Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum Potential As A Cryptocurrency And Its Dangers

Ethereum might revolutionize business and technology, or it may be merely a transitional platform displaced by other blockchain technologies.

The world of Ethereum, to be sure, has an element of the eccentric.

Ethereum is a technology started 24 months ago by a 21-year-old college dropout, Vitalik Buterin. Among the facts listed on his slender bio: in 2011 he won third place in a high school programing competition. Yet Ethereum is now supported by JP Morgan Chase and a bevy of tech titans. The market cap of its currency, Ether, hovers around $20 billion – down from its $37 billion cap a month ago.

There are Ethereum cryptocurrency miners who rent Boeing 747s to rush delivery of the super-charged graphic cards they need for their rigs. Ethereum is promoted by the Ethereum Enterprise Alliance, which sounds like a group Spock himself would have enjoyed.

Ethereum advocates herald it a “world computer.” This decentralized peer-to-peer platform – serving finance, retail, even the arts – will partner with cloud computing to launch technology’s next era. They claim the platform’s smart contracts (self-executing code that needs no human assistance) provides rocket fuel for business transactions.

The word Ethereum drives from the Latin root ether, meaning “the upper pure, bright air.” In olden times one inhaled ether before surgery to enter a painless dreamscape.

Funny, but Ethereum may fade like a burst of ether. The challenges it faces are wildly complex, from technical to legal to competitive. And those are just the known problems; no telling what unknown obstacles will arise.

Yet deep pockets don’t seem worried: the pile of money pouring into Ethereum is considerably larger than the Swiss Alps. (And the Swiss city of Zug is adopting an Ethereum-based ID verification system.)

So is Ethereum enabling a new era in tech, or is it a flight of fancy no stronger than a whiff of ether?

 

Ethereum and Blockchain

Ethereum is built on blockchain, a technology that reputable tech experts claim could become “bigger than cloud computing.”

A blockchain is a shared digital ledger that, in theory, cannot be hacked. Using an open source peer-to-peer network that connects countless servers worldwide, a blockchain enables cryptographically secure exchanges between network members. In a radical step forward, these secure transactions don’t require a central authority or third party verification.

Blockchain allows secure transactions for Bitcoin, the cybercurrency launched in 2009. Bitcoin is itself revolutionary: it’s a currency not backed by a nation state.

America backs the dollar; the European Union supports the Euro. But Bitcoin is supported solely by investor demand. Its value is driven by speculation, as reflected in this year’s wild price gyrations.

Yet while Bitcoin’s value shifts with the wind, the buy-sell transactions are secure – a blockchain network ensures this. (Digital wallets are hackable; but this is separate technology from blockchain).

Ethereum leverages blockchain with advanced tools like smart contracts, as mentioned above. This autonomous code collects payment in Ether, the platform’s currency.

Offering vast potential, Ethereum runs decentralized applications. Known as DApps, these programs are hosted across a broad blockchain network. When huge corporations’ servers go down – even the mighty Amazon has outages – customers suffer. But DApps are hosted on so many nodes that an outage is highly unlikely.
 

With the combined tools of smart contracts and DApps, the Ethereum platform allows a next-gen business structure: the decentralized autonomous organization (DAO). A DAO is self-running “company” or organization that can conduct business with minimal human involvement. Or a DAO extends the capability of human staffers.

Looking ahead, certainly Ethereum will enhanced by artificial intelligence, though AI is not part of Ethereum itself. So think of it: a securely-networked platform, conducting business on its own, powered by AI that allows it to adapt independently.

The Ethereum (Virtual) Goldrush

Ethereum’s ginormous potential is largely untapped. So, like the Internet in 1994, a mixed crowd of small time dreamers and big corporations is hustling to grab real estate.

In February 2017 a group of companies formed the Enterprise Ethereum Alliance. Members include Intel, Samsung, Toyota, Merck, Deloitte, and Mitsubishi. The Alliance has working groups delving into insurance, healthcare, supply chains, advertising and the legal industry.

Microsoft, an Alliance founding member, includes Ethereum in its Azure cloud platform – and Microsoft’s cloud is its most important business thrust. Azure offers Ethereum Blockchain as a Service.

These large companies will have plenty of start-ups to fuel the ecosystem.

LO3, an energy startup, uses Ethereum smart contracts to enable a market for locally generated solar energy. Golem has built a platform to rent the computing power of connected users’ machines. Basic Attention Token, created by Brendan Eich, co-founder of Mozilla, aims to disrupt online advertising.

In the arts, the DJ who scored the 2016 Grammy for Best Remixed Recording has released the first album distributed on the Ethereum platform. He released it in partnership with Ujo Music, which uses Ethereum to create what it calls a “modern music supply chain.” Ujo Music is owned by Consensys, which bills itself as a “venture production studio,” primarily based on Ethereum.

Fintech startup BAAB is constructing a banking operation. Ethlance is an employment-listing site that pays participants in Ether. Swarm City offers an ecommerce operation developed on Ethereum.

Ethereum is a perfect fit for the red hot Internet of Things sector. All those zillions of blinking devices out on the edge need smart contracts to collect payment for services. Chronicled lists an open source registry for IOT devices on the Ethereum platform.

Ethereum’s Dark Side

Not surprising given that Ethereum is a mere two years old, its founding chaos still swirls. In a May 2016 crowdsale, The DAO, a decentralized autonomous venture fund on Ethereum, raised a jaw-dropping $150 million. But – whoops! – in June 2016 The DAO was hacked and someone made off with $50 million.

In an attempt to defeat the hackers, Ethereum forked in two, with one version now called Ethereum Classic. In late 2016 there were two more forks in an effort to protect against attacks.

None of this inspires confidence. Famed investor Howard Marks, head of Oaktree Capitol, opined in a newsletter that digital currencies like Bitcoin and Ether are “nothing more than a fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it.”

Marks’s comments, however, don’t acknowledge that Ethereum is much more than a cybercurrency. Moreover, in July 2017 the Securities and Exchange Commission ruled that ICOs (initial coin offerings, the blockchain equivalent to IPOs), are securities, and so are subject to federal securities laws. This oversight should lend legitimacy to Ethereum.

Still, Ethereum faces legions of inspired hackers. A cool $32 million of Ether was heisted due to a bug in wallet.sol, a multi-signature smart contract app. During an ICO organized by startup CoinDash, hackers lifted at least $10 million.

Also troubling, the nascent technology of smart contracts offers a morass of legal questions. What if there’s a glitch in the code that causes financial loss? Beta releases of software are famous for bugs. Must a company compensate to the tune of millions for a few errant lines of code?

Do existing regulations cover all – or any – of this?

It’s likely that we’ll see court cases about Ethereum’s legal issues. Certainly there are enough uncertainties to fill a future class in law school.

Ethereum and the Great Unknown

Beyond legal and security challenges, Ethereum could at some point face an existential threat from competing technology.

The Darwinian ethic in technology winnows most sectors, sometimes to a 500-pound gorilla (like Windows on the desktop), or a few top competitors (like AWS-Azure in public cloud). Investment flocks to the winners, while the also-rans become that era’s Betamax.

Blockchain itself will certainly become a foundational building block. But whether Ethereum as a platform for blockchain’s power will thrive long term remains an open question.

First, there’s a massive rush to create new cybercurrencies – there were 900 at recent count, and probably 950 by the time you finish this sentence. Ether could get lost in the crowd.

For instance, start-up Ripple launched cybercurrency XRP, which in July 2017 saw its value leap from the prior quarter by 1,159 percent. As of mid-year 2017 its market cap runs just behind that of Ether and Bitcoin. The Bank of England did a proof of concept with Ripple, and its clients include the Royal Bank of Canada and the Mitsubishi UFJ Financial Group.

Ripple and Ethereum aren’t necessarily competitors. Yet Ripple does tout itself as “the world’s only blockchain solution for global payment,” so it clearly overlaps with Ethereum.

Most significant, Ripple’s surging success shows that this market is still new and highly unpredictable. What’s to prevent a well-funded competitor from expanding their platform so that Ethereum becomes yesterday’s news?

Amazon, which has a habit of dominating every market it enters, announced a partnership with Digital Currency Group to enable Blockchain development.

Hyperledger, an initiative of the Linux Foundation, is another leading blockchain developer. Founded in 2015, its blue chip sponsors include Intel, Accenture, Hitachi, JP Morgan Chase and Cisco. IBM, in partnership with the London Stock Exchange, is using Hyperledger to construct a trading system for shares of private stock in Italian companies.

With projects like that, you might assume that Hyperledger could displace Ethereum. But apparently the two platforms will work in synergy. In April 2017, Hyperledger approved a proposal to develop its first Ethereum-based application, the smart contract app Burrow. And Hyperledger projects will begin to include an Apache-licensed Ethereum Virtual Machine.

As Brian Behlendorf, Hyperledger’s executive director, explained in a blog post, “any positioning of the Hyperledger and Ethereum communities as competitive is incorrect.”

So the future looks promising for Ethereum. With developers on board, a vigorous startup community, VC interest and wide corporate support, it’s a reasonable bet that Ethereum will become a dominant platform.

Perhaps the most balanced view of Ethereum is that it’s an exceptionally promising seedling whose growth contains significant doubt. Yet one thing is certainly true: whatever contender becomes the leader for decentralized applications – Ethereum or a variation – will play a profound role in the future of technology.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrpreneur

 

Author: Sam Quinn

David

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

A new patent application from Mastercard suggests that the global credit card issuer is exploring ways to build refund services for cryptocurrency users.
 

The application, titled "Information Transaction Infrastructure", was published by the the U.S. Patent and Trademark Office (USPTO) on August 3, having been submitted in late January. Vladimir Goloshchuk, who according to LinkedIn previously worked as a senior analyst at Mastercard, is listed as the sole inventor.

 

The application details an infrastructure through which users could verify their identities, which would then be linked to cryptocurrency addresses they elect to disclose.
 

The text of the application points to this being most relevant for situations in which users are submitting payments to merchants from accounts on exchanges, or other services, in which their funds may be held alongside those belonging to others.

 

In the event that a merchant has to send the money back for a refund, they would send it back to an address linked to that user's account – a situation in which the exchange or custody holder might then need to know where those funds are being sourced from and why.
 

To counter this, Mastercard proposes a way for users, through a shared service, to have two kinds of wallets.
 

"The basic principle of the arrangement … is that a user of the shared wallet service has two types of wallet. Firstly, they have a 'public' wallet for on-the-chain publicly visible and verified transactions. The user will make and receive cryptocurrency payments external to the shared wallet service using a public wallet," the application explains, adding:
 

"Using this approach, the refund problem can be addressed – a payment received from the public wallet can be refunded by an equal payment back to the public wallet."
 

The application is the latest from Mastercard, which has filed several patents in the past few years. The company has also developed projects focused on blockchain tech, releasing a set of dedicated APIs last fall.

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Stan Higgings

David

Grandpa Had a Pension. This Generation Has Cryptocurrency

Grandpa Had a Pension. This Generation Has Cryptocurrency

Grandpa Had a Pension. This Generation Has Cryptocurrency.

Most readers have probably heard of Bitcoin, the digital coin that dominates the cryptocurrency market. It has gained notice both because of its skyrocketing value (from less than a cent in early 2010 to around $2,600 currently) and because it is frequently a key player in hacking- and black-market-related stories, from the looting of nearly half a billion dollars in coins from the Mt. Gox exchange in 2014 to the recent demand for payment in Bitcoin in the WannaCry ransomware attack.

But do you know Ethereum, with a total value of coins in circulation of close to $20 billion? Bitcoin Cash, which split off from the original Bitcoin on Aug. 1, lost about half its value within hours, then nearly quadrupled by the next day? Or, rounding out the Big Four, Ripple — whose currency is known as XRP — which shot up to about 40 cents by mid-May from less than a cent at the end of March? (Full disclosure: I owned but unloaded three of these currencies before writing this article.) Then there are over 800 lower-value and often creatively named coins among those listed on Coinmarketcap.com. One can buy FedoraCoin (its jaunty symbol being the Justin Timberlake-approved hat), CannabisCoin (one guess what it looks like) or, to choose one of many bringing up the rear, Quartz, currently priced around three-thousandths of a cent. (Bad news for those who bought it at just under $2 at the end of May.)

After years as a niche market for technologically sophisticated anarchists and libertarians excited about a decentralized financial network not under government control, digital coins may be on the verge of going mainstream. “It’s the wild, wild West,” said Ron Ginn, 35, founder of a private photo-sharing service called Text Event Pics in St. Augustine, Fla., who has taken all his money out of the stock market and put it into Ripple and real estate. “This is like getting to invest in the internet in the ’90s. I’m obviously very bullish, but I expect to make a couple million dollars off very little money. This is the opportunity of a lifetime. Finance is getting its internet.”

Cryptocurrency has understandable appeal to millennials who came of age during the 2008 financial crisis and are now watching the rise of antiglobalist populism threaten the stability of the international economy.
 

“There’s a low cost for entry, you don’t pay a lot of fees and millennials are the most tech-savvy,” said John Guarco, 22, a recent Duke graduate living on Staten Island who, like most of the people interviewed for this article, asked that names of the coins in which he has invested not be published for fear of being targeted by hackers.

Unlike previous generations, many of these greenhorn investors don’t have pensions or 401(k)’s, are mistrustful of socking money away in mutual funds and are fully accustomed to owning digital assets that have no concrete properties. As traditional paths to upper-middle-class stability are being blocked by debt, exorbitant housing costs and a shaky job market, these investors view cryptocurrency not only as a hedge against another Dow Jones crash, but also as the most rational — and even utopian — means of investing their money.

Sebastian Dinges, 33, the director of operations for Cheeky, a company that makes mealtime products, started his first job after college in 2007. Once he had enough money to invest in the stock market, he said, he “wanted to be risky and get a big return.” Within six months, the market crashed.

“So there’s definitely disillusionment,” he said.

The majority of Mr. Dinges’s holdings are now in cryptocurrency. His skepticism of traditional markets is shared by a number of cryptocurrency enthusiasts in his age bracket who have observed the recent political and economic upheavals.

“I do feel we’ve reached a new level where nobody knows what’s going to happen,” said Gabe Wax, 24, who runs the Rare Book Room recording studio in Brooklyn. “The things we’ve been able to rely on aren’t as reliable and we have a president who knows absolutely nothing about how the economy works, and he’s appointed people who have twisted views about how it works. That, more than anything, is what scares me.”

Mr. Wax was still in high school when the 2008 crisis unfolded, but he was paying attention to the headlines. So was Mr. Guarco, who said cryptocurrency was a “safeguard against the volatility in the rest of the world.”

“Investing in cryptocurrencies is a hedge,” he continued. “We’re entering a period of long-term deregulation and tax cuts to the wealthiest. It’s not the best recipe for stability.”

Mr. Wax also invests in cryptocurrency to shore up his finances as a freelancer in the precarious music industry.

“I constantly feel like I’m looking over the edge of a cliff,” he said. “I don’t like the idea of money just sitting in a savings account — with the way inflation works and how low interest rates are, you’re losing money. There’s less money than there’s ever been in the history of recorded music, so that gives me anxiety. It’s weird to say that owning cryptocurrency soothes that anxiety, because it’s counterintuitive, but it does.”

He is far from the only one hoping cryptocurrency will assuage his financial worries. Internet forums and Twitter accounts devoted to the subject abound with speculators who view digital coins as a lottery ticket, forecasting “moonshots” with, perhaps, irrational exuberance. For office drudges, the underemployed or those crushed by college loans, the slim chance that a $100 investment may someday reap close to $100 million — as would have happened with an investment of that amount in Bitcoin in 2010 — is too enticing to pass up.

But there are plenty of dissenters who are less sanguine about the future of cryptocurrency, arguing that we are in the midst of the biggest bubble yet, fueled by speculative trading in Japan and South Korea, and pointing to previous Bitcoin crashes as justification for their skepticism.

Nevertheless, it’s not just twentysomethings in the gig economy who are losing faith in traditional investment tools. Mr. Ginn quit working at Fidelity Investments the day before the market crash in 2008.

“It’s not investing,” he said of his old job. “It’s just sticking money somewhere. The investment advisory industry has to give out watered-down, averaged-out advice. When you get into mutual funds, you lose a lot of the ability to beat the markets.”

Tom Berg, 44, a founder of BloKtek Capital in Northbrook, Ill., which invests in digital currencies and assets, said: “I got out of the stock market years ago. “My personal opinion was I’m not going to fight for 2 or 3 percent. It’s a conservative place.” By contrast, digital currencies — his preferred term to cryptocurrency, which he says carries the stigma of black-market money laundering — have disrupted the internet and created a major opportunity for those willing to jump in early, Mr. Berg believes. “At first it was an internet of information,” he said. “Then it evolved to an internet of things — social media, I can buy this, I can sell stuff. Now it’s the internet of value.”

In his view, cryptocurrency left the “dark ages” six months ago, when it was still the domain of “a lot of people who believed in anarchy.” He thinks that cryptocurrency is a good five years from going mainstream and that the bubble will burst some time after that, at which point he will sell his assets
 

“If my landscaper ever asks me about crypto, that’s the day I get out,” he said.
 

There are some barriers to mass popularity. Investors must have enough familiarity with and trust of the internet to send money through a cryptocurrency exchange, such as Coinbase or Poloniex. Some of the exchanges also have elaborate and slow identity-verification processes, and certain states do not permit users to invest on them yet. But it’s continually getting easier, and various exchanges allow credit cards for speedy purchases.

Once one has bought digital coins, the threat of hacking remains a serious concern. Even users savvy enough to use two-factor authentication on their phones may not have the know-how to set up “cold storage,” or a system of storing coins offline (such as on a computer or dedicated piece of hardware not connected to the internet). There is no Federal Deposit Insurance Corporation insuring lost money; once it’s gone, it’s gone.

Assuming one’s money is protected, there are, of course, the standard risks of investing, amplified by the volatility of cryptocurrency. It’s common for a coin to fluctuate double-digit percentages within a day, often because of “pump-and-dump” techniques from coordinated users trying to manipulate prices in completely unregulated free markets.

For this reason, none of the investors I spoke with engage in short-term trading but instead choose, in the online parlance of cryptocurrency enthusiasts, to “hodl” (“hold on for dear life,” rather than sell off for temporary gains). Mr. Dinges and his wife recently bought a house in Los Angeles, but he didn’t use his Bitcoins to help with the renovations.

“This is a great opportunity to pull it out and put it toward fixing the house,” he said, “but the future potential is not worth it.”

Mr. Berg would agree, advising BloKtek Capital clients to “set it and forget it” and not fall prey to the temptation to make short-term transactions.

“My wife and I use it as our bank account,” he said. “Every paycheck, we put a percentage into long-term holdings. We do not expect to become rich overnight. That’s a way to become very poor in one hour.” (Though his wife works at his company, it bears mentioning here that the vast majority of cryptocurrency investors seem to be male, and their Twitter discourse tends to be less than refined, with insults often lodged at devotees of rival currencies.)

Even those in it for the long haul, however, admit to monitoring the prices compulsively, scratching the gambler’s itch.

“If I have a moment where the price has left my mind, I’ll want to reinsert it,” Mr. Wax, the record producer, said. “I check it as much as any social media. It’s become as distracting as anything else on my phone.”

As he works in the cryptocurrency world, Mr. Berg maintains an even more observant — and most likely exhausting — regimen.

“I’m always watching the markets,” he said. “The saying is, ‘Crypto never sleeps.’ It’s 24/7, it’s global, it doesn’t have a stock market, it doesn’t have a bell.

“I sleep about four hours a day.”

Beyond its potential long-term financial rewards, many holders of cryptocurrency view it as a vehicle for social change. While many coins have no value beyond serving as a potential alternative currency, or began as larks that have since been popularized by speculators (such as Dogecoin, whose logo is an internet-meme dog and which now has a market capitalization of about $200 million), others — namely Ripple and Ethereum — have meaningful real-world utility and are being adopted by banks and financial institutions.

“The financial gain is fun, but it’s really about improving the world, improving the financial system, transparency, cost, increased speed,” Mr. Ginn said. “It’s the double-sided tape for society. When financial markets collapse, the tape rips people apart and you have a system collapse. Finance got away with it in ’08; it almost took the world down, and nothing changed.” In lieu of more stringent government oversight, he believes that Ripple can help “reduce systemic risk.”

That safety-net altruism drives Yoni Saltzman, 24, who designs robotic mechanisms for aerospace and medical applications. Mr. Saltzman has holdings in four different cryptocurrencies and is working with a small team in New York to develop a digital coin it hopes to introduce within a year. “It’s not just about making money,” he said. “We like the idea of not only changing the world, but saving the world.”

This is, of course, the same vaguely idealistic rationale Silicon Valley executives routinely trot out to justify their ventures, not all of which seem especially concerned with the greater good. In the meantime, those who have boarded the crypto-train frequently proselytize to friends and family. Unsurprisingly, they have more luck with their younger peers. Mr. Guarco, the Duke graduate, has persuaded a few friends to take the plunge.

His older relatives, however, unaccustomed to coins that one can’t pluck out of a lint-filled pocket, are a harder sell.

“They usually respond, ‘Crypto-what?’” he said.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur
 

Author: Teddy Wayne

David

In Less Than 2 Days, Bitcoin Cash Becomes Third Biggest Cryptocurrency

In Less Than 2 Days, Bitcoin Cash Becomes Third Biggest Cryptocurrency

In Less Than 2 Days, Bitcoin Cash Becomes Third Biggest Cryptocurrency
 

Barely 48 hours since its spin-off from the Bitcoin blockchain, Bitcoin Cash has already surged past other cryptocurrencies to become the third-biggest in terms of market capitalization. How the currency will fare over time is still up for debate, as it still lacks support from several mining pools and major exchanges.
 

UNEXPECTED BOOM

Less than two days after splitting from the main Bitcoin network, Bitcoin Cash [BCC] now ranks third amongst the world’s most valuable cryptocoins. The budding cryptocurrency has reached a market cap of more $7.7 billion as of this writing, overtaking Ripple’s $6.7 billion market cap.

 

With a market cap of a little more than $44 billion, the original Bitcoin currency is leading the market, while Ethereum comes in second at $20.9 billion. In terms of value per coin, Bitcoin Cash is even ahead of Ethereum’s current valuation of $223.54, with a per unit value of $470.27.
 

The surge in Bitcoin Cash comes despite a lack of support from several mining pools and major exchanges like Coinbase and BitMEX. Some Coinbase users are even threatening to sue the exchange for not recognizing the currency.

 

Blockchain Global’s recently re-opened Australian Cryptocurrency Exchange, on the other hand, is confirming Bitcoin Cash trades and claims to have seen a huge demand for the currency. “We are receiving a lot of off-market orders for bitcoin cash — they’re exploding!” venture partner Sebastian Quinn-Watson told Business Insider.
 

A VOLATILE CURRENCY
 

The creation of Bitcoin Cash was the result of an ongoing debate regarding how to scale Bitcoin blockchain transactions, and experts are currently divided on how the split will ultimately play out.

 

For now, this sudden increase in value is understandable. Bitcoin Cash carries all the history of the original Bitcoin platform up until the fork on August 1, which means anyone with Bitcoin now has an equal amount of Bitcoin Cash.

 

Eventually, Bitcoin Cash should be able to stabilize itself for market exchanges, but right now, speculation is causing a surge in initial interest. “People are selling their Bitcoin positions and buying Bitcoin Cash as a proposition that it is the ‘new coin’ that has more value in the future,” explained Quinn-Watson. “It’s a bit speculative.”

 

No one knows for sure how long Bitcoin Cash can sustain this upshot. As with other digital currencies, Bitcoin Cash’s value depends mainly on how much value investors assign to it and how easily it can be used for “real-world” transactions.

 

“There’s no infrastructure available out of the box to support BCC,” Fran Strajnar, co-founder and CEO of Brave New Coin, told CNBC. “The network needs further support and infrastructure needs to be as easy as Bitcoin; otherwise, it’s over for BCC.”

 

David Ogden
Entrepreneur

 

 

Author Dom Galeon

David

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin might be dividing into two separate blockchains, but its downward slide has so far been contained, signaling confidence the biggest cryptocurrency will come out of the split unscathed.

The debate over how to scale bitcoin came to a head Tuesday as some cryptocurrency miners started using software called Bitcoin Cash and splitting a new blockchain off the old one. Blockchain is the technology used for verifying and recording digital currency transactions.

Bitcoin’s price should reflect the split by discounting the new coin, according to Charles Hayter, who runs the cryptocurrency data platform CryptoCompare. He likened it to a stock trading “ex dividend” — when the buyer isn’t entitled to collect a dividend on the shares.
 

After four days of gains, bitcoin was down $157, or 5.4 percent, to $2,729 at 11:05 a.m. in New York. Earlier in the day, the cryptocurrency fell as much as 8.4 percent, its biggest decline since July 25. Bitcoin cash futures rose 19 percent to $331, according to CoinMarketCap.com.

“The price of bitcoin has risen ahead of the split on the expectation that you’ll get that extra cash from bitcoin cash, so it should drop after the split,” Hayter said. “This has happened before in other blockchains. It’s a trading event where there’s number of hoops you have to jump though and people are trying to make a profit.”
 

Bitcoin Cash started gaining traction in the past week, just as miners fended off another split by rallying behind the scaling mechanism known as SegWit2X. Bitcoin Cash wants to increase the block size — the files in which transactions are recorded — while SegWit2X would transfer some of the operating power outside of the main blockchain. In other words, Bitcoin Cash would be one lane with bigger cars, while SegWit2X would be two lanes with smaller cars.

 

The great majority of miners and developers support bitcoin, while ViaBTC, which has almost 6 percent of bitcoin processing power, is the mining pool backing bitcoin cash.

“There’s a role for both of these coins,” said Cathie Wood, the New York-based chief investment officer at ARK Investment Management, which oversees the first exchange-traded fund with indirect exposure to bitcoin. “One is much more natural for store of value and the other one for a means of exchange.”

 

Some are less bullish. Ryan Taylor, chief executive officer of Dash Core, the sixth-biggest cryptocurrency, sees little chance that bitcoin cash will succeed in the long term.

 

“First, Bitcoin Cash has not solved scaling. It has merely kicked the can down the road with slightly larger blocks, but still lacks a credible technology to scale to massively larger numbers of users,” he said in an email. “Second, bitcoin will retain the network of integrated services that make the bitcoin network useful to businesses and consumers.”

 

Bitcoin holders are set to receive the same amount of bitcoin cash as they have in bitcoin if the exchanges and wallets they use support the new coin. Exchanges including Kraken and ViaBTC have said they’ll support both, while others like Coinbase and Poloniex have said they won’t, citing uncertainty that bitcoin cash will have lasting market value.

 

Kraken said that it’s working on crediting accounts with bitcoin cash, and that its site’s login function is down due to heavy traffic. While some miners are already using the Bitcoin Cash program, the real differentiation of the two blockchains will emerge when they mine more than 1 megabyte in one block, Hayter said. Bitcoin’s block limit is 1MB while Bitcoin Cash’s is 8MB.

“I’m not as concerned about this except for the administrative nightmare that some people are going to have to go through or have gone through already pulling out of the various exchanges that weren’t going to support it,” ARK Investment’s Wood said.

 

Bruce Fenton, founder of Atlantic Financial Inc. and a board member at the Bitcoin Foundation, said both currencies should trade heavily Tuesday.

“There are some very large holders who own bitcoin, who don’t like bitcoin and do like bitcoin cash,” he said. “But you also have a lot of people who can’t stand bitcoin cash, and as soon as they have the ability to get those coins they’re going to sell them on the market.”

“It could be a crazy day,” he said.

 

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entreprenuer

 

 

Authors: Camilo Russ & Lily Katz

David

Bitcoin Cash Futures Plunge on ViaBTC

Bitcoin Cash Futures Plunge on ViaBTC

 

The creators of Bitcoin Cash believe support for segregated witness was a mistake – and a diversion from Satoshi Nakamoto’s vision for Bitcoin – and they aim to help bitcoin scale by immediately increasing the block size from 1 MB to 8 MB.

Since Bitcoin Cash is forking the Bitcoin blockchain, most bitcoin holders will receive an equal number of bitcoin cash. As long as you control the private keys of your bitcoin wallet – or have your coins on an exchange which has pledged support for bitcoin cash – you will be able to claim your bitcoin cash. If your coins are on an exchange which opposes bitcoin cash – such as Coinbase – there is a good chance you will not receive them.

Although the UAHF has not yet been deployed, ViaBTC enabled traders to trade bitcoin cash futures (under symbol: BCC) by temporarily freezing their BTC balances on the platform.

Despite this move, ViaBTC says they are neutral and only added BCC support because they believed there would be a market for it. And indeed there was; 24-hour bitcoin cash volume surpassed $2 million on July 27, although it has since tapered to about $850 million. HitBTC later added BCC futures as well, although volume is extremely low.

 

Bitcoin Cash Price Chart from ViaBTC

Since its listing, the bitcoin cash price has plunged on ViaBTC. From July 24-25, the value of bitcoin cash futures hovered around $500. By the 26th, it had fallen to $400. Since then, it has continued to skid, falling below $300 on July 31. In the past day alone, the bitcoin cash price has declined 24% against bitcoin, bringing its present value to about $278 according to CoinMarketCap.

It’s important to remember that these are just futures. The actual bitcoin cash coins do not exist yet, so we shouldn’t extrapolate too much from the week that bitcoin cash futures were trading on ViaBTC. Right now, we have more questions than answers about the actual hard fork:

Will investors rush to sell their airdropped bitcoin cash for a quick payday, or will they take a more cautious route in case bitcoin cash gains traction?

Where will bitcoin cash debut in the market cap rankings? If the current price of its futures is any indication, it could vault to 4th place with a market cap of around $4.5 billion.

How will bitcoin cash affect the bitcoin price – and how much has it already? It is likely that bitcoin cash will pull at least some of its value from the bitcoin market cap, but how drastic and immediate will the transfer be? If the bitcoin cash price opens at $300, for instance, will the bitcoin price decline in response?

These are exciting – and anxious – times for bitcoin. Bitcoin cash already has a fairly solid wallet and exchange support, but the real test will be whether the miners get behind it. In any case, it will be extremely intriguing to watch the trajectory of the bitcoin cash over the coming weeks.

 

David Ogden
Entreprenuer

David Ogden Cryptocurrency Entrepreneur

 

 

 

Author: Josiah Wilmoth

 

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Top Cryptocurrencies Price Weekly Prediction – Next Days Will Be Rough For The Crypto Market

Top Cryptocurrencies Price Weekly Prediction – Next Days Will Be Rough For The Crypto Market

Top Cryptocurrencies Price Weekly Prediction – Next Days Will Be Rough For The Crypto Market

Not much has changed for most cryptocurrencies over the past few hours. Bitcoin is, together with Monero, the only currency in the top 10 noting a small loss, whereas most other coins have stabilized or regained some losses. Considering how the weekend is often a dreadful period for cryptocurrency trading this overall trend is rather positive. The total cryptocurrency market cap is heading toward US$90bn as well, which is a positive sign for the future.

CRYPTOCURRENCIES PREPARE FOR A STRONG WEEK

It seems evident most of the top 10 cryptocurrencies are in a good position for some notable gains over the next seven days. Even though we will see one Bitcoin hard fork materialize on August 1st, it is doubtful this will harm the price in a negative manner. Do not be mistaken in thinking Bitcoin Cash tokens come free of charge, though, as they may effectively subtract value from the actual Bitcoin price until the market stabilize.

That being said, we do see the Bitcoin price has dipped a whopping 0.19% over the past 24 hours. That in itself means very little as far as the world’s leading cryptocurrency is concerned. In fact, as long as Bitcoin doesn’t move by 5% or more over the course of 24 hours, there is absolutely nothing to be concerned about. A minuscule change such as this one means absolutely nothing.

lastest prices july

Despite the Bitcoin price “dip”, most altcoins are doing quite well. Ethereum is finally showing some life signs after weeks of declines. The 5.67% gain in the past 24 hours is quite substantial, as the price seems to be heading toward US$200 once again. It is still a far cry from US$400, though, and the currency is not out of the woods just yet. Future declines in value may still be a big part of Ethereum as there is still some funds in circulation which may be dumped across exchanges in the near future.

Other top currencies are showing small gains as well. Litecoin is up by 189%, whereas NEM, Dash, and IOTA all report gains below 1%. The big winners are XRP – up by 3.47% – as well as Stratis – up by 2.99% – and Ethereum Classic, which increased by 1.45%. The bigger question is when people will realize Ethereum Classic is the true, immutable Ethereum chain without SEC scrutiny, highly controversial ICOs, and a blockchain which can be rolled back when founders’ money is stake. Only time will tell if the ETH/ETC correlation will ever see proper momentum, as for now, all the hype and focus is still in Ethereum’s camp.

What is rather surprising is how Monero is the only top 10 currencies to note any losses, other than Bitcoin Monero lost6.41% of its value overnight, which is quite substantial. There is no real reason for this sudden downturn other than people speculating on the other currencies and trying to make a profit. Monero is still a very powerful cryptocurrency with honest developers who aim to provide anonymity to all users. Then again, a price of US$40.65 per XMR is still more than fair, all things considered.

Looking at the individual cryptocurrency market caps, it is pretty obvious Bitcoin remains the undisputed leader for some time to come. This also results in the Bitcoin Dominance Index going back above 50%, as it currently sits at 50.5%. Not too long ago, that percentage was heading toward 40% and lower, but it seems the market has finally come to its senses once again. There is no other currency capable of rivaling Bitcoin right now, that much is evident.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur
 

Author: Oliver Wood

 

David

Bitcoin Cash – Another Fork in the Road for Bitcoin

Bitcoin Cash - Another Fork in the Road for Bitcoin

Bitcoin Cash – Another Fork in the Road for Bitcoin

Last week the bitcoin community and investors breathed a sigh of relief as BIP 91 locked in and activated, signalling what we thought was a great step forward in finally resolving the long standing Bitcoin scaling debate. Confidence soared and the price recovered from a previous tumble.

And then came a twist.

In the last 72 hours, Bitcoin increasingly looks as though it is heading for a user activated hard fork (UAHF) called Bitcoin Cash. It is scheduled for the notorious date of 1 August 2017, previously earmarked as the proposed date for implementation of SegWit by way of a user activated soft fork (UASF).
 

What is Bitcoin Cash?

Bitcoin Cash is an alternative token that may come into existence as a result of a planned UAHF as mentioned above. Essentially this means that the Bitcoin blockchain may split into two competing chains.
 

The original plan for a UAHF came about from a contingency plan, proposed by Bitcoin mining company, Bitmain, who were opposed to the UASF for SegWit.

At the Future of Bitcoin Conference held in Arnhem, Netherlands from 29 June to 1 July this year, a software engineer named Amaury Sechet announced an alternative Bitcoin client (software) called Bitcoin Adjustable Blocksize Cap (Bitcoin ABC).
 

It has now been revealed that the token for this client is Bitcoin Cash.

Bitcoin Cash will differ from Bitcoin in terms of the following:

SegWit: Bitcoin Cash will not implement SegWit

Blocksize: Immediate increase from 1MB to 8MB

Coexistence: Replay and wipe out protections ensures that should the two chains continue to compete, Bitcoin Cash aims to reduce user disruption and allows for the safe existence of two chains.

How Does This Impact Your BTC Holdings?

 

In short, it does not affect your BTC balance. Instead a chain split will result in you holding an equal number of coins on both the old and new chains, however, the value of those coins will be different and probably vary dramatically as they establish themselves as either the majority or minority chain.

 

The Community Reaction

Miners

Statements released thus far by a number of mining pools, including Bitmain, have said they will continue to support SegWit2x and the original Bitcoin chain, and do not rule out supporting the Bitcoin Cash chain as well. ViaBTC, an exchange as well as a Bitcoin mining pool (ViaPool) have listed Bitcoin Cash futures and have explicitly stated their mining support for the chain.

Exchanges

Exchanges seem to be more divided than the mining pools. Some major exchanges such as Coinbase, Coinfloor and Bitstamp are not signalling any strong support for Bitcoin Cash and have left the crediting of the forked coins to their discretion. On the other hand, Bitfinex and Kraken, two other major Bitcoin exchanges, have announced that they will be crediting the forked coins to client accounts and will list the coin for trading. This could be vital to the coins survival as without any trusted exchanges listing the coin, there would be no market for it.

 

As we quickly approach 1 August 2017, a day that will long be spoken about in the Bitcoin community, the Bitcoin price will likely be volatile and an influx of opinions will generate a degree of hysteria amongst unseasoned Bitcoin investors.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur
 

Author: Adam Norrie

David

Indian Trade Survey – 97% Aware of Bitcoin, but Use of the Cryptocurrency Remains Low

Indian Trade Survey - 97% Aware of Bitcoin, but Use of the Cryptocurrency Remains Low

Indian Trade Survey – 97% Aware of Bitcoin, but Use of the Cryptocurrency Remains Low

A study by India’s market and trade body has found that while 97 percent of participants are aware of bitcoin, its use within their services remains low.

PHD Chamber of Commerce and Industry, which plays a role in India’s industrial development processes, hosted a meeting ‘Roundtable on Industry Perspective on Bitcoins: A New World of Payments and Deals,’ on Wednesday, according to News 18.

According to the report, the trade and industry body asked 223 stakeholders ranging from fabrics, electronic devices and automobile parts, to determine the impact that bitcoin was having in India.

However, results found that while 97 percent of participants are aware of the digital currency, its use within companies remains low.
 

Gopal Jiwarajka, President of the PHD Chamber of Commerce and Industry, said:

“Absence of the information about counterparties in the bitcoins transaction is a major drawback and may lead to unintentional transactions such as money laundering”.

He added that the use of bitcoin comes with huge risks and is not backed by any tangible asset, but sheer demand.

 

Calls for Regulation

This survey comes at a time when the Indian government is considering the regulation regime for bitcoin.

Even though there have been calls in the past from Indian politicians to ban bitcoin, a recent report has found that India is unlikely to declare bitcoin illegal in the country. Instead, it may be considered a security, but its regulatory fate remains uncertain.

Yesterday, it was reported that the Indian state of Karnataka is in the process of putting together a policy that focuses on digital currencies due to its rising demand. In particular, more young traders in the nation are being drawn toward bitcoin. In May, Coinsecure, an Indian bitcoin exchange, had to halt trading after recording a record number of users due to soaring interest and adoption of the currency in the country.

And yet, even though bitcoin is gaining in India there are risks that still need to be considered, according to Jiwarajka.

“Bitcoins are a fascinating instrument, however highly volatile, and susceptible to high risk makes it a vulnerable instrument”.

 

According to him, the Reserve Bank of India (RBI) should look into the idea of digital currencies and take a view on it and see whether it can become a tool for promoting a digital economy.

 

Speaking to The Hindu Business Line, he stated:

“We are not proponents of bitcoins. But, as an industry chamber, we are furthering the debate. The RBI should see whether a platform can be created with cryptocurrencies so that people-to-people and people-to-merchant transactions can happen with negligible cost”.

 

David Ogden
Entrepreneur

 

Author: Rebecca Campbell

David

Philippine Government Yet to Approve Cryptocurrency Exchange Applicants

Philippine Government Yet to Approve Cryprocurrwncy Exchange Applicants

Philippine Government Yet to Approve Cryptocurrency Exchange Applicants

Philippine business press, Businessmirror, has reported that the government has been yet to approve a single virtual currency exchange application. The Philippine central bank, Bangko Sentral ng Pilipinas, introduced regulations for virtual currencies earlier this year – which focussed heavily on creating guidelines for the operations of cryptocurrency exchanges.

The Philippine Central Bank Has Received Less Than 10 Applications For Virtual Currency Exchange Registration

The Philippine Central Bank’s Supervision and Examination Sector told Businessmirror that it has not approved any applications for entities seeking to register and establish cryptocurrency exchanges. It has also been revealed that the Bangko Sentral ng Pilipinas (BSP) has so far received less than 10 applications.

BSP representative, Chuchi Fonacier stated that increased Filipino bitcoin adoption had prompted the development of cryptocurrency regulations. “We have observed acceleration in transaction volume based on our survey of top industry players last year, prompting us to institute a regulatory framework. We have no updated statistics to date, as these will come from the regular reports that registered entities will submit to the BSP.”

The Philipines’ bitcoin regulations focus upon articulating a juridical framework for the operation of cryptocurrency exchanges, in addition to providing an inclusive regulatory apparatus for cryptocurrency-based remittance services.“We want to maximize the benefits from this technological innovation, while adequately managing the risks that come with it. Virtual currencies can help accelerate the delivery of financial services [e.g., payments and remittance] and lower the cost of transactions, which is consistent with our broader financial-inclusion agenda,” Fonacier said.

 

In Practice, the Philippines’ Cryptocurrency Regulations Appear to Be Very Limited in Scope

Officials have consistently iterated the Philippines’ government’s intention to simultaneously foster growth and innovation in the cryptocurrency industries, whilst restricting the risk of bitcoin being used for money-laundering or terrorist financing activities. “We are particularly keen on addressing money-laundering risk, that is why part of the responsibilities of a virtual-currency exchange is to comply with established anti-money laundering rules, such as know-your-client procedures, as well as proper reporting to the AMLC [Anti-Money Laundering Council].”

Despite local press describing the Philippines’ stance toward bitcoin as “a first of its kind in Asia”, the regulatory apparatus developed by the BSP appears to be limited in its scope. The regulations focus heavily on providing guidelines for the operation of virtual currency exchanges, yet have largely neglected to develop regulatory or taxation frameworks for general cryptocurrency use or mining. There has also been little effort made to promote and educate Filipino citizens about cryptocurrency, which will be vital for greater Filipino bitcoin adoption as only one in three Filipino citizens is reported to have access to the internet. Furthermore, the BSP has designed regulations so as to monitor the Filipino bitcoin economy through mandatory reporting submitted by virtual currency-based businesses – of which the BSP is yet to approve a single application.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

Author: Samuel Haig

David