Deputy Finance Minister: Bitcoin Payments Won’t be Legalised in Russia

Russia’s deputy finance minister has said that pending legislation on digital currencies is likely to include a ban on bitcoin payments.

According to state-backed Russian news source TASS, Alexey Moiseev, the deputy finance minister of Russia, said:

“No regulator doubts that payments will be banned.”

Additionally, he implied that discussions on the regulation of the cryptocurrency are still continuing in the State Duma, Russia’s national legislature.

He said:

“The discussions will continue. I think that within the framework of these discussions we will decide what we will do with it.”

He remarked that he is in favour regulating digital currencies in Russia, stating:

“In any case, there is a market. It is developing rapidly, and there are certain advantages that could be used. I mean the advantages associated with attracting investments for projects through the ICO. I have a positive attitude to this, but there is another point of view. In order to make a decision, consensus will be necessary.”

The draft law on the regulation of digital currencies is expected by next month.

Anatoly Aksakov, head of the State Duma for the financial market committee, said:

“I think we will determine it within a month. I think in October, and then we will discuss it before submitting it.”

Previously, Anton Siluanov, Russia’s finance minister, said that the regulation bill would be ready within a year.

Russia’s Central Bank Doesn’t Class Bitcoin As a Currency

For months, the discussion of how to regulate bitcoin payments in Russia have continued. Yet, while debates remain, the Central Bank of Russia has questioned whether it should be classed as a currency.

In June, Elvira Nabiullina, governor of the central bank, said that she views bitcoin as an asset.

At the time, she said:

“We don’t consider that bitcoin can be considered as a virtual currency. It’s more digital assets with the regulation of assets.”

She added that the bank had concerns about the cryptocurrency.

“We have some doubts, we don’t see some huge benefits from introducing digital assets in our economy.”

Recognising Digital Currencies

Back in April, Moiseev stated that Russia may recognise cryptocurrencies in 2018. In a report from Bloomberg, the deputy finance minister said:

“The state needs to know who at every moment of time stands on both sides of the financial chain. If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

At the time this news was quite significant from the country.

A year previously, Russia’s Finance Ministry was threatening prison time for anyone using digital currencies. A new amendment was placed under the Criminal Code. Management and executives of banks and financial service firms faced up to seven years. However, every day individuals faced prison sentences of up to four years.

It remains to be seen whether the country eventually recognises digital currencies in 2018. The market remains a popular one, which can be seen by its steadily rising value on a daily basis.

‘No Point in Banning Cryptocurrencies’

Interestingly, earlier in September, Siluanov was reported to be working on a law to regulate digital currencies by the end of 2017. As the Russian government has become more accepting of them, Siluanov stated that there was ‘no point‘ in banning them.

In a report, he said:

“The state understands indeed that cryptocurrencies are real. There is no sense in banning them, there is a need to regulate them.”

Aksakov is also reported as saying that a bill would be passed by the end of the year, adding:

“If we agree on the main approaches in the coming week, I think that by autumn, by the end of the fall session, we will be able to adopt this law in order to provide a legal space for the development of this market.”

However, given the country’s stance on the crypto market in the past, delays to when the bill will be ready are expected.

Bitcoin’s Value Grows

News that Russia won’t be legalising bitcoin payments comes at a time when the market is seeing an uptick in value.

At the time of publishing, on the 29th September, the digital currency is trading at $4,180, a 0.73 percent rise in 24 hours. In seven days its value has increased by 15.96 percent. Its market value is currently worth $69.3 billion.

For much of September, though, the digital currency has been hovering below $4,000. This was primarily to do with Chinese authorities prohibiting the operation of domestic digital currency exchanges.

Jamie Dimon’s Comments Get Shot Down

Yet, negative comments from various individuals may have also impacted its price. Namely, from Jamie Dimon, the CEO of JPMorgan Chase. According to him, bitcoin is ‘a fraud‘ that ‘won’t end well.’ In his opinion, the cryptocurrency will eventually blow up.

Earlier in September, Dimon said:

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”

He also claimed that he would ‘fire in a second’ any employee found trading in bitcoin.

Understandably, his remarks ignited a backlash from industry leaders. The most notable, of which, was from a fellow bank CEO.

Recently, James Gorman, CEO of Morgan Stanley, said that:

“[Bitcoin is] certainly something more than just a fad.”

He added:

“The concept of anonymous currency is a very interesting concept – interesting for the privacy protections it gives people, interesting because what it says to the central banking system about controlling that.”

Even though Gorman says he hasn’t invested in the currency, he’s spoken to people who have, stating:

“It’s obviously highly speculative but it’s not something that’s inherently bad. It’s a natural consequence of the whole blockchain technology.”

These comments will no doubt be refreshing to hear. Not only that, but the fact that they were uttered by a bank CEO illustrates the impact that bitcoin and bitcoin payments are having. The fact that some bank CEOs can’t see this may indicate that they are ‘probably afraid‘ of the currency and the technology behind it.

While bitcoin payments are expected to be banned in Russia that’s certainly not the case everywhere else.

Featured image from Shutterstock.

Novogratz: Cryptocurrency Market Will be ‘Largest Bubble of Our Lifetimes’

A former hedge fund manager at Fortress Investment Group is, reportedly, looking to create a $500 million hedge fund focusing on cryptocurrency and blockchain.

Mike Novogratz, the former manager at Fortress Investment Group, is investing $150 million of his own money. An additional $350 million is expected to be raised by January, 2018, through outside avenues, reports Bloomberg News.

If true, the Galaxy Digital Assets Fund would represent the biggest of its kind. Not only that, but it would illustrate Novogratz’s aggressive move into the sector, to date.

Despite the fact that he didn’t specify whether he’s raising a fund, he did explain why he’s taking part in what he called ‘the largest bubble of our lifetimes.’

He says:

“This is going to be the largest bubble of our lifetimes. Prices are going to get way ahead of where they should be. You can make a whole lot of money on the way up, and we plan on it.”

Investing in Bitcoin

Novogratz made headlines in April when he revealed he had put 10 percent of his net worth into bitcoin and ethereum.

At the time he declined to reveal how much his net worth was. However, he claimed that it was ‘the best investment of my life.’ In April, bitcoin was trading over $1,200. Fast-forward to September and bitcoin’s price topped the $5,000 mark on the 2nd.

Yet, shortly thereafter, it’s price plunged 30 percent as China’s ban on initial coin offerings (ICOs) and a crackdown on domestic digital currency exchanges impacted the market’s price.

Novogratz explains that he sold at the right time.

“I sold at $5,000 or $4,980. Then three weeks later I’m trying to buy it in the low $3,000s. If you’re good at that and you’re a trading junkie, it’s a lot of fun.”

It is because of the market’s fluctuating prices that Novogratz compares it to the Wild West. He believes that the cryptocurrency market needs more regulation and that some ICOs are simply fraudulent ‘get-rich-quick-schemes.’

Concerns Still Remain

While Novogratz appears keen to explore the cryptocurrency market further, most large establishments are steering clear. For many, concerns about its unregulated nature and its volatility remain.

Jamie Dimon, CEO of JPMorgan Chase, recently added his voice to those against bitcoin when he called it ‘a fraud.’

At a news conference, the banker claimed that the digital currency ‘won’t end well’ and that it will eventually blow up.

He said:

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”

He also mentioned that he would ‘fire in a second’ any employee found trading in bitcoin. Interestingly, questions have been raised about the fact that JPMorgan handles bitcoin-related client trades.

Another figure that has been against bitcoin is Howard Marks, founder of Oaktree Capital Management. At the end of July, Marks claimed that digital currencies ‘aren’t real‘ in a 22-page memo to clients. At the time, he said people were investing in the market for fear of missing out. Additionally, he claimed that digital currencies are ‘nothing but an unfounded fad or perhaps even a pyramid scheme.’

Interestingly, he has since changed his view on the market. As a result, in a new 11-page memo to clients he admits that bitcoin could become a legitimate currency. Yet, even though he considers himself ‘less of a dinosaur’ regarding his understanding of the currency, he’s still not investing in it.

He wrote:

“I still don’t feel like putting my money into it, because I consider it a speculative bubble.”

Seeing Opportunity Where Others Smell Fear

For Novogratz, though, the cryptocurrency market presents the perfect opportunity. And it’s one that he wants to be a part of.

He explains:

“In a lot of ways, this is a market like any other market. You see the psychology of fear and greed in the charts the same way you’d see it in charts of the Indonesian rupiah or dollar-yen or Treasuries. They’re exaggerated because of less liquidity and because you can’t get short.”

Interestingly, Rainer Michael Preiss, executive director at Singapore-based Taurus Wealth Advisors, said that CEOs of major U.S. banks are ‘probably afraid‘ of bitcoin and the blockchain.

In a report, he said:

“Of course, if you run a very large U.S. bank, most probably you are afraid of blockchain and bitcoin.”

This is understandable considering the amount of wealth they control. However, Preiss believes that cryptocurrencies are becoming a viable alternative to people because of a bank’s lack of transparency.

He added:

“The concerns are about the fractional reserve banking system, and the balance sheet of the Federal Reserve at $4.5 trillion, where the Fed officially refuses an audit. On the other hand, on the bitcoin blockchain, you have an audit everyday because it’s open-sourced.”

Investing in Ethereum

It wasn’t until Novogratz left his job at Fortress that he made a name for himself in the crypto market. In 2015, after seeing a friend’s startup and the success of it, he decided he wanted to become more involved in the space.

Instead of investing in bitcoin, though, he put his money into ethereum. At less than a dollar per ether, Novogratz invested $500,000 and left for a holiday to India. When he returned ether’s value has risen fivehold.

During 2016 and 2017, ether and bitcoin soared in value: ether touched $400 and bitcoin scaled $2,500. As a result, Novogratz was able to make around $250 million through the coins he sold. From then he became hooked. He believes that bubbles help to ‘fundamentally change’ the way people live.

“Remember, bubbles happen around things that fundamentally change the way we live. The railroad bubble. Railroads really fundamentally changed the way we lived. The internet bubble changed the way we live. When I look forward five, 10 years, the possibilities really get your animal spirits going.”

He now estimates that he has around 20 percent of his net worth invested in digital assets.

Despite his self-imposed exile from Wall Street after his losses at Fortress, Novogratz is keen to enjoy this venture in the cryptocurrency space. As he says, you ‘learn from your mistakes.’

Featured image from Shutterstock.

Japan’s FSA Regulator to Monitor Bitcoin Exchanges from October

Japan’s Financial Services Agency (FSA) is to begin monitoring Japanese bitcoin exchanges from October.

According to the Japan Times, the move is to ensure that digital currency exchanges have the correct internal systems, such as protecting customer assets, in place. If not, on-site inspections will be carried out.

In April, a revised payment services law went into affect. This set out operational standards for digital currency exchanges in addition to recognising bitcoin as a legal form of payment. As a result, there has been strong trading from Japan, which helped push bitcoin’s price up to $5,000 at the beginning of September.

According to an FSA executive, the move is to ensure the development of the market and to regulate bitcoin exchanges.

“We pursue both market fostering and regulation enforcement. We aim for sound market development.”

By the end of September, all cryptocurrency exchanges operating in Japan are required to register with authorities. The revised law includes anti-money laundering (AML) and know-your-customer (KYC) regulations.

To monitor the more than 20 bitcoin exchanges in Japan, the FSA has established a team of 30 members with the relevant expertise. The team will determine whether the exchanges have the appropriate risk management measures in place, including how to respond to cyberattacks.

Japan is no stranger to incidents involving the lose of customer assets in the digital market. The now-defunct bitcoin exchange Mt Gox is well known for its notorious past. In 2014, the exchange collapsed, which saw the loss of millions of dollars in customers’ funds. The exchange’s failure is considered a vital component in pushing Japanese authorities to regulating the market.

China Cracks Down on Domestic Bitcoin Exchanges

This move comes at a time when Chinese authorities have outlawed initial coin offerings (ICOs).

According to authorities, ICOs are an illegal form of fund-raising that is open to:

“…financial fraud, pyramid schemes and other criminal activities.”

After this announcement came the call to stop prominent domestic digital currency exchanges from operating in the country. Naturally, news of this saw market prices plummet. So much so, that on the 15th September, bitcoin’s price was trading at $2,947. As a result, its market cap was pushed down to $48.8 billion.

Following China’s move to halt bitcoin exchanges, several have already revealed when they will be closing. Chinese exchange BTCC is expected to stop functioning at the end of September. However, ViaBTC, will cease operations today, as of the 25th September. OKCoin and Huobi will halt their operations at the end of October. They have been given extensions due to the large number of users on their platforms and because neither listed ICO trading pairs.

Reportedly, ViaBTC will relaunch its platform overseas; however, it’s not know when the relaunch will take place.

Last week, at a global blockchain event held in Hong Kong, Haipo Yang, CEO of ViaBTC, said:

“A third of our customers come from outside China, and I believe these overseas users will continue to use the ViaBTC platform, so we can still provide value.”

Bitcoin’s Price Recovers Slightly

Since achieving the $5,000 mark at the beginning of September, bitcoin’s price has been on a roller coaster ride. This has been greatly brought about by China’s move to crackdown on the market.

However, today, the digital currency is showing some signs of improvement. At the time of publishing, bitcoin’s price is trading at $3,897, a 4.81 percent rise in 24 hours. In seven days, though, its value has dropped by 1.23 percent. Its market cap is currently worth $64.6 billion. Yet, it still has a way to go before it can attain its $75 billion market cap it achieved at the beginning of September.

At present, the combined market value is worth $135.4 billion. This, too, is a significant drop from its near $180 billion market value from the start of the month.

Only time will tell whether bitcoin’s price can once again reach new heights. Despite this slight setback in price many people remain confident that it will rise again, even further than what has already been seen.

To the Moon for Bitcoin?

Tom Lee, a Wall Street strategist and co-founder at Fundstrat, an independent research boutique, providing market strategy and sector research, believes bitcoin will rise to $25,000 in five years. Additionally, he states that it will remain the best asset to invest in to the end of 2017.

In a report, Lee said:

“I unequivocally believe bitcoin is your best investment to the end of the year.”

These are similar comments he made in August when he said:

“It has a lot of characteristics that are very similar to gold that I think will make it ultimately attractive as an alternate currency. It’s a good store of value.”

According to Lee, there’s no point in projecting bitcoin’s price two months from now. Instead, looking at its long-term future is the way forward.

Veteran trader masterluc has predicted a bullish price of $15,000 for bitcoin by the end of 2017. According to the trader, bitcoin will continue its bull run into 2019. At which point, the trader believes it will be worth between $40,000 and $110,000.

Bitcoin is ‘a Fraud’

Despite the confidence in the currency, not everyone thinks the same.

According to Jamie Dimon, JPMorgan Chase CEO, he thinks the cryptocurrency is ‘a fraud‘ and that it ‘won’t end well.’

At a conference in New York, the banker said:

“It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed. Currencies have legal support. It will blow up.”

Additionally, he stated that he would ‘fire in a second’ any employee found trading in the digital currency.

More recently, he took another shot at bitcoin claiming that it is a ‘novelty‘ and that it’s ‘worth nothing.’

In an interview, Dimon stated:

“Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down.”

He added that ‘creating money out of thin air without government backing is very different from money with government backing.’

As such, this sort of creation, to him, is ‘worth nothing.’

One report suggests, though, that the CEOs of major U.S. banks are ‘probably afraid‘ of bitcoin and the blockchain.

Rainer Michael Preiss, executive director at Singapore-based Taurus Wealth Advisors, thinks this is because cryptocurrencies are becoming a viable investment alternative for people.

Featured image from Shutterstock.

ViaBTC to Launch Bitcoin Exchange Overseas in Light of Beijing Ban

Chinese bitcoin exchange ViaBTC has announced that it will be launching an overseas platform after Chinese authorities cracked down on digital currency exchanges in the country.

On September 25, ViaBTC is expected to suspend its domestic services to customers. As a result, it has urged current investors to withdraw their assets before closing.

At a global blockchain event held in Hong Kong, Haipo Yang, CEO of ViaBTC, said:

“A third of our customers come from outside China, and I believe these overseas users will continue to use the ViaBTC platform, so we can still provide value.”

However, while this will no doubt help boost bitcoin trading, Haipo said no time frame had been established to relaunch the platform abroad.

Other mainland digital currency exchanges due to cease operations include BTCC, OKCoin and Huobi. BTCC is also expected to stop its domestic services at the end of September. However, it has been reported that OKCoin and Huobi have until the end of October. This is due to their large customer user base and because neither listed ICO trading pairs.

China Takes Steps to Ban ICOs and Domestic Exchanges

The start of September saw a new record high for bitcoin when it reached the $5,000 mark on the 2nd September. Yet, this new high was short-lived. Shortly after, on the 4th September, Chinese authorities outlawed initial coin offerings (ICOs). According to regulators they are an illegal form of fund-raising, which is linked to financial fraud and pyramid schemes.

Following the ICO announcement, rumours began circulating that domestic digital currency exchanges would be targeted too. These rumours eventually became fact, which saw China ordering the closure of several prominent exchanges.

Consequently, market prices plummeted. At the time of publishing, on the 22nd September, bitcoin is trading at $3,626, a 6.54 percent drop in 24 hours. Over seven days, though, it has risen by 12.19 percent.

So far, the lowest trading price for bitcoin was on the 15th September. Then it was valued at $2,947, pushing its market cap down to $48.8 billion, according to CoinMarketCap.

Since then bitcoin’s price has risen and fallen, even climbing back up to $4,000 at one point. Yet, it is due to the fact that there is a large amount of investor speculation, it’s decentralised and volatile that authorities are looking at it closely.

The National Internet Finance Association (NIFA), a self-regulatory body established by the People’s Bank of China (PBoC) called cryptocurrencies ‘a tool for money laundering, drug trafficking, smuggling, illegal fund-raising and other criminal activities.’

Could Mining be Impacted Too?

ViaBTC also operates a bitcoin mining pool. However, speculation remains as to whether China’s ban will extend to mining operations as well.

Chinese exchanges make up around 10-15 percent of trading volume. Yet, they account for around 65 percent of total bitcoin hashrate. However, it’s possible to use virtual private networks (VPNs) to get around China’s block.

Recently, Yang took to social media to say:

It remains, therefore, to be seen what China’s next move will be.

Yang said:

“We have yet to receive notice that we need to halt mining, so [mining] is operating as usual.”

Yang is of the opinion that digital currencies can’t be banned from the country.

He added:

“The bitcoin network is fully distributed, even if there is the [great firewall], users can easily bypass this using methods like [virtual private networks]”

“Synchronising bitcoin information is easy, as long as one [computer] in China is synchronised on the bitcoin network, every other [bitcoin] computer will also obtain the full information on the network.”

Regulatory Oversight Needed

According to a former U.S. market regulator, the volatility of bitcoin’s prices are concerning. So much so, that he believes the only solution is through regulation.

Bart Chilton, the former commissioner for the Commodity Futures Trading Commission (CFTC), made his comments in a recent opinion article on CNBC.

In it he discusses China’s closure on digital currency exchanges and Jamie Dimon’s remarks on bitcoin. The CEO of JPMorgan called bitcoin ‘a fraud‘ while claiming that the currency ‘won’t end well.’

Chilton believes that China’s actions should be a wake up call for bitcoin enthusiasts.

He wrote:

“Rather than waiting for governments to take actions that thwart the development of digital currencies, they should lead efforts to put in place appropriate regulatory oversight for these new and innovative financial technologies.”

He added:

“Visionary leadership is needed. Without it, there’s a mounting risk that more and more governments will simply ban—or over-regulate—bitcoin and other digital currencies.”

Dimon Knocks Bitcoin Again

Dimon was obviously not happy at the shot he took at bitcoin the first time round. As a result, he has done it again.

Not only is the currency ‘a fraud,’ but he claims that cryptocurrencies are a ‘novelty‘ and are ‘worth nothing.’

During an interview with CNBC-TV18 in New Delhi, India, he said:

“Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down.”

He added:

“It’s creating something out of nothing that to me is worth nothing. It will end badly.”

His comments have drawn criticism from the bitcoin community.

Scott Nelson, CEO and chairman of blockchain firm Sweetbridge, said last week, in light of Dimon’s fraud remarks, that:

“Comments like Jamie’s show a failure to grasp the significance of the blockchain and the power of brand in a fundamental sea of change.”

Meanwhile, London-based Blockswater, an algorithmic liquidity provider, has filed a complaint against Dimon for ‘spreading false and misleading information‘ about bitcoin.

According to a report, Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) when he called bitcoin a fraud.

Florian Schweitzer, managing partner at Blockswater, said:

“Jamie Dimon’s public assertions did not only affect the reputation of bitcoin, they harmed the interests of some of his own clients and many young businesses that are working hard to create a better financial system.”

The complaint was filed with the Swedish Financial Supervisory Authority and Schweitzer has asked the Swedish regulator to investigate. He notes in his complaint that market abuse in Sweden is punishable by up to two years in jail.

Featured image from Shutterstock.

Dimon Faces Market Abuse Report After Bitcoin Fraud Comments

A market abuse report has been filed against JPMorgan’s CEO after ‘spreading false and misleading information’ about bitcoin.

The report in question was filed by London-based Blockswater, an algorithmic liquidity provider. It was filed with the Swedish Financial Supervisory Authority against JPMorgan and its CEO Jamie Dimon.

According to Blockswater, Dimon violated Article 12 of the European Union’s Market Abuse Regulation (MAR) when he called bitcoin ‘a fraud.’

On the 12th September, Dimon took a shot at the digital currency stating that it ‘won’t end well’ and that it will eventually blow up.

He also said that he would ‘fire in a second’ any employee found trading in the digital currency for two reasons:

“It’s against our rules and they are stupid. And both are dangerous.”

After Dimon’s comments one observer noted that the cryptocurrency dropped in value.

According to the complaint, Dimon’s comment impacted bitcoin’s price negatively as the ‘cryptocurrency’s price and reputation’ dropped.

Florian Schweitzer, managing partner at Blockswater, said:

“Jamie Dimon’s public assertions did not only affect the reputation of bitcoin, they harmed the interests of some of his own clients and many young businesses that are working hard to create a better financial system.”

It was added that Dimon ‘knew, or ought to have known, that the information he disseminated was false and misleading.’

Since Dimon’s comments questions have been raised as to why the bank handles bitcoin-related client trades. According to a report, most Wall Street banks use the Bitcoin XBT platform to act as agents for buyers and sellers. JPMorgan does so too.

Yet, a spokesperson for the bank said it doesn’t trade with its own capital.

Brian Marchiony, JPMorgan Chase spokesperson, said:

“They are not JPMorgan orders. These are clients purchasing third-party products directly.”

Blockswater also claim that the bank traded bitcoin derivatives on Stockholm-based exchange Nasdaq Nordic for clients before and after Dimon’s comments. Schweitzer is of the opinion that it ‘smells like market manipulation.’

As a result, Schweitzer has asked the Swedish regulator to investigate. He notes in his complaint that market abuse in Sweden is punishable by up to two years in jail.

Bank CEOs Are ‘Afraid’ of Digital Currencies

Interestingly, one wealth advisor believes that CEOs of major U.S. banks are ‘probably afraid‘ of bitcoin and the blockchain.

Recently, Rainer Michael Preiss, executive director at Singapore-based Taurus Wealth Advisors, said:

“Of course, if you run a very large U.S. bank, most probably you are afraid of blockchain and bitcoin.”

His comments are in light of Dimon’s remarks about bitcoin. Preiss believes that due to a bank’s lack of transparency, cryptocurrencies are becoming a viable investment alternative for people.

He added:

“The concerns are about the fractional reserve banking system, and the balance sheet of the Federal Reserve at $4.5 trillion, where the Fed officially refuses an audit. On the other hand, on the bitcoin blockchain, you have an audit everyday because it’s open-sourced.”

Additionally, he believes that bitcoin remains ‘a good store of value.’ This is down to the fact that its price has risen from $7 to $5,000 since January, 2014. Bitcoin reached the $5,000 mark on the 2nd September when CoinDesk’s Bitcoin Price Index (BPI) recorded it at $5,010. Chinese bitcoin exchange OKCoin recorded the currency’s price at $5,149. At the time the combined market cap was worth nearly $180 billion. At the time of publishing, on the 21st September, it’s valued at $124.8 billion.

Bitcoin’s Price Tumbles to $3,600

Since the announcement from China that it is outlawing initial coin offerings (ICOs) and cracking down on domestic digital currency exchanges, bitcoin has seen its price drop.

This is due to the fact that several prominent exchanges will cease their operations. At the end of September Chinese digital currency exchanges BTCC and ViaBTC will suspend their functions. Meanwhile, OKCoin and Huobi are expected to stop operating at the end of October. It’s believed this is because of the large number of users on the platforms and because neither had listed trading pairs for ICO tokens.

So far since this announcement the number one digital currency has dropped below the $3,000 mark. On the 15th September it was recorded at $2,947, pushing its market cap down to $48.8 billion. Since then, however, it has improved. So much so, that on the 19th September it was trading at $4,090, pushing its market cap back up to $67.7 billion.

Yet, uncertainty still reigns within the market. As a result, the price of the currency has since dropped. At the time of publishing, it is trading at $3,647, which is an 8.22 percent drop in 24 hours. Subsequently, its market value is now worth $60.4 billion. Favourably, though, over a seven day period, its value has risen by 8.88 percent.

Cryptocurrencies Are ‘Garbage’

This is according to gold investor John Hathaway. He is the latest individual to speak out against the market in a new report.

Speaking with Kitco.com, a precious metal news and data site, the asset manager said simply that the cryptocurrency craze was simply ‘garbage.’

Hathaway said:

“It’s an absolute bubble – there’s no question in my mind that it’s in a bubble.”

Manager of the $1.2 billion Tocqueville gold fund, he added:

“Sure you can make money in bubbles any time but you have to get out. Let’s not forget that the total market value of these cryptocurrencies is $180 billion or so, maybe a little less now – that’s tiny compared to gold.”

Some have speculated that interest in bitcoin is taking away interest from gold. Mohamed El-Erian, Allianz’ chief economic adviser, is one such figure to voice these concerns. However, Hathaway doesn’t believe that’s the case.

“The idea that cryptocurrencies have somehow diverted interest in gold is baloney, it’s just not true.”

What Now?

It remains to be seen whether Dimon does face any repercussions from his bitcoin fraud remark. However, he will be hard pressed to find people who don’t think his comments impacted the currency’s price and reputation.

For now, we just have to wait and see. There are, however, a number of factors affecting bitcoin’s price, which it’s currently struggling to recover from.

Featured image from Shutterstock.

South Africa’s 2nd Largest Grocer Won’t Accept Bitcoin without Regulation

It was believed that South Africa’s second-largest supermarket chain, Pick n Pay, would start accepting bitcoin in one of its stores. However, a fresh report indicates that that is not the case.

On the 18th September, payments software development firm Electrum made the announcement. It said that it had enabled Pick n Pay to accept bitcoin payments in store. For a limited time, it was reported that customers at Pick n Pay’s head office store have been able to use the digital currency to buy groceries and services. During the check-out process, customers simple scanned the QR code through a bitcoin wallet app on the customer’s smartphone. The bitcoin infrastructure for the project was provided by South Africa-based Luno, a global bitcoin company.

Jason Peisl, an executive at Pick n Pay, said:

“Cryptocurrency and bitcoin are still relatively new payment concepts, yet we have been able to effectively demonstrate how we are able to accept such alternative payments.”

It’s thought that the goal was to determine what customers’ of Pick n Pay feel regarding the use of a digital currency. The next step then would be to start accepting the cryptocurrency across all its store locations in South Africa.

Electrum MD Dave Glass, added:

“We’ve worked closely with PnP for several years as a key technology provider. Our mission is to support innovative enterprises like Pick n Pay, and together we use the advanced Electrum software-as-a-service technology to move quickly on new opportunities, whilst at the same time delivering the best possible shopping experience.”

Regulatory Framework Needed

Yet despite claims that Pick n Pay is accepting bitcoin, it appears that isn’t the case.

In a separate report, the supermarket chain said it was ‘unlikely to roll out the solution‘ without an established regulatory framework in place.

Richard van Rensburg, Pick n Pay deputy CEO, explained that the test had been limited to their canteen store at the head office and was no longer active.

He said:

“We don’t expect that in the near term accepting bitcoin will unlock any significant new business and we are unlikely to roll out the solution until the payments industry and regulatory authorities have established a framework for managing the risks associated with cryptocurrencies. We have proved to ourselves, though, that it is technically possible to roll out a solution very quickly.”

He added that digital currencies were still in ‘relative infancy.’ As a result, it would take time for them to be accepted as a form of payment.

Rensburg said:

“Progress is unlikely to be hampered by technology but rather by regulatory issues and concerns.”

South Africa’s Central Bank Tests Digital Currency Regulations

In July, the South Africa Reserve Bank (SARB) revealed that it was to begin testing cryptocurrency regulations. For many authorities, regulation is the way forward.

Consequently, SARB has been in discussions with Bankymoon, a blockchain-based solutions provider. SARB has chosen Bankymoon for its first sandbox business to conduct an experiment with digital currency regulations.

At the time, Loerien Gamaroff, CEO of Bankymoon, said the two are working together to determine a future relationship.

He said:

“This is because the Reserve Bank is very hesitant to give a stamp of approval on anything that comes out. The sandbox will only be bitcoin focused during this initial phase, but is focused on applying broad regulations to all cryptocurrencies.”

Such a move, however, will give a formal foundation and deliver legitimacy to bitcoin that people will trust.

Gamaroff added:

“I think the regulation will move things along and make people on the street comfortable with bitcoin. With these new regulations, these everyday people can now trust that bitcoin is not just for hackers and criminals.”

‘Too Risky’ to Issue Digital Currency

However, despite South Africa’s interest in cryptocurrencies it doesn’t feel now is the right time to embrace it.

As a result, the deputy governor of SARB has said that it’s ‘too risky‘ to start issuing its own digital currency.

In August, Francois Groepe, the deputy governor of SARB, said:

“Virtual currencies have the potential of becoming widely adopted. However, for the central bank to issue virtual currencies or cryptocurrencies in an open system will be too risky for us. This is something that we really need to think about.”

Yet, the bank is still interested in exploring the technology. Consequently, SARB has established a three-man team to research cryptocurrencies. It’s hoped that, eventually, the central bank will be able to provide a clearer picture as to where the market stands.

Until then supermarket chains such as Pick n Pay are unlikely to start accepting bitcoin for grocery payments.

Central Banks Can’t Ignore the Crypto Market

A recent report has said that world central banks can no longer turn a blind eye to the digital currency market. According to the Bank for International Settlements (BIS), central banks need to look at them closely as they could pose a risk to financial security.

This report comes at a time when the market has experienced a tough week. China’s crackdown on initial coin offerings (ICOs) and domestic digital currency exchanges has impacted market prices. Several prominent crypto exchanges have already announced that they will be suspending their services. BTCC and ViaBTC will halt operations at the end of September. Whereas, OKCoin and Huobi are expected to stop operating by the end of October.

Additionally, Jamie Dimon, CEO of JPMorgan Chase, hasn’t helped things by calling bitcoin a fraud.

Yet, despite these setbacks in the market, prices have rallied back. At the time of publishing, on the 19th September, bitcoin is trading at $3,973. Over a 24-hour period it has increased its value by 3.44 percent. However, in seven days its remains down by 7.08 percent. Its market cap it worth $65.8 billion.

This is a marked improvement from when it was trading below $3,000 on the 15th September. Trading at $2,947, its market cap was worth $48.8 billion. The fact that the market is climbing again indicates that governments aren’t having much of an impact on the industry as initially thought. China and others may try to stamp out the sector, but it doesn’t appear to be going anywhere. This is good news for the community who are keen for bitcoin to continue to gain prominence. Only time will tell what will happen next.

Featured image from Shutterstock.

UK Watchdog Warns Bitcoin Investors Could Lose Their ‘Entire Stake’

The U.K.’s financial regulator has issued a warning to bitcoin traders over the frenzy created by initial coin offerings (ICO), some of which are being promoted by celebrities such as Paris Hilton and boxing champion Floyd Mayweather.

The Financial Conduct Authority (FCA) has said that traders investing in ICOs should be prepared to lose all of their money. Furthermore, they should be aware that some may end up being scams.

It said:

“ICOs vary widely in design. The digital token issued may represent a share in a firm, a prepayment voucher for future services or in some cases offer no discernible value at all. Often ICO projects are in a very early stage of development. ICOs are very high-risk, speculative investments.”

It added:

“You should be conscious of the risks involved and fully research the specific project if you are thinking about buying digital tokens. You should only invest in an ICO project if you are an experienced investor, confident in the quality of the ICO project itself and prepared to lose your entire stake.”

Following this was a list of the risks associated with ICOs. These included:

  • Unregulated space
  • No investor protection
  • Price volatility
  • Potential for fraud
  • Inadequate documentation
  • Early stage projects

It added that some ICOs may not use the money raised ‘in the way set out when the project was marketed.’

China Bans ICOs

The FCA’s comments come at a time when China recently outlawed ICOs in the Chinese nation. China has also said that it plans on banning the trading of digital currencies on domestic exchanges. At the beginning of September, the ban was backed by seven of China’s regulators. It is hoped this will stamp out fraudulent fundraisers.

According to a report, Beijing and Shanghai have seen an increase in ICO trading. So far, this year has seen the launch of 65 ICOs. This has raised around $400 million from 105,000 investors.

When someone invests in an ICO their money goes up when the coin’s value increases. To date, bitcoin has more than quadrupled during 2017. At the beginning of the year bitcoin was valued at $1,000. Yet, at the start of September it had risen to $5,000. As of the 13th September, bitcoin is trading at $3,902. It’s believed that China’s plans for digital currency exchanges is impacting the price of bitcoin.

Ethereum has also seen its value rise. At the beginning of the year it was trading around $8. Now, though, it’s valued at $260. As a result, traders are willing to speculate and put their money into ICOs. Of course, because of the market’s rise in value many ICOs are taking advantage and are simply scams to steal money.

China’s regulators believe that the issuance of token sales is illegal. As a result, they are keen to crackdown on fundraising activities in the country.

Following the ban, a statement from the regulators said:

“In essence, it is a kind of non-approved illegal open fund raising behavior, suspected of illegal sale tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities.”

BitKan Freezes Trading Services

Since the ban, one Chinese over-the-counter (OTC) trading service for digital currencies has frozen its activities.

BitKan said in a post that it would be suspending trading on the 14th September at 12:00 a.m., Beijing time. This is due to increased pressure from authorities. However, it didn’t mention when it would resume services, if at all. The move from BitKan is interesting as OTC traders may be excluded from the ban. The ban, at the moment, only impacts exchange-based trading.

Celebrities Promote ICOs

The increase in ICO trading is partly down to celebrities promoting them. This, in turn, is causing a frenzy as new investors jump on board.

At the end of July, boxing champion Floyd Mayweather took to Instagram to promote an ICO. In the photo Mayweather predicted that he would make a lot of money in the ICO for Stox, a prediction market project, which launched at the beginning of August. In its token sale, Stox went on to raise $30 million.

At the end of August, Mayweather then promoted his second ICO on Twitter. This time it was for the token sale of the Hubii Network, which is developing a blockchain-based content marketplace. He also mentioned the hash tag #CryptoMediaGroup, but didn’t elaborate.

Celebrity heiress and reality TV star Paris Hilton is the latest celebrity to jump on the ICO band wagon. On the 4th September, it was reported that Hilton had announced her participation in a token sale.

Taking to Twitter, she said:

“Looking forward to participating in the new @LydianCoinLtd Token! #ThisIsNotAnAd #CryptoCurrency #BitCoin #ETH #BlockChain.”

Many, however, remain dubious as to nature of the ICO. One person tweeted:

Called Lydian, the project claims that it is ‘developing blockchain driven technologies to reduce ad fraud and to maximize the effectiveness of ad marketing expenditures.’

A PR for it said:

“It aims to address the trust and transparency issues affecting digital marketing platforms using blockchain distributed ledgers and industry exclusive data sets to democratize trust at scale.”

China’s Ban Shouldn’t Stop Firms Researching the Blockchain

This is according to the director general of the Chinese central bank’s research institute.

In a report, Sun Guofeng, from the People’s Bank of China (PBoC), said that the ICO ban was ‘necessary and timely.’

However, he added:

“This should not prevent relevant financial technology companies, industry bodies and other technology firms from continuing their research into blockchain technology.”

He added that the blockchain is a ‘good technology’ and that an ICO is not the only way to research it.

For many, this move from China will be considered further interference from authorities keen to curb the market. For others, however, it’s a step in the right direction.

Sasha Ivanov, CEO of blockchain company Waves, said:

“There’s no secret that a lot of the initial coin offerings, with ads on Facebook promising huge discounts and returns, are nothing but a scam.”

“The Chinese government could cope with those companies working in a shadow zone of the law, but they have finally lost patience, as more and more companies tried to raise millions for nothing.”

David Moskowitz, co-founder and CEO of blockchain-powered social network Indorse, said that it would help to protect consumers from fake ICOs.

“We hope the authorities will recognize the potential of the sector for economic growth and technological development, and enact rules which will allow for the safe and secure future of the industry.”

Featured image from Shutterstock.

Howard Marks Has a Change of Heart Over Bitcoin, Sees it As a Currency

Billionaire bitcoin critic Howard Marks has reviewed his opinion on bitcoin, admitting it could be a legitimate currency.

At the end of July, the founder of Oaktree Capital Management wrote a 22-page memo to clients stating that digital currencies aren’t real. His position on them couldn’t be questioned. This was because he firmly stated they they weren’t real three times.

At the time he wrote:

“I’d guess these things have arisen from the intersection of (a) doubts about financial security — including the value of national currencies — that grew out of the financial crisis and (b) the comfort felt by millennials regarding all things virtual. But they’re not real.”

Furthermore, he believed people were investing in the crypto market for fear of missing out. He also claimed that digital currencies are ‘nothing but an unfounded fad or perhaps even a pyramid scheme.’ In a bid to deter people from investing in bitcoin he compared it to the tulip bubble.

However, after warning clients away from the market, it appears he’s changed his mind.

Bitcoin as a Form of Currency

In a new 11-page memo to clients Marks started by saying that his previous memo had generated the most response in the 28 years he’s been writing memos. As a result, he felt it was right to respond and reflect given the time that had passed.

He wrote:

“What bitcoin partisans have told me subsequently is that bitcoin should be thought of as a currency – a medium of exchange – not an investment asset.”

He then delves into further discussion, presenting the case for it as a currency. One of the points he mentions is that:

“For a long time currencies were backed by (and exchangeable for) gold or silver, but that’s no longer the case. The truth is, there’s nothing behind currencies these days other than their issuing government’s ‘full faith and credit.’ But what do they promise? New currencies are sometimes created out of thin air (like the euro, which wasn’t legal tender sixteen years ago), and sometimes they’re devalued.”

Marks ultimately agrees that the digital currency can be accepted for payments and as a store of value.

Reservations Still Remain

Yet, despite his new outlook on bitcoin Marks isn’t fully convinced. Even though he considers himself ‘less of a dinosaur’ regarding the currency he’s still not investing in it.

He wrote:

“I still don’t feel like putting my money into it, because I consider it a speculative bubble.”

However, he’s willing to be proven wrong about the currency. Interestingly, he sees bitcoin as being better than the dollar. This is due to the cap on the number of bitcoins issued. At present, 16.5 million coins out of the 21 million limit have been released. The cap is not expected to be reached until 2140. The dollar, though, or any other fiat currency can be issued at any time. As Marks writes this reduces ‘its purchasing power through inflation.’

He adds:

“Merely by limiting the growth of supply, bitcoin would become more valuable as other currencies devalue.”

Given the growth of bitcoin in the past nine months it remains to be seen whether Marks will eventually invest in it.

Volatility Remains

The value of bitcoin has soared to uncharted heights throughout 2017. As a result, it recently scaled the $5,000 mark. Such a milestone was monumental to the currency and those backing it. However, as of the 11th September it is trading at $4,186, according to CoinMarketCap. In a 24-hour period its value has risen by 2.09 percent, but in seven days it has fallen by 1.95 percent.

This price drop is believed to be because of China. The country recently announced the banning of initial coin offerings (ICOs) to prevent financial fraud and illegal fund-raising. As a result, the news has seen bitcoin’s value drop by nearly $1,000. On the 10th September, uncertainty over a Chinese report that the country may shut down exchanges saw bitcoin fall to $3,950. As can be seen it has slightly recovered in price.

According to the Wall Street Journal, the ban is expected to be limited to exchange-based trading and not over-the-counter transactions. The report states that China’s central bank – the People’s Bank of China (PBoC) – has drafted a draft, which will prevent Chinese platforms from providing virtual currency trading services.

It is because of situations such as this that volatility in the market remains. With people unsure of what China’s next step will be, many are selling off their coins now.

According to Yale economics professor and Nobel Prize winner Robert Shiller, the digital currency resembles that of a bubble. Known for his work on bubbles in economics, Shiller claims that bubbles are brought about by stories and not metrics.

He said:

“It’s the quality of the story that’s attracting all this interest, and it’s not necessarily sustainable.”

He added:

“The story has inspired young people and active people, and that’s what’s driving the market. It’s not fundamentals. It’s not like this is a fundamentally important thing, this bitcoin.”

Cryptocurrencies Will Remain

Of course, despite government curbs to control the digital currency market, they will remain.

This is the thinking of Mark Mobius, executive chairman of Templeton Emerging Markets. He said that the crypto market is gaining prominence because they provide a fast way to transact with.

Yet, he believes that China is ‘ahead of the game’ in stopping ICOs as there is the danger of them being used by terrorists. However, while there are attempts from governments to curb the market it’s unlikely that they will disappear anytime soon.

As another report puts it:

“A ban on crypto exchanges won’t mean the end of trading in digital currencies.”

The market is going through an interesting phase for many market watchers. As such, it remains to be seen what will happen in the weeks and months that follow. The jury is still out regarding China’s decision and while bitcoin has risen in price from the 10th, it’s still feeling an impact.

For the time being, however, Marks has given a small nod of approval toward the currency and that can only be seen as a good thing.

Featured image from Shutterstock.

Indian State Intends to Use the Blockchain to Protect Citizen Data

The Indian state of Andhra Pradesh has announced it is working with cybersecurity firm WISeKey to store citizens data on a blockchain securely.

Andhra Pradesh, bordering India’s southeastern coast, is the seventh largest state in the country. In an announcement, Swiss-based WISeKey and Andhra Pradesh will explore blockchain technology proof-of-concepts as pilot projects across a variety of departments.

The aim is to simplify processes and to enhance security in light of cybersecurity attacks worldwide. Earlier this year, malicious malware known as WannaCry crippled over 75,000 computers in 150 countries. It was the most audacious cyberattack to take place. According to Microsoft, it was a ‘wake-up call’ for governments to take action to prevent these attacks from happening. Shortly, thereafter, the NotPetya cyberattack targeted vulnerable computers around the world. Many victims were ordered to pay bitcoin ransom demands to receive access to their files.

In an attempt to take decisive steps, the government in Andhra Pradesh is taking measures to better protect citizen data. With a population of 88 million people there is a wealth of information that needs to be stored securely. To ensure this, it is teaming up with WISeKey to keep its various databases secure.

Carlos Moreira, founder and CEO of WISeKey, said:

“To have a pristine vision like putting the citizen at the center of gravity, and building all the infrastructure around this vision is the key to successfully empower citizens to unleash their full potential.”

JA Chowdary, special chief secretary & IT advisor to the chief minister of the government of Andhra Pradesh, said:

“We are looking towards WISeKey to play a leadership role in providing cybersecurity for the various initiatives of the government, but also drawing out the vision for smart cities who want to go beyond IoT, automation and use “Deep Tech” algorithmic technology.”

While N. Balasubramanyam, CEO and e-pragathi & transport commissioner for the government of Andhra Pradesh, added:

“Andhra Pradesh will be one of the first states in the world which will be implementing the blockchain technology in the transportation department.”

Andhra Pradesh to Record Land Deals on the Blockchain

In August, it was reported that the state of Andhra Pradesh was exploring the distributed ledger to record land deals. A second Indian state, Telangana, is also considering it too. The aim is to provide transparency to a corrupt system that leaves the poor at risk.

Most land ownership in India dates back to the colonial era. As such, knowing who owns what is fraught with difficulties. As a result, many people, particularly the poor, are left vulnerable with disputes ending up in court.

However, the use of the blockchain could provide better transparency for all concerned.

Vishal Batra at IBM Research, who works on the technology, said:

“The land registry is a good candidate for blockchain as there is no way to verify titles quickly. The process lends itself to fraud, as an owner can re-sell a property, and the buyer is ignorant. With blockchain there would be savings and efficiency, and there can be no fraud.”

Once a sale has been recorded on the blockchain, land owners, banks, sellers and brokers can track the record. This, in turn, gives everyone peace of mind that everything is above board.

Chowdary added:

“We are already digitising all land records, so this can be the next step.”

McKinsey Global Institute, the research arm of the global consulting firm, states that India’s land markets are hindering the country from producing more growth. Consequently, lost gross domestic product growth each year accounts for 1.3 percent.

Indian State to Secure Ration Cards with the Blockchain

These latest steps by Andhra Pradesh are not its first venture into the blockchain. In fact, its first steps can be traced back to 2016.

As early as then it was looking into the technology to fight cybercrime. As a result, it became the first state in Asia to implement the blockchain to provide cybersecurity and curb hacking.

This is significant considering the state’s government looks after a datebase of 103 million ration cards. N. Sambhasiva Rao, the director general of police in India, said at the time:

“Now the government has been encouraging to increase cashless and digital transactions from the present 10 percent to 50 percent.”

Ripple Opens New Office in India

Fintech payments firm Ripple has opened a new office in India’s business capital, Mumbai.

It’s hoped that the company will be capable of providing more customers with a faster settlement of international payments.

India has a population of 1.3 billion people. This expansion into India provides Ripple with a wealth of opportunities. Namely, because the country is the largest remittance receiver in the world. Ripple’s main objective is to get banks more attuned to the blockchain as a way of delivering faster payments.

For those sending money to India they may soon find themselves turning to Ripple’s services.

Navin Gupta, who has been appointed Country Manager for Ripple India, said:

“India is the largest recipient of corporate and retail remittances worldwide, totalling close to $71 billion. The businesses and Indian expatriates sending money into the country want their cross-border payments to be as fast and seamless as payments made within India’s domestic digital payment network.”

“Ripple’s instant, cost-effective blockchain-powered payments can be a transformative component of India’s economy, helping bring the many who have limited access to payment services into the fold.”

It remains to be seen what success this will bring to Ripple. Yet, considering India receives the most remittance payments in the world, the firm may see an uptick is users.

Turning to a Cashless Society

Over the last few years, India has been taking significant steps to embrace a digital agenda. What has helped to push the country forward was the removal of its two biggest banknotes: the Rs 500 and Rs 1,000.

Last November, Narendra Modi, India’s prime minister, ordered their removal. As such around 90 percent of the nation’s currency was wiped out overnight. The aim was to prevent terrorism, corruption and black market money.

While it was no doubt a drastic move for the country, it has aided its journey toward a digital society.

Featured image from Shutterstock.

Australia’s Corporate Regulator: Cryptocurrencies Will Replace Banknotes

Cryptocurrencies will replace bank accounts, changing how Australians pay for things, according to Australia’s corporate regulator.

Within the next 10 years, Greg Medcraft, the chairman of the Australian Securities and Investments Commission, predicts that consumers could live without a bank account as cryptocurrencies replace them.

He also thinks in the next five to 10 years central banks around the world will be issuing their own cryptocurrencies. One of the banks he predicts will do this is the Reserve Bank of Australia. Consequently, as more banks consider digital alternatives they will force other banks to think about how they do business.

In an interview he said:

“The smart banks get it and are reshaping what they do, but they know they are probably living on borrowed time. With central-bank issued digital currencies, you might not need a bank account anymore.”

If central banks start issuing their own digital currencies, consumers will more than likely transact with them rather than a commercial bank. Or they could turn to a technology company. This then puts the onus on existing banks to reconsider their business models if they wish to survive.

Medcraft added:

“There will come a time when if you want to transact, you won’t need a private bank account because you will essentially have a digital wallet with the central bank.”

Banks Must Embrace FinTech to Stay Relevant

In June, Anthony Jenkins, the former CEO of Barclays, said that banks face the threat of becoming obsolete if they don’t embrace the fintech sector.

Speaking at a Money 20/20 Europe fintech conference in Copenhagen, Jenkins said:

“We’re really at the end of the beginning of what we see as a revolution driven by technology with financial services, and fintech is really a too narrow categorisation of what’s going on here. As the technologies develop and season, they’re going to create a totally different way of doing banking and financial services.”

According to Jenkins, if banks embraced the blockchain they could save between $80-110 billion. He has previously said that the fintech sector will disrupt traditional finance. In 2015, he claimed that within 10 years those employed within the banking sector would drop by as much as 20 percent. However, this could go as high as 50 percent.

Similar to his concerns in 2015, Jenkins reiterated his feelings back in June. Consequently, if banks wish to remain relevant they need to change how they do business.

He added:

“Banks can avoid [becoming irrelevant], but they have to act now, and what they really need to do is think about innovation, but also transformation, doing something radically different.”

Banks Invest in the Blockchain

In a bid to stay relevant banks are already making some changes. According to Robert Half Financial Services, 52 percent have invested in the blockchain. Those planning on introducing it is 30 percent while 14 percent may consider using it in the future.

Favourably, the findings found that 85 percent of financial services executives think that the blockchain will have a positive impact on the sector by 2022.

While work is still in progress with the blockchain, if it wasn’t worth investing in banks would simply ignore it. That, however, isn’t the case.

Will FinTech Disrupt Traditional Finance?

Interestingly, while many such as Medcraft are saying fintech will disrupt finance, the World Economic Forum (WEF) thinks otherwise.

In a report, it states that while fintechs have changed the arena for competitiveness, they aren’t producing that much impact on financial services.

Looking at the three main areas of competition for financial services, it looked at cloud computing, big data and artificial intelligence. WEF claim that Amazon, Facebook and Google have a thorough understanding of these compared to the finance sector. Thus, it is these companies that are becoming more disruptive to banks than fintechs.

Large-Scale Rollout of Two-Way Bitcoin ATMs in Australia

In light of Medcraft’s interview is the announcement that a partnership will take place between two fintech firms in Australia. Their aim is to update 2,900 existing ATMs, so that they can become two-way bitcoin ATMs.

According to a press release, a joint-venture will happen between ASX-listed blockchain startup DigitalX and ATM developer Stargroup. It adds that Stargroup has around 500 ATMs in Australia and manages another 2,400 ATMs through its subsidiary StarLink.

Presently, in Australia there are fewer than 20 ATMs that can undertake a bitcoin transaction. According to CoinRadarATM, there are 16 bitcoin ATMs in Australia. Not only that, but conversion fees vary between four to eight percent of the total value. Furthermore, most of these machines are only one-way, which means users can only purchase bitcoin and then add it to their wallet through the ATM.

With two-way bitcoin ATMs, users will be able to do the above. However, they will also have the option of converting their bitcoin to cash at the ATM. This provides greater flexibility and opens up more possibilities and wider adoption of the currency.

Leigh Travers, DigitalX’s CEO, said:

“With our growing success in blockchain consultancy services we view this opportunity as a suitable fit to offer ordinary Australians exposure to cryptocurrency. The success of this joint venture with Stargroup will add long-term revenue channels to our business and additional value to our shareholders.”

Todd Zani, Stargroup’s CEO and executive chairman, added:

“Stargroup is pleased to partner with DigitalX on this project and leverage its unique ownership of its ATM manufacturer to develop a two-way ATM where a bitcoin owner can not only buy bitcoin but more importantly can cash their bitcoin out. This development may also be able to be applied to other cryptocurrencies and be distributed internationally.”

The Rise of Cryptocurrencies

The use of cryptocurrencies such as bitcoin is rising. Japan is one country that is experiencing an influx in consumers using it to pay for everyday purchases. So much so, that by the end of 2017, it’s projected that there will be around 300,000 stores accepting it for payment.

As a result, it’s easy to see that the market will one day replace traditional bank accounts. Yet, this growing market still has a lot to do before it can claim that milestone.

Featured image from Shutterstock.

Coinbase Sees Rise in the Number of Complaints from Customers

Coinbase is witnessing a rise in the number of customer complaints as investors get excited about the rise of bitcoin’s price.

Founded in June 2012, Coinbase has become a leading digital currency wallet that is supported in 32 countries. The San Francisco-based exchange has 9.8 million users and 32.8 million wallets. Since its founding it has seen over $20 billion in digital currency exchanged.

Yet, despite Coinbase’s popularity the number of customer complaints it has received is rising. According to the U.S. Consumer Financial Protection Bureau (CFPB) it has received over 330 complaints about Coinbase in 2017. This is compared to the six it received in 2016; seven in 2015; and one received in 2014. The latest complaint it received was on the 30th August.

This rise in complaints is likely to be due to a rise in digital currency users. With bitcoin’s price increasing more people are keen to jump on board and trade in the currency. Consequently, longer processing times are being experienced.

Many of the issues about Coinbase are that the exchange is not delivering customers’ money to their accounts when promised.

One user said:

“I have yet to receive the money into my account and have tried to reach out to the company via their support email to see when it will be delivered. They keep saying on their site how they are running into issues and response times are significantly different. Twelve days later or two business weeks later I still have yet to receive my money or an email from them.”

Another said:

“Every time the market price dips the Coinbase system shuts down buying and selling of the currency. It makes it impossible for investors to remain in control of their investment and ties our hands. It happens every time the price changes and is not available for hours. Investors are at the mercy of the market and can only watch the price spike or plummet and have no control of our investment.”

Coinbase Issues

Since founding in 2012 the number of users using the exchange has increased. As a result, so too have the number of issues it has had to manage.

On the 12th June, the exchange suffered a major outage after experiencing an influx of investors. Traders who went to the site were greeted by a ‘service unavailable’ notice for a few hours. This was around the time that bitcoin’s price had scaled the $3,000 mark for the first time. The previous week it had been trading between $2,700 and $2,900.

For many users who wanted to sell their coins amid the new high price weren’t able to. After the digital currency had soared $3,000 it then fell to $2,532. Naturally, those who wanted to sell their bitcoin took to social media to voice their displeasure.

At the time, Jonathan Triest said:

“If @coinbase wants to be treated like a financial institution then they better learn how to stay online like one #offlineAgain #bitcoin #eth.”

In a 6th June blog from Coinbase, Brian Armstrong, the company’s co-founder and CEO wrote:

“Over the past few months, we’ve seen an unprecedented increase in the number of customers signing up to use Coinbase (4x since January 2017). As a result, our systems have been pushed to the limit. This has caused many customers to have a negative experience.”

He added:

“We haven’t done enough to keep up with the growth, and we’re taking steps now to correct it.”

Not the First Issue with Coinbase

This, however, wasn’t a one-off occurrence with the exchange.

At the end of May, the exchange revealed that it was downgrading its performance for some users.

At the time, it said:

“Coinbase has experienced unprecedented traffic and trading volume this week. As a result, Coinbase.com has suffered a few outages and downgraded performance for some users this week. Our engineering and support teams are working around the clock to restore the site to normal performance.”

Yet, while Armstrong laid out steps for improvements on the exchange it seems that complaints will continue for a while.

Bitcoin is currently trading over $4,300 and is continually attracting new investors. As such, the number of people using Coinbase will keep rising.

However, while the company has an issue with its transaction times it doesn’t appear to be reducing it user numbers.

Bitcoin Trading

At the time of publishing, on the 4th September, bitcoin is trading at $4,310, a 4.35 percent drop in 24 hours. Over the past seven days its value has decreased by 0.18 percent. Its market cap value is currently worth $71.3 billion. The combined crypto market is worth $148.2 billion. This is a slight drop from its previous $164.4 billion market value on the 29th August.

Bitcoin has been experiencing an incredible rally during 2017. With four months left of the year it remains to be seen what else it can produce.

However, confidence in the currency is increasing. So much so, that plenty of people have predicted where they think its price will go to.

Veteran trader masterluc believes it will reach $15,000 by the end of 2017. This figure is certainly a bullish price, but illustrates the confidence of where many see the currency going.

Ronnie Moas, Standpoint Research founder, is another individual who has predicted a bright future for bitcoin. According to him, he thinks bitcoin’s price will reach $7,500 next year and projects each coin to be worth $50,000 by 2027.

Whereas, Dennis Porto, bitcoin investor and Harvard academic, thinks it will reach $100,000 by February 2021.

These price projections are just a few from analysts on where they see bitcoin heading to. Despite the fact that it is still relatively new, the digital currency is storming ahead. As such more people are investing in it, which is playing a role in its price.

No doubt there will be plenty more price swings in bitcoin’s future, but as long as demand remains it will continue to flourish. Who knows what the future will hold for the digital currency, but with such high confidence in it, it doesn’t appear to be going away anytime soon.

All we can do is wait and see what happens next.

Featured image from Shutterstock.