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Barry Silbert’s latest investment is more evidence Bitcoin’s biggest opportunities may lie outside the US

bitcoin-perfecthueBy Rob Wile From Business Insider

A gas station attendant looks at an Indian rupee.

American venture capital in Bitcoin continues to cross the ocean.

On Monday, Barry Silbert’s Bitcoin Opportunity Corp. announced it had invested $250,000 in Bangalore-based Unocoin.

The firm is less than a year old but already claims the title as the largest and fastest-growing bitcoin company in India. It does a little bit of everything, including trading, storage, and merchant processing.

a-gas-station-attendant-looks-at-an-indian-rupeeYear to date, India ranks 18th worldwide for number of overall raw Bitcoin protocol downloads according to SourceForge, more than many European countries, including Romania, which was just highlighted by Reuters as a Bitcoin hub.

India’s central bank has clarified that it would allow Bitcoin businesses to continue operating while warning of the cyptocurrency’s risks to average investors.

Bitcoin evangelists have long said the opportunity in places like India that are home to large populations of “unbanked” citizens is enormous. In a joint statement, BOC and Unocoin noted 40% of India’s urban population and 61% of its rural population lacks access to basic financial services. At the same time, remittances in India totaled over $70 billion in 2013.

“Bitcoin technology has the potential to provide sustainable solutions and smarter financial options to all sectors of India,” the firms said.

Of the nine investments Silbert’s BOC has made in 2014, four have been in overseas companies. In July, a report from CoinDesk showed the absolute number of firms receiving investment in Q2 was now split 60-40between America and the rest of the world.

When we talked with Silbert last month about his investment in a Swedish-based Bitcoin firm, he insisted America would continue to lead the world as the top destination for Bitcoin investing. And we aren’t suggesting there isn’t significant interest here.

But the needs of Bitcoin users in America are different from those elsewhere. And the U.S. (and Canada) continue to trail other countries in terms of Bitcoin interest: Here’s the year-to-date chart in Google Trends for “Bitcoin” — a crude measure to be sure but nonetheless telling:

And the Unocoin investment marks the largest known to date in India’s Bitcoin space, as well as one of the largest investments made by BOC outside of United States.

So it seems reasonable to say the makings of a trend are emerging.

IMAGE: A gas station attendant looks at an Indian rupee REUTERS/Rupak De Chowdhuri

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Bitcoin slips as US consumer finance agency warns of cryptocurrency risks

By Alex Wilhelm From Techcrunch

Remember bitcoin? Today the Consumer Finance Protection Bureau (CFPB) issued a lengthy set of risks that the cryptocurrency poses to early adopters. The list is somewhat decent in its content, though I suspect the bitcoin faithful will find its tone to be overly negative.

That same contingent will likely also find it encouraging that the CFPB is paying bitcoin any mind at all. The CFPB has also started to collect complaints from consumers relating to bitcoin, and its alternative coin cousins — the government agency cites XRP and Dogecoin in its release.

What are the risks according to the bureau? The usual list: scammers looking to take advantage of a growing market segment; cost to use; limited consumer protections in place; and, of course, hackers.

The group’s release also warns about massive price fluctuations, a lack of pure anonymity with some cryptocurrencies, and the fact that if you lose your private keys, you are in a tough spot. That’s a decent list, all told.

What the CFPB doesn’t do a good job of — or really any job of at all — is explaining the potential advantages of bitcoin. But that’s not the job of the agency, really, and is left, presumably, to the market.

The advisory appears to have had an impact on the price of bitcoin. It’s always somewhat risky to ascribe price swings to single news events, but this chart is somewhat interesting (24-hour chart, using weighted data from several exchanges, via Bitcoin Average)

It isn’t difficult to understand why a U.S. government advisory might impact the price of bitcoin. Any indication that the government’s position toward bitcoin hasn’t changed implies the local demand for the cyptocurrency could be less than expected.

The decision by the IRS to treat bitcoin as property and not a currency entails tax work that makes it less attractive for daily use. That is a tension that must be solved before bitcoin can become a mass-market consumer product in the U.S.

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