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Boost VC has released new figures related to the success of its startup investments in the bitcoin and blockchain industry.

Bitcoin Press Release: Having reached a significant milestone of over 2.5 million wins, custom developed Bitcoin gaming platform CryptoGames is pleased to announce the launch of its new Wheel of Fortune Game. Having launched in May 2015, CryptoGames.io developed an entirely original online Bitcoin casino with 4 provably fair games, presented in outstanding design. In less than half a year, CryptoGames crossed over 5 million bets so far with more than 2.6 million wins to the tune of 970 bitcoins. Recently, the platform presented a brand new game, Wheel of Fortune, which is actually 3 games in one, differing by […]

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In part two of his conversation with innovator and musician, D.A. Wallach, George Howard discusses Spotify, blockchain technology, and how to build a more moral music industry.

Bitcoin price declined to the vicinity of its 1-hour 200MA, today, without making a direct challenge on it. Price revisits the 200MA periodically but, during September, has crisscrossed it several times. Combined with the choppy wave patterns evident in the chart we conclude that price is in a corrective phase and prefer to stay out of the market. This analysis is provided by xbt.social with a 3 hour delay. Read the full analysis here. Not a member? Join now and receive a $29 discount using the code CCN29. Bitcoin Price Analysis Time of analysis: 15h03 UTC Bitfinex 1-Hour Chart From […]

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This is a guest post by Jesus Rodriguez.

Bitcoin has become one of the most intriguing and revolutionary technologies created in the last few years. From a functional standpoint, the cryptocurrency has challenged the most fundamental principles of the world’s financial systems by providing a decentralized, secured and trusted model to process financial transactions. To enable its magic, Bitcoin relies on an architecture powered by a groundbreaking technology known as the blockchain.

While bitcoin has clearly become the most important implementation, it is just one of many practical applications that can be powered by the blockchain. From the conceptual standpoint, the blockchain provides a series of capabilities that can change some of the well-established architectures in the enterprise digital world.

How can the blockchain redefine enterprise?

The decentralized, autonomous, trusted and secured capabilities of the blockchain can redefine the foundational patterns of enterprise applications. While the principles of the blockchain are well-understood patterns in enterprise solutions, until now we have lacked practical implementations that validate its functionality at an enterprise scale. The blockchain opens a new set of opportunities to enterprise scenarios that weren’t possible before. However, in order for blockchain solutions to be embraced in enterprise, they will have to develop a series of key capabilities to get past traditional IT compliance and regulatory practices.

What’s needed to adopt the blockchain in enterprise?

Despite its unique value, the process of adopting blockchain solutions in enterprise is far from trivial. Like many other technology trends, blockchain solutions will have to develop a series of enterprise-ready capabilities to be adopted in mainstream business scenarios. Those enterprise-ready capabilities are called to address many requirements in areas such as management, operational readiness, or compliance, which are essential to adopt solutions on different industries. The following list includes some of the key capabilities required to adopt the blockchain in mainstream enterprise scenarios.

• Development Platform: The blockchain is a very complex architecture modeled in terms of transactional exchanges. To mitigate that complexity, we need programming frameworks and languages that allow average developers to build general-purpose applications against the blockchain.
• Monitoring Tools: To be adopted in enterprise settings, the blockchain community should produce solutions that can actively monitor the health of a blockchain network and recover from unexpected failures. These capabilities will allow organizations to monitor the runtime behavior of blockchain solutions.
• Private Cloud Deployments: Facilitating the deployment of the blockchain in private cloud topologies using mainstream enterprise infrastructures is a key element to facilitate the wide adoption of blockchain solutions in the enterprise. In that sense, the blockchain should work seamlessly with technologies such as Docker, VMWare vCloud, Open Stack among other mainstream enterprise infrastructure platforms.
• Standards: As organizations start adopting blockchain solutions, the need to have standards will become increasingly relevant. Standards will facilitate the interoperability between different blockchain platforms while also enabling important security and compliance requirements of enterprise solutions.
• Interoperability with Well-Established Enterprise Platforms: Like any other enterprise software trend, blockchain solutions will be required to integrate with established enterprise platforms like databases, line of business systems, etc. Enabling that interoperability will be essential to power the adoption of blockchain solutions in the enterprise.

10 Enterprise Scenarios that can be Redefined by the Blockchain

Decentralized IoT

The Internet of Things (IoT) is becoming one of the most important trends in modern enterprise software. While many IoT platforms are based on a centralized model in which a broker or hub control the interaction between devices, this model has proved to be impractical for many scenarios in which devices need to exchange data between themselves autonomously. That specific requirement has been the fundamental principle behind decentralized IoT platforms. Those decentralized models are fundamentally powered by a trusted ledger of exchanges between smart devices fundamental to power real-world IoT solutions.

The blockchain provides foundational capabilities of decentralized IoT platforms such as secured and trusted data exchange as well as record-keeping. In this type of IoT architecture, the blockchain will serve as the general ledger, keeping a trusted record of all the messages exchanged between smart devices in an IoT topology.

Keyless Signature

Public Key Infrastructure (PKI) has been one of the fundamental technologies powering data signatures. PKI models rely on a central authority to stamp and validate signatures on a data payload. While PKI models have been incredibly successful, the dependency on a central authority presents serious limitations for large-scale scenarios and is also vulnerable to attacks involving quantum computation.

The characteristics of the blockchain can help to overcome some of the limitations of PKI models with a keyless security infrastructure (KSI). A KSI model uses only hash-function cryptography, allowing verification to rely only on the security of hash functions and the availability of a public ledger commonly referred to as a blockchain.

Data Archiving

Archiving historical data in a secure and trusted manner has been a permanent challenge of enterprise IT. Companies like EMC have become one of the most iconic enterprise software companies in history by providing robust storage and archiving solutions. More recently, cloud platform vendors such as Amazon have provided alternative data archiving solutions. However, in both cases, data archiving solutions rely on a centralized storage model, which has well-known limitations in enterprise scenarios in areas such as security and privacy.

Decentralized and autonomous data archives models, such as the ones provided by the blockchain, can be an interesting alternative to centralized data storage solutions. This model will eliminate the dependency on a centralized authority and will allow distributed and trusted storage across nodes in a blockchain network. More importantly, using the blockchain as a data archive will allow any nodes to validate the authenticity of the archived data without relying on central hub.

Decentralized B2B Auditing

Business-to-business (B2B) exchange models are one of the foundations of modern commerce. In those scenarios, transaction tracking, auditing and reconciliation processes are essential capabilities of B2B processes. Traditional B2B platforms enable these capabilities by providing centralized transaction tracking models that will be used by the different B2B endpoints to log relevant events of a specific transaction. These centralized tracking models have proved to be impractical to address many of the typical challenges of B2B transaction tracking processes in areas such as auditing and reconciliation.

Leveraging the blockchain as a decentralized, secured and trusted transaction ledger could be a more effective model to address the challenges of B2B transaction tracking solutions. Using the blockchain, each party in a B2B process could autonomously track the events related to a B2B transaction without the need to rely on a centralized authority. Additionally, the security capabilities of the blockchain will facilitate the implementation of more sophisticated reconciliation and auditing processes.

Legal Proof of Existence or Proof of Possession

Validating the existence or the possession of signed documents is an incredibly relevant element of legal solutions. The challenge of traditional document validation models is that they relied on central authorities for storing and validating the documents, which presents some obvious security challenges, but also becomes more difficult as the documents become older.

The blockchain provides an alternative model to proof-of-existence and possession of legal documents. By leveraging the blockchain, a user can simply store the signature and timestamp associated with a document in the blockchain and validate it at any point using the native blockchain mechanisms.

Distributed File Storage

Cloud file storage solutions such as Box, Dropbox or One Drive are becoming regular citizens of modern enterprise environments. Despite its popularity, cloud file storage solutions typically face challenges in areas such as security, compliance and privacy in order to be adopted in enterprise environments. Those concerns are all rooted behind the fact that enterprises need to trust a third-party cloud system with their confidential documents.

Security Trade Settlement

Central Security Depositaries (CSDs) have been an essential element of modern equity and bond trading. In the U.S. equity market, following frequent bottlenecks during the late 1960s in the settlement of securities trades, CSDs smoothed the post-trade process for transferring share ownership by eliminating the exchange of paper certificates and recording transactions in central, computerized book-entry systems. The international CSDs Euroclear and Cedel (now Clearstream) played a similar role in the Eurobond market from the 1970s onward.

The centralized nature of CSDs is essential to successful bond and equity trades. However, the settlement process via CSDs is incredibly expensive and slow, averaging two or three days per trade settlement.

The blockchain offers an interesting alternative to traditional CSDs as a decentralized ledger that can keep records of transactions without relying on a central authority. The query capabilities of the blockchain will allow the settlement of trades in minutes or even seconds and at a fraction of the cost of the current CSD solutions.

Anti-Counterfeiting

Counterfeiting remains as one of the biggest challenges in modern commerce. Segments like luxury goods, pharmaceutical or electronics are constantly affected by counterfeiting. As a result, the demand for anti-counterfeiting remains one of the hottest topics in the digital commerce world. Unfortunately, most solutions in the market require a trust in the third-party authority, which introduces a logical friction between merchants and consumers.

The decentralized and security capabilities of the blockchain can enable an interesting alternative to traditional anti-counterfeiting platforms. In that sense, we can envision a model in which brands, merchants and marketplaces are part of a blockchain network with nodes storing information to validate the authenticity of specific products. In this model, brands don’t have to trust a central authority with their product authenticity information and can rely on the security and decentralized trust models of the blockchain.

eGoverment

Governments all over the world are investing deep resources to digitize many of their existing processes. Many of these processes deal with sensitive information that require sophisticated levels of traceability, privacy and security. Inevitably, the digital collaboration process relies on trust on centralized authorities.

The blockchain capabilities provide a robust option to enable the digital collaboration between government agencies and citizens. In this model, different government agencies can store records in blockchain nodes so that it can be accessed and verified by other government parties and citizens in a secure and trusted way.

P2P Commerce

Traditional ecommerce business models are based on the presence of a centralized entity that control activities such as order processing, inventory management, catalog access, etc. In order to buy and sell goods, ecommerce marketplaces need access to sensitive user information such as credit card information, user profile data etc. This information often becomes the target of cybersecurity attacks and many other security and regulatory challenges.

The architecture of the blockchain can enable the first effective peer-to-peer (P2P) ecommerce network in which buyers and sellers can interact directly without the need of a central authority. The absence of a central marketplace eliminates many of the restrictions of ecommerce models such as fees, regulated transactions, etc.

Summary

The blockchain represents one of the most important advancements in computer science of the last few years. The ability to enable decentralized, secure, trusted and highly scalable architectures opens the door to a new group of enterprise software solutions on a large number of industries. Blockchain-powered solutions have the opportunity to challenge some of the fundamental architecture principles of enterprise solutions in areas such as security, data storage, trust, etc. Similar to Bitcoin, we should expect to see spectacular platforms in the enterprise software space powered by the blockchain.

The post Beyond Bitcoin: How the Blockchain Can Power a New Generation of Enterprise Software appeared first on Bitcoin Magazine.

Over the past year, bitcoin startups in the Philippines and Australia have begun to target day-to-day expenses and remittances; markets that are in desperate need of instantaneous, secure and cost-effective payment systems.

Startups including Australia-based Living Room of Satoshi and Manila-based Rebit.ph, also known as the parent company of Bills Ninja, have been trying to educate the global population to use bitcoin in day-to-day expenses, such as paying utility bills and settling bank payments.

Paying Bills with Ease

Earlier this year, Rebit.ph acquired bitcoin bills payment platform Bills Ninja, to allow its users to settle rental, tuition, and electricity and credit card bills abroad. The service has been used by Filipino expats working in countries including Canada, UAE, Singapore, Hong Kong, Austrailia and Canada.

“Using Bitcoin, we've made it easier for Rebit users to send targeted remittances. A good number of remittances coming from overseas Filipino workers are intended for bills payments anyway. By enabling our users with this service, we've made it more convenient by eliminating that second step for them,” Rebit.ph CEO John Bailon told Bitcoin Magazine.

An official with Satoshi Citadel, the parent company and investor of Rebit.ph told Bitcoin Magazine that the Philippines-to-Canada, -Hong Kong and -Singapore remittance markets are huge, and that there are hundreds of thousands of Filipino employees working in these countries to support their families in their homeland.

Quite often, these expat workers pay utility bills such as water and electricity and credit card bills directly from these countries, using the Rebit.ph platform or the Coins.ph platform, which is currently ranked among the top 300 most popular websites in the Philippines.

Coins.ph, a competitor of Rebit.ph has seen a huge success through its partnerships with local banks, remittance outlets and financial institutions. The platform enables users to pay utility bills and cash out bitcoin at any of its supported outlets, including thousands of ATMs from the nationwide Security Bank and remittance outlets from Lhuiller and Palawan Pawn Shop.

However, Bailon told Bitcoin Magazine that its platform is different from services such as Coins.ph, because of its over-the-counter transactions for remittances and bills payments.

“Coins.ph allows people to load funds into and draw from their mobile money wallet, while Rebit is closer to the current user experience of an electronic over-the-counter transactions for remittances and bills payments,” Bailon explained.

Currently, many local residents and employees prefer to pay bills at local establishments and institutions. However, the Rebit.ph team says that the local residents are starting to recognize the advantages of bitcoin and bitcoin bills payment systems.

“There needs to be a paradigm shift in consumer behavior when it comes to electronic bills payments. Most Filipinos still pay their bills in-person at establishments even though they actually have access to more convenient methods. We're getting there, and when more and more people start to realize the convenience of electronic bills payments, Rebit is here to allow them to do it over the blockchain,” said Bailon.

Living Room of Satoshi

Living Room of Satoshi, Australia-based bills payment platform allows anyone to pay any Australian bill using bitcoin. The platform has been providing bitcoin bills payment service in all sectors, including shopping, entertainment, banking, Internet, electricity/gas, rent, tax, insurance and water.

The platform has been welcomed and used by Australian residents across the country. In a recent interview with Bitcoin Magazine, Australian farm Buda Foods founder and CEO Mark Burgunder said:

“We currently have a great service available here called Living Room of Satoshi that allows us to make bill payments and electronic transfers to almost any bank account in Australia using bitcoins. We've been using this service on a number of occasions already with the largest purchases so far having been for chicken feed and for mobile electric fencing.”

Many bitcoin enthusiasts and startups in the Philippines and Australia believe that the key to mainstream success for bitcoin is to educate the general population about its advantages, and encourage people to use bitcoin for day-to-day expenses.

Photo www.tOrange.us

The post Bitcoin Used to Pay Utility and Credit Card Bills in the Philippines and Australia appeared first on Bitcoin Magazine.

This is a guest post by Michael Folkson.

The Internet was originally developed as a network for information exchange. Now, a multitude of entrepreneurs and software developers are building the Internet for value exchange. The next logical progression is to build the Internet for risk exchange.

Just as units of currency can be transferred to a third party, insurance contracts transfer risk exposures to a third party. Blockchain technology has the potential to radically transform how the insurance industry operates and how risk exposures are shared and distributed.

While Bitcoin offers a protocol for peer-to-peer value transmission bypassing the traditional banking system, an insurance industry leveraging a public blockchain presents an opportunity for individuals and entities to retain, share or transfer risk exposures without the requirement for risk exposures to sit on an insurance company’s balance sheet.

Science fiction frequently offers inspiration for what an industry could look like in the future. The short speculative fiction titled "Know When to Hold ’Em" by K.G. Jewell is a somewhat dystopian vision of futuristic insurance, but it does explain how the user interface of a peer-to-peer insurance market could operate.

In the story, the lead character, Jonas, acts as an insurer on the platform MicroRisk. Among the microrisks he chooses to provide insurance coverage for are vacation sickness, exam results, fashion (two individuals wearing the same outfit at an event) and being stood up on a first date. He is required to post collateral into his MicroRisk account before insuring a risk and is able to audit claims before paying out on them. The policyholder’s premium and the insurer’s collateral are frozen in escrow until the contract closed.

Some of these risks may be difficult to price due to limited data and increased moral hazard. However, the story does stir the imagination when envisaging what personal risks could be insured if the requirement to go through a conventional insurance company was lifted.

The transfer and distribution of risk dates back to at least to the second millennium B.C. In approximately 1750 B.C. Mediterranean sailing merchants paid their lender an additional sum to agree to terminate their liability conditional on the shipment being stolen or lost at sea.

There are a number of participants in today’s insurance industry. Brokers act as intermediaries to connect insurance buyers and sellers. Underwriters determine the premiums that should be charged in conjunction with the actuaries who also estimate the reserves required to meet future claims on an ongoing basis. Claims adjusters verify the legitimacy of insurance claims and assess the size of the payout.

There are many parallels between the banking and insurance industries with both sectors rewarded for accepting risk exposures. Rather than lending out funds and (hopefully) receiving them back at a future point in time, insurance companies receive funds in advance and return them contingent on future events.

The peer-to-peer lending model has thrived in recent years with companies such as Lending Club, Prosper and Zopa facilitating more than $1 billion of loans between individuals.

Its success is at least partly explained by re-establishing a direct link between investors and specific credit risk exposures at a time of economic uncertainty, sovereign debt crises and complex too-big-to-fail banking institutions. These direct credit risk exposures allow an investor to diversify her overall portfolio, and there are minimal infrastructure costs in comparison to traditional retail banks.

Similarly, a peer-to-peer insurance platform re-establishes a direct link between investors and specific insurance risk exposures. Today’s insurance companies are so large, complex and heavily regulated that the direct link between an investor and specific insurance risks has eroded. If an investor wants exposure to insurance risk to diversify her portfolio, she has little option but to invest in the shares of an insurance group and be exposed to multiple insurance risks in addition to asset risks such as sovereign bonds.

It is extremely difficult to match an investor’s risk appetite with specific insurance risks such as personal or commercial, home, car, health or travel. Moreover, it is impossible for an investor to opt out of specific risk exposures. The only insurance risks investors can get direct exposure to are credit and catastrophe risk through the issue of catastrophe bonds.

The peer-to-peer insurance model offers investors an opportunity to generate higher investment returns, transparency with regards to risk exposures and the satisfaction of directly insuring individuals or businesses rather than investing in a faceless insurance company. It offers policyholders access to cheaper premiums, faster claim payments and insurance coverage that might not be available through traditional channels.

Satoshi Nakamoto’s primary achievement of preventing users spending the same bitcoin on multiple occasions ("double spending") without a reliance on a trusted third party is a historic feat. However, it is worth emphasizing the obvious that the protocol does not wholly eradicate reliance on trusted third parties for all financial contracts.

For example, escrow mechanisms that are easily built using the Bitcoin protocol may still require dispute resolution if there is a disagreement over whether the goods or services delivered are of sufficient quality.

Nevertheless an escrow transaction built on a Bitcoin-like blockchain could be a template for how future insurance contracts are constructed. The insurance buyer and the insurance seller could transfer the premium and the collateral respectively into a multi-signature (2-of-3) Bitcoin wallet. The third signatory to the wallet would be the arbiter. Funds would be released from the wallet conditional on two parties signing the transaction, preventing the buyer, seller or arbiter from fraudulently seizing the funds.

Just as the execution of a standard escrow contract will rely on an arbiter to resolve disputes between the buyer and the seller, the execution of an insurance contract relies on claims adjusters to verify that incoming claims are valid and if necessary estimate the monetary value of the claim.

This service will vary from reviewing evidence submitted by the claimant to physically inspecting the scene of the insured event depending on the magnitude of the claim. It is currently difficult to automate this function, and artificial intelligence is not yet advanced enough to rebuff all human attempts of fraudulent submissions.

Decentralized platforms heavily rely on the efficacy and dependability of reputation systems. The upside of bypassing centralized services such as eBay, Kickstarter or Uber is that no third party can charge excessive fees, impose restrictive policies, prohibit bitcoin payments or present a single point of failure in the storing of users’ personal data.

However, the downside is that no organization is responsible for maintaining the integrity of the system. Instead a mixture of user feedback, reputation scoring and financial incentives must be combined to construct robust reputation systems. The alternative is to build quasi-decentralized systems that may be an improvement on centralized systems but don’t accrue all the benefits of purely decentralized systems.

For example, the various activities of an insurance company could be unbundled so that some activities are automated while others are outsourced to external providers. It may be the case that quasi-decentralized systems will need to be built as an intermediate step or that optimal systems will never be purely decentralized. However, it makes sense to fully explore all the options and capabilities of this technology before falling back on how current systems already operate.

Although private blockchains (or ‘permissioned distributed ledger systems’) are useful for keeping databases in sync in a more trusted environment, they are an incremental innovation when compared to the potential of public blockchains. Just as Bitcoin opens the floodgates for peer-to-peer transactions and permissionless innovation, peer-to-peer insurance leveraging a smart contracts protocol could provide a platform for matching insurance buyers and insurance sellers for any risk they agree to exchange.

This marketplace would be a radical paradigm shift from today’s centralized and spatially anchored insurance industry. The blockchain provides the opportunity to build a more innovative, expansive and transparent industry that evolves to the needs and requirements of its users.

Photo Pictures of Money / Flickr (CC)

The post Building a Risk Market for the Digital Age Using Bitcoin appeared first on Bitcoin Magazine.

A future without money would mean a surveillance state where every transcation is tracked by banks and the state, apart from those using cryptocurrencies like Bitcoin

If you type “money” into a Google image search, you get pictures of metal coins and paper notes. People fixate upon this physical currency, but while we still use such transferable tokens for many small transactions, large ones are inevitably electronic. When Rolls-Royce acquires metal to produce jet engines, it doesn’t hand over a bundle of pound notes. It makes an electronic transfer from its bank account to the metal dealer’s account.

Increasingly, though, we use electronic transfer in small-scale transactions too. Rather than handing over physical tokens, you might tap a contactless payment terminal at the supermarket. This sends a message via an electronic communication system – the Visa or Mastercard system, for example – that instructs two banks to edit account databases that keep score of the buyer and seller’s money. The money “moves” owing to third-party payment intermediaries changing your records in their data-centre hard drives.

Why are so many financial institutions investing in block chain innovation labs? Will the block chain, with its promise of rapid, secure and inexpensive transactions, really make many existing financial institutions obsolete as some have claimed? Thomas F. Dapp and Alexander Karollus examined the block chain’s impact on traditional financial institutions in a "talking point" article for Deutsche Bank Research, which provides macroeconomic analysis for Deutsche Bank Group. The article is titled, “Blockchain – attack is probably the best form of defence.” The authors noted that the block chain, because it constitutes a decentralized ledger system which can manage transactions […]

The post How Disruptive Will the Block Chain Really Be For Financial Institutions? appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

London has become a booming colossus for financial and fintech startups, with many of the $1 billion "unicorns" in the sector now in the British capital.

There are other pockets of Europe where financial startups also seem to thrive.

Many of these companies are working at the intersection of tech and finance. Some are aiming to market a product to everyone, some just to businesses, and some to the biggest banks and financial institutions.

What's common among all the companies is that they're actively making their own markets, fulfilling demand where there previously might have been none - especially since the financial crisis in 2008. But they're all offering something new, exciting, and financially promising.

18. eToro: Making trading more transparent

Etoro aims to bring "social trading" to a mass audience, and the Cyprus and London-based firm already boasts 4.5 million users.

The trading covers everything from currencies and stocks, to bitcoin. 

Among other features, it offers a "copy trading" option that allows you to allocate a portion of your funds to certain traders, and then simply mimic what they're doing — effectively taking some of the pressure off a retail investor. 

The company has raised $72.9 million (£48.06) in 7 funding rounds.

17. Metro Bank: The flagship challenger bank

There may be a few eyebrows raised at the idea of a fairly large bank being an innovative startup. But in the context of UK banking, Metro Bank is one of the most interesting forces in years.

The bank was set up over five years ago, based on the US Commerce Bank model, and already has hundreds of thousands of accounts in London and south east England. They're aiming for a flotation eventually, and chief executive Craig Donaldson has talked about being a FTSE 100 company in just four years.

They're focused on a service-provision model, putting an extremely high premium on the ease of opening and accessing an account, opening hours and customer care. With UK confidence in banks extremely low, that's been a winning strategy for Metro Bank so far. 

16. iZettle: Has a head start on Square in Europe

iZettle is one of Square's major competitors outside of the US. The Sweden-based service, which launched in 2011, markets low-fee mobile payments technology.

While Square had a year's head start on iZettle, the difference in card payments in the US and Europe gave iZettle an "in" before Square launched in Europe: card payments in the EU are almost all done by chip-and-pin; the US has yet to adopt the tech.

The firm has received $178.5 million (£117.82 million)  in five funding rounds, and launched in the Netherlands late last year.

Bitfilm, the worldwide bitcoin and blockchain film festival, has released its call for entries today.

Shares in Glencore, the troubled mining company, are recovering today (up 10% to £0.88 at the time of writing). But even that recovery begs the question: Why is a mining giant that has $221 billion (£146 billion) in annual revenues, which was once big enough to attempt a takeover of Rio Tinto, trading like a penny stock?

One answer is that the current chatter about Glencore revolves around how much it might be like Lehman Brothers or even Long Term Capital Management. For the older generation — people over 30 — those are scary names. Both triggered wholescale financial collapses when their leveraged bets went wrong.

So, could Glencore really be on the verge of creating another systemic worldwide threat?

Now, before we get into this, let's just make it clear that the evidence for this theory is thin at best. We are not saying this is going to happen.

Glencore does not, right now, look like it is going to implode and take a huge chunk of the global economy with it. Rather, this is what people have been saying about Glencore over the last couple of days. There is a difference between what people say and the actual facts. Unfortunately for Glencore, what people say sometimes moves markets.

In its defense, the company — which has declined to talk on the record to Business Insider — points to its balance sheet, which has $10.5 billion (£6.91 billion) in available liquidity:

But that liquidity will not be much comfort to the citizens of Zambia, where Glencore just suspended its Mopani copper mines.

Glencore is the largest private employer in the country, and as GLEN.LN stock has tanked, it has dragged down the Zambia's currency, the kwacha, with it. The kwacha has declined 48% against the dollar this year, Bloomberg reports:

That's powerful stuff: When Glencore sneezes, entire third world countries catch colds. 

Now look at what happened to Glencore's credit default swaps (CDS) in the last couple of days. Glencore has a lot of debt, in the form of bonds, and those bonds come with CDS, which function as a type of insurance. Basically, Glencore pays a fee to insure its bonds against the prospect that it can't pay the bonds back.

The price of Glencore CDS went through the roof in the last couple of days, as this chart from Bloomberg on Monday shows:

Two weeks ago, Glencore CDS were trading at 286 basis points, the FT said. That implies that it would cost  $286,000 (£188,293) to insure $10 million (£6.6 million) of Glencore's debt. Then they went up, as counter-parties decided that Glencore CDS were becoming more risky and therefore the insurance ought to become correspondingly more expensive:

Martin Enlund at Nordea Bank notes:

Here's a blast from the past, an "old" rule of thumb from 2008. Whenever a CDS spread hits 400bp, someone is in big trouble… a 400bp spread is consistent with a one-in-four chance of a default within 5 years

So 550bps is bad news.

Indeed, now the price of insuring a $10 million (£6.6 million) bond would be an implied $550,000 (£362,065) — twice what it was hours before. But the "bad news" didn't stop there, as Bloomberg noted later: 

Five-year credit default swap spreads on the commodities giant's debt jumped from 550 basis points on Friday to 757 bps today, indicating investors are willing to pay more for protection against default.

And then it got worse still, as Reuters reported yesterday:

Glencore's euro curve is now inverted and its CDS is also under sustained stress, peaking at 964bp on Tuesday morning in five-year terms.

Finally, back to Bloomberg: "The jump in Glencore's CDS spreads means investors would now have to stump up 1.4 million euros in advance to insure 10 million euros worth of Glencore’s debt for five years, plus pay 500,000 euros annually."

As we explained previously, Glencore is heavily indebted but only marginally profitable. So the cost of insuring its debt is more sensitive for Glencore than other companies. And that has people worrying about the extent of Glencore's "leverage," meaning the amount of money the company has borrowed in order to make bets within its commodities trading arm.

A few days ago, Private Eye's City Slicker column (not online) made a long-winded, slightly sketchy argument that Glencore's trading desks were so leveraged that they resembled Long Term Capital Management (LTCM).

LTCM is the hedge fund that made a series of disastrous bets on interest rate swaps in the late 1990s that went belly up, triggering a systemic banking crisis that was only averted when 16 other banks bailed it out.

That sounds histrionic, but the fact that Glencore can apparently tank an entire country's currency (albeit a small one) all on its own doesn't help the optics.

And then there is the Lehman issue. Here's Frank Holmes on CNBC:

"Glencore is like Lehman Brothers, they have the most sophisticated trading desk when it comes to metals, coal, copper, iron ore. They're not just a company processing ore from the ground. If it was to unravel, that could have a global impact," Frank Holmes, CEO and chief investment officer at U.S. Global Investors, told CNBC on Tuesday.

Those debt fears weighed on Asia-Pacific commodity stocks on Tuesday, with Sydney-listed Rio Tinto and BHP Billiton tumbling 5 and 6 percent respectively within the first two hours of trade, while Singapore-listed Noble Group tanked 12 percent.

Glencore could be the name that drags the entire market down because it has an elevated leverage ratio in order to secure high returns, Holmes explained, adding that the firm also has many counterparty transactions, so there are concerns about a domino effect and the leverage of other parties.

Glencore flatly denied that comparison when contacted by CNBC.

But the "Lehman" word keeps cropping up. Legal & General Group CEO Nigel Wilson also made the comparison on Bloomberg TV, saying Glencore faced "a quasi-Lehman moment." Wilson is a shareholder in Glencore, too. That was the kind of chatter that prompted Glencore to put out an unusual statement this morning saying it was doing just fine:

Our business remains operationally and financially robust - we have positive cash flow, good liquidity and absolutely no solvency issues.

We are getting on and delivering a suite of measures to reduce our debt levels by up to US$10.2 billion.

Glencore has no debt covenants and continues to retain strong lines of credit and secure access to funding ‎ thanks to long term relationships we have with the banks.

Of course, these CDS numbers are just prices. They are not actual deals getting done. And as Glencore's stock recovers as investors decide that it's not going to implode, the price of its CDS is likely to go down again. Even better, as GLEN.LN goes up, the comparison between its debt and equity gets better, and Glencore can expect to benefit from that too. There will be something of a self-fulfilling, virtuous cycle aspect to that.

And hopefully those Lehman comparisons will go away.

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The head of innovation at ABN Amro has said the Dutch state-owned bank wants to stay away from bitcoin.

Bitcoin Press Release: As well as advice for beginners, Bitcoin.com has a news section a rapidly growing forum, buy bitcoins page and bitcoin wallets page where anyone can choose from all types of wallets or buy bitcoins from trusted exchanges. Built on the Ultimate Bitcoin domain name newly launched Bitcoin.com aims to become the most comprehensive Bitcoin portal in the world. Bitcoin’s first angel investor Roger Ver is pleased to announce Bitcoin.com; an innovative collaborative platform for both novice and veteran members of the Bitcoin community. To increase digital currency awareness, Bitcoin.com will be a platform for the community, by […]

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Three upstate New York politicos are racing to adopt Bitcoin and promote the digital currency as part of their campaigns.

The post New York Politicos Race to Support Bitcoin appeared first on CCN: Financial Bitcoin & Cryptocurrency News.

A corrupt FBI agent is planning to extort $71m from Silk Road mastermind Ross Ulbricht, according to new allegations.