As Bitcoin plummets Coinbase temporarily halts trading

Image: AFP/Getty Images

Coinbase — the largest Bitcoin market in the U.S. — has disabled all buying and selling as the digital currency Bitcoin dramatically loses value. 

At 11:11 a.m. EST, Coinbase posted that it had temporarally disabled trading:

All buys and sells have been temporarily disabled. We are working on a fix and apologize for any inconvenience. 

About 25 minutes later, at 11:35 a.m. EST, the company said it’s still monitoring the problem:

Due to today’s high traffic, buys and sells may be temporarily offline. We’re working on restoring full availability as soon as possible. 

This “high traffic” is largely in reference to activity in the Bitcoin market. Bitcoin is the world’s highest-valued currency, as one Bitcoin hit nearly $20,000 this December.

But it’s lost about a quarter of its value in the last 24 hours and the fickle currency is now trading at around $12,874 — and some exchanges around $11,000.

Other cryptocurrencies have followed the pattern: Ethereum, Litecoin, and Bitcoin cash have all lost a quarter of their value over the last day. 

All of this frenetic activity likely overburdened Coinbase’s services — something it might better account for going forward: New currencies are inherently unstable, and the today’s cryptocurrencies will be swinging up and down for quite some time.

Read more: http://mashable.com/2017/12/22/coinbase-halts-trading-as-bitcoin-falls/

Bitcoin falls $1,000 after South Korea promises crackdown on trading

Move comes less than two weeks after high-profile digital currency exchange in Seoul was hacked and went bankrupt

Bitcoin plunged by more than $1,000 (740) on Thursday after South Korea said it was planning a crackdown on trading in the digital currency in the latest of a string of warnings for investors.

It dropped to about $13,500 after trading at about $15,400 on Wednesday. The dip was seen as a further illustration of bitcoins volatility.

The cryptocurrency has surged in value this year by more than 900%, becoming one of the biggest stories in finance amid a slew of warnings of a pending market crash.

Bitcoin recovered ground later on Thursday and was trading at about $14,000 at 5.30pm UK time.

South Korea, which is one of the biggest markets in the world for bitcoin, said it was preparing a ban on opening anonymous cryptocurrency accounts and new legislation to enable regulators to close coin exchanges if they felt there was a need to do so.

Q&A

What is bitcoin and is it a bad investment?

Bitcoin is the first, and the biggest, “cryptocurrency” a decentralised tradable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.

According to Reuters, the South Korean government issued a statement saying it had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility.

The move came less than two weeks after the high-profile insolvency of one of the countrys digital currency exchanges, after the Seoul-based platform was hit by hackers for a second time.

The exchange, called Youbit, shut down after losing 17% of its assets in a cyber-attack which was later blamed on North Korean hackers. The incident followed several other attacks against cryptocurrency platforms, such as a hack earlier in the month against the cryptomining marketplace NiceHash, which lost about 4,700 bitcoins in the attack.

The crackdown in South Korea comes amid repeat warnings from leading figures in finance and some of the worlds top economists, who have said the currency is a vehicle for fraudsters and drug dealers. There are also fears that its rapid increase in value this year could quickly unwind, causing severe losses for investors.

Sir Howard Davies, who chairs RBS, has likened investing in bitcoin to Dantes Inferno Abandon hope all ye who enter here while Jamie Dimon, the head of JP Morgan, has said bitcoin could potentially be worse than the tulip mania of the 17th century, when bulb prices rose vertiginously before crashing.

However, several leading academics have said bitcoin poses no threat to the stability of the financial system, as its total value stands at about $240bn, paling in comparison with the total value of global shares at almost $80tn.

Companies are also exploring ways to exploit blockchain which is the technology underpinning bitcoin and works by securely encrypting information to speed up everything in business from making payments to transferring data and contracts.

Bitcoin rose to nearly $20,000 a week before Christmas, following the introduction of derivatives trading for major investment firms on the Chicago Mercantile Exchange, which enabled hedge funds to place bets on future prices. However, it then lost 25% of its value on 22 December, before recovering earlier this week and then slumping again on Thursday.

While some have said more investors in the market could help support higher valuations, the currency is on a jittery run.

Craig Erlam, senior market analyst at trading firm Oanda, said the recent fall in value could have made speculators more wary of the potentially negative news from Korea for its market price.

We saw plenty of this in reverse on the way up, with positive news triggering significant rises and negative news being brushed aside. It wouldnt surprise me if we see prices heading back below $10,000 before they find their feet again, he said.

Digital currencies have grabbed the attention of global regulators this year as a consequence of bitcoins rapid price growth, gaining in value from about $1,000 at the beginning of 2017. Other cryptocurrencies such as Ethereum, Ripple and Litecoin have also gained in value this year.

Closer control of digital currencies by financial watchdogs could result in further volatility for bitcoin, as part of its attraction among supporters has been the lack of government and central bank oversight.

The UKs Financial Conduct Authority has issued a warning about investing in initial coin offerings, which use digital tokens to raise funds for startup businesses and projects.

Read more: https://www.theguardian.com/technology/2017/dec/28/bitcoin-falls-south-korea-crackdown-trading

Ethereum takes cue from Bitcoin, starts growing like crazy

Image: Wit Olszewski/shutterstock

Ethereum, the second largest cryptocurrency by market cap (behind Bitcoin), is currently trading at $707, a 20% increase in the last 24 hours. 

This is a new record for Ethereum, which has kept pace with Bitcoin for the better part of the year but started falling behind sometime in the summer. Bitcoin’s price grew tremendously in the second part of the year. One bitcoin is currently worth $17,176. 

Ethereum’s market capitalization, according to CoinMarketCap, is currently $66.5 billion. 

Besides being a blockchain-based cryptocurrency, Ethereum has fairly little to do with Bitcoin. While Bitcoin is primarily a payment system, Ethereum is a platform for decentralized apps running on its blockchain. 

Ethereum’s platform ushered in a completely new breed of startups that raised funds via initial coin offering or ICO events. Participants exchange Ethereum for new digital tokens created on the Ethereum blockchain. ICOs raised more than $1.24 billion in the third quarter of 2017, according to CoinDesk

Most recently, Ethereum has been in the news due to a popular game called CryptoKitties, which lets users collect and trade digital kittens stored on Ethereum’s blockchain. 

Looking at price alone, Ethereum’s growth has been even more impressive than Bitcoin’s this year. The cryptocurrency was trading for about $8.3 in January; its current price represents a 8,500% increase. 

Ethereum might be rising due to recent comments by SEC chairman Jay Clayton, who published a statement on Monday warning about the dangers of ICOs, which are largely unregulated. He also said that some digital tokens traded in ICOs aren’t securities and do not fall under SEC’s jurisdiction. 

Numerous other cryptocurrencies continue yesterday’s rally, most notably, the banking-oriented Ripple, which grew by 73% in the last 24 hours and now has a market cap of $18 billion. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH, as well as a swiftly rising number of digital kittens.

Read more: http://mashable.com/2017/12/13/ethereum-700/

Bitcoin loses a quarter of its value in one day’s trading

Cryptocurrencys year-end rally fails as its investors are finally introduced to the law of financial gravity

Bitcoin lost more than a quarter of its value on Friday as an analyst warned that investors in the cryptocurrency had finally been introduced to the law of financial gravity.

In the latest illustration of bitcoins volatility, it slumped to below $11,500 at one point on Friday touching $11,159 having started the week at a record high close to $20,000 and in its biggest weekly fall since 2013. However, by 5pm London time it was trading at $12,800 as the currency endured a see-saw day.

It is a sudden reversal of bitcoins upward trajectory this year, having started 2017 at $966, and sparked warnings that investors need to beware that they are not risking a rerun of the 17th century tulip bubble.

Bitcoin trades on a number of exchanges and one, Coinbase, was reported to have suspended transactions temporarily while there was also a temporary halt of the new futures contract which allows investors to take bets on the value of the digital currency at a predetermined point in the future on the Chicago Board Options Exchange while it waited for the price to stabilised.

Two futures contracts have been launched this month, which were regarded as taking a step towards legitimising digital currencies at a time when regulators are stepping up their surveillance of products linked to the new technology.

Fridays slump was said to have been fuelled by the founder of another cryptocurrency selling his holdings. Charlie Lee, founder of Litecoin, said he was selling his holdings to avoid a conflict of interest that he faces when talking about the price of the currency which could appear to benefit him.

Jasper Lawler, head of research at London Capital Group, said this decision was probably the root-cause of the insecurity thats been felt across the cryptocurrency space.

Bitcoin investors were introduced to the law of gravity over the last 24 hours Long term holders will be used to this level of volatility but newer crypto traders could be permanently put off, said Lawler.

The exponential price rise seen recently needs new investors to sustain it. In a bubble market its known as the bigger fool theory; you can buy high as long as there is a fool willing to buy it off you even higher, he added.

Charles Hayter, founder and chief executive of industry website CryptoCompare, said: A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes. A lot of traders have been waiting for this large correction.

Sir Howard Davies, chairman of RBS, has likened investing in bitcoin to Dantes Inferno Abandon hope all ye who enter here while Jamie Dimon, the head of JP Morgan, has talked about bitcoin as being worse than tulip mania, which took place in the Netherlands in the 1630s, when bulb prices reportedly rose more than 1,000% in a month.

Analysts said the dramatic moves in the runup to the end of 2017 meant that it was difficult to predict what would happen in the new year when trading volumes are expected to rise.

Lukman Otunuga, research analyst at financial firm FXTM, said: The aggressively bearish price action witnessed this week may prompt investors to start questioning if bitcoin will recover from the selloff or remain depressed moving into the new year.

Regulators have been sounding a cautious note about bitcoin, which is not regulated and is controlled by a network of computers that update all transactions which take place on a variety of trading platforms around the world. It only exists digitally and is mined using mathematical equations.

While the Bank of England has said it is not a risk to financial stability, governor Mark Carney told MPs this week that he expected international regulators will discuss cryptocurrencies and the potential future role of central bank digital currencies.

The Financial Conduct Authority has issued warnings about initial coin offerings (ICOs) which use cryptocurrencies to raise funds for startup businesses. Investors in ICOs pay in cryptocurrencies such as bitcoin and receive a coin in return, rather than shares in the company.

Andrew Bailey, chief executive of the FCA, has said bitcoin is not a really currency but more like a commodity.

Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.

Read more: https://www.theguardian.com/technology/2017/dec/22/bitcoin-price-plunges-2000-12-hours-year-end-rally-fizzles-out

Bitcoin is a bubble, but the technology behind it could transform the world | Will Hutton

Blockchain poses as big a threat to banks as Facebook and Amazon did to conventional media firms

Humanitys earliest, truly transformative general purpose technologies were the ability to cross-fertilise plants and cross-breed animals. Suddenly, it made more sense to farm than to hunt and gather. The surge in agricultural output meant humans could do other things than worry about survival; they could live in cities. Human civilisation began.

The story of the subsequent millennia has been how some 30 general-purpose technologies of equal power, ranging from the printing press to the steam engine, have driven similar leaps in transforming our economy, our lives and our civilisation. Today, we are living through another.

Digitisation is, if anything, even more powerful: it is a meta general-purpose technology. No area of human activity will be left untouched by the translation of the physical into digital data. Already, it has created astonishing new capacities: the chances are that you are reading this on a smartphone or tablet. But the adventure is only just beginning. Everything from banking to health is about to experience similar transformations.

Last week, the growing impact of blockchain and the price of one of the crypto-currencies it underwrites bitcoin hit the front pages. Regulators stopped the US stock market trading in the Crypto Company (a tiny penny stock whose main asset is its name) after its shares jumped 2,000%, so that it briefly, and stunningly, joined the Fortune 500 with a value of $12bn. As extraordinary, when the Long Island Iced Tea Corp yet to make a profit announced that it was changing its name to Long Blockchain Corp, its shares jumped 500%. The price of bitcoin itself $1,000 at the start of the year briefly hit $19,000 per coin last week before falling to $11,000 and then recovering to $14,000 yesterday. A crazy wildness, emulating every financial bubble in history, has settled on US investors.

But bubbles dont come out of nowhere. Peoples animal spirits are sparked by something real that collectively captures their imagination: blockchain and crypto-currencies are that something. Blockchain is a foundational digital technology that rivals the internet in its potential for transformation. To explain: essentially, blocks are segregated, vast bundles of data in permanent communication with each other so that each block knows what the content is in the rest of the chain. However, only the owner of a particular block has the digital key to access it.

So what? First, the blocks are created by miners, individual algorithm writers and companies throughout the world (with a dense concentration in China), who want to add a data block to the chain. There is no government or central direction; no permission is needed to create a block and unless the law is broken, no government, regulator or police authority can close the block down.

Just as the web once promised freedom, so does blockchain. The chain is self-policing. Anyone who attempts to launch an exchange of data outside the protocols of the chain will immediately be spotted by the other blocks and the exchange will be aborted. Suddenly, the world has acquired a system for the fast, trusted exchange of vast amounts of data without intermediaries or supervision.

In the way that Facebook, Amazon, Netflix and Google (the Fangs) replaced conventional media and communication companies, that prospect faces banks, insurance companies and many public services. Our health data can be given to the whole chain for it to assess, rather than an individual doctor, and the chain can then assess and price an insurable risk. No intermediary is safe. No wonder investors are salivating at the prospect of old, analogue organisations being driven out of business and mega fortunes being made by the companies replacing them, perhaps by the Crypto Company or Long Blockchain Corp. If you had bought Facebook 13 years ago you would now be very rich.

An
An array of computers in Siberia mining for crypto-currency. Photograph: Vyacheslav Prokofyev/TASS

One of the first casualties could be banking. Already, you can present your card to make a contactless payment in a store, pub or taxi. Cash has become digitised, although the payee wants to know that a bank has validated the creditworthiness of the payer before accepting the transaction.

But blockchain changes everything. It becomes a means to transfer digital cash or crypto-currencies, of which the best known is bitcoin in vast amounts, across any border, instantaneously. The blockchain makes sure bitcoin is spent once; indeed, blockchain was first invented by the originators of bitcoin to make sure there was no fraud. No 30 limits. No credit or debit card necessary; no central bank or government needed to guarantee the value of the money. Just buy your bitcoin from an online broker and you have buying power in your digital wallet: better still, it may go up in value, giving you more buying power still. The whole analogue apparatus of the financial system could be as severely challenged as newspapers and retailers are by online reading and internet shopping.

The question is whether banks are going to reinvent themselves using the blockchain as a key tool and become crypto-currency brokers before others. The trouble is that bitcoin, like other crypto-currencies, is not a reliable way of storing value a key function of money when its price can nearly halve in a week, as it did last week. Better not to think of bitcoin as money; rather, as a commodity that uses blockchain to make settlements faster, but it cant and never can be a way for the mass of workers to get paid or make their purchases. It could take millions of transactions away from banks and badly wound them, but its unlikely to replace them.

But it could still represent a huge shock. Blockchain will administer similar shocks to insurance, healthcare and all mass payment systems. Intermediaries in the service industries will face a new world in which their routine functions will be performed by machines, programmed by artificial intelligence, while the blockchain becomes the new means to do business safely, faster and less riskily. There will be new concentrations of economic power because, like the Fangs, the blockchain economic model is more efficient and more effective the larger the network. Moving ever more economic activity into this universe, with its anonymised transactions and secret keys, may please the ultra libertarians but there remains a public interest in ensuring accountability, justice and fairness. We have, in short, to understand and shape this new world before it shapes us. There are precious few signs of that.

Read more: https://www.theguardian.com/commentisfree/2017/dec/24/bitcoin-is-a-bubble-the-technology-behind-could-transform-world

How the Winklevoss twins became the worlds first bitcoin billionaires

The entrepreneurs sued Facebook founder Mark Zuckerberg years ago, and they invested their (supposedly) meagre payouts wisely

Name: Tyler and Cameron Winklevoss.

Also known as: The Winklevii.

Age: 36 and 36.

Appearance: Handsome, enormous, similar.

Because theyre identical twins? Yup. You might remember them from The Social Network in 2010.

Vaguely. So theyre actors, are they? No. Theyre venture capitalists and entrepreneurs. In 2008, they rowed for the US at the Beijing Olympics, finishing sixth. In the film, Armie Hammer played both of them as a kind of two-man master race. As one of them put it in a memorable line of dialogue, Im 6ft 5, 220 pounds and theres two of me.

Nice. But why make a film about them? Because they were at Harvard with Mark Zuckerberg, who they later sued, claiming he stole their idea for a website that they called Harvard Connection, but which he called the Facebook. (Dramatic music.)

And did he? Steal the idea, I mean? Oh, God, thats just too complicated to get into. The Winklevii launched numerous lawsuits about it, and got about $65m (48m) worth of Facebook stock, which wasnt much at the time.

Oh, yeah. Sure. These guys probably spend $65m on lunch. In fact, they spent $11m of it on bitcoin, so theyve probably cheered up a bit.

Bitcoin. Theres a word I dont understand. Its a crypto-currency.

Theres another one. Think of it as an electronic token, which can be owned and traded. Like normal money, it has value because other people consider it valuable. The number of bitcoins in circulation is strictly controlled by a clever bit of software that nobody can hack, called the blockchain.

Thank you. And the Winklevoss twins like having lots of bitcoins, do they? Im sure they do at the moment. In March 2013, they bought about 100,000 of them, when each coin was worth roughly $120. After a strong year, and a wild couple of weeks, each bitcoin is now worth lets see $11,826.

Holy moly! Thats right. Not counting the value of their other investments, the Winklevoss twins have just become the worlds first bitcoin billionaires. Apart from Satoshi Nakamoto, bitcoins mysterious inventor, of course.

Please dont explain who he is. Well, there are lots of intriguing theories

Do say: Theyre not billionaires theyre half a billionaire each!

Dont say: Just $73bn to go and theyll catch up with Zuckerberg.

Read more: https://www.theguardian.com/technology/shortcuts/2017/dec/04/winklevoss-twins-bitcoin-billionaires-mark-zuckerberg

Bitcoin: UK and EU plan crackdown amid crime and tax evasion fears

Cryptocurrency close to record high despite news Treasury plans to end traders anonymity

The UK and other EU governments are planning a crackdown on bitcoin amid growing concerns that the digital currency is being used for money laundering and tax evasion.

The Treasury plans to regulate bitcoin and other cryptocurrencies to bring them in line with anti-money laundering and counter-terrorism financial legislation. Traders will be forced to disclose their identities, ending the anonymity that has made the currency attractive for drug dealing and other illegal activities.

Under the EU-wide plan, online platforms where bitcoins are traded will be required to carry out due diligence on customers and report suspicious transactions. The UK government is negotiating amendments to the anti-money-laundering directive to ensure firms activities are overseen by national authorities.

The Treasury said: We are working to address concerns about the use of cryptocurrencies by negotiating to bring virtual currency exchange platforms and some wallet providers within anti-money laundering and counter-terrorist financing regulation.

Q&A

What is bitcoin and is it a bad investment?

Bitcoin is the first, and the biggest, “cryptocurrency” a decentralised tradable digital asset. Whether it’s a bad investment is the $97bn question (literally, since that’s the current value of all bitcoins in existence). Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it’s hard (but not impossible) to trace a bitcoin transaction back to a physical person.

The rules are expected to come into effect in the next few months. The Treasury said digital currencies could be used to enable and facilitate cybercrime. It added: There is little current evidence of them being used to launder money, though this risk is expected to grow.

The bosses of Goldman Sachs and JP Morgan have criticised bitcoin as a vehicle to commit fraud and other crimes. But Sir Jon Cunliffe, a deputy governor of the Bank of England, last week said the digital currency was too small to pose a systemic threat to the global economy. He also cautioned that bitcoin investors needed to do their homework.

Bitcoin was trading at $11,566 on Monday. It hit a fresh record high of $11,800 on Sunday but fell to $10,554 on news of the regulatory crackdown.

zerohedge (@zerohedge)

Reason For Bitcoin Sudden Plunge Revealed: UK Plans Regulatory Crackdown On Cryptocurrencies https://t.co/xIxdg6aUkU

December 3, 2017

The Labour MP John Mann, a member of the House of Commons Treasury select committee, suggested MPs would look into the regulation of virtual currencies.

He told the Daily Telegraph: These new forms of exchange are expanding rapidly and weve got to make sure we dont get left behind thats particularly important in terms of money laundering, terrorism or pure theft.

It would be timely to have a proper look at what this means. It may be that we want speed up our use of these kinds of thing in this country, but that makes it all the more important that we dont have a regulatory lag.

Stephen Barclay, the economic secretary to the Treasury, set out the governments plans in a written parliamentary answer in October. The UK government is currently negotiating amendments to the anti-money-laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into anti-money laundering and counter-terrorist financing regulation, which will result in these firms activities being overseen by national competent authorities for these areas.

The government supports the intention behind these amendments. We expect these negotiations to conclude at EU level in late 2017 or early 2018.

Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.

Read more: https://www.theguardian.com/technology/2017/dec/04/bitcoin-uk-eu-plan-cryptocurrency-price-traders-anonymity

Why is bitcoins price so high?

Bitcoin’s price has risen stratospherically, a fact that leaves many minor players in the market with massive gains and many bigger players millionaires. But is this a bubble? Are the gains real? And are the bitcoin whales in for a sad Christmas?

First we must understand what drives bitcoin price and, in particular, this boom. The common understanding for current growth leads us back to institutional investors preparing for the forthcoming BTC futures exchanges.

The primary theory about the astonishing rally being put forward by investors on social media is that bitcoin will soon benefit from big institutional money injections via the introduction of the first BTC futures products. CBOE Global Markets and CME Group are launching new futures contracts on December 10 and December 17, allowing investors to go long or short on bitcoin. This ability makes bitcoin far more palatable to big investors who are currently flooding the market to make profits if and when the bitcoin price falls.

This move also legitimizes bitcoin in Wall Street’s eyes, an important point considering cryptocurrencies are still suspect.

Further growth comes from the “bitcoin as a store of value” crowd. This group of enthusiasts bought and held bitcoin and will not sell it at any current price. More and more bitcoin fans are entering into this group and they are driving up demand increases. In a world where people expect bitcoin to be worth $1 million soon this sort of activity – whether rational or irrational – is quite popular.

We see a common thread between these points: hype and news. All cryptocurrency movements are based on domain specific media and conversations between traders. Bitcoin traders, it can be said, are now akin to the jolly colonists selling stocks under buttonwood tree. This small but influential market is prone to panics based on a single tweet and users work together to at least bolster themselves with cries of “HODL!” The market is so nascent that there are no dark pools, no popular algorithmic trading systems, and no real way to automate your buying and selling activities (although, without futures, there was never a need to). That is all coming and at that point the market will harden itself against panics and booms. Until then we enjoy rises and dips and volatility that puts most bitcoin dilettantes off their lunch.

Ultimately new and old users are testing the limits of a system that, for a decade, has been untested. The futures market will be a big driver in growth and bust over the next few months as institutional investors begin using the currency. CoinDesk writer Omkar Godbole notes that the price should remain stable but “a pullback to $11,000 cannot be ruled out, but dips below the upward sloping 10-day MA of $11,500 are likely to be short-lived.”

“As of now, a significant correction is unlikely and could be seen only on confirmation of a bearish price-RSI divergence and/or if RSI and stochastic move lower from the overbought territory,” he wrote.

Is this dangerous? Yes, to those who are betting big on BTC. Again, I cannot tell you whether to buy or sell but the common expectation is that bitcoin raises to a set point and then fluctuates between a high and a low until the next run up. Many expect foul play.

“The current price isn’t truly driven by demand. When CME Group went live with Bitcoin futures we saw a sharp increase in demand and an increased number of users in the network,” said Matthew Unger, CEO and Founder of iComplyICO. “Now, some institutional major players are flooding the network with new cash and creating what appears to be market manipulation. Now that Bitcoin futures are available it is easy to buy into futures market first and then create a massive number of buys or sells of Bitcoin to ensure the price swings in favour of your futures contract.”

“In many jurisdictions, Bitcoin has yet to become subject to regulations, leaving an investor with no recourse or protection from fraud or market manipulation,” said Unger.

Is this a bubble? Many are disappointed in the moves, believing the rise is happening because of market manipulation. But we must remember that the real value of a cryptocurrency is not driven by price but instead is driven by utility. While bitcoin may always be the proverbial hidden pot of gold for early buyers the future of all cryptocurrencies is still being written. Just as, in 1994, no one could have predicted the prevalence and value of open source projects like Linux and Apache, no one can currently predict what bitcoin and other cryptocurrencies will do for us in the future. Until we know, it’s best to buckle up and enjoy the ride.

Read more: https://techcrunch.com/2017/12/08/why-is-bitcoins-price-so-high/

Bitcoin is a vehicle for fraudsters, warns Goldman Sachs boss

CEO Lloyd Blankfein attacks cryptocurrency after worth dives 20% in a day, stating bank will not get included till it ends up being less unpredictable

The employer of Goldman Sachs ended up being the current prominent critic of bitcoin, declaring it was a lorry to dedicate scams as the worth of the cryptocurrency plunged 20% in less than 24 hours.

Lloyd Blankfein , president of the United States financial investment bank, stated: “Something that moves 20% [over night] does not feel like a currency. It is a lorry to commit scams.”

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Bitcoin is the very first, and the most significant,”cryptocurrency “– a decentralised tradable digital possession. Whether it’s a bad financial investment is the$ 97bn concern(actually, because that’s the existing worth of all bitcoins out there). Bitcoin can just be utilized as a circulating medium and in practice has actually been much more crucial for the dark economy than it has for a lot of genuine usages. The absence of any main authority makes bitcoin extremely resistant to censorship, corruption– or policy. That suggests it has actually brought in a variety of backers, from libertarian monetarists who take pleasure in the concept of a currency without any inflation and no reserve bank, to drug dealerships who like that it’s tough(however possible)to trace a bitcoin deal back to a physical individual.

Thank you for your feedback.

His remarks came throughout another hugely unpredictable trading session for the digital currency, which plunged by over $2,000 in a 24-hour duration. Having actually topped $11,000 to reach a brand-new record high of $11,395 on Wednesday, it was up to a low of $9,000 on Thursday, prior to getting a little later on in the day.

Blankfein stated Goldman did not have to have a bitcoin technique, including the digital currency would have to be a lot less unpredictable and a lot more liquid to validate closer attention.

“When do I need to have a bitcoin technique? Not today. Life needs to be truly rosy if that is exactly what we are discussing,” he stated. “Bitcoin is not for me. A great deal of things that have actually not been for me in the previous 20 years have actually exercised, however I am not thinking that this will exercise.”

Blankfein is the current manager of a significant bank to voice scepticism about bitcoin, after JP Morgan’s president, Jamie Dimon, explained it as scams that would eventually explode and stated it was just suitable for usage by drug killers, individuals and dealerships residing in locations such as North Korea.

On Wednesday, Sir Jon Cunliffe, a deputy guv of the Bank of England, stated the digital currency was too little to position a systemic risk to the international economy. He likewise warned that bitcoin financiers required “to do their research”.

Despite the fall in bitcoin’s worth on Thursday, it stayed far greater than it was at the start of 2017, when it was trading at $998. It is the greatest gainer of all possession classes this year, triggering sceptics to state it a timeless speculative bubble that might break.

Banks and other banks stay worried about bitcoin’s early associations with cash laundering and online criminal offense. Unlike conventional currencies, bitcoin is not released or managed by a reserve bank or federal government.

bitcoin

Lee Wild, head of equity method at online trading business Interactive Investor, stated the volatility in bitcoin trading was “wild west things”.

“Cryptocurrency land’s severe volatility resembles catnip to high-risk traders, as well as standard financiers are dipping their toe. Provided there’s no rational method to value them with any precision, this stays wild west things.”

Analysts at the spread wagering company, City Index, stated: “While standard properties are experiencing traditionally low levels of volatility, the whipsaw action of the bitcoin is drawing the attention of standard traders. Existing beginners and traders are significantly interested in worry of missing out on out.”

Read more: https://www.theguardian.com/business/2017/nov/30/bitcoin-is-a-vehicle-for-fraudsters-warns-goldman-sachs-boss

Everything you wanted to know about bitcoin but were afraid to ask

The value of cryptocurrencies is rising fast. But is it sustainable? And how does it work, anyway? These questions, and many more, answered

The money has become too much to ignore and so bitcoin and cryptocurrencies are back in the news. You may have heard about Ethereum, a cryptocurrency that has risen in value by more than 2,500% over the course of 2017. Or maybe youve heard about one ofthe many smaller cryptocurrenciesthat raised hundreds of millions of dollars in the first few days they were on sale, during their initial coin offering. Or youve just spotted that bitcoin, which made headlines in 2013 for hitting a high of $200, is now worth nearly $7,000 (5,250), making a lot of people very rich in the process.

Are these cryptocurrencies simply speculative bubbles or will they actually transform our financial system? Its time to answer afew common questions about this new technology and assess whether a lot of people have just pulled off the investment of their lifetime or made a hugemistake.

What actually is bitcoin?

Bitcoin is a cryptocurrency, the first and still the biggest example of its type. At its core, its a new form of digital asset, created through a cannycombination of encryption (the same technology that protects WhatsApp from eavesdropping) and peer-to-peernetworking (which allowed music piracy to blossom in the 00s through services such asKazaa).

If you own a bitcoin, what you actually control is a secret digital key you can use to prove to anyone on the network that a certain amount of bitcoin is yours.

If you spend that bitcoin, you tell the entire network that you have transferred ownership of it and use the same key to prove that you are really you. In that respect, your key is similar to a password that allows you access to your money, except with no possibility of resetting your key if you lose it. Anyone else who manages to discover your key would gain total, irreversible control over your cash. The history of all the transactions made is a lasting record of who ownswhich bitcoin: that record is called theblockchain.

What are its advantages over money created by central banks?

Bitcoin advocates will point to a number of possible advantages, from the ability to use the blockchain to track things other than simple money to the built-in support for smart contracts, which execute automatically when certain conditions are met.

But the biggest advantage, and the only one everybody agrees on, is that bitcoin is decentralised and so extremely resistant to censorship.

Although its possible to observe a bitcoin payment in process, its not practicably possible to stop it. That makes it radically different from conventional banking, where banks can, and do, intervene to freeze accounts, vet payments for money laundering or enforce regulations. That has made it a haven for activities from cybercrime and drug trading to enabling international payments to closed economies and supporting radically off-grid living.

Bitcoin
Bitcoin ATMs in a shop in Kazan, Russia. Photograph: Yegor Aleyev/TASS

So will I need to start taking bitcoin to Tesco for my weekly shop?

Unlikely. Bitcoin has one major hurdle to being used at scale for physical transactions: payments are only confirmed once every 10 minutes (and thats when everythings working well; in practice, it can take days for confirmation to occur). This means theoretically that its possible to spend a bitcoin, then walk next door and spend exactly the same bitcoin at a second establishment. Only one of those transactions will ultimately be confirmed, leaving the other place out of pocket.

More generally, bitcoin has limited advantages for payments between big companies and normal consumers. Its no easier or quicker than any other mobile payment, it introduces considerable volatility to your daily holdings (or a sizable hedging cost to guard against swings in the value of the currency) and remains a pain to integrate with the conventional banking system.

That hasnt stopped some large companies experimenting. Microsoft accepts bitcoin for payments on its online store and PayPal offers integration for merchants to offer the cryptocurrency as a payment option.

Is it really the new gold?

Probably not, but the comparison isnt completely spurious. One of the interesting quirks of bitcoin is that there will never be more than 21m of them in existence. That figure is written into the currency at its source code and is a function of how the network rewards those people who provide the computing power (called miners because of that gold analogy) that keeps it ticking over.

Every 10 minutes, one of the miners is rewarded with a sum of bitcoin. That reward doesnt come from anyone: it is created out of thin air and added to the bitcoin wallet of the miner. Initially, that reward was 50 bitcoin, but it gets halved every four years, until, midway through the 22nd century, the last bitcoin ever will beproduced.

For a certain type of economist, that hard limit is an extremely good thing. If you believe that the key problem with the financial system over the past 100 years has been that central banks print money, creating inflation in the process, then bitcoin provides an alternative ecosystem where inflation is capped forever.

Does it really create more carbon dioxide than Ecuador?

Yup. And then some. Citibank estimates that the bitcoin network will eventually consume roughly the same amount of electricity as Japan. The problem is that the mining process is incredibly wasteful and deliberately so. Those miners are all competing to be the first to solve an arbitrarily difficult computing problem, one that takes enormous amounts of processor cycles to do and still comes down mostly to luck. The computer that does solve it first, every 10 minutes, gets a sizable reward currently in the region of 65,000 in bitcoin but every computer, not just the winner, has had to spend that processing time to do the maths.

The reason for the mining requirement, which is essentially asking a computer to continue rolling a dice until it rolls a few thousand sixes in a row, is that it ensures that no single person can dictate what happens on the network. The proof that the miner has solved the problem is what it uses to claim its reward, but it also becomes the seal that it uses to verify the last 10 minutes of transactions.

I, miner number 2357398, have solved this problem, and the answer is [extremely long string of digits]. By the authority vested in me by the network, I declare that the following list of transactions to be confirmed: and then they list every transaction that they have heard about in the last ten minutes.

From that point on, every machine on the network begins solving a new problem, set by the last miner. But, crucially, they only do so if they agree with the miners list of transactions. That means that even if you do win the race, its not enough to simply insert your own lies in the block, and declare that everyone sent you all their money, because everyone else will simply ignore you and listen to the next miner in the chain.

(The reward itself isnt really necessary to Bitcoin, but its there to ensure that miners have some reason to throw their electricity at the network. In the long-run, the hope is that voluntary transaction fees for quicker confirmations will take over that role.)Because the problem is so processor-intensive and so randomly rewarded, its prohibitively expensive in electricity and computing power to attempt to fake it. But its also a vast use of electricity, worldwide, used to do little other than satisfy an arbitrary requirement for spending money.

Is bitcoin the only cryptocurrency?

Not at all, although its still the most valuable. After bitcoins creation in 2009, a number of other cryptocurrencies sought to replicate its success by taking its free, public code and tweaking it for different purposes.

Some had a very defined goal. Filecoin aims to produce a sort of decentralised Dropbox; as well as simply telling the network that you have some Filecoins, you can tell it to store some encrypted data and pay Filecoins to whoever stores it on their computer.Why would you want that? Well, it again comes back to censorship resistance. If you store something on your Dropbox that the company doesnt like, it can just delete the data and ban you. With Filecoin, its impossible to tell whats being stored, and impossible to force the network to block any given user anyway.

Others are more nebulous. Ethereum, now the second biggest name after bitcoin, is essentially a cryptocurrency for making cryptocurrencies. Users can write smart contracts, effectively programs that can be run on the computer of any user of the network if theyre paid enough Ether tokens.Think, for instance, of offering a small sum every time someone responds to a particular signal with todays headlines: youve built a decentralised news website, then. Or you could write a small program and reward someone every time its run: that way, youve created a decentralised cloud computer.

As a category, these new cryptocurrencies are increasingly referred to as decentralised apps, or dapps, with the focus being not on the specific currency used to make the system work, but on its overall goal.It might even be best not to think of the coins that lie at their heart as currency at all: when the token could represent a services contract, a land registry record, or the right to five minutes of computing time, the analogy to pounds and dollars has rather broken down.

Mike
Mike Tyson, who launched a bitcoin wallet app in 2016. Photograph: David Becker/Getty Images

What is driving the price rise?

Thats the billion-dollar question. A few different explanations have beenoffered.

Some fans will say that the price rise is simply a correction to the natural rate of growth for bitcoin. Sure, they argue, the technology has had its booms and its busts, but if it is to become a worldwide digital currency, its value will definitely be higher than it is today. In that narrative, the price rise is simply a reflection of the growing acceptance of bitcoin.

Other fans point to the growth in novel cryptocurrencies. Because of bitcoins maturity, and its focus on finance, if you want to buy some Ether, some Filecoins or any other cryptocurrency, its usually easiest to buy bitcoin with your conventional currency and then trade bitcoin for the cryptocurrency of your choice. Naturally, then, booms in those currencies are leading to booms in bitcoin itself, as more and more people attempt to buy into the whole system.

Then theres the bubble argument. There, people argue that the majority of the price rise is due simply to people buying bitcoin in the hope that they can sell it later for a profit. A classic speculative bubble, some people will make a lot of money while others will lose everything.

So is it a bubble?

Few would argue that there isnt a lotof speculation in the cryptocurrency market. There are adverts on the London underground, and all over Instagram and Facebook, encouraging viewers to invest in cryptocurrencies and, judging by the amount of money flowing in to the ecosystem, a lot of people are taking up the offer.

At some point, those people will get flighty and try to cash out their gains. If enough do at once, the price of bitcoin will take such a tumble that it will prompt a run and well see the classic crash.

But the real question is not whether this will happen, but when and how big the crash is. Three times now, bitcoin has had boom-and-bust cycles that have seen vast amounts of value destroyed, but have still left the currency valued higher than it was before the previous boom began. (Personally, I first called bitcoin a bubble in print when one coin was worth $30. After the crash that followed, one coin was worth $120.) Its not a smooth ride up, but that doesnt mean its a total bubble.

What is a hard fork?

As the bitcoin network has grown, its hit problems. For dull, technical reasons, the network as it was initially designed struggles to deal with the amount of traffic that flows through it these days, leaving huge delays in the amount of time it takes for a transaction to be confirmed.

In a normal, centralised, business, that wouldnt be a problem: simply update the software and move on. But a bitcoin update requires convincing every single miner to accept the new software otherwise, the miners who carry on running the old version are effectively running a completely different currency from those who have updated.

This is known as a hard fork, and for the first six years of bitcoins life, it was the nightmare every developer tried to avoid. But recently, divisions among the community have become so fractious that multiple hard forks have occurred, all around how to deal with this traffic slowdown.

With names like Bitcoin Classic, Bitcoin Unlimited, and Bitcoin Gold, each claims that it is the true heir to the original vision but with each fork, the playing field becomes more crowded.

Nothing is destroyed with each fork: if you had 100 bitcoin before Bitcoin Cash split off, after the split you still had 100 bitcoin and you had 100 Bitcoin Cash. But with each fork, the playing field becomes more crowded, more confusing for newcomers, and the overall reputation for (relative) stability becomes more eroded. Another fork, SegWit2x, was due to happen in late November, but its backers decided at the last minute it didnt have enough support and called it off.

Whats the banking establishments viewof bitcoin?

It varies greatly. Some, such as JP Morgan Chase head, Jamie Dimon, are extremely dismissive of the wholething, arguing that the very properties of bitcoin that make it so appealing as a form of digital gold are why its doomed to remain a niche prospect. For Dimon and co, the volatility of its exchange rate, lack of any economic oversight to control monetary policy and absence of support from major nation states mean bitcoin cant ever truly replacepounds and dollars and is therefore a failure.

Few disagree with that conclusion, but some bankers point to other advantages of the technology. The blockchain concept, they say, might be useful in conventional banking too. Forget bitcoin itself and focus instead on the value of a distributed ledger. What if all the major banks replaced their normal book-keeping with one shared, but still closed, database? Might that help cut down on fraud and ensure a more level playing field?

And then, of course, there are the advantages of bitcoin that conventional banking cant hope to compete with – and doesnt want to. Can a shadow currency exist purely on the back of drug dealing and cybercrime? Quite possibly: both are big businesses, and neither shows any sign of going away.

Craig
Craig Wright, who claimed to be Satoshi Nakamoto, the elusive bitcoin inventor. Photograph: Mark Harrison/PA

Whats the latest on the identity of Satoshi Nakamoto?

Hes still a mystery. The pseudonymous founder of bitcoin, Nakamoto appeared out of nowhere in 2008 when he published the white paper that described how his proposed digital currency would work. While he was active in the online community around bitcoin for the first couple of years of the currencys life, he posted less and less, making his last ever post on 12 December 2010.

Since then, a lot of people have been accused by others of being the real identity behind Nakamoto. Some of those accusations have been farcical Newsweek fingered a Japanese-American man named Dorian Satoshi Nakamoto as the inventor, leading to a slow-motion car chase around LA before the man had a sushi dinner with one hand-picked reporter, during which he repeatedly referred to bitcom and begged to be left alone.

Others have been based on the background discussion around cryptocurrencies at the time: leading thinkers such as Hal Finney and NickSzabo were named, on the basis of similar areas of research. Both mendenied being Nakamoto and pointed out that they were active under their own names at the time bitcoin was launched, with Finney (who died in2014) being the currencys secondever user.

Only one person has credibly claimed to be Nakamoto himself: Australian computer scientist Craig Wright. In 2016, Wright went public and gave a number of long interviews to the BBC, GQ, the Economist and London Review of Books, in which he claimed that he would provide evidence proving he is Nakamoto. When the evidence was released, however, it was flawed, proving nothing and leading some to accuse him of scammery.

Since then, there have been no other major names linked to Nakamotos identity and no action on the bitcoin holdings linked to his account, currently worth around $7bn. It is possible the world may never know who invented bitcoin. For many in the field, thats how it should be.

Read more: https://www.theguardian.com/technology/2017/nov/11/everything-you-ever-wanted-to-know-about-bitcoin-but-were-to-afraid-to-ask-cryptocurrencies