Cardano (ADA): The Golden Hand?

Luck is when preparation meets opportunity. The hard part is recognizing the opportunity.


The Cardano opportunity is a risk.

Life…is a risk.

The news today…the news any day…the last few crypto-days…is mixed.

From a layman’s point of view – one who has made a few good calls – I think that the next great cryptocurrency opportunity is here. The early cryptocurrencies were the introductions, the experiments and the tests.

A lot of people have made a lot of money in this space since 2009. Some of these newly minted multimillionaires have used this opportunity to push Fintech further. To create a second generation of cryptocurrencies with smart contracts and added tokens. To allow others to use their blockchains for good or ill.

From Bitcoin to Ethereum. Public blockchains that allowed innovators to dream and make their dreams into reality. The reality, the regulators, pushing back, but not yet winning.

From Bytecoin (stay away) to Monero (use at your own risk). And we must not forget the private angle. Others in this new space felt that the current governments obstructed the development of this technology as they, the Darknet users, actively created systems to hide behind a wall of code. Or give the user the choice to secure his accounts or make them public.

The principal problem with the private angle, is that we the users, do not often know who created these coins. We have no customer service. The risk, therefore, is great. To state otherwise is to be oblivious or perhaps to take that risk in hopes of a great return.

Is there a third way, however? A third generation of cryptocurrency? Not a compromise, as I have postulated before, but a “realist” coin? One that exists and uses the regulations to its benefit, rather than subjecting itself to the laws of all nations? In other words, can Cardano (ADA) use the law of nations to its advantage, while enticing a new breed of users?

We live in the real world after all. We earn and save and spend our money on real things in real stores, where real people stuff our groceries in real bags. We use fiat money, by and large, to do this. And there are many advantages to using fiat, except for micropayments across borders. Cryptocurrency handles the latter much better. But cryptocurrency has other problems.

Although, I’m no supporter of the IMF (International Monetary Fund) its current director made some interesting remarks recently.

Christine Lagarde, Managing Director at the IMF, indicated in her speech recently, “…this is not about digital payments in existing currencies—through Paypal and other “e-money” providers such as Alipay in China, or M-Pesa in Kenya…”

What does that tell you? Aside from the fact that she said it? Is Lagarde sounding the alarm or is she helping to clear the way for the banking industry to adopt the blockchain technology? If so, what type of cryptocurrency would governments accept? After all, the governments are the banks.

In the US, the company with the cheapest product wins the government business – a lot. Yes, there are affirmative action quotas (reverse discrimination policies) to follow, but the product used, needs to be under budget – until later, when the corruption and incompetence is discovered and the whole project exceeds the projected budget, plus some.

Would PoW cryptocurrencies be used by governments? Unlimited budgets are things of the past. Yes, China and Russia can offer inexpensive power (electricity) to cryptocurrency miners, having built the power stations on the backs of their subjects (tax and spend), however, freer countries cannot often hide such corruption for long.

PoS cryptocurrencies might fit the bill, however. In fact, Ripple is fitting the bill nicely now. More and more businesses and banks are signing on. But Ripple is not really PoS, is it? It does not encourage people to save and earn interest, it only entices them the buy, hold and sell. Perhaps to use their system. It is no longer user-friendly – if it ever was. But it is a pre-mined animal for the current financial system. Centralized and existing in the regulatory environs – and earning money for its investors.

Back to Lagarde. She also said, “For now, virtual currencies…pose little or no challenge to the existing order of fiat currencies and central banks…[b]ecause they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are too opaque for regulators; and some have been hacked.” (Underlining emphasis mine.)

Volatility is a given with cryptocurrencies. They are not often pegged to a basket of goods or a fiat money supply. On the other hand, they are not – in theory – able to cause inflation.

Energy. There’s the big one. Bitcoin, for example, uses as much power as hundreds of thousands of homes, certainly. And there are worries, that continued unchecked, the blockchain beast might use as much electricity as entire countries.

That is a non-starter for whole countries, if they are constrained by objectivity and budgets. So, what is better? What kind of cryptocurrency would entice the average Joe, the high-power banker and, at the same time, dissuade governments from clamping down on the process? Where whole nations could participate?

It would need to be – IMO – a cryptocurrency (or more than one) with wide acceptance, ease of use, an international governance structure, economical, secure, and transparent under certain circumstances. (By that I mean, an objective set of published rules whereby the ‘coin’ would, under the circumstances outlined, provide identity information to third parties.)  Whatever else the cryptocurrency could add, given the needs and desires of the populace, would be up to them. Smart contracts. Machine to machine payments etc.

Naturally, the acceptable cryptocurrency would require scalability. In other words, be flexible enough to increase business in an efficient fashion.

Such a cryptocurrency, could become a new world reserve cryptocurrency, if it was not subject to the whims and laws of every separate bureaucracy – used a system of governance akin to Maritime Law – as has been suggested. It can be argued that Bitcoin is like this today.

This would be, as some have called it, the third stage in the evolution of cryptocurrency. And, perhaps, a stage in the re-development of a base or reserve monetary system, decentralized at its heart and beholden to its users, not its users’ users.

Efficient, secure, regulatable, sustainable and trusted, all based upon the original concepts of peer to peer networks. With the added benefit of creating a voluntary user base to extend the network.

Let’s face it, Bitcoin would be much faster if everyone connected and kept their computer on. But why waste energy? Why download the blockchain when cryptocurrencies like Cardano offer more efficient ways of participating – and obtaining PoS rewards?

The trick will be in the regulation. And how Cardano can manage what will certainly absorb much of their nest egg, that we the user must be willing to provide.

Can Cardano outpace Ripple and become a serious international player in short order?

Read between my lines.

 


The above should not be considered investment advice. It is solely the opinion of the author. The author who had DASH when it was wet behind the ears, Ethereum when the nerds were wrecking “DAO” havoc, Bitcoin too late and Aeon, at pennies on the dollar. Now it is the time for Cardano — methinks.


 

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Bytecoin is still kicking…


Just a quickie, before you throw yourself under the bus…

Today, I received a response to one of my blogs about Bytecoin. It was a link to a video, an audio actually, of an interview with the mysterious Jenny Goldberg. Goldberg is the new Community Manager, if we can accept this — of Bytecoin.

(Hi, Jenny.)

The connection seemed to skip or warble at times and Jenny herself, to an American, had a strange accent. I’m no ‘world traveler’ and I could not place it.

I also checked Reddit and the video was also posted there.

As some of you may recall, I often blog about various coins, especially the more anonymous ones, because I think at some point, many in the cryptosphere will actually desire a more secure and less public coin. Meaning, a cryptocurrency that is usable by anyone but not visible to everyone all the time — like bitcoin.

It’s a move simply waiting to happen. The developers have been gearing up for it.

In the mean time, there will be a large number of people who will desire the services of an anonymous coin network now. They come in several flavors of dishonest, but the bulk I feel, will be derived from the honest. Those simply trying to find a way to move and/or store value (money) in a place where others, including governments, cannot get to it.

Think on that for a moment. Let me name a few places. China. Russia. North Korea. The United States of Taxes. Cuba. Greece. Cyprus. Venezuela. Planet Earth.

The thing is, I don’t want people to get screwed. That’s why this video I mentioned is important to hear. First, do a little homework. Learn about Bytecoin. Determine for yourself, if Monero is simply trying bash a good system. And I have spoken highly of Monero in the past. Now I’m more neutral.

Secondly, make your own educated decision. Is Bytecoin good to use? Can you send value over the internet in a secure fashion, with Bytecoin. The quick answer is yes, you can. The system does work, but be fast about it. Transfer and get out of it as fast as possible — if you must use it at all.

You want to retain as much value as possible, after all. Let someone else take the risk of “holding” any cryptocurrency. It’s like holding a greased pig on crack cocaine, while drinking a beer and talking to your wife about painting the downstairs — again. It is nearly stupid, for now. Even bitcoin holders might find themselves in a world of poop, if the market decides that crypto is “old hat.”

I’m not saying to stop making money. Go for it. Spin that dial and laugh. I am. For now. Just know that the next idea is just around that dark intersection — where the bus is coming.

And listen to regular people. Too many times we gravitate to the news fed to us. I even cite them in my posts. This magazine or that financial expert. Know that in this vein, the blood that runs herein is not necessarily blue. The value if these things is transitory as hell. And the last time I looked, Satan’s Pit of Boiling Mud (think Yellowstone National Park) is still looking for permanent tourists.

And for the record, I’m curious as hell about NAVCOIN these days.

Have a good day.

Jack Shorebird

 

 

 

 

Will Bitcoin Fork on July 21, 2017?

Burn

 

Bitcoin has been steadily devaluing. In fact, most of the major cryptocurrencies on earth are also losing steam. Ethereum, Ripple, Litecoin, Steem, and even Dash are suffering. In some cases losses have exceeded 25% in less than a week.

Is it the end of an era or a readjustment period? A shakeout, if you will?

Many have debated why, as bitcoin dips, does it seem to initiate a larger scale downward trend throughout the cryptosphere. Each time bitcoin sneezes, crypto in general, catches a cold. Today — this week — bitcoin has the flu.

Some have pointed to alleged “Civil War” between the Bitcoin Core Team and the Bitcoin miners as the culprit. Primarily, the accusations are being leveled against the miners who control most of the network. The Chinese.

There is also some bickering within the Bitcore Core Team itself. But the idea that all of the planned changes — the proposed updates — to the code, will cause a rift is also on the debate table. A debate about a potential bitcoin fork — a split of its blockchain. Or perhaps users will use another blockchain. (I will get to that in a moment.)

Let’s face it, most bitcoin users, investors, watchers, writers — do not give a bleep about large conglomerates of miners who are churning out bitcoins and making a tidy profit. They are charging the community for the privilege of using a peer-to-peer system, allegedly designed to reduce the financial friction between willing parties. That is now history. The price of doing bitcoin business is becoming more expensive to the small consumer. Still, aside from the slow processing times, sending large amounts of bitcoin internationally, is cheaper than using the antiquated banking systems of today. In other words, bitcoin seems to be helping those with lots of bitcoin. Not a good sign.

Many of us do care that the Bitcoin Core Team is working to keep the code “bug-free” and that they are attempting to update the system. However, they are not dictators. They do not have the final say. The community must accept the updates. The users of the system are voluntary. If they do not accept the changes — if the miners feel cheated by the prospect of having their profits reduced — we could see a fork. And this could mean the destruction of the most successful private money that has ever existed — maybe.

Such a thing would not only evaporate the wealth housed within the blockchain, but potentially all of the investments tied to the bitcoin ecosystem — worldwide. From ATM’s in Vegas to the Mom and Pop Dress Shops in Morocco. All of that seed money, those start-ups, YouTube preachers — you name it. Adrift in the cosmos of bankruptcy. It would be painful for some.

Is there a silver lining to all of this?

Antpool, the largest bitcoin mining operation on earth, does not want the updates offered by Core — “SegWit.” Bitcoin Core is pushing ahead anyway. It is a Goliath versus Samson battle — all over again. Core holds the sling (the keys to the original code) but Antpool can simply copy the code. If the Antpool Goliath does this, will anyone trust him? Actually, the last I read — and info can be sketchy here — Antpool had a back-up plan. They started mining Bitcoin Unlimited a few months ago. (That’s another story, but suffice it to say it solves many of the problems associated with the current version of bitcoin.)

Philosophical battles aside, the concerns over whether bitcoin (or any cryptocurrency) must decide between the corporate world and somebody’s idea of traditional capital is a red herring. Any money ought to be neutral in that sense, if the developers/community so decide. And therein lies the problem. Any community of anything is going to debate, endlessly. Although, I am not speaking in support of Dash, their governance model does have advantages.

In any event, the fireworks begin in just a few days — July 21, 2017. If 80% of the bitcoin community adopts the updates — SegWit — all should be fine. On the other hand, if the community does not adopt the updates, it is likely that an alternative solution might be employed on August 1, 2017. That is the idea of a “soft fork” employing SegWit as user activated “choice.” By then, Antpool may be off the reservation — employing Bitcoin Unlimited. The tension is palpable.

Let’s add more fuel to that fire, shall we dear readers?

CNBC put out a panic article recently and it does have some rather prescient information. Namely, that the Bitcoin.org community has recommended that everyone — every user of bitcoin — take a “bank holiday” a few days before the proposed changes are to take place. Say on Friday, July 19, 2017 — you know — just to be on the safe side. Did you catch that? Turn off your bitcoin wallets. Now I’m as brave as the next guy, but don’t get between me and my cash. And yet, major players are notifying bitcoin users that they are doing just that. No deposits or withdrawals? No trading for a few days? Be prepared.

Do you know what happens during bank holidays? Panic. Users might find a substitute. Certainly trust will be eroded.

Hence, bitcoin is devaluing. People are cashing out. Waiting on the sidelines.

Now if you are confused, you should be. Hour by hour, bitcoin is still loosing ground. As of this writing, the price of one bitcoin just dropped below $2000, then popped up again. That is over a 30% value reduction in just over a month. Coming from just over $570 each last August (2016), which is amazing in itself, anyone holding the coin, if the blockchain forks, could be left holding thin air.

As some have put it, we are witnessing, once again, a sea of red. Let’s just hope that the entire thing does not go “bleeps up.”

You can check here for up to date valuations:

CryptoCurrency Market Capitalizations.

Thanks for reading. If you have any input, let me know in the comments section below.

(Oh, and thanks RK.)


Image: Flickr

 

Bytecoin Team: The “Seigen” File

 

Who is “Seigen?”


Again, many of us have stared at the Bytecoin Team Members list on Bytecoin.org and wondered just who they were — or more precisely, who or what they are. Are they still around? Are they layered in pseudonyms to protect their identities or to hide criminal enterprise?

In a recent post I checked in on “Neocortex” or is that “Joseph Lin?” In any event, it is currently a dead-end and Mr. Lin has not responded to inquires — yet. Come to think of it, maybe Neocortex never existed, which means he can’t respond.

It’s so logical, it must be true, right?

So, in order to keep on task, I have randomly chosen another Bytecoin Team member for this post. For this ongoing ridicule.

Meet “Seigen,” the dashingly elegant “Go” player. He hails from…we don’t know.

What do we know about this monetary crusader? Zilch. Nada. Nothing. The big El-Zippo. And so many people think that’s dandy.

Let’s take this an “exhibit” at a time, shall we?

 

Exhibit A: “Go”

Why bring up the game of “Go?” Flavoring? To spice the mystery?


To understand this Seigen “handle” one needs to look at the artwork. Here is his “jpg” file on the Bytecoin website:

seigen
Source

I guess it’s copyrighted somewhere. But you know, I’m not so sure. Maybe someone can write to me and verify this. I will happily remove the copied file and apologize to the owner or manager or whomever. I promise. Just let me know. Seriously.

Many of us know that the black and white picture presented here, is a representation of a “Go” board. It’s an ancient Chinese game. Probably the oldest board game in existence. It is more complex than chess, according to Wikipedia. The game-board is larger and there are more possible moves. Something like 250 moves versus 35, when compared to chess. And so the heck what.

I think a few Chess Masters would take issue with “Go,” but that is not the thrust of this post. I’m not here to pick a fight with them. Chess died with Bobby Fischer anyway, right?

It is curious, however, that the object of the game “Go” is to surround your opponent and capture his pieces. The game, historically, was for those of culture — the educated Chinese aristocrats, with nothing better to do.They played their educated games, whilst the white-rice eaters toiled in the paddies and their armies did the real fighting.

I mean at least in chess there’s a freaking point. Not an endless stone toss. But I digress. Let me “Go” on.

Is that what Bytecoin is trying to do? Play the long game — as it relates to the world of cryptocurrency? What Seigen wants us to think? “Dudes, I’m so complex. You know I’m good for it. I swear, once you buy a few million BCN, I’ll do some more work on the code.”

It is not all that interesting that the name “Seigen” appears to be a reference to the Chinese born Go Master, Wu Qingyuan. He is better known by his Japanese name,”Go Seigen.” He was considered a prodigy, but began his training in the “Stone-age art” at a relatively tender late age of nine. Apparently, he played with his stones a lot and that got him in the mood. Maybe his mother said “don’t throw the stones, place them on this board, whilst the Chinese Communists take all of our stuff. Don’t you feel better, Honey?”

At any rate, Go Seigen died. It was on November 30, 2014, after the invention of Bytecoin — whenever that was.

It is apparent that our mystery Bytecoin “Seigen” has chosen a pseudonym to imply a mastery of “Go” and maybe a little respect for the one of the fathers of the game. Oh, and that he is also mathematically inclined, hence a cryptographer. And that chess is for “sissies.”

Whoops, I can’t say “sissies” because it’s a sexist remark. (If you have a problem with that please consult your censor-hate-speech expert — have him or her contact me that I may print a full rebuttal.)

But to Seigen, chess sucks — or at least that is implied. At to that I say: blasphemy. Eat my rook, Seigen. Go and move those little Stone-age stones around the dirt you silly Asian guy-person.

 

Exhibit B: Ecole Polytechnique 

Education lets us know that Seigen is no dummy, but maybe we are… Do you feel that way or is it just me?


Obviously a PhD in Math from Ecole Polytechnique is great for the kind of work Seigen did or does, for Bytecoin and his bank. What bank or banks? Name one.

So where is this school anyway? It is probably a reference to the one by the same name in France. A university known for its engineers — a top notch school. So they say.

The school was once a military academy and it was founded during the French Revolution (in 1794). Hint: the revolution failed. Remember Napoleon?

Today the school is still supervised by the Ministry of Defense of France. Does that make you squeamish? Is there a hint of state sponsored silliness? Oui? I mean, I can see them now…drinking a little wine and coding a little crypto, can’t you?

 

Exhibit C: Data Protector Man

“Comrade, I hear you expert in banking sector, true? Can leap tall buildings in Red Square, da?”

— Anonymous Bytecoin Philanthropist (V.P. of Moscow)


In Seigen’s proffered bio, we learn that he is “…a data protection expert in banking sector.”

Read that one part again, slowly. It reads, in part “…in banking sector.”

Do you see it?

In some English speaking countries we would write it this way:

“…in “the” banking sector.”

It just flows better. Note that for next time comrade. Actually I don’t think it will matter. The Bytecoin website is full of such errors or shall I say, “differences?”

As I have stated before and some of my readers have pointed out…do we hear Russians? Dissidents? I mean I have no problem with the Russians, so long as they are nice ones. No state sponsored crypto-graphic con artists, please. And no pre-mining fakers either.

Of course, we ask the question: where? Where is this alleged data protection expert?  In France? In Dubai? Singapore? God forbid, in China? How about Moscow? How about on Star Trek?

Is Seigen just a fictional character? Methinks…Oui.

If we focus on France, we can speculate where Seigen might work. BNP Paribas? It’s one of the largest financial institutions in France. How about the Credit Agricole Group? And we could go on. We could go to Mother Russia and apply for an account at  Sberbank as well. Do they take BCN or do they just wash rubles? Sounds dirty either way, don’t you think?

My point here? There is not enough to go on, but maybe with all of this speculation, someone else might get curious. Some other bored cryptocurrency enthusiast will chime in with the goods.

Do you know a PhD from Ecole Polytechnique who works at your institution and loves to play “Go?” Is an expert at it? Do you know Clark Kent Jr.? How about Chewbacca?

If Seigen was one of the first Bytecoin members, how did he join? Does this elite list of Bytecoin Team members have anything to do with the Cicada 3301 mystery? How about space aliens? That smell in the back of my closet downstairs?

 

Exhibit D: Wisdom

Asian Philosophy? Really?

“Confucius say…many apples fall to ground when wind blows hard…”


Aside from his school and “Go” what else do we know — or think we know — about Seigen?

We are told that Seigen “has always been a source of calmness and Asian philosophical wisdom.” Oh, please.

Really? How nice. How calm.

And I don’t care. If Seigen is a source a calmness, then please fire him. We need men, not castrated Asian philosophers. Why? Because, my dear “Go” player, the Art of Financial War is upon you. If you seek the oneness, try opium and beer. Leave the sport for the money-changers.

Are we to feel comforted by Seigen’s ability to walk on water — in today’s fiat money  oceans? How so?

I mean the Bytecoin Team  — if it really exists — is making us think that Seigen is a great guy, a wonderful crypto-graphic artistic, slightly Asian, educated in Europe (seasoned) and therefore a great developer, and as smart as he is all-around  “philosophical.”

But lay it on a bit thicker won’t you? Don’t tease us. Does he wear sandals? Does he take baths? Can he walk my dog?

Again, it is like saying that Seigen — if he really exists — is a Buddhist-Banker Security Guard. Perhaps he is a Falun Gong practitioner, who works in Beijing, which is why he must keep his identity under wraps — lest the Communist Party take certain liberties with his unused kidneys, so to speak.

For sure, we have learned thus far, that Seigen’s recycled food does not stink. Jesus.

 

Exhibit E: Elegance

What word does not match the others?


Think about this for a minute. “Fundamental solution.” Sounds reasonable right? Something that is core to understanding the root issues. The bedrock. The basics. The real. The wind beneath my buttocks.

Now think “simple solution.” We’ve all heard it right? Occam’s Razor? Keep it short and simple. Why? It cuts down on errors and complexity. It’s not always the best solution, just the humanly understandable one.

We could argue all day, but we won’t Why? Because we have simplified it. Great. Next batch of word stew.

Elegant. As in Seigen offers elegant solutions too. Oh?

What? I said elegant. Do you mean artistic? Stylistic? Pretty?

I don’t think so, because the Bytecoin Team or Seigen, used the word “and.” It’s kind of a weaselly way of writing stuff.

Seigen “always emphasizes the need for fundamental, simple and elegant solutions.” Does he mean all three at once or any of them, individually?

Why does this bother me? Because of the word elegant. Pansies are elegant. (Oh, again with the flowery language.)

Yes, math and fundamentals can be elegant in a sense, but the word elegant is also a gray-brown smog word. It can mean anything. It’s subjective. Cryptography is objective at its core.

Hell, maybe I’m just being too critical. Bummer.

 

In conclusion:


Seigen does not exist.

He never did — as a single person.

Prove me wrong.

 

Seigen Tidbits:

These are some things laying around the net, related to Seigen…


Tidbit #1

Tidbit #2

Tidbit #3

 


Photograph Source: Flickr

Five Reasons Why Bitcoin-is Here-to Stay???

I am amazed at the hype put out by some of the so-called news sites about cryptocurrencies. COINTELEGRAPH for one. This came out recently…

“It is possible to make a relatively accurate prediction about the future of Bitcoin by analyzing five factors successfully used by technology adoption experts for decades.”

Source: Five Reasons Why Bitcoin-is Here-to Stay

If you follow the link you will find five reasons, given by a guest author, as to why bitcoin is here to stay. Dear writers of the hype, nothing is “here to stay.”

Not really. It’s just a way to get you to read the COINTELEGRAPH story. It worked for me. But I felt cheated afterwards. Why? Because the guest writer even tells us that well, “maybe” bitcoin is here to stay or maybe not. But here’s why is might be around for a bit.

Relative Disadvantage:

First, bitcoin is said to have the advantage of  being a “decentralized ledger.” We’ve been over that. Every crypto-noob gets it. But dude, it isn’t just about the ledger. It’s about the probable Chinese control of most of the bitcoin system. Now that tingles my funny bone.

Secondly, the next alleged advantage? It’s cheap. Not so fast, gumshoe. The transaction costs of bitcoin have been climbing steadily since its inception. Relentlessly even. Each and every cryptocurrency exchange, retailer, Tom, Dick or Harry — has a different darned rate. And I’ll be a sheep herder if they are easy to understand.

Okay, compared to banks, fees are probably lower — if the value of the BTC doesn’t free-fall during your transaction. So, unless your fiat is depreciating like cash in Venezuela, PayPal is probably cheaper for purchases, at least in the United States. And a hell of a lot easier to use.

And spare me about there only being a limited supply of BTC’s. That’s a gimmick. What is the supply? Numbers? Codes on a shared ledger? It’s information everyone agrees is somehow limited — until we all agree that we can use a better, newer, more secure, more private ‘coin.’

It’s not about the artificially limited supply of bitcoin. It’s about the code. The secret code we the users (those who are allowed to use bitcoin) agree represents a form of functional money, then and there. In that second of time. Because in the next second, this funky bubble might burst all over Beijing. Actually, all over the noob-world, with the Chinese scooping up the whale’s share of other cryptocurrencies in a continued effort bilk the average investor. To convince the unhinged happy-go-broke-today-guys to raid their 401k’s as soon as possible — before there’s bubble-trouble.

No, say you? No bubbles in bitcoin?

(And yes I know that if the dollar takes a roll, 401k’s will become worthless in the United States — but so will just about everything else.)

Third. Well, the “guest writer” didn’t use my ordering here, but the fact that bitcoin payments do not go through a third-party is a bit misleading. Sure, you can send your BTC from your desktop wallet to a retailer or your local coffee shop — and wait 24 hours sometimes — but often retailers want a third-party intermediary.

Even guys like me might want to set our BTC aside, until our socks arrive at our doorstep, before we  “release” the cryptocurrency to the seller. Why? because the standard BTC transaction is a one-way ride to someone’s decentralized ledger. Once I send it, it’s gone, unless I use a third party or a smart contract, such as Ethereum. Confused yet? Yeah? Now try to get your bitcoin back.

Dear “Bit-Con Bank,” Joe’s Sock Retailer in Japan screwed me on a pair of socks. What? There is no “Bitcoin Bank?” Wait a minute…who is in charge here? Me? But I can trace the bitcoin to a funny address in Japan, err maybe that’s Hong Kong…wait a minute the bitcoin transaction split…went through a mixer…

The lesson here? Buyer beware.

Incompatibility:

Another great thing touted as a plus, is bitcoin’s iPhone-like “idea.” It’s compatibility. Seriously? Even iPhone is taking steps — or was — to keep our information private. Not bitcoin. At least not yet.

But that was not the rub here. The cited advantage here was that bitcoin was easy to use. Let me repeat that: easy to use. Are you kidding me?

Yes, I know I can download an app and use a third-party bitcoin service, with fees, and send my bitcoin around, after I scan a bar-code thingy or type a freaking long alphanumeric code (and hope I get it right). It’s just so darned cool… Not.

Sending bitcoin can be dicey. Why don’t the gurus of Fintech ever fess up to that fact? User friendly? Hardly. But I can use most of the wallets and I have tried a variety of third-party apps. The operative word here is “tried.”

I have since dumped all the bitcoin apps from my dumb-phone. They are not all that secure. I don’t bank on my dumb-phone for the same reason. Paranoid I guess. And I don’t have too much to hide. I just don’t want to leave chum in the water.

Non-Trial-ability:

Not “trialability.” The idea that more and more bitcoin ATM’s are beginning to show up and that people will “try” the goods is a bit over the top. Sure, people will be curious, but not stupid with their money. Not adults anyway. Not in the semi-IRS-police states of America anyway.

I don’t want my identity spilled all over the bitcoin ATM grid. Besides, these ATM’s are pricey. Coinbase is cheaper and so are a dozen other outlets.

Why do you think a lot of the BTC ATM’s are showing up in shady internet cafes, overpriced malls, and gambling establishments — with ear-biting, ex-heavy weight boxer logos? I don’t know if those ATM’s are made in South America or Switzerland. I do know who to call when I see an extra charge on my debit card from Coinbase. I won’t be calling “Mike” for a refund of BTC if one of his ATM’s breaks — he might be hungry. Might chew my ear off — literally.

Complexity:

If something is complex, but easy to drive, people might buy it. True. I’d have to agree here. But is bitcoin easy to drive and easy to trust?

Sure, you don’t need to know how your car works to be a great driver. You just need to know some basics. Steering wheel, gas pedal, brakes and you are off.

On the other hand, if one day your car gets better gas mileage and the next day it sucks, then what? Would you trust your complex, easy to drive roadster? How about if the car is not so reliable? You try to start it and nothing happens? You try again three hours later and it works? Hello?

This is bitcoin today. You click on send and wait and wait and say, “oh crap, where in the hell did my crypto go?” And, “you charged me what? How and when did you add that fee?” And, later, “I’m sorry, Mike — I didn’t know you owned that BTC ATM at Jim Bob’s Internet Cafe and Boxing Shop.”

Observability?

Seeing bitcoin in action.

The thing is, as the cited article states, we don’t see bitcoin in use much the United States. In other countries, such Japan, you do. Well congratulations Japan, maybe you are about to get some payback from China, however. You might want to diversify into other crypto’s fast like.

You don’t see much news about BTC, unless you go looking for it — or unless someone makes a lot of money — or loses a lot.  This is true.

The Other Reasons:

Then there is that pesky regulation problem. Bitcoin is just so new that the poor old governments are simply stumped. What ever shall we do? FinCen asks. How on earth will we ever catch up? the IRS complains. How can we copy it, the banking industry says.

Let not the cryptocurrency promoters take your eye off the ball. The regulators (governments) are the money makers — literally. They want bitcoin to bite the big bubble, so they can copy it and outlaw the private use thereof — in the U.S.

All the warnings are there. Lawsuits. Imprisoned users. Audits. Fines and so on.

You might want to prepare — if you are a cryptocurrency enthusiast — with a better coin. A more private and secure one.

No, bitcoin is not a passing fad. It is certainly a learning process. It’s this process that tells us that there will always be improvements to the code, unless the human race checks out. And that someone or some group of them, will certainly find a better system than bitcoin.

And when I see articles like this, offered as high-brow Kool-Aid for the misinformed, I just gotta pipe in. Let people know that there is another not-so-bright-side to cryptocurrency. That you need to dig a bit, before you go riding the fast lane to success…like me…but not so fast.


Featured Image: Flickr

 

 

 

 

 

 

 

 

 

The Great Bitcoin Pump and Dump from China

If you’ve been wondering why bitcoin prices have climbed over the past months weeks…months, look no farther, it’s the Chinese — again. Okay. maybe India and a little Venezuela.

According to HolyTransaction, a premier cryptocurrency multi-wallet service, the Chinese connection exists. In fact, the service warned us in the past to watch out for bitcoin ‘shorts.’

I thought it might be a good idea to remind ourselves to watch  — again.


China, in fact, has $30 trillion in deposits – which concerns about devaluations will make very “flighty” while the market cap of bitcoin is under $8 billion. 

— HolyTransaction / May 31, 2016

Source: Bitcoin rise driven by Chinese domain | HolyTransaction


Are the Chinese attempting to rescue their wallets, due to capital controls imposed by their government? That is the suggestion here — that it is a great way to move money out of the country.

The “Great Firewall of China” is essentially useless if a Chinese citizen knows how to avoid it with the many options Bitcoin has to ‘send’ and ‘receive.’

Another theory is the old ‘supply and demand’ scenario. There are fewer Bitcoins mined in now, because of a programmed mining halving and this supply reduction might continue to trigger higher prices, if demand remains constant.

Or is it the Ethereum issue? The fact that this relative newcomer to the crypto scene, courted by banks and investors, has stirred interest in Bitcoin? Maybe.

But as HolyTransaction indicated, China is probably the culprit.

How else can one explain it? If the Chinese account for more that 90% of the world’s Bitcoin trade they can certainly influence global prices.


…a Chinese investor effect, but also raise the possibility that the effect won’t last.

— Jeff John Roberts / Fortune / May 31,2016

Source: 3 Reasons Bitcoin Is Booming Again – Fortune


And now the warnings sink in. When will the Chinese pull the plug?


The price of bitcoin in China has been roughly $50 or higher than in other countries. So why is China buying so much cryptocurrency, and why now?

–Jamie Redmond /news.bitcoin.com/May 31, 2016

Source: Bitcoin Price Rally: ‘Hot Money in China Has to Go Somewhere’


Pulling the plug might not be in the cards any time soon. But remember the warning. The Chinese like to gamble.

As the Chinese government continues to devalue the Yuan, investors are signing up at the exchanges to beat the devaluations. Will Beijing move to further restrict bitcoin trade?

Will the government step in to halt the bitcoin trade in that country entirely?

If so, watch for bitcoin a tail spin.

Now think about where the Chinese will next invest? Will it be in Monero? For its privacy?

Think about that for a moment. The Chinese have the mining power. Would it be all that difficult to move in? Run Monero like they run bitcoin? Is Monero really that resistant to ASIC Mining? Bot driven miners?

A recent Come to Jesus incident happened with Monero recently. One Mining Pool — dwarfpol.com — actually surged past 51%. At that point, Monero could have been theoretically rewritten or simply owned by one party. We have been assured by the anonymous developers and one who remains public, that all is well.

If not Monero, with its anonymous developers, who we do not know if we can trust, what cryptocurrency is next best? Litecoin has seen new action of late. But Monero is bugging me.

 


Featured Image by Daderot (Own work) [Public domain], via Wikimedia Commons

Will Coinbase Survive?

(Updated)

This seems to be the burning question…

Will Coinbase Inc. survive one of the most unprecedented moves by the Internal Revenue Service (IRS) in recent years — its overreaching and unreasonable attempt to search and seize millions of private financial records and kill bitcoin — our digital gold?

It’s nothing new. They’ve done it before. The IRS has gone after deep pockets. And they are doing it again.

Deep pocket in question: Coinbase. But not all that deep.

Coinbase – according to their website:

 

  • Founded in June of 2012
  • Digital currency wallet and platform
  • Merchants and consumers can transact with digital currencies
  • Currently offers bitcoin and ethereum
  • Based in San Francisco, California       

No doubt the IRS has been investigating cryptocurrency exchanges for some time. The Coinbase investigation is just another domino, in a long line of dominoes, from the United States to China, from Russia to Australia and beyond. The very public Coinbase investigation is meant to strike a very real financial fear into the hearts of the American cryptocurrency enthusiast.

According to the Coinbase website, they have about 5,000,000 users on their platform. These users have 11,000,000 electronic wallets, which may or may not actually contain bitcoin or ethereum cryptocurrencies. Add to that mix, 45,000 merchants utilizing their platform and thousands of software applications from developers.

Again, according to their website, over $5,000,000,000 in cryptocurrency has been exchanged on Coinbase. The number is high, but are we talking about fours years of exchanges?

Coinbase is also in over 30 countries worldwide. Which means that only portion of profits and losses were had by Americans. Which means that foreigners probably owe the IRS money for doing business with an American Company. Foreigners who will now likely ignore the IRS, but whose banks and financial houses will likely not.

Why? Just ask UBS Bank in Switzerland. No longer are Swiss banks the go to gurus for wealth management and privacy. The IRS went after those who failed to report their foreign bank accounts at UBS, cited them for filing false tax returns. The result? Millions of dollars in fines, federal probation and prison sentences.

And the list goes on. We’ve all heard of the Panama Papers, where another two trillion dollars sought a tax haven, but a data leak exposed the process.

But why did the IRS investigate such a small company? Coinbase Inc. and UBS are like the proverbial elephant and mouse. With over two trillion in assets, UBS had far deeper pockets. Look at the larger picture.

UBS took years to accumulate the wealth it managed. Bitcoin transactions or sent bitcoins in 24 hours, approaches about 1.5 million  — in bitcoin. In today’s dollars, it would take over two years, at that rate, to send a trillion dollars worth. Not even Panama Paper worthy.

What about the world’s biggest holder of bitcoin? It’s probably still the million bitcoin owned by Satoshi Nakamoto. Current dollar value? It fluctuates, but as of January 1, 2017 it approaches a cool billion dollars.

Eliminating the non-U.S. based cryptocurrency exchanges would certainly help plug the fund hole many banks are no doubt reporting. How many wealthy citizens are moving their money, not to foreign lands, not under the mattress, but on a ledger kept by millions of people the world over. Then going abroad to trade that cryptocurrency for local currency or other property? Maybe.

Another hint that things are not what thy seem? Constant dribbles of news about how companies like Circle are jettisoning bitcoin sales, but are also continuing to investigate the technology behind bitcoin. Whose on their side? Goldman Sachs Group Inc.

Given just these brief snippets of information, can we assume that the IRS will also apply the foreign bank rules when American bitcoin users choose to hold their bitcoin in online wallets abroad?

In the end, if Coinbase continues to deny the IRS access to essentially all user records, expect a raid on the main offices in sort order and frozen accounts, as a result. It would be advisable for one to remove any cryptocurrencies stored at Coinbase. It would also be advisable that Coinbase encrypt all user account information and hand the keys over to their customers. At that point, only banks would have information as to who sent money to Coinbase.

Alas, the hope that Coinbase would keep customer accounts private and not allow the IRS access, is a mere pipe dream. People would need to go to jail or flee the country and be chased by the Feds for the rest of their lives. Not worth the sacrifice, unless these people have the backbone of Thomas Jefferson and pledge their freedoms — and fortunes.

If anyone thinks this is no big deal, think again. One of the largest cryptocurrency exchanges on earth is about to go down — in the land of the free and the home of the brave.

Next on the agenda? Bitstamp? Kraken? Poloniex? Just wait.

(Image compliments of flickr.)