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!

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.

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.

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

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.