Australian man who claimed to be Bitcoin creator Satoshi Nakamoto is ordered by US court to hand …

A U.S. court has ordered an Australian man who claimed to be the creator of Bitcoin to pay up to $5 billion to the estate of his former collaborator.

A U.S. court has ordered an Australian man who claimed to be the creator of Bitcoin to pay up to $5 billion to the estate of his former collaborator.

In an order on Tuesday, a federal magistrate judge in Florida ordered Craig Wright to give the estate of Dave Kleiman half of the bitcoin that they mined prior to Kleiman’s death in 2013.

Wright, 48, claimed in 2016 he was mysterious Bitcoin creator Satoshi Nakamoto, though that claim has come under serious doubt.

The court’s order specifically declines to address whether Wright is in fact Nakamoto, and also does not rule on how much bitcoin Wright owns, though the court heard testimony that his cryptocurrency assets could be worth some $10 billion.

Craig Wright is seen outside of federal court in June. A magistrate judge ordered him to hand over half of his bitcoin holdings to the estate of his former partner

Craig Wright is seen outside of federal court in June. A magistrate judge ordered him to hand over half of his bitcoin holdings to the estate of his former partner

Craig Wright is seen outside of federal court in June. A magistrate judge ordered him to hand over half of his bitcoin holdings to the estate of his former partner

The lawsuit does not claim that Kleiman or Wright are the actual inventors of Bitcoin, but instead alleges that the two were heavily involved with bitcoin in its infancy as partners.

Early adopters of bitcoin were able to acquire large quantities of bitcoin through a process known as mining long before its value ever got above a dollar.

For example, an extremely early transaction made on the Bitcoin network was when someone paid 10,000 bitcoins for Domino’s Pizza.

A single bitcoin now trades for roughly $9,699, though prices fluctuate rapidly.

Kleiman’s family alleged that the two men jointly owned roughly 1.1 million bitcoins and a company.

When Kleiman died in 2013, Wright allegedly backdated contracts to transfer the ownership of the coins and intellectual property to him.

Dave Kleiman, who died in 2013, was one of the early programmers involved in Bitcoin

Dave Kleiman, who died in 2013, was one of the early programmers involved in Bitcoin

Dave Kleiman, who died in 2013, was one of the early programmers involved in Bitcoin

Wright argued in court that he became horrified when the Bitcoin network became popular with drug dealers and other criminals, and that he encrypted his holdings and placed them in a blind trust.

He claimed that the encryption keys would be delivered to him in January 2020 by a bonded courier, and that until then he had no access to the bitcoin or even precise knowledge of the amount.

In his order, Judge Bruce Reinhart scoffed at the notion that Wright ‘is a latter-day Dr. Frankenstein whose creation turned to evil,’ calling the tale ‘inconceivable.’

‘I completely reject Dr. Wright’s testimony about the alleged Tulip Trust, the alleged encrypted file, and his alleged inability to identify his bitcoin holdings,’ Reinhart wrote.

‘When it was favorable to him, Dr. Wright appeared to have an excellent memory and a scrupulous attention to detail. Otherwise, Dr. Wright was belligerent and evasive,’ the order stated.

The court also ordered Wright to pay the Kleinman estate’s legal fees in the case.

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Beyond Bitcoin: Why There Will Be More Than One Successful Cryptoasset

It was created in 2009 when its pseudonymous inventor, Satoshi Nakamoto, figured out how to do a seemingly simple thing: send money over the …

People often ask me, “If bitcoin is so great, why do we need all these other coins like ether?”

Or, “Why do 2,000 different cryptoassets even exist? Shouldn’t we all just use the best one?”

It’s a logical question.

Various Hand Tools Hanging On Pegboard In Workshop

Why are there 2,000 different cryptoassets? Because each one is optimized for a different use case.

Getty

We’re taught to think about bitcoin and other cryptoassets as currencies. Viewed that way, having multiples makes no sense. Why do we need multiple digital currencies if there’s only one internet?

The answer is that the term cryptocurrency is misleading.

Traditional currencies like the dollar, the euro and the yen all do essentially the same thing; they are payment tools in different countries or regions. But cryptoassets like bitcoin and ether actually do very different things. Understanding those differences is the key to understanding which ones will be important in the future.

Bitcoin vs. Ether

Bitcoin was the first and is today the most valuable cryptoasset in the world. It was created in 2009 when its pseudonymous inventor, Satoshi Nakamoto, figured out how to do a seemingly simple thing: send money over the internet safely without using a bank.

The software that allows this to happen is called the “Bitcoin blockchain.” As the first blockchain ever created, the software underlying bitcoin is pretty basic. Essentially all you can do with it is send, receive, and store bitcoin.

Ether, by contrast, was created in 2015. The software that underlies ether is called the “Ethereum blockchain.” It’s much more flexible than the Bitcoin blockchain. In fact, the Ethereum blockchain is “Turing-complete,” meaning you can program it to do anything. If Bitcoin is a beeper, Ethereum is a smart phone.

It’s easy to imagine why Ethereum’s flexibility is a big deal. If you can programmoney, you can replace many of the things that the traditional financial services industry charges us huge fees for.

What Could Ethereum Do? Here’s One Example

Before I joined the crypto industry, I was the CEO of a business called ETF.com. We didn’t always have that URL, however; we bought it from a squatter for quite a bit of money.

When we bought it, we didn’t trust the squatter: We weren’t going to wire him money before he sent us the URL. Similarly, the squatter didn’t trust us: He wasn’t going to send us the URL before he got his money.

To facilitate the transaction, we hired a lawyer to sit in the middle and act as an escrow agent. We wired our payment to the lawyer, the squatter sent him the URL, and the lawyer crossed the transaction. For this service, he charged us something like $2,000.

Today, rather than hiring the lawyer, we could write a small program for the Ethereum blockchain. The program would say: When Matt uploads the money (in ether) and the squatter uploads the URL, cross the transaction. We would save $2,000! Multiply that by a hundred different simple financial services and you can see why ether is potentially a big deal.

Does That Mean Ether Is Better Than Bitcoin? No.

Does that mean ether is “better” than bitcoin?

No.

From a software security perspective, Bitcoin’s limited functionality “limits the attack surface” for cyber attacks. As a software that handles money, security is hugely important, and Bitcoin’s simplicity makes it super secure.

Moreover, from an ease of use perspective, having only “send”, “receive”, and “store” as your options makes it easier to avoid human error.

As such, bitcoin’s underlying software is optimized to be extremely secure and easy-to-use: Perfect for bitcoin’s primary use case as a kind of “digital gold.”

By contrast, ether’s underlying software is more flexible, which is why people talk about it disrupting the broader financial industry. It’s not as good as Bitcoin at storing value, but it’s way better at replacing overpaid lawyers and investment bankers.

Other leading cryptoassets are optimized for other use cases. XRP, for instance, is optimized for speed, and is designed to replace traditional international payment systems. Monero is optimized for privacy, and is optimized to complete with private/offshore banking solutions. And so on.

Does this mean we need 2,000 different cryptoassets? Of course not. Most of them are worthless and will trade to zero.

But my guess is that a handful of them will find major addressable markets and become quite valuable in the future.

PS: Crypto experts will undoubtedly point out that people are working to expand bitcoin’s core functionality using off-chain enhancements, such as the Lightning network. It’s true, and that work is very interesting. I’ll address the idea of off-chain enhancements to various blockchains in a later column.

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Cool Hip Tech Brands Don’t Get Bitcoin, But Global Brands Do

Singh, a financial technology veteran hired by BitPay for his ability to bring new products to market, believes Bitcoin is the least expensive way for …

“I talk to cool hip tech brands who are spending all this money on marketing right now,” says BitPay Chief Commercial Officer Sonny Singh. “All they have to do is accept bitcoin to get new customers. The whole crypto community, which has been valued as high as $800 Billion, would know about these brands. [They] would probably be doing about 5-10% of their online sales in bitcoin. And of that 5-10%, nearly 60% of those customers will be first-time customers.”

BitPay hired Singh for his fintech experience.

Sonny Singh, Chief Commercial Officer, BitPay

Karina Louise Photography

Singh, a financial technology veteran hired by BitPay for his ability to bring new products to market, believes Bitcoin is the least expensive way for brands to acquire new customers quickly.

“Yet, cool hip tech brands are the ones not doing it,” he says. “It boggles my mind when I talk to these mid-tier brands and they don’t even know about [bitcoin]. These are cool tech kids that are running these companies, backed by VCs. And they don’t even understand how Bitcoin works?”

Global brands like Microsoft, NewEgg, ATT, Avnet, Dish Networks all accept Bitcoin, but very few silicon valley startups or technology unicorns do.

“I get snail mail every day from new startups trying to get me to buy their sleeping mattresses or eye glasses when they could increase their sales dramatically by accepting Bitcoin,” he says. They’ll say they’re too busy or that they can’t hold bitcoin on their balance sheet.

“And we tell them they don’t have to,” says Singh. “They can settle in US dollars the next day. It is still not interesting to them. They’re going to get [potentially millions] in new revenue per year. Do they care about that? Still, they say, it’s not a fit for them right now or they’re too busy.”

According to Singh, merchants tell BitPay – which processed over $1 billion-worth of cryptocurrency transactions in 2018 for the second year in a row – that 53% of their customers that spend with bitcoin are new customers. Since you’re not spending much money to acquire these customers, the customer acquisition cost is, therefore, relatively low. And growing companies need revenue the most. But, while they might pay millions of dollars for an advertisement, they won’t implement Bitcoin and court its community.

“If you want to go after a community that is 18-45, affluent, 80% male, then the quickest way to do that [for those companies] is to accept Bitcoin,” says Singh.

When compared with credit cards, BitPay offers real savings. Accepting Bitcoin through BitPay costs 1% and is cheaper than a credit card by about 4%. There is no chargeback exposure. Merchants pay 2.75% through Stripe with a 2% chargeback risk on top of that. “You can make 4% margin on every product you sell Bitcoin versus credit cards,” says Singh.

Air Baltic, one of the largest airline carriers in Europe, charges a 5 euro fee on credit card purchases. With bitcoins, which the company accepts through BitPay, there is zero fee. Airlines and cell phone providers, such as new bitcoin accepting AT&T, have tight margins. Though mid-level tech brands aren’t always convinced by increased revenue and lower fees, payment managers at Microsoft and Newegg, both of which accept Bitcoin, recognize the payment value proposition. Singh doesn’t think they’re too concerned about $10 million to $20 million in new revenue.

When first considering accepting Bitcoin, big brands first want to know the legal implications of accepting Bitcoin. The legal team looks at it, and since there is nothing illegal about accepting Bitcoin payments, they sign off on it. Their next question often centers around if the payment method needs to be marketed any differently. They don’t.

“A lot of the project managers at Microsoft and AT&T, and the people doing the implementation, don’t know bitcoin and neither do most of the executives,” says Singh. “It takes longer to explain because they haven’t used bitcoin before.” Sometimes, BitPay’s educational efforts lead to individual converts. By the time BitPay went live at Avnet, for instance, a couple of the guys on the implementation team owned their own bitcoins. But, in general, big companies don’t have a lot of bitcoin champions internally.

When implementing Bitpay, big corporations assign project teams, and make a big deal of the timeline. “It’s great to watch them do it that way versus regular merchants [who] install a code and put it live,” says Singh. “They accept their timeline and dates and update calls every week, and do testing every week – it’s pretty amazing.” Eventually, it goes live.

“They just see it as a great payment option that they themselves might not use,” he says. “Then they learn why it’s better during the whole implementation process, and how supportive the community is by all the media attention they get. When big brands see Microsoft and Dish Networks go live, they take notice. It helps move brands.”

BitPay processed $1 billion in transactions in 2018.

A mobile, QR-code payment made via the BitPay app.

BitPay

BitPay has executive meetings with Fortune 2000 companies, and their executive teams often want to learn about Bitcoin. They want to know what they can do with it. BitPay sometimes does more education in these meetings than selling, giving them background on Bitcoin, how it works, the crypto community, cryptocurrency regulation and things like that.

The Fortune 500 brands BitPay talk to generally don’t understand how bitcoin transactions work. And so BitPay talks to them over and over again. Payment managers, who are supposed to be payment experts, don’t know how Bitcoin works. “They assume they have to hold it on their balance sheet and it is too volatile,” says Singh.

When they learn they do not need to do this when using BitPay, accepting Bitcoin makes more sense. The follow-ups begin to look more like traditional sales once the educational aspect is through.

For big brands like AT&T, it comes down to the pros and cons. “It’s cheaper and quicker than a credit card,” he explains. “People all throughout America get it.”

AT&T began accepting Bitcoin through BitPay in 2019. Anything that’s in their web app and the mobile app can be paid for in bitcoin. BitPay started engaging with AT&T a year and a half ago. AT&T is actually charging that 1% fee back to the customer.

“The AT&T excitement gets all these other brands moving faster now, that really helps everything out,” says Singh.

When Avnet, a world-leading distributor of electronic components and services, began accepting bitcoin payment process BitPay in March 2019, the news made Avnet the third largest technology company in the U.S. to accept Bitcoin payments, behind Microsoft and Dell.

“If you’re in Brazil, and you need to buy $2 million IBM servers from Avnet, you send Avnet $2 million and you pay 2% FX spreads on both sides, and it takes five days,” says Singh. “We can help Avnet get paid in one day, for a 1% fee and settled in USD.”

To BitPay, that’s really the pain point that Bitcoin can solve for cross border payments. They’re cheaper and quicker than wires in most regions in the world. “CFOs hate bank wires,” said Singh. “You send a million dollars from Thailand and it comes out in America at $950,000 dollars. What happened to the $50,000? FX fees. They might not even tell you how much it’s going to be half the time or how long it’s going to take.”

While some Bitcoin purists are upset that the whole world’s not accepting bitcoin yet, Singh is convinced of BItcoin’s value position in payments and confident in the progress it has made.

“From a Fintech point of view, Bitcoin’s actually working,” says Singh. “It’s making great progress. Everyone around the world knows the name Bitcoin now and understands bitcoin a little bit. It’s got the same brand recognition as Coca Cola or IBM, Argentina, Brazil or India now, which is pretty remarkable because it happened naturally and virally. Nothing in fintech moves fast, and this is moving faster than anything we’d ever seen in fintech before. “

Singh, is not concerned Bitcoin is not yet at McDonald’s. “It doesn’t solve a pain point at McDonald’s. But, we’re slowly seeing its adoption in use cases around the world.”

BitPay employees in the US, Europe, and Latin America receive part of their salaries in Bitcoin. In Argentina, its employees take one hundred percent of the salary in bitcoin. Why?

“Not because they think bitcoin is going up,” says Singh. “Because their own currency goes down. That’s the value of Bitcoin the American’s don’t quite see. Because in America it’s just been trading or speculation. People outside and America and Europe need bitcoin. They trust it more than their own currency.

He adds: “In the US, we all trust USD, and in Europe they trust the euro. Outside of that, most people don’t trust their own currency. Bitcoin enables them as a currency hedge. If you’re in India, and you want to buy something on Microsoft’s website, your Indian credit card wouldn’t work anyway. Bitcoin enables people all over the road to be part of the global economy now and you are getting the same Bitcoin in India as in Argentina and the US, which is the same bitcoin that Microsoft accepts. It’s actually working in a full circle and brings everyone together. That’s the message people miss.”

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Bitcoin Weakens, But Still Strongest Among Crypto Assets, Says Galaxy Founder Novogratz

Aug.28 — As investors flock to gold amid market volatility, digital gold, Bitcoin, has been underperforming. Michael Novogratz, founder, CEO and …

Aug.28 — As investors flock to gold amid market volatility, digital gold, Bitcoin, has been underperforming. Michael Novogratz, founder, CEO and chairman at Galaxy Digital, joins BNN Bloomberg to weigh in and to provide his outlook for the cryptocurrency industry.

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Bitcoin Price Drops Sharply Below $10K, Marking New Weekly Low

Chicago Mercantile Exchange (CME) Group’s managing director Tim McCourt recently said that Bitcoin futures saw an average daily volume of $515 …

The price of Bitcoin (BTC) has dropped dramatically today, falling by $600 at 6:00 p.m. UTC on Aug. 28.

In the course of an hour, the Bitcoin price sank from $10,269 to $9,630, but is currently attempting to stage a recovery. At press time, the coin is trading at $9,721.

Bitcoin price. Source: Coin360

Bitcoin price. Source: Coin360

Bitcoin’s current position marks a weekly low for the seminal cryptocurrency, after hitting a seven-day high of $10,791 on Aug. 20. On its 30-day chart, the coin is down to just above where it started at $9,519 on July 28.

The recent drop in price follows news that Bakkt — the much-anticipated Bitcoin futures platform — will let clients start depositing assets in its custodial offering Bakkt Warehouse on Sept. 6. Earlier this month, Bakkt announced that trading in its physically-delivered Bitcoin futures contracts would begin on Sept. 23.

Chicago Mercantile Exchange Group’s managing director Tim McCourt recently said that Bitcoin futures saw an average daily volume of $515 million in May 2019. On May 13, Bitcoin traded a record daily volume of 33,677 contracts, equivalent to over 168,000 BTC.

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