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A New Way To Raise Money: The Initial Coin Offering

https://coinmarketcap.com/charts/

Market Capitalization Of All Digital Currencies.

The digital currency ecosystem has had a crazy year. The Bitcoin market capitalization has grown from $11 billion on June 5, 2016 to almost $47 billion USD on June 5, 2017.

Negative news during that time included a 120,000 BTC heistfrom Bitfinex, worth $65m then and $350m now. The Winklevoss twins sought to create an exchange traded fund dealing in Bitcoin, but they were denied. Positive events were much broader, including Japan recognizing the coin as a legal payment method, Russia reversing their prior stand against Bitcoin, and Australia adjusting its policies to remove a double taxation problem for those accepting digital currencies.

Now a new phenomenon is sweeping the market, the Initial Coin Offering.

As of May of this year, over $380M has been invested into ICOs. Many of these companies are raising millions of dollars with nothing more than a white paper and a cryptocoin dependent on a small network of nodes running their blockchain. A year ago Bitcoin was 80% of the entire market capitalization of cryptocurrencies, and now it’s less than 50%, despite its meteoric rise in price.

Something is clearly happening here, so I spoke with Michael Terpin, a pioneering investor in the space, James Prestwich of Storj, a company that has offered ICOs on two different blockchain platforms, the co-founder of Ethereum, Anthony Di Iorio, and Ted Livingston, the CEO of KIK, the first $1 billion company to announce an ICO.

But first, what is an Initial Coin Offering? This phrase, like cloud and blockchain before it, is becoming overloaded as the market seeks to explain new concepts.

The idea around an ICO is that you create a digital coin or token and then you offer this coin or token for sale in an initial offering. An ICO is in some ways similar to an initial public offering. Both are done to raise funds, but, instead of stock, your ICO purchase gets you a new type of coin or token, an asset rather than a security.

The token can represent some sort of value or be of value itself. An ICO might involve attributing equity to a token so that ownership gives you voting privileges and access to dividends, which is what the now infamous fund raising effort of The DAOdid. Their use case for a token is the most similar to that of an IPO, however, the majority of use cases are for something different. The typical use case of a token issued in an ICO is the creation of an asset that gives you access to the features of a particular project. Instead of having cash or Bitcoin as the way to pay for goods and services from the ICO offerer, you use their token. You can think of these tokens as being similar to a store specific loyalty point, something you purchase with a general purpose digital currency and use at a specific location.

Ok great, now you have digital store specific loyalty point, why are these loyalty points so special? The reasons are tradability and use in decentralized applications.

Because these tokenized loyalty points are put onto a public blockchain, the points are not limited to being traded in exchange for services within the platform, but instead can be traded anywhere. If there is enough activity within a given ICO’s environment, their tokens will become globally traded on the various exchanges that handle cryptocurrencies. Successful ICOs are the product of careful thought on economics and game theory, and as a feature they intend that their tokens will increase in value as the volume of the activity on their platform rises.

As such, these loyalty points now have a variable value, based off of market perception and growing use of the platform. This creates a very interesting incentive mechanism because now the users of the platform who are receiving the tokens have incentives to bring other users to the platform in order to increase the value of their tokens.

Anthony Diiorio

Anthony Diiorio

Anthony Di Iorio

I spoke with Anthony Di Iorio, co-founder of Ethereum, the most successful ICO to date with over a $35 billion market cap, on the benefits of combining a token with a crowdsale. “Part of the goal of the [Ethereum] crowdsale was to create a community of ambassadors for the Ethereum project. We managed to grow our base of ambassadors by attending meetups around the world, targeting groups and leaders in certain communities. Once they got on board, these communities would become advocates for our project. In addition to being able to conjure up a massive community behind the project, about 9,000 people participated in the crowdsale, we were able to sell across the world.”

Combining a token with an initial offering through a crowdsale allows you to build an international network of early adopters and investors who will actively work to educate and spread awareness of your project. Unlike a traditional crowdsale on a system like Kickstarter, where the users who invest typically only have an incentive to invite others to enjoy the product with friends and family, the users who participate in a token crowdsale have the additional incentive of a gain on the value of their asset.

So what about the use case for decentralized applications? This is not as easily applied for typical companies. This assumes that you want to create an application that, instead of being centrally hosted by a company, is hosted in a decentralized manner. The main value of this is that, since there is a reduction in intermediaries, users have more control of the application and it can be faster and cheaper to use the application for certain use cases. A perfect example of a decentralized application is Bitcoin.

Bitcoin represents a decentralized monetary system, whereby users have direct control of their money and can send money to one another in a peer to peer fashion. No one company owns Bitcoin or verifies the legitimacy of transactions, instead, this is done in a decentralized way by stakeholders called miners, and to a lesser extent, user nodes. Everyone is incentivized to maintain the system through transaction fees directly from the users and the creation of new tokens, which in this case is the mining of Bitcoin. This mix of incentives and decentralization make it such that, for the first time, users no longer need to rely on a third party to issue, hold or transact with funds digitally.

But there are additional layers of complexity that a token can add to a decentralized application. I spoke with James Prestwich, co-founder of Storj, a pioneering decentralized storage platform, to learn more.

“Storj is a distributed network where machines can autonomously sell their storage space and bandwidth. Any computer can join the network and they pay each other with Storj. Storj Labs is a company built on top of this infrastructure. No one wants to learn how to use a distributed network and cryptocurrencies to push & pull data, so Storj labs inc builds the tools to make it easy.

Shawn Wilkinson ran the initial crowd sale in the middle of 2014, selling 500k USD worth of Storj coin in exchange for Bitcoin. Storj executed a second crowdsale ending May 25th, where we raised $30m USD worth of tokens.  The coin is used to buy and sell storage space on the network. Micropayments to the users hosting storage space will be a lot easier than with Bitcoin or Ether itself, since the coin is built with the Storj use case in mind. But the reason for the token goes beyond payments. It is necessary for the system to have everyone on the same token to ensure that people are following the protocol rules and behaving fairly. This will be done through network specific smart contracts that will incentivize people to behave fairly and punish users who try to cheat the system.”

The Storj system is a bit complex, as it handles two commodities – spare storage space and unused bandwidth of those providing that storage. Unlike Uber, where there is a central company organizing everything, Storj is completely decentralized and all the funds go directly to the storage holders. Lacking a centralized service ensuring that everyone is behaving correctly, there has to be some means of enforcing the agreed upon behavior. This is where smart contracts enter the picture.

The easiest way to think about a smart contract is allowing for the movement of money, without a third party involved, based solely on data input that is defined when the contract is made. Since Storj coin is built atop Ethereum they have access to a Turing Complete programming language for smart contracts, which is the computer scientist’s way of saying it’s a full featured language.

Storj smart contracts require that funds be held in escrow for users to participate in the system, either as storage providers or renters. If a user tries to cheat the system in some way, the smart contract can drain the funds from the escrow account of the cheater and return it to the user affected by the cheating. By leveraging the Storj coin, the value of these smart contracts become more predictable and correlated to the Storj platform, instead of being subject to the volatility of general digital currency markets such as Bitcoin or Ether.

Storj’s approach to building a company working on top of an infrastructure that is built with a team of Storj Labs developers in addition to the open source community is a very common approach for decentralized applications. This is done to create a more transparent environment for the infrastructure and to create an open platform that encourages other companies to build on top of and contribute to the system.

While Storj & Ethereum participated in crowdsales for the initial offerings of their tokens, they are careful to never use the term ICO, fearing that it is too closely associated with an IPO. Alan Cohn, co-char of Steptoe & Johnson LLP’s Blockchain and Digital Currency practice and head council to the Blockchain Alliance, explains that by calling an ICO a token crowdsale, it helps investors understand that they aren’t purchasing equity or a security, but an entirely new asset class. This is important for protecting investors in addition to protecting the startups themselves so that the SEC does not confuse their tokens with an asset that does not pass the Howey test. That being said, there are many ICO that intentionally act as securities, the most popular of which being Blockchain Capital, which raised $10 million in six hours.

So why are investors so excited about the new technology? I asked Michael Terpin, who invested in the original ICO, Mastercoin, and has advised 30+ ICOs, including top ICOs such as Ethereum, Factom, Augur, Golem and Gnosis, either personally or through his company Transform Group.

Micheal Terpin

Micheal Terpin

Michael Terpin

Terpin explains that “as a angel investor, you can put 25k into company equity, then the company goes through many more rounds of funding, and perhaps sells for $300m, but your stake has been diluted to almost nothing if there’s a down round anywhere along the way. With tokens, you can do the same kind of analysis of team and technology, but because it’s a trading token and not private equity, you can get out whenever you want. Even though tokens are typically not securities, they act more like gold or public stock from day one in terms of liquidity. This alone, coupled with the current bull market for ICOs, means a lot of investors are saying ‘I’ll take my chances with tokens’. Investors like it. Companies like it. Companies don’t give up any equity, just tokens, which in most cases are their product. Because it’s a product, it’s more akin to wine futures than stock. It’s a product with a resale value.”

Ted Livingston

Wikipedia

Ted Livingston

Another unique sign that ICOs are becoming mainstream is Kik’s upcoming Kin coin. Kik is a chat platform popular with U.S. teens with over 300 million users. Ted Livingston, Founder & CEO of KIK, explains, “A cryptocurrency creates a new way to economically align a large group of developers to work together to create a new ecosystem of digital services that are compelling for consumers, and fair and lucrative for developers. Doing an ICO is a new and exciting idea, and it took some time to run experiments like the Kik Points pilot program to prove that we could build an economy inside of Kik…[T]his was a new and viable way to monetize a community – instead of showing ads or selling items to our users, we could grow the value of a cryptocurrency with a larger community.”

Instead of relying on an ICO to raise money in order to build a product, Livingston sees this as a way to reduce friction for goods and services that already change hands via Kik, as well as creating the foundation for exciting new projects.

However, a token doesn’t have to be about raising money. My company, Bitwage, leverages the Bitcoin blockchain to help workers receive their wages faster and cheaper when working across international borders. We are looking at ways to leverage a token to create momentum around a new peer to peer recruitment platform we are launching. There will be no initial offering or selling of the token, we’re going to provide a method to earn tokens in a way to incentivize users to refer others and create a community.

If you are thinking of running or investing in an ICO yourself, make sure to check out my next article on the “dos & don’ts” for running your own ICO and how investors should evaluate potential ICOs and tokens to invest in.

Tezos’ $232 Million ICO May Just Be The Beginning

Bitcoin tokens sit next to a collection of U.S. one dollar. Photographer: Chris Ratcliffe/Bloomberg

So far, 2017 is shaping up to be a historic year for the crypto space with nary a dull moment. If you’ve been moving around in cryptocurrency circles, you probably already know that there’s value to be found in rebelling against conventional wisdom. Bitcoin was built on a foundation that rebelled against fiat currencies and centralized financial authorities. We’ve seen the bust and boom cycles of Bitcoin – and the cryptocurrency has proved that it can survive alongside fiat currencies. We have also seen the rise (and occasional fall) of dozens of other cryptocurrencies. Now, braver folks are venturing beyond the shores of traditional cryptocurrencies to seek their fortunes in the “new way to invest”—Initial Coin Offerings (ICO).

See The Emperor’s New Coins: How ICOs Are Fueling A $100 Billion Bubble.

An ICO is simply a process by which cryptocurrency startups raise funds for new ventures. ICOs are similar to crowdfunding, except that they are almost always designed to raise funds for cryptocurrency projects, that might not be eligible for the capital-raising process of banks and venture capitalists. During an ICO campaign, enthusiasts and potential investors will buy some of the tokens of the new cryptocurrency project. Just yesterday, Tezos announced the largest ICO to date, raising $232 million worth of bitcoin (BTC) and ether (ETH) coins, making it the largest ICO to date. Tezos is just a part of the current wave of interesting companies who have already been through or are currently in the process of an ICO.

Meet some other interesting ICOs:

Augur

Augur is created to be a decentralized prediction market where people can bet on the possible outcome of events – a betting/forecasting platform of sorts. Augur has practically created a betting platform where you can bet on “everything from elections to the destruction of our solar system.” if your forecast/prediction is correct, you’ll earn rewards in the form of Augur’s Reputation (REP) tokens. Augur’s ICO helped the firm to raise more than $5.2M in a token sale, with $2.5M in the first three days. Augur has already rewarded its early investors as its REPs currently trade around $26 and the price may continue to rise as more people come on board to the betting platform.

Chronobank

Chronobank is another cryptocurrency startup that has found a way to fund its business by holding an ICO. Chronobank is simply the Uber of recruitments as it works on creating an ecosystem where freelance projects are bought and sold with cryptocurrency. When the ICO ended, ChronoBank had raised a total of $5.4M collected in seven cryptocurrencies and USD. Chronobank now has a market capitalization of more than 5,400BTC. The firm’s CEO, Sergei Sergienko notes that “we have the funds we need to launch a successful platform and forge the relationships to make ChronoBank a major disruptive force in the recruitment industry”.

Agrello

Agrello is yet to hold its ICO, however, it has the potential to become one of the biggest success stories in the cryptocurrency world for smart investors. Agrello is simply a platform for building legally binding smart-contracts, using AI without having any prior legal skills or knowledge of coding. The Agrello token is called Delta Δ and it is being offered with Tier 1 at 0.0001Ƀ, Tier 2 at 0.00011Ƀ, Tier 3 is set at 0.00012Ƀ, and Tier 4 is set at 0.00013Ƀ.

One of the key factors that hint at the potential success of Agrello, is its application across a wide range of industries. For instance, Agrello recently inked a partnership deal with Finnish manufacturing giant INCAP, to provide smart agreement prototyping for INCAP’s labor management process. Agrello also has a deal with ViewFibn to develop a digital identity engine.

New investment vehicles arrive

Investing in the cryptocurrency market sounds simple enough by buying cryptocurrencies at a low price and selling them off at a higher price. Sophisticated investors may also consider putting their money into ICOs in much the same way that traditional investors look for promising IPO in stocks.

However, as the cryptocurrency markets start to mature, new kinds of investment vehicles and opportunities are coming to the limelight. One of these investment vehicles is the cryptofund, which can be likened to a hedge fund owning different sorts of cryptocurrencies. A cryptofund is simply a portfolio that seeks to make gains by trading cryptocurrencies — some cryptofunds might also be engaged in the mining of cryptocurrencies.

If you want to gain a diversified form of exposure into the cryptocurrency market, cryptofunds can provide you with a smart tool to access these markets. For instance, eToro’s CryptoFund, provides access to six unique cryptocurrencies in order to offer a balanced exposure to the cryptocurrency market. The diversification of the fund allows investors to be uniquely positioned to record gains across multiple cryptocurrencies and it protects them against massive losses in any single cryptocurrency.

If you would like to invest directly in startups operating in the cryptocurrency market, you may want to consider investing in Pantera Capital. The firm seeks to provide VC funding to startups working in the blockchain and cryptocurrency industries. By investing with a firm such as Pantera Capital, you’ll get a chance to profit from price gains in cryptocurrencies and profit from the success of the firms behind such cryptocurrencies.

The prospects of cryptofunds going forward

Cryptocurrencies, tokens, and ICOs are already an integral part in the fast-growing decentralized economy. I strongly believe that ICOs are here to stay and we will continue to see growth and depth in the quality of ICOs and their ability to provide startups with much-needed funding. For one, the decentralized nature of ICO’s makes them open to regular investors and accredited investors. More so, the paradigm shift from traditional institutional financing to crowdfunded opportunities, that will help spread the word about blockchain technologies and ingrain cryptocurrencies, deeper into the economic fabric of the global financial markets.

Kowloon Bitcoin Meetup – Hong Kong July 25th

Kowloon Bitcoin Meetup

  • Tuesday, July 25, 2017

     to 

  • Crescent Moon

    2-16 Hop Kwan Street, Tai Kok Tsui (map)

  • Bitcoin Accepted! 
    We meet once a month at The Crescent Moon (yes, they accept Bitcoin!) to hang out, chat and connect.

    The Crescent Moon is located in Tai Kok Tsui, about 5-10 minutes from Olympic Station or Prince Edward.

Bitcoin loses momentum on BTC1 deployment day

Bitcoin loses momentum on BTC1 deployment day

Bitcoin decreased over 6% but remained above $2,150 as the virtual currency’s community faces a large scaling debate. Traders remained cautious as the Bitcoin community is entering a period of uncertainty until August 1.

The deployment day for SegWit2x, which is also known as BTC1, starts on July 14. This update would enable more transactions on the network, but it would also increase the capacity of a single blockchain, a move opposed by some miners. Volatility is to be expected following the SegWit2x deployment, but the modification should have a positive long-term impact on the cryptocurrency as it will alolowe cheaper transactions and exponential speed.

Bitcoin decreased 6.18% to $2,186.5 at 7:01 pm CET. The cryptocurrency remains 126.4% higher since the beginning of the year.

Law Enforcement Takes Down the Biggest Darknet Market on the Deep Web

law enforcement

According to various reports the largest online marketplace located on the deep web, Alphabay, was seized by International law enforcement.

Law Enforcement Takes Down the Biggest Darknet Market on the Deep Web On July 11 Bitcoin.com reported on the Alphabay darknet marketplace going offline for over a week. In that report, we detailed a theory of a global “deep web” law enforcement task force that seized computers in Quebec and made a connected arrest in Thailand. On July 13 according to the Wall Street Journal and sources familiar with the international authorities — Alphabay has been shut down.

Founded in 2014 the marketplace Alphabay was a successor of the Silk Road and grew to be even bigger by 2017. Alphabay, like many darknet markets, was known for selling illicit narcotics and fraudulent credit cards. Wall Street Journal reporter Robert McMillan details the investigation was conducted by law enforcement agencies from a few countries including Thailand, the U.S., and Canada.

Canadian Police Search a Residence in Quebec While Bangkok Authorities Make a Related Arrest in Thailand

Law Enforcement Takes Down the Biggest Darknet Market on the Deep Web The international deep web task force arrested Alexandre Cazes, a Canadian citizen associated with the Alphabay marketplace on July 5 in Thailand. Interestingly the arrest was made the same day the Alphabay market went offline. Cazes was expected to be extradited to the U.S., an embassy employee from Bangkok told the press. Further, the investigation also took place in Canada as the Royal Canadian Mounted Police (RCMP) searched a home in Trois-Rivières, Quebec. However, Cazes took his life and was found hanging in his Thai cell on July 13.

According to Andrei Barysevich, a director of a company that sells data on deep web activities, Alphabay was far more diversified in sales than the Silk Road. Researchers from Carnegie Mellon University revealed that the Alphabay marketplace took in roughly US$600,000-800,000 in cryptocurrency revenue per day. Besides narcotics Barysevich said the market catered to credit card hackers and included fraud tutorials. Barysevich says over the past six months alone, Alphabay has sold “$5 million in stolen credit-card numbers.”

Alphabay was the biggest marketplace on the Dark Web

Law Enforcement Seizes Four Lamborghinis and Three Homes While Alphabay Joins the Graveyard of Darknet Markets

Alphabay will go down in history with the rest of the fallen darknet markets. At the moment there is no information provided on others involved with the daily operations of the Alphabay market or what Cazes actually did for the website. Reports from The Bangkok Post detail that authorities seized three Thai homes that belonged to Cazes worth 400 million baht (11.7M USD). Additionally Thai police claim they confiscated four Lamborghinis and said Cazes has been residing in Thailand for over eight years.

International law enforcement officials have arrested members from multiple markets over the past few years from websites like the original Silk Road, Nucleus, Agora, Sheep, Evolution, Hydra and many more. The difference between all of these markets is that Alphabay grew to be significantly larger in size and catered to a lot more people. The aftermath of the Alphabay takedown will surely be felt for quite some time by customers and vendors of the underground marketplace.

What do you think about the Alphabay marketplace takedown? Let us know in the comments below.

Meet The Man Traveling The World On $25 Million Of Bitcoin Profits

Mr. Smith, a Bitcoin millionaire many times over, requested that I change his name and hide his face for this story. Shutterstock

Last month, I found myself sitting next to a multimillionaire in the 56th-floor Horizon Club Lounge of the Island Shangri-La Hong Kong. He made no attempt to hide the fact that he was swimming in cash; I just wouldn’t have guessed he had made it all from Bitcoin. This is how he did it.

Mr. Smith—who asked me to conceal his real name—has been traveling the world in ultra-luxurious style for the past four years. He only flies first class, stays exclusively in 5-star suites, and hasn’t cooked since Thanksgiving. In the past thirty days he’s visited Singapore, New York City, Las Vegas, Monaco, Moscow, back to New York City, Zurich and now Hong Kong. “Never a dull moment,” he says, lifting his glass of champagne in a Gatsby-esque salute. Then he shared his story.

After finishing college in 2008, Smith landed a respectable job as a software engineer for a large technology company in Silicon Valley. He was a good employee, close with many of his co-workers. It was through one of these “equally geeky” friends in July 2010 that Smith first heard about Bitcoin, shortly after its first major price increase, when the cryptocurrency appreciated tenfold from $0.008 to $0.08 over the course of five days. Smith’s response, though intrigued, was measured: “That price jump really got my attention, but I still waited a few more months before investing. I wanted to learn more about the underlying technology first.”

By October 2010, Smith was ready to jump in. “I had no idea how much to invest, but I was getting paid pretty well at the time, so I decided on $3,000.” He paid just over $0.15 per Bitcoin, giving him slightly under 20,000. At the time, expecting any sort of return was a moonshot; even in Silicon Valley, simply mentioning “Bitcoin” was enough to raise eyebrows. The cryptocurrency hummed along fairly quietly, and though Smith would check on the price every couple of months, he assures, “I knew from the very start that I was playing the long game. I wanted to see how high it could go.”

Island Shangri-La Hong Kong Horizon Club Lounge

Island Shangri-La Hong Kong

This is where I met Mr. Smith, at the Island Shangri-La Hong Kong Horizon Club Lounge.

For the next three years, Smith worked his day job and largely forgot about his investment, until Bitcoin’s price leaps started making more mainstream news in 2013. “I couldn’t believe how quickly it was appreciating,” says Smith, speaking very quickly now. “It started rising by 10% or more every day. I was nervous, and excited, and terrified and confused all at the same time.” When the price hit $350, more than two thousand times what he paid for it, Smith sold 2,000 of his early stock; when the price hit $800 just days later, he sold 2,000 more. Just like that, Smith had landed upon a windfall of $2.3 million. “It was absolutely insane,” he says. “I quit my job and left on a round-the-world trip the following week.”

Just then, Smith’s girlfriend—a London-based photographer who accompanies him on about half of his travels—joined us. “He’s constantly talking about Bitcoin,” she said, shaking her head. “If he starts talking about it, he’ll never stop. Ever.” We’d been on the topic for over an hour at this point, but my curiosity was far from satiated.

I urged Smith to show me some proof to back up his claims; after all, he could just be a smooth talker with some family money to vaunt. After going through several rounds of security checks on his iPhone and requesting that I hand him my phone at the same time—“NFC scares me more than it should”—he turned it to me with his Bitcoin wallet exposed. Lo and behold, I saw what he had promised: a balance of 1,000.00 BTC, worth $2.6 million as of this writing.

Everything checked out: here was a man who had truly become filthy rich from Bitcoin, the proverbial Bitcoin millionaire.

Where did the rest of his 20,000 Bitcoins go? Smith walked me through a series of recent selloffs because, as he says, excessive speculation has pushed the price to an unsustainably high level. It was clear that he had a lot of thoughts on the notion of a current price bubble, but I decided to push for what I was really curious about instead: how much has he profited from Bitcoin overall? The answer came without any hint of hesitation or arrogance.

“$25 million, give or take.”

$25 million from an initial investment of $3,000—those are the sort of returns that make a Bitcoin millionaire. Of course, Smith still owns 1,000 Bitcoins, which he plans to sell, “When the price reaches $150,000,” a million-fold appreciation from his original buy-in price. “I really do think it will get there, he says confidently, “But a lot of governments and companies will have to be on board, first. No amount of speculation in the world will push it that high.”

When I ask Smith why he chose to sell when he did, and whether he’ll feel remorse if the price jumps tenfold again, he shakes his head. “I have everything I’ve ever dreamed of now. I fly all over the world visiting friends, I do whatever I want with my time and I never have to worry about money for the rest of my life. I’d be an absolute fool not to cash out now.”

Smith is the epitome of new money, a millennial millionaire with no reservations about flaunting his wealth. It’s been four years since he left his regular life in Silicon Valley behind, and in that span he’s been traveling non-stop. Even still, I have a strong feeling that whether he’s got millions in the bank or not, Smith will never find himself without a place to sleep.

If you can bring entertainment to people’s lives, you become special. And once you’ve built up that level of social capital, no matter how much money you have, you can always rest easy knowing friends will invite you over, serve you dinner and sit down on a couch to listen to your stories.

Jordan Bishop is the founder of Yore OysterHow I Travel and STORIED, the creative agency that empowers brands and individuals to tell transportation stories that engage and inspire.

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GOLDMAN SACHS: Bitcoin could see a big drop then surge to almost $4,000

Bitcoin had a blistering first half of 2017. It rallied from about $1,000 a coin to a record high near $3,000 before finishing June near $2,500. It booked a first-half gain of about 168%.

Retail store Sign - Hong Kong 2017
Retail store Sign – Hong Kong 2017

The historic run for the cryptocurrency has prompted observers both in the tech world and on Wall Street to talk about the cryptocurrency being in a “bubble.”

Last week, Jeffrey Kleintop, the chief global investment strategist at Charles Schwab, suggested bitcoin was in a bubble unlike any we had ever seen before. Kleintop’s warning came just a few weeks after tech billionaire Mark Cuban tweeted: “I think it’s in a bubble. I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble.”

Goldman Sachs thinks bitcoin could see a big drop before running to another record high. In a note to clients sent out Sunday, Sheba Jafari, the head of technical strategy at Goldman Sachs, suggested that while bitcoin’s correction hadn’t run its course, the cryptocurrency was ultimately heading higher.

Jafari wrote bitcoin was “still in a corrective 4th wave” that “shouldn’t go much further than 1,857.” That would make for a drop of about 25% from its current level.

But bitcoin enthusiasts shouldn’t worry too much, according to Jafari, because from there she sees the fifth wave of the move taking the cryptocurrency to a record high.

“From current levels, this has a minimum target that goes out to 3,212 (if equal to the length of wave I),” Jafari wrote. “There’s potential to extend as far as 3,915 (if 1.618 times the length of wave I). It just might take time to get there.”

BitcoinGoldman Sachs

Get the latest Bitcoin price here.

7 SEPTEMBER 2017 Blockchain & Bitcoin Conference Stockholm

Blockchain conference Bar

Register

On September 7, the event management company “Smile-Expo” is holding the first blockchain conference in Stockholm.

Blockchain & Bitcoin Conference is a series of Blockchain events taking place in Moscow, Saint Petersburg, Prague, Kiev and Tallinn.

We will focus on Sweden and foreign projects implementing Blockchain and cryptocurrencies. Experts will share their experience of implementing Blockchain in governmental institutions (Govtech), banking system, trading, media, healthcare and other spheres. We will discuss all the aspects of creating innovative IT products – from the emergence of idea to entering the market.

The main participants are IT developers, entrepreneurs, investors, software and equipment manufacturers. The speakers are managers of the well-known companies and representatives of governmental authorities.

English is the official language of the Conference.

Conference working hours: 10:00 – 17:00 on September 7, 2017
Source: https://stockholm.blockchainconf.world/en?utm_source=PR&utm_campaign=Banner&utm_medium=BannerPartners&utm_referrer=Partners © Stockholm Blockchain Conference

Barclays has spoken to regulators about bringing bitcoin ‘into play’

Barclays’ says talks with Britain’s Financial Conduct Authority says use of crypto currencies is ‘not ready for prime time, we’ll get there soon’

 PUBLISHED : Monday, 26 June, 2017, 5:25pm
UPDATED : Monday, 26 June, 2017, 5:26pm

 Barclays has been in discussions with regulators and financial technology – or fintech – firms about bringing cryptocurrencies like bitcoin “into play”, the bank’s U.K. chief executive told CNBC on Monday.

Ashok Vaswani revealed that the banking giant has met with Britain’s Financial Conduct Authority (FCA) watchdog to talk about how to make bitcoin safe in response to a question about whether Barclays could support bitcoin.

“We have been talking to a couple of fintechs and have actually gone with the fintechs to the FCA to talk about how we could bring, the equivalent of bitcoin, not necessarily bitcoin, but cryptocurrencies into play,” Vaswani told CNBC at the Money 20/20 fintech conference in Copenhagen, Denmark.

“Obviously (it’s) a new area, obviously an area we’ve got to be careful with. We are working our way through it.”

Vaswani did not expand on to what extent Barclays could be involved with bitcoin. Barclays has recently been involved in the digital currency space. Last year the bank partnered with social payments app Circle. The start-up, which received a license from the FCA last year, allows users to send money to each other in messages, and supports bitcoin. Barclays provided Circle with an account to store sterling, as well as the payments network to transfer money.

Banks have typically been very cautious of being associated with any companies involved with bitcoin due to the cryptocurrencies bad reputation as being used to buy illegal items on the so-called “dark web”.

But the world’s largest cryptocurrency by market cap has seen rising retail investor interest, as well as a major rally since the start of the year that has seen its price hit record highs. Even though the price has pulled back in recent days and there is still volatility, regulators are becoming interested in bitcoin, which is lending legitimacy to the digital currency.

For example, Japan made it legal for merchants to begin accepting bitcoin as payments and Russia is also looking at ways to regulate it. The FCA in the U.K. has been cautious on bitcoin, however.

Chris Woolard, the FCA’s executive director of strategy, said that there needs to be caution from institutions dealing with bitcoin.

“We don’t prohibit regulated firms from engaging in digital currency trading, nor do we prohibit banks from offering banking services to deal with currency firms that use [blockchain]. I am not saying that we view digital currencies as an inherently bad thing… but we do have to exercise a degree of caution,” Woolard said at a recent event, according to website Financial News.

While bitcoin has garnered plenty of interest recently, the banking industry is focused on using the technology that underpins it called blockchain. This is a distributed public ledger of activity on the bitcoin network. Banks see blockchain-like technology being applied to areas of their businesses from trading to money transfers. The promise is cost savings and faster processes.

Barclays and a number of other banks have been trialing different use cases for blockchain technology. Last year, the U.K. bank tested derivative trading using blockchain technology. Still, the industry admits it is early days and more work needs to be done to integrate this into everyday processes in banks.

“(We’re) working on it, (it’s) not ready for prime time, we’ll get there soon,” Vaswani told CSC

The US Government Clamps Down on Ability of Americans To Purchase Bitcoin

The US Government Clamps Down on Ability of Americans To Purchase Bitcoin

Currencies / BitcoinJun 18, 2017 – 10:43 AM GMT

Currencies

You have to feel sorry for Americans. They are some of the most financially enslaved people in the world.

The bankrupt US government has been instituting capital controls for years now and have ensured that Americans can’t open a bank account nor even a bitcoin exchange account outside of the US through things like the Foreign Account Tax Compliance Act (FATCA) and just outright threatening to attack any bank or bitcoin exchange in the world who accepts Americans as clients.

This leaves Americans in the “land of the free” with very few options for bitcoin exchanges.

No exchange outside of the US will accept Americans as clients. They’ll accept North Koreans. Iranians. Russians. Chinese. Anyone… except for Americans.

And due to all the regulations in the fascist/socialist mixed US economy, it is incredibly hard to even operate a bitcoin exchange in the US.

While there are now a few other options, which we’ll discuss further below, until recently, there was only one option. Coinbase.

To be fair to Coinbase a lot of the issues with the exchange aren’t its fault directly. They are due to the myriad of rules and regulations that are strictly enforced in the US police state.

This has led to countless complaints about how difficult it is to open an account at Coinbase. Many have said that it is just as difficult to open an account at Coinbase as it is to open a bank account in the US… which usually requires a phone book stack of documents and needing to report in each morning with what you ate for breakfast.

And there have been countless reports of people saying that Coinbase closed their account without reason or notice. And many others have reported that their bank accounts have been closed once the bank noticed they were doing business with Coinbase.

Matters were made worse when late last year the IRS requested a John Doe summons as part of a bitcoin extortion-evasion probe, seeking to identify all Coinbase users in the US who “conducted transactions in a convertible virtual currency.”

After all, the thieves at the IRS expect to get their cut.

To add to that, the US federal government is pushing a bill called “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017” – which we talked about a few days ago.

This bill takes a further step to target bitcoin and wants to put any business which “issues” cryptocurrency under this umbrella of anti-money laundering regulations. Also, it will include bitcoin on the list of monetary instruments that must be reported when entering or leaving the US.

As you can see, trying to do anything related to bitcoin in the “land of the free” anymore is becoming more and more difficult. This combined with the SEC turning down a bitcoin ETF months ago has all but ensured that many Americans missed out on massive gains in the rise of bitcoin and other altcoins in the last year.

All in the name of protecting Americans, of course!

Lately, the site has also been plagued by technical issues as it is unable to handle the demand from customers.

There have been numerous website inefficiency and maintenance issues which rendered buy and sell orders useless for extending periods of time.

Plus there were extended periods of time when the site couldn’t be accessed at all, which left users unable to move their funds into other wallets. It’s worth noting as well that the majority of these instances occurred during periods of massive price movement which probably costs users millions in potential profits and losses.

As if all that weren’t enough to make its users furious, it just came out that Coinbase disabled the fundraising account being used to pay the incarcerated founder of the Silk Road, Ross Ulbricht’s defense attorneys.

Ross Ulbricht, for those who don’t know, was given numerous life sentences for having a website in the, need I say again… “land of the free.” Here was my recent interview with his mother on the massive injustice done to him.

This happened not long after Coinbase hired the former Silk Road’s federal prosecutor, Kathryn Haun.

Wait a sec… why in the world is Coinbase hiring US government criminals?

Many libertarians were going to give the boot to Coinbase after hearing this… but it turns out this prosecutor was the one who put the corrupt FBI agents who stole Ross’s bitcoin in jail.

So, she may not be totally evil. We aren’t passing judgement just yet.

And, yesterday, Ross’s account was enabled again:

So, Coinbase saved some face this time.

But, if they can’t somehow lessen their adherence to the millions of US government regulations and fix their site technically they will lose customers to competitors.

At this time we are only aware of two other bitcoin exchanges operating in the US that will allow users with American bank accounts to exchange fiat for bitcoin.

There is New York-based Winklevoss twin’s Gemini exchange and the San Francisco-based Kraken exchange.

We recommend Americans at least consider them as alternatives to Coinbase.

That’s just being prudent.

As always, though, ignore Mike the Health Ranger Adams on anything to do with bitcoin.

He recently put out an article entitled, “Bitcoin wallet COINBASE now seizing accounts of Americans… users rage against ‘total ripoff’ as their Coinbase accounts VANISH,” saying that Coinbase stole everyone’s money.

This, as usual from Mike, is completely untrue. Please stick to vitamins Mike… we got the cryptocurrency space covered over here.

You can tell Mike doesn’t understand what he’s talking about in his article because he refers to Coinbase as a “popular bitcoin wallet”. Of course, it provides users with different wallets for different currencies, but only an inexperienced user would refer to an exchange as a “wallet.”

Mike goes on to quote an issue Coinbase is having with Wyoming users saying Coinbase is stealing their money;

“Although we strive to provide continuous access to Coinbase services, Coinbase has indefinitely suspended its business in Wyoming and we regret that we cannot currently support services in Wyoming. You can find a further explanation of our account suspension policy here. We hope to restore service in Wyoming soon, so please check back again.”

While it is true that many users in the state of Wyoming experienced this issue, Coinbase hasn’t yet stolen the funds Mike, let’s not jump to conclusions. And, as I said earlier, this issue is caused yet again by the egregious labyrinth of laws in the “land of the free”, not by Coinbase.

It seems like lately Mike seems to be jumping at any opportunity to incite more bitcoin-based fear propaganda, maybe he’s upset he sold his bitcoin at such a low price level?

In any case, one thing is clear through all of this. As an American, it is becoming harder and harder to get access to bitcoin.

This should be a wake-up call to many. The US government is bankrupt. The US government is installing capital controls to ensure Americans cannot leave the country with their money.

And, they are making it harder and harder for Americans to convert their US dollars into bitcoin.

The writing on the wall is clear. And if you haven’t begun to get at least some of your assets outside of the US you should be running not walking to do so.

This is what every country on Earth does just before their currency hyperinflates into worthlessness or the government defaults. Just ask people in Greece. The government there has just decided they will begin taking people’s homes and the contents of their safety deposit boxes in order to keep the country from bankruptcy.

People like Peter Schiff have been warning people to stay out of bitcoin since it was $20. And now the Health Ranger is warning you to stay out of it too.

You have to wonder what is the motivation of these people who should be smart enough to know that we are on the verge of a collapse of the US dollar to warn people away from alternatives that could save them.

Cryptocurrencies have a lot of risks and we wouldn’t recommend anyone put all their assets into them. But we do recommend you begin to use them, put a small percentage of your assets into them and learn more about them.

For that I have created a free four-video webinar on the importance of cryptocurrencies which you can view HERE. And we’ll even send you your first $50 in bitcoin if you accept our offer to get more information in the videos.

To summarize, Coinbase has a lot of issues, but most of the issues are just because it operates in the US. It still, however, is the largest exchange in the US and does offer an excellent bitcoin ATM/debit card. And you can get $10 in free bitcoin if you signup using this link.

Americans can expect to have more and more problems as the US government bankruptcy and Federal Reserve hyperinflation of the dollar nears closer.

My advice is just to get out of the US for much freer places across the world where you can trade easily in bitcoin.

But, if you can’t, or won’t, you should be at least ensuring your assets are kept out of the easy reach of the world’s largest terrorist organization, the US government and the world’s largest extortion racket, the IRS.

Bitcoin is just one easy way to do that. You can find out more in my free four-video webinar here.

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media.