$1,700? Bitcoin’s Price is Up Even as its Tech Progress Stalls

  

Referred to as the 'honey badger of money'

(after a famous viral video), bitcoin enthusiasts may find this comparison particularly apt of late. Since the beginning of the year, the network's value has nearly doubled – even while the community continues to be mired in debate. Market observers so far have offered a wide range of reasons for this uptick, though not all of them are good, with increasing prices causing concerns that the industry as a whole is entering a speculative bubble.

Supply and demand

Still, not everyone believes the boost is due to speculation. Redwood City Ventures founder Sean Walsh, for example, sent CoinDesk a bullet-pointed email summarizing the various global developments that could be contributing to the bitcoin price surge. He believes developments in South Korea, Japan, Russia, and China have all contributed. The price surge, according to Walsh, is simply supply and demand.

"Bitcoin is dramatically more scarce than most people realize, especially in the context of its total addressable market of nearly 3 billion internet-connected adults," he continued. Walsh framed the situation simply as one where the cryptocurrency is seeing increased demand, which looks to only increase in the future: "Once the global race to own bitcoin commences, the tiny supply of new bitcoins (just 54,000 new coins per month) will be completely overrun by demand,"

he said, adding:

“There just aren't anywhere near enough coins to go around, and pre-existing holders will grasp ever more tightly into this surging market, as perennially dictated by human nature.”

Tensions subsiding

Still, to those following day-to-day technical developments, it might seem odd that the digital currency's price has seen such an upswing amid its scaling debate and a stalled upgrade known as SegWit. Kristov Atlas, a security engineer at wallet and data firm Blockchain, for example, wasn't able to find technical reasons for the uptick in demand.

He told CoinDesk

"I don't see how the price increase could relate to tech changes; no big changes in long term projects like Lightning lately, and the block size stalemate is still status quo."

"It must be something outside bitcoin that investors have changed their minds about," he suggested. While developers, admittedly, might not be experts on economic market conditions, those that have been in the industry for a while are perhaps more aware of how technical developments could contribute to bitcoin’s price. When asked, some argued the state of the technology could have something to do with the recent increase, though, perhaps in surprising way.

For example, bitcoin’s block size debate took a weird turn a couple of months ago, when discussions about the possibility of forking bitcoin into two networks reappeared. This time around, some miners and developers suggested the idea of destroying the chain that didn't follow along with the majority of hashing power.

This has yet to happen, though, and worries about such an event happening have since died down. Some wonder if this could have given the price boost. "I think part of the rally is due to increased confidence that the risk of a contentious hard fork has all but evaporated," Reddit moderator BashCo said. Yet some expect to see a 'correction', where the price dips to a more reasonable place.

The emotion factor

The idea that raised tensions contribute to price swings fits with bitcoin developer and Nakamoto Institute director of research, Daniel Krawisz's view that the price has more to do with emotions. "The price of bitcoin never makes sense and it doesn’t have very much to do with the tech," he said. "It’s about emotion. It’s about greed." Krawisz also sees the price more aligned with bitcoin's original value proposition of giving users more control, rather than more granular tech additions or debates. “It’s not the new features of bitcoin that matter. What matters are the old features? People keep moving into bitcoin because it's a better alternative than their own national currency,”

he said, adding:

"Bitcoin doesn't really need new features, because it's already better."

Though, perhaps echoing other developer's sentiments about a reduction in fear, Krawisz went on to argue that the increase in demand probably has to do with bitcoin's apparent stability, since it’s been around for a long time compared with many cryptocurrencies. "It's the same reason that people always get into bitcoin now as ever," he concluded.

Chuck Reynolds
Contributor
Please click either Link to Learn more about TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Bitcoin plunges $200 after cyber attackers demand ransom using the digital currency

Bitcoin plunges $200 after cyber attackers demand ransom using the digital currency

  • Bitcoin fell from a record high after Friday's WannaCry cyberattack.
  • The digital currency hit an all-time high of $1,848.75 Thursday and on Monday traded near $1,676.42.
  • Analysts also pointed to increased Chinese selling.

A man talks on a mobile phone in a shop displaying a bitcoin sign in Hong Kong.

Bitcoin plunged from a record high hit last week to below $1,700 after cyber attackers locked up data in 200,000 computers Friday and demanded ransom in the digital currency. "It's a big hit to sentiment," said Brian Kelly, CEO of BKCM. "This is some negative publicity for bitcoin." Bitcoin fell more than $200 from an all-time high of $1,848.75 reached Thursday to a low of $1,644.64 Friday. The cryptocurrency steadied over the weekend and on Monday traded more than 5 percent lower on the day near $1,676.42.

One-month bitcoin performance

  

 

A virus called WannaCry hit 200,000 computers in at least 150 countries on Friday, according to the head of the EU police agency. The hackers demanded, for each computer, $300 in bitcoin within three days to unlock the files and threatened to double the fine after that, before permanently preventing access after seven days. Cybersecurity firm Check Point warned in a blog post Sunday, not to send any funds as no one who had paid had yet reported receiving their files back. Relatively few have paid the ransom. CoinDesk Research Analyst Alex Sunnarborg said Monday that $51,300 in 193 transactions were sent to the three bitcoin addresses connected to the malware.

Pickup in Chinese trading volume

In addition to profit-taking on the hacking, Kelly attributed bitcoin's decline on Monday to a drop in prices on the Hong Kong-based Bitfinex exchange, where prices had been artificially elevated due to withdrawal restrictions. Expectations that those restrictions will soon be lifted brought Bitfinex prices for bitcoin closer to the lower price of other exchanges. "A little bit of a price support has been removed," Kelly said. Chinese trading volume more than doubled its share, from 8.2 percent on May 1 to 22.8 percent Monday, according to analysis from Sunnarborg.

Even with the decline of the last few days, the volatile cryptocurrency has nearly doubled in value since the end of March.

Chuck Reynolds
Contributor
Please click either Link to Learn more about TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Watch the WannaCry bitcoin ransom trickle in

Watch the WannaCry bitcoin
ransom trickle in

The malware that's locked up hundreds of thousands of computers has netted roughly $70,000 so far. Why the WannaCry cyber attack is so bad and so avoidable

  

The WannaCry ransomware made on average $23,333 a day.

Monday was its most successful payday. In just four days, the WannaCry ransomware reeled in enough money to buy 8,750 servings of avocado toast (or maybe a modest house, if you're into that sort of thing). And now the ransom has doubled. The global ransomware plague started infecting computers on Friday, abusing an exploit discovered by the NSA that was leaked to the public by the Shadow Brokers hacker group. It breached computers through phishing emails and then spread through networks using a Server Messaging Block vulnerability on outdated Windows computers.

Before it was accidentally (and only temporarily) shut down, WannaCry had locked down more than 200,000 computers in more than 150 countries, affecting banks, universities, and hospitals, with a demand that the targets pay $300 worth of bitcoins by May 20. On Tuesday, the ransom doubled from $300 to $600, and the tally of WannaCry victims had reached more than 374,000 computers. In the last 72 hours, more than 261 people have decided they would rather pay the ransom than lose their important files forever, according to trackers analyzing the three known bitcoin wallets. (You can track the amount yourself here.) A majority of the payments came on Monday, just hours before the first deadline passed and the ransom rose.

In total, the hackers behind WannaCry made $69,535 by Tuesday morning, as payments continued to flow in. While the original ransomware has been slowed down, patched variations of the malware — pointing to the same bitcoin wallets — have appeared, this time without a kill switch. If every ransom ends up being paid, the hackers could make more than $1 billion from the breach. One risk analysis firm estimates that WannaCry could cost the world's economy $4 billion in damages and losses. It's unclear who is behind the massive attack, but researchers have found clues in the code linking the ransomware to North Korea.

Chuck Reynolds
Contributor
Please click either Link to Learn more about TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

DC Blockchain Advocates Seek Distance From Bitcoin Amid Ransomware Wave

 

Amid a flurry of negative publicity for bitcoin,

technology advocates are trying to distance themselves from the digital currency as part of a bid to protect the perception of more enterprise-facing blockchain initiatives. The change of public positioning follows an uptick in ransomware attacks using bitcoin as the medium of payment, the most recent of which (after causing major disruption within the UK's National Health Service and elsewhere) has sparked a global conversation.

At a briefing for congressional staff on Tuesday covering the potential uses of blockchain technology in the US healthcare system, the Chamber of Digital Commerce and a panel of other blockchain specialists acknowledged that the ransomware issue is again opening old wounds caused by the technology's association with illicit uses of bitcoin and cryptocurrencies.

In response, panelists sought to draw clear lines between the two technologies. "A lot of these initial attacks have been on healthcare systems and healthcare companies. This has come onto our radar because the ransomware is asking for the ransom in bitcoin," Perianne Boring, president of the Digital Chamber of Commerce, told an audience of roughly 70 healthcare and technology-focused staffers from congressional offices.

Elsewhere, the panelists sought to categorize bitcoin as merely "one application" of blockchain technology. Srinivas Attili, senior vice president and partner at IBM Global Business Services,

told attendees:

"Blockchain [gets] a lot of bad rap because of bitcoin, in my view. Bitcoin is just one application of blockchain, and you can have hundreds of applications of blockchain."

Blockchain good, bitcoin bad

Just how much regulatory attention is being aimed at bitcoin in the wake of the incidents is unclear, though a member of Congress introduced a bill Tuesday ordering the Department of Homeland Security to conduct a threat assessment regarding the use of virtual currencies by terrorists and criminals. It's happened before, so advocates worry bitcoin's bad press will rub off on the blockchain.

Attili drew the comparison to Amazon being just one among a countless number of businesses built on the HTTP protocol and highlighted Hyperledger as a promising blockchain technology suite that he believes is isolated from any nefarious activity associated with cryptocurrencies. "It's built for business. There's no concept of cryptocurrencies on Hyperledger," he said. Yet, Micah Winkelspecht, chief executive of Gem, a blockchain solutions company, did defend bitcoin, asserting that it's serving a legitimate use as a means of exchanging value.

Winkelspecht said:

"Bitcoin is to those types of attacks as the dollar is to the drug trade. Just because the dollar exists doesn't mean that it's the cause of the drug trade. Bitcoin is just a tool that these criminals are using because it is a good form of exchanging value. It's actually serving a really good purpose as an exchange of value. They are leveraging it as a tool."

"Blaming bitcoin for ransomware would be like blaming the Federal Reserve for any illicit transaction that happens in cash," Boring added.

Recasting the narrative

Still, the damage dealt by the ransomware attacks, compounded by past black eyes like Mt Gox and Silk Road, may cut deeper than many in the cryptocurrency community may wish to recognize. Congressional staffers speaking privately after the event said the concept of blockchain must be, to all intents and purposes, disassociated from bitcoin to gain serious traction in the legislative arena. Boring tried to flip the narrative by saying that, instead of blaming bitcoin for the attacks, there should be a greater focus on the potential of blockchain to protect against ransomware and other cyber attacks in the future.

She said:

"I would even argue that when we talk about protecting our healthcare systems or other systems that might be vulnerable to ransomware or other types of cyberattacks, that blockchain technology could be the silver bullet to protecting our infrastructure."

Winkelspecht concurred, arguing that blockchain could provide a better, more secure way to store data as hackers become more sophisticated in the future. "Before we used to see attacks that were more DDoS – they were attacks on infrastructure trying to bring systems down," he said. "Now we're starting to see more infiltration. They’re basically putting a ransom on data because that data is so valuable and they know that people will pay to unlock it."

Winkelspecht predicted that the next phase of cyber attacks will be "data integrity" attacks that involve breaking into a system and actually altering existing data in a way that "tricks" downstream systems. "Those are the most dangerous and potentially the most costly types of attacks because you may not know it's happening for literally years," he explained. The immutability of blockchain technologies, though, could be the only true line of defense against such intrusions,

he said adding:

"One of the things that blockchains can provide is an immutable proof of data integrity. We can guarantee beyond a shadow of a doubt that data has not been modified or changed.”

Chuck Reynolds
Contributor
Please click either Link to Learn more about TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Bitcoin logos are displayed at the Inside Bitcoins conference and trade show

AP Explains:
What is bitcoin?
A look at the digital currency

  

Bitcoin logos are displayed at the Inside Bitcoins conference and trade show

In this April 7, 2014, file photo, Bitcoin logos are displayed at the Inside Bitcoins conference and trade show in New York. It's worth more than an ounce of gold right now, it's completely digital and it's the currency of choice for the cyber attackers who cyber attackers networks around the world in recent days. Bitcoin has a fuzzy history, but it's a type of currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.

It's worth more than an ounce of gold right now, it's completely digital and it's the currency of choice for the cyber attackers who crippled computer networks around the world in recent days. When the attackers' "ransomware" sprang into action, it held victims hostage by encrypting their data and demanding they send payments in bitcoins to regain access to their computers. Bitcoin has a fuzzy history, but it's a type of currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.

Here's a brief look at bitcoin:

HOW BITCOINS WORK

Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who "mine" them by lending computing power to verify other users' transactions. They receive bitcoins in exchange. The coins also can be bought and sold on exchanges with U.S. dollars and other currencies.

HOW MUCH IS IT WORTH?

One bitcoin recently traded for $1,734.65, according to Coinbase, a company that helps users exchange bitcoins. That makes it more valuable than an ounce of gold, which trades at less than $1,230. The value of bitcoins can swing sharply, though. A year ago, one was worth $457.04, which means that it's nearly quadrupled in the last 12 months. But its price doesn't always go up. A bitcoin's value plunged by 23 percent against the dollar in just a week this past January. It fell by the same amount again in 10 days during March.

WHY BITCOINS ARE POPULAR

Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next. Transactions can be made anonymously, making the currency popular with libertarians as well as tech enthusiasts, speculators — and criminals.

WHO'S USING BITCOIN?

Some businesses have jumped on the bitcoin bandwagon amid a flurry of media coverage. Overstock.com accepts payments in bitcoin, for example. The currency has become popular enough that more than 300,000 daily transactions have been occurring recently, according to bitcoin wallet site blockchain.info. A year ago, activity was closer to 230,000 transactions per day. Still, its popularity is low compared with cash and cards, and many individuals and businesses won't accept bitcoins for payments.

HOW BITCOINS ARE KEPT SECURE

The bitcoin network works by harnessing individuals' greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction. The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldn't be an issue.

HOW BITCOIN CAME TO BE

It's a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention. But proponents say that doesn't matter: The currency obeys its own internal logic. An Australian entrepreneur last year stepped forward and claimed to be the founder of bitcoin, only to say days later that he did not "have the courage" to publish proof that he is.

Chuck Reynolds
Contributor
Please click either Link to Learn more about TCC-Bitcoin.

Alan Zibluk Markethive Founding Member

Ripple Market Capitalization Soars, Surges Past Ethereum

Ripple Market Capitalization Soars, Surges Past Ethereum

Ripple Market Capitalization Soars, Surges Past Ethereum

 

Ripple tokens have hit a massive upswing in market capitalization over the last day, surging past Ethereum and nipping at bitcoin’s heels.

At end of day May 14, Ripple’s market capitalization was at about $8,345,000,000. Ripple continued surging well into the next day at about $11,500,000,000, continuing to climb. This has occurred in an oscillating fashion over the last few weeks, as Ethereum and the blockchain transfer token duke it out for supremacy.

Several news sites and other sources suggest this upswing in market capitalization was spurred by recent partnerships in the ripple network. These partnerships include large banking conglomerates and other banking organizations opting to work with or adopt the Ripple network.
 

An April 26 Ripple press announcement said,

Ripple is proud to announce the addition of 10 new customers to our growing global network. These financial institutions include MUFG, BBVA, SEB, Akbank, Axis Bank, YES BANK, SBI Remit, Cambridge Global Payments, Star One Credit Union and eZforex.com, representing some of the world’s largest banks, innovative smaller banks, and payment service providers (PSPs).

Differences Between Ripple tokens and Bitcoin: Ripple is a “Bank Coin”

Even though Ripple is gaining ground on market capitalization, there are distinctions between Ripple tokens and currencies like bitcoin and Ethereum. For instance, Ripple has enjoyed its market capitalization skyrocket as a result of gaining the aforesaid partnerships.

This happened because Ripple is a “bank coin.”Ripple Market Capitalization Soars, Surges Past Ethereum Several commentators pointed out ripple is not a decentralized cryptocurrency. It is a centralized bank-to-bank transfer coin. Ripple’s own commentary from their labs suggested the same when they mentioned being able to use a global freeze feature.

“The freeze protocol extension gives gateways the ability to 1) globally freeze all their issued funds, or 2) freeze funds issued to a particular user. Frozen funds may only be sent back to the gateway who issued them.”

This ability to freeze funds means that Ripple is not a decentralized blockchain protocol, but instead a distributed database that maintains control of the network from a central hub. This is a feature that would be impossible to execute if the coin was founded on decentralized algorithms.

This comes to no surprise to many, though, because this fact is not a hidden agenda. Ripple’s website explained the purpose of their technology: Its purpose is to be an inter-bank transfer protocol to smooth out the financial interactions between banks.

Conclusion: Ripple’s Market Position

In this regard, Ripple’s market cap has increased as a result of their partnerships. These alliances caused the market capitalization to swell beyond Ethereum, even though Ripple is not in the same category of coin.

It happened as a result of their positioning in the market. It happened because of a business alliance. By definition and design, Ripple is not meant to be a cryptocurrency. It is a “database coin” that is controlled via centralization and economic engineers.

Will Ripple’s token continue to grow on into the future? Can it maintain the second position in terms of market capitalization?

David Ogden
Entrepreneur

 

By Sterlin Lujan

Alan Zibluk Markethive Founding Member