UK dealer charged in US over multimillion-dollar fake Bitcoin site scam

Renwick Haddow created trendy companies and duped investors into thinking they were big successes, authorities in New York allege

US authorities on Friday charged a British businessman with securities fraud, accusing him of deceiving investors over what turned out to be a fake trading platform for the cryptocurrency Bitcoin.

The Securities and Exchange Commission (SEC) alleged the clandestine Renwick Haddow, a UK citizen living in New York, diverted funds invested in a phoney Bitcoin site as well as from a flexible workspace firm Bar Works into accounts in Mauritius and Morocco, totalling $5m.

It said he touted experienced senior executives as behind the operations who turned out to be phantoms, and misrepresented the details and success of both companies.

Andrew Calamari, director of the SECs New York office, said: Haddow created two trendy companies and misled investors into believing that highly qualified executives were leading them to quick profitability.

In reality, Haddow controlled the companies from behind the scenes and they were far from profitable.

Bitcoin Store claimed to be an easy-to-use and secure way of holding and trading Bitcoin that had generated several million dollars in gross sales. The SEC alleged that in fact it never had any operations nor generated the gross sales it touted.

In 2015, Bitcoin Stores bank accounts allegedly received less than $250,000 in incoming transfers, none of which appear to reflect revenue from customers, the SEC said.

Haddows investors pumped more than $37m into Bar Works, which claimed to provide workspaces in old bars and restaurants, but in fact primarily sold leases coupled with sub-leases that together functioned like investment notes, the SEC said in a statement.

The commission alleged that throughout Haddow was hiding his connection to the companies given his checkered past with regulators in the UK, where he has faced similar charges for investment schemes.

According to a report in Crains, 27 investors from China filed suit in the state supreme court on 16 June seeking repayment of more than $3m invested in Bar Works, which they called a Ponzi scheme.

Another investment group filed a similar case against Bar Works in Florida in recent weeks.

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Bitcoin investors hoping to make billions may end up with a sack of fool’s gold

The cryptocurrency may not be a threat to the world economy, but that should not stop regulators from protecting investors from it

Sifting the Yukon river for gold was a waste of time for most of the 100,000 prospectors seeking to make themselves rich in the 1890s. The same can be said of the bitcoin miners who dream of striking it rich by getting their hands on some of the extremely lucrative and painfully elusive electronic currency.

Relatively few people have managed to decipher the codes needed to extract bitcoins from the 21 million locked inside the mathematical problems set by its creator, the software engineer whose true identity is unknown but who goes by the name Satoshi Nakamoto.

Those who have employed enough computer power and code-cracking know-how can consider themselves rich now that the value of one bitcoin has soared from $753 last December to around $10,000. The rest have deployed huge amounts of energy and time for no return.

Should anyone be worried about this turn of events? Or will it go down as a moment in history when an asset was mined, some people got rich and … that was it?

The ambitions of the bitcoin community mean the creation of a new currency must be taken more seriously. Its stellar rise in the last 18 months is likely to have sucked in thousands of speculators, many of them ordinary investors.

And with mainstream financial exchanges looking to host bitcoin as a tradeable asset, or list derivatives of bitcoin on their trading boards, thousands more will be sucked in over the next 18 months.

Where ordinary investors, hunting in large numbers, seek a return on their savings in a high-risk environment, governments are usually minded to regulate.

The idea behind bitcoin was that it should be like any commodity that, once discovered, became increasingly difficult to extract. Like gold, it would become a store of value and make those clever enough to find it and believe in it very rich.

JP
Jamie Dimon described bitcoin as only fit for use by drug dealers, murderers and people living in North Korea. Photograph: Eric Piermont/AFP/Getty Images

The distributed ledger designed to make each bitcoin account secure and accountable without the need for third parties, like banks, to be involved became for many participants a potential template for all future deposit saving and trading.

To that end, it was also viewed as a replacement currency to the dollar, euro or pound – one that could not be manipulated by central banks, which are only too keen to print extra notes, and thereby devalue the currency, in times of trouble. It is a seductive package that has led many in the banking industry – those most under threat – to call it a fraud.

Goldman Sachs boss Lloyd Blankfein said so last week, adding his voice to JP Morgan’s Jamie Dimon.

Dimon described it as fraud that would ultimately blow up and said the desire to hide funds from regulators and the police meant it was only fit for use by drug dealers, murderers and people living in places such as North Korea. Blankfein was more concerned that its volatile price, which dropped 20% in less than 24 hours after topping $11,000 last week, disqualified it from being a sensible currency.

Sir Jon Cunliffe, a deputy governor of the Bank of England, summed up the view of many in the City when he said calmly that bitcoin was a sideshow and too small to pose a systemic threat to the global economy.

To cover his flank against accusations that the Bank, which is the UK’s chief financial regulator, was too dismissive of the issue, he also cautioned that bitcoin investors needed “to do their homework”.

No doubt all bitcoin investors think they have done their homework. And regulators probably think they have enough work to do. But while it is easy to say that a fool and their money are soon parted, anyone who interacts with the financial services industry is a potential victim. And, with this in mind, regulators should be ready to impose all the usual tools of misselling rules and compensation schemes on this freshly minted industry.

At the moment, bitcoin is having a free ride. The tipping point is close. Regulators should be prepared.

Grayling mustn’t shunt true cost of rail network into the sidings

Another private operator on the east coast mainline, another bailout. History is repeating itself – again – and Chris Grayling is in the middle of the farce.

The transport secretary’s efforts to drum up a narrative of reversing Beeching cuts could not eventually conceal the small print in his rail strategy: a shabby face-saving deal with Stagecoach and Virgin, two firms who have richly profited from privatisation. Their Virgin Trains East Coast joint venture is to be curtailed, meaning that billions promised to the taxpayer by private-sector firms have again proved to be notional.

The government was in an invidious position: a delay to infrastructure upgrades by Network Rail and the shaky entry into service of Hitachi trains commissioned by the Department for Transport certainly gave the operators cause for complaint. Yet it will appear once again that private firms expect the downside to lie with the taxpayer.

Stagecoach/Virgin has a rich history of getting its way with the DfT, notably during the 2012 west coast franchise debacle, where it wrested back control of the contract from First Group. Since then, soul-searching reports have concluded that franchising does, indeed, work – but evidence has also accumulated to the contrary.

Competition has all but vanished: both parties in that west coast fiasco have been allowed to hang on to large franchises well into the next decade. The Thameslink megafranchise has turned Govia, which previously ran Southern services without much mishap, into a basket case. National Express has turned its back on rail and Stagecoach’s shares rocketed once news sank in that it was exiting East Coast early.

What franchising does offer the government is the fig-leaf of privately owned railways, even as it effectively dictates whether guards stay on trains, and by how much fares should rise.

Taking the flak directly, from commuters or unions, would not be for the fainthearted: Labour’s pledge to renationalise, slowly, is pragmatic. Yet an honest conversation about the true costs of the rail network, and who does and should invest, is long overdue. Grayling’s latest sleight of hand shows it is unlikely to be forthcoming soon.

No, Jeremy Corbyn – banker baiting’s bad for business

Picking a fight with a banker is still a good sport, 10 years after Northern Rock collapsed. Jeremy Corbyn knows it will provoke his supporters to chant his name to the tune of the White Stripes song Seven Nation Army once again. He knows it will earn the cheers of many beyond Labour’s membership ranks.

So there is probably little shock value in his response to Morgan Stanley last week after the US investment bank’s analysis that a Corbyn government would be bad for its clients and investors more generally. However, a prime-minister-in-waiting might want to be more circumspect about revolutionising an industry that accounts for more than 10% of GDP and makes a huge contribution to improving the UK’s balance of payments.

It’s an uncomfortable truth that Britain would find life difficult without the foreign banks in the Square Mile. Careful reforms are needed, not knee-jerk reactions.

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Meet the millennials making big money riding China’s bitcoin wave

The cryptocurrency may have no physical form but the returns from trading it can be very real and for some theyre worth giving up your job for

On a sunny afternoon in west Beijing, on the auspicious eighth floor of a nondescript concrete high-rise, Huai Yang sits with the curtains drawn in his apartment, making his own luck.

For the past six months, 27-year-old Yang has worked mainly from home, mainly from his sofa, tracking and trading bitcoin, and watching the money roll in. The flat itself is modestly sized; Yang moved in in his pre-bitcoin days when he worked variously for a crowdfunder start-up, a branding consultancy and dabbled in hedge-fund management, all of which he describes as creative financial work. Now, though, his main focus is bitcoin, which is much younger, more fun, and much more money. Yang claims to make up to 1m yuan (116,000) a month, under the radar of the taxman, purely from trading the online cryptocurrency.

Bitcoin has no physical form but the rewards are very tangible; Yangs home is packed full of expensive gadgetry, most prominently a mega-sized flat screen smart board, over a metre wide, which Yang uses to chart bitcoins rise and fall in HD.

Normally, the graphs on Yangs screen show bitcoins and his own fortunes going up and up. At the time of writing, one bitcoin is worth 6,600 yuan (768) recent months have seen the value hover well above 8,000 yuan. The global worth of bitcoin is over $14bn USD (11.3bn), of which over 90% is in yuan, and Yang and his peers are cashing in. I want a more splendid life, he says.

Huai
Huai Yang, who trades bitcoin from his sofa Photograph: Naomi Goddard for the Guardian

Theres certainly big money to be made in bitcoin, but it comes at a high risk. Bitcoin was designed to be a peer-to-peer currency, free from interference from government and central banks. Since the currency was launched in 2009, however, the Chinese market, where government interventions are common, has come to dwarf all others.

One such intervention took place in February this year, when the government warned that there would be serious violations for trading platforms that failed to abide by strict money-laundering regulations. In line with this, OKCoin and Huobi.com, the two biggest exchanges in China, announced that they would be suspending bitcoin withdrawals for one month.

Incidents like these, which Yang sees as not convenient, but not [a] problem, give Chenxing (who asked that I only use his first name) pause for thought. Chenxing, a boyish, skittish 35, has been trading bitcoin for the past four months, after giving up his too comfortable job as a geo-information engineer for the government. The governments pressure on bitcoin platforms is not so easy to understand, he tells me. Im not sure its really about money laundering they try to control [bitcoin], but they cannot.

For Chenxing, its the system itself that is vulnerable: Technology changes every day, he explains. Maybe tomorrow a hacker can find a way to crack bitcoin the security is from mathematics. If you can crack the mathematics, bitcoin is nothing. Thats why, even though Chenxing describes himself as a believer in bitcoin, he doesnt plan to stay involved for the long term.

Its really not a stable thing, he says, both in terms of fluctuating prices and the uncertain technological future of the cryptocurrency. That said, hes still making more money than in his previous government job. In a good month, Chenxing will pocket the cash value of around five bitcoin, which is close to 40,000 yuan, and which Chenxing prefers to have in cold, hard cash.

Chenxing is something of an anomaly in Chinese bitcoin circles, where the general mood is one of evangelical faith in the currencys potential, especially in an economy where the government often devalues the national currency.

Brendan Gibson, 32, is a United States national who has been in China for six years, trading bitcoin for three. Weve barely sat down to talk when Gibson takes my phone and downloads the BTC Wallet app onto it, before transferring me the seeds of my cryptocurrency fortune: 0.0027 bitcoin, worth 2.50, which is the amount that everyone in the world would have if the 21m bitcoin in existence were equally divided up between all 7.8 billion of us. He believes that everybodys aunt or grandma should be using bitcoin.

Brendan
Brendan Gibson: Im just kind of fed up with the system. Photograph: Naomi Goddard for the Guardian

For Gibson, bitcoin is a way of life. He hopes to be completely bank free in the near future. Hailing from the shady mortgage industry of corporate America, Gibson shares Chenxings distrustful attitude, but is more concerned about private banks than bitcoins technological vulnerability. Im just kind of fed up with the system, he tells me over coffee in a slick caf and co-working space from where Gibson does most of his work remotely.

I dont think economies should be built on inflated numbers, and I think its kind of ridiculous that everybody relies on this inflated number in their bank account when its definitely not there bitcoin and other cryptocurrencies are making it so that we are our own banks, and thats one less things we have to worry about. Gibson owns two companies in China, and as far as possible uses bitcoin for all his daily expenses, converting the personal profits he makes into bitcoin to avoid using banks.

One of the commonly cited weaknesses in the bitcoin system is that if you lose your private key to access your bitcoin wallet, the bitcoin within are lost forever. In 2015, it was estimated that up to 30% of all mined bitcoins had been lost, with a value of 625m. Unsurprisingly, plenty of people see this as an opportunity to make some money.

Sun Zeyu, 27, works at a tech start-up based near Beijings university district that specialises in bitcoin. His latest project is Coldlar, an offline, physical wallet that stores users bitcoin and can be accessed by scanning a QR code. Bitcoin security is a tough question, Sun tells me, which is why he and his colleagues designed a product that allows people to circumvent bitcoin platforms and have even greater control over their bitcoin. Now that the value [of bitcoin] is going up, he explains, people really realise the importance of security.

Before, when we just traded one or two coins, people didnt mind, [but] now the value of bitcoin is much bigger. Sun got involved with bitcoin while at university after attending a seminar run by Huobi, one of the biggest trading platforms in China. Like his flashier friend Yang, Sun wanted money, and lots of it. He wont tell me exactly how much he earns, but assures me that its hundreds or thousands times more than the 10,000 yuan per month he was earning when he first dabbled in bitcoin three years ago.

His money comes from both his trading activity and his company salary. With the growth of bitcoin and related products like his Coldlar wallet, Sun believes that in 10 years time, the value of the cryptocurrency will be one bitcoin, one house in Beijing. Minor shocks to the system, like the recent suspension of bitcoin withdrawals in China, are just like breathing, he insists, and the inhalations of profit dwarf any other bumps in the road.

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Sun Zeyu at work. Photograph: Naomi Goddard for the Guardian

Despite the solitary nature of their work, Yang, Sun, Gibson and Chenxing are all sociable creatures. Gibson is connected to hundreds of bitcoin aficionados in China, and has introduced close to 1,000 new people to the technology (although how many are like me, with 2.50 lying dormant in an unused wallet, is unknown), such is his enthusiasm for the cryptocurrency. Chenxing cites the social side of the bitcoin scene in Beijing as one of the main attractions of staying in the industry and the city.

I can meet some fun people who really love bitcoin I think most of the people who like bitcoin are people who like freedom he says. Yang, however, takes a slightly harder-edged approach. He has little patience for sceptics: Yes, bitcoin is a risk. Why should I have to discuss these things with [people concerned about the security]? I earn my money, thats enough. I dont waste my time explaining bitcoin [if] youre not my client. In some ways, Yang concedes, the less people understand bitcoin, the better it is for him. At the moment, the industry is like an ATM for him and his peers, and hes perfectly happy for things to stay that way.

In the fast-changing world of the crypto-currency, nothing seems to stay the same for long. Whether its unpredictable government interventions, or debates within the community about how the industry can and should be scaled, general growth in value thus fair doesnt necessarily suggest anything about the future of bitcoin, despite the faith of its adherents. Gibson makes the point that bitcoin has only been around for nine years; it took PayPal at least 10 to properly catch on.

In Japan it has recently been recognised as legal tender. Its unlikely that the same could ever happen in China, no matter how much its popularity continues to balloon. Chenxing, who has years of insider experience, is sure that [the government] will never accept a thing thats not built by themselves. Many bitcoin traders in China are in it for the long haul, confident that they can ride out any governmental interferences, as long as they have access to the internet. Chenxing, however, is more paranoid. His final thoughts on bitcoin are: I never feel secure.

Read more: www.theguardian.com

Ripple: cryptocurrency enjoys end-of-year surge – but will it endure?

Ripple, also known as XRP, peaks at more than $100bn and surpasses Ethereum to become second most valuable cryptocurrency after bitcoin

If 2017 was the year of bitcoin, the pioneering cryptocurrency that neared $20,000 in December, will 2018 be the year of Ripple?

The market value of Ripple, also known as XRP, rose more than 50% on Friday, to a record $85bn. Ripple continued to climb over the weekend, peaking at over $100bn, and now surpasses Ethereum ($72bn) as the second most valuable cryptocurrency after bitcoin ($237bn).

Friday’s sharp run-up puts the currency on track to have risen in value by more than 35,000% over the course of 2017. It began the year trading at around $0.006 and now sits at $2.25, according to coinmarketcap.com. Just three weeks ago, the currency was trading at 25¢.

According to Bloomberg, Ripple’s gains in 2017 have far outpaced the gains of Ethereum and bitcoin, which have gained roughly 9,000 and 1,400% year-to-date, respectively.

Ripple’s CEO, Brad Garlinghouse, said on Twitter on Sunday: “Proud to be ending 2017 with incredible momentum on a number of fronts! A huge, heartfelt thank you to the amazing @Ripple team, our great partners and an incredibly supportive $XRP community.”

The gains come as Ripple has made steps to establish itself as a coherent currency used by institutions. Established in 2012 and designed for interbank payments and settlements, Ripple has articulated a vision to ease the intense volatility experienced by other cryptocurrencies by establishing the structured sale and use of its currency.

The company has more than 100 banks signed on to its platform, RippleNet, and was recently accepted for testing by a consortium of Japanese banks. Global banks including Bank of America, RBC and UBS are also customers.

The company initially created 99bn XRP, and has released around 38bn. In May, Garlinghouse announced the company would place 55bn of its XRP into escrow and will unleash up to 1bn into the market each month.

Garlinghouse, formerly a senior executive at Yahoo and AOL, and CEO of the file transfer site Hightail (formerly YouSendIt), told the Wall Street Journal that the recent gains are a reflection of confidence in the coin’s development.

“We have real customers, really in production using this,” Garlinghouse, 46, said, “not science experiments. Science experiments are not a business model.”

Read more: www.theguardian.com

Man buys $27 of bitcoin, forgets about them, finds they’re now worth $886k

Bought in 2009, currency's rise in value saw $27 turn into enough to buy an apartment in a wealthy area of Oslo. By Samuel Gibbs

The meteoric rise in bitcoin has meant that within the space of four years, one Norwegian mans $27 investment turned into a forgotten $886,000 windfall.

Kristoffer Koch invested 150 kroner ($26.60) in 5,000 bitcoins in 2009, after discovering them during the course of writing a thesis on encryption. He promptly forgot about them until widespread media coverage of the anonymous, decentralised, peer-to-peer digital currency in April 2013 jogged his memory.

Bitcoins are stored in encrypted wallets secured with a private key, something Koch had forgotten. After eventually working out what the password could be, Koch got a pleasant surprise: 

“It said I had 5,000 bitcoins in there. Measuring that in today’s rates it’s about NOK5m ($886,000),” Koch told NRK.

Silk Road fluctuations

In April 2013, the value of bitcoin peaked at $266 before crashing to a low of $50 soon after. Since then, bitcoin has seen large fluctuations in its value, most recently following the seizure of online drugs marketplace Silk Road, plummeting before jumping $30 in one day to a high of $197 in October.

Koch exchanged one fifth of his 5,000 bitcoins, generating enough kroner to buy an apartment in Toyen, one of the Norwegian capitals wealthier areas.

Two ways to acquire bitcoins

Customers line-up to use the world’s first ever permanent bitcoin ATM at a coffee shop in Vancouver, British Columbia. Photograph: Andy Clark/Reuters

Typically bitcoins are bought using traditional currency from a bitcoin “exchanger”, although due to strict anti-money laundering controls, the process can can be tricky. A user can then withdraw those bitcoins by sending them back to an exchanger like Mt Gox, the best known bitcoin exchange, in return for cash.

However, bitcoin is gaining more and more traction within the physical world too. It is now possible to actually spend bitcoins without exchanging them for traditional currency first in a few British pubs, including the Pembury Tavern in Hackney, London, for instance. On 29 October, the world’s first bitcoin ATM also went online in Vancouver, Canada, which scans a user’s palm before letting them buy or sell bitcoins for cash. 

A small group of hardcore users also generate extra bitcoins by “mining” for them a process that requires computers to perform the calculations needed to make the digital currency work, in exchange for a share of the built-in inflation.

Mining is a time-consuming and expensive endeavour due to the way the currency is designed. Each subsequent bitcoin mined is more complex than the previous one, requiring more computational time and therefore investment through the electricity and computer hardware required.

In August, Germany recognised bitcoin as a “unit of account“, allowing the country to tax users or creators of the digital currency

Read more: www.theguardian.com

Blockchain: the answer to life, the universe and everything?

Bitcoin hasnt lived up to the salvation rhetoric, but the digital engine behind the currency may be about to change the world

Have you heard the good news? The blockchain is here and its going to save everything.

If you arent tied to the tech community, you might not have picked up on this salvation rhetoric. But you probably have heard of bitcoin, which burst into the public consciousness before imploding dramatically in 2014.

But now, bitcoin is starting to look less important than the engine that drives it the blockchain. It was created to solve a problem that had been puzzling digital activists for decades: how to create digital property without a central authority keeping track of who owns what.

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Australian Craig Wright claims he is bitcoin founder Satoshi Nakamoto

The 45-year-old IT and security consultant has reportedly provided evidence to the BBC supporting his claim that he is the inventor of the cryptocurrency

Australian entrepreneur Craig Wright has identified himself as Satoshi Nakamato, the pseudonymous creator of the digital currency bitcoin.

Wright, who was named as the cryptocurrencys founder by two separate media investigations in December, made the admission in a blog post on Monday, providing what he says is technical proof of his claim.

He also provided evidence to the BBC, reportedly including the use of cryptographic keys linked to the same blocks of bitcoin Nakamoto sent another developer, Hal Finney, in the currencys first transaction in 2009.

His claim was backed up by Jon Matonis, one of the founding directors of the Bitcoin Foundation, who said he had the opportunity to review the relevant data along three distinct lines: cryptographic, social, and technical.

It is my firm belief that Craig Wright satisfies all three categories, he said.

Wright, 45, is an Australian IT and security consultant, who described himself on a now-deleted LinkedIn page as a senior management executive information security specialist.

Until recently he was the director of more than a dozen companies, some involved in cryptocurrency, until he divested himself of 12 of them in the space of a week in July 2015.

Wired and Gizmodo published investigations in December claiming to reveal Wrights identity based on leaked transcripts, emails and financial records. Wright declined to comment on the stories, which were the subject of scepticism among some of his contemporaries.

The same day his north Sydney home was raided by Australian federal police in connection with a tax investigation, unrelated to bitcoin.

Wright said on Monday he was unmasking himself because I care so passionately about my work, and also to dispel any negative myths and fears about bitcoin.

I cannot allow the misinformation that has been spread to impact the future of bitcoin and the blockchain, he said in a statement.

Cryptocurrencies, among which bitcoin is the dominant version, allow consumers to make electronic transactions without commercial banks as intermediaries, and outside the reach of central banks.

There are around 15.5m bitcoins currently in circulation, including the million or so reportedly owned by Nakamoto, giving the founder or founders a net worth of around US$450m, at the current price.

One bitcoin is currently worth around 306 (US$449).

Nakamatos identity has been the subject of fierce speculation since he outlined the ideas behind bitcoin in an academic white paper in October 2008.

The software behind the system was launched the following year, Nakamoto continuing to develop it, with others, until he abruptly stepped back in April 2011, saying he had moved on to other things.

Media organisations including the New Yorker and Newsweek have unsuccessfully tried to reveal Nakamotos identity in past years.

Wright on Monday said the pseudonym was an homage to Tominaga Nakamoto, a 17th century Japanese philosopher, merchant and advocate of free trade.

He wrote on his blog: Satoshi is dead. But this is only the beginning.

After the December stories, Wright reportedly approached the author Andrew OHagan, to whom he also provided evidence of his involvement in bitcoin for an upcoming piece in the London Review of Books.

The Economist, to which Wright also gave evidence, said it had concluded the Australian could well be Mr Nakamoto, but that nagging questions remain.

David Glance, an associate professor of computer science at the University of Western Australia, who has worked with Wright in the past, told the Guardian he remained highly sceptical.

I would wait until weve actually seen absolutely proof that its the case, he said.

Read more: www.theguardian.com

Teenage bitcoin millionaire is back with a better Botangle

Erik Finman gained notoriety and a certainfameas a 14-year-old entrepreneur and bitcoin investor whod managed to turn a $1,000 investment in the cryptocurrency into more than a million dollars and a chance to never see the inside of a college institution.

Hailing from the small town of Post Falls, Idaho, Finman, the son of two Stanford-educated engineers whose small business sells big technology to the Defense Department, was a kid who never took to public education.

Unlike his brothers, Ross and Scott, the youngest Finman didnt respond to his parents curriculum of home-schooling and entrepreneurship and decided that a public education would be his way out into the wider world beyond the outskirts of a Coeur dAlene exurb (if Coeur dAlene can have an exurb).

Unfortunately, the public school system proved to be equally as ineffective as home-schooling for the young Finman, and at the tender age of 15 he had already turned on to bitcoin, tuned in to its wealth-creating allure and essentially dropped out.

He began making the tech-media speaking circuit discussing his rise to fame (and some fortune) through his bitcoin investments and his startup ideas.

Botangle, the first startup Finman launched, had as many as 20 developers around the world working on it, and is what provided his entre into the semi-rarified world of hucksters, hipsters, self-promoters, writers, entrepreneurs, inventors and the internet-famous that comprise the TED-talk-circus-circuit.

The company was born from Finmans early (and only) experiences in schooling, where he was unmotivated, uninspired and underwhelmed by his teachers.

His solution was to create a search service for students like him, who were looking for inspiration and werent finding it in their own schools. Indeed, one of Finmans early teachers told him he would end up working at McDonalds.

(According to a profile in New York Magazine, that same teacher got an email with a Look at me now, bitch! header from Finman after his bitcoin-based success.)

Botangle was acquired by another bitcoin millionaire from Finmans hometown one whose concerns over a government crackdown on the currency has led the individual to keep his identity off the record.

Now, several years after its sale, Finman is buying back his original startup. In the intervening years, Finman has set up shop in Los Angeles, bought a Lamborghini (as one does in Los Angeles) and is casting about for his next big thing.

In the meantime, hes returning to the educational mission that gave his early (earlier?) entrepreneurial years purpose education.

The idea is that an open-sourced Botangle can let anyone create an online school for their own interests.

My real life goal is to fix the education system, Finman writes. And the reason I created Botangle was because of my own personal negative experiences.

For Finman, it wasnt his aptitude, it was the environment. I wasnt doing very well academically, honestly, so I went to a summer program to prep for the next year. There, I had one teacher who helped me to love hardcore physics I realized that when I had the right teacher, I could not just love learning but be extremely competent in a particular subject.

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Bitcoin price soars above $5,000 to record high

Rising price of the cryptocurrency, now worth four times as much as an ounce of gold, has led to warnings of a bubble

The price of bitcoin has smashed through $5,000 to an all-time high.

The cryptocurrency rose by more than 8% to $5,243 having started the year at $966. Bitcoin has soared by more than 750% in the past year and is worth four times as much as an ounce of gold.

But the price has been volatile. The digital currency plunged below $3,000 in mid-September after the Chinese authorities announced a crackdown. Beijing ordered cryptocurrency exchanges to stop trading and block new registrations, due to fears that increasing numbers of consumers piling into the bitcoin market could prompt wider financial problems.

Price of bitcoin

Jordan Hiscott, the chief trader at Ayondo Markets, said: “The returns are truly remarkable, especially given the recent ban on bitcoin trading in China, where demand had previously accounted for at least 10% of all global volumes.”

Vladimir Putin, the Russian president, called this week for regulation of cryptocurrencies, saying their use “bears serious risks” such as money laundering, tax evasion and funding for terrorism. But he also warned against imposing “too many barriers,” which appears to have given bitcoin a boost.

Despite warnings over a bubble, bitcoin is gaining in acceptance. Last month, a London property developer, The Collective, said it would allow its tenants to pay their deposits in bitcoin and accept rent payments in the cryptocurrency by the end of the year.

Two weeks ago, Japan’s government implemented rules that recognise bitcoin as a payment method. Celebrities have also got involved, with the boxer Floyd Mayweather, the socialite Paris Hilton and the actor Jamie Foxx promoting coin offerings.

Using bitcoin allows people to bypass banks and traditional payment processes to pay for goods and services directly. Banks and other financial institutions have been concerned about bitcoin’s associations with money laundering and online crime because transactions take place anonymously.

The soaring value of bitcoin and other cryptocurrencies comes despite growing warnings over a price bubble.

The starkest warning came from the JP Morgan chief executive, Jamie Dimon, who said bitcoin was a fraud that would ultimately blow up. Speaking last month, he said there was a limited market for the digital currency, arguing that it was only fit for use by drug dealers, murderers and people living in countries such as North Korea. He pledged to sack any JP Morgan trader investing in Bitcoin, but also admitted he had not been able to dissuade his daughter from investing.

Dimon declined to comment on the surge in bitcoin during an earnings call on Thursday. “I’m not going to talk about bitcoin any more,” he said.

Kenneth Rogoff, a professor of economics and public policy at Harvard University and a former IMF chief economist, has predicted that the technology behind cryptocurrencies will thrive, but the price of bitcoin will collapse.

“It is folly to think that bitcoin will ever be allowed to supplant central bank-issued money,” he wrote in the Guardian this week.

“It is one thing for governments to allow small anonymous transactions with virtual currencies; indeed, this would be desirable. But it is an entirely different matter for governments to allow large-scale anonymous payments, which would make it extremely difficult to collect taxes or counter criminal activity.”

Daniel Murray, global head of research at EFG Asset Management, noted that in 2013, bitcoin soared twelvefold in just four months but within a month had lost a third of its value and four months after its peak had lost 60% of its value.

“Investors buy [an] asset because they are seduced by the prospect of further rapid gains without necessarily thinking about intrinsic value,” he said. He noted that historically currencies were backed by precious metals, and these days most currencies were based on macroeconomic fundamentals such as inflation, interest rates and growth, and were backed by a central bank and government. None of this applied to bitcoin, although the supply is carefully controlled.

“It is hard to argue that bitcoin does anything better than existing currency arrangements whilst it does some things to a lower standard,” Murray added. “Individuals are already able to transact electronically using a plastic card.”

Read more: www.theguardian.com

Don’t dismiss bankers’ predictions of a bitcoin bubble – they should know

The virtual currencys success reflects the continuing lack of trust in traditional banking following the credit crunch

When the boss of Wall Street’s biggest bank calls a bubble, the world inevitably sits up and listens, albeit with a sense of historically weighted irony: of course an investment bank boss would spot disaster after his industry presided over the last one. Jamie Dimon, the chief executive of JP Morgan, said last week that the ascendancy of the virtual currency bitcoin – which has risen in price from just over $2 in 2011 to more than $4,000 at points this year – reminded him of tulip fever in 17th-century Holland. “It is worse than tulip bulbs,” he said. “It could be at $20,000 before this happens, but it will eventually blow up. I am just shocked that anyone can’t see it for what it is.”

Dimon’s comments are an open invitation for derision from those who, rightly, point out that although JP Morgan may be top of the Wall Street heap, that heap is far from being the moral high ground. Under Dimon’s leadership, it has agreed a $13bn settlement with US regulators over selling dodgy mortgage securities – the instruments behind the credit crunch – and its run-ins with watchdogs include a $264m fine last year for hiring the children of Chinese officials in order to win lucrative business in return.

But it doesn’t make him wrong. Even the most basic description of bitcoin – an intellectual test on a par with describing a collateralised debt obligation – elicits mental images of a digital back-alley shell game. A bitcoin is a cryptographic solution to a complex equation. It is not as recognisable to you or me as a unit of value as, say, a dollar bill or a prize conker. There is no central authority validating the creation of bitcoins – instead, they are recorded on a public electronic ledger called a blockchain. If you regard the Bank of England as an all-powerful insurer for the pound, there is no such institution behind bitcoin.

This lack of a central authority is one of the reasons why Dimon cavilled in such strong terms last week. In the interstices of unregulated finance lurk ne’er-do-wells.

“If you were a drug dealer, a murderer, stuff like that, you are better off doing it in bitcoin than US dollars,” he said. “So there may be a market for that, but it would be a limited market.”

Hyperbole aside – murderers don’t necessarily need a digital wallet to fulfil their ambitions – Dimon is referencing a well-trailed link between bitcoin and narcotics. The currency is also vulnerable to hackers. Without a backstop central bank, heist victims stand to lose everything, as with the collapse of the MtGox bitcoin exchange in 2014. Taking out a mortgage denominated in bitcoins is not advisable and, luckily for those stupid enough to try it, you won’t find a high street bank willing to underwrite it.

But some of the perceived flaws behind bitcoin that alarm Dimon – no central authority, a public ledger of transactions – point to the foundations of a new financial establishment. In his jargon-busting lexicon of finance How to Speak Money, the author John Lanchester described how the high priests of ancient Egypt controlled agriculture – and by extension the economy – through a closely guarded flood measurement system known as a nilometer that was hidden behind a load of mumbo jumbo. Dimon, a modern high priest, faces a rival value system in bitcoin. It has no temple, no central authority and uses a rubric over which he has no control. In other words, it is an alternative financial establishment, whose popularity is inextricably linked with the ebbing of trust in the global system that was triggered by the credit crunch.

If bitcoin fails, or is discredited, another system will rise to take its place, without the imprimatur of Dimon or his peers around the altar.

First-time buyers beware: this rate rise could just be the start

House owners, and would-be house owners, beware. Change is coming. The majority on the Bank of England’s monetary policy committee against raising interest rates seems huge, confirmed at 7-2 last week. But the language is tightening around the nation’s finances.

Spare capacity in the economy – unfilled jobs and unspent money – is being whittled away more quickly than previously thought and inflation is still likely to overshoot its 2% target over the next three years. Yes, wage growth is running below an inflation rate that has now hit 2.9%, but all signs now point to that 7-2 split flipping the other way come November.

As the Bank said, “some withdrawal of monetary stimulus is likely to be appropriate over the coming months”. This was firmed up the following day by Gertjan Vlieghe, previously the most anti-rise MPC member, when he said the bank was “approaching the moment” for an increase.

Market punters now think there is a 42% chance of a rise in November, and more than 50% in December. The current split on the MPC masks the weighing of trade-offs – between economic growth and inflation, post-referendum stability and curbing consumer debt – which is ever delicate and close to a tipping point.

A rate rise from 0.25% at present to 0.5% will be no disaster and would merely represent a return to the previous record low, which had lasted from 2009 to the EU vote. But what should sharpen borrowers’ minds is the thought of further increases – as hinted by Vlieghe. Inflation remains stubbornly high; something will have to be done to temper a consumer lending surge growing at 10% a year.

Households might cope with a move to 0.5%, but if a rate increase augurs a sustained move against cheap borrowing and persistent inflation, then a wider rethink of ambitions, from getting further up the housing ladder to buying a new car, will be needed. And for those not on the housing ladder, hopes of a step up could be extinguished altogether.

Disney hopes its Star Wars choice will use the force wisely

Disney’s choice of creative talent in recent years has been impeccable, having handed the Avengers franchise to Joss Whedon and employed Lin-Manuel Miranda to co-write the music for Moana. But its decisions over the Star Wars universe have unravelled of late.

The director of Rogue One, Gareth Edwards, was sidelined during reshoots, while the directing duo behind the new Han Solo film, Phil Lord and Christopher Miller, were fired altogether shortly before shooting finished. Most recently, Jurassic World helmer Colin Trevorrow was yanked off the final Star Wars instalment before filming began.

Last week, Disney announced it was handing the final film in the latest Star Wars trilogy to JJ Abrams, the creator of Lost and director of The Force Awakens, the film that launched this Jedi triptych. Abrams is a conservative choice, by Disney’s recent standards. But what the studio needs right now is a safe pair of hands on the lightsaber.

Read more: www.theguardian.com