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Kanye West Threatens Businesses if they Accept Coinye’s

-By Milly Bitcoin®  - January 8, 2014.

Kanye West’s attorney has threatened the developers of the “Coinye West” coin being launched.  Since the Bitcoin software is Open Source and freely available anyone can copy the software, change a few things, and launch their own coin system.  Hundreds of these systems have been launched.  Coingen now offers and automated process to start a new system.  Other systems, such as Mastercoin, use the Bitcoin protocol as the underlying system and sit “on top” of Bitcoin.

The letter includes the usual claims of trademark infringement for use of Kanye West’s likeness and music at the web site.  However, it includes another interesting claim that they will “pursue claims of contributory trademark infringement and contributory unfair competition, among others, against any entity that accepts or exchanges COINYE WEST currency.”

A multitude of business that deal in various currencies and barter involving items that appear to be covered under this.  Ticket agencies, sellers on Ebay, etc. exchange concert tickets, CD’s, etc. for US Dollars without having a license directly from the intellectual property holder.  If someone makes an intellectual property claim against Paypal, Visa, Mastercard, etc. that they can somehow start suing companies across the US who accept these forms of payment?  An inquiry was made to the law firm who sent the letter asking them to elaborate.

The Bitcoin exchange Mt. Gox has registered trademarks for Bitcoin in some countries but they claim it was done to “fight opportunists.”  However, they could change their mind and start making claims if such a legal theory was possible.


bitcoinmilly1® Diverts Web Traffic from Typo Domain

-By Milly Bitcoin®  - January 2, 2014.

Payward, Inc. is currently developing a Bitcoin exchange and trying to get Money Services Business licenses throughout the USA and other parts of the world.   They are also the founding member of a self-regulatory group called the Digital Asset Transfer Authority and their attorney, Constance Choi, is also the secretary of the group.   It is unclear if the group ever officially formed.

As recently reported on Reddit, Payward has now started redirecting web traffic from the domain to Payward’s exchange,  Further investigation indicates email for the domain is also configured.  Payward’s CEO, Jesse Powell admits to diverting the traffic and calls it a victimless crime because Mt. Gox is the only victim and won’t respond to concerns over the data leaks.  The Godaddy legal department was contacted to shut down e-mail services to the domains in case sensitive information is sent in error.  He called the diversion of e-mail “ridiculous” and indicates he looks forward to dealing with the Godaddy legal department.  Mr. Powell has also publically posted a demand for payment from Mt. Gox (At the BTC rate in June 2011).  He later went on a rant claiming Mt. Gox should have registered for the domains and now they will “suffer” for not doing so.

Other domain attributed to Mr. Powell and Payward/Kraken include:

Several Bitcoin users have now indicated they will not use Kraken due to security and credibility concerns.

User should be careful only to communicate with Bitcoin exchanges via online forms where they have logged in and verified.  Numerous fake e-mails using typo domains, similar to what Kraken is doing, or fake return addresses are being circulated.  These e-mails sometimes send users to malware-infected sites or have malware as attachments.  A phishing example is at  Other e-mails send a file which they claim is a wallet with several Bitcoins in it.

Another complaint is also pending with the DATA group after BitPay processed a $1 Million payment for Butterfly Labs who is currently involved with legal issues over it Bitcoin miners.





AC Bitcoin Acquires

-By Milly Bitcoin®  - December 28, 2013.

Atlantic City Bitcoin has completed the acquisition of the “” web site.  This will be part of the Milly Bitcoin project to provide free support for Bitcoin users.  A professional production agency has been employed to develop assist with presentation of the site.  The “” site will have basic introductory material while will be for interactive support.  While the most common question is about how to buy Bitcoin and whether fractional Bitcoin can be purchased, questions are becoming more sophisticated.  Recent questions include how to set up web sites to accept Bitcoin and investments into alternate coins (Alt-Coins) which are Bitcoin clones with some of the parameters changed.

Other projects include to provide assistance for non-profits to accept Bitcoin and to answer the common complaint that people can’t use Bitcoin to buy food, to provide information for musicians and artists to accept Bitcoin, and the Bitcoin Information Center at  Other upcoming projects include to explain the various exchange rates and provide information about the various resources for monitoring the Bitcoin exchange market. will provide security best practices and is being developed by a Certified Information System Security Professional (CISSP).



FinCEN Issues Bitcoin-Friendly Ruling for Miners

-By Milly Bitcoin®  - December 27, 2013.


Milly Bitcoin’s Mining Rig

The US Department of Treasury, Financial Crimes Enforcement Network (FinCEN) has issues ruling that clears up an issue for Bitcoin mining.  The issue involves whether someone who mines Bitcoins for themselves can trade them for cash at an exchange or spend them directly without being classified as a Money Services Business (MSB) and register with FinCEN.  Many miners were concerned that the rules would require compliance with extensive regulations (see Jerry Brito, FinCEN explicitly stated in a personal letter that bitcoin miners need to register with FinCEN).  The rules could require miners to have things like an auditor on staff making it impossible for individuals to mine Bitcoins and stay within the regulations.

Atlantic City Bitcoin operates several ASICs miners at its facility in New Jersey and asked FinCEN to clarify the rules.  The owner of AC Bitcoin is a former federal employee who worked on anti-terrorism and security programs and took early retirement to work on Bitcoin.  According to the formal Administrative Ruling miners do not have to register with FinCEN as previously thought as long as they mine for themselves.  AC Bitcoin had frequent contact with FinCEN staff and pointed out that if FinCEN had required miners to register they would need to comply with the “Administrative Procedures Act” which would require them to consider public comments before making the requirement.

FinCEN ruled:

To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither “acceptance” nor “transmission” of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule. This is the case whether the user mining and using the Bitcoin is an individual or a corporation, and whether the user is purchasing goods or services for the user’s own use, paying debts previously incurred in the ordinary course of business, or (in the case of a corporate user) making distributions to shareholders. Activities that, in and of themselves, do not constitute accepting and transmitting currency, funds or the value of funds, are activities that do not fit within the definition of “money transmission services” and therefore are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs…

FinCEN therefore concludes that, under the facts you have provided, Atlantic would be a user of Bitcoin, and not an MSB, to the extent that it uses Bitcoin it has mined: (a) to pay for the purchase of goods or services, pay debts it has previously incurred (including debts to its owner(s)), or make distributions to owners; or (b) to purchase real currency or another convertible virtual currency, so long as the real currency or other convertible virtual currency is used solely in order to make payments (as set forth above) or for Atlantic’s own investment purposes. Milly Bitcoin’s Mining Rig

The ruling goes on to discuss that other arrangements, such as mining contracts where mining is done on behalf of another party, may be classified as a Money Services Business depending on the circumstances.  The entire ruling is below and will be published at FinCEN’s web site in the near future.






Re:     Request for Administrative Ruling on the Application of FinCEN’s Regulations to Bitcoin Mining Operations

This responds to your letter of June 1, 2013, seeking an administrative ruling from the Financial Crimes Enforcement Network (“FinCEN”) on behalf of Atlantic City Bitcoin LLC (“Atlantic”), about Atlantic’s possible status as a money services business (“MSB”) under the Bank Secrecy Act (“BSA”). Specifically, you ask whether certain ways of disposing of the Bitcoins mined by Atlantic would make Atlantic a money transmitter under the BSA.

You state that Atlantic mines Bitcoins. You further state that the Bitcoins that Atlantic has mined have not yet been used or transferred, but that Atlantic may decide to use this virtual currency to purchase goods or services, convert the virtual currency into currency of legal tender and use the currency to purchase goods and services, or transfer the virtual currency to the owner of the company. You ask in your letter whether any of these transactions would make Atlantic a money transmitter under the BSA.

On July 21, 2011, FinCEN published a Final Rule amending definitions and other regulations relating to MSBs (the “Rule”).1 The amended regulations define an MSB as “a person wherever located doing business, whether or not on a regular basis or as an organized business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(l) through (ff)(6) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.”2

BSA regulations, as amended, define the term “money transmitter” to include a person that provides money transmission services, or any other person engaged in the transfer of funds. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.3 The regulations also stipulate that whether a person is a money transmitter is a matter of facts and circumstances, and identifies circumstances under which a person’s activities would not make such person a money transmitter.4

On March 18, 2013, FinCEN issued guidance on the application of FinCEN’s regulations to transactions in virtual currencies (the “guidance”).5 FinCEN’s regulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.”6 In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. The guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.

For purposes of the guidance, FinCEN refers to the participants in generic virtual currency arrangements, using the terms “exchanger,” “administrator,” and “user.” An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency. A user is a person that obtains virtual currency to purchase goods or services on the user’s own behalf.

The guidance makes clear that an administrator or exchanger of convertible virtual currencies that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency in exchange for currency of legal tender or another convertible virtual currency for any reason (including when intermediating between a user and a seller of goods or services the user is purchasing on the user’s behalf) is a money transmitter under FinCEN’s regulations, unless a limitation to or exemption from the definition applies to the person.7 The guidance also makes clear that “a user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN’s regulations. FinCEN understands your letter to amount to a request to elaborate on this last statement in the specific context of a user that obtains the convertible virtual currency Bitcoin by mining.

How a user obtains a virtual currency may be described using any number of other terms, such as “earning,” “harvesting,” “mining,” “creating,” “auto-generating,” “manufacturing,” or “purchasing,” depending on the details of the specific virtual currency model involved. The label applied to a particular process of obtaining a virtual currency is not material to the legal characterization under the BSA of the process or of the person engaging in the process to send that virtual currency or its equivalent value to any other person or place. What is material to the conclusion that a person is not an MSB is not the mechanism by which person obtains the convertible virtual currency, but what the person uses the convertible virtual currency for, and for whose benefit.

FinCEN understands that Bitcoin mining imposes no obligations on a Bitcoin user to send mined Bitcoin to any other person or place for the benefit of another. Instead, the user is free to use the mined virtual currency or its equivalent for the user’s own purposes, such as to purchase real or virtual goods and services for the user’s own use. To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither “acceptance” nor “transmission” of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule. This is the case whether the user mining and using the Bitcoin is an individual or a corporation, and whether the user is purchasing goods or services for the user’s own use, paying debts previously incurred in the ordinary course of business, or (in the case of a corporate user) making distributions to shareholders. Activities that, in and of themselves, do not constitute accepting and transmitting currency, funds or the value of funds, are activities that do not fit within the definition of “money transmission services” and therefore are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs.8

From time to time, as your letter has indicated, it may be necessary for a user to convert Bitcoin that it has mined into a real currency or another convertible virtual currency, either because the seller of the goods or services the user wishes to purchase will not accept Bitcoin, or because the user wishes to diversify currency holdings in anticipation of future needs or for the user’s own investment purposes. In undertaking such a conversion transaction, the user is not acting as an exchanger, notwithstanding the fact that the user is accepting a real currency or another convertible virtual currency and transmitting Bitcoin, so long as the user is undertaking the transaction solely for the user’s own purposes and not as a business service performed for the benefit of another. A user’s conversion of Bitcoin into a real currency or another convertible virtual currency, therefore, does not in and of itself make the user a money transmitter.9

FinCEN therefore concludes that, under the facts you have provided, Atlantic would be a user of Bitcoin, and not an MSB, to the extent that it uses Bitcoin it has mined: (a) to pay for the purchase of goods or services, pay debts it has previously incurred (including debts to its owner(s)), or make distributions to owners; or (b) to purchase real currency or another convertible virtual currency, so long as the real currency or other convertible virtual currency is used solely in order to make payments (as set forth above) or for Atlantic’s own investment purposes. Any transfers to third parties at the behest of sellers, creditors, owners, or counterparties involved in these transactions should be closely scrutinized, as they may constitute money transmission. (See footnotes 8 and 9 above.) And of course, should Atlantic engage in any other activity constituting acceptance and transmission of either currency of legal tender or virtual currency, it may be engaged in money transmission activities that would be subject to the requirements of the BSA.

This ruling is provided in accordance with the procedures set forth at 31 CFR Parti010 Subpart G. In arriving at the conclusions in this administrative ruling, we have relied upon the accuracy and completeness of the representations you made in your communications with us. Nothing precludes FinCEN from arriving at a different conclusion or from taking other action should circumstances change or should any of the information you have provided prove inaccurate or incomplete. We reserve the right, after redacting your name and address, and similar identifying information for your clients, to publish this letter as guidance to financial institutions in accordance with our regulations.10 You have fourteen days from the date of this letter to identify any other information you believe should be redacted and the legal basis for redaction.


1  Bank Secrecy Act Regulations – Definitions and Other Regulations Relating to Money Services Businesses, 76 FR 43585 (july 21, 2011).

2  31 CFR § 1010.100(ff).

3  31 CFR § 1010.100(ff)(5)(i)(A) and (B).

4  31 CFR § 1010.100(ff)(5)(ii).

5  FIN-2013—G001. “application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies,” March 18, 2013.

6  31 CFR § 1010.100(m).

7  The definition of “money transmitter” in FinCEN’s regulations define six sets of circumstances – variously referred to as limitations or exemptions – under which a person is not a money transmitter, despite accepting and transmitting currency, funds or value that substitutes for currency.  31 CFR § 1010.100(ff)(5)(i)(A) – (F).

8  However, a user wishing to purchase goods or services with Bitcoin it has mined, which pays the Bitcoin to a third party at the direction of a seller or creditor, may be engaged in money transmission. A number of older FinCEN administrative rulings, although not directly on point because they interpret an older version of the regulatory definition of MSBs, discuss situations involving persons that would have been exempted from MSB status, but for their payments to third parties not involved in the original transaction. See FIN-2008-R004 (Whether a Foreign Exchange Consultant is a Currency Dealer or Exchanger or Money Transmitter – 05/09/2008); FIN-2008-R003 (Whether a Person That is Engaged in the Business of Foreign Exchange Risk Management is a Currency Dealer or Exchanger or Money Transmitter – 05/09/2008); FIN-2008-R002 (Whether a Foreign Exchange Dealer is a Currency Dealer or Exchanger or Money Transmitter – 05/09/2008).

9  As noted in footnote 8 above, however, a user engaging in such a transaction, which pays the Bitcoin to a third party at the direction of the counterparty, may be engaged in money transmission.

10  31 CFR §§ 1010.711-717.



Beware the API Key in Yor Online Bitcoin Account

-By Milly Bitcoin®  - December 15, 2013.

Many new users who open Bitcoin online accounts with exchanges or online wallet programs do not fully understand the ramifications of the “API Key.”  API stands for “Application Programming Interface.”   This key allows for programs to interface with your account.  For instance, if you have a computer program that makes automatic trades to your account.  Even if you have added security to log into your account, such as 2-factor authentication where a second password is sent via text to your smart phone or a hardware key is needed to be plugged into a USB port the API key will bypass this.

One reported case involved someone who created their account without 2-factor authentication because they had not yet made deposits.  Once they made deposits they enabled 2-factor authentication.  However, someone had already hacked their way into the account and created an API key.  They then proceeded to make withdrawals.  From the perspective of the exchange operator they cannot tell if is was actual theft or a scheme by the account holder to try to get a refund they do not deserve.

In another case someone had created an API key when they opened their account and forgot about it.  Now the key was somehow compromised and it was used to bypass the 2-factor authentication protection they had on their account.  It would be prudent for exchange operators to provide extra confirmation steps before an API key is created so the users is better informed of the risks.




Bitcoin Table at Philly Punk Rock Flea Market Saturday

-By Milly Bitcoin®  - December 13, 2013.


Atlantic City Bitcoin will be offering free Bitcoin support at the Philly Punk Rock Flea Market on Saturday, December 14.   Most Bitcoin events are geared towards techies and entrepreneurs.  This event will  give members of the public the opportunity to ask questions about Bitcoin while they do some Christmas shopping.  Atlantic City Bitcoin operates that provides free online support.  A wide range of questions ranging from using, accepting, investing, the what the future may hold have been submitted to the web site.  As questions come in the answers are provided in FAQ’s and articles at  The most common question involves buying a fraction of a Bitcoin.  Since Bitcoin is completely digital, fractions are used and a whole Bitcoin has no special significance.  Physical Bitcoins will also be on display.  Several Bitcoiners have signed to attend via

The event features more than 500 local artists, entrepreneurs and vendors of all-things-interesting, the flea market represents a wide cross-section of the city’s alternative culture.  While the event is labeled as “punk rock,” it is by no means restricted.  The event won a Reader’s Choice award from the Philly City Paper in 2013.  A $3 admission fee goes to support the First Unitarian Church and other proceeds from the event are being donated to to help young girls in Pakistan learn how to skateboard.


The Punk rock flea market in Philadelphia brings together vendors, vinyl and the city's hipster crowd.




Misunderstandings Leading to Increased Bitcoin Volatilty

-By Milly Bitcoin®  - December 8, 2013.

While there are many contributing factors to Bitcoin’s price volatility in relation to established government currencies one contributing factor is a misunderstanding of Bitcoin.

Bitcoin is a currency, a “commodity,” and payment system.  Many investors only see the commodity aspect and often point to “no intrinsic value.”  To an investor there is no “intrinsic value” because you cannot hold it or sell it if the value plummets.  For instance, even if the gold market crashes it still has value to make electronics and jewelry.  “Commodity” is in quotes because Bitcoin does fit the exact definition of a commodity but it is being discussed by regulators during recent US Senate hearings.

Non-investors often say Bitcoin does have intrinsic value as a payment system and a protocol.  For instance, the TCP/IP protocol has an “intrinsic value” in that it is used to operate the Internet.  The value of Bitcoin is in its use as a disruptive technology to displace outdated legacy services.  This disconnect is the result of different perspectives of the definition of “intrinsic value.”

Bitcoin is an experimental protocol.  Many discussions of Bitcoin compare it to established payment systems and conclude Bitcoin will be a failure.  While there are many issues with Bitcoin it is too early to make final conclusions about how it will pan out.  Someone looking at the Internet in the early 90′s would see rudimentary browsers that crash all the time and no search engines, no flash, no streaming video, no database-driven sites, etc.  If you ever sent your credit card info to a web site your funds would likely be stolen, and many businesses refused to have web sites because they were concerned about being associated with porn.  Some groups would claim that no advertising would be permitted on the Internet because it was designed for research collaboration.  Others claimed the Internet was for circumventing “real world” laws and used the Internet for all sorts of illegal things.  None of these issues, many of which still exist today, resulted in a “failure” of the Internet.

Exaggerations create false expectations.  Many people exaggerate the Bitcoin economy.  For instance, it is often stated that there are many thousands of merchants accepting Bitcoin.  While it may be technically true that thousands have signed up to accept Bitcoin the actual number of businesses selling things is substantially less.  For instance, is a site maintained by Atlantic City Bitcoin.  It you exclude local places that accept Bitcoin the number of places accepting Bitcoin for mail order food is less than 50 for the entire world.  Of course this was probably less than 5 a year ago.  When you strip away all the hype over the exchange rate volatility Bitcoin is actually experiencing essentially a linear and steady growth.  Some misinterpret the overheated price and hype bubbles as a sign that Bitcoin has no underlying value at all and compare it to things like Beanie Babies.

Other exaggerations and misinterpretations include claims that Bitcoin will replace all currencies, that Bitcoin will cause the failure of central banks/the federal reserve/governments and so on, or that Bitcoin is solely as a tool to create “anarchy.”  Of course there is no way to predict how these things will pan out but those that focus on these hyperbolic issues rather than the how the technology can be used to disrupt current services often leads to misinterpretations and misunderstandings.

The Bitcoin price is a bubble, on top of volatility, on top of  a steady increase.  Bubbles are being caused by hype and misunderstandings, volatility is cause by lack of liquidation among exchanges, and the steady increase is due to the usefulness of the technology.  The volatility is often cites as a problem with merchants accepting the currency without considering that the problem may go away when liquidity is available.

Successful decentralized coin systems are not easy to launch.  Anyone can launch a new coin system since the software is based on open source and is freely available to anyone.  Hundreds of such systems have been launched (see  However, a new systems takes a critical mass of users, miners willing to process the transactions, and merchants willing to accept the coin.  It is possible one of these systems will overtake Bitcoin in popularity but the chances of this are limited since Bitcoin users could decide to adopt some feature of these alternate coins if advantageous.  If Bitcoin does get replaced in popularity by some other system it would most likely be a system that is substantially different rather than one of these knock-offs.

Also see

Common Bitcoin Misconceptions – Great for new users and press reporters.



US Regulation Causing Consumer Issues for Virtual Currencies

-By Milly Bitcoin®  - November 25, 2013. is seeing an increasing number of issues caused by the lack of US-based currency exchanges.  US customers have limited choices such as CoinBase.  However, CoinBase is not an actual exchange and each time a buy and sell is made the funds are tied up for several days for bank transfers.  Some have reported banks accounts being frozen due to these transfers being labeled suspicious.

The result of this is some US customers may be giving foreign exchanges false information in order to trade on their systems.  If this is detected funds could be frozen.  There are also reports that it is difficult to wire funds to foreign exchanges.  Some users are being pushed to meeting individuals in person to buy with cash.  Prices are much higher and there have been some reports of counterfeit money being used, robberies, and hacking attempts when one users asks to use the computer of the other person.

Some users are trying to buy Bitcoin mining equipment because this essentially allows someone to buy bitcoins with currency without going through an exchange.  Companies have taken advantage of this and offered products that either never existed or would be delivered so late it results in tremendous losses.  While a few have delivered as promised, there is no incentive for a company to deliver the units on time because they just mine themselves until the “difficulty” goes up and the machines are no longer profitable.  Since there is a set number of bitcoins to be mined the more people mining causes the average reward to decrease.  The so-called “difficulty” increases and is used to estimate the average mining rewards.

Other users were using illegal offshore services.  Many users lost funds in the debacle where $1.2 Million was claimed to have been hacked by the teenager running the service.  One user said he pulled he money out just before the loss because he was concerned the funds were being used to gamble.  Since the site was run by anonymous individuals based on screen names of a forum site that gets hacked all the time there is no way to tell what actually occurred.  Most reports repeat the statements made by the person running the site since there is no way to verify any of the claims.

Users are also investigating “alt-coins” or alternative coins based on Bitcoin.  There are a few exchanges that allow exchanges between virtual currencies.  See Considerations for Investing in Virtual Currencies Other than Bitcoin.



Considerations for Investing in Virtual Currencies Other than Bitcoin

-By Milly Bitcoin®  - November 24, 2013.

Many questions have arisen lately about investing in virtual currencies other than Bitcoin.  This issue can get somewhat complicated and a few risks need to be understood:

Decentralized vs. Centralized.  Bitcoin is decentralized, meaning no central authority or bank, controls the supply.  It is controlled by people who run the software.  Centralized coins, like Amazon coin, are controlled by the central authority or company that operates the coin.  In this case the central authority controls the supply.  For instance, Ripples (XRP), is a centrally controlled currency operated by OpenCoin, Inc.  Currently, the only use of XRP’s to facilitate transactions on the Ripple system.  An investment in XRP is more like an investment in OpenCoin, Inc.

Alt-Coins.  This is the terms given to coins based on the Bitcoin software.  Since Bitcoin is open source anyone can take the code, change some things, and create another coin system.  New coins systems get created all the time (see  Generally, these coins depend on the Bitcoin developers to put out new versions of the software and they adapt it to whatever parameters they use.  If any of these coins were to overtake Bitcoin in popularity they would need their own developers.

Proof of Work, Hashing Rate, and Difficulty.  The security of decentralized systems depends on the “proof of work” algorithm and the amount of computer power to “mine” these coins.  Some coins use different proof of work algorithms so their hashing rate cannot be compared one-to-one.  The “difficulty” is a measure of how difficult a problem is to solve.

One scenario that has happened is that many people will start mining a specific coin, the hashing rate will rise and the difficulty goes up.  If the exchange price of the coin drops for some reason they trade their coins and move their mining equipment to another coin.  Now the difficulty is so high it takes weeks to solve the next section and all transactions stay in limbo.  Meanwhile, they sold off many coins and the value goes to essentially zero since it is essentially a non-functioning system.

Another scenario that has happened is a “51% attack” which is where one entity has a majority of the hashing power.  They create their own block chain ledger and create s situation where they can spend the same coins twice.  Or they can simply disrupt the whole system by delaying transactions.

Alt-coins replacing Bitcoin in popularity.  Some other coin could replace Bitcoin as the most popular virtual currency.  However, if one of these Alt-coins does something better than Bitcoin it is possible that Bitcoin users could adopt this change within the Bitcoin system rather than switching to another coin.  It remains to be seen what will happen.

Availability of exchanges.  Being able to exchange these alt-coins also depends on exchanges willing to exchange the coins.  Currently, these coins, if they are exchanged, may depend on one or two exchanges.  Of course Bitcoin was the same way when it started and still is to a certain extent.

Malware.  Some users report being infected with malware from downloaded alt-coin software.  One user reported that one program used a key logger.  This logs every key stroke and sends the information back to the attacker.  The information was used to steal funds from their various wallets.  Do not load this software on a computer where you have Bitcoin stored or do Bitcoin transactions or other important things, such as accessing your bank account.



Bitcoin Trademarks – Has Satoshi Been Found?

-By Milly Bitcoin®  - November 22, 2013.

The US Patent and Trademark Office has issued a trademark to Atlantic City Bitcoin for ”Milly Bitcoin” for “On-line journals, namely, blogs featuring information about Bitcoin” (Registration number 4435599).  The application was filed in March of 2013 and is only the second trademark issued in the United States using the word Bitcoin in the trademark.  Bitcoin Magazine was the first with a registration finalized earlier this year.

A scan of other pending trademark applications shows a very interesting claim.  Applications 85887676 and 85887743 claim they started using Bitcoin in commerce on February 11, 2008.  This is months before the original Bitcoin paper was published by Satoshi Nakamoto.  The trademark applications for “Bitcoin Mobile Money” and “m-Bitcoin” were filed by “iBanco” Doing Business As ”m-Banco” with an address on Wall Street in New York.  Their web site is at  The applications were filed by Nathan Ferguson of the Wilson Sonsini Goodrich & Rosati law firm in Palo Alto, CA.  Attorney Constance Choi who works at Payward/Kraken and who heads up the “Digital Asset Transfer Authority” (which is purportedly a “self-regulatory” body for companies involved in digital currencies and assets) previously worked at that firm.

Has Satoshi been found?  How could Bitcoin have been used in commerce before the paper was even released or the domain registered (August 2008)?

These are the 2 specimens filed with the applications.  They are nearly identical except for the trademark that is being applied for was inserted in the middle.  They were both claimed to be first used on the 11th of the month (but 8 month apart) back in 2008:

The Claimed February 11, 2008 use of "Bitcoins" Specimen Submitted to the US Patent and Trademark Office

The Claimed February 11, 2008 use of “Bitcoins” Specimen Submitted to the US Patent and Trademark Office


The Claimed October 11, 2008 Use of "Bitcoins"  Specimen Submitted to the US Patent and Trademark Office

The Claimed October 11, 2008 use of “Bitcoins” Specimen Submitted to the US Patent and Trademark Office


There are also 2 failed attempts to register “Bitcoin” as a trademark on the record.  A third application was made in October, 2013 by Kaglew Management LLC to use Bitcoin as a trademark for t-shirts and other clothing.  It is currently pending and is awaiting assignment to a trademark examiner.

Other pending applications include “Easy Bitcoin, ” “American Bitcoin,” “Bitcoin Investment Trust,”  ”Winklevoss Bitcoin Trust,” “Bivalent Bitcoin Jewelry,” and “Bitcoin Computer.”

Information about US trademarks is at




Considerations When Investing in Bitcoin

-By Milly Bitcoin®  - November 18, 2013.

Investing in Bitcoin has become all the rage in recent days.  It could be described as a bubble on top of volatility on top of a steady increase.  Keep in mind that Bitcoin can be used as a payment system and the volatility is only important if you hold bitcoins.  The price does not matter if the Bitcoins are converted immediately after transactions.  If you do want to invest here are a few considerations:

-New investors have entered the market pushing and many people have taken notice.

-Investment by Chinese savers looking for store of value has increased.

-US Congressional hearings went well and pointed out the innovation potential of Bitcoin.

-Many who previously panned Bitcoin are starting to realize it is an underlying protocol and services can be built on top of it.

-Only a tiny percentage of potential users are using Bitcoin now.  Gains can be large and dramatic.

There are many people who never heard about Bitcoin before are inquiring about investing.  Discussion boards are full of discussions about a “new paradigm” and some are advising people to take out loans to buy more now before it goes up even further.  More cautious advice is to invest a small amount so a huge gain would be great but a small loss won’t matter much.  Some claim that the bubble was the jump to $900 and when it went back to $500 it was over and the rest is just a normal increase..

Before investing a significant amount you should consider a few more things:

-Each time the market has increased like this before it corrected violently downward.  However, it has always come back up and exceeded previous highs in a relatively short amount of time.

-Bitcoin is still in its experimental stages and the software is still in “beta.” (version still starts with a “0″).

-Professional investors are involved who have worked on Wall Street.  Max Keiser, a big Bitcoin proponent and investor, worked on Wall Street for years and has a patent involving virtual currency exchanges.  They know what they are doing when it comes to investing.

-Depth in these markets is small.  This means a small number of investors with large holdings can sway the market.  Large changes in the price can occur in minutes any time of the night or day.  There is mostly no regulation to prevent market manipulation.

-Bitcoin is currently limited to about 7 transactions per second.  Visa/MasterCard can handle thousands of transactions per second.

-While the number of merchants is increasing, it is still very small.  BitPay has 12,000 merchants but it is difficult to find more than a few hundred that sell products and the selection is often thin.  China has only a handful of merchants who accept Bitcoin.  BitPay Directory | |

Profits and losses can be swift in this market.  Be careful!



® Launches with Free Listings

-By Milly Bitcoin - November 18, 2013.

One of the most common complaints about Bitcoin is “I can’t take it the supermarket and buy food with it.”  Well, now you can at  The site offers free listings to anyone selling food products for Bitcoin.  A link to is also provided which shows a map with local businesses who accept Bitcoin for those that want an immediate meal rather than mail order.  Bitcoin is great for small businesses and many unique items and specialty products are available for Bitcoin.




Monday Bitcoin Hearings on CSPAN-3 @ 3PM EST

-By Milly Bitcoin - November 18, 2013.

The Senate hearings on Monday are on CSPAN-3 from 3-5 PM Eastern Time.

Sen. Carper (D-DE) chairs a Senate Homeland Security & Governmental Affairs Committee hearing on digital currencies, such as Bitcoin. Panelists discuss challenges for law enforcement & regulatory agencies & the promises for U.S. & global economies.

Web streaming at

Panel I

Jennifer Shasky Calvery  Director, Financial Crimes Enforcement Network, U.S. Department of the Treasury

Mythili Raman  Acting Assistant Attorney General, Criminal Division, U.S. Department of Justice

Edward W. Lowery III  Special Agent in Charge, Criminal Investigative Division, U.S. Secret Service, U.S. Department of Homeland Security

 Panel II

Ernie Allen  President and Chief Executive Officer, The International Centre for Missing & Exploited Children

Patrick Murck  General Counsel, The Bitcoin Foundation, Inc.

Jeremy Allaire  Chief Executive Officer, Circle Internet Financial, Inc.

Jerry Brito  Senior Research Fellow, The Mercatus Center, George Mason University


US Seizes Funds from BitInstant Partner

-By Milly Bitcoin - November 17, 2013.

US Federal prosecutors in New Jersey have seized over $200,000 in funds from an alleged illegal money transmitter known as “Tcash Ads” who used the web site

The complaint alleges Tcash Ads operated a number of bank accounts where they process millions of dollars customer payments without a license.  Merchants were permitted to remain essentially anonymous except for basic contact information.   The complaint cites BitInstant as one of the largest recipient of the funds with over $1 Million in wired funds identified in the complaint according to bank records obtained by the Feds.

TCash Complaint

In a letter from Homeland Security to the Senate, the case is cited and indicates additional seizures may be made as it is an ongoing criminal investigation.

In March of 2013, the USSS discovered that an anonymous online payment processor, known as Tcash Ads Inc., was operating an unlicensed money services business through bank accounts held at Bank of America and Banner Bank. Bank records indicated that Tcash Ads Inc. authorized millions of dollars in wire transfers on behalf of the public into the bank accounts for BitInstant, a Virtual Exchange Broker dealing in Bitcoins.


Tcash Ads is also cited in a number of online complaints where a number people claim they purchased a web site monetization program where they set up web sites with Google AdSense ads.  Users report that within a short time Google banned their sites citing poor quality traffic leaving many customers asking for refunds.

BitInstant has closed their business citing the inability to obtain a bank account.


Princeton University To Hold Bitcoin Mining Presentation on 11/14

-By Milly Bitcoin - November 11, 2013.

A presentation, “The Economics of Bitcoin Mining, or Bitcoin in the Presence of Adversaries” will be presented at Princeton University on Thursday November 14, 2013 at 12:30.   The presenter is Joshua Kroll and is based on the paper at  The event will be simulcast and then placed on Youtube if you cannot attend in person.

The Bitcoin digital currency depends on a combination of cryptography, distributed algorithms, and incentive-driven behavior to maintain its correctness and stability. We examine Bitcoin as a consensus game and determine that it relies on a separate consensus about the rules and about game state. An important aspect of Bitcoin’s design is the mining mechanism, in which participants expend resources on solving computational puzzles in order to collect rewards. This mechanism purportedly protects Bitcoin against certain technical problems such as inconsistencies in the system’s distributed log data structure. We consider the economics of Bitcoin mining, and whether the Bitcoin protocol can survive attacks, assuming that participants behave according to their incentives. We show that there is a Nash equilibrium in which all players behave consistently with Bitcoin’s reference implementation, along with infinitely many equilibria in which they behave otherwise. We also show how a motivated adversary might be able to disrupt the Bitcoin system and “crash” the currency. Finally, we argue that Bitcoin will require the emergence of governance structures, contrary to the commonly held view in the Bitcoin community that the currency is ungovernable.

Mr. Kroll is also on the technical committee of Bitcoin 2014 to be help in Barbados on March 7, 2014.  The deadline for research paper submission is November 24 so act fast to submit a paper.


Bitvestment Partners LLC v. Coinlab, Inc. et al Court Docs

-By Milly Bitcoin - November 7, 2013.

The complaint in Bitvestment Partners LLC v. Coinlab, Inc. et al are online:


Bankruptcy Filing

The suit claims that Bitvestment partners paid to have Coinlab/Alydian mine approximately 6,700 bitcoins for $50,000.  Over that period Bitcoins shot up in value.  the complaint accuses CoinLab/Alydian of reneging on the agreement and taking on a second partner.  Someone posted a message on when they noticed a message was encoded in a mined block (known as the coinbase field).  Peter Vessenes answered by saying that Alydian had come out of the closet and was openly mining.

A hearing is set for later this month to ask for an order for Alydian to turn over its mining addresses and private keys and to send all mining proceeds to Bitvestment Partners as well as identifying the alleged new partner taken on my Alydian.



Another Scam Falls Apart – More than $1M Claimed Stolen

-By Milly Bitcoin - November 6, 2013.

Today an online “wallet” service has shut down claiming the loss of over 4,100 bitcoins worth over $1M has been “stolen.”  The service was heavily promoted on the web site as a “secure online wallet.”  These ads ran in spite of numerous warnings and complaints from veteran users.  For instance, user DannyHamilton, who is well known for spending a large amount of time giving detailed assistance to new users, has made numerous posts that the service was actually an unlicensed bank and not a secure wallet service.  When told about the “theft” he commented:

Why am I not surprised.  How often did I tell people that is a bank account and not a wallet.

It was well known that the operator of the web site is someone only known as “TradeFortress” and he also operates, an obviously illegal bank.  The site is labeled ”DEMO” in an apparent attempt to hide the true nature of the site from regulators.  Numerous complaints had been made to the administrators of, the Bitcoin Foundation, and even to the US Department of Treasury Financial Crimes and Enforcement Network (FinCEN).  The Bitcoin developers have also been asked to move their activities to another web site that was not designed to try to defraud new users entering the Bitcoin space.

The “hack” was blamed on an attack at the hosting level.  Of course any commerce web site with more than $1Million in funds would obviously have special security procedures to prevent any hacks of this type.  It is well known that hackers are attacking hosting providers in order to take control of servers.  The claim is it that had something to do with an e-mail address with no phone number attached.  Users should be wary about depositing funds with entities that remain anonymous or keep their domain records under privacy. has been involved in several recent actions by regulators.  A Ponzi scheme using bitcoins was operating on before the operator of the scheme, known as “PirateAt40″ was prosecuted by the SEC. was also mentioned in a recent indictment of the operator of Silk Road in the drug dealing and torture/murder for hire case.  The administrators of also openly encourage the sale of accounts claiming that people will do it anyway so supporting the activity is their way of warning users. has amassed more than $1.5 Million in bitcoins from running ads and collecting “donations” to improve the site.  Many donators have complained that little or none of their donations have been used to improve and secure the site.  The site has suffered several high profile hacks and was recently offline for several days.  this included the hilarious CosbyCoin hack where Bitcoins were supposedly converted to a coin operated by comedian Bill Cosby.  The site administrator posted that the funds are being saved to defend against possible legal action.

While has many knowledgeable and legitimate users and is the central source for information about Bitcoin, new users trying to get involved in Bitcoin should be careful about getting involved with any offers, ads, or solicitations on the site.

bitcoinmilly1 Offering Santa Letters for Bitcoin

-By Milly Bitcoin - November 6, 2013.


Atlantic City Bitcoin is getting ready for the holiday season by offering letters from Santa for Bitcoin. is a low cost service that sends fully customizable physical letters from Santa using festive stationary.  A discount can be offered for Bitcoin due to the reduced transaction fees.  Several example letters are provided or a customized message can be composed.  Bitcoin is perfect for low cost services such as this.  The price for the 2013 season is just 12 MillyBits to send a letter to anyone in the world.  Email can be sent to Santa free at [email protected] or at  All services protect the privacy of users and no information is sold.

bitcoinsanta will be opening shortly for Bitcoin enthusiasts and will provide Bitcoin decals and promotional coins that can be included with the Santa letters sent to bankers, brokers, regulators or others who may wish to receive a Bitcoin greeting.


coina-proof-3              coins-qu




“Brain Wallet” Thefts Increasing

-By Milly Bitcoin - November 3, 2013.

“Brain Wallets” are wallets created by a passphrase.  It could be a sentence or phrase or just a group of words.  Some users are confused about how complex this password or phrase must be in order to be secure.  The advice, Don’t do it.

The misunderstandings comes from several things.  A password attack that most users are similar with is where a user attempts to log into their e-mail account or a web site.  In these cases the attacker is communicating with a server that is processing the requests and this is often detected or limited in some way.  A “brain wallet” attack is done offline so the attacker can use many large computers to make many, many attempts without being detected.

Another misunderstanding is just how many attempts can be made.  For instance, replacing “S” with “$” probably isn’t going to add much security.  Many people are surprised after they lose funds with complex or obscure phrases.

Users are also shocked how fast the funds are taken, sometimes less than 5 seconds.  It works using “Rainbow Tables” which are tables of Bitcoin addresses and the associated private keys pre-calculated.  The Bitcoin transactions are monitored in real-time and when a match is seen, the money is withdrawn immediately via a script.  Some users think that if the funds are not taken right away then they are safe.  However, the script may wait until the balance is larger.  Also, the attackers are growing these “Rainbow Tables” over time and these is no telling how large they will become.

While it is possible to do a “Brain Wallet” securely a certain percentage of users will not do it correctly.  The easiest and most secure way to back up your funds is to use Bitcoin Armory wallet.  This is a “deterministic” wallet which means you just need one key to create or “determine” all the addresses used by the wallet.  It is backed up using a long string of letters.  Backing up this string of letters, without identifying it as a Bitcoin wallet, is a way of discreetly backing up your wallet.

One Bitcoin address collecting these funds put into weak “brain wallets” is at

370 millyBits has been collected so far.

A recent transaction from the “brain wallet” using the password:  “password” was taken in about 1 second since the Bitcoin transactions are easily monitored:





Don’t Confuse Breaking Cryptography and Breaking Encryption

-By Milly Bitcoin - November 2, 2013.

Recently the US Federal Bureau of investigations (FBI) seized bitcoins from the alleged Silk Road operator.  There is also discussion that the FBI has a wallet file that is encrypted.  Around the same time there has been speculation that the US National Security Agency (NSA) worked with the US National Institute of Standards and Technology (NIST) to recommend weak cryptography methods that could be broken.  Some recent articles and commenters have confused these concepts.

Breaking Encryption - A Bitcoin wallet is a collection of Bitcoin addresses and their associated private keys.  The private key is the “password” that allows the coins to be spent.  Anyone who has this private key can spend the funds so for security it is encrypted while it is stored on your hard drive.  That way, even if someone gets the wallet file they cannot read the private keys without knowing the password needed to decrypt the wallet file.  This password has nothing to do with the public Bitcoin address in the wallet and the FBI needs a copy of the wallet file if they wish to try to break the encryption.  Usually a wallet will contain multiple Bitcoin addresses and multiple private keys.  The Bitcoin protocol itself does not use encryption, it uses cryptography.  Encryption is something used to secure the private keys.

Breaking Cryptography - In order to create a Bitcoin address a private key is generated and then a Bitcoin address is calculated using a 9-step process.  There is no known way to go backwards from a public address to the private key other than to try to go through all possible keys and there are just too many.  There has been speculation that the NSA has some sort of back door to find the private key from the public Bitcoin address.  This is pure speculation at this point and there is no evidence this is the case.   If this were true then the private address could be determined from the public Bitcoin address.  The wallet file would not be needed and it would not matter if the wallet file was encrypted.  All funds could be taken from the information contained in the Bitcoin blockchain ledger.

How to create Bitcoin Address:

Click this image for a discussion of brute forcing addresses:



John the Ripper is a common tool to break encryption passwords  |  Choosing Strong Passwords