Bitcoin 2.0

A couple of weeks ago, in my Halloween post Bitcoin : Trick -or- Treat?, I was baffled by a new term.

That last reference mentions 'Bitcoin 2.0 technology'. I wonder what that means.

The reference was When, Not If: Bitcoin in Israel, and the context was

There were two things that struck me as particularly interesting about the Tel Aviv Inside Bitcoins conference. First, there was a heavy emphasis on Bitcoin 2.0 technology. Presentations from Colored Coins, Ethereum, Mastercoin, Lazooz, and others played a significant role in the tone of the conference. I found this to be very interesting, especially as many throughout the globe are still trying to understand and utilize Bitcoin 1.0.

Google to the rescue, as usual. Its first search result was Bitcoin 2.0 Applications, where I found,

The technology underlying the system -- the blockchain and mining effort to confirm and validate transactions on the blockchain -- is potentially even more exciting and valuable than the currency. Bitcoin mining serves a dual purpose: it creates new bitcoins to increase the money supply and simultaneously secures and verifies the blockchain, which is a public ledger of every transaction.

While this functionality serves to keep internal bitcoin-bitcoin transactions valid, it can also be used to confirm and validate external, non-bitcoin specific transactions. In other words, this enables the application of decentralized public ledgers for purposes other than digital currencies. These applications are referred to as Bitcoin 2.0.

In other words, Bitcoin 1.0 is where you find the people who are interested in bitcoin for its libertarian angle, for the currency. Bitcoin 2.0 is where you find the technologists. Many people are in both camps.

Another interesting quote I found in 'Bitcoin in Israel' developed the other half of 'two things that struck [the author of the piece]'.

Second, which I found more surprising, was the fact that Bitcoin was seen as a clear and obvious inevitability, by all parties. Now for ordinary Bitcoiners, this doesn’t sound like a shocking statement, considering our natural optimism. But it wasn’t just Bitcoiners sharing this sentiment. There were speakers from Israeli Parliament as well as the Central Bank of Israel. I remember my jaw hitting the floor when I heard a Central Banker make reference to when Bitcoin becomes systematically valuable, just like the dollar or euro. Not if, but when.

I've encountered a similar sentiment in other sources. Why Israel?

'Bitcoin Buy Online Books'

Getting back to Google Autocompletes 'Bitcoin Buy', my quest to actually buy something using bitcoin, Google's suggestion for the letter 'b' was 'bitcoin buy online books'. It turns out that the phrase can mean two different things: (1) 'buy books online paying with bitcoin' and (2) 'buy books about bitcoin online'. Since both activities are promising, I decided to combine them into 'buy books about bitcoin paying online with bitcoin'.

The first of the results returned was an Amazon.com link for 'Bitcoin: And the Future of Money' by [CNN Money reporter] Jose Pagliery. I doubt that Amazon accepts bitcoin directly -- and I can always use a credit card if I really want the book -- so I decided to continue searching. I did note that the book was '#31 in Books > Business & Money > Economics > Digital Currencies, a reference which might be useful later.

A significant number of search results appeared on the theme of 'What is an Order Book?', as in Bitcoin Trading: Interpreting Order Books. Thanks to a longtime personal interest in investing and markets, I'm already familiar with the term, and didn't need to spend any time on the subject.

Many search results led to outdated pages like Where to Spend Your Bitcoins (October 2012). Here a comment directed me to SynergeticPress.com, 'first book publisher to accept bitcoin for payment'. I couldn't find any books about bitcoin, so I noted the resource for future reference and moved on. It was reassuring to know that I'm not the only person who can't figure out what to do with bitcoin.

Eventually I came to bitcoinbook.info, a sales page for 'Mastering Bitcoin' by Andreas M. Antonopoulos, one of the gurus for the bitcoin movement. Although several other references hinted that I could buy the book using bitcoin, the publisher's checkout page offered only credit card payment. Perhaps I overlooked something, so I'll come back to this later. While I was looking at different resources for the book, I found one that offered a PDF version marked 'Early Release: Raw and Unedited'. Try before you buy? I'm good with that.

Most of the other resources that I encountered for books about bitcoin pointed to sales pages on Amazon. Finally I came to The Book of Satoshi.

Provides a convenient way to parse through what Bitcoin’s creator wrote over the span of the two years that constituted his "public life" before he disappeared from the Internet ... at least under the name Satoshi Nakamoto.

The page even had a link to 'Buy Ebook with Bitcoins', exactly what I was looking for! I followed the procedure to pay using my bitcoin wallet and about an hour later received an email informing me that 'Your files are ready to download'.

The book arrived in a ZIP file containing two formats -- EPUB & PDF -- and I immediately opened the PDF version to verify the content. In retrospect, it's completely appropriate that my first bitcoin purchase was for an ebook about the inventor of bitcoin. The entire exercise helped me to generate plenty of ideas for future blog posts.

Bitcoin : Trick -or- Treat?

Since it's Halloween today, let's take a short break from the thread last seen on It's for Speculating, Not Buying Stuff, and look at the following composite image. Is there anything to take away here?

Google image search on 'bitcoin halloween'

Jack-o-lanterns top row, left: I'm not sure who gets the credit as creator for this image -- it's a clever carving -- so let's take the one on a bitcoin domain. Bitcoin; Carving Out History! (31 October 2013, BitcoinNe.ws); 'Finishing up October with a treat, bitcoin remains over $200 on popular exchange Mt Gox which is a ~66% increase since the 1st.'

Costumed family pictured twice in the second row, left: Bitcoin Takes on a Scary New Look for Halloween; 'Online Halloween costume store Halloween Nation asks customers to pay with Bitcoin and Paypal instead of credit cards.'

Jack-o-lantern second row, center: BitClub Network International on Pinterest; 'BitClub Network International : A Global Wealth Building Company for the Digital Currency Market. The most innovative & lucrative way to earn digital currency. Join BitClub today!'

Jack-o-lantern group picture bottom row, center: When, Not If: Bitcoin in Israel; 'Have you seen Coinapult’s pumpkins for this year?'

That last reference mentions 'Bitcoin 2.0 technology'. I wonder what that means.

It's for Speculating, Not Buying Stuff

I finally see the light! The scales have fallen from my eyes! In Google Autocompletes 'Bitcoin Buy', I wrote

Why suggest other means of payment (credit card, debit card, paypal)?

In other words, why use one means of payment (like a credit card) to buy something (bitcoin) to buy something else (as in Buying Stuff with Bitcoin)? Why not just use the credit card to buy the 'something else'?

There's a useful site at en.bitcoin.it/wiki which keeps popping up on my searches. In a post, How To Buy Bitcoins With Your Credit Card, I learned,

Intro: While in the recent past it has been risky for sellers to offer this option, some services are now allowing you to buy bitcoins with your credit card. However, that does not mean it is entirely risk free in all markets; if you are from Asia or Africa your funds may be frozen by credit card payment processors for further inspection due to the large amounts of fraud that come from those continents.

Note: If you only want to take advantage of Bitcoin's price volatility you can trade CFDs on Bitcoin via a credit card on sites like AvaTrade or Plus500. When trading online your capital may be at risk. Trading CFDs is suitable for more experienced traders.

According to Wikipedia, CFDs are 'financial derivatives that allow traders to take advantage of prices moving (see Contract for difference). So the main interest in bitcoin isn't to buy stuff; it's to speculate in the price movement of bitcoin. This was confirmed in a CoinDesk article, How can I buy bitcoins?

Surprisingly, it's still not easy to buy bitcoins with your credit card or PayPal, depending on your jurisdiction. This is because such transactions can easily be reversed with a phone call to the card company (i.e. 'chargebacks'). Since it's hard to prove any goods changed hands in a transfer of bitcoins, exchanges avoid this payment method and so do most private sellers.

It's not that the credit card companies won't allow bitcoin transactions. For them it's just another commodity or service that a third party is buying. It's the sellers of bitcoin who won't accept credit cards. Since they can't prove that they've actually delivered something to the buyer, they risk a chargeback.

Given that I'm not interested in speculating with bitcoin -- let's not use the euphemism 'investing' -- does it still make sense to look into it? I'll think about that as I continue this blog.

Buy Bitcoin Geographically

At the end of my previous post, Google Autocompletes 'Bitcoin Buy', I noted,

That gave me plenty of ideas for further research -- Why the emphasis on geography? (australia, canada, ...)?

Starting with 'buy bitcoin online australia', first on the list was Buy and sell bitcoins in Australia, with cash and online.

LocalBitcoins.com is a marketplace for trading bitcoins locally for cash or online payments of your choice. Find local bitcoin exchangers in your country or start your own bitcoin exchange for profit.

The LocalBitcoins.com page has three sections:-

• Buy bitcoins online in Australia
• Sell bitcoins online in Australia
• Buy and Sell Bitcoins in these popular cities in Australia

In the first two sections, the various 'Buy' prices (~380 AUD) were about 20 AUD higher than the 'Sell' prices, making this the online equivalent of a currency exchange. In the third section, the first listing was for 'Trade bitcoins in Sydney NSW, Australia', where the highest prices were for 'Buy bitcoins with cash'. Since I think I know where this is going, I'll leave it there.

What about 'buy bitcoin online belgium', where I happen to reside? The equivalent page is Buy and sell bitcoins in Belgium. I don't have any cash that I need to convert to bitcoin, but I'll keep it in mind. Also interesting is Dutch Bitcoin Exchange Bitplaats Expands to Belgium (January 2014).

Belgian users can now trade digital currency from Bitplaats using the country's dominant online payments platform, Bancontact/Mister Cash.

Bancontact++ is the country's primary system for paying with bank cards, aka debit cards. This brings me to the next question from the 'Google Autocompletes' post:-

Why suggest other means of payment (credit card, debit card, paypal)?

I'll tackle this in my next post.

Google Autocompletes 'Bitcoin Buy'

After my attempt at Buying a Chess Set with Bitcoin flopped, I wondered,

Maybe I'm going about this the wrong way. Rather than try to buy a specific item -- this isn't about Amazon or eBay, after all -- I should look at the types of goods and services where bitcoin is preferred.

Here I fell back on the old 'Google Autocompletes' trick. I fed Google the keywords 'bitcoin purchase' and Google immediately suggested adding the words

online, uk, paypal, canada, india, usa, ...

On the keywords 'bitcoin buy' Google suggested adding

online, and sell, with credit card, price, instantly, debit card, paypal, gold, stuff, usa, ...

Since 'online' started both lists, I added that to both phrases, e.g. 'bitcoin purchase online', and sent it to Google. Here I received a list of pages for buying bitcoin. Since that wasn't what I was looking for, I extended the search by adding a single letter at a time, e.g. 'a', then recorded the suggestions that Google made for that letter. On adding 'a', it suggested

australia, alcohol, anything

On adding 'b',

books

On adding 'c',

credit card, canada

And so on. Now that gave me plenty of ideas for further research -- Why the emphasis on geography? (australia, canada, ...)? Why suggest other means of payment (credit card, debit card, paypal)? -- but I ran out of time to pursue them. I'll come back to the subject on my next post.

Buying a Chess Set with Bitcoin

I ended my previous post, Buying Stuff with Bitcoin, with a specific idea for this current post.

How about using bitcoin to buy a chess set? I didn't notice any possibilities while I was researching this post, but I didn't put any effort into it either. I'll look at that for my next post.

The first results on a search for 'bitcoin chess set' turned up many of the same pages I found in 'Buying Stuff'. The first real chess set was Bitcoin Gifts | Traditional Mandarin Design Chess Set (bitcoinbazaar.co.uk), which is more of a decorative item than a set I would use to play.

How about a Staunton style set? Here the first few results were from HouseOfStaunton.com and Amazon.com with the note 'Missing: bitcoin', i.e. let's first show this guy Staunton sets, because that's probably what he really wants. After those were a couple of metal sets from Peerhub.com with the note 'Payment accepted: PayPal / Bitcoin'. That's more like what I had in mind, but I prefer a wood set. Here I found nothing.

How about 'bitcoin chess board'? Here I also found nothing in the first few pages of results, which were mainly articles on bitcoin using a chess metaphor. The first result suggested an image search, which gave me the idea to redo 'bitcoin chess set', this time on images. The result is shown below.

Four of the six items in the first line, including the first two on the left, were again from bitcoinbazaar.co.uk, so I took the hint. The site's About Us page says,

Here at BitcoinBazaar we have some of the coolest gifts that Bitcoin can buy.

We like the fact that Bitcoin provides the easy transfer of value on an unprecedented scale. [...]

We like the fact that the Bitcoin network is secure. [...]

We like that the use of Bitcoin offers users increased anonymity to that of the traditional banking sector – the network verifies the payment and not the identity. [...]

Our primary aim as a company is to help promote the use of Bitcoin around the world and help it to gain traction as an accepted currency. [...]

Got it, thanks. It's as much about the political statement as it is about the medium of payment. I'll keep that in mind for a future post, but first I want to finish my search for a chess set.

Maybe I'm going about this the wrong way. Rather than try to buy a specific item -- this isn't about Amazon or eBay, after all -- I should look at the types of goods and services where bitcoin is preferred. I'll pursue that in another post.