When the Bitcoin Bubble Bursts

Financial markets are frothier than a millennial’s 3-D latte. Investors are scrambling to throw money at Argentina, Vice Media and George Clooney’s tequila. Only the crypto-currency craze seems to give us comfort there are worse bubbles out there.

The latest warning against digital currencies comes from Aberdeen Asset Management’s top venture capitalist, Peter Denious. He blames a feeding frenzy of speculation for the explosion in prices and new coins.

“A lot of lessons will be learned and a lot of money will be lost, before a lot of money can be made,” he told Bloomberg News. “It’s a gold-rush mentality.”

Denious is right to say that the market is speculative and unsustainable. Despite recent price wobbles, Bitcoin has almost tripled year-to-date, to $2,677. Its closest rival, Ether, is now worth more than 40 times its end-2016 level of $8.

This isn’t because people are using crypto-currencies to buy homes or cars, or because regulators suddenly like them. It’s seen as a way to make money.

It’s hard, though, to separate the crypto craze from worries about regulated public markets and the real economy after a decade of ultra-cheap central-bank cash.

Talk of a bubble permeates every aspect of today’s financial markets. Bank of America research offered up several signs of “Wall Street excess” on Friday:

  • Argentina’s over-subscribed 100-year bond;
  • Facebook’s market capitalization now exceeds that of the entire MSCI India index;
  • Volatility in the U.S. Treasury market is near an all-time low.

Bitcoin wasn’t mentioned once. That makes it harder for the mud thrown at crypto-currencies to stick. Even Fidelity’s CEO and John McAfee are mining bitcoins in this market.

The mind-boggling returns of crypto-currencies also reflect a desire to escape public market bubbles rather than just emulate them.

If bonds are the old world’s safe haven, Bitcoin is the millennial generation’s apocalypse insurance. Crypto-currencies are marketed as a direct expression of opposition to central-bank and government policy, far more so than gold.

Just as low yields push wealthy investors to take bigger risks — like buying Argentinian debt — some people see Bitcoin as an escape from financial repression and instability.

That’s why Venezuela, where demand for digital coins is soaring amid triple-digit inflation, currency devaluation and political crisis, has one of the highest potentials for bitcoin adoption in the world, according to the London School of Economics. The other top country is — you guessed it — Argentina. Monetary experiments beget technological ones.

This doesn’t mean that there are purely rational explanations for the actual price of crypto-currencies today, tomorrow or yesterday. If the bubble bursts, investors will have to lower their expectations as to what Bitcoin and its ilk can actually achieve without rampant speculation and illicit activity.

But the more worrying scenario is that political unease about central bankers and wealth inequality will help to funnel more money into crypto-currencies.

Societe Generale’s Albert Edwards reckons citizens are close to turning on “unelected and virtually unaccountable central bankers” after years of economic crisis and stagnation.

Bitcoin’s computer scientists don’t deserve to be seen as a better alternative. But if the path out of the financial crisis takes a sudden turn for the worse, it may well be too late.

Both bubbles seem too closely connected for comfort.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Lionel Laurent in London at llaurent2@bloomberg.net

To contact the editor responsible for this story:
Edward Evans at eevans3@bloomberg.net

Article source: https://www.bloomberg.com/gadfly/articles/2017-06-23/bitcoin-bubble-looks-too-much-like-your-own-for-comfort

Where to look for the next bitcoin-like rally — if the sun shines right

The battering the markets have taken from oil isn’t doing much for its popularity — or that of any commodity. But there’s an out-of-this world reason why it’s worth taking another look.

Crude is down 4.5% for the week, failing miserably to climb out of a bear market. It’s brought down stocks, too, as supply panic (again) gripped investors.

Never fear — the oil doom and gloom will all be over soon, says veteran macro-economic analyst Yves Lamoureux. He argues the news flow is now so utterly bearish on oil, that it’s time for a complete reversal.

And that’s not all. The entire commodity sector is heading into a five-to-seven year bull market, with agricultural produce in particular ready to make a sharp move higher, the market observer says for our call of the day.

“We believe that we have arrived at the turning point again, where commodities will outshine an investment in stocks. The next bitcoin might as well be cocoa, oil or coffee,” says Lamoureux, who way back in February predicted the bitcoin rally.

His call on “soft” raw materials comes even after cocoa

CCU7, +1.37%

 slumped close to a 10-year low this week, and coffee

KCU7, +2.27%

 fell to levels not seen in more than a year.

So why the optimism? It comes down to something as unexpected as sunspots — dark spots on the surface of the sun that reappear on an 11-year cycle.

“The level is going down, and it creates less illumination, resulting in poor harvests,” Lamoureux explains in an email to MarketWatch. That means demand for agricultural produce is likely to outstrip supply, which usually pushes up prices.

Yves Lamoureux

Investing on the basis of sunspots might seem crazy, and the correlation has been questioned regularly (see here for an explainer). But Lamoureux is happy to cite British astronomer Wilhelm Herschel — the discoverer of Uranus — who observed back in 1801 hat when there were fewer sunspots, the price of wheat soared.

Key market gauges

Dow

ESU7, +0.05%

  and Nasdaq

ESU7, +0.05%

futures

YMU7, -0.12%

 are falling, but SP futures

ESU7, +0.05%

are perking up a bit. That’s as crude

CLU7, +0.26%

 is still struggling to push back above $43 a barrel, swinging between gains and losses.

Europe

SXXP, -0.34%

 , however, is looking more downbeat this morning, following a mixed session in Asia

ADOW, +0.21%

Metals

GCU7, +0.00%

 are on the rise, but the dollar

DXY, -0.15%

 is pulling back against all other major currencies.

Read the latest in Market Snapshot

The chart

Airlines anyone? A few months ago when the United scandal raged on social media, investors duly shied away from shares in the industry. But it’s time to dive back into the sector, says J.C. Parets of the All Star Charts blog, who says the industry will take off as part of an inevitable rally in industrials.

“If you want to look inside of industrials to see what could possibly take the broader sector higher, look no further than airlines and railroads,” he said in a blog post.

“To me, this looks like an upside resolution in the AMEX Airline Index $XAL that is about to make a run towards those former all-time highs in the 1990s,” he added, pointing to this chart of the NYSE Arca Airline Index

XAL, +0.04%

 .

All Star Charts

The economy

We’ll get a snapshot of how well (or poor) the economy has done in June at 9:45 a.m. Eastern Time, when the flash manufacturing and services PMIs come out. Home sales for May at 10 a.m. will be closely watched, too.

A trio of Fed speakers are also likely to keep investors on their toes, with St. Louis Fed President James Bullard, Cleveland Fed President Loretta Mester and Fed governor Jerome Powell all speaking after the market opens.

See: MarketWatch’s economic calendar

The quote

“Nobody is perfect, but I fundamentally believe he can evolve into the leader Uber needs today and that he’s critical to its success” — Michael York, a product manager at ride-sharing service Uber, who started an employee petition to get Travis Kalanick back as chief executive.

Kalanick resigned earlier this week after a shareholder revolt.

The stat

15% — That’s how much the pound

GBPUSD, +0.3233%

 has lost in the year since the shock Brexit vote, getting no break as the uncertainty dragged on.

Read: Brexit’s impact on markets and the U.K., one year after the vote — in charts


The buzz

Bed Bath Beyond

BBBY, +0.24%

is getting crushed after a disappointing earnings report.

Whirlpool Corp.

WHR, +0.70%

 is also getting a little squeezed. London police said it was a fridge of Whirlpool’s Hotpoint brand that started the deadly fire in Grenfell Tower last week. The police are also considering manslaughter charges following the blaze.

Tesla

TSLA, +1.65%

 is considering building a car factory in China to build electric vehicles for that market.

U.S. banks are “strong” and would be able to survive a severe recession, according to the Fed’s stress test of 34 of the nation’s biggest banks.

Biotech

IBB, +1.27%

and health care shares 

XLV, +1.04%

 are on track for their strongest weekly gain since November last year, after Republicans released a draft of their health-care overhaul bill.

It doesn’t pay to be president. Donald Trump’s net worth has dropped below the $3 billion mark, according to the most recent Bloomberg Billionaires Index.

And then there’s good news for EU citizens living in the U.K. — British Prime Minister Theresa May has offered permanent residency for the bloc’s citizens, post-Brexit.

Random reads

Tonight Danes burn witches on bonfires to mark midsummer

Israeli airline El Al can no longer ask female passengers to change seats

Sand — it’s actually rarer than you think

Qatar must meet 13 demands if it wants four other Arab states to lift sanctions

How to avoid sexual assault — taught by Bill Cosby

The U.S. has banned imports of Brazilian beef

You can take your dog to work every day at these pet friendly companies

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Article source: http://www.marketwatch.com/story/these-commodities-could-be-the-next-bitcoin-if-the-sun-shines-right-2017-06-23

Bitcoin: Why The ‘Flippening’ Failed

Source

Bitcoin (Pending:COIN) is the first cryptocurrency, but it isn’t necessarily the “best”. In fact, multiple digital assets have staked their entire value proposition on providing slight improvements on the core technology Bitcoin is based on. This suggests a great deal of Bitcoin’s value seems to come from name recognition and other first-mover advantages.

The fact that Bitcoin isn’t necessarily superior to the alternatives like Ethereum, Ripple, and even Litecoin hasn’t escaped the attention of holders of those competing assets. Many feel that as soon as Bitcoin is dethroned – through another cryptocurrency (Ethereum) surpassing it in market cap – it will lose its premium status and investors will flock to the new coin, dramatically increasing the value of the new coin through an event that has been humorously dubbed “The Flippening

However, the Flippening is starting to look like a “Floppening”. And this key bullish argument for Ethereum is not playing out as expected. While many Ethereum bulls may have rejoiced at Bitcoin’s scaling issues and political squabbling over a solution to them – most probably didn’t expect Ethereum to run into similar issues a few weeks later. Massive fundraising events called initial coin offerings have revealed serious weaknesses in the Ethereum network, causing many to question how much “better” it really is than Bitcoin.

Status, a project that raised hundreds of millions within a day, appears to be the straw that broke Ethereum’s back – at least temporarily. The event was a mess, and it seemed to have set off a chain reaction of dysfunction throughout the entire network, culminating in a flash crash that caused many U.S investors to accidentally sell (through limit orders) their positions at ridiculous prices only to see the price of Ethereum soar back up again. The dysfunction in the Ethereum markets has been so severe that investors, especially on Reddit and other message boards, are suggesting market manipulation may be involved.

One theory suggests the June 21st flash crash was caused by a large holder termed a “whale” purposely dumping an astronomical amount of Ethereum on a single exchange to fill all the buy orders, liquidate leveraged longs, and drive the price extremely low in order to buy up as much Ethereum as possible at extremely low prices before it soared back up. Some Redditors even suggest that this “whale” could have been the recipient of recent ICO funds. To investors used to the highly regulated U.S markets, such a story sounds widely implausible. But in the wild-west of cryptocurrency, an unregulated asset class at the frontiers of finance, it actually makes sense to many people. GDAX, the exchange where the problem took place, is investigating the situation and has provided a response to the community’s suspicions by stating, quote:

On 21 June 2017 at 12:30 pm PT, a multimillion dollar market sell was placed on the GDAX ETH-USD order book. This resulted in orders being filled from $317.81 to $224.48, translating into a book slippage of 29.4%. This slippage started a cascade of approximately 800 stop-loss orders and margin funding liquidations, causing ETH to temporarily trade as low as $0.10.

Our initial investigations show no indication of wrongdoing or account takeovers. We understand this event can be frustrating for our customers. Our matching engine operated as intended throughout this event and trading with advanced features like margin always carries inherent risk.

We are continuing to conduct a thorough investigation and will keep customers updated with any resulting actions. With that in mind, it is important to note that these trades are final in accordance with our GDAX Trading Rules (Section 3.1). Honoring properly executed orders is critical to maintaining the integrity of an exchange.

In response to the large price movement, we decided to temporarily halt trading of ETH-USD. Once we confirmed all systems were operating correctly, we restored trading when in accordance with our Downtime Process (Section 5).

So far, the exchange has found no evidence of wrongdoing. But this event caused many investors, who had made incredible profits through leveraged Ethereum trading, to instantly liquidate their margined positions and those with sell orders to sell at prices as low as $10 for an asset that is currently worth above $300. On the flip side, investors who were lucky enough to have open buy orders were able to earn unbelievable profits by accidentally buying a $300 asset for $10. This sort of extreme activity is sure to attract unwanted regulatory attention. But the dysfunction seems to be concentrated in Coinbase and GDAX – two affiliated companies – and should not be seen as an indictment against Ethereum or cryptocurrency as an asset class.

Conclusion

Ethereum is suffering from currency-specific challenges that put hopes for the flippening at bay. The Bitcoin/Ethereum currency pair has moved in favor of Bitcoin and the Ethereum/USD pair is still reeling from the shock of a massive flash crash on a major exchange. Nevertheless, the bullish case for Ethereum remains strong, and the cryptocurrency is still healthy in regions outside the U.S. One of the key benefits of cryptocurrency is decentralization. Thankfully, for longs, these negative events were quarantined to a few exchanges and couldn’t spill into the entire market.

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.

Article source: https://seekingalpha.com/article/4083415-bitcoin-flippening-failed

How big is bitcoin, really? This chart puts it all in perspective

HowMuch.Net

Not all money is created equal.

Bitcoin burst into our financial consciousness like a fiery comet, setting the internet ablaze with visions of upending the existing global money system. Yet, by its nature as a cybercurrency, whose legitimacy only exists in the ether, its credibility leaves much room for debate.

HowMuch.net on Wednesday put things into perspective and demonstrated that for all the buzz and excitement bitcoin has generated, it still has a long way to go to be even remotely relevant.

The current value of all the bitcoin

BTCUSD, +0.19%

  in the world is worth about $41 billion, according to the cost-estimating website.

That is undoubtedly more money than most Americans will ever see in their lifetime. But when it comes to bragging rights, bitcoin really is the poor relation.

Also see: Teenage bitcoin millionaire can see the cryptocurrency’s value shooting as high as $1 million

As the HowMuch chart shows, the fattest bubble is for all the money in the world — including bank deposits — which comes out to $83.6 trillion.

See larger chart

The second biggest is for all the stocks trading across the globe, totaling $66.8 trillion, and more than double all the physical money in the world.

“A run towards or away from stocks would thoroughly deregulate the global economy, and nothing more dramatic than a minus sign in front of that amount would lead to the collapse of global civilization,” said Raul Amoros at HowMuch.net.

For all its glitter, the total value of gold is a distant fourth, at only about $8.2 trillion, while U.S. dollars in circulation add up to $1.5 trillion.

The next bubble is for Apple Inc.

AAPL, -0.16%

valued at about $730 billion, followed by Amazon.com Inc.

AMZN, -0.09%

at $402 billion.

Meanwhile, the value of all the cryptocurrencies in existence, such as Litecoin and Monero, checks in at $100 billion, slightly ahead of Bill Gates

MSFT, -0.01%

who claims a net worth of $86 billion as the richest man in the world.

Larry Page, co-founder of tech giant Google

GOOGL, -0.20%

 and the 12th-richest on Forbes’ billionaires list, alone is worth all the bitcoin floating around in cyberspace, with a net worth of $41 billion.

Money is about trust. Hence, the U.S. dollar

DXY, +0.02%

 as the monetary representation of the biggest economy in the world, is also the reserve currency of choice for many foreign governments.

As of yet, bitcoin does not command that level of respect given its wild swings recently. Nonetheless, the rise of cryptocurrencies in of itself suggests that people may be slowly losing faith in money and other traditional measures of wealth, according to Amoros.

Article source: http://www.marketwatch.com/story/how-big-is-bitcoin-really-this-chart-puts-it-all-in-perspective-2017-06-21

The Bitcoin Bubble Will Turn Into Mania Before It Bursts

(AP Photo/Jeff Chiu, File)

For the last nine months, the Bitcoin rally that took the digital currency from a few hundred dollars to close to $3000 had all the elements of a bubble that has yet to turn into a mania before it bursts.

Every asset bubble is different, and can be easily confused with healthy bull markets. But they all follow a certain pattern. They begin with ‘investor hype’ over a popular theme – an emerging industry or an exotic product that promises to change the world and make many people rich in the process.

Somewhere down the road Wall Street develops the vehicles that make broad investor participation in this theme easier, like a mutual fund or an ETF—turning investor hype into market contagion, and pushing the price of the underlying assets ever higher.

Source: Finance.yahoo.com 6/22/2017

Then comes easy money by accommodative central banks to provide ‘the air’ — financing for the bubble to grow bigger and bigger. Bold predictions by market gurus and talk in the mass and social media create buzz that help prices double or even quadruple in a matter of days, even hours—turning market contagion into mania. Investing in this theme reaches a cascade, as no investor wants to be left behind.

Finally, the bubble bursts, as early investors have already cashed out, and there are no more investors to join the party.

Apparently, the ongoing run up in Bitcoin and other digital currencies has most of the elements of a bubble. It’s an exotic asset that comes with big advantages—a better hedge against global uncertainties than conventional hedges like gold; a convenient medium of payment around the globe; and a limited supply–21 million. 

Meanwhile, there’s investor hype. More and more investors are becoming familiar with the digital currency, and can use ETFs to conveniently participate in the market.

Adding to the hype is an ultra-low interest rate environment (which has lowered the cost of holding all these four-digit trading Bitcoins).

But there’s one thing still missing to turn the bubble into mania: a broad participation beyond the “pioneers” and the “early adopters,” to “early majority–” along the Rogers curve.

That’s when the demand for Bitcoin reaches a cascade and turns into mania, as a critical mass of investors rush to buy “hot” Bitcoins for the promise they hold — rather than for the fundamentals they display.

Investors who have been around Wall Street long enough know all too well that when money becomes tight and investment promises aren’t fulfilled, bubbles and manias end; and millions made are lost much faster than they were made. And then some.

Article source: https://www.forbes.com/sites/panosmourdoukoutas/2017/06/22/the-bitcoin-bubble-will-turn-into-mania-before-it-bursts/

This play beats bitcoin with 100%-plus returns — and it’s less risky

Summertime and the living isn’t so easy, if you’re a stock investor looking over your shoulder at oil.

The hesitation we saw yesterday, as we adjust to the oil-in-a-bear-market world, looks set to continue today. So you just might just like to escape to another investing world where there is no Fed, OPEC or FANG stocks throwing curveballs.

Fatigue for traditional investors may be one reason why the excitement is booming in the wild west of the cybercurrencies right now. Over on Reddit, one forum dweller said they were ready to drop $20,000 into bitcoin — after doing some research and concluding the only way was up for the crypto cash. It beats “$20k sitting in a safe-deposit box,” the poster said.

“Only invest what you are willing to lose,” was one response.

And that leads us to our call of the day, which says there’s some big money being made on cybercurrencies — but the risk is on the same scale. And where there’s an opportunity, there are hedge funds.

Blogging for ValueWalk, Rupert Hargreaves took a deep dive into the Crypto-Currency Fund Index from Eurekahedge. The data firm uses the index to track the performance of five actively managed hedge funds with holdings in bitcoin, ethereum and other digital cash.

The findings? The Eurekahedge index not only beat traditional hedge funds, it even blew bitcoin itself out of the water.

Between June 2013 and April this year, the index shows eye-popping cumulative returns of 2,152.32%, versus 1,408.11% for the Bitcoin Price Index. Looked at annually, that’s a return of 125.35%, compared with 102.96%.


The funds on the index seem to offer a “less volatile way” to bet on cryptocurrencies over just buying bitcoin or ethereum, even though the level of volatility for the index itself “is off the chart,” Hargreaves notes in his blog post.

In its report on performance, Eurekahedge said that “over a period of 14 months between December 2013 and January 2015, the Eurekahedge Crypto-Currency Fund Index lost almost 73% of its value from its 2013 high. In contrast, the Bitcoin Price Index lost almost 81% of its value,” according to Hargreaves

Whether we’re on the edge of a South Sea Bubble or greatness for the cybercurrency faithful, bitcoin and its pals have been bringing the drama meanwhile.

Popular rival ethereum suffered a flash crash yesterday, which CoinDesk blamed on an influx of new users, pumped on media hype. ZeroHedge said it was caused by one seller trying to dump $30 million of ETH in one go.


Just a day in the life of a brave new world.

Check out: How big is bitcoin, really? This chart puts it all in perspective

Key market gauges

Back in the “real world,” weak oil is still a theme. Dow

YMU7, -0.05%

 , SP

ESU7, -0.04%

 and Nasdaq

ESU7, -0.04%

  futures are off a bit, and Europe

SXXP, -0.24%

 is looking at its third-straight loss on weak energy names.

Crude itself

CLU7, +0.80%

 is limping along on worries over U.S. supply data yesterday. Some metals are on the rise, and that has lifted parts of Asia

ADOW, +0.54%

MSCI’s inclusion of China stocks continued to boost the Shanghai Composite

SHCOMP, -0.28%

 .

Risk off? Gold

GCU7, +0.00%

 is up, and the yen

DXY, -0.03%

 too against the dollar.

Read the latest in Market Snapshot

The chart

It’s not just oil that’s hurting these days. Check out what’s happening with some soft commodities, via these charts from The Wall Street Journal’s Daily Shot.

Here’s sugar futures:


And cocoa:


The quote

Reuters

President Donald Trump speaks in Cedar Rapids, Iowa, on Wednesday.

“I love all people, rich or poor. But in those particular positions, I just don’t want a poor person. Does that make sense?” — That was President Donald Trump at a rally in Iowa Wednesday evening, in reference to Commerce Secretary Wilbur Ross, also present.

Trump said he needs people “great, brilliant business minds,” so that “the world doesn’t take advantage” of the U.S. anymore, said POTUS. Watch that clip here:

The stat

More than 600 — That’s how many buildings in England are estimated to have been fitted with the cladding that is suspected to have led to the deadly Grenfell Tower fire:

The buzz

Oracle

ORCL, +1.07%

looks ready to rally after upbeat earnings, as it looks like its cloud transition has hit a turning point.

Staples

SPLS, +0.35%

 shot up in late trade after Reuters reported that Sycamore Partners is in advanced talks to buy the office supplies retailer.

Steelcase

SCS, -1.21%

 dived late Wednesday after a miss from the office-furnishing company’s earnings.

Nike

NKE, +2.00%

 plans to sell some its products directly to Amazon

AMZN, +0.97%

 , according to a source. Check out a preview of Nike’s earnings, due June 29.

Read: Amazon Wardrobe is another blow to department stores

Twenty-five companies, including GE

GE, -1.24%

 and Microsoft

MSFT, +0.51%

will attend the White House’s tech summer event later today. They’ll talk about emerging technologies and the effect on U.S. industry jobs, says CNBC.

Weekly jobless claims are due at 8:30 a.m. Eastern Time, followed by leading economic indicators at 10 a.m. Eastern.

Random reads

Residents remain trapped in Isis-occupied Philippines city

Meanwhile, another piece of cultural heritage has been lost in Syria

The “Richest Person in Every State”? Most of them are self-made

With the help of a giant squirrel, John Oliver is now getting sued by a coal magnate

Stephen Hawking is “convinced humans need to leave the earth”

Millionaire may call off treasure hunt after a deadly turn

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

Follow MarketWatch on Twitter, Instagram, Facebook

Article source: http://www.marketwatch.com/story/hungry-for-bitcoin-heres-a-less-risky-but-hardly-risk-free-option-2017-06-22

How big is bitcoin, really? This chart puts it all in perspective …

HowMuch.Net

Not all money is created equal.

Bitcoin burst into our financial consciousness like a fiery comet, setting the internet ablaze with visions of upending the existing global money system. Yet, by its nature as a cybercurrency, whose legitimacy only exists in the ether, its credibility leaves much room for debate.

HowMuch.net on Wednesday put things into perspective and demonstrated that for all the buzz and excitement bitcoin has generated, it still has a long way to go to be even remotely relevant.

The current value of all the bitcoin in the world is worth about $41 billion, according to the cost-estimating website.

That is undoubtedly more money than most Americans will ever see in their lifetime. But when it comes to bragging rights, bitcoin really is the poor relation.

Also see: Teenage bitcoin millionaire can see the cryptocurrency’s value shooting as high as $1 million

As the HowMuch chart shows, the fattest bubble is for all the money in the world — including bank deposits — which comes out to $83.6 trillion.

See larger chart

The second biggest is for all the stocks trading across the globe, totaling $66.8 trillion, and more than double all the physical money in the world.

“A run towards or away from stocks would thoroughly deregulate the global economy, and nothing more dramatic than a minus sign in front of that amount would lead to the collapse of global civilization,” said Raul Amoros at HowMuch.net.

For all its glitter, the total value of gold is a distant fourth, at only about $8.2 trillion, while U.S. dollars in circulation add up to $1.5 trillion.

The next bubble is for Apple Inc.

AAPL, +0.59%

valued at about $730 billion, followed by Amazon.com Inc.

AMZN, +0.97%

at $402 billion.

Meanwhile, the value of all the cryptocurrencies in existence, such as Litecoin and Monero, checks in at $100 billion, slightly ahead of Bill Gates

MSFT, +0.51%

who claims a net worth of $86 billion as the richest man in the world.

Larry Page, co-founder of tech giant Google

GOOGL, +0.99%

 and the 12th-richest on Forbes’ billionaires list, alone is worth all the bitcoin floating around in cyberspace, with a net worth of $41 billion.

Money is about trust. Hence, the U.S. dollar

DXY, -0.08%

 as the monetary representation of the biggest economy in the world is also the reserve currency of choice for many foreign governments.

As of yet, bitcoin does not enjoy that level of respect given its wild swings recently. Nonetheless, the rise of cryptocurrencies in of itself suggests that people may be slowly losing faith in money and other traditional measures of wealth, according to Amoros.

Article source: http://www.marketwatch.com/story/how-big-is-bitcoin-really-this-chart-puts-it-all-in-perspective-2017-06-21

On Bitcoin, India’s Government And Tech Companies Find Common Ground

The popularity of bitcoin in India surged after the demonetization drive in November 2016. ( KAREN BLEIER/AFP/Getty Images)

The Bitcoin craze is catching on in India. While tech geeks and young investors eye the digital cryptocurrency as its value soars, the government, too, is contemplating a course of action surrounding its regulation.

In a move expected to boost financial inclusion, the Department of Economic Affairs in the Ministry of Finance in India has formed an inter-disciplinary committee to examine the framework on virtual currencies. (It is expected to share its findings next month.) In addition, the government initiated a discussion on its forum MyGov to seek public opinion on virtual currencies. Clearly, despite some initial reservations, the Indian government is keen on understanding how Bitcoin works and is willing to deploy resources to build frameworks.

Bitcoin investors and companies welcome these efforts. They feel will it allow them to address concerns over security and risks pertaining to the use of Bitcoin, and eventually work towards improving its infrastructure.

Recognizing concerns

The majority of Indians who participated in the discussion on MyGov expressed interest in seeing Bitcoin become a larger part of the financial and trading systems in India. But, they were also apprehensive about its reliability as a currency. There have been reports of bitcoin trading amounting to money-laundering and that it propagates the financing of terrorist outfits.

Hesham Rehman, CEO and cofounder of Bitxoxo, understands the concerns but urges that “there is nothing corrupt about cryptocurrencies—they enable direct transactions with no third-party intervention.”

Bitcoin is also viewed with suspicion because it doesn’t fall under the purview of any government-mandated monetary policy, and fluctuates in value. Earlier this year, India’s central banking institution Reserve Bank of India issued a note of caution to users and traders of virtual currencies about the risks of using Bitcoin.

Former RBI governor Raghuram Rajan said that virtual currencies will be safer and better over time, and eventually become a form of transaction. (PUNIT PARANJPE/AFP/Getty Images)

Still, Indian Bitcoin companies are observing an increase in customers. After Prime Minister Narendra Modi’s demonetization move last November, numbers surged and it believed there are nearly 600,000 Bitcoin users in India, according to the founders of several bitcoin outfits. Companies also attribute growing interest to the increase in internet penetration, the success of Bitcoin overseas and the allure of the returns on unconventional investments.

Keeping Bitcoin secure

To keep their user base growing, India’s Bitcoin companies are keen on proving their platforms are trustworthy. They’re implementing multiple security checks, and all Bitcoin companies seek a valid ID proof from users that include government-verified address documents, a Permanent Account Number (PAN) or an Aadhaar number. Some companies even conduct voice verification and seek bank account details.

Benson Samuel, chief technology officer and founder of Coinsecure says, “These are expensive but necessary steps. By improving our infrastructure, current customers are assuaged and future customers are confident.” Aside from providing a strong security infrastructure, Samuel also believes that service providers should work towards simplifying the Bitcoin interface for users, which would encourage more people to adopt the technology.

Private Bitcoin companies have even formed their own association: the Digital Assets and Blockchain Foundation India (DABFI). The self-regulated entity is working towards educating the masses about cryptocurrencies and propagating best industry practices for businesses. Rashmit Gupta, whose company SearchTrade is a founding member of DABFI, says that it aims “to create more confidence among the public to use Bitcoin, and eventually increase the use of digital tokens more effectively.”

Growing investor confidence

Such efforts have not gone in vain. Until 2013, Bitcoin wasn’t very popular in India. Now, there’s a fast-growing customer base as well as rising investor confidence.

Unocoin raised $1.5 million USD, a record for an Indian digital currency outfit, and is paving the way for domestic and international investors to support Indian Bitcoin companies. Another bitcoin company Zebpay raised $1 million USD in 2016, largely from Claris Life Sciences and Jindal Worldwide.

Arpit Agarwal, principal at Mumbai-based Blume Ventures, urges venture capitalists to keep an open mind when it comes to Bitcoin companies. “Some financial investors are rightfully cautious about investing in this space due to lack of regulatory clarity. But, the government is working with private players to sketch regulatory frameworks that boost innovation as well as ensure safety of the platforms,” he says.

A promising future

Bitcoin’s future in India looks promising. Service providers are keen to expand the scope of usage, with the hope that the government and regulatory authorities provides them adequate frameworks.

Currently, Bitcoins are used to make purchases through mobile apps and buy gift vouchers. In the future, companies plan to step up the infrastructure that would support remittances to India and provide online financial solutions for the country’s unbanked population.

Article source: https://www.forbes.com/sites/sindhujabalaji/2017/06/21/bitcoin-india-regulation/

A Bitcoin Scaling Upgrade: How It Could Finally Happen (And How It Could Fail)

Bitcoin, it seems, has one of two futures.

Either the $40bn economic network that still defies scientists is on the verge of the biggest change in the network’s history, or the most advanced of its many long-theorized scaling compromises is headed toward its biggest political failure.

In recent weeks and months, the likely outcome has shifted quickly, often daily, as the varying stakeholders and competing proposals have jockeyed for position, media attention, and in some cases, actual headspace in the form of creative political attire.

What has been less visible, however, is that, in the midst of the chaos, bitcoin has been progressing, slowly and messily, to the point where some sort of action in the years-long effort to increase its transaction capacity seems likely to be taken.

This is partly because of a key proposal that emerged last month.

After convening in a meeting in May, a group of entrepreneurs and miners put forward Segwit2x, certainly not the first, but arguably the most advanced alternative to the roadmap long advocated by Bitcoin Core, the network’s open-source developer group.

Armed with the commitments from the majority of bitcoin’s mining pools, the group, comprising more than 50 startups and organized by investment conglomerate Digital Currency Group, now has enough influence to push through at least the first portion of the agreement, though it’s not without its dissenters.

Come August, a number of outcomes are plausible. Some are more likely than others. Bitcoin could be upgraded smoothly, or not. But, the big conclusion could play out in many different ways.

The SegWit split

For the moment, the most important takeaway may be that every group is pushing for a change known as Segregated Witness. Bitcoin Core’s original roadmap, the Segwit2x plan and users rallying around a change known as a ‘user-activated soft fork’ (UASF), all call for the upgrade.

Introduced already to no ill effect on the litecoin network, SegWit could provide a boost to bitcoin’s transaction capacity among other enhancements. But it has yet to activate on its own. (Some mining pool operators and mining hardware companies have long pushed back against the proposal, though the motivations here are varied.)

But as all the proposals now ultimately support SegWit on different terms, many in the community see this as a sign that SegWit is finally going to activate this summer.

The question is whether it could ultimately lead to a split into two bitcoins, due to how the upgrades are set up.

For one, some mining pools are showing signs that they want to take aggressive measures to hard fork bitcoin to a 2MB block-size parameter. If that happens, it’s possible that bitcoin could split into two competing assets later in the summer.

The tricky part is that the debate is constantly shifting.

But, to help understand the current state, here’s a timeline of what could happen:

Segwit2x soft fork: 21st July

Described formally in BIP 141, SegWit was first released last November. Today, as many as 80% of bitcoin nodes are running it.

And though it has grown contentious, it’s important to note SegWit was originally billed as a ‘compromise’, since it increases the block size (though not in a way changes the hard-coded ‘block size’).

Partly because of this, the idea did not please everyone. Namely, most mining pools did not upgrade their software in support of SegWit, either because they did not agree with the change or because they were indifferent.

Because of the contention around SegWit, others have been looking for a way to boost capacity that aligns with more stakeholders.

SegWit2x is one alternative proposal that combines SegWit with an increase to a 2MB block-size parameter. Most major bitcoin companies and mining pools representing 80% of the hashrate signed the proposal.

As noted earlier, the compromise might be working. As of Monday, the majority of the bitcoin mining hashrate is signaling support for Segwit2x.

This is a non-binding show of support. But the code is set to be officially released by 21st July, according to the technical working group timelines. Once that happens, mining pools can run and signal support for the change.

If 80% of mining pools run the code for 672 blocks, over a period of four to five days, then SegWit will lock in. Although it’s non-binding, it’s notable that the mining pools plan to lock-in SegWit the day before 1st August (more on that below).

Three months later, the second portion of the agreement, the 2MB block-size increase, is supposed to kick in. The problem is that if not all users upgrade, this could lead bitcoin to split into two assets. At least some users have said that they don’t plan to.

Timeline: Signaling for the change begins on 21st July. Three months after SegWit is activated, users will need to upgrade their software if they want to support the 2MB block-size parameter increase.

Who supports it? Most major companies and mining pools.

If mining pools lock in Segwit2x by 31st July, then that might be it. Otherwise the following events could unravel.

BIP 148 UASF: 1st August

BIP 148 UASF also aims to activate SegWit, but it takes a different approach.

It rekindles an older way of making consensus upgrades to bitcoin, one that doesn’t explicitly ask mining pools for support before pushing through a code change. (Some in the community are calling it bitcoin’s ‘Independence Day’ for that reason.)

Many users and some companies are already running code that could trigger this type of soft fork. At this point, nodes will start rejecting blocks that do not signal support for SegWit.

That’s why the idea is controversial. As these nodes reject the blocks, they’re effectively pushing them to a different network. It’s a controversial idea because, like the above hard fork, it could lead bitcoin to split into two competing cryptocurrencies, both called bitcoin.

But, some argue that it has more of a psychological affect. For example, some believe that mining pools rallied around Segwit2x on Monday in response to growing support for BIP 148. The idea is that, if they don’t want bitcoin to split, SegWit needs to be activated somehow prior to that date.

Timeline: On 1st August, nodes that are running BIP 148 will start rejecting blocks from miners that do not support SegWit.

Who supports it? Some users, some businesses, some miners and some developers, but like the other proposals, support is split.

UAHF: 12 hours after BIP148

If BIP 148 gets off the ground on 1st August, mining firm Bitmain plans to roll out a “user-activated hard fork” (UAHF) in response.

This could potentially protect users’ money in the event of a split, according to the company, by making the split more permanent. In theory, a bitcoin hard fork could provide protection from a ‘wipe out’, where transactions on one version of the blockchain might accidentally be erased.

Still, mining pools might lose money if they end up mining a competing fork. So, some are calling the the Bitmain UAHF a bluff.

Another mining firm, ViaBTC, unveiled a related plan on Monday to guard against the prospect that some in the community may not uphold the 2MB increase portion of the SegWit2x agreement.

The far-fetched goal is to incentivize the creation of a bitcoin with bigger blocks by raising the funds to do so via an initial coin offering (ICO).

Timeline: If BIP 148 triggers, Bitmain will start mining a private chain and open it up to more bitcoin users if there’s enough support.

Who supports it? Two mining firms, Bitmain and ViaBTC.

What lies ahead

Still, it’s possible that all these scaling efforts will become obsolete once mining pools lock in Segwit2x. If not, though, there is the more complex timeline to keep in mind.

Meanwhile, there are other complexities to the argument, not the least of which is that it can seem like bitcoin users are voiceless in the middle of all this in-fighting.

This was the highlight of a debate between Blockstream CEO Adam Back and Peter Smith, CEO of bitcoin wallet startup Blockchain, on a mailing list last week. There, Back argued that users don’t want a small group of entities dictating the rules of what’s supposed to be a decentralized currency, while Smith asserted that its wallet users want cheaper fees.

Given the complexities of the outcomes above, bitcoin’s biggest question now may not be whether it will upgrade, but whose vision for the network will win out when it does (or doesn’t).

Disclosure: CoinDesk is a subsidiary of Digital Currency Group (DCG), which helped organize SegWit2x and has an ownership stake in Blockstream.

Mysterious chest image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at [email protected].

Article source: http://www.coindesk.com/bitcoin-scaling-upgrade-finally-happen-fail/

Bitcoin is rising in value but losing momentum with users

For digital-marketing agency Cooperatize.com, taking bitcoin for payment was easy enough. All co-founder Roger Wu had to do was obtain a digital wallet. To promote the move in 2014, he even penned a blog post for Forbes explaining the decision.

The number of bitcoin transactions the New York-based firm has made since? Zero.

“The biggest thing is, are people willing to pay in bitcoin?” Wu said. “The reality is that most of our customers are other businesses, and other businesses don’t use bitcoin.”

Even as the euphoria over bitcoin reached a fever pitch last week as the stock price surged to almost $3,000, slow transaction times and inertia are helping to prevent it from achieving widespread usage. Adoption has slowed, according to Morgan Stanley, after a slew of companies from Microsoft to Expedia initially trumpeted its use, and hurdles remain when it comes to longer-term viability.

“We see few reasons for consumers to use bitcoin over a credit/debit card given that paying online with bitcoin represents a marginally more inconvenient way to pay,” Morgan Stanley analysts wrote in a 33-page report released June 13. Processing costs for bitcoin and other digital currencies are likely to grow, they said.

Time and Dell said they’ve stopped accepting the cryptocurrency, with the computer maker citing low usage. When website content management system WordPress stopped taking bitcoin in 2015, founder Matt Mullenweg said usage was “vanishingly small,” adding that it was initially incorporated for philosophical reasons, not commercial ones.

Bitcoin allows people to make transactions, buy goods and services and exchange money across borders without involving banks or third parties.

This high school dropout who invested in bitcoin at $12 is now a millionaire at 18

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This high-school dropout who invested in bitcoin at $12 is now a millionaire at 18


Erik Finman made a bet with his parents that if he turned 18 and was a millionaire, they wouldn’t force him to go to college. Thanks to his savvy investments in bitcoin and the current all-time high valuation, he won’t have to get his degree.

“I can proudly say I made it, and I’m not going to college,” Finman said.

He currently owns 403 bitcoins, which at the current $2,700 a coin puts his bitcoin value at $1.09 million. He also has smaller investments in other cryptocurrencies, including litecoin and ethereum.

Bitcoin is very volatile, and the value could decline rapidly. A technical analyst told CNBC he believes bitcoin will only go up to $2,800 before the value recedes, while others think it may reach $100,000 in a decade.

Finman thinks its best days are still ahead. “Personally I think bitcoin is going to be worth a couple hundred thousand to a million dollars a coin,” he said.

Bitcoin and the blockchain technology it is built on allow people to cut out the middleman, Finman explained. For example, an open source blockchain ride-share platform would allow users to power the service on their phones using peer-to-peer technology without a central hub. It would allow the drivers to get more money by cutting overhead costs, he added. It could also create the next evolution of the internet, one which wouldn’t be reliant on servers.

The first time, he turned $1,000 into $100,000

Finman began investing in bitcoin in May 2011 at the age of 12, thanks to a $1,000 gift from his grandmother and a tip from his brother Scott.

Though he’s close with his family — which he calls the “Elon Musk version of the Kardashians” — growing up in “small town” Idaho outside of Coeur d’Alene wasn’t easy. Finman was especially frustrated with his high school teachers, and begged his parents to let him drop out at 15.

“(High school) was pretty low quality,” he said. “I had these teachers that were all kind of negative. One teacher told me to drop out and work at McDonald’s because that was all I would amount to for the rest of my life. I guess I did the dropout part.”

Surprisingly, his parents — who met pursuing their Ph.D.s at Stanford — agreed. Finman sold his first bitcoin investments at the end of 2013, when they were valued at $1,200 a piece.

With the $100,000 Finman launched an online education company called Botangle in early 2014 that would allow frustrated students like him to find teachers over video chat. He also used the funds to move to Silicon Valley, did some fun things like meet Reddit co-founder Alexis Ohanian and traveled.

“I really liked Colombia,” he said. “It was fun, but a little sketchy. Some interesting stuff happened. I was held up at gunpoint there, which is pretty scary, but I have this emergency button I programmed in Android that puts you on speaker but turns off audio automatically and dials [a local emergency number].”

“Maybe I’ll turn that into an app,” he added. “It’s handy.”

It was hard getting people to take a 15-year-old tech entrepreneur seriously, Finman admitted. He recalled being called in to interview with a “really, really high-up” unnamed Uber executive, who instead of listening to his Botangle pitch discouraged him and told him he would never win the bet with his parents.

Eventually he found a buyer for Botangle’s technology in January 2015. The investor offered either $100,000 or 300 bitcoin, which had dropped in value at that time to a little more than $200 a coin. He took the lower cash value bitcoin deal because he believed it was “the next big thing.”

“My parents asked ‘Why don’t you take the more cash?”‘ Finman explained. “But I thought of it more of an investment.”

Since then, Finman has been managing his family and his own bitcoin investments. He’s also kept busy on other projects, including working with NASA to launch a rocket through the ELaNa project. One thing he won’t do is go back to school.

“I never got my GED, and I don’t see the value in it,” Finman said. “The purpose of that would be to get another education level and get a job. I had to learn through running a business. Instead of writing essays for English class, I had to write emails to important people.”

Although the rest of his family has degrees — his brother Scott went to Johns Hopkins at 16 and now has an enterprise software company, while his other brother Ross went to Carnegie Melon at 16 for robotics and is now pursuing his Ph.D. at MIT — he’s happy learning about the real world from experience.

“The way the education system is structured now, I wouldn’t recommend it,” Finman said. “It doesn’t work for anyone. I would recommend the internet, which is all free. You can learn a million times more off YouTube and Wikipedia.”



Bitcoins sit on top of a collection of U.S. one dollar bills in this arranged photograph in London, U.K., on Friday, Jan. 29, 2016.


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The first investor in Snapchat explains why the bitcoin rally is just getting started

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Jeremy Liew

Uncertainty about governments could make cryptocurrency like bitcoin an even more in-demand commodity, said Lightspeed Venture Partners partner Jeremy Liew.

“Bitcoin and the other digital currencies, they all really see a lot of benefit in times of political and economic instability,” Liew said to CNBC. “Fundamentally when a citizen doesn’t have faith in their currency of their country, then they are looking for alternatives, and a digital alternative like bitcoin becomes much more compelling in those circumstances.”

Lightspeed co-led the first venture round in Blockchain, a bitcoin wallet, in October 2014. Liew also led the first venture investment in Snap, whose IPO in March turned a $485,000 investment into a stake worth more than $1 billion.

Liew said in parts of the Middle East, Africa, South America and Eastern Europe, concerns over the government being overthrown or persistent long-term currency inflation have been driving bitcoin’s increasing valuation. A bitcoin is valued at a little over $2,800 as of Tuesday afternoon, according to Coindesk.

While there are other cryptocurrencies like ethereum, Liew points out it’s currently valued at just a fraction of bitcoin’s market cap.

“If you’re going to be an investor in anything, you want to be where the most trading volume is happening, and right now that’s happening in bitcoin,” he said.



This high-school dropout who invested in bitcoin at $12 is now a millionaire at 18


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Your mom will soon be able to text the Bitcoin symbol, along with a bunch of new emoji

Bitcoin remains a thriving cryptocurrency, but its reputation as a cool, futuristic currency for savvy individuals may have just received a mortal blow. Along with a sampling of dinosaurs, shushing emoji, and many more, the Unicode Consortium’s 10.0 version of the Unicode Standard also includes the Bitcoin symbol.

The timely addition won’t appear as a traditional bubble-like emoji, but rather a regular Unicode character, the currency’s B-like symbol. Unicode 10.0 is dropping today, though the long delay for Bitcoin’s arrival — it’s been around for almost a decade now — could be due to the process for proposing new emoji and icons to the Unicode Standard. Still, it’s arguably the most mainstream Bitcoin has ever been: it’s no longer so unknown that your parents couldn’t pop off a quick reference to it in the same text about siblings or your family pet.

Unicode 10.0 is expected to add 56 new emoji, 8,518 characters, and four new scripts. For a complete breakdown with images, check out Emojipedia.

Article source: https://www.theverge.com/2017/6/20/15840008/new-emoji-unicode-consortium-version-10-bitcoin-symbol

Bitcoin Price Analysis: Understanding the BTC-USD Price Correction

Note: This analysis does not attempt to speculate on the market implications of news events. This is a pure analysis of the market data.

The unprecedented rise in the BTC-USD market to near $3,000 even caught many of the more bullish traders by surprise. However, this quick rise in value did not come cheaply: once BTC finally ran out of steam, the market correction not only affected BTC-USD prices, but it was felt throughout the entire crypto-space as entire market cap took a massive plunge from $49B to $36B over the course of three days.BTC Market Cap 1.png

Figure 1: Market Cap Pre–Bitcoin Price Correction

BTC Market Cap 2.png

Figure 2: Market Cap Post–Bitcoin Price Correction

Why Did This Massive Price Correction Happen and Where Are We Heading?

There are two ways of viewing the BTC-USD run to near $3,000 levels:

  1. The top can be viewed as the absolute top of the market ($2,948)

  2. The top can viewed as the peak at $2,726.50 with a healthy 127 percent Fibonacci Extension

I’m going to analyze the market from the view of option 2 because I feel this provides a more sober outlook on the direction of the BTC-USD market. In strong Bull Runs, it is very common for markets to take a 50 percent correction; a 100 percent Retracement of the initial downward move (if it’s a very strong Bull Run), followed by a 127 percent Fibonacci Extension will provide another test to see how the market feels in the new market highs. In our case, we didn’t quite make it to the 127 percent Extension (shown in orange in Figures 3 and 4).

BTCUSD Chart 1.png

Figure 3: BTC-USD, GDAX, 6-hr Candles, the Relative Market Top With Accompanying Extension

Failed Fib Ext.png

Figure 4: BTC-USD, GDAX, 2-hr Candles, Failed 127 Percent Fibonacci Extension

Currently, BTC-USD is finding support on the 50 percent Fibonacci Retracement of the Bear Run from $3,000 (labeled in green). It made a test of the 61 percent line (labeled in red) and it was ultimately rejected. This rejection and subsequent support test of the 50 percent line coincides with a decrease in volume and a near flip of the four-hour MACD from Bullish to Bearish (labeled in yellow). These market moves show that, unless significant volume hits the BTC-USD markets, there is a likely test of the lower Fibonacci Retracement Lines in its future.

BTCUSD 4HR Chart.png

Figure 5: BTC-USD, GDAX, 4-hr Candles, Fibonacci Retracement of Bear Run

After our initial market high around $2,700, multiple momentum indicators began to reveal that, although the price was increasing, the market was beginning to lose upward momentum — this type of price activity is called “Divergence” and can be seen across the RSI, MACD and Volume. The long-term outlook for BTC-USD indicates a possibility of lower lows in its future. On the higher time-scales (refer to Figure 3), the momentum indicators are pointing toward more downward movement as the price is currently failing to make a new high and seeing decreased market volume. It’s totally possible that the market could move sideways or even see price growth on decreasing volume — markets aren’t always rational. However, if you want to know whether the price growth is sustainable and reliable, keep an eye on the momentum indicators and watch for volume to accompany price growth in the coming days. For the time being, I find it very unlikely that BTC-USD will see any significant price growth. But, after all, this is cryptocurrency; anything is possible.

Summary:
  1. Short-term indicators are showing a possible move to the lower Fibonacci Retracement values ($2,500, $2,400, $2,280).

  2. Long-term indicators are showing a loss of upward momentum. Until more volume hits the markets, very little price growth is likely.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTCMedia related sites do not necessarily reflect the opinion of BTCMedia and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

Article source: https://bitcoinmagazine.com/articles/bitcoin-price-analysis-understanding-btc-usd-price-correction/

How To Buy Bitcoin, Now That It’s Reached An All-Time High – Forbes

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This story appeared in the June 19, 2017 issue of Level Up by Forbes newsletter. Subscribe

If you’ve ever exchanged dollars for euros, you expect the exchange rate to be nearly equal, give or take a few cents. Knowing that, it’s easy to see why bitcoin has been so hot lately. The price for one coin has spiked to about $2,900. If you haven’t already, now is the time to buy in.

Nixing exchange rate fees is just one of the appeals of a digital currency like bitcoin. Forget intermediaries like credit card companies or PayPal retaining your money in transaction fees. Forget the hassles of converting when you travel—dollars and euros don’t matter with this universal currency. Nor does your name, given bitcoin’s anonymity, so go for guilty pleasures like $56 worth of cupcakes. This brings up bitcoin’s biggest drawback: volatility. The relative novelty and mixed press have caused the value to vary, meaning those delicacies bought in April 2013 for .5896 BTC equated to $800 when BTC soared to 1,000 in December that year.

For the most user-friendly bitcoin experience, consider Coinbase. Like mobile banking, the app lets you buy, sell and check transactions on the go. Coinbase is a hosted wallet, so if you don’t want a third party to have access to your money, consider a user-controlled wallet, like Blockchain or Mycelium.

Article source: https://www.forbes.com/sites/levelup/2017/06/19/how-to-buy-bitcoin-now-that-its-reached-an-all-time-high/

Move Over, Bitcoin. Ether Is the Digital Currency of the Moment.

Even though most of the people buying Ether and Bitcoin are individual investors, the gains that both have experienced have taken what was until very recently a quirky fringe experiment into the realm of big money. The combined value of all Ether and Bitcoin is now worth more than the market value of PayPal and is approaching the size of Goldman Sachs.

Investors buying Ether are placing a bet that people will want to use the Ethereum network’s computing capabilities and will need the currency to do so. But that is far from a sure thing. And real-world use of the network is still scant.

Bitcoin, on the other hand, has made inroads into mainstream commerce, with companies like Overstock.com and Expedia accepting Bitcoin for purchases, along with the black-market operators who use the currency.

The fact that there are fewer real-world uses for Ethereum has many market experts expecting a crash similar to the ones that have followed previous run-ups in the price of Bitcoin and other virtual currencies. Even during recent pullbacks, though, the value of Ether has generally continued to gain on Bitcoin in relative terms.

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Ethereum was launched in the middle of 2015 by a 21-year-old college dropout, Vitalik Buterin, who was born in Russia and raised in Canada. He now lists his residence, jokingly, as Cathay Pacific Airlines because of his travel schedule.

The Ether he holds has made him a millionaire many times over, but he has generally avoided commenting on the price increase in Ether.

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Mr. Buterin was inspired by Bitcoin, and the software he built shares some of the same basic qualities. Both are hosted and maintained by the computers of volunteers around the world, who are rewarded for their participation with the new digital tokens that are released onto the network each day.

Because the virtual currencies are tracked and maintained by a network of computers, no government or company is in charge. The prices of both Bitcoin and Ether are established on private exchanges, where people can sell the tokens they own at the going market price.

But Ethereum was designed to do much more than just serve as a digital money. The network of computers hooked into Ethereum can be harnessed to do computational work, essentially making it possible to run computer programs on the network, or what are referred to as decentralized applications, or Dapps. This has led to an enormous community of programmers working on the software.

One of the first applications to take off was a user-led venture capital fund of sorts, known as the Decentralized Autonomous Organization. After raising over $150 million last summer, the project crashed and burned, and appeared ready to take Ethereum with it.

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Ethereum was launched in 2015 by Vitalik Buterin, a 21-year-old college dropout who was born in Russia and raised in Canada.

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John Phillips/Getty Images

But the way that Mr. Buterin and other developers dealt with the problems, returning the hacked Ether to users, won him the respect of many in the corporate world.

“It was good to see that there is governance on Ethereum and that they can fix issues in a timely manner if they have to,” said Eric Piscini, who leads the team looking into virtual currency technology at the consulting firm Deloitte.

Many applications being built on Ethereum are also raising money using the Ether currency, in what are known as initial coin offerings, a play on initial public offerings.

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Start-ups that have followed this path have generally collected Ether from investors and exchanged them for units of their own specialized virtual currency, leaving the entrepreneurs with the Ether to convert into dollars and spend on operational expenses.

These coin offerings, which have proliferated in recent months, have created a surge of demand for the Ether currency. Just last week, investors sent $150 million worth of Ether to a start-up, Bancor, that wants to make it easier to launch virtual currencies. If projects like Bancor stumble, Ether could as well.

Several big companies have also been building programs on top of Ethereum, including the mining company BHP Billiton, which has built a trial program to track its raw materials, and JPMorgan, which is working on a system to monitor trading.

Over the last few months, over 100 companies have joined the nonprofit Enterprise Ethereum Alliance, including global names like Toyota, Merck and Samsung, to build tools that will make Ethereum useful in corporate settings.

Many of the companies using Ethereum are building their own private versions of the software, which won’t make use of the Ether currency. Speculators are betting that these companies will eventually plug their software into the broader Ethereum network.

There is, though, also the possibility that none of these big trials come to fruition, and the current excitement fizzles out, as has happened many times in the past with Bitcoin after big price surges.

“I hope this is the year where we start to close the gap between the speculative value and the actual value,” Mr. Mougayar said. “There is a lot at stake right now.”

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Article source: https://www.nytimes.com/2017/06/19/business/dealbook/ethereum-bitcoin-digital-currency.html

How To Buy Bitcoin, Now That It’s Reached An All-Time High

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This story appeared in the June 19, 2017 issue of Level Up by Forbes newsletter. Subscribe

If you’ve ever exchanged dollars for euros, you expect the exchange rate to be nearly equal, give or take a few cents. Knowing that, it’s easy to see why bitcoin has been so hot lately. The price for one coin has spiked to about $2,900. If you haven’t already, now is the time to buy in.

Nixing exchange rate fees is just one of the appeals of a digital currency like bitcoin. Forget intermediaries like credit card companies or PayPal retaining your money in transaction fees. Forget the hassles of converting when you travel—dollars and euros don’t matter with this universal currency. Nor does your name, given bitcoin’s anonymity, so go for guilty pleasures like $56 worth of cupcakes. This brings up bitcoin’s biggest drawback: volatility. The relative novelty and mixed press have caused the value to vary, meaning those delicacies bought in April 2013 for .5896 BTC equated to $800 when BTC soared to 1,000 in December that year.

For the most user-friendly bitcoin experience, consider Coinbase. Like mobile banking, the app lets you buy, sell and check transactions on the go. Coinbase is a hosted wallet, so if you don’t want a third party to have access to your money, consider a user-controlled wallet, like Blockchain or Mycelium.

Article source: https://www.forbes.com/sites/levelup/2017/06/19/how-to-buy-bitcoin-now-that-its-reached-an-all-time-high/

Bitcoin Is Not Garbage, Embrace It

I ran across an article on MarketWatch regarding Bitcoin. The title: Stay Away From Bitcoin, It’s Complete Garbage. In the article, the author, Brett Arands, goes on to lay out a fictitious conversation where a supposed elite is asking an adherent why someone should use Bitcoin, but he never gets the question answered. Quickly, you throw in the towel on the article. The fact is, compared to the dollar in your pocket, Bitcoin may be the better form of payment when comparing apples to apples. First, however, you need a simple primer on what money is.

Money is a medium of exchange to avoid having to barter. Nothing more. That crisp piece of paper in your pocket is a form of medium of exchange. Long ago, society realized that the coincidence of want was a difficult hurdle to cross and so money, or the medium of exchange, was quickly adopted to facilitate this. Let me explain.

Suppose there is no money in the world. Instead, we are on the barter system. And, let us suppose you work for ABC Automotive and you manufacture transmissions for the car company. For your 40 hours of effort every week, the ABC Auto company provides you with one transmission as payment. You can use the transmission to barter for whatever you would like in this world.

It is Friday, and you want a beer and a burger because it’s been a long week. You step into a pub that I own and order said burger and beer. But, before that happens you inform me that you have one transmission that is valued at 250 beers. You would like one beer and wish me to trade off the rest the rest of the value of the transmission.

I ride a scooter. I do not want your transmission. Nor, do I want to be involved in trading off portions of the value of a transmission. You and I do not have a coincidence of want. So in theory, while although your transmission is valuable to you, it has no value to me, someone who needs to buy supplies for tomorrow’s restaurant patrons.

That simple story is the same story I was told in economics school at Pasadena City College with Mr McLean some period of time ago. It is easy to carry that story with you because of its simplistic approach of explaining why you have paper in your pocket instead of lugging around transmissions to try and trade for a beer and a burger.

The way fiat currency works is that there is an agreement that $1.00 purchases a certain product, such as a Snickers bar. You and I both agree that a snickers bar is worth $1.00 and so, therefore will make the exchange of $1.00 for a Snickers bar. And that is satisfying.

Bitcoin is nothing more than a medium of exchange. You and I would be able to exchange a Bitcoin for something. While there is technology involved in creating that exchange, the same job can get done.

There is one massive difference between Bitcoin and any other fiat currency in the world: Bitcoin has no central bank that is diluting the purchasing ability of the coin. In fact, just the opposite.

I bet if you asked Mr. Arands if he could buy the exact same amount of Snickers bar today than he could when he was a kid, his response would be the exact same as anyone who has lived more than 1 year on this planet: “Pssshhh… back in my day…”.

And, why is that? Because there is a central bank that “backs” said fiat currency. And, that central bank is moving society forward by wasting away said fiat currency by deflating the currency.

And Bitcoin? Back when Bitcoin first came, all the way back in 2009, 1,000 Bitcoins were needed to buy 1 Snickers bar. Today? 1 Bitcoin can purchase 2,500 Snickers bars.

Hmmm… should I go with the paper in my pocket that has value being destroyed every day? Or, should I go digital, like every other aspect of humanities life, and see my purchasing ability increase?

Decisions. Decisions.

Bitcoin has a set amount of currency. The US Dollar has an infinite supply and more and more is being created every day, destroying the purchasing value of the currency… because inflation is very healthy for an economy.

In Japan, where the Bank of Japan is desperately trying to decimate its currency to prop up inflation, Bitcoin was recently legalized and the country is rapidly embracing the technology and payment form. Some 100s of thousands of Bitcoin pay stations are being installed around the country. This has created a surge in demand, pushing the currency upward since the April 9th announcement from $900.00 to its recent high of $2,980.00 per coin. Read this paragraph again. Now, read it again. Until that sinks in.

Bitcoin works because individuals agree that it works. You and I can look at an exchange and see the rate of exchange for Bitcoin, whether it be against the USD, EUR, JPY, CNH, or every other currency out there. Then, if we decide to agree to use this form of medium of exchange, we do.

I remember the trust factor I needed to add PayPal as a source to have access to my bank account and then hitting the send button when I wanted to purchase something. That was eery. That was 20 years ago.

I remember telling a friend of mine that when I got back from a vacation, I was going to turn off my home phone because I only needed my cell phone anymore so why pay for two phones. He laughed and scorned me that I would be turning that phone on in no time at all. Again, that was 20 years ago. I have not owned a home line since the late 1990s.

Americans get too stuck in their ways when it comes to currency. When we cross a jurisdiction, we can still use the US Dollar. But, the Japanese, Brits, Europeans, Africans, Asians, South Americans… and on and on, when these individuals cross a jurisdictional boundary, they have to think in terms of another currency.

I guess I was an fairly early adapter to some forms of technology that we now utilize every single day without hesitation. But, I am rarely the first in line. The pioneers, those people tend to get arrows in their backs. But, I try and think things through. I have thought through Bitcoin. It is a viable medium of exchange.

I can use Bitcoin to buy and sell things, if I like. Or, I can use the crusty, germ-ridden, who-knows-who-touched-ti-before-me paper in my pocket. Either way, really. But, as a store of value, Bitcoin has fiat currencies beat all day long and will continue to do so. There are 7,000,000,000 people on the planet that potentially could use Bitcoin. There are only 21,000,000 coins in existence.

That is why the value keeps surging. And, more and more, there are pay stations going up around the world to facilitate this medium of exchange. I guess, however, these pay stations are not going up in Mr, Arand’s neighborhood, though. Too bad.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in COI over 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.

Article source: https://seekingalpha.com/article/4082254-bitcoin-garbage-embrace

Bitcoin Is Digital Gold. But Will You Buy a Sandwich With It?

For digital-marketing agency Cooperatize.com, taking bitcoin for payment was easy enough, all co-founder Roger Wu had to do was obtain a digital wallet. To promote the move in 2014, he even penned a blog post for Forbes explaining the decision.

The number of transactions the New York-based firm has made since? Zero.

“The biggest thing is are people willing to pay in bitcoin?” Wu said. “The reality is that most of our customers are other businesses and other businesses don’t use bitcoin.”

Even as the euphoria over bitcoin reached a fever pitch last week as the price surged to almost $3,000, slow transaction times and inertia are helping to prevent it from achieving widespread usage. Adoption has slowed, according to Morgan Stanley, after a slew of companies from Microsoft Corp. to Expedia Inc. initially trumpeted its use, and hurdles remain when it comes to longer-term viability.

“We see few reasons for consumers to use bitcoin over a credit/debit card given that paying online with bitcoin represents a marginally more inconvenient way to pay,” Morgan Stanley analysts wrote in a 33-page report released June 13. Processing costs for bitcoin and other digital currencies are likely to grow, they said.

Read more on the companies benefiting from the demand for cryptocurrencies

Time Inc. and Dell Inc. said they’ve stopped accepting the cryptocurrency, with the computer maker citing low usage. When website content management system WordPress stopped taking bitcoin in 2015, founder Matt Mullenweg said usage was “vanishingly small,” adding that it was initially incorporated for philosophical reasons, not commercial ones.

“It’s quite possible that after a while you just realize it’s not worth the cost of tooling up to take it and you decide to drop it if the publicity has run its course,” said David Yermack, a professor at New York University Stern School of Business who studies bitcoin.

Still, there’s plenty of evidence the price surge has helped boost bitcoin’s use — albeit from a low base. 

Payment processor BitPay said its now handling about $2 million in transactions a day, up almost threefold from April 2016. Coinbase’s volume has doubled since the start of the year. Overstock.com Inc., an online discounter, said it’s been handling around 100,000 bitcoin transactions per week, up from about 30,000 when it first added the payment method in 2014.

“There is what might be called a wealth effect that occurs, so as price increases people actually counter-intuitively are more likely to spend bitcoin,” said Justin O’Brien, product manager at Coinbase in San Francisco, which has partnered with more than 46,000 businesses for bitcoin payment.

Yet somewhat paradoxically, there’s the question of whether its status as a red-hot asset is compatible with being a stable method of payment.

There’s the issue of volatility. This year has seen bitcoin surge and plunge by as much as 19 percent over the course of a day. As transactions rise, processing them is also becoming slower and more expensive because of a cap on the data the bitcoin blockchain can process — an issue whose resolution has spurred bitter infighting within the development community.

“The blockchain underpinnings of most cryptocurrencies scale too poorly for most currency-like uses,” the Morgan Stanley analysts wrote. “Time to clear single transactions can often be from 10 minutes to more than an hour.”

And probably most importantly, bitcoin isn’t recognized as legal tender. The U.S. Internal Revenue Service has ruled that bitcoins are property, while regulators treat it as a commodity.

Most big businesses take bitcoin through payment processors such as BitPay and Coinbase. When a consumer makes a purchase via those platforms, he or she will pay at a conversion rate based on the latest bitcoin price. The processors then convert the bitcoin immediately and pass the fiat currency to the seller, essentially removing all exposure to bitcoin’s volatility.

Read more on how bitcoin is perplexing analysts

For merchants, Coinbase charges nothing for the first $1 million and 1 percent of transaction values afterward. That compares with Visa Inc.’s roughly 2 percent interchange rate and almost 3 percent charged by PayPal Holdings Inc. 

The process is more complicated for shoppers. Unless your digital wallet is already on the platform that’s processing the payment, transferring bitcoins incurs a transaction fee, which can vary depending on its size, how quickly you want it processed and network conditions. The median transaction fee was $2.10 on June 15, compared with an all-time high of nearly $3 reached earlier this month, according to BitInfoCharts.

Sonny Singh, BitPay’s chief commercial officer, said bitcoin is more useful in emerging economies where trust in local currencies is weaker and credit cards are less common.

The cryptocurrency is making more headway in markets like Japan, which started recognizing digital currencies as a form of payment this year, and in Venezuela, where the bolivar is almost worthless. It’s also useful for businesses that can’t rely on traditional banking, such as cannabis sellers.

While greater usage remains in question, there are often some unexpected benefits for merchants who’ve embraced bitcoin.

Since the Roast of Sherwood added a Coinbase wallet six weeks ago, it has averaged five bitcoin or ether transactions each week, according to Lee Galloway, who runs the sandwich stall with his father in a bustling street market along London’s Whitecross Street.

“For a few small payments we’ve taken, it’s a large amount of publicity,” the 32-year-old said. “If we’re taking large amounts of cryptocurrency payments, I’ll probably have to re-address and re-look at the entire issue, but I can’t imagine that happening any time soon.”

    Article source: https://www.bloomberg.com/news/articles/2017-06-19/bitcoin-is-digital-gold-but-will-you-buy-a-sandwich-with-it

Bitcoin and Ransomware: Regulations Hit White-Hat Hackers …

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Article source: http://fortune.com/2017/06/18/regulations-bitcoin-hacking/