Category Archives: Bitcoin Media

Bitcoin reaches new record high, breaks $9,000

 

The price of one bitcoin passed $9,000.

Bitcoin is getting closer and closer to $10,000.The cryptocurrency hit a record high of $9,033 per bitcoin early Sunday morning. The price rose steadily over the weekend and surpassed $9,000 at around 6:40 a.m. UTC (1:40 a.m. ET), according to CoinDesk’s Bitcoin Price Index. It now has a market cap of more than $150 billion.

 Another digital currency ethereum also hit an all-time high of $485.18 on Saturday but has since dropped to $461.79 on Sunday, according to CoinMarketCap.

Bitcoin had been on an incredible run in the latter half of 2017. It was valued at $1,000 at the beginning of the year and is now closer to reaching the $10,000 mark as we inch toward to 2018. Bitcoin’s value surpassed $5,000 and $6,000 in October and then rose over $7,000 and $8,000 in November.

Price per one bitcoin

Price per one bitcoin

 

That said, it’s too early to tell when the price of Bitcoin will reach that $10,000 milestone because the markets act irrationally and could face a price correction, as The Merkle noted.

Bitcoin was boosted by investor interest around Thanksgiving and Black Friday shopping, a digital assets analyst suggested to CNBC.

Indeed, Coinbase, the largest bitcoin exchange in the U.S., added around 100,000 accounts between Wednesday and Friday this week to reach a total of 13.1 million. Coinbase had 4.9 million users this time last year, according to CNBC.

 

Vietnam Is Preparing to Legally Recognize Bitcoin

Vietnam and Legal Bitcoin - Soon !
Vietnam and Legal Bitcoin – Soon !

Vietnam’s prime minister has approved a plan that could see the country formally recognize bitcoin as a form of payment by 2018.

According to regional news services VNA, Prime Minister Nguyen Xuan Phuc has tasked Vietnam’s central bank as well as the Ministry of Finance and the Ministry of Public Safety, to draw up a legal framework around cryptocurrencies.

An assessment for how the government should approach this process is due to be completed by August of next year. Once that is concluded, it’s expected that drawing up the legal documents required to recognize cryptocurrencies under a regulatory framework will be completed by the end of 2018.

In tandem, officials will also begin work on a tax treatment for cryptocurrencies. According to VNA, a system governing how cryptocurrency users will be taxed in Vietnam is slated to be in place by June 2019.

If approved, the move would signal that leaders in Vietnam are moving away from the more cautious viewpoint expressed in 2014, when central bank officials warned consumers about the risk of cryptocurrencies.

IF YOU BOUGHT $5 OF BITCOIN 7 YEARS AGO, YOU’D BE $4.4 MILLION RICHER

Bitcoin completely dominates over the USD after increasing almost 800,000 times in the last eight years.

Ever had a case where you wished you had bought something in the past that eventually went up significantly in value? Perhaps a plot in a low-value district which is now worth ten times more? Does that ring a bell? Well, here are some amazing stories about people who bought Bitcoins for fun, and due to the enormous rise of Bitcoin in the past few years, have now officially made millionaires status.

Monday marked the seventh anniversary of what is said to be the first recorded instance of Bitcoins being used in a real-world transaction. Over the course of seven years, Bitcoin’s value has multiplied 879,999 times. If an investor had decided to spend five dollars on about 2,000 Bitcoins back then, that stake would be worth $4.4 million today. With $1,200 spent on some 480,000 Bitcoins, the investor would be worth at least $1.1 billion today.

Bloomberg interview with Bill Gates. “Bitcoin is the answer.”

At first, Bitcoin didn’t really catch on, and it was solely the domain of the early adopters. There were very few businesses which accepted bitcoin as a payment method, and it was something which was almost frowned upon by most governments. As more and more businesses and governments accepted bitcoin, it gradually went up in value, more and more people were starting to embrace the idea of a decentralized currency, and as more people jumped on board, the price began to rise. Since the beginning of the year 2017, the value of Bitcoin spiked after gaining legitimacy in countries like Japan.

“Bitcoin is better than currency.” – Bill Gates

The main advantage of bitcoin is that it is decentralized – meaning, there’s no central bank or government which controls it. This freedom is the main reason why Investors have come to see the currency as something of a safe-haven-asset in a problematic geopolitical world — and there’s been plenty of that in recent months in Europe, Russia, Brazil and the United States. There is also an additional advantage in Bitcoin – there is a mathematical limitation to the number of Bitcoins that can be created, which means – no printing money, so the rules of economy work perfectly. Where there is a limited supply of something, and the demand goes up, the price goes up along with it.

Wences Casares has been called Bitcoin’s “patient zero” by the Silicon Valley elite. He got Bill Gates, Reid Hoffman, and countless other luminaries into Bitcoin at gatherings of the rich and famous such as Sun Valley.

Billionaire businessman Wences Casares says it’s not too late for people interested in Bitcoin.

The Argentinian-born Casares has founded an internet service provider, a video game company, and a bank, plus he sits on the board of PayPal, but it’s Bitcoin that Casares says he’s dedicating the rest of his life to, and he now runs a startup called Xapo that stores Bitcoin. At a dinner organized by the cryptocurrency policy group Coin Center in New York last night, Casares delivered the keynote speech, including some advice about how to get into Bitcoin.

 

The formula, according to Casares? Take 1% or less of what you own, buy Bitcoin with it, and then forget about it for at least the next five years; ideally the next decade. “You either lose one percent of your net worth, which most people can take, or you make millions.” he told a room of cryptocurrency advocates at the Westin in Times Square.

Experts predict a single Bitcoin will be worth $500,000 by the year 2030.

Casares pegs the odds of bitcoin failing completely and going to zero dollars at 20%. “If it fails, it will be worthless,” he says. “If it succeeds, in five to seven years a single Bitcoin will be worth more than a million dollars.” He puts the chances of success at greater than 50%.

Casares has an interesting reply for those people who believe they have already “missed out” on the bitcoin train and are afraid that they are joining too late. He said he’s seen people who bought bitcoin at cheap prices—as low as $13 who lost money because they tried to trade their way to profits, while those who bought at high prices even just a month ago have done “spectacularly well” by simply buying and holding.

So, what do you need to do if you want to invest a small amount in Bitcoin?

 Step One

Click this link to register a free account in Etoro. Why Etoro? It’s a fully regulated platform and a brand you can trust. There are endless reviews about Etoro world-wide, and people are very happy with their services. It is much safer to buy bitcoins with a regulated brand like Etoro than any other service.

 Step Two

Make the minimum deposit of $ 200 or more, depending on the amount you wish to invest.

 Step Three

Once you’ve made your deposit, enter in the top search bar the word “Bitcoin” or “btc.”

Hover

 Step Four

Click the “trade” button in order to buy the bitcoin currency. Since you’re not going to do any trading, do not touch any settings like “leverage.” Simply select the amount, for example, $200 or any amount for which you wish to buy bitcoins. Set the “stop loss” to let the system know the lowest price your bitcoin price can go to, and then set “take profit” at the highest price in which you’d like to convert back to your currency. For example, in the screenshot below, as soon as I make a $200,000 profit, I wish to sell my bitcoins and take the profit in US dollars.

 Step Five

Click the “open trade” button, and you’re done.

Congratulations! You are now part of the bitcoin community. If the price of the bitcoin rises – you can withdraw your money from Etoro as cash… whenever you want. Think about this – the most you can lose in the deal above is $250, but the profit you can make can be as high as $200,000 if the value of Bitcoin rises as expected. If you were to make the same deal 6 years ago, that same $250 you just put in would be now worth over $2,000,000. So how much will you have this time next year?

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.

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.

Need Business Cards in Hong Kong ?

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

What is Bitcoin Backed By?

 

Buy BitCoin !

Bitcoin and The Chinese power manufacturers

Wondering what bitcoin is backed by? The answer is nothing at all, but that’s actually not a bad thing. Like most modern currencies bitcoin is not backed by gold or other precious commodities. In a sense, bitcoin’s value is derived from our common belief that bitcoin has value. The same is true of the American dollar, the British pound, and the European Union’s euro, as well as nearly every other modern currency.

Historically speaking, up until August 15th 1971 most currencies were backed by a commodity, usually gold or silver. In fact, before the invention of paper money, most currencies were coins fashioned from precious metals. Further, following World War II and up until 1971, most of the world’s countries operated under the Bretton Woods agreement, currencies were backed by gold.

The Bretton Woods Agreement and the End of Commodity Backed Currencies

In order to understand the current system, it’s important to understand the old system. Under the Bretton Woods system, central banks would be able to trade gold amongst one another, and currencies would be tied to the value of gold, and pegged against one another. When an exchange rate is pegged, this means its value is set. So if the American dollar buys .75 British pounds, that is the value that it is set at. Most peg rates are actually adjustable peg rates, meaning that policy makers can adjust the value when needed.

The Bretton Woods system was designed to reduce the currency fluctuations seen in the 1920’s and 1930’s. During this period currencies were moving rapidly and uncontrollably, which caused international instability, and helped to worsen the Great Depression, and create the conditions that led to the outbreak of World War II. While the Bretton Woods system worked well for awhile, it eventually caused disruptions of its own.

The End of Bretton Woods and the Rise of Fiat Currencies

The Bretton Woods succeeded in creating stability in the years immediately following the second World War. By the end of the 1960’s, however, serious faults in the system were beginning to emerge. Among the biggest faults was that the U.S. dollar was too strong, which caused disruptions in international trade. For this reason, among others, governments decided to abandon the agreement, and to use “fiat” currencies instead.

Basically, a fiat currency is a free floating currency that is not backed by any sort of commodity. In the past, your dollars or other currencies would have been worth a certain amount of gold or another commodity. In practice, trading in dollars for gold was often highly restricted, still dollars were at least hypothetically worth a certain amount of gold.

Now, the dollar is no longer tied to gold. Of course, you can still buy gold with your dollars, but their values are independent from one another. Most major currencies are also not pegged to one another, but instead are allowed to float. Exchange rates can thus vary between different currencies. A few years ago, a euro could have bought about $1.4 American dollars. Now? A euro will buy only about $1.13 dollars.

Bitcoin is sort of a Fiat Currency, but So What?

Like the dollar and the euro, bitcoin and most other digital currencies are somewhat fiat. They are allowed to float in the market, and their value is determined by the market. In sense, you could even say that digital currencies and their value are determined by consensus.

Unlike traditional fiat currencies, however, there are several key factors that make bitcoin’s value potentially more reliable. First, bitcoins must be mined through computers, which requires an investment of time and money. As it becomes more expensive to mine bitcoins, it is likely that the value of the bitcoins themselves will slowly increase.

Second, while governments can increase their money supply at any given time, thus depreciating the value of individual currency units, bitcoin’s supply is tightly regulated, and the number of new bitcoins entering the market is slowing decreasing. Bitcoin is not subject to the whims of government officials or anyone else for that matter. It is a free and independent currency.

What “Backs” a Currency is Irrelevant, Perception is What Matters

Since the end of the Bretton Woods agreement, the idea that commodities are needed to back currencies has become irrelevant. Instead, public perception and economic policies are what matter. Money has value because we believe it has value. This is true of the dollar, the euro, the pound, and yes even bitcoin.

We can trade our money for goods. Many retailers now accept bitcoin as payment. In fact, when evaluating new “exotic” currencies like bitcoin, adoption rates, the ability to buy goods and services, established history, and community size are arguably the best indicators of a currency’s value. Are people using it to buy goods? Is the community itself large, sustainable, and established? For bitcoin, the answer to these questions is yes.

Many people think of bitcoin as more of an investment asset than a true currency. Part of the reason for is because bitcoin prices tend to swing somewhat dramatically. The value of all fiat currencies can swing also dramatically, however. This is true even for government-backed currencies, which are subject to the whim of government policies. The British pound, for example, has lost much of its value over the past few weeks following the Brexit vote.

In some cases, hyper inflation can even strike with money becoming nearly worthless. Consider Zimbabwe, where inflation got so bad a few years ago that the government started printing up 100 billion dollar bills. When the currency was phased out, 35 trillion Zimbabwean dollars equaled 1 American dollar. More recently, in April the IMF reported that Venezuela would suffer inflation of approximately 500% this year, and 1,800% next year. As this inflation unfolds, Venezuelan money will quickly lose its value.

More often than not, the rapid onset of inflation is caused by government mismanagement and the over-printing of money. This is why bitcoin aims to be government free. People create their own money through mining. Then, bitcoin is allowed to be freely traded in the market. Further, since the money supply itself is limited and already set, policy negotiations are no longer possible. So while it’s true that bitcoin isn’t tied to any commodity, and that it is dependent on our collection perception, like most modern currencies, the P2P currency is arguably a more reliable currency than government-backed fiat currencies.

Bitcoin Is Bigger Than Ever, And Here’s Why That Matters

The Bitcoin symbol.

The Bitcoin symbol.

The money you’ve been using all your life is backed by a government of some sort, and it exists in a tangible way. Bitcoin is neither tangible nor backed by anyone, but it’s still worth a great deal to some people. This digital currency began circulating on the internet in 2009 with each Bitcoin worth just a tiny bit of “real” money, but right now a single Bitcoin is worth more than $2,000. Bitcoin is fascinating from a technological standpoint, but it’s also fueling online crime and violence because of the anonymity it offers. Here’s how Bitcoin works and why you should care.

What is Bitcoin?

Bitcoin is what’s known as a cryptocurrency, a digital asset that exists only as data. You probably have money in the bank that is digital, but those digits equal physical currency. Not so with Bitcoin. Bitcoin also has no centralized regulation nor innate legal framework. As such, the value of Bitcoin is dictated entirely by the market, and the market is hot right now.

Bitcoin is stored in a digital wallet, which you can save locally on a hard drive or phone, or online with any number of Bitcoin exchanges. Saving your Bitcoins locally is like keeping all your money under the mattress. If something happens to the digital wallet, all your money is toast. Sending and receiving money is handled by pointing your Bitcoin client or web exchange toward a Bitcoin address, which every wallet has. A few minutes later, the Bitcoin will leave your wallet and show up in another. Websites that accept Bitcoin are rare, but they are out there. Spending it in real life is considerably more tricky, but again, there are a few system in place to manage it.

Is Bitcoin really anonymous?

Transactions are at the heart of Bitcoin — it’s powered by what’s known as a blockchain. You can view blockchain information for any wallet address, too. You don’t necessarily know whose wallet is whose, but you know what’s in them because it’s a public ledger. Perhaps you’ve heard about “mining” Bitcoin? That’s when you use a computer to crunch numbers for the blockchain. This is how transactions are verified, and in return you get some Bitcoin. It used to be easy to mine Bitcoins, but the difficulty increases substantially over time. Now, you need a server farm to earn much this way.

The blockchain info a WannaCry wallet.

Blockchain

The blockchain info for a WannaCry wallet with $41,000 in Bitcoin.

The “proof of work” model for the blockchain has been of great interest to organizations that want nothing to do with Bitcoin. A blockchain database is by its very design resistant to tampering and can be managed in a distributed manner. Both Senegal and Tunisia use blockchain-based national currencies. The Bill and Melinda Gates Foundation also hopes to use blockchain technology to help poor people without access to banking save and spend money.

How is Bitcoin involved with Ransomware?

So, Bitcoin could do a lot of good things, but you often hear about it in negative contexts. The anonymous aspect of Bitcoin has drawn cybercriminals to the digital currency. Ransomware attacks started occurring a few years ago as the price of Bitcoin shot upward, and the WannaCry ransomware made news just a few weeks ago. When your computer is infected with ransomware, it encrypts your important files and demands a Bitcoin payment to a specific address in exchange for the key. It’s not like criminals can ask you to wire some easily traceable money to their bank account, so Bitcoin is the perfect solution. After a few hops in the public blockchain, the money is essentially clean.

wcry_ransomnote-730x555

Unknown

The WannaCry ransomware alert.

Bitcoin is very much the wild west of international finance. Security firms have reported that some cryptocurrency from ransomware attacks ends up in the hands of North Korea, which is barred from many traditional financial markets by international sanctions. The same has been said about terrorist groups and organized crime, which risk having assets seized in traditional banks. All those ransomware payments are just the tip of the criminal iceberg, too. Numerous Bitcoin exchanges have also been the victim of hacking and fraud, which has led to Bitcoins being stolen from users. That money is just gone—there’s no FDIC to refund people when Bitcoin is stolen.

What does Bitcoin mean for the economy?

Despite all these issues, Bitcoin is surging in part because more people are using it. Bitcoin fans believe steadfastly that it’s the future. Regular people are becoming interested in cryptocurrencies, but it’s still too complicated for mainstream adoption. If that ever happens, we could see a lot more highs and lows in the global economy as Bitcoin’s value swings. And it does… a lot.

value

Coindesk

The value of one Bitcoin over the last few years.

If you’d bought $1,000 of Bitcoin in 2010, you’d be worth $35 million right now. However, if you bought $1,000 worth of Bitcoin in early 2014, you’d have only had a quarter as much buying power a year later. Imagine being paid in Bitcoin, and then finding your money was only worth half as much a few days later. Economies with that kind of inflation are not stable, but Bitcoin has the advantage of operating alongside regular government-backed money. Almost no one has all their assets in Bitcoin.

Is Bitcoin going to last?

As a backdrop to all this, programmers are arguing over how best to manage Bitcoin going forward. There are calls to “hard fork” the currency, which could lead to two competing standards. That would cause even wilder swings in price. Whatever the long term ramifications of these decisions, Bitcoin (or whatever cryptocurrency it becomes) isn’t going anywhere.

Is The World’s Largest Bitcoin Exchange Headed For A Mt. Gox-Style Collapse

Tyler Durden's picture

Could Bitfinex, the world’s largest, Hong-Kong based cryptocurrency exchange, be headed for a Mt. Gox-style collapse? It’s starting to look that way.

When Mt. Gox first halted customer withdrawals in February 2014, it waited more than two weeks to admit the truth to its customers: that hackers had stolen more than $450 million of their assets, leaving the exchange bankrupt and them holding the bag.  That hack effectively crippled the entire digital currency ecosystem, ushering in a two-year bear market that at one point carried the bitcoin price below $200, from what was then a record high north of $1,200 reached in November 2013.

So when another exchange engages in similarly shady behavior – withholding critical information about customer funds, or failing to produce audited financials despite promising to do so – it should prompt crypto traders to ask themselves why, with dozens, if not hundreds, of cryptocurrency exchanges operating around the world, they’re choosing to do business with this one.

That’s the question that customers of Bitfinex should be asking nearly two weeks after the exchange, once one of the world’s largest, first revealed that it had been cut off from sending outbound dollar-denominated wires to its customers.

Of course, halting customer withdrawals isn’t uncommon in the cryptocurrency world: All three of China’s largest exchanges suspended customer withdrawals in February. And last year, Kraken, one of the biggest U.S.-based exchanges, suspended withdrawals temporarily because of a glitch in its trading software.  But this freeze is particularly troubling because, like Mt. Gox, Bitfinex inexplicably decided to wait before informing customers of a critical problem. It also has implications that stretch beyond the bitcoin market, to another cryptotoken called tether that was launched by Bitfinex back in January 2015, and has since been dogged by allegations that it’s a scam.

The halt is already costing Bitfinex’s customers money. On Tuesday, bitcoins were going for $1,547 on Bitfinex’s platform, a premium of more than $100 over most of the other popular exchanges. Investors, apparently, feel that eating a 7%-8% loss is preferable to leaving their assets in Bitfinex’s care any longer.

Reddit users reported that wire transfers requested as early as March 9 were cancelled, and that the exchange offered only vague excuses as to why. It took the exchange until April 13, after it had filed a lawsuit against Wells Fargo & Co., whose correspondent banking division had effectively shut Bitfinex out of the global financial system, that the exchange disclosed the problem to its customers.

And while Bitfinex has repeatedly said it would make things right – it has promised to either establish a new banking relationship and to allow customers access to other fiat currencies  – only a handful of customers have been able to get their assets out of the exchange.

As part of the freeze, Bitfinex has established a moratorium on cashing in tether tokens held by its customers. These tokens were created by Bitfinex in 2015 to allow customers to exchange an asset that’s pegged to the dollar at a one-to-one ratio, allowing them to avoid costly wire transfers that must be processed through the banking system.

But the withdrawal freeze has put pressure on the tether market; for only the second time since they were introduced, investors are selling these tokens at a discount. The price of a single token has been languishing below the $1 level for more than a week.

More troubling still is that Bitfinex has so far refused to provide an audit of the fiat funds that allegedly backstop the tether float, despite promising that it would be “fully transparent and audited to demonstrate 100% reserves at all times” when it first launched the token.

This has lead some to speculate that the exchange could be commingling tether funds with other customer assets.

While evidence of this could cause irreparable damage to Bitfinex’s reputation, leading to a wave of withdrawals that could add further strain to its already thinning bitcoin reserves, as Twitter user @Bitfinexed points out, it’s not technically a violation of the tether terms of service.

Here’s an excerpt: “There is no contractual right or other right or legal claim against us to redeem or exchange your tethers for money. We do not guarantee any right of redemption or exchange of tethers by us for money. There is no guarantee against losses when you buy, trade, or redeem tethers.”

Given the preponderance of scams in the cryptocurrency market, investors who haven’t already, should probably take what’s left of their money and run, if they can of course.