Taiwan Follows Japan’s Bitcoin-Friendly Move, Avoids Outright Ban

In a positive move for the cryptocurrency market, Taiwan has announced that it won’t be banning digital currencies like bitcoin.

News of what Taiwan intends to do avoids the harsher steps taken by China and, more recently, South Korea. Instead, Taiwan is copying the move by Japan by embracing the digital currency market.

The news was announced by Taiwan’s Financial Supervisory Commission chairman Wellington Koo. During a joint session of parliament and cabinet, Woo stated that Taiwan would not regulate against the industry. Instead, he pledged to leave the door open for development.

Kuomintang Party (KMT) congressman Jason Hsu questioned Woo on the country’s position. However, Woo agrees with Hsu and believes that the technology presents a huge economic opportunity for Taiwan. The political party has long held a pro-fintech stance.

Hsu said:

“Just because China and South Korea are banning, doesn’t mean that Taiwan should follow suit – there is a huge opportunity for growth in the future. We should emulate Japan, where they treat cryptocurrency as a highly regulated, highly monitored industry like securities.”

According to Hsu, this paves the way for the passing of the ‘Financial Technology Innovation Experimentation Act.’

If passed, it would establish a regulatory fintech sandbox for research into digital currencies and the blockchain.

A Long Way to Catch Up

Unlike Japan, Taiwan’s venture into the cryptocurrency market is relatively new. Despite this, though, it has a highly active crypto scene. This can be seen by the fact that MaiCoin, Taiwan’s only digital asset exchange platform, has around 25,000 users.

Yet, the country is eagerly working at building the market.

So much so, that AMIS, a Taipei-based blockchain consultancy, is attempting to get financial institutions to join a private blockchain consortium proposition. AMIS is a sister company of MaiCoin. At present, only Taipei Fubon Bank and Taishin International Bank have joined while Taiwan’s Industrial Technology Research Institute is an investor; however, it’s still early days.

Hsu knows that Taiwan has a long way to go before it can catch up with the likes of Japan.

Japan has been in the market since the early days with its first digital currency exchange originating in 2010. Not only that, but the yen is a free-floating currency, whereas the Taiwan dollar is tied to the U.S. currency.

Taiwan realises that that isn’t going to stop them embracing the industry. Compared to countries that are shutting down cryptocurrencies, like bitcoin, Taiwan is remaining competitive in a growing sector.

China Bans ICOs and Closes Domestic Bitcoin Trading

At the beginning of September, Chinese authorities announced they would be banning initial coin offerings (ICOs).

In a joint statement from seven of China’s regulators, it read:

“[ICOs are] 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.”

This was shortly followed by the decision to halt domestic digital currency exchange trading. As a result, several prominent bitcoin exchanges – ViaBTC, BTCC, OKCoin, Huobi and Yunbi – announced they would be halting mainland services. ViaBTC and BTCC has since ceased operating. However, the remaining three aren’t expected to stop functioning until the end of October.

Naturally, news of this caused market prices to drop. On the 15th September, bitcoin was trading at $2,947. This was a significant fall considering it had achieved an historic high on the 2nd of September when it scaled $5,000. Since then, however, the market has steadily recovered.

At the time of publishing, on the 6th October, bitcoin’s price is trading at $4,364, a 1.13 percent rise in 24 hours. Over seven days its value has risen by 4.76 percent. It market cap is worth $72.4 billion.

Whether Chinese authorities lift the ban on domestic trading is not known. However, it signals the country’s determination to control money that is flowing in and out of the country.

South Korea Follows China

The announcement by South Korea to ban ICOs may not have been considered that surprising. Prior to stating its position, on the 4th September, South Korea’s digital currency task force had discussed increasing regulatory oversight on the trading of cryptocurrencies.

Kim Yong-beom, the secretary-general of the Financial Services Commission (FSC), said:

“At this point, digital currencies cannot be considered money and currency not financial products.”

The report added that authorities will ‘punish’ ICO fundraising platforms.

On the 29th September, the actual banning of ICOs in South Korea was made official. At a meeting the country’s financial regulator discussed digital currencies. One of the topics pertained to initial coin offerings.

Kim Yong-bum, the vice chairman of the FSC gave a speech and said that all ICOs were prohibited in all forms, including securities.

He said:

“ICOs are being increased worldwide by issuing digital tokens and investing in virtual currencies.”

Adding:

“There is concern about the adverse effects such as the increase in the risk of fraudulent receipt.”

According to the financial regulator, ICOs are a ‘violation of the capital market law.’ Consequently, it said that an ‘intensive crackdown’ will take place. Additionally, ‘penalties’ will increase for ‘illegal acts.’

Other countries that have issued guidelines on ICOs include the U.S. and Singapore. In July, the U.S. Securities and Exchanges Commission (SEC) applied securities laws to the issuance of ICO tokens. Whereas, the Monetary Authority of Singapore (MAS) clarified its position on ICOs in August.

Criminal Use with ICOs

For many authorities there is the risk that ICOs are being employed for illegal activities.

The Swiss regulator is concerned about this. So much so, that it believes that some are being used for ‘terrorist financing.’

In a report, the Swiss Financial Market Supervisory Authority (FINMA) said that it was investigating a number of ICOs. This was to determine whether they had breached ‘regulatory provisions.’

One of its concerns relates to ‘provisions on combating money laundering and terrorist financing’ and other areas.

Whereas, the chief executive of the Hong Kong Monetary Authority (HKMA) believes that digital currencies are linked to money laundering. This is an opinion shared by Larry Fink, chairman and CEO of BlackRock, the world’s largest investment management corporation.

Recently, he said:

“When I think about most of the cryptocurrencies, it just identifies how much money laundering is being done in the world.”

Featured image from Shutterstock.

UBS: European Banks Interested in Cryptocurrencies, but Not Bitcoin

European banks are interested in cryptocurrencies like bitcoin, but they don’t believe the currency is likely to become accepted, according to the chairman of UBS.

The head of the Swiss global financial services said that bitcoin’s use to banks is limited. This was due to its volatility and lack of control over its supply.

Speaking in Zurich, Axel Weber, chairman of UBS, explained:

“For money to be a generally accepted means of payment, and a means to store value, it is essential that a central bank limits its supply. This isn’t the case with bitcoin. This might change one day, if a central bank would issue a digital currency.”

He added that the bank doesn’t use or trade in bitcoin. However, it’s interested in the blockchain.

“We have several pilot projects where we are analysing the potential benefits of this technology.”

‘Utility Settlement Coin’

UBS is reportedly discussing with other central banks about the possibility of creating a ‘utility settlement coin.’ Apparently, this would be a collateralised cryptocurrency that banks could use to pay one another or purchase securities.

Expected to launch next year, subject to support from central banks, other financial establishments such as HSBC, Deutsche Bank and Barclays have demonstrated an interest in the project.

Improving Efficiency and Cutting Costs

For many banks, though, cryptocurrencies are a convenient way to do settlements. That’s certainly the thinking of Francisco Fernandez, founder and chief executive of Avaloq, which provides cloud-based software and services to banks.

He said:

“It is transparent and can enhance settlement efficiency.”

Yet, he added that bitcoin is still very new and is used in a speculative way, adding:

“Of course regulation must be addressed to make sure a digital currency is not used for money laundering or other fraudulent activities.”

He claims that there is no value ‘in prohibiting it from trading.’

‘Run for Their Money’

Interestingly, these comments from UBS come at a time when the International Monetary Fund (IMF) chief said that it would be ‘unwise‘ for banks to dismiss cryptocurrencies.

Speaking at a Bank of England conference at the end of September, Christine Lagarde, the managing director of the IMF, said:

“For now, virtual currencies such as bitcoin pose little or no challenge to the existing order of fiat currencies and central banks.”

She explained this was because they are ‘too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable.’

However, she claimed that:

“Many of these are technological challenges that could be addressed over time.”

As a result, digital currencies may become a viable alternative for countries that have weak economies. Furthermore, they present an ideal avenue for acceptance rather than taking on the U.S dollar or the British pound.

Lagarde said:

“Instead, citizens may one day prefer virtual currencies, since they potentially offer the same cost and convenience as cash—no settlement risks, no clearing delays, no central registration, no intermediary to check accounts and identities.”

Adding:

“So in many ways, virtual currencies might just give existing currencies and monetary policy a run for their money. The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.”

Regulating Cryptocurrencies

The digital currency market has expanded exponentially. So much so, that at the time of publishing, on the 3rd October, it is now worth $143.6 billion, according to CoinMarketCap.

Yet, the highest recorded value was when it within touching distance of $180 billion at the beginning of September. This was pushed alone by bitcoin’s rise to above $5,000 for the first time.

However, it’s because of the rapid rise that many are calling for the market to be regulated.

This can be seen by the fact that Japan’s Financial Services Agency (FSA) is to monitor bitcoin exchanges from this month.

In a report, this move is being undertaken to ensure the exchanges have the correct internal systems in place. If customer assets aren’t protected then on-site inspections will be carried out by the FSA.

An FSA executive said on the decision:

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

The volatility of market prices are of particular concern to a former commissioner of the Commodity Futures Trading Commission (CFTC).

Last month, Bart Chilton said that bitcoin’s price changes so much because of two things: it’s not like a stock and it’s not regulated.

He explained:

“Unlike oil, gold or corn, with digital currencies, there’s no “there” there—no physical stuff, or even made-up stuff backed by anyone or anything.”

Regarding regulation, he added:

“There’s no sure-footed surveillance to ensure trading is taking place in an orderly and appropriate fashion.”

However, according to him it’s not too late for solutions to be found. He claims that ‘visionary leadership is needed,’ to stop governments from banning or over-regulating the market.

Market Prices

At the time of publishing, the prices of cryptocurrencies are experiencing a drop in values.

This could be down to the fact that Switzerland’s regulator announced it was investigating some ICOs. According to the Financial Market Supervisory Authority (FINMA), ICOs are violating the country’s laws against ‘terrorist financing.’

Bitcoin’s price is currently valued at $4,262, a 3.39 percent drop in 24 hours. It does, however, retain a 8.46 percent rise over seven days.

However, industry insiders claim that bitcoin is heading for $6,000 by the end of the year. In a recent report, experts claim that investors should prepare themselves for further volatility.

Thomas Glucksmann, head of APAC business development at Gatecoin, said:

“Throughout the year we’ve been predicting the bitcoin price will surpass $5,000 and creep closer to $6,000 by year’s end. That prediction is looking more in line with market sentiment these days.”

In November, the community is expected to see another fork to the network through the creation of SegWit2x. Just like when bitcoin cash was created there may be some volatility as traders weigh the impact.

Ethereum is trading at $290, a 2.67 percent drop over 24 hours. It continues to evade the $300 mark and is currently valued at $27.5 billion.

Of the top 10 cryptocurrencies, the biggest 24-hour can be seen from 9th-placed IOTA. As can be seen from the graph below it saw a drop of nearly 11 percent.

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.

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.

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.

Criminals Drop Bitcoin in Favour of Other Cryptocurrencies for Anonymity

Criminals are dropping bitcoin in favour of other cryptocurrencies in a bid to achieve greater anonymity for their criminal activities.

That’s according to the co-founder and president of Blockchain Intelligence Group. He estimates that the number of illegal transactions involving bitcoin fell from half the total volume to around 20 percent last year.

In an interview with CNBC, Shone Anstey, co-founder and president of Blockchain Intelligence Group, said:

“Now it’s significantly less than that.”

This is despite the fact that the overall transaction volume in bitcoin has grown. At the time of publishing, on the 31st August, bitcoin is trading at $4,614, a 0.77 percent rise in 24 hours. Over the past seven days its value has increased by 10.52 percent. Its market cap is now worth $76.3 billion.

After bitcoin recently soared above the $4,600 mark it would be natural to think that criminals would favour it more. However, it appears that that isn’t the case.

Criminals Look Elsewhere

Instead, it seems that criminals are now turning their attention to other cryptocurrencies. According to a U.S. Homeland Security official criminals are ‘looking more closely at other currencies like monero and ethereum.’

The official said:

“What the criminals are starting to see, and some of the trends we’re picking up as well, is that bitcoin also works equally just as much against you as it does for you.”

According to Chainalysis, the leading provider of anti-money laundering software for bitcoin, the rise of cybercrime in ethereum has risen with initial coin offering (ICO) financing. In a blog post, it states that total cybercrime revenue rose from $100 million in June to $225 million in August this year.

The highest grossing exploit was the DAO hack in 2016 after the DAO had sold over a billion tokens worth $150 million. Taking advantage of a vulnerability, criminals managed to steal around $74 million worth of DAO tokens from 11,000 victims.

Smart coding company Parity has also been subjected to a security breach. On the 19th July, it reported that more than 155,000 ether, worth $35 million, had been stolen.

Chainalysis states that as ICOs are time sensitive access to the sale necessitates investors to trade their ether quickly for alternative tokens. As a result, investors may find themselves tricked into providing their credentials to fake websites.

This was certainly the case for victims of the CoinDash ICO, which occurred prior to the Parity hack on the 17th July. A hacker was able to steal over $10 million after changing the contract address of the ICO project. Investors unaware of the situation continued to place their funds into the hacked CoinDash account. Consequently, around 43,500 ether was sent to the fake address.

Chainalysis adds:

“These credentials are then used to drain accounts. The average financial loss incurred per victim has increased by 20% from $6,700 in June 2016 to $8,000 since the DAO.”

Since the DAO, Chainalysis estimates that there has been around 30,000 victims of cybercrime on ethereum, each losing an average of $7,500.

Monero Gains in Value

Since the beginning of 2017 monero’s value has increased significantly. At the time of publishing its trading at $140, which is an 8.45 percent rise in 24 hours. Over seven days its value has increased by 60 percent. Its market cap is worth just over $2 billion.

As can be seen from the chart below, monero was trading at $16.40 at the beginning of 2017. Then its market cap value was worth nearly $224 million.

Its explosive growth could be down to the fact that it is designed to be more private than bitcoin. This means it’s completely anonymous and virtually untraceable. Consequently, this makes it the perfect altcoin for criminals to use.

The highest it has reached is $154, up over 1,000 percent this year, according to CoinMarketCap.

For those craving the need for secrecy on the dark web criminals are turning to monero. Darknet marketplace AlphaBay was one site that permitted people to use monero and ethereum as alternatives to bitcoin. However, AlphaBay was shut down by law enforcement on the 20th July. According to a report, authorities in the U.S., Canada and Thailand coordinated raids on the 5th July, which saw equipment being seized. Europol claim that since 2014, when AlphaBay was founded, an estimated $1 billion in transactions has been processed.

Authorities Get Savvy

AlphaBay is not the only darknet marketplace that authorities have shut down.

According to the U.S. Justice Department and Europol, another large dark web marketplace was also seized this year. Known as Hansa, it listed thousands of vendors selling illegal drugs, illicit products and counterfeit identification documents.

Following that was the announcement from the U.S. District Court for the Northern District of California. On the 26th July, a grand jury had charged Russian national Alexander Vinnik and the bitcoin exchange he is alleged to have operated, BTC-e, with money laundering and other crimes related.

Derek Benner, Homeland Security Investigations (HSI) Acting Executive Associate Director, said:

“Homeland Security Investigations is strongly committed to tracking down criminals who seek to strike at the foundations of global financial security through complex money laundering schemes. The resulting indictment is a clear representation of why our close law enforcement partnerships are vital to our shared missions. HSI will continue to aggressively target those who deliberately seek to exploit financial systems for personal gain.”

The Homeland Security official added:

“We’re getting a lot better through law enforcement tracking those [criminals] and holding the exchanges more accountable. I think [bitcoin]’s a lot more legitimate than people give it credit for.”

Bitcoin Will Still be Used

Even though a July report from the EU suggested criminals were rarely using cryptocurrencies, they will still find it attractive. This is because they can convert it easily into cash without any middle men.

However, while bitcoin was perceived to be anonymous when it first emerged, it doesn’t offer the same level of anonymity that monero does. So much so, that Llew Claasen, the executive director of the Bitcoin Foundation recently said at a conference:

“Bitcoin is not completely anonymous and it is fairly easy for someone, say a revenue officer, to work backwards to find who was responsible for a transaction.”

Featured image from Shutterstock.

Bitcoin Price Soars to New All-Time Record High Above $4,600

The number one digital currency has gone and done it again. The bitcoin price has scaled to over $4,600 for the first time, pushing its market cap value to over $76 billion.

At 13:54 UTC, on the 29th August, the bitcoin price was recorded at $4,602. As a result, the combined market value soared to $164.4 billion.

At the time of publishing its price has dropped to $4,542. However, it marks a significant time for the digital currency.

Since the beginning of 2017, the bitcoin price is up by around 350 percent from roughly $1,000 on the 1st January. It has since quadrupled in value. On the 13th August, bitcoin finally managed to scale the $4,000 mark amid strong Japanese interest. Geopolitical turmoil in North Korea has also impacted its price as investors continue to consider it as a safe haven.

The week prior to that the bitcoin price had re-scaled the $3,000 mark when it reached $3,200 for the first time. Since then it has continued its upward trajectory, pushing the currency to new heights.

Ethereum Scales $360

Ether prices have also surged to new heights not seen in two months.

At the time of publishing, ethereum is trading at $369, pushing its market cap to $34.8 billion. In 24 hours it has risen by 7.30 percent whereas in seven days it has increased by 17.24 percent.

As can be seen from the chart below, ethereum’s price dropped to a low of $149 on the 16th July. Since then it has steadily been climbing up in price back to its current listing. Prior to dropping to $149, ether prices were trading below $400, at $391. It has yet to re-scale to that previous high. However, with its steady price gains it’s expected to see new heights.

Litecoin Climbs Above $60

Fifth-placed litecoin has also recorded new highs. Strong trading has helped to push its price over the $60 mark for the first time.

This price rise is due to increased trader interest from Japan and Korea. According to a report, Korean exchange Bithumb was responsible for over 20 percent of trading in litecoin in the past 24 hours.

At the time of publishing, litecoin is trading at $62.51, with a market cap value of $3.2 billion. In the past 24 hours its value has decreased by 1.07 percent. Meanwhile, in seven days its has risen by 34.13 percent.

At its peak, litecoin was trading at $64.92 on the 28th August. Yet, considering litecoin was trading just above $4 at the beginning of 2017 this is a significant milestone. It remains to be seen how much further the currency can go.

Charlie Lee, the founder of litecoin, recently took to social media to express his delight.

New Price Heights

What we are witnessing now, however, is just the start. According to Ronnie Moas, Standpoint Research founder, he predicts great things for the market.

Back in July, Moas said that bitcoin would reach $5,000 by 2018. He also said that ethereum would rise to $400 whereas litecoin double to $80.

At the time Moas said:

“$5,000 could happen in a few months. It’s only starting to gain traction right now. It’s starting to spread like wildfire right now.”

He determined that its price would go up as demand increased for its coins. At present, 16.5 million coins out of the capped 21 million has been issued.

Since making his prediction in July, Moas has increased the value to $7,500. This was after the bitcoin price scaled $4,000. He believes, though, that by 2027 each unit of bitcoin will be worth $50,000.

Furthermore, Moas thinks that the combined market cap will reach $2 trillion in 10 years. At a conservative estimate, he thinks that one percent of the $200 trillion global market will be invested in cryptocurrencies.

He said:

“A lot of people say there is a bubble out there. I see a bubble when you get down below the top 50 cryptocurrencies. There are more than 800 names right now. In my view, what happens outside the top 50 is irrelevant.”

Whereas, Aurelien Menant, CEO of regulated digital currency exchange Gatecoin, has said in the past:

“I would not be surprised to see the bitcoin price doubling again to around $6,000 by the end of the year.”

One bullish analyst thinks bitcoin’s price will reach $15,000 by the end of 2017. Even though there are only four months left of the year veteran trader masterluc has great confidence in bitcoin. Masterluc is of the opinion that bitcoin will continue its bull run into 2019. At which point he thinks that its worth will between $40,000 and $110,000.

Long-Term Price Heights

Others, however, have been thinking long-term for the currency’s future. So much so, that Dennis Porto, bitcoin investor and Harvard academic thinks it will scale $100,000 by February 2021. He thinks this is possible by simply following Moore’s law.

However, Kay Van Petersen, Saxo Bank analyst thinks it will reach $100,000 by 2027. Many may have confidence in Van Petersen’s prediction considering he correctly predicted when bitcoin would reach $2,000.

Some less bullish estimates include one from Tom Lee, a strategist at Wall Street firm Fundstrat. He thinks that bitcoin’s worth will be between $20,000 and $55,000 by 2020.

In a report, Lee said:

“We believe one of the drivers [of bitcoin] is crypto-currencies are cannibalizing demand for gold. Based on this premise, we take a stab at establishing valuation framework for bitcoin. Based on our model, we estimate that bitcoin’s value per unit could be $20,000 to $55,000 by 2022.”

At the time Lee’s prediction was considered bullish. However, since then others have made bigger predictions for the currency.

It remains to be seen who is right. Yet, at present it seems that the market will continue its upward trajectory to reach new heights.

Caution Urged

Interestingly, Llew Claasen, the executive director at the Bitcoin Foundation, has urged investors to be cautious with their investments.

Speaking at a recent conference in Africa, Claasen spoke about the potential bitcoin has in the continent. Yet, he stated that users should only invest what they can afford.

He said:

“To be honest bitcoin is not a great form of cash right now. Don’t think of it as cash, think of it as a digital form of gold that enables you to save outside of the current financial climate.”

Featured image from Shutterstock

Morgan Stanley: We Don’t Expect Cryptocurrencies to be Fully Disruptive

Leading global financial services firm Morgan Stanley has given its view as to how disruptive cryptocurrencies are going to be to fiat monies.

According to the bank, the crypto-revolution is not going to replace traditional currencies.

In a report, Morgan Stanley said:

“We think that cryptocurrencies as a group are likely to see some adoption outside of the incumbent financial system, but we do not expect them to be fully disruptive.”

In a ‘Fintech Gauntlet chart,’ Morgan Stanley has illustrated that disruption is possible, but it will be slow to take place. However, the bank suggests that only through regulation will cryptocurrencies be capable of gaining trust among the people. This will also enable them to enter the financial system.

The bank adds that digital currencies such as bitcoin are acting more as assets than as a way of transacting with.

It stated:

“With high volatility, low acceptance, relatively slow transaction times, and negligible fraud/transaction validity advantages (at least for now), bitcoin (and all cryptocurrencies) are functioning more like assets than true currencies or transaction mechanisms.”

High Electricity Use

One thing that is often debated is the amount of electricity required to mine each bitcoin. When bitcoin first appeared all that was required to mine it was a simple home computer.

However, as the mathematical problems to unlock new bitcoins became more complex to solve, networks with greater power than home computers were set up to mine the coins. As a result, this requires the use of more power and electricity.

According to Morgan Stanley, in the early days of bitcoin the energy generated could power a small power plant. Fast-forward to 2017 and the power generated is more than enough to power one million homes.

Additionally, as reigning networks don’t require huge amounts of electricity to function, it will be interesting to see how cryptocurrencies continue to mature.

Bitcoin Acceptance is Shrinking

This isn’t the first time that Morgan Stanley has made a statement regarding the crypto market.

In July, the bank said that bitcoin acceptance among top merchants was on the decline. In a research note to analysts it said that ‘bitcoin acceptance is virtually zero and shrinking.’

According to the bank, in 2016 the cryptocurrency was accepted at five of the top 500 online merchants. Yet, in 2017 that number had dropped to three. Of course, while the numbers may hardly be drastic, it does give some insight into what merchants are thinking. This is that accepting the digital currency may not be worth it.

It’s believed that this drop is down to the fact that people are more likely to hold on to their coins when its value goes up, rather than spend them.

The analysts said:

“The disparity between virtually no merchant acceptance and bitcoin’s rapid appreciation is striking.”

Overstock’s Confusion

Online retailer Overstock is confused. Confused by the fact that so many online companies don’t accept bitcoin as a payment option.

In July, Jonathan Johnson, the president of Medici Ventures, the venture capital subsidiary of Overstock, said that there had been a ‘modest’ uptick in the number of bitcoin transactions on the site. He also added that it was ‘crazy that so many retailers don’t accept bitcoin.’

One of the reasons may be down to the fact that retailers aren’t willing to pay for the costly transactions of bitcoin. Yet, Johnson believes this is irrelevant.

He stated:

“The cost of accepting bitcoin is very low. It’s actually cheaper for us to complete a bitcoin transaction than it is to complete a credit card.”

When Overstock first began accepting bitcoin in 2014, the company kept 90 percent of bitcoin and converted 10 percent back into cash. Now the company keeps 50 percent in bitcoin.

Such is Overstock’s commitment to the advancements of digital currency acceptance that the firm now accepts over 40 cryptocurrencies. Earlier in August, the company announced that it would allow customers to use major digital currencies such as ethereum, litecoin, Dash, Monero and bitcoin cash to buy online from Overstock’s nearly four million products. By integrating with ShapeShift, the world’s leading instant digital asset exchange, Overstock will be able to convert the cryptocurrencies into bitcoin.

Patrick M. Byrne, CEO and founder of Overstock, said:

“Overstock is pro-freedom, including the freedom of individuals to communicate information about value and scarcity without relying on a medium created through the fiat of unaccountable government mandarins. For that reason, we have been an early proponent and adopter of cryptocurrencies.”

Increasing Bitcoin’s Acceptance

Even though there are a handful of online merchants who accept bitcoin for payments such as Starbucks, Subway, Dell, Expedia and Microsoft, many would like that number to rise.

So much so that cryptocurrency fans launched a petition on Change.org urging Amazon to accept the digital currency. At press time, on the 25th August, there were 5,380 supporters of it with a goal of reaching 7,500.

Whereas CoinGeek, a bitcoin and blockchain news site, sent $100 in bitcoin to the financial directors at 20 of the top online brands. These included Alibaba, Amazon, Tesco, Staples, Uber, MacDonalds, Netflix, Airbnb, American Airlines, LVMH, AT&T, CVS Health, Tesla, Apple, FedEx, John Lewis PLC, Spotify, BMW and Red Bull.

Of those companies Airbnb was the first one to take up the offer in July. However, since then two other companies have followed suit: AT&T and American Airlines. Of course, this doesn’t mean the companies will automatically start accepting bitcoin. In fact the financial directors may simply just be taking the free coins on offer. Hopefully, though, in the not-so-distant-future more organisations will jump on board.

As Johnson said:

“I don’t know why a CEO wouldn’t want to make it easier for folks to spend money.”

Still a Long Way to Go

While the crypto market may be making an impact it still has a far distance to travel if it wants to disrupt finance. And yet, steps are clearly being made. The saying ‘Rome wasn’t built in a day,’ is very apt here and can certainly be applied to cryptocurrencies.

The finance world is witnessing a change in how people conduct their day-to-day finances and given time the digital currency market could replace incumbent networks.

Featured image from Shutterstock.