Category Archives: Bitcoin
Has bitcoin matched gold’s status? One expert weighs in – MarketWatch
The price for a single bitcoin exceeded the price of an ounce of gold for the first time ever Thursday, but the digital currency isnt ready to join gold or silver as a reliable long term store of value, Paul Mladjenovic, author of Precious Metals Investing for Dummies, told MarketWatch.
I want to see a lot more stability and I want to see that [bitcoin] has the same characteristics of durability that gold and silver have had over not just years but centuries, Mladjenovic said in a Facebook Live interview.
The price of a single bitcoin US:BTCUSD rose to an all-time high of $1,251.32 on Thursday, according to CoinDesks bitcoin price index. April gold futures on Comex GCJ7, -1.39% changed hands at $1,233.20 an ounce, down 1.4% on the day. For the year to date, gold is up more than 7%, while bitcoin is up more than 25%.
See: Bitccoin is now worth more than ounce of gold for the first time ever
Some view the eight-year-old cryptocurrency as a proxy for gold and silver because of its limited supply, Mladjenovic said. But its relatively short record and volatile action mean it has yet to achieve the same status, he said, arguing that bitcoin remains a speculators market.
Bitcoin has been in rally mode since early 2015, boosted in part by increased Chinese demand. Recent gains have also been attributed to expectations the Securities and Exchange Commission could soon authorize the creation of the first bitcoin exchange-traded fund.
The price of a single coin rose as high as $1,242 on some exchanges in late 2013 before the collapse of Mt. Gox, which was one of the largest digital currency exchanges. Bitcoin slumped to a low of $200 in the ensuing bear market.
Mladjenovic discussed a number of other topics related to gold and precious metals investing in the Facebook Live interview. He expects gold to rally amid a pickup in global inflation pressures. Watch the full interview here:
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Has bitcoin matched gold's status? One expert weighs in - MarketWatch
Opinion: Should you invest in a bitcoin ETF? – MarketWatch
Digital cryptocurrency bitcoin hit a record above $1,200 last week. Thats in large part because of speculation about the potential launch of the first-ever U.S. bitcoin ETF, but it also may be because of the uncertainty around all manner of investments in 2017.
After all, bitcoins advocates claim that it is a safe haven asset akin to gold. And according to a recent CNBC analysis, the digital currency has performed better than any other currency in every year since 2010 apart from 2014.
In an age where central banks in Europe and Japan continue to keep rates in negative territory and accusations of currency manipulation are a fixture of the Trump administration, you can understand why a digital currency like bitcoin has some appeal.
But its worth noting that bitcoin US:BTCUSD is notoriously volatile, and that its underperformance in 2014 was highlighted by a tremendous flop of about 70% from roughly $950 in January to under $300 at the end of that year. And since the currency has digital roots and was launched less than a decade ago, its also a popular target for internet crooks from small-scale phishing scams targeting would-be investors to hackers making off with a cool $65 million in bitcoin from Hong Kong exchange Bitfinex.
So whats the future of bitcoin? Will an ETF launch legitimize the digital currency and create a new option for investors looking to diversify into alternative assets? Or will the ups and downs of bitcoin continue, with a lucky few winning on their gamble even as volatility and outright criminal activity bankrupt others?
Here are some pros and cons of investing in this digital currency:
Long-term staying power: Bitcoin has reached roughly $19 billion in market value about 60% more than the total value of the digital currency during its previous peak in the 2014 bitcoin bubble. That rise hasnt been without serious volatility, of course, but the long-term gains in the last few years are dramatic as the currency has soared from roughly $15 as the start of 2013 to roughly $1,200 at present.
Playing nice with regulators: Despite a bitcoin user base that is sometimes generalized as libertarian or even anarchistic in their politics, there are many digital currency advocates who are quite comfortable playing by the rules of Washington and Wall Street going forward. A representative of the Bitcoin Foundation, for instance, told policy makers in 2013 that the organization wishes to craft a sane regulatory environment, and that it is comfortable with oversight so long as rulemaking is open and transparent. And outside the U.S., digital currency advocates in Australia and India are pushing self-regulation as a first step toward a shared set of rules in these marketplaces. This is all very good for the future of bitcoin as a legitimate alternative asset.
Former U.S. Chief Information Security Officer Brig. Gen. Gregory Touhill and Former Central Intelligence Director James Woolsey rank about the actors that pose the greatest threat to U.S. security. They speak with WSJ's Gerald Seib at the CIO Network in San Francisco.
Bitcoin isnt the problem bureaucracy is: There is a very real risk that the SEC will continue to drag its feet and we may not see a bitcoin ETF in the near future. But that could be a commentary on market bureaucracy rather than the future of bitcoin. As the former head of ETF listings at the New York Stock Exchange recently told MarketWatch, Bitcoin is new and different, and theres no incentive for regulators to be innovative. Even if there are setbacks, the rapid adoption of bitcoin is encouraging and like many technologies, it simply needs to wait for everyone else to catch up. Being an early adopter has been highly lucrative for bold investors in recent years, and things may only improve as the market and merchants catch up.
Crazy volatility: Bitcoin is hardly the only volatile investment out there. Take three-times leveraged gold miner investments Direxion Daily Gold Miners Bull 3X ETF NUGT, +1.79% and Direxion Daily Gold Miners Bear 3X ETF DUST, -2.19% as the poster children of aggressive, short-term instruments that can make a lucky few rich or bankrupt the unprepared.
In a typical retirement portfolio, there is no real place for bitcoin or leveraged ETFs or naked short selling or other risky strategies.
Former U.S. Chief Information Security Officer Brig. Gen. Gregory Touhill talks about some of the motivations of the hackers attacking U.S. companies. He speaks with WSJ's Gerald Seib at the CIO Network in San Francisco.
Hackers and scandals: The 2015 Silk Road scandal and the 2016 Bitfinex theft are pretty dramatic examples of the risks that come with an asset that isnt tangible. And even if you just isolated incidents, you have to acknowledge what such events do to investor sentiment. Just as the Wells Fargo WFC, +3.20% fraud scandal of 2016 had real consequences for the stock, further data breaches or bitcoin thefts could create huge headwinds for bitcoin investors and the adoption of the cryptocurrency. Throw in continued chatter about how bitcoin is the preferred currency for drug lords and sex traffickers, and even the most enthusiastic supporter must admit the risk of real tarnish to the bitcoin brand if these headlines continue.
Bitcoins big risk is its big reach: A 2016 report from a group of regulators that includes the Treasury, the SEC and the Federal Reserve warned that risks of bitcoin may not become apparent until they are deployed at scale and specifically highlighted potential problems arising simply because of the speed and volume of transactions.
There are plenty of other honest reasons to be concerned but when bitcoins biggest systemic challenge is simply executing transactions and reliably integrating into the financial system, that is a big red flag. It doesnt mean bitcoin doesnt have staying power, but it should warn investors of just how risky this currency remains despite talk of a mainstream ETF.
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Opinion: Should you invest in a bitcoin ETF? - MarketWatch
What Are Bitcoin And Gold Saying About Paper Money – Seeking Alpha
This week, gold rose to a new short-term high and Bitcoin to a new all-time price peak. Gold is traditionally a safe-haven asset. In times of uncertainty and fear, gold tends to outperform other assets. Gold is also a traditional hedge against inflation that eats away at the value of many assets. Gold metal has a long history as a commodity and a means of exchange, a currency.
Over the course of history, gold has been around a lot longer than all of the currencies now traded in the foreign exchange market around the world. Gold is a commodity, and in the United States the Commodities Futures Trading Commission (CFTC) regulates the largest and most respected gold futures market in the world, the COMEX division of the Chicago Mercantile Exchange.
Meanwhile, Bitcoin is a cryptocurrency that is new on the financial scene. The Commodities Futures Trading Commission has defined Bitcoin as a commodity but it is much more than that. Bitcoin is a pan-global currency. Central banks, monetary authorities, or supranational financial institutions around the world do not control Bitcoin in any way, shape, or form.
So far in 2017, the prices of both gold and Bitcoin are moving higher. The bullish price action in these two assets could be telling us a lot about the value of paper money these days as well as the future for the status quo of foreign exchange markets.
Gold takes off in December, again
After a sharp and painful correction that took gold from over $1345 on November 9 to lows of $1127.20 on the active month COMEX April futures contract on December 15, the yellow metal shifted back into bullish mode.
Source: CQG
As the daily chart highlights, gold took off to the upside again after making lows in the middle of December and traded to a high of $1264.90 on Monday, February 27. The next level of technical resistance for the yellow metal is above $1300 per ounce. Gold has moved higher as fear and uncertainty in markets has caused a flight to quality assets and gold has a long history as a safe haven for investors.
The all-time nominal high for the price of gold came back in September 2011 when it traded to $1920.70. Gold has been making a statement about the faith in paper currencies since it initially rallied from the $1046.20 level in December 2015 and the trajectory of price is, in many ways, a commentary on faith in currencies and other asset prices these days. While gold has been shinning, another alternative currency has blown the roof off and traded to a new all-time high this week.
Bitcoin moves to a new all-time high
The price action in Bitcoin has been more bullish than in gold.
Source: CoinDesk
On March 1, the cryptocurrency traded to its highest level in history when the price hit over $1225 against the U.S. dollar, and by the time you read this piece, it is possible that Bitcoin is even higher.
The price action in both gold and Bitcoin has been bullish in 2017, which I interpret as an important event for the future value of world foreign exchange markets.
Paper currencies are losing value - backed by nothing but goodwill
Paper currencies around the world have the backing of the full faith and credit of the governments that print the dollars, euros, yen, Swiss francs, pound sterling, RMB, and many other world foreign exchange instruments. Gold and Bitcoin have appreciated against all of these currencies so far in 2017.
There are virtually no countries in the world today that back their monetary units with gold, silver or any other hard asset. While central banks, monetary authorities, and supranational financial institutions continue to hold gold as part of their foreign exchange reserves, the days of a gold standard ended decades ago.
The global financial crisis of 2008 and slowdown in Chinese economic growth over recent years has caused a tremendous amount of volatility in markets across all asset classes. Central banks have used monetary tools such as low short-term interest rates and quantitative easing to stimulate economic conditions. While many of these tools have avoided financial disaster by encouraging spending and borrowing and inhibiting savings, the trend in monetary policy and effects of massive liquidity has diluted the value of currencies to a point where faith in central banks and governments has been on the decline.
The value of a currency is a reflection of both economic and political conditions within the nation that prints legal tender. In China, a devaluation of the RMB has led many within the nation who have seen their wealth grow over recent years to seek more stable vehicles to preserve the value of their savings.
In Europe, Japan, and many other nations around the world, economic conditions remain lethargic. Only in the United States has the economy seen a turn of events with unemployment declining and GDP starting to show signs of growth. However, the new administration in the U.S. does not wish to see a runaway dollar when it comes to value against other currencies.
The administration wants the dollar lower
In 2014, the U.S. central bank began tapering off its quantitative easing program, and in late 2015, the short-term Fed Funds rate rose above zero for the first time since the financial crisis of 2008.
Source: CQG
As the monthly chart of the U.S. dollar index illustrates, the greenback took off against other world currencies in 2014 and rose from 79.83 to 100.38 in only ten short months. The over 27% appreciation of the dollar caused hardship for multinational U.S. companies, which found their products less competitive on world markets as a result of the rally in the dollar.
The dollar index stabilized and traded in a range from 92-100.60 during a twenty-month consolidation period that following the ten-month rally. However, after the election of Donald Trump as the forty-fifth President of the United States, the U.S. currency broke above technical resistance on the upside and rallied to the highest level since 2002 when it traded at 103.815 at the beginning of January 2017.
In the past, administrations in the United States followed a strong dollar policy. However, there are signs that the Trump Administration under Treasury Secretary Steve Mnuchin will not be advocates for a strong dollar at this time. Additionally, when the U.S. Federal Reserve released their monthly minutes of the latest FOMC meeting last week, one of the biggest concerns voiced by members of the body that determines short-term interest rates was that a strong dollar could weigh on economic growth.
The bottom line is that the dollar is strong against virtually all other currency instruments but the administration and central bank do not want to see the dollar continue to rise to new heights versus the world's other major currency instruments. Therefore, it is probable that the rallies in gold and Bitcoin are a reflection of a world where all paper currencies are losing value.
So many issues on the horizon favor both Bitcoin and gold
Currencies are a reflection of politics and economics. It was the financial crisis of 2008, an economic event that caused central banks to add liquidity to markets to avoid recessions or worse around the globe. However, today it seems that political forces have taken over and weigh on the value of monies printed by the governments of the world.
In China, the devaluation of the yuan and the non-convertibility of the currency for many Chinese, has led to an increase in the demand for pan-global monetary instruments like gold and Bitcoin. The rest of Asia depends on China, the world's second richest nation, for economic growth and stability. Therefore, the Chinese economic slowdown and currency devaluation could be leading other Asian citizens to safe haven and pan-global monetary instruments. In Japan, short-term interest rates at negative forty basis points make the yen a less than attractive currency to hold.
In Europe, the Brexit vote last June was likely the first shoe to drop on the political front. With the United Kingdom leaving the European Union, the economic might of Europe suffered a blow. In 2017, three other major E.U. member nations will go to the polls to elect leaders for the coming years. In the U.K., many voted to exit the E.U. because of immigration policies made in Brussels. These policies are not popular with many in other member nations and it is possible that the other member nations will also go rogue and decide to elect candidates that are not supportive of E.U. policy.
The first election will take place in March when citizens of the Netherlands go to the polls to elect a Prime Minister. A populist candidate is currently close to the top of the polls. In April, France will elect their next leader and Marine Le Pen, a far-right, anti-immigration, and anti-E.U. candidate is also receiving a lot of support in the polls leading up to the election. Later in this year, Germans will go to the voting booth to either give Chancellor Andrea Merkel another term or replace her with another candidate.
Germany is the largest and most influential economy in Europe. The Brexit vote in the United Kingdom started a nationalistic trend in Europe and if these three nations decide to reject the status quo in the months ahead, it will have dire ramifications for the future of the European Union and the euro currency.
Source: CQG
As the monthly chart of the euro currency highlights, the currency has declined from around the $1.40 level against the dollar in May 2014 to under $1.06, the lowest level since 2003. A rejection of the current leadership and those who favor the Union over a nationalistic solution will likely cause the euro currency to weaken further in the months ahead. Like in Japan, the short-term yield on the euro is at negative forty basis points and the European Central Bank continues to follow a course of quantitative easing making the euro currency a less than attractive instrument to hold.
The election of Donald Trump as the forty-fifth President of the U.S. was yet another blow to the trend towards globalism in the world. President Trump has pledged to "put America first" when it comes to relations with the rest of the world. The new administration ran on a platform that was against many multilateral trade agreements negotiated by former administrations. President Trump has told the world that trade agreements will be on a bilateral basis going forward.
He also told the rest of the world that protection comes at a price and that other allied nations around the world will need to start contributing their fair share as America has been shouldering the financial burden of keeping the world safe causing the nation's deficit to grow to over $20 trillion. A dramatic change in U.S. relations with the rest of the world is yet another reason for uncertainty and fear when it comes to the future of financial markets.
Gold and Bitcoin are moving higher so far in 2017 and the value of paper currencies are in question as citizens across many nations are going to the polls and expressing dissatisfaction with the status quo. It is interesting that a move away from globalism towards nationalistic candidates in the political world is causing gold and Bitcoin to appreciate. After all, in many ways, gold and Bitcoin are pan-global currency instruments that attract safe haven buying.
For centuries, gold has been not only a store of value, it has been an instrument used when the political climate creates the need for flight capital. When it comes to Bitcoin, the cryptocurrency is a means for people all over the world to avoid the manipulation and restrictions placed on money by central banks and governments so they can money wealth and savings around the globe. Many around the world are rejecting the politics of globalism in exchange for nationalism.
The world has become a smaller place because of advances in technology. The strength in gold and Bitcoin is telling us that many embrace a global view towards economics and that their money and wealth should not be under control of the governments and central banks in power. It will be interesting to see if global wealth and free flowing money that travels under the radar of governments can coexist with nationalistic political policies around the world and if the governments can do anything about the increasing popularity of these assets.
The Chinese have a saying that goes something like this, "May you live in interesting times." It will be interesting to see if the trend that started in 2016 with the Brexit vote and Presidential election in the United States continues in Europe and around the globe in 2017. Right now, both gold and Bitcoin are saying that the trend is firmly in place.
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What Are Bitcoin And Gold Saying About Paper Money - Seeking Alpha
Top 5 Bitcoin Conspirary Theories – The Merkle
A lot has been said and written about bitcoin, even though there are some things which remain a mystery to everyone. No one knows for sure who created bitcoin, or why it was designed the way it is. Several conspiracy theories regarding bitcoin have popped up on the internet over the past few years, some of which seem more credible than others.
Back in Q4 of 2013, an intriguing conspiracy showed up on the bitcointalk forums. Someone floated the idea of how major governments specifically the US and China were buying up the biggest possible amount of bitcoin for themselves. Considering how both governments have opposed bitcoin since its inception, this theory is not as impossible as one might think. After all, at least government officials which have insider knowledge could tell people to look the other way while they scoop up cheap coins. Although this theory has never been proven, it is somewhat plausible.
Perhaps one of the more popular conspiracy theories is how bitcoin was created by the NSA as an experiment. Satoshi Nakamoto, whose real identity remains unknown to this very date, is believed to be a pseudonym for the NSAs top-secret cryptocurrency project. It is also believed the NSA has a backdoor to the SHA-256 algorithm, making bitcoin far less secure than what most people assume it is. Another theory that has never been provenyet could be worth enterntaining.
Considering China has always been keen to embrace bitcoin, many people believe it to be an invention by Chinese developers. While it is unclear as to why this would matter, theorists believe China may have created bitcoin to ultimately replace their reliance on the US Dollar. While it is true China has been working on a payment system together with Russia and others that can rival SWIFT, it is doubtful they would create bitcoin to replace US Dollars.
There could be a very good reason as to why no one has unmasked Satoshi Nakamoto yet. Despite the numerous manhunts taking place over the years, it is not unlikely Satoshi Nakamoto is not a person after all. Some people speculate the name is a pseudonym for an artificial intelligence created by an undisclosed government. This is by far one of the theories that is far out there, although it sparks some interesting discussions along the way.
Although this theory was merely provided to the world as a jest, there are some intriguing factors that seem to fall into place. Mt. Gox pushed the bitcoin value to higher limits, at which point it threatened the status of gold as the prominent safe-haven asset. JP Morgan orchestrated a bitcoin price crash, by selling over 8,000 coins to drive the price down.
At the same time, JPMorgan exploited withdrawal vulnerabilities on the Mt. Gox exchange, while funding anti-bitcoin articles greedily lapped up by mainstream media outlets. All of these concepts sound somewhat reasonable, depending on how large the tinfoil hat you wear is. Then again, it is true institutions such as JPMorgan see little merit in bitcoin, yet favor its underlying technology. It is very doubtful the institution would deliberately crash the bitcoin price, though.
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Top 5 Bitcoin Conspirary Theories - The Merkle
BTCC CEO Lee Pegs Bitcoin Price Between $5000 and $11000 by 2020 – CryptoCoinsNews
Bobby Lee, BTCCs co-founder and CEO recently tweeted a bitcoin price prediction, which is between $5,000 and $11,000 by 2020, after the block reward halving. The entrepreneur, who regularly makes predictions, also stated the daily inflow would scale accordingly from the current $2 million a day level, up to $5-$10 million a day.
Bobby Lee also reminded his 5,600 Twitter followers his medium-term price target for bitcoin is of, well, $5,600. There was, however, no mention of how long it will take bitcoin to reach that value. Later on, Lee also said that a $5-$10 million daily inflow isnt a lot. He compared it to golds inflow of $340 million a day.
The CEOs enthusiastic bitcoin price prediction comes after BTCC, one of Chinas biggest bitcoin exchanges, suspended bitcoin and litecoin withdrawals until March 15, in order to introduce new security requirements and comply with requests from the Peoples Bank of China (PBOC). Recently, Chinas big 3 bitcoin exchanges enforced a suspension of cryptocurrency withdrawals, and in response, traders turned to peer-to-peer marketplace LocalBitcoins.
As reported by CryptoCoinsNews, LocalBitcoins recently recorded a global all-time high, as Chinas trading volume surged in response to the exchanges decision. Its worth mentioning LocalBitcoins is blocked in China, as it uses Googles reCAPTCHA system, so users need to use a VPN to access the platform.
In the past,the CEO has addressed bitcoinsfuture in a positive way, by urging to community to scale responsibly and to be patient, so as to focus on maintaining bitcoin as a reliable digital asset. His upbeat attitude hasnt changed with time, as tough times for bitcoin in China never seem to have bothered him that much. He also sees bitcoins low volatility as a sign of maturity, just alike a few other experts, as bitcoin needs low volatility in order to maintain its growth and stability
Positivity is always welcomed in the bitcoin community. PBOCs interference with bitcoin has taken a toll on the cryptocurrencys value in the past, as it even forced HaoBTC, a prominent bitcoin company, to shut down its exchange. Nevertheless, bitcoin recently bounced back and managed to go beyond its new all-time high.
Image from Shutterstock.
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BTCC CEO Lee Pegs Bitcoin Price Between $5000 and $11000 by 2020 - CryptoCoinsNews
New Guidelines Give Bitcoin Startups In The Philippines ‘A Fighting Chance’ – Forbes
Forbes | New Guidelines Give Bitcoin Startups In The Philippines 'A Fighting Chance' Forbes Earlier this month, the Filipino government issued regulatory guidelines concerning Bitcoin use in the country. The guidelines were welcomed by startups in the country, as official clarity and endorsement of the cryptocurrency are expected to help ... Latest Regulatory Changes Give Bitcoin Startups in the Philippines A Chance to Survive |
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New Guidelines Give Bitcoin Startups In The Philippines 'A Fighting Chance' - Forbes
Bitcoin mining operations follow cheap power to rural Sichuan – TechNode (blog)
Editors note: This was contributed byLinda Lew, a freelance writer based in Beijing, currently studying for her Masters in Global Business Journalism at Tsinghua University. Before moving to China, she worked in New Zealand in cross-cultural communications focusing on the Asia Pacific region. She is interested in start-ups, technology, economics and the arts.
Bitcoin has proliferated in China so much that 70% of the worlds bitcoin computational power is concentrated here. Many bitcoin mining operations have even sprung up in power stations deep in rural Sichuan hillsides, an unexpected place to be associated with a blockchain-based digital currency.
As Bitcoin Mining explains, mining is a way to reward those who contribute computational power to the Bitcoin network by converting electricity. Miners are rewarded by bitcoins or the transaction fees included in the transactions validated when mining bitcoins. It can be easy to start mining for bitcoins: the required computer hardware and software are readily available. What is hard to do, however, is to mine bitcoins profitably.
Locations with cheap power will have a definite advantage. At Sichuans Leshan city, where many large scalebitcoin mines are based, the rate for commercial use electricity during the wet season is around RMB 0.5 per kilowatt. This is less than half of the rate in metropolitan centers, such as Beijing where commercial power costs around RMB 1.28 per kilowatt.
Sichuans is rich in hydroelectric resources, Ke Lei, a bitcoin mining supervisor explained in an interview (in Chinese). When in season, the hydropower stations generate more than whats needed and the electricity actually ends up being wasted. Why dont we make the most of this and turn the wasted power into Bitcoins?
Estimates say that there are over 10 thousand bitcoin mining machines hooked up to Sichuanese hydropower stations. National Business Daily visited(in Chinese) the largest Bitcoin mining operation in Leshan, where there are over 5,800 machines going. In total, they generate on average 27 Bitcoins each day. Power accounts for 60% of the operational costs, with labor, broadband and other utilities making up the rest.
However, where there are opportunities, there are also risks. Seasonal variation in the electricity rate is an issue when mines have to be moved to ensure that the power cost remains low. The volatility of Bitcoin pricing as well as unfavorable regulations are factors that can turn business unprofitable in the blink of the eye.
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Bitcoin mining operations follow cheap power to rural Sichuan - TechNode (blog)
A Binary Bet on the Bitcoin Twins – Bloomberg
Bits, the units of information that underlie any digital currency, have only two values: zero or one. Perhaps it's time investors were reminded thatbuying bitcoin is a similarly binary wager.
The virtual asset is trading at a record,shrugging off a campaignby the People's Bank of China to control trading. Underpinning its rise is the hope that American entrepreneursCameron and Tyler Winklevosswill succeed in their attempt to create thefirst bitcoin exchange-traded fund.
On March 11, the twins are expected to receive a final decision from the U.S. Securities and Exchange Commission on whether they can list their ETF.Afavorable outcome would create a precedent and pave the way for other providers. There are two more fundsseeking a review from the regulator -- one of which already trades over the counter -- and talk abounds of many more.
Investors who have driven bitcoin's price above itsNovember 2013 high of $1,137 are betting that the advent of bitcoin ETFs will spur demand foran asset class withlimited supplyand cause prices to extend their climb.
High Hopes
Investors are betting that the first SEC-approved bitcoin ETF could spur demand
Source: Bloomberg
What they may be missing is the possibility that the Winklevoss twinswill fail. A contract created by Bitcoin Mercantile Exchange, a cryptocurrency derivatives trading platform, to bet on the possibility of approval of the Winklevoss ETF, showed favorable odds of only 34 percent on Monday.
Odds of SEC approval
34%
In spite of employing lawyerKathleen Moriarty, a legend in the ETF world, the Winklevosses have been forced to wait since July 2013as the regulator takes its time to determine whether the digital currency can be considered an asset class. Even the lawyers working for the twinsinitially didn't want to take the case because they thought bitcoin might be a Ponzi scheme.
All the while, the twins have been amending their filing in an attempt to convince the SEC. The latest bull run started shortly after their most recent addendum, registered on Jan. 20, which among other things requested a larger initial issue size for the fund.
Along the way, they've added settlement systems in order to establish the bitcoin price and determine the net asset value of the ETF at the end of every day. (Conveniently, that process will happen on the Gemini exchange, owned by the Winklevosses.) They've also added insurance, so potential hacks shouldn't be an issue.
Yet for all their bending over backward, they have yet to win an endorsement from the regulator, which stilloperates mostly on legislation enacted in 1933. The U.S. government simply may not be ready to give the stamp of approval to bitcoin that allowing an ETF would imply.
In the more likely outcome of an SEC rejection, bitcoin could quickly drop back to the sub-$800 levels tested after China's latest crackdown was unveiled in January. That would be a drop of about a third from the current price. Meanwhile, the upside in the event of approval is unclear.
The launch of the first Gold ETF was hardly bullish. For the first year of its existence, themetal's price actually dropped. Eventually, it took off, but more as a resultof the turmoil unleashed by the global financial crisis than on its own merits.
Fall to Rise
In the first year of the pioneer gold ETF, the yellow metal's price actually dropped
Source: Bloomberg
Put simply, the downside for bitcoin is potentially much bigger than the upside -- at least in the short term. The digital currency's future has never been this binary. Unlike with programming code, though, one of the two alternatives isn't zero: It's a deeply negative number.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
(Updates fifth paragraph withBitcoin Mercantile Exchange contract.)
To contact the author of this story: Christopher Langner in Singapore at clangner@bloomberg.net
To contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.net
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A Binary Bet on the Bitcoin Twins - Bloomberg
Bitcoin charity platform Helperbit completes first case study – Brave New Coin
In the last few months devastating earthquakes have hit central Italy, devastating many mountain villages, killing nearly 300 people and displacing 22 thousand inhabitants. The environmentalist association Legambiente, and several partners, have since been collaborating on a crowdfunding campaign for those affected.
Legambiente (League for the Environment) is the most widespread environmental organization in Italy, with 20 Regional branches and more than 115,000 members. It is acknowledged as association of environmental interest by the Ministry of the Environment; it represents the UNEP National Committee for Italy, it is one of the leading member of the European Environmental Bureau, and of IUCN - the World Conservation Union.
The bitcoin based campaign was Legambientes first foray into bitcoin donations, thanks to Helperbit. 59 percent of the campaigns goal, over eight bitcoins, have already been raised. Five of those bitcoins were donated by insurance giant Swiss Re.
- Helperbit
Helpbit is an Italian startup that uses Blockchain technology to allow people to donate digital and local currencies to charities and people in need all over the world, while tracking the donations and the manner in which they are used.
The company co-founders Guido Baroncini Turricchia, Davide Gessa, Davide Menegaldo, Roberto Tudini, Vincenzo Agu and Gianluca Carbone, initially came up with the idea for their platform in 2009, after reading news about the ineffective management of charitable funds following the 2009 LAquila earthquake in Italy.
In 2012, the Italian il Fatto Quotidiano reported that the five million euros donated by Italians to help with building reconstruction were transferred to a guarantee fund, which locked up the funds for nine years.
The lack of transparency that characterizes the traditional systems allows donative streams to be drained along their way to those who need it, Helperbit states. The lack of transparency puts people off donating and we want to unlock this unexpressed donative potential.
Having officially launched in 2015, Helperbit now offers a bitcoin platform that allows people to donate digital and local currencies to charities and people in need all over the world. Donors can trace the funds and the manner in which they are used, offering true transparency.
- Helperbit
The recent fundraising campaign provided a specific case study for the Helperbit platform. The campaign funds are being offered to local entrepreneurs. We want to support and promote their economic activities and finance projects presented by those that, in front of the tragedy of the earthquake, want to react, investing on new corporate initiatives in those areas, Helperbit explains.
Among the many affected locals, the earthquake in central Italy has taken away everything Ilaria and Lorenzo have. The owners of Societ Agricola Etiche Terre S.S., moved to the region less than a year ago to start the production of saffron, garlic and black truffle.
The farmers recently uploaded the first invoice on the Helperbit platform, activating a refund request from Legambiente. Much of the process is visible in the public Bitcoin Blockchain, including the proof of expenditure with a cryptographic reference to the invoice.
The document certifying the request and the transaction are now inextricably linked in the immutable and decentralized public register, giving the opportunity to verify the sender, the recipient and the justification. The process provides a higher level of transparency and increases donor participation. They know precisely how the funds are spent.
Donors should be able to decide how their donation is used. Organizations that act properly should not be affected by few bad behaviors, states Helpbit. Our aim is to offer tools that allow the system to work with a complete audit of economic flows.
Each campaign Helperbit runs uses multisignature technology. Recipients get as many multisignature keys as is appropriate for their organization. This reduces drastically the risk of theft and misuse of the donations, Helperbit explains. Donors also receive a key. Helperbit Donors can fund their accounts by either sending bitcoin or simply use their own debit cards. Organization can accept bitcoin or local currency.
The platform won second place in the iBank Challenge 2016 competition in December, taking home 11,000 after beating out all but one of the 83 contestants. The contest was promoted by the Italian Banking Association and organized by its own R&D laboratory, ABI Lab.
- Helperbit
Vaious Charities including the Red Cross and Greenpeace hace accepted bitcoins for individual fundraisers in the past, but typically they do not explore accepting bitcoin permanently as the size of the market is still too small. Unfortunately, few if any of these attempts have exposed the major charities to the technological benefits of using a blockchain.
Bitgives GiveTrack is one of very few similar attempts at tracking charity funding from donor to recipient. The platform has many of the same features as Helperbit, and has successfully run several campaigns. The Water Project raised $11,000, more than their $10,000 goal.
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Bitcoin charity platform Helperbit completes first case study - Brave New Coin
CloudBleed Data Leak Is A Big Threat To Bitcoin Platforms – The Merkle
Bitcoin users need to be well aware of the recent CloudFlare issue, as it affects quite a few different cryptocurrency-related services. Several companies issued warnings regarding CloudBleed, all of whom advise users to change their passwords. With so many exchanges relying on CloudFlare, this is another example of why centralization needs to be avoided.
To put the CloudBleed security issue into perspective, the scope of services affected by this data leak extends well beyond the bitcoin space. It is believed the data leak exposes thousands of passwords and other personal information for several months until it was discovered. Cloudflare managed nearly 10% of all web traffic, which makes it one of the backbones of the internet, so to speak. Unfortunately, this also means virtually every popular service is affected by this data leak.
Among the information being leaked to anyone who requested it are passwords, cookies, messages, and any other type of personal information one can think of. The bug was discovered in September of 2016, yet no further specific details were provided to us at this time. We do know the list of clients affected by CloudBleed is a lot larger than most people would think possible.
Security analysts at Googles Project Zero noticed an overflow error that could leak sensitive information to search engines and other platforms scraping data from the internet. This opens up a treasure trove of financial information to hackers and other criminals looking to take advantage of it. It is unclear if any of this information was obtained by hackers, but it seems very plausible that is the case.
Cloudflare CEO Matthew Prince is confident the issue was fixed before someone could even take advantage of the flaw. That is a rather bold and positive statement, although it wont necessarily put peoples minds at ease. Various bitcoin companies issued warnings to their users to change their password immediately, as that remains the best course of action. Moreover, any platform where the same password was used will need to have the credentials updated as well.
The list of affected bitcoin companies is rather long and includes virtually every platform most users ever come in contact with. Popular exchanges, such as Coinbase, BTC-E, QuadrigaCX, Kraken, Bitstamp, and Bitfinex, for example, are all using Cloudflare for their Anti-DDOS protection. All of these companies advised users to update their password sooner rather than later. LocalBitcoins is also affected, even though the platform does not act as a custodian for funds. Then again, having someone steal your account and scamming users is still a real threat.
This event goes to show multiple companies relying on one and the same anti-DDoS provider is a big problem. Especially in the world of bitcoin and decentralization, a more distributed solution is direly needed. CloudFlare has built a strong reputation over the past few years, but this data leak highlights the problem of centralization. All bitcoin users relying on a service affected by this leak need to update their login credentials as soon as possible, that much is certain.
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CloudBleed Data Leak Is A Big Threat To Bitcoin Platforms - The Merkle