Category Archives: Bitcoin
Nigerian Bankers Committee Plans to Legalize Bitcoin The Merkle – The Merkle
Quite a few countries are contemplating how they should treat bitcoin moving forward. Cryptocurrency poses intriguing opportunities, yet it is difficult to regulate as there is no centralized entity controlling the ecosystem. Nigerian banks are contemplating to legalize bitcoin, which would give the popular cryptocurrency a significant boost, to say the least.
It is not the first time someone brings up the concept of Nigerian banks legalizing bitcoin. The same idea was proposedseveral months ago. Albert no one saw this as a hint of what the future could hold, it would appear various Nigerian banks are thinking along the same lines. This development caught quite a few people by surprise, even though it makes a lot of sense.
An article appeared in The Inquirer, which talks about how the Nigerian Bankers Committee is studying blockchain technology. That is anything but surprising, as nearly every bank around the world is well aware of what distributed ledgers bring to the table. However, there has not been any major product to come forth from this interest so far. Experts predict a few of these blockchain applications will see the light of day in 2017, albeit that remains to be seen for now.
What is more interesting, however, is how the Nigerian Bank Committee still feels bitcoin poses somewhat of a threat the national financial ecosystem. To be more precise, the group touched upon the concept of dubious virtual currencies flooding the country. It is not hard to see which projects they are talking about, as OneCoinhas become somewhat of a popular concept in Nigeria. Additionally, there is also the MMM Global scheme, which only accepts bitcoin deposits in Nigeria right now.
It is evident the Central bank of Nigeria wants to gain a better understanding of bitcoin and its blockchain technology. That open-minded approach can mean big things for cryptocurrency in the country moving forward. Moreover, it only appears to be a matter of time until Nigeria introduces bitcoin regulation, which could occur as soon as this year. Introducing such a regulation would effectively legalize bitcoin in Nigeria, even though the current is not issued by the countrys central bank.
Nigeria is not the only country in the world looking to regulate and legalize bitcoin. Japan will be doing the same later this year, which will bring a lot more legitimacy to cryptocurrency moving forward. Albeit no one can effectively regulate bitcoin itself, governments can impose specific guidelines for companies dealing with customer funds, either in the national currency or bitcoin. Then again, running a financial business will always be subject to specific regulation and bitcoin enterprises should not be exempt from those rules.
Bitcoin regulation does not have to be a bad thing by any means. Chinas central bank issued a few new regulatory measures over the past few weeks, which has only helped the bitcoin price stabilizes as time progressed. It is unclear what Nigeria will do exactly when it comes to blockchain and cryptocurrency, but it will be an intriguing situation to keep an eye on.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
Read the original:
Nigerian Bankers Committee Plans to Legalize Bitcoin The Merkle - The Merkle
What Is Bitcoin’s Correlation With Other Financial Assets? – Seeking Alpha
I'm strongly considering entering into a substantial investment in bitcoin as part of my passively managed, fully long portfolio. Before I do that, I decided to look into two questions regarding bitcoin's role in a portfolio:
My reasoning was that, if possible, it would be preferable to replicate exposure to bitcoin using existing financial assets because there are still substantial risks to owning bitcoin. First, a plot of bitcoin's price in both a linear and log scale to place the following analysis in context.
Can Bitcoin Be Considered a Financial Asset?
Before calculating bitcoin's correlation to other financial assets, it's useful to take a step back and think of whether bitcoin can be considered a financial asset based on its fundamental characteristics. And if bitcoin is a financial asset, how should it be classified?
A useful framework for thinking about this is in Robert J. Greer's paper, "What is an Asset Class, Anyway?" In this paper, Greer defines an asset class as "a set of assets that bear some fundamental economic similarities to each other, and that have characteristics that make them distinct from other assets that are not part of that class."
He proposes that any asset can be classified into one of three super classes:
In the real world, not every asset falls neatly into one of the three categories. Gold, for example, is both a consumable asset and a store of value asset. It's arguable that U.S. sovereign bonds are both a capital asset and a store of value asset. But it's still a useful framework to keep in mind when thinking about portfolio construction.
Where does bitcoin fall in this framework? Bitcoin can be safely categorized as a store of value asset in that it doesn't generate income, you can't consume it, and yet it has economic value. Store of value assets are often referred to by other names, including "safe haven assets" and "flight to safety assets". Thus, we should expect a priori that bitcoin should have a higher correlation to other store of value assets, including gold, other precious metals, and safe haven currencies like the Swiss franc, U.S. dollar, and Japanese yen.
Testing Bitcoin's Correlation Using the Brute Force Approach
In the past few years, ETF offerings have become sufficiently broad to represent virtually all asset classes across all major countries and geographies. ETF historical prices, therefore, represent a fairly high-quality source of asset returns. I wrote about how to obtain this data in a previous post: How to Scrape Data for Over 1,900 ETFs.
I first tested bitcoin's correlation to other financial assets using what I call the brute force approach: I calculate the correlation between bitcoin's weekly return and the weekly return of all ETFs with over $10 million in assets and plot the results in the following histogram.
The interpretation is that the correlation between bitcoin and other financial assets is extremely low. Most asset classes have a correlation between -0.1 and +0.1. The few ETFs with correlations outside of this range were mainly explained by the fact that some ETFs were launched recently and thus the correlation between bitcoin and these ETFs was largely spurious in nature.
This result was a bit disappointing since I was originally hoping to replicate bitcoin's exposure using a collection of highly correlated ETFs. On the other hand, this is a strong argument for including bitcoin as a significant part of a portfolio of risky assets. Finding and adding an uncorrelated asset to a portfolio can act as a powerful source of diversification by increasing the portfolio's sharpe ratio. There are extremely few assets that are this uncorrelated with other assets and that makes bitcoin extremely desirable from a portfolio construction perspective.
Testing Bitcoin's Correlation Using the Refined Approach
I decided to look into bitcoin's correlation further using a refined approach by calculating the one-year rolling correlation between bitcoin's weekly returns and the weekly returns of selected ETFs. There is evidence that bitcoin has become a more mature asset class over time in that its volatility has reduced and it has started to react more to macroeconomic factors and geopolitical events rather than things that are specific to bitcoin itself.
Below I plot of the one-year rolling correlation between bitcoin's weekly returns and the weekly returns of a selection of risky assets followed by a plot of a selection of safe assets.
The interpretation is that even looking at a one-year rolling window, the correlation remains low with many correlations oscillating between positive and negative. Current correlation is still low even though bitcoin has had time to mature into a legitimate asset class.
Remember, I had expected a priori that bitcoin would have a higher correlation to these safe, store of value assets. Originally, I had hoped to replicate bitcoin exposure using a combination of gold, US sovereign bonds, and foreign currencies. These results strongly suggest that this is not possible and that bitcoin is a unique, uncorrelated asset class that is not strongly affected by the macroeconomic factors that drive most asset classes.
Doing this analysis has given me conviction that bitcoin should be a part of my passively held, long-only portfolio. First, there aren't that many store of value assets in the first place. There's gold, US sovereign debt, safe haven currencies, and that's it. Second, it's surprising that bitcoin's correlation is this low, even among other store of value assets.
At the same time, there are strong theoretical arguments that bitcoin will serve as a hedge against harmful geopolitical events due to its decentralized nature. There's a growing body of empirical evidence of this also with bitcoin price spiking in response to both Brexit and Donald Trump's win.
Bitcoin is uniquely positioned to hedge against geopolitical risks but remain unaffected by the macroeconomic factors that drive other store of value assets.
Exposure to bitcoin can be obtained either by buying bitcoin directly, through the upcoming bitcoin ETF (Pending:COIN), or the Bitcoin Investment Trust (OTCQX:GBTC).
The code for this post can be found on my Github.
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. I have no business relationship with any company whose stock is mentioned in this article.
See the original post here:
What Is Bitcoin's Correlation With Other Financial Assets? - Seeking Alpha
History of Bitcoin in 500 words – The Merkle
The concept of bitcoin remains baffling to a lot of people Albeit this cryptocurrency has only been around for eight years, there are so many things people want to know about bitcoin. The currency has had a rather colored past as well, spurring multiple waves of mainstream media attention in the process. The below article will summarize Bitcoins 8 year history in under 500 words.
Bitcoin was created by Satoshi Nakamoto in 2009. It took nearly two weeks after its initial release until the first official transaction on the network occurred between Satoshi and Hal Finney. Moreover, it took some time until the first financial transaction denominated in bitcoin took place. This day is known as Bitcoin Pizza Day, an event that is celebrated around the world every single year.
Despite its potential, bitcoin hasnt been without flaws. A major flaw was discovered in August of 2010 which effectively allowed users to create an infinite amount of bitcoins. Thankfully, any wrongdoings were erased from the blockchain and a software update was released. So far, it is the only major bug to be found and exploited in the bitcoin protocol code to date.
It took until 2011 until bitcoin got taken more seriously. WikiLeaks embraced bitcoin as a donation method after being cut off by credit card issuers and PayPal. One year later, Bitcoin made its first TV appearance in an episode of The Good Wife. Quite a few shows have featured bitcoin ever since, albeit nearly always in a criminal setting. Considering the popular darknet marketplace Silk Road was created in 2011 and gained significant popularity throughout 2012, it is not hard to see where this criminal angle comes from. The platform was eventually taken offline by the FBI in 2014.
Things started to unravel a bit in 2013, as the Mt. Gox exchange had bank accounts seized by the US authorities. Operating an unlicensed bitcoin exchange while serving US customers was one of the final nails in the coffin for Mt. Gox before declaring bankruptcy in 2014. Several hacks affected the bitcoin ecosystem in 2013 as well, albeit the payment technology itself was never breached. On the upside, M-Pesa and Bitcoin came together in Kenya under the Bitpesa banner and turned into a very successful company.
Bitcoin was ruled a form of money in August of 2013. Ever since that time, various countries have started debating how they want to label bitcoin moving forward. Japan will legalize cryptocurrency later this year. During 2014 and 2015, merchants started accepting bitcoin payments, bringing their total to 160,000 in August of 2015. That number has continued to grow and includes some of the worlds largest platforms, including Microsoft and Overstock.com.
2016 Has been the year during which the bitcoin price exploded in the final 6 months. Bitcoin was deemed one of the worlds best performing assets for the calendar year, and that bullish trend is still visible today. With the number of bitcoin ATMs around the world reaching the 1,000 mark soon, the future looks very bright for cryptocurrency. There are exciting times to live in, that much is certain.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
Originally posted here:
History of Bitcoin in 500 words - The Merkle
China’s Bitcoin Drama Isn’t A Financial Meltdown – Forbes
Forbes | China's Bitcoin Drama Isn't A Financial Meltdown Forbes China, currently the world's largest Bitcoin trader, has caused some complications for the cryptocurrency since the beginning of the year. The amount of Bitcoin traded in the country has plummeted from 10 million a day to 30,000-90,000 due to 'abnormal ... Bitcoin traders look to other digital currencies for returns Bitcoin Price Above $1000 For One Whole Week, Passes $1060 Bitcoin Tracker: Denouement? |
Read the original post:
China's Bitcoin Drama Isn't A Financial Meltdown - Forbes
Bitcoin Needs to Be Watched Closely Now – CryptoCoinsNews
Bitcoin continues to show strength as it is relentlessly advancing through each and every resistance it encounters. I find myself in a quandary. It is becoming increasingly clear that the macro vision I had in the past few weeks, of Bitcoin testing its recent lows, and from there beginning a stunning advance to ridiculous new highs, was wrong. I am starting to grasp that it is more likely that the recent lows will not be tested.
The daily chart has broken through the 2nd arc. Barring a stunning reversal before tomorrow morning, the daily chart will give a clear buy signal tomorrow.
Meanwhile, the 4 hour chart has closed above resistance, again. It has even poked its head above a novice resistance line drawn from the last 2 swing highs.
There is a 5th arc at ~ $1100 on the 4 hour chart, which could be a stopper, but that resistance is not readily apparent on the daily chart. My reticence to be a short-term bull is starting to feel like I am being victimized by preconceptions not endorsed by recent chart signals.
So, I am looking anew at the charts. As I have stated in the past, 2/19-2/21 is an energy point in time for bitcoin. As I have stated, I had thought a low would be seen in that time frame. Recently, it seemed more likely there would be a top in that time frame. Well, 2/19 is tomorrow. I see little compelling reason to think that a top will be reached tomorrow or the next day on the daily chart. There, the strong resistance is seen ~ $1200. (If $1200 is reached by 2/21, it will likely be a top.)
The weekly chart is showing a warning however:
As you can see, the last advance was stopped by the 2nd arc of the 3rd pair. Pricetime will hit that same arc again at ~ $1074. I suspect price will get through it this time. We will see
Happy trading!
Remember: The author is a trader who is subject to all manner of error in judgement. Do your own research, and be prepared to take full responsibility for your own trades.
The rest is here:
Bitcoin Needs to Be Watched Closely Now - CryptoCoinsNews
Even More US Enterprises Are Stockpiling Bitcoin To Combat Cyber Attacks – newsBTC
Last but not least, paying the bitcoin ransom is no guarantee to have company files decrypted again.
It would appear even more US companies are stockpiling bitcoin to fight off cyber attacks. This type of behavior is not entirely new, but it appears to become even more prevalent as of late. Rather than upgrading cybersecurity measures, US companies would rather pay criminals in bitcoin. A very troublesome development that will only invite more criminal activity moving forward.
It is not advisable to stockpile bitcoin in case a cyber attack occurs. Criminals from all over the world use a wide range of tools to infiltrate enterprises. Once they do so, the enterprise will receive a request to pay a ransom in bitcoin. Since hardly any company keeps cryptocurrency on hand, that causes a bit of a problem.
To combat this issue, US companies are now buying bitcoin in case an attack would occur. That is anything but the right approach, as it only invites more cyber attacks moving forward. Losing valuable corporate data is a big problem, everyone can understand that. Openly inviting criminals to do their worst and pay their demand in bitcoin, however, is an incomprehensible decision.
Dealing with this moral dilemma is anything but easy for US companies right now. Then again, looking to pay off criminals once they infiltrate a system is equal to taking three steps backward. Paying means helping the bad guys and rewarding them for illegal behavior. It is the same as negotiating with terrorists, which is something no American would ever do, or so they claim. Incident response planning in the corporate sector should never include stockpiling bitcoin to meet ransom demands.
To put this into perspective, the average ransom demand sits between US$10,000 and US$75,000. Even at current prices, that equals to stockpiling bitcoin in large quantities. Once criminals become aware of which companies are easy to exploit, they will continue hitting them with malware attacks. This unusual strategy will not work out in the end, as it only serves to enrich hackers. A better option would be to beef up existing security protocols. Doing so is not only the only morally right course of action, but also the much cheaper option in the long run.
Last but not least, paying the bitcoin ransom is no guarantee to have company files decrypted again. So far, nearly 25% of all malware attacks remained unresolved after the bitcoin payment was made. It is expected this number will go up over time, especially when companies are so eager to pay bitcoins for criminals. Stockpiling bitcoin is not the answer to these threats, that much is certain.
Header image courtesy of Shutterstock
Link:
Even More US Enterprises Are Stockpiling Bitcoin To Combat Cyber Attacks - newsBTC
Bitcoin ETFs For Dummies – ETF.com
Spencer Bogart is vice president of equity research for Needham & Co. He joined the firm in 2014 and currently leads the research efforts on blockchain technology and bitcoin while supporting research on cloud software (SaaS) companies. ETF.com recently sat down with Bogart, a former ETF.com analyst, to get his take on all the important developments in the bitcoin market ahead of the key SEC decision on the Winklevoss ETF, expected within the next month.
ETF.com: Before we jump into more specifics, in a nutshell, how would you describe what bitcoin is to the layperson?
Bogart: Bitcoin is peer-to-peer digital cash that's not issued by any central authority.
ETF.com: Tell us about the highly anticipated decision that's coming from the SEC. What is it ruling on and what are the odds the ruling will be positive? Spencer: There's a number of bitcoin ETFs that are going through the regulatory approval process. The one that's been going through the process the longest is the Winklevoss bitcoin ETF [Winklevoss Bitcoin Trust (COIN)]. That's been going on for about 3 1/2, four years now.
The exchange they would like to list that particular ETF onwhich in this case is Bats [owner of ETF.com]has filed a proposed rule change, which would be necessary to list the ETF. It's that proposal that essentially we've been watching go through the regulatory approval process.
At each point along the way, the SEC has had the option to approve, disapprove the ETF or to extend its time to make a decision. All along the way, its chosen the opportunity to extend the time to make a decision, including submitting requests for public comments.
Well now see an end to that process before March 11, which is the deadline. Before that, well either get an approval, a disapproval or Bats will withdraw its request for a rule change. Or, if no decision is made by March 11, then the rule change is automatically approved.
ETF.com: What factors are the SEC considering?
Bogart: I don't have any inside information, but my sense is that the majority of the things that the SEC is particularly concerned about revolve around bitcoin itself as opposed to anything specific about the Winklevoss filing.
They're asking if a digital asset such as bitcoinwhich, unlike a commodity doesn't have a physical form, and unlike a security or derivative, is not under any kind of regulatory supervisionis a suitable underlying asset for an ETF.
At the highest level, that's the kind of thing they're considering. A little bit more in the weeds they're asking if the specific markets that bitcoin trades on are stable, fair and efficient, and if they facilitate or enable or encourage any kind of market manipulation.
And then of course, there are the factors that are more specific to the ETF itself, which I think, in this case, probably the most important ones are what do you use as a reference price for bitcoin, and how are you going to securely store that bitcoin?
View post:
Bitcoin ETFs For Dummies - ETF.com
Core Developer: Bitcoin is About Financial Sovereignty, Not Speed – The Merkle
Eric Lombrozo, a Bitcoin Core developer, believes that bitcoin is about financial independence and freedom, rather than providing a centralized settlement network which already serves as the backbone of todays global financial ecosystem.
Over the past two years, various bitcoin communities, analysts and experts have debated on the characterization of bitcoin; specifically whether bitcoin demonstrates the qualities of a settlement network or digital gold.
Since the initial deployment of the bitcoin network, Bitcoin Core developers and other talents in the open source development community of bitcoin have focused on strengthening security measures to eliminate the presence of a central authority within the bitcoin network and ensure the network itself will not be compromised in the future.
The prioritization of security instead of flexibility and functionality as seen in alternative failed blockchain projects allowed bitcoin to prosper and evolve into a decentralized financial network that cant be censored or restricted by a governing entity. It allowed users to settle payments with low fees and at relatively fast speeds, in comparison to traditional banking.
As the bitcoin network grew in size, transactional delays caused discomfort for daily users. Some individuals expressed their concerns over the increasing transaction fee of bitcoin, which is currently at US$0.32 for an average transaction. A $0.32 fee should be enough to have transactions confirmed within a few hours.
However, the Bitcoin Core development team and industry leading companies arent particularly concerned of the rising fees as it is the result of the prioritization of security. Bitcoin Core developers are focused on introducing software like Segregated Witness (Segwit), which allows bitcoin to scale significantly without imposing major security risks unlike hard forks.
Users and investors shouldnt necessarily be overly concerned about the scalability of bitcoin as well because there already exists a scalability and transaction malleability solution in Segwit and two-layer solutions such as Lightning and TumbleBit that can contribute to the scalability of bitcoin. Lightning in particular enables the facilitation of micropayments, that open doors for many applications which intend to rely on bitcoin micropayments.
Bitcoin is still a technology at an early stage. Currently, the Bitcoin network allows users to make payments that werent possible before. Before bitcoin, users couldnt imagine the possibility of transacting millions of dollars within a few hours with less than $1 in transaction fee without the presence and involvement of a governing entity or a bank.
As Lombrozo explains, Bitcoin is about financial sovereignty. If you think its merely about fast and cheap youre short-changing yourself.
The contemporary structure of bitcoin makes it difficult for two-layer solutions to exist. Soft forks like Segwit however allows bitcoin to eliminate transaction malleability and alter its design to welcome two-layer solutions that could enable bitcoin to become a fast, cheap and secure financial network for mainstream users.
Lombrozo believes that the activation of Segwit, implementation of layers and introduction of innovative solutions will allow bitcoin to serve as an important technology to provide users with financial freedom, privacy, independence and flexibility.
You can make it fast and cheap with layers. Current network design does not allow it at large scale. I wish this werent so. Unfortunately HFs carry significant political cost and security risks. I also wish this werent so, noted Lombrozo.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
Read the original here:
Core Developer: Bitcoin is About Financial Sovereignty, Not Speed - The Merkle
Bitcoin Price on the Rise Again After Regulatory Crackdown in China – The Merkle
It seems that the drama with the PBOC and regulations in China is becoming less and less significant, as these news dont seem to have as much impact on the price. In fact, the price is on the way to recovered to pre-crackdown prices as Bitcoin is trading at $1035 on Bitstamp. On Feb. 9th, the PBOC released quite a threatening statement which tanked Bitcoins price 10%, on the bright side it looks like the worst is behind and Bitcoin is setting a new price floor at $1000.
While Bitcoin is receiving scurrility in the East, the Western markets are showing massive support for the cryptocurrency. We can see that the Chinese markets are loosing dominance becausethere is now a premium of $40-50 for the Western markets, while the value per Bitcoin on the Chinese exchanges is lower than average. This chart from Tradeblock shows the price difference best:
Its only expected that Bitcoins price would be cheaper in China as many users refuse to convert their Yuan into Bitcoin for the fear that they wouldnt be able to withdraw the coins later. However, some more opportunistic traders are also doing just the opposite which is buying up those cheap coins in the hopes of the price stabilizing again once cryptocurrencywithdrawals turn back on.
People were doing the same thing when MtGox was going under, they bought coins on MtGox much under market price, since they bet on the exchange to returning to normal. Unfortunately for them we all know how that situation turned out MtGox filed for bankruptcy and every investor took a loss.
Other relevant news include the fact that Investing.com, one of the most popular investment resources has labeled Bitcoin as a strong buy. According to their technical summary chart for the cryptocurrency, Bitcoin is worth buying at the moment:
It seems that traders are optimistic about Bitcoins support. However, in such a volatile free market any hint of drama can send the chart sideways. With the Bitcoin ETF decision coming March 11th, tensions will only increaseas traders bet on the outcome.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
Read this article:
Bitcoin Price on the Rise Again After Regulatory Crackdown in China - The Merkle
5 Common Misconceptions About Bitcoin – The Merkle
Satoshi Nakamotos creation is often seen as something it is not, as there are a lot of misconceptions that simply dont want to go away. Sometimes, because some want to smear bitcoin, and often because others fail to do their homework properly. Here are a few common misconceptions about bitcoin that the average joe keeps on believing:
Ponzi schemes usually involve a central entity trying to persuade possible investors, telling them they will make a huge profit. In these schemes, the only way those on top can make money is at the expense of others. Bitcoin is a decentralized peer-to-peer currency, there is no central entity. It does not require a constant flow of money to sustain itself, not does it require new adopters to survive.
Moreover, it is important to note that, if it was all a Ponzi scheme, we would assume Satoshi Nakamoto, bitcoins creator, would live an extravagant lifestyle. He owns roughly 1 million bitcoins a little over US$1 billion at the time of press. Yet, these coins havent been moved in years.
It is true that Silk Road, an infamous dark web marketplace, helped bitcoin grow in 2011. In 2013, the FBI took down the Silk Road, but that did not stop bitcoin from growing. Recently, bitcoins market caphit $15 billion, as the ecosystem of legitimate businesses who accept bitcoin keeps on growing. In some cases, businesses can even get a special license that allows them to legally accept bitcoin as a form of payment.
Nevertheless, bitcoin is used by criminals, just like fiat currencies, commodities, app store gift cards, gym membership vouchers and pretty much anything with value.
In the early days, it was very hard to use bitcoin as almost no one was accepting the cryptocurrency. Nowadays, however, there are thousands of businesses accepting bitcoin throughout the world, and one can not only buy food, but also get a haircut, hire a lawyer, and even get a lightsaber. Theres a useful app out there, called Bitcoin Map, that lets users know which brick-and-mortar businesses around them accept bitcoin.
Heres a video of a transaction at Subway:
Hackers have been successful at stealing large amounts of bitcoin in the past, but that doesnt mean the cryptocurrency isnt safe. Most bitcoin thefts were a result of inadequate wallet security, and since then risk-mitigating measures have been taken. Yet, these high-profile bitcoin heists can make the currency look unsafe.
Users need to properly secure their wallets , and that means backing them up and encrypting them. Offline wallets are the safest way one can store their bitcoins, and even these should be backed up.
Although you dont need a bank account or a social security number to pay with bitcoin, transactions arent completely anonymous. Every transaction is publicly recorded on the blockchain in order to prevent certain actions, such as spending the same bitcoin twice.
Granted, its hard to use bitcoin transactions to uncover someones real identity, but it is possible. If someones transactions are tracked down to an exchange, for example, it is possible authorities uncover the persons identity through a subpoena. To protect ones privacy, a bitcoin address should only be used once.
If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.
View post:
5 Common Misconceptions About Bitcoin - The Merkle