Top 3 Reasons Not to Use an Exchange Wallet to Participate in a Cryptocurrency ICO

Top 3 Reasons Not to Use an Exchange Wallet to Participate in a Cryptocurrency ICO

Top 3 Reasons Not to Use an Exchange Wallet to Participate in a Cryptocurrency ICO

Even though cryptocurrency ICOs have been going on for quite some time now, a lot of basic questions continue to show up. It appears there is a lot of confusion as to why one should never send funds to an ICO from their exchange wallet directly. There are several good reasons as to why this should not be done, though, as we outline below.

3. TRANSACTION DELAYS CAN COST MONEY

Contrary to what some people may think, exchange wallets do not always send out withdrawals right away. In some cases, it can take an hour or longer until your withdrawal is effectively processed. Depending on which cryptocurrency we are talking about, it may take even longer to get the necessary network confirmations. This is anything but a fun experience, especially when it comes to dealing with a cryptocurrency ICO.

These ICOs often provide early investors with some sort of a bonus. Having to wait until the exchange sends out your funds can result in buying less ICO tokens than initially anticipated. It is not something anyone wants to deal with. Even if an ICO is scheduled to last multiple days, there is no reason not to transfer funds to your own wallet first before participating in a crowdsale.

2. AN EXCHANGE WALLET IS NOT YOUR WALLET

It may be hard for novice users to understand this principle, but a cryptocurrency wallet is not like a bank account. With a bank account, you rely on a third-party service provider to safeguard your funds. That is exactly what exchange wallets are, yet they do not let users spend their funds as they want. You always need “permission” from the exchange wallet service provider to move funds around, which is both annoying and risky.

There is a big difference between an exchange wallet and a private wallet. With a private wallet, you are the only one controlling the wallet address and its associated private key. An exchange wallet is generated on your behalf, yet you have no control over it whatsoever. Although you can freely use an exchange wallet, it is not your digital property by any means. Unless you own its private key, it’s not yours, nor is any of the money associated with it.

1. YOU WON’T GET YOUR TOKENS (RIGHT AWAY)

Perhaps the biggest complication that arises when using an exchange wallet is how the purchased ICO tokens are not yours to control by any means. In most cases, a cryptocurrency ICO smart contract will send money back to the address the deposit was made from. If that wallet is an exchange wallet, the exchange is the actual owner of the tokens you purchased using their wallet. That is a rather disturbing way of buying ICO tokens, yet the end user cannot claim ownership of the tokens, as they do not own the wallet’s private key.

Granted, in some cases, exchanges will eventually support these ICO tokens and return the purchased amount to the customer. However, one has to keep in mind they have no legal obligation to do so by any means. If you send money to a cryptocurrency ICO address from a wallet, you do not fully control as the sole owner, it is your own fault. All ICOs clearly warn users not to send funds from an exchange to avoid any complications.

 

David Ogden
Entrepreneur

 

Author: JP Buntinx

David

There Will Be No Bubble for Bitcoin and Ethereum, Here’s Why

By Joshua Althauser
https://cointelegraph.com/news/there-will-be-no-bubble-for-bitcoin-and-ethereum-heres-why

There Will Be No Bubble for Bitcoin and Ethereum, Here's Why

Tech entrepreneur Mark Cuban has recently stated that Bitcoin is facing a bubble. However, Daniel M. Harrison, the CEO of DMH&CO and managing partner of Monkey Capital, reveals that such a thing is impossible due to the market-influencing capabilities of Bitcoin and Ethereum.

Market bipolarity

The main factor that makes a digital bubble impossible is market bipolarity. For many people, market bipolarity is confusing but it can be distilled in a few important and understandable viewpoints. Apparently, market bipolarity is directly affected by George Soros’ “theory of reflexivity.”

According to George Soros, market conditions are not influenced by equilibrium. Rather, they are “reflexive” due to the synchronization of two functions: cognitive and manipulative function. The cognitive function is a neutral thinking base – this is where economic participants assess facts for what they are.

The manipulative function, on the other hand, turns one fact (or a couple of facts) in order to gain an advantage. Once the cognitive mind is affected by the manipulative mind, the neutrality will be “painted” in a different light it becomes a manipulated fact.

Therefore, markets reflect the view and perspective of participants, not the full scope of economics.

The situation can be represented in two ways:

  • Manipulative Cognitive = Reflexive
  • Manipulative + Cognitive = Equilibrium

The aforementioned equations show that a manipulative thinking pattern is the usual baseline and not a cognitive function. This shows the reflexive nature of all markets one of the clear indicators that Bitcoin and Ethereum are far from experiencing a digital bubble.

Artificial vs. Natural

More importantly, Ethereum and Bitcoin markets are influenced by two thinkers: artificial and natural. Artificial pertains to the Blockchain AI and natural is all about human intervention. Many experts think that Blockchain is adopting an "economic mindset."

If markets with manipulative and cognitive participants are suddenly annexed, it will always result in reflexivity or positive feedback loops. In this case, digital markets are bound by reflexivity or states of reflexivity. This is a self-perpetuating situation that can go on for many years.

It’s also important to know that artificial thinkers are the “igniters” of self-perpetuating reflexivity. With AI (Blockchain), digital markets will continue to thrive, leading to fluctuating values of Bitcoin and Ethereum. Market bipolarity will always be constant.

Through market bipolarity, any episode of a digital bubble is canceled out. The whole Blockchain system will never return to its “roots” but it will continue evolving. Price valuations, on the other hand, may remain grounded and directed by economic factors.

Innovation or its application in various sectors is also another important factor that shapes Blockchain technology’s tenacity and ability to survive a “bubble.”

David

Why Hydro-Politics Will Shape The 21st Century

It's been called the 'next oil'. In the coming decades, the supply of water has the potential to influence geopolitics, diplomacy and even conflict.

  • By Bryan Lufkin 16 June 2017

Ecopol Project - Portland State University: Water Wars

The 2008 James Bond film Quantum of Solace pits 007 against an evil criminal syndicate bent on global domination. Sounds par for the course… but this particular network of baddies isn’t using lasers or missiles to cause havoc.

Grand Challenges

In this special series, Future Now takes a close look at the biggest, most important issues we face in the 21st Century.

For two months, we'll bring you insight from leading scientists, technologists, entrepreneurs and influencers to help you make sense of the challenges we face in today's rapidly evolving world.

No, the Quantum organisation has a uniquely dastardly plan: seizing control of Bolivia’s water supply.

While the evil syndicate’s role in the film might not be entirely realistic, this piece of fiction does raise a scenario that is worth considering seriously: what would happen if a country’s water supply was cut off? What would be the global fallout?

Think about it: sure, we need water to survive. But it also fuels a country’s commerce, trade, innovation and economic success. This has been the case for time immemorial, from the Nile in Ancient Egypt to the Amazon in the Brazilian rainforest.

While bodies of water typically help form natural borders of countries, several nations tend to share access to rivers or lakes – the Nile runs through nearly a dozen countries alone, for example. Given how conflict-prone humankind is, it’s surprising there haven't been more dust-ups of a “hydro-political” nature.

 

Water politics

Bodies of water have always formed natural boundaries between countries, forcing people to figure out ways to share water peaceably. (Credit: Getty Images)

 

Experts agree: if there was no access to water, there would be no world peace. That’s why one of the grand challenges of the next few decades could be maintaining this ultra-sensitive stasis of water management. In the 21st Century, freshwater supplies are drying up, climate change is raising sea levels and altering borders, explosive population growth is straining world resources, and global hyper-nationalism is testing diplomatic relations. Meanwhile, water demand is expected to go up 55% between 2000 and 2050. In the coming century, in terms of its value as a global resource, it’s been described as “the next oil."

So what can we do to guarantee global access to water – and thus global peace?

World peace hinges on hydro-politics

Water’s role in shaping politics goes back centuries. “In the ancient world, large bodies of water formed natural boundaries for people and nations,” says Zenia Tata, executive director of global development and international expansion at XPrize, an organisation that’s holding a worldwide competition for innovative water management solutions. “But today’s geopolitical landscape looks very different,” and access to water remains paramount.

Experts agree: if there was no access to water, there would be no world peace

In many areas of the world, bodies of water run through several countries or brush up against many countries’ borders. That’s where something called "riparian water rights" come into play.

In the case of a river, upstream countries – where the river originates – enjoy inherent power and leverage over the downstream countries. These kinds of riparian hotspots abound. And they’re often in places that are already fraught.

In the Middle East, the Jordan River basin is the primary water source for many regions, including Jordan, Palestine, and Israel, regions of long-standing political tensions. In Syria, meanwhile, the worst drought in close to a millennium has been partly blamed for the country’s generation-defining civil war and radicalisation that led to the formation of so-called Islamic State.

Egypt and Ethiopia have sparred over development of water from the River Nile for centuries: the iconic river originates in Ethiopia but ends in Egypt, which sets up an inherently combative relationship. In 2015, Egypt and Ethiopia put enough differences aside to construct the Grand Ethiopian Renaissance Dam on the river, which is Africa’s largest dam and is due to open in July. The countries also signed a deal that strives to ensure fair river access.

Tata points to many developed or emerging markets that have had similar challenges: “Take the example of Malaysia’s 99-year deal with Singapore, giving them paid access to fresh water from the Johor River,” Tata says. “Singapore is arguably one of the most progressive nations on our planet, but without sufficient fresh water resources within its boundaries, all industry, trade, commerce and culture would all stand still."

The answer might lie in how countries with more food and water export those supplies to other countries

According to the Pacific Institute, a California-based water resource information nonprofit, there have been dozens of water-related conflicts worldwide from 2000BC to present day.

So how do we make sure everyone gets enough water – and thus keep relative world peace in the 21st Century? The real answer won’t lie in countries controlling others’ water supply in what’s been dubbed so-called "water wars" – rather, the answer might lie in how countries with more food and water export those supplies to other countries.

 

Water politics

Droughts and climate change will make water-fuelled diplomacy a crucial exercise in the 21st Century. (Credit: Getty Images)

 

Divvying up water supplies

While there have been many “water-related” conflicts over the millennia, there have actually been very few in terms of sending water over national boundaries.

There are three main issues when it comes to water in the 21st Century, says Aaron Wolf. He’s a professor of geography at Oregon State University who specialises in water resource management and environmental policy.

The first issue is the most obvious: water scarcity. A lack of safe, reliable water kills as many people worldwide as malaria and HIV/Aids, he says.

The second issue is the political implications of that scarcity. For example, in Syria, that history-making drought drove more people to cities, saw rising food prices, and exacerbated tensions in the country that already existed. They ended up with “climate refugees”, who travel to other countries to seek places that have better water availability, which may in turn stoke the flames of political tension.

The third main issue – and perhaps the most underreported, experts say – is that trans-boundary flow of water. In other words: water moving between countries. And that’s where those riparian rights come into play.

But here’s the twist – that third part of the puzzle, the hydro-politics, is actually the part to be most optimistic about, says Wolf, since there have been so few violent skirmishes over transboundary water flows.

 

Water politics

Countries with a water surplus export "virtual water" around the world – water embedded in products like wheat and meat. (Credit: Getty Images)

 

The grand challenge: building hydro-diplomacy

Despite alarmist headlines about “water wars”, the 21st Century is still offering up no shortage of new and unique threats that complicate hydro-diplomacy more than ever before.

Population explosions, especially in Asia and Africa, strain resources. Increasing global temperatures have led to some bodies of water drying up. And rising nationalism worldwide may stymie diplomatic efforts across the board.

While water presents obvious potential conflict, it could also accelerate global cooperation

So that’s why at Oregon State University, Wolf helps organise the Program in Water Conflict Management – where they try to identify where hydro-diplomatic tensions are going to rise in the next three to five years. For example, Afghanistan is an upstream country to many nations in the region, and is trying to use that advantage to develop its economy. For a country that’s been subjected to decade upon decade of war and upheaval, the political power of water sources like the Kabul River could be a boon.

That’s why there’s growing academic desire for an increased awareness of not just hydro-politics, but hydro-diplomacy – that while water presents obvious potential conflict, it could also accelerate global cooperation.

“We’re building the next generation of hydro-diplomats,” says Wolf.

A solution? Pay farmers more

But amid all these changes in the aqua political landscape, experts urge us to remember that not all water exists in rivers and lakes and even oceans.

There’s water in the soil – the soil that farmers use to grow vegetables, crops and feed for livestock. And the water from that soil is transferred into these products – whether it is wheat or beef – ­before they get shipped from water-surplus nations to deficient ones. This is known as “virtual water”,­ a phrase coined by John Anthony Allan at King’s College London, whose specialities include water issues, policy and agriculture. "Virtual water" is going to play a huge role in the 21st Century.

 

Water politics

Governments stay in power by subsidising farmers' livelihoods, and water-deficient countries gladly import the under-priced food. (Credit: Getty Images)

 

If you include virtual water in the picture, farmers are managing much of the water in the supply chain. And in countries that are water deficient, that imported embedded water is integral. In Europe alone, 40% of this "virtual water" comes from outside the continent.

Here’s the problem: farmers are underpaid for the critical role in that transaction. And by the time the food reaches the destination country, its politicians use subsidies to keep food prices low. The reason? Politicians want to maintain peace among their people – they want their citizens to live under the assumption that they’ll be able go to the store and expect food on the shelves.

160 countries depend on imported food – and the water needed to make it

“Governments go to great lengths to make sure there is enough affordable food on the market,” Allan says. “There are forces in places that will bring the prices down – there’s pressure to keep food cheap."

For water-surplus countries like the United States or Canada, they sell these products to more water-deficient countries at a low price. Over 60% of the around 220 countries in the world are major food importers. In other words, 160 countries depend on imported food – and the water needed to make it.

“The world is at peace because we have virtual water trade,” says Allan. “It’s solved silently. Revealing virtual water trade as a solution is something that politicians don’t want to do because they want to appear as they’re managing their country well.”

But in reality, the water that goes into the country's food is being brought in from elsewhere. That’s why hydro-diplomacy is one of the great unsung heroes in maintaining global stability that you never hear about.

It’s also why water’s next big challenge isn’t just making sure it’s judiciously and peaceably managed between nations to accommodate the world’s ever-burgeoning population. It’s about helping farmers who live in nations that have lots of water do their jobs successfully, and manage that water and how it’s distributed to drier places.

Of course countries need low-priced food, especially in places with lower income citizens. But the public needs to know that imports, exports, and hydro-diplomacy are what really keep countries with imbalanced water sources in balance. In our globalised, 21st Century world, it's not just about where countries fall along the flow of a river. It's about working together to share Earth's most vital resource.

So while a James Bond-scale water hostage situation isn’t exactly realistic – there’s nothing unrealistic about needing to maintain worldwide access to water. Even as we use it to slake our thirst and grow our crops, the political power of water shouldn’t be forgotten. It's been around for millennia, and it's not going anywhere.

 —

Bryan Lufkin is the editor of Future Now. Follow him on Twitter @bryan_lufkin.

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David

Bitcoin prices likely to continue wild ride

Bitcoin prices likely to continue wild ride

Bitcoin prices likely to continue wild ride

SAN FRANCISCO — What goes precipitously up, often comes crashing down to earth.

So it was with bitcoin on Thursday, when the price of the digital currency plunged 19% — its steepest drop in more than two years — after a record run. The volatility remained on full display late Thursday and, as of Friday evening, bitcoin rebounded to $2,484.59.

The cryptocurrency, which flirted with $3,000 on Monday, sunk as low as $2,076.16 in intraday trading early Thursday amid a confluence of bad omens. Tech stocks have recently taken a thumping over concerns about their lofty valuations. Ominous reports from Goldman Sachs and Morgan Stanley suggested bitcoin was due for a reversal in price and required government regulation. The Federal Reserve hiked interest rates Wednesday.

Compounding worries, digital currency exchange Coinbase experienced an outage Monday because of high-trading volume. Another exchange, Bitfinex, on Tuesday said it was under DDOS attack.

Meanwhile, prices for digital currencies ripple and NEM declined the past week, though Ethereum, the second-largest currency, has soared 20% on speculation it will be the top currency. At $371.36, it lags far behind bitcoin in value.

CryptoCurrency Market Capitalizations

"Bitcoin and other digital currencies are experiencing rapid growth these days," says Guy Zyskind, CEO of Enigma, a start-up in cryptocurrency investing. "For this to be sustainable over time, the market has to correct itself from time to time."

The market's wild ride this week underscores "the ebbs and flows of an entirely new asset class," says Bill Barhydt, CEO of Abra, a peer-to-peer payment service.

"While the bitcoin price will likely recover and continue to rise, what we should see in the future is bitcoin becoming a solid store of value, much like gold," says Mihir Magudia, executive director of LEOcoin Foundation. "It will be relatively easy to liquidate but will not be used to commonly pay for goods and services."

David Ogden
Entrepreneur

 

Author: Jon Swartz , USA TODAY

 

 

David

Bancor initial coin offering raises over $200 million in three hours to become the largest crowdfunded project ever

Bancor initial coin offering raises over $200 million in three hours to become the largest crowdfunded project ever

DOMINIC POWELL / Friday, June 16, 2017

A demo of the Bancor protocol. Source: Bancor.network

A new blockchain startup built on the Ethereum platform has become one of the highest funded crowdfunding projects ever, raising approximately $US153 million ($201 million) through an initial coin offering (ICO) in just three hours earlier this week.

The startup is called Bancor, and it offers a platform aimed at making it easier for other startups and users to launch, manage, and trade their own forms of blockchain currency, known as “tokens”. These tokens are managed through the Ethereum network’s “smart contracts”, which enable self-executing contracts enforced and recorded on the blockchain.

Combining these two features, the Bancor protocol offers “smart tokens”, which enable “any party to instantly purchase or liquidate the smart token in exchange for any of its reserve tokens, directly through the smart token’s contract, at a continuously calculated price, according to a formula which balances buy and sell volumes”.

The ICO was intended to run for an hour, reports Coindesk, with a funding target of 250,000 ether (the main currency of the Ethereum blockchain), or around $US95 million. Due to alleged difficulties with the network, including supposed delayed transactions, the campaign was extended an additional two hours, resulting in a total of 396,720 ether or approximately $US153 million being raised.

Over 10,000 investors got on board with the ICO, with Coindesk reporting the largest single purchase was $US27 million, equalling 6.9 million BNT, the token used by the Bancor protocol to fuel its new platform.

This was enough to shoot Bancor into the number one spot of highest funded crowdfunds, and continues the recent initial coin offering craze, with blockchain startup Brave raising $US35 million in 30 seconds via a recent ICO.

However, due to the transitory value of cryptocurrencies such as Ethereum, the true amount raised by these startups is ever-changing. With the value of ether increasing over 2800% this year alone, a $US153 million raise could be $50 million more, or less, in a matter of days.

The Ethereum protocol is proving to be a popular platform for successful crowdfunds, with seven of the top 10 crowdfunding projects having been based on the platform, including the crowdfund for the platform itself.

David

BREAKINGVIEWS-Review: Gold’s financial fascination never dies

BREAKINGVIEWS-Review: Gold's financial fascination never dies

by Reuters

Friday, 16 June 2017 13:33 GMT

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

By Kate Duguid

NEW YORK, June 16 (Reuters Breakingviews) – Before winning the presidency and replacing the Oval Office's red drapes with lamé, Donald Trump was lionizing the gold standard (http://bit.ly/2riEUiS). He wasn't alone. Campaign rivals Texas Senator Ted Cruz, Kentucky Senator Rand Paul and Ben Carson also backed reviving a policy that had been abandoned by the global financial system 40 years earlier. James Ledbetter's new book "One Nation Under Gold" helps explain why the outdated idea won't die.

These Republican presidential contenders were not proposing sincere policies with white papers and serious co-authors. Bullion-backed bucks had been discarded for good reason: it was an impractical constraint that, even when it was the law of the land, had to be abandoned when the United States needed money for war or to combat recession.

No countries in the world operates on a gold standard today; there is no consensus on what a standard would look like or how it would be implemented. And, as Ledbetter puts it: "there will never be enough gold in the world to support the U.S. economy at its current size."

Yet gold, the book argues, is woven into the American DNA. It is enshrined in the Constitution which says that states may not "make any Thing but gold and silver Coin a Tender in Payment of Debts." Ledbetter chronicles two centuries of debate over the clause's exact meaning and its implications for a federally distributed currency. The California gold rush of the mid-19th century established the West as a locus of political and economic power, largely because of the immigration it brought, and the subsequent development of industry. The gold rush became part of America's founding myth, and for early settlers, evidence of divine providence.

Sound money, as commodity-backed currencies are known, also appeals to an American tradition of small government. A limited supply of gold necessarily limits the supply of money a government can issue, which in theory limits government spending.

Gold remains of interest to Americans not just as a basis for currency, but also as an investment. Though it pays no dividends and, unlike a company, the size of the asset will not grow, the precious metal is still popular, particularly amid economic insecurity. To wit: in 2011, after the financial crisis, gold prices reached an all-time high of more than $1,800 an ounce.

When presidential candidates talk about the gold standard, they're not just addressing worries about fiat currency, they're also signaling to goldbug investors who have more faith in a scarce commodity than American industry. One of the more interesting arguments comes toward the end of Ledbetter's book. "Listening to today's gold populists, it can be difficult to distinguish between the sales pitch for buying gold and the arguments for gold-backed currency; it seems likely that some of that confusion is a deliberate blurring of passions." Ledbetter's account of gold's association with populism illuminates how these two interests have blurred.

Like bitcoin, gold, as a basis for currency and an investment, appeals to those with little faith in government or the financial system. Anti-gold sentiment in the 19th century and early 20th was associated with the East Coast banking elite, and became linked to big government during Franklin Roosevelt's four presidential terms. Though the United States didn't fully abandon the international gold standard until 1971 – a decision made by the Republican administration of Richard Nixon – its limits were clear when Roosevelt decided paper money would no longer be convertible to gold and the dollar became a permanently managed currency.

Enabling the president to adjust the value of the dollar based on economic need arguably helped the United States to recover from the Great Depression. It also linked Roosevelt's anti-gold policies with what critics deemed to be the socialist programs of the New Deal, as Ledbetter documents. This was enmeshed with a virulent strain of anti-Semitism, and produced a populist movement familiar today: nativist, anti-elitist and anti-government.

The performance of the S&P 500 Index has largely been inversely correlated with the price of gold, affirming our understanding of gold as a safe-haven investment. When faith in the American economy is low, gold prices tend to increase, as was the case in 2011. The trend, however, has been harder to map in 2017. The S&P peaked in June, as Trump's political crises helped gold hit its highest level since he was elected. While that can be explained by gold's status as a safe haven, it may also indicate skepticism about the financial system, government and big business that has persisted since the financial crisis.

Though the price of gold fell from its peak in 2011 as the American economy began to recover, it never returned to pre-crisis lows. That may suggest that as long as American populism has life, so does the country's fascination with the shiny metal.

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David

Traders Plan for Correction as Crypto Market Falls Below $100 Billion

Traders Plan for Correction as Crypto Market Falls Below $100 Billion

Traders Plan for Correction as Crypto Market Falls Below $100 Billion

The total value of all publicly traded cryptocurrencies may be at an all-time high, but trader confidence isn't keeping pace.

After rising more than 1,500% from just over $7bn on 1st January, the market is beginning to show signs that its rapid ascent in 2017 may be slowing.

According data from CoinMarketCap, the cryptocurrency asset class fell from a high of $117bn yesterday to just under $100bn today, a period in which more than 80 of the top 100 cryptocurrencies have seen double-digit declines.

While this decline may just be a speed bump in the world of cryptocurrencies, some analysts report it is sufficient enough that they are beginning to reassess their positions in light of recent activity.

Hedging for a crash?

Indeed, several traders spoke with CoinDesk about the strategies they're currently using to hedge against a potential decline in cryptocurrency prices, with some indicating they're employing simple strategies by reducing their holdings.

For example, Charlie Shrem, a bitcoin entrepreneur and over-the-counter (OTC) trader, is in this camp. He reported he's been buying more bitcoin lately, with "less than 10%" of his portfolio in alternative assets.

Marius Rupsys, a cryptocurrency trader and co-founder of fintech startup InvoicePool, took a bolder approach, telling CoinDesk he liquidated his entire cryptocurrency portfolio and has started shorting bitcoin, actively betting its price will go down.

Rupsys predicted:

"There should be larger correction at some point which will cause altcoins to fall and bitcoin to fall at the same time."

While several traders identified portfolio management and active trading strategies as ways to hedge against a cryptocurrency price crash, cryptocurrency trader Kong Gao offered a different solution.

One way to hedge against this decline, he said, is to begin mining on alternative asset protocols, and simply hold the coins they receive instead of selling them.

Irrational exuberance

Elsewhere, Rupsys spoke to how he believes the increasing price has been largely caused by highly optimistic newcomers, a prospect that leads him to believe the bull run could soon fade.

"Many of these new traders are retail traders that have little knowledge of crypto-assets or trading in general," Rupsys told CoinDesk.

He added, many people have contacted him interested in getting rich quick.

Tim Enneking, managing director of cryptocurrency hedger fund, Crypto Asset Management, also spoke to the exuberance in the market.

While cryptocurrencies have been experiencing sharp gains, they will reverse direction at some point, Enneking predicted. Crypto Asset Management has set up stop loss orders to liquidate positions in certain cryptocurrencies should these digital assets suffer an "abrupt crash", he said.

And according to Charles Hayter, co-founder and CEO of cryptocurrency exchange CryptoCompare, a crash is likely. The attention alternative asset protocols have gained lately have highlighted some of this overconfidence, he said.

While there may be no clear signs yet, Hayter is still putting his money where his mouth is, noting CryptoCompare is going so far as to reallocate its active positions in the market.
 

David Ogden
Entrepreneur

 

Author: Charles Bovaird

David

Getting High on Cryptocurrencies

Getting High on Cryptocurrencies

Getting High on Cryptocurrencies

There are now four times as many cryptocurrencies in circulation as fiat currencies.That's amazing. And encouraging.According to the Swiss Association for Standardization, which maintains the International Standards Organization database, there are 177 national currencies currently in use. That list generously includes four precious-metals and four bond-market units (codes XBA to XBD, for the curious).NUMBER OF DIGITAL CURRENCIES753The CoinMarketCap website lists 753 cryptocurrencies, all the way from Bitcoin and Ethereum down to StrongHands and Paccoin (current value: $0.00000014).With a retired basketball star promoting one such incarnation — tied to marijuana — on a recent trip to a repressive Asian nation lying to the north of South Korea, I'm tempted to call Peak Crypto.But let's not kid ourselves: The madness is far from over. Bitcoin skeptics have been eating their words ever since the leading digital currency reached $1,000. January seems like such a long time ago now that Bitcoin is trading above $2,700.

Bruised Bears

Although Bitcoin has climbed 300 percent in the past 12 months, giving its "coins" in circulation a value of $45 billion, Satoshi Nakamoto's brainchild is actually declining in relative importance. From more than 95 percent in late 2013, Bitcoin now accounts for 39 percent of the value of all cryptocurrency in circulation. Ethereum has caught up fast, from 3.9 percent at the start of the year to 31 percent of the total now, according to CoinMarketCap. Ripple is in third place at around 8.8 percent after briefly overtaking Ethereum last month.

VIRTUAL VALUE

The other 20 percent of cryptocurrency value is unevenly distributed among the 750 wannabes along a very long tail. It's possible some will rise to a level of legitimacy that will make them viable in the long term. Many are betting not on mass uptake but on niche acceptance — one pitches itself as the payments platform for online games; another limits the amount of coins to the number of kilometers between Earth and its moon; one seeks to be the official currency of a fictitious nation.

Market Force

Bitcoin remains the world's biggest cryptocurrency, but its dominance has waned

Yet Bitcoin itself remains so niche that the WannaCry hackers reaped a minuscule harvest after infecting more than 200,000 computers, because they insisted on being paid in the cryptocurrency.Just because the boom is ridiculous doesn't mean it lacks momentum — it just tells you that consolidation also is inevitable. Not in the traditional M&A sense, but in the way that messenger apps like AIM, ICQ, Yahoo and MSN quietly gave way to WhatsApp and WeChat, which then led to the ubiquity of instant-messaging technology.Morgan Stanley posited last week that government acceptance will be key to Bitcoin's continued rise, with the flipside being some kind of regulation of the currency. That's probably right, and if proponents of cryptocurrencies think they'll achieve widespread uptake without a nod from the authorities, they're probably smoking something.

David Ogden
Entrepreneur

Author : Tim Culpan

 

 

David

Bitcoin, Ethereum and a New Direction for Cryptocurrency Investment

Bitcoin, Ethereum and a New Direction for Cryptocurrency Investment

Bitcoin, Ethereum and a New Direction for Cryptocurrency Investment

This week CoinDesk released its State of Blockchain Q1 2017 study, which details recent trends, statistics and sentiment around cryptocurrencies and blockchain technology.

While the entire report is worth a read (there are some surprises), two slides especially caught my attention. When put together and compared with current data, they point to what could be a fundamental shift in market dynamics.

Now, why would investors give up bitcoin to buy into ethereum? Either they believe that bitcoin will soon start heading down – slide 62 shows that almost 45% of respondents are negative on the cryptocurrency – or that it could continue to go up, but that ethereum will increase by even more. Either way, we’re looking at an asset reallocation.

If you take a look at the ether trading volumes today, though, you see a different picture.

The volume of fiat purchases of ether has shot past that of bitcoin to account for approximately 70% of volume (at time of writing). A large part of that growth is due to a jump in interest from South Korea, but US dollar purchases have also increased significantly.

This looks like ‘new money’ is coming into cryptocurrencies and choosing ethereum over other alternatives. Bitcoin’s trading volume is also increasing (and still dwarfs that of ethereum), but not by as much.

What could this mean?

While trading data of a few weeks does not necessarily translate to new market trends, it could hint at a shift in portfolio prominence. While bitcoin has traditionally been the main cryptocurrency holding for both private and institutional portfolios, ether is emerging as a strong contender.

One interesting effect from this will most likely be a change in the conversation. It should move from the 'bitcoin isn't money' diatribe, to one of 'what can ethereum do?'.

Although over 85% of our survey respondents felt that ether could serve as a currency as well as bitcoin could, it has never worn the currency cloak like bitcoin has. Ether has traditionally been positioned more as a ‘digital token’ that can engage with scripts and contracts, and can be used to enable apps across a wide range of sectors.

From an asset allocation and a sentiment perspective, ether’s rise in prominence is encouraging. A shift in focus from threat to innovation would be more constructive for all, and should push development in the cryptocurrency sector even further.

From an asset allocation and a sentiment perspective, ether’s rise in prominence is encouraging. A shift in focus from threat to innovation would be more constructive for all, and should push development in the cryptocurrency sector even further.

David Ogden
Entrepreneur

Article by Noelle Acheson

Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.

David

Hedge Funds Are Quietly Investing in Bitcoin

Hedge Funds Are Quietly Investing in Bitcoin

Hedge Funds Are Quietly Investing in Bitcoin

Bitcoin’s price has gained over 180 percent this year, while hedge funds have only returned 3.5 percent on average. Most hedge fund managers have stayed away from bitcoin. However, the few that have included it are significantly outperforming their peers.

Average Hedge Funds Return 3.5% This Year

Hedge fundsHedge Funds Are Quietly Investing in Bitcoin are investment funds whose clients are accredited or institutional investors. They are less regulated than mutual funds since they are not subject to strict rules designed to protect investors. Some of them are not even required to register or file public reports with financial regulators.

Investments in hedge funds are only restricted by each fund’s mandate. They can effectively be anything including land, real estate and currencies, as long as they seek to maximize investors’ returns while reducing risks.

The comprehensive overall returns of hedge funds are measured by the hedge fund absolute return index (HFRX), which is representative of all hedge fund strategies. Hedge Fund Research (HFR), which provides data on more than 150 hedge fund indices, is the industry’s leading provider of hedge fund index data. According to HFR, the HFRI Weighted Composite Index only returned 0.46% in May and 3.5% year-to-date. In comparison, the S&P500 total return was 1.16% in May and 9.61% year-to-date.

Bitcoin Helps Hedge Funds’ Bottom Line

HFR’s data reveals that most hedge fund strategies underperformed the market both in May and year-to-date, CNBC reported. The index provider noted that technology and currencies were the only two strategies that performed well in both time periods, adding that:

The FX funds did well because of exposure to digital currencies like bitcoin.

The hedge funds that do invest in bitcoin currently do not have large positions. The best performing hedge fund index in May was the HFRI Macro Currency Index which gained 3.49% in the month and 8.22% year-to-date.

“In addition to contributions from Euro, Swiss Franc, New Zealand Dollar and Korean Won, the Currency Index also had strong contributions from exposure to digital currencies,” according to the HFR report.

Why Don’t More Hedge Funds Invest in Bitcoin?

“Many hedge funds are still very reluctant to dip a toe into the asset class,” CNBC recently reported. One hedge fund veteran, with 16 years of experience, told the news outlet:

To be honest, I just don’t know enough about it.

The reasons hedge funds are reluctant to invest in bitcoin “really boils down to concerns over volatility, security and perception,” Louis Gargour, the founder of asset manager LNG Capital, told the publication.

He listed three concerns. Firstly, “bitcoin’s extreme volatility doesn’t sit well with managers working on a risk-adjusted return basis.” Secondly, fund managers are concerned with the digital currency being hacked or stolen. Lastly, “there’s a perception that bitcoin remains a niche, retail investment that does not yet demonstrate sufficient quality to be seriously considered for many reputable institutions,” he explained.

However, as bitcoin continues to outperform other asset classes, more hedge fund managers may start following their peers and invest in the digital currency. At press time, Bitstamp shows that bitcoin has gained over 180% so far this year and over 70% in May.

By Kevin Helms

 

David Ogden
Entrepreneur

David