Crypto Biz Magazine—July, 2014/Issue.02

Bitcoins for Sale!

CONTENTS
14
26
30
The Power of The Blockchain:
Future Developments and
Applications
by Dom Steil
Why You Should Probably
Be Using a MultiSig Bitcoin
Wallet
by Arianna Simpson
Cryptogenic Bullion and the
Consultancy Culture
by Brian Vereschagin
Expert Advisory Board 9
Visual Culture and Cryptocurrency 10
by Nikki Olson
Crypto Biz Magazine Page.4 July.2014
yesbitcoin 12
by Branden Petersen
Can Bitcoin Displace Gold as a Store of Value? 18
by Ariel Deschappel
Bitcoin for Charities 22
by Piotr Piasecki
CryptoCoin Social 32
Q&A with Swarm 28
Continued on page.8

Issue.02
July.2014
I AM SOSHI…
Published by CRYPTO BIZ MEDIA,
a division of CRYPTO BIZ GROUP
Editor-In-Chief
SOSHI
Chief Operations Advisor
TRENT NELLIS
Chief Financial Advisor
BARRY MORGAN
Chief Technical & Media Advisor
JAY ADDISON
Senior VP of Business Development
NATHAN WOSNACK
Art Director
VANESSA KING
Social Media Crusader
TYLER OMICHINSKI
COVER DESIGN Jay Addison
CONTRIBUTING WRITERS Oleg Andreev,
Kristov Atlas, Gary Boddington, Sean
Comeau, Ariel Deschappel, Susan Fourtané,
Ben Isgur, Reed Jessen, Daniel Krawisz,
Alexander Merricks, Vivek Nair, Phoenix
Olivia, Nikki Olson, Jacob Payne, Branden
Petersen, Piotr Piasecki, Arianna Simpson,
Domenic Steil, Brian Vereschagin
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I am Soshi and this is Issue.02 of Crypto Biz Magazine. I welcome you to our journey
into the futuristic world of crypto currency. Over the next decade, the world’s economy
will be revolutionized by innovation and efficiency through the mass adoption of
crypto currency, and its unlimited benefits and improvements on the current global
economic models.
Mankind’s creativity has always been driven by innovation and necessity. There is almost
always a “better way” with which to achieve our goals, whether they are on an individual
level or a global scale. Look at the evolution of finance and technology as a natural
progression from the centuries-old centralized system we have all been beholden to. As
a consumer, you can expect to see the infrastructure for Bitcoin growing around you.
Recently, we have seen Overstock.com, Dish Network and Expedia boldly and proudly
announce to the world that they are accepting Bitcoin. Our global economic substructure
will experience an infiltration of payment gateways, implemented and accepted as
seamlessly as the introduction of debit transactions were in the 1980s. Look for the
official “Bitcoin” sticker in retail storefronts around the world, adjacent to the traditional
VISA, Amex and MasterCard logos. Consumer adoption and confidence will innately grow
as crypto currency and Bitcoin become familiar terms in the world’s vocabulary.
In this issue we bring you an eclectic mix of articles surrounding crypto currency and
goings-on in our sector. A descendant of Bitcoin with an advanced security model,
our cover story is about Cryptogenic Bullion. This is a hybrid concept that presents a
strategy to buy and hold crypto currency as a commodity, in much the same way you
would precious metals like gold and silver.
US Marshals recently auctioned off nearly 30,000 Bitcoins seized from Silk Road, which
was speculated to have negatively impacted the price of Bitcoin. However, this supply
only strengthened the demand for Bitcoin, and the price actually rose nearly 7%. What
does this tell us? Consumer confidence, buoyed by the US Government’s validation of
Bitcoin, equals increased demand—and thus the price did, and will continue to, increase.
You can read about the Silk Road Legacy of Dread Pirate Roberts inside.
In late June there was a Bitcoin conference in Washington, DC. We have a review of
Bitcoin in the Beltway by Ben Isgur that details the attendees, speakers and the general
positive aura that accompanies this growing sector of finance. Innovation and community
are the strong points in this space, and the reports we’ve had from those in attendance
were very positive.
The organizer of the Bitcoin in the Beltway conference was Jason King, the founder of
Sean’s Outpost, a Pensacola, FL non-profit named after a deceased friend of Jason’s. His
mandate has been to help the less fortunate in his area with Bitcoin donations. Bitcoin
community members have proven to be compassionate and generous, as noted by
Sean’s Outpost and another charitable organization, The Water Project. Our Advisory
Board member, Piotr Piasecki, shows us the benefits of crypto currency for donations in
Bitcoin for Charities.
Finally, we very are proud to announce that Minnesota State Senator Branden Petersen
recently joined our Advisory Board. Petersen was elected to the House in 2010. His
legislative priorities include funding equity for schools with great needs but insufficient
revenue, and “value-added” teacher evaluations that measure effectiveness by student
progress, rather than teacher proficiency. Recently, Petersen announced that he’s
founding a new non-profit, yesbitcoin, with a mission to communicate to people and
organizations how Bitcoin works, and the ideas and infrastructure behind it.
Read and enjoy. If you have feedback, including questions, please feel free to contact
me at soshi@cryptobizmagazine.com.
Enjoy! —S
July.2014 Page.5 Crypto Biz Magazine

THE EVOLUTION
OF TRANSACTION
SOLUTIONS
SPECIAL ADVERTISING FEATURE
Bitcoin offers merchants transaction fees that
are much lower than other payment solutions
With the excitement of all the various cryptocurrencies currently in the
space, what sometimes is under-discussed is their role in the future
of transactions. As merchants learn about the benefits of accepting
cryptocurrencies like Bitcoin, skepticism will be met by the numerous
advantages of using this type of protocol for payment.
At BitPay we currently have 30,000 merchants, including higher profile
clients like Gyft, TigerDirect and the NBA’s Sacramento Kings. While these
forward thinking companies immediately saw the benefit of Bitcoin and
were quick to jump aboard, the mainstream acceptance of Bitcoin also
requires our smaller merchants that sell specialized items or services.
Once skepticism and misinformation is quelled, the facts of Bitcoin as a
payment method become crystal clear to many merchants.
Through BitPay merchants pay 1% or less of their transaction amount
(depending on volume) as a processing fee which is significantly less
than other payment processing options. It’s the P2P nature of the Bitcoin
network that enables this extremely low payment processing option. It’s
also important to realize that Bitcoin is still in its infancy and other payment
options have had 50 plus years to build their network and infrastructure.
Bitcoin has been around since 2009 and in those five years the user
experience for merchants and customers has become drastically easier.
This will continue to improve as the open source platform develops.
What’s important is for other Bitcoin companies in the space to contribute
development time to ensure the protocol can grow properly. At BitPay,
Bitcoin Core developer Jeff Garzik is a member of our team and we
continue to contribute to the platform through projects such as Bitcore.
One of our biggest hopes is as other startups grow that they will be able
to expand their development teams to contribute to Bitcoin.
Bitcoin users currently have various reasons to use the protocol;
including technological, political, financial and economic. As merchant
acceptance grows and education on the subject grows, the user base
will diversify and the platform will become easier to use. We aren’t close
to widespread acceptability in the same vein as a credit card, but it is
something that the Bitcoin community is currently developing.
An analogy I quite often make is to the music industry in the early 2000s.
Napster forced record labels to change their business model to one that
is more in line with what the consumers wanted. Some advantages that
Bitcoin has over what happened with Napster include the existence
of a global marketplace, venture capital investments and continued
development of the protocol. The switch to digital was something that was
confusing and scary for many music fans and the immediate resistance
slowly faded away and business opportunities such as iTunes and Google
Music came to make buying digital music easier and the preferred way
to purchase a song. Bitcoin is controversial now because it’s challenging
something that has been the same for a very long time. It’s more important
to realize that, like any other technology, it becomes more mature and
easier to use over time.
Some of the smartest and most successful entrepreneurs in the world
are embracing Bitcoin.
These individuals see the long term potential in how it could drastically
reduce payment costs as well as the global reach it has. BitPay has
continued to bring credibility, excellent support and development of the
platform to the community and that has resulted in being the market
leader for Bitcoin Payment Processing. We also hope to continue to grow
globally with new offices in San Francisco, New York City, Argentina
and Amsterdam as well as a new location for our continuously growing
Atlanta office.
ACCEPT BITCOIN
www.bitpay.com

CONTENTScontinued
Boatcoin 2014 Debuts During The London Technology Week 34
by Susan Fourtané
Where does Accounting/ERP meet Bitcoin, Dollar, Euro & Yen? 36
by Gary Boddington
Dark Marketplaces Positioned to Accelerate the Collapse of Governments 38
by Kristov Atlas
The Legacy of the Dread Pirate Roberts 40
by Daniel Krawisz
Bitbasket Q&A 42
by Jacob Payne
OPENCL vs OPENGL for Mining 43
by Vivek Nair and Alexander Merricks
Crypto Biz Magazine Page.8 July.2014
What Makes a ‘Good’ Password Manager Good? 44
by Sean Comeau
Bitcoin and Cryptocurrencies: Prospects for Development in Russia 46
Bitcoin Suppression via the Patent System 48
by Reed Jessen
A Personal Journey Down the Bitcoin Rabbit Hole 50
by Phoenix Olivia
Bitcoin in the Beltway—Who, What, and Where Is Charlie? 52
by Ben Isgur
Github Bitcoin Glossary 58
by Oleg Andreev

EXPERT ADVISORY BOARD
BLAKE ANDERSON
BLAKE ANDERSON is an MIT
educated cryptographic
economist and computer scientist.
Having worked in Fortune 25
finance as a math based security
project manager he now works with Bitcoin
derivatives, contracts and financial products.
Working full time with BTC behind the scenes for
years prior to IRS direction Blake is now happiest
when speaking publicly about technology
empowering the individual. More about Blake at:
cointelegraph.com/post/blake_anderson
KRISTOV ATLAS
KRISTOV ATLAS is a network
security and privacy researcher
who studies crypto-currencies.
He is the author of Anonymous
Bitcoin: How to Keep Your Ƀ
All to Yourself, a practical guide to maximizing
financial privacy with Bitcoin. Kristov is also a
correspondent for the World Crypto Network,
appearing regularly on the weekly roundtable
show The Bitcoin Group, and host of Dark News, a
show about un-censorship technologies.
LISA CHENG
LISA CHENG is the co-founder of
Distributed.buzz and the CEO
of the Vanbex Group. She is the
force behind the popular news
aggregation site BitcoinRegime.
com and a behind the scenes advocate of
Bitcoin 2.0 and blockchain technology. She
comes from an accomplished background after
having worked at Fortune 500 companies and
technology startups involved with Big Data,
algorithmic trading, and enterprise systems.
Lisa’s time is now focused on consulting and
planning for new cryptocurrency projects after
having worked for the Mastercoin Foundation in
leading the Business Development effort. She is
located in Vancouver, British Columbia, Canada
and you can reach her via Twitter @lisacheng.
SUSAN FOURTANÉ, BA
SUSAN FOURTANÉ, Science &
Technology Journalist—Susan’s
articles on diverse technology
topics have appeared in various
UBM Tech and UBM Electronics
online publications since 2009, and on Helsinki Times
and other publications since 2006. In February 2014
Susan joined CryptØMiners’ Board of Advisors as
Media Advisor. Susan on Twitter: @SusanFourtane.
BRANDEN PETERSEN
BRANDEN PETERSEN is the
founding Executive Director
and Chairman of the Board of
yesbitcoin. Along with this work, he
serves on the Financial Standards
Working Group at The Bitcoin Foundation. Elected
to the Minnesota House of Representatives in 2010
and the Minnesota State Senate in 2012, Petersen
currently represents the people of Senate District
35 in Northwest Anoka County. His legislative
accomplishments in education policy reform as well
as citizen data privacy protections are among the
notable items in his body of work as the youngest
member of the State Senate. Along with his work in
the public sector, Petersen has also been delivering
strategic communications solutions for an array of
non-profit and corporate clients as a Senior Counselor
at Ainsley Shea Communications in St. Paul, MN.
PIOTR PIASECKI, BSc MSc
PIOTR PIASECKI is a Chief
Scientist at Provable Inc, a
Vancouver-based software
development startup. Since
discovering Bitcoin in 2011, he
became a reputable member of the Bitcoin
community under the nickname “ThePiachu.”
Piotr wrote his Master’s thesis on the subject of
Bitcoin security in Technical University of Lodz,
in Poland. He is also a moderator of Bitcoin.
StackExchange.com, /r/Bitcoin subreddit, runs
a number of Bitcoin-focused websites, such as
Vanity Pool and TestNet Faucet, as well as writes
a blog on various cryptocurrencies.
July.2014 Page.9 Crypto Biz Magazine

VISUAL CULTURE AND
CRYPTOCURRENCY
by NIKKI OLSON
Imagine yourself designing a
new cryptocurrency. You develop
the protocol and other specific
software attributes, and perhaps
you’ve already settled on a name
for your currency. Now you’re at
the point where you have to create
your cryptocurrency’s imagery…
How do you decide how it will
look, and why?
Creating and decoding the significance
of visual attributes is an
exercise in visual culture.
What is “visual culture”?
Visual culture refers to aspects of
culture that are communicated or
evidenced in visual mediums.
It can refer to anything from
explicit art to fashion, from
logos to typefaces—essentially,
it’s anything that corresponds
to a culture that is
processed visually.
and paper currency being a source
of nationalism and national iconography.
For over 2.5 millennia, currency
around the world has been a way in
which countries have made visual
their self-image, ideals, aspirations,
history, mythology and many other
things. The most common images
on money are of people (commonly,
national heroes), but also popular
are buildings, local flora and fauna,
the common themes communicate;
and can design in this space be
categorized in any way?
A survey of top crypto currencies
reveals that the digital aspect of
cryptocurrency is a consistently
highlighted and/or central attribute
in design. Binary digits and/
or circuitry are common, as are
aesthetics denoting a futuristic kind
of elegance and sheen. Another
thing to note is the frequent
use of historic and even ancient
language symbols. The “D”
character on the Devcoin, for
instance, which also appears on
Dogecoin, is the historic character
“eth,” which is used in numerous
languages of the Middle Ages,
including Old English.
Others reach even
further back.
Zetacoin
uses the
Greek
Page.10 July.2014
Crypto Biz Magazine
While there are many interesting
visual facets to the
cryptocurrency culture itself,
in this piece I’ll focus on
cryptocoin logos, elucidating
the contrast between nationstate
currency and cryptocurrency
from a visual standpoint, as well as
explore the common symbolism
used in cryptocurrency design (and
the meaning it conveys).
The visual aspects of nation-state
currency have a rich history, dating
back to approximately 600 B.C. in
Lydia (present-day Turkey), which
is where the first coins with artistic
symbols and pictures etched into
them appeared (Standish, p.15).
The Greeks quickly followed, and
in both instances the images on
coins were symbolic logos, often
representing the city-states that
were producing them. What would
ensue would be a 2,600-year history
of a globally shared practice of met al
Examples of ancient Greek
coins, which followed the first
coins from Lydia, (present-day
Turkey) 600 B.C.
and methods of transportation.
In general, the visual
aspect of nation-state currency
can be thought of as
a source of citizen education,
artistic enjoyment, and of course,
communication and propagation
of national values.
It should be quite clear that the
visual aspects of cryptocurrency
are of a vastly different orientation.
Cryptocurrency imagery almost
unanimously takes the form of
circular logos, often of 2 or 3 solid
colors. There are of course a few
significant counter-examples, which
I will turn to in a moment, but first,
I pose the question: what are the
common visual themes? What do
alphabet’s “Zeta,” and Primecoin
uses its “Psi.”
What kind of meaning is conveyed
by historic lettering? One could
argue that the addition of historic
lettering serves to give the logo
an official feeling, as well as to
emphasize positive attributes of
stability and longevity. In addition,
some instances of ancient letters

(such as “zeta,” and the written version of megacoin
(MSC) which uses the summation symbol), have crossover
use in mathematics and engineering, giving
these logos, in addition, connotations of “precision,”
“intelligence” and “reason.”
One area of the market where design in this space is
perhaps most interesting, and in many cases more
similar in nature to traditional currency, is in instances
where cryptocurrency is designed for a particular
group of people, such as a nationality, or groups with
common interests.
“Ideological coins” (for example Anoncoin and Franko
Coin,) and novelty coins such as Dogecoin, also tend
to appeal to specific cultural groups more intentionally
in the logo.
What does the future hold in terms of
cryptocurrency’s visual space?
As the cryptocurrency movement unfolds, it will be
interesting to see the aesthetic relationship communities
have with cryptocurrencies grow in richness and
complexity. Some visual customs of nation-state
currency, such as the use of “official-looking” script
and culturally significant images, having been
carried through to cryptocurrency design
and I wouldn’t expect that to change.
However, as our relationship with
cryptocurrency grows and unfolds,
the meaning we associate
with crytpocoin imagery will
continue to change and intensify.
References:
1. Standish, D. (2001). The Art of Money:
The History and Design of Paper
Currency from Around the World. San
Francisco: Chronicle Books. —S
Take, for instance, Aurora Coin, a coin created for
Icelandic citizens. Given the nation-state context,
we find ourselves back in a familiar place in terms
of design, where visual attributes (and the name, in
this instance) are connected to local geography and
the history of the region. The image is of the Aurora
Borealis, a significant phenomenon of the sky in the
far north, and the character on the coin is a Viking
Rune, the first letter of the Runic alphabet. The
character means “wealth” or “cattle,” but also bears
resemblance to a coniferous tree, which is a tree of
the North. Another example is MazaCoin, which is the
official reserve currency of the Oglala Lakota Tribe.
The MazaCoin logo incorporates the colors of the
Lakota medicine wheel. You can see the evolution of
the logo here.
NIKKI OLSON is an entrepreneur,
Transhumanist writer, and
Affiliate Scholar at the Institute
for Ethics and Emerging
Technology. She has a BA in
Sociology and Philosophy and
is now a student of Computer
Information Systems at the
University of the Fraser Valley.
Contact inikki3@gmail.com.
Her Bitcoin address is:
1GRxv7cuPU2P25kMR78qp6vrX5n71uCogD
July.2014 Page.11 Crypto Biz Magazine

YESBITCOIN
by EXECUTIVE DIRECTOR BRANDEN PETERSEN
Page.12 July.2014
Crypto Biz Magazine
For five years, Bitcoin advocates have
helped build an ecosystem that has
caught the attention and interest of the
world’s most powerful institutions. Yet
today, less than five million people worldwide
use Bitcoins in their everyday purchases.
Bitcoin remains an enigma to the mainstream
consumer marketplace despite exponential
growth in venture capital and number of
commercial business entities. Bitcoin investors,
users and commercial interests are depending
on the adoption of Bitcoin as a mainstream
currency with upside value heavily dependent
upon its use as a currency in the everyday
marketplace. In order for this to happen, the
broader community of diverse interests must
communicate effectively to the marketplace
at-large, as well as key constituents who have
a stake in the successful adoption of Bitcoin as
a global currency and technology.
To address the challenges, a 501(c)(3) non-profit
organization named yesbitcoin will launch as the
world’s first strategic, consumer—and merchantfacing
communications effort on behalf of the
world’s most prominently accepted crypto
currency. yesbitcoin will focus primarily on
driving understanding and acceptance of Bitcoin
as a mainstream consumer technology.
As Co-Founder and CEO of Coinbase recently
said in an interview with CNBC about Bitcoin’s
mainstream adoption, “The biggest hurdle
is education.” But educating the broader
marketplace is a challenge when talking about
something that is inherently decentralized.
The decentralized and diverse nature of Bitcoin
interests and core constituents makes large-scale,
focused communications and
public relations an overwhelming
challenge for the community.
Individual business entities or
interest groups, no matter how
successful, will likely be unable
or reluctant to “carry the water”
for the Bitcoin ecosystem
because those organizations
will not be the sole, direct
beneficiaries of such an effort.
Any investment they make in
large-scale communications on
their own behalf will benefit
competitors and the ecosystem at large.
Secondly, Bitcoin interests can’t scale
communications efforts in a way that makes
economic sense for their organizations and
business objectives. Again, the decentralized
nature of the Bitcoin ecosystem makes
informational and advocacy work on behalf of
bitcoin use problematic. Of course, given that most
consumers are unaware of Bitcoin, this educational
advocacy must be done before a brand can even
begin to talk about their own value.
Bitcoin needs a single, recognizable, central
advocate that can help the entire ecosystem by
communicating on behalf of all interests on an

appropriate, strategic scale without the conflicts
presented by proprietary interests—with a single
objective of driving understanding, acceptance
and use.
yesbitcoin is the world’s first global nonprofit
organization committed to demystifying the
Bitcoin economy and increasing understanding,
acceptance and use of Bitcoin. The
yesbitcoin mission is to immediately become
the solution to the problem of decentralized
interest and lack of focused, strategic advocacy.
Consumers and merchants are accustomed to
advertising communications from the financial
service industry. Visa, MasterCard, American
Express and other financial service providers
have been selling the benefits of their products
for decades, and have paved the path that
Bitcoin must travel. We seek to serve in this
capacity on behalf of Bitcoin, with “retail”
communications efforts that can be easily
understood by the marketplace at large.
yesbitcoin will operate in a collaborative, nonterritorial
and transparent manner. We seek
to be a partner in propelling Bitcoin into the
mainstream. We will continue in the tradition of
the broader Bitcoin community, and work with
all interests to advance our cause.
We are an organization that is dependent on
donations from the community.
DONATE TO: 1DV9NsxTsaLMbDaduS49oKcAEcpER4aqJX
or at www.coinbase.com/yesbitcoin
WEB SITE: www.yesbitcoin.org
CONTACT US: at branden@yesbitcoin.org or call
1 (763) 227-5444
BRANDEN PETERSEN is the
founding Executive Director
and Chairman of the Board
of yesbitcoin. Along with this
work, he serves on the Financial
Standards Working Group at
The Bitcoin Foundation. Elected
to the Minnesota House of
Representatives in 2010 and the
Minnesota State Senate in 2012,
Petersen currently represents
the people of Senate District 35 in Northwest Anoka County.
His legislative accomplishments in education policy reform as
well as citizen data privacy protections are among the notable
items in his body of work as the youngest member of the State
Senate. Along with his work in the public sector, Petersen
has also been delivering strategic communications solutions
for an array of non-profit and corporate clients as a Senior
Counselor at Ainsley Shea Communications in St. Paul, MN:
1GRxv7cuPU2P25kMR78qp6vrX5n71uCogD
July.2014 Page.13 Crypto Biz Magazine

THE POWER OF THE BLOCKCHAIN:
FUTURE DEVELOPMENTS AND APPLICATIONS
by DOM STEIL
“Talent hits a target others can’t hit,
Genius hits a target others can’t see.”
—Arthur Schopenhauer
mechanism of transfer and record. It is the “third-party”
that is needed in so many of our current trust base
models for various services. It is the “universal balance
sheet” used to record and verify the most recent state
of various digital ownerships.
Page.14 July.2014
Crypto Biz Magazine
The sentiment surrounding Bitcoin has transformed.
It has gone from being the anonymous payment
mechanism to facilitate illegal transactions, to a
speculative digital bubble with no intrinsic value, to
what industry leaders are now calling the greatest
and most disruptive technological breakthrough since
the Internet.
The paradigm has shifted; entrepreneurs and worldclass
venture capital firms are teaming up to improve
the efficiency and effectiveness of this new payment
ecosystem through:
online exchanges
single-signature wallets
multi-signature wallets
merchant integration services
B2B enterprise solutions
mobile user applications
So far, what has been built is a secure and effective
means to “pay” someone else without the need for a third
party. It is simply a global transfer of ownership mechanism
using a mathematically distributed digital asset
that is growing in scarcity because of an increase in
the awareness of its namespace and purposiveness.
It is a decentralized peer-to-peer (P2P) transfer of
ownership protocol using a time-stamping mechanism,
and ultimately, it works.
The underlying technology that facilitates the transfer
of bitcoins, the blockchain, the namespace not in the
headlines, is what will transform almost every domestic
and international vertical market. The blockchain is
intrinsically powerful in that it is the backbone of
this new type of open source, verifiable, distributed
The blockchain is the foundation for so much more
than just a payment network in the same way the
Internet is the foundation for so much more than just
e-mail. If the blockchain is what’s important, then
“Bitcoin” is simply the global onloading mechanism.
It is the first tier, an introduction to a new age of
what is possible through decentralized networking
and computing.
Tier 1: A Decentralized Digital Currency and Payment
Network
Why is Bitcoin being developed in the form of
multiple online exchanges and wallets based on
geographical location and currency?
What if there was one was global exchange that
allowed anyone to buy and sell any form of digital
or physical asset regardless of location in world?
How could a global asset exchange such as this
increase the security, transparency, and efficiency
of global finance and trade?
Tier 2: Decentralized Networks and Development
Platforms
Why are digital currencies the only things being
built up on top of this blockchain technology?
What if anything that could logically be expressed
in code could be implemented on a blockchain?
How could this type of network and platform be
adopted by the global economy?
This concept has the namespace of “Ethereum,” “Eris”
(on Ethereum), “Colored Coins,” “Smart Contracts,”
“Bitcoin 2.0,” and “Sidechains.”
The crux of this whole phenomenon is that “Bitcoin” is
a currency application to the blockchain.
Ethereum wants to make it so ANY type of deal,
organization, service, or system, can be decentralized. It
just requires the parties involved to set the parameters
expressed in code. So what will be built on top of the
Ethereum network for consensus verification?

Third-party Trust Models
Real Estate escrow between parties can be
implemented using multi-signature contracts
Insurance Policies can be engrained
in the blockchain
Digital Commodity Pricing
Commodities pegged at consensus-aggre gated
value
Weather Based Contracts
Contract premiums based on seasonal conditions
A Farmer makes an insurance agreement based
upon rainfall data
File and Data Storage
Proof of Existence on Bitcoin Blockchain
Dropbox/Box-type cloud storage
Enterprise storage, buy space from others on
the network
Smart Contracts and Escrow
Hedging accountability
No option of default
Signatures
Docusign
Multi-signature to set proportional abilities on
access to assets given a certain number of keys
Private Keys to Share Economy Assets
Home and Apartment Leases
Home and Apartment Keys
Hotel Keys
Airbnb
Car and Ride Leases
Car and Ride Keys
Autonomous Vehicles
Safety Deposit Box Keys
Package Delivery Keys
Permits to Controlled Assets
Guns
Prescriptions
Timestamped verifiable access
Audit and Financial Services
Taxes
Returns
Gambling and Betting
Proof of a Bet
Indisputable
APIs with Global Mobile Banking
MPesa
WeChat
Alipay
Non-Disclosure Agreements
Timestamped Verification
Patents, Copyrights, and Trademarks
Timestamped Intellectual Property Rights
Payment Processors
DAOs (Decentralized Autonomous Organizations)
An organization run and bound by code
Domain Names
Namecoin
First to exist
ICANN Replacement
Governance
Opt-In
Laws consensus driven
Voting Systems and Records
Reputation Systems
Online Identification Systems and Records
Medical Records
Incentivized Truth Consensus Crowdsourcing
Range of n inputs for a sought after accurate condition
or state of n, correct answers are rewarded x
What is actually enabling individuals to trade any
amount of bitcoin, regardless of their location in the
world? “Mining.”
The cryptographic time-stamping mechanism that
replaces centralized authority with community
consensus. The blockchain needs miners to survive.
It needs nodes to verify valid blocks with valid
transactions.
What if the mining becomes centralized, thus Bitcoin
becomes centralized? It is now self-evident to anyone
who has been following the development of this
cryptocurrency that the “mining” and “the blockchain”
are what really matter.
July.2014 Page.15 Crypto Biz Magazine

Page.16 July.2014
Crypto Biz Magazine
The incentivized mining mechanism is what should make
this ecosystem thrive, not the companies building a new
type of wallet or security feature.
User adoption isn’t people buying up, holding and
dumping after a price increase, it’s about people
mining, becoming another node, therefore increasing
the security and transaction volume capacity of the
network. It’s those people realizing they can be part of
a truly empowering decentralized global network. The
network effect is what makes this technology powerful,
its functionality as a type of distributed consensus
technology increases over time.
So the Bitcoin blockchain is being “mined” for a
currency because it’s catching on, people are starting
to accept it, online and offline. There is incentive.
For all of these other future blockchain applications
to work, you need people to mine “ether” from the
Ethereum blockchain. I don’t know if I will be able to
spend “ether” anytime soon, but the important thing is
that if given the right incentives, a blockchain has the
potential to become very powerful.
Create an incentive for people to decentralize a type
of process:
Bitcoin
Create a platform that allows people to decentralize
any type of process:
Ethereum
Additional Reading on this:
Tomorrow’s Apps Will Come From Brilliant
(And Risky) Bitcoin Code
By PRIMAVERA DE FILIPPI
Wired
The coming digital anarchy
By MATTHEW SPARKES
Deputy Head of Technology
The Telegraph
Think the Internet’s disruptive? Hold tight for
blockchain
DOM STEIL is an entrepreneur from
the Silicon Valley. He is well-versed in
a variety of technological fields and
has experience as a business analyst
at the international enterprise level.
For more information, visit his blog at
www.dominicsteil.wordpress.com.
Dom also accepts Bitcoin tips to:
1FiYresjQP7GV9EUxr9fudWm3Xz7WC2VMC
By PHIL WAINEWRIGHT
diginomica
—S

VeriCoin
50% of the Multi-pool fees will go to the VeriFund,
services for VeriCoin will be paid from the VeriFund.
Proof-of-Stake Verified.
Proof-of-Work Distributed.
Network-Stake-Dependent Interest.
www.vericoin.info/verifund.html
Donate:
VRC: VTHZfUg11wEJmSgBLUcmCKGYekuqFcGHQq
BTC: 1LRWAyE3WKwTzXszEmtqKXzikQvoq7NJBa
www.vericoin.info

CAN BITCOIN
DISPLACE GOLD AS
A STORE OF VALUE?
by ARIEL DESCHAPPEL
Page.18 July.2014
Crypto Biz Magazine
After several high profile arrests, the
collapse of its once biggest exchange,
and many other setbacks and
scandals, Bitcoin is still around… and
kicking as hard as ever. The price of a bitcoin
has rebounded over 70% since April, and
venture capital continues to be injected into
the ecosystem.
In May, the Bitcoin payment processor BitPay
raised $30 million in a funding round that included
major players such as billionaire investor Sir
Richard Branson.
Also in May, the leading Bitcoin mining hardware
manufacturer, BitFury, closed its own additional
funding round of $20 million.
Circle Financial, another Bitcoin startup, has
raised $26 million to-date and recently just
unveiled its first consumer service, aimed at
making it as easy as possible for the mainstream
to use Bitcoin.
Perhaps most interestingly, Euro Pacific
Precious Metals—one of the world’s largest
gold and silver dealers by volume—has started
accepting Bitcoin payments. Euro Pacific
Precious Metals was founded by Peter Schiff,
gold bug, and since early 2013, one of the
leading vocal critics of Bitcoin.
So why this seemingly sudden development?
Has Peter Schiff altered his opinion on Bitcoin
and “crypto currencies”?

Not according to his brief
interview with CoinDesk,
where he states that this is
simply a strategic move, and
proceeds to reiterate some
of his previous objections
to Bitcoin. Ultimately, Schiff
still believes gold is better
than Bitcoin.
Oddly enough, extreme
skepticism of Bitcoin is
quite possibly the only
thing Peter Schiff and
Paul Krugman—the New
York Times writer who
penned ‘Bitcoin is Evil’—
truly have in common. For
Krugman this makes
sense given his traditional
background in favor of
large government spending,
regulation, Federal stimulus
programs, etc. All policy
recommendations whose principles stand in stark
contrast to Bitcoin. Yet Schiff is another matter,
and may simply be too beholden of gold to let
it go so easily. So how do gold and Bitcoin really
match up?
Mr. Schiff has several objections to Bitcoin, all I
believe stem from a lack of appreciation for its
many technical intricacies. For starters, Mr. Schiff
is perturbed by the fact that Bitcoin is backed by
nothing. Critics like Schiff claim its value can go
from thousands of dollars to zero at any time,
leaving owners holding the bag. Gold, on the
other hand, can always be melted down into
jewelry, and used in many industrial applications.
However, the large bulk of the demand for gold
comes from its value as a hedge against inflation
and as an investment. These two uses make up
the vast majority of its demand.
Now it’s important to realize that thinking of Bitcoin
as “not real” is a silly mistake. It may only exist in the
digital realm, but Bitcoin is cryptographically hardwired
to have a limited supply of only 21 million
units. This scarcity is very real, and even more
transparent and assured than gold. Further, these
limited units have utility. They can be transferred
all over the world almost instantaneously and at
practically no cost. Bitcoins have utility because
they are the only unit of value on the planet that
can boast such global efficiency.
It’s an extremely powerful means of transferring
value in the digital world, at the same speed we
can transfer information, something that had
eluded us until Satoshi’s original white paper.
If Bitcoin is not “backed” by anything in the
traditional sense, it’s because bitcoins are already
“something” themselves. Each bitcoin is a unique,
unreplicable unit—much like gold. But where
gold first gained value from its aesthetic appeal,
Bitcoin gains its value from its built-in global
payments network, and technological advantages.
Once you realize that Bitcoin is as “real” as
any other limited good with value, you realize
both Bitcoin and gold play by the same market
rules. If, for whatever reason, everyone decided
tomorrow that gold wasn’t pretty anymore, and
Bitcoin became useless as a means of exchange,
then both would indeed collapse in price. In
that situation the fact that gold holders have
something physical left over is a moot point if it
isn’t worth much. The only advantage gold really
has in this respect is a multi-millennia track record
of holding value, while Bitcoin is admittedly far
newer and therefore carries inherently more risk.
However these risks are easily identifiable, so to
render Bitcoin useless or totally insecure as a
means of exchange (and thus worthless) would
require either a catastrophic internal bug, or
some other mass loss of confidence in favor of a
superior “cryptocurrency.”
The odds of a catastrophic glitch being discovered
at this point is practically zero, as Bitcoin is open
source software that has been scrutinized, tested,
and tweaked by legions of programmers and
computer scientists over the past 5 years. While
there are a number of smaller internal issues
July.2014 Page.19 Crypto Biz Magazine

Page.20 July.2014
Crypto Biz Magazine
and debates that you can spend weeks reading
into, none of them spell the doom of Bitcoin. As
for a mass exodus to another digital currency,
in order to supplant the massive first mover
and networking advantage
Bitcoin has, it better have
features that far surpass it,
and it’s hard to beat instant,
and virtually free. More likely
Bitcoin will be the “Facebook”
of digital currencies, with
newer ones with specialized
features appealing to
niches that may be sizable
in themselves but won’t
threaten the incumbent. Gold
originally became soughtafter
because of its luster,
and will always retain some
kind of value because of this
property. Similarly a Bitcoin
will always have value as long
as the network continues to
function, something that its
decentralized architecture ensures as there is no
one point of failure.
In a debate with Stefan Molyneux of Freedomain
Radio, Mr. Schiff commented, in regards to
Bitcoin, “A currency backed by something is
always better than a currency backed by nothing.”
To be fair, in a world of precious metals and fiat
cur rencies, this is an accurate statement. Modern
day fiat currency is merely a tool leveraged by
governments to help finance unsustainable
spending and debt. In the United States the
dollar has lost 97% of its purchasing power since
the abolition of Bretton Woods in 1971, deficit
spending continues to spiral out of control,
and as of 2011 the largest holder of US debt is
the Federal Reserve. Contrary to the delusions
of some, like Paul Krugman, there is no reality
where this ends well. All of these developments
have only been made possible by fiat currency,
and the power of the printing press. The opposite
of this monetary system was the Classical Gold
Standard, which tied currencies to the supply
of gold. That is the primary purpose of any
commodity-based currency: to prevent the
unlimited, unsustainable, and arbitrary printing of
currency by a central authority.
While there is certainly a certain allure to a tangible
and physical store of value like gold, this should
not be confused as a superior monetary property
in regards to Bitcoin. In fact the physical nature of
gold has a number of major disadvantages in that
regard. Let’s use a hypothetical example Mr. Schiff
presents on a number of occasions to illustrate
this point: A gold-backed digital currency. Actually
it’s not a hypothetical, as it has been attempted a
number of times and failed. There are a number
of problems with a gold- or commodity-backed
currency today, and the simple way to sum them
up is centralization. To back a digital currency
with gold requires a place to hold all this gold, be
it a Swiss bank or Fort Knox, and the capital to
support all of that storage and overhead. This all
requires trust in the party holding the gold, in the
infrastructure running the digital currency to be
maintained properly, etc.
At the end of the day, this is not only massively
expensive but it’s pointless. What this system
ultimately tries to accomplish is a modern form
of the classical gold standard. A digital currency
that can indeed be traded and transferred
instantly but is fundamentally limited in supply.
However if the ultimate goal of tying a currency
to a commodity is to create scarcity, and therefore
ensure its sustained value, then why bother with
these shenanigans at all? The technology behind
Bitcoin fundamentally allows for hard-coded
scarcity, doing away with the need to be tied
down to a commodity to keep supply limited. In
fact the most important quality gold has in terms
of securing its value is its scarcity. If it rained from
the sky, or a massive super reserve was discovered
and mined, for all its aesthetic appeal it would
still be worthless. Bitcoin perfectly employs the
great attribute of scarcity that has allowed gold
to exist as a standard of value in countless world
civilizations for thousands of years.
But having that scarcity be physical can actually be a
downside. Gold-backed digital currencies all had one
major reason for failure due to their centralization:
government shutdown. You see, governments aren’t

fond of the idea of losing their monopoly on money.
A central location with hoarded gold backing up a
digital currency is easy to put pressure on, or in
extreme cases, confiscate—an event that actually
has precedence in the United States. Bitcoin, on the
other hand, exists over the Internet with no central
point of control. Short of Armageddon, it can never
be shut down, and can
never be confiscated.
You may correctly think
that a gold-backed di gital
currency would have a
price stability advantage,
which is certainly true
today. That is because
gold, having existed for
thousands of years, has
already experienced repeated
price discovery,
while Bitcoin is still up
in the air. Fortunately,
fundamental logic would
suggest that the higher the Bitcoin market cap
and daily volume rises, the more stable the price
will be. Take the dollar, which—like Bitcoin—
is backed by nothing and has value that is
determined entirely by supply and demand. The
dollar, however, is used every day by hundreds of
millions of people, and, as a result, its day-to-day
value is very stable. Theoretically, the dollar at the
market size of Bitcoin would be just as volatile, and
Bitcoin used at the level of the dollar would be just
as stable. Of course the difference is that bitcoins
are limited in supply while dollars are not.
The question is, can Bitcoin crawl up to levels of
greater usage and thus stability? It’s actually a bit
of a paradox, as greater amounts of people would
only be confident using Bitcoin if it was more
stable, and it won’t get more stable until greater
amounts of people use it. This makes it an uphill
battle for adoption, one that is unprecedented as
far as technological advancements go. However,
the potential benefits of Bitcoin, if widely
adopted, are clear, even if it could take a while.
Goldman Sachs estimates $210 billion could be
saved a year globally by Bitcoin, and that’s only
the economic benefit that’s easily measurable.
It’s impossible to even contemplate how
much economic damage is done in the form
of artificially inflated bubbles from rampant
and irresponsible government money printing,
not to mention the theft of the purchasing
power of citizens to fund what would otherwise
meet violent opposition if it required increased
taxes. Finally, Bitcoin is an open platform that
allows for permissionless innovation, much like
the Internet, allowing for an untold number of
applications and useful subsystems to be added
to it in the future. Gold doesn’t have even a
medi ocre chance of matching any of these
technological achievements.
In ancient times, gold used as a ubiquitous
means of exchange was a revolution in trade
and com merce. It
was, and remains,
easily di visible, limited
in supply, durable
and impossible to
counterfeit. However,
Bitcoin represents a
similar revolution in
money, combining the
fundamental values
of gold as money and
implementing it in a worldwide decentralized system
with no borders, no artificial barriers, and
with total monetary freedom. It instills the ability
in all owners, whether wealthy venture capitalists,
or a merchant in Zimbabwe with a cell phone, to
send money instantaneously around the world
without any middlemen, at close to no cost.
Bitcoin is the embodiment of both sound money,
and a new age of unprecedented global trade
and economic freedom. Gold will always have its
historic past, but the future belongs to Bitcoin. —S
ARIEL DESCHAPELL
is an enthusiastic Bitcoin
community organizer, analyst,
writer, and entrepreneur. Since
first hearing about Bitcoin
he has been on a mission to
correct the vast amount of
misinformation circulating
about Bitcoin online, article
by article. He is a Miami born
Cuban-American, and attends
Florida International University
for finance. In his spare time he enjoys reading, eating, playing
Halo, and mountain climbing. Ariel accepts Bitcoin tips:
1D9P94wkZNvaDVei4q8iYS9zKKkHgbRjLG
July.2014 Page.21 Crypto Biz Magazine

BITCOIN FOR
CHARITIES
by PIOTR PIASECKI
Page.22 July.2014
Crypto Biz Magazine
The Bitcoin technology has a lot to offer to the
non-profit sector. This message permeated the
Bitcoin in the Beltway conference. It doesn’t
matter whether you’re feeding the homeless like
Sean’s Outpost, building water wells through The
Water Project, or mapping the asteroids floating
in our solar system with B612 Foundation, the
Bitcoin community wants to give you money,
and it will go out of its way to make sure you
can accept it.
Using Bitcoin can be a challenge in itself, let
alone using it in your business. However, there are
many great services that take care of everything
for you. For example, BitPay will accept Bitcoin
payments and donations on your behalf, convert
the money into your local currency of choice and
deposit it into your account in a matter of days.
Moreover, if you are a registered charity or nonprofit,
they will do it for free, end-to-end. No
setup fees, no transaction fees, no withdrawal
fees, nothing. All a non-profit needs to do is set
up with the service, put a widget or a QR code
on their website and it’s done.
If that still sounds too complicated, or like
too much of a hassle for your charity, another
organization by the name of Bitcoin 100 will
gladly help you go through the process. In
addition, once you start accepting funds on your
website, they’ll give you the equivalent to $1000
in Bitcoin for your trouble. No strings attached.
While this amount might just pay for the effort
of setting everything up in the West, that can be
a sizable contribution in developing countries.
And that’s only a start…

The Bitcoin community loves to support
charities in its space. The Celebrity of Bitcoin
non-profits is by far Sean’s Outpost, a homeless
outreach from Pensacola, FL. In their first year
of operation (they recently celebrated their oneyear
anniversary) they fed over 60,000 meals to
the homeless, handed out 1,000 blankets, got
nine people off the street permanently, created
a Satoshi Forest homeless sanctuary, and much
more. They raised about 733 bitcoins in total
for their cause and are going so strong they
are planning on setting up new charters all over
the US and in Canada. The message couldn’t be
clearer—Bitcoiners love nonprofits.
Another important thing to remember is that
Bitcoin can thrive under oppression. Women’s
Annex Foundation is a charity aiming to bring
digital literacy to women in Afghanistan and other
countries. While in the Western world one takes
access to banks for granted, it is a struggle in devel -
oping countries. Traveling long distances to a bank,
the danger of robbery when carrying a lot of money,
women unable to open bank accounts without
their husband’s consent—a reality for many people.
Bitcoin changes all of that. One can easily use
Bitcoin with SMS through 37Coins, or a number
of online wallets on a smartphone. Transactions
are cheap, Bitcoin does not discriminate against
anyone and you can use it everywhere. Not only
can Bitcoin technology help charities, it might be
the only way for some people to receive money.
When you’re talking about money,
you also have to keep in mind how
difficult and expensive it is to send
money to some places in the world.
PayPal doesn’t support many coun -
tries (complete list of unsupported
countries), countries such as Haiti,
Iran or Pakistan. Sending $100 to
these countries through Western
Union can cost as much as $12, and
the ratio gets worse with smaller
amounts. With Bitcoin, no amount
is too small. It’s actually economically
feasible to donate one
dollar or less to a charity half a
world away, and know they’ll
receive that money instantly.
A charity in a third world country
can solicit direct donations from
anyone on the Internet without
having to rely on third par ties
or having to pay an arm and a leg
for the privilege.
Lastly, Bitcoin protects the
charities from fraudulent “donors” and charge -
backs. You hear those stories every now and
then about someone who steals credit
card information and decides to be a
“generous” Robin Hood and donate some
of the stolen money to a charity. A few weeks or
months down the line that charity receives a massive
chargeback on their account, for money they’ve
already spent, because it came from a fraudulent
source. Despite accepting the money in good faith,
the charity suffers. Bitcoin donations are like cash,
once they’re given, that’s it—there is no taking
it back.
Not only do Bitcoin enthusiasts love charities,
they go out of their way to support them. The
Bitcoin technology boosts existing charities
and enables new non-profits to form where
they couldn’t before. So if you’re donating
to a charity, let them know about Bitcoin and
why they should accept it. If you are a charity
or a non-profit, give Bitcoin a go—it costs you
nothing to try and who know how many people
will shower you with their coins and affection. —S
PIOTR PIASECKI is a Chief Scientist at Provable Inc, a
Vancouver-based software development startup. Since discovering
Bitcoin in 2011, he became a reputable member of the Bitcoin
community under the nickname “ThePiachu.” Piotr wrote his
Master’s thesis on the subject of Bitcoin security in Technical
University of Lodz, in Poland. He is also a moderator of Bitcoin.
StackExchange.com, /r/Bitcoin subreddit, runs a number of
Bitcoin-focused websites, such as Vanity Pool and TestNet Faucet,
as well as writes a blog on various cryptocurrencies.
July.2014 Page.23 Crypto Biz Magazine

CRYPTOCOIN SOCIAL
@MaxKeiser
Page.24 July.2014
@CryptogenicBull
Crypto Biz Magazine

CRYPTOCOIN SOCIAL
@BitcoinReporter
@BitcoinPrice
July.2014 Page.25 Crypto Biz Magazine

WHY YOU SHOULD PROBABLY BE
USING A MULTISIG BITCOIN WALLET
by ARIANNA SIMPSON
If you’re like most people,
you probably like things to be
simple. Many users simply don’t
want the headache of thinking
about security, which is the
appeal of a full-service solution
that stores your private keys
for you. These full-service solutions
become problematic for
more advanced or tech-savvy
users, who generally want a
heightened degree of security
while maintaining control over
their assets.
Page.26 July.2014
Crypto Biz Magazine
I WOULD SAY I’M GENERALLY
a jovial person, but if I woke up
and realized I had lost 7500
bitcoins, I would encourage
the rest of the world to back
away from me… very slowly and
without making any sudden
movements. Fortunately, this
hasn’t happened to me, but it
did happen, unfortunately, to
Jeremy Howells, who became
infamous in the Bitcoin community
for accidentally disposing
of his hard drive with the keys
to all of his bitcoins on it.
At this point in time, we’re still
in the early stages of Bitcoin’s
life cycle, and five years is like
the blink of an eye in currency
years. Although there is a strong
trend toward mass adoption
(5 million wallets, growing 8x
year-over-year, according to
Mary Meeker’s annual report),
we’re not there yet. As things
currently stand, there’s a
fundamental disconnect
between usability and control.
You can choose to keep your
private keys yourself in what is
known as a client-side wallet,
or you can hand them over to
a third party that stores them
for you in a web wallet. When
you do the latter, you’re trusting
that the third party is taking
appropriate security measures,
which includes keeping at least
the majority of your bitcoins in
cold storage. As we’ve learned
from Mt. Gox and other similar
fiascos, this isn’t always the
case, which is why the safest
thing to do is to diversify your
holdings by using a variety of
wallets so if one gets hacked,
you don’t lose everything.
Conveniently enough, the
Bitcoin protocol can accommodate
such a tall order. Pay
to Script Hash (P2SH) is a type
of Bitcoin address that was
introduced as part of Bitcoin
Improvement Proposal 16
(also known as BIP 16), early in
2012. P2SH addresses can be
secured using a more complex
algorithm than standard addresses,
and involve the use of
multiple Elliptic Curve Digital
Signature Algorithm (more
commonly known as ECDSA)
keys, rather than only one.
Multi-signature (M of N) wallets
allow users to maintain
direct control over their
bitcoins while also removing
some of the security burden
from them. In the event that
one of their private keys is lost
or stolen, it no longer means
lost access to your bitcoins,
as they can still be accessed
using the backup keys.
The concept of m-of-n signature
schemes is fairly simple,
at least at an abstract level:
In order to complete a transaction,
more than one private key
(m) is needed out of a total
number generated (n). In a
2-of-3 scenario, you would need

two out of a
total of three
keys to withdraw
money, but the process for deposits is the same
as it would be for a standard address.
You can then approach distributing and storing the
keys in various ways. You could hold one key, you
could give another key (the backup) to a trusted
friend or relative—or even store it yourself in a
different location from the “main” key, and the
third key would be held by another party, such
as a company offering the service. BitGo, which
I recommend checking out, is a company at the
forefront of implementing m-of-n addresses.
Since it’s significantly harder for someone to
steal two private keys than one, this adds an
additional safety net against both physical
and digital theft. The benefit of multi-signature
wallets is that they’re more secure than a
traditional digital signature setup, and also
offer more protection from human error. In the
event that I accidentally go into spring-cleaning
overdrive and toss out my hard drive with my
private keys on it, I can still access my bitcoins
using the backup key.
The reason I like multi-signature addresses and
wallets is that, unlike having a vault that is simply
insured, they use technology to secure the coins.
What’s most exciting about multisig is that it’s an
actual advancement in the protocol that permits
this type of address to be created and used.
While insurance has its place, it does not actually
solve or get rid of the problem of loss or theft—it
merely corrects the wrong after the fact. Insurance
does not offer an advancement in technology, and
the onus still falls on the insurance company to make
things right again.
I have no doubt that insurance covering Bitcoin assets
will become industry-standard in the next few years,
but if Bitcoin ends up requiring all the same cumbersome
financial infrastructure as the current
system, we will have gone full circle while making little
real progress.
I’ve only examined the application of multisignature
transactions and wallets for security
purposes here, but it can also be applied to escrow,
and to transactions involving digital payment for
physical goods. Multi-signature transactions can
also be used in institutional or corporate settings,
where more than one person is needed to sign
off on something before funds can be released,
for example. These applications of multi-signature
transactions deserve their own examination, which
I’ll address in an upcoming issue. —S
As a Bitcoin enthusiast and investor,
ARIANNA SIMPSON is
particularly passionate about
helping women get involved in the
Bitcoin community. She is now at
Facebook, working out of the New
York office, where she organizes
the Bitcoin meetup group. In her
previous lives, Arianna did ecology
research for the National Science
Foundation in South Africa, cofounded
Tigervine, lead sales &
boutique operations at Shoptiques.com, and spent several months
backpacking through Southern Africa. Her Bitcoin address is:
1DLBeB2NxcGNsCAFyLa6ateQqtBc1o1LJh.
July.2014 Page.27 Crypto Biz Magazine

Q&A WITH SWARM
CEO JOEL DIETZ
Page.28 July.2014
Crypto Biz Magazine
Crypto Biz Magazine’s Editor-in-Chief Soshi sits down
with Swarm Corp’s CEO Joel Dietz. On the weekend
we covered their pre-launch party, which took place in
Berlin, Germany, as they counted down to their (June
17th, 2014) launch, and to keep the momentum going we
decided to also include a Q&A.
SOSHI: Thank you for joining us for an interview, Joel!
Our team is honoured to have the pleasure to sit down
with such an important innovator from within our fastgrowing
crypto-community.
DIETZ: Super excited to be with you guys! Been very
impressed with Crypto Biz Magazine so far.
SOSHI: Please tell our readers a little a bit about
Swarm Corp, how it all got started and the moments
leading up to your Tuesday launch?
DIETZ: Largely under Vitalik Buterin’s influence, I
started to see the potential for applications built on
top of the blockchain. I also was heavily influenced
by conversations with Nick Szabo and Tim Swanson
(author of Great Wall of Numbers) on the potential of
smart contracts. A platform for issuing crypto equity,
allowing easy access via crowdfunding seemed like
the best next step to building full crypto companies.
The need for some intermediary step, ideally one
that includes both funding and accountability, was
especially clear when I saw the struggles that some
folks were having with their own fundraisers.
SOSHI: We read online that the Swarm crowdfunding
platform raised over 450 Bitcoins (over $600 USD
each at today’s prices) in two weeks. This is truly a
phenomenal feat, and unlike many of the other startup
crowdfunding efforts we’ve seen in some time!
DIETZ: Yep, we actually hit our 500BTC target without
any advertising. It was all done through networks
of open source developers, which excites me a lot,
concerning the future of crowdfunding, since even
large raises can totally be driven by the future users
of the project.
SOSHI: We also read that your COO, Ben Ingram, has
described your Swarm platform as the Facebook of
crowdfunding. In what ways are Swarm’s crowdfunding
efforts different than other ones we’ve seen previously
in this space?
DIETZ: One of the benefits of crypto technology is
that it is frictionless and instantly global, so this allows
people easier access to your crowdfunding efforts.
Because it’s all programmable, it also allows a lot of
fascinating incentivization strategies that encourage
people to get in early. It’s also very focused on building
blocks that increase the overall value of these open
source ecosystems.
SOSHI: Your site mentions that Swarm plans to make
100 million SWARM coins available in a limited-crowd
sale until July 20th. How can the general public get
in on Swarm Coin and where can they get involved in
this crowd sale?
DIETZ: That’s right, the sale starts at Midnight in
Berlin (GMT +1). Instructions are on our website,
but you just need to set up a counter wallet
(www.counterwallet.co) and then send bitcoin to
our address.
SOSHI: We read that your team has been working
closely with Evan Wagner and Adam Krellenstein at
Counterparty XCP. Can you tell us a bit about your
choice to use Counterparty as opposed to others?
DIETZ: We love Counterparty. It’s very developer-friendly
and we are currently seeing a boom in activity in the ecosystem
around it. A lot of the features (like dividends)
are also extremely high value to us and only available
on Counterparty.
SOSHI: It’s been said that the Vennd functions will help
with creating a frictionless experience for the users who
convert from XBT (Bitcoin) to Swarm Coins. Can you
explain a bit about how ‘Vennd’ works?
DIETZ: Vennd (www.vennd.io) is an open source platform
that allows people to easily exchange one asset class
for another. This works between assets created on
Counterparty, and other things like BTC or other alt coins
with their own blockchain like DOGE. We’ve been working

with the Vennd guys very closely to add on some custom
code that allows for things like linear depreciation in
exchange rate and other things that allow easy access
(but also prevent massive arbitrage opportunities, as with
Maidsafe). We think a bunch of vending machines will
greatly increase the liquidity around Counterparty.
SOSHI: Your COO Ben Ingram seems to be big into 3D
Printing. 45 minutes ago you guys posted some excellentlooking
designs. Maybe we can send you some designs
for Ben to make for CBM (Crypto Biz Magazine)?
DIETZ: We will be busy for the next couple of weeks with
the launch, but in early July we will be hanging out in
Ben’s bat cave near London. Send us some specs and
we’ll see if we can knock something out
SOSHI: We read that you have a few different phases for
SWARM Coin. Phase One—4,000 Bitcoin @ 5,250
SWARM coin per Bitcoin, decreasing to 4,750 per Bitcoin
until the end of Phase One. Phase Two—17,000 Bitcoins @
4,250 SWARM coin per Bitcoin, decreasing to 3,750 per
Bitcoin until they are all gone. How has this been coming
along? Are you seeing consistent purchases as you ramp
up to the launch?
DIETZ: In our “Indications of Interest” round the first bitcoins
came as a steady stream of small amounts, then
suddenly we started seeing much larger chunks come in
and our sale jumped it to near full.
SOSHI: If you were to give one piece of advice to those
starting out within the crypto currency crowdsourcing
space based on your own success with Swarm, what
would that be?
DIETZ: It’s important to face the legal challenges
square on at an early stage. We’ve spent a lot of time
and energy to make our best effort be legally compliant
(although there’s a lot of grey area that we are working
hard to clarify).
SOSHI: What are some of your plans for the remainder
of the year post-IPO for Swarm? We read there are
some plans for an app, can you tell us a bit about this
and other plans on the horizon for you and SWARM?
DIETZ: We are very excited as we put together the
plans for the next three coins to launch via SWARM.
We are planning to announce these throughout our
fundraiser. We have quite a bit of work to support these
coin offerings, including custom pages for each project
Kickstarter-style, as well as a dashboard that allows
you to see each of the coins you hold. That’s the next
two-plus months.
Later this year I want to focus on implementing
decentralized due diligence so that we can allow anyone
to evaluate coin offerings and mobile apps so that you
can get information on everything going on in Swarm.
SOSHI: Thanks for your time, Joel! We appreciate it.
—S
July.2014 Page.29 Crypto Biz Magazine

CRYPTOGENIC BULLION AND
THE CONSULTANCY CULTURE
by BRIAN VERESCHAGIN
Trends: Obscurity, Capitalization,
Mining and Speculation, Adoption
If the advances of Bitcoin and its ecosystem of
altcoins have been like a meteor shower, what
comes next may be an extinction-level
event for debt-based fiat currencies.
In this article, we will try to break
down some of the fundamentals of
the cryptosphere, and the logical
conclusions of what’s next. Our
position is to embrace the diversity of
altcoins while accepting that one coin
cannot perform all necessary tasks.
Page.30 July.2014
Crypto Biz Magazine
Bitcoin’s trailblazing efforts have left it
in a unique position as a highly liquid
market gateway which we all rely so
heavily on. The Bitcoin crowd bridges
the divide between the heavily
regulated fiat markets and the new
realm of digital currencies. So long as it does this
well, it will maintain its value. With the protocol a
solid foundation, a flexible and dynamic community
can only boost the effect.
Cryptocurrencies began to see a real capitalization
phase in early 2013, which carried on to its blow
off top by the end of the year. This mainstream
attention led to hundreds of new altcoins and an
overall focus on mining and speculation. Cryptogenic
Bullion, now a year old, was designed with the properties
of money, and modeled after the supply of
gold, making it a better store of wealth. Other coins
work better for spending, like Dogecoin, whose
major innovation is a welcoming, highly organized
community with an adorable dog for a mascot; it’s
not to be underestimated.
The explosion of the altcoin scene was met with
the outflow of capital aided by constant negative
signals from media and government around the
world. This has really become a survival of the
fittest, though positive news is taking hold again.
In times like these, we can more easily consider
working together to transition from the current
focus on mining and speculation, to the capital
that awaits “mainstream” adoption. Our goal is
to show how this is possible, through education
and consultation.
As an investor, it helps to know some fundamentals.
Cryptocurrencies can be held to spend, held to
save, held to invest, and used to move funds from
one person, place, or market to another. Predicting
changes in this demand is one way that an investor
can generate a return. As we become more aware
that adoption is at hand, we can invest, and then
push capital towards the projects that are making
it happen. With these fundamentals in mind, we
can better understand the financial services which
will satisfy the increasing demand.
Adapting Financial Services to Meet
Demand
Gold and silver are called honest money for a reason,
and it’s the same reason that you can apply to crypto
currencies; they pay special favor to no one. They can
be stored in a safe, or removed and sent across the
world in minutes. We are now able to create decentralized
trading markets which facilitate trades on
a peer-to-peer basis. As the pendulum swings we
seek balance between centralized convenience and
decentralized freedoms.
As awareness is expanded and major demand is
realized, some of the largest financial institutions
begin to offer accounts denominated in cryptocurrencies.
These financial institutions will be wellconnected
to foreign exchange markets, including

all major cryptocurrency exchanges. A mobile
app and an online wallet will utilize proprietary
infrastructure to execute requested transactions.
These financial institutions will provide security,
printing and delivery of private keys on request,
customer-verified segregated funds, and advanced
cryptocurrency functions like claiming interest.
These services will all integrate seamlessly with
customer expectations.
The freedom to interact with each other in
boundless, and yet fair, new ways is what will drive
the demand for these cryptographic blockchain
technologies. However, freedom always comes
with responsibility. Today’s financial system totally
depends on centralized trust to store and transact
our savings. The trade-off for this convenience of
security is that you don’t actually control your money
(and it doesn’t technically exist outside trust).
While government regulations will shape the
industry, the decentralized nature of crypto assures
us that it shares qualities with physical cash, and
can not be truly controlled. Cryptocurrencies may
actually ensure that a cash substitute is always
available, regardless of our move to a “cashless”
society. Each wallet is like a bank account,
but banking services will bring elements of
centralization and trust such as those that allowed
Mt. Gox to fail. There is a balance to be found, and
it will require active participation.
What Makes CGB Unique and Pioneering?
To get a better understanding, we will quickly go
over some variables that can make a coin unique.
One is what we call the inflationary profile; that’s
the rate of monetary base expansion over time.
Another is security method and reward. Proof of
Work (PoW) rewards miners with newly created
units, while Proof of Stake (PoS) provides existing
holders with interest, in an energy-efficient
manner. Cryptogenic Bullion is an example
of a hybrid, which rewards miners at 0.5%/yr,
and savers at 1.5%/yr. The perceived fairness of
distribution can also be an important factor.
Cryptogenic Bullion was among the first
PoS coins, owing its lineage to Novacoin, and
the original innovator, Peercoin. It’s the first
cryptocurrency to display all of the properties
of money, while providing the bearer with
interest for holding it. Like gold, it is portable,
divisible, fungible, scarce, low inflation, durable,
non-consumable, and a store of wealth. Not only
does Cryptogenic Bullion emulate the supply
of gold, a classic safe-haven asset, but it also
represents a part of the movement towards a
more fair and honest system of money.
While Bitcoin is being mined over the span of
decades, most altcoins chose a quicker expansion
phase. Cryptogenic Bullion was very bold at the
July.2014 Page.31 Crypto Biz Magazine

Page.32 July.2014
Crypto Biz Magazine
time to set a one year mining period. This rapid
tapering leaves the coin with a very small inflationary
headwind on the price. Quark had a six month mining
period and the investor-friendly inflation level seen
since then likely plays a big role in its respectable
market cap.
Every successful coin eventually has to navigate the
transition from mining and speculation to adoption.
This means that we have to adopt the currency into its
intended role to provide the demand (chicken and egg
problem). The methods of how to do this are being
developed right now in the CryptoTown On
The Ground project. This is the level of
flexibility and innovation that the
CGB Core Team and community
are becoming known for.
We acknowledge that one
coin cannot efficiently
fill all roles, and that
competition keeps the
ecosystem healthy. The
value of Cryptogenic
Bullion is neither determined
by how many
markets it can directly
trade to, nor by how
many businesses and
individuals will accept
and hold it for spending,
but from its fundamentals,
which allow it to serve as a
more stable store of wealth.
The role of any cryptocurrency
also changes over its life-cycle
and all have yet to reach their full
potential. As time goes on, CGB
is building utility as a more stable
store of wealth, and as a currency for settling larger,
more infrequent transactions. With this focus in mind,
we still encourage businesses to accept payments
in CGB as a matter of convenience. The consultancy
culture is about helping people to understand these
and other fundamentals, so we can all make more
rational choices— individually, and together.
The Consultancy Culture
This idea stands on its own and is not unique to
CGB; that open, rational discussion is preferred
for better understanding and outcomes. We all
have something to bring to the table through more
open collaboration and organization. This notion
underlines the importance of our education focus,
our open community collaboration, and our on-theground
consultancy.
This culture is borne out of the understanding that CGB
does not compete with, but actually complements,
most other cryptocurrencies. CGB’s consultancy culture
is developing a knowledgeable and open community
that advances the cause of all cryptocurrencies,
based upon the principle that the more people who
end up using them, the more people will end up owning
some CGB.
By taking a non-biased approach, we can tap
the resources and excitement of the entire
cryptosphere in a credible manner. The end result
is something that can seldom be experienced in
few other communities—honest, up-front advice
coming from a “big picture” perspective. Talented
individuals looking to make their mark on the
frontier of cryptocurrency adoption need look
no further.
Some of the concepts that we
would like to convey can be
nuanced and quite difficult
to truly understand.
An already difficult
concept can be made
almost impossible
to convey when
met with prejudice,
emotion, and outsider
defenses. This is a
natural reaction in
human society and
it can protect individuals
from harm,
but it may also stifle
progress. This is the first
major challenge for any
encounter with which the
consultancy culture aims
to reconcile.
Two major forces
at play here are
personal gain, and constructive
creativity. It is very simple to tell the difference
between the two. Profit motivated schemes almost
always involve trust, and apparent convenience, while
constructive creativity requires no trust, but individual
work and skills may be required. The CryptoTown On The
Ground project can be seen as creative construction,
while a CryptoMall itself could be run for profit or even
mismanaged. Decentralization demands that we
become more independent, and “street smart,” to
properly navigate.
This empowerment is a side effect of the consultancy
culture and helps to make stronger communities from
more independent individuals. Our laser focus on
the fundamental path toward mass adoption is what
will keep CGB and the Consultancy Culture relevant.
Proactive creation of global demand may seem like a
daunting task, but we already have a plan in place, and
boots on the ground to back it up.

“On The Ground” Consultancy to Drive
Adoption
A major new channel for crypto-advocacy is being
created through the CryptoTown On The Ground
project. We are developing a comprehensive guide and
the resources necessary for creating and participating
in what we call a CryptoMall. A CryptoMall is a directory
and network of businesses, investors, consultants,
and resources maintained by a group of volunteers
who organize and advise its members. The Official
CryptoTown Guide is part of a decentralized structure,
much like the crypto we advocate, which relies on
individuals, “on the ground,” to sort out the specifics
of their own situation.
This project is the product of collaborative effort
amongst these self-managed CryptoMalls to explore
and document the most effective methods to
facilitate the adoption of cryptocurrencies as part
of stronger communities. An effective feedback
loop and open structure ensures that anyone can
start a CryptoMall and share their experiences and
ideas back into The Official CryptoTown Guide. It is
becoming clear that the “buy and hold” mentality
is not going to drive real demand. Those who are
able can find many ways to help out through the
CryptoTown On The Ground project.
We are positioning CGB as a leader in the facilitation of
cryptocurrency adoption by businesses, with a focus on
those with physical establishments. Cryptogenic Bullion
backs CryptoTown with its reputation, resources, and
consultants. At just one year old, CGB is becoming
more than just a cryptocurrency. It is evolving into a
suite of tools and services which allows it to adapt to
many use cases. As we execute and explore real-world
strategies for cryptocurrency deployment, problems
and inefficiencies will be remedied through active
development of these tools and services. Through
development of our shared resources, our communities
become stronger, and each of us more self-reliant. —S
BRIAN VERESCHAGIN
an Information Technology
professional with an affinity for
communication networks. His
logical approach and attention to
detail has provided him with the
tools and experience necessary to
discern the way forward. “When
we understand that teaching
is not only knowing a concept,
but also knowing your student
and forming the understanding
based on that, we can then take these technologies forward
with logic and reason to a wider audience. Consider holding
a bit of Cryptogenic Bullion (CGB). To find out why, read on
and ask some questions; experience the consultancy culture.”
Brian takes CGB tips at 5d8i3zuAugZXLnouJnhFPcZJCLuQPjXkRP
CRYPTOTOWN ON THE GROUND
A guide and resource for independent CryptoMall directories to more effectively organize
stronger, crypto-friendly communities.
For Business
Increase sales from
“cryptotourism”
Sell excess crypto
to local buyers
Build a strong, self-reliant
business network
For the Crypto Crowd
Directory of places to
spend your crypto
Resources for effective
crypto advocacy
Purchase crypto at
the local exchange
For Investors
A framework for
driving demand
Business services
and advertising
Trade for profit on the
local exchange
July.2014 Page.33 Crypto Biz Magazine

BOATCOIN 2014
DEBUTS DURING
THE LONDON
TECHNOLOGY
WEEKby SUSAN FOURTANÉ
English landmarks, cruising the Thames, and
cryptocurrency networking was a cocktail of
some of the best cryptonews happening in June
Page.34 July.2014
Crypto Biz Magazine
Sailing the waters of the River Thames, the first
ever Boatcoin Conference cruise debuted on
June 18, during the vibrant, first-ever London
Technology Week, attracting an interesting
group of cryptocurrency speakers
and attendees. After a smooth
boarding from Westminster Pier
on the good ship M V Royalty, the
conference began with a series of
presentations on the latest and most
important topics on Bitcoin and
other cryptocurrencies.
The cruise, which launched
from Westminster Pier and sailed for nearly six
hours, was a one-of-a-kind event where, welcomed
by Boatcoin host Mark Le, the attendees had a
unique opportunity for networking.
The event was also an opportunity to ex perience
a typical sightseeing cruise, admiring London
attractions such as the
magnificent Big Ben and
Houses of Parliament, the
London Eye, London Bridge,
Tower Bridge, and much
more between presentations,
or during the lunch break. It
was, by far, one of the best venues for a
networking event of this type. Attendees
also the chance to snap some pictures
while networking.
The presentations by Stanislav Wolf, from
World Bitcoin Forum; Alex Kotenko,
from XBTerminal.com; Stephan Tual,
from Ethereum.com; Nicolas T.
Courtois, cryptologist, UCL; Olly Wasser, from
altcoinspeculation.com; Niki Wilies, from
Counterparty.com; Ivo Mosler, author of In the
Name of the People published in 2013; and Simon
DIxon, from BankToTheFuture.com, were followed
by a panel discussion, right before the attendees
started taking the last pictures and ending their

cryptocruise adventure and heading back to
Westminster Pier.
Did you miss the most important cryptocurrency
event of the year?
Crypto Biz Magazine was there to bring you the
highlights from this year’s Boatcoin conference
in the hope that next year you will not miss the
cruise. Watch out for Crypto Biz Magazine’s
August issue for highlights on Boatcoin 2014
presentations. —S
All photos by Susan Fourtané
SUSAN FOURTANÉ, Science & Technology Journalist—
Susan’s articles on diverse technology topics have appeared in
various UBM Tech and UBM Electronics online publications since
2009, and on Helsinki Times and other publications since 2006.
In February 2014 Susan joined CryptØMiners’ Board of Advisors
as Media Advisor. Susan on Twitter: @SusanFourtane.
July.2014 Page.35 Crypto Biz Magazine

WHERE DOES ACCOUNTING/ERP MEET
BITCOIN, DOLLAR, EURO & YEN?
by GARY BODDINGTON
Planning) industry as an isolated example,
for no reason other than this domain stands
in line to be disrupted as much as any other.
Page.36 July.2014
Crypto Biz Magazine
Can you imagine a world where a crypto cur rency
(something like Bitcoin) sits alongside the dollar,
the euro and the yen? In a recent discussion at a
Bitcoin meetup in Vancouver, the topic turned to
user adoption and, more specifically, what needs
to be done to see crypto currency gain mass
adoption on Main Street. This was encouraging,
not least because I believe crypto currency
discussions to date have been unnecessarily
encumbered with technical one-upmanship, or
arguments over monetary policy ideology, or a
confusing cocktail of both.
Full disclosure, I am firmly in the camp that believes
that crypto currency will ultimately reach its
aspirational goals of Main Street adoption, but I am
categorically under no illusion that this will happen
either quickly or soon. It is clear that there’s a
wide gamut of “traditional world” business across
banking, legal, accounting, financial services,
taxation, gaming and gambling that could be
shaken to their core, so in the interest of invoking
a discussion, and attempting to understand the
crypto currency world we endeavor to live in, let’s
use the accounting & ERP (Enterprise Resource
The Accounting & ERP vendors
(vendors) landscape is an incredibly
competitive landscape populated
by mul tiple large and small vendors
distributed globally, all of which
cater to all sizes of organizations.
So, how does crypto currency gain
adoption amongst these vendors
who influence millions of the world’s
businesses through the software they produce and
the associated advice their channel of integration
partners offer? Well, at first glance it seems
straightforward, because crypto currency is just
another currency, just like the dollar, euro and yen,
and almost all of these vendors have multi-currency
functionality as standard. So it’s that simple then,
vendors just communicate to their market that
they already handle multi-currency as existing
functionality, so everyone just go right ahead and
transact in the crypto currency of your choice.
But hang on, not every crypto currency is created
equal—certainly not in the hands of global
regulatory agencies, anyway. Depending on the
region of the world a vendor operates in, crypto
currencies have been treated dramatically—
and with mass adoption aspirations in mind—
damagingly, inconsistently, ranging from a
traditional currency to an informal form of barter.
The reactions of separate jurisdictions have
ranged from enacting very strong pro-crypto
regulations, including strong privacy, to an
attempt at an outright ban by certain states.

Regardless, for vendors to ponder adoption
of crypto currency for their install base, this
represents a potentially harmful legislative
minefield that poses a non-trivial challenge to
adoption. But let’s steamroll that issue for the
sake of this article and imagine for a moment we
all live in a global crypto currency utopia, a place
where all regulatory authorities give the green
light to crypto currency on their turf.
Sounds great—but wait, there are already a wide
range of digital currencies to choose from, and
a whole range of new “derivatives” under construction
in the crypto currency development
community. So, does each vendor need to accommodate
all these currencies, or should they
choose to support just a few? Does that mean,
for example, that vendors need to consider an
integration with one crypto currency exchange,
or will it need to support a few, or none? If it’s
necessary to collaborate with more than one, how
does a vendor choose the most reliable and reputable
exchange to integrate with; and where do
the big guys that have operated in the money
exchange space traditionally stand on their own
crypto currency play? Should vendors wait and
let this play out, choose not to integrate at all, or
choose to build or buy something of their own?
In pursuit of user adoption, let’s keep moving forward
regardless, and let’s imagine even further
that the vendors have made their decisions
about a currency, or currencies, to support, and
an associated crypto currency exchange to work
with, does it then elect to build its own wallet, or
integrate with an existing wallet, or many wallets?
Still more questions, and again certainly no
trivial issues.
Vendors clearly have some planning ahead in the
crypto currency space and early adopters have
already started planning. Portland-based,
VersAccounts ERP, offers online ERP solutions
designed for medium-sized businesses with a
global footprint, and CEO Sunil Pande has taken
a long-term view as an early adopter in saying,
“We are 100% sure that crypto currencies will
become an important vehicle for commerce in
the near future, and we are actively engaged
in developing our plans around how to best
support it for our customers, as well as for
ourselves and our channel partners.”
Pande’s reference to his partner channel is
very representative of the Accounting & ERP
industry in general insofar as it is built on
an interdependent triumvirate of vendors,
partners and consumers, which, when working
in harmony, form the B2B backbone of the
industry’s ecosystem. The partner will typically
advise their customers which software to adopt
and will offer professional services associated
with the application they elect to support. Right
now, and with apologies to the early adopters,
and as a sweeping generalization, this underlying
triumvirate reflects no more than a collective
conglomerate of ignorance when it comes to
crypto currency, and represents a concurrently
massive educational challenge for the crypto
currency industry to address, if it is to achieve
mass adoption in this lucrative B2B space.
The ranks of the early adopters are swelling in the
partner community as well. Rusty Tarsches, a CPA
who owns and runs Targo Advisors in Atlanta,
GA, supports XERO Accounting & VersAccounts
ERP to offer cloud-based accounting services
for start-ups, emerging growth and mature
business organizations. Rusty believes, “…crypto
currency has a huge potential for disruption in
many industries, and at Targo we make decisions
about which vendors we support based on their
progressive thinking, and we are very interested
in how vendors will integrate crypto currency into
their architecture. We are learning as the crypto
industry emerges so we can give our customers
the most informed professional advice possible.”
It seems certain that crypto currency is a tsunami
in an ocean of small waves. It will have enormous
implications. As vendors, and as partners providing
mission-critical services for these vendors, now is
the time to become appropriately familiar with this
space. Customer needs and opportunities are on
the way.
For crypto currency adoption to happen in
the Accounting & ERP space, a market greater
than three million businesses worldwide, it’s the
vendors that will need to ask and answer these
questions for themselves, before any users start to
adopt new crypto currencies, and, in my opinion,
it’s at the wallet level that you get to the user
experience interaction, where “the rubber meets
the road” and Main Street users will get to make
their decisions about accepting a crypto currency
alongside, or in substitute of, the dollar, the euro
and the yen. —S
GARY BODDINGTON Silver Lining Ventures Inc, Vancouver, BC,
Canada, Email: gary.boddington@outlook.com. LinkedIn • Twitter
July.2014 Page.37 Crypto Biz Magazine

DARK MARKETPLACES
POSITIONED TO ACCELERATE THE
COLLAPSE OF GOVERNMENTS
by KRISTOV ATLAS
Page.38 July.2014
Crypto Biz Magazine
The solvency of the US government has been circling
ruin for the last several decades. Without reversing
the current trend and drastically reducing taxes and
capital controls, the dark market economy will flush
this government directly down the drain.
Since the 1970s, each American economic recession
has taken longer than the previous to recover from.
Real income has steadily declined throughout the
last forty years. Washington has attempted to hide
this course through profligate money printing and
make-work in government sector jobs, but to limited
avail. Between 2000 and 2010, public sector jobs in
the US rose from 20.5 million workers to 22 million,
while private sector jobs declined from 110 million
to 108 million. By July of 2010, the average federal
government worker was paid 60 percent more than
the average private sector worker. Money continues to
pour out of the government spigot, lining the pockets
of politically connected corporate officials like those
of Halliburton, Lockheed Martin, and Citigroup; yet the
average American’s standard of wealth continues to
plummet. Between 2009 and 2014, the number of
households on foodstamps rose from 15 million to 23
million—a record 20 percent of US households. One
third of all households are now living from
paycheck to paycheck, with 66 percent
of those residing in the middle class. The
government’s balance sheets scarcely look
better, having accumulated 17 trillion dollars
in debt and 127 trillion dollars in unfunded
liabilities by the end of 2013.
The typical government knee-jerk reaction
to such losses is to grow: more
taxes, more capital controls,
more laws, and more threeletter
agencies. However,
economists have long
studied this approach and
documented its counterproductivity.
Compounding

the effects of government
regulation with further restrictions
on market activity drives
more market actors into the
safe haven of the underground
economy. In a 1997 economic
paper studying this phenomenon,
The Underground
Economy: Global Evidence of
its Size and Impact, Canada’s
Fraser Institute wrote that
“personal taxes must figure
prominently [...] among
the factors that have caused
the growth of the under -
ground economy.”
Those of us who do not
participate in the underground
economy are often
unaware of its breadth: it grew
to include one half of the world’s workers by 2009, and
is projected to include two-thirds of workers by 2020.
Europeans affectionately refer to it as Système D, short
for the French word “débrouiller,” meaning “to manage,
especially in an adverse situation.” Système D now globally
represents a ten-trillion-dollar economy.
Participants in the underground economy have traditionally
used cash to transact privately. This will
rapidly change as more of them realize the incredible
potential of crypto-currencies in general, and Bitcoin in
Not content to simply splin ter
the Silk Road into many
scion marketplaces, independent
software developers
continue to press the issue,
evolving them to become
ever more resistant to state
intervention through peerto-peer
protocols like Dark
Market/Open Bazaar. This
next generation of dark
marketplaces will serve not
only as places for people to
buy drugs and guns, but also
to execute sophisticated
cryptographically-enforced
smart contracts and to exchange
completely mundane
items, when traditional markets
fail them. A few years
from now, we may be as likely
to see a toaster oven purchased through Open Bazaar as
Amazon.com.
By default, the market tends to eliminate middlemen
and transcend coercive elements. These are sources
of friction to a machine seeking to travel ever more
quickly and efficiently, and must be removed in order
for that machine to achieve its goal. In the past few
decades, this has been accomplished by the pluck
of Système D entrepreneurs and cash, but with
the advent of Bitcoin and dark marketplaces, far
A few years from now, we may be as
likely to see a toaster oven purchased
through Open Bazaar as Amazon.com.
particular. Whereas cash can only be transported slowly,
with great risk, and in limited quantities, Bitcoin has
demonstrated the capacity to send unlimited funds
across the world within a few minutes without fees, and
practically no risk of interception. This is what Satoshi
and his successors have provided to the world: fast,
cheap, censorship-resistant money.
Immediately after this incredible tool was invented,
dark marketplaces using crypto-currencies and other
cryptographic means of protection sprang up around
the Internet. For years the Silk Road, the first and most
famous of dark marketplaces, has allowed underground
market actors to trade with confidence some of the
most highly prohibited items in the world. The shutdown
of the original Silk Road led darknets to generate
several new marketplaces, with the total number of
items available for sale and overall transaction volume
significantly eclipsing the numbers observed just before
the shutdown.
greater distances are possible for the underground
economic machine. Unless lawmakers tempt their
citizens back into state-approved realms by reducing
friction themselves, economists may have to adjust
their projections upward for participation in 2020s
underground economy. —S
KRISTOV ATLAS is a network
security and privacy researcher who
studies crypto-currencies. He is the
author of Anonymous Bitcoin: How
to Keep Your Ƀ All to Yourself, a
practical guide to maximizing
financial privacy with Bitcoin.
Kristov is also a correspondent
for the World Crypto Network,
appearing regularly on the weekly
roundtable show “The Bitcoin
Group,” and host of “Dark News,”
a show about un-censorship technologies. Kristov also accepts
Bitcoin tips: 1H694KgneawqRfyZzR2yJ7oTvNN2EJghxm.
July.2014 Page.39 Crypto Biz Magazine

THE LEGACY
OF THE DREAD
PIRATE ROBERTS
by DANIEL KRAWISZ
Page.40 July.2014
Crypto Biz Magazine
I vividly remember the first
time I saw the Silk Road
in mid-2012. Like a timid
fawn venturing out into an
unknown meadow, I fired
up the Tor Browser, en tered
some gobbledygook
into the address bar, and
took my first peek into
the darknet.
When I finally log ged in,
it was like witnessing a
miracle. The variety! The
selection! “Crack?” I said
to myself. “I can buy crack
here? I’ve never even
seen crack in real life!”
I was awe struck. For a
few hundred dollars I
could have reams of LSD
blotters. There were things,
like ketamine, that I, a libertarian
activist, had
never even heard of. I’m
not much of a drug addict,
but for a moment, I felt like
Hunter S. Thompson.
All at once, so many things
that I had always been told
were evil, forbidden, taboo even, to investigate or discuss
rationally were now available on the cheap, and at the
push of a button! The brilliant thing about the Silk Road
was that it operated just like a normal business. It
operated out in the open, in defiance of the entire
drug war, and invited anyone to participate. It staked
its reputation on quality and low prices. This is what
freedom feels like.
When I saw it, I im mediately knew the rules had changed.
It opened its doors like any ordinary business. It let people
interact without fear. We now know that it brought peace
to the illegal drug wholesale market and that it made
enormous profits doing so. It was, furthermore, infinitely
reproducible. Thus, even though it could not exist with
complete impunity, it could be recreat ed again and again.
This is, I suppose, why its
mysterious founder chose
the name Dread Pirate
Roberts for himself. As in
the film from which the
name was taken, imitators
would replace him—even
if he himself were caught
and humiliated. His name
is a statement of both
economics and of a defiance
that is unstoppable.
Each iteration of the Silk
Road would make the
industry more peaceful,
more secure, and more
ordinary. It was one act
of defiance, but nothing
could stop the imitation
that it would provoke.
The more accessible to
ordinary people that
illegal drugs become, and
the more that the drug
market can operate like
an ordinary business, the
less people will be able
to maintain a conceptual
separation between recreational
drugs and other
business. Once that conceptual separation has been
broken, the drug war will end because it will simply not
make sense to anyone anymore.
The biggest problem with the Silk Road, I thought
initially, was that of exchanging bitcoins for dollars.
That was a real inconvenience. But the more I
pondered it, the less of a problem it seemed. In fact,
it was not a problem. If the Silk Road was attracting
business, it meant that going through the Bitcoin
network was worth the inconvenience of doing it.
It meant that there was profit to be made helping
dealers spend their bitcoins—which could be done
by just doing more business in Bitcoin! Because the
drug market was using the Bitcoin network, it would
draw more opportunities within it, which in turn would

draw in more, and so on. These were my thoughts
over the next several weeks. Of course, that’s
not quite what ended up happening,
but I think I was pretty close.
Bitcoin is now roughly
one hundred times
more expensive and
there are now several
com peting Silk Road
incarnations.
The Dread Pirate
Roberts changed
the world in two different
ways. He communicated
the idea of the Silk Road’s
business model and
produced the first
sustainable source of
Bitcoin profits. When
the Silk Road first came
online, Bitcoin could not
compete with credit cards and
traditional banking because Bitcoin
services were so sparse. It was where these services
were excluded—on the black market—that Bitcoin could
be most useful. This was its path of least resistance
upward. Before the Silk Road existed, Bitcoin was little
more than a curiosity. Afterwards, Bitcoin was something
the world needed. This was understood by some at the
time: the opening of the Silk Road sparked the first
Bitcoin mania in 2011.
Every Bitcoin venture must build upon Bitcoin’s former
successes because each step in Bitcoin’s growth makes
Bitcoin more useful and makes new opportunities
possible. Without the early proof, courtesy of the Silk
Road, of Bitcoin’s viability, Bitcoin would not have
attracted the investors that it did then, and consequently
would not now be attracting the investors that it does
today. All Bitcoin entrepreneurs today build on top of the
success of the Silk Road. His made their work possible.
I confess, I never actually bought anything at the Silk
Road and I never engaged with the community there.
Now that the opportunity is lost forever, I really wish I
had. However, I did do some things.
It was shortly thereafter that I
gave a presenta tion to the
Libertarian Longhorns in
which I advised them
to cease all political
activity immediately
and focus entirely
on crypto anarchy.
A libertarian victory
was no longer
impossible, but nigh
inevitable. Shortly thereafter
another group I attended, The Mises Circle
at UT, became the first Bitcoin student group that
I know of, and not long after that we started the second
Bitcoin student group I know of (The Cryptoanarchy Club
at UT). The first group was for economic discussions and
the second for cypherpunk discussions. Finally, we started
the Satoshi Nakamoto Institute in mid 2013.
When Ross Ulbricht was caught in late 2013, I was surprised
because I had met Mr. Ulbricht briefly in 2009, at
an event called 3-Day Startup. If he is really the Dread
Pirate Roberts, then I had met him before he was famous,
before he had created his great work. This is not so
unlikely; we did have some unusual interests in common.
Unfortunately, I don’t really remember our meeting
very well, but a friend recalls me telling him that digital
currencies are a stupid idea. That’s how life is sometimes.
The evidence strongly suggests that Ross Ulbricht and
DPR are the same person. If this is true, then DPR is a
political prisoner, and he is nearly alone when he deserves
the whole of the agorist and Bitcoin communities to
honor him as their master. I wish I had written this article
for him sooner, but it is easy to get caught up in dayto-day
concerns and forget what is most important.
He is the greatest agorist of our times, and, probably,
who will ever live, and I would rank him as the second
most important Bitcoiner after Satoshi Nakamoto. Please
support his cause at freeross.org. —S
DANIEL KRAWISZ graduated
with his Master’s degree in physics
from The University of Texas at
Austin in 2010. He is a founder of
the Satoshi Nakamoto Institute
and is now its Director of Research.
Daniel accepts Bitcoin tips:
19zEabLpYpB7yMQCXF8K9un67ZL7U59M3h
July.2014 Page.41 Crypto Biz Magazine

BITBASKET Q&A
by JACOB PAYNE
Before reading the Bitbasket Q&A we recommend reading the whitepaper, which is available at: www.bitbasket.info.
Page.42 July.2014
Crypto Biz Magazine
Jacob Payne, inventor of Bitbasket, discusses Bitbasket:
A Scalable Peer-to-Peer Multi-Cryptocurrency Wallet
System whitepaper that he recently wrote.
Q: If one sidechain member is attacked wouldn’t this
stall the system?
PAYNE: As long as all of the sidechain member host
nodes have not been compromised, the minority will
ignore the longest host chain, and instead continue to
work on their shorter, but honest, chain and continue
with the rest of the thread members to create the next
thread block.
Q: What prevents a sibyl attacker from creating bogus
thread chains?
PAYNE: If the system where pure SPV then yes. However,
since the network depends on both sidechain minertype
validation, with the longest validated thread, this
forces a sibyl attacker to create valid spoof threads
for each sidechain proof-type as well. The thread
is validated from height from a client node, and both
depth and height from a miner node, preventing an easy
sibyl attack.
Q: Sure, but each sidechain is, individually, easy to attack.
What prevents a sidechain from forking?
PAYNE: To put it simply: each sidechain node no longer
accepts its longest host chain to be the valid one, only
the chain that can continue to be a member of the
longest thread. Even with a minority of honest nodes
within a sidechain, the minority nodes with the shorter
chain still have the advantage, correlating with the rest
of the thread members.
Q: What if the attacker makes an attack across the majority
of sidechains?
PAYNE: That is highly improbable since being able to
attack multiple sidechain members precludes the ability
to be more powerful than the majority of hash-type
powers combined. Surprisingly, even if that were the case,
the attacker would still not succeed! To understand this,
you need to understand that for a valid thread block to be
made, all of the sidechains must be consistent. Even with
a majority, the remaining minority of those compromised
threads will still continue to work, with the last remaining
minority of honest sidechains to create the next thread
block.
Q: How does a new sidechain member join the thread?
Wouldn’t this create a fork?
PAYNE: When a new sidechain member transaction is
sent, this changes the hash value embedded within each
transaction. When nodes receive the other transactions
they will notice that, while each hash is the same across
each sidechain block, the hash result of them combined
is not correct. Because of this, a host miner node can
realize that it is missing a new sidechain member and
request the new member block. As long as the new
sidechain miners can propagate their new block to the
majority of other sidechain miners, their sidechain will
become a valid thread member. —S
A web developer from Vancouver,
JACOB PAYNE is an avid con tri butor
to open-source projects and cryptobased
startups. He often explores and
discusses opportunities in varied areas
of blockchain-based technologies and
contributes brand and PR strategies
to multiple teams of developers.
Jacob accepts Bitcoin tips at:
12Fx3xCCeB8KiZjk5WSdPKDx21EF4AL9Sn

OPENCL vs OPENGL
FOR MINING
by VIVEK NAIR AND ALEXANDER MERRICKS
As we witness the evolution of the creation of digital
assets via the birth of the virtual cur rency world, it is
critical to understand the foundation of what makes
this innovation possible.
OpenGL is a scientific computing architecture that
enables an individual to perform advanced scientific
calculations using the higher floa ting point capacity
of a graphics device. The only limitation of OpenGL
is that the user will have to create a mechanism to
convert the compu ting problem to a graphical context
so that OpenGL can process the calculation.
Nvidia uses OpenCL-based CUDA architec ture on
their devices to enable their GPU hardware to be
used for applications other than graphical rendering
and gaming. The GPU has been used more often for
scientific computing, such as Open CUDA-enabled
graphical cards which possess enhanced computing
possibilities due to their increased ability to handle
floating points.
The solutions that arose from these innovations lead to
the development of newer breeds of GPUs and FPGAs.
The topic at hand discusses how the application of this
newer breed of GPUs is applied for digital currency
mining. The changes that these advancements have
brought about made possible the implementation of
OpenCL and OpenGL digital currency miners.
With OpenCL, the calculations are computed as a
floating point, but in case of OpenGL, these calculations
are computed by converting them into scalar images
which are then computed by the GPU as just another
graphical calculation.
OpenCL is based on an earlier ancestor named GPGPU, a
system that is based on the application Nvidia engineers
and architects created which includes other firms. This
solution was used by the digital mining revolution which
started with Bitcoin and now includes over 300 different
currencies. It has matured beyond GPUs and FPGAs with
the onset of the ASICS, and we are seeing the digital
currency world grow leaps and bounds.
The technology that has created the solutions for this
phenomenal change in the same way that money has been
perceived, has been created by OpenCL and OpenGL.
The developers of Bitcoin, who began this revolution in
2009, initially started with the OpenGL-based miners,
gradually moving into Nvidia’s hardware which was
less expensive than its AMD-based graphics card
counterparts. This attracted the attention of developers
and they implemented OpenCL/CUDA-based miners.
These
were less
ex pensive and
more cost-efficient
for digital currency mining
processes. This brought about
a greater acceptance of Bitcoin
and its many successors.
Technologically, OpenCL is faster than and superior to
OpenGL, with respect to digital currency mining, as it
doesn’t have to convert the mathematical logic into
graphical data, which saves a lot of time and reduces
the computational usage. An Nvidia-based miner for
Litecoin (a successful successor of Bitcoin) is about
55% cheaper than its AMD-based successor.
This is currently very relevant since understanding
the concepts of OpenCL and OpenGL enables
miners and programmers to develop solutions for
their ASICS. The collective knowledge and collective
involvement is responsible for bringing about the
success of digital currencies.
With any new technology, there will be obstacles and
hurdles to overcome. OpenCL and OpenGL open the
door to future applications beyond the current mining
aspects. The integration of gaming and mining will lead
to new ways of providing access for high-level graphics
and rendering capabilities.
As we move forward, monetizing digital assets
in the 21st century will become a more intelligent
and efficient process. If we continue to use these
architectures and move forward in this manner, the
possibilities are endless. —S
VIVEK NAIR and ALEXANDER
MERRICKS are the founders
of CosmicHQ.com. They provide
integration of digital
currencies and consulting on
the SHA 2 protocol and similar
cryptographic algorithms.
Bitcoin tips to CosmicHQ at:
1GfQcd79rx1tQwdFk694Tyh3ugkikezbRe
July.2014 Page.43 Crypto Biz Magazine

WHAT MAKES A
‘GOOD’ PASSWORD
MANAGER GOOD?
by SEAN COMEAU PART 2 OF 4
Page.44 July.2014
Crypto Biz Magazine
KeePass is an open source application available
at no cost. It has OSI open source certification.
Downloads for KeePass are available at the
developer website. KeePass is available as a
classic 1.x version and “professional” 2.x version.
Both versions are in active development. The
website has a page describing the differences
between the versions. The Windows versions are
available with an installer and as a zip file. Both
are self-contained. The folder from the installer
version, when copied to a USB drive runs fine.
The installer merely provides desktop and start
menu shortcuts, and automatically copies the
program to a desired location.
The 2.x version runs on more operating systems
than 1.x, but uses Mono which proved problematic
in our test on OS X 10.6.8. This might be overcome
with work at the command line in Terminal, but
the necessity of this violates the ease of installation
requirement.
Ports are available for the 1.x version. The Mac port
for this version comes as an OS X app called
KeePassX but is reported to have weaker protection
against dictionary attacks. The database from
version 2.x is not compatible with KeePassX. Thus
KeePass is available on Mac OS X if version 1.x is
used and reduced protection against dictionary
attacks is acceptable.
There is a 2.x compatible port for Android,
KeePass2Android. This port is installed from Google
Play on an Android tablet. It opened a test database
created on a Windows Vista computer and
transferred passwords to Chrome and Firefox. 2.x
ports are available for other platforms as well.

The standard installation of
KeePass will allow the login
information to be transferred
to any web browser by drag
and drop. The web page can be
accessed from KeePass. Doubleclicking
on the user name and
password in KeePass will copy
these to the clipboard for pasting
into any browser. More direct
interaction with browsers may be
available with plugins.
KeePass does not store the
password database on the web.
They have no plans to offer this
ability for security reasons. An
individual user could upload the
database to a remote storage
service and access it there from
multiple devices. The database
itself is secured as will be discussed
further on. The user will have
to identify a remote service with
acceptable security features
where they will do the upload.
KeePass is compatible with a
variety of database formats,
including the widely used CSV
(comma-separated values).
Thus, it will be able to import
data from any password manager
that exports a CSV file. Data
from KeePass is readable by any
program that reads CSV files.
The standard installation of
KeePass does not detect password
events in the browser, nor
does it fill forms. These capabilities
might be available with
plugins. However, the availability
for specific platform-browser
combinations will vary.
KeePass offers the feature of
secure notes and attachments.
The entire database is encrypted,
so any notes or attachments will
be secured by the encryption.
The standard installation of
KeePass does not fill forms, but
this feature may be available
with plugins.
Both versions of KeePass can
be used by multiple users. The
synchronization ability is much
better in the 2.x version.
The 1.x version is not
synchronized at all.
The 2.x version does
not use record-level
synchronization, but
uses a method which is
described in overview.
It does not support
multi-user permissions,
however, a method to
approximate this is
described in the KeePass
discussion forum at
Sourceforge.
Security of
Encryption
KeePass is an open source
project, using open encryption
technology. Encryption is done
using AES, and hashing is done
with SHA-256. These are both
well understood and highlyregarded
algorithms. Additionally,
the hash is performed with a
random salt. Steps are taken to
generate truly random numbers.
Steps are taken to prevent
against dictionary attacks. Data
is encrypted in the memory used
by the KeePass process. Some
protection against keyloggers
is provided. All of the security
features are described on the
KeePass website.
KeePass allows for two factor
authentication by providing the
option for a keyfile as well as the
password. This is all done locally
so the user can secure the
process to their satisfaction. If
the database is stored in an online
storage service, the keyfile can be
kept locally on each device that
needs access. Users will have to
decide whether this meets their
security needs.
KeePass will securely generate a
random password for each site
that you use. If you choose your
own password KeePass will show
an indicator bar describing the
strength of the password. It does
not prevent you from choosing a
poor password but does attempt
to warn you with the color coding
of the indicator bar.
The availability of plugins gives
more functionality to KeePass, but
also creates a security concern.
Plugins are installed by getting
copied into the application folder
and will run if they are present.
This means that KeePass could
be targeted with a malicious
plugin that would merely need to
be copied to the correct location.
This could be prevented by
write-protecting the folder as an
administrator and then running
from a non-admin account.
All ports of KeePass to other
operating systems are labeled as
unofficial on the website. Thus
we are not explicitly assured
that the security measures
described for the main product
are implemented correctly in
the ports.
KeePass scores well on the openness
standard. They use open
security algorithms and they
are fairly detailed in describing
the security of the product. This
description is available on a
dedicated page, and the link to
it is clearly visible and available
from every page. —S
SEAN COMEAU is a computer security
and cryptography enthusiast based in
Vancouver, BC, Canada.
July.2014 Page.45 Crypto Biz Magazine

Page.46 July.2014
Crypto Biz Magazine
FOR IMMEDIATE RELEASE
Crypto Currencies Foundation Russia (CCFR)
and First Bitcoin Center Russia (Bitcoin Russia),
with the assistance of the Bitcoin Foundation
and Ethereum, invites you to participate in the
First International & All-Russian Conference
“Bitcoin and Cryptocurrencies: Prospects for
Development in Russia,” which will be held
August 9, 2014 in St. Petersburg, Russia.
There will be appearances and addresses by
official guests and speakers, Bitcoin developers
and officials, chief editors of leading professional
media, the creators of online Bitcoin-relevant sites;
there will be exchanges and exchange offices, as
well as the Bitcoin business community—including
the founders and managers of online stores and
service businesses. Guest speakers include invited
government officials, representatives of the banking
community and companies developing payment
systems, including the National payment system.
The Conference will discuss the following
questions:
Legal and regulatory framework in Russia,
jurisprudence and legal aspects;
The use of cryptocurrency (the viewpoint of
supervisory and regulatory authorities, credit
institutions, payment systems and so on);
Business security and expert advice;
Turnover Bitcoin: experience operating
businesses;
Creation of Bitcoin centers (advice from
leading experts);
Mining (especially activities that compare
analysis of hardware and software and
master class);
Russia’s first Meetup with the Ethereum
creators;
Presentation of the first regional
cryptocurrency on the territory
of the former USSR;
Other topics discussed and
will be presented later.
The Conference will hold roundtables for developers
and enthusiasts, a special session for the
media and owners of online shops, as well as by an
open general meeting hosted by CCFR.
We invite Bitcoin-professional participants of the
market, the media, government officials, lawyers
and enthusiasts interested in promoting their
own projects.
Event website: CryptoForum.info
Promoter website: CCFR.info
BITCOIN AND CRYPTOCURRENCIES:
PROSPECTS FOR DEVELOPMENT IN RUSSIA
Crypto Biz Magazine’s Nathan Wosnack will be speaking
remotely at the First International & All-Russian Conference
Forum “Bitcoin and Cryptocurrencies: Prospects for
Development in Russia.” This is an exciting invitation from
the CCFR and a wonderful opportunity for Nathan to share
his views, insight and experiences with the Eastern European
crypto community. —S
NATHAN WOSNACK is a serial entrepreneur and pioneer in
cryptocurrencies; first running Bitcoin in November 2009. He is
involved as an advocate, miner, trader, and community spokesperson in
Vancouver, BC, Canada.

BITCOIN SERVICE DIRECTORY
WALLETS
BLOCKCHAIN
blockchain.info
COINBASE
coinbase.com
COINKITE
coinkite.com
HIVEWALLET
hivewallet.com
MULTIBIT
multibit.org
XAPO
xapo.com
EXCHANGES
BTC-E
btc-e.com
CAVIRTEX
cavirtex.com
CRYPTSY
cryptsy.com
MINTPAL
mintpal.com
QUADRIGA CX
quadrigacx.com
SWISSCEX
swisscex.com
INDEXES
BITCOIN AVERAGE
bitcoinaverage.com
BRAVENEWCOIN
bravenewcoin.com
BITSTAMP
bitstamp.com
COINDESK
coindesk.com
BITCOIN CHARTS
bitcoincharts.com
COINMARKETCAP
CoinMarketCAP
coinmarketcap.com
This is a list of merchants, and their websites, that accept bitcoins for their services. If you know companies that are now accepting bitcoins
and who you’d like to see added to this list, please contact us at directories@cryptobizmagazine.com. Additionally, let us know if you find
that any of these companies has stopped accepting bitcoins, or if you have any difficulty using bitcoins with them.

BITCOIN SUPPRESSION VIA THE PATENT SYSTEM
by REED JESSEN
Page.48 July.2014
Crypto Biz Magazine
The advent of bitcoin presents the global economy
with an issue it has never had to face before. Bitcoin is
the first currency that is fundamentally a technology.
It’s not simply an electronic network for keeping
track of who owns how much fiat currency, like the
Automated Clearing House. Nor is it a technological
abstraction of an underlying non-technical asset, like
an oil futures contract. It is, at every level of the protocol,
a novel and unobtrusive technological advancement,
and many of its embodiments are, there fore, patentable.
Before going any further, it is important to make a
distinction. The bitcoin protocol itself has been opensourced
and is no longer patent eligible. Many of the
innovations developed on top of the blockchain, however,
could be patented. If an inventor successfully obtained
such a patent, it would grant them monopoly power to
exclude others from its use for the next 20 years.
A good clarifying example of the relationship between
patents and bitcoin can be seen in the dairy industry.
Milk, as a product naturally occurring in nature, is not
patentable. Nevertheless, technologies developed to keep
milk fresh, safe, and to transport it to the breakfast table
certainly are patentable. The same is true with bitcoin.
While the protocol itself is not patentable, embodiments
like QR code transactions, dual signature wallets, and
serverless cloud storage like MaidSafe certainly are.
Bitcoin represents a massive disruption of the natural
order that traditional transaction companies like Visa,
MasterCard, and Western Union have come to expect.
These companies are accustomed to skimming 3% or
more off the top of every transaction. When retailers and
consumers are offered a viable alternative, which costs
them nearly nothing, and provides an equal or greater
level of security, they will migrate in droves to the
cryptocurrency economy. This will cut deeply into the
profit margins of the traditional transaction companies,
thus highly incentivizing them to suppress the adoption
of cryptocurrencies.
Examples of established power structures suppressing
the adoption of disruptive innovations are all around
us. As a taxicab company, what do you do when Uber
comes into your territory? You first kick yourself for not
leveraging the computer in your customer’s pockets to
better serve them. Next, you lash out with the monopolistic
taxicab medallion laws you paid to put in place.
Or, as a car dealership, what do you do when Elon Musk
says he’s going to circumvent the dealership system and
sell Tesla cars directly to consumers? You dust off your
ancient tomes of anti-competitive automotive franchise
law (again, that you paid to have written) and load your
lawsuit cannons.
As bitcoin begins to transact a larger portion of the
economy, traditional transaction companies will
react. They will attempt to suppress the adoption of
cryptocurrency technologies with the most effective
tool at their disposal… the patent system. One could
imagine that credit card companies, pressured to keep
profits up, may sue companies like Coinbase for their
merchant-integration API, Robocoin for their ATM, and
Xapo for their debit card.
Examples of patent-based technology suppression are
all too real. The 3D printer was first invented in 1984, but
key patents on laser printing technologies have kept
the price of quality 3D printers prohibitively high and
therefore out of the hands of average consumers. After
20 years, these patents are expiring and only now might
we see the decentralized manufacturing revolution. It’s
exciting to see this revolution begin to take shape today
but sad to consider that the patent system may have
need lessly delayed it for so long.
Early Linux innovators saw the risk that patent suppression
posed to an open source operating system.
They founded the Open Invention Network (OIN) to pool
Linux-related patents for a common defense and to keep
Linux royalty-free. They knew that offering free software
would draw the ire of the powerful proprietary software
vendors. In 2007, a patent licensing company with ties
to these powerhouse software companies called IP
Innovation LLC, tested OIN’s resolve by asserting old
Xerox patents from the late ’80s against Novell and
RedHat for their use of Linux. The OIN community came
to their defense, mounting a massive prior art search.
After 3 years of court battles, the jury looked to this prior
art and finally found IP Innovation’s patents invalid. OIN
drew a line in the sand and today the Linux kernel is
found on almost half of all mobile devices.
Members of the bitcoin community need to be aware of
the economic forces at play in the nascent cryptocurrency
economy. Bitcoin adoption is undermining traditional
power structures and it is predictable how those losing
power will react. If we want bitcoin to flourish like Linux
rather than stall like 3D printers, we need to actively engage
the patent system and leverage it to our advantage. —S
REED JESSEN is a patent ana lyst
and the creator of The Cryptocurrency
Defense Foundation. The Foundation
is a defensive patent aggregator
that acquires cryptocurrency rela ted
patents and licenses them openly
to all those who agree to not enforce
their patents against other members
of the community. Reed regularly
blogs about intellectual property
at Preferred Embodiment. Bitcoin
tips for the Cryptocurrency Defense
Foundation/Reed Jessen at:
15KV1Apea7U2ucZcYKNjv98iZPABM2i2zt

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A PERSONAL JOURNEY DOWN
by PHOENIX
THE BITCOIN RABBIT HOLE OLIVIA
I first heard of Bitcoin on a Sunday afternoon while
walking along Kitsilano Beach (Vancouver, BC, Canada)
with my friend Sebastian.
He asked, “Ever heard of something called ‘Bitcoin’?”
I hadn’t, so Seb proceeded to sketch out the basic tenants
of the bizarre-sounding idea. At first I was bewildered,
but the more I heard the more I became fascinated and
intrigued by the concept. His understanding of it was
elementary, but it was enough to spike my curiosity and
desire to do more digging.
The following day I asked a few of my friends if they had
ever heard of a digital currency called ‘Bitcoin.’ No one
had, but another friend mentioned she knew someone
in her network who told her years ago he was mining
Bitcoin—his name was Frankie. It turned out Frankie
was someone I’d met several years back during my
early DJing years in Vancouver, and he’d even fixed my
computer once.
I quickly tracked him down online and sent a message
saying I wanted to learn more about this mysterious and
baffling thing called ‘Bitcoin.’ He responded immediately
and the next day I was at his downtown office.
Page.50 July.2014
Crypto Biz Magazine
What Frankie explained to me that day blew my mind.
At first I was confounded. It didn’t make sense—how
it could be possible for this idea not to be a scam of
some sort—or, if not, then to even be accepted by the
“powers that be,” the people who own and control
most of the financial systems of the world.
The idea was too beautiful to survive in a world designed
from the top down to be unfair. Nevertheless, as Frankie
told me more about Bitcoin, I started to catch a glimpse
of its potential and power. Being a firm believer that
the world is long overdue for a major upgrade of many
of its old, antiquated systems, I became hopeful, and
excited, and left the meeting with four bitcoins, with
a determination to continue studying the crypto cur -
rency phenomenon.
The idea that ‘The People,’ not financial institutions,
could determine exactly how their money was spent,
who their money went to, how payments were made,
all done within minutes and costing mere pennies,
was stunning. Bitcoin was essentially cutting the
parasitic middlemen such as PayPal, Visa, MasterCard,
and Western Union from the equation and turning
the existing money exchange paradigm on its head,
by shifting the power balance into the hands of
individuals. Even more exciting for me, however, were
the ramifications this new paradigm would have on the
world outside of North America and Europe.
The people of the developing world have forever been
cut out of the world of money, and fair access to the
wealth of the developed world.
Family members in the West attempting to send money
back home to relatives are faced with fees and charges
from the current institutions that are unjustifiably high.
By the time the money gets to where it’s going, it’s
significantly less than what was originally sent. Most
people in the developing world have no bank account,
so reliance on these systems for money from the West
is absolute. Until now they had no choice.
PayPal charges from 0.5% – 3.9% on every person-toperson
transaction; Western Union charges 0 – 5% to send
money; the credit card companies place limits and
restrictions on who can get a card, while charging
outrageous rates; and bank fees eat away at people’s
hard-earned money. Bitcoin is practically free and takes
minutes to complete transactions around the world.
The majority of people in third world countries have no
bank account, nor the means to get one. Bitcoin requires
no bank account, no credit checks, no social status; it’s a
truly non-prejudicial platform that places financial power
in the hands of the people on a global scale, instead of
only a privileged few.

This must be terrifying to some people, who would
prefer the world of inequality to stay just the way it is,
with one percent feeding off the backs of 99 percent.
Western Union, Paypal and the credit card companies
must feel extremely threatened by Bitcoin, but clearly
these companies aren’t going to close up shop and walk
off into the sunset. They have tried to make Bitcoin go
away but failed, so they must realize that the world of
money exchange is radically evolving and they’ll have to
grow with it.
BitPay’s Manager, Moe Levin, says “If you didn’t have
a strategy for the Internet in 1995 it’s the same as not
having a strategy for crypto currencies now.”
This is the age of the Internet and it makes complete
sense that our money become more digitally based.
Humans are flawed and corruptible, mathematics are not.
Crypto currencies are a logical step forward in a
world that uses fewer resources. Jeremy Alaire from
Circle, a consumer finance company says, “Bitcoin is
the economic singularity. It’s like the invention of the
printing press, or railroads, or the Internet, except this
is happening on a really compressed scale.”
Individuals choosing to adopt Bitcoin may find it
confusing and overly technical at first, but when you
actually make the first step you quickly realize, as I did,
that it’s not that overwhelming at all. It’s actually far
simpler than opening a bank account.
Everyday an increasing number of systems are being
put in place to enhance security and create ease of
use for regular people who aren’t tech-savvy. Already
a healthy and vibrant ecosystem exists around Bitcoin
and is growing fast. At this point the big companies and
banks have to find a way to work with it or be left on the
sidelines! The Bitcoin protocol is beautiful. It evens out the
playing field for everyone and makes the world a bit more
fair, by allowing wealth to be accessible to anyone with an
Internet connection and a smart phone. With the release
of Firefox’s new $25 smartphone, even more people in
the developing world can now access Bitcoin. As Eric
Hoffer, the American author and social philosopher,
states, “In times of change the learners inherit the earth,
while the learned find themselves beautifully equipped to
deal with a world that no longer exists.”
Change is inevitable, it’s long overdue for our global
financial system, and Bitcoin is a long-awaited and
much-needed medicine. —S
PHOENIX OLIVIA is a
Vancouver-based DJ and crypto
coin enthusiast. She accepts tips at:
1Df8AUxjU1wrCQCEp2r31uac2SzP7mZjM
July.2014 Page.51 Crypto Biz Magazine

BITCOIN IN THE BELTWAY—
WHO, WHAT, AND WHERE IS CHARLIE?
by BEN ISGUR
I was lucky enough to be able to attend Bitcoin in
the Beltway this past weekend, hosted by none other
than the man who is probably the best known Bitcoin
philanthropist, Jason King of Sean’s Outpost. When I
say lucky enough, I mean it—for many reasons. First,
I was local, and not always having to travel far makes
events like this much easier to make it out to. Second, I
was the recipient of Jason’s good will—I keep to a tight
budget and wasn’t able to find a way to add in the
price of attendance in time for the event, but he was
kind enough to offer me a last-minute press badge so
I could still come by and have a great time interacting
with the community.
However, the third, and most significant, reason I say I
was lucky enough to attend, is the all-star list of speakers
and Bitcoin businesses that were in attendance.
For those not fortunate enough to be there them selves,
I snapped a few pictures during my time there. There was
quite a bit going on!
The gentlemen and lady running BitPay’s booth were
constantly swarmed by people wanting to talk to them.
I couldn’t even find a time to get a quiet picture of just
them and their booth, so I had to settle for this! I’ve heard
Plenty of other big names in the cryptocurrency world
were there as well, showing off the newest of the new.
Mycelium’s booth was staffed by Dmitry Murashchik,
or, for those that know him by his alias, Rassah, and he
had a neat little new gadget from Mycelium to show off.
What is that he’s holding, you ask? It’s called Mycelium
Entropy. It’s a tiny random wallet generator that is
designed to be plugged directly into a printer. It remains
entirely offline during the process, and prints out a
beautiful paper wallet. It can also print out 2-of-3 wallets,
if you’d prefer. If you can see the tiny white button on the
device, that is used to switch between the two modes:
2-of-3 and single address. Dmitry had printed off test
versions of each to show off the functionality, and while
Page.52 July.2014
Crypto Biz Magazine
of much worse problems than having your
time demanded by interested potential
customers, though.
And even if I couldn’t get a solid picture
of their booth, I didn’t walk away emptyhanded.
I stole (was given, same thing)
a stuffed copy of Bitpay CEO Tony
Gallippi’s dog.
I imagine the real-life version to be much
cuter, but I bet that he doesn’t wear a
Bitpay shirt!
The Mycelium Entropy—plug into your printer, it
prints a beautiful paper wallet, or 2-of-3 wallets
the paper is simple, the functionality
is both quite obvious and quite
valuable. Mycelium intended to
launch a Kickstarter for the device,
but they’re being prevented from
doing so by Kickstarter themselves,
who claim that their project violates
Kickstarter’s rule against
providing financial services. If this
device interests you, look to see a
crowdfunding project going live
very soon from Mycelium—and
probably on a better website than
Kickstarter; hopefully one that
can understand the difference
between financial services and data
security services.
Moving on… Also in attendance
was BitMainTech, a Bitcoin mining

hard ware manufacturer known for their Antminer line
of products. They’ve got a solid track record within the
Bitcoin mining space, because there’s something they
do a little bit differently than their competitors: they
don’t do preorders. They only sell products that are
either in-hand or are very close to being in-hand—never
vaporware. While this can hardly be considered good
for them, as preorder capital is delicious, it is
definitely good for their customers, who can
be certain of receiving their products when
they expect them—and not 6 weeks later,
when their profitability might be seriously
different. Antminer is just about to send
out Batch 4 of their new S2, a 1TH/s miner
with pretty low power consumption at ~1100
watts from the wall and a price point of
3BTC. You can check it out here.
ATM is a profitable business—maybe enough to justify
the price tag.
The guys at the College Crypto Network are pushing
the cause forward among the most receptive demographic
out there—college students. As a rule, students
are fed up with the predatory banking system, fed up
Butterfly Labs, the best-known and largest producers
of mining hardware, also attended the conference.
This weekend though, when I asked, they wanted to
show off something a little bit different. Rather than
their mining machines, they were focused on their new
hardware wallet, the BitSafe. They had a demo copy
flashing through a few of the default screens.
Butterfly Labs’ BitSafe lets you create
and store addresses, label them however
you’d like, display QR codes, send and
receive payments, and so on. It pretty
much does everything, while remaining
immune to intruders—and to water! It’s
not quite available yet, but it will be soon.
Check in with Butterfly Labs soon to
order one yourself!
CoinOutlet is a very young company—
so young, in fact, that their website is
just getting finished up! They were onsite
showing off their Bitcoin, Dogecoin,
and Litecoin ATM Kiosk! It’s a nice piece
of machinery with a relatively simple
process for first time buyers—my only
complaint was the price. At $5,000
per model, you’d have to be certain of
placing it in a high-traffic area for it to
be worth the investment. Still, running an
with student loan garbage, distrustful of the government,
and excited about new technology. Who better
to pitch the cause of cryptocurrency to? The CCN was
there taking names and contact info, looking to start
up more and more campus groups—as well as getting
commitments from potential guests that they would
shop around to groups who would like to host speakers.
Grassroots activism like this is the way to move us
forward, and I was glad to see some fellow young faces
around the conference hall—bright-eyed and looking
forward to a Bitcoin-powered future.
Another company I hadn’t heard of but whose acquaintance
I was glad to make, CrowdCurity, is a
July.2014 Page.53 Crypto Biz Magazine

Page.54 July.2014
Crypto Biz Magazine
crowdsourced platform for web security. An organization
for white hat programmers (those who look for bugs,
security flaws, and other issues with the intention of
informing the owners so that they can be fixed, as
opposed to black hats, who search for flaws to exploit or
sell them for personal gain). CrowdCurity is making it easy
for smaller web businesses to incentivise programmers
to secure their websites through bug bounty programs.
You’ll no longer need an in-house security expert to run
a secure platform, thanks to CrowdCurity. Yet another
example of how decentralization can improve the lives
of everyone—individuals and corporations alike. White
hats get jobs, companies get affordable security, and
consumers can be more confident of their personal
information security on various platforms they use.
Everybody benefits from competition.
A man who should need no introduction, Davi Barker
of Bitcoin Not Bombs fame, was there and I had a
chance to talk with him. For those unfamiliar with him
or his organization, he is a prolific anarchist and activist.
Bitcoin Not Bombs is an organization devoted to just
what you might expect—the cause of liberty. It was great
to get a chance to meet him and have a quick exchange
(mostly about his risqué t-shirt, pictured here)—he’s
a very friendly and likable guy, out in the world doing
something he is extremely passionate about, and for
good reason. His table was full of merchandise of all
sorts, much of which you’ll be able to find on the Bitcoin
Not Bombs shop once it relaunches. If you want a copy
of that risqué t-shirt, though, you’ll have to get at him on
Twitter or through e-mail! When I spoke to him, he was a
little uncertain of whether it should be available for sale
online. I tried my best to convince him it should be, but
rabid customers will do it better! He’s not threatening
violence against anyone—he’s just threatening to replace
the old paradigm with a new one, built on Bitcoin, aimed
at creating freedom. Hardly something worth not selling
a shirt over, in my mind.
Last of the attendees I spoke to, but far from least, was
this unassuming booth. You can’t see it in the picture,
but the computer screen is showing the stock ticker for
NEMstake on the NXT Secure Asset Exchange. The man
on the right is Sergey Nazarov, one of the developers
of the Secure Asset Exchange and someone who
likely deserves far more followers on Twitter than he
currently has. I find the project incredibly exciting—it’s
only missing one thing: more companies listing a diverse
array of assets on the exchange. That’s something that
will come in time, though. Still, even now, the exchange
has a few worthwhile ventures you should consider
looking into. I anticipate that the SAE will be one of
the most important early-use cases for cryptocurrency
moving forward, and I’m excited to watch it push on.
That’s all for the various exhibitors who were present,
but what about the other meat of the conference? The
speakers were a diverse group, but I’m going to focus
briefly on just a few of the most influential.
The headliners for the conference were the alwaysimpressive
Patrick Byrne, the impeccable Jeffrey Tucker,
and the inimitable Andreas Antonopoulos. Andreas spoke
early on the first day, and not surprisingly his speech was
so popular that it ran well past its appointed time. His talk
got a lot of laughs, but it was actually deadly serious.
Andreas’ point is much the same as it has been in the
past: ‘Bitcoin’s great achievement is a movement of
power from a corrupt and centralized structure to an
open, transparent, and decentralized structure. Power
has returned to those to whom it belongs: the individual.’
Andreas ended his talk with a brief discussion
and announcement of something he called “Proof
of Publication.” Details on that project should hopefully
be forthcoming, and I’m certainly looking forward to
seeing it happen.
Mr. Tucker’s presentation focused on a different understanding
of the history of the world than is commonly
taught; one in which money fuels conflict, an idea that

seems so obvious once presented. He catalogued the world
moving forward as one in which a cycle repeats itself: a
centralized institution takes control of a people’s monetary
supply. That institution, or those pulling its strings, uses that
power for selfish reasons—to wage wars, to disenfranchise
the powerless, to hurt those with whom they disagree or
who might question their power or its use. And then it
implodes, and yet eventually, every time, we manage to
return to the first step: a centralized institution is given
control over people’s money. Bitcoin has ended this most
vicious cycle, finally, once and for all. It disrupted step one:
instead of a centralized institution being given control over
people’s money, a decentralized one has taken its place.
And ‘given control’ might even be a misnomer, given the
programmatic nature of the Bitcoin system.
Jeffrey Tucker was, as always, eloquent and good-humored,
even while discussing this most dismal of topics. I enjoyed
his speech immensely, and would strongly recommend it to
my readers once it is available on YouTube.
Last item of the day—Patrick Byrne, Bitcoin Messiah,
CEO of Overstock.com, and Scourge of Wall Street.
While Mr. Byrne chose to spend the first few minutes
of the presentation disavowing that particular titling,
I would disagree with him. It certainly seems welldeserved
to me.
Patrick’s speech was very different. If you’ve heard the
phrase, “a face only a mother could love,” I’d suggest a
slight deviation of it would be applicable to his speech.
“A talk only another philosopher could find enrapturing.”
Mr. Byrne holds a Doctorate in Philosophy from Stanford
University, and as a fellow philosopher, I recognize the
curse this has laid upon him: he has difficulty discussing
complex topics in a way that non-philosophers can find
engaging. This problem only persisted for the first portion
of his discussion (which was, in retrospect, critical to the
remaining portions. I don’t mean to criticize his speech with
my quip about philosophers, merely to note the unusual
characteristics of his presentation.)
Mr. Byrne wove together several topics in his discussion,
but his focus was on the concept which we might
commonly call corruption within centralized institutions.
He excellently articulated a concept titular to his
investigative journalistic work, DeepCapture.com, which
focuses on… well, his website speaks for itself. In the
about section:
‘Public choice theory describes a phenomenon whereby
industries take control of, or “capture,” regulators who
are supposed to oversee them.’
The claim of this website is that powerful actors have
been able to influence or take control of not just the
regulators, but also law enforcement, elected officials,
national media, and the intellectual establishment.”
Mr. Byrne’s speech provided an excellent backdrop and
justification for this work—very important work that it is.
Recently DeepCapture made waves by filing a historic
lawsuit against the SEC, specifically relating to their
lack of enforcement of naked short selling laws. I hope
to see it continue to push forward exposing corruption
within not just financial regulators, but also in the realm
of law enforcement, the mud of political arenas, and
the two-faced theater that is media. I doubt there is any
shortage of muck to be dug up.
Mr. Byrne ended with a surprising announcement on a
different topic that was met with deafening applause.
Overstock.com will begin donating a significant portion
of their added profits from Bitcoin to some worthy
organization aimed at promoting the technology. The
program is still so new that the details are not perfectly
settled, but somewhere around 3% of Bitcoin sales will be
going back into the Bitcoin ecosystem in order to promote
it. A very kind gesture on their part, one that is very likely to
provide an additional surge of goodwill from our community
to their company. A win-win, as they say.
To hop back a moment over the topics I’ve touched on,
though, I’d like to discuss the title of this article: Who,
What, and Where’s Charlie?
Charlie, of course, is Charlie Shrem, currently under house
arrest, although still quite active in the Bitcoin community.
He was supposed to be attending and speaking at Bitcoin
in the Beltway, but he was prevented from doing so
for unknown reasons. Captured authorities, one might
suggest, though without evidence at the moment. It
is unfortunate to see such an influential member of
the community prevented from fulfilling something as
innocuous as a speaking obligation, due presumably
to a relatively unrelated but ongoing criminal case. Of
course, we all wish him the best, although he has gone
through immense personal tribulations these past months,
and continues to, he has never given up on the Bitcoin
community, and never stopped doing his utmost to
support and encourage it as it developed.
That’s all for my summary of Bitcoin in the Beltway this
past weekend! I hope you enjoyed getting a chance to
visit along and see a little of what went on over the
weekend. Make sure to check out the excellent and
dense array of panels, speeches, and presentations
from the weekend as they pop up on YouTube! There
were far too many excellent presenters to discuss in
just one article, and much of what they had to say is
certainly worth a watch (or a listen!). —S
BEN ISGUR is a cryptocurrency analyst, journalist, and
advocate. He is the author of both TheBlogChain.com, a
cryptocurrency news and analysis blog, and Bitcoin in Brief, a

BITCOIN MERCHANT DIRECTORY
ADORMO
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BITFARE
bitfare.org
COINRX
coinrx.com
DISH NETWORK
dish.com
EXPEDIA
expedia.com
NEW MEXICO TEA CO. nmteaco.com
JRT PROPERTY
JRT Property
International Real Estate
NEW EGG
jrt.com
newegg.com
SIMPLY TRAVEL simplytravelonline.com
OVERSTOCK.COM
overstock.com
This is a list of merchants, and their websites, that accept bitcoins for their products. Please contact us
at directories@cryptobizmagazine.com if you know merchants who are now accepting bitcoins and
who you’d like to see added to this list. Additionally, please let us know if you find that any of these
merchants has stopped accepting bitcoins, or if you have any difficulty using bitcoins with them.

GITHUB BITCOIN GLOSSARY
Some unusual terms are used in Bitcoin documentation and discussions about tx or coinbase, or words like scriptPubKey fly
around, without reference or context. Help is here! This glossary will help you understand the exact meaning of all Bitcoin-related
terminology—both words and phrases.
Page.58 July.2014
Crypto Biz Magazine
0-Confirmation (Zero-Confirmation)
See Unconfirmed Transaction and Confirmation Number.
51% Attack
Also known as >50% attack or a double spend attack. An
attacker can make a payment, wait till the merchant accepts
some number of confirmations and provides the service,
then starts mining a parallel chain of blocks starting with a
block before the transaction. This parallel blockchain then
includes another transaction that spends the same outputs
on some other address. When the parallel chain becomes
more difficult, it is considered a main chain by all nodes and
the original transaction becomes invalid. Having more than
a half of total hashrate guarantees possibility to overtake
chain of any length, hence the name of an attack (strictly
speaking, it is “more than 50%,” not 51%). Also, even 40% of
hashrate allows making a double spend, but the chances are
less than 100% and diminish exponentially with the number
of confirmations that the merchant requires.
This attack is considered theoretical as owning more
than 50% of hashrate might be much more expensive
than any gain from a double spend. Another variant
of an attack is to disrupt the network by mining
empty blocks, censoring all transactions. An attack
can be mitigated by blacklisting blocks that most
“honest” miners consider abnormal. Under normal
conditions, miners and mining pools do not censor
blocks and transactions as it may diminish trust in
Bitcoin and thus their own investments. 51% attack
is also mitigated by using checkpoints that prevent
reorganization past the certain block.
Address
Bitcoin address is a Base58Check representation of a
Hash160 of a public key with a version byte 0x00 which
maps to a prefix “1.” Typically represented as text (ex. 1CBtc-
GivXmHQ8ZqdPgeMfcpQNJrqTrSAcG) or as a QR code.
A more recent variant of an address is a P2SH address: a
hash of a spending script with a version byte 0x05 which
maps to a prefix “3” (ex. 3NukJ6fYZJ5Kk8bPjycAnruZkE5Q7UW7i8).
Another variant of an address is not a hash, but a raw private
key representation (e.g. 5KQntKuhYWSRXNqp2yhdXzjekYAR7US3MT1715Mbv5CyUKV6hVe).
It is rarely used,
only for importing/exporting private keys or printing them
on paper wallets.
Altcoin
A clone of the protocol with some modifications. Altcoins
usually have rules incompatible with Bitcoin and have their
own genesis blocks. Most notable altcoins are Litecoin (uses
faster block confirmation time and scrypt as a proof-ofwork)
and Namecoin (has a special key-value storage). In
theory, an altcoin can be started from an existing Bitcoin
blockchain if someone wants to support a different set of
rules (although, there was no such example to date). See
also Fork.
ASIC
Stands for “application-specific integrated circuit.” In other
words, a chip designed to perform a narrow set of tasks
(compared to CPU or GPU that perform a wide range of
functions). ASIC typically refers to specialized mining chips
or the whole machines built on these chips. Some ASIC
manufacturers: Avalon, ASICMiner, Butterfly Labs (BFL)
and Cointerra.
ASICMiner
A Chinese manufacturer that makes custom mining
hardware, sells shares for bitcoins, pays dividends from onsite
mining and also ships actual hardware to customers.
Base58
A compact human-readable encoding for binary data
invented by Satoshi Nakamoto to make more user-friendly
addresses. It consists of alphanumeric characters, but does
not allow “0,” “O,” “I,” “l” characters that look the same in
some fonts and could be used to create visually identical
looking addresses. Lowercase “o” and “1” are allowed.
Base58Check
A variant of Base58 encoding that appends first 4 bytes of
Hash256 of the encoded data to that data before converting
to Base58. It is used in addresses to detect typing errors.
BIP
Bitcoin Improvement Proposals. RFC-like documents
modeled after PEPs (Python Enhancement Proposals)
discussing different aspects of the protocol and software.
Most interesting BIPs describe hard fork changes in the core
protocol that require a super-majority of Bitcoin users (or, in
some cases, only miners) to agree on the change and accept
it in an organized manner.
Bitcoin
Refers to a protocol, network or a unit of currency.
As a protocol, Bitcoin is a set of rules that every client must
follow to accept transactions and have its own transactions
accepted by other clients. Also includes a message protocol
that allows nodes to connect to each other and exchange
transactions and blocks.
As a network, Bitcoin is all the computers that follow the
same rules and exchange transactions and blocks between
each other.
As a unit, one Bitcoin (BTC, XBT) is defined as 100 million
satoshis, the smallest units available in the current transaction
format. Bitcoin is not capitalized when speaking about the
amount: “I received 0.4 bitcoins.”

GITHUB BITCOIN GLOSSARY CONTINUED
Bitcoin Core
New name of BitcoinQT since release of version 0.9 on March
19, 2014. Not to confuse with CoreBitcoin, an Objective-C
implementation published in August 2013. See also Bitcore,
a JavaScript implementation for Node.js by Bitpay.
Bitcoinj
A Java implementation of a full Bitcoin node by Mike Hearn.
Also includes SPV implementation among other features.
Bitcoinjs
A JavaScript toolkit. Allows signing transactions and
performing several elliptic curve operations. Used on
brainwallet.org.
BitcoinQT
Bitcoin implementation based on original code by Satoshi
Nakamoto. Includes a graphical interface for Windows, OS
X and Linux (using QT) and a command-line executable
bitcoind that is typically used on servers.
It is considered a reference implementation as it’s the most
used full node implementation, especially among miners.
Other implementations must be bug-for-bug compatible
with it to avoid being forked. BitcoinQT uses OpenSSL for
its ECDSA operations which has its own quirks that became
a part of the standard (e.g. non-canonically encoded public
keys are accepted by OpenSSL without an error, so other
implementations must do the same).
bitcoind
Original implementation of Bitcoin with a command line
interface. Currently a part of BitcoinQT project. “D” stands
for “daemon” per UNIX tradition to name processes running
in background. See also BitcoinQT.
bitcoin-ruby
A Bitcoin utilities library in Ruby by Julian Langschaedel.
Used in production on Coinbase.com.
Bitcore
A Bitcoin toolkit by BitPay written in JavaScript. More
complete than Bitcoinjs.
Block
A data structure that consists of a block header and a
merkle tree of transactions. Each block (except for genesis
block) references one previous block thus forming a tree
called the blockchain. Block can be thought of as a group of
transactions with a timestamp and a proof-of-work attached.
Block Header
A data structure containing a previous block hash, a hash
of a merkle tree of transactions, a timestamp, a difficulty
and a nonce.
Block Height
A sequence number of a block in the blockchain. Height 0
refers to the genesis block. Several blocks may share the
same height (see Orphan), but only one of them belongs to
the main chain. Block height is used in Lock time.
Blockchain
A public ledger of all confirmed transactions in a form of a
tree of all valid blocks (including orphans). Most of the time,
“blockchain” means the main chain, a single most difficult
chain of blocks. Blockchain is updated by mining blocks with
new transactions. Unconfirmed transactions are not part of
the blockchain. If some clients disagree on which chain is
main or which blocks are valid, a fork happens.
Blockchain.info
A web service running a Bitcoin node and displaying
statistics and raw data of all the transactions and blocks.
It also provides a web wallet functionality with lightweight
clients for Android, iOS and OS X.
Brain wallet
Brain wallet is the concept of storing private keys as a
memorable phrase without any digital or paper trace. Either a
single key is used for a single address, or a deterministic wallet
derived from a single key. If done properly, a brain wallet
greatly reduces the risk of theft because it is completely
deniable: no one could say which or how much bitcoins you
own as there are no actual wallet files to be found anywhere.
However, it is the most error-prone method as one can simply
forget the secret phrase, or make it so simple that someone is
able to brute force and steal all the funds. Additional risks are
added by a complex wallet software. E.g. BitcoinQT always
sends change amount to a new address. If a private key is
imported temporarily to spend 1% of the funds and then the
wallet is deleted, the remaining 99% is lost forever as they are
moved as a change to a completely new address. This has
already happened to a number of people.
Brainwallet.org
Utility based on bitcoinjs to craft transactions by
hand, convert private keys to addresses and work with a
brain wallet.
BTC
The most popular informal currency code for 1 Bitcoin
(defined as 100,000,000 Satoshis). See also XBT.
Casascius Coins
Physical collectible coins produced by Mike Caldwell. Each
coin contains a private key under a tamper-evident hologram.
The name “Casascius” is formed from a phrase “call a spade a
spade,” as a response to the name of Bitcoin itself.
Change
Informal name for a portion of a transaction output that
is returned to a sender as a “change” after spending that
output. Since transaction outputs cannot be partially spent,
one can spend 1 BTC out of 3 BTC output only by creating
two new outputs: a “payment” output with 1 BTC sent to
a payee address, and a “change” output with remaining 2
BTC (minus transaction fees) sent to the payer’s addresses.
BitcoinQT always uses a new address from a key pool for
better privacy. Blockchain.info sends to a default address
in the wallet.
A common mistake when working with a paper wallet or a
brain wallet is to make a change transaction to a different
address and then accidentally delete it. E.g. when importing
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a private key in a temporary BitcoinQT wallet, making a
transaction and then deleting the temporary wallet.
Checkpoint
A hash of a block before which the BitcoinQT client
downloads blocks without verifying digital signatures for
performance reasons. A checkpoint usually refers to a very
deep block (at least several days old) when it’s clear to
everyone that the block is accepted by the overwhelming
majority of users and reorganization will not happen past
that point.
It also helps to protect most of the history from a 51% attack.
Since checkpoints affect how the main chain is determined,
they are part of the protocol and must be recognized by
alternative clients (although, the risk of reorganization past
the checkpoint would be incredibly low).
Client
See Node.
Coin
An informal term that means either 1 bitcoin, or an unspent
transaction output that can be spent.
Coinbase
An input script of a transaction that generates new bitcoins,
or the name of that transaction itself (“coinbase transaction”).
Coinbase transaction doesn’t spend any existing transactions,
but contains exactly one input which may contain any data
in its script. Genesis block transactions contain a reference to
The Times article from January 3rd, 2009 to prove that more
blocks were not created before that date. Some mining pools
put their names in the coinbase transactions (so everyone can
estimate how much hashrate each pool produces).
Coinbase is also used to vote on a protocol change (e.g.
P2SH). Miners vote by putting some agreed-upon marker
in the coinbase to see how many support the change. If a
majority of miners support it and expect non-mining users
to accept it, then they simply start enforcing the new rule.
The minority should either continue with a forked blockchain
(thus producing an altcoin) or accept the new rule.
Coinbase.com
US-based Bitcoin/USD exchange and web wallet service.
Colored Coin
A concept of adding a special meaning to certain transaction
outputs. This could be used to create a tradable commodity
on top of Bitcoin protocol. For instance, a company may
create 1 million shares and declare a single transaction
output containing 10 BTC (1B satoshis) as a source of these
shares. Then some or all of these bitcoins can be moved to
other addresses, sold, or exchanged. During a voting process
or a dividend distribution, share owners can prove ownership
by simply signing a particular message by the private keys
associated with addresses holding bitcoins derived from the
initial source.
Cold Storage
A collective term for various security measures to reduce
the risk of remote access to the private keys. It could be
a normal computer disconnected from the Internet, or a
dedicated hardware wallet, or a USB stick with a wallet file,
or a paper wallet.
CompactSize
Original name of a variable-length integer format used
in transaction and block serialization. Also known as
“Satoshi’s encoding.” It uses 1, 3, 5 or 9 bytes to represent
any 64-bit unsigned integer. Values lower than 253 are
represented with 1 byte. Bytes 253, 254 and 255 indicate
16-, 32- or 64-bit integers that follow. Smaller numbers
can be presented differently. In bitcoin-ruby it is called
“var_int,” in Bitcoinj it is VarInt. BitcoinQT also has even
more compact representation called VarInt, which are not
compatible with CompactSize and used in block storage.
Confirmed Transaction
Transaction that has been included in the blockchain.
Probability of transaction being rejected is measured in a
number of confirmations. See Confirmation Number.
Confirmation Number
Confirmation number is a measure of probability that
transaction could be rejected from the main chain. “Zero
confirmations” means that transaction is unconfirmed
(not in any block yet). One confirmation means that the
transaction is included in the latest block in the main chain.
Two confirmations means the transaction is included in the
block right before the latest one. And so on. Probability
of transaction being reversed (“double spent”) diminishes
exponentially with more blocks added “on top” of it.
Difficulty
Difficulty is a measure of how difficult it is to find a new block
compared to the easiest it can ever be. By definition, it is a
maximum target divided by the current target. Difficulty is
used in two Bitcoin rules: 1) every block must meet difficulty
target to ensure 10 minute interval between blocks and 2)
transactions are considered confirmed only when belonging
to a main chain, which is the one with the biggest cumulative
difficulty of all blocks. As of September 5, 2013, the difficulty
is 86,933,018 and grows by 20 – 30% every two weeks. See
also Target.
Denial of Service
A form of attack on the network. Bitcoin nodes punish
certain behavior of other nodes by banning their IP addresses
for 24 hours to avoid DoS. Also, some theoretical
attacks like 51% attack may be used for network-wide DoS.
Depth
Depth refers to a place in the blockchain. A transaction with
6 confirmations can also be called “6 blocks deep.”
Deterministic Wallet
A collective term for different ways to generate a sequence
of private keys and/or public keys. Deterministic wallet does
not need a Key Pool. The simplest form of a deterministic
wallet is based on hashing a secret string concatenated
with a key number. For each number the resulting hash is
used as a private key (public key is derived from it). More
complex schemes uses elliptic curve arithmetic to derive
sequences of public and private keys separately, which allows
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without storing private keys on a web server. More information
on Bitcoin Wiki. See also Wallet.
DoS
See Denial of Service.
Double Spend
A fraudulent attempt to spend the same transaction output
twice. There are two major ways to perform a double spend:
reverting an unconfirmed transaction by making another
one which has a higher chance of being included in a block
(only works with merchants accepting zero-confirmation
transactions) or by mining a parallel blockchain with a
second transaction, to overtake the chain where the first
transaction was included.
The Bitcoin proof-of-work scheme makes it incredibly
difficult to double spend transactions included in the
blockchain. The deeper transaction is recorded in the
blockchain, the more expensive it is to “reverse” it. See also
51% attack.
Dust
A transaction output that is smaller than the typical fee
required to spend it. This is not a strict part of the protocol,
as any amount more than zero is valid. BitcoinQT refuses
to mine or relay “dust” transactions to avoid uselessly
increasing the size of unspent transaction outputs (UTXO)
index. See also UTXO.
ECDSA
Stands for Elliptic Curve Digital Signature Algorithm. Used
to verify transaction ownership when making a transfer of
bitcoins. See Signature.
Elliptic Curve Arithmetic
A set of mathematical operations defined as a group of
points on a 2D elliptic curve. Bitcoin protocol uses predefined
curve secp256k1. Here’s the simplest possible explanation of
the operations: you can add and subtract points and multiply
them by an integer. Dividing by an integer is computationally
infeasible (otherwise cryptographic signatures won’t work).
The private key is a 256-bit integer and the public key is a
product of a predefined point G (“generator”) by that integer:
A = G * a. Associativity law allows implementing interesting
cryptographic schemes like Diffie-Hellman key exchange
(ECDH): two parties with private keys a and b may exchange
their public keys A and B to compute a shared secret point
C: C = A * b = B * a because (G * a) * b == (G * b) * a. Then
this point C can be used as an AES encryption key to protect
their communication channel.
Extra nonce
A number placed in coinbase script and incremented by a
miner each time the nonce 32-bit integer overflows. It is not
necessary to continue mining when nonce overflows, one
can also change the merkle tree of transactions or change a
public key used for collecting a block reward. See also nonce.
Fee
See Transaction Fee.
Fork
Refers either to a fork of a source code (see Altcoin) or, more
often, to a split of the blockchain when two different parts of
the network see different main chains. In a sense, fork occurs
every time two blocks of the same height are created at the
same time. Both blocks always have the different hashes
(and therefore different difficulty), so when a node sees
both of them, it will always choose the most difficult one.
However, before both blocks arrive at a majority of nodes,
two parts of the network will see different blocks as tips of
the main chain.
Fork or hard fork also refer to a change of the protocol that
may lead to a split of the network (by design or because
of a bug). On March 11, 2013, a smaller half of the network
running version 0.7 of bitcoind, could not include a large
(>900 Kb) block at height 225430, created by a miner
running version 0.8 or newer. The block could not be included
because of the bug in v0.7 which was fixed in v0.8. Since
the majority of computing power did not have a problem,
it continued to build a chain on top of a problematic block.
When the issue was noticed, majority of 0.8 miners agreed
to abandon 24 blocks incompatible with 0.7 miners and
mine on top of 0.7 chain. Except for one double spend
experiment against OKPay, all transactions during the fork
were properly included in both sides of the blockchain.
Full Node
A node which implements all of Bitcoin protocol and does not
require trusting any external service to validate transactions.
It is able to download and validate the entire blockchain.
All full nodes implement the same peer-to-peer messaging
protocol to exchange transactions and blocks, but that is
not a requirement. A full node may receive and validate data
using any protocol and from any source. However, the highest
security is achieved by being able to communicate as fast as
possible with as many nodes as possible.
Genesis Block
The very first block in the blockchain with hard-coded contents
and an all-zero reference to a previous block. Genesis
block was released on 3rd of January, 2009 with a newspaper
quote in its coinbase: “The Times 03/Jan/2009 Chancellor
on brink of second bailout for banks” as a proof that there
are no secretly pre-mined blocks to overtake the blockchain
in the future. The message ironically refers to a reason for
Bitcoin existence: a constant inflation of money supply by
governments and banks.
Halving
Refers to reducing reward every 210,000 blocks (approximately
every 4 years). Since the genesis block to a block 209,999 in
December 2012 the reward was 50 BTC. By 2016 it will be 25
BTC, then 12.5 BTC and so on, until it’s only 1 satoshi around
2140, after which point no more bitcoins will ever be created.
Due to reward halving, the total supply of bitcoins is limited:
only about 2100 trillion satoshis will ever be created.
Hard Fork
Some people use the term hard fork to stress that changing
Bitcoin protocol requires overwhelming majority to agree
with it, or some noticeable part of the economy will continue
with original blockchain following the old rules. See Fork and
Soft Fork.
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Hash Function
Bitcoin protocol mostly uses two cryptographic hash
functions: SHA-256 and RIPEMD-160. First one is almost
exclusively used in the two round hashing (Hash256), while
the latter one is only used in computing an address (see also
Hash160). In addition to Hash256 and Hash160, scripts may
also use SHA-1, SHA-256 and RIPEMD-160.
Hash, Hash256
When not speaking about arbitrary hash functions, Hash refers
to two rounds of SHA-256. That is, you would compute an SHA-
256 hash of your data and then an SHA-256 hash of that hash.
It is used in block header hashing, transaction hashing, making
a merkle tree of transactions, or computing a checksum of an
address. Known as BTCHash256() in CoreBitcoin, Hash() in
BitcoinQT. It is also available in scripts as OP_HASH256.
Hash160
SHA-256 hashed with RIPEMD-160. It is used to produce
an address because it makes a smaller hash (20 bytes vs
32 bytes) than SHA-256, but still uses SHA-256 internally
for security. BTCHash160() in CoreBitcoin, Hash160() in
BitcoinQT. It is also available in scripts as OP_HASH160.
To hash
To compute a hash function of some data. If hash function is
not mentioned explicitly, it is the one defined by the context.
For instance, “to hash a transaction” means to compute
Hash256 of binary representation of a transaction.
Hashrate
A measure of mining hardware performance expressed in
hashes per second. As of September 5, the hash rate of all
Bitcoin mining nodes combined is around 647,000 Gh/s. For
comparison, AMD Radeon graphics cards produce from 200
to 800 Mh/s depending on model.
Hash Type (hashtype)
A single byte, appended to a transaction signature in the
transaction input, which describes how the transaction
should be hashed in order to verify that signature. There
are three types affecting outputs: ALL (default), SINGLE,
NONE and one optional modifier ANYONECANPAY affecting
the inputs (can be combined with either of the first three).
ALL requires all outputs to be hashed (thus, all outputs are
signed). SINGLE clears all output scripts but the one with the
same index as the input in question. NONE clears all outputs
thus allowing changing them at will. ANYONECANPAY
removes all inputs except the current one (allows anyone to
contribute independently). The actual behavior is more subtle
than this overview, you should check the actual source code
for more comments.
Height
See Block Height.
Input
See Transaction Input.
Key
Could mean an ECDSA public or private key, or AES
symmetric encryption key. AES is not used in the protocol
itself (only to encrypt the ECDSA keys and other sensitive
data), so usually the word key means an ECDSA key. When
talking about keys, people usually mean private keys as
public key can always be derived from a private one. See
also Private Key and Public Key.
Key Pool
Some wallet applications that create new private keys
randomly keep a pool of unused pre-generated keys
(BitcoinQT keeps 100 keys by default). When a new key
is needed for change address or a new payment request,
the application provides the oldest key from the pool and
replaces it with a fresh one. The purpose of the pool is to
ensure that recently used keys are always backed up on
external storage. Without a key pool you could create a
new key, receive a payment on its address and then have
your hard disk die before backing up this key. A key pool
guarantees that this key was already backed up several days
before being used. Deterministic wallets do not use a key
pool because they only need to back up a single secret key.
Lightweight client
Comparing to a full node, lightweight node does not store
the whole blockchain and thus cannot fully verify any
transaction. There are two kinds of lightweight nodes: those
fully trusting an external service to determine wallet balance
and validity of transactions (e.g. blockchain.info) and the
apps implementing Simplified Payment Verification (SPV).
SPV clients do not need to trust any particular service, but
are more vulnerable to a 51% attack than full nodes. See
Simplified Payment Verification.
Lock Time (locktime)
A 32-bit field in a transaction that means either a block height
at which the transaction becomes valid, or a UNIX timestamp.
Zero means transaction is valid in any block. A number less
than 500,000,000 is interpreted as a block number (the
limit will be hit after year 11,000), otherwise a timestamp.
Mainnet
Main Bitcoin network and its blockchain. The term is mostly
used in comparison to testnet.
Main Chain
A part of the blockchain which a node considers the most
difficult (see difficulty). All nodes store all valid blocks,
including orphans, and recompute the total difficulty when
receiving another block. If the newly arrived block or blocks
do not extend existing main chain, but create another one
from some previous block, it is called reorganization.
Merkle Tree
Merkle tree is an abstract data structure that organizes a list
of data items in a tree of their hashes (like in Git, Mercurial
or ZFS). In Bitcoin, the merkle tree is used only to organize
transactions within a block (the block header contains only
one hash of a tree) so that full nodes may prune fully spent
transactions to save disk space. SPV clients store only block
headers and validate transactions if they are provided with
a list of all intermediate hashes.
Mempool
A technical term for a collection of unconfirmed transactions
stored by a node until they either expire or get included in
the main chain. When reorganization happens, transactions

GITHUB BITCOIN GLOSSARY CONTINUED
from orphaned blocks either become invalid (if already
included in the main chain) or moved to a pool of unconfirmed
transactions. By default, bitcoind nodes throw away unconfirmed
transactions after 24 hours.
Mining
A process of finding valid hashes of a block header by
iterating millions of variants of block headers (using nonce
and extra nonce) in order to find a hash lower than the target
(see also difficulty). The process needs to determine a single
global history of all transactions (grouped in blocks). Mining
consumes time and electricity and nowadays the difficulty
is so big, that energy-wise it’s not even profitable to mine
using video graphics cards. Mining is paid for by transaction
fees and by block rewards (newly generated coins, hence
the term “mining”).
Mining Pool
A service that allows separate owners of mining hardware
to split the reward proportionally to submitted work. Since
probability of finding a valid block hash is proportional
to miner’s hashrate, small individual miners may work for
months before finding a big per-block reward. Mining pools
allow more steady stream of smaller income. Pool owner
determines the block contents and distributes ranges of
nonce values between its workers. Normally, mining pools
are centralized. P2Pool is a fully decentralized pool.
Miner
A person, a software or a hardware that performs mining.
Mixing
A process of exchanging coins with other persons in order to
increase privacy of one’s history. Sometimes it is associated
with money laundering, but strictly speaking it is orthogonal to
laundering. In traditional banking, a bank protects customer’s
privacy by hiding transactions from all third parties. In Bitcoin
any merchant may do a statistical analysis of one’s entire
payment history and determine, for instance, how many
bitcoins one owns. While it’s still possible to implement KYC
(Know Your Customer) rules on a level of every merchant,
mixing allows you to separate information about one’s history
between the merchants.
Most important reasons for mixing are: 1) receiving a salary
as a single big monthly payment and then spending it in
small transactions (“café sees thousands of dollars when you
pay just $4”); and 2) making a single payment and revealing
connection of many small private spendings (“car dealer sees
how much you are addicted to coffee”). In both cases your
employer, a café and a car dealer may comply with KYC/
AML laws and report your identity and transferred amounts,
but neither of them need to know about each other. Mixing
bitcoins after receiving a salary and mixing them before
making a big payment solves this privacy problem.
M-of-N Multi-signature Transaction
A transaction that can be spent using M signatures
when N public keys are required (M is less or equal to N).
Multi-signature transactions that only contain one OP_
CHECKMULTISIG opcode and N is 3, 2 or 1 are considered
standard.
Node
Node, or client, is a computer on the network that speaks
Bitcoin message protocol (exchanging transactions and
blocks). There are full nodes that are capable of validating
the entire blockchain and lightweight nodes, with reduced
functionality. Wallet applications that speak to a server are not
considered nodes.
Nonce
Stands for “number used once.” A 32-bit number in a block
header which is iterated during a search for proof-of-work.
Each time the nonce is changed, the hash of the block header
is recalculated. If nonce overflows before valid proof-of-work
is found, an extra nonce is incremented and placed in the
coinbase script. Alternatively, one may change a merkle tree
of transactions or a timestamp.
Non-standard Transaction
Any valid transaction that is not standard. Non-standard
transactions are not relayed or mined by default BitcoinQT
nodes, but are relayed and mined on testnet. However, if
anyone puts such transaction in a block, it will be accepted
by all nodes. In practice it means that unusual transactions
will take more time to get included in the blockchain. If
some kind of non-standard transaction becomes useful and
popular, it may get named standard and adopted by users
(like it). See also Standard Transaction.
Opcode
8-bit code of a script operation. Codes from 0x01 to 0x4B
(decimal 75) are interpreted as a length of data to be
pushed on the stack of the interpreter (data bytes follow
the opcode). Other codes either do something interesting,
are disabled and cause transaction verification to fail, or do
nothing (reserved for future use). See also Script.
Orphan, Orphaned Block
A valid block that is no longer a part of a main chain. Usually
happens when two or more blocks of the same height are
produced at the same time. When one of them becomes a
part of the main chain, others are considered “orphaned.”
Orphans also may happen when the blockchain is forked
due to an attack (see 51% attack) or a bug. Then a chain
of several blocks may become abandoned. Usually a
transaction is included in all blocks of the same height, so
its confirmation is not delayed and there is no double spend.
See also Fork.
Output
See Transaction Output.
P2SH
See Pay-to-Script Hash.
Pay-to-Script Hash
A type of script and address that allows sending bitcoins to
arbitrary complex scripts using a compact hash of that script.
This allows payer to pay much smaller transaction fees and
not wait long for a non-standard transaction to get included
in the blockchain. Then the actual script matching the hash
must be provided by the payee when redeeming the funds.
P2SH addresses are encoded in Base58Check just like regular
public keys and start with number “3.”
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Paper Wallet
A form of cold storage where a private key for Bitcoin address
is printed on a piece of paper (with or without encryption)
and then all traces of the key are removed from the computer
where it was generated. To redeem bitcoins, a key must be
imported in the wallet application so it can sign a transaction.
See also Casascius Coins.
Proof-of-Work (PoW)
A number that is provably hard to compute. That is, it takes
measurable amount of time and/or computational power
(energy) to produce. In Bitcoin it is a hash of a block header.
A block is considered valid only if its hash is lower than the
current target (roughly, starts with a certain amount of zero
bits). Each block refers to a previous block thus accumulating
previous proof-of-work and forming a blockchain.
Proof-of-work is not the only requirement, but it’s an
important one to make sure that it is economically infeasible
to produce an alternative history of transactions with the same
accumulated work. Each client can independently consider
the most difficult chain of valid blocks as the “true” history of
transactions, without need to trust any source that provides
the blocks.
Note that owning a very large amount of computational
power does not override other rules enforced by every client.
Ill-formed blocks or blocks containing invalid transactions are
rejected no matter how difficult they were to produce.
Private Key (Privkey)
A 256-bit number used in ECDSA algorithm to create
transaction signatures in order to prove ownership of a
certain quantity of bitcoins. Can also be used in arbitrary
elliptic curve arithmetic operations. Private keys are stored
within wallet applications and are usually encrypted with a
pass phrase. Private keys may be completely random (see
Key Pool) or generated from a single secret number (“seed”).
See also Deterministic Wallet.
Public Key (Pubkey)
A 2D point on an elliptic curve secp256k1 that is produced
by multiplying a predefined “generator” point by a private
key. Usually it is represented by a pair of 256-bit numbers
(“uncompressed public key”), but can also be compressed
to just one 256-bit number (at the slight expense of CPU
time to decode an uncompressed number). A special hash
of a public key is called address. Typical Bitcoin transactions
contain public keys or addresses in the output scripts and
signatures in the input scripts.
Reference Implementation
BitcoinQT (or bitcoind) is the most used full node
implementation, so it is considered a reference for other
implementations. If an alternative implementation is not
compatible with BitcoinQT it may be forked, that is, it will
not see the same main chain as the rest of the network
running BitcoinQT.
Relaying Transactions
Connected Bitcoin nodes relay new transactions between
each other on best-effort basis in order to send them to
the mining nodes. Some transactions may not be relayed
by all nodes. E.g. non-standard transactions, or transactions
without a minimum fee. Bitcoin message protocol is not
the only way to send the transaction. One may also send it
directly to a miner, or mine it yourself, or send it directly to
the payee and make them relay it or mine it.
Reorg, Reorganization
An event in the node when one or more blocks in the main
chain become orphaned. Usually, newly received blocks
extend the existing main chain. Sometimes (4 – 6 times a
week) a couple of blocks of the same height are produced
almost simultaneously, and for a short period of time, some
nodes may see one block as a tip of the main chain which
will be eventually replaced by a more difficult block(s). Each
transaction in the orphaned blocks either become invalid
(if already included in the main chain block) or become
unconfirmed and moved to the mempool. In case of a major
bug or a 51% attack, reorganization may involve reorganizing
more than one block.
Reward
Amount of newly generated bitcoins that a miner may claim
in a new block. The first transaction in the block allows miner
to claim currently allowed reward as well as all transaction
fees from all transactions in the block. Reward is halved every
210,000 blocks, approximately every 4 years. As of September
5, 2013, the reward is 25 BTC (the first halving occurred in
December 2012). For security reasons, rewards cannot be
spent before 100 blocks are built on top of the current block.
Satoshi
The first name of Bitcoin’s creator Satoshi Nakamoto and
also the name of the smallest unit used in transactions. 1
bitcoin (BTC) is equal to 100 million satoshis.
Satoshi Nakamoto
The pseudonym of the author of the initial Bitcoin implementation.
There are many speculations on who and how
many people worked on Bitcoin, of which nationality or age,
but no one has any evidence to say anything definitive on
the matter.
Script
A compact turing-incomplete programming language used
in transaction inputs and outputs. Scripts are interpreted by
a Forth-like stack machine: each operation manipulates data
on the stack. Most scripts follow the standard pattern and
verify the digital signature provided in the transaction input
against a public key provided in the previous transaction’s
output. Both signatures and public keys are provided using
scripts. Scripts may contain complex conditions, but can
never change the amount being transferred. Amount is
stored in a separate field in a transaction output.
scriptSig
Original name in bitcoind for a transaction input script.
Typically, input scripts contain signatures to prove ownership
of bitcoins sent by a previous transaction.
scriptPubKey
Original name in bitcoind for a transaction output script.
Typically, output scripts contain public keys (or their hashes;
see Address) that allow only owner of a corresponding
private key to redeem the bitcoins in the output.

GITHUB BITCOIN GLOSSARY CONTINUED
Sequence
A 32-bit unsigned integer in a transaction input used to
replace older version of a transaction by a newer one. Only
used when locktime is not zero. Transaction is not considered
valid until the sequence number is 0xFFFFFFFF. By default,
the sequence is 0xFFFFFFFF.
Signature
A sequence of bytes that proves that a piece of data is
acknowledged by a person holding a certain public key.
Bitcoin uses ECDSA for signing transactions. Amounts of
bitcoins are sent through a chain of transactions: from one to
another. Every transaction must provide a signature matching
a public key defined in the previous transaction. This way, only
the proper owner of a secret private key, associated with a
given public key, can spend bitcoins further.
Simplified Payment Verification (SPV)
A scheme to validate transactions without storing the whole
blockchain (only block headers) and without trusting any
external service. Every transaction must be present with
all its parent and sibling hashes in a merkle tree up to the
root. SPV client trusts the most difficult chain of block
headers and can validate if the transaction indeed belongs
to a certain block header. Since SPV does not validate all
transactions, a 51% attack may not only cause a double
spend (like with full nodes), but also make a completely
invalid payment with bitcoins created from nowhere.
However, this kind of attack is very costly and probably
more expensive than a product in question. Bitcoinj library
implements SPV functionality.
Secret key
Either the Private Key or an encryption key used in encrypted
wallets. Bitcoin protocol does not use encryption anywhere,
so secret key typically means a private key used for signing
transactions.
Soft Fork
Sometimes the soft fork refers to an important change of
software behavior that is not a hard fork (e.g. changing
mining fee policy). See also Hard Fork and Fork.
Spam
Incorrect peer-to-peer messages (like sending invalid
transactions) may be considered a denial of service attack
(see DoS). Valid transactions sending very tiny amounts and/
or having low mining fees are called Dust by some people.
The protocol itself does not define which transactions
are not worth relaying or mining, it’s a decision of every
individual node. Any valid transaction in the blockchain must
be accepted by the node if it wishes to accept the remaining
blocks, so transaction censorship only means increased
confirmation delays. Individual payees may also blacklist
certain addresses (refuse to accept payments from some
addresses), but that’s too easy to work around using mixing.
Spent Output
A transaction output can be spent only once: when another
valid transaction makes a reference to this output from its
own input. When another transaction attempts to spend
the same output, it will be rejected by the nodes already
seeing the first transaction. Blockchain as a proof-of-work
scheme allows every node to agree on which transaction
was indeed the first one. The whole transaction is considered
spent when all its outputs are spent.
Split
A split of a blockchain. See Fork.
SPV
See Simplified Payment Verification.
Standard Transaction
Some transactions are considered standard, meaning
they are relayed and mined by most nodes. More complex
transactions could be buggy or cause DoS attacks on
the network, so they are considered non-standard and
not relayed or mined by most nodes. Both standard and
non-standard transactions are valid and once included in
the blockchain, will be recognized by all nodes. Standard
transactions are: 1) sending to a public key; 2) sending to an
address; 3) sending to a P2SH address; 4) sending to M-of-N
multi-signature transaction where N is 3 or less.
Target
A 256-bit number that puts an upper limit for a block header
hash to be valid. The lower the target is, the higher the difficulty
to find a valid hash. The maximum (easiest) target is
0x00000000FFFF0000000000000000000000000000000000000000000000000000.
The difficulty and the target are adjusted every 2016 blocks
(approx. 2 weeks) to keep interval between the blocks close
to 10 minutes.
Testnet
A set of parameters used for testing a Bitcoin network.
Testnet is like mainnet, but has a different genesis block (it
was reset several times, the latest testnet is testnet3). Testnet
uses a slightly different address format to avoid confusion
with main Bitcoin addresses and all nodes relaying and mining
non-standard transactions.
Testnet3
The latest version of testnet with another genesis block.
Timestamp
UNIX timestamp is a standard representation of time as a
number of seconds since January 1st, 1970, GMT. Usually
stored in a 32-bit signed integer.
Transaction
A chunk of binary data that describes how bitcoins are
moved from one owner to another. Transactions are stored
in the blockchain. Every transaction (except for coinbase
transactions) has a reference to one or more previous
transactions (inputs) and one or more rules on how to spend
these bitcoins further (outputs). See Transaction Input and
Transaction Output.
Transaction Fee
Also known as “miners’ fee,” an amount that an author of
transaction pays to a miner who will include the transaction in a
block. The fee is expressed as the difference between the sum
of all input amounts and a sum of all output amounts. Unlike
traditional payment systems, miners do not explicitly require
fees and most miners allow free transactions. All miners are
competing between each other for the fees and all transactions
July.2014 Page.65 Crypto Biz Magazine

GITHUB BITCOIN GLOSSARY CONTINUED
are competing for a place in a block. There are soft rules
encoded in most clients that define minimum fees per kilobyte
to relay or mine a transaction (mostly to prevent DoS and
spam). Typically, the fee affects the priority of a transaction.
As of September 5, 2013 average fees are below 1 BTC per
block. See also Reward.
Transaction Input
A part of a transaction that contains a reference to a previous
transaction’s output and a script that can prove ownership
of that output. The script usually contains a signature and is
called scriptSig. Inputs spend previous outputs completely. So
if one needs to pay only a portion of some previous output,
the transaction should include extra change output that
sends the remaining portion back to its owner (on the same
or different address). Coinbase transactions contain only one
input with a zeroed reference to a previous transaction and
arbitrary data in place of script.
Transaction Output
An output contains an amount to be sent and a script that
allows further spending. The script typically contains a public
key (or an address, a hash of a public key) and a signature
verification opcode. Only an owner of a corresponding
private key is able to create another transaction that sends
that amount on to someone else. In every transaction, the
sum of output amounts must be equal or less than the sum
of all input amounts. See also Change.
Tx
See Transaction.
Txin
See Transaction Input.
are considered dust (containing outputs smaller than a
transaction fee required to mine/relay them).
VarInt
This term may cause confusion as it means different things in
different Bitcoin implementations. See CompactSize.
Wallet
An application or a service that keeps private keys for signing
transactions. Wallet does not keep bitcoins themselves (they
are recorded in blockchain). “Storing bitcoins” usually means
storing the keys.
Web Wallet
A web service providing wallet functionality: ability to store,
send and receive bitcoins. User has to trust counter-party to
keep their bitcoins securely and ready to redeem at any time.
It is very easy to build your own web wallet, so most of them
were prone to hacks or outright fraud. The most secure and
respected web wallet is Blockchain.info. Online exchanges also
provide wallet functionality, so they can also be considered
web wallets. It is not recommended to store large amounts of
bitcoins in a web wallet.
XBT
Informal currency code for 1 Bitcoin (defined as 100,000,000
Satoshis). Some people proposed using it for 0.01 Bitcoin
to avoid confusion with BTC. There were rumors that
Bloomberg tests XBT as a ticker for 1 Bitcoin, but currently
there is only ticker XBTFUND for SecondMarket’s Bitcoin
Investment Trust. See also BTC. —S
Page.66 July.2014
Crypto Biz Magazine
Txout
See Transaction Output.
Unconfirmed Transaction
Transaction that is not included in any block. Also known
as “0-confirmation” transaction. Unconfirmed transactions
are relayed by the nodes and stay in their mempools. An
unconfirmed transaction stays in the pool until the node decides
to throw it away, find it in the blockchain, or include it in the
blockchain itself (if it’s a miner). See also Confirmation Number.
UTXO Set
A collection of Unspent Transaction Outputs. Typically
used in discussions on optimizing an ever-growing index
of transaction outputs that are not yet spent. The index is
important to efficiently validate newly created transactions.
Even if the rate of the new transactions remains constant, the
time required to locate and verify unspent outputs grows.
Possible technical solutions include more efficient indexing
algorithms and more performant hardware. BitcoinQT, for
example, keeps only an index of outputs matching user’s
keys and scans the entire blockchain when validating other
transactions. A developer of one web wallet service mentioned
that they maintain the entire index of UTXO and its size was
around 100GB when the blockchain itself was only 8GB.
Some people seek social methods to solve the problem.
For instance, by refusing to relay or mine transactions that
GITHUB bitcoin Glossary by
OLEG ANDREEV
(oleganza@gmail.com).
Twitter: @oleganza.
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