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Bitcoin Price Could Double with Scaling Resolution: Hedge Fund

Bitcoin Price Could Double with Scaling Resolution: Hedge Fund

Bitcoin Price Could Double with Scaling Resolution: Hedge Fund

 

Global Advisors, a U.K.-based investment firm that has developed an investment program to provide market exposure to the price of bitcoin, recently offered an upbeat outlook on bitcoin. The assessment noted that Litecoin’s recent soft fork gives reason to think the scaling solution could be applied to bitcoin, possibly doubling its price.

Taking measure of the range of news around bitcoin of late, the Global Advisors’ assessment quoted the late Jesse Livermore in saying “a prudent speculator never argues with the tape.” Livermore, an American who lived from 1877 to 1940, shorted the stock market crashes of both 1907 and 1929 and was worth $100 million at his peak before committing suicide following a series of losses.

While much negative news has been reported on bitcoin, the prices have been strong.

Media Focuses On The Negative

On the negative side, which the media tends to focus on, China has clamped down on bitcoin trading by imposing trading fees and AML/KYC controls. There has also been a ban on withdrawals from cryptocurrency exchanges. There has been a roll-over on the temporary ban and a discount of up to $250 for trapped coins.

Looking further back, the IRS last year subpoenaed Coinbase to release client records for bitcoin trades.

More recently, the dispute between different factions within the bitcoin community over the future development of the bitcoin protocol continues.

The SEC denied the Winklevoss bitcoin exchange-traded fund.

Bitfinex, which suffered a hack last year, continues to lack fiat withdrawal capability.

Why The Price Keeps Rising

Bitcoin’s price, nonetheless, has been on an upward trend throughout all the various challenges.

Global Advisors’ assessment points to Japan, the new hot spot of bitcoin bitcoin trading. The BitFlyer exchange has been successful with Japanese investors, likely due to its advertising campaign. BitFlyer’s sign ups set a new record on Facebook.

Litecoin also creates reason for hope. Segregated Witness, a protocol designed to shorten bitcoin transactions and improve the capacity of the transaction blocks, has been successfully implemented by Litecoin. Litecoin’s price, as a result, has tripled.

Litecoin’s SegWit success holds promise for bitcoin. The price impact on bitcoin could be “shocking,” and a price doubling wouldn’t be unexpected.

The hedge fund stated:

 

“Even though one can find no evidence whatsoever that there were scaling pressures in Litecoin, this upgrade went ahead and if it is even slightly predictive of a path that can be taken in bitcoin, one that will at least show progress if not resolution, the price impact could be significant. A double up wouldn’t be shocking.”

Altcoins overall will serve as “test beds” for bitcoin. New features developed for altcoins can be incorporated into bitcoin. ZCash, Ethereum and other altcoins offer desirable features.

Altcoins Gain Market Share

Ethereum’s and Litecoin’s rises have changed the “bitcoin dominance” metric, the assessment noted. Bitcoin dominance is based on the cryptocurrency’s market capitalization as a percent of all coin market capitalization. This dominance has been dropping as the total value of all coins has increased.

Bitcoin comprised 95% of the total crypto market capitalization three years. It now stands at 60%. Global Advisors termed this a “stunning progression.”

But as noted above, growing altcoins bring positive influences for bitcoin.

Arbitrage opportunities: What do they mean?

Global Advisors noted that it receives a lot of requests for an “arbitrage-only” product, which is not the best use of a company’s time that remains upbeat on bitcoin’s price and on scaling its product offerings.

Arbitrages are a consequence of fragmented bitcoin trading venues and limited capital in each trading venue. Hence, a big unidirectional flow can alter a given price deck, yielding an arbitrage opportunity.

Exchanges have three areas leading to wider arbitrage opportunities: credit/reputation risk, difficulties moving coins and problems moving cash. Chinese domestic coins are currently frozen, for example, while Bitfinex and other exchanges have banking issues.

Combined, these factors present arbitrage opportunities, some of which are untradeable, others requiring patience and still others requiring speculation.

Rather than focus on arbitrage opportunities, Global Advisors believes bitcoin’s best days are still ahead.

 

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

Florida Bill Would Punish Criminals Who Use Cryptocurrency

Florida Bill Would Punish Criminals Who Use Cryptocurrency

Florida Bill Would Punish Criminals Who Use Cryptocurrency

 

State lawmakers in Florida have introduced two bills which would add virtual currencies to the state’s money laundering statute. The bills were introduced in the wake of a Miami court case from last year, where a judge ruled that cryptocurrencies like bitcoin are not money, and thus did not fall under the state’s money laundering law. The Senate version of the bill, Senate Bill 1626, was first introduced in the Florida Senate on March 3rd by Republican state Senator Rob Bradley. The companion bill in the Florida Houses of Representatives, House Bill 1379, was introduced on March 7th by Republican state Representative Jose Felix Diaz. State Rep. Diaz represents District 116, which includes Miami-Dade County.

On April 18th House Bill 1379 passed the state House’s Appropriations Committee unanimously, and on Monday the 24th the bill unanimously passed the the state House’s Judiciary Committee. The House version of the bill was added to the Special Order calendar for Wednesday the 27th, where the bill could be voted on by the full state House of Representatives. Senate Bill 1626 unanimously passed the state Senate’s Criminal Justice Committee on March 27th, and then unanimously passed the Appropriations Subcommittee on Criminal and Civil Justice on April 13th. The Senate’s version of the bill is now being considered by the state Senate’s Appropriations Committee.

The two bills were drafted with the help of Katherine Fernandez Rundle, a cybercrimes prosecutor from Miami-Dade County.“The high-tech criminals of the 21st Century use virtual currencies like bitcoin to accumulate and hide the profits of their illegal activities. This legislation makes sure that traffickers and fraudsters can no longer try to use internet-based currencies to hide and move their ill-gotten gains,” Miami-Dade State Attorney Katherine Fernandez Rundle said in a statement.

The proposed legislation would define virtual currency as “a medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.” The language used in both bills is practically identical. For now, cryptocurrencies like bitcoin are not among the types of financial instruments and transactions which are applicable to the money laundering statute. The current law in Florida prohibits people from gaining money from a criminal activity, as well as prohibits using money to further a criminal activity. Due to the court ruling from last year, cryptocurrencies like bitcoin are not legally recognized as money, and therefore cannot be treated as such under the state’s current money laundering law. If the proposed legislation is enacted, prosecutors will still need to prove that a person intended to help launder money, or intended to help further criminal activity.

In the case which inspired the two bills a Florida man, Michell Espinoza, fell victim to undercover law enforcement agents who tried to set him up in a sting operation by buying, what at the time was, $1,500 US Dollars worth of bitcoin. The undercover agents told Espinoza that they had planned to purchase stolen credit card numbers with the bitcoin he was selling them. Michell Espinoza won his case and was cleared of all charges in July of 2016. The state unsuccessfully tried to appeal the judge’s ruling in that case, but were unsuccessful.

While legislators may intend for the two new bills to make people like Michell Espinoza into criminals, it is important to remember something that Miami-Dade Circuit Judge Teresa Mary Pooler wrote in her eight page opinion in the case of the State of Florida v. Michell Abner Espinoza, where Judge Pooler wrote, “This court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning.” Even if the new bills are enacted, it is possible that future defendants being prosecuted under Florida’s money laundering statute could successfully argue that the law is unconstitutional in that it violates the vagueness doctrine.

 

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

Cryptocurrency Costs Unlikely to Crowd Out Fiat Currencies in Korea.

Cryptocurrency Costs Unlikely to Crowd Out Fiat Currencies in Korea

Cryptocurrency Costs Unlikely to Crowd Out Fiat Currencies in Korea
 

South Korea’s central bank has published a new working paper analyzing a dual-currency regime by pitting cryptocurrencies against traditional fiat currencies.

Penned by economists and academics from the Bank of Korea and Seoul’s Hongik University, the working paper, titled ‘Crowding out in a Dual Currency Regime? Digital versus Fiat Currency’, was published earlier this week.

“We examine the impact of a privately issued digital currency and fiat currency using the simplest framework, with which we may derive the most straightforward implications,” reads the introduction of the paper. “More specifically, we attempt to answer the question of whether digital currency will crowd out fiat currency.”

The authors claim their research employs the ‘simplest model of monetary economics’ to drive these straightforward implications with the minimum number of assumptions. The research considers dual currency regime, one which sees the coexistence of privately-issued digital currencies and fiat currencies issued by the government. Bitcoin is underlined is a notable example of a private digital currency.

Making note of a number of efforts with central banks exploring the possibility of issuing their own digital currencies, the researchers point to the example of the Bank of England which has publicly revealed its effort to do so. Such an attempt “could drastically change our monetary system” the authors write.

According to the researchers, the costs associated with both fiat and digital currencies will see both of them function together with each other’s drawbacks. High costs in using one could inturn spur demand for the other, and vice-versa, allowing both fiat and digital currencies to co-exist. They state:

“High costs of using fiat currency increase the demand for digital currency. Similarly, high costs of using digital currency relative to fiat currency raise the demand for fiat currency. In a world of imperfect currencies with uncertain costs associated with the use of a currency, it is unlikely that the relative costs of using digital currency will be low enough to drive out and accordingly crowd out fiat currency entirely. Our results rather suggest that the threshold of equating the demand for fiat currency with that for digital currency will allow the co-existence of both currencies.”

Fiat currencies have been historically known to decrease continuously, the authors confirm, due to inflation and the factor of new money pumped in to the supply by the central bank, also known as quantitative easing.

Bitcoin, in stark contrast, has a fixed supply which would imply a “deflationary bias”, the authors note.

“This could lead to a situation in which Bitcoin drives out fiat currency as a store of value,” the authors speculate, before quickly adding:

However, security or trust issues – the decentralization of digital currency and the absence of insurance provided by governmental authorities – may prevent digital currency from being used as a store of value. Instead, digital currency may be used as a medium of exchange dominantly.

The authors also point to future research possibilities, such as covering the topic of digital money appreciating due to ever-increasing demand and the possibility of a triple currency regime, one which would see private digital currencies like bitcoin, central bank digital currencies and fiat currencies operate together.

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

UK Banks Shun Bitcoin !

Banks in the United Kingdom are turning a deaf ear to bitcoin exchanges, despite the government’s pro-blockchain position, according to financial writer Roger Aitken, writing in Forbes. Unless the situation changes, the banks will undermine bitcoin’s progress and drive Cryptocurrency entrepreneurs out of the banking system.

This fact together with the uncertainty  surrounding the pound due to Brexit could be a disaster for those who live in the UK, the banks are feeling under threat. Hopefully the government will step in and tell them not to be so stupid.

Cryptopay, a bitcoin brokerage, recently informed customers that it will no longer support British Pound deposits and withdrawals on account of new bank policies. Such incidents have increased as bitcoin has gained popularity.

Cancellation of GBP deposit and withdrawal facilities limits people to Single Euro Payments Area (SEPA) transfers, making Cryptopay’s buying and selling useless to most British customers.

U.K. Banks Shun Bitcoin

A dozen or more U.K. brokerages and bitcoin exchanges have suffered over the past three to four years as banking facilities have become unavailable. Some have closed or resorted to awkward arrangements.

Britcoin, which became rebranded as Intersango, started in 2011. It faced problems with U.K. bank transfers before eventually closing. An August 2012 update noted that bridging the gap between bitcoin and the conventional banking system was costly on account of technical issues, missing transfers, and accounts frozen and closed without warning.

In 2014, Bit121 had a promising start, but banks withdrew their support and the exchange closed.

In Bitcoin We Trust suffered the same fate. It resorted to using postal orders before giving up.

Coinfloor, one of the only U.K. exchanges still operating, uses SWIFT transfers, which incur hefty costs and delays. The minimum transfer is £1,000 (c.$1,250).

Banks Pour On The Pressure

CoinJournal, a bitcoin publication, saw its banking services come to an abrupt end after its U.K. banking provider Barclays terminated its business account. CoinJournal received no official warnings prior to its account closure. Even more alarmingly, Barclays still hasn’t given a reason for the extreme action.

CoinJournal believes the decision taken by Barclays to close its business account was an “automated” call, after seeing a pattern of banking transactions involving prominent bitcoin exchange and service provider Circle.

The decision was likely “a result of us using Circle to transfer fiat from ad revenue into bitcoin to pay our writers and some overheads,” a representative for the publication told CCN.

Similar scenarios have played out in Australia and New Zealand.

BitNZ, a New Zealand bitcoin exchange, has announced it is closing due to the refusal of New Zealand banks to allow bank accounts to trade bitcoins, and has advised customers to withdraw all funds before April 15, 2017.

The Australian Competition and Consumer Commission is scrutinizing attempts by Australia’s biggest banks to swallow fintech companies developing technologies like blockchain solutions in the financial sector.

P2P Services Fill The Void

Peer-to-peer services match individual buyers and sellers in the U.K. in lieu of traditional exchanges. Trust is established by reputation.

Once a buyer has paid, usually with a bank transfer the seller sends the bitcoins.

As for other nations, Russia recently relaxed its regulatory position and taken a “wait and see” approach. It has effectively legalized bitcoin and allowed for exchanges to operate.
Switzerland is a more progressive country. It is easy to buy bitcoins through a network of ATMs on the rail system.

In Japan, it is possible to pay electric bills with bitcoin.

The United States has a more complex regulatory framework. But progress is on the horizon since the New York BitLicense took effect in 2015, with other state’s following a similar approach.

Bitcoin is legal in China, although the central bank recently stopped highly leveraged trading.

U.K. Banks At Odds With Government

The banking sector is clearly at odds with the U.K. government, which is openly pro-blockchain. The situation is peculiar, with the government saying the country is open to bitcoin but the banking sector standing in the way.

Since the financial crisis, the taxpayer has become the majority shareholder in the Royal Bank of Scotland, holding at around 82% of the bank. This would normally translate into a certain amount of leverage by the taxpayer.

The U.K. also has a reputation for being a fintech hub, to which the banking sector seems to have taken exception.

For whatever reason, the banks have closed ranks and chosen not to work with bitcoin.

The fact that bitcoin is decentralised and fiat currency is centralised could be at the root of the conflict.

Also read: Blockchain platform Waves raises more than $2m at the start of the crowdsale campaign

What’s To Be Done?

Money cannot flow easily from the blockchain economy to the traditional financial sector and vice versa without banks’ cooperation. The bitcoin sector is not large enough to offer all the goods and services needed to make bitcoin a sufficiently broad means of payment.

Bitcoin’s volatility also makes it an unsuitable unit of account or store of value. While it’s a great transfer medium, its price against fiat fluctuates too much for most people.

The bitcoin economy won’t expand until bitcoin is better suited as a means of payment. But it won’t be better suited without more growth and stability.

Waves, a custom blockchain tokens platform, offers a solution – fiat-backed blockchain tokens. It raised $16 million last summer through crowdfunding. Waves can act as a gateway between the blockchain and the fiat world.

Customers pay money into the gateway using a bank transfer or another suitable means, and the gateway issues them the same sum in blockchain tokens

The same exchange occurs in reverse when customers cash out their Waves GBP and have them sent as “real” GBP to their bank account. Waves essentially serves as a toolkit.

Sasha Ivanov, CEO and founder of Waves, noted that Waves can make money more efficient. By putting fiat money on the blockchain, Waves can make it more transparent and faster, and it can reduce the cost of sending it abroad.

Ivanov thinks Waves can introduce competition and encourage banks to become more accountable. If banks in one sector in one country won’t work with Waves, it will work with those in another jurisdiction.

Waves does not immediately solve the problem of U.K. banks’ hostility to bitcoin, but it suggests the roadblocks are not insurmountable. The answer may be to work around them rather than with them.

David Ogden
Entrepreneur

 

Alan Zibluk Markethive Founding Member

Bitcoin is back above $1,000

 

Bitcoin is back above $1,000

Bitcoin is is back above $1,000 for the first time since January 5. The cryptocurrency was higher by 1.5% at $1,000.10 a coin as of 11:39 a.m. ET.

It's been a wild year for bitcoin. It began 2017 with a 20% rally during the first five days of the year before crashing 35% on concerns of a crackdown on trading in China.

Thursday's gains have extended bitcoin's winning streak to a sixth straight session as trade appears to be benefitting from uncertainty surrounding Donald Trump's presidency. The cryptocurrency has gained nearly 10% since Trump was inaugurated on January 20.

I believe that is the $1,000 level can be maintained  we will see a rise again later in the year. The recent trend has been upwards but it wil peak and then fall again.

I have been earning free bitcoins at Bitearn , by completing surveys, the rewards are not great , the equivalent of less than a pound a day, which I transfer to my wallet. This adds interest to tracking the market both in Bitcoin and other Cryptocurrencies.

Today Infinity Economics Launched thier wallet to members. The next few weeks will see added functions, as it is much more than a wallet.

David Ogden

Earn Free Bitcoins Here

 

 

Alan Zibluk Markethive Founding Member