Category Archives: Bitcoin
The Bitcoin Cash Hard Fork Will Show Us Which Coin Is Best – Fortune
On August 1, the digital currency Bitcoin split into two derivative currencies, Bitcoin Classic (BTC) and Bitcoin Cash (BCH). Far from being a rushed spinoff, as Blockstream Chief Strategy Officer Samson Mows August 7 op-ed in Fortune claims, the split was a long time coming.
The origins of the debate can be traced back to 2010, when a one megabyte per 10 minutes limit was quietly added into the Bitcoin codebase as a spam control measure. Because the value of a bitcoin was so low at the time, trading for pennies each, the limit was intended to prevent would-be attackers from overloading the network with a flood of cheap transactions.
This one simple variable gradually led to the emergence of two competing factions within the Bitcoin industry. One side wanted the limit raised to allow Bitcoin to scale with growing demand, while the other side claimed that allowing Bitcoin to grow too quickly would result in its centralization and shift to corporate control.
As the Bitcoin network grew in popularity, this one megabyte limit started being pushed up against in late 2016, but through organic network growth rather than by a flood of maliciously generated transactions. The result was that Bitcoin found itself unable to absorb increased demand: Every transaction would now be at the expense of another, and a fee bidding war drove the average transaction fee from pennies to a peak of more than $5 in June 2017.
Many worried that such high fees would hinder Bitcoins growing adoption and use, disenfranchising most of the worlds actual Bitcoin users, leaving only price speculators and those willing to pay high fees to transact in bitcoin.
After years spent at loggerheads with the other faction, the Bitcoin Cash supporters decided that rather than try to morph Bitcoin to their wishes, they would simply create a split of the ledger and let the market decide. The Bitcoin Classic chain retains the one megabyte limit and the legacy ticker symbol, BTC, while the Bitcoin Cash chain has increased the limit to eight megabytes and adopted a new ticker symbol, BCH (alternatively BCC, depending on who you ask).
Any person holding bitcoin at the time of the split on August 1 received identical amounts of each new coin at the time of the split. If you had one Bitcoin at the end of July, youd now have one BTC and one BCH in August. Rather than causing a market upset, the split achieved the desirable outcome of allowing both visions of Bitcoin to compete in the free market.
Many have decided to sell one side of the split to buy more of the other side, but more conservative holders can benefit from holding both and refraining from speculation. Preventing either of the two ideologically divided camps from pursuing their vision does no one any favors: Both camps were stuck with a version of Bitcoin they viewed as suboptimal. The split allows each coin to develop and grow in the way its supporters believe to be best.
And the markets seem to agree. The price of both tokens combined is now greater than the price of one Bitcoin before the split. In the long term, expect to see market demand coalesce around one of the two coins. Bitcoin has always belonged to the free marketmay the best coin win!
Jake Smith is a manager at Bitcoin.com.
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The Bitcoin Cash Hard Fork Will Show Us Which Coin Is Best - Fortune
‘Blockchain technology will change the world’: Fidelity Labs SVP – CNBC
Imagining the future of blockchain technology is like trying to imagine Google and Facebook on the day the first web browser came out, said Hadley Stern, senior vice president at Fidelity Labs.
Stern is responsible for running Fidelity's bitcoin, blockchain and digital currency incubator. His research team has been experimenting with bitcoin because he said it is like "digital gold" and that "blockchain technology will change the world."
The corporation announced Wednesday that it started allowing clients to view bitcoin and other cryptocurrencies on its website, making it one of the few established institutions that have warmed up to cryptocurrencies.
"The big story is you can transfer value through software and software alone. This is a huge societal breakthrough," Stern said on CNBC's "Closing Bell."
And regardless of whether bitcoin will survive, it could be like the Napster of blockchain technology, Stern said, where it is the first of its kind but the next products, in this case Spotify and Apple Music, get better and better.
"I do think [cryptocurrencies] will make things, whether it's bitcoin or something else, faster and cheaper and create new products and services that we can't even imagine," Stern said.
While some critics are skeptical of how bitcoin is used, Stern said that banning the cryptocurrency would be like banning the web or open internet protocols.
"Whether governments like it or not, it's here to stay," he said.
Stern did emphasize though that Fidelity's move does not mean their clients can make bitcoin transactions through their corporation, saying "we're not necessarily making a judgment on bitcoin." It is just a way for clients to view their bitcoin balances alongside their accounts.
Bitcoin reached an all-time high of around $3,500 Friday, up more than 20 percent for the week.
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'Blockchain technology will change the world': Fidelity Labs SVP - CNBC
$5000 Bitcoin? 3 Reasons to Buyand to Stay Away – Fortune
Bitcoin has gone on bull runs before but nothing like this: Prices this week shot through the $3,500 mark as the mainstream media hailed digital currency as a new asset class. Then it got another boost as the blue chip brokerage house, Fidelity, allowed its customers to create bitcoin accounts.
Now, some people are calling for it go even higher. As Quartz reports, a Standpoint Research analyst has called a target of $5000 for bitcoin by 2018. This raises the question of whether ordinary investors should put a smidgen of their savings, or even their retirement accounts, into buying bitcoin. (Keep in mind you don't have to buy a whole bitcoin. Since it's digital, you can buy a hundred millionth of onethis tiny unit is called a Satoshi after bitcoin's creator.)
There are strong arguments to buyand also strong ones to stay the heck away. Here are three of each.
Major investors and the financial industry is taking it seriously
Since its creation in 2008, Bitcoin's biggest boosters have been computer geeks and libertarians. But recently, they've been joined by a growing number of mainstream investors and entrepreneurs who see bitcoinand other digital currenciesas a legitimate asset class such as stocks, bonds, or commodities.
In 2017 alone, famous names like Andreessen Horowitz and Sequoia Capital have bet on hedge funds that are investing hundreds of millions of dollars into digital currency funds. Meanwhile, the financial infrastructure to support bitcoin and other digital currency is maturing rapidly: Coinbase's GDAX exchange has supported margin trading since March, while the Commodity Future Trading Commission just gave the green light for firms to sell digital currency options and other derivatives.
There is only a limited amount of bitcoin
One reason to buy bitcoins are a valuable asset is that only 21 million of them will ever come into the worldand most of them are already here. As those familiar with bitcoin know, the number of coins created by the mining process drops by half every few years. Right now, around 80% of all bitcoins are already mined and no new ones will appear after the year 2040. This scarcity could continue to drive up demand, especially if (as has been rumored), central banks decide to start buying them as foreign currency reserves.
Some see bitcoin as the new gold
So-called gold bugs like to own the precious metal because it is an asset whose value is not controlled by governments. Even if a country is ravaged by war or its profligate central bank prints too much money, the value of gold (unlike the national currency) will remain. Bitcoin has many of the same qualities. It exists on a decentralized computer network that transcends national borders, and there is no Federal Reserve-like authority that can devalue it.
This isn't a definitive reason to buy bitcoin any more than it is to buy gold. But an analyst cited by Quartz predicts the gold bugs will become bitcoin bugs instead, which means a lot of money flowing into the digital currency.
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Bitcoin's core users are still criminals and fringe figures
For years, stores like Overstock and Subway have accepted bitcoin as payment alongside cash and credit cards. But despite the promise of true believers that bitcoin could replace cash one day, there is no evidence this will happen. The reality is bitcoin is too slow compared to visa or debit cards, and transaction fees are rising. Right now, you can pay a fee and wait ten minutes for your bitcoin transaction to clearor swipe a credit card to pay instantly and get a cash reward.
Because of these limitations, bitcoin's core use remains what's it's always been: paying for drugs or extortion fees on the Internet. For instance, the cyber-criminals who launched a recent wave of "ransomware" attacks known as WannaCry asked for payment in bitcoin.
Ordinary consumers, meanwhile, are not using it as a payment method. That doesn't mean its not valuable as an investmentjust that, in the real world, it's even less useful than gold.
Bitcoin is extremely volatile
Over its nearly decade-long history, bitcoin has been prone to spectacular crashes. In 2013, for instance, the currency went on a run to over $1,100 only to tank to $700 a few months later, and then bottom out near $200 in early 2015. There is no reason this couldn't happen again.
While investors may drool at $5,000 bitcoin, they better be equally ready to kick themselves if it tumbles back to $2,000 or lower this year. This goes double for the many other so-called alt-currencies (other digital currencies some people buy as a proxy investment for bitcoin.)
Bitcoin only exists on computers
This may sound obvious but, as a form of money, bitcoin might be the most intangible stuff in history. Even paper money or securities can be presented to a central bank or company in the hopes someone will redeem them. No such possibility with bitcoin. Digital currency is just a piece of code out there on the Internet (or in special digital storage vaults to prevent hackers from stealing it), and there is no country or company you can ask to honor it.
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$5000 Bitcoin? 3 Reasons to Buyand to Stay Away - Fortune
Fundstrat’s Tom Lee" Bitcoin will be the best asset through year-end – CNBC
Bitcoin will likely outperform stocks and bonds the rest of the year, according to the first major Wall Street strategist to issue a report on the digital currency.
"I think bitcoin is an underowned asset with potential for huge institutional sponsorship coming," Fundstrat co-founder Tom Lee said Wednesday on CNBC's "Fast Money."
"It has a lot of characteristics that are very similar to gold that I think will make it ultimately attractive as an alternate currency," he said. "It's a good store of value."
Here's Lee's outlook on bitcoin given on the show into year-end:
Gold or bitcoin? Bitcoin?
"Yes."
Would you rather own bitcoin versus a basket of U.S. stocks?
"Between now and year end it's easily bitcoin."
Will bitcoin be the best performing asset?
"Yes."
Bitcoin leaped to record highs this week above $3,500, more than tripling in value for the year despite a split in the currency last week into bitcoin and bitcoin cash, an alternative version supported by a minority of developers.
Bitcoin traded 1.5 percent higher near $3,428 Thursday morning, according to CoinDesk. Bitcoin cash steadied after wild swings in its first week, trading near $303, according to CoinMarketCap.
Another digital currency, ethereum, rose 1 percent to just under $300, according to CoinDesk.
Bitcoin three-month performance
Source: CoinDesk
Lee published a report in early July outlining the potential for bitcoin to rise above $20,000 and potentially reach $55,000 by 2022. Formerly the top stock strategist at JPMorgan and a perennial favorite of big institutional investors, Lee was also one of the few on Wall Street to predict that a Donald Trump win in last year's election would cause stocks to rally, not fall like most had seen.
Lee sees another reason for optimism about bitcoin.
"Institutions have to directly buy the coin today through a broker, but both the CBOE and the CFTC have opened up options futures trading, so I think it's going to grow in holdings," he told CNBC.
In the last month, the Chicago Board Options Exchange said it plans to offer bitcoin futures by early next year, while the U.S. Commodity Futures Trading Commission approved a digital currency trading firm called LedgerX to clear derivatives.
Market strategists have noted there are few highly attractive investment opportunities with U.S. stocks at all-time highs and bonds steady as the Federal Reserve remains on a gradual pace of monetary policy tightening and gold in a trading range.
The median S&P 500 target of strategists surveyed by CNBC is 2,475, just a point above where the stock index closed Wednesday. Lee happens to be the most bearish among those strategists with a year-end target of 2,275, or 8 percent below Wednesday's close.
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Fundstrat's Tom Lee" Bitcoin will be the best asset through year-end - CNBC
Bitcoin Price Index – Real-time Bitcoin Price Charts
Bitcoin Exchange Coincheck Unveils $450k Startup Investment Fund
Aug 10, 2017 at 19:30 | Wolfie Zhao
Tokyo-based cryptocurrency exchange Coincheck is launching a new investment fund.
Aug 10, 2017 at 12:00 | Ash Bennington
A new fund launched by a prominent trader aims to offer U.S. investors broad exposure to the fast developing cryptocurrency asset class.
Aug 9, 2017 at 23:05 | Stan Higgins
Analysts at Goldman Sachs are advising clients to stay abreast of developments in the cryptocurrency sector even if they don't plan on investing.
Aug 9, 2017 at 21:05 | Ash Bennington
How is bitcoin's recent fork affecting price forecasts? According to bitcoin traders, the weather ahead looks unexpectedly sunny.
Aug 9, 2017 at 20:00 | Wolfie Zhao
European cryptocurrency exchange Bitstamp will launch new trading pairs for ether next week.
Aug 9, 2017 at 14:30 | Pete Rizzo
Litecoin continues to hover near all-time highs a move that suggests it could be developing staying power in a diversified crypto market.
Aug 9, 2017 at 13:00 | Stan Higgins
Bitcoin exchange BTC-e has said it will return under a new name and issue a token to refund users after it was closed by U.S. authorities.
Aug 9, 2017 at 05:00 | Ash Bennington
Fidelity Labs is partnering with Coinbase to enable its customers to track their bitcoin holdings alongside traditional investments.
Aug 9, 2017 at 02:50 | Pete Rizzo
The price of ether increased today, topping $300 for the first time since June amidst a broader appreciation of the cyrptocurrency asse
Aug 7, 2017 at 20:30 | Wolfie Zhao
Online retailer Overstock.com is shifting an earlier strategy by keeping half of the bitcoin it takes in as payment, the company's CEO has said.
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Bitcoin Price Index - Real-time Bitcoin Price Charts
Commerzbank’s Curious Way to Get Bitcoin Exposure Without Actually Buying It – Bloomberg
Want to own bitcoin, but too embarrassed to tell your friends youve eschewed traditional assets for a currency with a checkered past as an illicit means of exchange? Too thrifty to buy a bitcoin fund that typically trades at a substantial premium to its net asset value?
Commerzbank AG may have a solution for you -- though it doesnt appear to be a very efficacious one.
The firm is marketing a structured note that allows investors "to get exposure to bitcoin without actually investing in it directly." The underlying basket consists of an equal-weighted shares of Shopify Inc., DISH Network Corp. and Microsoft Corp.
These companies are "all active in blockchain technology" -- according to the product summary for non-U.S. customers. The common thread tying these firms to bitcoin: They facilitate transactions in the digital currency.
The catch is that none of the stocks have displayed anything resembling a meaningfully strong relationship with bitcoins price movements during the past three years. The 63-session correlation between the daily change in the digital currency and any of those equities has never exceeded 0.35. A correlation closer to one suggests something trades in lockstep with another.
A spokeswoman for Commerzbank declined to comment.
Surprisingly, chipmakers like Nvidia Corp. and Advanced Micro Devices Inc., which have seen demand for their graphics cards buoyed by rising interest in mining cryptocurrencies, arent included in this basket.
"Bitcoin has been the top-performing currency in the world in six of the past seven years, climbing from zero to a new high value of about $2,700," the Aug. 7 client recommendation says. "With bitcoin hitting record high prices recently, there are other ways of investing in the cryptocurrency and the technology behind it without buying it outright."
If only this were one of those.
Read more on what Goldman Sachs is telling customers about bitcoin
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Commerzbank's Curious Way to Get Bitcoin Exposure Without Actually Buying It - Bloomberg
Howard Marks, who has called past market bubbles, says ‘I don’t understand what’s behind bitcoin’ – CNBC
Bitcoin has gotten a lot of fanfare lately, but not from Howard Marks, a legendary value investor on Wall Street.
Marks told CNBC's "Halftime Report" on Thursday that's because he doesn't understand what is the actual value of bitcoin.
"It's not a medium of exchange, it's a medium of trading, so I can't see any intrinsic value," Marks said. "I don't understand what's behind bitcoin."
"For me, there is only one kind of investing: When you look at something, you don't think, 'Is it going up or down tomorrow?' ... You say, 'What is the intrinsic value?' and then you say, 'Can I buy it for less?'" Marks added. "There is no intrinsic value in bitcoin."
Bitcoin has surged nearly 250 percent this year alone, prompting many to hop on the cryptocurrency's bandwagon.
Bitcoin in 2017
Source: Coindesk.com.
Fundstrat co-founder Tom Lee told CNBC's "Fast Money" on Wednesday he thinks the cryptocurrency will be the best-performing asset class through year-end. Investing legend Bill Miller reportedly owns bitcoin, and Josh Brown, CEO of Ritholtz Wealth Management, said last month he used Coinbase to buy bitcoin.
"Maybe I'm just too old and too much of a dinosaur to understand bitcoin," Marks said jokingly.
The co-chairman of Oaktree Capital is widely known for his investment memos, which predicted the financial crisis and the dot-com bubble implosion.
In a memo last month Marks compared cryptocurrencies with the Tulip mania of 1637, the South Sea bubble of 1720 and the internet bubble of 1999.
With reporting by Tae Kim.
Disclosure: Josh Brown is a CNBC contributor.
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Howard Marks, who has called past market bubbles, says 'I don't understand what's behind bitcoin' - CNBC
Bitcoin retreats from all-time high even as Fidelity debuts digital-currency tracking – MarketWatch
Bitcoin saw a modest pullback from its recent record run on Wednesday, but the cryptocurrency enjoyed some upbeat news on the session, with Fidelity Investments announcing that it would start tracking the digital unit for its clients.
A single bitcoin was valued at $3,393.76, off by about 2.5%, based on levels from late Tuesday in New York, according to digital-currency research site Coindesk.com. The total market value for the most popular digital currency was at $55.4 billion, according to CoinMarketcap.com.
Boston-based money-management giant Fidelity Investments said it would, starting Wednesday, enable clients to monitor their digital-currency holdings via their accounts, in partnership with digital-wallet provider Coinbase.
This is an experiment in the spirit of learning what these crypto assets are like and how our customers may want to interact with them, Hadley Stern, senior vice president and managing director at Fidelity Labs, the companys innovation unit, told Reuters.
Fidelity CEO Abigail Johnson has been one of the biggest champions of bitcoin and its underlying blockchain among traditional financial-services companies. Digital-currency blockchains refer to the peer-to-peer digital network designed to transfer and track ownership of he currency.
Recognition by mature, Wall Street enterprises has appeared to both help support demand and reaffirm to some the growing legitimacy of virtual monetary units, even if they are not totally understood or used by average investors.
Bitcoin and its virtual ilk have drawn increased attention from businesses and regulators in recent months, which may also account for its record rally in 2017. Bitcoins value has surged by 250% since the start of the year, compared with a 10.5% year-to-date rise for the S&P 500 index SPX, -0.04% and a nearly 12% gain for the Dow Jones Industrial Average DJIA, -0.17%
Rising geopolitical tensions, headlined by North Korea threatening to launch a ballistic-missile attack against U.S. territory Guam, didnt appear to influence digital currency moves Wednesday.
Read: Guams governor: There is no threat but American island will be defended
Elsewhere in digital currencies, the ethereum networks ether token bought $299.77, up 6.7% from its levels late Tuesday in New York. Ethers total value was at about $28.2 billion.
Meanwhile, Bitcoin Cash was down about 7% at $308.79, compared with its late-Tuesday value. The new digital currency, which emerged out of the original bitcoin Aug. 1, is the result of a small faction of bitcoin developers demand for a version of the currency that allowed for so-called miners, who support the unit, to process transactions in larger increments. The currency is presently the fourth-largest cryptocurrency, with a value at $5 billion.
Also read: Meet Bitcoin Cash the new digital-currency that surged 122% in less than a day
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Bitcoin retreats from all-time high even as Fidelity debuts digital-currency tracking - MarketWatch
As bitcoin comes off its record high, the next step is to avoid a ‘lightning fork’ – CNBC
Currently, bitcoin transactions are validated through a process called mining, where powerful computers solve a complex math problem before the transaction is recorded on the blockchain. A whole confirmed transaction can take up to an hour.
The Lightning Network promises to reduce this process to seconds. It requires participants to agree to a transaction on a separate channel and then the blockchain will update their accounts accordingly. This can be done without the need for miners or third parties such as digital wallet providers.
The developers of Lightning say this means transactions can be instant, will allow for micropayments of bitcoin and enable a larger volume of transactions. It may even help bitcoin be used more on the high street.
"Lightning can be used at retail point-of-sale terminals, with user device-to-device transactions, or anywhere instant payments are needed," the developers said in a summary document.
Lightning will make bitcoin a long-term competitive payment platform and could revolutionize peer-to-peer payments, according to Gatecoin's Menant.
"Particularly with regards to micropayment transactions that may be useful for emerging markets with low-value local currencies," he said.
"It can also be implemented to facilitate machine to machine payments, using its smart contract framework, so that firms running various automated processes can benefit from direct payment relationships between its software and that of its clients or suppliers."
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As bitcoin comes off its record high, the next step is to avoid a 'lightning fork' - CNBC
Bitcoin is almost triple the price of gold here’s what traders think you should buy – CNBC
Two traders are unfazed by bitcoin's meteoric surge and say that between the cryptocurrency and gold, you're better off trading the yellow metal.
Bitcoin has jumped 240 percent this year to a high of $3,288 on Wednesday, while gold was trading at $1,280. But despite the bitcoin gains, Brian Stutland of Equity Armor Investments and Path Trading Partners' Bob Iaccino believe gold is still a better bet than bitcoin from technical and fundamental perspectives.
"When you look at gold over the past couple of months, [it has] tracked very well [relative] to the cryptocurrency," Stutland said Tuesday on CNBC's "Futures Now." "If you price adjust and volatility adjust, I think gold still has a little bit of catching up to do."
As for Iaccino, he believes that while bitcoin's popularity is indisputable, a takeover by another digital currency could be possible, leading him to believe that bitcoin is more unstable than many may think.
"Bitcoin, right now, is the most popular [cryptocurrency] and it is the most valuable one," he said. "But I don't see it as a store of value, because any [other cryptocurrency platform] could come out with a slightly better technology and completely replace bitcoin."
In order to catch up to all the action bitcoin is seeing, Stutland wants to buy gold at the $1,265 level, targeting a move up to $1,285 by December expiration with a stop at $1,250, a key support level that gold has held, according to the trader.
"The volatility is tremendous, so you're going to see wild swings in here and that is something to be aware of," he said.
Gold actually rose more than 1 percent on Wednesday off threats delivered by President Donald Trump and North Korea's Kim Jong Un to one another, the yellow metal being one of the biggest safety trades in times of possible turmoil. Bitcoin, on the other hand, dropped more than 3 percent Wednesday, reversing some of the cryptocurrency's gains from the week
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Bitcoin is almost triple the price of gold here's what traders think you should buy - CNBC