Bitcoin’s Plunge in Volume Stirs Questions About Its Usage

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Earlier this year, when Bitcoin’s price fell by more than 60 percent from its record close, a less-noticed Bitcoin figure also plunged: the number of daily transactions.

There are many explanations for the fall-off in trading, from software- to news-related. What’s less understood is why the level hasn’t recovered as Bitcoin’s price made a 50 percent comeback since Feb. 5. That’s left some investors wondering whether the cryptocurrency is waning in popularity.

The average number of trades recorded daily has roughly dropped in half from the December highs and touched its lowest in two years last month, even as Bitcoin became a household name and roared back to near $11,000.

The transaction data may be bad news for Bitcoin bulls, according to Charles Morris, chief investment officer of Newscape Capital Group in London, who invests in cryptocurrencies. Trading and purchases on the Bitcoin network, which can be measured by metrics like transaction volume, is indicative of price direction, he said.

Average transaction confirmation times have tumbled — though that may be in part because the technology that underlies Bitcoin has already been adapted to address some of these delays. For example, a software enhancement known as the SegWit protocol, changing the way data is stored on the blockchain, was activated last week by Coinbase Inc., the largest U.S. cryptocurrency exchange.

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Not everyone agrees that lower volumes signal trouble for Bitcoin. It may be a healthy return to normality and signs that the market is maturing.

Should prices start rallying again, traders may well be coaxed back, according to David Drake, whose New York-based family office has more than $10 million in cryptocurrency and blockchain investments. He sees the currency soaring to $35,000 by the end of the year.

“We have a legacy of transactions being too slow and expensive, and it will take some time for people to forget,” Drake said by phone. “But they’ll come back.”

The decline in prices may itself be to blame for lower trading volumes in Bitcoin. And websites that once only allowed payment in Bitcoin now accept a much wider range of digital currencies, according to Kyle Samani, managing partner at crypto hedge fund Multicoin Capital. That makes alternative currencies more appealing than the first-mover in the space. A year ago, bitcoin’s market capitalization was about 85 percent of the total sector. It’s now around 40 percent, according to website

“Merchants, payment processors and online gambling are moving off of Bitcoin,” Samani, who has $50 million allocated to the space, said in an email. “Our Bitcoin position as a fund is small — I believe Bitcoin is in the process of failing.”

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    Bitcoin Snaps Slide as Crypto Markets Dodge Push for Regulation

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    Bitcoin rose for the first time in six days, snapping a losing streak that had helped push overall losses in digital currencies to about $500 billion, as the top U.S. market cops said they possessed all the authority needed to regulate and risk appetite returned to financial markets.

    Prices steadied as Securities and Exchange Commission Chairman Jay Clayton reiterated in a Congressional hearing that he believes every initial coin offering he’s seen is a securities sale and the agency already possesses the regulatory oversight needed for enforcement.

    “It was great for the space,” said John O’Rourke, chief executive officer of Riot Blockchain Inc., which invests in cryptocurrency and blockchain startups. “They don’t want to do anything to hamper the development of this technology.”

    Lawmakers may still need to to pass legislation that gives agencies jurisdiction over Bitcoin’s spot market and the online platforms that digital coins trade on, Clayton and Commodity Futures Trading Commission Chairman J. Christopher Giancarlo said during the hearing.

    The selloff had knocked about half a trillion dollars from digital coins since early January. That’s shaken a nascent market whose core attraction — anonymity and decentralization — is being challenged as never before by regulators.

    Tuesday’s U.S. hearings follow comments from Bank for International Settlements General Manager Agustin Carstens that there’s a “strong case” for authorities to rein in digital currencies and that central banks — along with finance ministries, tax offices and financial market regulators — should police the “digital frontier.”

    “Novel technology is not the same as better technology or better economics,” Carstens said in a speech in Frankfurt. He said Bitcoin may have been intended as an alternative payment system with no government involvement, yet it has become “a combination of a bubble, a Ponzi scheme and an environmental disaster,” in reference to its electricity use.

    Cryptocurrencies tracked by have lost more than $500 billion of market value since early January as governments clamped down, credit-card issuers halted purchases and investors grew increasingly concerned that last year’s meteoric rise in digital assets was unjustified. The selloff had coincided with a rout in global equities.

    For more on cryptocurrencies:
    Bitcoin Crash Sees Miners Fried in This Game of Chicken: Gadfly
    Bitcoin Trading Signal That Returned 1,152% Is Flashing Sell
    Cryptocurrency Rules From Congress Sought by U.S. Market Cops
    Bitcoin Selloff Among Biggest in Digital Coin’s History: Chart
    Why Bitcoin Goes Down as Well as Up (Plus What It Is): QuickTake
    Power-Hungry Crypto Mines Clean Up as Cost of Electricity Grows

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      A Classic Scam Finds New Life Stealing Bitcoin on Twitter

      A new version of a classic online scam is percolating on Twitter. And while anyone even halfway paying attention likely wouldn't fall for it, the trick has already raked in thousands of dollars of ethereum and bitcoin in less than a week.

      The scheme itself is pretty straightforward: Attackers make Twitter handles that closely mimic the verified accounts of well-known figures like Elon Musk, John McAfee, or Ethereum cofounder Vitalik Buterin. Then they respond to one of those genuine tweets, giving the appearance of having started a thread, in which they claim that they'll send a significant quantity of cryptocurrency (like 2 bitcoin) to anyone who sends a smaller amount of currency (like 0.02 bitcoin) to a particular wallet. Yup, that's it. As of publication, you can see new attempts popping up on Twitter every few minutes.

      "It's like a social media impersonation mixed with a classic Nigerian prince scam," says Crane Hassold, a threat intelligence manager at the security firm PhishLabs, who previously worked as a digital behavior analyst for the FBI. "Twitter will likely start blocking the accounts making the posts, but the level of effort needed for this scam is so low that it'll probably be a cat and mouse game, and the return on investment at the beginning will be pretty good for the actor."

      The scheme also closely resembles a popular trick in the game Eve Online, in which scammers post "send a little, get a lot" promises to collect Eve's in-game currency (known as ISK) in its Jita solar system, which acts as the commerce center. Like cryptocurrency, ISK is stored in electronic wallets for digital transactions.

      'The level of effort needed for this scam is so low that it'll probably be a cat and mouse game'

      Crane Hassold, PhishLabs

      The Twitter version, which started cropping up on February 1, doesn't appear to be a total blockbuster, since most people know to avoid "send a little, get a lot" setups. (Not to mention that Elon Musk probably wouldn't randomly give out a ton of bitcoin for no reason through Twitter. We think.) Still, many of the bitcoin and ethereum wallets the attackers set up do have a low key stream of payments coming in. For example, one wallet posted in a fake John McAfee tweet, which promised 20 bitcoin for every 0.02 received, racked up 0.184 bitcoin within hours. At current prices that's about $1,500. Not a gold rush, but also not bad for a scam that takes so little effort.

      "It’s all a statistics game. They aren’t targeting folks who need to be convinced, they’re targeting folks who will knee-jerk react," says Tinker, a researcher from the Dallas Hackers Association who was early to spot the scam. "By lessening the length of the message, it makes the scam more consumable. Combine that with impersonating famous people sending out popular tweets and the fall of bitcoin—folks are desperate to get a gain on their loss."

      As the price of cryptocurrencies has soared—and then crashed back down—scammers have capitalized on the booms and preyed on victims of the busts. The hustles are diverse, including all different types of phishing, spamming, and the notorious development of bogus initial coin offerings, but social media impersonation has a role in many of them, perhaps because so much discussion, speculation, and misinformation about cryptocurrency takes place there.

      One attempt to identify bogus accounts impersonating prominent cryptocurrency community members is the new Chrome Extension "EtherSecurityLookup." Created by web developer Harry Denley, who also makes the anti-phishing tool "EtherAddressLookup," the new extension checks Twitter accounts against a whitelist of legitimate cryptocurrency community members, and flags handles that are too similar as potentially problematic.

      Impersonation on social media is an ongoing problem, but these rackets violate the user agreements of pretty much every service, and platforms like Twitter can discourage them by playing whack-a-mole with the malicious accounts. And scams that are easy for fraudsters to run never totally go away, because it doesn't take much investment to do them as quick one-offs. "It's like any of the old school schemes," PhishLabs' Hassold says. "They're somehow still around, because there are always people who are going to fall for it."

      The Cryptocurrency Racket

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      Bitcoin is down to $9,300, but news from India might not be as bad as it seems

      Image: slavkoSereda/gettyimages

      After several short-lived drops under $10,000, it looks like the price of Bitcoin finally yielded under pressure. The largest cryptocurrency by market cap is currently trading at $8,947, down 11 percent in the last 24 hours according to CoinMarketCap

      The trigger for the price drop is likely the news from India, where finance minister Arun Jaitley expressed a largely negative view towards cryptocurrencies in his 2018 budget speech. 

      “The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system,” Jaitley said according to Fortune

      The price of Bitcoin fell significantly from its December heights of around $20,000.

      Image: coinmarketcap

      Several outlets, including Fortune and Quartz, interpreted this as a country-wide ban on Bitcoin and other cryptocurrencies. However, that’s impossible to deduct from this single quote, which merely states that the government is against two things: crypto-assets financing illegal activities, and crypto assets being used as part of the payment system. 

      In other words, Bitcoin won’t soon become legal tender in India, but there’s nothing here about an outright ban. 

      In fact, according to several outlets, Jaitley actually uttered a couple of positive words about cryptocurrencies in that same speech. According to Hindustan Times, he said the government “will explore the use of blockchain,” and Unocoin, a crypto exchange based in India, has an expanded version of that quote, in which Jaitley says the government will look into blockchain tech “proactively for ushering in digital economy.” 

      The South Korean government recently introduced more stringent cryptocurrency trading rules, but stopped short of any sort of cryptocurrency ban. Like most governments, the Indian government does not appear to be happy with illegal use of cryptocurrencies, but we’ll have to wait for an official policy to draw any finial conclusions.  

      Nevertheless, the markets reacted strongly. Top ten cryptocurrencies by market cap have all dropped double digits in the last 24 hours, with one notable exception: Ethereum. The cryptocurrency that’s also a platform for decentralized apps is currently trading at $1,133 and is actually up by 1.78 percent in the last 24 hours. 

      Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH. 

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      Bitcoin Ban Expands Across Credit Cards as Big U.S. Banks Recoil

      A growing number of big U.S. credit-card issuers are deciding they don’t want to finance a falling knife.

      JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. said they’re halting purchases of Bitcoin and other cryptocurrencies on their credit cards. JPMorgan, enacting the ban Saturday, doesn’t want the credit risk associated with the transactions, company spokeswoman Mary Jane Rogers said.

      Bank of America started declining credit card transactions with known crypto exchanges on Friday. The policy applies to all personal and business credit cards, according to a memo. It doesn’t affect debit cards, said company spokeswoman Betty Riess.

      And late Friday, Citigroup said it too will halt purchases of cryptocurrencies on its credit cards. “We will continue to review our policy as this market evolves,” company spokeswoman Jennifer Bombardier said.

      For more on cryptocurrencies, check out the podcast:

      Allowing purchases of cryptocurrencies can create big headaches for lenders, which can be left on the hook if a borrower bets wrong and can’t repay. There’s also the risk that thieves will abuse cards that were purloined or based on stolen identities, turning them into crypto hoards. Banks also are required by regulators to monitor customer transactions for signs of money laundering — which isn’t as easy once dollars are converted into digital coins.

      Bitcoin has lost more than half its value since Dec. 18, falling below $8,000 on Friday for the first time since November. The drop occurred amid escalating regulatory threats around the world, fear of price manipulation and Facebook Inc.’s ban on ads for cryptocurrencies and initial coin offerings.

      Now, cutting off card purchases could exacerbate those pressures by making it more difficult for enthusiasts to buy into the market. Capital One Financial Corp. and Discover Financial Services previously said they aren’t supporting the transactions.

      Mastercard Inc. said this week that cross-border volumes on its network — a measure of customer spending abroad — have risen 22 percent this year, fueled partly by clients using their cards to buy digital currencies. The firm warned that the trend already was beginning to slow as cryptocurrency prices fell.

      Discover Chief Executive Officer David Nelms was dismissive of financing cryptocurrency transactions during an interview last month, noting that could change depending on customer demand. For now, “it’s crooks that are trying to get money out of China or wherever,” he said of those trying to use the currencies.

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        Homeowners now accepting bitcoin in latest cryptocurrency trend

        Bitcoin for homes.
        Image: bob al-greene/mashable

        The bitcoin craze has officially jumped to real estate. 

        Despite the risky, volatile nature of cryptocurrency, homes and property across the U.S., Australia, Canada, and beyond are for sale for the unpredictable coin. Even after one bitcoin dropped from $14,000 to $11,000 in value in a matter of days, homeowners are still putting up their homes for some of that flashy money.

        It’s not just a few listings here and there. According to Bitcoin Real Estate,  a site that has been tracking the business for several years, the trend is growing more and more and not slowing down.

        At the end of 2017 a Miami condo reportedly sold for 17.7 bitcoin and actual cryptocurrency was exchanged between the buyer and seller. Not just bitcoin converted into cash, which is the more popular way to use the coin.

        Trulia spokeswoman Andrea McDonald found 80 listings on the site that reference cryptocurrency in some way. Many just note “bitcoin accepted,” but others really get into it.

        A property near Joshua Tree National Park in Southern California makes that case for paying with cryptocurrency, insisting that the property “can be a nice investment for future at a very reasonable $5,250 per acre for a total of $2.1 million or 124 bitcoins.”

        Another home in West Palm Beach, Florida, is open to buyers with bitcoin and ethereum and litecoin, but with the caveat that cryptocurrencies are constantly changing. “Owner financing possible $149,900 USD, 13 bitcoin 375 ethereum, 950 litecoin (crypto price subject to change. Inquire crypto price at time of interest),” the listing says.

        So far Trulia hasn’t officially seen a sale go down with the coin, McDonald said, but it’s probably just a matter of time.

        Redfin, another online real estate database, has also seen a crypto trend in its listings, especially in hubs like the Bay Area and Miami. The number of listings that accepted cryptocurrency jumped from 75 in December to 134 in mid-January. Some of those 134 listings have sold, but as a Redfin spokesman explained it’s unclear if cryptocurrency was used for all or a portion of the sale price.

        Some of the listings are trying so hard to initiate a cryptosale. A Florida home used all caps and asterisks to lure in investors, screaming, “**BITCOIN SALE PREFERRED! Unique opportunity to be one of the first transactions using Bitcoin.**”. Another listing for a property in Washington state, meanwhile, was generous with exclamation points: “Seller willing to accept BITCOIN!!! The new rate of cryptocurrency that [sic] taking the world by storm!” 

        Aaron Drucker, a Redfin agent in Miami, said in a phone call that including cryptocurrency in a listing gives a property more exposure. He’s also noticed that bitcoin listings tend to be luxury condos. “Earlier investors in bitcoin have made a lot of money,” he said. “They may want to convert some of that into a tangible asset.”

        “I wouldn’t recommend this for first-time home buyers.”

        But bitcoin sales aren’t for everyone. “I wouldn’t recommend this for first-time home buyers,” he added. “But if you want to buy a second home, this might be something to consider.” No matter how you look it at, Drucker said, it’s “definitely risky.”

        Others are using bitcoin and other coins for their lucrative value. A Redfin agent in San Diego helped a buyer cash out two bitcoin valued then at nearly $7,500 each to cover closing costs for a home in Carlsbad, California. 

        Carina Isentaeva, a Redfin agent in San Francisco, is in the center of the crypto-mania. In a call she said it’s all about “crypto homes” now. She had a deal that fell through because the buyer’s ICO flopped. But more surprising to Isentaeva was that the seller was willing to work with a cryptocurrency contingent sale. “You couldn’t imagine this a few years ago,” she said. “Everyone would want to see a bank statement,” not ICO filing paperwork.

        Another big issue holding up more sales with actual cryptocurrency is regulation. Just finding an escrow service that will handle a crypto sale instead of traditional cash is difficult. As Isentaeva noted, the technology is moving much faster than government and laws. So the workaround is to convert bitcoin into cash and then buy property. But eventually the tech should catch up and the transaction will be more streamlined — at least that’s what Isentaeva hopes.

        But no matter the difficulties, the crypto listings keep coming. Welcome to the neighborhood, bitcoiners.

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        Why is Bitcoins price down to two-month lows?

        Crypto investors are seeing red this week. Bitcoin plunged to two-month lows on Thursday, dipping below $9,000 for the first time since November. At the time of writing, Bitcoin had bounced back up to the $9,200 level, down from weekly highs just above $12,000. This week has seen coins across the board in the red — a sign that investors are jumping ship to fiat currencies this time instead of swapping into altcoins as we’ve seen in the recent past.

        At the time of writing, the total cryptocurrency market cap weighed in at $459 billion, down from January highs around $830 billion. It’s a contraction to be sure, but not a low for the last 30 days (that low came on January 18).

        Is this the bitter end for Bitcoin? For cryptos? Well, no, probably not. Get your head screwed on right and you’ll see that (for better or worse) many coins have seen unprecedented growth in the last six months to a year, even with Bitcoin’s price halved from holiday highs closer to $20,000. On this day last year, Bitcoin was sitting pretty at $982. At the height of December’s craze, most reasonable crypto-watchers could agree that the price was overheated and there was only one way for it to go in the short term. Still, in the thick of the current correction, Bitcoin’s longer-term growth is anyone’s guess.

        Cryptocurrency die-hards expecting the price to bounce back, even partially, will see these tanking numbers as the perfect entry point for getting in low and maximizing gains. Late speculators who got in during the mass crypto hysteria of the holiday season aren’t likely to have such steady hands, a factor that’s likely contributing to the slide.

        So what’s causing the slide to begin with? As usual, no one thing can be blamed for Bitcoin’s current downturn, but recent skittishness around a subpoena for Bitfinex and concerns around Tether — a kind of cryptocurrency counterpart to USD that matches the dollar one to one — probably factor in. Recent news that Facebook would ban ads for ICOs probably didn’t help either. And it seems like every day a new Ponzi scheme gets busted, throwing yet more doubt on the credibility of plenty of less than legit ICOs.

        Even beyond news cycle highs and lows, Bitcoin has seen a few mid-January dips before, though 2017’s Bitcoin behavior certainly broke from any seasonal patterns of the past.

        Still, these growing pains are far from surprising. As cryptocurrencies mature — assuming they continue to do so — regulatory “bad” news will become more common. Countries across the globe will continue to struggle to accommodate their citizens’ sudden interest in digital currencies — or not, in the case of India, which just decided to ban them outright. Unsurprisingly, headlines like these inspire a sense of foreboding among cryptocurrency enthusiasts wondering which country will be next to come down hard. Fear, perhaps justified fear for many speculators with plenty to lose, amplifies each new regulatory revelation. But for cryptocurrencies to grow out of the current scam-laden chaotic era, a thorough house cleaning is healthy.

        Bitcoin and other cryptocurrencies have also looked less responsive to positive news in the latter half of January compared to their relative buoyancy during December’s dizzying highs. Then, every little positive news blip seemed to push the prices higher.

        Bitcoin aside, some altcoins might just be adjusting from overheated, overhyped December highs. Ripple is a good example of this, hovering around $1 Thursday, a price that’s five times its November value and only looks bad after XRP flew a bit too close to the sun with sudden early January highs above $3. Ethereum is also faring pretty well, all things considered, down from all-time highs above $1,400 but holding most of its newly built value after doubling in price from December prices around $500.

        It’ll be interesting to see what happens as we move into next week’s Senate Banking Committee hearings on cryptocurrency. Titled “Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission,” the open hearings will air on February 6 at 10:00 Eastern time. It’s possible that the upcoming discussion in Congress has traders nervous, but ultimately variables from all over the globe combine to affect the market every day.

        For anyone considering riding out the current correction, a little historical perspective — in this case, even a few months’ worth — could go a long way.

        Disclosure: The author holds a small position in some cryptocurrencies. Regrettably, it is not enough for a Lambo.

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        50 Cent used to sell albums for Bitcoin and now he’s rich

        Bitcoin millionaire Curtis Jackson aka 50 Cent.
        Image: Dave Kotinsky/Getty Images

        If you’re looking for 50 Cent you can probably find him in the club, celebrating his new Bitcoin fortune worth over $7 million.

        Yeah. Apparently years ago while you were all snoozing on the future cryptocurrency fad, rapper 50 Cent “took a chance” on Bitcoin and started accepting the digital coin as payment for his music.

        He essentially forgot all about it, until the recent Bitcoin boom reminded him, and has since realized the move seriously paid off.

        The rapper’s unexpected riches were first reported by TMZ on Tuesday, who noted 50 Cent first started accepting Bitcoin as payment after releasing his 2014 album, “Animal Ambition.” 

        Back then the currency was valued at around $662 per Bitcoin, so people could buy an album for a teeny tiny fraction of a bitcoin.

        “Animal Ambition” reportedly earned around 700 Bitcoin in sales according to TMZ’s sources, which already uh translates to more than $400,000 in 2014 dollars.

        In 2018 Bitcoin’s been booming, and the current value of the rapper’s forgotten digital currency is around $7.7 million based on today’s Bitcoin price. Casual. 

        50 Cent addressed the news on Instagram, sharing a screenshot from the TMZ article with the caption, “Not Bad for a kid from South Side, I’m so proud of me. LOL #denofthieves”

        While Bitcoin’s had a good run the past few months, it’s been crashing recently so 50 might want to make some moves.

        Perhaps these valuable life experiences will lead to a future Bitcoin rap album: “Get Rich on Bitcoin, or Die Tryin.”

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        A Debate About Bitcoin That Was a Debate About Nothing

        James Altucher would like to remind us of the math behind cryptocurrency: Two hundred billion dollars in supply. Two hundred trillion dollars of potential demand, even more if you throw in contract law. There’s 10,000 man-years of science behind it. The investment opportunity is bigger than you think, and trust him, he knows. “More than trading, more than charts, more than, like, investing—I run a hedge fund, I’ve been a day trader, I run a bunch of hedge funds, I’ve seen every trade in the book, I’ve written the book! It’s called Trade Like a Hedge Fund. Don’t buy it, I wrote it in 2004 … I worked with Jim Rogers a long time, he hates it—but, but, what you have to ask is, not these little trading things, but what is going on? Why does bitcoin even exist? Why do cryptocurrencies even exist?” he tells a crowd of around 60 people crammed into a comedy club on New York's Upper West Side1.

        I’m in the crowd to watch Altucher, a self-help guru, author, and podcaster, participate in a debate. His pale face, framed by crooked, rimless glasses and topped by a fluffy mop of curls, is instantly recognizable from the banner ads that have stalked me around the web for the last couple of months. Altucher, according to the ads, is the “crypto-genius” who will unveil the next bitcoin. Never mind criticisms that he directs his followers to invest in risky small-cap stocks and cryptocurrencies, leading to a temporary bump in their prices followed by a sell-off. Never mind the complaints from some customers that the newsletters and research papers he hawks via publishing company Agora Financial offer obvious information that’s otherwise freely available online. (Altucher and Agora Financial CEO Doug Hill have disputed these complaints.) Tonight he’s introduced as “the bitcoin baron,” “Mr. Bitcoin,” and even “the bitcoin babe.”

        The debate topic—Which is a better investment, gold or bitcoin?—is mostly a farce, since both present opportunities for people eager to make a quick buck. (Tonight, it’s just a room full of New Yorkers, but online the supply of suckers is infinite.) Anything in the world can be twisted into a get-rich-quick scheme with the right buzzwords, charisma, and $2,000 newsletter subscriptions. And no one knows this better than James Altucher.

        An ad for James Altucher’s crypto advice.

        The crypto-genius enters the stage wearing a shiny blue boxing robe over a baggy cardigan over a baggy button-up over a white T-shirt that says “i’m fine.” He just turned 50 and bought a stake in this very comedy club. He relishes in celebrating his failures and counterintuitive rejections of things like college and 401(k)s. Lately, he’s been all-in on digital currency, an area that’s blazing with hype, greed, breathless speculation, and fear of missing out but is poorly understood by most people. Digital currencies are worth something because people value them as worth something, and Altucher’s endorsement can boost the price of the tiny crypto tokens. In that way, his predictions become self-fulfilling—his saying a token is valuable could actually make it so. For a couple of days, at least.

        Agora Financial has used Altucher’s messy hair (geniuses don’t primp!), crooked glasses (geniuses don’t care!), and distant stare (geniuses think complex thoughts!) to market his financial advice via ubiquitous banner ads. Despite looking like a stereotypical geek genius, Altucher possesses something most of them don’t—charm, wit, the ability to entertain, and the ability to sell. Just buy this newsletter subscription, and then this research report, and then this video.

        Debate opponent James Rickards, who is also a member of Agora Financial’s network of financial forecasters, dons an appropriately gold boxing robe. He is an equally cartoonish physical embodiment of his investment philosophy with a combover and navy sport coat that screams “your grandfather’s safe investment tip.”

        Altucher predicts the price of bitcoin will reach $1 million by 2020. Rickards predicts the price of an ounce of gold will go to $10,000 in the same time frame. “So, who’s right?” the opening speaker asks as a rhetorical lead-in.

        “JAMES!” someone yells from the audience, though it’s not clear which James he means. Perhaps he means both—neither prediction necessarily negates the other. Early in the debate the Jameses agree on one point: They hate banks and paper money. Altucher notes that paper money requires working with banks, which have endless fees and potential for human error every step of the way. He adds, “Probably most people in here don’t like banks. That’s why you’re here.”

        James Altucher and James Rickards on stage at Stand Up NY with moderator Cheryl Casone, a Fox Business Network anchor.

        Erin Griffith

        I notice most audience members are sporting an off-duty banker look: Blue-checked button-downs, fleece vests, expensive haircuts, and shiny dress shoes. There are a few shady-looking characters in the back (ahem, neck-tattoo guy). But I see no hoodies, no signs of stereotypical bitcoin bros. Are these (likely) bankers here because they hate the institutions that they (likely) work for? Perhaps they’re just hoping for a hot crypto investment tip. One of them begins taking notes after Altucher name-checks Zcash and Monero, two cryptocurrencies that are well-known among enthusiasts.

        The few attendees I meet are either curious lookie-loos trying to learn about bitcoin or fans of one or both Jameses. The fans consider themselves technophiles, even if they don’t work in tech. They’re also investment geeks, even if they don’t work in finance. They’re libertarians, even if they don’t use Reddit. And they’ve bought into bitcoin, even if they don’t actually own that much of it. Bitcoin is now a lifestyle brand and personal identity choice in the same way a Prius signifies environmental awareness or a New Yorker tote shows you’re an aspiring member of the intelligentsia. Getting into crypto shows you support a set of ideals: decentralization, anti-institution, revolution. The social movement is so strong that true believers don’t mind the influx of greed-driven mercenaries in the sector. They don’t even care about the silly stuff like CryptoKitties or Dogecoin, or the ridiculousness of two stock-tip newsletter writers pimping investment ideas in boxing robes. Anything that gets more people involved is a net positive.

        Altucher keeps things loose in his opening arguments. We’re in a comedy club, after all. His comedy club. Why not start with a little crowd work? Who here owns bitcoin? Hands fly up, but not every hand, and Altucher zooms in on a woman named Beverly. “So, you’re the only woman in this place who owns a bitcoin. Bitcoin is usually owned by men,” he says, which isn’t true of the bitcoin community, much less of the hands in the air in front of him. He does not seem concerned about the tech industry’s gender disparity or how such comments may perpetuate it.

        He puts us at ease by ensuring he won’t get too technical. He’s not here to talk about economics or technology, he says, because “economics is boring, and technology is even more boring.” Buzzwords connect to pat narrative arcs, which connect to punch lines, which connect to applause lines. Everything he says feels Tweetable, except when I go to do so, I realize I’m not exactly sure what it means. Did I miss a word? It certainly sounded good. Altucher delivers a flip explanation of the history of gold as a currency, stating that around 5,000 BC, humans turned gold into coins, which meant gold was no longer a necessary form of currency. By the following year, he says, “it was a rock.”

        “It’s a metal, actually,” Rickards quips. Details, details.

        The audience laughs when Altucher tells a story about the time he used bitcoin to pay for lap dances at his bachelor party. (At current prices, the bitcoin he used to pay for lap dances would be worth $17 million, so the point is: Don’t worry about volatility.) He gets some laughs noting that the only use for lawyers in the future will be to deal with DUIs. He says his two teenage daughters are “somewhat below average,” adding, “on a scale of zero to 10, [they’re] maybe a three or four in intelligence. And yes, they use digital currencies, but they don’t have the slightest clue about bitcoin. I can explain to them whatever which way, they’re like, ‘Dad, just, we’re too stupid to listen to you.’”

        Altucher and Rickards banter over the history of bartering, whether the US government can use cryptocurrency to pay off Afghan warlords, and whether bitcoin mining is a form of the rich stealing from the poor. Rickards jokes that he “needs a net to scoop up all the red herrings” that Altucher released, before declaring bitcoin is a “fraud, a Ponzi, and a bubble all at the same time” and touting 2 billion views on a related Facebook video of his. (Rickards hinted that he is a fan of other cryptocurrencies. Indeed, last week he hawked “the $0.70 crypto that could make you rich in 2018” in a members-only online group called Rickards’ Crypto Profits.)

        After the debate, the comedy club’s cofounder shows me a photo of himself with Tracy Morgan, taken at the bar minutes earlier. He tells me that while the rest of us were hitting our two-drink minimums listening to a couple of middle-aged internet personalities promote themselves and their investment tips, Morgan stopped by, saw it wasn’t a normal standup night, and held court at the tiny bar for 30 minutes. Suddenly all the attraction and revulsion and fascination I’ve felt toward the world of cryptocurrencies in recent months makes me dizzy. There’s only one conclusion to draw, and it’s that life is a series of sexist jokes and fake boxing matches, then you die. HODL on for dear life.


        • Startups that aren't growing as rapidly as hoped are invoking blockchains to woo attention and investors.
        • Venture-capital firms fear missing out on cryptocurrencies, but many of their partners fear getting in.
        • A Twitter joke by WIRED writer Erin Griffith led to the creation of a browser extension that adds the words "on the blockchain" to the end of every sentence.

        1 CORRECTION: This story originally stated that the comedy club that hosted the debate was on New York City's Upper East Side. It is on the Upper West Side.

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        Bitcoin could change the world by making governments change money

        Image: Bob Al Green/Mashable

        Russia is working on a government-run cryptocurrency. And they’re not alone. 

        Governments around the world — including the U.S., China, Japan, Canada, Venezuela, Estonia, Sweden, and Uruguay — are either actively working on some form of digital currency or exploring the topic. 

        But don’t expect a bunch of bitcoin clones. Governments have very different priorities, and decentralization — a main feature of most cryptocurrenices including bitcoin — doesn’t tend to be one of them. In fact, government digital currencies could herald a new era of centralization, posing serious questions about privacy and the viability of true cryptocurrencies like bitcoin. 

        There’s important differences between true cryptocurrencies and what are generally called “centralized digital currencies” (CDCs). One of the main qualities — if not the central feature — of cryptocurrencies is that they’re decentralized. This means no single person, government, company, or group can control them. CDCs, on the other hand, are on the opposite end of the spectrum. They are as centralized as can be.

        That centralization could provide governments with some world-changing capabilities — some good, some rather scary. There’s the upside of giving people a secure and cheap way to buy thing. There’s also serious privacy concerns, especially when talking about authoritarian countries. 

        Russia has, in particular, floated some interesting ideas around why it would want to introduce some form of government-led cryptocurrency. Details are scant, and it’s not clear if the “cryptoruble” would be a true cryptocurrency using decentralized ledger technology or if it could be mined. What is clear, however, is that Russia is interested in some sort of digital currency to get around international sanctions and possibly even allow the government to tax its sizable black markets.

        “There have been two reactions from central governments. One is to try to figure out how to regulate the darn things, and the other is, do we figure out how to make our own?” said Paul Triolo, head of geotechnology at the Eurasia Group. “2017 was sort of a watershed year in that 2017 saw the regulatory response globally really pick up.”

        Why now?

        The technology behind digital cash isn’t new in concept of execution. Long before Venmo had become a verb, companies were working toward entirely digital transactions. 

        Adoption wasn’t terribly quick or widespread. Nor were the systems that emerged to service digital transactions terribly efficient or cheap. Governments and banks weren’t in any hurry to adopt this tech since nobody else was either.

        Then bitcoin happened. The explosion of BTC and other cryptocurrencies have forced governments to take a look at just what these technologies mean for the future of commerce, finance, and centralized authority over the creation and movement of money.

        Jacob Eliosoff, founder of cryptocurrency investment fund Calibrated Markets, said governments are now seeing the benefits of this technology but are also going to need time to understand it.

        “In principle there could be various benefits: the simple efficiency of instant global electronic transactions, preventing counterfeiting, better record-keeping and monitoring of transactions, no printing press, etc,” Eliosoff wrote in an email. “But also right now some governments, like some companies, are probably just dazzled by the hype and making stuff up so as not to get left behind.”

        There’s also some larger conceptual issues at play here. Bitcoin has proven that it’s possible to create money outside of government-based financial systems. Ole Bjerg, an associate professor in at Copenhagen Business School, said this is forcing governments and central banks to ask tough questions about their role in the economies of the future.

        “What bitcoin has done is it’s sort of made a lot of people aware that you can actually create money in new ways,” Bjerg said.

        By many definitions, digital currencies backed, issued, and tracked by a government or central bank would not be a cryptocurrency. 

        “To many of us Bitcoiners, the essence of ‘crypto’ is decentralization: a currency that no person or institution owns or controls, so no one can take it from you or prevent you from sending it, or print it at will,” Eliosoff wrote. “Countries like Denmark have been moving towards cashless societies since before Bitcoin existed, but of course those are still centrally managed currencies. You don’t have to be against fiat per se (I’m not) to see it as fundamentally different from cryptocurrencies.”

        To some, the question of what is and isn’t a cryptocurrency is besides the point. The mechanism is just a detail. 

        “The main point is you can have digital money which is a liability with a central bank rather than a private bank. Whether you do that with a blockchain or you do it with a database doesn’t make much of a difference,” Bjerg said.

        Why should I care?

        There’s a very simple reason a government digital currency could be good for you. 

        It’ll save you money.

        Andrew Levin, a professor of economics at Dartmouth College, said digital currencies could cut out middlemen and banks, meaning fewer people taking a cut out of transactions.

        “One important reason for trying to move ahead with a central bank digital currency is to create a payment system that is essentially free for consumers and businesses,” Levin said.

        If you have a debit card, there’s a good chance it says some combination of MasterCard, Visa, Bank of America, Wells Fargo, or any variety of other companies. They’re not providing that service out of the goodness of their hearts. They make money when you use that card.

        Under the new system, you’d pay with money directly held by the government (or really a country’s central bank) through what some call a “Centralized Digital Currency,” or CDC.

        With a CDC, you’d have a card but it wouldn’t say any of those companies. It would say probably say “U.S. Federal Reserve” — the U.S. central bank. It wouldn’t take any cut, and the U.S. government is much less likely than a bank to go under and take your cash with it.

        A CDC, then, is the functional equivalent to using cash, with one big caveat that we’ll get to shortly.

        Even the economists are getting excited

        There’s a good reason that economists have been getting excited about CDCs. 

        Governments control the economy through central banks. In the U.S., that’s the Federal Reserve a.k.a the Fed. The Fed controls the economy through a relatively arcane system in which it tweaks interest rates to control the money supply. It’s a multi-step process that attempts to influence spending and saving behavior by consumers and businesses. But since financial resources are held by private institutions, the ultimate effects of the Fed’s decisions are filtered through these other organizations. 

        The major upside of a CDC is that central banks would be able to directly change the interest rates on the currency, meaning it’s incentives for saving and spending would pack a much bigger punch. And not just that, it could easily turn the interest rate negative — something central banks can’t really do now — when it really needed to stimulate growth. 

        After the financial crisis and the ensuing global economic slowdown, these measures did not prove terribly effective at stimulating growth. Central banks did what they could, lowering interest rates about as much as they could in order to try to goose their economies. 

        Giving central banks the ability to aggressively push the economy through control of a digital currency would make a major difference in peoples’ lives, Levin said.

        “This has been a very long slow painful recovery that’s been very painful for lots of normal households. Normal American families have really suffered for the last ten years and part of the reason for that is that the Federal Reserve was constrained,” he said. 

        Imagine that the financial crisis was just a speed bump instead of a giant crater that the U.S. (and really the world) is just barely climbing out of. That’s the kind of promise that some economists think CDCs could deliver on.

        OK, so what are the downsides?

        There’s two main drawbacks here.

        The first is that the promise of decentralization isn’t just negated by a central digital currency; a CDC is even more centralized than the existing system. For people who believe that decentralization is a good thing that will free people from dependence on governments and big companies, 

        The other main drawback is privacy. Cash is anonymous, giving people a certain amount of freedom to spend money without having to worry about explaining their actions.

        A CDC would conceivably remove any and all privacy from your spending (at least as far as hiding it from the government). 

        “This sounds glib, but many of us would argue that untraceable transactions are actually an important civil liberty which cryptocurrency enables, but digital fiat impairs,” Eliosoff wrote.

        Russia’s nefarious goals for its cryptocurrencies point to how governments around the world could start embracing digital currencies for their own ends both good and bad. Meanwhile, countries like Russia and China — two of the countries most aggressively pursuing their own digital currencies — are the ones cracking down hardest on bitcoin and other distributed currencies.

        Cache money

        In the near future, not much will change. Governments don’t tend to move quickly. There will be any number of tests to see how this could work, as some countries have done with ideas like a minimum basic income

        They could, however, be forced to adapt if cryptocurrencies begin to offer a real, viable alternative to the existing financial system. There’s plenty of blockchain enthusiasts who believe that’s just a matter of time, though it could be a while.

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