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BitBlotter: Circle Reveals Its Financial Services Product; The Fed Has Something Good to Say About Bitcoin


The price of Bitcoin broke above $500 this week.

Whether you're a Bitcoin fanatic or just beginning to familiarize yourself with the emerging space, BitBlotter gives you a weekly snapshot of all things digital currency.

Over the past week, Circle Internet Financial revealed what it has been building using all of the venture investment it received, and the Bitcoin Foundation saw members resign following the election of a new board member. Meanwhile, the price of a bitcoin rose above $500 for the first time since April.

After raising $26 million in venture capital, Circle finally reveals its plan. The Boston-based start-up, founded by internet pioneer Jeremy Allaire in 2013, is launching a suite of Bitcoin financial services products that appeal to mainstream consumers. At the Bitcoin Foundation's conference in Amsterdam last weekend, Allaire revealed Circle to be a free service through which customers may store, send, and receive bitcoins. On the company's blog, Allaire explains how the platform distances consumers from the technically abstruse and intimidating process that bitcoin interactions currently demand. Circle will effectively mimic retail banking accounts, except with bitcoins instead of cash, and it's doing it without any charge to customers. Circle is registered with the US government as a money transmitter. All of its accounts are insured for free, and new users get a $10 credit just for signing up. Sound too good to be true? This one Reddit user thinks so.

A lot of people were talking about Bitcoin this week. Marc Andreessen, founder of Netscape and cofounder of the venture capital firm Andreessen Horowitz, told The Washington Post that in 20 years we'll be talking about Bitcoin in the same ubiquitous way we talk about the Internet. Wences Casares, CEO of the Bitcoin storage start-up Xapo -- which has raised $20 million in venture capital funds -- told the Wall Street Journal that he believes the developing world will determine Bitcoin's success. The Winklevoss twins told The Guardian they believe Bitcoin has the potential to be bigger than Facebook (NASDAQ:FB), which currently has a $151 billion market value. Julian Assange, the founder of WikiLeaks, addressed a crowd at the Net Prophet technology and trends conference in South Africa via video link and told them he believes Bitcoin is an intellectually interesting development and will play at least some role in the revolution of the finance sector.  

An exodus from the Bitcoin Foundation is currently under way. Following the election of Bitcoin entrepreneur and former Disney (NYSE:DIS) star Brock Pierce to the board of directors of Bitcoin's largest trade group, at least 10 members of the nonprofit organization have resigned. Among their complaints was a red flag from Pierce's past: formal accusations from employees of Pierce's first company, the bankrupt Digital Entertainment Network, that Brock gave them drugs and sexually assaulted them when they were minors. These accusation emerged in 2000, and Pierce was never criminally charged; Pierce has publicly denied the allegations. The Bitcoin Foundation has been plagued by its association with less-than-reputable characters. Mark Karpeles, who headed the now defunct Bitcoin exchange Mt. Gox, and Charlie Shrem, who was charged with money laundering in connection to the illegal marketplace Silk Road, were both former board members of the organization.

Bitcoin merchant processor BitPay has partnered with Toshiba (OTCMKTS:TOSYY). The deal will see Toshiba integrating Bitcoin payments into VisualTouch, its point-of-sale platform. Bitcoin payments will be possible on more than 6,000 VisualTouch systems that are used in the retail, restaurant, and hospitality sectors worldwide. The partnership is a continued demonstration of BitPay's expansion efforts, which include an announcement earlier this week that BitPay would release a testing platform to software programmers to try out new ideas using BitPay's services. BitPay raised $30 million in a Series A funding round earlier this year.   

A Federal Reserve-commissioned committee said something good about Bitcoin. The Federal Advisory Council, a committee of bankers that advises the Fed's board of governors, said that Bitcoin could "serve as a boon" to economic activity, not threaten it. It also said that while illicit application of the technology is "rampant," it's not "endemic to Bitcoin." The council suggested regulation should be pursued to protect consumers and help prevent illegal activity. Early this year, Federal Reserve Chair Janet Yellen said that the Fed doesn't have the authority to regulate Bitcoin.

Bitcoin's price finally broke out of its holding pattern. It had been stuck within the $420 to $480 range since the end of April until Tuesday, when it broke out and pushed above $500. Bitcoin is now trading at $520 on Bitstamp, the world's largest Bitcoin exchange.


Twitter: @brokawbrokaw
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The author of this article owns bitcoins.
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