r/Bitcoin - Hi, this is Ben Lawsky at NYDFS. Here are the ...

Questions on Satoshi Roundtable? Not secret, just AMA

Some questions on social media after today's Coindesk article.
Anyone with questions, feel free to ask.
I'm pretty transparent, if you are on my Facebook etc.
A couple points:
Why private? I mentioned on Bitcoin Talk -- there is value in private meetings, just like when people meet at their office or for dinner or a group ski trip. One example: I'm a very vocal critic of Ben Lawsky. Some CEOs might feel the same way but would not discuss it publicly due to fear of regulatory punishment. (I'm not saying this is the case with anyone on the list, just an example.)
Will this secretly harm Bitcoin or work on new regulation? Absolutely not.
submitted by bruce_fenton to Bitcoin [link] [comments]

There is a 30 day comment period for the current Bitlicense proposal. Unless there are substantial changes, New York will be a Bitcoin dead zone

The 30 day comment period starts next week. Bitlicense, as proposed will force most companies that store customer BTC deposits to block New York IP addresses. There is very little chance that Lawsky will make any further changes to it, so what will this mean for Bitcoin around the world?
EDIT, as a reminder:
This is how the Bitlicense will affect Bitcoin businesses, taken from here:
http://www.reddit.com/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nydfs_here_are_the/cizyqyz
(I've added modifications in light of changes in the new proposal and information that I found was missing in the original write-up)
Entities are considered dealing in virtual currencies if:
.. to any resident in New York. Web services, even those incorporated overseas, must either comply or block access for NY users. (200.2n)
Entities 'dealing in virtual currency' must:
Added:
The (only?) good news: Merchants do not need a BitLicense to accept Bitcoin for a good or service. (200.3c2).
> This post was created for general guidance, and does not constitute legal advice. You should not act upon the information contained in this publication without obtaining specific advice from a professional. No representation or warranty (expressed or implied) is given as to the accuracy or completeness of the information contained in this post.
EDIT 2, targetpro suggested expressing any concerns you may have about the proposed regs to the NY Dept. of Finan. Services:
submitted by aminok to Bitcoin [link] [comments]

BitLicense isn't bitcoin regulation, it is a de facto bitcoin ban, coupled with the introduction of a whitelist-based altcoin run by governments but utilizing the bitcoin blockchain.

It's tough to accept, but we might be facing the first attempt at seriously enforcing a total ban on all bitcoin transactions. The fact that it will be enforced simultaneously with the introduction of a government-controlled NYCoin just makes it even more dangerous.
This is probably the first time bitcoin has ever been in real danger of being supplanted by something else. NYCoin might become USACoin, which might then merge with ChinaCoin and EUCoin to become something I imagine will commonly be called WhiteCoin - a global surveillance based currency with a worldwide monopoly on trading legal goods and services.
I think it is important that we realize that the BitLicense is what can best be described as an "attack" - a deliberate attempt to hurt bitcoin users - and we should fight back with everything we have. The fact that Ben Lawsky tricked us into thinking his main concern was to ensure a good environment for startups shows that the people attacking us are not holding back, but are willing to use any tricks necessary to crush us.
I can't think of much that can be done right now, but my best bet is that we need to try to attack the value of this WhiteCoin wherever it pops up, NYCoin being the first. It will be tough, and a boycott will not be enough because this is the coin that big money will be investing in.
Perhaps it will be possible for bitcoin users to force miners to choose between mining transactions for one of the two coins, thus making sure that as long as bitcoin is the dominant digital currency by transaction fees, whitecoin transactions will be really slow. We can be absolutely certain the opposite would happen instantly should whitecoin ever become the dominant currency.
submitted by Rune_And_You to Bitcoin [link] [comments]

Truth you don't want to hear. Bitcoin Price Matters. Grow the fk up.

Listen, I am a Crypto-anarchist. I've read all those books you've read - Ayn Rand, Friedman, listened to the Molyneux podcasts and all that.
And I just went full time on Bitcoin. So yeah I am in this boat with all of you.
But I also worked on Wall Street for many years and all I see is amateur hour in the bitcoin community and people with no fucking business sense.
You want to extend the commenting window for Ben Lawsky to set regulations for NY? Yeah go fucking do that. And watch every startup in the space run out of money waiting 2 years to get clarity while you write your letters of 'truth'.
You want to keep being 'intellectually smart' and go to meetups about Stellar this week, Ethereum last week, Bullshit coin next week and watch Bitcoin startups fail in the meantime? Then go ahead.
You want to keep showing up at Bitcoin conferences spewing your bullshit to make yourself sound hard saying stuff like "Ethereum is Bitcoin 2.0. I see a world of many successful altcoins each with their own purpose" or "I will die defending freedom and I don't care how much it costs me, I will never get in bed with those evil regulators" Go right on ahead.
But remember this: Currencies are winner take alls. The only reason we have many different 'healthy' fiats is because these countries all have a military to defend their own paper. That's why GBP, USD, EUR, CNY etc can coexist for now.
In Crypto space however, there are no borders or guards. You can freely switch from one coin to another. That means 1 crypto will win and only 1. If you spend any time or money on altcoins, it means you either don't understand how money works, or you have left Bitcoin. The first thing you should say then to other people you see at a Stellar meetup is "My name is Bob. I hate fiat and I hate Bitcoin." You can't believe both Bitcoin and Stellar can have monetary value. Believing that just shows you're an amateur. Stripe, you're anti-Bitcoin.
Here's my message to you all: Stop fucking supporting 18 year old engineers with no idea of how money works who come up with fancy new features for some new bullshit Ethereum coin. Stop thinking it's fun and funny to get some Doge. Stop thinking somehow that because Stellar is being distributed in a more fair way than Ripple that it's going to end up being worth any monetary value. If you trade on an exchange that also supports litecoin, that means they have no idea what they are doing.
Bitcoiners and Altcoiners are enemies not friends. If you want to convince me your Ethereum is 2.0, then show me your skills by breaking Bitcoin first. Otherwise, you are a supporter of the state. You are as big a harm to Bitcoin as anybody in government. The people that should be giving you Bitcoin for Ether are the corrupt politicians.
Bitcoin's Price is why there is even a conference for you to get paid to speak at. Bitcoin's Price is what pays your salary at your startup. Bitcoin's Price is the only reason VCs have poured money in.
If you believed in Bitcoin, you'd let the regulators pass whatever they want - paying no attention to them. If you believed in Bitcoin, you'd let anyone invent their own coin - paying no attention to them. The sooner regulators can help take it mainstream by making it 'safe' the sooner you can get to work finding a workaround for Bitcoin. Letting Lawsky play the delay game means a ton of bitcoin startups will fail.
The only thing you should focus on is 'what can I do today to help the Bitcoin price go up'. Cause the honest truth is unless the price keeps going up, there isn't going to be more jobs, more conferences, more startups, more freedom, more prosperity, more people in this reddit thread. So either help the cause by hoarding Bitcoins, developing for the Bitcoin ecosystem and the Bitcoin ecosystem only, or GTFO.
Nothing else matters.
submitted by btcgrowup to Bitcoin [link] [comments]

Bitcoin 2017 a Comprehensive Timeline

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submitted by BitcoinChronicler to btc [link] [comments]

A few thoughts - Monday, August 18, 2014

Good afternoon! A few thoughts for lunch today:

bit_by_bit's thoughts on "social capital"

bit_by_bit made an interesting post on the idea of "social capital," which I thought was worth mentioning here. At http://www.reddit.com/Bitcoin/comments/2ds548/what_is_going_on_with_the_rise_and_rise_of/cjsmm5q, he talks about the death of his grandfather, for which I offer my sincerest condolences. Having attended the funeral, he mentions how friends and family have caused him grief about his support of bitcoins. bit_by_bit is incorrect in his posts where he writes bitcoins off as "dying." At the same time, if bitcoins were "dying" right now, then my least concern would be about what my friends think of me.
What bit_by_bit says about "social capital" is completely true. If your goal is to make lots of friends, then you can approach the problem scientifically by following rules. For example, a good way to make friends is to talk to lots of people and to never share controversial opinions. Toastmasters has a good template for this in one of their advanced communications manuals; there is a four-step process they suggest on how to introduce yourself to someone you've never met before. Following the process, you can move from talking about the weather to politics to discussing your divorce in ten minutes. I imagine it would be possible to attend lots of parties and use this technique on many people, making lots of people one might misinterpret as friends.
Once you have those friends, then the best way to keep them is to agree with them as much as possible. Some people are shallow creatures and turn against their friends easily. I mentioned the situation with the family member and the damaged property in a previous post, and the core issue in that situation preventing action was the family member's worry of what friends of friends would think should a stand be taken on repayment.
For good or bad, unlike bit_by_bit, I don't worry about "social capital." I worry about whether I treat people fairly and about what is right and wrong, not about how many friends I will lose or gain by taking actions. People who live their lives worrying about what other people think end up with legions of shallow acquaintences, like the people I know who do little with each other except go out on Fridays and get drunk. Even if bitcoins were dead, friends and family members who would make rude jokes at someone's expense are lesser people who aren't worth associating with. Why should bit_by_bit (or you or I) place the same level of credence in what they think as in someone who is caring and treats others with respect? Rather than losing respect, bit_by_bit has actually gained valuable information, because the respect of such people doesn't matter, and because he now has a smaller number of friends who he deserve more of his time and attention.
If bitcoins were to die, I would not be concerned whatsoever about what colleagues or friends thought of my discussions about them. I would be profoundly disappointed that I live in a world where people are so stupid and closed-minded that they were not able to recognize how bitcoins could have improved the lives of everyone so dramatically.

Some comments on the recent decline

sqrt7744 has an interesting comment about the ongoing decline at http://www.reddit.com/BitcoinMarkets/comments/2duufu/daily_discussion_monday_august_18_2014/cjti1za. In it, he mentions that markets are irrational and also talks about how the falling prices make it difficult to convince newer people to invest. But I don't think that this selloff is irrational like he does.
One thing that's noteworthy about his comment is where he discusses the impact of Ben Lawsky on bitcoin prices. It's reasonable to make a case that this decline was directly caused by Lawsky's regulations. There are some issues with the timing of that argument, so readers can consider for themselves whether Lawsky singlehandedly caused these declines.
The selloffs during the last cycle every time there was some Chinese news were irrational, because bans in China never represented a fundamental threat to bitcoins. While there are still a few posts that continue to claim the fundamentals have not changed (moral_agent has firmly sided with the people who think that we are still in the previous cycle by not changing his charts), some people in /bitcoinmarkets are finally starting to wake up now. The current selloffs are rational, because they are based on fear of one of the two things that can cause bitcoins to fail: that people simply don't want to use them. The question for this cycle is not whether governments will allow bitcoin usage but whether people will use them, and the cycle won't end until that is proven one way or the other months from now. What happened is very simple: people aren't using bitcoins at the same rate as before, July 24 came without adoption having increased, and people who see they can make more money in stocks and other investments left.
As an aside, I should note that the transaction volume has remained unchanged compared to the number of transactions, so it looks like the increasing number of transactions is a false indicator. Anyone can increase the number of transactions by spending a small amount to send a little money to lots of people. The chart to look at is "transaction volume," which hasn't moved.
My bottom line: I remain bearish, just as I did at every step since $620. This downturn does not end tomorrow or next week and because this crash was caused by a change in the fundamentals, there needs to be another change in the fundamentals before recovery begins. The only exception to this rule would be if the price reaches $150 or some unlikely absurd value in a matter of a day, in which case it would make sense to buy huge even if it is just to make short-term gains.

Redefining "speculation"

I think it's worth redefining the term "speculation" to mean "wealth storage." People who buy bitcoins and don't spend them are not leeches upon the network. In addition to providing liquidity, they are using bitcoins for one of their intended purposes: storing their wealth away from the hands of governments and everyone else so that it is available anywhere in the world.
Spending bitcoins on products and services is only one use of the bitcoin network. People who say that bitcoin is "overvalued" for its current uses based on spending alone are adhering to a very limited view of the network's usefulness. I argue that the most useful feature of the network is its ability to store huge amounts of wealth, and that is even more useful than the transactional features. When we redefine the value of bitcoins to include wealth storage, then we have to also redefine the "basic value" of the network to determine whether it is overbought or oversold.

PETA "changes its mind" about switching to P2Pool

On Friday, PETA changed its mind about switching to P2Pool, stating that its hardware wasn't compatible and that they could achieve lower variance by not switching. Such an action is likely illegal, as over 90% of shareholders voted for the switch. If I owned shares or had any association with them whatsoever, I would be selling and would get out immediately with whatever I can salvage.
The company made headlines a few months back when they announced that they would be switching to promote decentralization, and received huge support (and huge money) from the community. A post on Friday attracted quite a bit of negative publicity, so hopefully people who read it will stop supporting them and the company will pay for its duplicity.

Gavin Andresen makes over $206,000

I wanted to make a quick note that it was revealed last week that gavinandresen makes over $206,000 for his work as a bitcoin developer. I've never heard of a software engineer who makes anywhere close to that much; it's almost three times what I make.
As a genius, this is the one case where I can say that he deserves every cent he makes. Most of the time, you hear about stories of CEOs who earn $3m or $10m in cash and bonuses and stock options - but these CEOs don't actually produce any work for the company. Andresen works hard and actually produces meaningful stuff that advances the purpose of his organization. A company can survive without a CEO, but it can't survive if it doesn't have deveopers producing a product. It's good to see the right people getting rewarded for their work, rather than CEOs leeching off others' hard work.

Other

submitted by quintin3265 to BitcoinThoughts [link] [comments]

Altisource Portfolio Solutions S.A.

Altisource Portfolio Solutions S.A.
This is gonna be a long one.
"You don't have to know how much a man weighs to know he is fat."
Background:
Altisource Portfolio solutions "Altisource" was spun off from Ocwen Financial in 2009. Ocwen financial is a mortgage servicer. Of all the mortgage servicers, Ocwen is the most cost efficient, best run, and best capitalized. As a mortgage servicer, Ocwen acquires mortgage servicing rights (MSRs). Owners of MSRs collect a small fee from every mortgage payment it is servicing. Ocwen may service a mortgage by handling day to day tasks of servicing a loan, process payments, keep track of principal and interest paid, manages escrow accounts, initiate foreclosure, modify loan payments for subprime and delinquent loans and so on.
The reason Altisource was spun off from Ocwen in 2009 is because Ocwen's Chairman Bill Erbey knew the software division of Ocwen was not being valued properly within the business. Altisource is now incorporated in Luxembourg for tax reasons but it basically does everything a United States company would do. It files with the SEC, gets audited and does almost all business in the United States.
Thesis:
What does Altisource do?
From the 2013 10k-
"Altisource®, together with its subsidiaries, is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. We leverage proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants."
If you figured out what they did from reading that, congratulations, because I couldn't. I own the company and I still do not know all of the services they provide. What I do know is that more than half of Altisource's revenue is derived from Ocwen. Ocwen uses Altiosurce's state of the art servicing technology to service their loans. Altisource's technology allows Ocwen to be such a low-cost servicer. Altisource only provides their technology to Ocwen and no other servicers.
http://oraclefromomaha.files.wordpress.com/2014/04/1.png
In the above link, you can see the ways Altisource generates revenue. The main thing to know here is that Altisource generates a huge portion of their revenue from Ocwen. When Ocwen makes less modifications on loans, they use Altisource's services less so Altisource makes less money. When Ocwen modifies more loans then Altisource makes more money because Ocwen uses their serivices more. It provides a hedge against parts of their business that may struggle in a recession like any other business. During the natural economic cycle if there is a recession and Ocwen is modifying more loans because more homeowners cannot make payments then Altisource is making more money than they would during good economic times because Ocwen uses their services more. The more MSRs Ocwen acquires, the more Altisource makes.
Ocwen's growth (basically a quick long thesis on Ocwen)
When a bank loans money to an individual to buy a house, a mortgage is originated and an MSR is created. The bank then keeps the mortgage on its books or sells the mortgage to another entity. Perhaps Fannie or Freddie. But what happens to the MSR? The MSR is then sold to a servicer such as Nationstar, Walter Investment Management Corp, or Ocwen. The reason the banks or originator of the mortgage sell the MSR is because they cannot service it properly and/or they would lose money in the process of trying to service it. Because of Dodd Frank, banks are trying to get MSRs off their books even faster because they cannot service them efficiently as previously mentioned and because they will have to hold 250% more capital against the MSRs. All banks are moving away from owning MSRs and non-bank servicing is becoming a larger industry, and Ocwen is leading the way. Due to the high supply of MSRs that are wanting to be sold by banks the MSRs can currently be bought at a 20-30% yield. Ocwen can buy the most MSRs because they are the best capitalized and they use the most conservative balance sheet. Ocwen being the lowest cost operator provides them with a huge competitive advantage when bidding for MSRs as well. Ocwen will continue to lead the non-bank servicers in buying MSRs. Ocwen currently has $464 billion of unpaid principle balance of loans they are servicing and another trillion dollars of subprime (Ocwen specializes in subprime) UPB is expected to get into the hands of non bank servicers by 2018 (3-4 trillion in UPB of regular MSRs). Ocwen will get the most of that trillion dollars of UPB of any servicer because of their competitive advantages.
Another competitive advantage of Ocwen is their relationship Home Loan Servicing Solutions Ltd. HLSS was also created by Bill Erbey. HLSS provides the capital for Ocwen to service loans so Ocwen does not have to tie up their capital. In the future, HLSS will acquire more loans and allow Ocwen to sub-service them through a unique financing strategy. This strategy called the accretion model is a genius way to get capital for HLSS to afford a virtually unlimited amount of MSRs. HLSS pays a huge dividend and because of this dividend, HLSS trades above its tangible book value due to fixed income hungry investors who want a fat dividend. HLSS then issues more shares above tangible book value to then acquire more MSRs. Issuing shares above book value actually creates value for HLSS shareholders also instead of diluting value as many people would think issuing shares does. Those MSRs are then sub-serviced by Ocwen, who still uses Altisource's technology.
Ocwen is also getting into foreword and reverse mortgage origination so they can have a constant stream of MSRs.
Basically, Ocwen and HLSS are going to acquire more MSRs and Ocwen will be servicing more mortgages. More mortgages serviced by Ocwen = more revenue for altisource.
All MSR transactions have currently been stopped by a New York financial regulator but we will get to that issue later.
Share Repurchases
Up until a few months ago the laws of Luxembourg restricted the amount of shares that Altisource could repurchase. Altisource recently created a foreign subsidiary that does nothing called "MidCo" to hold all other parts of the business so there would legally be no restrictions on share repurchases. Until Altisource did this, they were repurchasing the maximum amount of shares that Luxembourg would allow.
Here is Altisource's entity structure to bypass Luxembourg share repurchase laws http://i.imgur.com/J6LPEc0.jpg
The highlighted dark blue entity will be the entity repurchasing unlimited shares because MidCo, its parent company is not in Luxembourg. How smart is that.
Altisource currently authorized the repurchase of up to 2.9 million shares. 2.9 million shares is 13% of their market cap. They could easily repurchase that amount. Altisource also just finalized a loan with BAC for $200 million to repurchase shares so the share repurchases will really start to kick into high gear with the new liquidity and cheaper price. Up until the sharp share price drop, Altisource was repurchasing for the past several months around $110. That shows the board and management think the company is undervalued at $110 and now it is at $84 and nothing fundamentally changed about the company.
Insider Purchases
During the past 6 months, 3 insiders have purchased at $102, $103, $106, and $120. Between 20% and 43% above current market prices. Bill Erbey also owns 30% of Altisource and 13% of Ocwen. His views are directly in line with other shareholders.
Bill Erbey and his Capital Allocation
Bill Erbey is the Chairman of Ocwen, Altisource Portfolio Solutions, Altisource Asset Management Corporation, Altisource Residential, and Home Loan Servicing Solutions. Bill has done a great job of creating shareholder value for Ocwen and Altisource shareholders. Bill has also greatly benefited from this because of his stakes in thise companies. Before the sharp share price drop due to outside forces, Bill compounded Ocwen's stock at 30% per year since 2002 WITHOUT including the Altisource spinoff which compounded itself since 2009 at almost 75% a year. Altisource then spunoff Altisource Residential and Altisource Asset Management. Every spinoff is a value creating machine. At one point AAMC had compounded 430% in a year and a half, although it was due to a stretched valuation. Bill is dedicated to doing whatever it takes to create shareholder value. He relocated to the Virgin Islands just to save Ocwen some money on taxes.
I once read a story about Bill in his Virgin Islands home and his electric bill for the air conditioning. Keep in mind, Mr. Erbey is a multi billionaire. Bill got his electric bill and saw his costs had skyrocketed due to his air conditioning. Bill then sat there after that baking and sweating in the heat in his home so he could save a couple thousand on his electricity bill. He will do anything to save a dollar.
Hubzu
Hubzu is owned by Altisource. Hubzu is currently an online marketplace to buy and sell foreclosed homes. Like Zillow and Trulia but for foreclosed homes. Hubzu takes foreclosed homes from Ocwen and lists them on their website Hubzu.com. Hubzu is trying to get into the non-distressed house listing like other real estate websites like Zillow and Trulia. This will grow Hubzu at an even faster rate. Altisource states Hubzu gets about 1 million unique new visitors per month. When you buy Altisource you are also buying the jewel of Hubzu. Bill Erbey claims that Hubzu makes "as much money in one quarter as Zillow does in 4 quarters" Zillow has a market capitalization of $5 billion. Zillow's market capitalization is definitely stretched but a spinoff would create a lot of shareholder value even if the market gave Hubzu a fraction of Zillow's valuation.
Why is the company undervalued?
All this greatness in one company so why is it so undervalued? Remember how Altisource's earning were pretty much directly tied to how well Ocwen does? A New York State Financial Department regulator named Benjamin Lawsky halted a $2.7 bilion ($39 billion in UPB) Wells Fargo MSR transfer to Ocwen. This also halted all of the other MSR transactions between banks and servicers. Benjamin Lawsky is probing into Ocwen and other servicers. He states that he wants to make sure Ocwen and other servicers have the capacity to service loans efficiently because they are "growing too fast". The relationships these 5 companies share though is somewhat sketchy. They have a lot of the same board members and they all work with each other and make money off each other. Ocwen is the best servicer of them all though. They provide more loan modifications than anyone else and they have the lowest re default rate.
A slide from an investor presentation shows how they compare to others http://i.imgur.com/YkIKD2O.png
Even if Lawsky did find that some servicers do not have the capacity to service loans then Ocwen would be the last one in question because it is easy to see they are doing the best for their consumer compared to anyone other servicer.
Benjamin Lawsky is doing this for his own political reasons. He wants his name on the news. He wants people to see his name. Perhaps he wants to run for governor or something. Why would he schedule an interview with CNBC about the probe into the mortgage servicers right after it is announced. Why would he send a letter to Altisource and at the same time send it to the press, therefore ruining Altisource's reputation without giving them a chance to respond. He is also really into regulating bitcoin in New York which is just another vehicle to get his name in the news.
There are very recent updates with the regulatory pressure and basically the probing is narrowed down to an issue with force placed insurance and Altisource. Ben Lawsky could not find anything else. He sent this letter on Aug. 4th to Ocwen. So this is what the probe is narrowed down to.
http://www.dfs.ny.gov/about/press2014/pr140804-ocwen-letter.pdf
Basically, if a homeowner is struggling to make payments and can't pay their insurance, Ocwen has the right to force place insurance into their payments so the mortgage owner does not incur massive losses if a catastrophe happens. Ocwen has to outsource whoever force places the insurance and the issue that Ben Lawsky was worried about was why Altisource was appointed to find someone to force place that insurance, why Altisource received commission for basically doing nothing, and why Bill Erbey did not consult with any of the Ocwen board before making this decision to allow Altisource to find an insurer.
Altisource will probably get a one time fine settlement and they will go on doing business as usual. I believe this because an almost identical situation happened with Assurant and the New York State Financial Department and they settled for $14 million. There is also an interview on CNBC with someone who talks to the CEO of Ocwen and they are sure that Ocwen and Altisource will just settle with a deal with Lawsky and that will be the end of it.
Interview:
http://video.cnbc.com/gallery/?video=3000298804
Risks Benjamin Lawsky actually finds something else that Altisource was doing wrong. Bill Erbey Dies. He is in his 60s and overweight.
Conclusion
In conclusion Altisource is extremely cheap. Remember that quote about not knowing how much a man weighs but knowing he is fat? That is the case with Altisource. Altisource is definitely undervalued but there are a range of possibilities of the valuation with Hubzu, regulatory matters, growth, etc.
submitted by nomcow to SecurityAnalysis [link] [comments]

Novauri's comments on the BitLicense

Hello, this is Will from Novauri. You almost certainly haven't heard of our company before. We are not planning on releasing it for use until 2015, and we haven't spent a dime on marketing. Still, our team feels strongly about the emerging BitLicense regulations in New York, and I wanted to share the letter we sent to the DFS with the community today.
We already shared our views within days of the proposal being released here, but we've had much more time to craft a formal response. You'll find an abbreviated version below, and a full copy of our letter on our website here.
I know this is a somewhat 'dry' topic, but it's important to the future of bitcoin in the US. Our thoughts on this topic are below. Thank you.
About Novauri
Novauri is a virtual currency startup based in Denver, Colorado and San Francisco, California. Novauri will allow bitcoin users to purchase and sell bitcoin using ACH debits and credits from their bank accounts. The service will be available initially to US consumers in early 2015.
We are different from our competitors in that Novauri will not control the private keys to our customers’ bitcoin addresses. Not only will Novauri never have access to customers’ private keys, but our systems are designed so we will never see private keys in unencrypted form.
We intentionally built this feature into our service as a risk protection measure for our customers. Novauri cannot suffer from the catastrophic failures and massive internal thefts we’ve witnessed at services that pool customer bitcoin and control their private keys because Novauri never has control of our customers’ funds, bitcoin or US Dollars. We feel strongly that this feature is both safer for our customers and cheaper for us as a service provider. Our design requires no expensive security layers around pooled wallets, no insurance for massive, pooled wallets that are vulnerable to insider theft, or regulatory responsibility as a fiduciary holding retail customer deposits like a bank.
Innovation, bitcoin, and concerns about the proposed rules
We believe bitcoin and its underlying blockchain technology is the most significant invention of the century. Bitcoin allows for unique digital information that can exist safely on the open Internet without the protection of a central authority. Bitcoin’s unique combination of cryptography and “hashcash”-based proof of work consensus with an integrated economic incentive to participate in the consensus that also creates an automated, and fully predictable monetary policy is something we’ve never dreamed of before 2009. The applications for this technology extend far beyond payment systems, and have the capability to uniquely identify anything digitally; a possibility that becomes exponentially more exciting when it intersects with other emerging technologies, such as the Internet of things, drone applications, or holograph-based UI and peer-to-peer communications.
That being said, we believe the proposed BitLicense regulation falls short in three key areas:
1) Redundancy with existing regulation, and creates an unfair playing field
Novauri believes that the BitLicense regulation is written in such a way that it will greatly stunt growth and drive innovation to other States or Countries entirely. The regulation contains provisions that exclude existing banks from the rules entirely.
Novauri recommends removing the provisions that exempt banks entirely, and replacing the redundant and overreaching language in these areas with a simple statement: The rules and regulations applying to bitcoin at a Federal level (especially from FinCEN) shall apply to all applicable virtual currency businesses with activities in New York State.
2) KYC provisions and ineffective cyber security provisions are dangerous for consumers
Perhaps the most dangerous aspects of the proposed regulations are the identity verification processes. We’ve already seen the disasters that the data retention provisions in the Bank Secrecy Act have caused in terms of the ongoing identity theft epidemic. Every week another bank is hacked, and more and more personal information goes up for sale on the darknet. We feel that these issues are an unintended consequence of the data retention requirements in the BSA, as well as the decision by certain companies to monetize “big data”. Novauri feels that these are misguided regulations and business decisions, and is vehemently opposed to corporations storing and selling personal information. The economic costs of identity theft greatly outweigh any advertising revenue made by these companies, and the cost to taxpayers in reimbursing billions and billions of dollars in stolen tax refunds each year, to say nothing of the stress these unintended consequences cause normal people when they discover their identities have been stolen.
This issue will be far worse with bitcoin, which features a public ledger. As soon as personal information is leaked, it can be associated with the blockchain and the entire financial history of individuals will be viewable by anyone. As written, Novauri feels the proposed KYC provisions in the BitLicense proposal constitute a potential threat to our National security.
Novauri recommends that the NYDFS delay the requirements around KYC until a more elegant solution evolves that doesn’t risk massive identity theft incidents or violations of personal privacy. We recommend full synchronization with existing regulation, and revision such that an individual’s right to privacy is balanced against the needs of law enforcement. This synchronization should also include checks and balances that are non-existent today.
Regarding “cyber security”, Novauri believes that the regulations are ineffective, as technologies are continuously evolving. Novauri recommends that the NYDFS require businesses that act as fiduciaries for customer deposits and maintain control of private keys to hold deposit insurance for 100% of the value of all fiat and virtual currency deposits. If the business has faulty security, the insurance company can make that determination and increase their premiums. In the event that the business’s security is unsafe, the insurance companies will not issue insurance at all. This is a “future proof” way to ensure cyber security without politicizing the topic or risking that rules and regulations become ineffective and anachronistic with time, as they almost certainly will as written.
3) Failure to create a risk-based system that scales with the risk of the service
The proposed regulation doesn’t differentiate between businesses that exchange fiat for bitcoin while taking control of deposits, those that exchange fiat for bitcoin and do not take control of deposits, or even businesses that exchange no currency at all and have no responsibility as a fiduciary. This will effectively kill all small businesses and startups in the State of New York, and if these rules are used as a model in other States, will drive the industry offshore entirely.
Novauri recommends creating at least two types of businesses under the proposed BitLicense regulation:
Virtual Currency Retail or Investment Banking Providers would be regulated in a manner similar to banks, but Virtual Currency Retail or Exchange Service Providers would be subject to minimal regulation. Again, Novauri highly recommends using insurance as a way to “future proof” the areas of cyber security and KYC provisions.
In closing, given the possibilities presented by this emerging technology, Novauri requests that the NYDFS consider revising the rules heavily, adopting a progressive and risk-based approach that uses insurance in lieu of prescriptive measures, removes duplicative rules and regulations, and gives the technology the room it needs to grow and evolve.
Sincerely,
Will Madden Founder & CEO Novauri, LLC
For a full version of our comments on the BitLicense proposal, please visit our website here.
submitted by MrMadden to Bitcoin [link] [comments]

Why Reddcoin is going to the top, part 2

Why Reddcoin is going to the top, part 2
Yesterday I posted part 1 of my article, “Why Reddcoin is going to the top”:
http://www.reddit.com/reddCoin/comments/2bspjm/why_reddcoin_is_going_to_the_top_part_1/
In the first part of the article, I separated the top 20 altcoins on coinmarketcap into three groups, and provided some argument as to why all the coins in the group “Decentralised something-or-other coins” are going to grow slower than Reddcoin.
Today I am moving on to the reasons why coins in the category “Anon currency coins” are not going to be able to keep up with Reddcoin.
Anon currency coins
Ingenious, daring, mysterious... yes. Wanted and desired by your average everyday person? Not really.
Anonymous cryptocurrency projects are and will remain at the fringe. But why? Who is interested in them?
And there are strong indications that the hype bubble is now bursting. Look at the flagship of anonymous coins, Darkcoin. This project has a dedicated dev team and community. I applaud them for their tireless effort to get the complicated functionality of Masternode payments and Darksend working correctly. And it looks like their efforts have paid off. And the code is about to be vetted by a respected cryptographer. So why is the price not taking off? Why does it continue to stagnate and fall? Because Darksend and Masternode Payments have already been priced in, meaning that in the collective mind of investors Darkcoin should have already been fully functioning as planned for a while now. The reason then for the continued decline in prices is that the market is still returning to where it should be after an almighty hype pump.
But there is another reason to doubt the long-term viability of anonymous coin projects: the Darkwallet project, set to launch very soon. Darkwallet will provide anonymising functionality to a Bitcoin wallet, and so as well as being considered short-term or fringe projects, anon currency coins look set to become obsolete in one fell swoop, when the main selling point of all these coins, the fact that Bitcoin transactions are not anonymous, is snuffed out with Darkwallet.
When considering the above factors it is easy to see how Reddcoin has a target audience far, far greater than anonymous cryptocurrency, and also how anonymous coins are likely to face certain significant threats to their survival, threats that Reddcoin will not be subject to.
Of course the above is a general overview of anonymous cryptocurrency. I respect the sincere efforts being undertaken for these projects and readers of this article may know of particular features offered by anonymous coins that they believe will gain traction over the long term. If so I would really appreciate your comments.
The final part of this article comes tomorrow!
submitted by reddibrek to reddCoin [link] [comments]

Member of New York Department of Financial Services posts proposed regulatory framework to /r/Bitcoin. A few buttery finds to be enjoyed

So Ben Lawsky is Superintendent of Financial Services at the New York State Department of Financial Services (DFS). He's posted some regulatory frameworks for how certain entities dealing in Bitcoins might function in NYS legally. It goes about as well as you might expect.
YOU HAVE NO POWER HERE
Worship your rulers harder
At least we can rationally discuss the value of debate
Watch out plebeians
If you're looking for some decorum in conversation you might just be a concern-trolling asshole
submitted by lumpy_potato to SubredditDrama [link] [comments]

The New York State Attorney General lives in Alternate Reality !

Dear Friends,
Legal Parallel Universe is the first thing that came to my mind when I read this final legal reply.
Pierre says it in a different way:
According to Defendants-Respondents’ response to Plaintiffs-Petitioners’ Cross-Motion for Limited Discovery, they should be entitled to live in a legal world where virtually no one has standing to challenge a regulation involving new technology or new markets, and where no plaintiff ever has grounds to seek limited discovery.
Now that all the documents are filed there shouldn’t be any more delays and as you can read in the rest of Pierre’s brief (which is located: http://www.article78againstnydfs.com/docs/Index-101880-15/17-ReplyMemoLimitedDiscovery/01-ReplyMemoLimitedDiscovery.pdf) we are requesting experts.
Ben Lawsky is a Lawyer and a politician. He is a good one but he is not an economist. Nothing in Benjamin Lawsky background predispose him to lead the NYDFS. It was just the best illustration of cronyism within the New York and Wall Street democratic establishment. His testimony is to explain why he ignored Professor Williams’ comments.
During the hearings on the proposed regulation, Mark T. Williams’s written testimony establishes that Bitcoin should be treated as a commodity, and not as a currency, yet Defendants-Respondents did not address Mark T. Williams’ position. Additionally, supposedly, the Defendants-Respondents conducted “extensive research at analysis” when they proposed the Regulation, yet the research and analysis has never been produced so it is unclear how Defendants-Respondents came to the conclusion that Bitcoin could be regulated by them.
As New Yorkers, we might understand that it’s bad politics to listen to Bostonians professors. We know that our Public University professors might not be the most distinguished but we will settle for one that is been quoted by the Attorney General.
We need to have a professor in economy and the state of New York has so many on their payroll, we are simply asking the judge to make CUNY professor available to us since his conclusions are being quoted by the Attorney General.
The citation to Mr. Krugman’s article was taken from the following passage in DFS’s opening brief: These terms—“medium of exchange” and “form of digitally stored value”—are commonly used to describe financial products and services. See, e.g., United States v. Faiella (observing that “money” in ordinary parlance means “something generally accepted as a medium of exchange, a measure of value, or a means of payment”); Paul Krugman, The Int’l Role of the Dollar: Theory and Prospect in Exchange Rate Theory & Practice 8.2 (John F. Bilson & Richard C. Marston eds., 1984) (noting that money generally “serves three functions: it is a medium of exchange, a unit of account, and a store of value”); see also United States v. E-Gold, Ltd. (holding that “a ‘money transmitting service’ includes not only a transmission of actual currency, but also a transmission of the value of that currency through some other medium of exchange”).
Legal scholars might call the Attorney General logic a Legal Parallel Universe. I personally would simply ask what medicine those attorney representing the state of New York are on.
Defendants-Respondents cannot have it both ways -- have the Court believe that Plaintiffs-Petitioners discovery motion should be thrown out just because of the absence of any merit to Plaintiffs-Petitioners’ case and argue Plaintiffs-Petitioners’ petition should be dismissed on an unresolved threshold issue. Either Defendants-Respondents should not have filed their Cross-Motion to Dismiss or limited discovery is necessary on the threshold issue as to the economic nature of Bitcoin.
Please share the date of October 10, 2017 with everyone interested in attending. It’s going to be historic!
All the documents of the lawsuit are on the website here: http://www.article78againstnydfs.com/raw.php
See you on the 10 ! (and don't forget Morpheus waiting for his trial from his jail cell.)
Theo Chino http://AbolishTheBitlicense.com https://www.meetup.com/Article-78-Against-NYDFS
submitted by theochino to Bitcoin [link] [comments]

Building a United Platform

No matter which coin you're backing (or how many), the regulations coming out of New York State have large, overreaching and severe consequences for all cryptocurrencies.
You can read the proposed BitLicense Regulations here.
AmericanBitcoin has put together a TL;DR of the proposed reglations
In response, you can read the in-progress GitHub Fork of those same regulations here.
If you'd like to see a quick breakdown of examples of what's wrong with the proposed regulations, I highly recommend you read this comment by MrMadden over in /Bitcoin, which is utterly fantastic.
Instead of standing 'against' these regulations, let's stand for:
The problems, right now:
These regulations are vague in some important areas and could have unintended consequences.
For example, here's a great breakdown from goldcakes (originally made here)
Entities are considered dealing in virtual currencies if:
.. to any resident in New York. Web services, even those incorporated overseas, must either comply or block access for NY users. (200.2n)
Entities 'dealing in virtual currency' must:
The (only?) good news: Merchants do not need a BitLicense to accept Bitcoin for a good or service. (200.3c2).
This post was created for general guidance, and does not constitute legal advice. You should not act upon the information contained in this publication without obtaining specific advice from a professional. No representation or warranty (expressed or implied) is given as to the accuracy or completeness of the information contained in this post.
submitted by GoodShibe to CryptosUnited [link] [comments]

Lawksy's new regulations highlight the twin futures of Cryptocurrency. Whether you advocate for surveillance or fear it, we're all getting what we want.

The more things change, the more they stay the same.
"I'm very excited about what the future could hold for this very powerful technology."
Writes BenLawsky, on bitcoin, 4 months ago in his AMA.
He also writes:
"We're hopeful that clear regulations, if done in a smart, modern way, may incentivize some of these exchanges to come ashore (hopefully here in NY)."
These are the words of a man eager to capitalize on the benefits of a new technology. Bitcoin has existed in a somewhat legal grey area, but Lawsky thinks if he can clarify a regulatory landscape then it will remove any uneasiness that interested but hesitant corporations have shown to adopting bitcoin.
In the same AMA where the word "Laundering" was mentioned 263 times, Lawsky was quick to lay out his own agenda on the issue. He's a regulator who staunchly believes that extensive KYC/AML policies will help stamp out terrorism and other forms of financial crime. Transactions need to be tracked in Lawsky's world, and he's more than willing to force the entire population to submit to that maxim in order to catch a few bad guys. He and others have been barking up the paper trail tree for a very long time, and there's nothing to suggest they will ever stop.
Regulatory clarity is an idea that makes sense on paper at least, and it will cause legitimate well-funded exchanges to spring up that submit to these extensive, and expensive, compliance checks. It will go on to cause 50 different U.S. states to create 50 different nuanced compliance schemes that each exchange will have to take into account. Such is the cost of doing business in the U.S. And yes, it will absolutely drive some business out of the US entirely and cause others to forbid american customers from participating.
It's also worth noting that Lawsky is attempting to prevent another MtGox fiasco by forcing companies that hold customers' bitcoin to provide adequate security measures, keep collateral on hand that effectively insures the deposits, and prevent them from holding any profit in bitcoin.
Bravo Mr. Lawsky. You can have your little regulated corner of the world, and the rest of us will be living in ours.
This is simply not the future of bitcoin. No one asks you for anything when downloading a wallet for yourself. No one asks for your permission, background information, or intentions when moving funds from one address to another. No one can freeze or seize the funds in an address you control. The type of rules being proposed here are the last bastion of federated economy attempting to impose control with the best of intentions. But it's exactly those intentions that will drive virtual currency usage away from government influence.
The truth is that effective money laundering control is impossible in the virtual currency world. Broad and intrusive regulation might catch some of the low hanging fruit at licensed exchanges, but users who are determined to skirt the rules can and will find ways around it, and many already have. While institutions and investors are busy sinking enormous sums of capital into the digital economy, others are busy setting up decentralized exchanges and services that fly free of regulatory scrutiny.
In Lawsky's eyes such activity might look like the golden age of piracy again, but this time it's largely a body of good actors operating under the banner of financial privacy. This is a group that is simply fed up with the big brother state. It does not trust 3rd parties, let alone their own government, to own and scrutinize their spending habits
Every modicum of value that enters the virtual currency ecosystem, even through well-regulated and compliant exchanges, increases the effectiveness of a system that operates entirely independent from this scrutiny. On a fundamental level Lawsky and I may agree that terrorism is heinous, but the days when we can trace financial transactions with any certainty are coming to a close. It's a hard pill to swallow, and it probably won't stop regulators from trying to clamp down extensively, but they're going to have to find other means to nab criminals who are engaging in harmful activities. And no, I don't mean more KYC/AML, I'll repeat this again: the more you try to push down on transaction tracking, the less effective it will be.
I firmly believe that virtual currency in some form, is here to stay, it's foolish to dismiss this. It's equally as foolish to think that all fiat currency may crumble overnight or become obsolete. Perhaps one may win over the other someday, but we're bound to see a lot of resistance to the death of either system and they will be living in tandem for a very long time. Lawsky and the regulators may claim some domain over the fiat world and transition points that convert between bitcoin and cash, but the time is quickly approaching when one is able to depart from the fiat world, and never return again.
submitted by TryAgain_NY to Bitcoin [link] [comments]

Altisource Portfolio Solutions (S.A.) Long Thesis

Altisource Portfolio Solutions S.A.
This is gonna be a long one.
"You don't have to know how much a man weighs to know he is fat."
Background:
Altisource Portfolio solutions "Altisource" was spun off from Ocwen Financial in 2009. Ocwen financial is a mortgage servicer. Of all the mortgage servicers, Ocwen is the most cost efficient, best run, and best capitalized. As a mortgage servicer, Ocwen acquires mortgage servicing rights (MSRs). Owners of MSRs collect a small fee from every mortgage payment it is servicing. Ocwen may service a mortgage by handling day to day tasks of servicing a loan, process payments, keep track of principal and interest paid, manages escrow accounts, initiate foreclosure, modify loan payments for subprime and delinquent loans and so on.
The reason Altisource was spun off from Ocwen in 2009 is because Ocwen's Chairman Bill Erbey knew the software division of Ocwen was not being valued properly within the business. Altisource is now incorporated in Luxembourg for tax reasons but it basically does everything a United States company would do. It files with the SEC, gets audited and does almost all business in the United States.
Thesis:
What does Altisource do?
From the 2013 10k-
"Altisource®, together with its subsidiaries, is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. We leverage proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants."
If you figured out what they did from reading that, congratulations, because I couldn't. I own the company and I still do not know all of the services they provide. What I do know is that more than half of Altisource's revenue is derived from Ocwen. Ocwen uses Altiosurce's state of the art servicing technology to service their loans. Altisource's technology allows Ocwen to be such a low-cost servicer. Altisource only provides their technology to Ocwen and no other servicers.
http://oraclefromomaha.files.wordpress.com/2014/04/1.png
In the above link, you can see the ways Altisource generates revenue. The main thing to know here is that Altisource generates a huge portion of their revenue from Ocwen. When Ocwen makes less modifications on loans, they use Altisource's services less so Altisource makes less money. When Ocwen modifies more loans then Altisource makes more money because Ocwen uses their serivices more. It provides a hedge against parts of their business that may struggle in a recession like any other business. During the natural economic cycle if there is a recession and Ocwen is modifying more loans because more homeowners cannot make payments then Altisource is making more money than they would during good economic times because Ocwen uses their services more. The more MSRs Ocwen acquires, the more Altisource makes.
Ocwen's growth (basically a quick long thesis on Ocwen)
When a bank loans money to an individual to buy a house, a mortgage is originated and an MSR is created. The bank then keeps the mortgage on its books or sells the mortgage to another entity. Perhaps Fannie or Freddie. But what happens to the MSR? The MSR is then sold to a servicer such as Nationstar, Walter Investment Management Corp, or Ocwen. The reason the banks or originator of the mortgage sell the MSR is because they cannot service it properly and/or they would lose money in the process of trying to service it. Because of Dodd Frank, banks are trying to get MSRs off their books even faster because they cannot service them efficiently as previously mentioned and because they will have to hold 250% more capital against the MSRs. All banks are moving away from owning MSRs and non-bank servicing is becoming a larger industry, and Ocwen is leading the way. Due to the high supply of MSRs that are wanting to be sold by banks the MSRs can currently be bought at a 20-30% yield. Ocwen can buy the most MSRs because they are the best capitalized and they use the most conservative balance sheet. Ocwen being the lowest cost operator provides them with a huge competitive advantage when bidding for MSRs as well. Ocwen will continue to lead the non-bank servicers in buying MSRs. Ocwen currently has $464 billion of unpaid principle balance of loans they are servicing and another trillion dollars of subprime (Ocwen specializes in Subprime) UPB is expected to get into the hands of non bank servicers by 2018 (3-4 trillion in regular MSRs). Ocwen will get the most of that trillion dollars of UPB of any servicer because of their competitive advantages.
Another competitive advantage of Ocwen is their relationship Home Loan Servicing Solutions Ltd. HLSS was also created by Bill Erbey. HLSS provides the capital for Ocwen to service loans so Ocwen does not have to tie up their capital. In the future, HLSS will acquire more loans and allow Ocwen to sub-service them through a unique financing strategy. This strategy called the accretion model is a genius way to get capital for HLSS to afford a virtually unlimited amount of MSRs. HLSS pays a huge dividend and because of this dividend, HLSS trades above its tangible book value due to fixed income hungry investors who want a fat dividend. HLSS then issues more shares above tangible book value to then acquire more MSRs. Issuing shares above book value actually creates value for HLSS shareholders also instead of diluting value as many people would think issuing shares does. Those MSRs are then sub-serviced by Ocwen, who still uses Altisource's technology.
Ocwen is also getting into foreword and reverse mortgage origination so they can have a constant stream of MSRs.
Basically, Ocwen and HLSS are going to acquire more MSRs and Ocwen will be servicing more mortgages. More mortgages serviced by Ocwen = more revenue for altisource.
All MSR transactions have currently been stopped by a New York financial regulator but we will get to that issue later.
Share Repurchases
Up until a few months ago the laws of Luxembourg restricted the amount of shares that Altisource could repurchase. Altisource recently created a foreign subsidiary that does nothing called "MidCo" to hold all other parts of the business so there would legally be no restrictions on share repurchases. Until Altisource did this, they were repurchasing the maximum amount of shares that Luxembourg would allow.
Here is Altisource's entity structure to bypass Luxembourg share repurchase laws http://i.imgur.com/J6LPEc0.jpg
The highlighted dark blue entity will be the entity repurchasing unlimited shares because MidCo, its parent company is not in Luxembourg. How smart is that.
Altisource currently authorized the repurchase of up to 2.9 million shares. 2.9 million shares is 13% of their market cap. They could easily repurchase that amount. Altisource also just finalized a loan with BAC for $200 million to repurchase shares so the share repurchases will really start to kick into high gear with the new liquidity and cheaper price. Up until the sharp share price drop, Altisource was repurchasing for the past several months around $110. That shows the board and management think the company is undervalued at $110 and now it is at $84 and nothing fundamentally changed about the company.
Insider Purchases
During the past 6 months, 3 insiders have purchased at $102, $103, $106, and $120. Between 20% and 43% above current market prices. Bill Erbey also owns 30% of Altisource and 13% of Ocwen. His views are directly in line with other shareholders.
Bill Erbey and his Capital Allocation
Bill Erbey is the Chairman of Ocwen, Altisource Portfolio Solutions, Altisource Asset Management Corporation, Altisource Residential, and Home Loan Servicing Solutions. Bill has done a great job of creating shareholder value for Ocwen and Altisource shareholders. Bill has also greatly benefited from this because of his stakes in thise companies. Before the sharp share price drop due to outside forces, Bill compounded Ocwen's stock at 30% per year since 2002 WITHOUT including the Altisource spinoff which compounded itself since 2009 at almost 75% a year. Altisource then spunoff Altisource Residential and Altisource Asset Management. Every spinoff is a value creating machine. At one point AAMC had compounded 430% in a year and a half, although it was due to a stretched valuation. Bill is dedicated to doing whatever it takes to create shareholder value. He relocated to the Virgin Islands just to save Ocwen some money on taxes.
I once read a story about Bill in his Virgin Islands home and his electric bill for the air conditioning. Keep in mind, Mr. Erbey is a multi billionaire. Bill got his electric bill and saw his costs had skyrocketed due to his air conditioning. Bill then sat there after that baking and sweating in the heat in his home so he could save a couple thousand on his electricity bill. He will do anything to save a dollar.
Hubzu
Hubzu is owned by Altisource. Hubzu is currently an online marketplace to buy and sell foreclosed homes. Like Zillow and Trulia but for foreclosed homes. Hubzu takes foreclosed homes from Ocwen and lists them on their website Hubzu.com. Hubzu is trying to get into the non-distressed house listing like other real estate websites like Zillow and Trulia. This will grow Hubzu at an even faster rate. Altisource states Hubzu gets about 1 million unique new visitors per month. When you buy Altisource you are also buying the jewel of Hubzu. Bill Erbey claims that Hubzu makes "as much money in one quarter as Zillow does in 4 quarters" Zillow has a market capitalization of $5 billion. Zillow's market capitalization is definitely stretched but a spinoff would create a lot of shareholder value even if the market gave Hubzu a fraction of Zillow's valuation.
Why is the company undervalued?
All this greatness in one company so why is it so undervalued? Remember how Altisource's earning were pretty much directly tied to how well Ocwen does? A New York State Financial Department regulator named Benjamin Lawsky halted a $2.7 bilion ($39 billion in UPB) Wells Fargo MSR transfer to Ocwen. This also halted all of the other MSR transactions between banks and servicers. Benjamin Lawsky is probing into Ocwen and other servicers. He states that he wants to make sure Ocwen and other servicers have the capacity to service loans efficiently because they are "growing too fast". The relationships these 5 companies share though is somewhat sketchy. They have a lot of the same board members and they all work with each other and make money off each other. Ocwen is the best servicer of them all though. They provide more loan modifications than anyone else and they have the lowest re default rate.
A slide from an investor presentation shows how they compare to others http://i.imgur.com/YkIKD2O.png
Even if Lawsky did find that some servicers do not have the capacity to service loans then Ocwen would be the last one in question because it is easy to see they are doing the best for their consumer compared to anyone other servicer.
Benjamin Lawsky is doing this for his own political reasons. He wants his name on the news. He wants people to see his name. Perhaps he wants to run for governor or something. Why would he schedule an interview with CNBC about the probe into the mortgage servicers right after it is announced. Why would he send a letter to Altisource and at the same time send it to the press, therefore ruining Altisource's reputation without giving them a chance to respond. He is also really into regulating bitcoin in New York which is just another vehicle to get his name in the news.
There are very recent updates with the regulatory pressure and basically the probing is narrowed down to an issue with force placed insurance and Altisource. Ben Lawsky could not find anything else. He sent this letter on Aug. 4th to Ocwen. So this is what the probe is narrowed down to.
http://www.dfs.ny.gov/about/press2014/pr140804-ocwen-letter.pdf
Basically, if a homeowner is struggling to make payments and can't pay their insurance, Ocwen has the right to force place insurance into their payments so the mortgage owner does not incur massive losses if a catastrophe happens. Ocwen has to outsource whoever force places the insurance and the issue that Ben Lawsky was worried about was why Altisource was appointed to find someone to force place that insurance, why Altisource received commission for basically doing nothing, and why Bill Erbey did not consult with any of the Ocwen board before making this decision to allow Altisource to find an insurer.
Altisource will probably get a one time fine settlement and they will go on doing business as usual. I believe this because an almost identical situation happened with Assurant and the New York State Financial Department and they settled for $14 million. There is also an interview on CNBC with someone who talks to the CEO of Ocwen and they are sure that Ocwen and Altisource will just settle with a deal with Lawsky and that will be the end of it.
Interview:
http://video.cnbc.com/gallery/?video=3000298804
Risks Benjamin Lawsky actually finds something else that Altisource was doing wrong. Bill Erbey Dies. He is in his 60s and overweight.
Conclusion
In conclusion Altisource is extremely cheap. Remember that quote about not knowing how much a man weighs but knowing he is fat? That is the case with Altisource. Altisource is definitely undervalued but there are a range of possibilities of the valuation with Hubzu, regulatory matters, growth, etc.
submitted by nomcow to valueinvestorsclub [link] [comments]

Altisource Portfolio Solutions S.A.

Altisource Portfolio Solutions S.A.
This is gonna be a long one.
"You don't have to know how much a man weighs to know he is fat."
Background:
Altisource Portfolio solutions "Altisource" was spun off from Ocwen Financial in 2009. Ocwen financial is a mortgage servicer. Of all the mortgage servicers, Ocwen is the most cost efficient, best run, and best capitalized. As a mortgage servicer, Ocwen acquires mortgage servicing rights (MSRs). Owners of MSRs collect a small fee from every mortgage payment it is servicing. Ocwen may service a mortgage by handling day to day tasks of servicing a loan, process payments, keep track of principal and interest paid, manages escrow accounts, initiate foreclosure, modify loan payments for subprime and delinquent loans and so on.
The reason Altisource was spun off from Ocwen in 2009 is because Ocwen's Chairman Bill Erbey knew the software division of Ocwen was not being valued properly within the business. Altisource is now incorporated in Luxembourg for tax reasons but it basically does everything a United States company would do. It files with the SEC, gets audited and does almost all business in the United States.
Thesis:
What does Altisource do?
From the 2013 10k-
"Altisource®, together with its subsidiaries, is a premier marketplace and transaction solutions provider for the real estate, mortgage and consumer debt industries offering both distribution and content. We leverage proprietary business process, vendor and electronic payment management software and behavioral science based analytics to improve outcomes for marketplace participants."
If you figured out what they did from reading that, congratulations, because I couldn't. I own the company and I still do not know all of the services they provide. What I do know is that more than half of Altisource's revenue is derived from Ocwen. Ocwen uses Altiosurce's state of the art servicing technology to service their loans. Altisource's technology allows Ocwen to be such a low-cost servicer. Altisource only provides their technology to Ocwen and no other servicers.
http://oraclefromomaha.files.wordpress.com/2014/04/1.png
In the above link, you can see the ways Altisource generates revenue. The main thing to know here is that Altisource generates a huge portion of their revenue from Ocwen. When Ocwen makes less modifications on loans, they use Altisource's services less so Altisource makes less money. When Ocwen modifies more loans then Altisource makes more money because Ocwen uses their serivices more. It provides a hedge against parts of their business that may struggle in a recession like any other business. During the natural economic cycle if there is a recession and Ocwen is modifying more loans because more homeowners cannot make payments then Altisource is making more money than they would during good economic times because Ocwen uses their services more. The more MSRs Ocwen acquires, the more Altisource makes.
Ocwen's growth (basically a quick long thesis on Ocwen)
When a bank loans money to an individual to buy a house, a mortgage is originated and an MSR is created. The bank then keeps the mortgage on its books or sells the mortgage to another entity. Perhaps Fannie or Freddie. But what happens to the MSR? The MSR is then sold to a servicer such as Nationstar, Walter Investment Management Corp, or Ocwen. The reason the banks or originator of the mortgage sell the MSR is because they cannot service it properly and/or they would lose money in the process of trying to service it. Because of Dodd Frank, banks are trying to get MSRs off their books even faster because they cannot service them efficiently as previously mentioned and because they will have to hold 250% more capital against the MSRs. All banks are moving away from owning MSRs and non-bank servicing is becoming a larger industry, and Ocwen is leading the way. Due to the high supply of MSRs that are wanting to be sold by banks the MSRs can currently be bought at a 20-30% yield. Ocwen can buy the most MSRs because they are the best capitalized and they use the most conservative balance sheet. Ocwen being the lowest cost operator provides them with a huge competitive advantage when bidding for MSRs as well. Ocwen will continue to lead the non-bank servicers in buying MSRs. Ocwen currently has $464 billion of unpaid principle balance of loans they are servicing and another trillion dollars of subprime (Ocwen specializes in subprime) UPB is expected to get into the hands of non bank servicers by 2018 (3-4 trillion in UPB of regular MSRs). Ocwen will get the most of that trillion dollars of UPB of any servicer because of their competitive advantages.
Another competitive advantage of Ocwen is their relationship Home Loan Servicing Solutions Ltd. HLSS was also created by Bill Erbey. HLSS provides the capital for Ocwen to service loans so Ocwen does not have to tie up their capital. In the future, HLSS will acquire more loans and allow Ocwen to sub-service them through a unique financing strategy. This strategy called the accretion model is a genius way to get capital for HLSS to afford a virtually unlimited amount of MSRs. HLSS pays a huge dividend and because of this dividend, HLSS trades above its tangible book value due to fixed income hungry investors who want a fat dividend. HLSS then issues more shares above tangible book value to then acquire more MSRs. Issuing shares above book value actually creates value for HLSS shareholders also instead of diluting value as many people would think issuing shares does. Those MSRs are then sub-serviced by Ocwen, who still uses Altisource's technology.
Ocwen is also getting into foreword and reverse mortgage origination so they can have a constant stream of MSRs.
Basically, Ocwen and HLSS are going to acquire more MSRs and Ocwen will be servicing more mortgages. More mortgages serviced by Ocwen = more revenue for altisource.
All MSR transactions have currently been stopped by a New York financial regulator but we will get to that issue later.
Share Repurchases
Up until a few months ago the laws of Luxembourg restricted the amount of shares that Altisource could repurchase. Altisource recently created a foreign subsidiary that does nothing called "MidCo" to hold all other parts of the business so there would legally be no restrictions on share repurchases. Until Altisource did this, they were repurchasing the maximum amount of shares that Luxembourg would allow.
Here is Altisource's entity structure to bypass Luxembourg share repurchase laws http://i.imgur.com/J6LPEc0.jpg
The highlighted dark blue entity will be the entity repurchasing unlimited shares because MidCo, its parent company is not in Luxembourg. How smart is that.
Altisource currently authorized the repurchase of up to 2.9 million shares. 2.9 million shares is 13% of their market cap. They could easily repurchase that amount. Altisource also just finalized a loan with BAC for $200 million to repurchase shares so the share repurchases will really start to kick into high gear with the new liquidity and cheaper price. Up until the sharp share price drop, Altisource was repurchasing for the past several months around $110. That shows the board and management think the company is undervalued at $110 and now it is at $84 and nothing fundamentally changed about the company.
Insider Purchases
During the past 6 months, 3 insiders have purchased at $102, $103, $106, and $120. Between 20% and 43% above current market prices. Bill Erbey also owns 30% of Altisource and 13% of Ocwen. His views are directly in line with other shareholders.
Bill Erbey and his Capital Allocation
Bill Erbey is the Chairman of Ocwen, Altisource Portfolio Solutions, Altisource Asset Management Corporation, Altisource Residential, and Home Loan Servicing Solutions. Bill has done a great job of creating shareholder value for Ocwen and Altisource shareholders. Bill has also greatly benefited from this because of his stakes in thise companies. Before the sharp share price drop due to outside forces, Bill compounded Ocwen's stock at 30% per year since 2002 WITHOUT including the Altisource spinoff which compounded itself since 2009 at almost 75% a year. Altisource then spunoff Altisource Residential and Altisource Asset Management. Every spinoff is a value creating machine. At one point AAMC had compounded 430% in a year and a half, although it was due to a stretched valuation. Bill is dedicated to doing whatever it takes to create shareholder value. He relocated to the Virgin Islands just to save Ocwen some money on taxes.
I once read a story about Bill in his Virgin Islands home and his electric bill for the air conditioning. Keep in mind, Mr. Erbey is a multi billionaire. Bill got his electric bill and saw his costs had skyrocketed due to his air conditioning. Bill then sat there after that baking and sweating in the heat in his home so he could save a couple thousand on his electricity bill. He will do anything to save a dollar.
Hubzu
Hubzu is owned by Altisource. Hubzu is currently an online marketplace to buy and sell foreclosed homes. Like Zillow and Trulia but for foreclosed homes. Hubzu takes foreclosed homes from Ocwen and lists them on their website Hubzu.com. Hubzu is trying to get into the non-distressed house listing like other real estate websites like Zillow and Trulia. This will grow Hubzu at an even faster rate. Altisource states Hubzu gets about 1 million unique new visitors per month. When you buy Altisource you are also buying the jewel of Hubzu. Bill Erbey claims that Hubzu makes "as much money in one quarter as Zillow does in 4 quarters" Zillow has a market capitalization of $5 billion. Zillow's market capitalization is definitely stretched but a spinoff would create a lot of shareholder value even if the market gave Hubzu a fraction of Zillow's valuation.
Why is the company undervalued?
All this greatness in one company so why is it so undervalued? Remember how Altisource's earning were pretty much directly tied to how well Ocwen does? A New York State Financial Department regulator named Benjamin Lawsky halted a $2.7 bilion ($39 billion in UPB) Wells Fargo MSR transfer to Ocwen. This also halted all of the other MSR transactions between banks and servicers. Benjamin Lawsky is probing into Ocwen and other servicers. He states that he wants to make sure Ocwen and other servicers have the capacity to service loans efficiently because they are "growing too fast". The relationships these 5 companies share though is somewhat sketchy. They have a lot of the same board members and they all work with each other and make money off each other. Ocwen is the best servicer of them all though. They provide more loan modifications than anyone else and they have the lowest re default rate.
A slide from an investor presentation shows how they compare to others http://i.imgur.com/YkIKD2O.png
Even if Lawsky did find that some servicers do not have the capacity to service loans then Ocwen would be the last one in question because it is easy to see they are doing the best for their consumer compared to anyone other servicer.
Benjamin Lawsky is doing this for his own political reasons. He wants his name on the news. He wants people to see his name. Perhaps he wants to run for governor or something. Why would he schedule an interview with CNBC about the probe into the mortgage servicers right after it is announced. Why would he send a letter to Altisource and at the same time send it to the press, therefore ruining Altisource's reputation without giving them a chance to respond. He is also really into regulating bitcoin in New York which is just another vehicle to get his name in the news.
There are very recent updates with the regulatory pressure and basically the probing is narrowed down to an issue with force placed insurance and Altisource. Ben Lawsky could not find anything else. He sent this letter on Aug. 4th to Ocwen. So this is what the probe is narrowed down to.
http://www.dfs.ny.gov/about/press2014/pr140804-ocwen-letter.pdf
Basically, if a homeowner is struggling to make payments and can't pay their insurance, Ocwen has the right to force place insurance into their payments so the mortgage owner does not incur massive losses if a catastrophe happens. Ocwen has to outsource whoever force places the insurance and the issue that Ben Lawsky was worried about was why Altisource was appointed to find someone to force place that insurance, why Altisource received commission for basically doing nothing, and why Bill Erbey did not consult with any of the Ocwen board before making this decision to allow Altisource to find an insurer.
Altisource will probably get a one time fine settlement and they will go on doing business as usual. I believe this because an almost identical situation happened with Assurant and the New York State Financial Department and they settled for $14 million. There is also an interview on CNBC with someone who talks to the CEO of Ocwen and they are sure that Ocwen and Altisource will just settle with a deal with Lawsky and that will be the end of it.
Interview:
http://video.cnbc.com/gallery/?video=3000298804
Risks Benjamin Lawsky actually finds something else that Altisource was doing wrong. Bill Erbey Dies. He is in his 60s and overweight.
Conclusion
In conclusion Altisource is extremely cheap. Remember that quote about not knowing how much a man weighs but knowing he is fat? That is the case with Altisource. Altisource is definitely undervalued but there are a range of possibilities of the valuation with Hubzu, regulatory matters, growth, etc.
submitted by nomcow to investing [link] [comments]

Bitcoin and Cryptocurrency Month in Review: July 2014

The Bitcoin & Cryptocurrency world moves so quickly that it's hard to keep track of everything. For my benefit and yours, I'd like to attempt a monthly post to capture the zeitgeist of the movement. This isn't exactly "news", but more of a sense of the current state of our ecosystem. I was going to wait until Aug 1, but I got froggy. Maybe I'll repost then.
Items are selected based on my knowledge and experience of the crypto sector. I will update the OP in consideration of valid items I missed.
Please don't lament the inclusion of "Cryptocurrency" - I've discovered that many folks are in bitcoin for the value aspect only, but that's nearsighted. Others feel threatened by other cryptocurrencies because they might challenge bitcoin. Lets move past that.
These things happened in July:
That's my recap of July. Please share a note if you think I've missed something important. I do reserve the right to use my discretion to add it or not :)
submitted by secret_bitcoin_login to Bitcoin [link] [comments]

Entidades Reguladoras Veem Valor No Bitcoin, E Investidores Se Apressam Em Concordar.

BY NATHANIEL POPPER
A moeda virtual bitcoin deu um grande passo em direção a sua popularização nesta segunda-feira quando as autoridades federais sinalizaram sua disposição de aceitá-la como uma alternativa de pagamento legítimo. Um número de funcionários federais disse em uma audiência no Senado que essas redes financeiras ofereceram benefícios reais para o sistema financeiro, assim como eles reconheceram que as novas formas de dinheiro digitais haviam fornecido caminhos para a lavagem de dinheiro e atividades ilegais.
"Há muitas oportunidades para as moedas digitais operarem dentro das leis e regulamentos existentes", disse Edward Lowery, um agente especial do Serviço Secreto, que é encarregado de proteger a integridade do dólar. Sinais de que o governo não iria se colocar no caminho do desenvolvimento do bitcoin, mesmo que ele venha reprimindo as redes criminosas que usam o dinheiro digital, alimentou uma forte recuperação no preço do cripto-moeda.
Na segunda-feira à noite, o valor de uma unidade de bitcoin explodiu ultrapassando 700 dólares em algumas trocas. Esse excepcional montante de bitcoins - que é criado por uma rede de usuários que resolvem problemas matemáticos complexos - agora vale mais de US $ 7 bilhões. A audiência do Senado nesta segunda-feira à tarde, foi uma indicação mais clara do desejo do governo de lidar com as consequências deste crescimento, e o reconhecimento de que o bitcoin e outras redes semelhantes podem se tornar peças mais duradouras e importantes do cenário financeiro.
Video: http://www.nytimes.com/video/business/100000002167289/bitcoin-has-real-world-investors.html
"A decisão de trazer a moeda virtual dentro do escopo do nosso quadro regulamentar deve ser visto por aqueles que respeitam e obedecem aos fundamentos básicos da lei como um desenvolvimento positivo para o setor", disse Jennifer Shasky Calvery, o diretor do Departamento de Execução de Crimes Financeiros do Tesouro. "Ele reconhece a inovação que moedas virtuais fornecem, e os benefícios que elas podem oferecer." Ms. Shasky Calvery e os outros funcionários na audiência disseram que ainda havia questões básicas a serem respondidas sobre moedas virtuais, incluindo se elas realmente podem ser consideradas moedas ou se são mais corretamente classificados como bens ou valores mobiliários. A distinção vai determinar quais agências regularam as redes e como elas serão tratadas sob a lei fiscal.
Ms. Shasky Calvery disse que a Receita Federal estava "trabalhando ativamente" em suas próprias regras para o bitcoin.
A audiência seguiu outras medidas menos visíveis tomadas pelos reguladores e legisladores para trazer o dinheiro digital ao mainstream monetário.
O principal regulador financeiro do Estado de Nova York, Benjamin M. Lawsky, disse na semana passada que ele iria realizar uma audiência para considerar a criação de um BitLicense para fornecer mais fiscalização para as transações. Mais cedo, a Comissão Federal Eleitoral expôs um aviso indicando que bitcoin pode ser legalmente aceitos como doações políticas.
O conselheiro geral da Fundação Bitcoin, uma organização sem fins lucrativos que defende a moeda, disse em seu depoimento na segunda-feira que ele estava recebendo uma resposta muito mais amigável do governo e do setor financeiro.
"Nós recentemente percebemos uma melhora acentuada no tom e ênfase tomada por ambos os funcionários do Estado e executivos de banco", disse o conselheiro-geral, Patrick Murck, disse.
Bitcoin tem experimentado uma ascensão notável desde que foi criado em 2009 por um programador anônimo ou coletivo conhecido como Satoshi Nakamoto. O dinheiro, que não está vinculado a qualquer moeda nacional, tem sido popular com tecnófilos que são céticos dos bancos centrais do mundo. Apenas uma quantidade finita de bitcoin será criada - 21 milhões de unidades. Os usuários alavancaram os preços pelas casas de câmbio pela Internet, apostando que a moeda será mais amplamente utilizada no futuro.
Há questões importantes sobre a sabedoria de usar o dinheiro digital como um investimento, uma vez que bitcoin não possui valor intrínseco e provou ser vulnerável a hackers. Muitos gestores de fundos têm recomendado aos investidores inexperientes para permanecerem longe.
Recentemente, porém, o bitcoin tem pegando fogo em todo o mundo, com trocas na China particularmente ativas. Um número crescente de investidores americanos proeminentes também compraram participações, incluindo Michael Novogratz, diretor da gigante Fortress Investment Group¹, assim como os gêmeos Winklevoss, Cameron e Tyler.
A participação cada vez mais generalizada do bitcoin deslocou a atenção para longe dos empreendimentos criminosos que usaram o dinheiro digital, mas era um foco na audiência do Senado.
No mês passado, o mercado on-line Silk Road, onde o Bitcoin é a principal forma de pagamento, foi fechado e seu fundador preso depois que as autoridades o acusaram de ser usado para comprar e vender drogas, armas e pornografia. O presidente da comissão do Senado, Thomas R. Carper, democrata de Delaware, disse que poucos dias depois da prisão, um site semelhante surgiu.
"Pode ser mais difícil de rastrear os criminosos que usam o Bitcoin", policiais disseram na audiência, "porque operam através das fronteiras internacionais e muitas vezes não usam instituições financeiras estabelecidas que reportem as transações”.
Mas Mythili Raman, um procurador-geral adjunto do Departamento de Justiça, também disse que, porque cada transação de bitcoin era gravada em um registro público, foi possível aos investigadores rastrear a movimentação de dinheiro entre contas.
"Não é, de fato, anônimo. Não está imune a investigação", disse Raman.
Todos os funcionários na audiência disseram que crimes tinham sido um problema durante os primeiros dias de cartões de crédito e sistemas de pagamento online como o PayPal, e não deve ser uma razão para limitar a inovação.
"É nosso dever, como aplicadores da lei de permanecermos vigilantes, reconhecendo que há muitos usuários legítimos desses serviços", disse Raman.
Os defensores do bitcoin que testemunharam na audiência disseram que o bitcoin pode trazer grandes mudanças para o sistema financeiro por cortar os intermediários necessários para movimentar o dinheiro em todo o mundo. "Estou aqui para testemunhar porque eu acredito que a moeda digital global representa uma das inovações técnicas e econômicas mais importantes do nosso tempo", disse Jeremy Allaire, presidente-executivo do Círculo Internet Financial, que está tentando promover uma utilização mais difundida da moeda.
Dado o apelo do bitcoin aos céticos do governo, muitos aficionados têm sido cautelosos com envolvimento de Washington. Mas os defensores na audiência disseram que a crescente cooperação com as entidades reguladoras poderiam lançar as bases para um maior crescimento.
"À medida que essa tecnologia se desloca de pioneiros para a aceitação popular, é fundamental em minha opinião, que os governos federais e estaduais estabeleçam políticas em torno da moeda digital", disse Allaire.
¹http://dealbook.on.nytimes.com/public/overview?symbol=FIG&inline=nyt-org
Traduzido por Sarah Alexandre
Uma versão desse artigo aparece na impressão de 19/11/2013, na página B1 da edição do NewYork com o título: “Regulators See Value in Bitcoin, And Investors Hasten to Agree” Texto original em: http://dealbook.nytimes.com/2013/11/18/regulators-see-value-in-bitcoin-and-investors-hasten-to-agree/?_r=0
submitted by sa_rah to BrasilBitcoin [link] [comments]

[Table] IAmA full-time Bitcoin day-trader, blogger, and explainer. I was a pro TCG player. Here until Midnight EST. AMA!

Verified? (This bot cannot verify AMAs just yet)
Date: 2014-02-20
Link to submission (Has self-text)
Questions Answers
Let's say someone was looking for a stay at home computer job, would you recommend doing what you do? Is it something you can hop into, or is it something a lot of time must be put into before considerable income comes? You handle risk and pressure well, and you don't let your emotions guide your decision-making. Professional Poker and TCG players often develop this skillset.
You have experience working with stocks, bonds, derivatives, foreign exchange, or other financial instruments. If you have a strong mathematical background, that would also likely fulfill this.
You can invest significant capital into trading while remaining financially secure if it all suddenly vanishes.
You are capable of constantly monitoring a situation, waking up in the middle of the night if an alarm goes off, etc. It requires serious dedication.
You are good at keeping up with news, understanding market psychology, and "feeling" shifts in attitude and perception among other market participants.
Of those, I'd be most cautious if you don't meet no. 3. Going bust is a real possibility--day-trading a volatile commodity is inherently extremely high-risk. Nos. 2 and 4 are the easiest to learn or force through routine. No. 1 requires a person who approaches things in an emotionally detached manner. No. 5 is something that comes with investing enough time.
Second question: I'm answering this after that big block of text because this answer will come off like a get-rich-quick scheme. Yes, you can hop into it very quickly, and you can start making very high profits very quickly. I put in a small initial investment to test the waters, and made 10% on it in a few days. If you have the right skillset, composure, and resources, yes. It is a potentially very lucrative and exciting stay-at-home job. It is not for everyone, though.
As much as it would be beneficial for me (being in the industry and all), to tell everyone it's easy and that it will help them provide for themselves I feel that people need to know the real risks that are involved. Regardless, that's all a little irrelevant. We're not playing the house, and we're not flipping coins. We're playing other investors, and we're making actual decisions. You keep saying things like "98% lose money" and "Go onto any FOREX forum, and you will see from the users posts that they pretty much all lose money" but you don't back it up. Cool, yeah, it's a zero-sum game with a rake: a little more than half of the players will lose. That's expected. They'll probably complain about it, too, huh?
Retrospect can have a very positive effect. Got any real account trading statements I can have a look at? Let's see how fast you can come up with excuses not to show me ;) I only have and need one: I have chosen not to disclose my personal valuation for privacy reasons. Same reason I've had all along. I instead publicly disclose my trades, as they happen, on my website. The posts are timestamped, and the ones that are the start of a position contain the price I entered at. Go check the posts, then go check the charts, then go check my archive. But feel free to continue to arbitrarily call my credibility into question--that makes your argument better!
What leverage do you use? In Australia the leverage is typically 100:1, perhaps that's why your not seeing how risky I deem it to be. First, our argument so far has had nothing to do with risk. Second, I told you I am leveraged 2.5:1, two posts ago. Third, you realize I'm trading Bitcoin, not ForEx, correct? And that no one in their right mind would offer 100:1 leverage on Bitcoin due to its volatility?
What's your last year's hourly salary? A year ago I was finishing up college and extricating myself from the TCG business I'd co-founded. I took very little in take-home pay over that period, but kept part ownership of the continuing business. Money isn't just about the number on your bank account--it's also about residual future income.
How many hours a week are you typically on a computer? On a computer, probably 50-55, if you add in time I spend on my phone, I'd say 65-70. Day trading takes constant watchfulness. I imagine it's like an easier version of taking care of a baby.
What are your favorite to sources of news besides waiting for it to get to the front/hot page of /Bitcoin when it's several hours old? I have an IFTTT for /BitcoinMarkets and /Bitcoin that notifies me early on about some posts.
What's the weirdest thing about your mom? She started a bookselling business online in her 50s and makes more money than me.
Or.
She's a little old lady who loves gadgets and technology.
What are your thoughts on Dogecoin and other bitcoin competitors? Do you think any have staying value? LTC.
DOGE.
NXT.
VTC.
Coins that offer something different or that have a strong community to them can be valuable prospects.
LTC is the first-mover scrypt coin - DOGE has the most non-techies interested in its success and is spreading quickly as a result - NXT is a cool generation two coin that has a lot of features BTC doesn't have - VTC is ASIC-resistant
Ok, let me spell it out to you. The retail forex market only makes up 5% of the total forex markets liquidity. The other 95% is from hedge funds and institutions. Therefore, 99% of the retail market losing their money is very possible, as that only makes up 4.95% of the whole market. Is it possible that 4.95% of the market generally loses? Yes. How is that infeasible? Nope. That's a false equivalence. It is possible that 4.95% of the market loses. It is not feasible, that, say, 99% of people with blue eyes lose. What, exactly, in empirical terms, is the difference between retail investors and hedge/institutions that causes this INCREDIBLE disparity? Would you care to respond to my above empirical argument that demonstrates that a zero-decision system is flipping a losing coin? Do you consider it feasible for 99% of people playing a 45-55 game to lose?
Are there options and/or futures markets for Bitcoin? Not really yet, but there will be more prominent ones soon. I hear about a new one pretty regularly, it seems, but nothing that seems truly legitimate has come out. I'm certainly excited for them, though.
Eventually, once Mr. Lawsky and co. get things sorted out, I'm certain we'll see a big-name investment bank start offering them.
From the time you started trading until today, what is your overall percentage return? In USD, my percentage return calculated from investment to current valuation is about 300% over a little more than 2 months.
In BTC, my percentage return calculated from investment to current valuation is about 425% over a little more than 2 months.
Using my average per-coin buy-in price, if I had just bought-and-held, I would have lost about 27% of my initial investment value.
Ben, i told you I'd be here and asking about Hearthstone first. If there's one class that needs a bit of tuning, up or down, which is it and why? I think Mage needs basic, class-level tuning. I'm not sure what needs to be done exactly, but I don't like what the Mage class power does to gameplay. I've thought some about how different it would be if it could only hit minions, and I'd want to know if Blizzard had tried that out. The Mage power is too versatile, and over the long-term I think it will prove to be problematic.
What's your favorite card? Lord Jaraxxus is my favorite card. He has a truly legendary feel to him when you play him, but your opponent can still win, even though he's very powerful.
So, where do you think we go from here? I'm currently short, but I don't expect to be so for a lot longer. I don't think we'll get past 550. I also don't expect this drop to hold on for a really long time.
I haven't seen a good, substantive rationale for what the MtGox situation really has to do with Bitcoin price. Yes, it looks bad, it certainly doesn't help with our legitimacy, but is it really worth the incredible price declines we continue to see? I don't think so. I think we are seeing these impressive declines because the price on MtGox (which is a reflection of trust in MtGox relative to Bitcoin price, not just Bitcoin price) has been declining heavily. I don't expect it to continue forever, especially not with things like the Winkdex and the accompanying ETF launching.
MtGox is basically dead to me, for now at least. The sooner everyone stops paying attention to it, the sooner we can all get back on track, which I, for one, will be quite happy about.
Do you think that it's a good thing for a game when the developers of that game discourage certain playing styles (e.g. mill decks or decks that try to win in unconventional manners) whether in hearthstone, MTG, or other TCGs? It can be. I don't want the developers metaphorically over my shoulder outlawing strategies, but I don't mind if the strategies that are "less fun" for your opponent (Draw/Go, Mill, or Hard Combo from MTG, for example) are also less powerful. Most players prefer a game where the best decks are also among the most fun, because it means that they are playing against fun decks more often. Clearly the 2-cost 3/3 will be played most often. If you fix this by making both 2-cost guys 2/2s or 3/3s, or by making one a 2/3 and the other a 3/2, then you've done something--but it's not that interesting. If you instead make the 2-cost 2/2 have text that says "While you control the 3-cost 3/3, this gets +2/+2" and you give the 3 cost 3/3 text that says "While you control the 2-cost 2/2, it has Taunt" you now have more complex cards that reward players for doing something other than just playing the best stand-alone card.
Which do you think is a better option to encourage diversity in TCGs; improving/buffing cards/decks that hardly see any play versus weakening/nerfing cards that are overwhelmingly played? This is obviously a very simplistic example, but I hope it makes the point. Games are more fun when you give players more relevant choices: buffing and nerfing cards tends not to do that as well as promoting synergies does.
Where/what is the actual money behind bitcoin? If it does exist. You might need to rephrase your question for me to understand what you're asking. If you're asking why a Bitcoin has value, the answer is the same as any other good: because someone is willing to pay it.
If you're asking why someone is willing to pay that amount, my answer would be utility.
I just got started on Bitfinex (using your referral link) and am a little intimidated. What types of trades would I recommend I try as a beginner? From there, just keep careful watch, and see what happens. Be neutral and objective toward your own hypothesis, just like in science. Don't be biased by your hopes, be focused on the reality.
So far I've only done a liquidity swap offer to try it since it seemed (nearly) risk free. Have you done any liquidity swap or is it too low in profit? If I'm not going to be able to check my computer for a day or two, or I'm uncertain of what's going to happen the next few days, I do use the liquidity swap function. It's actually very profitable, relative to traditional investments. And you're right, it is low-risk. I'm a fan. Good job selecting it if you were intimidated--that's a good place to start. As far as actually starting trading, do science. Start with a hypothesis. If you were up at 5 AM today when MtGox published their announcement, a good hypothesis might have been something like: "This announcement is going to be a blow to their credibility, and might panic the markets. We'll probably drop by some amount as a result." Invest based on it, figure out around what price you want to take profits, and at what price you'll cut your losses and get out. Stick to those determinations unless something substantive changes. The time you tell yourself you can afford to not close your position because it will "rebound" back to where you want is also the time you lose your shirt.
Is it true that you like Balloons? No, I <3 them.
Lol to the question about your mom... Ben, from my understanding Bitcoin is anonymous, does this mean that you can avoid taxation when receiving payment? Bitcoin isn't anonymous. That's actually a common misconception. It's actually pseudonymous, like Reddit. You end up with an online identity--a wallet address--that you use with Bitcoin.
If I walk up to you on a street corner and buy Bitcoin with cash, then I'm pretty much anonymous. If I buy it from a large institution like Coinbase or some other company, they will have records of the address my Bitcoin was bought for. As a result, you can trace them down, generally speaking.
As for avoiding taxation, that's a general no.
What do you think Bitcoin's biggest hurdle is and how do you think it can be overcome? Are there any misconceptions about Bitcoin that you think people have? The biggest hurdle for Bitcoin to overcome is governments. Governments have a variety of reasons not to want an alternative currency. We seem to have done pretty well on that front here in the US, but for other countries (China) that is not the case. Past that, the other major hurdle is something I consider an inevitability: consumer adoption. Business adoption has begun in earnest, consumer adoption hasn't. It will when enough businesses take Bitcoin to give it sufficient utility for the average customer.
What trading platform do you use to daytrade Bitcoin? What is the standard margin that Bitcoin brokers offer? what's the typical ask/bid spread? I primarily use Bitfinex.
Very few Bitcoin brokers currently offer leverage, Bitfinex offers 2.5:1. Over time, I anticipate it will become more like current Forex, where 10:1 or greater leverage is common.
It varies by exchange depending on their fees. Huobi charges 0% fees, so their spread is generally tiny. Some exchanges can be as wide as 1.5%. Typically, I see spreads between .5 and .7%.
Do you invest in any other type of cryptocurrency? if so, which is your favorite besides bitcoin? I currently have no other holdings, but I've held DOGE and LTC at points and am considering VTC and NXT. DOGE is probably my favorite, because if the community can keep this up for a little longer it will snowball into amaze.
Can you trade me a Jace? TMS WWK, TMS FTV, Beleren, MA, or AoT?
Beleren. M10, M11, LOR, JVC, JVCJPN, or Book Promo?
M10 and if not possible then M11. Sure.
I've been reading your blog for quite some time and especially like your summaries for recent events. Keep up the good work! Do you use strict stop-loss orders for your trades? When do you decide to close a trade? Especially in situations where you can basically see you profit/loss grow by the minute. When is enough? Do you have a longterm bitcoin investment you don't touch or do you use everything you have for trading? I do use relatively strict stop losses, but they're not stop loss orders. My conditions usually aren't just the price hitting a certain point, but instead it sustaining for a brief period, or hitting it with a certain volume, or with a certain amount of resistance to retreat. I don't want my stop loss to be triggered by some idiot who dumps 300 BTC and temporarily drops the price 15, but only ends up really dropping it 3. I am very strict with myself about this, though, generally speaking--if I can't trust promises I make to myself, what good am I?
Let's say for example you have a sum x dollar and a sum y bitcoin on your trading account. How much % of x or y do you risk at every trade? I've seen a formula for the max. amount of investment and read numerous times that traders shouldn't risk more than one or two percent of their "bankroll". Do you generally have dollar and btc or just one of them at any given time? 100% of funds in every trade, so long as all funds are easily moved into the position. Common exceptions are lack of liquidity and funds being on other exchanges. My reasoning for being all-in all-the-time is that it's a profit-maximizing move. It is also risk-maximizing. My risk tolerance is infinite; most people's isn't. Only ever one. Generally BTC if I'm long, dollar if I'm short. I prefer to double-dip, as otherwise it would be in contradiction to the 100% plan. I use everything I have for trading. Again, profit-maximization, infinite risk tolerance.
I decide a closing price when I'm near either my stop loss or my profit aim. I place a limit order or multiple limit orders wherever I need to. I avoid market orders whenever possible. Enough is when I hit my goals or my loss tolerance. I decide these at the start, but I frequently re-evaluate them as news and market conditions develop.
What is a typical bid/ask spread for Bitcoin? It depends what exchange you're looking at, but generally .5-.7%.
What's the best way to popularize Bitcoin among the masses? Add your own but would love your thoughts on: -microtransactions developing nations -gift economy (tipping) I would suggest just running around shouting "You get to be your own bank" is probably the best way.
In all seriousness, though--we don't need to try. It's going to happen on its own from now on, as the news media slowly starts to pick up the story. People will start appearing on TV talking about it with more and more frequency. Things like the Dogelympic teams are great PR and help boost it up, as well, of course, but in general it's just going to follow the adoption curve of every other technology.
If it picks up in a few developing nations that have stable internet, it will be a massive revolution for them. Self-banking can do a huge amount of good for an economy like theirs. We might see reports on that. If a major newspaper decides to run a permanent paywall like what the Sun-Times tested recently, that could be big as well. The slow PR from tipping on Reddit is another way, to be honest. Every bit helps, but the cryptocurrency community is now large enough that we're going to do a significant amount of organic, word-of-mouth style growth.
Do you think that a magic game could beat harthstone? If they do a good job, absolutely. They have to focus on the right things. It needs to be mobile-available, easy to pick up and play, and fun.
Is there a good crypto currency to get in on now, before it explodes like bitcoin did? There are plenty of options. Check out coinmarketcap.com. Fair warning, there are plenty of horrible things there--treat it kind of like penny stocks. I like BTC, LTC, DOGE, NXT, and VTC.
Also, why is it such a pain in the ass to buy them with actual money? Like you have to have bitcoins to buy other crypto currency. It's such a pain to buy them with USD because no one has made a good system to do it on, like Coinbase. If you think there's a desire, go do it!
Well the way I look at it, is how the hell else would you be able to buy them? Not everyone has piles of bitcoins lying around and I really don't want to spend $600+ on a single bitcoin just to buy some other currencies. Ah, I see the problem! You can buy fractions of a Bitcoin using Coinbase--I think .01BTC (~$6) is their minimum.
The March 2013 appreciation was from American and European investors and November 2013 was mainly from Chinese investors. Which group of people do you think will be the next to buy (I hate using the word invest when talking about bitcoin) bitcoin for investment purposes? American institutional and hobby investors. That is, Wall Street and people who pay attention to Wall Street.
Which do you think will be a better long term (~5 years) investment, Bitcoins, Litecoins, Dogecoins, Fetch Lands, Shock Lands, or Original Dual Lands? Does it change for ~10 years? Either Bitcoin or Fetch lands for 5 years. For 10 years, Bitcoin. I'd be worried about the 10-year view for paper MTG.
Ive been mining Bitcoins for years now, i have a good sum im my wallet but i never plan to use them. Does this make me a bad person? Approximately yes.
Ben, I should've simultaneously copied and pasted all of my questions from the Spreecast over to here but here are a few... It seems like the conspiracy crowd has really latched onto the idea of Bitcoin as being a discreet form of currency. If Bitcoin is backed up by the internet why would people choose having a currency that's being tracked over say cash, gold, different commodities? Having a currency be tracked has negatives and positives, but it's overwhelmingly positive for the average consumer. Because it's tracked, you don't need to pay someone to move your money for you. There also are no chargebacks, which means merchants aren't getting scammed and passing those costs onto consumers. Theft costs everyone money. It's also very fast--transactions confirm in just 10 minutes, regardless of size or where it's going. Transferring dollars from here to China is very difficult--transferring Bitcoin? Just as easy as from anywhere else to anywhere.
My job is a mix of voodoo, intuition, science, and news. In USD, my percentage return calculated from investment to current valuation is about 300% over a little more than 2 months.
No, just gambling. In BTC, my percentage return calculated from investment to current valuation is about 425% over a little more than 2 months.
Anyway, how have the profits been from start to finish compared to the market? Using my average per-coin buy-in price, if I had just bought-and-held, I would have lost about 27% of my initial investment value.
Are you willing to disclose how much you have in your trading portfolio/what kind of profit you turn both % and $ wise? In USD, my percentage return calculated from investment to current valuation is about 300% over a little more than 2 months.
In BTC, my percentage return calculated from investment to current valuation is about 425% over a little more than 2 months.
Using my average per-coin buy-in price, if I had just bought-and-held, I would have lost about 27% of my initial investment value.
What would you say is the easiest method of shorting bitcoin or any other coin? For shorting Bitcoin or Litecoin, check here.
For other coins, there isn't really a good way yet, to the best of my knowledge. A few exchanges have plans to add short-selling, but Bitfinex is really the only one I know of that has.
What did you have for breakfast today. Didn't breakfast, was delicious.
Hey Ben, I know next to nothing about Bitcoin. I went to /bitcoin after seeing this AMA on your FB, and I noticed that everyone is going apeshit over "Gox". I have no idea what that means or why everyone is so sad/angry/suicidal. MtGox (which originally stood for Magic the Gathering Online eXchange) was the first prominent Bitcoin exchange. They've been going through some rather rough times lately, some of which I was an early cataloguer of here. In short, everyone is freaking out because the exchange may be insolvent. It's not really a big deal to Bitcoin as a whole, but it's certainly an obvious blow to credibility. In my view, people are primarily upset because MtGox has been a part of Bitcoin for a very long time, and it can be hard to let go of what we're used to. I expect that they will either fix the issues or will go out of business officially very soon.
Please explain what happened.
Tell me every artist in your iTunes. Daft Punk, detektivbyrån, Kid Cudi, Matisyahu, The White Panda.
Spotify for life, yo.
Follow up question, what % are you in BTC vs Fiat and when you are on the losing side of a trade do you find your self dumping in more to get right or do you pull the cord Unless my positions are on different exchanges or in different coins, they're all always 100% of what I'll put into that trade at entrance and exit. As a result, I end up with a binary choice: stay or reduce/close. I very rarely reduce position size, nearly always preferring to just end the position instead.
Last updated: 2014-02-25 04:57 UTC
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Ben Lawsky's BitLicense could cost New York Jobs

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