Bitcoin Down 53%? Time to panic or time to be happy?

We’ve got to put this all into perspective when people come panicking and asking if you’ve sold all of your Bitcoin.  Just hold, the chart isn’t a lot different than a lot of stocks or commodities.  Let’s speak in terms of the chart since May of 2016.

 

BitcoinMay-2016-toApril-01-2018

Let’s first look back to May 2016 where it was worth about $423 USD.  Is today’s $6974.84 USD so bad?

How about April 20, 2017 whereit was worth $1216 is that so bad compared to today?

The time that makes people nervous is when Bitcoin went on a bullrun around November 1st, 2017 and was worth around $6700 USD to an all time high of around $19500 on December 16th.  I would expect like with any stock that there will be a digestion period or a pullback.

Am I worried yet?  No, unless Bitcoin drops below a year ago’s $1000 why would anyone worry?

Bitcoin on top of that now owns about 50% of the market with this drop so it has shown resiliency and leadership.

It’s not time to panic, it is time to hold steady and wait for the next bull run.  At the end of the day government policy can’t stop Bitcoin.  There will always be a country where it is legal and exchangeable.  If a blanket ban happens people will start trading directly with Bitcoin for other goods.  There’s no way people who have invested thousands of dollars in hardware and power will be throwing these coins away or walking away from them.

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!

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.

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.

We Need A Better Coin Now!

Cryptocurrency today as of the time of this writing is in a bit of a flux and identity crisis.  Part of this is due to a well directed campaign in the news via government and banking entities.  However, I will always give credit where it is due and many of the flaws that have been pointed out by these entities are completely true.  In fact, from a business, security and IT standpoint I find that most cryptocurrencies are almost impossible to use.  There are coins that individually address “some of the issues” but I have never seen a coin or team that “just seems to get it”.

Whether it’s how an ICO is run, basic functionality, security, privacy, getting out information it seems apparent to me that the vast majority of teams and coins do not sufficient combined IT and Business Knowledge to make things work.

There are just so many issues with a lot of the top coins that could kill them, let me name a few in no particular order.

Speed – 99% of cryptocurrencies are extremely slow taking minutes, hours or several days to complete a transaction!

Expensive – A lot of times you can spend a small fortune just sending a small amount of coin to someone (you could spend $100 to send $5 of coins with some Ethereum tokens for example)!

Security – Most coins are by default completely insecure.  Any coin that has a public ledger is insecure and has 0 privacy.  This allows for replay attacks and all kinds of nasty things.  It also means your activities are easily tracked and traced.  Imagine if your competitors can see exactly who is paying and who you are paying including the full amounts?  It would put your business at a huge disadvantage.  Having “public, permissionless blockchain” such as Bitcoin, Ethereum, Litecoin etc..  will mean the coins can never be secure when the whole public is involved.

Hardforks – Most coins are easily counterfeited, hard or softforked where basically anyone can copy an entire coin and just rename it and call it their own, while confusing and devaluing the original coin holders.  This should never be able to happen just for the reason of sanity, continuity and integrity.  There have already been scams like the BTG Scam and replay attacks.

PoW/Mining – It is absolutely crazy that mining still exists, as cool as it originally was, mining is now a hindrance in many ways to the cryptocurrency community.  Not only is it wasteful in terms of energy resources, it is unsustainable in both environmental, monetary and functional terms.  Returns are so slow with most major coins that it is almost not worth it unless your power is cheap or free.

To top it off why on earth should we let transactions be controlled by “miners finding the next block”.  It doesn’t secure the network anymore and that is because coins like Bitcoin were created before ASICs and assumed “no one would party would hold more than 10% hashing power”.  Of course single pools in China have way more than 10% power and so do some mining farms possibly.  This means that pools and large farms could work together to defraud people by sending false transactions and confirming it among themselves.  By the time the scam is realized the parties who initiated the scam would already have escaped with the money.

Mining also leads to centralization, the very thing that cryptocurrency was meant to avoid.  This inevitable because as difficulty increases, only large corporate or government players with deep pockets can continue.

The same applies with running full nodes, large organizations will be the one running them.

Usability – Most coins are unusable because they are slow and insecure but to make it worse there’s more.  The current coins are not easily integrated in a secure way.  You shouldn’t have to run a full Litecoin, Bitcoin or Ethereum node on a huge mega server with tons of RAM and HDD just to create receiving addresses and receive payments.  This not only inefficient, it is insecure because the same computer that generates the receiving addresses is usually the one that holds the wallet/funds.

To top it off you can send to a wrong or non-existent address and lose your money forever with virtually all currencies.  Blockchain is just a big database, couldn’t some query be done to make sure the address actually exists?!  On top of that there is no feedback, send by e-mail or notifications by e-mail you always need to keep your wallet open to notice.  It would be much easier if these different functions are kept separate.  However this is a problem too because most cryptocurrencies are admittedly not secure if you don’t sync the entire chain.  And that’s another issue, syncing is a huge issue with coins like Ethereum it is extremely slow and takes a ridiculous amount of CPU cycles.  Imagine paying someone from Craigslist in person  and one of you says “hold on mate sorry I have to wait for my wallet to sync for hours or days!”.

 

Pablo Escobar’s Brother Trafficks an ICO and new Bitcoin Fork!

Pablo Esobar’s brother makes some very bold claims surrounding his new cryptocurrency launch.

https://www.ccn.com/pablo-escobar-brother-diet-bitcoin/

One of those claims is that Bitcoin was created by the CIA, however this may be contradicted by the fact he also claims he met a Satoshi Nakamoto of Japan.  As proof he shows a Passport bearing the same name:

satoshi-passport

Of course it is possible someone from Japan could be working for the CIA, most people don’t believe a single person created Bitcoin.  So I do think there is credence to believing a large organization such as the CIA or other resourceful and skilled group created Bitcoin (so I call this one plausible).

Some critics have said his website for his coin Diet Bitcoin was nearly copied from the original bitcoin.org and that so are the specs.  I’m going to be fair in that I don’t see how Diet Bitcoin is any worse than other Bitcoin forks such as Bitcoin Gold.  As many know I am against hardforks as I see them as counterfeiting, being confusing and just simply wrong but it also illustrates weaknesses in any currency which can be copied in such a manner (where I believe forks should be impossible to keep the network secure and ensure integrity).

 

 

Edward Snowden Says Bitcoin’s Downfall Is Public Ledger

I couldn’t have said it better myself although I have said as much about all cryptocurrencies which have a public ledger.   Edward Snowden made the comment at the Blockstack event in Berlin, Germany.   They are completely insecure and unsuitable for personal or business use in the long-term due to a lack of privacy.   There are other issues that Edward touched on such as extremely slow transaction times and many more I’ve talked about in other posts.

Snowden also predicted that a coin which fixes these various issues could be the one to replace Bitcoin.  While I fully agree privacy and security in Bitcoin and most other coins are an issue, aside from that most currencies are slow, inefficient, difficult to use and simply don’t work properly to send or receive payments.  This will all eventually be fixed but so far what I find is that some currencies fix one problem while ignoring the rest.

Ledger Nano S Bitcoin Altcoin Hardware Wallet Hacked By Teenager

I have warned for awhile about these hardware wallets.  I’ve never trusted them as you truly don’t know what is in the hardware or firmware and if it could be extremely vulnerable.  As bad as it sounds a traditional, secure PC is still the safer way to handle your cryptocurrency.

A teenager stumbled upon a vulnerability by noting the CPU that controls the private keys cannot differentiate between authentic or user made firmware.  This CPU is used to transmit data including keys.  Without much effort he was able to compromise this supposedly secure hardware wallet.

On top of that it looks like Ledger tried to downplay the issue and brush off the teenager who warned them of the vulnerability.  In all fairness physical is required but that’s not good, you shouldn’t worry that if your hardware wallet is found that someone could easily extract your private keys and coins from it!

They’ve also recently admitted another vulnerability exists where attackers could trick users to send out their funds to hackers.

For this reason I still don’t recommend hardware wallets, you are much safer on a secure computer.

The NSA is spying on cryptocurrency including Bitcoin – Edward Snowden

Unsurprisingly Edward Snowden recently revealed to the world that the NSA is tracking cryptocurrency users including Bitcoin.  What makes it worse, but also not surprising is that they tricked users to install security software they wrote that actually feeds all of their private data, cryptokeys, back to the NSA directly.  It is soon going to be an absolutely necessity to increase your own security and to start using better, more secure coins that cannot be so easily tracked.  This is the equivalent of the government following you around and poking around your wallet and watching each transaction you do even with cash.  There’s no privacy anymore and ironically cryptocurrency is part of this reason, or shall we say at least, the majority of insecure, public, permissionless blockchain based currencies.    This could send the value of currencies like XMR/Monero skyrocketing as a Bitcoin alternative.  While Monero is in my opinion better in almost everyway to Bitcoin, it is still not the perfect coin as it does have some issues including the use of PoW and of course the whole public, permissionless issue, speed issues etc..

Ripple Performance Beats Bitcoin and Ethereum!

Despite so much turbulence in the markets Ripple has returned 4.8% vs Bitcoin’s 2.64% in the last 24 hours or Ethereum’s -.75%.  Ripple is proving itself to be able to withstand strong headwinds after nearly hitting the $5 mark last year.  Of course $.70 is a far cry from its all time high but considering the market as of lately this is impressive.  I think despite the concerns over XRP’s future in terms of it being associated with large and central banking clients, there is value in it being a hedge.  This is one of the reasons I invested in Ripple as I feel with increasing government scrutiny, regulation, threats, bad news etc.. that this would all cause Ripple to return much better in the long-term.  However as I’ve said in past posts, there appears to be the very real fear and possibility that Ripple may just dump XRP if the banks tell or pay them to.  In fact I even e-mailed them with detailed concerns from another blog and they had no comment other than asking me to check their news, blog and website so at this point I feel it is very plausible.  Ripple’s affiliation with banks and government will either help it right to the top or it could weight down Ripple.  Besides that I feel Ripple is a fairly good currency but does suffer from a few other flaws that I won’t get into here.

 

CoinmarketCap-2018-03-20