Category Archives: Bitcoin
Bitcoin Fans Say Cryptocurrency Tokens Are the Future of Tech Funding – Fortune
A pile of Bitcoins are shown here after Software engineer Mike Caldwell minted them in his shop on April 26, 2013 in Sandy, Utah. Bitcoin is an experimental digital currency used over the Internet that is gaining in popularity worldwide. George Frey Getty Images
Ever since Bitcoin first appeared on the scene several years ago, fans of the cryptocurrency have been searching for a way to apply the idea that might capture the public imagination and broaden the use of the technology beyond just geeks and programmers.
Now, some believe that application has appeared with the rise of the "token" economy, in which companies or startup ventures fund their operations by handing out units of cryptocurrencies. Some companies have even done what are known as "initial coin offerings" or ICOs, in which they distribute tokens instead of shares to investors.
The cryptocurrency market is seen by some as a bubble with hugely inflated prices. Some observers say bitcoin and other similar ventures are similar to Linux , an open-source alternative to Microsoft's Windows operating system that has never really achieved mainstream success.
But entrepreneur and investor Balaji Srinivasan, a partner at Silicon Valley venture capital firm Andreessen Horowitz, believes that token-based systems "may eventually create and capture more value than the last generation of Internet companies."
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In an essay published recently on the blogging platform Medium, Srinivasan and his partner Naval Ravikant, co-founder and CEO of a popular online VC community called AngelList, said they believe the token economy has the potential to become "a Kickstarter on steroids."
The two men, both of whom have been investing in bitcoin-related technology for several years, argue that using tokens as a financing option has the potential to improve the liquidity options that companies have by several orders of magnitude, as well as increasing the size of the available audience that might want to invest in such ventures.
All of this is possible because of an explosion in the cryptocurrency market over the past few years, they argue, in which Bitcoin has survived internal strife but also given birth to alternative currency systems and platforms such as Ethereum.
Initial coin offerings or ICOs are one way of using these new currencies, Srinivasan and Ravikant say. Canadian messaging-app maker Kik recently announced that it is launching its own cryptocurrency called Kin, and plans to offer units of it to supporters through a crowdfunding campaign. The currency is based on Ethereum's blockchain technology.
Kik plans to issue 10 trillion Kin tokens to developers and users via a separate non-profit foundation called the Kin Foundation, which will ultimately hold 60% of all the Kin tokens and be run by a group of independent directors.
Srinivasan and Ravikant warn that some uses of cryptocurrency tokens, including some ICOs, may be subject to regulation by governments if they are seen as equivalent to doing a traditional equity offering or IPO, in which investors receive shares of the company. But they argue other uses of tokens for crowdfunding could essentially be unregulated.
Token supporters say they aren't really equity but more of a digital IOU, which entitles the holder to redeem their tokens in return for access to a platform like Ethereum's.
That access has value because it can be used to generate Bitcoin-style currency through a computer-intensive process known as "mining," and those coins can in turn be exchanged for other more familiar currencies like U.S. dollars. One bitcoin is currently worth about $2,300.
Some skeptics say token-based fundraising has the potential to turn into a huge boondoggle if it is unregulated, with unwary investors being fleeced of their savings with little to show for it.
Ravikant and Srinivasan, however, argue that tokens will allow companies to raise money much more quickly for new ventures than existing systems do, and will also allow for startups to build valuable services without having to rely on advertising as their only revenue source.
Large technology companies like Google and Facebook offer "have sometimes come under fire for making billions of dollars while early adopters only receive the free service," their essay says . "After the early kinks are worked out, the token launch model will provide a technically feasible way for tech companies to spread the wealth and align their user base behind their success."
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Bitcoin Fans Say Cryptocurrency Tokens Are the Future of Tech Funding - Fortune
Bitcoin Is Bigger Than Ever, And Here’s Why That Matters – Forbes
Forbes | Bitcoin Is Bigger Than Ever, And Here's Why That Matters Forbes The money you've been using all your life is backed by a government of some sort, and it exists in a tangible way. Bitcoin is neither tangible nor backed by anyone, but it's still worth a great deal to some people. This digital currency began ... Why Bitcoin Just Dropped 30% Bitcoin Has Come Roaring BackBut So Have the Risks | WIRED Bitcoin briefly plunges below $2100 as upward momentum fades |
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Bitcoin Is Bigger Than Ever, And Here's Why That Matters - Forbes
Bitcoin is worth more than ever, but it’s losing clout
With that said, you might not want to get too comfy if you've amassed a fortune. As our TechCrunch pals observe, Bitcoin's share of the cryptocurrency market has plunged sharply in the past few months. Where it regularly dominated the market with about an 80 percent share, it's down to just 47 percent in a matter of months. Ethereum, Ripple, Litecoin and others have all seen surges that have whittled away Bitcoin's control.
It's not certain just why that is. There is a concern that Bitcoin's scaling is causing problems by slowing down transactions -- people may just want to explore alternatives that won't bog down so easily. The rapid rise in Bitcoin's value casts doubt on that, though, as you'd expect its worth to tank. If scaling is a problem at all, it hasn't spooked users yet. It may just be a matter of the market growing up, or of speculators hedging their bets by pouring money into more than one digital currency. You wouldn't want to panic if you've already committed to Bitcoin, but nor should you assume that it'll always be the format of choice.
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Bitcoin is worth more than ever, but it's losing clout
If You Bought $5 in Bitcoin 7 Years Ago, You’d Be $4.4 …
Seven years ago, the value of a single bitcoin was worth a quarter-of-a-cent. Today, that single bitcoin is worth upwards of $2,200 .
Monday marked the seventh anniversary of what is said to be the first recorded instance of bitcoin used in a real world transaction. Over the course of seven years, bitcoin's value has multiplied 879,999 times over since 2010. If an investor had decided to spend five dollars back then on about 2,000 bitcoins, that stake would be worth $4.4 million today. With $1,200 spent on some 480,000 bitcoins, the investor would be worth at least $1.1 billion today.
The early months of 2017 have been particularly heady days for bitcoin. Since the beginning of the year, the value of the cryptocurrency has surged as it gains legitimacy in countries like Japan . Investors have also come to see the currency as something of a safe haven asset amid geopolitical turmoil and there's been plenty of that in recent months, in both Europe and the United States.
And that first transaction? A software programmer on " Bitcoin Talk " known as Lazlo Hanyecz offered to 10,000 bitcoins for a couple of pizzas. For a least three days, no one took bite of the offer, with Hanyecz writing: "So nobody wants to buy me pizza? Is the bitcoin amount I'm offering too low?"
A user eventually paid about $25 for two pizzas. In today's bitcoins, those pizzas cost Hanyecz $22 million.
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If You Bought $5 in Bitcoin 7 Years Ago, You'd Be $4.4 ...
Bitcoin is Soaring; Should You Buy? – Barron’s
Barron's | Bitcoin is Soaring; Should You Buy? Barron's The price of the digital currency bitcoin swung wildly this week, hitting record highs and then plunging dramatically, day after day. It jumped to a new record of $2,791.70 on Thursday, and has more than doubled this year. That said, it's also had 300 ... |
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Bitcoin is Soaring; Should You Buy? - Barron's
Bitcoin Is Twice as Valuable as Gold Right Now – Fortune
Photograph by George FreyGettyGeorge Frey Getty Images
A single bitcoin is now roughly twice as valuable as an ounce of gold.
The most recent flurry of buying helped send the price of bitcoin up over $2,600 in trading Friday, while the value of gold has stayed at about $1,267 per ounce. Bitcoin's value has since pared its gains, and traded at about $2,433 midday Friday.
Just two months ago, bitcoin only just inched above the value of gold .
The surge comes as the cryptocurrency gains legitimacy in countries such as Japan, and Chinese regulators look to be growing more tolerant of bitcoin . Despite bitcoin's volatility, some investors have also come to see the currency as a good place to store funds in times of geopolitical uncertainty.
Gold, too, is known to be a "safe haven" asset investors buy the precious metal when turmoil looks just around the bend. But while gold has risen 10% this year, bitcoin has risen 153%.
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Bitcoin Is Twice as Valuable as Gold Right Now - Fortune
Wall Street laughed at a call for bitcoin at $25000but after a 400% surge, the laughter is fading – MarketWatch
Yuk it up! But will Yves Lamoureux have the laugh last?
Back in February when one bitcoin was worth $994, the owner of an eponymously named boutique advisory firm in Montreal forecast that the cryptocurrency would hit $25,000 over the next 10 or 15 yearsa figure that is both outlandish and mind-boggling, and it was met with more than just a dollop of skepticism and derision.
However, as the digital currency has surged a breathtaking 400% over the past year, Wall Street may be apt to take Lamoureuxs call a little more seriously. At least, thats the hope of the 54-year-old former retail broker and trader who established what he describes as macroeconomic research firm, Lamoureux & Co., about four years ago.
I was talking to institutions and just a few months back some were skeptical for whatever reason, now that this thing has shot up, now they are ready to listen and they are ready to buy [bitcoins], Lamoureux told MarketWatch.
Read: Opinion: Three reasons to fear the coming crash in bitcoins
On Thursday, a single bitcoin BTCUSD, -11.12% surpassed the record level of $2,700 before retreating back to around $2,462.57 in recent trade. That swing, perhaps, highlights the volatility inherent in the digital currency that has reclaimed the worlds attention three years after spectacularly imploding following Mt. Goxone of the first and formerly one of the largest bitcoin exchanges, which abruptly halted bitcoin withdrawals after a security breach.
Against that backdrop, doubts about bitcoins staying power this time around, and its ability to clamber to fresh records unimpeded, would be logical.
But Lamoureux makes the case that this time it is different. His argument is that bitcoinand its underpinning, the blockchainis in the early stages of a long-term uptrend that he likened to the nascence of the dot-com era.
From the ashes [of the dot-com bubble], we got the real take of what was to come. You can go on your smartphone and do anything you want. Ten or 15 years back, we would not have been able to imagine that, he said. Thats what we have with bitcoin now, he said.
That may be an apt analogy since hes expecting the run-up for the digital currency to be interrupted by more than a few bumps in the road, but hes still uncategorically bullish on the asset.
Lamoureux also touts the view that bitcoins moves appear to be uncorrelated to other assets, like the S&P 500 index SPX, -0.01% and the Dow Jones Industrial Average DJIA, +0.01% 10-year Treasury notes TMUBMUSD10Y, -0.31% or gold GCM7, +0.88% In other words, bitcoin doesnt have a significant relationship with other asset classes, moving independent of them. Thats a feature that may appeal to investors looking to diversify their portfolios to mitigate losses in other investment segments, Lamoureux says.
What I am basically trying to tell my clients is that [bitcoin] is noncorrelated asset to anything that they own in their portfolio, he said.
Of course, bitcoins reemergence can make it a playground that is rampant for speculation. And there are some who believe that moves in the relatively thinly traded cryptocurrency are being manipulated by a handful of owners with hefty bitcoin positions.
Still, the Qubecois is far from the only one bullish on bitcoin and attempting to proselytize those uninitiated.
John McAfee, of antivirus software fame, is calling for bitcoin to hit 3,000 soon. Bitcoin has enormous momentum, McAfee said. MGT Capital Investments Inc., his cybersecurity-focused investment fund MGTI, -9.62% is ramping up its operations to increase its position in bitcoin.
Meanwhile, Cathie Wood, chief executive officer of ARK Investment Management, told MarketWatchs Ryan Vlastelica that bitcoin is underappreciated: Weve watched the volatility in bitcoin ever since we first bought it, and were not blind to the fact that prices are driven by speculation to a certain degree. However, we think its utility is very underappreciated, and that there isnt as much speculation as people think, necessarily.
Earlier this week, billionaire and Fidelity Investments scion, Abigail Johnson, said bitcoin has some wrinkles to iron out before it becomes more widely adopted, but envisioned a rosy future for the digital currency. I like to think that huge new markets and products will be built on these platforms, she said at Consensus, a conference put on by digital currency site CoinDesk.
Bitcoins recent rally has coincided with its growing acceptance by regulators. A law passed by Japanese lawmakers earlier this year that allows financial institutions to participate in the digital-currency market took effect in April.
Meanwhile, bitcoin may have garnered additional legitimacy recently after the Securities and Exchange Commission said it would reassess its earlier ruling in March that effectively killed the Winklevoss Bitcoin Trust, which had been closely watched for signs that the digital currency could underpin an exchange-traded funda potentially bullish move for its price.
To be sure, the recent and unrelenting focus on bitcoin should send one clear message to wannabe investorseven if Lamoureux and other digital currency enthusiasts are correct in their predictions: Be wary.
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Wall Street laughed at a call for bitcoin at $25000but after a 400% surge, the laughter is fading - MarketWatch
Coinbase Suffers Outages Amid Bitcoin Surge – Fortune
Coinbase said on Thursday it suffered outages this week as the bitcoin exchange saw "unprecedented traffic and trading," with the digital currency hitting record levels.
Bitcoin fell as much as 6.5% to $2,263.72 at around 1:30 p.m. ET on Thursday, but rebounded shortly after to hit a fresh all-time high of $2,760.10.
Bitcoin hit a record on the BitStamp platform on Wednesday, driven by an uptick in demand for crypto-assets, with the creation of new tokens to raise funding for start-ups using blockchain, the underlying technology behind bitcoin.
So far this year, the price of bitcoin has more than doubled.
Coinbase, the world's largest bitcoin company with operations in 32 countries, said the heavy traffic had caused outages at its website as well. The exchange said it was working to resolve the issues.
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Problems that Coinbase's platform experienced earlier this week, including card verification failures and slow load times, were resolved, its status page showed.
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Coinbase Suffers Outages Amid Bitcoin Surge - Fortune
Why bitcoin prices are rising — way more than a bit – CBS News – CBS News
When hackers recently threatened torelease an unnamed Disney filmunless they received a payoff, they asked for the ransom in bitcoin. The incident highlights the cryptocurrency's dual nature these days as an increasingly prized and accepted financial asset but one that still retains its outlaw allure.
Bitcoin prices are topping $2,000, more than doubling in value this year, as political instability in many parts of the world cause a spike in demand that some fans say could one day upend the world's banking system.
As a result of the latest price surge, the value of the digital currency's total circulation has hit nearly $35 billion. While that may sound like a lot, it's not in the grand scheme of other markets. That's less than the market cap of a single good-size S&P 500 company like Ford's (F) $45 billion market cap or Tesla's (TSLA) $50 billion.
Will the latest bitcoin bubble burst? Or is it different this time? Some market watchers argue that prices for bitcoin and other digital currencies will continue rising. They cite increased economic instability in places like Russia, Nigeria and even South Korea that's encouraging people to turn to bitcoin because it can be a more stable way to conduct financial transactions.
Bitcoin also is being used by people in Venezuela, whose economy is collapsing, to buy food from Amazon (AMZN) through a middleman company.
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It's been said that cash is king, but lately it's been getting a little competition from a currency you can't see. It's called Bitcoin. Despite i...
"What we're seeing is mainstream adoption ... and cryptocurrencies like bitcoin becoming an accepted commodity for investment," said Sheffield Clark, co-founder and CEO ofCoinsource, the world's largest bitcoin ATM network. "I also expect many countries to follow Japan's footsteps and recognize bitcoin as a legal payment method. As the investor base broadens, there inevitably will be a bandwagon effect that will take hold."
Unfortunately, criminals have also taken hold of bitcoin. The hackers behind the recent WannaCry attack that crippled computers in more than 100 countries demanded payment in the cryptocurrency before they would release the lock they had placed on victims' computers. People involved in prostitution are using bitcoin to pay for ads on sites like Backpage because they're prevented from using conventional payment processors.
Drug dealers are also accepting the cryptocurrency as payment, and bitcoin is the "perfect" tool for tax evaders, according to Tone Vays, a derivatives trader and consultant who hosts a podcast about bitcoin.
The bitcoin market crashed three times between 2011 and 2014, plunging more than 50 percent each time. Prices tumbled earlier this year after the U.S. Securities and Exchange Commission rejected plans by twin-brother entrepreneurs Tyler and Cameron Winklevoss to offer a bitcoin exchange-traded fund. Prices have rebounded since.
Meanwhile, a digital currency called ethereum, which ranks second in the market behind bitcoin, has been on a roller-coaster ride of its own, climbing more than 2,000 percent since January. Ripple, the third-largest, leaped 7,000 percent in two months before crashing recently.
"After these blistering surges of thousands of percentage points in the shortest time, no one is even trying to pretend that these are usable currencies," wroteanalyst Wolf Richter on his website. "That notion has totally fallen by the wayside. They're not even called 'cryptocurrency' anymore. They're cryptocoins or alt-coins or bitcoins or just tokens."
Vays also is skeptical about rivals to bitcoin, predicting that when they crash, it "will make the dotcom bubble look like an appetizer."
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Why bitcoin prices are rising -- way more than a bit - CBS News - CBS News
Opinion: Three reasons to fear the coming crash in bitcoins – MarketWatch
An investment of $1,000 in bitcoin in 2010 would be worth more than $38 million today, not $38 billion, as an earlier version of this column mistakenly stated.
$1,000 $2,000 or $3,000. Heck, it could be up to $10,000 by the end of the month, and carry on climbing from there. While most markets around the world are mildly positive for this year, the cryptocurrency bitcoin has gone through the roof. At $2,400 it has more than doubled in value this year alone, and it is hitting fresh highs almost every day.
But hold on. Bitcoins themselves may be very new, yet that kind of price action is very old. In truth, it is starting to look like a bubble, and that should be making investors everywhere feel nervous. Why? Because it tells us that financial crazes are back. Because it will lead to overinvestment and wild speculation. And because bubbles inevitably crash and once that happens, the losses can ripple out in unexpected ways.
Also read: 4 reasons bitcoin still isnt mainstream
If you were lucky enough, or smart enough, to load up on some bitcoins early, you will be feeling a lot wealthier heading into the summer.
On Monday, the value of bitcoin BTCUSD, +9.47% raced up close to $2,200, an all-time high. By Wednesday it was soaring over $2,400.
If you had put $1,000 in the electronic currency in 2010, it would be worth an extraordinary $38 million (up from $35 million on Monday and compared to $2,500 if you had put it into the S&P 500 SPX, +0.25% ). Not many people were ever going to be that quick off the mark, but if you had loaded up on a few when the price last crashed in 2014 you would have almost quadrupled your money. In the last month alone, the price has risen by 87%, and there is little sign of it stopping there.
There are plenty of solid reasons why bitcoins are going up in price. It is growing in importance, along with other cryptocurrencies, as more and more companies accept it as a means of payment, and as regulators start to accept it as a legitimate investment. It may well start to break out of a small techno world, and become a mainstream asset, like the dollar, or equities, gold or bonds.
Even so, 87% in a month is not a normal price movement. In reality, no one really needs to spend time debating whether its a bubble or not. It is just obvious. The interesting question is what will be the consequences of that, and how much damage it might do when it bursts.
On one level, the answer might be not much. For all the hype and hoopla around electronic currencies, they are not yet a huge financial deal. There are 16 million bitcoins out there, and they currently have a combined value of $35 billion.
Okay, so that might be $40 billion or even $50 billion by the time you get around to reading this far, but in the context of the global capital markets that is not a huge sum.
Apple AAPL, -0.30% has a market value of $805 billion. All the gold in the world has an estimated combined price of $8.2 trillion. The United States bond market is worth an estimated $31 trillion. Bitcoin is hardly that important. Associated British Foods ABF, +0.03% , a relatively dull company you have probably never heard of, is worth about the same as all the bitcoins put together and the markets would not crash if it went pop.
On another level, however, the bubble could matter a lot. Here are three reasons why it should be making investors, whether they have any cryptocurrencies in their portfolio or not, feel anxious.
First, like any mania, it will lead to overinvestment, and that will lead to a misallocation of capital. Only this month, a company called RSK Labs raised $3.5 million for a bitcoin smart contract. Coinbase, a digital wallet startup, raised $75 million in funding.
Anyone who has time on their hands this week might want to try rolling up to a venture capital fund with a whizzy idea for a bitcoin something-or-other. They will probably walk out with $10 million, and a promise of more funding when that is used up. Sure, some of those will be great ideas, and go on to make everyone a lot of money. But a lot of them will flimsy and unpractical and will burn though a lot of cash that could have been more usefully deployed elsewhere.
Next, it tells us that manias are back.
In any long bull market, there are always one or two assets where the price goes completely crazy. It might be dot-com stocks, or space exploration companies, or apartments in central London, or hedge-fund managers, or if you go back far enough, radio shares, or South American railway companies.
But it is always something. If there is an asset bubble underway, it surely tells us that we are close to the peak of a bull market and sooner or later, that will turn down.
Finally, if bitcoin crashes, it might not do that much damage. $30 billion can disappear without leaving much of a trace in the capital markets. The worrying point is this. Bitcoin is not just any old asset. It is also money, if not of the conventional sort.
As we learned in 2008 and 2009 when a part of the financial system starts to crumble, suddenly the whole edifice starts to look pretty shaky. We dont really know what contracts have been linked to cryptocurrencies, what derivatives have been hitched to them, or how deeply they have been embedded into the financial system. One thing is for sure, though. In a crash, we would find out very quickly and the losses might ripple out in all unexpected ways.
Right now, bitcoin is on a roll. We have no way of knowing what its real value might be. The peak of a run might well be some way off. But when a crash comes, it wont just be its holders who feel the pain.
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Opinion: Three reasons to fear the coming crash in bitcoins - MarketWatch