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Teenage bitcoin millionaire can see the cryptocurrency’s value shooting as high as $1 million

Teenage bitcoin millionaire can see the cryptocurrency's value shooting as high as $1 million

Teenage bitcoin millionaire can see the cryptocurrency’s value shooting as high as $1 million

If this teen entrepreneur, high-school dropout and bitcoin millionaire has any predictive powers at all, then we’ve hardly seen the top of the market for the hot cybercurrency.

Meet Erik Finman, who started picking up bitcoin at $12 apiece back in May 2011, when he was just 12, riding a hot tip from hits brother Scott and a $1,000 gift from his grandmother, he told CNBC. He’s now the owner of a reported 403 bitcoins, and while the cybercurrency has been on a bit of a bumpy ride lately, at a Wednesday morning price BTCUSD, -0.48% of $2,773.54 each, the now 18-year-old Idahoan’s stash is worth $1.1 million and change.

“Personally I think bitcoin is going to be worth a couple hundred thousand to a million dollars a coin.”

Erik Finman

 

Finman cashed out his first bitcoin investment back in 2013 and started Botangle, an online education company that provides tools for locating instructors in subjects they need or wish to learn about.

He wasn’t a fan of high school and convinced his parents, both Ph.D.’s, to let him drop out at 15.

His teachers clearly weren’t seeing his potential. “One teacher told me to drop out and work at McDonald’s because that was all I would amount to for the rest of my life. I guess I did the dropout part,” the young bitcoin millionaire said. He didn’t really want to go to college, either, and won a bet with his parents that if he was worth a million dollars by 18, he could skip it. He was, and so he did.

Finman encountered discouragement from an Uber executive, who, instead of listening to his Botangle pitch, told him he should count on college rather than racking up millions. But the teen did end up successfully selling his company’s technology, for a cool price of 300 bitcoin, reportedly. He has said he turned down a $100,000 offer.

Bitcoin prices have soared more than 300% in the span of a year, with the bulk of the gain coming during May and June. Ethereum, one of its chief rivals, has also seen big gains. Bitcoin tapped $3,000 last week, before a pullback last week that saw it shed billions in market cap.
 

David Ogden
Entrepreneur

 

Author: Barbara Kollmeyer
Markets Reporter

Alan Zibluk Markethive Founding Member

How To Grow Bitcoin

Grow Your Bitcoin

How to grow Bitcoin

 

Bitcoin is the leading chryptocurrency and is starting to change the way people use money and invest in the future. The coin is a limited resource which some compare to Gold and certainly at the moment it is holding its own value wise.

Unlike traditional coins chryptocurrencies have many more decimal places which mean you can purchase sell or earn a bit of a coin, just like in ancient times where physical coins were cut into pieces.

Bitcoins have become popular in developing countries, where they are perceived to be better value and safer to use than traditional currencies which are controlled by Governments

I started earning bitcoin a few month ago, completing online survey and earning 74to 359+ bits for 5-30 minutes work. It may not be much, but I puts you on the road to prosperity. Currently I have some 100 ukpd worth of coins in my wallet.

Rather than leaving you Bitcoin in a wallet, You can invest and trade them online, which can be risky if you do not know what to do, the basic aim is to buy on the lows and sell on the highs.

You will see many companies which offer to multiply you coins by hype methods offering high returns which are not sustainable and often lose down without notice.

I have found two companies who actually trade chryptocurrencies using specialized trading algorithms, which greatly reduce the risk of loss. One company has a excellent track record, however you need to keep you coins invested for a year, compounding your gains.

The second company based in the Far East has only been trading for a short while but is very reactive to changing conditions, which have forced its competitors to shut down, it also transfers the interest you earn into your personal wallet, which is then under your own control.

There will be many people who claim that both of these companies are a scam, but frankly most do not know what they are talking about. I used to be a currency trader many years ago and know for a fact that automated trading programs do work. Chryptocurrencies are more volatile so one can see that doubling your money in 60 days is not an unreasonable target.

 

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

Ethereum Tokens Are All the Rage. But What Are They Anyway

Ethereum Tokens Are All the Rage. But What Are They Anyway

Ethereum Tokens Are All the Rage. But What Are They Anyway

Ethereum wants to create an ecosystem where everything works together seamlessly as part of its vision for a 'world computer' – and that includes the tokens required to power it.

Launched in 2014 by a band of coders and an upstart teenager, ethereum was designed to make it possible for anyone to code nearly any type of app and deploy that on a blockchain. Many of these decentralized apps (or 'dapps' for short) needed their own token that could, among other things, be sold and traded easily.

To that end, nearly 18 months ago, the ERC-20 token standard was born.

It's hard to overstate how important that interface has been. By defining a common set of rules for ethereum-based tokens to adhere to, ERC-20 allows developers of wallets, exchanges and other smart contracts, to know in advance how any new token based on the standard will behave.

This way, they can design their apps to work with these tokens out of the box, without having to reinvent the wheel each time a new token system comes along.

As a result, almost all of the major tokens on the ethereum blockchain today, including those sold in the recent surge of ethereum-based initial coin offerings (ICOs), are ERC-20 compliant.

 

Tokens 101

Before delving deeper, it's important to spell out what a token actually is and how it differs from ether, the native currency driving the ethereum blockchain.

As they relate to the ethereum network, tokens are digital assets that can represent anything from loyalty points to vouchers and IOUs to actual objects in the physical world. Tokens can also be tools, such as in-game items, for interacting with other smart contracts.

But put simply, a token is nothing more than a smart contract running on top of the ethereum blockchain. As such, it is a set of code (functions) with an associated database. The code describes the behavior of the token, and the database is basically a table with rows and columns tracking who owns how many tokens.

If a user or another smart contract within ethereum sends a message to that token's contract in the form of a 'transaction,' the code updates its database.

So, for instance, when a wallet app sends a message to a token's contract to transfer funds from Alice to Bob, this happens:

First, the token's contract checks that the message was signed by Alice and that Alice has enough funds to cover the payment

Then, it moves funds from Alice's to Bob's account in the database

Finally, it sends a response, letting the wallet know the transaction was a success.

In contrast to tokens, ether is hard coded into the ethereum blockchain. It is sold and traded as a cryptocurrency, and it also powers the ethereum network by allowing users to pay for smart contract transaction fees. (All computations on the ethereum network have a 'gas' cost.)

When you send tokens to an exchange, for example, you pay for that transaction (in this case, a request to the token's contract to update its database) in ether. This payment is then collected by a miner who confirms the transaction in a block, which then gets added to the blockchain.

Early on in ethereum's history, standards were part of the overall plan to create a user friendly and broadly accessible system. But like all standards, ERC-20 took time to evolve over a series of long discussions and careful considerations.

So, sometime before DevCon1, the first big ethereum conference in 2015, Vitalik Buterin, the founder of ethereum, introduced the initial standards token.

Later that year, Fabian Vogelstellar, one of the developers working on ethereum's Mist wallet, took that standard, changed a few things, and proposed it to the community as ERC-20 to initiate a formal conversation around how the standard should be implemented.

Then in April, due to changes in how the Ethereum Foundation was organizing its GitHub, the ERC-20 standard was moved to a Github pull request.
 

What's inside?

ERC-20 defines a set of six functions that other smart contracts within the ethereum ecosystem will understand and recognize.

These include, for instance, how to transfer a token (by the owner or on behalf of the owner) and how to access data (name, symbol, supply, balance) about the token. The standard also describes two events – signals that a smart contract can fire – that other smart contracts 'listen' for.

Together, these functions and events make ethereum tokens work the same almost everywhere within the ethereum ecosystem. As a result, nearly all wallets that support ether, including Jaxx, MyEtherWallet.com and the official ethereum wallet, now also support ERC-20 compliant tokens.

According to Vogelstellar, who spoke to CoinDesk about the importance of ethereum's token standard, this interoperability lays the groundwork for big changes to come.
 

He said:

"I believe we are just at the beginning of tokenizing everything. Maybe in the future, you will be able to buy a share of the chair you are sitting on, the paint inside your house or a fraction of equity in a huge building complex."

 

Bumps in the road

One thing to keep in mind, though, is that ERC-20 is formally a draft, meaning it is not being enforced and still needs to be fully blessed by the ethereum community. Regardless, Vogelstellar said, every new token will likely conform to its set of rules.

He cautioned, however, that the standard is still young, so there will be bumps in the road. One of those bumps is that sending tokens directly to a token's smart contract will result in a loss of money. That is because a token's contract only tracks and allocates money. When you send tokens to another user from a wallet, for example, that wallet calls on the token's contract to update the database.

As a result, if you attempt to transfer tokens directly to a token's contract, the money is 'lost' since the token's contract cannot respond.

So far, $70,000 worth of tokens have been lost in this manner.

But solutions are in the works. As an extension to ERC-20, ERC-223 attempts to resolve the issue by suggesting a token's contract implement a tokenFallback function to prevent the contract from holding tokens sent directly to it accidentally.

Vogelstellar argued this is all just part of developing a solid system, though, saying:

"Driving with these prototypes can be rocky at times, but ultimately they provide the necessary learning that will bring us to the future of blockchain and smart contract interactions."

 

David Ogden
Entrepreneur

 

Author: Amy Castor

 

Alan Zibluk Markethive Founding Member

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

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

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

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

3. TRANSACTION DELAYS CAN COST MONEY

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

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

2. AN EXCHANGE WALLET IS NOT YOUR WALLET

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

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

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

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

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

 

David Ogden
Entrepreneur

 

Author: JP Buntinx

Alan Zibluk Markethive Founding Member

Hedge Funds Are Quietly Investing in Bitcoin

Hedge Funds Are Quietly Investing in Bitcoin

Hedge Funds Are Quietly Investing in Bitcoin

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

Average Hedge Funds Return 3.5% This Year

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

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

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

Bitcoin Helps Hedge Funds’ Bottom Line

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

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

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

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

Why Don’t More Hedge Funds Invest in Bitcoin?

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

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

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

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

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

By Kevin Helms

 

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member

Is Bitcoin or Other CryptoCurrency a Good Investment

Is Bitcoin or Other CryptoCurrency a Good Investment

Is Bitcoin or Other CryptoCurrency a Good Investment

Despite all denials of the techies, the Bitcoin continues to fly under the pressure of marketing that makes it a form of Russian roulette that benefits those who know the manipulation. Since March 26, the Bitcoin has increased from $ 973 to $ 2,795. A real explosion of prices which can only be explained by fraudulent maneuvers. It went from $ 16 billion to $ 43 billion.

But behind this surge, there are formidable manipulators who have means that are the exchanges of bitcoins of which several leaders are in prison. The founder of the world’s largest depository based in Bitcoins, now based in Zug, Switzerland, predicts that the value of a Bitcoin will surpass the million dollar mark in 10 years, taking by surprise the whole assembly and even the most Optimists in the sector. Some see the replacement of gold. We are in full delirium.

On several occasions, these dramatic increases came from the conversion of dirty money into Bitcoin. We do not know what causes these mood swings that fall quickly. Do they pose a fundamental question: Beyond the technology behind the object, from where comes the value of $ 32 billion?

No regulation of false rumors or manipulations

There is a lot of talk about the Bitcoin right now, as well as a few other crypto-currencies, but are they really good investments? Recently I read research which describes why Bitcoin are a good investment for the future. They also provide detailed analysis and data to showcase their study. So I am exploring based on that and my personal opinion on crypto-currencies.

I will divide this question into three points:

1. Are crypto-currencies really an investment?

2. What currency crypto choose?

3.Are crypto-currencies really an investment?

Nowadays, virtually everything is called an “investment”. In the case of crypto-currencies, trading (trading) and investment are again confused, even by financial professionals.

 

An investment is when you buy an asset that produces something, and that by extension creates income.

For example, if you buy a tractor and lease it, it will allow someone to dig to then put the foundation of a house, pull farm machinery, and much more. In exchange for the productivity of your assets, you receive an income.

The question is, therefore: does the crypto-currency produce something?

The main added value of crypto-money is that it can make anonymous transactions, so it increases economic activity (albeit generally illegal).

That said, it produces nothing tangible for you because its overall productivity is drowned in the pool of all transactions.

Your only hope is therefore that its overall productivity in the form of a currency function is growing so that you can “freak out” your crypto-currency.

Basically, crypto-currency does not produce income for you, and your only option to make money is that its demand increases.

When a profit is generated not by production but by the difference between the purchase price and the selling price, it is called trading and not an investment.

What does it actually mean that it is trading and not an investment?

Trading is speculation and it’s not complicated, 95% of people lose at this activity.

Investing is a much safer way to get rich. You simply need to be aware of what you are doing with your money, and not speculate in thinking that you are investing.

Which crypto-currency to choose?

Bitcoin? Zcash and Zcoin? SafeCoin? Syscoin?

Admitting that you understand that you are speculating, the only crypto-currency I would negotiate personally is the Bitcoin, for two reasons:

 

Reason # 1: Everyone knows the Bitcoin

This point seems banal and simplistic. However, it should not be forgotten that the value of crypto-currencies is based on people’s trust. Indeed they are “fiat currencies”, like the Canadian dollar, the US dollar, and virtually all currencies in the world.

People have a tremendous confidence in the Canadian dollar and particularly the US dollar, which is the world’s reserve currency. What about crypto-currencies?

How do people trust you, the Bitcoin, the Zcoin, or the Syscoin? Obviously, people have more confidence in the Bitcoin, and one can easily assume that it will only go by increasing over time.

However, there is always resistance, and people do not have enough confidence in the Bitcoin to move away from the Canadian dollar or the US dollar.

In particular, the critical point or the Bitcoin could explode in price is when people will have enough confidence to use another function of the currency: the reservoir of value.

When people have confidence in Bitcoin to use it as saving, as an entity where they can retain the value of their work, then everything will change.

But how could the Bitcoin reach this level? How to develop this trust? These questions lead me to the second reason.

 

Reason # 2: The Bitcoin is the only crypto-currency that has a real chance

The Bitcoin is the only crypto-currency that has a real chance of what? To become an official currency, endorsed by the government and the financial system.

A strong and unshakeable confidence in the Bitcoin can only exist if governments and the financial system give it their approval.

In fact, it seems that in Canada the government is increasingly ready to incorporate the Bitcoin into daily transactions. This is not cast in concrete, and the future is still vague at the legislative level.

One of the barriers to official currency status for Bitcoin is that the government cannot legalize a private currency, which would limit its ability to tax transactions.

Can another crypto-currency based on the blockchain possibly be adopted rather than the Bitcoin? Yes, but precisely, there lies the whole aspect of speculation: we must try to predict the future.

In summary, invest in crypto-currencies or not?

Honestly, the majority of people do not even have $ 2,000 in an emergency, according to an article I read, so I do not see myself buying Bitcoins.

In this situation, I would buy stocks, bonds, gold, and real estate well before buying Bitcoins.

So unless I have a full RRSP and a TFSA, stuffed with income-producing assets, I cannot justify buying crypto-currencies.

I understand the desire to hit a home run with the Bitcoin, the desire to make 10 times his initial bet. This may be suitable for some people, but I cannot endorse this strategy because it makes a lot more losers than winners.

The strategy to get rich that works for me and in general is to get rich in the long run, walking by walk, so surely find myself at the top of the stairs.

 

Aashish Sharma

 

The article above is quite interesting but many people do not realise you do not need to to purchase a wholw bitcoin, there are ways and means to earn bits for free completing surveys, or by investing in Trade Coin Club

David Ogden
Entrepreneur

 

Alan Zibluk Markethive Founding Member

Crypto Asset Fund looks to raise $400 million to buy into blockchain frenzy

Crypto Asset Fund looks to raise $400 million to buy into blockchain frenzy

Crypto Asset Fund looks to raise $400 million to buy into blockchain frenzy

 

Timothy Enneking started a cryptocurrency fund in 2014, when the market was almost exclusively bitcoin. That's no longer the case.

The 58-year-old money manager is now aiming to raise up to $400 million for the Crypto Asset Fund, a diversified pool of digital currencies and assets that he expects to be in the tens of millions of dollars by the end of this year. Enneking filed with the SEC on Monday.

With the soaring value of ethereum, Ripple XRP and NEM, the top 100 cryptocurrencies combined are now worth more than $98 billion, according to CoinMarketCap. Bitcoin accounts for 46 percent of the total. Enneking said just six to eight months ago, the total value was in the low teens and 85 to 95 percent was bitcoin.

"We can actually now apply much more sophisticated tools to a portfolio of investments," said Enneking, who started managing money in Russia in 2002 and is now based in San Diego. "I don't think the world has seen but the pointy end of the spear in terms of what's going to happen in cryptocurrencies."

Crypto Asset is a trading fund, so it's not for the buy-and-hold investor. Enneking said that the minimum investment for the fund is $25,000 and that most of the institutions that are approaching him have between $100 million and $2 billion under management.

What Is Blockchain

The craze around cryptocurrencies stems from growing adoption of blockchain, a distributed electronic ledger that makes all transactions trackable. Banks are using it for payments and back-office functions, while companies in digital music, ride-sharing and cybersecurity are starting to use blockchain for tracking, sharing or protecting assets.

It's still very early and speculators abound. Start-ups built on blockchain are creating their own crypto-tokens and selling them to investors and prospective customers in initial coin offerings (ICOs). Buyers can hold the tokens in the hopes of price appreciation or, in some cases, use them as currency in the company's ecosystem. For example, a cloud storage company called Storj sold tokens that customers can use to buy digital storage space.

Enneking said he participated in an ICO for INTCoin, which calls itself "a next-generation decentralized currency that takes advantage of blockchain capabilities for instant transactions with a minimum fee."

'Less regulation'

As for the Crypto Asset Fund's strategy, Enneking said he's broken the market up into six pieces, ranging from the "blue chips" valued at above $2 billion all the way down to the currencies with so little value that they don't trade. There are currently four cryptocurrencies that fall into the blue chips category — bitcoin, ethereum, XRP and NEM — and another 22 in his large-cap group with coins outstanding valued at $200 million or more, according to CoinMarketCap.

Enneking spends much of his time educating investors about the market and trying to get them comfortable with the idea that crypto is just like any other asset, except it's moving much more quickly and the regulators have yet to become a presence.

That's a big part of the risk.

"It's not nearly as different as the average fiat investor thinks it is," Enneking said. "It's better, faster and with less regulation, which isn't always good."

Ari Levy

Senior Tech Reporter CNBC

 

If you do not have $25,000 to invest, you could go to Trade Coin Club where minimum starting investment is 0.35 Bitcoin

David Ogden
Entrepreneur

 

Alan Zibluk Markethive Founding Member

The new cryptocurrency gold rush: digital tokens that raise millions in minutes

The new cryptocurrency gold rush: digital tokens that raise millions in minutes

The new cryptocurrency gold rush: digital tokens that raise millions in minutes

 

New York City

About a dozen rain-soaked people were crammed between the revolving doors and security barriers in the lobby of New York University’s Stern School of Business as torrents pelted down outside. All desperately wanted in to the hottest ticket in town, one that promised to make some of them overnight millionaires, if not billionaires. Among them was Dan Morehead, a former Wall Street titan turned bitcoin investor, and a dentist working on a blockchain startup who had flown in from Seoul.

“I don’t really care that you overbooked, it’s not my problem! I don’t care about a refund,” one agitated man seeking entry barked at two T-shirt clad twentysomethings on the other side, one of them clutching a clipboard.

“You can be upset and raise your voice, but we can’t change anything,” one of the gatekeepers replied.

“We have three clients down there!” another man interjected.

The clipboard holder dutifully scribbled down names. When it was my turn, she said NYU wanted to clear out the huddled mass blocking the building’s entrance: “The auditorium holds like 470 people. We have more than 500 people down there right now. NYU is calling security.”

Inside, a conference called “Token Summit” was in full swing. The event was the first to focus on a rapidly snowballing phenomenon called cryptocurrency token offerings—a new fundraising method that allows companies to raise millions of dollars in mere minutes.

The cryptocurrency world has gone mad for token offerings. These launches, popularly known as ICOs or initial coin offerings, have already raised more than $150 million this year, according to research firm Smith + Crown. They are seen as a disruptive new mechanism that could displace traditional venture capitalists from the fund raising process—a view that’s been endorsed by a coterie of brand name VCs themselves—and remake the internet’s business model with decentralized applications and cryptocurrencies. Take an outfit known as Gnosis, a decentralized prediction market, which raised $12 million in under 15 minutes, valuing it at $300 million. Investors had invested based solely on a PDF prepared by its founders (recently a firm called Brave raised $35 million in 30 seconds).

As cryptocurrency prices exploded, ICO fever gripped the over 2,700 blockchain tech enthusiasts who descended on New York in late May for a series of back-to-back industry conferences. Rumors flew about the fortunes being made, as the cryptocurrency ethereum climbed from $127 per unit of ether at the start of the week to $228 by Thursday. The head of an ethereum app development shop was said to hold 6 million ether, meaning he went from being a mere millionaire on Monday to an ether billionaire, holding $1.4 billion worth of the stuff, three days later. “Out of the 2,700 attendees there were at least 500 millionaires, and between zero to five billionaires,” said one longtime observer of the cryptocurrency scene, who wanted to remain anonymous.

Why are tokens a big deal?

The oracles of Silicon Valley say token offerings could reinvent the “freemium” business model of the internet, upending the huge centralized services—think of Facebook or Google—that have emerged. Instead of enticing users with free services, paid for by venture capital, and then eventually turning a profit by showing ads to those users, tokens offer a direct channel for capital to flow between user and the technologist.

The user would pay for a token upfront, providing funds for coders to develop the promised technology. If the technology works as advertised and gains popularity, it should attract more users, thus increasing demand for the token offered at the start. As the token value increases, those early users who bought tokens will benefit from appreciating token prices. Each token offering has different rules around the total supply of tokens and when they are released.

“This is a ‘better-than-free’ business model, where users make money for being early adopters,” write Balaji Srinivasan and Naval Ravikant, a partner at venture firm Andreessen Horowitz and the founder of investing platform AngelList, respectively. Ravikant has launched a platform called CoinList that will help accredited investors put money into token launches.

Token offerings could also correct an imbalance in the way financial rewards are distributed among technologists. Historically, the people who develop foundational technologies, such as protocols, have watched from the sidelines as others—firms that build the applications running atop those protocols—reap the riches. The Google search engine, for instance, is an application that trawls the world wide web, which is made up of a collection of open-source protocols. Yet it’s Google’s founders who are billionaires and not Tim Berners-Lee, who came up with the protocols that made not just Google, but the entire web, possible.

Cryptotokens could change that because protocol creators now have a way to be rewarded for the success of their technology, without having to create a hit application on top of it. “With tokens … the creators of a protocol can ‘monetize’ it directly and will in fact benefit more as others build businesses on top of that protocol,” writes Albert Wenger, a partner at Union Square Ventures.

This is the argument behind the “fat protocol” investment thesis: the protocols of the past were “thin” and unable to accrue financial value. The application layer resting atop those protocols were the ones to reap the rewards. But cryptotokens could enable the protocols of today to become “fat”—creating more wealth and value than even the enormously successful applications of the past. “These new ‘fat protocols’ may eventually create and capture more value than the last generation of Internet companies,” Srinivasan and Ravikant write.

Venture firms who subscribe to this theory have wasted no time putting their money where their mouths are. This is why firms like Union Square Ventures and Andreessen Horowitz have backed funds like Polychain Capital, which invest exclusively in token offerings. While the tokens are being raised for digital services at the moment—things like storage, identity management, or chat room stickers—one can imagine them being used for offline products and services someday in the future, too.

Nor are tokens limited to new projects. The chat platform Kik, with 15 million monthly active users, launched its own token last week at the conference, in the hopes of seeding an “economy built around chat (pdf).” In practice this means Kik users can earn and spend on special stickers, images, or even entry to celebrity chat rooms using the chat app’s Kin token. Unlike traditional loyalty points issued by a merchant, however, the Kin tokens are decentralized because they are issued on top of ethereum (more on that below). The Kin digital currency could exist even if the chat app vanished after issuance—although it probably wouldn’t be used very much and would be worth little.

What are tokens, exactly?

At this stage, an explainer on what tokens are, exactly, is helpful. You can think of a token offering as a hybrid between a Kickstarter campaign and a stock market flotation. On one hand, the launch lets customers reserve a product or service before it’s completed and ready for the market—that’s the Kickstarter part. On the other hand, it also gives those customers a stake in the future of that product or service; if the service gains in popularity, the token should rise in price, enriching the original users, making it a lot like getting in on a hot IPO. However, one of those analogies puts token issuers squarely in the sights of securities regulators, so the distinction is crucial. More on that later when we discuss the legal gray area that tokens occupy.

Like the rest of the cryptocurrency industry, token offerings rely on a basic circular logic: A token has as much value as its users bestow on it, just as bitcoin rises in price so long as demand outstrips supply. But token boosters say their units of digital currency are different from bitcoin in one critical respect: they are programmable, and have been coded to perform various useful functions.

Tokens issued today are built atop ethereum, the second most valuable cryptocurrency on the market. Ethereum is like bitcoin because it is a tradable digital currency, which is called ether. It’s unlike bitcoin because it was designed with its own programming language—a significant departure from, and its creators say, an upgrade over, bitcoin. This language allows people to write “smart contracts” or automatically executed agreements on ethereum. A bond, for instance, might automatically pay out its coupon, without the need for an intermediary or paperwork.

It turns out that ethereum’s programming language is powerful enough that coders can write smart contracts that issue new units of digital currency, bound by their own rules. This is what the tokens offered today are: a series of complicated ethereum smart contracts. The ethereum network itself is being used as a giant token-issuing machine. “Right now ethereum is a token factory,” says Muneeb Ali, co-founder of Blockstack, a startup working on building tools for a decentralized internet.

The circularity of cryptocurrency economics is at play again here: Ethereum itself raised capital from its users by offering ether tokens in 2014, raising $18 million. The ethereum protocol then became a staging ground for experiments in token funding: A vehicle called the Decentralized Autonomous Organization managed to raise $150 million on the promise that it would be a new form of business structure, one that automated away managers using a combination of smart contracts and tokens. It was promptly hacked for millions and flamed out spectacularly.

An ethereum-based token is to ether as a concert ticket is to a US dollar, Peter Van Valkenburgh, director of research at the Coin Center think tank, suggests. “In the real world we often use all sorts of items rather like we use cash,” he writes. “We use tickets, coupons … and a variety of bearer instruments because they entitle the holder to different things.” These customized tokens can be traded on secondary markets, like exchanges, and have their own value, independent of the price of ether.

Orange groves and securities law

While the potential of token launches remains vague, though powerful, almost everyone I spoke to at the New York conferences agreed on one thing: The US government would crack down on the offerings eventually. No one seems to think the good times for ICOs will last.

The legality of tokens hinges on something called the “Howey test,” named after a Florida company in the 1940s that tried to raise capital by selling contracts against its citrus groves—a practice that the US Supreme Court ruled was similar to a stock offering. At the Consensus conference, the debate about whether or not ICOs were like citrus grove contracts was captured by an exchange between Van Valkenburg, who argued that tokens are like products and not securities, and Preston Bryne, a lawyer and founder of a blockchain company called Monax.

“It’s like buying gold … it’s not like buying a security in a gold mine,” said Van Valkenburg. Responded Bryne, “This is complete nonsense. Everybody knows what this is. It’s, in substance and form, the sale of investments that people are purchasing with expectation of profit at a later date.”

Of course, what really matters is the regulator’s opinion. The US Securities and Exchange Commission hasn’t weighed in on the matter yet. But an SEC official who spoke at the Consensus conference, Valerie Szczepanik, who heads its unit looking at blockchain tech, sounded a note of caution, according to Reuters: “Whether or not you are regulated by the SEC, you still have fiduciary duties to your investors. If you want this industry to flourish, protection of investors should be at the forefront.”

Token boosters await official intervention with a mixture of trepidation and relief. Take Stan Miroshnik, who was a veteran investment banker with Morgan Stanley in London. He now runs a firm called Argon that corrals big investors—like cryptocurrency “whales,” adventurous family offices, and hedge funds—into token launches to ensure they’re sold out.

When a group of coders wants to raise money for their project, Miroshnik hits Slack teams, Telegram groups, and gets press in the cryptocurrency trade media to rustle up business. “Having seen the technology boom in the 90s, this is just another emerging capital market,” he says. “It needs institutional grade providers like ourselves who come out of traditional investment banks. One day Fidelity is going to show up and say, ‘I want $4 billion of that token, help me buy it.’ You need someone who can, frankly, speak their language.”

For Miroshnik, the sooner the SEC steps in, the better. “I welcome it,” he says. “It would be helpful to figure out where the boundaries are.”

WRITTEN BY
Joon Ian Wong

David Ogden
Entrepreneur

 

Alan Zibluk Markethive Founding Member

How to get started in the cryptocurrency game

How to get  started in the cryptocurrency game

How to get started in the cryptocurrency game

 

As bitcoin reaches for $2,500 again, I thought this would be a good time to let readers know exactly how digital currencies work and how to get more information if you wish to partake in this alternative investment.

There will be only 21 million bitcoins created, and as of last month, roughly 16.8 million or 80 percent of all the bitcoins have been “mined,” or created. So unlike the paper currencies in the world today, no governing body can print more bitcoin to dilute its value.

To get started, the first thing you will need is a digital wallet.

The wallet can be thought of more like a bank account, which can reside on your computer, phone or other smart device. It is always advisable to have your wallet backed up in another location so that a crashed hard drive does not wipe out your bitcoins.

There are many wallets out there to choose from, depending on your security needs and whether you wish to be an active trader or a more passive buy-and-hold investor.

Once you have set up your wallet, then you can go to one of the many digital currency exchanges to purchase a bitcoin.

Many exchanges now allow you to buy bitcoin with a credit card over the Web. Coinbase.com and Coindesk.com are two of the largest, and offer tutorials on digital currencies.

However, if you do not wish to use your bank account, there is one site called LocalBitcoins.com that allows face-to-face purchases.

Bitcoins are mined, or searched for, by using computing processing power in a distributed network to locate and solve mathematical problems to acquire the code for the “coin.”

This distributed network also provides the backbone to use bitcoin to purchase items or identify the bitcoin you hold.

There are a growing number of outlets that are accepting bitcoin for payment, including an Acura dealership in Valley Stream, LI, which offers pricing using bitcoin.

Bitpremier.com has an entire Web site dedicated to high-end Brooklyn real estate listing for $1.975 million or 809 bitcoin and other luxury items including a Peter Max print for $5,000 or 2.05 bitcoin all just a mouse click away.

As the value of bitcoin has skyrocketed, most bitcoin holders are investors, however, not consumers.

One year ago, bitcoin was trading at $525. It is now nearing $2,500, so at this point it does not make sense to purchase items using bitcoin until the price finds its level.

Like any other investment, there’s no guarantee that bitcoin will continue this rapid rise, but there are some aspects of bitcoin that point in that direction.
 

A bullish marker for bitcoin is that a vast majority of the planet does not know of, or is yet involved in, digital currencies, so as this news moves into the mainstream, more investors may jump in.

There are some very outlandish predictions for bitcoin’s value over the next three years due to its scarcity and a growing number of investors becoming aware. But as I said, no investment goes straight up.

As the value rises, a very important aspect to bitcoin is it can be divided into smaller parts. The smallest divisible amount is one hundred millionth of a bitcoin, and is called a “Satoshi,” after Satoshi Nakamoto, the software developer who founded bitcoin.

Remember, this is just a primer, and there are many resources out there to help you to study up on this new form of currency.

By Michael Gray

Once you have purchased you first bitcoin there is a way to continue to grow your number of bitcoin and that is to invest in Trade Coin Club which will help to continue to grow your wealth even if the price goes up or down.

David Ogden
Entrepreneur

 

 

Alan Zibluk Markethive Founding Member

Will Investing in Cryptocurrency Make You Rich

Will Investing in Cryptocurrency Make You Rich

Will Investing in Cryptocurrency Make You Rich

 

Have you heard? Cyptocurrency is so hot right now. Bitcoin's price has been climbing for the better part of a year, topping $2,000 per coin for the first time in May, and rising to a record high above $2,500 — before dropping down just above $2,400 a coin as of Friday afternoon, per CoinDesk.

Those numbers mean nothing to you? This one might: If you had made a small investment in bitcoin back in 2010 — buying just $100 worth, when each unit was worth a fraction of a cent — your stash would be valued today at more than $70 million. Talk about an early retirement!

Even if you had been late to the party and bought bitcoin last year, you would be feeling pretty good. At one point, bitcoin prices were up roughly 180% for the year, as CNBC reported. Compare that with the broad stock market, which returned between 7.9% and 15%, depending on which index you look at.

Other cryptocurrencies have been on a tear as well. Ethereum, launched in 2015, is a software platform that has a cryptocurrency of its own, called "ether." Ether, or "ether tokens," hit a new all-time high Wednesday after climbing more than 35% in 24 hours, per CoinDesk. (There's also litecoin, which is similar to bitcoin but easier to obtain, more transactional, and seen as less valuable.)

So does that mean you should buy cryptocurrency today? Some say yes: One bitcoin proponent told CNBC he expects its value to keep rising and hit $100,000 within the decade. While digital currencies may seem alien now, it serves to remember that when Apple and other tech brands began gaining steam in the 1980s, people were skeptical anyone would have use for a personal computer. That story had a happy ending for early Apple investors.

Then again, hindsight can be 20/20, and just because an asset's price is going up doesn't mean it's actually getting more valuable. Just ask someone who bought U.S. real estate in 2007, or a tulip bulb during the infamous Dutch tulip bubble. If all that is driving prices to rise is hype, it's a good time to remember that what goes up must come down.

 

What are bitcoin and ether, exactly?

For the uninitiated, cryptocurrencies like ether and bitcoin are digital forms of money that live online, embedded in algorithms that record their movements. Bitcoin was the first major cryptocurrency, invented by an anonymous hacker known as Satoshi Nakamoto, in 2008. In a paper about the technology, Nakamoto envisioned a "peer-to-peer electronic cash system" that would let people conduct business directly, without the need of any outside institution.

The idea can be an exciting one: No more bank fees, for one, and you wouldn't need credit cards or debit cards, either. You also wouldn't need central banks or treasuries, since the price of currency would be set on the global stage by computers. Proponents of bitcoin, and its underlying technology, blockchain, hope that it could make most middlemen irrelevant by making all transactions instantly trustworthy and automated by Bluetooth.

If you needed a ride somewhere? You'd just summon your self-driving car, it would automatically read your digital wallet and take its fee, and you'd get out. It's a future that could save billions in transaction fees, protect identities and be a whole lot more sanitary. But we're not there yet, not by a long shot.

Currently, the system of using bitcoin relies on programmers to record transactions and build out what's known as a blockchain in exchange for a small bitcoin bounty. That process is called "bitcoin mining," and anyone can participate, although the reward will diminish over time

 

The case for investing in cryptocurrency

Cryptocurrency has come a long way from bitcoin's roots as the shadow currency favored by criminals on the Silk Road. Skepticism over bitcoin reached a boiling point in 2014, when Mt. Gox, the largest bitcoin exchange in the world, abruptly declared bankruptcy after than $460 million in bitcoin essentially disappeared.

Despite a rocky start, bitcoin has arguably entered the mainstream. For one, you can actually use it to buy stuff now. Many retailers, like Microsoft and Overstock, have started accepting bitcoin directly, and for the retailers that don't — notably Amazon — proponents have found a workaround by buying gift cards with their bitcoin and making purchases that way.

"The vast majority of bitcoin proponents are now either in finance or government," said Ian Bogost, an author, professor and game designer who has written about bitcoin for the Atlantic. "And for them, the speculative aspect is like a repurposing. The speculatists couldn’t give a shit what they’re speculating on, what the object is. Just that there is the possibility of substantial gain."

Ironically, given its roots, many of bitcoin's recent wins have been thanks to governments. Most recently, Japan voted to make bitcoin an officially sanctioned currency, and other countries like Barbados are looking into whether they should start purchasing bitcoin of their own.

Interestingly, many fans of cryptocurrency argue that the real value might not be in the currency itself, but in the technology that enables it — ways to safely and securely move value, for example, or trustworthy ways to validate identity.

"Bitcoin basically operated in obscurity until 2012, when media began reporting on its pseudonymous payments on Silk Road and it hit $1,000 before crashing," said Amanda Gutterman, chief marketing officer of ConsenSys, a blockchain studio which builds products on Ethereum. "As interest picked up, there was a desire to create more sophisticated financial products."

Bitcoin started as an experiment in monetary theory, Gutterman said, but it has already started to inspire real technology. ConsenSys, for example, is working with the city of Dubai to leverage blockchain and make the city government paperless by 2020. Because it's easier to build products around, many experts believe Ethereum could soon supplant Bitcoin.

 

The case against buying cryptocurrency

While the price of cryptocurrencies might be going up, there are still a lot of reasons to be wary, not least because it's virtually impossible to determine what a fair price for bitcoin or ether might be.

Part of what makes currencies and other assets valuable is that they have a history of appreciation, which cryptocurrencies do not share. Then there's the fact that people don't exactly agree on what the rules for bitcoin should be. It's not really a currency, since currencies are backed by a government, which issues them. It's also not really like a stock, either — cryptocurrencies don't report earnings or generate profits, and earnings and profits are how people try to determine what a "fair price" for a given stock might actually be.

Now, a few people have developed formulas to figure out the fair price for bitcoin: The Financial Times spoke to one anonymous London financial analyst who developed a model for pricing bitcoin based on the assumption that its "core utility value" is as the currency for shadow markets. By comparing the total amount of money that's laundered around the world with the overall GDP, he estimates that bitcoin's current price is about 238% higher than it should be. Other skeptics say that bitcoin has no real underlying value at all.

Despite being embraced by corporations and governments, bitcoin is still associated with criminal activity: When the WannaCry ransomware attack hit computers all over the world in May, the hackers involved requested their bounties in bitcoin. That means that even as some governments embrace bitcoin, others are cracking down: In Florida, for example, the state legislature recently passed a law that would make it easier to prosecute criminals who use bitcoin for money laundering.

Somewhat paradoxically, these types of criminal activity might actually be part of what's making bitcoin more valuable at the moment. Confronted with a rise in bitcoin ransoms from hackers, Bogost noted that a very natural response for a company is to buy a little bitcoin in case it happens again.

Bogost said she fears that bitcoin is particularly susceptible to monopoly — as hackers have very successfully cornered the market in the past. "We’ve seen with these sort of ups and downs, these small groups of mostly Chinese pools end up with more than 50% of the capacity. And we don’t know anything about these organizations. Are they state controlled?" Bogost said. "The moment [there is too much consolidation in the mining pools] then effectively the platform is dead, at least as a currency."

Finally, there's the possibility people are unwisely romanticizing a future without middlemen. The people who lost their bitcoin in the 2014 Mt. Gox hack are still trying to get their money back, and are unlikely to. After all, when the value of your cash is held in anonymous, poorly-understood algorithms, it's hard to hold somebody accountable if you lose it.

If you still feel like investing a small amount of money in cryptocurrency, be sure not to dip into your emergency savings. It's rarely a good idea to buy something when its price is at its all-time high. And remember that there are a lot of horses in this race: In addition to bitcoin, ether, and litecoin there's also ripple, namecoin and peercoin.

 

How to buy and store cryptocurrency

If you have some "play" money and want to make a bet on cryptocurrency, you should absolutely feel 100% comfortable with the idea of losing all that money. Cryptocurrencies have crashed before, often, and probably will again in the future. They're also historically expensive — if you must buy some, you might be served by waiting a bit for prices to drop, so you're more likely to get a deal.

There are lots of ways to buy cryptocurrencies, and some countries have even set up ways to purchase them via an ATM.

Coinbase is one of the more well-known bitcoin brokers, and often recommended for beginners. Coinbase allows you buy bitcoin and other cryptocurrencies by linking to your debit or credit card account. Business Insider reports that the mobile app is buggy, and banks will sometimes lock a card after making these transactions. To that end, BI recommends letting your financial institution know before trying to make a purchase.

There are a few other options, though they have less of a track record: Kraken is one reputable alternative; it has been around since 2011 and works with a wide range of traders and governments. There's also Gemini, but it is not yet available in every state.

Finally, because exchanges, even the largest ones, have crashed abruptly, it's also important to get yourself a safe place to store your bitcoin, in case your provider goes out of business or suffers a hack. These devices are often referred to as bitcoin "wallets." Ledger is a popular option.

by James Dennin

 

David Ogden
Entrepreneur

Alan Zibluk Markethive Founding Member