China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

  • Order comes amid a broader clampdown on financial risk
  • China is home to nearly a quarter of world’s bitcoin trades

China plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, dealing another blow to the $150 billion cryptocurrency market after the country outlawed initial coin offerings last week.

The ban will only apply to trading of cryptocurrencies on exchanges, according to people familiar with the matter, who asked not to be named because the information is private. Authorities don’t have plans to stop over-the-counter trading of virtual currencies, the people said. China’s central bank said it couldn’t immediately comment.

Bitcoin slumped on Friday after Caixin magazine reported China’s plans, capping the virtual currency’s biggest weekly retreat in nearly two months. The country accounts for about 23 percent of bitcoin trades and is also home to many of the world’s biggest bitcoin miners, who confirm transactions in the digital currency.

“Trading volume would definitely shrink,” said Zhou Shuoji, Beijing-based founding partner at FBG Capital, which invests in cryptocurrencies. “Old users will definitely still trade, but the entry threshold for new users is now very high. This will definitely slow the development of cryptocurrencies in China.”

While Beijing’s motivation for the exchange ban is unclear, it comes amid a clampdown on financial risk in the run-up to a key Communist Party leadership reshuffle next month. Bitcoin has jumped about 600 percent in dollar terms over the past year, part of a broad surge in virtual currencies that has fueled concerns of a bubble. The People’s Bank of China has done trial runs of its own prototype cryptocurrency, taking it a step closer to being the first major central bank to issue digital money.

“There has been a general tightening of the screw on regulating financial and monetary conditions,” said Mark McFarland, chief economist at Union Bancaire Privee SA HK in Hong Kong. “All of these things suggest a longer term process of tightening scrutiny of activities that aren’t in the normal sort of monetary realm.”

China Is Said to Ban Bitcoin Exchanges While Allowing OTC Trades

OKCoin, BTC China and Huobi, the country’s three biggest bitcoin exchanges, said on Monday that they hadn’t received any regulatory notices concerning bans on cryptocurrency trading. All three venues reported transactions on Monday, with bitcoin rising 6.3 percent on OKCoin as of 11:56 a.m. local time.

While bitcoin users will still be able to trade cryptocurrencies in China without exchanges, the process is likely to be slower and come with increased credit risk, analysts said.

The exchange ban is unlikely to have a major impact on the prices of cryptocurrencies because venues outside China will continue trading, according to FBG Capital’s Zhou. The country’s role in the bitcoin market had already started shrinking in recent months as authorities tightened regulation. At one point, exchanges in the country accounted for more than 90 percent of the world’s bitcoin transactions.

The bigger risk for global bitcoin traders may be the massive rally in prices, according to McFarland.

“Whenever you start to hear about Hong Kong taxi drivers becoming millionaires from buying bitcoin, you start to think this is not necessarily driven by fundamentals,” he said. “So you will get quite substantial pullbacks at some point.”

 

Bloomberg News
11 September 2017, 05:36 BST
— With assistance by Steven Yang, Gary Gao, Yinan Zhao, Yuji Nakamura, Lulu Yilun Chen, Justina Lee, and Eric Lam

 

Posted by David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Deciphering China’s Central Bank Regulation on ICOs

Deciphering China's Central Bank Regulation on ICOs

Deciphering China’s Central Bank Regulation on ICOs

In typical fashion, a Chinese news outlet reported something, no one who could translate it reported on it in the west, and a panic ensued, demonstrating just how much influence governments still have over cryptocurrencies. The Chinese central bank allowed this chaos to reign all week, not issuing an official English notice until Friday afternoon. Our editor Samburaj Das was on the case early in the week, writing:

As CCN reported in late August, Chinese authorities held a meeting to discuss regulations of ICOs on August 18 where the possibility of a complete ban on all ICOs was discussed. Last week, the National Internet Finance Association of China issued an ICO warning to members, deeming ICO platforms a threat to the stability of China’s financial sector.

At the time, Das was victimized by the opacity of information. The author’s own words ring truer on points like this, as regards Red Pulse, which are building a product (ICO funded) which aims to cut through the vaguenesses and opacity of news from China and surrounding regions:

Ironically, one of the ICOs greatly affected by the news of Chinese regulation is the Red Pulse ICO, which aims to put an end to Chinese rumor mills among other problems of opacity that investors face with the Asian market. For their part, Red Pulse have limited participants from both the US and China, and are requiring KYC regulations be met before investing.

Das referenced an official URL:

http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/3374222/index.html

However, this link is now dead. We tried pulling up the original Chinese article from Archive.org, but it appears the document has already slipped out of the memory hole.

Nonetheless, an unaltered document used in this piece, that was published on the PBOC website, is now available. The author is serving an unaltered copy of this document here with a sha256sum of 072eb59a9fb4f3901eb2a9d3ecfeda05fa1ea9a2e9623455b0c72ca9d780e76b.

 

Public Notice by PBOC On Preventing Risks of Fundraising through Coin Offering

The document released by the Chinese central bank and its associated bodies has five instructions, which are as follows.

  • No Organizations or Individuals Shall Engage in Illegal Fundraising through Coin Offering

From a high level, this seems obvious, but they’re not talking about raising funds for illegal activities. They mean that the ICOs themselves were illegal, and they explain this in pretty clear terms:

From the date of release of this Notice, fundraising through coin offering shall be banned immediately. Any individuals or organizations that have completed fundraising through coin offering shall make arrangements to return the funds raised, and to ensure that the legitimate rights and interests of the investors are protected and the risks involved are properly managed. The government departments concerned will strictly investigate and address the coin offering activities that have continued despite the ban and the illegal activities in the projects that had completed fundraising.

Now here is the interesting part of this part of the edict: it specifically says “from the date of release of this notice.” This can literally be interpreted to mean that previously operated ICOs are not in the crosshairs of government guns so long as they comply with the next part of the edict: that they arrange to refund all the monies raised.

NEO’s approach to this part of the dictate is that they are offering yet another refund round. Unfortunately, it seems clear that only a few of the token holders would actually be interested in selling their NEO back at a loss. It seems the actual loophole for this legislation is to just have a token that hasn’t gone to total crap – thus we can assert that for those who operated badly in the grey area, without creating legitimate projects, the government may be breathing down their necks.

  • Management of Related Platforms Shall be Strengthened

By this, the PBOC means that the screws need to be tightened on Chinese exchanges. In no uncertain terms they have banned the trade of cryptocurrencies for fiat currencies in China. It’s one of those rare moments where the puppet master really reveals his hand:

From the date of release of this Notice, any so-called platform that provide trading and exchange services for coin offering shall not engage in exchange businesses between legal tender and token or “virtual currency”; or engage in proprietary trading activities or trading as an central counterparty of tokens or “virtual currencies”; or provide pricing services or act as information intermediary for tokens or “virtual currencies”.

The ban really gets draconian when you read every implication. A Chinese citizen is now banned from even relaying the price of Bitcoin as a service or even telling someone about Ethereum – although the author is uneducated as to what a Chinese court would consider an “information intermediary.” They go on to hint that several Chinese exchanges will soon be no more:

As for the trading platforms with activities that have violated laws or regulations, the financial regulatory authorities will notify the administrative department in charge of telecommunications to adopt measures such as shutting down its website platform and mobile APP, notify the administrative departments in charge of cyberspace to remove its mobile APP from the APP store, and notify the business administration department to revoke its business license.

Jihan Wu seems to interpret the information differently:

Jihan Wu @JihanWu

Bitcoin is still legal in China. But ICO is illegal now.

Yet it ishard to get around the broad language here. Unless “Bitcoin” falls under some classification besides “virtual currency” there. It’s Jihan’s business, not our problem.

  • Financial Institutions and Non-Bank Payment Institutions Shall Not Conduct Businesses Related to Coin Offering Fundraising and Trading

Once clues of illegal coin offering fundraising and trading is identified, financial institutions and non-bank payment institutions shall promptly report to the departments concerned.

In Chinese law, now, ICO stands for “illegal coin offering.” In essence. This part of the edict banishes other businesses from providing insurance or other services to ICO-related companies. Again, it seems obvious that this blanket ban can easily apply to Bitcoin and other cryptocurrencies. What is not obvious is how enforceable such large-scale bans even are in a country with a population exceeding 1 billion.

  • The Public Need to Stay Aware of the Risks of Coin Offering Fundraising and Trading

The obligatory tattle tale clause, which orders that Chinese are to report any shifty cryptocurrency people they might notice:

The public shall be aware of the risks and learn to identify the illegal financial activities in the name of “currency” (“bi” in Chinese), and report clues of illegal activities in a timely manner.

  • Self-regulatory Organizations Shall Exercise Industry Self-Regulation

As a westerner, the author is afraid for the “self-regulatory organizations” so commanded in this last clause, because they are ordered to interpret its orders “properly.” Thus, it seems pretty easy for one to do it improperly and be implicated without even trying:

To keep financial activities in order, all kinds of self-regulatory financial organizations shall interpret policy properly, urge members to consciously resist illegal financial activities related to coin offering fundraising and trading or “virtual currencies”, and to stay away from market irregularities and improve investor education.

Status of Chinese Exchanges, Time of Writing

The top Chinese Bitcoin exchanges were still posting current information at time of writing. This website is a good jumping point.

Chinease Exchanges

More Rumors Unconfirmed

A document allegedly listing 60 ICO-related projects targeted by the Chinese government has allegedly surfaced. We at CCN are still trying to verify the text and legitimacy of this document. Here is the original source. We note the author’s name:

Native speakers are welcome to help us out in the comments.

 

Best Practice for Crypto Traders

The author has never recommended anyone leave anything on exchanges. All the same, now is a time more important than ever to not be keeping any funds on Chinese exchanges or service providers. They have the ability and authority to pull the plug whenever they wish, and most exchanges have some form of user agreement that makes them blameless in such events, giving you almost no recourse. Take this one, for instance, from newer exchange Binance.

In case of any of the following events, BINANCE shall have the right to directly terminate this agreement by cancelling your account, and shall have the right to permanently freeze (cancel) the authorizations of your account on BINANCE and withdraw the corresponding BINANCE account thereof: after BINANCE terminates services to you, you allegedly register or register in any other person’s name as BINANCE user again, directly or indirectly; the main content of user’s information that you have provided is untruthful, inaccurate, outdated or incomplete; when this agreement (including the rules) is amended, you expressly state and notify BINANCE of your unwillingness to accept the amended service agreement; any other circumstances where BINANCE deems it should terminate the services. After the account service is terminated or the authorizations of your account on BINANCE is permanently froze (cancelled), BINANCE shall not have any duty to keep or disclose to you any information in your account or forward any information you have not read or sent to you or any third party. You agree that, after the termination of agreement between you and BINANCE, BINANCE shall still have the rights to: keep your user’s information and all the transaction information during your use of BINANCE Service. Claim against you according to this agreement if you have violated any laws, this agreement or the rules during your use of BINANCE Service. After BINANCE suspends or terminates BINANCE Service to you, your transaction activities prior to such suspension or termination will be dealt with according to the following principles and you shall will take care of on your own efforts and fully undertake any disputes, losses or extra expenses caused thereby and keep BINANCE harmless from any losses or expenses: BINANCE shall have the right to delete, at the same time of suspension or termination of services, information related to any un-traded coin tokens that you have uploaded to BINANCE prior to the suspension or termination. If you have reached any purchase agreement with any other member prior to the suspension or termination but such agreement has not been actually performed, BINANCE shall have the right to delete information related to such purchase agreement and the coins in question. If you have reached any purchase agreement with any other member prior to the suspension or termination and such agreement has been partially performed, BINANCE may elect not to delete the transaction; provided, however, BINANCE shall have the right to notify your counterparty of the situation at the same time of the suspension or termination.

After reading this, the author gets no confidence that in the event of government interference from PBOC or any other wing of the Chinese government, his funds would be safe. Nothing here explicitly states he would get his funds back, just that the exchange has the “right to withdraw” them. Destination unknown. Most legal agreements are like this, and clearly it’s bad business to steal deposits – but what would that matter to an exchange under government duress?

The author will just have to be more precise in his NEO trading going forward. Additionally, everyone dealing with Chinese cryptocurrency services should take careful notice: the real regulatory wave might finally be here. It would be in the exchange’s economic worst interest to undutifully inform you of changes, even if they suspect them. If expecting to hear news of closure from them, you will hear it last.

China has unkowingly, probably without irony, dubbed the term “illegal coin offering” in their Friday move, and they let the market sweat the issue for a full five business days before actually laying words out in English. So let’s not kid ourselves: they have power over the cryptonaughts and their beloved honey badger(s), just perhaps not as much or of the nature they previously believed.

 

Collated by P. H. Madore on 09/09/2017

 

Posted by David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Bitcoin Price Sinks Below $4,200 on China Uncertainty

Bitcoin Price Sinks Below $4,200 on China Uncertainty

Bitcoin Price Sinks Below $4,200 on China Uncertainty

Markets for bitcoin and other cryptocurrencies have fallen over the course of the day, following contested reports that regulators in China are looking to shut down the country's exchange ecosystem.

CoinDesk's Bitcoin Price Index (BPI) is currently at about $4,184, representing a nearly 10 percent decline since the start of the day's trading. Markets peaked today at $4,698.73, per the BPI, though prices began to tumble around 13:20 UTC.

Additional data from CoinMarketCap reveals that – perhaps unsurprisingly – China's top bitcoin exchanges are reporting some of the steepest price declines. The BTC/CNY market on OKCoin is at $3,650.71, while Huobi and BTCC are reporting prices of $3,657.84 and $3,656.57, respectively, at press time.

Other major bitcoin exchanges, including Bitfinex and Bistamp, are reporting current prices above the $4,100 level, according to data from BitcoinWisdom.

As reported earlier today, Chinese news source Caixin, citing unnamed sources, said that regulators are looking to shut down the exchanges. That decision, the newspaper claimed, has already been made and disseminated to other sources. Yet in the wake of that story, exchanges in China said they haven't receive any notices from the Chinese government, casting doubt on the veracity of the Caixin report.

Amidst the uncertainty, other cryptocurrency markets have seen notable declines as well. Ether prices are down more than 10 percent today, trading at around $295.93. Broad market declines have pushed the collective cryptocurrency market capitalization below $150 billion, after spending several days above the $160 billion level.

 

Sep 8, 2017 at 22:58 UTC by Stan Higgins

 

Posted By David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

Alan Zibluk Markethive Founding Member

Bitcoin Breakout – Price Action Analysis Hints at Possible Pullback

Bitcoin Breakout - Price Action Analysis Hints at Possible Pullback

Bitcoin Breakout – Price Action Analysis Hints at Possible Pullback

The bitcoin price [BTC to US dollar exchange rate] fell to a two-week low of $3,900 on Tuesday, a market movement that represented the biggest decline for the asset since July.

Triggered by the sudden news from China that the country’s financial regulators would ban initial coin offerings, the decline has also called into question just how big the appetite is for a higher bitcoin price given its 700% year-over-year gains.

However, traders appear to be bullish on the idea it can rise back above $5,000, the all-time high it set last Friday. In fact, traders who missed the rally appear to be utilizing the dip to board the bitcoin freight train – over the last 48 hours, the digital currency has recovered more than 50% of the losses it suffered during the four day period from September 2–5.

At press time, the BTC traded at $4,620, according to the CoinDesk Bitcoin Price Index. Week-on-week, bitcoin is down 2.69%. On a monthly basis, the cryptocurrency is up 34.8%.

Still, while the sharp rally from the weekly low of $3,900 has triggered speculation bitcoin is aiming for the fresh record highs, technical studies say the recovery lacks substance.

Money Flow Index [MFI] does not support further gains

The Money Flow Index (MFI) is an oscillator that uses both price and volume to measure buying and selling pressure. (MFI indicates rising or falling prices always through its own rise or fall.) If the MFI rises above the centre line [50], this is regarded as a buy signal.

Similarly, an intersection going down is regarded as a sell signal.

Daily chart

Bitcoin Breakout - Price Action Analysis Hints at Possible Pullback

The MFI index is pointing downwards and shows no signs of life despite the sharp recovery from the weekly low of $3,900.

The weakness in the MFI could be an indication that the technical recovery lacks substance, i.e. lacks buying pressure and could have been fuelled by unwinding [profit taking] on the shorts.

4-Hour chart

Bitcoin Breakout - Price Action Analysis Hints at Possible Pullback

The MFI is close to overbought levels. Typically, an MFI above 80 is considered overbought and MFI below 20 is considered oversold. These levels are often used to identify unsustainable price extremes.

Overbought levels alone are not enough to turn bearish. However, in BTC’s case, the overbought MFI on the 4-hour chart could be read as a signal that the recovery from the low of $3,900 has ended. This is because, the daily MFI is bearish as discussed above.

Furthermore, the decline from the record high of $5,000 was triggered by a bearish price-RSI divergence. A bearish price RSI divergence is formed when prices form higher highs while the oscillator – in this case an RSI – forms significantly lower highs.)

As such, bitcoin’s outlook remains bearish unless we break above $5,000 as such a move would signal the bearish price RSI divergence is no longer valid.

View

Daily chart

Bitcoin Breakout - Price Action Analysis Hints at Possible Pullback

Bullish factors

  • The rising trend line is intact and is likely to offer support at $4,265

Bearish factors

  • As discussed above, the MFI is not in favor of further gains in bitcoin
  • Bearish price-RSI divergence
  • Potential head and shoulders pattern

BTC is more likely to break below $4,265, in which case a lower highs pattern would be confirmed. An uptrend, which is a series of higher highs and higher lows, reverses into a downtrend by changing into a series of lower highs and lower lows.

Lower lows would be confirmed if prices break below the recent low of $4,900.

Also note that a lower highs would increase the odds of the prices forming a head and shoulders [H&S] bearish reversal pattern. The Head and shoulders is a reversal pattern that, when formed, signals the security [in this case bitcoin] is likely to move against the previous trend.

The H&S neckline [line drawn from the left shoulder bottom and right shoulder bottom] support is seen at $3980 levels. A break below the neckline level confirms bullish-to-bearish trend reversal.

Bullish scenario

A break above $4,640 could result in a rally towards $5000, although caution is advised as only a move above $5,000 would make the bearish price-RSI divergence invalid and shall revive the rally set in motion from the July low of $1,826.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

Sep 7, 2017 at 14:20 UTC by Omkar Godbole

 

Posted By David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

What you need to know about the latest Bitcoin boom

What you need to know about the latest Bitcoin boom

 

You may have noticed reports about Bitcoin’s value recently – its price is headed into the stratosphere.

The crypto-currency’s recent meteoric price rise over the summer has seen one Bitcoin go from being worth $1,500 in early May to more than $5,000 over the weekend, before dropping to $4,654 at the time of publication.

And that has got all kinds of people interested – people like Andrew Beckwith, a DJ who goes by the name Supersede. “I play restaurants, lounges, nightclubs, corporate events,” he says.

But he also invests. Beckwith has just taken his first step into the world of crypto-currencies, having converted $100 into Bitcoin.

“I don’t know how far it’s going to grow,” he explains, “but if something is growing at hundreds of per cent, that’s a pretty valuable return.”

Bitcoin is notorious for its volatility, but the recent peaks are unprecedented. In late 2013 its value jumped from around $100 to $1,000 – a bigger percentage increase – but it is worth more than four times that today.

“Recently there’s been a lot more talk in the media and others have been investing,” explains Kiran Varughese, another amateur investor, who works for an elevator company in Dubai.


The notoriously volatile crypto-currency has been making headlines with its skyrocketing value, but some believe it’s a bubble driven by speculation (Credit: Getty Images)

A friend’s experiments with Bitcoin piqued his curiosity so he clubbed together with another pal to invest $1,000 in August. If they lose it, he says they won’t be too worried – the potential for a big return within the next few years is too tantalising for Varughese to resist.

But are investors like Varughese and Beckwith taking too much of a risk by buying into Bitcoin, and other crypto-currencies like Ethereum, Litecoin or Dash? Is there something about these digital currencies that underpins their soaring prices or are they simply subject to whims in the market that can make fortunes but also devastate them?

While the market capitalisation of all crypto-currencies now stands at $150 billion, they still occupy a strange space in the world of finance.

“Every year Bitcoin continues to exist is something to take note of,” says Garrick Hileman, a research fellow at the Cambridge Centre for Alternative Finance at the University of Cambridge. “It’s a significant achievement for Bitcoin to have survived the many setbacks and challenges that it has faced.”

One of these challenges occurred recently when Bitcoin split in two. It happened after the Bitcoin community became divided over how to allow more transactions to be processed with the currency. Because Bitcoin has no over-arching authority that controls it, any decision to alter the system that underpins it needed to gather enough support from Bitcoin users to go ahead. The system itself is called the blockchain – a huge digital ledger that records every single Bitcoin transaction in history.


Mining Bitcoin takes time and computer processing power, so it’s often done in massive farms such as this converted warehouse in Moscow, Russia (Credit: Getty Images)

As computers on the Bitcoin network verify transactions, “blocks” of data are added to the ledger, storing this information. Computers that do this work receive a small sum of bitcoins as a reward – this is the process known as mining. Every single computer on the network has a copy of the blockchain and their copy of it is constantly updated.

But until recently, Bitcoin blocks were limited in size to a megabyte every 10 minutes, meaning that the rate at which the blockchain could grow was capped. In early August, a new version of the crypto-currency – Bitcoin Cash – was mined for the first time. Its blocks can be up to eight megabytes in size.

Some believe the smooth transition through this “fork” without any technical disasters has contributed to renewed confidence in Bitcoin, in turn helping to pump the price up. One “coin” of Bitcoin Cash is worth less, around $630 today, but that’s up $200 since its inception a month ago.

Another fork to upgrade the block size further is expected in November and if successful, it might have a similar impact on Bitcoin’s buoyant price.

But “currencies” like Bitcoin aren’t really playing the role of a traditional currency at the moment, says Vili Lehdonvirta, an economic sociologist at the Oxford Internet Institute, which is part of the University of Oxford.

“When I called up a restaurant in Helsinki earlier this year to ask if they accept Bitcoin, the response was that they tried it a few years ago, nobody ever used it, and thus they no longer accept it,” he explains.


Most retailers don’t accept the crypto-currency (Credit: Getty Images)

BBC Capital contacted 10 businesses in London that have advertised an ability to accept Bitcoin in the past. Four of them said they had stopped accepting and two that did accept them reported hardly ever processing such payments.

Instead, it appears many people are simply speculating on Bitcoin – investing in what is a relatively high-risk asset in the hope of a short-term gain in profit. But lucrative outcomes are by no means guaranteed – and many still think that Bitcoin is just a bubble.

In the short-term there may be various reasons why people are buying in while the price is buoyant. Some may like investing in a currency unconnected to nation states, suggests Hileman. It could be seen as good insulation against uncertain political developments that can cause traditional currencies to plummet dramatically – as happened to the British pound in the aftermath of the Brexit vote. Volatile international disputes, such as those involving North Korea, could be driving people to put their money elsewhere.


The pound dropped sharply after Brexit – since Bitcoin is not tied to any one nation-state, it’s less affected by large political events (Credit: Getty Images)

“If you’re in South Korea and you’re concerned about a geopolitical event, do you trade in the US dollar?” asks Hileman. “Maybe that’s not a great idea because the US will be involved, as will China and Japan, so it’s not surprising to see people look for alternative currencies,” he says.

Applied cryptography consultant and Bitcoin-watcher Peter Todd says some are also attracted by Bitcoin’s independence for broader political reasons, too.

In an uncertain world, people’s financial freedom is sometimes limited by their governments. Take India, which recently tried to curb public investments in gold as this was harming the nation’s economy. Bitcoin is a global entity, no one government can fiddle with it – although there are countries where trading it is illegal.

Still, crypto-currencies remain associated with plenty of risks that go beyond their volatility. Many people store their bitcoins in online exchanges and should these be hacked or go bust, which has happened more than once, then the money is often lost forever.

With all the technical ups and downs of crypto-currencies – their changes and potential to split into new currencies for example – there is also a significant degree of complexity that can leave less informed investors bewildered.


MtGox, a Bitcoin exchange based in Tokyo, collapsed after losing nearly $500m in Bitcoin to what it says was a hack attack (Credit: Getty Images)

A new area of excitement, known as initial coin offerings (ICOs), are also beginning to worry some experts. ICOs allow owners of crypto-currencies to invest in fledgling companies, with many using Ethereum as their digital coin of choice. However, ICOs have already been associated with a number of scams and hacks, and China just banned them, calling ICOs 'illegal fundraising'.

“I think the main thing we’re seeing in ICOs is straight-up fraud,” says Todd. He is concerned about efforts by regulators to clamp down on this because such an approach could backfire and encourage scammers to become more sophisticated.

“It’s when things look legit that they get dangerous,” he says, pointing out that a few years ago Bitcoin and other digital tokens had more of a “Wild West” feel to them, which perhaps meant people were less likely to be duped since scams were crude and easy to spot. As more and more investors get involved in crypto-currencies, scams can get slicker and the natural wariness that can keep people cautious may also diminish.

Bitcoin and other crypto-currencies are gradually cementing their stated position – providing a radical new alternative to the investment options that existed before them. But there is no certainty as to how this massive experiment will play out. Though when did that ever stop hopeful investors taking a punt?

 

By Chris Baraniuk
7 September 2017

This story was produced under the BBC's guidelines for financial journalism. A full version of those guidelines can be found at bbc.co.uk/guidelines.

 

Posted by David Ogden Entrepreneur

Alan Zibluk Markethive Founding Member

Bitcoin’s Golden Future

Bitcoin Golden Future

Bitcoin's Golden Future

Could bitcoin be the next gold?The idea has a lot of intuitive appeal. Gold bugs and bitcoin fetishists tend to share a deep distrust of fiat currency and the nation state, an impregnable bullishness about their favored asset class, and an obsessive attention to details of market movements combined with a blithe disinterest in bigger-picture issues.The idea has become particularly popular as the value invested in bitcoin and other cryptocurrencies has marched upward over the past year. Even after this week's selloff, prompted by China declaring initial coin offerings illegal, the value of all cryptocurrencies in circulation is around $155 billion, according to Coinmarketcap.com.

That may sound small compared to the $7.8 trillion notional value of the world's 187,200 metric tons of gold. At the same time, it's already about a tenth the value of the 40,000 tons of yellow metal used for investment as bullion bars and coins, and has overtaken the amount held in gold exchange-traded funds. At more than $78 billion, Bitcoin alone isn't far from overtaking the $90 billion-odd invested in all gold ETFs.There are two main reasons to doubt bitcoin's viability as an investment. One is an engineering issue: Its creaky infrastructure is likely to be a turn-off for all but the hobbyist fringe. Another is more philosophical: Digital currencies have no fundamental value, so have no place in a portfolio.Both objections are weaker than you might think.Take infrastructure. It's certainly true that bitcoin's operations are surprisingly clunky. Just confirming a single transaction typically takes more than an hour or longer — it briefly took more than a day at one point last month, according to software company Blockchain.info.
Having said that, financial markets are generally built on similar Rube Goldberg foundations. It's comically difficult for ordinary investors to buy an actual barrel of crude oil, as Tracy Alloway of Bloomberg News found out a few years back. The economist John Maynard Keynes, according to one possibly apocryphal story, once measured up the storage capacity of the chapel of King's College, Cambridge after coming perilously close to having to take delivery of a month's worth of the U.K.'s wheat supply. Completing transactions in the real world is often so clunky that some banks are already exploring using, um, blockchains instead.What makes markets investable for the most part is not their physical foundations, but the superstructure of derivatives contracts, exchanges and clearing houses built on top.To date, the world of bitcoin exchanges has been the wild west. When Mt. Gox filed for bankruptcy in 2014, it said it had lost 850,000 coins worth more than $450 million. Another $70 million-odd was stolen in a hack of Bitfinex last year. The likes of Deribit and Bitmex have been offering bitcoin futures and options for some time, but major institutional investors are only going to participate if they think the clearing and settlement process is rock-solid and the exchange itself reliably solvent.Change on that front is imminent. The Chicago Board Options Exchange is planning to start offering cash-settled bitcoin futures by next April, CNBC reported last week. Trading platform LedgerX LLC last month won regulatory approval from the U.S. Commodity Futures Trading Commission to act as a clearing house for derivatives settled in digital currencies. The ability to short or take leveraged positions in digital currencies could open them to a far wider array of investors.

What, though, is the value of a digital currency? It's a fair question, but one that could equally be leveled at gold. Since Richard Nixon ended the fixed $35 an ounce convertibility of gold in 1971, its value has risen at times (the 1970s, the 2000s) and fallen at others. The best argument to justify investing in gold these days is not that it's an eternal "store of value" but that its very weirdness makes it special: According to modern portfolio theory, you should buy the shiny stuff not for its superior investment returns, but because it doesn't correlate much to other asset classes such as stocks, bonds and commodities.

However, while gold did exhibit weak or negative correlations to returns on the S&P 500 for much of the 1980s and early 1990s, it's been positively correlated for extended periods since then. During gold's 2012 run-up, the two moved more or less in tandem. If gold deserves investment dollars because its inconsistent correlation with equities helps diversify portfolios, the same argument can be made for bitcoin, too.Digital currencies may be as vulgar as the original barbarous relic, but neither is going away any time soon. If that makes investors in both look less like seers and more like problem gamblers betting on where a fly will land — well, welcome to financial markets.

 

Author: David Fickling

 

Posted By David Ogden Entrepreneuer

David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Bitcoin price drops $200 after new ruling from Chinese regulators

Bitcoin price drops $200 after new ruling from Chinese regulators

Bitcoin price drops $200 after new ruling from Chinese regulators

  • Bitcoin's price fell after China announced a ban on initial coin offerings (ICOs) from $4,584 to around $4,350 per bitcoin.
  • This move to be shortlived, according to experts.
  • The move by China is not the first time the country's regulators have attempted to crack down on cryptocurrency.
  • The price of bitcoin fell sharply after Chinese regulators announced a ban on organizations from raising funds using initial coin offerings (ICOs).
     

ICOs allow start-ups to raise investment by selling new cryptocurrencies, which are similar to bitcoin, in return for cash. However, the People's Bank of China says this practice, which has become popular around the world as well as in China, constitutes illegal fundraising.

Despite bitcoin's price falling, some expect this move to be shortlived.

"This type of news is 'universally' negative sentiment, within the crypto space, so we are not surprised to see a dip on all assets today," Fran Strajnar, co-founder and CEO of data and research company Brave New Coin, told CNBC via email.

"We do not see this to be a lasting issue."

While the ban on ICOs does not directly affect bitcoin, the news created negative market sentiment which is weighing on the prices of several virtual currencies, according to Charles Hayter, chief executive and founder of digital currency comparison website CryptoCompare.

"A rising tide lifts all boats but the opposite is also true – with generally bad news reverberating across the ecosystem all cryptos have turned red together," he told CNBC via email.

However, Hayter added that the long-term effects of regulation are positive.

"The wheat will be sorted from the chaff and a new gold standard of ICOs can be striven for," he said.

Bitcoin's price fell from $4,584 shortly before the announcement to around $4,350 per bitcoin. It was trading around the $4,429 level at midday London time on Monday, according to market data from Coindesk.

The move by China is not the first time the country's regulators have attempted to crack down on the cryptocurrency space. In January and February, the central bank warned several digital currency exchanges they would be shut down if they violated anti-money laundering rules.

Furthermore, while bitcoin dropped sharply on the news, its price has been trending down since hitting the $5,000 milestone at the weekend. Strajnar said this recent climbdown is most likely just profit taking by investors.

"There is likely some profit taking since reaching almost $5,000 on bitcoin, but the amount of fresh capital that continues to pour in suggests this is not the start of a trend reversal."

Should you invest in a cryptocurrency?

Author: Luke Graham 

Posted by Daviid Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

Mine Bitcoin Here

 

Alan Zibluk Markethive Founding Member

Venezuela Cracks Down On Cryptocurrency Mining

Venezuela Cracks Down On Cryptocurrency Mining

Venezuela Cracks Down On Cryptocurrency Mining

Venezuela Cracks Down On Cryptocurrency Mining
 

Cryptocurrency mining has become an important source of income in Venezuela, a country ravaged by hyperinflation, but it has also become hazardous as police are cracking down on people they suspect of using too much electricity.

Venezuelans have turned to cryptocurrencies as inflation has ravaged the official bolivar, which has lost 99.4% of its value since 2012. As a result, mining has become more lucrative, and a way for people to earn money to pay for basic living expenses, according to CNBC.

 

Desperation Drives People To Mining

One miner, who agreed to speak only anonymously, became a miner because his $43 monthly salary couldn’t support his family. He began mining illegally by using government computers where he worked, and eventually quit his government job to mine at home.

Another miner who has since fled to the U.S. said mining kept him out of poverty in Venezuela. He said one mining rig will produce enough income to feed a family.

Another woman who works three jobs said mining produces 80% of her $120 monthly income. She said mining has allowed her to support herself and her daughter.

One man said the easiest way to acquire commodities in Venezuela is to use cryptocurrency to buy things on purse.io. He said he orders staples like soap and deodorant and has a courier deliver them to his office.

Miners often turn to online forums to learn how to mine.

 

Government Cracks Down

While mining has become a necessity to many, it has also become dangerous since it is illegal and police arrest people they suspect of using too much electricity. Subsidized electricity in Venezuela keeps the cost of mining down, but the government monitors its use carefully.

In 2016, two men in Valencia were arrested on charges of energy theft and possessing contraband. Since then, arrests have increased. One police official said the offenders are exploiting resources without documentation. A Reddit post said miners in the country are being arrested and charged with terrorism, money laundering and other crimes.

One 23-year-old who said he earned $20 a day mining Ethereum when the currency was at its price peak said he lives in fear of being arrested. Another miner said he was approached by intelligence officials who asked him why he was consuming so much power from his home. He said he moved to another location.

Still another miner said he conceals his electrical footprint by splitting his mining equipment across three locations. He pays neighbors to use their electricity for his mining.

Joe Lubin, Ethereum co-founder, said cryptocurrencies, despite their volatility, are integral to survival in places where natural currencies are spiraling out of control.

 

Author: Lester Coleman on 03/09/2017

 

 

Posted By David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Record $5,000 Bitcoin Price Triggers $13 Billion Market Sell-Off

Record $5,000 Bitcoin Price Triggers $13 Billion Market Sell-Off

Record $5,000 Bitcoin Price Triggers $13 Billion Market Sell-Off

The bitcoin price touched $5,000 this morning, ushering in a historic moment for the cryptocurrency ecosystem. Unfortunately, this achievement also triggered off a comprehensive market sell-off. Almost every major cryptocurrency–including ethereum, Ripple, and IOTA–experienced significant price decreases.

Record $5,000 Bitcoin Price Triggers $13 Billion Market Sell-Off

Chart from CoinMarketCap

The sell-off led to a significant crypto market cap pullback. At the height of the rally, the total value of all cryptocurrencies reached $179.7 billion–a new all-time high. However, nearly $13 billion of that has evaporated in the past 12 hours, bringing the current market cap to about $167 billion.

Chart from CoinMarketCap

Bitcoin Price Hits $5,000, then Dives

The bitcoin price crossed the $5,000 threshold on several exchanges during the early morning hours of September 2, raising the global average price to an all-time high of $4,975. Unfortunately, the bitcoin price did not sustain that level for long. By 3:30 UTC, the bitcoin price had fallen to $4,800. Within another three hours, it had plunged to $4,625. Bitcoin rallied back to $4,775, but the upward momentum did not continue. By the time of writing, the bitcoin price had dropped to $4,630, which translates to a $76.6 billion market cap.

Bitcoin Price Chart from CoinMarketCap

Ethereum Price Rally Stalls

The bitcoin sell-off led to a widespread market pullback, and the ethereum price was not immune. For most of September 1, the ethereum price hovered at about $390. But once bitcoin began to fall, ethereum followed. The ethereum price plunged as low as $352 at 6:00 UTC and currently sits at $357. This reduced ethereum’s market cap to $33.7 billion–a 24-hour decline of 8%.

Ethereum Price Chart from CoinMarketCap

Litecoin Price Reaches $92 for New ATH

The altcoin markets turned red following the bitcoin sell-off, and only three top 25 cryptocurrencies made positive movement for the day.

After inching back to $600 yesterday, the bitcoin cash price dropped to $591. The Ripple price mirrored ethereum’s plight, dropping 8% to $0.231.

Altcoin Price Chart from CoinMarketCap

Litecoin was one of the rare coins with a 24-hour price increase. The litecoin price increased 6% to $80. During the past day, only bitcoin boasted a trading volume greater than litecoin’s $1.7 billion.

However, what this statistic conceals is the fact that the litecoin price had actually risen to a new all-time high of $92 this morning, meaning that it has dropped $12 from its daily peak. Litecoin now has a market cap greater than $4.2 billion.

Litecoin Price Chart from CoinMarketCap

The NEM price fell 5% but maintained a slight market cap edge on Dash, which returned a 6% decline. The Monero price, meanwhile, fell 8%, forcing its market cap below $2 billion. Tenth-ranked IOTA had the worst performance of any top 10 coin, plunging 20% to $0.678.

IOTA Price Chart from CoinMarketCap

Aside from litecoin, only two top 25 cryptocurrencies increased in value over the past 24 hours. Ethereum classic, now ranked 9th, grew 3% to $20 as part of its latter-week rally. NEO, which recently dropped out of the top 10 following a steep decline, managed to defy the wider markets and rise 5% to $33.

Bitcoin Dominance Stable for Week

Bitcoin’s slice of the total crypto market cap ended the week at 45.8%, which is just slightly below where it began. Ethereum’s share had swelled during the middle of the week but had tapered to 20.1% by Saturday. Litecoin recorded the week’s most significant gains, rising from 1.7% on August 26 to 2.5% on September 2.

Market Cap Distribution Chart from CoinMarketCap

As the distribution currently stands, bitcoin cash and Ripple account for 5.9% and 5.3%, respectively. The remaining ~20% is divided between the other 1,000 or so coins and assets tracked by CoinMarketCap

 

Author: Josiah Wilmoth on 02/09/2017

Posted by David Ogden Entrepreneur

Alan Zibluk Markethive Founding Member

Bitcoin Price Nears $5,000; YTD Growth Exceeds 400%

Bitcoin Price Nears $5,000; YTD Growth Exceeds 400%

Bitcoin Price Nears $5,000; YTD Growth Exceeds 400%

2017 has been a breakout year for bitcoin and the cryptocurrency ecosystem as a whole. Now, as the bitcoin price approaches $5,000, it’s an excellent time to look back at the trials and triumphs that have contributed to this 400% YTD rally.

Global Adoption & the Road to $5,000

Bitcoin rang in the new year by crossing $1,000 for the first time since the 2013 melt-up, and the Financial Times promptly called it a pyramid scheme that would soon collapse to zero. The bitcoin price held at this level for the next three months, leading critics like Gizmodo writer Michael Nunez to complain that it “refuses to just die already.”

Of course, bitcoin obituaries like these ignored bitcoin’s increasing global expansion. There was once a time when bitcoin risked becoming a Western phenomenon, excluding the majority of the world’s population. Today, that could not be further from the truth. Bitcoin adoption has exploded in Asia, and the highest-volume cryptocurrency exchange is located in South Korea. Bitcoin has also made inroads into emerging markets such as Africa and India.

This year has also seen Japan embrace bitcoin more rapidly than perhaps any other nation. Toward the beginning of the year, Japan terminated its crippling 8% bitcoin consumption tax, and before long major retailers were accepting bitcoin payments. By the end of the year, analysts predict that as many as 300,000 Japanese businesses will accept bitcoin.

By late April, the crypto market advance had begun to pick up steam, leading to a market cap explosion in May and June. On May 20, the bitcoin price broke through $2,000. Less than a month later, it crossed $3,000 on several exchanges for the first time.

Bitcoin Price Nears $5,000; YTD Growth Exceeds 400%

YTD Bitcoin Price Chart from CoinMarketCap

Despite this bull run, bitcoin almost lost its status as the largest cryptocurrency by market cap. About this time, ethereum came within $10 billion of bitcoin’s market cap, making it seem inevitable that there would be a “Flippening” between the two cryptocurrencies. MarketWatch columnist Brett Arends, meanwhile, wrote that both cryptocurrencies were “complete garbage.” However, the Flippening never came. The markets took a bearish turn following the June 26 “Monday Massacre,” and bitcoin consolidated its position as the dominant cryptocurrency.

Eventually, the markets recovered. After falling as low as $1,900 during mid-July, the bitcoin price reversed course toward the end of the month, initiating the record rally that has carried bitcoin to the brink of $5,000.
 

Bitcoin Overcomes UAHF and PBoC Squeeze

The most astonishing aspect of the bitcoin price’s 2017 performance is not its 400% climb, but rather the trials it overcame to get there. Aside from the incessant claims by mainstream media analysts that bitcoin is a bubble, bitcoin faced adverse events that threatened its future. One of these was increasing regulation. Bitcoin has faced regulation since shortly after its inception, but its 2017 bull run has intensified government interest in cryptocurrency. As early as January, the People’s Bank of China (PBoc)–China’s central bank–began putting a regulatory squeeze on bitcoin exchanges in response to “abnormal [bitcoin] price fluctuations.” Exchanges shut their doors as the PBoC began conducting on-site inspections. However, the PBoC ultimately allowed Chinese bitcoin exchanges to continue their operations, albeit with strict supervision.

More recently, bitcoin survived the contentious bitcoin cash hard fork that split the bitcoin network into two different blockchains. Rather than lead the bitcoin price into decline, the hard fork actually appeared to build confidence in bitcoin’s ability to survive a serious community divide, and bitcoin soared more than 75% in the month that followed.

Scaling With SegWit

The bitcoin cash hard fork was caused by the debate about the best way to scale the bitcoin network. Bitcoin cash proponents, claiming to follow Satoshi’s vision, believed that raising the block size was the best way to ensure bitcoin remained a viable P2P transaction vehicle rather than just a settlement layer. Bitcoin Core, however, adopted Segregated Witness (SegWit), a scaling and transaction malleability fix that also facilitates the creation of Lightning Networks. SegWit was activated earlier this month, which should soon cause bitcoin transaction fees–which reached above $8 this month–to finally decrease to more acceptable levels.

SegWit2x and the Road Ahead

Of course, SegWit activation did not put the scaling debate to rest. Earlier this year, a group of prominent bitcoin companies and personalities signed the New York Agreement (NYA), which proposed a hard fork to the bitcoin protocol. SegWit2x, as the proposal is known, called for a block size increase in addition to SegWit activation. The proposal received near-universal support from miners, but Bitcoin Core developers have vociferously opposed it. Relations between Core and SegWit2x supporters have worsened over the intervening months, and several companies have reversed their NYA support. Despite Core opposition, SegWit2x proponents say they will proceed with the hard fork in November, creating a potentially-chaotic situation in which two blockchains will fight to be the “real bitcoin”.

Nevertheless, investors remain bullish on bitcoin, and the bitcoin price’s triumphant march toward $5,000 continue

 

Author: Josiah Wilmoth on 01/09/2017

 

Posted by David Ogden Entrepreneur

David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Look Mom I have a blog