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).

 

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.

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!”.

 

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..

US Cryptocurrency and ICO Regulations Push Business Overseas

First of all bravo for Coinbase, with a lot at stake itself, for getting this issue right in the following quote:

There is so much uncertainty about the definition of a security and the scope of regulatory control that the market is being chilled. This is bad for everyone because the technology won’t stop — it will simply move overseas and we will miss out on the opportunity to cultivate the benefits in the U.S.

Much like I’ve been saying is that governments who are overly aggressive, ambiguous and don’t create a fair playing field for cryptocurrency and related companies will be sidelined.  Cryptocurrency cannot be contained by borders anymore than the web could be.  Naturally, I do agree certain practical laws and regulations should apply but the laws should be clear and easy to follow.  If companies are essentially being threatened, raided and faced with uncertainty it hurts both the company and investors.  Ultimately as I’ve said before it will drive these huge sums of money away to countries that treat cryptocurrency users, traders and companies well.

There are so many conflicting statements from governments around the world and multiple bodies in the US.  It sometimes seems as if government officials and bankers who have a lot of input in these matters diverge on the matter.  This is OK but it should not be reflected by creating an atmosphere of fear and confusion whether by design or by fluke.

We all see the market has been impacted significantly with nothing but negative press for cryptocurrency but I believe it will resolve on the upside as investors realize it isn’t going anywhere and no single government or bank can ever stop it.  In fact I predict that the market may just start using more privacy and security based coins and trade them exclusively and directly for goods, bypassing fiat altogether.  Ironically this is probably the last thing governments and banks want but this is where all of this action is heading towards in my opinion.

 

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.

 

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