Microsoft: Bitcoin Regulation Will Influence Expansion Plans

Pete Rizzo (@pete_rizzo_) | Published on December 30, 2014 at 20:35 GMT

Global tech giant and Internet pioneer Microsoft ignited a new wave of interest in both bitcoin and its brand with its surprise December announcement that it had integrated the digital currency as a payment option for digital goods.

While widely lauded by the bitcoin community as a small but forward-thinking step, optimism about the move arguably reached fever pitch when just a day later its partner BitPay suggestedMicrosoft was already considering ways to expand the payment option globally.

Speaking to CoinDesk, however, Microsoft offered a somewhat different take on its internal conversation regarding bitcoin. While the company did not deny that discussions about the technology were ongoing, the company sought to frame such conversation as typical for any of its products and services.

The spokesperson said:

“We are a global company, and we always think about our markets globally, be it for bitcoin or for all of our services and products.”

Notably, Microsoft went on to suggest that, while it has no new announcements to make at this time, it may be looking for further assurances of bitcoin’s legal status before making any additional movements in the space.

“Whatever we might do, we will do it in a smart way to ensure we meet our customers’ needs while respecting local laws and regulations,” the company added.

The comments come as regulation for bitcoin businesses is maturing in the US, though ongoing debate on the subject continues globally.

Flexibility at the forefront

In statements, Microsoft went on to paint its initial interest in bitcoin as part of its overall drive toward offering more flexible spending solutions to its customers, particularly ones that garner sufficient consumer demand.

"Microsoft continually investigates new technologies and that means providing our customers with personalized and frictionless buying experiences,” the company said.

Microsoft cited its recent support for digital gift cards via a dedicated website and application as yet another example of how it is seeking to more widely embrace payments innovation.

With this in mind, the company framed digital goods as “a logical first place” to add bitcoin, though it did not indicate that other products were considered during the planning process or if it is attempting to reach any specific demographics with the option.

Interest in bitcoin tech

Though short on details, Microsoft did corroborate BitPay’s statements that it sees potential for bitcoin beyond the world of payments.

“The technology behind bitcoin also represents an interesting set of new technologies to explore in the world of distributed, connected devices,” Microsoft stated, hinting at bitcoin's potential to impact the developing Internet of Things economy.

For now, however, even those who seek to spend bitcoin through their Microsoft accounts will be somewhat limited. The company imposes a $1,000 daily spending cap for those who load their accounts with bitcoin, and a $5,000 maximum per account.

Overall, despite such restrictions, the company is pleased with the results, concluding that customers have "responded positively" to the decision.

Microsoft image via Wikipedia

BitPaymerchantsMicrosoft

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TOO BIG TO FAIL?

 PHOTOGRAPHER: JOHANNES EISELE/AFP/GETTY IMAGES

CHINA

China Needs Its Lehman Moment

1 DEC 30, 2014 6:31 PM EST

By William Pesek

As they prepare for 2015,  China's leaders should learn from the experience of Japan in 2014.

There is mounting  evidence that Japan may have squandered its best chance for a meaningful recovery in more than a decade. The country is in recession again, foreign investors are losing confidence in Prime Minister Shinzo Abe's revival plan and deflation has returned. This week, the government approved a $29 billion stimulus package that it hopes will keep things from getting worse.

The travails of Abenomics should be a warning to President Xi Jinping of China, whose nation increasingly seems at risk of a Japan-like lost decade. Although speculation has focused on the "why" and the "how" of the Japanization of China's economy, the year ahead will provide clues to the question of "when."

China in 2015 is likely to look a lot like Japan in 1998. when the zombification of its economy truly began. The Japanese government had recently allowed Yamaichi Securities to crash, an epochal moment for a government that had spent the preceding decade resisting any kind of reform. The collapse of Yamaichi, a 100-year old institution founded at the height of the Meiji Restoration, was Japan's Lehman Moment, and suggested a new political will to force banks to write down bad loans from the 1980s. Then Japan lost its nerve. When Long-Term Credit Bank of Japan and other institutions teetered on the edge in 1998, the government rescued them. Many weak institutions and irresponsible bankers were propped up in subsequent years.

Rather than fix a financial system suffocating under liabilities and beset by complacent executives, the Japanese government chose to treat the symptoms of the dysfunction with zero interest rates and fiscal handouts. Abe's government is the latest to follow this tired strategy. For all his bold talk of reducing trade barriers, encouraging entrepreneurship and empowering women, Abe has spent the past year prodding the Bank of Japan to weaken the yen and his Finance Ministry to borrow more, an approach that merely papers over Japan's cracks.

To avoid a similar fate for China, Xi should begin by allowing some significant debt defaults. Xi has to contend with the world’s biggestcorporate liabilities, estimated  by Standard & Poor’s at $14.2 trillion in 2013, a figure that excludes the debt binge of 2014. As borrowing costs rise, an increasing number of companies will face failure.

The question is whether China will allow a Lehman-style purge to play out. So far, Xi has shown little appetite for defaults that might panic markets. China's first default in March was an encouraging sign, but officials have prevented additional ones since then. Yet the longer China puts off the inevitable, the worse it will be for the world economy. 

“It’s necessary to let those zombie companies default,” Wang Ying of Fitch Ratings in Shanghai told Bloomberg News. “If there is no real default, risks will never be priced in a correct way.”

Xi faces a tough balancing act. The Chinese economy is set for theweakest growth in more than two decades and his task will be be to prevent it from slowing further. But achieving sustainable growth in the future will require painful and destabilizing shakeouts in the sprawling shadow-banking sector and state-owned enterprises addicted to easy credit.

The premier must find his inner Joseph Schumpeter, and embrace creative destruction. Along with letting some big companies fail, China should scrap its annual growth target. The obsession with meeting this arbitrary goal (7.5 percent this year) creates moral hazards as regional governments resort to borrowing to meet targets. 

China’s runaway credit growth is hard to curtail because of the widespread belief that banks and risky investments will always be protected. That flawed thinking is particularly ingrained in state-owned companies that deem themselves too politically-connected to fail. If Xi can't alter that perception during the next 12 months, China may cross the line that Japan did 16 years ago.

To contact the author on this story:
William Pesek at wpesek@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net

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Gold Beat All Other World Currencies in 2014

Gold Beat All Other World Currencies in 2014

-- Posted Tuesday, 30 December 2014 | | 1 Comment “Gold is money. Everything else is credit.” ~J.P. Morgan in 1912 Loyal readers of our Investor Alert and my blog Frank Talk are no doubt aware that the U.S. dollar’s rising strength has put pressure on commodities such as oil and gold. I wrote about this as recently as my roundup of the top commodities stories of 2014, which you can read here. Gold took a blow in the second half of 2014 as a result of the dollar’s ascent, and sentiment toward the yellow metal right now is less than ideal. But to keep things in perspective, its performance this year has far outpaced that of 2013, when it fell 28 percent—its worst showing since early into President Reagan’s first term. Even though gold has lost 0.8 percent year-to-date as of this writing, it still leads all major world currencies except for the U.S. dollar. The Case for Gold as Currency In his most recent book, former Federal Reserve Chairman Alan Greenspan convincingly makes the case that gold is indeed money: Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Greenspan goes on to make another astute point. If gold is nothing more than a commodity, then why do most developed countries’ central banks see the need to hold the stuff? Wouldn’t some other commodity suffice? Diamonds perhaps, or soybeans?   During a Congressional monetary policy meeting in 2011, Texas Representative Ron Paul squared off against former Fed Chairman Ben Bernanke over this very topic. When asked why central banks still insist on holding the precious metal in their reserves, Bernanke responded that it was simply tradition. Tradition, yes, but the reason goes so much deeper than that. Gold has an intrinsic value that transcends its commodity-ness, something that’s recognized by nations all over the globe. For example, we’re seeing a trend among European central banks seeking to bring their gold reserves back under their jurisdiction. Although Switzerland recently voted down a referendum that would have done just that, there’s talk now that Austria, Belgium and France are interested in shoring up their own gold reserves. The Netherlands and Germany have already brought some of their gold home. China and India’s central banks are in the buying mood. Russia is currently snapping up gold at an astounding rate: 130 tons this year alone, up 73 percent from 2013. Of course, if you’re Russia, buying that much bullion makes perfect sense. When your currency is the worst-performing in the world, you sorely need something in your coffers with greater value, ample liquidity and no credit risk. Diversify and Rebalance For the rest of us, gold remains an exceptional instrument to diversify your portfolio with. Despite its decline midway through the year, its price has remained relatively stable, much more so than oil’s. What investors—especially the gold bears—need to remember is that bullion has a 12-month standard deviation of ±18 percent, meaning that its price action this year is well within normal behavior. As always, I advocate a 10-percent weighting in gold: 5 percent in physical metal, 5 percent in equities, then rebalance every year. Speaking of which, look out for my special New Year’s edition of the Investor Alert this Friday. I’ll be discussing what steps you can take to maximize your portfolio going into 2015!   Past performance does not guarantee future results. Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility. Diversification does not protect an investor from market risks and does not assure a profit. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content. -- Posted Tuesday, 30 December 2014 | Digg This Article script async src="//pagead2.googlesyndication.com/pagead/js/adsbygoogle.js"></script> <!-- nomorefiatmoneyplease_sidebar-right-1_AdSense1_250x250_as --> <ins class="adsbygoogle"      style="display:inline-block;width:250px;height:250px"      data-ad-client="ca-pub-9205484028477356"      data-ad-slot="1840165228"></ins> <script> (adsbygoogle = window.adsbygoogle || []).push({}); </script> www.google.com/+EricAu118 nomorefiatmoneyplease.blogspot.com www.bitcoinfoundation.org  |  Source: GoldSeek.com

30 December 2014

Best of 2014: Economics, Capital Flows, and Innovation

By Ron Rimkus, CFA

Every year at this time, we reflect back on the events of the last 12 months and take inventory. This year (2014) will likely go down in history as a pivotal transition year. The status quo is shifting. We are leaving behind the post-crisis global economic recovery, the resource shortages caused by the rise of emerging markets, as well as the policy aftermath of the financial crisis of 2008 (bailouts, zero interest-rate policy (ZIRP), negative interest-rate policy (NIRP), monetary stimulus, currency wars, and fiscal stimulus), and embracing something new. Enough time has passed and the telltale signs of change are all around us.

The story in oil: Marginal supplies are growing and marginal demand is declining. On the supply side, the US shale revolution is having a major impact. US production has ramped up from about five million barrels per day in 2008 to about nine million today. Also, fears or problems related to several recent disruptions in supply (e.g., ISIS in Iraq or civil unrest in Libya, Nigeria, and elsewhere) have largely subsided. And, of course, OPEC is caught flat-footed and voting to maintain current production quotas. On the demand side, China, Japan, and Europe are all showing significant fatigue with energy demand weakening.

Perhaps no country has been hit harder than Russia. The ruble is falling like a stone — down almost 50% vs. the US dollar in mid-December 2014. Ouch. Early on fear of war caused capital to flee Russia, then it was sanctions from the West, and then it was declining oil prices. The tipping point for Russia appeared to hit around 27 November, when Saudi Arabia announced its unwillingness to decrease OPEC oil production to offset the surge in output by the United States. Since that moment, oil prices have cratered and capital flight from Russia accelerated. The Central Bank of Russia hiked interest rates once in October and twice in December — from 8.0% to 17% in total. It seems Russia is in a “catch-22,” damned if they raise rates, and damned if they don’t. Sharply higher rates in Russia will throw them into recession. Even though the price of oil is falling in US dollar terms, the sharply declining ruble is raising the cost of energy in ruble terms — while also slowing the economy. If Russia maintains low rates, the exodus of capital from Russia could push the ruble even lower, creating massive inflation. A severe recession for Russia is in the offing.

The same factors that are hurting Russia — a stronger US dollar, hawkish US Federal Reserve, declining energy prices, declining global demand, declining commodity prices, and capital flight — are also wreaking havoc in other commodity-heavy emerging economies like Brazil, Thailand, Indonesia, Malaysia, etc. Brazil’s real plunged along with oil and the ruble. Southeast Asian markets are down as capital flight escalates there, too.

In Japan, Prime Minister Shinzo Abe came to power promising to rescue Japan from the desperate deflation of the past 20-plus years. Deploying all three arrows of the Abenomics strategy, Japan has now seen its economy shrink rather than grow. Japan’s revised numbers for Q3 2014 are now in and its recession is worse than initially reported. Japan is now printing 15% of GDP in new money each year. Two consecutive quarters of shrinking GDP cast doubt on Abenomics. Moreover, weakness in the global economy will likely erode Japanese exports, further offsetting any gains in trade a lower yen might have brought.

China continues to struggle with a mountain of bad debt, and the government seems intent on maintaining the status quo — albeit at a somewhat lower growth rate. This despite reports that the Chinese government has squandered almost $6.8 trillion in the five years since the financial crisis. And unless they attempt to rebalance their economy,they will likely experience steadily diminishing growth rates.

Europe continues to stumble along, desperately trying to maintain the status quo. Yet,recent signs suggest the status quo is yielding to recession. Moreover, connecting the dots, it seems that Europe’s notorious real estate bubbles in London, Paris, and Germany could all be impacted by the US shale revolution.

With all that crisis and confusion as a backdrop, we must remind ourselves that innovation flows like a river. 2014 was no different than the years before it as productivity advanced at a dizzying pace. In June, a supercomputer named Eugene managed to convince one third of a board of judges at the Royal Society in London that it was a 13-year-old boy — thereby becoming the first computer to meet the qualifications of the Turing Test. In the world of cryptocurrency, bitcoin has endured a wild ride, racing over $1,000 and then falling to about $315 today. But whether or not bitcoin itself succeeds misses the point. Bitcoin is not just a better PayPal . . . it has solved the fundamental problem of trust between two foreign parties in a transaction. Now the genie is out of the bottle and it can act as a platform to build an incredible array of things. In medical science, researchers have made profound advances in growing organs from stem cells. In energy innovation, scientists in Australia have reached an important new milestone by converting over 40% of the absorbed solar energy into electricity. Moreover, breakthroughs in battery technology are leading to a much more competitive profile for alternative energy. Researchers at Stanford have figured out how to extend lithium battery life by three to four times. Researchers at Harvard have developed an organic grid-scale battery. And lastly, Australia’s Commonwealth Scientific and Industrial Research Organisation (CSRIO) has created a supercritical solar steam engine that can compete with fossil fuel energy in terms of cost per megawatt. It seems, these innovations can radically change the long-term future for energy (and geopolitics for that matter), while shale oil and gas are reshaping the present.

In total, 2014 stands as a turning point. The status quo has changed. We are, it seems, embracing yet another brave new world. Have a safe and prosperous New Year!

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OKCoin Now Offers P2P Lending to International Users

Jon Southurst (@southtopia) | Published on December 30, 2014 at 02:13 GMT

OKCoin's new one-screen Futures interface

OKCoin.com, the international arm of China's OKCoin, has introduced a peer-to-peer (P2P) lending system it says will increase liquidity on its spot market and provide low-risk interest returns for users willing to loan their coins to traders.

It is the first time all OKCoin's users around the world will have the opportunity to access the lending feature. Traders can choose loans at their preferred interest rates, and are offered 2.2x to 3x leverage depending on their 'VIP level'.

OKCoin has previously deployed the lending system on its Chinese OKCoin.cn site, and says there has been a waiting list for loans. It hopes P2P lending will, as well as build USD spot market liquidity, encourage yet more bitcoin trading on the already high-volume exchange.

It is similar to those available on other exchanges in the region, such as BitVC and Quoine, although BitVC's system works with fixed interest rates.

User-set conditions

The lending market automatically matches borrowers to the most suitable loan conditions, satisfying both parties. Users have the ability to set and choose their own interest rates and a duration of three to 360 days.

All funds available for lending are provided by other users; the company does not make any of its own funds available, and it does not provide a guarantee against default.

An OKCoin spokesperson told CoinDesk that while defaults on such loans is "exceedingly rare", there is an option for lenders to take out insurance against this at a charge of 10% of interest earned.

New Futures trading interface

In addition to the new lending features on the spot-price market, OKCoin has added a full-screen trading interface (above) to its BTC and LTC Futures platforms. The new design has click-to-populate orders and displays complete trading position and market information without having to leave the page.

The fully interactive interface also offers a suite of drawing tools and numerous indicators for in-depth market analysis, as well as a choice of light/dark themes and various chart styles.

OKCoin says both the P2P lending features and interface upgrades are part of its "aim to develop a seamless trading experience, with a strong focus on transparency and visibility of information for all traders".

Launched in July 2014, OKCoin.com is the company's Singapore-registered USD exchange. OKCoin itself is China's largest exchange by trade volumes, and has received over $10m in venture funding from such investors as Ceyuan Capital, Venture Labs and Tim Draper.

AsiaChina

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The Bitcoin Phenomenon by SQ1.tv (Youtube)

The Bitcoin Phenomenon - Youtube

by SQ1.tv

• 111,563 views

Produced for SQ1.tv, this Bitcoin documentary looks at the history, the ideologies, and the conflict between the politics of the early-adopters and the VCs/entrepreneurs pushing to take Bitcoin mai...

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