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BitBlotter: Chinese Bitcoin Conference Draws a Crowd; BitPay Raises $30 Million With Investment by Li Ka-shing


The price of bitcoin appeared to remained stable.

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, Bitcoin supporters came out in stride in China, while a major mining equipment maker is revealed to be in hot water. Meanwhile, eBay (NASDAQ:EBAY) CEO John Donahoe had positive comments about digital currencies. 

China's first Bitcoin conference draws a crowd, despite government crackdown. Several hundred people attended the Global Bitcoin Summit held in Beijing over the weekend, reports the South China Morning Post. Li Xiaolai, the Bitcoin entrepreneur and educator who organized the conference, told the Post that bitcoin users don't feel threatened by the central government. The same can't be said about the CEOs of China's five major digital currency exchanges -- OKCoin, BTC China, BtcTrade, CHBTC, and Huobi -- who publicly withdrew from the conference via a joint statement on May 6. The exchanges have faced increased pressure from the People's Bank of China, which has begun to enforce a December 2013 statement that it doesn't want banks conducting business with bitcoin exchanges. In the past month, 12 Chinese banks have announced that their accounts can no longer be used to fund bitcoin trading. Meanwhile, the US-China Economic and Security Review Commission released a report that predicted "the global bitcoin market will face continued price declines, significantly decreased trading volumes, and threats to its legitimacy" if Chinese regulators prevent Chinese users from accessing bitcoin.

Bitcoin mining equipment maker ButterflyLabs owes customers over $1 million. Documents obtained by Ars Technica through a Freedom of Information Act request reveal 283 complaints have been filed against ButterflyLabs with the US Federal Trade Commission since 2012. The complaints come from people all over the world and are either overorders that haven't been received or refunds that haven't been processed. The Kansas-based manufacturer is currently fighting one lawsuit in federal court and lost another in 2013 (although Ars Technica reports the plaintiff hasn't received its $13,000 settlement payment). A representative from Butterfly Labs told Ars Technica that developing and producing its mining equipment -- hand-designed ASIC computer chips -- takes time, and that it has a 2% return rate on the 50,000 units it claims to have shipped. Mining is a process in which people verify Bitcoin's publicly distributed transaction ledger for a chance to win newly created bitcoins, and it requires significant computing power.

BitPay received the biggest venture-capital investment in digital currency yet. On Tuesday, the Atlanta-based bitcoin payments processor completed a $30 million Series A funding round led by Index Ventures, with investors including Virgin Group Chairman Richard Branson, Yahoo (NASDAQ:YHOO) cofounder Jerry Yang, and China's richest man, Hong Kong billionaire Li Ka-shing. Ka-shing's investment is a notable vote of confidence, considering recent crackdowns by the Chinese government. Branson, whose space tourism company Virgin Galactic recently began accepting bitcoins as payment for tickets to blast into low-Earth orbit, told The Wall Street Journal that "banking as we know it is in the midst of enormous change and innovation." In December, another bitcoin payment processor, Coinbase, raised $25 million in venture funding. BitPay CEO Tony Gallippi says the funds will be used toward the company's international expansion. At the moment, BitPay services 30,000 merchants, double the number of companies they serviced at the end of 2013.

EBay CEO John Donahoe has good things to say about Bitcoin. At the company's annual shareholders' meeting on Tuesday, Donahoe was asked by an audience member how eBay might utilize bitcoin. Donahoe responded with a lighthearted comment, saying they "could spend a couple of days talking about bitcoin." He went on to say that eBay believes bitcoin has an important role in the future, but he's not sure how they would incorporate it into their existing PayPal payment system. David Marcus, who heads the company's PayPal division, commented that they're paying attention to Bitcoin and believe it will be an important trend.

Bitcoin's price has stabilized in the $430 to $450 range over the past month. For an asset whose value skyrocketed nearly 1,000% in 2013 and then plummeted 70% in the beginning of this year, this prolonged level is a notable departure. 


Twitter: @brokawbrokaw
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