2013, The Bitcoins will be auctioned in a series of “blocks” of 2000 and 3000 Bitcoins, requiring $100,000 and $150,000 deposits, respectively. It is important to note that you must register for each individual block, and pay the deposit for each block.

Bidder registration has opened already, and closes on March 2, 2015. According to the US Marshal website, the required items for registration are:

  • A manually signed pdf copy of the Bidder Registration Form
  • A copy of a Government-issued photo ID for the Bidder (or Control Person(s) of Bidder)
  • Deposit in US Dollars sent by wire transfer originating from a bank located within the United States
  • A copy of the wire transmittal receipt

The online auction will take place on March 5, 2015,  beginning at 8 AM EST, and ending at 2 PM EST.
The winners will be notified by March 6 at 5 PM EST, and must initiate a wire transfer by March 9, 2015, 2 PM EST.

For full information, consult the Official US Marshall Website

 

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How to Protect Yourself Against Web Exploits

Bitcoin wallet stealing malware has been circulating for years, and it’s important to protect yourself against it. These exploits usually come either as a trojan that disguises itself as something such as a price ticker, faucet bot, or other Bitcoin related program, or in the form of a malicious webpage that executes scripts to install itself.

Prevention

The best way to prevent your Bitcoins from being stolen by malware is to avoid storing the majority of them on a computer connected to the internet. If you choose to hold onto a large amount of Bitcoin, its highly recommended that you create a separate cold storage wallet for the majority of your reserves.

If you aren’t storing much, or don’t want to invest in a paper wallet or other offline storage solution, then at least be careful with your web activities. Avoid downloading any Bitcoin-related software on the same computer you store your wallet, besides the wallet itself. Avoid downloading shady software such as pirated games or programs.

Disable scripts on your browser, and make Java require permission to run. You can add exceptions for sites that you trust, but keep it disabled by default. This way, websites cannot execute scripts that will attempt to steal your Bitcoin. Without disabling scripts and Java, simply visiting a malicious webpage could compromise your system by exploiting a vulnerability.

Reddit user Peakfoo reports that upon clicking a link to a phishing website, the page showed content, then vanished. A few days later, “five infected items turned up by Malwarebytes in [his] AppData folder, 4 [being] exes, and an infected adobe_updater.exe”. By simply clicking the link to a fake website, his computer was compromised, allowing hackers to steal 4.7 BTC.

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Why Bitcoin Is Perfect For Online MMORPG Sales

Publishers of online games that utilize microtransactions experience a difficult problem- third party gold sellers that utilize stolen credit cards to purchase cash shop items, then offload their profits to other accounts. These items are often purchased, then quickly sold on the auction house before the cardholder recognizes the fraudulent charges and files a dispute. They then proceed to sell their gold to other players, hurting the market for gold->cash shop items due to providing a more fair price. While publishers learn to track where gold travels after the fraudulent charges, the items are already injected into the economy, hurting their profits.

To combat this, many games prevent you from purchasing cash shop credits until you reach a certain level, and also limit how much you can purchase daily. In a market where f2p games rely on impulse spending, a new technology that allows for large-scale spending can help profits significantly. With Bitcoin, there’s no risk of fraudulent charges and chargebacks. Because of this, publishers can receive large amounts of payments, and not worry about them being fraudulent. This enables players that would like to spend a lot of money to do so in one day.

In addition, Bitcoin has no fees for the receiving end. As a result, it can offer truly “micro” transactions, allowing players to purchase smaller packs or items that would usually require them to purchase $5 or more.

Bitcoin seems well fit for f2p online games, and hopefully it will see more use in the future.

 

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Could MTGox Have Manipulated Trade Data To Run A Ponzi Scheme?

Disclaimer: This article merely presents a theory and speculation. Do not interpret the ideas described here as fact, but rather a possibility.

Throughout the years, many economists have accused Bitcoin of being a ponzi scheme. These narrow minded accusations are usually an assumption stemming from not understanding the fundamental technology behind Bitcoin, as well as the incredibly rapid growth in value Bitcoin had. With traditional investments, such as an investment firm, 5000% growth in a year would be seen as impossible, and certainly a scam. Economists applied this simple means of thinking to Bitcoin, without further looking into the topic.

These claims can be debunked by the sole fact that Bitcoin is a decentralized, open source technology. There is no sole operator behind Bitcoin, so it isn’t a simple case of the operator using new investor funds to pay older investors, as Bitcoin has no central operator. Bitcoin is simply a decentralized currency, protocol, and payment network used for high speed, secure, and low fee transactions.

Bitcoin’s value grew significantly in 2013, only to decline severely in 2014 following MTGox’s declaration of Insolvency. Despite growing merchant adaptation, investors getting involved, and an increasing amount of transactions sent daily, Bitcoin lost over 70% of its value within the span of a year.

The slow decline in value during a period of rapid growth in usage seems bizarre. This could mean that Bitcoin was never truly worth more than $1000 as a result of supply and demand, and that MTGox manipulated trading on their exchange to increase the value. The Bitcoin price on MTGox was  approximately $100 higher than other exchanges for several months prior to its shutdown. Many claim this is because USD withdrawals to the US were difficult to go through, and that the higher price was due to more people needing to buy BTC to get their funds out of MTGox, however that is unlikely to cause that large of a spread as not every country experienced as difficult of withdrawal restrictions. Users could have simply purchased on Bitstamp, and sold on MTGox if they resided in a country that had reliable bank transfers with MTGox.

Except for coins shown as proof of solvency back in 2011, MTGox has not proven that it does not run a fractional reserve. As a result, it is quite possible that they could have input fake buy and sell orders to manipulate the price. By pumping up the price, the value of their BTC reserves were increased, and at the peak of it all they used the safeguard of a “cyber attack” to cover up their tracks.

According to an investigation by the Japanese Police, MTGox’s insolvency is believed to be an inside job. Only 1% of the missing Bitcoins were lost due to theft/hacking, whereas the rest are unaccounted for. Considering 200,000 coins were found shortly after the filing for bankruptcy, it seems as if some employees from MTGox may still be in control of the coins.

MTGox has a record of Bizarre behavior. In 2011, MTGox was hacked, causing the price on the exchange to drop to one cent. In 2013, MTGox halted trading for a “market cooldown”, citing no other reason at all, which had a heavy effect on Bitcoin’s market price. In 2014, MTGox reported being targeted by an attack that exploited a bug known as transaction malleability, a glitch that allows nodes to change a transaction id without invalidating a transaction. After withdrawals and deposits were disabled on MTGox, trading remained open. During this time frame, a variety of strange patterns occured. Huge trades that had a massive impact on the price occured just minutes before information was released to the public, on a number of times.

The constant stream of problems that came from MTGox, the signs towards insider trading and market manipulation, and their price that heavily outlied other exchanges all hint towards a possible ponzi scheme run by MTGox. Because they only need to cover withdrawn funds, and not credit, MTGox may have used their funds and platform to stimulate Bitcoin’s growth, as well as manipulate the market in their favor.

 

Sources:

http://www.engadget.com/2015/01/01/tokyo-police-bitcoin-mt-gox/

http://the-japan-news.com/news/article/0001825662

http://www.securityweek.com/failed-mtgox-exchange-finds-200000-bitcoins-old-wallet

http://www.businessinsider.com/mt-gox-halts-bitcoin-trading-2013-4

Bitcoin’s Greatest Limitation-Lack of a Reliable Exchange

Throughout Bitcoin’s history, exchanges have been frequently targeted by hackers, or lost their coins in some way. Exchanges provide an easy way to aqcuire Bitcoins, as well as a way to liquidate them-but with all of their shortcomings, can they really be trusted?

MTGox, initially one of the largest Bitcoin exchanges, shut down and declared insolvency, citing hackers as the reason for their loss of reserves. After the event, many people developed their own theories to what actually happened-many believe most of the coins were lost due to an inside job, and only a small portion of their coins were actually stolen by an outside source. MTGox described transaction malleability, an old bug that would allow nodes to change a transaction id without invalidating a transaction, as the cause of the theft. This bug was widely known throughout the Bitcoin industry, which is why transaction ids were used as a convenience identifier rather than an actual one used in databases. Strangly enough, MTGox also discovered they still had 200,000 BTC in an old cold wallet, shortly after the shutdown. Surely, they would know how much the hackers stole in the first place, since they have records to their own database?

 

A few days ago, Bitstamp temporary shut down their service as they believed thousands of their Bitcoins may have been hacked. At the time, Bitstamp was one of the largest and most respected exchanges. This leaves us with very few alternatives. Coinbase is not a true exchange;they rely on buying coins from Bitstamp and reselling them to others. BTC-E is operated anonymously, meaning its difficult to identify the owner and keep them liable.

Some may say “just don’t leave your coins in exchanges”. While this does severely reduce the risk of losing your money to someone buying or selling coins, it doesn’t help those that daytrade. If nobody left up buy and sell orders, Bitcoin wouldn’t have the liquidity for businesses to utilize. Additionally, it would result in greater volatility, as larger buys and sells could have a massive effect on the price.

 

Quite sadly, it’s near impossible to have a truly decentralized exchange; if one wishes to deposit fiat funds, it must go through a bank to some site. The closest means of a decentralized exchange would be a decentralized localbitcoins-like service. But even with a service like that, you need to trust the other party not to scam you, or rob you if you sell in person.

 

Perhaps governments will establish regulations for Bitcoin exchanges that help ensure that they remain secure and solvent, such as enforcing multi-sig addresses, proof of reserves(both fiat and BTC), and other security audits. The banking industry maintains its security via a myriad of technical regulations. Perhaps with proper research, governments can ensure that Bitcoin exchanges stay reliable, and not constantly hacked by criminals.

 

How To Keep Your Bitcoins Safe

General Security Practices

Bitcoin is a revolutionary digital currency that allows you to “be your own bank”. Bitcoin gives you full control over your own money, without government, bank, or other third party interference. Like all things, with great power comes great responsibility. Making a mistake while using Bitcoin could mean losing all your money, so you need to be careful when using it. Unlike banks, there are no safeguards in place to protect you from criminals or your own mistakes when using Bitcoin.

If you’re handling significant amounts of Bitcoin, it’s recommended that you have a dedicated device for it. Malware can come from a variety of sources. Bitcoin users are often targeted with phishing emails that contain attachments that attempt to steal Bitcoin wallets, and keyloggers that steal your passwords/encryption keys. Various websites may also download malware via script vulnerabilities too. Lastly, torrenting also puts you at significant risk.

By exclusively for Bitcoin, I mean only your Bitcoin storage client. Don’t go installing Bitcoin price tickers or anything like that. Hackers will make seemingly harmless software to try and steal Bitcoins- and what better software is there to make than one that appeals exclusively to Bitcoin users? Just because the software works does not mean it doesn’t do other bad things. Only install Bitcoin software if its open source and well known/trusted, and don’t install it on the same machine as your wallet.

Avoid New Altcoin Software

Altcoins are probably the most common software containing Bitcoin stealing malware, due to their close relation to Bitcoin.

If you’re storing a lot of Bitcoin, avoiding installing clients for various altcoins, especially when they’re new. Do not install a client if it is not open source, no matter what-if the developer wants to hide something with their code, you cannot trust them. Sometimes altcoin developers will not release their source code, claiming they don’t want other altcoins to copy them, but more often than not they have ulterior motives. Even if an altcoin is open source, it does not guarantee that it does not contain wallet-stealing malware. Until people begin to actually look through the source code, and compile the client themselves, it is not proven that the program is safe- do not trust your anti-malware software to spot a Bitcoin-stealing program, it will not notice it.

If you absolutely must install the client for the fancy new altcoin, do so on a different computer, or at the very least, wait until its open source, been out for a few days, and installed by thousands of users that have reviewed the source code. When downloading it, ensure it’s from the “official” site, and run a quick google search to make sure nothing is wrong with the coin. I heavily recommend not installing altcoins on the same machine as your Bitcoin client, but if you must, at least consider these tips.

Storing Your Bitcoin

There are a variety of ways to store your Bitcoin. Some are easy to use, others require a decent understanding of technology and Bitcoin to use correctly. It’s important to make sure you use a secure solution when dealing with large amounts of Bitcoin, otherwise you may find yourself at a loss when hackers or human error causes you to lose your Bitcoin.

Use Caution When Using Online Wallets

Web wallets provide an easy way to access your Bitcoin anywhere. They also are generally very easy to use. Because of this, many beginners start out with web wallets. Web wallets are the least secure of any of the Bitcoin storage options. Using a web wallet is the rough equivalent of using a bank prior to them becoming insured federally, except worse. You’re trusting a 3rd party to handle your Bitcoins and provide you with them upon request, and worse yet, they may be operating anonymously. At any time an online wallet service can be hacked, rendering everyone out of luck that used their service.

Because of these issues, it isn’t recommended you keep more in an online wallet than you’re willing to lose. I would not recommend keeping more in an online wallet than cash you would keep in your pocket when walking through the bad side of town at night. Online wallets and exchanges are constantly targeted by hackers, due to the incentive to potentially steal millions worth of Bitcoin.

Running A Software Wallet

Running a wallet on your system, such as Bitcoin-QT, provides decent security. As long as your system remains uncompromised, your Bitcoin should stay safe. It is generally advised that you encrypt your wallet with a passphrase that no one would be able to guess, so that anyone that accesses your device cannot steal your Bitcoin.

You also should create backups after you encrypt the wallet. It is recommended that you create several. You can put them on USB storage devices, external hardrives, or any form of storage you would prefer. As long as they’re encrypted, and they are not stored containing the passphrase you chose, anyone who finds the backup won’t be able to take your Bitcoin. You should store them in multiple locations to remain the most prepared. While a backup stored in a drawer next to your computer will save you from a hard drive failure, it won’t protect you from a fire or natural disaster that damages everything in your room/house.

Linux is regarded as the best operating system for Bitcoin usage, due to it being free and open source. The best distribution is open to debate, however I believe Ubuntu is the most beginner friendly. If you are used to windows, it should be good enough, assuming your copy is genuine- don’t trust torrented versions of the OS for Bitcoin storage. If you can learn Linux, it saves you money on an OS, and it also can be more secure due to not potentially containing backdoors.

For the average user, a Software wallet ran on a computer or system that is not used for other purposes should be enough security. if you plan to store massive amounts of Bitcoin, large enough to make you a target, then you may need to consider even greater security, such as ensuring your network is setup in an extra secure way. If you use wireless, ensure it is encrypted with WPA or better-WEP is considered insecure. Also ensure firewall and other security measures are setup properly, and that windows 7 file sharing is turned off. Should you carry enough wealth in Bitcoin, it’s possible vulnerabilities in your network could be exploited to attempt to spread a worm throughout your network.

Paper Wallets

Paper wallets are often regarded as the most secure storage, however you should use them with caution. Paper doesn’t last forever, and is incredibly susceptible to various types of damage. In addition to flooding or fire damage, paper degrades over time.

If you wish to use a paper wallet, make sure you use the correct type of printer. Impact printers, which work much like a typewriter, generally last the longest. Laser printers last the 2nd longest. Inkjet printers last shorter than laser printers, but longer than thermal printers. Thermal printers last the shortest, so they are not recommended. Most home printers are either laser printers, or inkjet printers.

When storing your paper wallet, store it in a safe location. It is generally recommended that you avoid humid environments, too much exposure to sunlight, or storing it where you or someone else may mistakenly dispose of it. Don’t store it beneath other documents, as you may forget you had it there and end up throwing it out, should you keep it stored for a long period of time.

Keep in mind that many modern printers often have a cache that stores documents you printed recently, so if you print a paper wallet from it, be careful if you must dispose of the printer.

 

Bitcoin is easy to use, but it requires that you remain careful and intelligent to keep it secure. By following these tips you can keep yourself more protected against data loss, hacking, or other means in which you may lose your Bitcoin. Following these tips does not guarantee that you will not be hacked, however it does significantly improve your security.

 

Dynamic Block Size Cap Scaling

The Current State of the Blockchain

blockchainsize

 

Bitcoin, in its current state, cannot act as a major transaction network. Because blocks are current limited to be 1 MB in size, Bitcoin is limited to handle roughly 7 transactions per second. In comparison, thousands of credit card transactions happen per second across the world. Despite its declining price, Bitcoin’s usage has been growing- the average block size has doubled in the past 6 months. If this rate of growth continues, Bitcoin will reach its limits within a year. Once every block begins to reach maximum capacity, fees will begin rising rapidly as people wishing to have their transaction included in a block will be competing with each other.

Why The Block Size is Limited, And the Developer’s Perspective on the Issue

The block size is limited to prevent a bad miner from creating a massive block that everyone would be forced to download. Hypothetically, if the cap didn’t exist, a miner could create a 100 GB block that everyone had to download, and continue doing so to destroy Bitcoin by making the blockchain too large for everyone to store, and transmit.

Raising the block size limit is considered to be something that will eventually become necessary; however, developers wish to wait as long as possible. They believe that because the blockchain must fork to make the change, it isn’t worth the struggle when Bitcoin is doing fine right now.

At this point, a blockchain fork would require getting the approval of most of the major businesses in the industry, such as Bitpay, Coinbase, Bitstamp, and other merchant services/exchanges. If the majority of people disagreed on a fork, it could be disastrous to Bitcoin as it would effectively be split in two, and people would disagree on whose money is on the “real chain”.

By waiting longer, we’re effectively waiting until it becomes a problem. And with all forks, it requires planning and time. You can’t fork well in a day; ideally its best to announce it months ahead of time,  put it on the testnet, and then implement it several months later, with the fork happening months after people have a chance to update wallets, at a specific block. If we wait until Bitcoin grinds to a halt due to the blockchain reaching its limits, it would take a long time for the problem to be resolved. As a result, trust in Bitcoin may be lost, and it would be a lot harder to recover.

The refusal to do anything about an issue until it becomes a problem is not an uncommon thing for humans to do. People neglect making backups until they lose their data, businesses often ignore certain aspects of security until being hacked, airline security was lax until 9/11 happened. But it most certainly foolish to not prevent things before they happen, and it is crucial that we plan ahead for Bitcoin’s future.

The Problem With Simply Raising The Limit

If we raise the limit, it’s possible that we may need to raise it again in the future. Each time we fork, it causes inconveniences to businesses and users, as they must update their software and wallets to reflect the change, and it must be approved by both the general public and the majority of businesses. It’s also risky, as a glitch could occur on the actual chain that for some reason doesn’t happen on the Testnet. At the same time, if we raise the limit so much such that it never needs to be raised again, we risk the blockchain getting flooded with spam transactions, making it very hard to store the Blockchain on an average hard drive, or transmit it on average cable/DSL.

Because of these factors, agreeing on a number is hard. Hypothetically, one exchange may believe a 10 MB cap is the best for Bitcoin right now. At the same time, another exchange may believe a 100 MB limit is best for the future of Bitcoin. These disagreements may lead to controversy, and creates a risk of a fork not going smoothly at all.

 

The Proposed Solution

Instead of choosing a specific limit for the size of the block, the block size limit should scale based on a formula that takes into account how big the blocks have been. The maximum size should never reduce, only increase.

An idea for the algorithm used for the calculation of the maximum block size in pseudo-code might be as follows:

if(average size of last 4096 blocks*4>maxblocksize && median size of last 4096 blocks *8>maxblocksize)

maxblocksize=(average size of last 4096 blocks*4)

The maximum block size would be recalculated every 4096 blocks, much like the difficulty is recalculated every 2 weeks.

This is more of just showing the idea than proposing an actual formula, I’m sure a better one could be created. The logic behind this formula is to ensure both the median and average are higher. If just the average is used, the block size may increase when it isn’t needed just because of a few spam blocks every cycle. By checking the median, it ensures that there are legitimate blocks that are reaching that size. The only way the median would be a faulty indicator of what is needed would be if spamming miners controlled more than 50% of the blocks, but at that point, greater problems would exist. The median is likely harder to reach the same number as the average, due to smaller miners capping their blocks, which bigger miners compensate for. As a result, the median threshold is more lenient.

In Plain English:

If 4 times the average of the last 4096 block  is greater than the current maximum block size, and 8 times the median of the last 4096 blocks is greater than the current maximum block size, then increase the maximum blocksize to 4 times the average of the last 4096 blocks.

Basically, you’re allowing room for 4 times what’s actually being used, and recalculating every month.

What it Accomplishes

Because there is always a limit, the block size limit can only do so much as Quadruple once a month, preventing rapid change. In some months, it may not go up at all due to usage not increasing. This formula allows the network limit to grow as much as 400% monthly. In theory, the 4 can be replaced with the variable scaleFactor, and a more appropriate number could be decided by the developers. 

This solution would still prevent a bad miner grabbing hold of a couple blocks and creating a block too big, as it would be denied by the network. A few blocks created at the new maximum size won’t cause any issues due to checking the median. This change allows lets Bitcoin scale infinitely as long as infrastructure supports it, which means we won’t need to fork for this reason any time in the future.

 

Regarding Technology Limitations

One of the largest criticisms of this model is that technology and infrastructure may not be able to keep up. While server-grade hardware and fiber connections set up between thousands of companies can easily support thousands of transactions per second on the Bitcoin network, the average user would not be able to handle all of the bandwidth, or store the entire blockchain if Bitcoin ever reached this magnititude. Making sure running a full node remains viable to the average person is of great importance to some people, so that needs to be taken into consideration.

One way to meet this goal would be to limit the speed at which the maximum size is increased, in another calculation. Perhaps, for example, the growth is limited to 10% per month at maximum. The calculation proposed earlier will be done, however if the new value exceeds 110% of the previous block size value, it will be set to 110% of the last value, so that the increase is only 10%(or whatever value is deemed appropriate). If It doesn’t exceed 110% of the last value, but is greater than 100%, then the cap will be increased to the value calculated.

This is just yet another idea for consideration, that those who believe the ability for anyone to run a full node may prefer. Limiting Bitcoin to allow for full nodes to be run by anyone would prevent it from becoming a mainstream payment network if technology doesn’t advance. However, ensuring anyone can run a full node helps decentralization by increasing the amount of nodes. Limiting the growth to 10% per month while adapting this model would help Bitcoin to grow as a Niche payment network and protocol, but with this limit, it would not be capable of growing to become as large as credit cards or other payment technologies.

 

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How Bitcoin Improves the Freelance Market

Current Limitations of Freelance Work

Freelance work has been a growing type of employment in recent years due to the ever-increasing usage of the internet; however, many limitations in the payment industry prevent people from truly earning a living with freelance work.

The problem with freelance work is that payments are complicated. First, services like Paypal charge large fees. In some countries it’s about 3%; however, in other countries it’s significantly higher. On top of Paypal, many Freelance sites also charge massive fees on top of the payment network. Fiverr charges 20% fees, and other sites like eLance charge 6.75-8.75%. These immense overhead fees severely cut into the profits of workers, and discourage employers from considering online employment.

Secondly, Paypal also has a lot of chargeback fraud. It’s very hard to win a dispute as a seller on Paypal if the buyer is committed, so your employer can trick you into working for them, only to get a full refund 4 months later, potentially putting you into severe debt. The liability concerns of working online can cause severe anxiety and distrust.

 

Bitcoin Used In Small-Business Outsourcing

Outsourcing from the United States to other countries such as India is likely to increase due to increased socialist regulations such as Obamacare, and increased restrictions on employment.

Sending payments overseas can become extremely expensive, and also a logistical struggle due to regulations and the cost of outreaching and setting up communications. Bitcoin creates a simple way to outsource work, by sending payments to the recipient instantly, without needing to first obtain information regarding their identity, address, or other details. Bitcoin also helps the unbanked to receive international payments, as its very difficult to conduct cash transactions without first setting up a foreign office, which can be extremely expensive in resources and money for a startup.

If Bitcoin begins to stabilize in future years, it may also act as a way for those in developing nations to receive payments without fear of rapidly declining value. As of now it isn’t really an effective way, as it is extremely volatile, but in the future it may have potential due to it being decentralized, unlike government issued fiat currencies that can be hyper-inflated or influenced by economic situations with a specific country.

 

Identity Concerns, Discrimination, and Public Relations.

Paypal/Elance require an identity to register for. Businesses often discriminate to the fullest extent they can within the law to maintain PR. If the public becomes aware that someone they don’t like was employed by a company, the media will erupt on the topic, protests will happen, and sales will be heavily affected. Laws are created to protect particular classes of people from discrimination; however, it is often very hard to prove discrimination. Employers often never respond to denied applicants, or they give very vague responses. Almost never do applicants receive a formal letter of denial stating the reasons they weren’t employed.

For this reason, ex-Felons and other people may struggle to find a way to turn their life around. Instead of potentially becoming productive by finding a career, they may turn to crime in order to survive in the borderline-poverty that is welfare. The falsely accused may suffer as well, unable to be a productive member of society due to a poorly conducted investigation or false accusation. Freelance work has the potential to enable them to become productive members of society, and support themselves.

Bitcoin makes up for the limitations in the freelance industry. By allowing for secure, irreversible payments with no fees, workers can safely receive payment without fear of potential scamming, losing a large portion of the transaction to a 3rd party, or revealing their identity. Sites like Coinality allow for job listing and resume posting, providing employers a place to post employment opportunities, and job-seekers a place to display their skills and past work.

By providing an anonymous, secure way to make irreversible payments with no fees, Bitcoin enables the Freelance market to continue to grow in an increasingly digital economy. This niche market may be one of the most important for Bitcoin’s Growth and success, as it benefits much more from the advantages of Bitcoin than other traditional markets do.

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Why Accepting Bitcoin Benefits Online Businesses

Accepting Bitcoin is a move many businesses are taking. Thousands of companies accept Bitcoin, and recently, many larger ones such as Microsoft began accepting the digital currency. Bitpay serves over 40,000 merchants worldwide, and Coinbase also serves thousands more. Both take care of the overhead technology needed to accept Bitcoin, and also allow the merchant to instantly convert to their country’s currency at the time of purchase, eliminating any risks Bitcoin has on finances, or tax burdens. Even if you’re hesitant towards Bitcoin itself due to Security, volatility, or needing to develop for it, keep in mind Bitpay and Coinbase’s API will take care of it for you, and if you choose to instantly convert to fiat currency, you’re not taking any risk with Bitcoin’s rapidly fluctuating value. The only investment you need to make is the 1-2 hours  it takes for your web developer to implement the API into your website’s checkout, link your company’s bank account, and register for an account.

 

Will Bitcoin Help My Business?

 

Before accepting Bitcoin, it’s important to consider your target demographic, and how it compares to Bitcoin’s demographic. Bitcoin users may be more likely to buy particular products. If your products are highly desirable to Bitcoin users, you’ll likely see a large increase in sales if you begin accepting Bitcoin, and market it accordingly through social media. For more information, read here.

If your product doesn’t directly interest Bitcoin users, don’t assume its pointless to accept it. It may draw in a new consumer base that had never considered your products before. Bitcoin users love to support merchants that begin accepting Bitcoin, so they may choose to purchase from your store simply because you accept Bitcoin. Even if they don’t have much use for it their selves, they may consider them as gifts for others, or just an extra luxury for themselves that they’ll find a way to appreciate. Contrary to expectations, Overstock reported that the most commonly purchased item with Bitcoin was “sheets”, despite many expecting it to be electronics.

To develop an idea of Bitcoin’s demographic, it may help to understand what Bitcoin is and how it appeals to its users. Bitcoin appeals to the tech-savvy crowd, as it requires a decent amount computer proficiency to use, and extensive knowledge of computer technology to fully comprehend. If you own a technology based store, accepting Bitcoin is almost certainly a good idea. This survey by the Massachusets Division of Banks shows factors that make up the Bitcoin demographic.

Creating a Niche Product

Developing a Niche product, and marketing it to the world in hope of selling it is very difficult. Not only is it hard to find anyone interested in your product, but there’s likely someone that does it better, or at least is better known in the industry. Accepting Bitcoin allows you to step ahead of your competition, and brings to you an additional set of  consumers. By bringing attention to your goods or services through an alternative payment method, you may help spread the word of your product, as your new patrons may share it with friends/family that may not use Bitcoin, or even heard of your shop in the past. Bitcoin creates enormous potential for new online startups, by enabling them to reveal their products to a large crowd of cryptocurrency enthusiasts. If you have a quality product that you feel people would like, then Bitcoin may be the catalyst you need to get it rolling.

 

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