UPDATED 13:11 EDT / JUNE 05 2013

NEWS

Bitcoin Weekly 2013 June 5: The Federal Reserve ‘Studies’ Bitcoin’s Impact, EFF Thanks the Bitcoin Community, Humble Indie Bundle 8

While this week hasn’t been overly dramatic for the Bitcoin market, that doesn’t mean that there isn’t a lot of questions still rolling around about regulation and government activity. Last month, we saw MtGox’s Dwolla account sized by the US government, Liberty Reserve get shut down for criminal activity, and further money exchange domains have been called for capture. Keeping track of the Bitcoin community has become about understanding currency regulation.

Which is why I’m including FinCEN’s boss recently outlining rules for Bitcoiners reported over at CoinDesk.

As for this week’s news, the Federal Reserve has commissioned a study of modern day money transmission–which includes PayPal and Bitcoin–but there’s not much to report on what the Fed thinks about either. It’s understandable because a currency such as BTC could essentially cut out banks and credit agencies from money transfers on the Internet and that’s the stuff of conspiracy theory in the community, but it still might interesting to see what the organization determines.

The EFF has seen $95,070.73 in donations of the BTC variety.

And, Humble Indie Bundle 8 has reports on how many people used bitcoins to bid on indie video games.

The Federal Reserve Examines Paypal and Bitcoin

The Raw Story reports that the US Federal Reserve–a collection of banks and monetary organizations–has announced that it’s conducting a study of how Paypal, Bitcoin, and other money exchanging networks are affecting banking. Part of this seems to revolve around how payment mechanisms (and potentially the Internet in general) may affect the future of banking.

“We have been talking… with banking organisations over the last year or two, trying more carefully to understand what the concerns are with these new payment mechanisms,” Federal Reserve Vice Chair Janet Yellen said. “In point of fact, at least in the United States, there are regulations that apply to PayPal and other payment providers. But that said, this is very much on our radar screen and we are carefully trying to identify where the risks are.”

The decentralized function behind the bitcoin protocol provides a much safer exchange mechanism than most banks, credit cards, or even money processors such as Paypal or others can provide–using the basic concepts of cryptography and computer science to enable nonreversable payments as well as reduce the possibility of fraud. As a result, when used as a currency rather than simply a commodity, evangelists have claimed that it could change the very nature of Internet money exchange. Of course, regulators and watchdogs have noted this nature, especially the semi-anonymous nature, could be used by criminals and black markets.

An organization such as the Federal Reserve looking out for its constituents isn’t unexpected; but no other news about and findings have come out.

While Federal Reserve spokespeople have mentioned that money exchange in the US is in fact not unregulated–it brings up the seizure last month of the MtGox Dwolla account by the Department of Homeland Security claiming that MtGox had failed to register properly as a money transmitter and the shutdown of money-holding company Liberty Reserve.

While the federal government of the US has tried to make it clear its not gunning for bitcoin or virtual currencies in general, the increase in these events has gotten some of the natives restless.

EFF: “Thank you, Bitcoin community”

In a previous Bitcoin Weekly, I reported about the Electronic Frontier Foundation (EFF) accepting bitcoin donations again after a nearly 2-year hiatus. They had originally stopped accepting BTC for donation due to the expectation of controversy about the virtual currency’s legal status. The decision to start accepting donations in the cryptocurrency has worked out extremely well for the advocacy foundation.

This week, the Electronic Frontier Foundation received a generous donation of 726 bitcoins – worth $95,070.73 in United States dollars.  See the blockchain transaction here.

This is in addition to over $7,000 USD we’ve received through Bitcoin donations in the last couple weeks.

Part of this donation came from the original donations of BTC the EFF had before the foundation stopped accepting the cryptocurrency. As explained by the blog post, instead of liquidating the original BTC donations into dollars, the amount was put back into the community via giving them to the Bitcoin Faucet–a slow distribution system run by lead Bitcoin developer Gavin Andresen. As the Faucet was shut down a few months ago due to constant fraud attempts, some of that original donation remained, and those BTC were returned to the EFF.

The result: the EFF has seen a huge windfall in the form of donations in the bitcoin variety.

In video game news: Humble Indie Bundle 8, .1% of sales

But, as it turns out, bitcoin donators tended to be more generous, according to a post on reddit about the subject.

The Humble Double Fine Bundle was actually our first bundle to support it, which came out last month. It represents less than .1% of our sales for Humble Indie Bundle 8, which is pretty surprising for me. Bitcoin users do seem more generous than average though. I want to get some official stats for a blog post soon.

The Humble Indie Bundle is a packaging of multiple indie video games that can be bought by customers who pay what they want (and how they want.) HIB 8 is the first bundle to support payments via BTC and while the bitcoin community didn’t represent that huge of an amount of the total sales, it’s still heartening to see it as a payment option.

Customers can also choose how the payment will be divvied up upon payment including how much to charity, developers of the games, and as tip to the bundle organizers.

Enthusiastic bitcoin users who also play PC games could do the community a great boon by pitching in to buy some great indie games this way.


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