The Future Of Blockchain Currencies like Bitcoin, Ethereum and Litecoin belong to governments, banks and large corporate players.

One aspect of cryptocurrencies that some users aren’t aware of is that decentralized blockchain based currencies are in their own ways their own worst enemy.  The blockchain is the problem, as currencies like Bitcoin and Ethereum keep getting slower due to their limited transactions per second, and the blockchain gets large this has started the end game.   The end game is clearly spelled out in Ethereum’s current white paper and it’s that essentially the blockchain will get so large no small players (individuals) will be able to participate.   This is because all transactions are stored in the blockchain ledger, and the more transactions the larger it gets.  Eventually the blockchains will grow to several terabytes and require more memory.  This will mean that only big corporate, government and banking players will have the resources to control these so-called decentralized currencies.  It is really inevitable unless a mechanism is adopted for off-loading this storage to trusted third parties.

I may not be a huge Microsoft fan but I think Ankur Patel has stated what many in the cryptocurrency already understand to be correct.

Patel said that blockchains that increase network capacity through on-chain scaling, which involves raising the blocksize, will eventually experience degraded centralization and will not be able to function on a “world-scale.”

https://www.ccn.com/public-blockchain-chain-scaling-degrades-decentralization-microsoft-researcher/

This is something that Stellar Lumens and Ripple essentially do.  They are a centralized blockchain that are generally faster than the competitors but are centralized and literally supported by big corporate players and banks.  These have pros and cons.  As an investment they are an excellent hedge against threatened regulations that people fear for the decentralized currencies and they also provide real value and work very well.

Is this all bad?  It’s hard to say because public blockchains can be attacked literally with DDOS/SPAM/bad blocks and this has happened with all the major currencies.  On top of that you are still giving up trust to unknown people and the value and stability of these currencies are at risk for other reasons such as hardfork cash grabs like Bitcoin Cash and the Bitcoin Gold Group.

The future is bright for crypto but these uncertainties need to be accounted for and sorted out.  It may be that the future is going to involve a combination of foundations and semi-decentralized currencies.

Mercatox Cryptocurrency Exchange Review

I found Mercatox because they were one of the few that had some coins I wanted to buy but have since given up out of both frustration and lack of trust.  Unfortunately in traditional form these smaller exchanges are usually broken or worse, some are often unreliable or outright scams.

The first notice I saw was a warning of “not to deposit to old BTC addresses due to security issues”.  It is good to warn your users but why couldn’t they secure their own wallet?

So why not send some ETH?  Oops it’s not working.

Mercatox-ETH-Deposit-Not-Available

Dogecoin is “Not Available”

LTC is “Under Maintenance”.

Mercatox-Broken

So basically you have an exchange that isn’t working from the start and can’t accept deposits.

That’s when I clicked the “Logout” button as fast as I could, never to return to Mercatox.  I’d rather not deal with the myriad of other issues that are the symptom of problems at the front end.  This is also because in the cryptoworld 9/10 companies will never help you no matter what (eg. missing coins, deposits, withdrawals) good luck unless you sue them (if you can find them since most are anonymous without real contact information or ownership).

 

 

Bitcoin Gold Scam Heist – Who Should Be Held Responsible?

For those who don’t know Bitcoin Gold is yet another fork from Bitcoin.  As many users warned even before this, with BCH (Bitcoin Cash) to be careful of these coins because they have NO official wallet and rely on random third party wallets.  Particular there were warnings for BCH that if you try claiming your free BCH that a bad wallet creator could take your wallet.dat to steal your actual BTC (Bitcoins) so prudent users moved money from their original wallet before claiming.

With Bitcoin Gold the issue was different, there was no wallet (I have no idea how so many projects don’t have their own guaranteed, safe original wallets) so people were understandably looking to get into BTG with a wallet.  One such wallet was “mybtgwallet.com” who the BTG team recommended on their website and Twitter.

JohnDassbtg

This wallet was apparently created by someone they claimed to work with and a developer named “John Dass”, essentially the wallet asked users to upload keys and passwords for their other currencies and ultimately many people lost a lot of money totaling in the millions of various coins including Bitcoin and Ethereum.  The BTG team seems to dispute this version of events and claim John Dass was not a developer but then why and how can some random person declare themselves a developer and scam users so easily?  This is a big part of the basis of the lawsuit against the BTG team.

Making matters worse, their official Twitter account advised the mybtgwallet was safe to use.  Deleted Tweet sourced from here:

BitcoinGoldRecommends-mybtgwallet-scam-walletbtg2

Lots of users on Reddit began calling the BTG team out and some have apparently filed a lawsuit.

WARNING: Bitcoin Gold’s official website linked to a scam wallet that stole user funds, including my own, for weeks. from BitcoinMarkets

I don’t see that BTG has been up front about the issue.  It’s been reported that the BTG team did their best to silence news of this and threatened the victims that they wouldn’t be compensated if they made their experience public.  If that is true it really speaks volumes about the project, team, trustworthiness and integrity of the coin.

If the Reddit community and experiences are true as posted online then I would say BTG is liable for the losses for many reasons with aggravating factors being that they did little to vet, warn or stop this scam from happening and have appeared to have not helped the victims.

 

Screenshot-CRITICAL WARNING - Bitcoin Gold - Mozilla Firefox

What are my personal thoughts and opinion?

Looking at their team profile looks has little to no information.  Most projects at least have a bio and more info about their background.

Their lead developer is named “h4x3rotab” with no picture or info at all so I’m very skeptical.

Screenshot-Team - Bitcoin Gold - Mozilla Firefox

I’ve reached out to the BTG team and will post any response if any.

2018 Year of the Dogecoin Prediction as it crosses the 1 cent mark!

I’ve held Dogecoin for some time and never really considered it the “internet meme joke based currency” that some consider it and recently bought more as  I saw it approaching the 1 cent mark.  Those days are gone with a Christmas Present of Dogecoin crossing the 1 cent mark!  In fact it is been surging lately despite naysayers predicting its demise for various reasons.  One huge thing Dogecoin has always had is a loyal and large community who uses the currency.

dogecoin-2017-2018-47percent-surge

Now that Litecoin has hit the $300 USD territory and many other altcoins are very expensive clearly others have seen the value and potential in Dogecoin.   In fact I believe it is undervalued and in the past 7 days Doge has nearly doubled to reach the 1 cent mark and market cap of 1.2 billion!  It’s a huge milestone and for those who remember way long ago, there was a point where Doge was equivalent in value to Bitcoin!

I believe 2018 is Doge’s time to shine and it is definitely going to head into Litecoin territory (possibly the tens of dollar range in 2o18).  Essentially the Dogecoin client looks the same as Bitcoin’s and Litecoin’s.  In terms of technology though Dogecoin is more like a derivative or little cousin of Litecoin in the sense they both use Scrypt technology.

This is a good thing because I’ve never had delays or issues with sending or receiving Litecoin or Dogecoin, whereas Bitcoin can be slow and Ethereum is a nightmare to use (it is the worst wallet/client/network I have ever used and I absolutely dread Ethereum).

I think amazing things are going to go down for Dogecoin holders, likely not as big as long-time Bitcoin holders but I think in the coming years, Dogecoin users will be handsomely rewarded as the value skyrockets.

Another reason Dogecoin is rising is because of research, awareness and it is also a plain good buy compared to a lot of other much more expensive altcoins I firmly believe Dogecoin is largely undervalued.  Dogecoin is a long-time crypto whose stability has been tested and proven for years.

I’m bullish on Dogecoin so long as the developers keep working on and marketing this currency and if they cap the supply.  I don’t think it will take much for Dogecoin to see meteoric rise so long as those conditions are met.

 

 

Bitcoin, Ethereum, and Altcoin Crash – What You Need To Know

So essentially overnight Bitcoin lost 40% but at this point is still at this point at nearly $15000 and I believe will recover the $20K mark before the New Year (probably).  Some people have asked me what “FUD” is and blame it for the drop which stands for Fear, Uncertainty and Doubt.  I’m not buying that.  I also want to give a shoutout to Max Kessler who called a lot of things right about Bitcoin and predicted a sharp correction around the $20K mark but insists Bitcoin will keep running much higher.

If you look at the charts for the top 100 cryptocurrencies you will see an almost simultaneous drop in all of them.  Now if this just happened in the top 10 or a handful I would believe it is people taking profits randomly (nothing organized or not VERY large sellers).

Could Charlie Lee (creator or Litecoin/LTC) have triggered this? Yes I believe so and I don’t understand his reasoning for selling all of his position.  It’s no conflict to own your own coin and try to make it succeed.  To many acute investors they would have viewed this like a company about to bankrupt and the executives dump all of their stocks.  I certainly don’t think this was Charlie’s intention or concern at all though.

Look at the chart of the top 10 or even top 100 and they look eerily similar.  Massive selloffs with similar percentage losses of up to 30%.  The only good news or winner here is that Ripple (XRP) hardly lost anything and recovered faster than the others.

So am I worried about crypto or that there is a bubble? Yes and no, I think it has a number of years to run before the risk of a formed bubble bursting happens (and it will be massive bleeding when it does…).  But what triggered this current drop of all currencies simultaneously?

My theory is that billions of dollars of hedgefund money has come in, and in the last few weeks the currencies had significant appreciation and like some stock traders, these managers took massive profits which will look very great to the portfolio and their clients.

Now this is where it gets scary because if a small amount of people precipitated this event then it becomes easy for a small group of people to control, manipulate and play the market.

I’m not shaken from what happened, nor do I believe it was the “FUD”, I’m still long on crypto including Bitcoin but as always proceed with caution as we are heading into completely uncharted territories with massive volatility being the norm for now.  I will believe more in the FUD as Bitcoin gets higher though because those who have bought in at such high levels have a lot more to risk and worry about.

Bitcoin – I Don’t “Get It”

This may sound strange coming from a CEO who owns and uses Bitcoin and other cryptocurrency through multiple businesses that accept Bitcoin each day.   But I still really don’t understand Bitcoin on a practical level, the technical part is understandable but for how long will the current model of currencies like Bitcoin and Litecoin work?  Do not get me wrong, I am long on crypto still but what that means in the coming years and decades is probably going to be vastly different than the current model of today.

What Is A Confirmation And Why Does It Take So Long?

What I’m referring to is when you send or receive currency there are varying opinions of what it means to actually “confirm” you have it.  But even before that people who have sent and received cryptocurrency know it is actually quite slow.  It can easily take a number of minutes and even after that point it is recommended you wait for a certain amount of confirmations.

It’s quite simple, these crypto networks with multiple nodes have to talk to each other, this takes time for them to all be in sync or agreeance with the blockchain.  Once that happens you get your first confirmation, however this can be a number of minutes and still doesn’t absolutely guarantee you have the money in your wallet.

The current system is nearly impossible to use as a daily transaction/banking experience.

I’m used to using cash, debit, credit or even services like PayPal.  It is all fairly instant (although sometimes it can take several seconds for debit or credit) but once the payment is approved and the merchant is notified instantly, they knew they have their money.  Imagine waiting for even a single confirmation for cryptocurrency while in line at a supermarket?

Why does the problem exist?

It’s quite simple, ironically it’s the one huge negative side effect of distributed, decentralized cryptocurrencies.   There are other drawbacks too such as what happens to banks if they are DOS’d but this hasn’t been a huge factor so far in crypto’s history.

What other risks exist?

My biggest fear is that in the future a powerful organization or entity may eventually be able to reverse engineer or find another way to attack the blockchain and algorithm of some cryptocurrencies.  This would essentially spell disaster, chaos and the end of that currency.  It would be the equivalent of the destruction or infiltration of a fiat currency’s central banking and distribution system.

One other issue with the blockchain

Everyone knows the safest way to hold crypto is with your own wallet because exchanges are routinely hacked and coins are stolen, it is more risky to keep your coins with a third party wallet (essentially the equivalent of an online crypto bank).  The problem lays with the issue at this moment that those deposits are not insured (although I believe Coinbase and a few others may have some insurance).  This may change in the future and exchanges and currencies that are insured will definitely rise above the rest.

What is the solution?

This may draw the ire of a lot of hardcore crypto users but there has got to be some sort of central authority, body or “top-tier” network similar to root DNS servers on the internet that can serve and validate transactions on the blockchain.  There must be some sort of physical organization between the nodes on the blockchain.

Is there a current solution to this problem?

Ripple/XRP solves this problem by essentially verifying transactions instantly and keeping all the currency in essentially an online global wallet (there is no such thing as paper wallet or traditional on your computer/device wallet).  The advantage is that you don’t have to store hundreds of gigabytes of blockchain data (and growing) like Bitcoin and other currencies.  Ripple has the benefit of also being endorsed by major financial institutions which is a first for digital crypto that I’m aware of.

I haven’t done further research but currencies like XRP I believe are the future, things can be done anyway technically and Bitcoin, Litecoin and similar blockchained coins can do this if they change some of their decentralized model.  I expect there will be more infighting and similar splits as the Bitcoin Cash that emerged from the Segwit update as the industry matures and expands.

Disclaimer

I hold positions in multiple cryptocurrencies including Bitcoin and Ripple and have given my true opinion of both in this article.

Bitcoin’s Hard Fork of BCH Bitcoin Cash a milestone for cryptocurrency

The hard fork occurred on August 1st, 2017 with some nodes of the Bitcoin network implementing the “Segwit update”.  Although a lot of potential chaos could have happened, many in the industry called it correct that the most probable scenario is that the split would occur with the creation of BCH and Bitcoin users would not lose any coins and would be rewarded with an equal amount of BCH.  However, most exchanges and users were advised to backup their wallets and not do any transactions in the meantime.

Beyond this a lot of questions and issues need to be sorted out in the cryptocurrency world for things to stabilize and be universally accepted by businesses and individuals.  The key issues in my mind are “volatility”, “stability”, “security” and “regulation”. Really a serious issue with either of my three cores issues puts people and businesses at big risk although new updates and coins keep coming out with some promising the solution to these various issues.

Volatility

This is in reference to the extremely unpredictable nature of many currencies and Bitcoin is a core example with rapid swings.  Now people have often been warned that “don’t store your coins for the long-term” and this comes from the Bitcoin team itself as no one can be certain of the future of any coin at this moment.

Some have lamented that cash is the same, this is true but with the caveat that cash is backed by a government and central bank (all of who which do not really like cryptocurrency unless it is managed or under their control-more on regulations later).  Cash of course has had its issues whether run on banks, robberies, theft, fraud and other misuses of currency however cash is what most of us know and there is some safety and security in the “right cash” and at least often some predictability.

Take for example a record high of Bitcoin at the time in 2013 of approximately $1300 USD but sometime in 2015 trading was just at $267 USD.  The point here is that at this time cryptocurrency can be very volatile and unpredictable.  It can create chaos in everyday life for both business and individuals.  A risk that many businesses echo is the above scenario what if you accept payment based on USD in a cryptocurrency and the value plummets by 80% or some other high number suddenly?  It creates huge issues to say the least and time should address them but until there are more coins that have some consistency in their valuation without rapid descents there will be some reluctance.

Stability

There have been many instances on both the networks and exchanges for Bitcoin and Etherum where there are a ton of unconfirmed transactions.   I still have trouble understanding this but there are various numbers of “confirmations” before once can be comfortable they really have the currency that has been sent.  What if the network stops working or slows down creating massive fraud or inability to process transactions?

Fortunately there are new coins coming out which are instant that solve this issue but still there are many in the wild, common and highly valued that do not have these features.

There is also of course the concern that massive DDOS attacks could take out the network of a cryptocurrency or effectively shutting it down.

Security

The biggest threat is that there is the assumption that blockchain is secure and irreversible and it is impossible to play around in ways you shouldn’t.  However, this also relies on someone not finding a weakness or exploit against the blockchain, and what is more probable going forward is that an organization with massive computing power ultimately finds this and exploits this in various ways.

There are also other considerations such as people losing their coins to viruses or hackers, this has even happened to exchanges such as Coinbase executives.  One thing for sure is that it is not wise to leave your coins in an exchange if not for the risk that in the recent Bitcoin Fork the exchange refuses to give you the split/new currency.

Regulation

This is the biggest uncharted territory but governments and large financial institutions have made their position clear and my interpretation is that “we love blockchain” but “we hate that it is not under our control yet”.  This will have significant repercussions worldwide on how individuals and businesses deal with cryptocurrency.  Significant regulation and the introduction of state-run/central cryptocurrencies could potentially wipe out or make worthless some coins overnight. On another note it appears to be increasingly difficult to buy or sell out of the cryptocurrency markets with banks making it increasingly difficult for the coin exchanges to operate.

Conclusion

Bitcoin and other cryptocurrencies have made it far beyond the naysayers and through many difficult and unpredictable times.  Ultimately I believe cryptocurrency will continue to evolve and improve but as with any tool there are always going to be some pitfalls and bottlenecks.