Bitcoin turned 10 years old, a milestone for a technology that few have used and even fewer understand. Ultimately, the blockchain it wrought could be the biggest change to banking, finance and politics ever — or it could be a dud. The jury is still out, but let’s take a walk down memory lane and see just how the product grew from White Paper to world beater.
The cruise ship wasn’t big enough for the both of them.
On September 10, somewhere in the Mediterranean, two well-known rivals in the cryptocurrency space stood awkwardly poolside. A crowd, sporting a mix of cryptocurrency-themed t-shirts and bikinis, lounged nearby on the ship’s upper deck. One man, sweatpants sloshing in the water, steadied a tripod. The Bitcoin versus Bitcoin Cash debate was about to begin.
It only took 37 seconds to spiral out of control.
The CoinsBank Blockchain Cruise, chartered to take cryptocurrency die-hards from Barcelona, to Monaco, to Ibiza, and then back, was in its fourth day, and a highly billed event had managed to drag a few likely hung over attendees out from their below-deck cabins. Jimmy Song, a venture partner at Blockchain Capital LLC, was to argue the relative merits of Bitcoin (BTC). Early Bitcoin adoptee and Bitcoin Cash evangelist, Rover Ver, was to speak on behalf of Bitcoin Cash (BCH).
Bitcoin Cash was born following a 2017 Bitcoin hard fork, and despite BTC’s and BCH’s shared history, the two cryptocurrencies and their respective boosters have become the blockchain’s very own Montagues and Capulets — each disparaging the other at every conceivable opportunity, with both sides lobbing accusations of fraud and deception.
It was perhaps to be expected that the debate wouldn’t go smoothly, but just how quickly it went off the rails surprised even those in attendance.
Song, cowboy hat atop his head and microphone in hand, attempted to introduce the format of the event — a “Lincoln-Douglas style debate” — but was soon interrupted by Ver.
Shouts of “no Roger” emanated from the crowd, as Ver told the audience to “calm down.”
It quickly spun out from there, with Song repeatedly telling Ver to “sit down” as Ver angled for the microphone.
“Do you want to debate me or not,” Song demanded. “OK then sit down,” he repeated as he stood behind the podium.
Bickering over whether or not Ver would get a one-minute introduction before the official start of the debate continued on, with Song addressing the crowd and Ver shouting at the top of his lungs.
They heatedly yelled over each other as the crowd jeered.
Three minutes had passed, and things were not going well. And then someone handed Ver a mic.
You better believe Song wasn’t having that, and so he stormed offstage saying he was “refusing to do the debate.”
Finally with the stage all to himself, Ver attempted to speak but was immediately shouted down by an angry, shirtless man yelling from the pool. And that’s all just the first five minutes. The video is over 40 minutes long.
In the end, despite all the bullshit, one clear consensus did manage to emerge: If these people are the future of finance, then we should all pray for a return to the past.
A new pilot program in West Virginia aims to take voting into the technological future. In doing so, the state has cast its eye toward one of the most popular tech buzzwords of 2018.
West Virginia has contracted the Boston company Voatz to enable voting via smartphone for troops overseas in the 2018 midterm elections, according to CNN. Members of the military will be able to cast their ballots using an app, with voting data recorded on a blockchain.
Troops will still be able to cast paper ballots if they prefer.
To use the app, voters will have to submit a photo of their government issued ID, as well as, um, a selfie video. Voatz’ facial recognition technology will ensure that the person voting in the selfie video matches the ID.
But the use of smartphone-, app-, and blockchain-based voting prompts concerns, because these technologies may not be consistent with the recommended way to secure an election. Joseph Lorenzo Hall, the chief technologist at the Center for Democracy and Technology, even told CNN that it was a “horrific idea” because of the security vulnerabilities it opens up.
The industry standard for election security is to use devices that produce a paper trail. That way, there is a non-digital, and non-vulnerable back-up, should anything go awry. Facilitating voting via a (hackable) smartphone, and aggregating that data digitally sans paper trail — whether on much-evangelized blockchain technology or not — opens up too many avenues for attack, Lorenzo Hall said.
And attack is nowhere near out of the realm of possibilities for the 2018 midterms. U.S intelligence agencies concluded that in the 2016 election, Russian hackers attempted to hack the voting systems in 21 states, and were successful at accessing voter data in at least one, Illinois (however, there’s so far been no evidence the data was altered or votes were changed).
Federal officials warn Russia is now attempting to interfere with the 2018 midterms. And while they do not see hacking election machines as the main vulnerability, they’re keeping an eye on it.
But the U.S. may not be doing enough to bolster the digital integrity of election infrastructure. Last week, the Senate voted down a bill that would provide $250 million to states to modernize and secure the voting process, because they said it was not clear how states had used the $380 million already allocated. Still, experts say the initial funds are nowhere near enough to fully secure America’s elections.
It might just be too soon to rest our faith in American democracy on the blockchain.
Look, cryptocurrency is complicated. We get it. What with all the different coins, tokens, ICOs, exchanges, scams, protocols, and DApps, it’s borderline impossible for the casual observer to keep it all straight.
And so, with that in mind, let us now turn to approximately three combined hours of our elected officials rambling on about the blockchain and our decentralized future.
The fun started early Wednesday, when members of the House Committee on Agriculture held a hearing to discuss the future of the crypto-verse.
“We should prohibit US persons from buying or mining cryptocurrencies.”
“This hearing will shed light on the promise of digital assets and the regulatory challenges facing this new asset class,” committee chairman Rep. K. Michael Conaway of Texas (R-Texas) explained. “Our committee has a deep interest in promoting strong markets for commodities of all types, including those emerging through new technology.”
But that wasn’t the only fun to be had today. Later in the afternoon, the House Financial Services Committee met to “examine the extent to which the United States government should consider cryptocurrencies as money and the potential domestic and global uses for cryptocurrencies.”
And what did we learn from this esteemed group? Well, for starters, that bitcoin’s got to go.
“We should prohibit U.S. persons from buying or mining cryptocurrencies,” Rep. Brad Sherman of (D-Calif.) blasted from the podium. “Mining alone uses electricity which takes away from other needs and-or adds to the carbon footprint. As a store, as a medium of exchange, cryptocurrency accomplishes nothing except facilitating narcotics trafficking, terrorism, and tax evasion.”
Did you catch that? Mining uses electricity, and therefore should be banned.
But not everyone agreed with Sherman. Conaway, in his closing statements, seemed to argue in favor of bitcoin — at least as opposed to more privacy-focused cryptocurrency like Monero or Zcash.
“As long as the stupid criminals keep using bitcoin, we’ll be great,” he observed when commenting on the pseudonymous nature of bitcoin.
Hear that, stupid criminals? Stick to bitcoin.
Other fun gems include Rep. Collin Peterson (D-Minn.) admitting that “there’s a lot of things here that don’t make much sense to me.” And yet, Peterson actually seemed to have some relevant statistics at hand, like the fact that “over 80 percent of the initial coin offerings are scams.”
Good on you, Peterson.
Over all, the two hearings painted a picture of our elected officials attempting to wrap their heads around this brave new cryptoworld. And hey, that’s a good thing. Everyone has to start somewhere.
After all, we can’t all be self-assured teen crypto millionaires.
The world of cryptocurrency just got some much needed good news.
With the prices of bitcoin and ether on a steady downward trend, the Securities and Exchange Commission today provided hodlers with a flash of hope: Neither of the cryptocurrencies are considered securities.
So reports CNBC, which notes that the SEC’s head of the Division of Corporate Finance, William Hinman, delivered the news at the San Francisco Yahoo All Markets Summit: Crypto conference. If the SEC had decided differently, then exchanges and markets would likely have faced some serious regulation.
And, well, no one in cryptoland likes regulation.
The announcement was celebrated by big names in both the Ethereum and Bitcoin space.
But all this doesn’t mean the SEC is washing its hands of the entire emerging industry. According to Hinman, many ICOs are in fact securities and will be on the receiving end of SEC regulatory action.
Interestingly, Yahoo News reports Hinman as explaining that simply calling something a coin or a token makes no difference in the eyes of his agency. More important is the extent of decentralization involved in the network in question.
“Over time,” CNBC quotes him as saying, “there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required.”
So, you know, better hype up your blockchain project’s decentralized attributes now. It may save you from the SEC’s wrath later.
The world of finance isn’t done yet with its effort to turn artistic masterpieces into tradeable securities. A decade ago it was hedge funds and bankers selling small shares in works by Andy Warhol and his ilk as investment opportunities. Today it's the cryptocurrency crowd.
If history’s a guide, the risk and cost of owning a tiny part of an illiquid, hard-to-value asset still outweighs the rewards. And all that without ever getting to hang the picture on your wall.
The new tilt at art trading is as much a throwback to pre-crisis financial engineering as it is about crypto-futurism. A British gallery is promising to sell up to 49 percent of Warhol’s 14 Small Electric Chairs in a blockchain-powered online auction. Buyers can pay in Bitcoin, Ether or other tokens. They’ll take cash too if you’re that way inclined.
These micro-stakes would then be traded on a marketplace. There may be a blockchain verifying transactions, and crypto-currencies changing hands, but we've seen art investment pools and art stock markets before. They don't always end well.
Despite all the airy talk about democratizing art ownership and disrupting the gilded world of auction houses and dealers, this doesn’t really do that. Nobody owning a piece of the Warhol will take it home. It's locked up in a tax-free zone somewhere. What’s being traded is a stake in the special purpose vehicle that holds it.
This may be a wonderful way for the ultimate owner to make money from an artwork without taking it out of storage or ceding control, but it's hardly the Barnes Foundation.
As for the idea that this is a clever bet on the future value of a piece of art, these assets are as risky as any others. The art market is illiquid and can be volatile. Blue-chip artists are no protection against a market crash. Even Warhols were sold at a loss during the financial crisis. Do punters know the difference between this “Electric chairs” canvas, which the gallery says has been valued at 4.2 million pounds ($5.6 million), and others by the same artist?
Imagine what the combined volatility of cryptocurrency markets and the art market might create in times of stress. Liquidity would evaporate. That initial buy-in fee of 2 percent wouldn’t seem so cheap then.
Warhol himself might have enjoyed the idea of trading and owning pieces of art that you've never seen. And there is at least one tangible thing on offer: The people running the auction say buyers can choose to receive a special scanned print of the work in question, which to the naked eye looks just as good as the original. As David Bowie once sang in a song about Warhol: “Can't tell them apart at all.”
If people do manage to make money from this, then finance truly will have reached its post-modern apotheosis.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the editor responsible for this story:
James Boxell at [email protected]
I mean, just check the dude out.
He’s an absolute unit, with bad-boy appeal.
And! He’s knows how to accessorize.
Let’s not overlook the fact that he believes in saving for retirement.
But he’s not stingy, either. Check this party vibe.
Also, hell yeah to these shades. My man’s got style.
Not only that, he makes a coherent argument about the relative value of cryptocurrency versus fiat. (The tie means he’s legit.)
So while the market may be volatile, and the entire blockchain industry is basically a solution in search of a problem, at least it gave us this cat. 🙌
Read more: https://mashable.com/2018/06/01/bitcoin-cat/
It’s 8:15 a.m. at the Hilton hotel in Midtown Manhattan, and the escalator has a bouncer.
An estimated 8,500 blockchain experts and cryptocurrency evangelists have come from around the globe to be here at the 2018 Consensus conference, and the line to pick up attendee badges shows no sign of moving. A security guard in a suit, talking into his sleeve, eventually gives a small group the go-ahead to ride up to the second floor where another line awaits.
It feels like we’re trying, and failing, to get into New York’s hottest nightclub.
“This is like the Coachella of Bitcoin,” a passerby whispers to her companion as they breeze by.
And indeed, while it lacks Beyonce and the questionable wardrobe choices of the Southern California music festival, the Coindesk organized Consensus more than makes up for it in its sheer opulence and buffoonery — a fact made obvious before you even walk through the conference doors.
Parked outside the hotel were three Lamborghinis — an inside joke within the cryptocurrency community — and, opposite them, a man claiming that the developers of NEM screwed him out of over $1.5 million USD worth of cryptocurrency.
Across the street was an entirely different type of show: specifically, a fake protest. Chanting “hey hey, ho ho, Bitcoin has got to go,” the group of self-described bankers and CEOs (one man told me he got his suit out of a dumpster) carried signs reading “paper checks use less electricity” and “we thought this was a bubble.”
According to a rambling statement on the group’s website, the Genesis Mining-backed demonstrators were actually protesting aspects of the financial industry, but either way, they generated enough of a scene to draw a crowd and put conference attendees in what can only be described as an appropriately absurdist frame of mind.
Because as soon as those who came to hear the blockchain gospel made it past the aforementioned escalator bouncer and the formidable registration line, they were met with what can only be described as a hodler’s paradise.
Want 18-karat gold crypto-jewelry to commemorate your ride-or-die status as a Bitcoin maximalist? Consensus 2018 is the place for you.
And sure, you may know about beer, but have you heard of cryptobeer?
If that’s not your thing, don’t fret, just make you way over to the cyptopuppy (yes, this dog was described to me as a “cryptopuppy”) named after Margaret Thatcher chilling on the fourth floor.
But just like the SEC trying to shit all over the decentralized parade, the real world did poke its annoying head into the immutable bubble of joy. That’s right, someone ticketed the Lambos.
What’s more, in what definitely isn’t a metaphor for the entire industry, it turned out that the fancy cars weren’t even the fruit of early Bitcoin adoption. They were just a promotional stunt.
But push that all to the back on your head, fellow believer. Because if there’s one thing “the Coachella of Bitcoin” makes clear, it’s that these are serious people with serious ideas — even if, as one major player in the cryptocurrency space told me on background, 80 percent of people in the scene are likely scammers.
Because scammer or no, at the 2018 Consensus conference we’re all heading to the moon.
It’s difficult to stand out in the often bonkers world of cryptocurrency.
With all the scams, hacks, and animated dancing coins, it can be really hard to break through the noise and into the public’s consciousness with your surely revolutionary tech. That’s where the fake protest comes in.
As the 2018 Consensus blockchain conference kicked off today in Midtown Manhattan, one bitcoin mining company apparently decided that the best way to make a splash was with a few shouts. As the event was getting started, a group of people could be found marching in front of the hotel hosting the 8,500-person-strong gathering. They chanted slogans like “hey hey, ho ho, Bitcoin has got to go,” and held signs informing anyone who passed by that “paper checks use less electricity!”
And, as things often go in the world of Bitcoin, everything was not as it seemed.
The “protest” was ostensibly organized by a group calling itself Bankers Against Bitcoin, which, as you have probably guessed, is not a 100-percent real protest group. It does have real backing, though. Specifically, that of Bitcoin mining company Genesis Mining.
Importantly, it’s not like Genesis Mining is trying to hide it. As the organizer’s website explains, the company wants everyone to get on the cryptocurrency rocket ship before it’s too late.
“This protest is representative of what will happen to those industries and companies that fail to understand times have changed,” explained Genesis Mining CEO Marco Streng on the Bankers Against Bitcoin website. “The consumer abuse that’s been possible due to a lack of competition is over. The biggest competitor big banks have ever faced has arrived and it’s not a company or organization, it’s a decentralized technology.”
And Genesis Mining is here to help you avoid the soon-to-be grisly fate of the big banks with a “small,” “medium,” or “large” mining package for the low cost of $1,520, $4,440, or $12,960, respectively.
We reached out to Genesis Mining with the hope of getting a little more background info on what appears to be, in effect, a well executed publicity stunt. Were the protesters, for example, paid? Unfortunately we don’t know, as we didn’t hear back as of press time.
But that shouldn’t surprise anyone. After all, when it comes to making it in the world of cryptocurrency, simply grabbing headlines is often good enough.
- Amber AI’s PTD2 fund surged 30% in first three months of 2018
- Hedge fund advised by BitSpread made 5.7% in quarter
Bitcoin’s terrible start to 2018 is highlighting the appeal of cryptocurrency hedge funds that make money in both bull and bear markets.
Funds specializing in virtual currency market making and arbitrage strategies delivered first-quarter gains even as their mostly bullish peers lost 40 percent on average. That’s a big reversal from last year, when digital assets soared and market-making funds lagged far behind their long-biased counterparts.
Pivot Digital Trading-2, managed by Hong Kong-based Amber AI Group, generated some of the biggest gains among cryptocurrency funds that avoid directional bets. It rose 4.3 percent in March to bring its first-quarter return to 30 percent, according to the firm. Market Neutral Liquidity SP-Institutional, domiciled in the Cayman Islands, earned 5.6 percent in the first quarter, said Cedric Jeanson of BitSpread Group, investment adviser to the portfolio.
The results suggest some managers are finding ways to profit from wild swings in cryptocurrencies without having to predict whether the coins will rise or fall. Such tactics may appeal to investors who want exposure to digital assets without their extreme volatility.
As a group, cryptocurrency hedge funds are still highly correlated to the market. A Eurekahedge index for the category posted its biggest three-month slump on record last quarter as Bitcoin sank more than 50 percent. The index soared 1,709 percent in 2017, when Bitcoin jumped about 1,400 percent.
Among funds that lost money was Silver 8 Partners. It dropped 25 percent in March and 32 percent in the first quarter, according to a commentary sent to investors. Silver 8 invests in digital assets, along with fintech, blockchain and machine learning companies.
"High levels of uncertainty and low market liquidity make investments in blockchain-related assets volatile," the firm said in a newsletter. "They tend to overreact to cycles of euphoria and pessimism, where the market price itself acts as a catalyst for further momentum."
The fund has made more than 1,000 percent for investors since its inception in 2016, including a more than 750 percent gain in 2017.
While funds from Amber AI and BitSpread tend to not post such high returns during boom times, they provide investors with some protection when prices of digital assets fall.
PDT2, as the Amber AI fund is otherwise known, trades the 25 largest digital currencies on exchanges including Huobi, OKEX, Bitfinex, Binance, Kraken and BitStamp, said Tiantian Kullander, one of the four former Morgan Stanley traders who started the firm with a one-time programmer at Bloomberg LP, the parent of Bloomberg News.
The fund began trading early this year and oversees about $25 million, said Kullander. Its quantitative trading strategies include market-making, short-term trend following and exploiting pricing discrepancies between different currency pairs and exchanges.
Market Neutral Liquidity SP-Institutional, with more than $100 million of assets under management, makes markets for currencies such as Bitcoin, Ethereum and Ripple, BitSpread’s Jeanson said.