Lots of big news this week for the Bitcoin community and it’s hard to keep on top of what should be put in the spotlight. In the end two major stories take the stage: Kraken’s acquisition of Coinsetter (which moves the European majority exchange onto the North American continent) and Mike Hearn’s desertion of the Bitcoin community.

Also this week, Cryptsy announced that much of its troubles and subsequent insolvency was caused by a Trojan hack that ended in the theft of almost $6 million in cryptocurrency assets.

Finally, BitPay took a look back at 2015 and what factors have been behind the growth of bitcoin throughout the year. This is especially interesting because BitPay is one of the largest merchant-centric Bitcoin processors, which puts the company in the perfect position to pool data on Bitcoin use and market growth.

This and more in this week’s Bitcoin Weekly.

Kraken acquires Coinsetter and Cavirtex

Much like the multi-tentacled beast that is the San Francisco-based Kraken’s (Payward, Inc.) namesake, the Bitcoin exchange recently acquired New York-based Coinsetter and its subsidiary exchange Calgary, Canada-based Cavirtex.

Although based in the U.S., Kraken historically primarily serves European markets as the exchange lacked the regulatory license to serve U.S. residents. That has changed with this acquisition that opens up Kraken’s potential audience to much of North America including all of Canada and the U.S. with 37 states and Washington D.C.

In celebration of this move, Kraken is waiving deposit fees until March 1, 2016 for American and Canadian customers.

When it comes to the reach of a Bitcoin exchange, this acquisition sets the stage for Kraken to expand operations across two continents. Coinsetter arose as an exchange directed at high-volume Wall Street traders and Cavirtex has the distinction of being the first and highest volume Canadian exchange.

Mike Hearn is a Bitcoin core developer and ex-Google employee, photo via Money & Tech.

Mike Hearn says “the [Bitcoin] community has failed” much to Bitcoin’s surprise

It seems that (yet again) Bitcoin is dead, but this time it’s a well-known, and controversial, Bitcoin developer saying this. Mike Hearn, best known for his attempt to force discussion of the Bitcoin blockchain block size debate with widely-rejected Bitcoin XT client, wrote an op-ed on Medium arguing that Bitcoin has failed.

Hearn’s commentary was quickly picked up by major media outlets, including Newsweek and The Washington Post, citing Hearn as quitting Bitcoin development and liquidating his bitcoins. A story about a Bitcoin developer getting out of the business is big news, especially if said developer decries the Bitcoin community and calls it a failure on his exit.

However, within that community, Hearn’s reputation is somewhat tarnished now and what isn’t mentioned about him is that he is now employed by R3CEV LLC. In an article on SiliconANGLE, reporter Duncan Riley dubs Hearn a “shill” for R3, which is a consortium think tank for multiple large international banks seeking to develop blockchain-technology (the software that underlies and secures Bitcoin) for proprietary interests.

Operations such as R3 began to rise in 2015 with a common litany of “Bitcoin bad; blockchain good,” trying to separate the technology that secures Bitcoin into something manageable without the Bitcoin. This paradigm, of course, does not sit well with the Bitcoin community and its developers, which paints Hearn’s exit and his comments in a very negative light due to the clear conflict of interest.

The long, hard fall of Cryptsy: Exchange announces it’s been hacked

Bitcoin and altcoin exchange Cryptsy (Project Investors, Inc.) has appeared in the news repeatedly recently as it continues to fail. This week, founder Paul “BigVern” Vernon went to the exchange’s blog to say that it had been hacked. SiliconANGLE reports the claim that 13,000 bitcoins and 300,000 litecoins (another type of cryptocurrency) had been stolen, valued at today’s exchange rate of around $6 million.

According to BigVern, the hack was perpetrated by malware installed on the Cryptsy platform by the developer of Lucky7Coin, which gave the attacker access to the exchange’s wallets.

This announcement came after Cryptsy has has numerous troubles throughout 2015, starting with Coin Fire’s report that the exchange was under investigation by several federal agencies for trading and money fraud. And continuing when the exchange suspended withdrawals (but not deposits) in October last year; during that time the exchange was accused of going “full Mt Gox,” a reference to the famously failed Bitcoin exchange.

Most recently, Cryptsy froze trading as well as withdrawals in the wake of a claimed DDoS attack earlier this month.

photo credit: Bitcoin IMG_1924 via photopin (license)

BitPay: Understanding Bitcoin’s Growth in 2015

The year of 2015 was an interesting year for Bitcoin (check it out in the Bitcoin Yearly Part 1 and Part 2) and BitPay, Inc., a major Bitcoin merchant processor, believes it has the point of view to talk about the cryptocurrency’s growth.

According to BitPay’s numbers, Bitcoin transaction volume hit new highs in 2015 and BitPay itself saw transaction volumes increase by 50 percent in just the last two months of 2015 and increase by 110 percent in 12 months. The company also cites more than 100,000 BitPay invoices processed during November and December 2015. This provides a rate of one shopper somewhere in the world spending bitcoin every 25 seconds at a BitPay merchant.

The region with the largest growth in the world appears to be Latin America with transactions up over 1747 percent in 2015 over 2014. The majority of total transactions took place in Europe, which lead with 54 percent of the transaction volume for 2015.

BitPay also believes that the one factor that will lead to even further growth for Bitcoin is its reliability and speed over current traditional remittance processing systems. Already several businesses have sought to use the Bitcoin blockchain to overcome barriers that slow down remittance speeds. The other thing using Bitcoin is good at is lowering fees, since there’s no “middle man” being paid to overcome international regulations and other processes and trades are exchanged directly between payer and payee.

Companies such as Align Commerce, Inc. already seek to overcome traditional systems such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT) for international payments. In 2015, Align Commerce raised $12.5 million in Series A funding to this end. SWIFT itself has started looking into blockchain-technology to up its own game in the brave new Bitcoin blockchain world.

Bitcoin also permits a certain reliability in an industry that is fraught with payment fraud (one of the things that Bitcoin is very good at preventing).

All of these factors together show the strong industry-wide interest in Bitcoin as well as blockchain-technology within the fintech ecosystem and much of this leads back to the growth of Bitcoin in 2015 and into 2016.

Featured image credit: Bitcoin Logo, https://www.flickr.com/photos/thelastminute/12350379324.