The Coinoutlet Blog

The Major Difference between a Legal Tender and Money

A quick look on the Investopedia, an Internet site devoted to investment education, a legal tender is defined as any currency that has been declared legal by a government. Going by this definition, are other forms of currencies illegal? Are you committing a crime by accepting, holding or settling debts using bitcoins? Well, to answer these questions, we first need to understand what money is and how a legal tender fits in it. In The Law Of Bitcoin, a book published in 2015 and the first to delve into cryptocurrency law in Canada, Germany, the United Kingdom and the United States, the author explains that there is no universally accepted definition of money. Money is either monetary objects or monetary value But all the definition commonly used fall into two categories; economic and legal. The former emphasizes on money being a store of value, unit of account and medium of exchange, and the latter is concerned with it as a tool for performing contracts. Further, according to the book, money is either monetary objects (Physical money) or monetary value (the right to receive monetary objects). And it is the power to create monetary objects (legal tender notes and coins) that the law confers exclusively on government through such agencies as the Federal Reserve in the US. That implies that creation of monitory value is open to everyone as long as others are willing to accept it. Indeed, the major difference between a legal tender and other forms of currency is in the fact that a creditor or a merchant has a right not to accept a currency as long as it is not a legal tender. You can’t say no… read more

What Sidechains Are and How They Will Change Cryptocurrency

Since the establishment of the Genesis block in January 2009, the blockchain, the distributed public ledger on which bitcoin is a native, has grown exponentially both in terms of adoption and the number of other applications that have been built on it. Many hold the view that Satoshi Nakamoto’s thought about its design meticulously enough that it can scale as well as accept technological changes with no challenges in future. Far from this rosy path, its implementation has continued to expose shortcomings such as rigidness to innovation. Given that it is not easy to significantly alter the core software of the blockchain, many latter developers have resorted to creating entirely new crypto coins that incorporate the features they wished bitcoin had. Sidechains are expected to make altcoins unnecessary This has resulted in hundreds of alternative coins in just less than seven years of Bitcoin’s existence. Not every developer, however, thinks that this is the best way to improve the blockchain technology. Some believe altcoins are working against the digital scarcity, which is one of the properties that make Bitcoin money. Nevertheless, almost all developers, entrepreneurs, users and enthusiasts of the blockchain technology support the idea of moving the ecosystem from Bitcoin 1.0 to Bitcoin 2.0. One way of doing this that is getting a lot of attention from the Bitcoin community is the idea of Sidechains. It is what a team led by Adam Back, a cryptographer best known for developing HashCash, and Austin Hill, a Canadian entrepreneur and angel investor with a lot of interest in the digital currency, is pushing. A whitepaper explaining how Sidechains will work and… read more

Books about Bitcoin You Must Read

The number of books you can read on Bitcoin is still very small. You can almost count all them with fingers in one hand. However, that is only true if what you are looking for are those with Bitcoin, in specific terms, as their central subject. Otherwise, if your interest is in all the technologies that make the cryptocurrency, then you have more than you can read in a very long time. There are hundreds if not thousands of books that talk about such topics as cryptography and computer networks. It is important to note that while Bitcoin has only been around since 2008, when Satoshi Nakamoto published his white paper; Bitcoin: A Peer-to-Peer Electronic Cash System, most of the technological ingredients that are in the digital currencies have been in existence for many years before. For instance, cryptography has been part of human civilization going back thousands of years. Julius Caesar used it to communicate securely with his generals and foot soldiers. Closer to our times, cryptography was at the center of both the first and second world wars.  In particular, the success and failure of the Enigma, the Germany cipher machine, have been portrayed charting the course and ultimately shaping the outcome of the Second World War. You can, therefore, imagine how many books have been written about cryptography both for the public consumption as well as for professional training. On its part, Proof of Work as a concept came into being almost two decades before Nakamoto published his white paper. It was fronted as the solution to email spam and denial of services attacks in the… read more

How to Shop On Amazon with Bitcoins

At the beginning of July 2015, I wanted to buy a Kindle book on Amazon, and so I visited the mega e-commerce site. While there I realize that I did not have funds on my PayPal account. Neither did I have any money on my debit card, but I did have more than the price of the book in my Bitcoin wallet. I recalled reading in one blog post that it was possible to make a purchase on Amazon and pay with bitcoins. However, no step by step was given in the article. It was just a quick mention. I added the book to the shopping cart and moved to the checkout page, where I expected to see a ‘Pay with Bitcoin’ button. However, to my disappointment, I did not see the button. Bitcoin is not listed on Amazon Apparently no cryptocurrency was listed among the payment methods Amazon accepts. I reasoned that maybe the e-commerce site had discontinued this option.  For a moment, my shopping faced a dead end. However, after looking around on the internet for a few minutes, I did finally find a way to pay for the book in bitcoins. And in less than 10 minutes I had it in my Kindle. You too have probably heard of this option and maybe you are consideration using it. I am going to share with you the step by step procedure for doing this. It is important to note, at this juncture, that Amazon has not as at July 2015 added Bitcoin to the list of their direct payment options. Nevertheless, someone else has created a way… read more

Top Five Global Bitcoin Exchanges for Traders

So you have heard about Bitcoin and cryptocurrencies trading and after taking some time to research, you are finally ready to buy and sell. But, where do you start? A digital currency exchange is where most people go to start trading in cryptocurrency. With a growing demand of not only bitcoins but also altcoins such as Dogecoin and Litecoin, many exchanges have sprung up in different parts of the world. The following is not an exclusive list of exchanges in existence nor is it in any order. However, it will help you get around: BTC China It was set up in June 2011 as the first Chinese Bitcoin exchange and operates out of Shanghai. Nevertheless, it serves traders from all over the world with volumes that rank it 2nd largest exchange in the world. On this platform, you can trade both Bitcoin and Litecoin using the Yuan and a few other selected international currencies to make deposits and withdrawals. In addition to normal trading, margin trading and future contracts are also on offer. Huobi Exchange This is also based in China and is headquartered in Beijing. The exchange has been around since September 2013 and accepts both Chinese and international traders. It handles about 13% of global volumes. Through its subsidiary, BitVC, it offers trading products that include derivative instruments, margin trading, and P2P lending as well as standard trading order books. Huobi also allows its clients to mortgage their BTC holdings, up to 60%, as collateral in exchange for trading shares on the Shanghai Stock Exchange. ItBit The exchange is headquartered in New York, with offices in Singapore…. read more

Making Sense of Multisignature Use in Transactions and Wallets

The Bitcoin network experiences a high level of security largely because of its decentralized nature. Nevertheless, the network users do face security threats especially at touch points, where they interact with it. It is common for people to lose bitcoins from their wallets through hacks as well as fraud schemes. One security feature that has sprung up to protect users from this and other potential risks is the Multisignature.  It fits into a variety of use cases, including mass market applications for both businesses and individuals. Today, it is commonly used by exchange, vault, escrow and wallet service providers. So what is multisignature? It is simply the use of more than one signatory to unlock an account, which, in this case, is a Bitcoin wallet. It is comparable to a couple who share a joint account at a bank. Both partners will have to co-sign to make any withdrawals. Aside from Bitcoin wallets, the multisignature feature is applicable in any case where more than one authority is required to approve an action. This could be in land title registration or trust fund liquidations. A Bitcoin wallet is paired public key and private key. The public key is the address that you share with anyone who wants to send you money. A private key, however, should be held safely because, without it, you will not access the funds. If it falls into the hands of others, you are likely to lose ownership of your money. In the Multisignature scenario, a public address is generated with more than one corresponding private keys. That means, to authorize the movement of any amount… read more

Bitcoin is Completely Digital, but Physical Bitcoins Do Exist 

Bitcoin is a native of the internet, and thus it is digital in its entirety. This is something about money that the world had never seen. Before the Internet, all forms of money have been based on tangible objects. It is therefore not surprising that you may fancy having physical Bitcoins. These you would share with friends and family as memorabilia collectibles. Thanks to ingenious entrepreneurs, this is a reality. A few enterprises out there are minting coins that represent bitcoins and selling them to willing buyers. Broadly, the physical Bitcoins in supply are in two forms: Those that act as wallets for bitcoins, as well as memorabilia Those that are not used as wallets, but only as memorabilia Casascius Coins Casascius is the oldest pre-loaded coin in the market. Mike Caldwell, a bitcoin enthusiast, began manufacturing and shipping them in 2011 from his home workshop. His collection included a variety gold, silver and brass plated coins embedded with bitcoin addresses and redeemable private keys underneath sealed hologram. Since, owning bitcoins, means owning a set of private keys, owning Casascius coins means holding bitcoin value in the physical form. Indeed, for some, this is a preferred form of cold wallet. Unfortunately, US FINCEN regulators now classify this activity as money transmission. This has forced Mike Caldwell to halt production of pre-funded coins. Nevertheless, those already in circulation can still be found on auctions and marketplaces such as Amazon and eBay as well as from individual owners on forums such as In a bid to comply with regulations, the company now ships unfunded physical coins that have empty private… read more

Top 5 Cryptocurrency Aside from Bitcoin

The emergence of Bitcoin in 2008 opened a flood of innovation in crypto and virtual currencies. Because it’s open source, bitcoin inspired developers to come up with different models and possibilities of value tokens. Some of them out rightly bootstrapped the code minor tweaks, others borrowed some features and incorporated them while, others built new crypto platforms from scratch. Here is a list of 5 altcoins. 1. Lite coin LTC came out in 2011 to address some of bitcoin’s perceived shortcomings. For example; It implements a scrypt proof of work algorithm compared to bitcoins SHA-256 PoW. Its mode of mining is based on memory operation versus bitcoin’s process based Its network processes blocks every 2.5mins, and bitcoin does this in 10 minutes on average Charlie Lee, an ex-Google employee and developer of this cryptocurrency, added specific features to stymie a potential mining arms race. By limiting mining to CPU and GPU miners, average PC owners could participate. It is currently tradable on a number of exchanges – Bitfinex, OKcoin, Kraken, Yacuna – with a market cap of $ 52,504,661 and a supply capped at 84 million litecoins. 2. Ripple Ripple is a payment protocol and currency exchange built on a distributed consensus network. Unlike other crypto networks, it was designed for all types of tokenized assets and currencies such as fiat, gold, airline miles, loyalty points and IOUs. At its core is a public ledger that records all transactions users. Ripple differs from Bitcoin in the following ways: Its native currency XRP is pre-mined versus bitcoin’s ongoing mining supply Its network reaches distributed consensus in 5 seconds compared to… read more

6 Venture Capital Groups and Investment banks With Interests in Cryptocurrency Technology

Facebook, Google, Mozilla, Twitter and many applications we use today, were made possible by VCs turning them from ideas to global brands. Although many are still in their early days, crypto startups have also captured the attention of respectable VCs and investment banks. Here is a list of most notable investors who have put their money in cryptocurrency: 500 Startups 500 Startups is an early-stage seed fund startup accelerator. It has a portfolio of over $175million invested around the world in 656 companies. Founded by former team members of PayPal and Google, the firm is part of a Fintech syndicate that focuses exclusively on Bitcoin financial technologies. Its investments include Change tip, Chain, BlockCypher, melotic exchange and GogoCoin. Others are Coinalytics, Neuroware, Monetsu and Bonafide. Boost VC Boost VC is a tech startup accelerator wholly focused on bitcoin technology that is based in San Mateo, California. It takes in young entrepreneurs through a three-month program offering mentorship, working space and capital. Tim Draper, a serial bitcoin investor, best known for purchasing 30,000 BTC seized from Silk Road at a public auction, co-founded this program, alongside Brayton Williams. It has invested in over 100 startups to date. Some of its bitcoin investments include Volabit exchange, Blockscore, and BitPagos. Others are Snapcard, Gliph, Vaurum and blockcypher Union Square Venture This is New York-based venture capital firm that runs a portfolio worth over $1 Billion. It was founded by Fred Wilson and Brad Burnham in 2003 and is best known for early stage investments in Twitter, Zynga and Tumblr. Besides early entries, it also invests in growth capital, late stage and start-up… read more

4 Digital Currencies that Came before Bitcoin

Attempts at creating digital currencies for e-commerce stretch as far back as the late 80s. The online community has always desired a safe, fast and secure means to transact online. To understand cryptocurrencies of today, you may have to look back at the time Before Bitcoin (BB). Indeed, insights from the success and failures of past e-currencies have informed their design and development. Here are four digital currencies that came before Bitcoin: BEENZ Beenz was a centralized digital currency that Charles Cohen built in 1998 on a website ( From the outset, he intended it to be used as a medium of exchange in online commerce. Beenz tokens were purchasable by individuals and companies.  Customers could also earn them for visiting a web site or login in through an Internet service provider. In turn, they would use them for online shopping. Unfortunately, wide adoption necessary to establish its own free floating exchange rate did not materialize. Despite VC backing of up to $100 million, it ran into cash flow problems just as the dot-com bubble imploded. It was sold off in 2001, but never to be revived. FLOOZ Flooz launched online in 1999, deriving its name from the Arabic word for money ‘fuloos’. Like beenz, it worked as a centrally issued currency comparable to virtual points, loyalty points or airline miles. You could either purchase the currency or get it through promotional giveaways. Customers could spend them at online stores that accepted them as a means of settlement. Like all other e-currencies, flooz’s take off hinged upon widespread adoption by both users and merchants. This, however, failed to happen,… read more