More news on Bitcoin:
U.S. makes Bitcoin arrests after Silk Road closure
_http://www.bbc.co.uk/news/technology-25919482
The operators of two exchanges for the virtual currency Bitcoin have been arrested in the US.
The Department of Justice said Robert Faiella, known as BTCKing, and Charlie Shrem from BitInstant.com have both been charged with money laundering.
The authorities said the pair were engaged in a scheme to sell more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.
The site was shut down last year and its alleged owner was arrested.
Mr Shrem, 24, was arrested on Sunday at New York's JFK airport. He was expected to appear in court on Monday, prosecutors said.
Mr Faiella, 52, was arrested on Monday at his home in Cape Coral, Florida.
Mr Shrem is accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to anonymously buy drugs.
The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.
The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.
Emily Spaven, managing editor of news site Coindesk, told the BBC: "Since the closure of Silk Road and arrest of alleged owner Ross Ulbricht, we always knew more arrests would follow.
"It is unfortunate Silk Road continues to make the headlines in association with Bitcoin - this is the dark side of Bitcoin, which the vast majority of digital currency users have no association with."
Mr Shrem is a founding member and the current vice chairman of the Bitcoin Foundation, a trade group set up to promote Bitcoin as an alternative currency.
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Russian Bitcoin users could face Jail time under Anti-terror Laws: Central Laws
_http://www.economywatch.com/news/russian-bitcoin-users-jailtime.28-01.html
Russia’s top monetary authority, the Bank of Russia, has warned businesses and citizens away from trading with bitcoins, claiming that the virtual currency could unintentionally involve users in terrorism and money laundering activities.
In a statement published on their website, the Bank of Russia highlighted the “speculative nature” of bitcoins’ value; and said that, at best, they carried “a high risk” of loss of value.
At worst, users, particularly financial institutions, “will be considered as having potential involvement in illegal activity such as the legalisation (money laundering) of criminal gains and financing terrorism,” the central bank said.
According to Ria Novosti, involvement in money laundering is punishable with up to seven years in prison in Russia; while the punishment for funding terrorism is up to 15 years jailtime.
The Russian central bank was responding to a statement by Sberbank’s chairman German Gref late last year, hinting that his bank could issue electronic money such as bitcoins at some point.
At Davos last week, Gref also called bitcoins a “very interesting global experiment” and said that banning them would be a "colossal step backward."
Nonetheless, the Bank of Russia referred back to federal law to argue its point against the virtual currency.
Russia’s central bank is not the first to voice its concerns about the digital currency. Last month, the People’s Bank of China, China’s central bank, handed down an order banning banks from handling bitcoin transactions and said that it was stepping up efforts to curb the risk of the virtual currency in laundering money.
The ban by China saw the value of bitcoins immediately crash from above $1,000 to around $600, though it has since recovered.
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Way beyond Bitcoin: The coming of "Smart Contracts"
_http://www.economicpolicyjournal.com/2014/01/way-beyond-bitcoin-coming-of-smart.html
Forget about Bitcoin as a currency. The Bitcoin technology has much more interesting applications in other areas.
Wired has a short profile on Vitalik Buterin and what he is working on. A few weeks ago Vitalik passed through San Francisco and I had the chance to meet up with him. I found him to be very smart, intellectually honest,, a very creative thinker and a visionary. That's part of the reason, I am very excited about what he is working on.
Key snippets from Wired:
Most people think of bitcoin as a form of money, if they think of bitcoin at all. But 19-year-old hacker Vitalik Buterin sees it as something more — much more. He sees it as a new way of building just about any internet application.
The bitcoin digital currency is driven by open source software that runs across thousands of machines around the globe. Borrowing code from this rather clever piece of software, independent hackers have already built applications such as the Twitter-style social network Twister, the encrypted e-mail alternative Bitmessage, and the unseizable domain name system Namecoin. But Buterin believes that many other applications can benefit from the genius of the bitcoin software, and that’s why he’s joining forces with several other hackers to create something called Ethereum.
He envisions Ethereum as an online service that lets you build practically anything in the image of bitcoin and run it across a worldwide network of machines. At its core, bitcoin is a way of reliably storing and moving digital objects or pieces of information. Today, it stores and moves money, but Buterin believes the same basic system could give rise to a new breed of social networks, data storage systems and securities markets — all operated without the help of a central authority[...]
Ethereum won’t use the peer-to-peer network that bitcoin runs on, nor will it use the same software. Instead, Buterin and his team are building a completely new system that will run atop its own network. But the project borrows heavily from the ideas behind the bitcoin software.
All bitcoin transactions, for instance, are stored in a massive public ledger called the “blockchain.” This is a type of encrypted database, and you can use it to power other applications — as we’ve seen with Twister and BitMessage. Ethereum will feed still more applications through something similar to the blockchain, and it will offer a stripped-down version of the Python programming language — known as Ethereum Script — that’s specifically designed for building these blockchain-based applications.
As with bitcoin, the network that underpins Ethereum will be powered by machines donated by the people of the world, and to encourage donations, the system will allow these machines to collect fees from developers who build and run an applications atop the network. In similar fashion, bitcoin shares its money with those who run the machines driving its network.
The system could potentially drive everything from Dropbox-style storage systems to custom digital currencies. According to Buterin, it will be particularly well suited to something called “smart contracts.” A simple example is a betting system. Two people could place bets on, say, the outcome of the Super Bowl, entrusting a certain amount of digital currency to system. The system would then check the final score of the game via the web and distribute the funds appropriately. No bookie needed.
But Buterin also envisions far more complex smart contracts, including joint savings accounts, financial exchange markets, or even trust funds. Theoretically, these contracts would be more trustworthy because — if the software is properly designed — no one could cheat. Many bitcoin geeks even believe that smart contracts could lead to the creation “autonomous corporations” — entire companies run by bots instead of humans.
The Ethereum team plans to have a test network up and running soon, and on February 1, it will launch a crowdfunding campaign to finance its further development. The code will be open source, another reflection of the bitcoin way.
