Bitcoin Price Stability Through Shutdowns

The past couple weeks have seen some drastic moves by the United States Government and the US Global Illicit Financial Team. Starting with the DHS blocking and seizing Dwolla accounts that were linked to Mt. Gox a little more than two weeks ago, the scene was set for more of the same. The crime in question: Money Laundering and not registering as a money-transmitting service.Seized5_HR

This past week the witch hunt continued with Liberty Reserve being the next suspect. Liberty Reserve is a Costa Rica based online virtual currency service similar to PayPal. Founder, Arthur Budovsky, was arrested in Spain and was one of six indicted in connection with Liberty Reserve. The indictment included a ludicrous claim that the service laundered, “more than $6 billion in criminal proceeds” and was “one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes” — essentially accusing most of the users of being involved in criminal activities.

Among the legitimate customers of Liberty Reserve is ePay Cards, a service that functioned like an online pre-paid Master Card or Visa. Mitver Holdings owns ePay Cards and has $28,000 USD tied up in Liberty Reserve accounts at the time of the shutdown. This is not a new territory for Mr. Budovsky, in 2006 he was found guilty for operating Gold Age from his Brooklyn, New York apartment. Started in 1999, Gold Age was one of the first independent e-gold exchangers.

Small Fish

Liberty Reserve is certainly getting a lot of press out of the shutdown but several other sites have also had their domain names seized this past week. Here is a list of other sites shutdown or seized:

Panama based Perfect Money is taking steps to protect itself from becoming a victim of the witch hunt by changing policies to restrict US residents from using their service. They put out this statement:

We bring to your attention that due to changes in our policy we forbid new registrations from individuals or companies based in the United States of America. This includes US citizens residing overseas. If you fall under the above mentioned category or a US resident, please do not register an account with us.

The Dollar / Bitcoin Portal

As we have talked about on the Neocash Radio podcast, efforts by the US government to halt the growth of Bitcoin have focused on points at which dollars are exchanged for the digital currency. This appears to be the primary tactic employed in the State’s strategy.

The Bitcoin network is largely unassailable due to it’s decentralized and distributed nature. With a total computer power leagues ahead of current super computers, there are few options to hinder the digital currency. While this latest trend does not bode well for the services that have existed for years, start-ups and recent Bitcoin based services like bitinstant and bitpay are stepping up to fill the newly created void.

Bitcoin Price Stability  

The price of bitcoin across exchanges has remained on a steady upward climb the past two weeks regardless of the bad news generated by government intervention. Many articles and comments were made about how Bitcoin is maturing. I think it more accurate to say that the large number of recent adopters have become more confident in the digital currency.

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Mt. Gox USD May 15th – May 30th, 2013 (Source: BitcoinCharts.com)

The volume of trading at Mt. Gox has been trending downward since the $266.00 price point. What effect the most recent shutdowns have had is difficult to parse out. The Dwolla shutdown appears to have had some effect but exact numbers would be difficult to calculate. Mt. Gox remains the highest volume exchange in the marketplace with U.S. Dollars as the most used currency.

Mt. Gox Volume March 30 - May 30, 2013 (Source: BitcoinCharts.com)

Mt. Gox Volume April 2nd – May 30th, 2013 (Source: BitcoinCharts.com)

Other exchanges are growing and seemingly picking up some of the volume lost at Mt.Gox. BitStamp is one of the up and comers with recent days where it traded 50% the volume of Mt. Gox. BitStamp has also moved into second, overtaking BTC-e, for overall volume of USD trades according to the charts at BitcoinCharts.

Positive Growth

Regardless of the recent government interventions Bitcoin markets and entrepreneurs are not deterred. Quite the opposite, Venture Capitalists are jumping to be a part of the next bitcoin business, Russian WebMoney is adding a bitcoin payment option for it’s 11 million users, and companies are coming up with innovate new exchanges. The future of Bitcoin is set to be fascinating and more importantly, functional.

It only makes sense when you consider the fact that Bitcoin grants the user a stronger position in terms of control over their money. Capital controls may not be a big thing in the United States but there are many countries who’s residents are looking for a better way to buy what they want and Bitcoin is offering a solution. Bitcoin is a truly international phenomenon, a universal currency devoid of dogma, duty or nationalism and it represents a dynamic change in human evolution. Bitcoin returns to the individual the power of money in a civilization ruled by money.

The World’s First ATM for Bitcoin is the Bitcoin Machine

On February 16th, 2013, nearly two months before one bitcoin hit $266.00 in value, three brave entrepreneurs unveiled their Bitcoin Machine to the public. The venue was the 2013 International Young Americans for Liberty Conference held in Washington D.C. and the three early adopters were Zach and Josh Harvey, and Matt Whitlock of Lamassu BTC Ventures. One week later they debuted it at the 2013 Liberty Forum in New Hampshire and $5500 worth of Bitcoin was purchased, at the time bitcoin was rough $30.00 each.

The Prototype Bitcoin Machine debut in Washington D.C. Feb 16th, 2013

The Prototype Bitcoin Machine debut in Washington D.C. Feb 16th, 2013. From left to right: Matt Whitlock, Josh Harvey, Zach Harvey (COURTESY)

The three returned to the development of the machine and while they fine tuned the design Bitcoin took off! On April 10th, 2013 at just after 12:00pm UTC bitcoin hit $266.00 in value and the world took notice! A week earlier the situation in Cyprus was heating up and the talk of the worlds first Bitcoin ATM started to happen. The press jumped on this story and soon Jeff Berwick was known as the Bitcoin ATM guy with quotes like, “we already have orders from 30+ countries”.

These sort of stories continue as the idea of a bitcoin ATM is exciting, this one is from May 3rd, 2013: San Diego May Get World’s First Bitcoin ATM. The press is hungry for Bitcoin news and it’s no wonder, Bitcoin is fast becoming the hip trend to jump on.

The Bitcoin Machine

Lamassu BTC pushed to finished their development and the rise of bitcoin only intensified the demand for a machine that could accept Dollars and vend Bitcoins. More recently exchange crashes, DDoS attacks, and bank account closings have caused some difficulty for consumers to get their money in and out of Bitcoin. The Bitcoin Machine will help with one of those problems leaving wire transfers and a variety of non-bank methods for changing your Bitcoin into Dollars.

The Bitcoin Machine (courtesy of Lamassu BTC)

The Bitcoin Machine (courtesy of Lamassu BTC)

The Bitcoin Machine is going through the final stages of testing and development in Manchester, NH. The machine is designed to be a counter-top unit kept indoors and under supervision. It works with the consumers smartphone camera and utilizes a QR code to relay wallet address information. As you can see from the photograph, some effort was put into making sure the device was not only secure and functional but also aesthetically pleasing. The company hopes to start taking pre-orders as early as this summer.

Neocash Radio had a chance to conduct a phone interview with one of the owners, Zach Harvey for Episode 3 of the podcast. We have packaged the interview in a stand-alone format for easy listening and sharing. Take a listen!