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Tag: bitcoin mining

87.5% of all Bitcoins [BTC] will be mined by 2020 – Here’s why it matters!

87.5% of all Bitcoins [BTC] will be mined by 2020 – Here's why it matters!

87.5% of all Bitcoins [BTC] will be mined by 2020 — Here’s why it matters!

The block reward for Bitcoin will halve next in about two years from the time of publishing this article. The estimated time for the next half of the reward is around 732 days, but it is relevant now for a few reasons.

The current bear market offers opportunities for investors to buy and hold Bitcoin, as it is currently trading at a low since the past week. It has been plagued by sell-offs and FUD, along with a general bearish trend. Market sentiment is also low after the CFTC and US Justice Department declared the existence of a probe into cryptomarkets for fraudulent practices.

As the price is currently low, interest by institutional investors is on a high after a successful Consensus conference and general adaptive behavior. News such as Goldman Sachs beginning a cryptocurrency trading desk and JPMorgan’s high-level reshuffling to focus on cryptocurrency may as well be the tip of the adoption iceberg.

As the 17 millionth coin was mined sometime last month, a reality check descended on the market that the amount of Bitcoin left in existence is limited. Even as digital assets tend towards digital abundance, Satoshi’s blockchain allows for real digital scarcity with real-world parallels. The 21 millionth coin will be mined in around 2140, approximately. The time, electricity, and computing power required to mine new coins is constantly increasing, with Murphy’s law being barely able to keep up.

As the block reward is halved every 210,000 blocks, it constantly decreases the rate at which it is possible to create new Bitcoin tokens. The new landmark on ETA, 28th May 2020, will decrease the reward from the current 12.5 coins to 6.25 coins. The total coins mined before the next halving of the block reward will be 18,375,000, which marks 87.5% of the possible 21 million Bitcoin tokens.

This will then exponentially reduce the speed at which new Bitcoin come into existence, spiking up demand for the coin due to reduced supply. Analysts predict that this bear market will be the last one before 2020.

Crypto analyst Trevor Wade says:

“This bear market is the last chance for investors to buy into Bitcoin before the price goes up to $10000+. Reduced block rewards will result in supply cutting off and demand going up, which will cause an exponential spike. Regulators and institutional investors are moving in in a safe way, allowing for large-scale adoption of financial system disruptors.”

 

Author Anirudh VK May 27, 2018

 

Polsted by David Ogden Entrepreneur

Alan Zibluk Markethive Founding Member

The 17 Millionth Bitcoin Is About to Be Mined

The 17 Millionth Bitcoin Is About to Be Mined

The 17 Millionth Bitcoin Is About to Be Mined

Bitcoin's limited supply is about to get a bit more limited.

Barring an unforeseen event, the 17 millionth bitcoin is likely to be mined in the coming days, a development that would mark yet another milestone for the world's first cryptocurrency. That's because as per bitcoin's current rules, only 21 million bitcoin can ever be created.

Stepping back, the milestone, the first million-bitcoin marker to be crossed since mid-2016, is perhaps noteworthy as yet another reminder of the technology's core computer science achievement — digital scarcity created and enabled by shared software.

In short, bitcoin's code, since cloned and adapted by scores of other upstart cryptocurrencies, ensures that only a set number of new bitcoins are introduced to its economy at intervals. Miners, or those who operate the hardware necessary to track bitcoin's transaction set, are rewarded with this scarce data every time they add new entries to the official record.

Still, there's a lot of variability in the process.

Of note is that it can't be precisely predicted when the 17 millionth bitcoin will be mined or who will mine it, due to the many minute variances that are created in keeping a common software in sync. That said, there's a relative predictability. Each bitcoin block produces 12.5 new bitcoin, and as bitcoin blocks occur roughly every 10 minutes, about 1,800 new bitcoin are created each day.

As such, it's perhaps best to view this event as a "psychological barrier," Tetras Capital founding partner Alex Sunnarborg told CoinDesk, one that is interpreted differently by different communities.

Sunnarborg, for example, sought to stress that another way to interpret the result is that 80 percent of all the bitcoin that will be ever created have now been mined. In other words, only about one-fifth of the eventual supply remains for miners and future buyers.

Others see the milestone as one that's ripe for appreciation of the technology and its achievements.

"I think it is awesome," Tim Draper, the venture capitalist who bought millions of bitcoin seized by the U.S. government at auction in 2014, said of the coming milestone.

He told CoinDesk:

"I would bet the founders wouldn't have imagined how important bitcoin would become in their wildest dreams."

Way with words

Others sought to suggest the milestone is one that should be considered as an opportunity for education about both the features of bitcoin, and those of cryptocurrencies broadly.

For example, unless all of the humans who operate the computers running the bitcoin software decide to make a change (a perhaps unlikely scenario today), there's really no way to ever introduce more new bitcoin. This achievement, a technical reality, has played a key role in bitcoin's association with money, economics and other scarce, naturally occurring assets.

In this way, the goldbugs and readers of Austrian economics who piled into bitcoin early on were quick to realize the value of the feature, perhaps giving rise to the term "cryptocurrency" itself.

Trace Meyer, one of this group's most vocal members, summed up the philosophy in a recent tweet, in which he argued governments might seek to prevent users from holding bitcoin in the future.

"Increasing money supply is a means to confiscate through inflation which is a form of taxation without representation or due process of law," he wrote.

Even the new way new bitcoins come into being, called "mining," is a nod to the gold analogy.

Rather than being issued by a central bank, bitcoin is created by a network through the work of maintaining the blockchain. When a miner finds a valid hash for recent transactions, solving the bitcoin protocol's puzzle, he or she is rewarded with a "coinbase transaction," bitcoin credited to her account.

A little bit of cryptocurrency is created and deducted from the final supply
 

The bitcoin supply curve

How participants have been rewarded has, of course, changed over time.

When bitcoin's founder Satoshi Nakamoto mined the first bitcoin block on Jan. 3, 2009, he created the first 50 bitcoins. This reward stayed the same for another 209,999 blocks, when the first "halvening," or reduction in rewards, took place.

It didn't come as a surprise. Every 210,000 blocks, according to a hard-coded schedule, the network reduces the block reward by 50 percent. Following the most recent halvening, in July 2016, the reward is 12.5 bitcoin.

That means that while there are only 4 million bitcoin left to mine, the network will not reach its final supply in anything like the nine years it's taken to get this far. As the halvenings halven, the rate of monetary inflation — supply growth — slows.

BashCo, a pseudonymous moderator on the r/bitcoin subreddit, has plotted the trajectory of bitcoin's total supply (blue curve) against its rate of monetary inflation (orange line).

Source: BashCo.

Assuming the bitcoin protocol remains the same (a new block is mined every 10 minutes on average and the halving schedule and supply cap are unchanged), the last new bitcoin will not be mined until May 2140.
 

The next 120 years

With this in mind, the chart hints at another common talking point when acknowledging the milestone — that bitcoin is programmed to run for a very long time.

Jameson Lopp, lead infrastructure engineer at wallet provider Casa, was quick to remind CoinDesk that bitcoins are divisible, and that as such, the smallest parts of each bitcoin can hold seemingly infinite value.

He said:

"While 17 million BTC may sound like a lot, it's incredibly scarce — there won't even be enough for every current millionaire to own a whole bitcoin. Thankfully, each bitcoin is divisible into 100 million satoshis, thus there will always be plenty to go around!"

But there are other quirks to the software as well.

For one, bitcoin will never actually reach 21 million units, as barring a protocol change, the total supply will fall short by at least one satoshi. That's because on May 17, 2011, the miner "midnightmagic" — for reasons that remain unlear — claimed a 49.99999999 block reward, rather than an even 50.

Further, to be clear, bitcoin does not stop running when 21 million bitcoin are produced. At that point, the idea is that miners would be compensated purely through the fees, which they already collect. (Though some scientists have sought to project whether such a market would work in practice).

With so many questions left unanswered, if anything, the event serves as yet another reminder of how far bitcoin has come, and just how far it has to go.

In the words of long-time developer Adam Back:

"Another million down four more to go."

 

Author David Floyd Updated Apr 26, 2018 at 03:33 UTC

 

Posted by David Ogden Entrepreneur

 

Alan Zibluk Markethive Founding Member

Chinese Entrepreneur Warns Against Mining and ICO Bans

Chinese Entrepreneur Warns Against Mining and ICO Bans

Chinese Entrepreneur Warns Against Mining and ICO Bans

Angel investor and Founder of Chinese app Meitu, Cai Wensheng, has published criticisms of the central government’s expanding regulatory crackdown on cryptocurrencies via Wechat. Mr. Wensheng warns that heavy-handed regulatory policies may squander the opportunity for China to maintain a significant presence in the burgeoning global cryptocurrency sector, in addition to arguing that many of the challenges faced by cryptocurrencies are indicative of the typical “development process” experienced by emerging monetary forms.

Cai Wensheng, the founder of Meitu, has expressed criticisms of the Chinese government’s prohibitive regulatory policies regarding cryptocurrency mining and initial coin offerings (ICOs).

According to The Meitu founder, the majority of the world’s bitcoin mines are located in China, with Mr. Wensheng estimating that “80%” of the world’s bitcoins are produced by hardware housed in China. As such, Mr. Wensheng believes that a regulatory crackdown targeting bitcoin mining risks squandering the opportunity to maintain its dominance in the bitcoin markets, describing such a potential export industry.

Mr. Wensheng argues that China should use bitcoin mining surplus power for productive purposes, stating that “China’s surplus power [can be used] to produce surplus power to produce bitcoin, [which can be] sold to the South Koreans, Japanese, and Americans” — making China “a bitcoin foreign exchange earner.” However, Mr. Wensheng also warns that if bitcoin miners are “forced overseas [to] Iceland, Chinese people will need to spend a lot on foreign exchanges to buy back bitcoin.”

Challenges Faced by New Monetary Forms

The Meitu Founder argues that many of the challenges and criticisms faced by bitcoin have been experienced by other emerging monetary forms throughout history, stating that “every coin is a kind of faith.” Mr. Wenshen asserts that many of the world’s national currencies have gone through numerous periods of considerable volatility throughout history, claiming that political instability led to dramatic price fluctuations for many sovereign currencies prior to 1973.

“This is the case with the Golden Circle Certificates of the Republic of China, Mr. Wenshen stated, adding that instability is an inherent component of the requisite “development process” experienced by emerging monetary forms.

Mr. Wensheng also predicted that cryptocurrencies will reshape the securities industry.

 

Entrepreneur Warns Against Heavy-Handed ICO Regulations

Mr. Wensheng has argued that initial coin offerings do away with many of the barriers preventing ordinary investors from being able to access exposure to emerging companies, adding that venture capital and investment firms typically access tokens at the same price as their retail counterparts in the ICO markets.

Mr. Wensheng also compared the ICO markets to the dotcom bubble of the nineteen-nineties, stating that of the “hundreds of companies” that listed Initial Public Offerings (IPOs) “in 1999” very “few companies are left,” however, “One Amazon is enough” — implying that heavy-handed restrictions on ICOs may result in China failing to facilitate the growth of potential major companies that could emerge through the disruptive ICO sector.

 

Author: Samual Haig

 

Posted by David Ogden Entrepreneur
David Ogden Entrepreneur

Alan Zibluk Markethive Founding Member

Crypto Mining Craze Creates Global GPU Shortage

Crypto Mining Craze Creates Global GPU Shortage

Crypto Mining Craze Creates Global GPU Shortage

The cryptocurrency bull run of 2017 attracted multitudes of investors looking to get rich quick but it also created a mining boom that has resulted in a worldwide shortage of computer components.

 

Miners Plunder Singapore, Hong Kong For Cheap Rigs

Scores of miners from around the world come to the electronics bazaars in Asia to buy cryptocurrency rigs. Hong Kong’s Sham Shui Po and Singapore’s Sim Lim Square to name just a couple are jammed with people of all ages ordering specialized rigs.

This new demand for mining rigs has revitalized these electronic markets that were dying only a few years ago when shoppers turned online for computers, cameras, and gadgets of all kinds.

“It’s 30-50 percent cheaper to buy equipment related to crypto-mining in Hong Kong than in Europe,” Russian bitcoin miner Dima Popov said. This is because Hong Kong has no sales tax and is in close proximity to Chinese components manufacturers.

Miners are demanding more powerful rigs that can include up to 500 graphics cards each which has created a worldwide shortage of the cards allowing manufacturers and retailers to gauge buyers on the price.

 

Scarce GPU Cards Selling At Double Price

The market for high-end graphics cards used to work like anything else. You went to the electronics shop, found the card you wanted and paid just about the Manufacturer’s retail price. Today due to the escalating demand from mining you’ll most likely find the shelves that once held them bare but if you do actually what your looking for expect to pay a premium.

These high-end graphics cards are the most efficient way to mine cryptocurrency and as hobbyist miners and big players alike scramble to snatch up as many as they can prices go through the roof. Last summer popular GPU’s like the AMD Radeon RX 580 sold for about $250 at retail, today the price is more likely to be over $500 and that is if you can find them.

Checking the price of the 5 most popular graphics cards from last year and comparing it with the updated version shows a general price increase of between 70 and 100%. This leaves many wannabe miners trolling online for the best deals on new or even second-hand cards. Buying older cards though means slower computing ability which reduces the profitability of a rig.

Rigs using, for example, a high-end Nvidia Geforce GTX 1080 ti card costing around $1,300 (MSRP) can earn as much as $10 dollars a day at current crypto values. This means that the card may pay for itself in about 4 months.

String the math out and it’s easy to see how a fair sized rig can make a very nice profit over a year or more. Retailers reported a dip in demand for the cards during the crypto market correction but now that Bitcoin and it’s like are on the rise sellers and manufacturers are looking for demand to reach and surpass 2017.

Author JMCMAHON • FEB 21, 2018 • 05:02

 

Posted by David Ogden Entrepreneur
David Ogden Crptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Russian nuclear scientists arrested for Bitcoin mining plot

Russian nuclear scientists arrested for Bitcoin mining plot

Russian nuclear scientists arrested for Bitcoin mining plot

Russian security officers have arrested several scientists working at a top-secret Russian nuclear warhead facility for allegedly mining crypto-currencies.

The suspects had tried to use one of Russia's most powerful supercomputers to mine Bitcoins, media reports say.

The Federal Nuclear Centre in Sarov, western Russia, is a restricted area.

The centre's press service said: "There has been an unsanctioned attempt to use computer facilities for private purposes including so-called mining."

The supercomputer was not supposed to be connected to the internet — to prevent intrusion — and once the scientists attempted to do so, the nuclear centre's security department was alerted. They were handed over to the Federal Security Service (FSB), the Russian news service Mash says.

"As far as we are aware, a criminal case has been launched against them," the press service told Interfax news agency.

Crypto-currencies like Bitcoin do not rely on centralised computer servers. People who provide computer processing power to the crypto-currency system, to enable transactions to take place, can get rewards in Bitcoins.

In the Cold War the USSR's first nuclear bomb was produced at Sarov, during Joseph Stalin's rule.

The top-secret town was not even marked on Soviet maps and special permits are still required for Russians to visit it.

Putin, power and poison: Russia’s elite FSB spy club

Sarov is surrounded by a tightly guarded no-man's-land, with barbed wire fences to keep the curious away.

There are suspicions that the radioactive polonium-210 used to kill ex-FSB agent Alexander Litvinenko in London in 2006 came from Sarov.

The Federal Nuclear Centre reportedly employs up to 20,000 people and its supercomputer boasts a capacity of 1 petaflop, the equivalent of 1,000 trillion calculations per second.

Mining crypto-currencies requires great computational power and huge amounts of energy.

There have been reports of some other industrial facilities in Russia being used for crypto-mining, and one businessman reportedly bought two power stations for the activity.

 

Source BBC News 9th February

Posted by David Ogden Entrepreneur

David ogden Cryptocurrency entrepreneur

Alan Zibluk Markethive Founding Member

Crypto bull sees bitcoin at $11 500

Crypto bull sees bitcoin at $11 500

Crypto bull sees bitcoin at $11 500

The bitcoin bulls are charging. A day after hedge fund manager Mike Novogratz said the cryptocurrency will end the year at US$10 000, Fundstrat’s Thomas Lee doubled his price target to $11 500 by the middle of 2018 — a 40% gain from current levels.

Lee, who heads research at Fundstrat, said a 10% pullback earlier this month triggered by the controversial cancellation of an upgrade to bitcoin’s underlying software has set the stage for the coming surge.

The November slump “cleaned up weak hands”, Lee wrote Wednesday in a note to clients that almost doubled his last forecast. The strategist had warned earlier in the month that bitcoin’s rally to $7 000 from $3 500 raised the likelihood for a short-term pullback. “We no longer feel caution is warranted,” he said.

Bitcoin rose 1.2% to $8 230.12 as of 11.05am in New York, about $100 short of its all-time high set on Tuesday after Novogratz’s comments. The most popular cryptocurrency has surged more than seven-fold since December, surpassing $8 000 for the first time this week.

The ride to records hasn’t been straight up for the virtual asset, with three separate slumps of more than 25% all giving way to subsequent rallies this year.

“We recommend steady buying of bitcoin at these levels,” Lee said in the Wednesday report. Fundstrat also boosted its price target for the Bitcoin Investment Trust, an over-the-counter security that offers investors exposure to bitcoin. Lee predicts it will trade at $1 300 by mid-2018, up from his prior target of $800.

Reported by Lily Katz, (c) 2017 Bloomberg LP

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur
Start Mining Bitcoin

Alan Zibluk Markethive Founding Member

Bitcoin Cash Hard Forks In Bid to Ease Mining Difficulties

Bitcoin Cash Hard Forks In Bid to Ease Mining Difficulties

Bitcoin Cash Hard Forks In Bid to Ease Mining Difficulties

Bitcoin cash appears to be successfully navigating a planned hard fork.

At press time, the majority of the network nodes (roughly 82 percent) have transitioned to new software (version 0.16.0 or later) that includes rules aimed at making the protocol's reward distribution more attractive to the miners that secure its blockchain.

Executed at roughly 21:00 UTC, the new version of the bitcoin cash blockchain has since amassed six blocks, while none have yet been mined on the older network. The results suggest that, while still possible, the fork will pass without the creation of a competing cryptocurrency.

As reported by CoinDesk, today's hard fork looks to switch the protocol to a different mining algorithm that will favorably adjust how hard it is for miners to create new blocks roughly every 600 seconds.

The idea is that by doing so, bitcoin cash will avoid the sudden changes in difficulty that have encouraged large numbers of miners to switch frequently between the bitcoin and bitcoin cash blockchains, migrating to whatever version is offering the most in terms of rewards.

Kept intact will be the rules that caused the creation of the cryptocurrency, which hard forked off of the main bitcoin blockchain in August by way of code that increased its block size to 8 MB, up from 1 MB on bitcoin.
 

Smooth upgrade

But it's the necessity of the mining change that has many thinking the upgrade will be smooth.

In remarks, Haipo Yang and Jiang Zhuoer, two major mining pool operators, said they didn't expect the change to be contentious. Other users, speaking in WeChat channels dedicated to the cryptocurrency, voiced similar statements of support for the measure.

This is due in part to the mining algorithm, which they acknowledged as having produced wild fluctuations in hash rate in the past. Developers have largely agreed.

According to the blog post outlining the hard fork and the updated software, the current rule is "problematic because it prevents consistently fast confirmations for users, and radically shifts the coin issuance schedule."

In this way, Juan Garavaglia, a developer working to coordinate the fork sought to label it as successful, indicating his optimism that the majority of the bitcoin cash network will update.

"For [the] fork… economically relevant and miners [nodes] are the critical ones," he said.

Already, startups including Yours and Ledger have migrated software.

 

Cash and carry

Should the software upgrade ultimately hold, it could bode well for bitcoin cash.

The protocol's supporters are arguably more encouraged about the network's future with the suspension of the Segwit2x hard fork, scheduled to occur on bitcoin last week. A controversial scaling proposal drafted by a group of miners and bitcoin businesses, Segwit2x looked to increase the bitcoin block size from 1 MB to 2 MB by way of a hard fork.

Still, with the measure failed, its supporters appear to be migrating to alternatives. This weekend saw bitcoin cash rise to a value of nearly $2,000, an all-time high, though analysts differed on whether this amounts to lasting (or even real) support for the network.

At the same time, money talks, and already at least one smaller miner indicated they're following the situation, possibly hinting at the psychological factors at play in the market.

Yimo Cheng, a China-based tax accountant who mines bitcoin out of his home, said he hasn't yet started mining bitcoin cash for concerns about its ownership being concentrated among Chinese buyers.

And while he believes bitcoin is "more international," he ultimately said he would continue to monitor how the dynamic between the two blockchains developers.

He resolved:

"I will obverse it for a while."

Bailey Reutzel contributed reporting.

 

Author: Pete Rizzo Nov 13, 2017 at 22:30 UTC

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Managing Enormous Risk — Bitcoin and Altcoin Investment Strategies

Managing Enormous Risk - Bitcoin and Altcoin Investment Strategies

Managing Enormous Risk — Bitcoin and Altcoin Investment Strategies

While some have made millions investing in digital currencies, others would call it degenerate gambling. If you’re reading this, then you know how exciting and unpredictable the crypto world is. Fortunes are built and demolished in seconds, new and exciting technology pops up every day, and controversy rules the land. It’s pretty much the Wild West of finance.

The unprecedented growth of cryptocurrencies has attracted investors from all walks of life, many of whom have been enticed by the staggering returns made by early investors. If this sounds like you, then keep reading. Unfortunately, we're not going to teach you how to get rich in a few days; in fact, we're going to try and deter you from that objective.

Not that we don’t want you to be super-rich, don’t get us wrong. But we prefer to have more grounded goals and we want you to do the same. Investment is a tricky game and the patient person usually wins. Avoiding “fear of missing out” (FOMO) is essential, especially in crypto, where disinformation, fake news and drama are commonplace.

So what exactly is the point of this article, you may wonder? Well, today, we want to give new players in the cryptosphere some ideas on how they can begin to navigate the tricky world of investment. We feel this is important due to the growing amount of scams and low quality projects out there.

We’re not saying that the strategies we discuss are foolproof or even profitable. They are not based on any mathematical formula nor were they devised by any experienced investment professional. These are simple ideas that are popular among entrants and old school digital currency investors alike.

It’s important to note that this article is not to be taken as investment advice and that you should always remember the golden rule of investment: Never invest more than what you can afford to lose.

Diversify and play it safe

This is a simple one. If your portfolio only has one coin on it, you’re doing it wrong. Now, we know some people will say Bitcoin is the only cryptocurrency you should own, but at this point it’s safe to say that this is an absurd statement founded on feelings and ideals, rather than actual facts.

Bitcoin is thriving because it is the first and most popular cryptocurrency out there. It has the first mover advantage and it is also backed by an extensive network of miners who keep it safe. In terms of technology or features, however, Bitcoin falls short of its peers. We’re not saying you shouldn’t have Bitcoin, but you should also acknowledge other cryptocurrencies out there.

It may be a good idea to play it safe, however, and to “bet” on the most popular coins only, such as the top 10 by market capitalization. At present, those are: Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin, Dash, NEM, NEO, BitConnect and Monero.
 

Bet on the idea, not the project

The world of Blockchain technology has evolved to a point where currency is just one of the many functions a cryptocurrency can have. There are smart contract platforms like Ethereum, NEO and Qtum, there are decentralized storage networks like Storj, Sia Coin and Filecoin and there are decentralized exchange platforms like Waves, Bitshares and others.

Our suggestion is, instead of buying one cryptocurrency in each category, you should spread your investment throughout multiple options inside each category. This will allow you to reduce the risk of investing in one single currency. In the world of crypto, a technical difficulty or even a grievance within one of the teams can lead to an rapid crash in the price, regardless of how promising the project and tech are. Just look at what happened with Tezos.
 

Hedging

Again, diversification is the name of the game. If you’re in crypto, then you are probably aware of how risky it all is. The cryptocurrency movement could end in days if some major security flaw was discovered or if all governments decided to ban them. The same can happen if some new and improved alternative to Blockchain technology comes along. These are, of course, worse case scenarios that are unlikely but possible nonetheless.

So, if you’re not one to have all your eggs in the same basket, you may want to extend your investment strategy to instruments outside of crypto. Precious metals, stocks, and other traditional investment vehicles may be a great addition to your portfolio and will allow you to reduce the risk you would take by investing in cryptocurrencies only.

Some companies, for example, manage cryptocurrency investment funds that combine cryptocurrency investments with investments in other sectors, like real estate. We talked to Kirill Bensonoff, CEO and founder of Caviar, about the importance of heeding your investment in the cryptocurrency space with traditional instruments.

He stated:

“We found a couple of major issues with crypto-asset investing, namely, it’s difficult and time consuming, and all assets are highly correlated. There is no ‘safety’ asset that also produces an income. We also see a movement towards having crypto be backed by traditional assets, such as gold, real estate and others, and we are addressing this head on.”

Liquidity, liquidity, liquidity

This is something that many new players forget about. You may find yourself investing in a cryptocurrency, having it increase in value several times over, only to realise that you can’t really sell it. If you try to sell large amounts at once, you’ll crash the price. Why? Because there is no liquidity. If a coin has no trading volume, significant price swings are bound to happen.

You can play it safe and avoid low volume coins all together but if you don’t want to, the least you can do is to know the risk you’re taking. CryptoCompare has a portfolio tool that allows you to analyse several risk factors in your portfolio, including volatility, exposure and, of course, liquidity. Their tool allows you to get an estimate of how long it would take to sell a certain coin based on the current volume. We asked Charles Hayter, CEO of CryptoCompare, why this tool is important for entrant users. He stated:

“We want to make it easy for users to track how well they're doing. Crypto is risky in the extreme and we want to help people understand where these risks lie and how to quantify them.”

Room to grow

Remember what we just told you about liquidity? Well, this strategy is somewhat contradictory, but it’s important to note that not all of these strategies are compatible with one another. Also, some involve more risk than others, and this one is risky. So, what do we mean with “room to grow”?

Small market cap cryptocurrencies have more growth potential than the ones at the top. Of course, other factors will determine if the price will rise or not but the idea is that, if you invest in cryptocurrencies before they are big, you may get to see your investment grow several times over.

Now, before you go to the nearest exchange and start stacking up on useless meme coins, have a think about what you want to buy. Then, perform your due diligence, check the roadmap, check the team, read the whitepaper, learn about the technology. Do everything in your power to ensure that your investment is justified. This will also make it easier for you to stick to your strategy, knowing that you are invested in something you believe in.

Technical analysis

Yes, chart wizardry. To be honest, I have no idea how it works and I admire anyone that does. All those numbers and lines give me headaches. Nevertheless, if you have it in you, learning T.A. can do wonders for your investment strategy even if you only touch the surface! We asked Jonathan Hobbs, CFA and author of the Stop Saving Start Investing: Ten Simple Rules for Effectively Investing in Funds investment book how technical analysis can be useful even for a newbie investor. He stated:

“Any good investment strategy needs rules. Technical Analysis (or “TA”) uses rules to look for price and volume patterns in charts to try and predict what’s going to happen next. It helps investors choose when to buy or sell. One example of TA is the Simple Moving Average (or “SMA”). The 50-day SMA, for instance, is the average price over the last 50 days, which changes or ‘moves’ each day. When an investment starts trading above its SMA, this is could be a bullish sign. Since TA can also protect the downside, it’s a good risk management tool for volatile investments like cryptocurrencies.”

Proof of Stake interest

A lot of people would love to invest in cryptocurrency mining, but at this point, you either go big or go home. Mining has become an industrialized practice reserved only for those with large financial backing, high tech equipment and access to low energy prices. Although there are several alternatives to traditional mining, Proof of Stake is the most relevant one for the subject at hand.

To put it simply, Proof of Stake allows users to “mine” coins without mining equipment. In this system, the amount of coins a user holds will determine how many coins he mines. Although most PoS cryptocurrencies will require you to leave your wallet running, some implementations of PoS like Waves and Lisk allow you to earn interest by leasing or delegating your stake.

Do note that you shouldn’t go out and buy every PoS coin out there. You should, however, check your holdings for these types of coins and, if you have them, mine them! In the worst case scenario, you’ll need to leave the wallet running which can be done with any laptop or even a Raspberry Pi device.

 

Author: Frisco d'Anconia

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

Alan Zibluk Markethive Founding Member

Global Regulators Play Bitcoin Whack-a-Mole as Demand Explodes

Banks Respond to Growing Interest in Cryptocurrencies

Global Regulators Play Bitcoin Whack-a-Mole as Demand Explodes

  • Evading government control a central feature of bitcoin
  • Efforts to regulate digital currencies stymie authorities


Banks Respond to Growing Interest in Cryptocurrencies

Regulators worldwide are finding that it’s incredibly hard to control the explosive growth of money tied to no nation.

Russian President Vladimir Putin is the latest to call for regulation of cryptocurrencies, saying there are “serious risks” they can be used for money laundering or tax evasion. Finance Minister Anton Siluanov has called for regulating digital money as securities, while central bank officials vowed to work with prosecutors to block websites that allow retail investors access to bitcoin exchanges. “We think this is a pyramid scheme,” said Sergey Shvetsov, first deputy governor of the central bank.

Global efforts to regulate digital money have accelerated in the past month since China banned initial coin offerings and ordered all cryptocurrency exchanges to close, following inspections of more than 1,000 trading venues over a six-month period. At least 13 other countries have imposed new rules or announced plans to tighten regulations, including South Korea, which also banned ICOs. Last week, European Central Bank Governing Council member Ewald Nowotny said the bank is discussing "concrete legal restrictions" on digital coin sales.

It’s a development that creators of bitcoin, the best-known digital currency, saw coming, and prepared for. Since it works on a peer-to-peer network, users can buy and sell coins and secure and perpetuate the system without any government or central bank involvement. Trying to control it is “like trying to catch water,” said Alex Tapscott, chief executive of NextBlock Global Ltd., a venture-capital firm that invests in blockchain startups.

Global Regulators Play Bitcoin Whack-a-Mole as Demand Explodes

Nine years after a mysterious coder that goes by the name Satoshi Nakamoto unleashed bitcoin on the world, some see it as a revolutionary use of technology that takes power away from governments and gives it to individuals, like handheld video cameras in the hands of civil rights activists, or social media during the Arab Spring uprisings.

"As cryptocurrencies gain wider acceptance, their ability to undermine politicians increases,” said Roger Ver, an early investor in bitcoin who is known as Bitcoin Jesus, for proselytizing about the digital currency in its early days. "The invention of bitcoin is one of the most liberating technologies in all of human history. It is on par with the importance of the invention of the printing press, or the internet itself."

Digital currencies live on computers and can be held by millions worldwide, bought and sold on websites, at MeetUps, or in person-to-person meetings. Even if there’s no ATM or exchange nearby, anyone with access to the Internet can buy them. And they can be used to purchase everything from a sandwich to a carpet to a house, or they can be held as an investment.

An investment of $1,000 in bitcoin in 2012 would now be worth about $4.9 million, while the number of transactions continues to increase. In the second quarter, they reached an average of about 291,000 per day for bitcoin and nearly double that when other major cryptocurrencies are included, from about 60,000 per day in 2013, according to researcher CoinDesk.
 

Dark Side

Yet there is an undeniable dark side. Bitcoin rose to prominence with Silk Road, a marketplace for weapons, drugs and other illicit goods, and it’s still used for such sales on the so-called Dark Web even after Silk Road was shut down. It’s also the currency of choice for hackers who have invaded the computers of everyone from hospitals to police departments. Even the North Korean government is accumulating bitcoin as a means to dodge international sanctions.

That’s why Jamie Dimon, the chief executive officer of JPMorgan Chase & Co., sees bitcoin as a “fraud” that’s destined to come crashing down, as its use in ransomware schemes, drug and arms trafficking ultimately persuades authorities to find a way to put a stop to it. “Someone’s going to get killed and then the government’s going to come down,” Dimon said. “You just saw in China, governments like to control their money supply.”

While any central banker might be troubled by a stateless currency competing with the coin of the realm, China’s efforts to crack down suggest it may be harder than it appears. While the government crackdown sent bitcoin prices plunging as much as 30 percent, it has now recovered those losses, even as a growing number of governments take action.

Once the largest global market for trading, China now accounts for 1.5 percent of bitcoin transactions, while Japan — where regulators have been more open to digital currencies — accounts for more than 60 percent, according to CryptoCompare.com.
 

Bitcoin Mining

China is the leader in bitcoin mining capacity — computers that are used to support bitcoin transactions and then get paid for the service with newly minted coins. Regulators have so far refrained from any action in that area. Wu Jihan, CEO of Bitmain Technologies Ltd., the world’s biggest mining operation, said in an interview that regional governments are welcome to legally set up bitcoin mining farms which are clean and considered part of the high-tech industry.

Cryptocurrencies are attractive where there are restrictions on taking cash abroad or where the local currency is weakening because of inflation. In Venezuela, a place with both problems, bitcoin’s weekly trading volume spiked to an all-time high in early April, when violent clashes between protesters and police started. The government has conducted raids on bitcoin miners, accusing them of “internet fraud and electricity theft.”

The same combination of capital controls, high inflation and a weakening currency have driven demand for cryptocurrencies across Latin America. Bitcoin demand spiked in Argentina in 2013 after former President Cristina Fernandez de Kirchner banned dollar purchases, while Ecuador and Bolivia are among the few countries that have outright bans on the currency.

By contrast, the U.K. has exempted bitcoin from value-added taxes, and says it should be considered a foreign currency for corporate tax purposes. The U.K. was early in publishing clear directives, ruling in 2014 that "bitcoin may be held as an investment or used to pay for goods or services at merchants where it is accepted.”
 

Crypto-Friendly Japan

Japan this year began enforcing a law that recognizes bitcoin as a legal method of payment, and overseeing cryptocurrency exchanges — effectively providing clarity and support to local entrepreneurs. That’s something Vietnam may do as well.

The U.S. Commodities Futures Trading Commission classified bitcoin as a commodity in September 2015 and this year approved the first cryptocurrency options trading, clearing and settlement firm. The Securities and Exchange Commission in July said some coins issued in ICOs would be considered securities and regulated as such unless “a valid exemption applies.”

While government efforts to come to grips with digital money have been fraught, the more important trend may be the growing number of money managers who are looking at cryptocurrencies as an asset class for investment.

"What’s more interesting is the increased sophistication of the institutional buy side for cryptocurrencies," said Nolan Bauerle, director of research at CoinDesk. "This new type of buyer means this is only a hiccup. There are important sums of fiat ready to cross into crypto in the short term." There are more than 68 hedge funds focused on cryptocurrencies today, many of them run by people from Wall Street.

 

Author: L Olga Kharif and Camila Russo
11 October 2017, 10:00 BST

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

 

Alan Zibluk Markethive Founding Member

Chinese money dominates bitcoin, now its companies are gunning for blockchain tech

Chinese money dominates bitcoin, now its companies are gunning for blockchain tech

Chinese money dominates bitcoin, now its companies are gunning for blockchain tech

Beijing, China

It’s a sweltering summer night when I’m invited to join a bitcoin miner from Shenzhen at a “bitcoin club” somewhere in downtown Beijing. I’ve just returned from visiting one of the world’s largest bitcoin mines and find myself at a gathering of cryptocurrency enthusiasts at a craft beer brewery in the Sanlitun nightlife district.

I excuse myself from the bitcoin meetup and resort to jumping in a pirate taxi because I don’t have a mobile wallet from Alibaba or Tencent—the primary way to hail and pay for taxis in the city. After paying in cash—now a rarity in China’s mobile payment saturated cities—I disembark, then get lost amid Beijing’s ancient hutongs, the narrow alleyways that link China’s traditional courtyard residences.

My host puts me out of my misery by sharing his location on a real-time map over our WeChat direct messages. Now drenched in sweat, I meet Jack Liao, who runs a bitcoin mining firm called Lightning Asic. He leads me through a dark hutong, coming to a set of carved wooden double-doors. Pushing them open, we enter into the courtyard of a palatially renovated villa. This is my first look at the elusive “bitcoin club.”

The club is located in a 2,000-square-foot villa with a staff of 15, including cooks, cleaners, and wait people. It has two guest rooms, a dining room that hosts two dozen people, a professional Texas Hold ‘Em table emblazoned with the legend, “Faith in Bitcoin,” an automated mahjong table; shelves stacked with fine wine and liquor, a room for practicing Chinese caligraphy, and so on. The table stakes are bitcoin, AliPay credits, and sometimes even yuan, the only non-virtual currency accepted. Guests can sleep, eat, drink, and gamble for free if they’re acquainted with the miners who run the place. “People come here just to chat about projects,” Liao says.

The eye-popping villa bankrolled by bitcoin mining is a symbol of just how lucrative the cryptocurrency industry has been for some on the Chinese mainland. China is home to the world’s largest bitcoin mines, thanks to abundant and cheap electricity, and at one time the country accounted for 95% of the volume traded in global markets. Its central bank is experimenting with a blockchain-backed digital currency, and its biggest companies, from tech giants to industrial conglomerates, are racing to bake blockchain tech into major new projects.

All this points to a central question: How did stateless cryptocurrencies get so big in China, a country where the national currency—along with so much else—remains tightly controlled by the government? Why has bitcoin, along with other cryptocurrencies, flourished with so much vigor here in China? A two-week journey through bitcoin trading operations in Shanghai, mining operations in Inner Mongolia, and the club in Beijing hasn’t answered the question definitely—but it’s gotten me much closer.

Bitcoin is a political statement

Bitcoin began as an experiment in economics and politics, as a project to create electronic money that anyone could use but no one controlled, especially a sovereign authority. The code behind the new currency gave life to libertarian ideals like: money free from government controls on spending and taxation; transactions that could ignore a global, sometimes corrupt banking system; and freedom from central bank targeting of interest rates and inflation. It was also rebuke to the very notion of conventional money.

Bitcoin’s pseudonymous creator, Satoshi Nakamoto, encoded a headline from the Times of London in the first block of transactions ever created on the bitcoin blockchain. It read: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

Given bitcoin’s political bona fides, it’s a great irony that Chinese companies and individual users are so dominant in its daily activities. The world’s biggest bitcoin miner is a Beijing-based company called Bitmain, which operates two mining pools that control nearly 30% of all the processing power devoted to bitcoin mining. It might seem that Chinese bitcoiners are carrying out some kind of libertarian protest against China’s ruling communist party, subverting the status quo by processing cryptocurrency transactions towards a yet-to-be-revealed political end.

They aren’t.

“In China, bitcoin is one thing and in America and Europe it is another thing,” Liao said as we sipped tea from porcelain cups on the villa’s top floor. Our host, Wu Bi, explains there is no competition between cryptocurrencies and the government-controlled renminbi, at least as the government sees it. “In China our government says bitcoin is not a currency, it is a commodity, so there is no chance it will compete with the renminbi,” Wu told me in Chinese, with Liao translating. “Bitcoin is a great idea, but in China we care more about blockchain.”

Wu and his Chinese compatriots are focused not on the currency, but on the technology behind it. Blockchain is simply a technical way to record encrypted transactions that are distributed across a computer network; once entered they cannot be altered. Instead of using blockchain, or bitcoin, as a permissionless cryptocurrency, banks want to shoe-horn some of bitcoin’s features into current transaction systems to create a low-cost network that, crucially, would require administrators to grant users access. Those administrators, of course, would be banks, or central banks. “Different countries may have different ideas about what is government, and what is the liberty of individuals,” Wu says.

Bitcoin users I met in Beijing were similarly dismissive of bitcoin’s libertarian politics. They did not want to be named or quoted directly, but their argument was essentially this: People in China simply aren’t interested in bitcoin’s potential for political change. And besides, China’s closely controlled economy has delivered prosperity for now—what benefits does bitcoin bring besides as an investment that might appreciate?

Object of speculation

Ordinary Chinese bitcoin users I spoke to, and those who are served by the exchanges and wallet providers, are far more interested in the ability to speculate on bitcoin’s wild price swings—it’s just another way to make money as China continues to adopt characteristics of a market economy.

As it happens, bitcoin arrived just as a class of retail investors in China is growing in size, and seeking better returns than those offered by a restricted financial products market. Even the market for property in China’s top-tier coastal cities, usually reliable for spectacular returns, has been subjected to ever tightening lending restrictions by a government eager to curb speculation. “[Chinese consumers] have had such limited channels for so long, and [bitcoin] was finally one that was not tightly controlled by the government,” says Martin Chorzempa, a research fellow specializing in Chinese internet finance at the Peterson Institute for International Economics in Washington DC.

One seasoned observer of the Chinese bitcoin scene concurs. Eric Zhao is n engineer at the Chinese Academy of Sciences in Shanghai and runs the widely followed Twitter account CN Ledger. Bitcoin became popular almost by default, because of the paucity of products for the Chinese retail investor, he says. “There are not many good investment choices for common people in China. Many people worry about inflation and lots of people feel insecure about their financial status,” he says. “They buy it simply because they believe it will appreciate in value.”

Uncorrelated to major asset classes and generally disconnected from the Chinese economy, bitcoin has been hugely attractive to Chinese investors already overweight domestic stocks and property. Indeed, research from Pantera Capital, a venture fund for blockchain companies, shows that bitcoin is almost completely uncorrelated to major equity, debt, and commodity asset classes. “Because [bitcoin] is globally connected, it’s not easily affected by the Chinese economy,” says Isaac Mao, a longtime entrepreneur and investor in China’s technology scene. “It may be the only economic activity fully connected to the global economy.”

Crackdown

The wild ride on bitcoin in China, however, braked to a stop Sept. 4, when China’s central bank began to take steps to halt domestic bitcoin trading. It started with a ban on “initial coin offerings,” followed by a shutdown of local bitcoin exchanges. China’s authorities have clamped down on bitcoin trading before, most notably in 2014, when the cryptocurrency was on a historic rally driven, in part, by Chinese money.

Now rumors are swirling that a ban on bitcoin mining may be enacted. But if the government has found bitcoin to be a potentially dangerous element in the country’s socio-political mix, why didn’t it crack down before? Instead, it has been relatively tolerant of a technology that was designed to weaken the state’s grip on money.

The rare true believer in bitcoin’s libertarian properties is Bobby Lee, an American who runs the world’s oldest bitcoin exchange, BTCC, in Shanghai. His firm was forced to shut down domestic trading through its BTCChina arm, although it still runs an exchange for non-Chinese traders. When we spoke before the crackdown in August, Lee was enthusiastic about government regulation, saying it would help the market mature. But he also struck a defiant note, saying that bitcoin’s design made it impossible for China’s regulators to shut down. “There is nothing [the Chinese government] can do. That is the beauty of [bitcoin],” he said.

I pointed out that the government could seize exchanges, and even bitcoin mining facilities, and compel their owners to run certain types of code or mess with transactions, thus damaging the cryptocurrency. Lee was sanguine. “They’ll want to control it, but bitcoin was not meant to be controlled,” he said. “You can make all the rules you want, and the question is, can they be enforced? With guns you can say, let’s make guns illegal. But with bitcoin, there’s nothing physical. It’s information, and there’s plausible deniability.”

The reality may be more prosaic. Bitcoin and cryptocurrencies are simply too small to bother the Chinese government much, says Isaac Mao, the investor and entrepreneur and one of China’s earliest bloggers. “The [Chinese Communist Party] doesn’t recognize it as a threat, so bitcoin actually grows very quickly in China,” he told me at a cafe in Hong Kong, where he is now based. “But it’s too small. There is no scale. The market capitalization of bitcoin is about the same as PayPal,” or about $70 billion.

I spoke to Mao in August, but the crackdown doesn’t signal any political threat, writes Chorzempa of the Peterson Institute. It’s more likely that bitcoin trading is just collateral damage from a wider set of restrictions on alternative financial products that have caused billions in consumer losses. Regulators have reigned in not just crypto trading but peer-to-peer loans, trusts, and lending to non-bank institutions this year, Chorzempa writes: “The clampdown thus fits into a broader set of efforts to lessen financial market risks perceived by Chinese policymakers.”

Everyone hates inflation

To the extent that bitcoin trading and mining is a political statement, it’s a demonstration against inflation. Prices in China grew rapidly in the aftermath of the financial crisis in 2008, hitting their highest level in decades in 2007. Inflation has moderated since then, but ordinary Chinese say they still feel the pinch.

Bitmain’s Micree Zhang, who developed its proprietary mining chips, says worry about inflation chewing up his earnings was one reason why he first became interested in bitcoin. “Before I knew about bitcoin I disliked, and was very worried about, inflation. Especially in China in the last 10 years,” he said when I visited with him at Bitmain’s main facility in Inner Mongolia. “When I discovered bitcoin, I knew it was a good idea, very quickly.”

One bitcoin user I met in Beijing told me he was attracted to the cryptocurrency because the government couldn’t devalue it by printing more money, unlike the yuan. The Chinese government controls its currency far more tightly than other major economies.

This level of control can lead to panics. In 2015, the Chinese government devalued the yuan in an attempt to boost economic growth, sending shockwaves through global markets. While today the central bank’s move is seen as astute, at the time Chinese consumers were hit hard, worrying about paying more for everything from Australian beef to New Zealand milk.

Digging for digital gold

China has been the world’s largest electricity producer since it surpassed the United States in 2011. Cheap electricity is the crucial ingredient for a profitable bitcoin mining operation—and China has it in spades. So it’s no surprise that China has become a world center for the activity.

Take Beijing-based Bitmain, for instance. It’s the world’s biggest bitcoin miner, but the company doesn’t divulge its financial data, and there’s no easy way to find out because its beneficial owner is a trust in the Cayman Islands. But one longtime commentator in the bitcoin space, Jimmy Song, has performed an analysis of the firm’s likely profitability. His estimate: $77 million in mining profits for the firm this year, of which electricity and other operational costs come up to about $23 million.

It’s estimated that two-thirds of the world’s processing power devoted to mining bitcoin resides in China. These bitcoin mines take the form of giant warehouses filled with thousands of custom-designed machines and chips, all whirring away to check bitcoin transactions and compete for a slice of the 12.5 bitcoins awarded to a miner every 10 minutes. Collectively, bitcoin miners have collected more than $2 billion in revenue over the cryptocurrency’s nine-year lifespan.

Bitmain leads the pack as both a creator of bitcoin mining rigs and chips, and an operator of vast server farms. It’s now raised $50 million from marquee Silicon Valley investors including Sequoia Capital to expand to the US—perhaps reducing its exposure to Chinese regulations—and to develop a new set of chips for artificial intelligence.
 

Sheer scale

Bitmain’s position as the world’s largest miner is only the tip of Chinese industrial interest on blockchain technology. Last May, a Chinese company called Wanxiang Group, one of the world largest automotive parts makers, sponsored a blockchain hackathon at the Deloitte offices in Rockefeller Center in New York. Wanxiang plans to embed blockchain technology into a new “smart city“—a nine square kilometer plot of land with a planned population of 90,000 people and $30 billion in investment—that it is building from scratch near Hangzhou in eastern China. It was looking for the world’s brightest blockchain developers.

Wanxiang was offering $15,000 to teams who came up with an enticing blockchain project for the smart city, with an additional $1 million in funding. As Wanxiang executive Peter Liang clicked through his slides detailing how blockchains would power everything from the city’s electricity grid to its traffic control system and be embedded in Wanxiang’s factories, the handful of programmers in the room grew both skeptical and awed. “It’s so huge, it’s hard to even believe,” one developer told him.

Wanxiang isn’t the only Chinese conglomerate with blockchain dreams. Beyond cryptocurrencies like bitcoin, some of China’s biggest firms are betting on the technical ideas behind it to revolutionize their businesses. They’re placing much bigger bets than their counterparts elsewhere in the world, who are mired in small-scale trials, proofs of concepts, or slow moving consortia. Chinese companies “are not only moving faster, but the scale of their blockchain ambitions dwarf what we’re seeing elsewhere,” says Garrick Hileman, of the Cambridge Centre for Alternative Finance.

The Chinese e-commerce giant JD has already launched a food supply tracking system using a blockchain in Beijing supermarkets and online stores. The tech giant Tencent has partnered with Intel to develop a blockchain architecture. And the People’s Bank of China, the country’s central bank, has said it’s researching blockchain technology as a way to potentially digitize the yuan.

Blockchains for industry

Unlike firms elsewhere in the world, Chinese companies sense an opportunity to unify the fragmented data flows flowing through their stupendously large and complicated factory floors and supply chains by marrying a blockchain data layer with Internet of Things devices. Conveniently, these applications are also free of the regulation and scrutiny that can slow down financial applications. “I personally believe that non-financial [applications] will go commercial sooner,” says Vincent Wang, Wanxiang’s chief innovation officer.

Foxconn, one of the world’s largest contract manufacturers of electronics and best known for manufacturing Apple’s iPhone, sees blockchain as way for its suppliers to get easy financing. “In China, 85% of SMEs can’t get financing,” Foxconn executive Jack Lee told a conference in New York in May. “They have to go to shadow banking … so it’s very inefficient and costly.” If Foxconn can leverage its current data on small businesses through blockchain, it could create a highly efficient supply chain that could also track delivered goods.

Just as mobile phones allowed China and emerging economies to leapfrog the rich world’s telephone landlines, blockchain technologies could help its industries skip the development of antiquated financial services models. After all, Chinese tech firms Alibaba and Tencent are already processing trillions of dollars through their mobile payments businesses. “We are more interested in getting to a next-generation financial services business,” Foxconn’s Lee says. “That’s the key. As a side benefit for Foxconn, it will streamline the supply chain.”

Those kinds of observations make less worrisome the recent drop in China’s share of bitcoin trading volume as well as rumors on Telegram chat groups about an imminent crackdown on even China’s powerful bitcoin miners. Because Chinese money’s waning influence over the bitcoin markets may be replaced by control over an even greater prize.

As it continues to move from a rural to an industrial economy, China needs to leapfrog the incumbents and assert itself as a technology leader. Bitcoin and the ideas behind its blockchain may be one way to do that—and it may be why China has been a leader of a stateless cryptocurrency for so long.

 

Author: Joon Ian Wong

 

Posted by David Ogden Entrepreneur
david ogden cryptocurrency entrepreneur

Alan Zibluk Markethive Founding Member