Bitcoin Weekly 2013 December 18: More Chinese market upheval, EU banking authority warning about BTC, Tor Project thumbs-up Bitcoin donations


After reaching $1000, Bitcoin market value has seen a bit of turmoil and a tumble with China being at the forefront. Rumors and regulation make the grade and Dr. Bitcoin has weighed in on the trajectory of the currency’s value and the expectations involving China and India. This Wednesday, that rumor is starting to look a lot like reality–but interpretation of those real regulatory statements happen to be the rule of the day.

In European news the  European Banking Authority (EBA) recently also spoke a few words about bitcoins and made some pretty fair warnings about volatility and the possibility of fraud in a new market.

In some lighter news, the Internet anonymity people at the Tor Project have begun taking bitcoins for donations to make the Internet a cooler place.

China continues to be a source of Bitcoin value volatility

In the previous weeks, the introduction of China into the Bitcoin market saw the sudden blossoming of what now seems to be the most recent bubble—skyrocketing the currency’s value from $200 to exceed $1000. Shortly thereafter, the widespread and increasing popularity of the virtual currency in China has led to a series of rumors and upsets as the Chinese government begins to make regulatory statements.

First, on December 5th, China released its first official statement on Bitcoin essentially declaring it not a currency but a commodity. Then on December 6th, Baidu, a Chinese company who was initially used to show China’s interest in BTC, decided to suspend BTC trading due to the sudden upsurge in value and the general market volatility.

“Due to the recent fluctuations in the price of Bitcoin larger unable to protect the interests of users,” wrote Baidu in an official message, “in response to the risk of state-controlled bitcoin spirit Baidu music accelerate decision to suspend with immediate effect from accepting bitcoin buy accelerate music services.”

Then we roll around to Monday, December 16th and the hammer really comes down with a rumor from China that the People’s Bank of China would be banning third-party payment processors from involvement in Bitcoin transactions. This information has spawned a gigantic amount of speculation from numerous sources including noting that the statement itself is difficult to interpret (from Coindesk.)

Now the market value of bitcoins continues to drop while both China and the rest of the world attempt to understand what these regulations mean. The ban rumors have reportedly been confirmed by Chinese journalists with PayPal, Alipay (a subsidiary of the international trading company Alibaba), and TenPay. All third-party payment companies who would be affected by the rumor.

Since all this news came to light, the value of a bitcoin on the open market has fallen from $876 to dip as low as $445; but now it’s hovering around $600 as things begin to shake out. Although feels like the end of another bubble, BTC value is once again at a higher water mark and China still has a lot to offer once the trade culture sorts itself out. For more analysis on China and a look at India, grok this week’s Dr. Bitcoin for Mark “Rizzn” Hopkin’s analysis of last night’s price shifts.

European Union’s banking authority releases warning about Bitcoin

The statement from the European Banking Authority (EBA) is possibly the most boring statement on virtual currencies, especially Bitcoin, that readers probably have ever read. However, it’s not like bureaucratic industry organizations aren’t well known for stating the obvious.

The European Banking Authority (EBA) issued today a warning on a series of risks deriving from buying, holding or trading virtual currencies such as Bitcoins. The EBA said that consumers are not protected through regulation when using virtual currencies as a means of payment and may be at risk of losing their money. It also added that there is no guarantee that currency values remain stable The warning was issued while the Authority assesses further all relevant aspects associated with virtual currencies, in order to identify whether virtual currencies can and should be regulated and supervised.

The takeaways are that currently most virtual currencies aren’t regulated—a fact that many traders in the BTC market are watching curiously to see which way governments will jump when it comes to digital currency. However, this hasn’t done anything to stop the market from rising all the way to $1000 per BTC nor a healthy volume of trade.

Customers could risk losing their money because regulation doesn’t consider it a currency of exchange and it’s untested in European (or even US) courts in many fraud cases yet. However, Bitcoin does provide an interesting mechanism for proof of exchange that few other currencies across the world can via the Blockchain. Finally the EBA warns that people could use money because the value of BTC changes and there’s no guarantee that it might remain stable.

Newcomers to trading and exchanging Bitcoin should first get their bearings by reading up on how to avoid scams. Most importantly, BTC is a brave-new technology that new people may not fully understand and getting a basic grounding in how it works and who trades in it is a must for well-informed risk. In the end, that risk is very minor for people who aren’t in BTC in order to use market swings to make a lot of money.

The Tor Project is accepting bitcoins for donation

The people who brought us the “dark web” and greater anonymity to the Internet see Bitcoin as the future and are taking the cryptocurrency for donations to continue their work.

The anonymity project intends to use BitPay and to transfer donations directly from the virtual currency into USD–this is an extremely common way for merchants to participate in BTC transactions without worrying about volatility. It’s also a perfect way for charities and projects like Tor to enter into the market as well as show support for users of the cryptocurrency (by giving them a way to donate.)

The Tor Project has posted a short blog post discussing the decision and how it will work for donators,

Over the past year, we have received many requests for us to accept bitcoin donations. After careful consideration and research, we are thrilled to announce that effective today The Tor Project is accepting bitcoin donations. In partnership with Bitpay, bitcoins can easily and directly be donated to support Tor’s ongoing mission of being the global resource for privacy technology advocacy, research and education in the ongoing pursuit of freedom of speech, privacy rights online, and censorship circumvention. Check out our donations page now. Bitcoin donations received by The Tor Project will be converted directly to US Dollars.

Tor has now joined the ranks of the Electronic Frontier Foundation in accepting BTC donations and shows that Tor believes that the current regulatory questions in the United States won’t stand in their way to using the currency. In the hearts and minds of many users who require anonymity, Tor and Bitcoin go together extremely well.

Point-in-fact, Tor and Bitcoin are exactly what made the now infamous The Silk Road function so well. That the Tor Project has appeared boldly in support of Bitcoin after it was connected to what has been painted as a black enterprise with an alleged villain at the helm–a fact that portions of the media attempted to use to draw criminal connections to BTC use–shows that the existence and takedown of The Silk Road shows that Bitcoins merits far exceed its potential criminal uses (after all money is money.)