Category Archives: Bitcoin
Bitcoin Scam Site Warning CryptoBusinessWorld – The Merkle
A lot of bitcoin Ponzi schemes make people believe their offering is legitimate. This is part of the reason why these scams are sosuccessful, although users are smartening up and are trying to avoid HYIP schemes. CryptoBusinessWorld has been getting some traction lately, even though their plans are anything but legitimate. It is best users avoid this platform altogether.
While this particular bitcoin HYIP scam has a nice website design, it is anything but a professional operation. Any program offering different investment plans for users to take advantage of need to be scrutinized. CryptoBusinessWorld is an obvious Ponzi scheme that will only pay out as long as new capital is coming in. Unfortunately for them, that revenue stream may dry up a lot sooner than anticipated.
CryptoBusinessWorld is one of those bitcoin HYIP scams focusing on plans with daily earnings. Most people know there is no way for anyone to guarantee fixed returns on a daily basis. This is not possible in the financial sector and it will certainly not work in the world of volatile cryptocurrencies. Anyone claiming otherwise is lying through their teeth.
CryptoBusinessWorld investors can earn anywhere from 3% to 9% per day. While three percent may seem manageable, nine percent is simply ludicrous. There is also a plan to earn 20% weekly for one full year, resulting in a 1,040% return of investment. Bigger numbers will always entice novice users to make an investment sooner or later, yet no one should fall for these tricks by any means. There is no way anyone can provide such returns in a legitimate manner.
If that isnt enough to prove this platform is a scam, look at the referral commission users can earn. CryptoBusinessWorld users can earn 8% commission from level one referrals, 4% from level 2 and 2% from level 3. Once again, these numbers are extremely unrealistic. If one of your referrals invested US$500 worth of bitcoin as a level 1 referral, the affiliate will earn US$40. A very high amount considering the company would need to repay at least 3% of the original investment back every single day.
Another dead giveaway of CryptoBusinessWorld being a scam is how they accept the traditional payments involved in HYIP scams. Bitcoin is accepted, of course, as are Payeer and Perfect Money. All three of these payment methods have irreversible transactions, making them a perfect solution for people looking to defraud others. It is not hard to see why platforms like these cant be trusted with your money.
As one would expect, the business is registered as a company in the United Kingdom. The registration number is legitimate, although it takes little to no effort to get such a number. The address listed on the site does not resemble the home of a business that will help others make money by any means. Keep your money safe and dont fall for these cheap HYIP scams.
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Bitcoin Scam Site Warning CryptoBusinessWorld - The Merkle
Why bitcoins are a bit risky – The Hindu
The Hindu | Why bitcoins are a bit risky The Hindu Bitcoin value hits a life-time high,; bitcoins are now more expensive than gold,; Winklevoss twins make a bid for an exchange traded fund based on bitcoin. Headlines such as these are making everyone sit up and take notice of the virtual currency ... |
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Why bitcoins are a bit risky - The Hindu
Bitcoin: ETF Dream Deferred – Chief Investment Officer
Spec price drops, rebounds after SEC rejects first exchange-traded fund that tracks Bitcoin.
Late last Friday, the SEC rejectedan application from Winklevoss Bitcoin Trust for what would have been the first exchange-traded fund that tracks Bitcoin. The highly anticipated announcement ended plans to list and trade shares on the Bats BZX Exchange Inc. The SEC was worried about the currencys vulnerability to manipulation and the feasibility of surveillance. Bitcoin dropped12.3 percent to $1,069 following the news from the SEC. It seems, however, to have no trouble recovering from the stumble.CoinDesk, says Bitcoin opened trading Mar. 14 at $1172.91This rejection denies many investment institutions the opportunity for more direct exposure to the dynamic currency.
Specifically, the SEC expressed concerns that the proposed activity of the ETF would have fallen short of compliance with Section 6(b)(5) of the Exchange Act and rejected a proposed rule change and specifically called out two major, interrelated drawbacks concerning oversight and fraud prevention:
The planned ETF classified Bitcoin as a commodity, rather than a currency, with shares representing 0.01 BTC. The shares would have tracked the price of bitcoins on the Gemini Exchange, owned by Gemini Trust LLC. Bats BZX was set to collaborate with the Gemini Exchange to monitor the Winklevoss Bitcoin ETF in the same way the exchange keeps an eye on derivatives trading. The Gemini Exchange has been authorized to trade digital currency for two years by the NY State Department of Financial Services (NYSDFS). Also, last May, the NYSDFS gave its approvalfor the Gemini Exchange to trade Ether, a new and promising cryptocurrency. Ether, short for Ethereum, can impact trading and institutional investors because it allows for the creation and support of smart contracts for trading without a middle man.
Multiple companies submitted Bitcoin ETFs proposals to the regulatory approval process, including one from SolidX Bitcoin Trust, from SolidX Partners Inc, a blockchain technology services company. Tyler and Cameron Winklevoss, famous for their lawsuit against Mark Zuckerberg, alleging he stole their idea for Facebook, were the first to submita proposal for an ETF. Their plan for The Winklevoss Bitcoin ETF [Winklevoss Bitcoin Trust (COIN)] had been pending three and half years ago, and experienced more than one decision delay. In the interim, the SEC noted and avowed tighter regulatory surveillance to keep abreast of the burgeoningETF market, now valued over $3 trillion in net assets.
The recent trend to increase transparency for Bitcoin has grown in accordance with interest in trading. Chicago Mercantile Exchange, the leading derivatives marketplace, successfullylaunched two new tools last November, the CF Bitcoin Reference Rate (BRR) and CME CF Bitcoin Real Time Index (BRTI). The BRR aggregates the trade flow of the major bitcoin spot exchanges during a specific calculation window into a once-a-day, transparent reference rate of the US dollar price of bitcoin," according to a CME press release. To do this, CME works with several bitcoin exchanges and trading platforms including Bitfinex, GDAX, itBit, Kraken, and Bitstamp.
Bitcoins future faces other challenges, including piracy and liquidity risk. Uniquepartnerships, such as the one between Polychain Capital and venture capital players, Andreessen Horowitz and Union Square Ventures, are forming to seek the rewards in the risk. Blockchain, the technology behind Bitcoin, is also making inroads in other areas of business, including shipping logistics, manufacturing and more.
Cryptocurrencies are decentralized global digital currencies that provide relatively more secure and efficient means of payment and offer. The underlying technology makes tracking assets and transactions more secure. Thusfar, these advantages have attracted interest from banks and other financial institutions. But will major industry players continue to race to prepare for a future defined by this new asset class? Only time will tell.
By Tasha Williams
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Bitcoin: ETF Dream Deferred - Chief Investment Officer
Bitcoin Price Analysis – SEC disapproves ETF Brave New Coin – Brave New Coin
The U.S. Securities and Exchange Commission (SEC) made history on Friday by disapproving the Bats BZX Exchange filing to list and trade shares of the Winklevoss Bitcoin Trust. The shares, representing 0.01 BTC, would have tracked the price of bitcoins on the Gemini Exchange. The digital-asset exchange is owned and operated by the Gemini Trust Company, which would have owned the equivalent share value in bitcoins.
The Commission believes that the significant markets for bitcoin are unregulated, which means they are unlikely to approve any US based exchange-traded product using bitcoin as the underlying asset. There was a 25% drop from the high that day, which was a brief new all-time high of $1319.50 on the $BLX.
Aside from the ETF, this weeks big conundrum was the increasing support among large Chinese miners for Bitcoin Unlimited, a counter proposal to Segregated Witness (SegWit), spearheaded by Roger Ver, which would remove the block size cap entirely through a hard fork.
SegWit would increase the block size by up to 4MB through a soft fork. A hard fork would split bitcoin into two different cryptocurrencies, whereas a soft fork would be backwards compatible. Many argue that a hard fork would be dangerous to the bitcoin ecosystem as a whole, the Bitcoin Unlimited code has not been fully tested, and two Bitcoins would create brand confusion. A zero day exploit brought down 75% of bitcoin unlimited nodes this week. While the attack vector was quickly patched, the attack validated the concern around releasing untested code into a $20 billion asset.
Both sides of the debate agree a solution needs to be reached soon. Blocks have become increasingly full, which increases transaction fees due to users wanting to be included in the next block, and slows down transaction times generally.
The Peoples Bank of China (PBoC) has been rather quiet over the past week. Domestic Chinese exchanges remain under a withdrawal halt until further auditing is completed. Being unable to withdraw bitcoin means that many traders have been staying off the exchanges entirely.
Of note from China this week is the opening of a new quarterly futures contract from OKCoin. Below is a chart showing the quarterly contract open dates (orange), the previous quarterly moving to biweekly (blue), and the previous quarterly contract closing (yellow).
Whether or not any true significance or correlation can be gleaned from this is difficult to say. It is safe to correlate either increased periods of volatility around the quarterly rollover dates, or complete stability which was the bottom of the uptrend at the time. The current volatility occurring before the opening of the next quarterly contract suggests a bearish forecast for the next quarterly. Said a different way, either the high or low for the quarter has been made around quarterly contract rollover dates.
However, Chinese volume and therefore Chinas ability to move the entire bitcoin market has largely diminished since the PBoC crackdown. This upcoming quarter may be a turning point where OKCoin futures have less relevance than it has in the past.
Even though Chinese exchange volume remains diminished from previous months, even falling behind the South Korean Won in volume, Chinas Local Bitcoin volume remains at all-time high levels. Expect Chinese exchange volume to increase substantially once the moratorium for withdrawals is lifted.
When assessing the health of a trend or diagnosing the bearishness of a pullback, the highest timeframes offer an overview, while the Ichimoku Cloud indicator offers more detail. As long as the price remains above the cloud, sentiment remains bullish. Price in the cloud which indicate a neutral trend, and below the cloud would indicate a bearish trend. When the Tenkan (T) is over the Kijun (K) sentiment is bullish. K over T would indicate bearish sentiment. When the Lagging Span (LS) is above the cloud and above the price sentiment is bullish, below the cloud and price would indicate bearish sentiment. The best entry signals for the cloud occur when trend is obvious, but 1 or 2 of the signals have yet to become confluent with a higher timeframe trend.
For even more precision, an oscillator, such as the Relative Strength Index, can be added to determine momentum. A bearish divergence is created when price makes a higher high but RSI or momentum, does not make a higher high. This suggests weakening of bullish momentum. A bullish divergence is created when price makes a lower low and RSI makes a higher low. This suggests weakening of bearish momentum. Divergences suggest reversal of trend, however, divergences can continue growing until the reversal becomes obvious and should be thought of as a lagging indicator.
All cloud signals on weekly Ichimoku Cloud remain strongly bullish. However, the last three local highs have made lower highs on RSI, creating a growing bear divergence, suggesting weakening bullish momentum. Price would remain in a bull trend as long is RSI remains above 50, and enter a bear trend should a weekly candle close with RSI below 50. This is confirmed by the current trend, which began in October 2015 when RSI broke above 50. One of the few things powerful enough to create such a bearish pullback could be a hard fork in the blockchain.
Another trend indicating system is Heikin-Ashi (HA) candles, which use open and close data from the previous period, and open and close data from the current period. An open and a close above the previous period suggests strong momentum of the given trend. An open and a close within the bounds of the previous period suggests a slowing of trend. A color flip from green to red or red to green indicates the possibility of the beginning of a new trend and the end of the previous trend. Weekly HA candles have been green ever since the Bitfinex exchange hack.
Similar to Ichimoku Cloud, the best entry occurs when the macro trend flips from a pullback and continues. HA candles flipping from red this week or next, and back to green the week after, would indicate a strong probability of trend continuation.
Other indicators, such as the Pitchfork, can confirm trend continuation as well. Each diagonal of the Pitchfork can be thought of as a Potential Reversal Zone or support/resistance line. The upper blue diagonal zone being most overbought, or the top bounds of the trend, and the lower blue diagonal zone being most oversold, or the bottom bounds of the trend.
A macro pitchfork, anchored early in 2015, captures the entire uptrend. This shows current price well outside the bounds of the trend, or in overbought territory, but also shows even with the current pullback, the overall trend is in no danger of ending.
Similar to the weekly Ichimoku Cloud, all signals on the daily Ichimoku Cloud remain bullish. Support is drawn at the Kijun, $1076, and the top of the cloud, $980. These are considered safe bids until a clear bottom forms on the current pullback.
The Pitchfork anchored from a previous local low gives a buying opportunity, or bid zone from $975-1105.
The gold standard for trend indication is perhaps the moving average (MA) on the daily timeframe. Price above the 200MA indicates a bullish trend, below indicates a bearish trend. A slower MA, like the 50 period MA, is often added to create an additional support/resistance line and a potential for identifying crosses, similar to the TK lines of the Ichimoku cloud. Price remains far above the 200MA on the daily time frame ,with no indication of a 50/200MA cross any time soon. The last price touch of the 200MA occurred during the Bitfinex hack.
The Ichimoku Cloud on the four hour timeframe shows a bearish kumo breakout, or candle close below the cloud, with a bullish TK and cloud. Due to macro conditions yielding a bullish trend, a strong long entry signal would occur if price reverses, or finds a bottom, and breaks cloud again in bullish territory. The current play on this time frame is to sit tight on the long entries for now. Although the four hour timeframe is calling for a short entry, it should be avoided as it contradicts higher timeframes, which always take precedent.
Applying the 50MA and 200MA on the four hour timeframe show how price has tried to rebound from the 200MA a few times, but is currently closing below the 200MA.
Price has not had consecutive closes below the 200MA since the PBoC announcements in early January. Although this will occur slowly over the next month, a cross recross of the 50/200MA would be the safest long re-entry, similar to the recross that occurred in late January. Although this does not capture the exact bottom, it avoids much of the risk of buying before the bottom is firmly established. Because of how the price action fits around OKCoin quarterly futures, there will likely be an extended period of time before a 50/200MA cross recross occurs.
Ichimoku Cloud on the lowest timeframe appropriate timeframe, one hour, shows a hidden bullish divergence, higher low in price with lower low on RSI, suggesting an interim bottom forming here as bearish momentum is weakening. This can be thought of as a higher price with increased bearish momentum, or failure to bring price lower with increased bearish momentum.
There is also an edge to edge cloud trade, in yellow, which has already completed, again suggesting the move may be slowed or over for now.
Lastly, there is a potential for a Bullish Bat Harmonic, which is based on fractals and fibonacci retracement levels, giving a confluence of support around $980. This is a very loose harmonic because it excludes the high made on ETF decision day, but includes the low made on that day. Harmonics are often draw from an extreme high or low, which often form an M or W. The exact points can be predicted based on the pattern. This shape is considered bullish because it will typically bounce up from the last point once completed. Targets for harmonics are the 50% fibonacci retracement level of the entire move.
Harmonics can be drawn as leading indicators, before all the points are completed, such as this formation, or drawn as they happen to confirm the direction of a move.
The SEC decision, which would not have altered Bitcoin protocol, was a bearish news event in an already overbought market. A protocol change to Bitcoin Unlimited with a hard fork, which would likely have unknown consequences for the Bitcoin ecosystem, is already beginning to drum up fear, uncertainty, and doubt over the mere possibility of its passage. A resolution of the block size debate, with either SegWit or Bitcoin Unlimited, should be enough impetus to push the entire market in one direction or another. Dont expect either proposal to be adopted any time soon.
The macro trend remains extremely bullish with some indications on lower timeframes of a kind of pullback which resets entry signals. Look for and expect long entry signals on Ichimoku Cloud, Heikin-Ashi candles, or 50/200MAs as price finds an interim bottom, possibly around $980 over the next week. Volatility around quarterly OKCoin futures rollover suggests a local top with extended consolidation over the next quarter.
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Bitcoin Price Analysis - SEC disapproves ETF Brave New Coin - Brave New Coin
Pastor, Programmer Convicted of Conspiracy and Bribery in Bitcoin Exchange Scheme – Fortune
A bitcoin token.Chris Ratcliffe Bloomberg via Getty Images
A New Jersey pastor and a Florida software engineer were convicted on Friday of scheming to help an illegal bitcoin exchange avoid having banks and regulators look into its activities.
The bitcoin exchange, Coin.mx, was linked to an investigation of a data breach at JPMorgan Chase & Co, revealed in 2014, that exposed more than 83 million accounts.
Pastor Trevon Gross, 47, and programmer Yuri Lebedev, 39, were convicted of conspiracy and bribery charges by a jury in Manhattan federal court after a week of deliberations, according to a spokesman for federal prosecutors. Lebedev was also convicted of wire fraud and bank fraud.
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Henry Klingeman, Gross's attorney, said in an email that he would seek an order overturning the verdict, "and if and when the time comes a fair and lenient sentence."
Eric Creizman, a lawyer for Lebedev, had no immediate comment.
Prosecutors charged that Lebedev helped arrange bribes to Gross, including $150,000 in donations to his church. In exchange, they say, Gross helped the operator of Coin.mx, Anthony Murgio, take over a small credit union Gross ran from his church.
Murgio used the credit union to evade scrutiny of banks wary of processing payments involving the virtual currency, prosecutors say. Lebedev was accused of working for Coin.mx through a front called "Collectables Club."
Attention 20-Year-Olds: Dont Ruin Your Finances
Over the course of a four-week trial, lawyers for Lebedev and Gross tried to paint a different picture, saying their clients did not know that Murgio was running an illegal operation and never acted with corrupt intent.
The trial followed a probe rooted in the JPMorgan ( jpm ) data breach, which lead to charges against nine people.
Gross, Lebedev and Murgio were not accused of hacking. But prosecutors said Coin.mx was owned by an Israeli who was behind the breach, Gery Shalon.
Bitcoin May Go Boom: A Guide to This Weeks Big SEC Decision
Prosecutors say Shalon, together with Maryland-born Joshua Samuel Aaron, orchestrated cyber attacks that resulted in the theft of information from more than 100 million people.
Prosecutors said they carried out the hacks to further other schemes with another Israeli, Ziv Orenstein, including pumping up stock prices with promotional emails. Shalon, Aaron and Orenstein have pleaded not guilty.
Murgio pleaded guilty to charges related to Coin.mx in January. He is scheduled to be sentenced on June 16.
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Pastor, Programmer Convicted of Conspiracy and Bribery in Bitcoin Exchange Scheme - Fortune
The Initial Coin Offering, the Bitcoin-y Stock That’s Not StockBut Definitely a Big Deal – WIRED
Slide: 1 / of 1. Caption: Getty Images
Next month, a venture capital firm called Blockchain Capital plans to do something that could change the way companies get fundedand perhaps even the way they operate. Instead of an Initial Public Offering, in which a company sells stock via a regulated exchange like Nasdaq, the San Francisco-based VC firm is making an Initial Coin Offering, selling its own digital token as a way of raising money for its latest venture fund. Anyone who buys a token will be buying into the fund.
Yes, they call it an ICO, and over the last 14 months, more than 60 startups, open source projects, and ragtag online communities used this method to raise over $250 million for their own business efforts. The data shows a ton of momentum at the end of the year, says Matt Chwierut, of Smith and Crown, a new research outfit that tracks this new phenomenon, and that momentum has only continued.
This isnt just more blather about bitcoin as the future of currency. Yes, many of these online operations are merely trying to create digital currencies that serve as an alternative to bitcoin. The Zcash Electric Coin Company, for instance, recently offered up a currency designed to ensure that financial transactions remain private. But many others are using new internet tokens not as digital currencies per se, but as a way of building an entirely new kind of business.
Take The Golem Project, which bills itself as AirBnb for computers. This rather elaborate effort aims to create a system that allows anyone to buy computing power from anyone else. But the added trick is that this system will operate outside the control of any one central authority, as a kind of online co-op. Golem recently offered up a digital token that provides a share of the fees generated when services are bought and sold on its network. This token is not quite a currency. And its not quite a stock. Its a third thing when you thought there were only two.
For now, this strange new breed of business operates outside of government oversight, and nobody is really sure how governments will regulate these kinds of sales. Thats where Blockchain Capital comes in. Today, the firm announced that in the US, it will only offer its tokens to accredited investors, as the firm seeks to comply with US regulations. Overseas, any investor can buy the token, which will be called BCAP. The firm plans to release a detailed memorandum describing the offering on April 3, and the offering itself will likely follow after a few more weeks, through an organization based in Singapore. In Singapore, regulators do not consider this kind of digital token to be a security.
Our view is: lets just face regulation head on, and see if this can be done compliantly, says Blockchain Capital managing partner Brock Pierce. Once weve done this, everyone is going to copy the roadmap weve created.
This method is new to the ICO world, but probably warranted. The structures to help ICOs succeed and thrive in the mainstream are still evolvinglike the Argon Group, which longtime Wall Streeter Stan Miroshnik founded to help oversee ICOs. Argon will bookrun the token offering on behalf of Blockchain Capital, meaning, in this case, that it will actually issue the token. Our mission is to help this new capital market evolve, Miroshnik says.
Certainly, Blockchain Capitals coin offering is far less extravagant than an ICO from a distributed operation like The Golem Project. And it lacks the potential to truly change the nature of business in the way such a project can. But it could at least call greater attention to the complex dynamics that an ICO can bring.
ICOs are a very different animal from IPOs. Operating atop a blockchaina vast ledger for recording digital transactions, like the one that underpins bitcointhese coins have value in and of themselves. When you buy a coin, youre not just buying something that represents a piece of an operation. Youre buying an actual piece. It has some resemblance to how equity works, says Peter Van Valkenburgh, a lawyer and the director of research at the Coin Center, a crypto-finance think tank. But it works in a purer way. Plus, these coins can help drive a truly decentralized operation like the Golem Project. Like many other ICO tokens, the Golem coin sits atop the Ethereum blockchain, which can run automated agreements called smart contracts. That allows the project to operate without a central authority.
The Blockchain Capital token will be somewhat similar, in that it will let individuals buy straight into an operation. The firm invests solely in, yes, companies exploring technologies related to bitcoin and the blockchain. Previously, it raised money for two traditional funds. Now, its ICO will provide partbut not allof a third.
This ICO also means investors can readily sell their investments on a secondary market. In the US, only accredited investors can buy the coin at the beginning, but after a waiting period, they can offload their investments online, and others can buy in. We call this liquidity-enhanced venture capital, Pierce says, meaning that people can invest without locking their money up for years on end. In the long run, this kind of setup could attract more investors, and more money. Of course, as Van Valkenburgh points out, the secondary market for these coins may be subject to regulation.
Because only accredited investors can buy the coin in the USwith Blockchain Capital adhering, it says, to regulations that exempt it from registering the coins as securities with the SECthe initial ICO wont reach as many investors. And the fund certainly isnt decentralized. Pierce and his partners will decide how to invest the money. Across the community that drives bitcoin and various other blockchain projects, the real hope is that ICOs can feed far more ambitious creations. Already ideas like Arcade City, a decentralized version of Uber, and Augur, a decentralized service for prediction markets, have raised money through ICOs. Ethereum itself was originally funded with an ICO, and similar blockchains continue to offer their own coins. The knock-on effect is enormous. A new San Francisco hedge fund called Polychain is investing solely in ICO coins.
That said, theres reason for caution. Blockchain watchers will remember the Decentralized Autonomous Organization, a blockchained venture capital fund that got hacked to the tune of $50 million. Todays ICOs have even more potential than the DAO, as long as the people using them take the time to ensure theyre on solid ground.
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The Initial Coin Offering, the Bitcoin-y Stock That's Not StockBut Definitely a Big Deal - WIRED
Bitcoin down but not out following SEC rejection – The Hill (blog)
Last Friday, the SEC ruled against approving the Winklevoss Bitcoin Trust exchange-traded fund (ETF), the outcome of an almost four-year process. While the decision was a disappointment to many, it is only one skirmish in what is likely to be years of back-and-forth before digital assets take their rightful place as widely-accepted tokens for global commerce.
While regulatory debates continue, the price of bitcoin is up almost 200 percent from March 2016, overtaking gold for the first time in history this month. This demand continues to drive the development of varied and institutional-quality investment vehicles for digital assets.
A Deeper Issue
The SECs decision is indicative of a much deeper and more systemic issue within the U.S. regulatory landscape. Our regulatory system is fragmented, complex and uncoordinated. It is laden with agencies quick to point the finger and slow to assume responsibility for enabling innovation.
In its rejection, the SEC noted that the majority of bitcoin is traded on exchanges outside of the U.S. hardly surprising when considering the current status quo.
In the U.S., digital currency exchanges have largely been categorized as money service businesses, subjecting them to state regulation. These exchanges have to obtain licenses on a state-by-state basis in order to operate an enormously burdensome, if not prohibitive process.
Without a clear regulatory framework, nor the ability to secure the licensing and approval needed to go to market, blockchain companies are increasingly being forced overseas. Our global counterparts continue to show decidedly more progressive attitudes toward the development of blockchain technology.
With moves like this SEC decision, we risk more jobs, innovations and businesses seeking friendlier regulatory environments in Europe and Asia, where the appetite for fintech innovation is markedly greater.
To regain and retain leadership in this important sector of the economy, U.S. regulators should focus on pro-growth initiatives, such as establishing a federal option for digital currency exchanges, to seize the generational opportunity to develop this country as a true center of excellence in financial technology.
Steady Progress
Progress has never been linear for digital assets, but it's been mostly consistent.Innovation on a potential multi-trillion-dollar scale naturally generates something of a rollercoaster think back to when the Netscape browser gave way to Internet Explorer and Safari, Google supplanted Yahoo!, or Facebook replaced MySpace.
We should accept that this is the natural process when high tech brings value to people, and regulators should be judicious in facilitating the adoption of best practices.The SECs decision not to approve an application for a Bitcoin ETF captivated the attention of financial leaders, blockchain startups, retail investors and the financial media.
Now is a crucial time for the blockchain community to build on this momentum and to capitalize on the growing public awareness of this emerging sector.Government agencies across the U.S. are actively exploring blockchain technology, including the U.S. Department of Homeland Security, the Food and Drug Administrationand the Department of Health and Human Services.
Despite this latest setback, there are still many avenues for the blockchain community to establish a permanent place for digital assets in our financial system and to encourage the incorporation of distributed ledger solutions at a widespread level.
Perianne Boring is the founder and president of the Chamber of Digital Commerce, the world's largest trade association representing the blockchain industry.
The views expressed by contributors are their own and not the views of The Hill.
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Bitcoin down but not out following SEC rejection - The Hill (blog)
Digital Currencies Went Crazy in the Wake of the SEC’s Bitcoin Ruling – Fortune
Something strange is happening in the world of digital currency. When the Securities and Exchange Commission passed a harsh judgment last week on bitcoin, many expected the entire asset class to crumble.
Instead, the opposite has happened.
The SEC ruling, if you missed it, came down on Friday afternoon. The long-awaited decision, citing the possibility of fraud and market manipulation, rejected a proposal to create an exchange traded fund (ETF) for bitcoin, and threw cold water on hopes institutional investors would use the ETF to stock up on the currency. The market quickly punished bitcoin , driving its price down to around $1,050a more than 15% drop from its highs earlier that day.
But when it came to other digital currencies, investors didn't bail on them. They started gobbling them up. These other currencies such as Ethereum and Ripple (there are dozens) aren't as famous as bitcoin but have been around for a while, and some people treat them as a proxy asset for bitcoin. Since the SEC decision, they've all shot up, some of them dramatically.
Here is a chart that shows how the prices have changed. The data is compiled from each currency's lowest price on March 10 (the day of the ruling) through Tuesday morning:
As you can see, Ethereum has made spectacular gains. The currency, which is tied to a popular new form of blockchain technology, is up around 60%. Dash, a less well-known bitcoin rival, is up about 59%.
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The other surprise in chart is how nicely bitcoin has recovered from the SEC's punch last Friday. Here's a closer look, courtesy of Coindesk , of how its price has moved since Friday:
As you can see, bitcoin is nudging back towards its near all-time high of $1,300, which came amid a frenzy of speculation that a positive SEC ruling would send the price soaring.
For now, there is no clear explanation of why bitcoin recovered so quickly, or why the so-called "alt-currencies" like Dash initially rose when bitcoin fell. Some commentators have suggested the recent boom comes from new digital currency converts who learned about the assets as a result of the publicity surrounding the ETF decision. Others say the recent prices simply reflect the fact that digital currencies are a far more sturdy asset than they were two years ago, and their values can no longer be derailed by a bit of negative news.
It's also worth noting the SEC jolt from last week has brought about a change in the makeup of the overall market cap for digital currency. Note below how bitcoin's share of the pie has dropped about 10% since the news:
The upshot of this is that while bitcoin still clearly dominates the digital currency world, other assetsparticularly Ethereummay now be emerging as more than also-rans.
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Digital Currencies Went Crazy in the Wake of the SEC's Bitcoin Ruling - Fortune
Bitcoin: The Winklevoss Twins Cannot Catch A Break – Seeking Alpha
On Friday, March 10, Bitcoin rose to the highest price in history when the cryptocurrency hit $1,285.74 against the U.S. dollar. Bitcoin trading was born in 2010 when the price was only 6 cents in dollar terms, and the asset has come a very long way since.
There has been lots of debate surrounding the cryptocurrency. Some call it a commodity and others a currency. Most commodities are raw materials or hard assets that owners can hold in their hands or store for safe-keeping. One can only store Bitcoin in a computer wallet via a computer code. One of the most interesting things about Bitcoin is the blockchain technology that records a chain of ownership. Blockchain has many applications for other assets and could revolutionize the back-office function creating economies of scale and decreasing the cost of settling transactions across all assets. The current acting Chairman of the Commodities Futures Trading Commission (CFTC) commented on blockchain or DLT (distributed ledger technology) in January. "DLT may allow market participants to manage the enormous operational, transactional, and capital complexities brought about by Dodd-Frank. At the same time, it may provide regulators with the market visibility necessary to fulfill our mission to oversee healthy financial markets." The CFTC has designated Bitcoin as a commodity.
Last Friday, the Bitcoin market faced a highly anticipated decision by another regulator, the Securities and Exchange Commission (SEC), which ruled on a rule change that would have allowed for the creation of the first Bitcoin exchange-traded fund (ETF). Gemini sought to list the ETF on the NYSE Arca exchange. The ETF was the brainchild and supported by the Winklevoss twins who are angel investors in Gemini.
Bitcoin holds gains after SEC decision after an initial selloff
As those who trade Bitcoin held their collective breath and waited for the decision from the SEC last Friday, the price of the cryptocurrency rallied to its all-time high. After all, an affirmative nod from the regulatory body would have opened the floodgates for investors to position in Bitcoin via an ETF product. (Source)
As the price chart over the past few trading sessions highlights, Bitcoin fell to a low of $1,085.33 following the adverse decision from the SEC, a decline of 15.6% over the course of one-hour last Friday afternoon.
The SEC said in their decision that they were unnerved by a market that operates on an unregulated basis largely outside of the United States. They went on to tell the market that the chances for market manipulation are high in the world of Bitcoin at this time. There are currently two other proposals before the SEC when it comes to an ETF product for Bitcoin, but Friday's decision handed another in a series of bruises to the ego of the Winklevoss twins.
Despite the decision, the reasons that have caused the increase in value for Bitcoin remain strong. As a currency instrument, Bitcoin can float freely and its value comes from supply and demand for the cryptocurrency. While other foreign exchange instruments are subject to controls and manipulation by governments and monetary authorities around the world, Bitcoin is a pan-global means of exchange tool. In nations where currencies are not freely convertible, like China and Russia, the popularity of Bitcoin has soared. Therefore, by Monday, just a few days after the SEC handed down a decision that put an economic bullet into the twins' dreams of reaching the pinnacle of the cryptocurrency market, the price was right back up above the $1,240 level and trading near last week's highs. Eventually, there will be a market product that replicates the price action in Bitcoin, but the chances are that those poor Winklevoss twins lost their opportunity last week. It seems like everything they get involved in is a huge winner and at best, they only can capture a sliver of the value.
Another in a series of blows to the ego
The Winklevoss twins reached the height of their fame when they worked with Mark Zuckerberg at Harvard to develop Facebook. While Zuckerberg became a billionaire, the poor twins settled for $65 million in cash and Facebook stock which today is probably only worth a couple of hundred million. The twins argued in a lawsuit that they were the founders of the company and their piece of the Facebook pie amounts to a mere pittance when compared with Zuckerberg's net worth of which is north of $56 billion.
Money cannot matter much to the twins these days as a couple of hundred million is probably more than both can spend in their lifetimes, but the blow to the ego from the SEC decision has probably sent both into deep analysis wondering why they just cannot get anything to go their way. After all, Facebook has been a sensation that has surpassed almost everyone's wild dreams, and the future Bitcoin ETF product will likely have a similar result.
A Bitcoin ETF could attract lots of action
One of the biggest problems with Bitcoin is that it is so foreign to the traditional investment community. Investing in Bitcoin requires a certain amount of computer savvy, imagination, and a wallet in one's computer to store the cryptocurrency. While many millennials have embraced Bitcoin, the nontraditional method of investing in and holding the asset has caused many seasoned investors and traders to avoid it like the plague. Whenever I write a piece on Bitcoin, I always get at least one comment asking why someone should invest in anything that is backed by nothing. The other comments express the same concern cited by the SEC and other regulatory bodies that manipulation is too rife in the market to make it a solid investment vehicle. An ETF product would go a long way towards acceptance of Bitcoin as a trading sardine. Face it, investors and speculators love volatility, and if they can trade an asset that offers wide price variance and trades on a bona fide exchange, it will go a long way to increasing market visibility and acceptance. A Bitcoin ETF product will succeed once the regulators figure out a way to understand the flows in that market and the exchanges are chomping at the bit knowing that the trading volumes and fees will be huge.
Bitcoin at an all-time high
Bitcoin did not fall apart in the wake of last week's SEC announcement to reject the ETF product offered by the twins. In fact, the price action following the announcement was just another example of another higher low for Bitcoin.
Source: http://www.coindesk.com/price/
As the chart dating back to March 2016 shows, the price of Bitcoin has tripled and has been making higher lows, and higher highs as more people around the globe embrace a currency or commodity that is simply a function of supply and demand and that transcends the forces of government. In an age where citizens in Western nations are rejecting decades of the status quo as exemplified by the Brexit vote and election of Donald Trump as President of the United States, the rise in popularity of Bitcoin should come as no surprise. Moreover, as individual wealth in China increases, the controlled nature of the currency and exportation of wealth creates the perfect environment for Bitcoin to thrive. For the time being, it could be a case of this week's highs are next week's lows for Bitcoin and the SEC decision has little to do with the future popularity and acceptance of the cryptocurrency.
Is regulation of Bitcoin possible?
Regulators are struggling to get their hands around Bitcoin under the pressure of exchanges that smell profits from transaction fees. If the U.S. regulators do not act fast enough, it is likely that a foreign exchange in a friendlier regulatory environment will capture market share and leave the U.S. exchanges in the dust, just like the Winklevoss twins.
The CFTC was correct to label Bitcoin as a commodity. National interests tend to drive currencies, stocks, and bond prices over time which allows regulators to liaise with markets and exchanges to control and monitor flows. However, commodities are a different story given that production occurs in some regions of the world and consumption is ubiquitous. The CFTC regulates commodity prices within the United States and works with other cooperating nations to protect the markets from bad behavior. However, the U.S. regulators do not have the ability to control raw material markets on a pan-global basis, and they concentrate on the activity within the borders of the nation. If someone in the Ivory Coast decided to control and manipulate the price of cocoa, the regulators could not do much. OPEC has been attempting to manipulate the price of oil for decades, but it still trades actively and is regulated by the CFTC when it comes to trading on the U.S. futures market. Bitcoin is a commodity, and regulation needs to come with the full knowledge that what happens away from U.S. borders will be beyond the reach of regulatory bodies.
The SEC ruling last week was short sighted in that their argument was specious. Commodities markets, like Bitcoin, operate largely outside of the U.S. and there are instances where market manipulation occurs. The CFTC is accustomed to regulating commodities and therefore should have the role of guiding the SEC. After all, there are currently Cocoa (NYSEARCA:NIB) and crude oil (USO and BNO) ETF and ETN products that the SEC has approved for trading, and there is little difference between a Bitcoin ETF and those products when it comes to the arguments presented by the SEC.
The chances are that the regulatory body will eventually bite the bullet and approve an ETF product for Bitcoin. The problem for the Winklevoss twins is that they cannot catch a break. They will be left on the sidelines and on the outside looking in, once again, watching others make fortunes while wondering if they just have a dark cloud hanging over their heads.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Bitcoin: The Winklevoss Twins Cannot Catch A Break - Seeking Alpha
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