Bitcoin Now: Exploring the New Frontier of Digital Currency

Monday, November 4th, 2013
1:00PM – 2:30PM
The Boston University Castle
225 Bay State Road

Featuring speakers Jeremy Allaire and John Beccia of Circle Internet Financial

Digital currencies have emerged as the next frontier in finance and technology. Implications for monetary policy, regulation, banking and financial inclusion are significant. Technologies such as Bitcoin have the potential to revolutionize the way people and companies spend, invest, send money and use financial services in general. Consumers and merchants can radically lower the cost of payments, enhance the user experience by leveraging advances in touchless and mobile payments using mobile devices, and help facilitate greater global integration and trade by leveraging internet-based platforms. At the same time, regulatory and security issues abound.

This event is sponsored by Boston University’s Center for Finance, Law & Policy, the Rafik B. Hariri Institute for Computing and Computational Science & Engineering, and SMG Graduate Program in Mathematical Finance.

Media Coverage

Bitcoin Pursues the Mainstream – (10-30-2013) The New York Times, Nick Wingfield.

Recommended Reading

$10: One Perspective On What Bitcoin Will Be Worth In 2014 – (1-15-2014) Forbes, Samantha Sharf (quoting Mark Williams)

Disruptions: Betting on a Coin With No Realm – (12-22-2013) New York Times, Nick Bilton (quoting Mark Williams)

Here’s why Bitcoin matters

From CNN Money
By  Jose Pagliery
March 7, 2014


The world is finally paying close attention to Bitcoin, but people are more focused on its creator than the power behind the revolutionary digital currency.
They shouldn’t be. Whether or not Dorian Satoshi Nakamoto, a 64-year-old retired engineer living quietly in California, is the father of Bitcoin is not really the point.

Bitcoin matters because it has governments and major banks scared stiff. It presents a currency that cuts them out of the picture.
China restricted banks from using Bitcoin late last year. In February, Russia’s top prosecutor declared that Bitcoin and all anonymous payment systems are illegal.
For now, the United States is letting the experiment move forward. But New York state’s top financial regulator has already detailed plans to regulate bitcoins sometime this year.
Banks see the writing on the wall too. In a quiet move last year, JPMorgan Chase (JPM, Fortune 500) filed a patent for a Bitcoin-like payment system — digital wallets, anonymity and all.
“We have finally figured out how to send value over the Internet – faster, cheaper and more securely. We are not going to ‘unlearn’ that,” said Jinyoung Englund, spokeswoman for the Bitcoin Foundation, the currency’s top advocate.

Forget money made of paper and metal. Bitcoin lives as a computer code and is created and traded electronically…


Read the full article at:

Mt. Gox is Dead: Long Live Bitcoin?

From NBC News
By  Julianne Pepitone
February 28, 2014


The once massive bitcoin exchange Mt. Gox is effectively dead after losing nearly $500 million worth of customers’ money and filing for bankruptcy in Japan on Friday.

Naysayers have called Mt. Gox’s failure the beginning of the end of bitcoin, while proponents of the virtual currency argue that the problem is limited to Mt. Gox’s lax security controls. But both camps agree the crash-and-burn is an important moment in the evolution of bitcoin, and that the post-Gox bitcoin world will be altered.

“Mt. Gox was one of the first [exchanges] out of the gate, and grew quickly to be the largest,” said Geoff Vaughan, a security consultant at Security Compass who has owned bitcoins since 2010. “There was a lot of attention on Gox. Now we need to get past it and move on to what’s next.”

It may not be so easy for all to move on from the fate that befell Mt. Gox — which, as what was once the largest bitcoin exchange by far, became something of a barometer for the overall bitcoin industry.

For the critics, Mt. Gox represents all of the concerns about a decentralized, largely anonymous and unregulated system like bitcoin. Mt. Gox was vulnerable to hackers who overloaded the system with bogus transactions — forcing the company to halt withdrawals starting Feb. 7 — and ultimately, the exchange lost the money of customers who may have no way to get it back.

Supporters in the wider bitcoin community quickly distanced themselves from the problem, pointing out that the flaw in question has been public since 2011. Six rival exchanges released a statement Monday, after Mt. Gox took its website offline, insisting the problem lies solely with Mt. Gox and not with bitcoin as a currency.

Mt. Gox CEO Mark Karpeles himself echoed that point in a news conference on Friday announcing the bankruptcy filing, in which he attributed Mt. Gox’s fall on weakness in its own system and called bitcoin itself “healthy” and “growing.”

But Mark Williams, a former Federal Reserve Bank examiner who now teaches finance at Boston University’s School of Management, disagrees. He realizes Mt. Gox failed to protect itself from a known flaw — but he thinks its decline is indicative of larger problems in the system…


Read the full article at:

US prosecutors investigate businesses dealing in bitcoins

From The Guardian
By: Staff and agencies
February 26, 2014


Manhattan US attorney Preet Bharara’s office is seeking information from businesses dealing in bitcoin on how some of them handled cyber-attacks that hamstrung several exchanges in recent weeks, a source familiar with the probe told Reuters on Wednesday.

Subpoenas have been sent to numerous businesses, including MtGox, once the largest bitcoin exchange, as well as other firms that did business with the Tokyo-based company, the source said.

Prosecutors want to know more about the nature of the cyber-attacks on MtGox and other exchanges and how those exchanges dealt with them. MtGox halted customer withdrawals on 7 February in response to what it termed unusual activity, and on Tuesday the exchange went dark, leaving customers unable to recover their funds.

Mark Williams, a risk management expert who teaches finance at Boston University, said the investigation is a positive step in regulating virtual currency.

“If bitcoin is going to be a currency then it needs to actually play by the rules,” Williams said. “At this point, there’s been no regulation in this sector.”

Regulators have faced some hurdles in regulating bitcoin, which has not been designated as a currency or asset in the US economy. Williams expects that the rumored investigation and resulting decisions by the US government will have a global impact on the virtual currency industry.

He also expects a short future for MtGox because they’ve broken trust with their customers. “They’re done, they’re toast, they’re Enron – they can’t resurrect themselves,” Williams said…


Read the full article at:

Can Bitcoin survive? Debate rages, but experts say regulation is possible

From The Christian Science Monitor
By Gloria Goodale
February 26, 2014


Once again, the doomsayers are hovering over Bitcoin, the crypto-currency that has attracted the attention of both federal and New York State regulators in the past four months.

Tuesday’s closure at Mt. Gox, the currency’s largest exchange, shook the market, sending prices downward.

Wednesday saw prices rebound, however, leading some analysts to suggest that a little bit of good, old-fashioned market regulation is all the upstart digital cash really needs to move it into the mainstream. But, say others, this very respectability could compromise the essence of its appeal, namely its freedom from government oversight.

Bitcoin’s days need not be numbered, says Peter Zaleski, economics professor at Villanova University in Philadelphia, but  “regulation would kill rather than help Bitcoin.”

If it were regulated, then it wouldn’t be Bitcoin, he says via e-mail. “Bitcoin was created by and for risk-loving individuals. The everyday risk-averse person, which describes most people, should rightly be concerned andstay away,” adds Professor Zaleski.

A balance is possible, say financial experts, one that would put in place tools that have proved useful in protecting against fraud while retaining the desired freedom from the heavy fees and delays in many traditional financial transactions. 

Regulation is inevitable, if the cyber-currency is to endure, says Jason Hogg, founder of the financial services company Revolution Money and a professor at Cornell University in Ithaca, N.Y.  “Look at all the many regulations that have evolved over the years in our current markets,” he says, and they protect consumers against fraud and stabilize against volatility.

Officials have responded to Tuesday’s meltdown with calls for an investigation, both in Tokyo and the United States. 

In a statement, as reported by Bloomberg News, Benjamin Lawsky, superintendent of financial services for New York state, said, “Tailored regulation could play an important role in protecting consumers and the security of the money that they entrust to virtual currency firms.”

This is not the first time Bitcoin has drawn official attention. Congress held hearings on virtual currency back in November, and New York officials held them in late January…


Read the full article at:


SecondMarket jumps to give legitimacy to Bitcoin

From USA Today
By Matt Krantz
February 27, 2014


Bitcoin gets a second chance from SecondMarket — and it may be just what the virtual currency needs to become a legitimate rival to major currencies.
SecondMarket, a New York company, plans to launch a regulated exchange to facilitate trading in Bitcoin, a digital currency some think could be a global form of monetary transfer. Given its successful track record, some say this small company with just 50 employees has the heft to push Bitcoin past recent major problems and make it a legitimate rival to major currencies, such as the U.S. dollar and stores of value like gold.

Giving investors a digital meeting place to buy and sell off-the-beaten-path securities is something SecondMarket has already done several times in its 10-year history. SecondMarket became a force on Wall Street by conducting trading in shares of Twitter and Facebook even before either company was publicly traded.

If SecondMarket can repeat its success bringing dark corners of financial markets into the light with Bitcoin, the currency could go from being a technological proof-of-concept to a real and stable global form of monetary exchange, proponents say.

“We think it (digital currency) is an undeniable trend,” says David Kinitsky, senior director of SecondMarket, who is heading up the new venture, which will be spun out of SecondMarket and given a new name. “From the big banks to the big corporations and banks, everyone seems to recognize the possibility that Bitcoin, or something like it, is here to stay.”

SecondMarket’s move comes just after Bitcoin suffered yet another reputational hit. On Monday Mt. Gox, one of the biggest marketplaces for Bitcoin transactions based in Tokyo, closed its doors causing an estimated 744,000 Bitcoins valued at $400 million to vanish.

The move by SecondMarket lends much-needed credibility to Bitcoin, which has been the currency of choice for international illegal activities often exchanged in shady person-to-person transactions. “SecondMarket is proving that some firms run into the fire and see opportunity where others see danger,” says Mark Williams, professor of finance at Boston University. “However, SecondMarket is a vast improvement over the likes of Mt. Gox.”…


Read the full article at: