Department of Homeland Security orders Dwolla to stop processing payments from Mt. Gox

Users on Reddit and the bitcointalk.org forums are reporting receiving emails from Dwolla stating that they are no longer allowed to process payments associated with Mt. Gox, due to a court order from the US Department of Homeland security. The Mt. Gox / Dwolla combination has been the most convenient (and cheapest) way for most people to convert bitcoins into cash.

The full text of the email from Dwolla reportedly looks like this:

You’re receiving this notice because our systems have indicated that you’ve processed and completed a real-time Dwolla-to-Dwolla payment to Mutum Sigillum LLC (“Mt. Gox”) within the last 24 hours.

Due to recent court orders received from the Department of Homeland Security and U.S. District Court for the District of Maryland, Dwolla is no longer legally able to service Mutum Sigillum LLC’s account.

This is a courtesy email encouraging you to follow up on any uncompleted orders with Mutum Sigillum LLC as Dwolla is now unable to move money to and from Mutum Sigillum LLC’s Dwolla account.

Dwolla is not party to this matter nor does it have any information or further insight into the situation. We strongly encourages those with questions to contact Mutum Sigillum LLC

Note: Dwolla requires a court order before honoring requests such as seizing funds or revoking access to an account.

On behalf of Dwolla, we apologize for this inconvenience.

I haven’t seen anything official from either Gox or Dwolla yet, so it’s possible that this is a coordinated hoax in an attempt to manipulate market prices, I suppose. The prices of both BTC and LTC are already down quite a bit on the news.

Update: Mt. Gox has posted a short statement on their site regarding the order.

Update 2: CNET is reporting that they were able to confirm the validity of the story. Not a hoax.

Update 3 (5/15): Ars Technica has the reason for the DHS action.

Reminder: upgrade your Bitcoin client before May 15

Bitcoin logoIf you’re running Bitcoin-qt or bitcoind, check to make sure that you have the latest version before May 15th. Running old versions after May 15th will cause you problems.

Bitcoin.org explains why this is necessary:

A bug caused a temporary block chain fork on 11 March, 2013. After investigating that bug, we determined that the bug can happen even if the entire network was still running old versions of Bitcoin-Qt/bitcoind. Therefore, the only option is to require everybody to either upgrade or workaround the bug.

You can get the latest version at bitcoin.org.

Wall Street Journal: Why Bitcoin is being taken seriously

The Wall Street Journal posted a short commentary on Bitcoin today:


(if the video doesn’t load for you, click here)

The altcoin explosion… and how to profit from it

AltcoinsIf you’re following the cryptocurrency mining scene at all, you’ve probably noticed that there are digital currencies other than Bitcoin and Litecoin. Quite a few of them, actually. Bytecoin, Terracoin, PPCoin, Feathercoin, Freicoin, Novacoin… the list goes on and on, and it seems like there is a new addition weekly.

The sad reality is that virtually all of these coins bring nothing significant to the table when compared to Bitcoin. The Bitcoin code is open-source, which means that anyone with a few hours of time on their hands can make some minor adjustments and fork off a brand new virtual currency that is nearly identical to the original in everything but name.

But why would somebody make a near-clone of Bitcoin? Why would anyone use a knock-off currency when they could just use bitcoins instead? Read on for some answers about altcoins, and how you can profit from them as a miner.

Khan Academy on Bitcoin

The Khan Academy posted an introduction to bitcoin mechanics, including brief overviews of the block chain, mining, and how transactions work:

It’s a bit dry, but if you’re fuzzy on the basics of how digital currencies work, you’ll probably find it enlightening.

Coinlab sues Mt. Gox for $75 million

If you’re wondering what’s going on with the price of digital currencies over the past day or so, this lawsuit between two of the biggest players in the bitcoin arena is likely to blame.

From the Gawker article:

The Coinlab-Mt. Gox juggernaut was supposed to bring a new level of service, along with the legitimacy that came with the Silicon Valley Bank’s backing, to Mt. Gox and the economy as a whole. The partnership was considered so important to the growth of Bitcoin that some observers credited it with sparking a massive 40% surge in Bitcoin prices past $250 when it was first announced, during which some big Bitcoin hold probably made millions. (At least until the price crashed back down again.) Now the biggest hope of Bitcoin has devolved into the biggest lawsuit.

Forbes journalist living on bitcoin for a week

A Forbes staffer is chronicling her week-long experiment to live solely on bitcoin for one week. Her journey only began yesterday, but you can read about how the first day went by clicking the link.

BBC News Report on Bitcoin

The BBC posted a short “how it works” video about Bitcoin today:

(click here if the video won’t load for you)

While short, the video is interesting, accurate, and up to usual high BBC standards. Keep your eyes open for a shot of cgminer running about 2 minutes in. =)

CNET: Bitcoin is the future of money

BitcoinCNET posted an opinion piece on Bitcoin today that delivers a positive outlook on the future of cryptocurrency. While there are a couple minor misconceptions in the article, it’s always nice to see good press on digital currency in mainstream news. A snippet:

Crypto-currency is a certifiable Pretty Big Deal. The Facebook antagonists otherwise known as the Winklevoss twins have amassed huge sums of Bitcoin; it’s minting its own millionaires (in real dollars); and an increasing number of global citizens consider Bitcoin a better investment than Wall Street these days.

Somebody should probably tell the author that the US dollars in her pocket haven’t been backed by gold in over 40 years, though.

Nearly half of Bitcoin exchanges fail

A recent Wired UK study concluded that a whopping 45% of Bitcoin exchanges have failed, usually resulting in the loss of users’ deposits. Exchanges that manage to stick around are typically under constant attack from hackers looking to commit virtual heists. From the article:

Exchanges handling 275 Bitcoins’ worth of transactions each day have a 20 percent chance of being breached, compared to a 70 percent chance for exchanges processing daily transactions worth 5570 Bitcoins. [The researchers] estimate that the median lifespan of any Bitcoin exchange is 381 days, with a 29.9 percent chance that a new exchange will close within a year of opening.

Let this be a warning to anyone holding non-trivial amounts of digital currency: don’t treat exchanges like banks! Keep the majority of your bitcoins (and other altcoins) in local encrypted wallet files, preferably stored offline in multiple locations (USB sticks are great for this).