Ethereum Miners Lease Boeing 747s to Ship AMD Processors; Share Price Goes Up

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July 28, 2017

Ethereum miners purchasing advanced micro devices (AMDs) are helping to push their share prices up with some miners leasing Boeing 747s to ship the devices out quickly for them to be plugged in to the network.

According to a report from Quartz, AMD shares rose by 11 percent on 25 July; however, over the last 12 months the firm’s stock is reported to be up by more than 152 percent. This makes it the fourth best performer on the S&P 500.

Lisa Su, AMD’s chief executive, said the company had seen an increase in the purchase of AMDs from digital currency miners.

While management wasn’t specific on how much, the [graphics processor unit] revenue upside was driven by cryptocurrency applications.

Leasing Boeing 747s

Ethereum, the second largest digital currency with a market cap value of $18.3 billion, has experienced an influx of interest from traders, in particular with the mammoth number of ICOs currently circulating. However, it’s value has seen a near 4 percent drop since yesterday when it had a market value of over $19 billion.

Despite this, though, many investors are keen to take advantage of ethereum’s gold rush. So much so that ethereum miners are leasing Boeing 747s to ship AMD and Nvidia processors so that they can receive them quickly.

Marco Streng, chief executive of Genesis Mining, a major ethereum miner, said:

Time is critical, very critical. For example, we are renting entire airplanes, Boeing 747s, to ship on time. Anything else, like shipping by sea, loses so much opportunity.

At present, the price of ether is floating under $200 at $195, according to CoinMarketCap.

Potential Profits Increase 40-Fold

Through the use of graphics processing units (GPUs) acquired from the likes of AMD or Nvidia, miners can make money. However, in order to mine a supply of ether each day the miners are required to pay for the labour and electricity to run them.

However, as Quartz points out the costs involved have remained stable while ether prices have climbed from $8 at the beginning of the year to over $400 in June, meaning miners potential profits have risen 40-fold.

Streng added:

Everyone began to realize this and wanted to get GPUS to get mining. The mining return has gone up by 40 but the hardware is still the same cost. This creates an incredible economic incentive for people to start mining.

Interestingly, it was recently reported that small-scale ethereum miners were selling their AMD and Nvidia GPUs. According to a report from Motherboard, sellers are claiming that mining is no longer profitable.

Overstock’s TØ Has Already Built a Platform for Trading Regulated ICOs

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July 28, 2017

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US retail giant Overstock.com has been waiting for the US Securities and Exchange Commission (SEC) to tell the world exactly when a crypto token is a security.

Since 2014, the company has been building a regulated, blockchain-powered stock exchange to sell tokenized, compliant securities, and it even sold the first SEC regulated crypto-securities last December.

It was a historic moment, but one that was perhaps just a bit ahead of its time. Since raising $1.9m in a sale of its own shares on the platform, not a peep has been heard on the potential for others to follow suit.

What the tØ founders had hoped would be the dawn of a new era of blockchain securities was cut short by a burgeoning new concept called an initial coin offering (ICO).

Instead of companies raising funds under the watchful gaze of the SEC, ICOs initially promised to cut out platform providers like tØ and regulators altogether. In short, a potential disruption was itself disrupted by an unforeseen technological leap.

TØ president Joseph Cammarata told CoinDesk:

“We were kind of annoyed when these ICOs started taking off. They weren’t getting approval, it was the Wild West. We thought long and hard about doing our own ICO … But we held off, going down the regulatory road.”

Then, earlier this week, tØ got the news it had been waiting for when the SEC finally published the results of a landmark report in which it clearly laid out its rationale for why some tokens are still securities.

Moreover, the report clarified that, once a token issued in an ICO has been deemed a security, only national securities exchanges like Nasdaq and some alternative trading systems (ATSs) are permitted to be involved in the trading.

It’s at this point in the report that Cammarata said tØ expects to find the opportunity it has been waiting for.

From the SEC report:

“Any entity or person engaging in the activities of an exchange … must register as a national securities exchange or operate pursuant to an exemption from such registration.”

A blockchain ATS

Unveiled at Nasdaq in August 2015, tØ is Overstock.com founder Patrick Byrne’s concerted effort to get even with Wall Street.

Long a detractor of a practice called “naked short selling” – where traders methodically bid down the price of stock by selling shares they haven’t first procured, Byrne set about using blockchain to cut out everyone who stood in the way of buyers and sellers.

But as a subsidiary of the publicly traded Overstock.com, which was itself the victim of an alleged naked short selling scheme, Byrne would have to beat the system from within.

Following on a series of acquisitions by Overstock, tØ had obtained a coveted ATS license along with a number of potentially valuable connections with national securities exchanges, sell-side management systems, and more.

So it was, that way back in December 2015, the same regulatory body that published its guidance earlier this week approved Byrne’s plan to issue legally compliant blockchain securities.

“We’re uniquely positioned in that we’re already approved for the ATS,” said Cammarata, who joined the company after his equity order routing company, SpeedRoute, was acquired by Overstock.

He continued:

“We’re also integrated in every single US equities exchange. So if they want to trade on a national exchange we’re already interconnected.”

Regulated ICOs

Since Overstock sold the first ever SEC-regulated blockchain shares, the idea of removing middlemen from within the existing financial paradigm has gained momentum, even if slowly.

In March 2017, Blockchain Capital announced its own compliant ICO built using the same JOBS Act exemptions mentioned in the SEC report, eventually raising $10 million of a $50 million fund selling its tokenized securities.

One possible explanation for the relatively few compliant blockchain capital raises is uncertainty about the legality of recording stock ownership on a distributed ledger, according to Andrea Tinianow, founder and director of the state-run Delaware Blockchain Initiative.

Using technology that tØ’s parent company invested in last week, made by New York-based Symbiont, Delaware has just signed into law a series of amendments that Tinianow has said will remove much of that uncertainly for firms incorporated in her state.

“We’ve got the regulatory framework for blockchain shares,” said Tinianow. “Now the SEC is coming in with federal guidance and it’s a natural fit.”

Multiple sources have confirmed there are “dozens” of ICOs in the works looking to run compliant projects, but that the time to market with such an investment is between six months and one year.

For companies looking to host such capital raises, Cammarata said tØ is ready with its own ICO technology, so long as they’re willing to put in the leg work.

“We are prepared to take them on today,” he said, concluding:

“If they’ve gone through the proper regulatory channels.”

Russia Considers Official Crypto Asset Platform As Court Bans Bitcoin Info

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July 28, 2017

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Russia’s National Settlement Depository (NSD) is considering building a platform for handling cryptocurrency assets to corner the nascent market.

As local news portal Kommersant reports, the NSD is currently researching proposals to formally interact with crypto tokens, a source confirming interest in the project.

“The NSD along with market players is considering options in this field in light of regulatory initiatives,” the organization’s press service told the publication.

“As per our assessments, the technology behind the securities market has the potential to incorporate crypto assets.”

The joint plans involve the creation of a platform “allowing the introduction of digital assets (following token holder certification) and settlements, as well as for storing private keys and carrying out identification of wallet owners,” Kommersant continues.

Waves is to play a central role in the process, cementing its status in Russia’s still sidelined Blockchain development sphere.

“From a technical perspective the project is not hard to realize,” CEO Sasha Ivanov commented. “Much more difficult is the conceptual, organizational aspect.”

A lack of efficient legal mechanisms for allowing digital assets to operate at state level is the major issue, he added.

The mood in Moscow nonetheless contrasts with news from Russia’s second city St. Petersburg yesterday, where a court issued a ban on distribution of material related to cryptocurrency.

Along with forbidding “spreading of information” about Bitcoin, the ruling blocked access to an alleged forty exchanges.

IOTA Plans for the Future, Announces Major Partnerships

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July 26, 2017

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By Anthony Mandelli

The IOTA Foundation has been making waves in the distributed ledger and IoT worlds, with its innovative approach to solving the scalability issues traditionally faced by blockchain-protocols.

The Tangle, IOTA’s direct acyclic graph-based distributed network, has demonstrated the power and flexibility founder David Sonstebo set out to deliver. As IOTA has grown along with interest in decentralised applications, and a parallel increase in the widespread desire for a commercial Internet of Things infrastructure, more organisations have come on board to further distributed ledger research utilising the Foundation’s platform.

Gaining Momentum

The addition of IOTA’s latest partners comes not long after the announcement of historic collaboration with healthcare providers in Norway and student-driven research groups at UCL and UC Berkeley. A pivotal moment in IOTA’s development, these partnerships allow for the continued researching of the potential of the Tangle to be applied to across a variety of industries and use-cases. “Getting academics and students involved is vital,” said Sonstebo in reference to IOTA’s latest team-ups.

The Imperial Imperative

Continuing the trend of academic alliances, the IOTA Foundation has entered into a partnership with the renowned Imperial College London’s Centre for Cryptocurrency Research and Engineering (IC3RE) as part of the ongoing research efforts in conjunction with Outlier Ventures. This partnership will tap some of the brightest minds studying cryptocurrencies and distributed ledger technologies to “conceptualise and build new proof of concepts on top of the IOTA protocol,” as per the recent press release.

Dr Catherine Mulligan, Co-Director of IC3RE, said:

The IOTA protocol is an extremely exciting new approach to distributed ledger technology that promises huge scalability and economic improvements over traditional blockchains.

Growing the Ecosystem

Along with academic research, the IOTA Foundation is actively developing the Tangle ecosystem in an effort to create an environment that’s functional, as well as attractive to enterprise and individual users.

To further this growth, the Foundation established the IOTA Ecosystem Fund, a fund dedicated to supporting the development of new proof of concepts and applications built for the Tangle. Looking to exponentially amplify the effect of the Ecosystem Fund, the IOTA Foundation has teamed up with F6S, the world’s premier platform for founders, startups, and accelerators which boasts a roster of over two million developers.

“We are naturally very excited about this partnership,” Sonstebo said in a blog post announcing the collaboration, “and look forward to the results of having a whole new passionate community merge with our own.”

Bitcoin Cash: Why It’s Forking the Blockchain And What That Means

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July 26, 2017

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bitcoin-bitcoin-cash-hard-fork — from QZ.com

By Alyssa Hertig

Bitcoin’s scaling debate finally seems to be shaking out, but some users aren’t happy with the results.

After a few years of debate, it was perhaps to be expected that at least some were going to come away empty-handed. Controversial scaling proposal Segwit2x tried to remedy this by joining two code change ideas – the code optimization Segregated Witness (SegWit) and a block size increase.

Today, SegWit is just a couple of steps away from activating on bitcoin, but some bitcoin users are unhappy about the outcome.

Others who originally backed the Segwit2x proposal appear to be losing confidence in an eventual block size increase and are now taking matters into their own hands by making their own version of bitcoin – and they’re doing so on a short timeline.

On August 1, at precisely 12:20 UTC, the group claims that they will split off from bitcoin, creating a new cryptocurrency called Bitcoin Cash.

Developer Calin Culianu, who’s contributing code to an implementation of Bitcoin Cash, is one user who doesn’t like SegWit, suspecting that others feel the same way.

Culianu told CoinDesk:

”If the Segwit2x agreement fails to implement the 2x part, which is not entirely unreasonable, and only ends up being being basically SegWit without the 2x, many miners will likely defect to Bitcoin Cash.”

What is Bitcoin Cash?

So, what is it? And how does it differ from bitcoin?

There are two main changes of note:

It increases the block size to 8 MB.
It removes SegWit, a code change that might activate on the bitcoin blockchain by the end of August.

Some, including a few of the project’s supporters, call Bitcoin Cash an “altcoin,” a term that usually denotes a fork of the software that creates a new cryptocurrency, with its own market.

Indeed, the cryptocurrency is currently trading at $461, meaning it’s worth about 18% of bitcoin’s current price of $2,568, in an already-open futures market.

Unlike other altcoins, though, Bitcoin Cash’s transaction history would be the same as bitcoin’s – at least up until the point of the split. So, if and when Bitcoin Cash splits off, users would have bitcoin on both blockchains.

Another difference is the project says it will support multiple implementations of its software, a move that’s not surprising given the criticism that Bitcoin Core’s software is too dominant on the bitcoin network.

BitcoinABC is the first software to implement the Bitcoin Cash protocol, but the goal is for there to be many implementations.

Culianu said that both Bitcoin Unlimited and Bitcoin Classic, other implementations that aim to increase bitcoin’s block size, are working on a version compatible with Bitcoin Cash.

These might or might not be ready for August 1.

Who’s involved?

So far, most bitcoin companies, mining pools, users and bitcoin developers seem uninterested in the effort. Yet, there are some eager supporters.

Beijing-based mining firm ViaBTC, which boasts roughly 4% of bitcoin’s computing power, is the clear ringleader.

The firm, which also operates an exchange, has become the first to list the cryptocurrency and also has plans to launch a new mining pool dedicated solely to Bitcoin Cash. (Though, so far, it’s not clear how much of its 4% mining hashrate it will commit to the effort.)

Asked if he believed Segwit2x would fulfill its roadmap, CEO Haipo Yang responded: “I doubt it.”

Further, Bitcoin Cash has attracted support from some users who want a block size increase, as well as developers of other proposals such as Bitcoin Classic and Bitcoin Unlimited.

What might be more surprising, though, is who’s not involved.

Even former supporters, including mining firms Bitcoin.com and Bitmain, seem hesitant to back the effort. For now, they remain committed to controversial scaling proposal Segwit2x.

Mining company Bitmain even inspired Bitcoin Cash. Yet, the firm said that they only planned on going through with making the switch under certain conditions. Still, the firm might support both Segwit2x and Bitcoin Cash in the future.

In a PSA statement, Bitcoin.com said that it will allow miners in its pool to choose if they want to mine the Bitcoin Cash token BCC.

For now, though, it will mine on Segwit2x chain, though it said it “will immediately shift all company resources to supporting Bitcoin Cash exclusively” if the block size increase part of SegWit, scheduled for roughly three months from now, falls through.

Wait, but why?

There are a few reasons users and mining pools might like to break off from bitcoin:

These users want an increase in bitcoin’s block size parameter, and believe that the cryptocurrency’s future depends on it.
SegWit is likely going to activate soon and some users want to avoid the feature.
There’s a possibility that Segwit2x’s block size parameter increase will ultimately fall through.

This mix of ideological and technical reasons was also on display in conversations with users.

When asked by CoinDesk what BitcoinABC’s goal is, Culianu responded:

“To save bitcoin. We want to scale bitcoin up so that it won’t die. It’s already a bit sick and dying.”

What’s different here?

Many other efforts over the last couple of years have said they would split off from bitcoin, if they gained enough support from those operating the computers that secure the network. But, to date, no group has actually carried through with this plan so far.

Bitcoin Cash might be unique in that it’s actually committing to a deadline to split bitcoin into two, and that deadline is less than a week away.

If miners and users indeed go ahead with the split, it would mark the first time a cryptocurrency split off from bitcoin, carrying with it bitcoin’s transaction history.

Like past efforts intended to replace the bitcoin used today with a new bitcoin, however, Bitcoin Cash has the same goal, but it seems willing to wait and see if users join the effort.

Rather than call it bitcoin, ViaBTC, as well as a group of bitcoin companies in China, signed an agreement to label it a “competitive currency,” not the “real” bitcoin.

The move could set up the split to happen more quickly, as in the past exchanges have expressed confusion over how to handle a fork.

What’s next?

If a new cryptocurrency splits off from the main bitcoin network, it will mark a first. So, some users are curious to see what happens.

Still, without much support from miners and users, it might not end up having that much of an impact on the course of the main network.

Nonetheless, it might if be worth watching if the second half of Segwit2x falls through. That’s when it might see some more supporters.

Culianu, for example, concluded on an optimistic note:

”My secret gut feeling is Bitcoin Cash may surprise all of us. It is not entirely impossible that it will be the de-facto bitcoin after a few months. The much roomier 8 MB block space is attractive.”

Greek Police Arrest Man Who Laundered $4 bln in Bitcoin Over 6 Years

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July 26, 2017

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By William Suberg

The largest Russian-language cryptocurrency exchange BTC-e was closed on “unscheduled technical work.”

The owners of BTC-e diligently kept anonymity. However, our source from qugla.com ICO marketing agency has revealed to Cointelegraph that Alexander Vinnik is one of the owners and administrators of the exchange.

Earlier today, Greek police have arrested Alexander Vinnik accused of heading a group which laundered $4 bln in Bitcoin over six years.

“There was practically no KYC on the exchange, and, as a result, the cash flows were unregulated,” the source explains.

“The reason why Vinnik has been caught only now is relatively simple – SEC is tightening the screws, and in November there will be a new law in the US regulating token sale.”

There is no reliable information, but in the opinion of our source, the funds are in the hands of the second administrator of BTC-e who is now actively negotiating with SEC and the Ministry of Justice.

“If within 48 hours the situation is not resolved in a positive way, with a high degree of probability you can forget about the money.”

BTC-e invested in a lot of cryptocurrency startups as well as exchanges.

Connection with MtGox

As the source confirms, Vinnik has a direct relationship to hacking MtGox. The hacked Bitcoins were not only laundered by BTC-e but also were on Vinnik’s personal wallet. The total amount is about 300 000 BTC. In the same manner, they laundered stolen BTC from other exchanges.

“He was singled out through WebMoney – there was a connection with his wm-exchanger service”, explains the source. “He caught the interest of the police in their investigation of MtGox”.

“Sasha is an outstanding person, the cleverest of people, according to those who know him. He could multiply three-digit numbers mentally. He is very calculating. He had no equal for reasoning. He was always one step ahead of competitors and authorities.”

“Simply under arrest”

The arrest warrant was originally issued by the US Ministry of Justice and relates to activities involving the use of Bitcoin stretching back to 2011.

“We can confirm a Russian citizen was arrested yesterday (July 25) on the orders of the US Ministry of Justice,” a source from the Russian general consulate in Thessaloniki told RBC. “His detention is not yet finalized and for now he is simply under arrest.”

A raid on the 38-year-old’s hotel room produced multiple computers, phones and credit cards, Mail.ru further reports.

Details of the scheme are yet to emerge, but it is by far not the first incident of Bitcoin-related transactions leading to arrests and international headlines from the US.

Operating money transfer businesses without a license has frequently formed the motivation for jail sentences in recent years as informal Bitcoin trading goes awry.

SEC: US Securities Laws ‘May Apply’ to Token Sales

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July 26, 2017

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By Stan Higgins

The US Securities and Exchange Commission said today that the offering and sale of digital tokens “are subject to the requirements of the federal securities law.”

The agency, in its statement, revealed that it had been investigating the issuance of tokens connected to The DAO, the ethereum-based funding vehicle that collapsed dramatically last summer following an exploit of a flaw in its code.

Per the SEC, those “DAO tokens” constitute securities, though the agency said that it was not going to pursue any charges in connection with the project, but is releasing its finding “to caution the industry and market participants.”

The agency said:

“…the Commission deems it appropriate and in the public interest to issue this Report in order to stress that the U.S. federal securities law may apply to various activities, including distributed ledger technology, depending on the particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular offer or sale.”

Stephanie Avakian, co-director of the SEC’s Enforcement Division, added in a statement:

“The innovative technology behind these virtual transactions does not exempt securities offerings and trading platforms from the regulatory framework designed to protect investors and the integrity of the markets.”

In tandem with the DAO report, the SEC published an investor bulletin about initial coin offerings, or ICOs. Among the items included was a warning about the risks of fraud for those who opt to participate.

“Investing in an ICO may limit your recovery in the event of fraud or theft. While you may have rights under the federal securities laws, your ability to recover may be significantly limited,” the bulletin read.

The move comes months after the SEC was formally petitioned to issue guidance on blockchain assets and ICOs, effectively ending a period of doubt as to what approach the SEC would take.

Read the full SEC report here.

Roger Ver: It Would Be a Good Thing If There Was a Coin Split, Supports Bitcoin Cash

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July 26, 2017

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Roger Ver, a self-described bitcoin evangelist and a supporter of Bitcoin Unlimited (BU), has said a coin split would be good as he announces support for Bitcoin Cash (BCC).

In the New York Times, he’s reported as saying:

I actually think it would be a good thing if there is a split.

The angel investor, who now lives in Japan after renouncing his U.S. citizenship, appeared to show his support for the Bitcoin Cash hard fork yesterday via Twitter. With lacking support behind Bitcoin Unlimited Ver suggested that projects such as Omni and Counterparty would choose Bitcoin Cash.

SegWit Makes Progress

Even though bitcoin miners are making progress on the digital currency’s scaling issues, not everyone’s happy.

Two possible solutions, but only one answer. The jury’s still out as to what will happen despite the fact that miners have signalled support for, locked in and activated BIP 91, the first significant step along the SegWit roadmap. This follows along to SegWit2x, considered a controversial scaling proposal, that aims to implement a block size increase later this year.

As of today, the lock in for SegWit is at 69.5 percent with 1,310 out of 2,016 blocks signalling support.

Despite the apparent support with SegWit2x a group of investors and entrepreneurs are preparing to take matters into their own hands, and they’re attempting to do this in a relatively short period of time.

As reported by CCN, proponents of BCC claim that the proposed hard fork is simply continuing on from the original version that Satoshi had for bitcoin; however, those against it state that it’s simply attempting to cash in on the bitcoin brand.

According to one individual, though, if SegWit2x doesn’t activate a lot of people will lose faith in bitcoin:

Not because I have any particular support for 2X or any particular problem for Segwit, but because it shows fickleness and underhand moves based on politics not sensible technical decisions.

Proponents Find the Answer in Bitcoin Cash

According to a Medium post by Jimmy Song, bitcoin developer and entrepreneur, the proposed fork is a surprise as ‘many people thought Bitcoin Cash (and its client Bitcoin ABC) was just a credible threat to prevent a contentious user-activated soft fork (UASF).’

However, those unconvinced by SegWit and its possible outcome are finding some solace in the possibility of Bitcoin Cash. Namely, that it increases the block size to 8 MB and removes SegWit, which is expected to activate by the end of August.

BCC is currently trading at $451, according to CoinMarketCap. Bitcoin prices have dropped below $2,500, in what is believed to be over investor hesitance stemming from the Bitcoin Cash hard fork.

Featured image from Shutterstock.

Aircraft Asset Management: An Untapped Market for Blockchain Technology

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July 25, 2017

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By Lester Coleman

Bas de Vos, director of IFS Labs, thinks blockchain technology has an untapped market in managing commercial aircraft assets, according to MRO-Network.com.

There are disparate systems for managing assets among manufacturers, operators, transporters and maintenance groups, he said. The lack of standardization results in limited traceability, and non-compliance costs are high, especially considering there are two million to three million parts on a commercial aircraft.

If participants in the aircraft parts supply chain submitted transaction transcripts onto a purpose-specific ledger that only authorized participants would have access to, managing the records would be considerably more efficient. The manufacturer could begin the blockchain for the asset, and each participant would add blocks of information to it.

How It Would Work

The distributor would notify the chain that an asset was transported from point A to point B, for instance, while the operator would register the number of flight hours the asset has undergone.

The digital transcripts could include a complete copy of the original transaction or parts of it, which the transaction owner decides to share among the chain’s participants.

The digital transcripts would include a work order, a maintenance order or a shipping movement. The digital copy would exist in each participant’s underlying business application, such as an enterprise asset management or a resource planning system.

Supply Chain Benefits

De Vos claims the blockchain could deliver a 100% verifiable, traceable history of asset life cycles in real-time. At the same time, each participant in the chain would retain the features and benefits of its own business applications to operate its business.

Benefits would include improved data quality, minimal manual data entry, a traceable record of serial numbers, more accurate maintenance histories, improved trust among participants and reduced costs.

Cooperation Needed

To apply blockchain technology to the aviation industry, technology providers will have to work with software providers, regulators, airlines, MROs and logistic partners, de Vos said. Technical performance also has to be considered, since the latency of transactions and computing power could undermine achieving consensus in a chain. Data privacy, ownership and security must also be addressed.

If these challenges can be addressed, de Vos said the technology would be adopted by organizations at a single point in time in a supply chain, or at multiple points in time if an organization has a vast asset structure and supply chain.

Aviation assets last several decades, so it makes sense to begin the traceability of existing assets at an agreed date when the relevant parties can support the distributed ledger. Participants would benefit from complete traceability if a distributed ledger were in place when an asset enters a supply chain.

De Vos envisions aviation parts blockchains to start as highly purpose-specific since the technology today faces serious scalability challenges. If an asset owner decides to move to the blockchain, it would make more sense to have everything on-chain since it would be easier to trace the audit trail.

American Express Brings Credit Card Buying to Bitcoin App Abra

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July 25, 2017

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By Michael del Castillo

Beginning today, a select group of Abra users and new customers will see the option to buy bitcoin with their American Express card.

The months-long integration process between the two companies involved Abra exposing the depths of its business processes to its partner and investor, and has resulted in an even closer relationship between the firms.

Still, Abra founder and CEO Bill Barhydt believes the end result of that effort could be a rapid acceleration of bitcoin adoption globally.

Barhydt told CoinDesk:

“Abra has to become effectively an American Express processor internally in order to do this, because we’re processing directly with American Express. There’s no third-party acquirer in the middle.”

This means users whose American Express purchase option is enabled today can now purchase up to $200 worth of bitcoin per day, and up to $1,000 of bitcoin per month for a 4 percent fee.

Designed to cover Abra’s own costs, Barhydt said the startup doesn’t expect to generate any revenue from the fees, but will rather earn its share from managing the exchange rates between US dollars and bitcoin.

All hands on deck

But it’s perhaps the scale of what was needed to make this feature a reality that is most notable.

In the weeks leading up to today’s launch, Abra employees, American Express staff and Abra investors have been testing the integration, Barhydt said. In spite of the tests though, the remaining Abra customers won’t receive permission to conduct American Express purchases until initial users safely complete purchases.

“There are some potentially unsavory folks in our universe,” said Barhydt. “And we want to make sure we’re servicing the people whose intentions are good, and not the other folks.”

Eligible cards include American Express US consumer cards, American Express-branded cards issued by third parties and American Express re-loadable prepaid cards, Bluebird and American Express Serve, which can be purchased at Walmart, CVS, Walgreens and more.

“Anybody who shops at Walmart can walk into a Walmart store anywhere in the country, buy a Bluebird card at check-out, put all the money they need to on that card, register that card, and once the card arrives at their home, they can immediately load those funds into their Abra app,” Barhydt said.

Obstacles to mass adoption

To pull off the months-long project, Barhydt said the two companies invested “significant” resources integrating on a technical level to ensure satisfactory security on both sides of the deal.

In particular, Barhydt said his firm was asked to reveal how it works with exchange partners, as well as its know-your-customer process.

After raising $14m venture capital from American Express Ventures and others, Abra now lets its customer store funds in both bitcoin and fiat currency with support from banks including Bank of America, Capital One, and Chase, along with credit unions from Charles Schwab, Fidelity, and Wells Fargo.

But Abra too had its own concerns about American Express’s KYC practices.

As result, the “instant issue” capability of some reloadable cards has been disabled. Instead of being able to add cash to a card and spend it immediately, customers will have to have to go through extra steps to connect their identity to the funds.

“You will have to register the card with American Express and wait for the fully registered card to arrive in the mail,” said Barhydt.

The bitcoin boost?

Still, Barhydt believes the work is worth it.

In interview, he cited American Express’s brand credibility as among the reasons the partnership is a boon for not only his company, but for bitcoin and cryptocurrencies generally. But there’s little doubt the potential benefits could go both ways.

As American Express competitors Visa and Mastercard each begin testing the waters with blockchain, the Abra partnership also signifies an industry-wide search for increased efficiency and speed that the technology could bring.

But while both parties potentially stand to gain from the partnership, neither is depending exclusively on the other.

In January, American Express joined blockchain consortium Hyperledger, which is exploring ways to capitalize on the technology without cryptocurrency at all. Further, Abra itself is excited about what the partnership could mean for blazing trails with other credit card companies, even even among it’s own bitcoin payments competitors.

“Having a traditional card network partner directly with a company directly in the cryptocurrency world is a huge win for the space, and it’s been a long time coming,” said Barhydt, who concluded:

“I’m quite confident it will lead to even bigger and better things for Abra and the entire space down the road.”

NPNewspaperPublication

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Leasing Boeing 747s

Potential Profits Increase 40-Fold

A blockchain ATS

Regulated ICOs

Gaining Momentum

The Imperial Imperative

Growing the Ecosystem

What is Bitcoin Cash?

Who’s involved?

Wait, but why?

What’s different here?

What’s next?

Connection with MtGox

“Simply under arrest”

SegWit Makes Progress

Proponents Find the Answer in Bitcoin Cash

How It Would Work

Supply Chain Benefits

Cooperation Needed

All hands on deck

Obstacles to mass adoption

The bitcoin boost?

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