17 August 2013, 19:32

German Finance Ministry recognizes bitcoin as currency

Bitcoin БИТКОИН

Key aspects of the bitcoin, a popular online currency, have been recognized for legal and tax purposes by Germany, newspapers reported Saturday.

The recognition, which was laid out in a Finance Ministry response to a query from a member of parliament, means Germany recognizes the online currency as a "currency unit" and "private money," reported the Frankfurter Allgemeine Zeitung and the Neue Osnabruecker Zeitung.

Bitcoins have been a popular form of payment among netizens since 2009 although economists question their viability because they are backed by neither a government nor a central bank.

An overseer group called the Bitcoin Foundation limits the total number of currency units to 21 billion, but it has been unable to avoid sharp fluctuations as it grows more popular.

Currently, 1 bitcoin is valued at about 110 dollars, according to online currency conversion site xe.com, which also states that the currency is currently not recognized by any national government.

Snowden defense fund allows donations from Bitcoin crypto-cash system

Donations for the Edward Snowden defense fund can now be handed over in a new currency—Bitcoin. The virtual money is being accepted for his cause. All the money raised is to be used to legally protect Snowden, who shared top secret NSA documents with the entire public.

On August 9 The Journalistic Source Protection Defence Fund (JSPD) was established to provide legal assistance to Snowden’s case along with campaign aid for sources in the field of journalism. Snowden has been recognized from the organization as the first source to receive funding. He is also known as the leaking the largest amount of intelligence information to the public.

For the time being, Snowden resides in Russia under temporary asylum. Back in the US, charges are mounting against him, including those connected to espionage among other crimes.

The funding’s sole purpose it to assist Snowden and is being controlled by UK laws and managed by London-based Derek Rothera & Company Charted Accountants. Over nine thousand dollars has been raised from over 160 contributors.

Besides credit cards, bank transfers, and checks being allowed as a monetary form of payment, Wikileaks announced that they will be accepting Bitcoin, the virtual currency. Bitcoin was created in 2009 and is a type of crypto-cash. People who have become upset with traditional banks have turned to Bitcoin instead, and it has been gaining popularity.

Bitcoin to be declared a real currency

Bitcoin has been legitimated as a currency by federal court, which will allow the digital crypto-cash to be controlled by government.

US federal judge ruled yesterday that the virtual currency Bitcoin is real money and is subject to regulation by government agencies, according to news sources.

Trendon Shavers, a 30-year-old businessman recently charged with running a Ponzi scheme using Bitcoin, tried to get his case thrown out by claiming that Bitcoin isn’t real money and therefore is not subject to regulation by the U.S. government.

The court rejected Shavers’ claim yesterday stating that Bitocin is real money, and that the Bitcoins invested in Bitcoin Savings and Trust - Shavers’ hedge fund - count as securities that are subject to SEC regulation.

In his ruling, Judge Amos Mazzant said that Bitcoin is a security because people exchange it for real goods and services: “It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the US dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money”.

Bitcoin is a virtual currency that doesn't have any type of physical asset or government to back it up. The value of an individual Bitcoin can rise and fall, just like other financial investments, and a Bitcoin can be traded for traditional forms of money.

Bitcoin was originally founded on the idea that it could not be regulated, since Bitcoins are handled by computer algorithms, open source Bitcoin applications and a peer-to-peer network, rather than by a central bank.

Despite that original intention the U.S. and other governments have begun taking regulatory actions around the virtual currency. The Department of Homeland Security recently issued a seizure warrant on a Bitcoin exchange. And last month Thailand became the first country to ban Bitcoins completely.

The Bitcoin community has made efforts to be ahead of regulators. A number of Bitcoin participants recently banded together to form a self-regulatory organization called DATA.

Now with the magistrate’s permission, the SEC can continue with its case against Shavers and his site. With that same ruling, though, the government is for now getting the go ahead for what could lead to the strict regulation of Bitcoin.
Even if this week’s ruling is a deliberate decision with regards to Bitcoin, it certainly isn’t the first time when the US intervened in the digital marketplace – for instance, in May the US Department of Homeland Security seized a payment processing account that belonged to the largest international Bitcoin trader, claiming the monetary exchange service falsified financial data.

Voice of Russia, RT, dpa, BBC


 

'It is most safe to sell products using Bitcoins than to buy them' - expert

Bitcoin has been officially declared a legitimate currency for the first time by a US federal judge. The digital crypto currency now has a real chance to fall under the regulation of the US legal system. The decision of the judge which is now a precedent means that Bitcoin will be officially considered a currency until any other federal judge rules otherwise. Vladimir Marchenko, chief technology officer of BTC Global (Uruguay), Inventor of Bitcoin Mining Contracts, Bitcoin and Information Security Consultant, talked with the Voice of Russia about one of the few currencies in the world which is absolutely decentralized and not officially controlled.

What is this whole system about? How popular is it all over the world? Is it safe to purchase or sell products using digital currency?

It is difficult to explain what Bitcoin is and how it works. It is a complex system but effectively it is money just like the judge mentioned. It is money, you can use it to buy goods and services. You can use it to pay, you can use it to invest.

How popular is it all over the world?

It is popular and what is more important is the trend, the popularity is growth potentially. There are millions of people that use Bitcoin in one way or another. From the statistics available for example from SourceForge, a number of downloads, we can see that the trend is growing and there is increasing popularity of the system all over the world.

Is it safe to purchase or sell products using this digital currency?

It is like credit cards, it is most safe to sell products using Bitcoins than to buy them. And the reason for that is that there is no insurance for buyers.

What does this precedent mean for the Bitcoin system? What are the prospects for Bitcoin?

I don’t think that this specific precedent is all that important. In my opinion the judge simply said that white is white. So, in area of security law yes, it is definitely a precedent that might be applied more widely, and more certainly may be used as a precedent in whatever other cases, which may rise further down the road.

Could that decision be regarded as the first step to popularize digital currency? Could it become a real substitution of money?

Yes, I am optimist. I pretty much expect that Bitcoin will be extremely popular. There are many reasons for it. It is pretty much money which are designed to be money, to be currency, which has almost all properties of currency and they have properties of money in application to Bitcoin, to US dollars, to some other currencies, Amazon coins for example – it is not really currency.

Is there any truth that the Winklevoss Twins of Facebook fame have some percentage of Bitcoin?

It was reported that they purchased significant amount of Bitcoins. I believe it is 1% of all Bitcoins, which are produced.

Thailand's Bitcoin ban: 'there is no real ban, just an advice' - Michael Parsons

Thailand is not known for strict regulations. It was surprising enough when earlier this week it became the first country that decided to ban Bitcoin. Thailand’s Central Bank concluded that there were no applicable laws that can control this cryptocurrency. The bank informed the company overseeing Bitcoin in the country it was illegal to trade bitcoins, move them in or out of the country, or use them to buy or sell goods or services. The Voice of Russia taked on the phone from London is Michael Parsons – Bitcoin Advisor, Presenter & Entrepreneur in the UK.

Thailand’s Central Bank did not ban Bitcoin outright. It only issued a preliminary ruling that using bitcoins as described was illegal. Moreover the Bank of Thailand does not have the constitutional ability to outlaw anything. Most of the experts believe that this so-called ban is a temporary measure and the decision will soon be revised.

Simply Thai authorities have not worked out yet how to control bitcoin and how to profit from it. Frankie Bishop, a virtual currency consultant, said that even if a bitcoin’s ban was introduced, enforcing it would be “difficult to almost impossible” for the authorities.

Bitcoins emerged in 2008. This virtual currency is not managed by any company or government and exists through an open-source software program. Bitcoins can be transferred through a computer or smartphone. The process of transaction is secured by servers called bitcoin miners.

Users can buy bitcoin through exchanges that convert real money into the virtual currency. Supporters argue that anonymity of bitcoins allows for greater protection from identity theft and credit card fraud when used for online shopping. Critics say that less regulatory oversight and supposed greater privacy of virtual currencies make them more attractive to scammers.

Financial authorities in many countries restrict the circulation of bitcoins. In the US, the financial regulator has recently warned investors about the potential for fraudulent scams involving the virtual currency after busting a man in Texas for running a financial pyramid through his bitcoin fund.

Michael Parsons – Bitcoin Advisor, Presenter & Entrepreneur in the UK.

What do such bans mean for the bitcoin as an alternative currency?

First of all, it is only one country banning bitcoin, not a world government or any other government. And secondly, the ban isn’t a ban as such. The ban was announced by the actual exchange, not by the Central Bank or the Government. And there was no act of Parliament being produced. So, the ban is like advice. There isn’t really a ban in place to my knowledge, anyway.

How is Bitcoin pegged to conventional currencies, for example to dollar or euro?

Bitcoin is very different. Bitcoin is not issued by the governments or by central banks, or by other banks. It is issued by people, by miners. And they are rewarded by bitcoins for confirming the transactions in the network.

Is the popularity of virtual currencies growing today? What is the trend?

I think it is growing because it gives you a way of doing both Internet transactions and formal routines at a very low or no cost, compared to the existing legacy bank systems.

And what is the future that you predict for bitcoin, let’s say in Europe?

I think that bitcoin, it won’t be placed to legacy bank systems. But governments and banks will have to embrace it. And I think for a time bitcoin will run parallel with the banks, and it won’t be placed into banks, but it will provide an alternative and better way of making payments across the Internet, which currently is being done by credit cards which is very insecure – it is liable to frauds and also it costs you 2-3%.

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