Bitcoin wobbles as traders turn to other cryptocurrencies

bitcoin wobbles as traders turn to other cryptocurrencies

Bitcoin wobbles as traders turn to other cryptocurrencies

Bitcoin wobbles as traders turn to other cryptocurrencies

It's been a volatile period for Bitcoin investors, as holders of the cryptocurrency prepare for a potential 'fork' in the blockchain.

From Friday morning until Monday afternoon, Bitcoin was trading under the $1,000 level, and even fell beneath $900 on Saturday. This is significant as, barring the weekend of March 18 and 19, Bitcoin has traded above $1,000 since early February and hit a fresh all-time high of around $1,325 on March 10.

Bitcoin is currently back above the $1,000 handle, but is well off these recent highs, wiping billions off of its market cap value.

There are several causes for the recent volatility: Chinese regulators cracked down on Bitcoin exchanges, while U.S. authorities rejected a proposal for a Bitcoin-backed exchange-traded fund (ETF). The current concern is over the future of the Bitcoin technology.

Bitcoin faces a scaling issue, where the number of Bitcoin transactions that can happen on the blockchain at any one time is limited. This is creating a backlog of transactions that are needed to be processed and slowing down the system.

A group called Bitcoin Unlimited advocates for increasing the size of the blocks on the blockchain in order to process more transactions, but this has split the community. To increase the block size would involve splitting the blockchain, causing a fork and creating two major blockchains. This would effectively create two different coins and it's not clear which would become dominant.

As a result, investors are hedging their bets or selling out of Bitcoin, waiting to see whether or not the fork will happen, and if so, which blockchain will be favored by the market.

Data from Bitfinex indicates around 49 million more coins have been sold than bought, or roughly 5 percent of total coins traded, in the last 30 days. Through March, the number of long Bitcoin positions held by investors has decreased from 26,858 to above 23,142, while the number of short positions has increased from 9,820 to 14,731.

Meanwhile, the market cap of blockchain assets other than Bitcoin, such as ether, dash and monero, has more than doubled since March 10 from $3.5 billion to more than $7 billion, according to Chris Burniske, blockchain products lead analyst at ARK Invest.

"At the same time, Bitcoin's market cap has gone from $19 billion to $16 billion. Hence, Bitcoin's market cap has lost $3 billion in value while the combined market cap of all other blockchain assets has added more than $3 billion," he told CNBC via email.

"Given these market indicators, it would appear investors are diversifying their blockchain asset holdings, positioning themselves for a generally rising tide in this emerging asset class."

Whether or not the fork happens is hard to tell, but it may harm Bitcoin's brand, according to Jani Valjavec, co-founder of ICONOMI, a digital asset management platform for cryptocurrencies. Valjavec argues the brand is the main thing behind Bitcoin's value.

"It has wide acceptance now, real world use cases, it can be a great store of value, and it is currently trusted by the community. Our understanding is that a hard fork, instigated by two parties with very competing interests, will primarily weaken the brand," he told CNBC via email.

"The next biggest brand in the distributed economy is Ethereum, and that's why we believe it will benefit the most."

However, Fran Strajnar, co-founder & CEO of data and research company Brave New Coin, says the market is still within the parameters of a Bitcoin bull cycle.

"The proposed contentious fork is unlikely but better to happen now than in the distant future. We would end up with the original Bitcoin and remaining miners activating segwit (a well-designed package of system upgrades) and a new, much smaller, privatized alternative version of Bitcoin," he told CNBC via email.

"The sum result of all the network fork (fear, uncertainty and doubt) is we are seeing investors hedge by buying into ether. We expect a price drop if there is a fork but a similar outcome to Ethereum, where the long term market capitalization increases for both assets."

David Ogden
Entrepreneur

 

Luke Graham

 

 

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

A Regulated Cryptocurrency

A Regulated Taxable Cryptocurrency

A regulated Chrypto currency

Regulatory compliance and cryptocurrency are unlikely bedfellows; paying tax on crypto transactions isn't even in the room.

But times are changing. We are seeing a crop of services doing just those sorts of things, leveraging the transparent, immutable nature of distributed ledgers to track and trace cryptocurrencies.

Recently the IRS has been rattling sabres at Coinbase in a move to get cryptocurrency holders to pay tax on transactions. According to court filings, less than 1000 people have registered to pay tax on Bitcoin transactions in the last three years.

Enter Node40, a blockchain accounting system which has grown out of a business hosting Dash masternodes.

Node40 co-founder Perry Woodin explained the company was being paid mostly in Dash for its infrastructure services and had to report US taxes.

"We asked our accountant how to do that and he wasn't sure. Most accountants look at capital gains for gains and losses; they look at first in, first out.

"That strategy doesn't work for digital currencies because of the way transactions are built with multiple inputs and all these inputs have potential gains and losses and various days carried."

Sean Ryan, co-founder Node40, wrote a program to figure out gains and losses. Users import transactions from their Dash wallet and these are analysed against the blockchain to work out the average US dollar value for every single transaction.

Ryan said: "You upload your list of transactions and you get the final number. We don't actually calculate any percentages for taxes – so, for example, your jurisdiction would say that if you made this much income, we are going to tax you at say 22%.

"What we do is present numbers that you would be obligated to pay taxes on. There are levels that allow you to get to those answers, all the way down to the individual components that make up an individual transaction.

"Because these ledgers/blockchains are open they are mathematically sound, all you need to do from an engineering perspective is extract the pieces of data from the blockchain that are most relevant to specific transactions."

The user can then annotate transactions using Node40, like they might with QuickBooks or TurboTax: who they sent the funds to, who they received them from, marking certain things as tax exempt in the case of assets purchased rather than income received.

"There are some additional nice things like being able to set custom values on what your incoming purchase was. If the market value says one Dash is worth $100 but you bought it from somebody who was willing to sell it to you for $90, we allow people to override that initial value," said Woodin.

"Once people have gone in and started annotating transactions, we produce nice reports that show then their performance of their asset with their portfolio. Then as a last step they are able to generate their IRS documents, and that's a capital gains document – form 8949."

The recent surge in cryptocurrency values, not least Dash which has shot up in price, is probably also garnering attention. But Woodin pointed out that holding crypto that goes up in value does not constitute a taxable event.

"If you are just buying something and holding it, there is no taxation even though there's an increase. If you received it as income or if you are exchanging it for some other asset like dollars, euros then that's a taxable event."

Woodin said the ongoing IRS Coinbase scenario has definitely got people edgy and this may be the year people begin to start paying their taxes on crypto.

"I think by next year it's just going to be assumed that if you are transacting in digital currency, you are going to be paying taxes. It's that conversion from digital currency to fiat where the government is going to say: why do you have a deposit in your bank account with no record of income?"

Node40 Balance is now live to use with Dash and will be ready for Bitcoin later in the year.

"There are certain exemption limits and thresholds that we observe. We have four different KYC levels that we enforce. Up to €150 we just need to know the shopping cart details from the merchant which includes the name of the consumer and the email address," said Kaufmann.

"If it goes higher there is another flag at €800, then at €4000 and every time the consumer has to provide more information."

So rather like transaction reporting as it exists today. Kaufmann added that a large transaction – say €25,000 to buy a load of servers – would merit closer scrutiny.

"We have the capability of doing an online verification where people can jump on Skype with our customer support. We will take a picture of their passport number using machine readable zones that are scanned into the system and then we verify it and run it against a sanctions list.

"There is some very profound filtering going on. We do have tools that allow us to look back at the history of Bitcoin transactions. We are careful to follow Swiss data privacy laws and have the support of a fintech-friendly regulatory regime," he said.

David Ogden
Entrepreneur

 


 

By Ian Allison

 

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

Bitcoin Falls as Investor Move to altcoins

Bitcoin Investors Move into Altcoins

Investors move to altcoins

Bitcoin’s scaling fight has led to a record low in its percentage of cryptocurrency’s total market cap as investors hedge with top altcoins.

As its user base expands, Bitcoin’s transactions have also grown, leading to blocks, capped at 1mb, to be filled to capacity. As a result, transactions have slowed and fees have spiked. An effort to solve Bitcoin’s scaling issues has led to a civil war of sorts between the Core development team and its supporters backing the Segregated Witness (SegWit) soft fork, and the Bitcoin Unlimited miner-directed block size hard fork and its supporters.

In contrast to previous hard fork attempts (XT, Classic), Unlimited has gained speed, occasionally passing SegWit in adoption by miners. Recently, Unlimited has secured a solid lead, due in part to a major mining pool, Antpool, switching to Unlimited.

“Bitcoin Jesus” Roger Ver, who has led the opposition to the current state of Bitcoin and its hard cap of 1mb blocks, has stated that he believes that the current inability to find a resolution to the issue has cost Bitcoin billions of dollars already:

As a result of increasing uncertainty, lack of usability and conflict surrounding Bitcoin, its growth has stagnated- even receded, while other coins have seen exceptional gains. Ethereum, cryptocurrency’s number two contender, has seen a massive increase, more than doubling in market cap and price in the last 10 days alone. It currently sits at about $4 bln total and $45 per coin, with a current trading volume of over $200 mln.

Dash has seen even more impressive relative gains, multiplying its value and market cap five times over since one month ago. It has broken the three-digit barrier and appears to have settled above $100, having also broken 10 percent the price of Bitcoin per coin. As a result of this growth, Dash’s treasury, 10 percent of its block reward set aside for development and other projects, has passed $500,000 monthly, closing in on a million dollar monthly budget for the newly number three ranked coin. Monero has also picked up on the Bitcoin exodus, doubling in value over the last 10 days, maintaining a solid fourth place and passing $300 mln in market cap.

This growth and reshuffling of the cryptocurrency field has led to a slipping in Bitcoin’s dominance. Bitcoin’s share of the total cryptocurrency market cap has sunk to 70 percent, a new all-time low since the previous low of 74 percent during Ethereum’s initial boom last year. Total cryptocurrency market cap remains slightly lower than its all-time high, while combined altcoin value has grown from approximately $2.2 bln at the year’s start to over $7 bln now, nearly $4 bln of that growth over the last month alone.

The scaling debate gets ugly

In spite of this growing shift, the Bitcoin scaling conflict continues to become more heated. Ver alleges that many Unlimited nodes identify as Core in order to avoid DDoS attacks, which have plagued Bitcoin.com all last week. Unlimited supporters have documented a pattern of alleged censorship on the Bitcoin subreddit, filtering out comments in support of an alternative implementation of Bitcoin than the one stewarded by the Core developers.

Meanwhile, faced by increasing resistance from large mining pools, such as Antpool, Core member Peter Todd publicly mused about a proof-of-work algorithm change in order to reshuffle mining power as a “backup plan”:

David Ogden
Entrepreneur

 

Contributor

 

Roger Ver

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

Make Your Bitcoin Work For You

Trade Coin Club

Bitcoin prices have recently fallen from Parity with Gold, so it could be a good time buy. Now for people who purchased bitcoin when it was over 1,000pounds per coin, they are facing a loss. To be honest this is quite normal with chryptocurrencies which are more volatile compared with fiat currencies. The long term futures for the likes of of popular chryptocurrencies such as bitcoin and Etherium are good.

Rather than question and worry that you might have purchased at the wrong time and now you are facing a loss, you might want to consider a way of putting your bitcoins to work for you. Just as you can trade fiat currencies and earn money when prices rise and fall, you can do the same with chryptocurrencies.

I recently joined Trade Coin Club, which allows members to trade bitcoins and earn revenue from an automated trading systems which follows the top ten popular chryptocurrencies. You do not need to have any experience either of chryptocurrency or trading this is all taken care of on you behalf. Once you have purchased a membership, a proportion of the amount you paid is traded on the system 5 days a week and the income you gain can be withdrawn or traded in     the following week.  

The lowest membership fee will cost you 0.36 bitcoin or around 300 pounds, and to protect you from loss only part of this money is traded. I believe this is a great way to put you bitcoin to work with a minimum of risk.

David Ogden
Entrepeneur 
                           

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

Etherium 25% Rise

Ethereum appears to be making a comeback with its price considerably rising during the past week from around $10 to over $13, settling at around $12.80.

Ethereum’s Price Rose by Almost 25% Over the Past Week – image from poloniex

The second biggest digital currency returns to a market cap of above $1 billion following news that JP Morgan, Microsoft, BP and other household brands are working on launching Enterprise Ethereum, a modified fork of ethereum to be used for private blockchains.

There were suggestions the household brands will also contribute to the public ethereum blockchain, but no further details were provided.

On other ethereum related news, Melonport, a “blockchain protocol for digital asset management on the Ethereum platform” – according to the greenpaper, sold out its almost $2 million ICO in about 13 minutes with 99% of the token gone in 3 minutes.

This is probably the fastest sell out of any ICO, indicating a huge demand to fund innovative start-ups in the ethereum space specifically and the wider blockchain space more generally.

A Boom in ICOs

Rather than holding ETH, etherumers appear to prefer parking their currency on eth based tokens which may earn returns through price appreciation and through profit-sharing schemes depending on the ICO’s terms.

The legality of these arrangements is not very clear. It is probable that any sale under $5 million is fine, but scams should be expected.

I’ve long suggested the setting up of a non-governing body to ensure some sort of quality and accountability, but its implementation probably suffers from the commons problem – it’s in no one individual’s interest to take up the initiative, but it is in everyone’s interest for it to be established.

The Trump administration is currently very busy, but now that UK is mired in Brexit, USA may take the torch and lead the world in providing some sort of regulation for quality assurance while not hampering innovation.

Specifically, they could fund the non-governing body and initiate its establishment while inviting many leaders in this space to sit on its board or provide input.

Might Eth Overtake Bitcoin?

Bitcoin has seen an incredible rise in 2016, but the digital currency has now stagnated as far as the protocol and underlying innovation is concerned. After almost two years of debate on how to increase transaction capacity, no solution appears likely. Bitcoin may therefore continue to operate for much of this year at over capacity – a first in its eight-year’s history.

Bitcoin based transaction fees are seemingly increasing exponentially. The user experience has considerably degraded to slow, unpredictable and frustrating. Businesses have long called for a solution, but no one appears to be listening.

The currency, nonetheless, leads in brand recognition and is reaping the rewards of a billion or more invested in its infrastructure in 2013. Since then, such investments have fallen considerably, potentially stocking up problems in the near future.

Its main use now appears to be that of acting as a hedge, but that seems to be solely based on its brand recognition and an easily copied limited number of coins which can no longer move conveniently or cheaply.

The currency, therefore, seems ripe for disruption. With the second largest market cap, a well-funded and capable development team, corporate interest, additional functionality in smart contracts, 17 seconds average times for transaction confirmations and plans for unlimited scalability, Ethereum might be best placed for such disruption if it happens.

Whether it will, remains to be seen. It may well be the case that the two currencies have their own niche with bitcoin being like tor – slow, clunky, inconvenient, prioritizing edge cases above all else – while Ethereum might turn out to be bitcoin’s version of Firefox – fast, cheap, convenient, privacy conscious, prioritizing ordinary users while being inclusive of edge cases.

Although there are many races in the blockchain space and even races within races, currently, the one between Bitcoin and Ethereum is the most interesting. How this will play, all will be watching as a general realization and awareness now rises that blockchain technology will soon transform the world. I wonder how Infinity Economics will effect the situation in the future.

David Ogden
Entrepeneur

 

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