The Bitcoin “Bubble” May Pop But Rise Again

I know the news is in full panic mode and for partially good reason.  Not only has the market shrunk and fallen but it appears new investors are staying out.  The average investor in my opinion is still on the sidelines and they will be until things become more clear.

With that said I am HODLING and not panicking…….well except for ICOs based on Ethereum ERC20 Tokens like Finom, Tron, Bitclave, Bloom, all of who appear to have produced nothing so far.  In all fairness it takes time but my appetite for ICO and tokens is saturated.  I truly feel 99% are scams that will never produce anything and therefore the return will in the end be 0.  This is because those tokens are just an investment in what is often a bad idea or an idea that will never be executed or completed as advertised.   So for your tokens, I say it is time to panic and rightfully so.  That being said I am HODLING those too but wouldn’t hesitate to unload most of them should there be a good opportunity for return (unless I still believe in the project).

For cryptocurrencies that are usable and have real value I believe they will rise again just like the stock market regardless  of what happens.  There are a lot of remorseful people who sold their Bitcoins and Litecoins at very low levels when things weren’t looking up.  In all fairness in this new market it’s hard to be sure where things will end.

But I’m of the opinion that I will hold for years if necessary, the same discipline one should use for commodities in the stock market (unless an underlying valuation aspect has significantly or permanently changed).  From that perspective I think cryptocurrency is here, so there is demand, and it will continue to grow and be more popular.  The stock market has had far worse happen to it and recovered (however as a fan of Jim Rogers I do believe this next crash that Wall Street is due for may never recover or not for a long time).  Much like cryptocurrencies, we see the market on Wall Street can be artificially manipulated up or down.  I believe the same players are using these tactics in cryptocurrency, such as similar stock market scandals where the elite and wealthy trick people into selling short while they buy it all and sell high later on.

I am long on cryptocurrencies which involve and have a minimum bureaucracy that just get things done.  I’ve said it before but simple changes shouldn’t be debated or discussed, if a currency isn’t functioning properly then if the block size or time needs to be changed just do it!  Some things needn’t and shouldn’t be debated if they are necessary.  This is again where I disagree with hardforks and why they shouldn’t be possible.  If there is really an ideological split then the team who disagrees should start their own currency from scratch.

In reality though we just need teams around that know business, IT and security rather than expert marketers and sales people.  I think the industry will naturally head in that direction inevitably as a result of both regulation and genuine issues with the way things are done now.

For one, as a business it is still hard to integrate cryptocurrency and insecure (more on that in another article) but the revolution will come.  If the community does it, then the majority will benefit but if a government, bank or other large corporate entity does it, it will not benefit us.  So it’s time to check ourselves, pack up, roll up our sleeves and get to work!

What the FUD (Fear Uncertainty and Doubt)

There is no doubt 2018 has been an incredibly tumultuous start for cryptocurrency.  But I’ll say it again, there are still huge gains for the majority of people unless they bought at the end of 2017.  There are still valid reasons to be both bearish and bullish, depending on which segment of cryptocurrency you are talking about.

I think first we should think what is really driving down the pricing?  People were buying in like crazy and prices were going sky high for both Bitcoin and Altcoins.  I’ve always had reservations about particular currencies and ICOs but the majority did not.

My belief is that there is a concerted world-wide effort by government and finance moguls to dethrone cryptocurrency.  Governments hate it because it threatens the entire central banking system, and bankers hate it for the same reason.  Yes there are some issues with ICOs but there are also stock market scams to this very day.  Fiat is also used illegally and counterfeited all the time and it never got banned.

So with that, I propose that statements from governments and banks are akin to all out war on cryptocurrency.  In 2018 we are seeing that plan move into action as they panicked as they saw the market cap grow exponentially in 2017.

However, much like Gold or Silver, it can only be kept down for so long.  You can push them down under the water but they come floating and rushing back to the top.  I think that is what will happen with cryptocurrency in the near-time.

Now don’t get me wrong, there are real issues and risks and I’ve talked about those endlessly.  The winners will be the ones who embrace change and understand the basics of business and IT security have been breached with most cryptocurrencies and ICOs.  The ones who solve these problems and the ones who invest in the solutions will be the long-term winners.  I dare say any project and investor who doesn’t take part in the solution may be on the dot-bomb side (an era which I feel many have never known or forgotten).

There is a lot of FUD but is artificially manipulated and perpetuated in the media and also directly with attacks on the price through large whale investors/hedgefund managers selling and controlling the price of cryptocurrency.

I am bullish on crypto still because there are a lot of astute and average investors who have not jumped in.  Eventually they will jump in, and the moment they do is when cryptocurrency will enter a stratospheric increase in market cap.  I also feel the ones who wait will be more diligent and disciplined investors (the kind who didn’t panic during 2008).

Time will tell but my call is for the bulls!

Cryptocurrency Groups Sue Google, Facebook, Twitter and Yandex For Advertising Ban

This is very interesting and about high time.  There is hardly any legal basis to single out the banning of cryptocurrency and ICOs when so many other questionable things are promoted on Google, Facebook and Twitter.  They could have probably gotten away with banning a few confirmed scam coins or ICOs but they’d also have to demonstrate similar action in other industries that they have never done with this.

The allegation of collusion is important and I am very curious how this plays out.  My suspicion is that these actions are voluntary.  The CEOs of these companies were essentially convinced and paid out to it by stakeholders of fiat and traditional securities.  If not that, here would be an interesting defense if they could make such a defense legally in this scenario I propose.  Of course all 3 of the major companies are based in the US and are subject to the laws of the US including being obliged to co-operate by providing the NSA backdoors for spying.  What if under the pretext of national security these companies were forced to ban cryptocurrency advertising?  It may sound far fetched but the US government even wanted to put tariffs on Canada during negotiations for NAFTA under the pre-text of National Security.

It is hard to say for sure what the truth is but I’ll be following these lawsuits as some of the truth may come out in the reply to the claim, discovery and other filings.  One thing I am sure of is that neither company came up with the idea of their own volition.  It would be another thing to prove which external force or entity is really responsible for this.  Financially it makes little sense since they all stood to profit more from the increased advertising revenue so it is very plausible that some other stakeholders made an offer they couldn’t refuse whether in the form of enticement or being obliged by law (even if falsely under the pre-text of national security).

 

300Billion in Market Cap Lost in Cryptocurrency in 2018

Now before we either all panic of HODL our funds I think it’s time to take a step back.  I don’t think cryptocurrency is going anywhere regardless of the bad news and government threats.

But with that said let’s take an even further step back and ask what has worked, what hasn’t worked and why has this happened to the market?

There are a lot of factors but I’ll speak about the ones that I think are most significant.

Bad News

The news is key here because a lot of family and friends are worried that all of us crypto holders have lost all of our money.  Even with Bitcoin around the $7-$10K mark, unless you bought in at the end of last year you’re still probably doing very well.  In general the market for most major currencies is up well over what it was in the first 3 quarters of 2017.  However, there is no denying that the charts look a little bearish but I think there will be a breakout in the coming months.

Government/Finance Manipulation

Much like the news, government and big financiers are having a big impact.  We know hedgefund investors have poured in billions.  Whether by intention or not a lot of them could be pulling money out of certain currencies to create an artificial crash and panic selling.

Too Many ICO Scams

I used to feel the word scam was used too liberally in the digital age of many honest IT companies.   However, in terms of ICO even the Ethereum Founder, Vitaly Buterik says 90% of tokens on his network are scams.  This is a very rational reason that will have a huge chill on investment. I would say blame a good portion of these problems on Ethereum honestly.  The unregulated and wild wild west of ICOs have brought government wrath and regulators banging on the door of all crypto stakeholders.

Lack of Common Sense and Proper Business and IT Practices

It is very clear to me in looking at how a lot of teams and ICOs operate that a good portion of people holding power in the cryptoworld have no clue.  If they did a lot of common sense things would be happening and they simply aren’t.

Such as Coinbase’s decision to open itself and its investors for huge losses and liability by selling Ethereum ERC20 Tokens.

The very idea of “free for all” in the cryptoworld reminds of the 90’s of the wild wild west of the World Wide Web and the lessons I thought we all learned.  Admittedly, and clearly, a lot of people have forgotten or were not old enough to be around for that.

I could say more but it’s so clear that essential business and IT practices have been thrown to the wind.  This is a huge impact on a lot of the issues the cryptoworld has been facing.

The Coming

I am still very optimistic about the long-term crypto outcome, but there are a lot of self-created and external factors at this moment.  I do think it is temporary but a dot bomb in crypto will certainly be repeated and appear.  The currencies and teams who didn’t learn from the 90’s will likely be the first ones swept away, leaving way for the next generation of cryptocurrency that simply just works for people and business.

Bitmain Reportedly Creates an Ethereum ETHash and Cryptonight Monero ASIC Miner

Some analysts on Wallstreet are claiming this and I would say it is likely credible seeing as how a Cryptonote Miner is being sold on their site now.

1. Hashing algorithm: CryptoNight

Power consumption: 550W

Hashrate: 220KH/s

These are the most conservative estimates. We expect the miners to deliver higher performance and efficiency when they are ready to ship.

2. There are financial risks associated with mining cryptocurrencies. These risks can be related to changes in exchange rate of the cryptocurrency or to changes in the algorithm that is used to mine the cryptocurrency. Please deliberate well before making a purchase because we will not accept any requests for refund for orders of this batch.

3. One major cryptocurrency which is using CryptoNight hash function is about to change their PoW algothrim, and according to their public statement, it is purposely to brick ASIC mining rigs including X3. When you buying it, you are betting that they are wrong

This is one instance where I am happy with Bitmain (unlike the scam they pull where the miner you buy will mine for them until you change the config!  They could at least default it to an account on Hashnet that gives you credit).  But in all fairness for the X3 Cryptonight miner they have given fair warning that there are two significant risks and issues with using their ASIC.

Cryptonight apparently has threatened to do something that would cause these ASICs to brick.  Even if they won’t be bricked Cryptonight has pledged to stop the use of these ASICs which is a huge threat to owning these units from Bitmain.

This could get interesting if they do release an Ethereum ASIC but Ethereum itself has stated they will eventually move to PoS (Proof of State) which will essentially stop all mining.

If the above scenarios play out then I believe most people would point their GPUs at ZCash and Monero instead and those currencies would rise in value.

We’re in very curious and serious times for cryptocurrencies between uncertainty over regulation, government, mining and the future value.  Is Bitmain leading to its doom or leading the market to more growth?

Time will tell and it is really hard to call which way it heads.

Coinbase To Support Ethereum ERC20 Tokens

Coinbase just announced it will be supporting the trade of ERC20 tokens.  A lot of times in the crypto world I look and shake my head and I just can’t stop with this one.  I could see if Coinbase wanted to support actual currencies like Ripple, Lumens, Monero etc… those are reasonably safe currencies to invest in.

ICOs which are essentially crowdfunding/pseudo-stocks (depending on who you ask) are extremely risk and I would say about 90% of those are fraudulent in that they collect your coins and never intended to deliver anything.  I think we can all agree at any rate that ICOs are extremely risky and HODLING may be as useful with those tokens as holding RIM stock.

Coinbase has a huge client base and is one of the easiest ways for people to get into cryptocurrency.  However, they risk bringing regulatory wrath and also dampening new investors from coming in when they get burnt on these ICO scams.

It’s recently come to my attention that some people weren’t aware that Ethereum Smart Contracts or ERC20 tokens are not vetted, supported or approved by the Ethereum team in any way.  This is  huge issue of course and why I am so against smart contracts at the moment.  Let’s get cryptocurrency as an infrastructure in terms of B2B,B2C,C2C etc… working fast, efficiently, securely and easily before biting off more than we can chew!

I am also at a loss as to how the Coinbase legal team approved this one?  Did they run it by any counsel at all?  I think if and when people lose massive amounts that Coinbase could be held liable regardless of waivers and disclaimers for losses in some of the huge ICO busts and scams to come.  Especially when there are so many other avenues and stable currencies they could have directed their customers to.

I am fearful for the investors, for Coinbase and the cryptocurrency market as a whole but should these warnings go unheeded and “things go terribly wrong” then it would be a good, fresh start for the industry.  Investors also need to do their diligence and exercise good understanding and judgement before making investment decisions.

It will be interesting to see where this leads but I would never recommend any friend or family member to invest in any Ethereum Based Token ICO and to stick with solid and real cryptocurrencies that solve the problems of today.

Binance Moves HQ to a Welcoming Country of Malta

Recently, a famous cryptocurrency exchange, Binance got into issues in Japan although it is based in Hong Kong.  Malta is a Southern European island country which is essentially located between Italy and Tunisia. It moved its HQ to Malta to an apparently very welcoming Prime Minister who said the following on Twitter:

. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies

Although this is very encouraging it remains to be seen how much they can weather storm from external pressures.  Malta is not a strong or powerful country so if a foreign country or powerful bankers threatened Malta to comply with their wishes against cryptocurrency could they really refuse?

The announcement from Malta is good but it will take a stable and powerful country to do the same for cryptocurrency people and business to migrate there.  It may provide temporary protection or respite but what is truly needed is for a place like Hong Kong or Singapore to step up and do something similar.

At this point I think Venezuela may be the leader in this regard but the major risk with Venezuela is the political, economic and social stability.  If they can resolve those issues Venezuela could be like the Hong Kong or Singapore of Latin America in no time.

IRS / US Taxman Says Cryptocurrency Income IS Taxable

Like the old saying goes one thing is certain “taxes and death”.  The IRS definitely hasn’t disappointed even cryptocurrency owners by clearly stating cryptocurrency is taxable.

Hopefully the rules will be fair.  I feel it should only be taxable like any stock, so when there is a capital gain through resale.

The same rules of the IRS apply for tax evasion if you’re a US citizen and don’t report your crypto earnings.  One other interesting thing is how the IRS has got their hands on Coinbase data for some users.  This will certainly be used to go after users who’ve made profits.

Why Deleting Facebook Is Futile Unless…..

I’ve had this conversion with a lot of people over the years and what I’ve found is that the majority of people are complacent about privacy and security.  In a way it is good that some have woken up to what Facebook is and has been doing but this idea of some floated around that “I will trust Facebook until it gave me reason not to”.  This is a completely flawed idea in my opinion.  Facebook was never trustworthy and its TOS always gave it a right to violate your privacy, harvest your data for both government and marketing purposes etc… In fact Google, Gmail, Hotmail, Telegram, Whatsapp and the list goes on are free for a reason.  One, they make money by spying on you and they also provide a great backdoor to the NSA to spy on you (hopefully everyone now understand the PRISM spying network).

There were times where some would debate about the length and depth of spying by major free services but this is no longer in debate.  If you are using these freebie services and just delete Facebook alone you haven’t done enough.

Here are some steps to secure yourself and your privacy:

Delete Everything!

Seriously stop using these free chat and e-mail services and tell your friends and family that you won’t communicate via those mediums.

Secure Your E-mail

Use your very own, owned e-mail server with encryption including GnuPG to encrypt e-mails in both transit and storage.  There are providers who can get you a VPS or full Dedicated Server for this purpose.  You will probably find that your e-mail stops going missing, is fast and more reliable to boot!

Stop Using US Based Massive Cloud Servers

This could be in the form of an Amazon, Microsoft, Alibaba VPS instance but you can expect that those services will not be keeping your data private and most likely have been obliged to allow backdoor access to your server and data.

Another type of user would again be those who “store data in the Microsoft, Google or Apple Cloud”.  Stop using those services if you value your privacy.

Secure Your Chat

Everyone likes instant chat but did you ever wonder why all the traditional chat services like ICQ and MSN Messenger shutdown?  My belief is that being forced to chat on your phone makes it easier to both identify and track you but also to spy on you.  Once again top offenders are Telegram, Whatsapp and any similar ones.

To secure your chat you should run your own encrypted chat server.

These are just a few common sense things you can do to make it much more difficult to have your rights and privacy violated.  Personal and intimate moments shouldn’t be uploaded to the Cloud for corporate and government agencies to peruse!]

In general try to think in a security minded way perhaps as you would your house.  Would you feel secure at home if you knew your living quarters was shared with multiple people or that it was being spied on constantly.   Think about steps you would take to protect your house or property from intruders and spies.  Your digital house works the same way, so be sure to keep the keys and access in your control and not that of a third party which can’t be trusted.

Donald Trump USA Bans Nicolas Maduro’s Petro Coin

The USA’s President Trump has officially banned the Petro Coin.  This is actually encouraging and not unexpected.  To me it speaks volumes that it can work but is working, otherwise there would be no point in banning it.  Apparently it will also be possible to exchange Petro for the Russian Ruble.  As I suspected I feel strongly that the initial funding largely consisted of China, Russia and Iran and that more support will be ongoing once the coin is launched.

As an investor I am a bit frustrated with this ICO (as I am with most these days) because it took way too long to find information about it and individual investors have been locked out.  They really do risk alienating the audience they were targeting as I am getting frustrated and losing interest fast.  However, the prospects for this first state backed coin remain high and will either boom or bust I predict.  And there will probably be a lot more booming considering what is at stake and the support that Venezuela has.

If the US thought the Petro Coin would be worthless and had no hope of succeeding it’s unlikely they would ban it.  Regardless of what we may personally feel, this is a strategic tactic by the US to stop the first country to try to evade sanctions placed on it.  It will be another precedent if Petro succeeds and other sanctioned countries can freely trade in this similar way or ecosystem created by Venezuela.

Ironically Venezuela is helping to keep the cryptocurrency dream alive which is becoming your own bank and that no one has the right to freeze, take or prevent the spending of your money.