With no exchanges, P2P marketplaces, or escrow services in bitcoin’s earliest days, acquiring coins wasn’t easy. You either mined them or begged someone on the Bitcointalk forum to sell to you OTC. Then, along came a developer called Gavin Andresen who created a faucet that allowed anyone to claim free BTC.
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How Gavin Andresen Turned on the Tap for bitcoin
Gavin Andresen
“For my first bitcoin coding project, I decided to do something that sounds really dumb,” Gavin Andresen. “I created a website that gives away bitcoins.” It was June 2010 and, in an era when obtaining BTC wasn’t easy, Andresen’s idea proved to be very smart. For the nascent cryptocurrency community to grow, it was essential that bitcoin be distributed as widely as possible. Only through having skin in the game, and sending and receiving BTC, would it be possible for people to understand bitcoin and for it to grow from an idea into a global phenomenon.
bitcoin faucets were the original airdrops, and Andresen’s was the first faucet. To begin with, it dispensed 5 BTC per visitor, each of whom was required to do nothing more than complete a captcha. The notion of receiving a king’s ransom in BTC for little more than visiting a webpage seems outlandish today, but back then, 5 BTC was worthless in dollar terms. “It only gives 5 coins [a day],” complained the second forum user to reply to Andersen’s post (the first was bitcoin pizza guy Laszlo). Satoshi was impressed though, enthusing:
Excellent choice of a first project, nice work. I had planned to do this exact thing if someone else didn’t do it, so when it gets too hard for mortals to generate 50BTC, new users could get some coins to play with right away.
To those who had the perspicacity to appreciate what they were taking from the tap, those bitcoins were priceless. A handful may have hodled, but the majority of claimants will have long since frittered their coins away on sites like Satoshidice and later Silk Road. Faucets such as Andresen’s were forerunners to the sort of websites where BTC could be exchanged for goods and services.
The webpage for Gavin Andresen’s bitcoin faucet
One thing that anyone revisiting the early Bitcointalk threads will note is the benevolence that pervaded: More than one individual found security holes in Andresen’s faucet, and one drained his wallet of BTC before kindly returning it and explaining how to patch the flaw. Through altruistic deeds such as these, bitcoin’s early adopters gave the cryptocurrency its value back then, placing community ahead of personal profit.
19,700 BTC Given Away
To fuel the first faucet, Andresen loaded it with 1,100 BTC of his own. After these were disbursed, the faucet was reloaded, with early bitcoin miners and whales also donating coins. “Bitcoins are a new kind of money,” explained Andresen’s faucet website. “They aren’t created or controlled by a government (like dollars or euros), they’re created and controlled by anybody who wants to be part of the bitcoin payment network.”
“What’s the catch?” asked the last of the four questions on the developer’s website, to which came Andresen’s reply: “I want bitcoin to be successful, so I created this little service to give you a few coins to start with.”
It’s fair to say that both bitcoin and Andresen went on to overachieve in some style. By the time the faucet had dispensed its last coins in early 2011, 19,715 BTC had passed through Andresen’s. bitcoin, meanwhile, was on the way to its first parabolic price spike, mainstream media coverage, political censure, and a world of adventure. But those are all tales for another time in bitcoin History.
bitcoin History is a multipart series from news.bitcoin.com charting pivotal moments in the evolution of the world’s first and finest cryptocurrency. Read part one .
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Two United States congressmen have introduced two pieces of legislation to help prevent alleged cryptocurrency price manipulation while aiming to position the U.S. at the forefront of innovation within the digital asset industry.
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Protection From Price Manipulation
The Virtual Currency Consumer Protection Act of 2018 and the U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018 task U.S. financial regulators with researching means to protect retail investors from price manipulation, while staking the global economic powerhouse’s share in the evolving financial technology.
Darren Soto
In a congressmen Darren Soto, a democrat, and republican Ted Budd approvingly noted the potential of virtual currencies, and the technology that powers them, to facilitate economic growth as well as the need for security guarantees for users.
The lawmakers pointed out the need to “ensure that the United States is at the forefront of protecting consumers and the financial well-being of virtual currency investors, while also promoting an environment of innovation to maximize the potential of these technological advances.”
In terms of the two bills, the U.S. Commodity Futures Trading Commission (CFTC), which regulates futures and option markets, as well as other financial regulators will make critical recommendations on fine-tuning the regulatory environment for consumers and businesses.
The congressmen observed that the bills are particularly important following concerns raised in the New York Attorney General’s recent report on cryptocurrency exchanges, showing how they are prone to the risk of manipulation. The Wall Street Journal also recently detailed potentially abusive software, whereby bots can manipulate the price of bitcoin.
The representatives said:
The Virtual Currency Consumer Protection Act directs the CFTC to describe aspects of how price manipulation could happen in virtual markets and then to make recommendations for regulatory changes that can improve the CFTC’s monitoring procedures in preventing price manipulation.
Driving Innovation
The second bill, titled the U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018, seeks to keep the U.S. at the cutting edge of blockchain technology. The bill directs the CFTC to run a comparative study of the regulation of virtual currency in other countries and then table recommendations for the U.S.
Based on the CTFC’s recommendations, the U.S. will craft for regulatory changes to promote competitiveness in the industry, with a view of providing regulatory clarity and bringing in alternatives to cumbersome regulations that may be currently discouraging innovation in virtual currencies.
“For example, it asks the CFTC to clarify the virtual currencies that qualify as commodities and examine the costs and benefits of a new, optional regulatory structure that could replace the current state money transmission system,” the congressmen explained in their statement.
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The take into account the lack of clarity in providing a regulatory framework for cryptocurrency and direct regulatory bodies to have a comprehensive system in place for both the consumers and enterprises. The main aim of the bill is to minimize the chances of price manipulation in wake of the Attorney General’s report which highlighted the risk of price manipulation.
The first bill calls upon the CFTC to describe how price manipulation could take place in virtual markets. It also directs the regulator to make recommendations for regulatory changes that can improve its monitoring procedures in preventing price manipulation.
The second bill directs the CFTC to conduct a comparative study of the crypto regulation in other countries and then make recommendations for regulatory changes to promote competitiveness in the U.S.
In a joint statement, Soto and Budd said:
“We must ensure that the United States is at the forefront of protecting consumers and the financial well-being of virtual currency investors, while also promoting an environment of innovation to maximize the potential of these technological advances. This bill will provide data on how Congress can best mitigate these risks while propelling development that benefits our economy. ”
The Virtual Currency Consumer Protection Act, directs the CFTC to describe aspects of how price manipulation could happen in virtual markets and then to make recommendations for regulatory changes that can improve the CFTC’s monitoring procedures in preventing price manipulation. Click here for the full text of the Virtual Currency Consumer Protection Act.
Lawmakers Claim Crypto Can Drive Economic Growth
As we already mentioned, in their statement Soto and Budd underscored the “profound potential” of cryptocurrencies and blockchain, the technology underpinning bitcoin.
Soto and Budd said the laws they proposed would protect consumers and investors without dampening the “environment of innovation” that would maximize the potential of these groundbreaking technologies. Most recently, a bipartisan bill was introduced that proposed creating a “consensus-based definition of blockchain” in October.
Earlier in September, the New York Office of the Attorney General released a report on cryptocurrency trading platforms, finding that many are susceptible to market manipulation “The industry has yet to implement serious market surveillance capacities, akin to those of traditional trading venues, to detect and punish suspicious trading activity,” the report stated.
The U.S. Department of Justice is also looking into crypto market manipulation, reportedly most recently focusing on whether Bitfinex exchange and Tether Ltd. have supported bitcoin’s price using the tether stablecoin.
Also this year, Soto, Budd and other prominent lawmakers talked to the chairman of the Securities and Exchange Commission (SEC), Jay Clayton, and asked him to clarify whether Initial Coin Offerings (ICOs) can be considered sales of securities or not, something that the chairman did not explain at the time as the whole question is very muddled right now.
Introducing a Pro-ICO and Crypto Legislation
We already wrote yesterday how the biggest bitcoin enthusiast in Congress was set to introduce a new pro-ICO and crypto legislation. He believes that cryptocurrencies can thrive in a Federal-regulated environment.
The bill, when finalized, would create an ‘asset class’ focused on tokens only. The new bill will prevent cryptos from being classified as securities. However, the new law would let the federal government regulate ICOs more effectively. The announcement came at a four-day blockchain conference in Cleveland. The Ethereum co-founder, Joseph Lubin, was also in attendance.
While bitcoin itself has been around for a decade, the cryptocurrency fundraising method known as initial coin offerings began attracting billions of dollars from retail investors at the end of last year. Regulators and lawmakers were caught unprepared as many ICOs turned out to be frauds, backed merely by abstract ideas or in some cases nothing at all.
Wall Street has already focused on market manipulation control meanwhile, Nasdaq in October claiming its financial instruments could help mitigate the practice.
Also, it’s important to emphasize that there were similar cases when, in this year, one employee, with access to insider information, has shared details of the Bitfinex investigation in regards to the anomalous growth of bitcoin and decrease in the USDT. According to the employee, Bitfinex itself was not connected to the situation. Although, a third-party connected network of trading bots, that were set up for massive sales, were implicated in the exchange rate manipulation.
The payments global giant, stated that they have a new method of maintaining the anonymity of all cryptocurrency transactions. The company has proposed a system of executing transactions over a blockchain. This system would disguise both the amount and point of origin according to their patent published on December 6.
The Process
This publication by the comes just a few months after in blockchain technology. The application highlighted that the system would use an intermediate address during transactions that work together with the public key. The acquired transaction data is then stored concurrently as a private key generates a new transaction and digital signature.
The new transaction data features the payment amount and the destination address. According to the patent filing:
“The method would result in showing the user only transferring funds to and receiving funds from a small number of addresses that are also involved in a significantly large volume of transactions with various other users, thereby rendering the data innocuous.”
Furthermore, the amounts may also appear anonymous through the use of several transfers using numerous addresses. The application also stated that blockchain platforms are taking over the global financial world. More users are shifting to different digital currencies like bitcoin to execute transactions.
Reason for the Application
MasterCard says that the move was inspired by the fact that some users . It is almost impossible to identify users behind a blockchain address except for the case of permissioned blockchains. Thus, an individual can send or receive funds anonymously via blockchain.
Many of the existent blockchain ledgers are not actually anonymous. The application overtly states that transactions are traceable due to the immutable nature of the blockchain ledger. Therefore, it is possible to know all transactions associated with a particular blockchain wallet using public data. Eventually, the strategy reveals the identity of the users.
MasterCard highlights that such data may reveal the identity of the wallet owner after precise accumulation and analysis. In the least case, it offers information about the owner without revealing their identity. But, the blockchain technology needs the identity of the origin and destination of the executed transactions to maintain the ledger.
The application concluded that:
“There is a need for a technical solution to increase the anonymization of a wallet and the user associated therewith in a blockchain.”
The Attention
This MasterCard patent application reiterates the comments made by supporters of privacy-focused cryptos like and . Both of these tokens incorporate features that hide the source and destination of all transactions. Moreover, the total amounts involved in these transactions remain anonymous.
Currently, most users prefer anonymity when executing transactions. But, the prominence of coins like Zcash and Monero has raised enough to get the attention of various government agencies. For instance, the U.S. Department of Homeland Security is relentlessly looking for ways to .
Earlier in the week, the agency published a pre-solicitation document. The document featured a proposal for studying various forensic analysis procedures to track privacy coin transactions.
