Wednesday, June 28, 2017

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Blog entries and news about Bitcoin and other cryptocurrencies.

Subcategories from this category: Bitcoin Minute

World Bitcoin Network

When bitcoin was first born in 2009, the cyber-currency was expressly set up to avoid the pitfalls of a Federal Reserve or the pricey bailouts given to the failing banks.
Bitcoin's novelty was based on the fact that it was entirely decentralized.
But there's no question that an overarching, indeed, central player has emerged.
And Mt Gox, the first major exchange of bitcoins is that entity.
In fact it is near impossible to follow bitcoins without hearing about this Japanese based exchange.
And while the relationship has long been rosy, 2013 has seen trouble in paradise for Mt Gox.
Suddenly, the elephant in the room with respect to bitcoin success is the company's liquidity or possible shady dealings.
Originally set up to exchange magic cards that can sell for as much as bitcoins, Mt Gox now is accused of selling nothing more than magic vapors.
As Forbes' recent article suggests, bitcoin has become a Roach Motel for your dollars.
They check in, but they don't check out.
Online sources concur.
Revealing no record of Mt Gox paying out in dollars to anyone.
Some users have even posted rewards for any proof of US Dollar payouts without much success.
So while it is easy to buy bitcoins from the exchange, even easy to send the bitcoins outside their system Mt Gox seems unwilling to sell them.
Is it a question of liquidity, fraud or government regulation?
It is not clear.
But one thing is sure, Bitcoin has been the focus of a number of US Federal investigations in recent months, with nearly 5 million seized in perceived actions of money laundering.
So how does this Magic firm stay in business?
How does it still capture the majority of transactions?
Well, Mt Gox sells bitcoins at the highest prices, often TEN to FIFTEEN dollars more than Bitstamp.
Any amateur in arbitrage sees this difference as enormous potential, but when they are lured in, its over.
Their cash is stuck.
Today, most savvy investors avoid the Mt Gox entirely. And as questions swirl about their involvement in illegal arbitrage, potentially worth millions of dollars, the exchange has seen its numbers of transactions fall.
Sure US regulators have pushed them around, but the bigger issues with Mt Gox are now about transparency and trust.
Its high time the Roach Motel cleaned house.

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World Bitcoin Network

As the average value of bitcoin for the week approaches new highs of 140 dollars, once again we are seeing a new round of Tulip comparisons sprouting on the net.
And the concern is fair.
In 1637 Holland's fancy colored tulips became all the rage, And in just a couple months, the price multiplied.
At the height of this tulip mania, one tulip could be exchanged for two tuns of butter, four oxen, eight adult pigs or even a mug of silver.
But on February 3rd 1637, the tulip market had an historic collapse.
Many refer to this Tulip Mania as the first economic bubble, and as such, the story is often tossed into the discussion when the prices of bitcoins surge up.
But many pundits suggest that this a not a valid comparison.
Indeed they claim that Bitcoin is more like Apple Computer or the Internet because of the array of services it offers. Others suggest that bitcoin's services could prove to be even more valuable than Apple and the Internet combined.
So while tulips can be replaced with roses, vases or paintings, what exactly that they claim bitcoin offers?
First, Bitcoin's near zero transaction costs could not only revolutionize international remittances but also free stores from hefty credit card fees.
This offers a savings to consumers of hundreds of billions of dollars a year.
Second: Money can be sent easily without the nightmares of chargebacks, credit card fraud, falsified checks and bank limits.
Third: Bitcoin's unlimited and free accounts, give hi-tech financial access to the world's un-banked.
Highlighted recently by a number of homeless men with a bitcoin account.
This service could improve the lives of over a billion people.
Finally: bitcoin offers to be the first truly un-inflatable currency in history, indeed becoming gold on steroids.
New Euros, Yen and Dollars are printed daily, even gold is still being pulled out of the ground or could eventually be synthesized.
But Bitcoin's limit is fixed, capping itself at 21 million total coins.
Because of all of this, one recent article suggested that even wary banks could increase profits by adopting bitcoin.
Hmm.
While no one can predict the value of a currency, and bitcoins could still prove to be a dangerous bubble, one thing is clear if bitcoin can provide all that its technology promises, well, real services have real prices.
And hundreds of billions of dollars of services could make one pretty tulip indeed.

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World Bitcoin Network

Hello, this is James D'Angelo and welcome to the bitcoin minute.
For those who follow the motto of Groucho Marx and refuse to join clubs that want you as a member, a new form of ultra-exclusivity might suit you just fine.
Just like the back alley club with a confusing address, Bitcoin is a currency for insiders — with a fixed hard limit of 21 million coins.
And just as bitcoin is exploding with popularity, it is also in the tail end of production. Over half of all future coins have already been put into circulation.
Suddenly that 21 million limit on coins seems awfully small, especially, given that bitcoin is an international currency. Providing bitcoins for all 7 billion people on earth is simply impossible.
Instead, we are looking at an average of around 1 bitcoin for every 333 people! Exclusive indeed. Yet, even this number is worse than one might think, because huge quantities of the online currency have already been snapped up by small groups and individuals.
For example, just a few months ago, the Facebook twins disclosed holdings of 108,000 bitcoins. Enough for them to consider starting a fund on wall street.
Worse, it has been rumored that an early investor, possibly even the founder himself, has stockpiled more than 1 million bitcoins. This total is currently worth well over a hundred million dollars, but worse, it is also one twentieth of the world's supply.
Given all this, it seems likely that when the chips fall, a majority of the bitcoins will end up in very few hands indeed.

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World Bitcoin Network

Today in a rush of press, the US-based bitcoin exchange Tradehill has suspended all trading. The company has been under fire recently as the federal regulators are cracking down on bitcoin based businesses, issuing dozens of subpoenas in recent weeks and grumbling about bitcoins usage in shading dealings.
Unlike Coinbase, another US-based exchange, Tradehill is particularly vulnerable because their exchange allows you to keep a balance of US Dollars in your account as well.
And for regulators, that difference is the big no no.
Coinbase does things differently, filling its coffers with nothing but bitcoins opting instead to transfer dollars immediately into and out of a users traditional and FDIC approved bank. But will that keep them safe in the months of ahead?
The Tradehill suspension comes just a couple months after the Federal Regulators pushed bitcoin's largest exchange Mt. Gox into temporary submission.
And even after it has resumed business US Dollar payouts have been near zero.
Still, the US government is smart to move slowly. Whether they like it or not, many realize that Bitcoin could signal a fundamental sea change in the way Americans interact with money.
And it seems likely that whether bitcoin lives or dies, the concepts put forth by anonymous founder Satoshi Nakamoto will continue to create change in the financial sector.
In fact, just this week, US regulators received a number of such cautions first hand, via the bitcoin foundation.
In a closed door meeting in Washington this group of self-appointed Bitcoin aficionados made it clear that if the Federal Regulators come down too tough on bitcoin these young exchanges and businesses will likely flee to places like Germany or Canada.
With the government's approval over issues of banking and privacy at an all time low, it would seem improbable that federal regulators wouldn't offer an olive branch to this fledgling currency. But rewriting the books to accommodate change is never government's best suit.
And, today, of course, bitcoin is a minor player. But many believe that like travel agencies, maps, phone service, and traditional, bitcoin will replace traditional currency and in the process usher forth trillions of dollars of business. The question that remains is whether this windfall will grown in the US or set up shop overseas.

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World Bitcoin Network

This Papa John's pizza might look like an ordinary delivery, but it seems likely to go down in history as the most expensive food of all time. And the date it was purchased, May 22nd 2010 could well mark the first shot fired in a major revolution in the history of economics.
This is because this pizza was bought for bitcoins, and it is likely the first ever transaction ever made with the fledgling currency, which came to life in 2009.
Further when programmer Laszlo Hanyecz ordered the pizza in Jacksonville, Florida, three years ago, he purchased it with 10,000 bitcoins. At today's exchange rate of approximately 120 dollars to one bitcoin that amounts to a current day price for the pizza of 1 million 2 hundred thousand dollars.
For historians, Laszlo's initial exchange can still be seen today on the bitcoin forum. He wrote:
"I'll pay 10,000 bitcoins for a couple of pizzas.. like maybe 2 large ones so I have some left over for the next day. I like having left over pizza to nibble on later."
It seems impossible to imagine these days, as prices for bitcoins have multiplied in value over 50 thousand times. This was recently highlighted by the bitcoin purchase of a Porsche in Austin Texas. The price here, just 300 bitcoins.
Clearly, this leads us to a greater question. How far will the bitcoins value soar. An answer that no one knows. Yet some pundits suggest that bitcoins could swarm into the $60 trillion dollar international space for transactional currency.
Indeed if bitcoin even grabs a 1% share of this market, its value can be calculated to climb to a phenomenal 100 thousand dollars per coin. At that point, the pizza would be worth exactly 1 billion dollars. Too much? Its not clear. Laszlo ate well that night, and launched the once abstract coin into the world for the first time as a currency.

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