Arkansas Police Generates Its Own Cryptocurrency to Track Child Porn

Arkansas Police
Generates Its Own Cryptocurrency
to Track Child Porn

The Cyber Crimes Division of the Benton County Sheriff’s Office

in Arkansas has launched a pilot program involving the mining of Bitcoin and other cryptocurrencies to monitor the activities of criminals online. The division has generated its own digital currency to track such crimes as the proliferation of child pornography.

Combating cybercrimes

Based on data from the US Federal Bureau of Investigation (FBI), there has been an increase in the number of individuals who use Bitcoin and secret web browsers to trade or distribute child pornography, to illegally purchase drugs, as well as to engage in prostitution or human trafficking and other unlawful activities. In an interview with television news station KHBS in early October 2017, Benton County detective David Undiano claimed that the program aims to help their investigators to tackle crimes that they might have previously been

unequipped to process.

"People are selling child pornography on the dark web and on the Internet. They are accepting Bitcoins, not payments. We can't use the sheriff's office credit card, and we can’t exchange child pornography. We need some type currency to get this and then identify who we are getting it from. That way, we can go arrest that person."

Opposition to the pilot program

However, despite the potential effectiveness of the campaign, some individuals seem not to be very supportive of it. In his interview with the Arkansas Democrat-Gazette, potential sheriff candidate Glenn Latham voiced his opposition to the policy, claiming that it would eventually result in very high expenses that will be shouldered by

local taxpayers.

"These machines that they have to use draw a huge amount of power and cooling costs will go up. That’s at the taxpayers’ expense.”

Chuck Reynolds


Marketing Dept
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Bitcoin Gold Off to Rocky Start After DDoS Attack

Bitcoin Gold Off to Rocky Start
After DDoS Attack

Recently, Bitcoin Gold became the latest “fork” of the original Bitcoin digital

currency, joining Bitcoin Cash which was the first major hard fork back in August. However, Bitcoin Gold’s emergence has been far less controversial or even influential, but it has been rocky. The aim of Bitcoin Gold is to be a currency that hands power back to the ordinary miner and enable anyone with a graphics processing unit to mine the new cryptocurrency that has roots in the original Bitcoin. However, Bitcoin Gold has essentially zero chance of replacing Bitcoin in the marketplace as a ‘fork,’ it’s more of an air-drop than a chain split. And, as such, its entrance onto the stage, has been less than impressive.

Massive DDoS attack

As Bitcoin Gold split, a tweet was sent out that alerted the community that a massive DDoS attack had hid the site. "Massive DDoS attack on our cloud site," stated a tweet from the Bitcoin Gold account. "10M requests per minute. We are working with the providers to ban all the IPs.

We will be up soon!"

Massive DDoS attack on our cloud site. 10M requests per minute. We are working with the providers to ban all the IPs. We will be up soon!

This means what probably happened was a network of hijacked devices were accessing the Bitcoin Gold site 10 mln times a minute in order to block out legitimate traffic. At 10 mln attacks a minute, it was a rather large hijacking, but still not the biggest. However, on the Bitcoin Gold Slack channel, it was announced that most of the attacks were emanating from China. Hours later, Bitcoin Gold tweeted that the attack had been "handled" but that "it will take a bit more time" for the site to be operating normally.

A long road for Bitcoin Gold

Although it is calling itself a fork, Bitcoin Gold really does not satisfy many of the presumed attributes of a forked currency, and its operation and application have been shaky already. The team has given itself a soft deadline of Nov. 1 to "launch" the coin properly by releasing the code and allowing people to mine it. At this time people will also receive a mirror balance of their Bitcoin in Bitcoin Gold. There have been warnings and non-support from many exchanges about Bitcoin Gold; however, there is still interest about for the chance of being additionally credited the equivalent amount of Bitcoin Gold. Bitcoin Gold futures were trading at $117.50 per coin on Bitfinex the day after the split.

Chuck Reynolds


Marketing Dept
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Vietnam Becomes the Latest to Ban Bitcoin, but in China, the Rules May Be Changing

Vietnam Becomes the Latest to Ban Bitcoin, but in China, the Rules May Be Changing

Vietnam Becomes the Latest to Ban Bitcoin, but in China, the Rules May Be Changing

Vietnam became the latest nation state to launch an attack on cryptocurrency, as regulators sided with the alarmists without providing much of a rationale.

Vietnam Issues Ban

The ban, which applies to all cryptocurrencies not deemed legal tender, was issued via formal statement by the State Bank of Vietnam. The punishment for accepting or offering payments in bitcoin can run more than $8,000 USD.

Vietnam’s central bank says only traditional forms of payment are accepted within its borders. This includes cash, checks, credit cards and other electronic payments.

The state-run bank has issued the following statement, according to Mirror:

“Bitcoin virtual currency and other similar is not lawful means of payment in Vietnam; The issuance, supply, use of bitcoin and other similar virtual currency as a means of payment is prohibited in Vietnam.”

The announcement, whenever it was made, had very little impact on cryptocurrency trading. At press time, bitcoin (BTC/USD) was trading at $6,162 for a gain of $57.

The bulls blew the door wide open this weekend, sending bitcoin north of $6,300 for the first time ever.
 

Chinese Ban? Let’s Move to Hong Kong

Now that China’s Communist Party gathering has come and gone, sanity appears to be returning to public discourse. That is, according to a recent report from CNLedger, which our pals at CCN.com recently covered. The trusted news sources have revealed that OKEX is expected to launch its peer-to-peer OTC bitcoin trading platform shortly.

As it turns out, OKEX and several other leading blockchain companies like BTCC and Huobi-Pro are located in Hong Kong. Theoretically, their presence in the Special Administrative Region allows them to circumnavigate the mainland’s recent ban on everything crypto-related.

It should be noted that OKEX is offering a bitcoin-to-crypto trading platform. Regardless of what Beijing thinks, it might not be a good idea to launch this platform on the mainland. That’s because the Chinese government recently blocked a major port for MetaTrader4, which is the engine of the online forex community.

Regulators have apparently shut down port ‘443’, which is used for secure web browser communications. The port also happens to be the one MT4 brokers use to connect to their trading server.

The port probably inhibits the government’s ability to spy on traders, or at least monitor their data flows (like that’s different?). There’s reason to believe this ban could extend to other trading platforms that utilize a similar standard.

Last month, China broadened its online censorship by blocking WhatsApp, the popular messaging platform acquired by Facebook for way too much. The ban was another blow to the social networking giant, as it too is banned on the mainland.

 

Author: Sam Bourgi

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

David https://markethive.com/david-ogden

Happy Birthday Bitcoin! October 31 Sees $6k Crypto Turn 9 Years Old

Happy Birthday Bitcoin!
October 31 Sees $6k Crypto
Turn 9 Years Old

Tuesday marks nine years since Satoshi Nakamoto

announced the creation of the Bitcoin “Peer-to-Peer Electronic Cash System.” The Bitcoin whitepaper, still available on the same Bitcoin.org domain as it was in October 2008, offers an increasingly fascinating view into the niche project which in October 2017 has a market cap of over $100 bln. The document famously begins:

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

“Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network.”

Those networks are now used by three mln users every day, with that number expected to increase to 200 mln within just seven years projections state. This year’s anniversary is especially timely as Bitcoin reaches new all-time highs without a hint of serious price corrections.

Oct. 31 this year is also significant for other reasons, the date marking the deadline by which China’s domestic market exchanges must cease providing Bitcoin-to-fiat trading. While those traders have since migrated to alternatives, the mood both inside and outside the multibillion-dollar cryptocurrency industry is that Bitcoin is here to stay and will come out stronger as a result of competition from copies – Bitcoin Cash, Bitcoin Gold, Bitcoin Silver and SegWit2x.

Huobi Says ‘Goodbye’ To Bitcoin Industry Amid Rumors It’s Not Over For China

Chinese Bitcoin exchange Huobi’s domestic arm

has issued a farewell to the industry as it prepares to shut down Tuesday. In a blog post, Huobi said it would reimagine itself as an “integrated information and research service provider in the vertical field of Blockchain (sic)” dedicated to the Chinese market. Commenting on the shutdown, founder

Leon Li called this month’s events a “milestone.”

“I believe that this is not only a milestone for Huobi but also a watershed in the history of Chinese digital assets and even a memorable day in the development of global digital assets.”

While hope remains that China’s domestic traders will once again get access to exchanges, the country’s big names such as BTCChina, OKCoin and others will all disappear from Nov. 1. This week saw rumors that Chinese investors may be able to use Huobi and OKCoin’s international sister platforms in the future when they launch p2p Bitcoin-to-fiat trading. The information nonetheless comes only in the form of implication.

Li continued:

“In the past, Huobi brand in China has been a significant symbol in the industry of digital assets. In the future […] Huobi team will continue to actively and globally participate in the development of the industry.”

An interim measure has seen Chinese traders return en masse to p2p platforms, principally LocalBitcoins, the use of which has ballooned for a second time this year. Li concluded by thanking users and reiterating a desire to leverage benefits of the Chinese regulatory crackdown.

He wrote:

“With your trust and talent, I believe all challenges Huobi is facing today can be opportunities.”

Chuck Reynolds


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
Interested or have Questions. Call me 559-474-4614

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Bitcoin Price Will Have ‘No Difficulty’ Hitting $10k, With 30,000 New Wallets a Day: Max Keiser

Bitcoin Price Will Have ‘No Difficulty’ Hitting $10k, With 30,000 New Wallets a Day: Max Keiser

After Bitcoin hit $6,000 and stayed above it Monday,

the virtual currency’s most famous fans are confident $10,000 will involve little effort. Mixed messages are accounting for Bitcoin’s sudden second surge above the $6,000 mark, with Max Keiser pointing to a combination of

factors for underlying support.

30,000 new #Bitcoin wallets a day. ETF coming soon. Wall St. just getting started. Regulators waking up to their impotence. Hello $10,000!

The move itself, however, could be down to just one trader, analysis on

social media suggests.

it wont appear in the feed due to time to close but all signs point to a top holder getting liquidated credit

Bitcoin continues to deny bubble criticism from major legacy finance figures, which now include infamous investor Warren Buffett, while JPMorgan CEO Jamie Dimon has taken a back seat in his cryptocurrency chiding. Keiser meanwhile remains steadfast in his prediction of an easy ride to $10,000 per Bitcoin, reiterating his long-term target since 2011 being ten times that – $100,000.

Anyone who thinks otherwise, he wrote on Twitter Monday, “has not been paying attention.” Bitcoin prices reached a new all-time high of $6,300 Sunday before tailing off to hover around $6,110 at press time. The move dragged altcoin markets along with it, with the top ten seeing 24-hour gains of up to 6.6 percent. Bitcoin Cash, too, has achieved multi-week highs with its Sunday trading price of $475 at its highest since mid-September.

Bitcoin Fork SegWit2x:

eToro Draws Battle Lines While OKEx Could Service China

The Bitcoin industry continues to take different approaches

to SegWit2x as eToro and OKEx issue their positions on the Bitcoin hard fork. In statements over the past week eToro became one of the more skeptical exchange platforms, opting for limited SegWit2x support and shunning the Bitcoin Gold fork altogether. “…In the case of the upcoming Bitcoin2X fork, there is no Replay Protection, which may lead to transaction errors and double spending,” a dedicated blog post reads. eToro added it would continue applying the BTC ticker to the Bitcoin Core chain, unlike others such as Xapo, which has stated BTC could signify the SegWit2x chain should the latter receive adequate support.

Conservative standpoints like eToro’s have seen support from community commentators, with popular commentator WhalePanda even endorsing companies treating SegWit2x as an altcoin. OKEx meanwhile has taken a more inclusive stance. Coming at a time when a major p2p trading offer is about to launch, rumors say Monday, the exchange’s support for the 2x chain could affect the huge domestic Chinese market. “…As a company dedicated to promote Bitcoin application, we strive to provide the best services to our customers. Therefore, we will support all major Bitcoin technical development roadmaps and respect our customers’ individual desire,” OKEx wrote in

its corresponding announcement.

“The […] token supporting Segwit2x will be named as BT2, the token derived from the original chain will be named as BT1.  If the hardfork occurs then BT1 will be renamed as BTC.”

Chuck Reynolds


Marketing Dept
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Please click either Link to Learn more about -Bitcoin.
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Bitcoin Price Going From $4,000 to $400,000 is Easy – Hedge Fund Manager Mark Yusko

Bitcoin Price Going From $4,000 to $400,000 is Easy - Hedge Fund Manager Mark Yusko

Bitcoin Price Going From $4,000 to $400,000 is Easy – Hedge Fund Manager Mark Yusko

Mark Yusko, the founder & CEO of Morgan Creek Capital Management, the $3.7 billion North Carolina-based investment firm, has stated that the bitcoin price is expected to reach $400,000 in the long-term.

Over the past 12 months, the price of bitcoin has increased from less than $900 to over $5,900. In a relatively short-term, the bitcoin price has demonstrated an exponential rate of growth, almost immediately recovering from China’s ban on cryptocurrency trading and increasing from $3,300 to $5,900 within two months.

According to Yusko, the highly regarded hedge fund manager, the challenge for bitcoin at its early stage was to surpass the $100 mark. Today, the price of bitcoin is closing on the $6,000 region, and Yusko emphasized that the long-term target of $400,000 should be “easy” to achieve.

“Only gamble was whether bItcoin would make if from $0 to $100, that was the real miracle. Going from $4,000 to $40,000 or $400,000 is easy,” said Yusko.

Confidence Behind the Statement of Yusko

High profile hedge fund managers such as Yusko, billionaire investor Mike Novogratz, and executives at Fidelity, a financial services company with over $2 trillion assets under management, have publicly expressed their certainty over bitcoin’s long-term performance.

Novogratz, who recently established a cryptocurrency focused hedge fund, revealed that an increasing number of institutional investors and large-scale retail traders are preparing to engage in bitcoin and cryptocurrency trades. He stated:

“I can hear the herd coming. I was just in San Francisco, met with a few big institutional investors and their still a ways away but they’re coming. Lots of funds are being raised and so I’m pretty confident to say that it [Bitcoin price] is going higher.”

Investors such as Novogratz and Yusko are confident in the mid and long-term performance of bitcoin because of the increasing interest and demand for bitcoin and the cryptocurrency market from the traditional financial industry.

Already, exchanges like LedgerX, an institutional trading and clearing platform approved by the U.S. Commodity Futures Trading Commission (CFTC) to trade and clear swaps and options on digital currencies, has started to facilitate the settlement of options, futures, and derivatives trades around bitcoin. According to the LedgerX team, during its first week of operation, it has settled over $1 million worth of trades, which was an unexpected volume for the company.

“We ended up completing swaps and options trades worth over $1,000,000 USD. Crucially, these trades were cleared through LedgerX, which is the only institutional grade, US federally regulated exchange and clearing house for digital currencies. And we are literally just getting started,” said LedgerX.

Some of the largest financial institutions and exchanges in the US including CBOE, the largest options exchange in the country, are preparing to address the growing demand for bitcoin from institutional investors, which is a positive indicator for bitcoin’s long-term growth

 

Author Joseph Young

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

David https://markethive.com/david-ogden

How About an ICO? Company’s Stocks Rocket 400% On Blockchain Rebranding//Chinese may trade again.

How About an ICO?
Company’s Stocks Rocket 400%
On Blockchain Rebranding

It’s not just initial coin offerings (ICOs) that are acting like magic

– the word ‘Blockchain’ has just revolutionized one company’s finances by 400 percent. UK-based On-Line PLC, which supplies Internet-related software through various subsidiaries, saw its share price rocket from £15 ($19.60) to a high of £84 ($110) in hours after it announced it was adding ‘Blockchain’ to its name. On-Line, which has been around since the start of the Internet boom in 1996, saw unprecedented trading based on the news, Bloomberg reports. Shares in the company are currently retracing after the sudden spike to circle around £60. The performance mimics that of multiple altcoins following news about their interaction with the mainstream cryptocurrency market.

“We feel the time is right to re-name the company to reflect these developments, where we believe the future growth will be in our sector,” a statement released Thursday explains, calling Blockchain “new and exciting.” The day’s growth puts On-Line’s market cap at £4.17 mln and reflects the continued buzz around Blockchain which is seeing an increasing number of corporations go in for experimenting with it. This week, ratings agency Moody’s nonetheless said Blockchain’s disruptive potential still made it a distant threat, albeit one which would likely inevitably shake up the norm when it hit.

Chinese Might be Able to Trade
Bitcoin Again Soon

19th National Congress of the Communist Party of China,

the most important conference in China this year, ended on Oct. 24. With the end of the conference, some temporary regulations and policies are canceled as well. Among the regulations, the shutdown of Bitcoin trading in China might be one. On Oct. 28 ZB.com, which is a new cryptocurrency trading platform, announced that all trading functionality will be available from Nov. 1. Users can sign up for accounts and deposit now.

The platform claims that people all over the world, including those in mainland China, can exchange and trade on the platform. The languages of the website are Chinese and English. However, it’s too soon to state that the regulation toward Bitcoin and other cryptocurrencies is invalid. Maybe the platform will be closed by the government soon. Nevertheless, there are also people saying that the Chinese government is behind the platform.

Offline trades become popular after regulation

For now, nobody knows exactly what’s going to happen after Nov. 1. It's good news if Chinese Bitcoin traders may operate more easily. Since the shutdown of Bitcoin trading platforms in China, people have started to trade Bitcoin through Taobao, which is the Chinese version of eBay which belongs to Alibaba Group, Wechat chatting group, and QQ chatting group. Offline trades have become popular between Chinese Bitcoin traders.

Chuck Reynolds

 


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
Interested or have Questions. Call me 559-474-4614

 

David https://markethive.com/david-ogden

UK Auditors Blast NHS ‘Basic’ Security Failures Over WannaCry Cyberattack // more

UK Auditors Blast NHS ‘Basic’ Security Failures Over WannaCry Cyberattack

The UK’s National Audit Office (NAO) has said the country’s health service failed

to “follow best practices” to prevent the WannaCry cyberattack. The National Health Service (NHS) was one of the first major victims of May’s international Bitcoin ransomware, which demanded users pay $300 in order to regain access to infected computers. Despite being a “relatively unsophisticated attack,” the NAO said in a new report, the NHS was easy prey. WannaCry “could have been prevented by the NHS following basic IT security best practice.”

“There are more sophisticated cyber-threats out there than WannaCry, so the Department (of Health) and the NHS need to get their act together to ensure the NHS is better protected against future attacks,” it advised. The report comes as a new variety of ransomware known as Bad Rabbit makes its way across the world, infecting public computer systems in Russia, Ukraine, elsewhere in Europe and even Japan. WannaCry was the most prolific attack of its kind, spreading easily due to a conspicuous lack of security guarding the IT systems of its victims.

“The NHS could have fended off this attack if it had taken simple steps to protect its computers and medical equipment,” Meg Hillier, chair of the UK government’s public accounts committee reiterated. “…The NHS and the department need to get serious about cybersecurity or the next incident could be far worse.” Though the discovery of an antidote, WannaCry’s effect was limited after a certain point, and the attack was notable for the correspondingly meager amounts collected by hackers. This led Russia’s Internet advisor Herman Klimenko even to suggest the perpetrators were children.

Japan’s Quoine – Too Much Interest
to Handle from ‘Desperate’
Chinese Exchanges

China’s Bitcoin-to-fiat exchange and ICO ban

is producing a record number of “desperate” refugees, Quoine’s CEO Mike Kayamori has said. In comments to Bloomberg, the Japanese exchange head said the fallout from the Chinese rules means the country’s exchange operators are fervently looking for alternatives, including in Japan. “We’re talking to almost all of those guys. They’re all desperate now,” he told the publication.

Japan offers a ‘friendlier’ licensed environment for crypto exchange businesses, while China’s household names such as OKCoin and Binance are eyeing up Hong Kong, Singapore and South Korea. Kayamori said that such is the scale of demand, Quoine alone is unable to service Chinese requirements. “There’s a lot of Chinese retail people reaching out to us, but we can’t handle it. So if a Chinese partner can handle all of those and they connect to us, that will be much easier,” he added.

As China’s flagship exchange BTCChina shuts its doors in the coming days, the Bitcoin sphere is buzzing with speculation as to if and when the situation will change once again. In the meantime, international scaling is something OKCoin is considering in light of current demand. “China used to account for a significant share of the cryptocurrency market, so we think the demand is there," Lennix Lai, financial market director for its subsidiary OKEx said. “As formerly one of the biggest operators in China, we think we have a good chance of competing globally.”

Chuck Reynolds


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
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Ethereum and Bitcoin Price Decline Again – Major Factors For Mid-Term Recovery

Ethereum and Bitcoin Price Decline Again - Major Factors For Mid-Term Recovery

Ethereum and Bitcoin Price Decline Again – Major Factors For Mid-Term Recovery

The price of Ethereum and bitcoin have declined in the past two days, with the bitcoin price struggling to rebound beyond the $5,700 mark and the price of Ether dipping below the $300 region again.

Although the price of bitcoin has increased since plunging to $5,300 prior to the Bitcoin Gold hard fork, over the past 24 hours, the price of bitcoin declined from $5,767 to $5,680.

Like bitcoin after the disappointing release of Bitcoin Gold, Ethereum was expected to sustain its upward momentum in the mid-term subsequent to the Byzantium hard fork. But, primarily affected by a series of minor corrections of the cryptocurrency market, the price of Ether has struggled to surpass the $300 mark in the past week.


Factors For Recovery: BItcoin

It has been evident over the past week by the trend of the bitcoin price that the Bitcoin Gold hard fork has had a direct impact on the short-term price trend of bitcoin. Experts including highly regarded bitcoin developer Jimmy Song noted that prior to the Bitcoin Gold hard fork, a relatively large portion of users migrated their funds from bitcoin wallets and exchanges to alternative cryptocurrencies (altcoins) to avoid the Bitcoin Gold hard fork.

The majority of investors and traders were seeking to avoid the Bitcoin Gold hard fork because it had lacked strong replay protection before the fork, which is necessary for bitcoin wallets and exchanges to credit users with Bitcoin Gold on a 1:1 ratio with bitcoin. But, even after the fork, the Bitcoin Gold development team has failed to deliver on their promise and have not implemented any sort of replay protection.

Consequently, wallets like Trezor and Blockchain have not been able to provide support for Bitcoin Gold deposits, withdrawals,and trading.

More to that, at this phase of development, it is difficult to justify whether Bitcoin Gold is an actual cryptocurrency, because it lacks hash power, wallets, miners, and a client.

Analysts such as Bitfinexed, a popular cryptocurrency blogger, stated:

As the bitcoin market recovers and restructures from the controversial Bitcoin Gold hard fork, it is likely that the price of bitcoin will be able to rebound in the upcoming days, at least until the SegWit2x hard fork scheduled for November 16. Several investors like Tuur Demeester emphasized that a similar trend as Bitcoin Gold is expected around mid-November, as bitcoin investors could potentially migrate to other altcoins to avoid the fork.
 

Ethereum Price Remains Below $300

Since early September, prior to the initial coin offering (ICO) and cryptocurrency trading ban by the Chinese government, the price of Ether has struggled to remain in the $300 region, despite significant optimism surrounding developer activity and solutions on Ethereum such as the Byzantium hard fork and Ethereum co-founder Vitalik Buterin’s scalability solution Plasma.

As demonstrated in the two price charts above, the price trend of Ether is often correlated with the short-term performance of bitcoin. Hence, during certain periods in which the price of bitcoin corrects itself, the price of Ether is likely to fall by a similar margin.

But, adoption of Ethereum is an important indicator for the mid and long-term price trend of Ether. Earlier this week, Blockchain, the second most popular bitcoin wallet behind Coinbase, announced the integration of Ethereum into its mobile wallet, the most widely utilized bitcoin mobile wallet in the market.

 

Author: Joseph Young on 28/10/2017

 

Posted by David Ogden Entrepreneur
David Ogden Cryptocurrency Entrepreneur

David https://markethive.com/david-ogden

How Bitcoin Forks Influence Bitcoin Price Rise and Fall

How Bitcoin Forks Influence Bitcoin Price Rise and Fall

Prior to the Bitcoin Gold fork two days ago,

the market made some interesting moves. Bitcoin price reached a new all time high on Oct. 20, 2017 – five days before the Bitcoin Gold fork -surpassing $6,000 for the first time and eventually climbing to nearly $6,200.

Those of you who have endured past chain splits are aware of what usually happens when there’s a split from the Bitcoin network. Ordinarily, the community complains, reddit.com, medium.com, and twitter.com become platforms for soapbox speeches, and a lot of trash is talked by factions within the community. However, have you noticed the other events that are correlated with a chain split? Once a chain splits, you suddenly own a number of split tokens equivalent to the number of tokens you had on the Bitcoin network. This is because the new chain will be an exact copy of the Bitcoin Blockchain up until the point where the fork occurs.

If the wallet you use supports the forked chain’s software, you will be the owner of two digital tokens: Bitcoin and the Forked Chain Token. In our example we will use Bitcoin Cash (BCH) as the forked token. When the Bitcoin Cash chain forked off of the main chain, owners of Bitcoin became owners of an equivalent amount of Bitcoin Cash. This is because the chains were identical until the fork occurred. If you owned 10 BTC before the split, then you owned 10 BTC and 10 BCH after the split. This is where the slope becomes slippery.  People or organizations with unfathomable amounts of money can use forks as an opportunity to extort both the Bitcoin network and the forked network for enticing capital gains

when a fork occurs.

 How important is the impact of #Bitcoin forks on Bitcoin price?

Preparing for the fork

Let's say Randy owns 35,000 Bitcoins; at a value of $5,000 per Bitcoin, Randy’s digital assets are worth $175,000,000. Just like anybody with large amounts of money invested in a market, Randy pays attention to news that may affect his position (wealth) in that market. Randy learns that there will be a hardfork in the Bitcoin network and that the hardfork will create a new token, Bitcoin Cash (BCH).

On top of this, Randy learns that his Bitcoin wallet provider will support the forked software, so he knows that he will own Bitcoin Cash as well as Bitcoin once the fork occurs. Now, Randy expects to have 35,000 Bitcoin Cash tokens in addition to his 35,000 BTC after the fork.  If Randy was to increase his position by millions of USD worth of Bitcoin, he would be the owner of more Bitcoin than he previously owned.

However, he would also create a buy wall that drives the Bitcoin price up since he is such a large player in the Bitcoin market. When Randy increases the amount of Bitcoin he owns, he also increases the amount of Bitcoin Cash he will own once the fork occurs. Because Randy is an educated investor, Randy decides to increase his position in Bitcoin so that he owns 50,000 Bitcoin the day before the fork. Randy did this because he would like to own even more Bitcoin Cash than the 35,000 he would have had if he did not increase his position in Bitcoin. Now when the fork occurs, Randy expects to have 50,000 BCH in addition to his 50,000 BTC.

What happens when a chain forks

When the Bitcoin Network forks, some of the value that was in the Bitcoin network splits into the forked chain. When Bitcoin Cash forked from the Bitcoin network, the value of Bitcoin went from $2800 to $2700 (July 23,2017). As a result of the fork, Bitcoin Cash was created and was valued around $555 at the time of it’s launch. (July 23, 2017).

Now what does that mean for Randy?

When Bitcoin dropped from $2,800 to $2,700, Randy's digital assets (wealth in Bitcoin)  dropped from $140,000,000 to $135,000,000, a $5 mln loss. However, because of the fork, Randy now has 50,000 BCH worth $555 a piece. Because Randy is an educated investor and has no plans to use the Bitcoin Cash (BCH), he immediately sells his BCH for a profit the moment the option to sell BCH becomes available to him on his preferred exchange.

Randy sells all 50,000 of his BCH for a profit of $27,750,000. A nice $28 mln gain (rounded number) to make up for the $5 mln loss that he suffered due to the decline in the price of Bitcoin. At the end of the day, Randy profits around $23,000,000 from the chain split. Keep in mind, there are other investors like Randy who are highly educated and extremely skilled at what they do. Furthermore, they may be executing a similar or even more efficient strategy as Randy regarding the hardfork; buy a lot of Bitcoin, anticipate a chain split where you are left with a number of new altcoins equivalent to the number of Bitcoin you own, quickly sell off the altcoin for a profit and then decrease your position in Bitcoin because it is overvalued.

Individuals like Randy are referred to as whales: individuals who hold positions so large in the Bitcoin market, that their bid and ask orders are capable of shaking up the market. Since it only takes a few big players using a similar strategy to drive the value of Bitcoin up or down, when an opportunity like this presents itself (a hardfork), the price of Bitcoin may not reflect the true value of Bitcoin.

Since educated investors know that the Bitcoin price may be artificially high due to big players like themselves implementing a hardfork strategy, the big investor(s) have an incentive to lower their position in Bitcoin once they have executed their hard-fork gameplan. This is because they expect the Bitcoin price to correct to a value that is closer to its true value once all the hard-fork affiliated nonsense subsides. Because there are multiple people like Randy who have a relatively large position in the Bitcoin market, when these people decrease their position in Bitcoin to an amount that they are comfortable owning during a bear period (and that number may be zero) their collective ask offers are capable of creating a sell-wall that drives down the price of Bitcoin.

After the big sell off of both the altcoin – because investors find it virtually worthless for them to hold for the long term – and Bitcoin – because investors know the price is artificially high for the short term due to their market strategy – investors capitalize on the low price of Bitcoin from the massive sell-wall and they buy back the Bitcoin that they previously unloaded. On top of the profit investors make from selling-off all of their altcoin, investors will experience capital gains from selling their Bitcoin at an artificially high price and then purchasing Bitcoin back once the price is lower. During the period where investors buy back Bitcoin, we tend to see the price stabilize for a short period of time.

Boom and bust

Investors may have stockpiled Bitcoin anticipating an equal amount of altcoin and then sold off a significant amount of both Bitcoin and altcoin – in our example Bitcoin Cash – to reap the massive capital gains available to them. I can’t rule out the possibility that several other market factors had an effect on the Bitcoin price surge and subsequent plummet, but that being said, how plausible do you think it is that the whales set off the surge and fall of Bitcoin?

Chuck Reynolds


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David https://markethive.com/david-ogden