Category Archives: blockchain technology

How to accept Bitcoin, for petite businesses – Bitcoin Wiki

How to accept Bitcoin, for puny businesses

It has been suggested that this article is merged with Merchant Howto.

This guide is intended for petite business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It’s written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to challenge with government currency, many petite business owners wonder what’s the right way to accept and account Bitcoin, or if it’s legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

Bitcoin has been formally recognized by some governments and authorities as a “currency”, but in practice, Bitcoin is no different than accepting payment in other forms such as cash or gold or scrip or bounty cards or foreign currency. We think that it is pretty much the same as the local businesses of Good Barrington, Massachusetts choosing to accept their locally-printed “Berkshire Bucks” to support their local economy.

Contents

Beginning to accept Bitcoin for transactions

Accepting Bitcoin at a petite business is best commenced in whichever manner keeps the accounting ordinary for you. This will vary by the type of business you are operating.

Begin with a sign

If you expect that the number of people interested in using Bitcoin is petite, you might simply commence by posting a sign or a note: “We Accept Bitcoin”, and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you’re helping Bitcoin in two ways: one, by enhancing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

Accepting Payment

If you sell things in a brick and mortar shop, customers can pay using hardware terminals, touch screen apps or elementary wallet addresses through QR Codes.

For an online website, accepting Bitcoin should be implemented by a competent programmer and you should run a total knot, especially if you sell larger-ticket items.

Brainy Phone or Tablet

You can use a dedicated app or webapp that generates a QR code on the fly including the amount. Many wallets directly support QR code scanning for payment.

Accounting

When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to come in it in a way that suggests you received a payment. If on the other palm, you’re providing “discounts” for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

Businesses that suggest bounty cards

If your business sells bounty cards or bounty certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of bounty cards, and then require the bounty cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing bounty cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a petite daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don’t accept bounty cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail bounty card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the capability to support numerous applications on the same terminal. Bounty cards are also very profitable because of “breakage”, or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label bounty card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label bounty card service provider necessarily have to treat your funds – they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that permit users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

Businesses that mail invoices

Does your business send out invoices to customers? Adding one line may make a phat influence for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand fresh Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you’ll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to please an invoice in utter. Your invoice should suggest an amount.

You might be able to anticipate the possibility that even however a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should very likely still do it anyway. The customer is very likely going to want some paper trail for his payment. Providing him a pre-printed payment stub with a pre-printed address will please that, because the customer can independently and publicly prove through Block Explorer that the payment took place.

Does your business have a website? On your invoice, consider permitting them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand fresh address for each invoice whenever possible, and use it only once. This benefits the customer as it eliminates any ambiguity as to which customer is making which payment and for which invoice.

Avoiding fraud

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn’t likely in general – it depends on how well a fraudster could find out who your customers are in the very first place – it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people attempt to type Bitcoin addresses off payment stubs – instead, force people to get the utter Bitcoin address from your website via secure SSL. But, still print most of the address on the payment stub (perhaps with four or five characters starred out), so that the customer’s need for a paper trail can be sated, so they can prove they paid if there is ever a dispute. Merchants can also use the IP address geolocation to understand the close proximity of users. There is automated solution such as FraudLabs Pro that automates the screening of Bitcoin transactions to determine risk level.

Setting Prices

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is introduced to the customer

Bitcoin Prices lists the exchange rate for many currencies on numerous exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis.

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can almost entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

Contract

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For example, the party sending payment is responsible for paying any transaction fee that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn’t confirmed quickly.

Other items that might be addressed in a contract:

  • Requirement and treating of escrow through an escrow service.
  • Jurisdiction for disputes.
  • Refund policy (particularly with the exchange rate being volatile)

Paying taxes on Bitcoin income

Tax compliance is a topic of concern for puny businesses. We aren’t accountants or lawyers, and can’t give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn’t leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would treat a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The response for Bitcoin should most likely be the same.

As for how to determine what a Bitcoin transaction is worth: the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they have rules and guidelines on how to value transactions made in foreign currency or “cash equivalents”. We imagine the accounting would be similar.

With Bitcoins, there’s likely to be some difference inbetween the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you determine to do so. This script, likewise, would be no different if you accepted foreign currency or gold as payment. Under some screenplays, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the entire thing at the time of exchange.

Perhaps you might talk to your accountant. You don’t need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can most likely get all the answers you need. What would you ask your accountant if you determined that you desired to accept Berkshire Bucks or 1-ounce gold coins as payment?

How to accept Bitcoin, for petite businesses – Bitcoin Wiki

How to accept Bitcoin, for petite businesses

It has been suggested that this article is merged with Merchant Howto.

This guide is intended for puny business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It’s written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to contest with government currency, many petite business owners wonder what’s the right way to accept and account Bitcoin, or if it’s legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

Bitcoin has been formally recognized by some governments and authorities as a “currency”, but in practice, Bitcoin is no different than accepting payment in other forms such as cash or gold or scrip or bounty cards or foreign currency. We think that it is pretty much the same as the local businesses of Superb Barrington, Massachusetts choosing to accept their locally-printed “Berkshire Bucks” to support their local economy.

Contents

Embarking to accept Bitcoin for transactions

Accepting Bitcoin at a petite business is best commenced in whichever manner keeps the accounting elementary for you. This will vary by the type of business you are operating.

Embark with a sign

If you expect that the number of people interested in using Bitcoin is puny, you might simply embark by posting a sign or a note: “We Accept Bitcoin”, and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you’re helping Bitcoin in two ways: one, by enhancing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

Accepting Payment

If you sell things in a brick and mortar shop, customers can pay using hardware terminals, touch screen apps or elementary wallet addresses through QR Codes.

For an online website, accepting Bitcoin should be implemented by a competent programmer and you should run a total knot, especially if you sell larger-ticket items.

Brainy Phone or Tablet

You can use a dedicated app or webapp that generates a QR code on the fly including the amount. Many wallets directly support QR code scanning for payment.

Accounting

When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to come in it in a way that suggests you received a payment. If on the other palm, you’re providing “discounts” for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

Businesses that suggest bounty cards

If your business sells bounty cards or bounty certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of bounty cards, and then require the bounty cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing bounty cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a petite daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don’t accept bounty cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail bounty card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the capability to support numerous applications on the same terminal. Bounty cards are also very profitable because of “breakage”, or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label bounty card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label bounty card service provider necessarily have to treat your funds – they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that permit users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

Businesses that mail invoices

Does your business send out invoices to customers? Adding one line may make a big influence for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand fresh Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you’ll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to please an invoice in total. Your invoice should suggest an amount.

You might be able to anticipate the possibility that even tho’ a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should most likely still do it anyway. The customer is most likely going to want some paper trail for his payment. Providing him a pre-printed payment stub with a pre-printed address will sate that, because the customer can independently and publicly prove through Block Explorer that the payment took place.

Does your business have a website? On your invoice, consider permitting them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand fresh address for each invoice whenever possible, and use it only once. This benefits the customer as it eliminates any ambiguity as to which customer is making which payment and for which invoice.

Avoiding fraud

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn’t likely in general – it depends on how well a fraudster could find out who your customers are in the very first place – it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people attempt to type Bitcoin addresses off payment stubs – instead, force people to get the utter Bitcoin address from your website via secure SSL. But, still print most of the address on the payment stub (perhaps with four or five characters starred out), so that the customer’s need for a paper trail can be sated, so they can prove they paid if there is ever a dispute. Merchants can also use the IP address geolocation to understand the close proximity of users. There is automated solution such as FraudLabs Pro that automates the screening of Bitcoin transactions to determine risk level.

Setting Prices

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is introduced to the customer

Bitcoin Prices lists the exchange rate for many currencies on numerous exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis.

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can almost entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

Contract

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For example, the party sending payment is responsible for paying any transaction fee that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn’t confirmed quickly.

Other items that might be addressed in a contract:

  • Requirement and treating of escrow through an escrow service.
  • Jurisdiction for disputes.
  • Refund policy (particularly with the exchange rate being volatile)

Paying taxes on Bitcoin income

Tax compliance is a topic of concern for puny businesses. We aren’t accountants or lawyers, and can’t give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn’t leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would treat a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The response for Bitcoin should very likely be the same.

As for how to determine what a Bitcoin transaction is worth: the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they have rules and guidelines on how to value transactions made in foreign currency or “cash equivalents”. We imagine the accounting would be similar.

With Bitcoins, there’s likely to be some difference inbetween the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you determine to do so. This screenplay, likewise, would be no different if you accepted foreign currency or gold as payment. Under some screenplays, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the entire thing at the time of exchange.

Perhaps you might talk to your accountant. You don’t need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can most likely get all the answers you need. What would you ask your accountant if you determined that you wished to accept Berkshire Bucks or 1-ounce gold coins as payment?

How to accept Bitcoin, for petite businesses – Bitcoin Wiki

How to accept Bitcoin, for puny businesses

It has been suggested that this article is merged with Merchant Howto.

This guide is intended for puny business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It’s written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to contest with government currency, many petite business owners wonder what’s the right way to accept and account Bitcoin, or if it’s legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

Bitcoin has been formally recognized by some governments and authorities as a “currency”, but in practice, Bitcoin is no different than accepting payment in other forms such as cash or gold or scrip or bounty cards or foreign currency. We think that it is pretty much the same as the local businesses of Good Barrington, Massachusetts choosing to accept their locally-printed “Berkshire Bucks” to support their local economy.

Contents

Kicking off to accept Bitcoin for transactions

Accepting Bitcoin at a petite business is best commenced in whichever manner keeps the accounting ordinary for you. This will vary by the type of business you are operating.

Commence with a sign

If you expect that the number of people interested in using Bitcoin is puny, you might simply embark by posting a sign or a note: “We Accept Bitcoin”, and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you’re helping Bitcoin in two ways: one, by enhancing awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

Accepting Payment

If you sell things in a brick and mortar shop, customers can pay using hardware terminals, touch screen apps or elementary wallet addresses through QR Codes.

For an online website, accepting Bitcoin should be implemented by a competent programmer and you should run a total knot, especially if you sell larger-ticket items.

Clever Phone or Tablet

You can use a dedicated app or webapp that generates a QR code on the fly including the amount. Many wallets directly support QR code scanning for payment.

Accounting

When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to come in it in a way that suggests you received a payment. If on the other mitt, you’re providing “discounts” for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

Businesses that suggest bounty cards

If your business sells bounty cards or bounty certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of bounty cards, and then require the bounty cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing bounty cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a petite daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don’t accept bounty cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail bounty card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the capability to support numerous applications on the same terminal. Bounty cards are also very profitable because of “breakage”, or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label bounty card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label bounty card service provider necessarily have to treat your funds – they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that permit users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

Businesses that mail invoices

Does your business send out invoices to customers? Adding one line may make a gigantic influence for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand fresh Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you’ll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to sate an invoice in utter. Your invoice should suggest an amount.

You might be able to anticipate the possibility that even however a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should very likely still do it anyway. The customer is very likely going to want some paper trail for his payment. Providing him a pre-printed payment stub with a pre-printed address will please that, because the customer can independently and publicly prove through Block Explorer that the payment took place.

Does your business have a website? On your invoice, consider permitting them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand fresh address for each invoice whenever possible, and use it only once. This benefits the customer as it eliminates any ambiguity as to which customer is making which payment and for which invoice.

Avoiding fraud

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn’t likely in general – it depends on how well a fraudster could find out who your customers are in the very first place – it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people attempt to type Bitcoin addresses off payment stubs – instead, force people to get the total Bitcoin address from your website via secure SSL. But, still print most of the address on the payment stub (perhaps with four or five characters starred out), so that the customer’s need for a paper trail can be sated, so they can prove they paid if there is ever a dispute. Merchants can also use the IP address geolocation to understand the close proximity of users. There is automated solution such as FraudLabs Pro that automates the screening of Bitcoin transactions to determine risk level.

Setting Prices

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is introduced to the customer

Bitcoin Prices lists the exchange rate for many currencies on numerous exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis.

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can almost entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

Contract

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For example, the party sending payment is responsible for paying any transaction fee that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn’t confirmed quickly.

Other items that might be addressed in a contract:

  • Requirement and treating of escrow through an escrow service.
  • Jurisdiction for disputes.
  • Refund policy (particularly with the exchange rate being volatile)

Paying taxes on Bitcoin income

Tax compliance is a topic of concern for petite businesses. We aren’t accountants or lawyers, and can’t give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn’t leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would treat a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The response for Bitcoin should very likely be the same.

As for how to determine what a Bitcoin transaction is worth: the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they have rules and guidelines on how to value transactions made in foreign currency or “cash equivalents”. We imagine the accounting would be similar.

With Bitcoins, there’s likely to be some difference inbetween the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you determine to do so. This script, likewise, would be no different if you accepted foreign currency or gold as payment. Under some screenplays, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the entire thing at the time of exchange.

Perhaps you might talk to your accountant. You don’t need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can very likely get all the answers you need. What would you ask your accountant if you determined that you wished to accept Berkshire Bucks or 1-ounce gold coins as payment?

How to accept Bitcoin, for puny businesses – Bitcoin Wiki

How to accept Bitcoin, for puny businesses

It has been suggested that this article is merged with Merchant Howto.

This guide is intended for petite business owners who wish to help promote Bitcoin by accepting it as payment for goods and services. It’s written with the assumption that you operate a regular business that sells goods or services for regular national currency such as dollars, and that you wish to accept Bitcoin as another legal way to pay, and that you intend to pay taxes on your Bitcoin income just like any other income.

With Bitcoin being touted as a way to conduct anonymous transactions and as way to challenge with government currency, many puny business owners wonder what’s the right way to accept and account Bitcoin, or if it’s legal or ethical, or whether and how they should pay taxes on income received through Bitcoin.

Bitcoin has been formally recognized by some governments and authorities as a “currency”, but in practice, Bitcoin is no different than accepting payment in other forms such as cash or gold or scrip or bounty cards or foreign currency. We think that it is pretty much the same as the local businesses of Superb Barrington, Massachusetts choosing to accept their locally-printed “Berkshire Bucks” to support their local economy.

Contents

Beginning to accept Bitcoin for transactions

Accepting Bitcoin at a petite business is best embarked in whichever manner keeps the accounting elementary for you. This will vary by the type of business you are operating.

Commence with a sign

If you expect that the number of people interested in using Bitcoin is puny, you might simply begin by posting a sign or a note: “We Accept Bitcoin”, and ask people to contact you directly in order to make a payment. Even if hardly anybody uses Bitcoin as a payment method, you’re helping Bitcoin in two ways: one, by enlargening awareness, and two, by making your customers more willing to accept Bitcoin as payment from others in the future, because now they know somewhere they can spend it.

Accepting Payment

If you sell things in a brick and mortar shop, customers can pay using hardware terminals, touch screen apps or ordinary wallet addresses through QR Codes.

For an online website, accepting Bitcoin should be implemented by a competent programmer and you should run a utter knot, especially if you sell larger-ticket items.

Wise Phone or Tablet

You can use a dedicated app or webapp that generates a QR code on the fly including the amount. Many wallets directly support QR code scanning for payment.

Accounting

When a customer makes a payment, you might simply issue a credit to their account. Ideally, you want to inject it in a way that suggests you received a payment. If on the other forearm, you’re providing “discounts” for Bitcoins, but then you are selling the Bitcoins for currency and then counting that as income, then chances are good that your calculation of income is making up for it. Ask your accountant.

Businesses that suggest bounty cards

If your business sells bounty cards or bounty certificates, you may find that the easiest way to accept Bitcoin is to accept it only for the purchase of bounty cards, and then require the bounty cards to be used for actual purchases of goods or services. This way, the accounting practices you already have in place for processing bounty cards can be put to use. The accounting for Bitcoins would then be minimized to tracking sales of a single SKU.

This method is also ideal for retail food establishments and convenience stores, where the payment of Bitcoins through a mobile phone for a petite daily food purchase might be cumbersome or disruptive, especially in front of a line of other customers. Bitcoins in this case would be best used to reload prepaid cards that can then be swiped at point-of-sale.

If you don’t accept bounty cards, but you already accept credit cards through a swipe terminal, consider the possibility that you could add a retail bounty card system through the swipe terminal you already own. Many point-of-sale terminals, including ones from VeriFone®, are designed around the capability to support numerous applications on the same terminal. Bounty cards are also very profitable because of “breakage”, or in other words, the fact that a significant percentage of them never get redeemed.

You could consider adding a private label bounty card program from a provider who specializes in this, not just as a jumpstart to accepting Bitcoins, but as an extra boost to income. A private label bounty card service provider necessarily have to treat your funds – they can simply provide a solution that keeps track of the balance on the cards on your behalf, including features that permit users to check their balances by phone or by web. Such a solution, of course, is also what makes the cards swipeable through the card reader.

Businesses that mail invoices

Does your business send out invoices to customers? Adding one line may make a big influence for the Bitcoin economy. Perhaps you list it as a payment option just after Visa, MasterCard, and American Express, even if that means your customer must call or e-mail to make a payment.

If you have access to the programming expertise such that you can generate Bitcoin addresses programmatically, consider generating a brand fresh Bitcoin address for each invoice, and print it on the invoice. When a Bitcoin payment arrives, you’ll automatically know where it should arrive.

Customers might wonder how much BTC they should pay in order to please an invoice in total. Your invoice should suggest an amount.

You might be able to anticipate the possibility that even tho’ a Bitcoin address can be printed on an invoice or payment stub, that they are very cumbersome for most people to type, especially being a mix of uppercase and lowercase letters. However, you should most likely still do it anyway. The customer is very likely going to want some paper trail for his payment. Providing him a pre-printed payment stub with a pre-printed address will please that, because the customer can independently and publicly prove through Block Explorer that the payment took place.

Does your business have a website? On your invoice, consider permitting them to go to a special URL to get the address to make a Bitcoin payment just by typing in their invoice number. This way, they can see the Bitcoin address, copy and paste it directly into their Bitcoin client.

Use a brand fresh address for each invoice whenever possible, and use it only once. This benefits the customer as it eliminates any ambiguity as to which customer is making which payment and for which invoice.

Avoiding fraud

You should also consider the possible risk that fraudsters could send counterfeit invoices to your customers, and entice them to make a payment to a Bitcoin address they control, instead of you. While that isn’t likely in general – it depends on how well a fraudster could find out who your customers are in the very first place – it would certainly be an unpleasant situation if it ever happened. One way you could control that is, whenever possible, never let people attempt to type Bitcoin addresses off payment stubs – instead, force people to get the utter Bitcoin address from your website via secure SSL. But, still print most of the address on the payment stub (perhaps with four or five characters starred out), so that the customer’s need for a paper trail can be sated, so they can prove they paid if there is ever a dispute. Merchants can also use the IP address geolocation to understand the close proximity of users. There is automated solution such as FraudLabs Pro that automates the screening of Bitcoin transactions to determine risk level.

Setting Prices

When a business accepts bitcoins for payment, there generally is the need to convert them to the currencies used for paying suppliers, employees and shareholders. Some merchants set prices based on the current market rate at the time the price quote is introduced to the customer

Bitcoin Prices lists the exchange rate for many currencies on numerous exchanges.

When prices are determined using an automated process, the current market rate can be based on either a current price or on a weighted average basis.

When bitcoin funds for purchases are received, some merchants instantly exchange those proceeds into the preferred currency used. Hedging for each transaction can almost entirely eliminate exchange rate risk that the business is exposed to when accepting bitcoins for payment.

Contract

A sales contract might be used to ensure that specific terms are met to lessen the chances of a misunderstanding. For example, the party sending payment is responsible for paying any transaction fee that might be necessary. A contract might specify that a transaction fee must be paid and what amount, so as to prevent the situation where the transaction is considered a low priority transaction and thus isn’t confirmed quickly.

Other items that might be addressed in a contract:

  • Requirement and treating of escrow through an escrow service.
  • Jurisdiction for disputes.
  • Refund policy (particularly with the exchange rate being volatile)

Paying taxes on Bitcoin income

Tax compliance is a topic of concern for puny businesses. We aren’t accountants or lawyers, and can’t give legal or accounting advice.

But in many respects, Bitcoin transactions work very much like cash. Just like Bitcoin, cash is anonymous and doesn’t leave a paper trail, yet is widely used in commerce every day.

Ask yourself how you would treat a cash transaction. Do you accept cash transactions? Do you normally pay taxes on cash transactions? The reaction for Bitcoin should most likely be the same.

As for how to determine what a Bitcoin transaction is worth: the IRS, as far as we know, has never issued a guide mentioning how to value Bitcoin transactions. But they have rules and guidelines on how to value transactions made in foreign currency or “cash equivalents”. We imagine the accounting would be similar.

With Bitcoins, there’s likely to be some difference inbetween the value of BTC when you received them as payment, versus when you go to exchange them for another currency like USD, should you determine to do so. This script, likewise, would be no different if you accepted foreign currency or gold as payment. Under some screenplays, it might make sense to book the dollar value of BTC income as it is received, and then to book any difference incurred when it is exchanged for fiat currency. Under others, it might make sense to book the entire thing at the time of exchange.

Perhaps you might talk to your accountant. You don’t need to get into a discussion with your accountant about block chains and private keys or the philosophy behind a decentralized currency. By comparing the fundamentals of Bitcoins to accounting concepts already well understood by the public, you can very likely get all the answers you need. What would you ask your accountant if you determined that you wished to accept Berkshire Bucks or 1-ounce gold coins as payment?

Related video:

http://www.youtube.com/watch?v=tKJkiQXcosA

How long does it take for a Bitcoin transaction to be confirmed, Coin Center

How long does it take for a Bitcoin transaction to be confirmed?

Stanford researcher Dr. Joseph Bonneau explains the distinction inbetween “confirmed” and “unconfirmed” Bitcoin transactions.

Frequently in popular descriptions of Bitcoin and in the user interfaces of wallet software, a distinction is made inbetween “confirmed” and “unconfirmed” transactions. What is the difference?

At a high level, a transaction is only confirmed when it is permanently included in the Bitcoin blockchain. The blockchain is a ledger of all transactions in the history of Bitcoin. It is append-only, meaning fresh data can be added to the end of the ledger, but data can never be liquidated once included. This ledger is necessary to prevent double-spending, which is a key technical challenge in designing any cryptocurrency.

How Bitcoins are Transferred

Recall that if Alice “owns” some quantity of bitcoins, this truly means she knows one or more cryptographic keys which have been designated as the controller of those coins in a transaction on the ledger which transferred the coins to Alice. In order to transfer the coins to another entity, Alice will use these keys to produce a digital signature on the statement “I would like to redeem (spend) this transaction and send the value to X, Y, Z…” where X, Y, and Z will be fresh cryptographic addresses indicating keys known by other individuals (or perhaps Alice herself).

Now, suppose Alice signs a statement on her own computer telling she wants to transfer some coins to Bob but never sends the statement to Bob. In this case, clearly the coins have not been transferred. This is harshly like a tree falling in the forest with nobody around to hear it. However, sending the signed statement only to Bob is not enough, because Alice could have signed a conflicting transaction telling she wants to transfer the coins to Carol which she only sends to Carol. If Bob and Carol both accepted these statements as indicating that they have received the coins from Alice, then Alice will have effectively spent her coins twice!

This is where the idea of a global ledger comes in. If Alice wants to transfer her coins to Bob, she must publish her statement authorizing the transfer to the blockchain. The miners who maintain the blockchain will only include this transaction if Alice has not yet transferred the coins to anybody else, so once Bob sees the transaction show up in the blockchain he can be certain that he is the fresh proprietor. Even if Alice later attempts to produce a statement telling she transfered the coins to Carol, it will never be accepted into the blockchain because the transaction transferring to Bob was published very first.

Blockchain Forks

So it seems elementary: a transaction is “unconfirmed” once it has been produced and cryptographically signed and “confirmed” once it has been successfully included in the blockchain. Unluckily, the blockchain does not suggest strong consistency, meaning that any data included in the blockchain is ensured to be included forever. For technical reasons, the blockchain offers a weaker property called eventual consistency, meaning that eventually all parties will agree on the blockchain up to a certain ever-increasing prefix.

Put another way, the blockchain is a series of n blocks (presently almost 400,000), and at any given time the most latest several blocks are not assured to be permanently included. It is possible for the blockchain to fork by having numerous potential (often inconsistent) blocks which claim to be the last block in the chain. Eventually one of these blocks will win and be permanently included, but it won’t always be instantly clear which block this is. When an evidently valid block is substituted by a contesting block, this is called a blockchain reorganization and the substituted block is called anorphan block.

Given this we might be tempted to say a transaction is “confirmed” once it has been included in a block which is not the very last block in the blockchain. However, it is possible (albeit infrequent) for the last n blocks to be orphaned in a reorganization. This is exponentially less likely to occur the larger n gets. It typically happens numerous times a day, for example, that a single block is orphaned, but has happened only a few dozen times in history for n inbetween two and Four, and exactly once for ngreater than four (a 24-block reorganization in March two thousand thirteen due to a technical glitch).

Acceptable Confirmation

Barring technical glitches, formal modeling of Bitcoin suggests that large reorganizations are exponentially unlikely, but possible. Therefore we can never say with certainty that a transaction is “confirmed” because it is always possible that a transaction will evidently be included in the blockchain but be substituted by a large reorganization.

In practice, the community has adopted six blocks as a standard confirmation period. That is, once a transaction is included in a block in the blockchain which is followed up by at least six extra blocks, the transaction is called “confirmed.” While this was chosen somewhat arbitrarily, it is a reasonably safe value in practice as the only time this would have left users vulnerable to double-spending was the atypical March two thousand thirteen fork.

For very large transactions, coin owners might want to wait for a larger number of “block confirmations” and most wallet software now says more precisely that a transaction is “confirmed by n blocks” to enable users to determine for themselves if more confirmation is needed.

For relatively puny transactions (like buying coffee), users might be fine with a shorter confirmation period such as one or even zero blocks. Even with only one confirmation (accepting a transaction once it is included in the most latest block in the chain) the risk of losing it to a reorganization is low (1-2%) and even then it will very likely be re-included after the reorganization occurs.

How Long Does six Blocks Take?

Assuming Alice is fine with the community standard of six blocks, how long will she have to wait? “One hour” is the common reaction but this is not fairly the entire story. Because blocks are found by a random process, there is no telling precisely how long it will take for six blocks to be found. On average, it takes about ten minutes to find each block. The average block time can actually be slightly shorter or longer depending on if the total hash power of the Bitcoin network is growing or shrinking. Overlooking this detail tho’, this is why six confirmations take about one hour on average. However, the block-creation (or mining) process is random and each block may take much longer or shorter.

Conclusion

At a high level, a transaction is confirmed when it is permanently included in the Bitcoin blockchain. The significant takeaway tho’ is that there is no absolute notion of “permanently included” and the community simply uses a reasonably safe policy of considering transactions confirmed when they are “included with very high probability.” The time it takes for this to happen is fairly variable-sometimes confirmation may be ems of minutes and sometimes it may take over two hours, but on average it will take about an hour.

Dr. Joseph Bonneau is a researcher at Stanford University and a technology fellow at the Electronic Frontier Foundation. He has instructed several university courses on cryptocurrency technology and is presently writing a textbook on the subject.

The weekly briefing from Coin Center.

Everything you need to know about cryptocurrency and public policy in one entertaining read.

How long does it take for a Bitcoin transaction to be confirmed, Coin Center

How long does it take for a Bitcoin transaction to be confirmed?

Stanford researcher Dr. Joseph Bonneau explains the distinction inbetween “confirmed” and “unconfirmed” Bitcoin transactions.

Frequently in popular descriptions of Bitcoin and in the user interfaces of wallet software, a distinction is made inbetween “confirmed” and “unconfirmed” transactions. What is the difference?

At a high level, a transaction is only confirmed when it is permanently included in the Bitcoin blockchain. The blockchain is a ledger of all transactions in the history of Bitcoin. It is append-only, meaning fresh data can be added to the end of the ledger, but data can never be liquidated once included. This ledger is necessary to prevent double-spending, which is a key technical challenge in designing any cryptocurrency.

How Bitcoins are Transferred

Recall that if Alice “owns” some quantity of bitcoins, this truly means she knows one or more cryptographic keys which have been designated as the controller of those coins in a transaction on the ledger which transferred the coins to Alice. In order to transfer the coins to another entity, Alice will use these keys to produce a digital signature on the statement “I would like to redeem (spend) this transaction and send the value to X, Y, Z…” where X, Y, and Z will be fresh cryptographic addresses indicating keys known by other individuals (or perhaps Alice herself).

Now, suppose Alice signs a statement on her own computer telling she wants to transfer some coins to Bob but never sends the statement to Bob. In this case, clearly the coins have not been transferred. This is toughly like a tree falling in the forest with nobody around to hear it. However, sending the signed statement only to Bob is not enough, because Alice could have signed a conflicting transaction telling she wants to transfer the coins to Carol which she only sends to Carol. If Bob and Carol both accepted these statements as indicating that they have received the coins from Alice, then Alice will have effectively spent her coins twice!

This is where the idea of a global ledger comes in. If Alice wants to transfer her coins to Bob, she must publish her statement authorizing the transfer to the blockchain. The miners who maintain the blockchain will only include this transaction if Alice has not yet transferred the coins to anybody else, so once Bob sees the transaction show up in the blockchain he can be certain that he is the fresh possessor. Even if Alice later attempts to produce a statement telling she transfered the coins to Carol, it will never be accepted into the blockchain because the transaction transferring to Bob was published very first.

Blockchain Forks

So it seems ordinary: a transaction is “unconfirmed” once it has been produced and cryptographically signed and “confirmed” once it has been successfully included in the blockchain. Unluckily, the blockchain does not suggest strong consistency, meaning that any data included in the blockchain is assured to be included forever. For technical reasons, the blockchain offers a weaker property called eventual consistency, meaning that eventually all parties will agree on the blockchain up to a certain ever-increasing prefix.

Put another way, the blockchain is a series of n blocks (presently almost 400,000), and at any given time the most latest several blocks are not assured to be permanently included. It is possible for the blockchain to fork by having numerous potential (often inconsistent) blocks which claim to be the last block in the chain. Eventually one of these blocks will win and be permanently included, but it won’t always be instantly clear which block this is. When an evidently valid block is substituted by a contesting block, this is called a blockchain reorganization and the substituted block is called anorphan block.

Given this we might be tempted to say a transaction is “confirmed” once it has been included in a block which is not the very last block in the blockchain. However, it is possible (albeit uncommon) for the last n blocks to be orphaned in a reorganization. This is exponentially less likely to occur the larger n gets. It typically happens numerous times a day, for example, that a single block is orphaned, but has happened only a few dozen times in history for n inbetween two and Four, and exactly once for ngreater than four (a 24-block reorganization in March two thousand thirteen due to a technical glitch).

Acceptable Confirmation

Barring technical glitches, formal modeling of Bitcoin suggests that large reorganizations are exponentially unlikely, but possible. Therefore we can never say with certainty that a transaction is “confirmed” because it is always possible that a transaction will evidently be included in the blockchain but be substituted by a large reorganization.

In practice, the community has adopted six blocks as a standard confirmation period. That is, once a transaction is included in a block in the blockchain which is followed up by at least six extra blocks, the transaction is called “confirmed.” While this was chosen somewhat arbitrarily, it is a reasonably safe value in practice as the only time this would have left users vulnerable to double-spending was the atypical March two thousand thirteen fork.

For very large transactions, coin owners might want to wait for a larger number of “block confirmations” and most wallet software now says more precisely that a transaction is “confirmed by n blocks” to enable users to determine for themselves if more confirmation is needed.

For relatively petite transactions (like buying coffee), users might be fine with a shorter confirmation period such as one or even zero blocks. Even with only one confirmation (accepting a transaction once it is included in the most latest block in the chain) the risk of losing it to a reorganization is low (1-2%) and even then it will most likely be re-included after the reorganization occurs.

How Long Does six Blocks Take?

Assuming Alice is fine with the community standard of six blocks, how long will she have to wait? “One hour” is the common response but this is not fairly the entire story. Because blocks are found by a random process, there is no telling precisely how long it will take for six blocks to be found. On average, it takes about ten minutes to find each block. The average block time can actually be slightly shorter or longer depending on if the total hash power of the Bitcoin network is growing or shrinking. Disregarding this detail however, this is why six confirmations take about one hour on average. However, the block-creation (or mining) process is random and each block may take much longer or shorter.

Conclusion

At a high level, a transaction is confirmed when it is permanently included in the Bitcoin blockchain. The significant takeaway however is that there is no absolute notion of “permanently included” and the community simply uses a reasonably safe policy of considering transactions confirmed when they are “included with very high probability.” The time it takes for this to happen is fairly variable-sometimes confirmation may be ems of minutes and sometimes it may take over two hours, but on average it will take about an hour.

Dr. Joseph Bonneau is a researcher at Stanford University and a technology fellow at the Electronic Frontier Foundation. He has trained several university courses on cryptocurrency technology and is presently writing a textbook on the subject.

The weekly briefing from Coin Center.

Everything you need to know about cryptocurrency and public policy in one entertaining read.

How long does it take for a Bitcoin transaction to be confirmed, Coin Center

How long does it take for a Bitcoin transaction to be confirmed?

Stanford researcher Dr. Joseph Bonneau explains the distinction inbetween “confirmed” and “unconfirmed” Bitcoin transactions.

Frequently in popular descriptions of Bitcoin and in the user interfaces of wallet software, a distinction is made inbetween “confirmed” and “unconfirmed” transactions. What is the difference?

At a high level, a transaction is only confirmed when it is permanently included in the Bitcoin blockchain. The blockchain is a ledger of all transactions in the history of Bitcoin. It is append-only, meaning fresh data can be added to the end of the ledger, but data can never be liquidated once included. This ledger is necessary to prevent double-spending, which is a key technical challenge in designing any cryptocurrency.

How Bitcoins are Transferred

Recall that if Alice “owns” some quantity of bitcoins, this indeed means she knows one or more cryptographic keys which have been designated as the controller of those coins in a transaction on the ledger which transferred the coins to Alice. In order to transfer the coins to another entity, Alice will use these keys to produce a digital signature on the statement “I would like to redeem (spend) this transaction and send the value to X, Y, Z…” where X, Y, and Z will be fresh cryptographic addresses signifying keys known by other individuals (or perhaps Alice herself).

Now, suppose Alice signs a statement on her own computer telling she wants to transfer some coins to Bob but never sends the statement to Bob. In this case, clearly the coins have not been transferred. This is harshly like a tree falling in the forest with nobody around to hear it. However, sending the signed statement only to Bob is not enough, because Alice could have signed a conflicting transaction telling she wants to transfer the coins to Carol which she only sends to Carol. If Bob and Carol both accepted these statements as indicating that they have received the coins from Alice, then Alice will have effectively spent her coins twice!

This is where the idea of a global ledger comes in. If Alice wants to transfer her coins to Bob, she must publish her statement authorizing the transfer to the blockchain. The miners who maintain the blockchain will only include this transaction if Alice has not yet transferred the coins to anybody else, so once Bob sees the transaction show up in the blockchain he can be certain that he is the fresh holder. Even if Alice later attempts to produce a statement telling she transfered the coins to Carol, it will never be accepted into the blockchain because the transaction transferring to Bob was published very first.

Blockchain Forks

So it seems elementary: a transaction is “unconfirmed” once it has been produced and cryptographically signed and “confirmed” once it has been successfully included in the blockchain. Unluckily, the blockchain does not suggest strong consistency, meaning that any data included in the blockchain is assured to be included forever. For technical reasons, the blockchain offers a weaker property called eventual consistency, meaning that eventually all parties will agree on the blockchain up to a certain ever-increasing prefix.

Put another way, the blockchain is a series of n blocks (presently almost 400,000), and at any given time the most latest several blocks are not ensured to be permanently included. It is possible for the blockchain to fork by having numerous potential (often inconsistent) blocks which claim to be the last block in the chain. Eventually one of these blocks will win and be permanently included, but it won’t always be instantaneously clear which block this is. When an evidently valid block is substituted by a challenging block, this is called a blockchain reorganization and the substituted block is called anorphan block.

Given this we might be tempted to say a transaction is “confirmed” once it has been included in a block which is not the very last block in the blockchain. However, it is possible (albeit uncommon) for the last n blocks to be orphaned in a reorganization. This is exponentially less likely to occur the larger n gets. It typically happens numerous times a day, for example, that a single block is orphaned, but has happened only a few dozen times in history for n inbetween two and Four, and exactly once for ngreater than four (a 24-block reorganization in March two thousand thirteen due to a technical glitch).

Acceptable Confirmation

Barring technical glitches, formal modeling of Bitcoin suggests that large reorganizations are exponentially unlikely, but possible. Therefore we can never say with certainty that a transaction is “confirmed” because it is always possible that a transaction will evidently be included in the blockchain but be substituted by a large reorganization.

In practice, the community has adopted six blocks as a standard confirmation period. That is, once a transaction is included in a block in the blockchain which is followed up by at least six extra blocks, the transaction is called “confirmed.” While this was chosen somewhat arbitrarily, it is a reasonably safe value in practice as the only time this would have left users vulnerable to double-spending was the atypical March two thousand thirteen fork.

For very large transactions, coin owners might want to wait for a larger number of “block confirmations” and most wallet software now says more precisely that a transaction is “confirmed by n blocks” to enable users to determine for themselves if more confirmation is needed.

For relatively puny transactions (like buying coffee), users might be fine with a shorter confirmation period such as one or even zero blocks. Even with only one confirmation (accepting a transaction once it is included in the most latest block in the chain) the risk of losing it to a reorganization is low (1-2%) and even then it will very likely be re-included after the reorganization occurs.

How Long Does six Blocks Take?

Assuming Alice is fine with the community standard of six blocks, how long will she have to wait? “One hour” is the common reaction but this is not fairly the entire story. Because blocks are found by a random process, there is no telling precisely how long it will take for six blocks to be found. On average, it takes about ten minutes to find each block. The average block time can actually be slightly shorter or longer depending on if the total hash power of the Bitcoin network is growing or shrinking. Overlooking this detail however, this is why six confirmations take about one hour on average. However, the block-creation (or mining) process is random and each block may take much longer or shorter.

Conclusion

At a high level, a transaction is confirmed when it is permanently included in the Bitcoin blockchain. The significant takeaway however is that there is no absolute notion of “permanently included” and the community simply uses a reasonably safe policy of considering transactions confirmed when they are “included with very high probability.” The time it takes for this to happen is fairly variable-sometimes confirmation may be ems of minutes and sometimes it may take over two hours, but on average it will take about an hour.

Dr. Joseph Bonneau is a researcher at Stanford University and a technology fellow at the Electronic Frontier Foundation. He has instructed several university courses on cryptocurrency technology and is presently writing a textbook on the subject.

The weekly briefing from Coin Center.

Everything you need to know about cryptocurrency and public policy in one entertaining read.

How long does it take for a Bitcoin transaction to be confirmed, Coin Center

How long does it take for a Bitcoin transaction to be confirmed?

Stanford researcher Dr. Joseph Bonneau explains the distinction inbetween “confirmed” and “unconfirmed” Bitcoin transactions.

Frequently in popular descriptions of Bitcoin and in the user interfaces of wallet software, a distinction is made inbetween “confirmed” and “unconfirmed” transactions. What is the difference?

At a high level, a transaction is only confirmed when it is permanently included in the Bitcoin blockchain. The blockchain is a ledger of all transactions in the history of Bitcoin. It is append-only, meaning fresh data can be added to the end of the ledger, but data can never be eliminated once included. This ledger is necessary to prevent double-spending, which is a key technical challenge in designing any cryptocurrency.

How Bitcoins are Transferred

Recall that if Alice “owns” some quantity of bitcoins, this indeed means she knows one or more cryptographic keys which have been designated as the controller of those coins in a transaction on the ledger which transferred the coins to Alice. In order to transfer the coins to another entity, Alice will use these keys to produce a digital signature on the statement “I would like to redeem (spend) this transaction and send the value to X, Y, Z…” where X, Y, and Z will be fresh cryptographic addresses indicating keys known by other individuals (or perhaps Alice herself).

Now, suppose Alice signs a statement on her own computer telling she wants to transfer some coins to Bob but never sends the statement to Bob. In this case, clearly the coins have not been transferred. This is harshly like a tree falling in the forest with nobody around to hear it. However, sending the signed statement only to Bob is not enough, because Alice could have signed a conflicting transaction telling she wants to transfer the coins to Carol which she only sends to Carol. If Bob and Carol both accepted these statements as indicating that they have received the coins from Alice, then Alice will have effectively spent her coins twice!

This is where the idea of a global ledger comes in. If Alice wants to transfer her coins to Bob, she must publish her statement authorizing the transfer to the blockchain. The miners who maintain the blockchain will only include this transaction if Alice has not yet transferred the coins to anybody else, so once Bob sees the transaction emerge in the blockchain he can be certain that he is the fresh proprietor. Even if Alice later attempts to produce a statement telling she transfered the coins to Carol, it will never be accepted into the blockchain because the transaction transferring to Bob was published very first.

Blockchain Forks

So it seems elementary: a transaction is “unconfirmed” once it has been produced and cryptographically signed and “confirmed” once it has been successfully included in the blockchain. Unluckily, the blockchain does not suggest strong consistency, meaning that any data included in the blockchain is ensured to be included forever. For technical reasons, the blockchain offers a weaker property called eventual consistency, meaning that eventually all parties will agree on the blockchain up to a certain ever-increasing prefix.

Put another way, the blockchain is a series of n blocks (presently almost 400,000), and at any given time the most latest several blocks are not ensured to be permanently included. It is possible for the blockchain to fork by having numerous potential (often inconsistent) blocks which claim to be the last block in the chain. Eventually one of these blocks will win and be permanently included, but it won’t always be instantly clear which block this is. When an evidently valid block is substituted by a challenging block, this is called a blockchain reorganization and the substituted block is called anorphan block.

Given this we might be tempted to say a transaction is “confirmed” once it has been included in a block which is not the very last block in the blockchain. However, it is possible (albeit infrequent) for the last n blocks to be orphaned in a reorganization. This is exponentially less likely to occur the larger n gets. It typically happens numerous times a day, for example, that a single block is orphaned, but has happened only a few dozen times in history for n inbetween two and Four, and exactly once for ngreater than four (a 24-block reorganization in March two thousand thirteen due to a technical glitch).

Acceptable Confirmation

Barring technical glitches, formal modeling of Bitcoin suggests that large reorganizations are exponentially unlikely, but possible. Therefore we can never say with certainty that a transaction is “confirmed” because it is always possible that a transaction will evidently be included in the blockchain but be substituted by a large reorganization.

In practice, the community has adopted six blocks as a standard confirmation period. That is, once a transaction is included in a block in the blockchain which is followed up by at least six extra blocks, the transaction is called “confirmed.” While this was chosen somewhat arbitrarily, it is a reasonably safe value in practice as the only time this would have left users vulnerable to double-spending was the atypical March two thousand thirteen fork.

For very large transactions, coin owners might want to wait for a larger number of “block confirmations” and most wallet software now says more precisely that a transaction is “confirmed by n blocks” to enable users to determine for themselves if more confirmation is needed.

For relatively puny transactions (like buying coffee), users might be fine with a shorter confirmation period such as one or even zero blocks. Even with only one confirmation (accepting a transaction once it is included in the most latest block in the chain) the risk of losing it to a reorganization is low (1-2%) and even then it will very likely be re-included after the reorganization occurs.

How Long Does six Blocks Take?

Assuming Alice is fine with the community standard of six blocks, how long will she have to wait? “One hour” is the common response but this is not fairly the entire story. Because blocks are found by a random process, there is no telling precisely how long it will take for six blocks to be found. On average, it takes about ten minutes to find each block. The average block time can actually be slightly shorter or longer depending on if the total hash power of the Bitcoin network is growing or shrinking. Overlooking this detail tho’, this is why six confirmations take about one hour on average. However, the block-creation (or mining) process is random and each block may take much longer or shorter.

Conclusion

At a high level, a transaction is confirmed when it is permanently included in the Bitcoin blockchain. The significant takeaway however is that there is no absolute notion of “permanently included” and the community simply uses a reasonably safe policy of considering transactions confirmed when they are “included with very high probability.” The time it takes for this to happen is fairly variable-sometimes confirmation may be ems of minutes and sometimes it may take over two hours, but on average it will take about an hour.

Dr. Joseph Bonneau is a researcher at Stanford University and a technology fellow at the Electronic Frontier Foundation. He has trained several university courses on cryptocurrency technology and is presently writing a textbook on the subject.

The weekly briefing from Coin Center.

Everything you need to know about cryptocurrency and public policy in one entertaining read.

How long does it take for a Bitcoin transaction to be confirmed, Coin Center

How long does it take for a Bitcoin transaction to be confirmed?

Stanford researcher Dr. Joseph Bonneau explains the distinction inbetween “confirmed” and “unconfirmed” Bitcoin transactions.

Frequently in popular descriptions of Bitcoin and in the user interfaces of wallet software, a distinction is made inbetween “confirmed” and “unconfirmed” transactions. What is the difference?

At a high level, a transaction is only confirmed when it is permanently included in the Bitcoin blockchain. The blockchain is a ledger of all transactions in the history of Bitcoin. It is append-only, meaning fresh data can be added to the end of the ledger, but data can never be eliminated once included. This ledger is necessary to prevent double-spending, which is a key technical challenge in designing any cryptocurrency.

How Bitcoins are Transferred

Recall that if Alice “owns” some quantity of bitcoins, this truly means she knows one or more cryptographic keys which have been designated as the controller of those coins in a transaction on the ledger which transferred the coins to Alice. In order to transfer the coins to another entity, Alice will use these keys to produce a digital signature on the statement “I would like to redeem (spend) this transaction and send the value to X, Y, Z…” where X, Y, and Z will be fresh cryptographic addresses signifying keys known by other individuals (or perhaps Alice herself).

Now, suppose Alice signs a statement on her own computer telling she wants to transfer some coins to Bob but never sends the statement to Bob. In this case, clearly the coins have not been transferred. This is toughly like a tree falling in the forest with nobody around to hear it. However, sending the signed statement only to Bob is not enough, because Alice could have signed a conflicting transaction telling she wants to transfer the coins to Carol which she only sends to Carol. If Bob and Carol both accepted these statements as indicating that they have received the coins from Alice, then Alice will have effectively spent her coins twice!

This is where the idea of a global ledger comes in. If Alice wants to transfer her coins to Bob, she must publish her statement authorizing the transfer to the blockchain. The miners who maintain the blockchain will only include this transaction if Alice has not yet transferred the coins to anybody else, so once Bob sees the transaction show up in the blockchain he can be certain that he is the fresh holder. Even if Alice later attempts to produce a statement telling she transfered the coins to Carol, it will never be accepted into the blockchain because the transaction transferring to Bob was published very first.

Blockchain Forks

So it seems elementary: a transaction is “unconfirmed” once it has been produced and cryptographically signed and “confirmed” once it has been successfully included in the blockchain. Unluckily, the blockchain does not suggest strong consistency, meaning that any data included in the blockchain is ensured to be included forever. For technical reasons, the blockchain offers a weaker property called eventual consistency, meaning that eventually all parties will agree on the blockchain up to a certain ever-increasing prefix.

Put another way, the blockchain is a series of n blocks (presently almost 400,000), and at any given time the most latest several blocks are not ensured to be permanently included. It is possible for the blockchain to fork by having numerous potential (often inconsistent) blocks which claim to be the last block in the chain. Eventually one of these blocks will win and be permanently included, but it won’t always be instantly clear which block this is. When an evidently valid block is substituted by a rivaling block, this is called a blockchain reorganization and the substituted block is called anorphan block.

Given this we might be tempted to say a transaction is “confirmed” once it has been included in a block which is not the very last block in the blockchain. However, it is possible (albeit uncommon) for the last n blocks to be orphaned in a reorganization. This is exponentially less likely to occur the larger n gets. It typically happens numerous times a day, for example, that a single block is orphaned, but has happened only a few dozen times in history for n inbetween two and Four, and exactly once for ngreater than four (a 24-block reorganization in March two thousand thirteen due to a technical glitch).

Acceptable Confirmation

Barring technical glitches, formal modeling of Bitcoin suggests that large reorganizations are exponentially unlikely, but possible. Therefore we can never say with certainty that a transaction is “confirmed” because it is always possible that a transaction will evidently be included in the blockchain but be substituted by a large reorganization.

In practice, the community has adopted six blocks as a standard confirmation period. That is, once a transaction is included in a block in the blockchain which is followed up by at least six extra blocks, the transaction is called “confirmed.” While this was chosen somewhat arbitrarily, it is a reasonably safe value in practice as the only time this would have left users vulnerable to double-spending was the atypical March two thousand thirteen fork.

For very large transactions, coin owners might want to wait for a larger number of “block confirmations” and most wallet software now says more precisely that a transaction is “confirmed by n blocks” to enable users to determine for themselves if more confirmation is needed.

For relatively puny transactions (like buying coffee), users might be fine with a shorter confirmation period such as one or even zero blocks. Even with only one confirmation (accepting a transaction once it is included in the most latest block in the chain) the risk of losing it to a reorganization is low (1-2%) and even then it will very likely be re-included after the reorganization occurs.

How Long Does six Blocks Take?

Assuming Alice is fine with the community standard of six blocks, how long will she have to wait? “One hour” is the common response but this is not fairly the entire story. Because blocks are found by a random process, there is no telling precisely how long it will take for six blocks to be found. On average, it takes about ten minutes to find each block. The average block time can actually be slightly shorter or longer depending on if the total hash power of the Bitcoin network is growing or shrinking. Disregarding this detail tho’, this is why six confirmations take about one hour on average. However, the block-creation (or mining) process is random and each block may take much longer or shorter.

Conclusion

At a high level, a transaction is confirmed when it is permanently included in the Bitcoin blockchain. The significant takeaway tho’ is that there is no absolute notion of “permanently included” and the community simply uses a reasonably safe policy of considering transactions confirmed when they are “included with very high probability.” The time it takes for this to happen is fairly variable-sometimes confirmation may be ems of minutes and sometimes it may take over two hours, but on average it will take about an hour.

Dr. Joseph Bonneau is a researcher at Stanford University and a technology fellow at the Electronic Frontier Foundation. He has instructed several university courses on cryptocurrency technology and is presently writing a textbook on the subject.

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Earn 20% More Prize with Bitcoin! Supporters-blog

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    Don t rush into investments linked to virtual currencies, Invest News & Top Stories – The Straits Times

    The Straits Times

    Don't rush into investments linked to virtual currencies

    Since January 2016, the Consumers Association of Singapore (Case) has received five complaints over digital currencies, such as bitcoin. PHOTO: REUTERS

    Understand the potential risks of sophisticated products before leaping in, warn experts and the authorities

    In latest years, virtual currencies such as bitcoins – and the phat gains these digital tokens have achieved – have made headlines globally. They commenced as virtual currencies but some have evolved to involve investment schemes.

    Before you rush in, you should heed the advice of financial experts and the authorities who are urging investors to understand the potential risks of these elaborate products.

    On Thursday, the Commercial Affairs Department (CAD) and the Monetary Authority of Singapore (MAS) warned retail investors not to throw caution to the wind when dealing with such investment schemes. They noted the emergence of initial coin (or token) offerings (ICOs), and other investment schemes involving digital tokens here. Some latest ICOs were TenX in June and Cross Coin last month.

    Since 2015, a little over one hundred police reports have been filed here involving five such investment schemes. And since January last year, the Consumers Association of Singapore (Case) has received five complaints over digital currencies, such as bitcoin. The complaints focused on the lack of payouts after investing or unsatisfactory services.

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    The consumer advisory goes after a latest clarification from MAS on its regulatory stance on digital tokens. MAS had said that the current securities regulatory framework requires that any suggesting of shares, debt instruments, or units in a collective scheme will have to conform with prospectus requirements, or exemption requirements (if any are applicable).

    The statement “was a strong reminder, to clarify to the market that transactions falling within one of the above categories would be regulated. This is to ensure that the market understands that just because there’s a cryptocurrency, digital token or blockchain element, it does not exempt it from regulations”, said TSMP Law Corporation joint managing playmate Stefanie Yuen Thio.

    Singapore University of Social Sciences (SUSS) Professor David Lee said he has invested in digital tokens not to get good comebacks, but to learn and be involved in the digital token community. He declined to disclose the sum he had invested.

    “I love the inclusive nature of the community and the potential of blockchain. The invested amount will not prevent me from sleeping. If comebacks come, then (it shows) you are good at identifying what technology will scale and which will benefit mankind and be very valuable,” he said.

    Simply put, a blockchain is a way to maintain a database without a central authority.

    Do you know.

    Q WHAT IS A VIRTUAL CURRENCY?

    A A virtual currency typically functions as a medium of exchange, a unit of account or a store of value. It may be used as a means to pay for goods or services.

    Virtual currencies very first emerged about ten years ago and do not necessarily have a physical form, unlike coins or notes. Examples of virtual currencies are bitcoin and ethereum’s ether.

    They are not issued by any government, and are not legal tender. This means that you may only use them to pay for goods or services if you are dealing with someone who is willing to accept them as a mode of payment. Typically, payments with virtual currencies are made online.

    Mr Sachin Mittal of DBS Group Research said that if you wish to invest in digital currency, open a digital currency wallet either through a wallet service or a cryptocurrency exchange. In Singapore, exchanges are required by the Monetary Authority of Singapore to verify the identity of the investors. Some of the prominent wallet and exchange services here include CoinHako, Coinbase, Luno and ItBit.

    Q WHAT IS A BLOCKCHAIN?

    A Users of a virtual currency transact directly with each other, and each transaction is typically recorded in a blockchain for that virtual currency. Users of a virtual currency usually maintain anonymity with respect to their transactions entered into the blockchain which may be publicly available.

    Q WHAT IS A DIGITAL TOKEN?

    A A digital token is an electronic representation of a token-holder’s rights to receive a benefit or perform specified functions. One particular type of digital token is a virtual currency.

    However, the function of digital tokens has evolved beyond a virtual currency. For example, they may represent ownership or a security interest over the token-seller’s assets or property, or a debt owed by the seller. Such digital tokens have been marketed as investment opportunities.

    Q HOW DO ICOS AND INVESTMENT SCHEMES INVOLVING DIGITAL TOKENS WORK?

    A Digital tokens may be suggested through an initial coin suggesting (ICO) or other investment schemes. Those suggested through an ICO are usually specific to the seller, and such tokens are typically sold to consumers in exchange for a widely used virtual currency or cash. These sellers often set out their business proposal in a so-called “white paper” published online.

    ICOs and other investment schemes may be structured in many ways with different business propositions. For example, they may seek to develop a fresh digital platform, suggest an chance to invest in a property, business and assets, or promise certain benefits or monetary comebacks.

    According to financial research provider Autonomous Research, more than US$1.Two billion (S$1.6 billion) in cryptocurrency was raised through ICOs in the very first half of this year around the world.

    Besides hoping for high comebacks through appreciating token prices, advocates of digital tokens see the fresh technology as an enabler of the growth of community projects, particularly in areas where financial services infrastructure is lacking. Others like the transparency and liquidity opportunities.

    Potential pitfalls

    Like any investment product, it is prudent to understand it very first. When sellers of digital tokens fail to highlight the risks, consumers should make the effort to find out more information about the underlying project, business or assets. Look out for these eight risks.

    1. FOREIGN AND ONLINE OPERATORS

    The CAD and MAS warned that you are exposed to heightened risk of fraud when investing in schemes that operate online or outside Singapore as it would be difficult to verify their authenticity.

    Should the scheme collapse, it would be difficult to trace the scheme’s operators. The recovery of invested monies may also be subject to foreign laws or regulations, which may not be the same as Singapore’s.

    Mr Low Kah Keong, a fucking partner at WongPartnership, said: “It will be difficult to get an effective legal remedy if an issuer breaches its promises but has no substantive assets in Singapore to compensate an investor who obtained a court judgment.”

    Two. SELLERS WITHOUT A PROVEN TRACK RECORD

    Sellers of digital tokens may not have a proven track record, making it hard for one to establish their credibility. As with all start-ups, the failure rate tends to be high.

    Trio. INSUFFICIENT SECONDARY MARKET LIQUIDITY

    Even if digital tokens are tradable in a secondary market, in practice, there may not be enough active buyers and sellers or the bid-ask spreads may be too broad. This means you may not be able to exit your token investments lightly.

    In the worst-case screenplay where no secondary market develops, you may not be able to liquidate your token holdings at all. The exchanges or platforms that facilitate secondary trading of digital tokens may not be regulated by MAS.

    Four. Very SPECULATIVE INVESTMENTS, PRICE VOLATILITY

    The valuation of digital tokens is usually not translucent, and is very speculative. Transparency could be limited as there might be little publicly available information that could help you gauge the fair value of the virtual currency.

    This could lead to speculative compels driving up unit prices resulting in volatile price swings.

    Where digital tokens do not hold any ownership rights to the seller’s assets, the digital tokens would not be backed by any tangible asset. Such tokens would be merely speculative investments and their traded price can fluctuate greatly within a brief period of time.

    There is a high risk that you could lose a portion or your entire investment amount. In the worst-case screenplay, the digital tokens could be rendered worthless.

    Five. INSUFFICIENT SECURITY PRECAUTIONS

    The platforms or persons you deal with may not have taken enough security precautions and this could lead to theft through hacking.

    For example, in the case of bitcoin exchange Mt Gox, 850,000 bitcoins were stolen in February two thousand fourteen (valued at more than US$450 million at the time), leading to its subsequent bankruptcy and closure.

    6. FRAUD AND SCAMS

    Fraud has also occurred in relation to companies that claim to suggest virtual currency payment platforms and other virtual currency-related products and services.

    For example, in December 2015, the United States Securities and Exchange Commission charged two bitcoin mining companies with conducting a Ponzi scheme.

    7. INVESTMENTS PROMISING HIGH Comes back

    Be wary of investment schemes involving digital tokens that promise high comes back. The higher the promised comes back, the higher the risks.

    High comes back could come in the form of high referral commissions, that is, promising consumers benefits for referring extra participants. In fact, such commissions would increase operating costs, which could lower the chances of achieving the comebacks.

    8. MONEY LAUNDERING AND TERRORIST FINANCING

    Funds invested in investment schemes involving digital tokens are prone to being misused for illegal activities due to the anonymity of transactions, and the ease with which large sums of monies may be raised in a brief period of time.

    As such, you would be adversely affected if law enforcement agencies investigate any alleged illicit activities related to the token investment scheme you have invested in.

    Consumer checklist

    Financial experts say it is worthwhile putting in the time to educate ourselves on initial coin (or token) offerings (ICOs) and other investment schemes involving digital tokens. After all, digital is the future – but that does not mean that every digital currency-related investment will make money. Nor is it a suitable asset class for everyone.

    TSMP Law Corp’s joint managing fucking partner, Ms Stefanie Yuen Thio, advised consumers not to be seduced by sexy terms like “cryptocurrency”, “ethereum” or “bitcoin” and think that this is a sure-win money-spinner. “Unless you know the arrangers of the transaction to be reputable and regulated, which can be verified against the Monetary Authority of Singapore (MAS) website, investors should proceed with extreme care,” she said.

    “A white paper does not provide the same degree of information as a prospectus. We shouldn’t let the fresh nomenclature make us believe that an ICO has the same protection as an initial public suggesting.”

    Ms Chung Shaw Bee, head of deposits and wealth management, Singapore and the region, at UOB, cautioned there are a number of uncertainties that could confuse prospective investors. These include the technology which is the medium of the exchange of value, the real value of the virtual currency and the real value of the underlying assets. “The technology of and behind the virtual currency does not necessarily ensure the substance, quality or even existence of the investment’s underlying assets. Neither does it provide for certainty of comes back,” she said.

    Mr Nizam Ismail, head of regulatory practice, RHTLaw Taylor Wessing, said that if the coins suggest some form of securities (for example, with rights similar to that of shares and bonds) or collective investment schemes, the issuer has to have a prospectus lodged with MAS. “If there is no prospectus, then the suggest of securities may be an illegal one and could give rise to a criminal offence. If the coins do not suggest securities, it would still be prudent for an investor to find out from the white paper, or from their own due diligence, how the company intends to use the proceeds from the ICO,” he said.

    For those already invested in such schemes, Mr Anson Zeall, chairman of local trade assets Access, suggests asking whether the coins issued to you are securities, that is, they give you rights similar to shares (ownership in a company), or debt (promise of comeback of coupon/interest), or a collective investment scheme. “If they do, the issuer should be regulated and cannot issue coins without a prospectus lodged with MAS. If you suspect that these are securities and there has been no prospectus, you should obtain legal advice or contact MAS,” he said. Access represents the Singapore Cryptocurrency and Blockchain Industry Association.

    WHEN IT MAY BE ILLEGAL.

    If there is no prospectus, then the suggest of securities may be an illegal one and could give rise to a criminal offence.

    MR NIZAM ISMAIL, head of regulatory practice, RHTLaw Taylor Wessing.

    Mr Low Kah Keong, a fucking partner at WongPartnership, recommends that an investor also consult his legal adviser to find out available remedies, including the right to cancel the agreement.

    The Sunday Times compiles a checklist from financial experts:

    • Do you understand what business the ICO issuer is doing?

    • Does the rock hard have a website that sets out what it does?

    • Does the ICO issuer have a legitimate business presence in Singapore, or is planning to have one? Any track record?

    • Be aware that if it is a foreign hard, there may be practical legal difficulties in suing the stiff or enforcing judgment.

    • Who are the persons running the company, the shareholders and what is their track record?

    • How is the issuer planning to use the proceeds of the ICO and has it set out its projected financials?

    • What sort of rights you are entitled to as the holder of a coin?

    • Has the issuer disclosed risks relating to the ICO and are you able to accept those risks?

    • What is your investment risk appetite? Coin or token investments carry risks and may be more volatile than other investment products. Are you ready to write off the coin investment substantially or downright?

    • Do the coins give you rights similar to shares (ownership in a company) or debt (promise of comeback of coupon/interest) or a collective investment scheme? If they do, the issuer should be regulated and cannot issue coins without a prospectus lodged with MAS, said Mr Nizam.

    • Do you understand how to exit from your coin investments?

    • Are the coins going to be listed on an exchange to permit you the capability to convert the digital tokens into cash?

    • Is the person or entity regulated by MAS?

    The laws administered by MAS require disclosure of information on investment products being suggested to consumers. They are also subject to conduct rules aiming to ensure they deal fairly with consumers.

    To find out whether an entity is regulated by MAS, consumers can check the authority’s Financial Institutions Directory on the MAS website. Consumers can also look up the MAS’ Investor Alert List for a non-exhaustive list of entities that may have been wrongly perceived to be regulated by MAS. Consumer alerts on the MoneySense website also has tips on avoiding scams.

    Consumers who suspect an investment scheme involving digital tokens could be fraudulent should report such cases to the police.

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    Do you accept Bitcoin (or other forms of virtual currency)?

    Do you accept Bitcoin (or other forms of virtual currency)?

    “Virtual currency” (and Bitcoin in particular) is receiving a lot of attention recently in the financial sector. A virtual currency is a type of unregulated, digital money, which is issued and usually managed by its developers and used and accepted among the members of a specific virtual community. Virtual currency exhibits properties similar to physical currencies but permits for instantaneous transactions and borderless transfer of ownership however it does not have all the attributes of “real” currency or legal tender status.

    Bitcoin is perhaps the best known example of virtual currency. Bitcoin was invented by Satoshi Nakamoto[1], launched in two thousand nine and came to prominence in late two thousand thirteen when the price of a Bitcoin shortly soared to $1,230 from around $Ten only eighteen months previously. The Bitcoin system is an online payment system that uses cryptographic software to generate a digital currency and validate transactions using that currency. Satoshi Nakamoto defined an electronic Bitcoin as a “chain of digital signatures”. Users of the Bitcoin system can mine, buy, sell and accept Bitcoins anywhere in the world so the speed of a transaction is not affected by the geographical location of the payer or payee. The global reach of Bitcoin permits parties to conduct borderless international transactions with greater simpleness and any foreign exchange issues (including foreign exchange cost implications) fall away. The code of each Bitcoin holds the entire history of that Bitcoin, including each transfer from one possessor to the next. The Bitcoin system is designed so that there will never be more that twenty one million Bitcoins in existence. There is presently only around £60m of Bitcoin circulating in the UK.

    1. Is Bitcoin (or similar virtual currencies) acceptable as a form of collateral for lending transactions?

    At present, there are a number of characteristics of Bitcoin (together with legal and practical obstacles) that make it unattractive as a form of collateral for a loan:

    (a) Bitcoin has no intrinsic value and is very volatile as a “currency”. One example of its volatility was in April 2013, when the value of one Bitcoin against the US dollar fell by over $160 (from $266) in one day. [Two]

    (b) There is no existing legal framework which addresses the unique features and functionality of Bitcoin. There is presently no legislation that specifically addresses virtual currencies and their risks and it is difficult to work out where virtual currencies sit within UK financial services regulatory framework.

    (c) Bitcoin is not regulated or backed by any real-world commodity (for example, gold) or central bank or government. The way in which virtual currencies work can be very sophisticated which may make it difficult for regulators to assess how they should be regulated.

    (d) The anonymity of the payment system. The fact that a virtual currency can be held and spent anonymously will appeal to criminals engaged in money laundering, financing illegal activities, fraud and tax evasion and this is why it has attracted the attention of financial regulators.

    (e) The payments made under the system are irreversible.

    (f) How does a creditor maintain control of the ‘wallet’ containing the virtual currency, especially if the Bitcoin is held by a third party wallet provider? If the creditor sought to take security from the Bitcoin proprietor over its rights against a third party wallet provider, it may be difficult to establish who the third party wallet provider is and carry out sufficient due diligence against the provider. In July 2014, the European Banking Authority recommended that national supervisory authorities discourage credit institutions, payment institutions and e-money institutions from buying, holding or selling virtual currencies[Three] so the option of actually transferring title to the Bitcoin to a creditor remains unattractive.

    (g) Virtual currencies, by their nature, are downright dependent on technology and suitable IT infrastructure to support them. The systems are open to attacks by hackers.

    (h) At present, it would be very difficult for a creditor to realise its security.

    Two. The future for virtual currency in the UK

    In a response to the call for information on virtual currencies, HM Treasury issued a report on eighteen March 2015[Four] which addressed the benefits and risks associated with virtual currencies. The report states that the UK government wishes “to foster a supportive environment for the development of legitimate businesses in the digital currency sector so that the UK can see some of the benefits of digital currencies, while also creating a hostile environment for illegal activity”. The UK government’s next steps in establishing this environment will be to:

    (a) apply anti-money laundering regulation to digital currency;

    (b) ensure law enforcement bods have the necessary abilities, instruments and legislation to identify and prosecute criminal activity relating to digital currency;

    (c) work with the British Standards Institution and the digital currency industry to develop standards for consumer protection; and

    (d) develop further the research initiative for digital currency technology.

    The Bank of England announced, at the end of February, that is has begun considering the issue of introducing its own digital currency[Five]. The European Central Bank also recently stated[6] that the technology associated with digital currencies presents a potentially attractive option for both domestic and international remittances.

    Albeit virtual currency is a somewhat fresh concept and is in the process of being understood and analysed by consumers, sellers, investors and regulators worldwide, it remains a hotly debated topic within the tech and financial sector particularly as the level of interest and number of transactions in virtual currencies is enlargening steadily.

    Given the potential benefits associated with the use of virtual currency, by providing the legitimacy and confidence that may presently be lacking with respect to virtual currency, any bank backed digital currency (together with sufficient regulation and legislation) could accelerate the use of virtual currency.

    For the reasons set out above, Bitcoin and virtual currencies presently pose a number of risks as a potential form of security. Whether these concerns can be overcome remains to be seen but it seems unavoidable that virtual currency will proceed to grow.

    [1] It is not known whether the name Satoshi Nakamoto is real or a pseudonym.

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    Deloitte Says Consortia Key To Blockchain

    Consortia Key To Blockchain’s Success, Says Deloitte

    Deloitte has been an early embracer of blockchain technology, and two thousand sixteen was a busy year for the consulting rock-hard in the space. Earlier this month, Deloitte exposed an investment in blockchain startup SETL, a U.K. rock-hard that uses distributed ledger technology for payments and settlement. It was Deloitte’s very first public investment in a blockchain startup, according to reports, but the company had already been working with SETL to develop contactless card solutions for Metro Bank.

    Back in October, Deloitte announced Deloitte Catalyst, an incubator to support startups exploring disruptive technologies — and that, of course, includes blockchain. Clearly, the company has its faith set in distributed ledger technology, a technology that has mainly been focusing its disruption on the financial services space.

    But a report released by Deloitte earlier this month aimed to highlight the fact that blockchain won’t stop at FinServ in its disruptive path. Indeed, the majority of executives at companies across verticals surveyed by Deloitte said they have at least some skill of blockchain technology. Consumer products and B2B manufacturing are at the forefront of embracing blockchain (aside from financial services), the report found, with thirty eight percent of executives in this space reporting that they have filed for a blockchain patent.

    In years ahead, blockchain is likely to make its mark in sectors like media, telecoms and manufacturing.

    “This diversity may be a testament to the versatility of the technology,” Managing Director David Schatsky said in a statement. “But it is likely also a reflection of the fact that, despite the hype, the influence that blockchain will likely have on businesses in various industries is not yet fully understood.”

    In the years ahead, industries are sure to build up a clearer understanding of how blockchain will disrupt their markets. But for 2017, financial services proceeds to be the largest target of the technology.

    “2017 has the potential to be a banner year for blockchain in the financial services space,” Eric Piscini, a principal with Deloitte Consulting LLP and global blockchain leader for financial services, told PYMNTS. “In a latest Deloitte survey of blockchain-knowledgeable executives, just twelve percent of financial services executives said their company has deployed blockchain in production. But they are aiming to pick up the tempo: twenty four percent say these companies plan to go live with blockchain in the coming year.”

    According to Piscini, it will be crucial for the success of blockchain that a major trend seen in two thousand sixteen proceeds in the fresh year: blockchain consortia.

    This year witnessed the rise in these groups of banks, technology conglomerates and FinTech players banding together to explore blockchain use cases and develop real-world solutions. Among the largest of these groups is the R3 consortium, which Deloitte will be eying closely in the year ahead.

    “We will be tracking industry alliances, such as the thirty banks participating in the R3 consortium and adoption by major companies, which will likely result in fresh applications emerging,” Deloitte recently wrote.

    Piscini echoed that concentrate on blockchain consortia to PYMNTS.

    “Industry consortia will be critical to unlocking mass-scale value and keeping blockchain relevant in 2017,” he said. “With more than twenty consortia in place already, we are on our way to success.”

    He added that the concept of collaboration brings fresh power to the exploration of blockchain.

    “Smaller consortia are critical for one ordinary reason: If you are on your own in blockchain, the value is utterly limited,” Piscini continued. “They need to include a petite subset of key players at very first, what we call the ‘minimal viable ecosystem.’ These players need to represent all key functions and be represented by financial institutions, technology companies, regulators and consultancies to make them real.”

    But, like any emerging technology, doubters persist in the blockchain sphere. Those doubts may grow in two thousand seventeen as R3 comes in the year with a bit of trouble: The group greatly missed its funding target this year when it raised $59 million from its members, despite hoping to raise $200 million. Making matters worse, some of its top members — Goldman Sachs, Santander, Morgan Stanley and the National Australian Bank — all determined to let their memberships in R3 lapse.

    Faith in blockchain technology remains, however — with some even arguing that these fights will only clear a path for the true victors in the industry. For example, Chris Finan, cofounder of blockchain begin Manifold Technology, told PYMNTS this month that these troubles have a silver lining and can bring clarity to the ways blockchain will actually make an influence on global markets.

    “When the glitter starts to fade away on some of the unrealized promise of the technology — that it was going to be a panacea for capital markets and help institutions fully offload risks — I think people are embarking to say, ‘OK, let’s think more practically about this,’” he said.

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    Dash vs Bitcoin: Has Dash Successfully Overcome Bitcoin – s Shortcomings

    Dash vs Bitcoin: Has Dash Successfully Overcome Bitcoin’s Shortcomings

    Bitcoin’s shortcomings led to the development of the cryptocurrency Dash, but do Dash’s results live up to its lofty ambitions?

    Bitcoin entered the scene in two thousand nine and developed a sizable network effect in a field of little competition. However, as the Bitcoin network grew and development standardized, improvements became difficult to implement. Such switches require an terrific consensus from all network participants, thus creating numerous contentious debates, as has been witnessed recently in the Bitcoin scaling debate. As a result, a lot of Bitcoin’s shortcomings are now solidified into the protocol, meaning that it can only maintain certain specific use cases.

    (Formerlly known as XCoin & DarkCoin)

    What Bitcoin blockchain weaknesses does Dash seek to overcome?

    Bitcoin’s weaknesses include a block size limit that slows transaction processing time and a 10-minute block creation period that constricts Bitcoin’s real world transaction usage by users.

    As an open source project, Bitcoin lacks a developer funding model, which leaves the development to be managed by volunteers or powerful interest groups. Bitcoin also lacks a coherent governance mechanism that would permit for protocol switches to be lightly agreed on and implemented. The blockchain data validation is managed by low end-nodes on a voluntary basis, and there’s no financial incentive to upgrade to the latest hardware and software.

    Bitcoin transactions also lack privacy. Data mining companies are becoming awkwardly good at identifying the source of Bitcoin transactions.

    As a result of these and other weaknesses, Bitcoin faces enlargening barriers to market adoption and the fantasy of a true P2P electronic cash has been mired by endless debate and slow upgrades.

    So what does Dash do better than Bitcoin?

    The developers of Dash wished to whip out a fresh blockchain, free of these ‘baked in’ weaknesses. Dash developers baked their fresh blockchain to be the world’s very first self-funding and self-governed blockchain protocol, with instant payments running on a network of incentivized Masternodes. Here are some of the key ingredients Dash introduced that Bitcoin doesn’t have:

    • Masternodes. Unlike Bitcoin, Dash introduced Masternodes to incentivize users with payments to secure the network and add cool transactional features like InstantSend. Masternode operators invest 1,000 dash to host a Masternode. Masternode operators get 45% of the prize for every Dash block that’s mined. Each operator receives their prize of around seven dash each month.
    • InstantSend. Instasend uses the instantX Masternode feature to send and confirm transactions in seconds. Bitcoin’s block propagation takes an average of ten minutes, and six typical conformations for large purchases could even take an hour.
    • X11 Mining Algorithm. Bitcoin uses SHA 256, which is utterly energy intensive and susceptible to ASIC mining chips. This means only a few big players that can afford hashing power monopolize. The X11 mining algorithm is more energy efficient and resistant to ASIC chips, so Dash miners can use CPUs and GPUs for hashing power.
    • PrivateSend. While Bitcoin transactions are pseudonymous and can be traced to their users, Dash introduced PrivateSend transactions that permit Dash users to opt for total privacy in their transactions.
    • Self-Sustainable Decentralized Governance. While Masternodes are incentivized and can govern the blockchain with one vote per Masternode, the Dash blockchain is also self-funded. A portion of each block—currently 10%–is allocated to the Network Development and Promotion Budget. This means Dash developers and promoters receive payments for their contributions, unlike on Bitcoin where contributions are voluntary and unincentivized.

    So what does the market think of Dash?

    Despite its features, Dash is still catching up to reigning champ Bitcoin’s 5-year headstart. Dash ranks behind Bitcoin as the 6th thickest currency in terms of total market capitalization.

    A coin’s market cap is one way of measuring the size of a cryptocurrency. The volatility of a crypto’s price influences the market cap of cryptos. Daily trade volume—calculated in USD—is argubly a more useful measure. Trading volume reflects how much a particular cryptocurrency is actually used. Bitcoin still reigns king here: Today Dash trade volume ranks 11th with $61.27 million behind Bitcoin’s $1.9 billion very first place value.

    Even daily trade volume does not give the utter picture tho’, as much of it consists of trading activity on exchanges rather than real world purchases. This is an significant distinction. Many exchanges use Bitcoin to trade so you so you would have to primarily buy bitcoin to then trade for other cryptocurrencies. This may skew the figures, but it also shows the strength of Bitcoin’s very first mover advantage.

    With Bitcoin’s very first mover advantage, Bitcoin has become a clear market leader. This makes for a skewed and unfair comparison with all other cryptocurrencies. Yet, while looking at market caps and trade volumes, it is significant to note that other cryptocurrencies that share similar features to Dash are sometimes higher up in the pecking order. Litecoin also generates fresh blocks every Two.5-minutes and has long held a higher market cap than Dash. Monero, another privacy focused coin, released in the same year as Dash, has a higher daily trade volume. Ripple also has quick transaction confirmations and is rigidly placed in the top Five.

    The Verdict

    All this seems to suggest that simply introducing features that are an improvement on Bitcoin’s deficiencies is presently not enough for the market. While Dash’s self-funded blockchain provides slew of money to spend on development and marketing, Dash still seems to be fighting to attract 2nd tier developers to build out the blockchain aftermarket infrastructure, like Point of Sale apps and an array of innovative wallets for users. Bitcoin and the leading cryptocurrencies such as Ethereum, Monero and Litecoin among others, have built more connections with secondary industry players that connect merchants and users.

    It may be unfair to compare a cryptocurrency that is three years old with one that has been around for eight years. It could be argued that at a similar stage of its development, Bitcoin was still an obscure computer science project, or ‘nerd money’. What is certain is that Dash has shown resilience and has infrequently been outside the top ten currencies since hitting the scene. Having developers and Masternode operators paid for their efforts directly by the blockchain, along with improved governance mechanisms, certainly has positive implications for Dash’s long term expansion and agility in adding fresh features. As cryptocurrencies mature, there is slew of space for many to establish their own markets. Instead of attempting to pick an outright winner, it is very likely more significant to see which cryptocurrencies have the right fundamentals to sustain and thrive. In those terms, Dash is well placed to proceed growing and innovating.

    Related video:

    Coinbase, Instant Exchange

    Coinbase

    Instant Exchange

    Instant Exchange permits you to send bitcoin and pay for it with your local currency from the same page. You can also receive bitcoin and Coinbase will execute an instant sell in the background. The sell will credit funds to your local currency wallet.

    Instant Exchange is a excellent instrument for people who want to use bitcoin but choose to cash out instantaneously to fiat currency. The fiat currency value of each conversion transaction, after Coinbase’s conversion fee, will be reflected in your USD, EUR, and/or GBP wallets. Instant Exchange is supported only for users who hold fiat currency wallets with Coinbase.

    How does it work?

    Instant Exchange is just a different way to use Coinbase's existing Conversion Service. For example, when you wish to instantly purchase and send bitcoin using Instant Exchange, you can simply click on the "Send/Request" tab in your Coinbase Account, identify the recipient, and indicate the amount of bitcoin or USD-equivalent you wish to transfer. By selecting your USD Wallet as the funding source, when you confirm the transaction you will (a) use Coinbase's Conversion Service to purchase a corresponding amount of bitcoin, and then (b) instantaneously transfer the bitcoin from your Coinbase Account to the recipient.

    On the roll side, you can also use Instant Exchange to instantly sell bitcoin which you receive into your Coinbase Account. Using the same “Send/Request” feature, you can generate a unique bitcoin address for this purpose. Instant Exchange will then permit you to use that address to (a) receive bitcoin from the payer into your Coinbase Account, and (b) instantly sell the bitcoin using Coinbase's Conversion Service. This is a good way to use the Bitcoin payment network.

    What are the fees?

    Coinbase’s standard Conversion Fee applies to all bitcoin purchase and sale transactions. There are no extra fees for use of Instant Exchange.

    For example, if you wish to use Instant Exchange to send $15-worth of bitcoin to a recipient, the total amount debited from your USD wallet will be $15.15: the amount of USD you wish to convert into bitcoin plus Coinbase’s Conversion Fee. This works the same way in switch roles, so if you receive $15-worth of bitcoin and sell it instantaneously using Instant Exchange, then your USD wallet will be credited $14.85: the USD-value of the bitcoin you converted into USD, minus Coinbase’s Conversion Fee. As always, you can loosely fiat currency from your Coinbase Account back to your own bank account without charge from Coinbase (for ACH transfers; for list of all withdrawal fees, please see this page).

    What are the thresholds?

    Instant Exchange is just another way to use Coinbase’s Conversion Service, so your standard buy/sell thresholds will apply. You therefore will not be able to exceed your weekly or aggregate buy boundaries when you use Instant Exchange to purchase and send bitcoin. It is also significant to recall that you cannot use Instant Exchange to receive and sell bitcoin in excess of your weekly or aggregate sell thresholds. If you receive an amount of bitcoin for Instant Exchange whose conversion would exceed your weekly or aggregate sell limit, all of the bitcoin will be received into your default bitcoin wallet and no conversion will occur. You can separately initiate a bitcoin sell transaction in an amount that does not exceed your sell limit.

    You can check your buy/sell boundaries by logging into your Coinbase Account and visiting this page.

    Can I send or receive bitcoin like this using my linked bank account?

    Not yet, but we are working on this feature.

    I use Coinbase Merchant Services. Will anything switch?

    Nothing switches on the merchant side of things. We are just extending and expanding Instant Exchange to the rest of our customers.

    Related video:

    Buy bitcoins instantly in Nigeria, Paxful

    Buy bitcoins instantly in Nigeria

    Protect your money from the falling Naira and secure your currency in Bitcoin. Buy bitcoin with any payment option including Amazon Bounty Card, iTunes Bounty Card and Bank transfer!

    Buy bitcoins with

    National Bank Transfer
    iTunes Bounty Card
    Western Union
    MoneyGram
    Amazon Bounty Card
    Click here to see all options
    Attempt another way to pay

    1. Select a way to pay from left side

    1. Select a way to pay from above

    Select from top payment methods in Nigeria. Or find any other payment method from selection below top methods.

    Two. Type in your amount

    You can buy bitcoins in numerous ways

    Buy bitcoin with Bounty Cards

    If you choose to buy bitcoin with bounty cards like Amazon Bounty Card or iTunes Bounty Card then you have to buy them with CASH ONLY. Our sellers require picture of receipt before they release bitcoin.

    1. Go buy bounty cards with cash from your local store like Blessings Computer or Konga.com.

    Two. Choose the payment method above and type in how much money you have on card and click “Buy bitcoins now”. Fresh window opens with suggest selected by Paxful (best suggest).

    Three. Read through the suggest terms and commence a trade. Upload pictures of the back of the card scraped off and the receipt. Be sure to activate the card very first! Click “I have followed instructions” button and wait for them to release bitcoins.

    Buy bitcoin with National Bank Transfer

    1. Select National Bank Transfer and type in the amount you can spend above. A vendor will help you add money to your Paxful bitcoin wallet.

    Two. Go after their instructions to transfer the funds from your bank account to the vendor. NO QUICK TELLERS PAYMENTS, NO ATM TRANSFER.

    Trio. Once the transfer is made, Click “I have followed instructions” button and wait for them to release bitcoins.

    Four. Bitcoins are instantly available in your Paxful wallet and can be sent anywhere in the world right away.

    Buy with Western Union / MoneyGram

    1. Select Western Union or MoneyGram and type in the amount you can spend above. A vendor will help you add money to your Paxful bitcoin wallet.

    Two. Go after their instructions to transfer the funds. There can be a long wait from Western Union but the Paxful vendor has no delays.

    Three. Once the transfer is made, Click “I have followed instructions” button and wait for them to release bitcoins.

    Four. Bitcoins are instantly available in your Paxful wallet and can be sent anywhere in the world right away.

    What is Paxful?

    Paxful is a Peer to Peer Bitcoin marketplace connecting buyers with sellers. Simply select how you want to pay and type in how much Bitcoins you need.

    Our mission is to give working people a plain, fair and secure platform for trading the value of their work. Often our fattest problems revolve around money, earning it and transporting it. We are dedicated to unlocking the power of people by building a global peer to peer payment logistics platform of the future. Paxful is PayPal + Uber and the peoples Wall Street.

    Can I sell bitcoin on Paxful?

    Help Nigerians get bitcoin and you can earn BIG profits up to 60% on each sale. Begin selling with your Nigerian bank account now, see our free guide. Paxful gets 1000’s of bitcoin buyers from Nigeria every day.

    Earn Passive Revenue

    Know alot of people who want to buy bitcoin in Nigeria? With your Bitcoin Kiosk and Playmate program you earn 2% on each trade forever by just sharing a link. Get embarked now.

    Why Bitcoin?

    Bitcoin is a digital asset and a method of payment. Paxful makes it effortless to convert your bounty cards into bitcoins and out of bitcoin. Bitcoin has become a valuable asset in our digital world. You can think of it as an internet version of gold. Like gold, bitcoin price has been fluctuating and it’s expected to see stable growth in bitcoin price, especially when economic times are fragile.

    After receiving bitcoins you can do whatever you like. You have option to hold them in your Paxful wallet, sell bitcoins for US dollars or any other currency. You can also send your bitcoins to any other bitcoin wallet.

    Where to spend bitcoins?

    Spend bitcoins by your interests

    • Gambling – BitCasino, BetCoin
    • Sports betting – SportsBet, NitrogenSports
    • Electronics – NewEgg
    • Turn bitcoins into cash with Bitcoin ATM near you – Coin ATM Radar

    Bitcoin in the news

    Fresh Bitcoin marketplace concentrates on Nigeria

    Buying and selling bitcoins made effortless by Paxful

    Buy bitcoins instantly in Nigeria, Paxful

    Buy bitcoins instantly in Nigeria

    Protect your money from the falling Naira and secure your currency in Bitcoin. Buy bitcoin with any payment option including Amazon Bounty Card, iTunes Bounty Card and Bank transfer!

    Buy bitcoins with

    National Bank Transfer
    iTunes Bounty Card
    Western Union
    MoneyGram
    Amazon Bounty Card
    Click here to see all options
    Attempt another way to pay

    1. Select a way to pay from left side

    1. Select a way to pay from above

    Select from top payment methods in Nigeria. Or find any other payment method from selection below top methods.

    Two. Type in your amount

    You can buy bitcoins in numerous ways

    Buy bitcoin with Bounty Cards

    If you choose to buy bitcoin with bounty cards like Amazon Bounty Card or iTunes Bounty Card then you have to buy them with CASH ONLY. Our sellers require picture of receipt before they release bitcoin.

    1. Go buy bounty cards with cash from your local store like Blessings Computer or Konga.com.

    Two. Choose the payment method above and type in how much money you have on card and click “Buy bitcoins now”. Fresh window opens with suggest selected by Paxful (best suggest).

    Three. Read through the suggest terms and commence a trade. Upload pictures of the back of the card scraped off and the receipt. Be sure to activate the card very first! Click “I have followed instructions” button and wait for them to release bitcoins.

    Buy bitcoin with National Bank Transfer

    1. Select National Bank Transfer and type in the amount you can spend above. A vendor will help you add money to your Paxful bitcoin wallet.

    Two. Go after their instructions to transfer the funds from your bank account to the vendor. NO QUICK TELLERS PAYMENTS, NO ATM TRANSFER.

    Three. Once the transfer is made, Click “I have followed instructions” button and wait for them to release bitcoins.

    Four. Bitcoins are instantly available in your Paxful wallet and can be sent anywhere in the world right away.

    Buy with Western Union / MoneyGram

    1. Select Western Union or MoneyGram and type in the amount you can spend above. A vendor will help you add money to your Paxful bitcoin wallet.

    Two. Go after their instructions to transfer the funds. There can be a long wait from Western Union but the Paxful vendor has no delays.

    Trio. Once the transfer is made, Click “I have followed instructions” button and wait for them to release bitcoins.

    Four. Bitcoins are instantly available in your Paxful wallet and can be sent anywhere in the world right away.

    What is Paxful?

    Paxful is a Peer to Peer Bitcoin marketplace connecting buyers with sellers. Simply select how you want to pay and type in how much Bitcoins you need.

    Our mission is to give working people a elementary, fair and secure platform for trading the value of their work. Often our largest problems revolve around money, earning it and transporting it. We are dedicated to unlocking the power of people by building a global peer to peer payment logistics platform of the future. Paxful is PayPal + Uber and the peoples Wall Street.

    Can I sell bitcoin on Paxful?

    Help Nigerians get bitcoin and you can earn BIG profits up to 60% on each sale. Embark selling with your Nigerian bank account now, see our free guide. Paxful gets 1000’s of bitcoin buyers from Nigeria every day.

    Earn Passive Revenue

    Know alot of people who want to buy bitcoin in Nigeria? With your Bitcoin Kiosk and Fucking partner program you earn 2% on each trade forever by just sharing a link. Get embarked now.

    Why Bitcoin?

    Bitcoin is a digital asset and a method of payment. Paxful makes it effortless to convert your bounty cards into bitcoins and out of bitcoin. Bitcoin has become a valuable asset in our digital world. You can think of it as an internet version of gold. Like gold, bitcoin price has been fluctuating and it’s expected to see constant growth in bitcoin price, especially when economic times are fragile.

    After receiving bitcoins you can do whatever you like. You have option to hold them in your Paxful wallet, sell bitcoins for US dollars or any other currency. You can also send your bitcoins to any other bitcoin wallet.

    Where to spend bitcoins?

    Spend bitcoins by your interests

    • Gambling – BitCasino, BetCoin
    • Sports betting – SportsBet, NitrogenSports
    • Electronics – NewEgg
    • Turn bitcoins into cash with Bitcoin ATM near you – Coin ATM Radar

    Bitcoin in the news

    Fresh Bitcoin marketplace concentrates on Nigeria

    Buying and selling bitcoins made effortless by Paxful

    Related video:

    Blockchain one hundred one for Lawyers Part one – Law Technology Today

    Blockchain one hundred one for Lawyers Part 1

    e-Filing and Legal Document Marketplace Sites

    September 7, 2017

    Artificial Intelligence Can Reduce 99% of Review Hours

    September 6, 2017

    Why Lawyers Shouldn’t Put a Fork in Bitcoin

    September 1, 2017

    “The very first generation of the digital revolution brought us the Internet of information. The 2nd generation — powered by blockchain technology — is bringing us the Internet of value: a fresh platform to reshape the world of business and convert the old order of human affairs for the better.

    Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value money, but also titles, deeds, identities, even votes can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

    Dan Tapscott, author of Blockchain Revolution: How the Technology Behind Bitcoin Is Switching Money, Business and the World.

    Dear fellow lawyers, there is yet another tech term we should become familiar with: blockchain. I know, it’s becoming staggering, all the technical terms legal professionals must add to our lexicon.

    But if you want to sustain, or dare I say thrive, as a 21st century lawyer, you need to know at least three things about blockchain:

    1. What is it?
    2. How is it impacting your clients?
    3. How it may influence the legal profession?

    What Is Blockchain

    If you’ve heard of blockchain it’s most likely been in the context of the digital currency bitcoin — blockchain is the technology upon which bitcoin transactions are built. In essence, blockchain is a distributed ledger (or register) made up of digitally recorded and encrypted (cryptographically hashed) data in the form of blocks, which when connected via the distributed network of computers storing the blocks, form the blockchain.

    Being distributed across a network of computers, the ledger is not under any single control and thus operates by consensus. This is fairly different from a traditional transaction ledger — one that is typically maintained by one entity (e.g. a bank) and audited by another entity (e.g. a trusted intermediary). In a blockchain, all parties have a copy of the ledger and can confirm in real time the status of the transaction.

    What Lawyers Need To Understand

    blockchain creates a real-time digital record verifying that a transaction containing certain data happened at a certain time and in a certain order.

    Further, integrity of the transaction can be trusted due to two of blockchain’s fundamental characteristics: it is immutable and very hack-resistant. This translates into a very high level of data integrity — once data comes in the blockchain, it is resistant to alteration, hacking, or deletion. Let’s explore these two characteristics.

    Blockchain Is Immutable

    As each block of data is created in the blockchain, the block is time-stamped. A block of data in the chain can be added to the chain only after the time stamp is applied and verified by the distributed computers across the chain.

    The practical effect of time-stamping is that a block of data can never be switched retrospectively. This means that each block in the chain creates an accurate, time-stamped record as to that block – when it was added, and in what order it was added. If an attempt is made to switch any data in a block already added to the chain, it is rejected by the network of computers connecting the blocks in the chain. The network won’t approve switches to data in a block that has already been verified as to content and timestamp, as this would have the effect of violating the chain. Thus, the blockchain is immutable.

    Blockchain Is Very Hack-Resistant

    To date, a blockchain itself has yet to be hacked. Recall that blockchain is the underlying technology. Systems built on top of blockchain (such as cryptocurrency exchanges) have been hacked. But the blockchain itself has not.

    Understanding what makes blockchain resistant to hacking is significant from a legal perspective, so bear with me as we delve into just a bit more of the technical minutiae.

    Recall that blockchain is a distributed ledger, meaning that the blocks of data comprising the ledger are spread across a network of computers that could be located anywhere in the world. Each computer (referred to as a knot) holds all or part of the entire blockchain, and applies the particular blockchain’s computational algorithm to verify a block and permit it to be added to the chain. This is happening at the same time across the network, making it (theoretically, at least) next to unlikely for hackers to attack the chain, since each example of the data is being held in many places all at one time, and a block may be verified and added to the chain by any number of knots.

    Blockchain also is hack-resistant due to how the data in the chain is stored and transferred. Data added to the chain is cryptographically “hashed,” meaning that a brief digest of the data is created. It is this hash of data that is stored in a block and transferred in encrypted form via the blockchain — not the actual, underlying data itself. As a digest, the hashed data can’t be decrypted to reproduce the utter underlying document or transaction data. However, within the chain, the hash can verify a copy of the underlying document or transaction existing outside of the blockchain.

    What does this mean, for practical purposes? Very first, if a hack to a block in the chain is attempted, it doesn’t expose the underlying data within the document or transaction because the hashed data is simply a digest and not a accomplish record of the data. Thus, the underlying data is not exposed to potential hacking.

    2nd, because the transaction ledger is stored across a distributed network of computers, redundancy is created. The underlying, hashed data is stored at the same time across numerous machines, making it infinitely more difficult to hack.

    These characteristics help ensure both the privacy and authenticity of the underlying data within the blockchain, two properties that are very relevant to legal transactions.

    CLICK TO Increase

    And it’s not just data that can be transferred via blockchain. Cryptocurrencies use blockchain to transfer economic value. How about transferring energy? Music? Real estate titles? It’s either happening, or about to. Time to discuss why lawyers should care about blockchain.

    How Will Blockchain Influence Your Clients

    It’s disrupting, or has the potential to disrupt, a number of industries that rely powerfully on lawyers’ counsel and advice. And this disruption will create opportunities for us to help, as industries wrangle with how disruption impacts everything from operations to regulatory and legal structures. I predict these disruptions will create niche practice areas for those lawyers who choose to understand blockchain (more on that in Part II of this series).

    I suggest but a few examples of blockchain’s current and potential influence on business and industry:

    Finance

    One word: fintech. The financial industry is facing immense disruption thanks to fintech, which is the application of technological innovation to traditional activities of the financial industry – ranging from banking to investing to payment processing. Think Bitcoin, PayPal, Robinhood, Prosper, LearnVest — just to name but a very few examples.

    There are dozens of blockchain-based fintech companies suggesting a range of products and services. A few examples of how blockchain in fintech is disrupting the status quo in finance: 21.co wants to build the machine-payable web with bitcoin. Skuchain is building a supply-chain network on a blockchain structure, to govern all phases of trade transactions. T Zero’s tagline is “the trade is the settlement” — it seeks to take the (considerable) friction out of lodging securities transactions using blockchain.

    Blockchain is a natural fit for the financial services industry for evident reasons: it self-verifies and authenticates transactions, and it’s hack-resistant. Bitcoin and other cryptocurrencies are among the very first to use blockchain to support friction-less financial transactions, but they are far from the last.

    Energy

    Highly-regulated, the energy industry is being disrupted by startups using blockchain technology such as Transactive Grid, which created a peer-to-peer market for the buying and selling of energy. Other blockchain-based startups in the energy space include Grid Singularity and SolarCoin.

    These disruptors will present a challenge for the current regulatory structure. And lawyers who understand blockchain will have the unique chance to form the future of the energy industry.

    Music

    In the near future, all transactions involving the creation and sale of music may very well take place on a blockchain structure. Consider Resonate, which uses blockchain to create a fresh kind of music streaming platform aiming to give artists greater control and a greater share of profit. Or Ujo Music, which seeks to build an “open music ecosystem” on the Ethereum blockchain. Pledge Music is a global direct-to-fan platform that permits artists to fully bypasses traditional “friction” in the music industry (record labels, publishers, distributors).

    By its very nature, blockchain is uniquely suited to address the piracy, control and monetization issues of music that have become rampant in the digital age. To lawyers indicating traditional players in the music industry: your clients need you to understand how startups like Resonate, Ujo Music, and Pledge Music are switching the rules for how music is protected and monetized.

    Real Estate

    Real estate transactions are ripe for improvement: the mountains of paperwork, lack of transparency during and after transactions, and opportunities for error in public records – all can be addressed vis a vis blockchain. Inject Ubitquity, which is creating a blockchain-based platform to securely record, track, and transfer deeds, to help “real estate, title, and mortgage companies benefit from a clean record of ownership, reducing future title search time, enhanced confidence, and technology.”

    The Midasium Blockchain proposes to be the “blockchain of real estate,” with the objective of creating “a global collective distributed ledger system for securely executing and recording real estate financial transactions over the internet.”

    As Midasium’s site notes, blockchain’s characteristics align fairly well with the requirements of real estate transactions: durability, transparency, immutability, longevity, and reliability and availability of data. This likely is why the country of Sweden is considering the placement of its entire land registry system on a blockchain.

    If you do any legal work for clients involved in any aspect of real estate transactions, you need to understand that things are about to switch radically thanks to blockchain.

    Healthcare

    One clear application of blockchain is its use to manage patient medical data (electronic medical records or EMRs) — for one example see MedRec. Gem, Another blockchain startup, has created Gem Health, which seeks to apply blockchain to a host of healthcare use cases, including EMRs, wellness apps, global patient ID software, and medical inventory management.

    The healthcare technology company Pokitdot has created DocChain, the company’s implementation of blockchain for healthcare data. DocChain creates a single and secure network that connects all the stakeholders in a patient’s care — from EMRs, to their medical device sensors, to the pharmacy packing their prescriptions.

    Hashed Health, a Nashville-based startup, is creating a consortium of healthcare companies to leverage blockchain technology for the purpose of advancing innovation industry-wide. Hashed Health’s website identifies a number of reasons why blockchain is an ideal technological medium for the healthcare industry: blockchain reduces costs, increases speed, increases security, reduces fraud, and reduces risk. (Recall these five benefits – they are very relevant to blockchain’s influence on the legal profession, which I’ll cover in Part II of this series.)

    These benefits clearly illustrate the disruptive influence that blockchain can have on the heretofore rigorously siloed maintenance and transfer of medical data. It’s an industry that has profited mightily from the friction created by middlemen and regulations. The benefits of blockchain clearly illustrate why lawyers serving the healthcare industry owe a duty to their clients to understand this technology and its import for the healthcare industry.

    How May Blockchain Influence The Legal Services Industry?

    I’m saving the legal industry, and how it will be disrupted by blockchain, for Part II of the blockchain for Lawyers one hundred one series. The future of blockchain and law is at once imminently disruptive and ripe for chance. Stay tuned.

    Blockchain one hundred one for Lawyers Part one – Law Technology Today

    Blockchain one hundred one for Lawyers Part 1

    e-Filing and Legal Document Marketplace Sites

    September 7, 2017

    Artificial Intelligence Can Reduce 99% of Review Hours

    September 6, 2017

    Why Lawyers Shouldn’t Put a Fork in Bitcoin

    September 1, 2017

    “The very first generation of the digital revolution brought us the Internet of information. The 2nd generation — powered by blockchain technology — is bringing us the Internet of value: a fresh platform to reshape the world of business and convert the old order of human affairs for the better.

    Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value money, but also titles, deeds, identities, even votes can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

    Dan Tapscott, author of Blockchain Revolution: How the Technology Behind Bitcoin Is Switching Money, Business and the World.

    Dear fellow lawyers, there is yet another tech term we should become familiar with: blockchain. I know, it’s becoming breathtaking, all the technical terms legal professionals must add to our lexicon.

    But if you want to sustain, or dare I say thrive, as a 21st century lawyer, you need to know at least three things about blockchain:

    1. What is it?
    2. How is it impacting your clients?
    3. How it may influence the legal profession?

    What Is Blockchain

    If you’ve heard of blockchain it’s most likely been in the context of the digital currency bitcoin — blockchain is the technology upon which bitcoin transactions are built. In essence, blockchain is a distributed ledger (or register) made up of digitally recorded and encrypted (cryptographically hashed) data in the form of blocks, which when connected via the distributed network of computers storing the blocks, form the blockchain.

    Being distributed across a network of computers, the ledger is not under any single control and thus operates by consensus. This is fairly different from a traditional transaction ledger — one that is typically maintained by one entity (e.g. a bank) and audited by another entity (e.g. a trusted intermediary). In a blockchain, all parties have a copy of the ledger and can confirm in real time the status of the transaction.

    What Lawyers Need To Understand

    blockchain creates a real-time digital record verifying that a transaction containing certain data happened at a certain time and in a certain order.

    Further, integrity of the transaction can be trusted due to two of blockchain’s fundamental characteristics: it is immutable and very hack-resistant. This translates into a very high level of data integrity — once data comes in the blockchain, it is resistant to alteration, hacking, or deletion. Let’s explore these two characteristics.

    Blockchain Is Immutable

    As each block of data is created in the blockchain, the block is time-stamped. A block of data in the chain can be added to the chain only after the time stamp is applied and verified by the distributed computers across the chain.

    The practical effect of time-stamping is that a block of data can never be switched retrospectively. This means that each block in the chain creates an accurate, time-stamped record as to that block – when it was added, and in what order it was added. If an attempt is made to switch any data in a block already added to the chain, it is rejected by the network of computers connecting the blocks in the chain. The network won’t approve switches to data in a block that has already been verified as to content and timestamp, as this would have the effect of violating the chain. Thus, the blockchain is immutable.

    Blockchain Is Very Hack-Resistant

    To date, a blockchain itself has yet to be hacked. Recall that blockchain is the underlying technology. Systems built on top of blockchain (such as cryptocurrency exchanges) have been hacked. But the blockchain itself has not.

    Understanding what makes blockchain resistant to hacking is significant from a legal perspective, so bear with me as we delve into just a bit more of the technical minutiae.

    Recall that blockchain is a distributed ledger, meaning that the blocks of data comprising the ledger are spread across a network of computers that could be located anywhere in the world. Each computer (referred to as a knot) holds all or part of the entire blockchain, and applies the particular blockchain’s computational algorithm to verify a block and permit it to be added to the chain. This is happening at the same time across the network, making it (theoretically, at least) next to unlikely for hackers to attack the chain, since each example of the data is being held in many places all at one time, and a block may be verified and added to the chain by any number of knots.

    Blockchain also is hack-resistant due to how the data in the chain is stored and transferred. Data added to the chain is cryptographically “hashed,” meaning that a brief digest of the data is created. It is this hash of data that is stored in a block and transferred in encrypted form via the blockchain — not the actual, underlying data itself. As a digest, the hashed data can’t be decrypted to reproduce the total underlying document or transaction data. However, within the chain, the hash can verify a copy of the underlying document or transaction existing outside of the blockchain.

    What does this mean, for practical purposes? Very first, if a hack to a block in the chain is attempted, it doesn’t expose the underlying data within the document or transaction because the hashed data is simply a digest and not a accomplish record of the data. Thus, the underlying data is not exposed to potential hacking.

    2nd, because the transaction ledger is stored across a distributed network of computers, redundancy is created. The underlying, hashed data is stored at the same time across numerous machines, making it infinitely more difficult to hack.

    These characteristics help ensure both the privacy and authenticity of the underlying data within the blockchain, two properties that are very relevant to legal transactions.

    CLICK TO Enhance

    And it’s not just data that can be transferred via blockchain. Cryptocurrencies use blockchain to transfer economic value. How about transferring energy? Music? Real estate titles? It’s either happening, or about to. Time to discuss why lawyers should care about blockchain.

    How Will Blockchain Influence Your Clients

    It’s disrupting, or has the potential to disrupt, a number of industries that rely strongly on lawyers’ counsel and advice. And this disruption will create opportunities for us to help, as industries wrangle with how disruption impacts everything from operations to regulatory and legal structures. I predict these disruptions will create niche practice areas for those lawyers who choose to understand blockchain (more on that in Part II of this series).

    I suggest but a few examples of blockchain’s current and potential influence on business and industry:

    Finance

    One word: fintech. The financial industry is facing immense disruption thanks to fintech, which is the application of technological innovation to traditional activities of the financial industry – ranging from banking to investing to payment processing. Think Bitcoin, PayPal, Robinhood, Prosper, LearnVest — just to name but a very few examples.

    There are dozens of blockchain-based fintech companies suggesting a range of products and services. A few examples of how blockchain in fintech is disrupting the status quo in finance: 21.co wants to build the machine-payable web with bitcoin. Skuchain is building a supply-chain network on a blockchain structure, to govern all phases of trade transactions. T Zero’s tagline is “the trade is the settlement” — it seeks to take the (considerable) friction out of lodging securities transactions using blockchain.

    Blockchain is a natural fit for the financial services industry for demonstrable reasons: it self-verifies and authenticates transactions, and it’s hack-resistant. Bitcoin and other cryptocurrencies are among the very first to use blockchain to support friction-less financial transactions, but they are far from the last.

    Energy

    Highly-regulated, the energy industry is being disrupted by startups using blockchain technology such as Transactive Grid, which created a peer-to-peer market for the buying and selling of energy. Other blockchain-based startups in the energy space include Grid Singularity and SolarCoin.

    These disruptors will present a challenge for the current regulatory structure. And lawyers who understand blockchain will have the unique chance to form the future of the energy industry.

    Music

    In the near future, all transactions involving the creation and sale of music may very well take place on a blockchain structure. Consider Resonate, which uses blockchain to create a fresh kind of music streaming platform aiming to give artists greater control and a greater share of profit. Or Ujo Music, which seeks to build an “open music ecosystem” on the Ethereum blockchain. Pledge Music is a global direct-to-fan platform that permits artists to fully bypasses traditional “friction” in the music industry (record labels, publishers, distributors).

    By its very nature, blockchain is uniquely suited to address the piracy, control and monetization issues of music that have become rampant in the digital age. To lawyers signifying traditional players in the music industry: your clients need you to understand how startups like Resonate, Ujo Music, and Pledge Music are switching the rules for how music is protected and monetized.

    Real Estate

    Real estate transactions are ripe for improvement: the mountains of paperwork, lack of transparency during and after transactions, and opportunities for error in public records – all can be addressed vis a vis blockchain. Inject Ubitquity, which is creating a blockchain-based platform to securely record, track, and transfer deeds, to help “real estate, title, and mortgage companies benefit from a clean record of ownership, reducing future title search time, enhanced confidence, and technology.”

    The Midasium Blockchain proposes to be the “blockchain of real estate,” with the purpose of creating “a global collective distributed ledger system for securely executing and recording real estate financial transactions over the internet.”

    As Midasium’s site notes, blockchain’s characteristics align fairly well with the requirements of real estate transactions: durability, transparency, immutability, longevity, and reliability and availability of data. This likely is why the country of Sweden is considering the placement of its entire land registry system on a blockchain.

    If you do any legal work for clients involved in any aspect of real estate transactions, you need to understand that things are about to switch radically thanks to blockchain.

    Healthcare

    One clear application of blockchain is its use to manage patient medical data (electronic medical records or EMRs) — for one example see MedRec. Gem, Another blockchain startup, has created Gem Health, which seeks to apply blockchain to a host of healthcare use cases, including EMRs, wellness apps, global patient ID software, and medical inventory management.

    The healthcare technology company Pokitdot has created DocChain, the company’s implementation of blockchain for healthcare data. DocChain creates a single and secure network that connects all the stakeholders in a patient’s care — from EMRs, to their medical device sensors, to the pharmacy packing their prescriptions.

    Hashed Health, a Nashville-based startup, is creating a consortium of healthcare companies to leverage blockchain technology for the purpose of advancing innovation industry-wide. Hashed Health’s website identifies a number of reasons why blockchain is an ideal technological medium for the healthcare industry: blockchain reduces costs, increases speed, increases security, reduces fraud, and reduces risk. (Recall these five benefits – they are very relevant to blockchain’s influence on the legal profession, which I’ll cover in Part II of this series.)

    These benefits clearly illustrate the disruptive influence that blockchain can have on the heretofore stringently siloed maintenance and transfer of medical data. It’s an industry that has profited mightily from the friction created by middlemen and regulations. The benefits of blockchain clearly illustrate why lawyers serving the healthcare industry owe a duty to their clients to understand this technology and its import for the healthcare industry.

    How May Blockchain Influence The Legal Services Industry?

    I’m saving the legal industry, and how it will be disrupted by blockchain, for Part II of the blockchain for Lawyers one hundred one series. The future of blockchain and law is at once imminently disruptive and ripe for chance. Stay tuned.

    Blockchain one hundred one for Lawyers Part one – Law Technology Today

    Blockchain one hundred one for Lawyers Part 1

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    September 6, 2017

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    September 1, 2017

    “The very first generation of the digital revolution brought us the Internet of information. The 2nd generation — powered by blockchain technology — is bringing us the Internet of value: a fresh platform to reshape the world of business and convert the old order of human affairs for the better.

    Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value money, but also titles, deeds, identities, even votes can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.”

    Dan Tapscott, author of Blockchain Revolution: How the Technology Behind Bitcoin Is Switching Money, Business and the World.

    Dear fellow lawyers, there is yet another tech term we should become familiar with: blockchain. I know, it’s becoming breathtaking, all the technical terms legal professionals must add to our lexicon.

    But if you want to get through, or dare I say thrive, as a 21st century lawyer, you need to know at least three things about blockchain:

    1. What is it?
    2. How is it impacting your clients?
    3. How it may influence the legal profession?

    What Is Blockchain

    If you’ve heard of blockchain it’s most likely been in the context of the digital currency bitcoin — blockchain is the technology upon which bitcoin transactions are built. In essence, blockchain is a distributed ledger (or register) made up of digitally recorded and encrypted (cryptographically hashed) data in the form of blocks, which when connected via the distributed network of computers storing the blocks, form the blockchain.

    Being distributed across a network of computers, the ledger is not under any single control and thus operates by consensus. This is fairly different from a traditional transaction ledger — one that is typically maintained by one entity (e.g. a bank) and audited by another entity (e.g. a trusted intermediary). In a blockchain, all parties have a copy of the ledger and can confirm in real time the status of the transaction.

    What Lawyers Need To Understand

    blockchain creates a real-time digital record verifying that a transaction containing certain data happened at a certain time and in a certain order.

    Further, integrity of the transaction can be trusted due to two of blockchain’s fundamental characteristics: it is immutable and very hack-resistant. This translates into a very high level of data integrity — once data comes in the blockchain, it is resistant to alteration, hacking, or deletion. Let’s explore these two characteristics.

    Blockchain Is Immutable

    As each block of data is created in the blockchain, the block is time-stamped. A block of data in the chain can be added to the chain only after the time stamp is applied and verified by the distributed computers across the chain.

    The practical effect of time-stamping is that a block of data can never be switched retrospectively. This means that each block in the chain creates an accurate, time-stamped record as to that block – when it was added, and in what order it was added. If an attempt is made to switch any data in a block already added to the chain, it is rejected by the network of computers connecting the blocks in the chain. The network won’t approve switches to data in a block that has already been verified as to content and timestamp, as this would have the effect of cracking the chain. Thus, the blockchain is immutable.

    Blockchain Is Very Hack-Resistant

    To date, a blockchain itself has yet to be hacked. Recall that blockchain is the underlying technology. Systems built on top of blockchain (such as cryptocurrency exchanges) have been hacked. But the blockchain itself has not.

    Understanding what makes blockchain resistant to hacking is significant from a legal perspective, so bear with me as we delve into just a bit more of the technical minutiae.

    Recall that blockchain is a distributed ledger, meaning that the blocks of data comprising the ledger are spread across a network of computers that could be located anywhere in the world. Each computer (referred to as a knot) holds all or part of the entire blockchain, and applies the particular blockchain’s computational algorithm to verify a block and permit it to be added to the chain. This is happening at the same time across the network, making it (theoretically, at least) next to unlikely for hackers to attack the chain, since each example of the data is being held in many places all at one time, and a block may be verified and added to the chain by any number of knots.

    Blockchain also is hack-resistant due to how the data in the chain is stored and transferred. Data added to the chain is cryptographically “hashed,” meaning that a brief digest of the data is created. It is this hash of data that is stored in a block and transferred in encrypted form via the blockchain — not the actual, underlying data itself. As a digest, the hashed data can’t be decrypted to reproduce the utter underlying document or transaction data. However, within the chain, the hash can verify a copy of the underlying document or transaction existing outside of the blockchain.

    What does this mean, for practical purposes? Very first, if a hack to a block in the chain is attempted, it doesn’t expose the underlying data within the document or transaction because the hashed data is simply a digest and not a finish record of the data. Thus, the underlying data is not exposed to potential hacking.

    2nd, because the transaction ledger is stored across a distributed network of computers, redundancy is created. The underlying, hashed data is stored at the same time across numerous machines, making it infinitely more difficult to hack.

    These characteristics help ensure both the privacy and authenticity of the underlying data within the blockchain, two properties that are very relevant to legal transactions.

    CLICK TO Enhance

    And it’s not just data that can be transferred via blockchain. Cryptocurrencies use blockchain to transfer economic value. How about transferring energy? Music? Real estate titles? It’s either happening, or about to. Time to discuss why lawyers should care about blockchain.

    How Will Blockchain Influence Your Clients

    It’s disrupting, or has the potential to disrupt, a number of industries that rely strongly on lawyers’ counsel and advice. And this disruption will create opportunities for us to help, as industries wrangle with how disruption impacts everything from operations to regulatory and legal structures. I predict these disruptions will create niche practice areas for those lawyers who choose to understand blockchain (more on that in Part II of this series).

    I suggest but a few examples of blockchain’s current and potential influence on business and industry:

    Finance

    One word: fintech. The financial industry is facing immense disruption thanks to fintech, which is the application of technological innovation to traditional activities of the financial industry – ranging from banking to investing to payment processing. Think Bitcoin, PayPal, Robinhood, Prosper, LearnVest — just to name but a very few examples.

    There are dozens of blockchain-based fintech companies suggesting a range of products and services. A few examples of how blockchain in fintech is disrupting the status quo in finance: 21.co wants to build the machine-payable web with bitcoin. Skuchain is building a supply-chain network on a blockchain structure, to govern all phases of trade transactions. T Zero’s tagline is “the trade is the settlement” — it seeks to take the (considerable) friction out of lodging securities transactions using blockchain.

    Blockchain is a natural fit for the financial services industry for demonstrable reasons: it self-verifies and authenticates transactions, and it’s hack-resistant. Bitcoin and other cryptocurrencies are among the very first to use blockchain to support friction-less financial transactions, but they are far from the last.

    Energy

    Highly-regulated, the energy industry is being disrupted by startups using blockchain technology such as Transactive Grid, which created a peer-to-peer market for the buying and selling of energy. Other blockchain-based startups in the energy space include Grid Singularity and SolarCoin.

    These disruptors will present a challenge for the current regulatory structure. And lawyers who understand blockchain will have the unique chance to form the future of the energy industry.

    Music

    In the near future, all transactions involving the creation and sale of music may very well take place on a blockchain structure. Consider Resonate, which uses blockchain to create a fresh kind of music streaming platform aiming to give artists greater control and a greater share of profit. Or Ujo Music, which seeks to build an “open music ecosystem” on the Ethereum blockchain. Pledge Music is a global direct-to-fan platform that permits artists to totally bypasses traditional “friction” in the music industry (record labels, publishers, distributors).

    By its very nature, blockchain is uniquely suited to address the piracy, control and monetization issues of music that have become rampant in the digital age. To lawyers indicating traditional players in the music industry: your clients need you to understand how startups like Resonate, Ujo Music, and Pledge Music are switching the rules for how music is protected and monetized.

    Real Estate

    Real estate transactions are ripe for improvement: the mountains of paperwork, lack of transparency during and after transactions, and opportunities for error in public records – all can be addressed vis a vis blockchain. Come in Ubitquity, which is creating a blockchain-based platform to securely record, track, and transfer deeds, to help “real estate, title, and mortgage companies benefit from a clean record of ownership, reducing future title search time, enhanced confidence, and technology.”

    The Midasium Blockchain proposes to be the “blockchain of real estate,” with the objective of creating “a global collective distributed ledger system for securely executing and recording real estate financial transactions over the internet.”

    As Midasium’s site notes, blockchain’s characteristics align fairly well with the requirements of real estate transactions: durability, transparency, immutability, longevity, and reliability and availability of data. This likely is why the country of Sweden is considering the placement of its entire land registry system on a blockchain.

    If you do any legal work for clients involved in any aspect of real estate transactions, you need to understand that things are about to switch radically thanks to blockchain.

    Healthcare

    One clear application of blockchain is its use to manage patient medical data (electronic medical records or EMRs) — for one example see MedRec. Gem, Another blockchain startup, has created Gem Health, which seeks to apply blockchain to a host of healthcare use cases, including EMRs, wellness apps, global patient ID software, and medical inventory management.

    The healthcare technology company Pokitdot has created DocChain, the company’s implementation of blockchain for healthcare data. DocChain creates a single and secure network that connects all the stakeholders in a patient’s care — from EMRs, to their medical device sensors, to the pharmacy packing their prescriptions.

    Hashed Health, a Nashville-based startup, is creating a consortium of healthcare companies to leverage blockchain technology for the purpose of advancing innovation industry-wide. Hashed Health’s website identifies a number of reasons why blockchain is an ideal technological medium for the healthcare industry: blockchain reduces costs, increases speed, increases security, reduces fraud, and reduces risk. (Recall these five benefits – they are very relevant to blockchain’s influence on the legal profession, which I’ll cover in Part II of this series.)

    These benefits clearly illustrate the disruptive influence that blockchain can have on the heretofore stringently siloed maintenance and transfer of medical data. It’s an industry that has profited mightily from the friction created by middlemen and regulations. The benefits of blockchain clearly illustrate why lawyers serving the healthcare industry owe a duty to their clients to understand this technology and its import for the healthcare industry.

    How May Blockchain Influence The Legal Services Industry?

    I’m saving the legal industry, and how it will be disrupted by blockchain, for Part II of the blockchain for Lawyers one hundred one series. The future of blockchain and law is at once imminently disruptive and ripe for chance. Stay tuned.

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