Google Coin May Stand Up Against Bitcoin

Added by Daris Abraham on January 26, 2014.
Saved under Daris Abraham, Opinion, Technology
Tags: google

A recent e-mail conversation between Google executives and a curious columnist had indicated the internet giant’s intention to include Bitcoin as a medium of payment for transactions. However, the truth might be far from this and Google may be already on the road to stand up against Bitcoin with its own Google Coin.
The news of Google-Bitcoin integration had created a lot of flutter in the tech circuit since Bitcoin getting attention from a prestigious company like Google would give it the required reputation boost. Google’s Senior VP of Ads and Commerce, Sridhar Ramaswamy, had apparently confirmed through the e-mail that the company was in midst of a working strategy to integrate alternate payment solutions like Bitcoin.
Bitcoin’s disadvantages in its current form, however, makes it very difficult for Google to quickly align its service with the digital currency. Moreover, Google itself dealing with the currency transaction through its platform could result in multiple issues and even a possible litigation for the company through the still unreliable Bitcoin universe.
Customers and users of Bitcoin have been cribbing about the various usage issues involving Bitcoin including security and ease in interface for the transactions. Yet, there seems to be no let up in the ever-increasing popularity of the digital currency. It is clearly visible that Bitcoin has captured the imagination of many and can become a powerful element in the future.
Thus, Google is most likely to introduce a rival to Bitcoin with the introduction of a robust coin system capable of standing up against it. This will ensure that the company is able to serve the ever-increasing customer demand for an independent and universal digital currency transactions.
With Google’s extensive experience and research capabilities it can quickly encompass the issues that currently haunt the Bitcoin service and ensure availability of a seamless system for users across geographical locations:

• Google Drive for Google Coin Wallet 

The biggest concern of every Bitcoin user is the loss of Bitcoins to wallet file corruption from hard disk crashes or virus attacks. Any loss of Bitcoins from such data corruption is forever lost in the system and there are no available measures to claim the orphaned coins back.
Google Drive and the Google Wallet can essentially resolve this issue within no time as both services can hold data away from such mundane issues and keep Google Coins safe for its users. Google Coin millionaires and billionaires will feel far more secure with their hard-earned money.

• Traceable Transactions 

The serious adoption of digital currency has been plagued by bans in some countries like Thailand for its already reported use in buying drugs and in other illegal transactions. The lack of traceability of transactions by the authorities is a worrying concern which could find more countries pursuing a total ban in the future.
Google with its “One account, All of Google” service can effectively keep every transaction completely traceable. Illegal transactions once discovered can be mapped back to the suspects involved.

• Irreversible Payments

Lack of a central payment authority certainly undermines the possibility of resolution of any payment related errors that can occur for Bitcoin users. Non-reversible payments has continues to be an issue but Google with its Wallet service can quickly look into a possible solution of the same, possibly by setting up a central authority for regulation and addressing grievances.

• Escrow Services for Buyer Protection

Google Wallet can effectively be an escrow account service as well for all transactions that has a waiting period attached to it. Buyers can make the payment into the Google Wallet which can be later released once the seller delivers its promised service effectively.

• Ease of Use of Interface

Bitcoin interface remains confusing for almost all current users and new users are finding it extremely difficult to navigate through the services. This deficiency in ease of usage has been the reason behind the lack of wide-scale adoption of the digital currency.
Known for its dumbed down user-interface for all its platforms and services, Google is already a master of simplicity. Google Coin, thus, can be launched with an easy to use platform for better adopt-ability by all users concerned.
Bitcoin is at its very nascent stage of evolution and as more and more people discover its benefits, more chinks will definitely emerge. Google’s vast team present in the payments and Wallet section would definitely watching over and would be able to resolve these issues faster with its Google Coin services as against Bitcoin. Google for sure has the ability to stand up strong to rival Bitcoin and may even surpass its popularity with its own Google Coin service.
By Daris Abraham
Sources:
Wallstcheatsheet
Blackbambu
Stanford.edu
Yahoo
Telegraph

Mining Roundup: Solar-Powered Mining, DVR Malware and the ‘Bitcoin Baron’

Daniel Cawrey (@danielcawrey) | Published on April 6, 2014 at 16:47 BST | Analysis, Mining, News, Prices, Startups, Technology

The price of bitcoin on the CoinDesk Bitcoin Price Index (BPI) has declined in recent weeks on the news that the Internal Revenue Service (IRS) had released complex guidance for digital currency users amid growing uncertainty regarding exchange regulation in China.
In the mining world, these price fluctuations can cause ongoing profitability issues, as miners, hardware manufacturers and price are key factors that impact the difficulty.
The incentive for people to mine varies with the bitcoin price. A high price makes mining attractive and people invest in costly ASIC rigs. The mining manufacturers then ship newer, more powerful units which raise the difficulty and mean more capital expenditure for miners if they want to keep up with the mining Joneses.
Then the price plummets, leaving everyone mining at high difficulty without the ability to cash in their coins at a significant profit.
The mining industry is pretty much held hostage to these realities. Call them bitcoin economic factors, if you will. Now, with that unfortunate news out of the way, let’s see what’s been happening since our last roundup.

The worst bitcoin miner ever

Records television shows well. Mines bitcoin not so well. Source: Engadget

Bitcoin mining in the form of SHA-256 hashing requires serious processing power, and the higher the difficulty, the more power needed. That’s why it seems counterintuitive to create ARM-based bitcoin mining malware.
Sure, recently discovered Linux-based bitcoin mining malware already seems like a bad enough idea, but the concept of ARM processor mining malware that can infect digital video recorders (DVRs) is just downright inefficient.
There is potential for lower-powered chips to mine bitcoin in the future, but that’s only going to happen on smaller nodes of silicon that are using ASICs designed for that specific purpose. Anything else is just going to be a complete nuisance.
Also to be filed under pointless mining malware is the one announced on 25th March, that gets your Android device mining for dogecoins – veeery slooowly.

City-sized electricity bill for miners

Freakonomics recently released a bitcoin podcast that featured venture capitalist Marc Andreessen and Stanford professor Susan Athey.
If anyone ever thought that bitcoin was a resource hog, take this comment from Athey as an idea of how much energy mining might use:
“So it’s just burning a lot of electricity, enough to power many, many homes. I’ve heard estimates as high as 3 million homes could be powered with the electricity that goes to bitcoin mining.”
Athey’s number for bitcoin mining’s electrical consumption is just an estimate, but given ever-increasing network power, it’s likely to end up being far higher than that.
As a result, technologies that can improve the efficiency of miners are going to become highly important, which brings us onto …

Spondoolies Tech now shipping power efficient miners

Spondooliestech Sp10 Dawson, still in the box. Source: Mineforeman

Israel-based manufacturer Spondoolies-Tech has begun shipping units of its new power-efficient miner.
Called the Sp10 Dawson, this rig should produce 2.1 TH/s per kilowatt of energy, claims the company – a figure that Spondoolies-Tech reached by reducing the toggle rate of its 40nm ASICs.
However, Neil Fincham from Mineforman reviewed one of these units and found that the miner hashes at 1.49 TH/s. The SP10 Dawson does draw at less than 1 Watt per gigahash, though – adds up to 1388W while running.
The unit weighs in at 14kg, which gives it the heft of a regular server and means it needs to be housed in a proper rack.

Solar-powered bitcoin mining

The unit has a battery for cloudy days. And those pesky nighttime hours. Source: Solarminer.

Some people try to locate miners in places where there they can find cheap prices for all that power their miners will eat up, but if you don’t want to move to Iceland or the US’s Pacific Northwest, you could opt to go green.
Solarminer is now selling a USB hardware product that the company says uses nothing more than sunlight in order to operate.
The device uses three 150W solar panels and 288Wh LFP batteries to harvest and store energy, and costs $889.
Solarminer customers do have to buy USB miners for the unit’s 16 slots. However, there are a lot of different USB mining options available, and using something like, for example, the BitFury RedFury USB miner you could hash at 40 GH/s from one of these, just with sweet sunlight.

The ‘Bitcoin Baron’

Selling at every single peak. Source: Wired

Wired recently ran a story on a couple of data geeks, Kai Chang and Mary Becica, that took the leaked Mt. Gox data and made a bunch of visualizations from that information. One user that stood out was referred to as the ‘Bitcoin Baron’ – a Mt. Gox exchange trader that mostly sold BTC at the top of every market peak.
The speculation is that the Bitcoin Baron might be a big-time miner, or perhaps a pool operator. Many (but not all) of those who operate large bitcoin mines or pools are hesitant to divulge any information regarding operations. But if this chart is true, it shows that big-time miners are always closely looking to make the best fiat profit that they can.

2.5 TH/s Bitfury Razz

BitFury’s slogan is “Extreme Performance. Source: Bitfurystrikesback

BitFury, a chip manufacturer that claims it powers 20-30% of the bitcoin network, is now selling mining units.
The ecommerce site Bitfurystrikesback is offing the 2.5 TH/s ‘Razz’ unit, which sucks up 3kW of power for its hashing ability.
The Razz costs €7,250, or about $9,947. Interestingly, it is marked as a ‘used’ model, which would logically lead one to assume that BitFury has used these Razz units to mine prior to putting them up for sale.
When CoinDesk asked Bitfurystrikesback’s CEO Niko Punin about the used status of the machines, he offered no comment.
However, Punin did say that there would be another version of the Razz for sale soon with even better specs.

1.2MW, liquid-cooled, bitcoin mining container

Industrial mining evolved. Source: Allied Control

For those inclined to study data centre architecture and design, the concept of the modular container has been considered one of the best ways to pack servers into a small area. Google did it in secret for a while, and then Facebook open-sourced it.
Allied Control, which is a startup partnering with 3M on a special type of cooling fluid, has written a paper on modular bitcoin mining design.
It involves immersion cooling using six 200-240kW flat-rack tanks and is designed so that ASIC boards can be easily swapped when they become obsolete.
Each of these modular units can support a whopping 1.2MW of power. That is a figure that even Allied Control admits would not have seemed fathomable in bitcoin mining a year ago, but has become a harsh reality.
Got a cryptocurrency mining tip for future roundups? Contact us.
Disclaimer: This article should not be viewed as an endorsement of any of the companies mentioned. Please do your own extensive research before considering investing any funds in these products.
Electrical lines image via Shutterstock

The US Tax Man Speaks For The First, But Not Last Time

Brian Klein (@http://www.twitter.com/brianeklein) | Published on April 6, 2014 at 14:25 BST | Law, News, Regulation, US & Canada

Brian Klein is partner at the litigation boutique Baker Marquart LLP and chair of the Bitcoin Foundation’s legal advocacy committee.
Klein has co-authored this piece with Jay Weill, a partner at Sideman & Bancroft in San Francisco representing people and entities in both civil and criminal matters involving the IRS. Weill was the former Chief of the Tax Division at the US Attorney’s Office in San Francisco. 

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Death and taxes are the two certainties of life, so the old saying goes. On 25th March, three weeks before the US 15th April tax filing deadline, the US Internal Revenue Service (IRS) finally issued guidance regarding the taxation of bitcoins and other digital currencies in what the IRS, in typical IRS-speak, calls Notice 2014-21.
One could almost have believed that the IRS had forgotten about bitcoins and other digital currencies. But really, everyone should have seen this day was coming. Indeed, it was long overdue.
The IRS could have treated digital currency as either currency or property. It chose to treat it as property, imposing the general tax principles relevant to property transactions on those of digital currency. This means that digital currencies will be taxed as ordinary income or as assets subject to capital gains taxes, depending on the circumstances. The choice has far-reaching tax implications that will affect anyone who uses digital currency.
In the notice, the IRS co-opted FinCEN’s definition of digital currency:

“Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.”

It goes on:

“The sale or exchange of convertible digital currency, or the use of convertible digital currency to pay for goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability.”

This is very understated. The tax consequences are far-reaching and depend on how one uses digital currencies. The following provides a thumbnail sketch of certain tax consequences for US taxpayers.

Employers and employees

Employee wages in digital currency are subject to federal and state income tax withholding, and by law should be reflected on both employers’ and employees’ tax returns. Such payments are required to be reported to the IRS on your business and payroll tax returns and must further be reflected on IRS Forms W-2 issued to each employee and filed with the IRS. In turn, the employee must report to the IRS and state tax authorities the wages he or she receives in digital currency on his or her personal tax returns.
For each, the reported amounts – the wages reported paid or received and the payroll taxes withheld – will be calculated using the fair market value of the digital currency in US dollars on the date paid or received.

Independent contractors

Businesses paying independent contractors with digital currency must report amounts on Form 1099 – the document used to report other forms of income than wages or salaries – and supply the forms to tax authorities and their independent contractors.
Like employees, independent contractors are taxed in the same manner as if the amounts were received in US dollars. They must report amounts received as income on their tax returns and pay self-employment tax.

Investors

The IRS’ treatment of digital currency as property is a boon to taxpayers holding it as a long-term investment – that is, holding it for more than a year. This is so because when investing in or undergoing transactions in foreign currency, the gains are taxed at the ordinary income tax rate; whereas with digital currency treated as property, the taxpayer can benefit from the lower capital gains tax rate.
Moreover, like any other commodity, if the digital currency loses value instead of making gains then the taxpayer can claim a capital loss, which would help lessen the tax bill. The character of gain or loss generally depends on whether the digital currency is a capital asset in the hands of the taxpayer.
According to the IRS, if the taxpayer holds digital currency as capital – such as stocks or bonds or other investment property – gains or losses are realized as capital gains or losses. But where such currency is held as inventory or other property mainly for sale in a trade or business, then ordinary gains or losses are generally incurred.

Miners

Taxpayers who obtain digital currency through mining must include the fair market value of the digital currency, as of the date of receipt, when reporting their gross income on tax returns.
This creates an enormous task for frequent miners who have to go back and see what the values of the bitcoins were on the dates they were mined. If the mining activities make up a trade or business, and the miner is not an employee, then the net earnings resulting from the activities constitute self-employment income that’s subject to self-employment tax.

Exchanges 

When an exchange sells digital currency to a customer as a part of a trade or business, its gross income will equal the value for which the digital currency was sold.

Catch-all for payors

Any disposition of digital currency is a taxable event, including the use of digital currency to acquire another asset, to pay for services, in retail transactions and investments where the merchandise received or investment has a higher value than the payor’s basis in the digital currency.
And, payments made using digital currency are subject to the same tax reporting and backup withholding as other payments made in property.

The character nature of the tax

The IRS notice left many unanswered questions as well.
For example, any person or business that receives more than $10,000 in one transaction or a series of transactions must identify the person involved to the IRS via Form 8300. Since digital currencies, like bitcoin, are not recognized as currencies by the IRS, does a car dealer have to report an automobile purchased with bitcoins?
US individual and business taxpayers alike should consult with their tax advisors about the implications of their particular digital currency transactions. They will now have to track their digital currency purchases in order to correctly prepare and file their 2013 tax returns due on 15th April, as well as potentially amend 2012 and earlier tax returns.
The IRS notice also invites comment from the public. Undoubtedly, the IRS will receive an extensive amount of feedback. In light of the path the IRS chose, one that requires extensive tax compliance efforts, the IRS should expect much of it to be extremely negative – and rightfully so.

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IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with Treasury Department and IRS regulations, we inform you that any federal tax advice contained in this communication is not intended or written by the parties to be used, and cannot be used for the purposes of (i) avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.