As we near the end of 2014, the Bitcoin ecosystem keeps growing on all fronts (although it’s hard to tell that from the recent price of bitcoin), including (but not limited to) adoption by merchants and a tech giant like Microsoft, a host of secure hardware wallets options for consumers to explore, a bit more regulatory clarity regarding taxation & regulation from the State of New York, and ongoing experimental work by Bitcoin’s lead developers in anticipation of the global transaction traffic scaling up.
Corporate / Merchant
Lots of Bitcoin-accepting merchants are opting to save some or even all of the bitcoin they receive. BitPay, a Bitcoin Payment Processor, reported that over 40% of merchants opt to not cash out at least some of the bitcoin they receive, while over 10% do not cash out at all. Merchants holding on to bitcoin is a trend necessary for “closing the loop”: paying their employees (cough Bitwage) and eventually their suppliers with bitcoin.
The most notable merchant to begin accepting Bitcoin so far has been Microsoft. Microsoft is looking to not only accept bitcoin for retail transactions, but also to innovate with Bitcoin in the years ahead – in an attempt to win back market share from its tech competitors.
One of Bitcoin’s promise is to allow anyone to be their own bank, yet keeping your bitcoin both easily accessible (hot storage) and secure from hackers can be quite a battle. From a security standpoint, several hardware wallet solutions have shipped in 2014. The simplified hardware greatly reduces the number of ways your bitcoin can be stolen (vs when it’s stored on a desktop or laptop), with some hardware-wallet devices offering multi-sig. Of course, while these hardware wallets may be helping to solve security issues, we may have to wait for debit cards for accessibility.
Tax & Regulation
While the scope of the New York DFS BitLicense is still being debated, another New York government agency recently announced that buying bitcoin itself will not be subject to a sales tax. This is a small victory for Bitcoin, given the importance of New York State for setting precedent for other governments. Regulators in the EU and other jurisdictions are yet to say whether the sale of Bitcoin is subject to a sales tax (also known as VAT or GST) while Australia and to some extent Singapore are already taxing it.
Now let’s put on our computer science hats. Although Bitcoin in general is still nascent and subject to many growing pains, the Bitcoin developer community is working with cutting edge Computer Science research to help prepare the infrastructure to handle rapid growth and scaling up of the “back end” of the network. One such anticipated technical challenge is propagation and acceptance of newly-mined blocks with the most recent (still unconfirmed) transactions, while the growing transaction volume makes the blocks more and more bulky. The proposed solution is too technical to go into here, but it’s worth listening to in a LetsTalkBitcoin podcast interview of Gavin Andreesen, one of Bitcoin’s lead developers, and Andeas Antonopolus, one of Bitcoin’s most cautiously optimistic experts. In general, over the past decades Computer Science has been tackling problems previously thought intractable – by finding an approach that works smarter, not harder. Andreas’ takeaway from the interview is that although Bitcoin is still mostly in the Experimentation stage (which must precede any meaningful Standardization, let alone Optimization) the Bitcoin of 2014 is already “not your grandparent’s Bitcoin” – compared to the super-early days of 2009.
So What’s Happening Here at Bitwage? BP(i) Batch 2
We’re hard at work developing the easiest way for you to obtain and spend your Bitcoins. We have begun to slowly start accepting our next batch of users for our Bitcoin Payroll for the Individual solution. The round will be limited, so make sure to sign up early if you have not done so already. If you have already signed up and have not yet been on-boarded, please send us an email at firstname.lastname@example.org and we’re happy to get you up and running.
In other news, we will be speaking at the North American Bitcoin Conference in Miami (January 16-18). If you were ever looking for an excuse to take a weekend trip out to Miami, come out and meet the team, we would be happy to meet you.
Stay Classy Bitwagers,