BITCOIN’S VALUE WAS FRAUD?

 The Coordinated Manipulation
According to research done by Professor John Griffin of Texas Finance, last years epic rise for Bitcoin was actually done by coordinated market manipulation.

Professor Griffin goes on to explain that he examined millions of transactions on cryptocurrency exchange Bitfinex, and says that “the US dollar pegged cryptocurrency Tether was used to buy Bitcoin at the times that the latter was falling- which helped ‘stabilize and manipulate’ the price”

First I’ll explain what Griffin’s said, and then I’ll explain why he’s wrong about Bitcoin but right about Tether. And it boils down to his understanding of how Exchanges work and how Bitcoin works.

Griffin said “Fraud and manipulation often leave footprints in the data and it’s nice to have the blockchain to track things,” Griffin told CNBC. Whenever bitcoin fell, Tether was used to buy it to prop up the price again.

“It was creating price support for bitcoin and, over the period that we examined, had huge price effects. Our research would indicate that there are sophisticated people harnessing investor interest for their benefit.”

Bitcoin started 2017 at below $1,000 and by Dec 2017 hit 20,000. But as if February to June 2018 it’s been jumping back and fourth from it’s lowest at $6k to the highest $10k (which didn’t even last)  Tether is the 11th largest cryptocurrency and is pegged to the US dollar. Some critics say Tether owners don’t have enough fiat currency to back its $2.5 billion market capitalization.

Bitfinex CEO J.L. van der Velde told CNBC that neither the exchange nor tether helped to boost bitcoin prices. “Bitfinex nor tether is, or has ever, engaged in any sort of market or price manipulation. Tether issuances cannot be used to prop up the price of bitcoin or any other coin/token on Bitfinex,”

Now here’s what I think:

I’ve personally used Tether but I do worry about it. A lot of people have accused Tether of fraud, and Tether certainly hasn’t proven the naysayers.  Do they have the 2.5 billion USD and how are they raising funds?  Essentially as far as I can see, Tether is a non-backed, way of essentially printing virtual USD.  I think Griffin is way off on this one.  USDT (Tether) is a convenient trading pair that can be used with some of the top cryptocurrencies to trade and exchange directly for other coins.

The issue is that a lot of people don’t realize most tokens and currencies are not directly convertible or tradeable for others on exchanges.  Generally you’ll have to sell your ABC alt-coin or tokens for Bitcoin, or USDT and then use the major currency you sold or exchanged to buy say another coin such as Ripple, Litecoin, Lisk etc..  So this is where USDT comes in, if Griffin thinks it propped up Bitcoin I think he is misunderstanding how the exchanges work.  Yes a lot of people are using USDT to buy other currencies but is USDT a market factor?  No, I don’t think so, it’s just simply convenient and I agree with Bitfinex that it doesn’t appear they are using it to prop up Bitcoin.

However, USDT could not be used in such a way if it wasn’t given prominence and primary trading pairs like Bitfinex and other major exchanges have used.  Could some of the exchanges be in cahoots with currencies like USDT and others?  Absolutely, and this is the more likely scenario of market manipulation in the sense that they essentially largely control which currencies fail and flourish.

Any coin that is used as a primary trading pair or in other words directly convertible has more value and will intrinsically be used more as a vehicle to buy coins like Bitcoin.

I think Griffin just raises the simple question about USDT being a fraud and this is the biggest concern but I highly doubt USDT’s existence or trading patterns are responsible for Bitcoin fluctuations directly.  He may derive this from trading patterns but I really just think USDT is a convenient and easy to understand intermediary trading pair vs how you wrap your mind around how many BTC another coin like Ripple, Ethereum or Litcoin is worth etc…

What do you think?

Cheers!
-A. Yasir

Psychopath CEO’s

The Jobs Psychopaths Are In the Most

A person with a Psychopathic personality is defined as having an inflated, narcissistic sense of themselves and are very good at manipulating people. And with the world naturally turning more and more narcissistic with social media and the images of ‘your best self’ (or rather your fake self), it’s getting to be a pretty psychopathic world.

We once considered Ted Bundy and psychopath murderers and honestly world leaders as general well known psychopathy. But as it turns out, the world is filled with psychopaths, and you might just be working next to one. And most surprisingly, is that CEO was ranked #1 for the most psychopaths…I’m a CEO and I’m both worried and fascinated…

So why are there so many psychopathic CEO’s? Well psychopaths tend to go for jobs or careers that put them in leadership positions because they have charisma, are good at making on the spot decisions and are fearless.  They have a goal and they can make it happen and will stop at nothing (including stomping out others) to get what they want.

Kevin Dutton, a British psychologist and writer, specialises in the study of psychopathy, made a list of the types of jobs that attract the MOST PSYCHOPATHS.  In his book “The Wisdom of Psychopaths: What Saints, Spies, and Serial Killers Can Teach Us About Success.”

“Functional psychopaths,” as Dutton calls them, “use their detached, unflinching, and charismatic personalities to succeed in mainstream society.”  Basically, psychopaths are normal people but have a few traits that make them ‘different’.

10. Civil Servant:
Fun fact, in 2014, UK Government officials considered recruiting psychopaths specifically “to keep order,” because they are “very good in crises” and have “no feelings for others, nor moral code, and tend to be very intelligent and logical.”  Ouch.

9. Chef:
Should they really be in charge of our food and knives? But apparently the 9th most popular job for psychopaths is being a chef. According to Dutton, they thrive in chaos. And the chaos of the kitchen is right up their alley.

8. Clergy Person:
This may come as a surprise because we don’t normally associate such a personality type with this job. But according to FBI veteran Joe Navarro, ‘religious organisations may provide a means for people to exploit others, while also giving legitimacy to their actions.’ It’s also very easy to make alliances.

7. Police Officer:
If you thought clergy person was insane, police officer isn’t too far off.  Keeping calm during a stressful situation comes with the job as police offer. And in this dangerous and high intensity job, being able to control your emotions and think before you act comes as a huge benefit.

6. Journalist – it all makes sense now.
If you thought Elon Musk was right to call out mainstream media who then got a lashing out from media personalities, and thought to yourself, wow these media people aren’t professional at all- then you were right. They’re not professional because they are literal psychopaths. Journalism is yet another popular job for a psychopath.

5. Surgeon:
If you’re in need of a surgery, well don’t worry you’re in good hands.  It’s not what you think, again psychopaths are people who do well in keeping calm during stressful situations and can make quick difficult situations, which they have to make everyday. In this respect, be glad you’re in the caring hands of a psychopath. :)

4. Salesperson
Are you a shameless self promoter, who has no qualms of stealing other peoples work or contracts, have a intense desire to earn the most money and can’t be over shot by anyone? Are you in sales? You should be.

3. Media Person in TV or Audio
Narcissism can be a trait of a psychopath, which you can say is an important part of being a public figure. Being a TV anchor or a radio personality is the 5th job with the most psychopaths.

2. Lawyer
Somehow this doesn’t come as a surprise. You’re going to have to be a very motivated person who can manipulate the ‘truth’ and ‘facts’ to fit the narrative you need. Self confidence and deceitful charm can help create a good lawyer.

And lastly,

1. CEO
Yes, that’s right, CEO’s are the #1 job for psychopaths. I never really viewed myself as a psychopath but here’s some of the traits:
Cool headed during stressful situations.
Able to make decisions quickly during intense situations.
Being able to overcome emotions.
Able to remove emotions during situations and focus on the issue at hand.
Able to maneuver using charm and manipulation.
You get gist. But on top of this, is resilience to chaos.
Resilience to chaos is something we CEO’s have.  This doesn’t necessarily mean that you’re cool headed under stress, it can mean that you cause a lot of crazy for others too because it makes you feel good when everybody around you is struggling…OUCH that hurts my heart.
But some CEO’s use this method to climb that ladder all the way to the very top.  Now this isn’t indicative of all CEO’s, since self confidence, resilience and determined for a end goal is also high drivers of a CEO, but these are eye openers of how others might view their leader.

What do you think? Did your job make the cut? Did you find out a little about yourself? Or do you disagree with the findings?

Cheers!
– A. Yasir

 

Bitcoin Fails To Defend 10K Mark

Let’s let the chart do the talking for the past 3 months where it currently sits at $9327.65

Bitcoin-2018-02-05-PriceChart

Back in February BTC posted the maximum high for the past 3 months of just over 11K.  As you can see from March to April the lowest moves of the recent past were posted around the 7K mark.  To me this looks like a classic sideways trading that eventually breaks out.  You can see since April there has been a steady upward trend.

BTC hasn’t been able to defend the 10K mark but I do believe we have stability around the 9K mark.  Some indicators claim BTC is currently neither overbought or oversold.  But common sense has to tell you that if the price is going down it appears we have more sellers than buyers at the $10K mark.  It could be people cashing out for fear of wondering when does BTC return back to the 20K mark?

Many people have said this  spells disaster but I really do think we are just getting started with the BTC rally and I think much higher prices are around the corner in the near future.  There has been a lot of positive news from around the world that seems to be increasingly towards accepting that BTC is here to stay.

Perhaps some regulators thought twice and realized that “like it or not BTC is too big and risky to ban”.  Because people can move BTC at will and it cannot be frozen or truly banned.  I think regulators are finding just as the case is with exchanges, if you put undue pressure on owners of cryptocurrency they will simply just move away to a friendlier jurisdiction.  I would imagine they should favor BTC as it is not anonymous and is easily and fully trackable.  If people switched to more private based coins they’ll have little chance at regulation such as with Monero.

Federal Reserve Says Bitcoin Cannot Replace the US Dollar

The new chief of the San Francisco branch, of the privately held, Federal Reserve Bank has stated that Bitcoin cannot, and will not ever replace the US Dollar.  First of all, they are doing a fantastic job and understand their market and duties.  They cannot step into this job and say anything else and expect to keep it.

I get it, Bitcoin is printed without supposed backing, although it is backed by a lot of physical hardware assets and electricity.  Fiat currency, especially the US Dollar is printed and floated without any controls or restrictions.  Well, actually, the only control and restriction is that there is none.  The Federal Reserve prints at will and on demand, without limitation or backing of any sort, and they have long abandoned the gold standard.

The fact that the Federal Reserve would comment at all on this matter and mention Bitcoin, to me, is very telling that it is very much a possibility.  When you have this much money put into something that is being traded worldwide, every second, and such an ecosystem I think it is an excellent contender to the US Dollar and fiat currency in general.  Remember, fiat is backed by nothing as well and printed without any limit.  Most cryptocurrencies actually are limited in how many coins can be mined or minted at any rate.

Cryptocurrency is currently at a $421 Billion USD market cap and I think it won’t be long before it is in the trillion dollar range.  This is ultimately the worst nightmare for any central banker with so many competitors, of course your number one priority should be outlawing them and shutting them down.

On that end the Fed is right to do it and is doing their job well.  However, for people who don’t essentially control the fiat financial system, we would do well to root for cryptocurrency as an alternative system.  I think both systems can survive and work together, but if fiat pushes it too much, I think there may be a digital currency revolution that far surpassed the digital rights movement of the late 90s and early 2000s that caught the RIAA and MPAA by surprise.

Bitcoin Private and Cloak Cryptocurrencies

There is a huge emphasis on privacy with a lot of new coins but I do feel that a lot of coins focus on a single issue and leave the overall business and usability aspect out.  How do these newer coins fare?

Cloak

My first impression is why doesn’t the non-www version work while the www version does?  Does their team not know how to properly configure nginx or is it just a simple mistake and oversight?

Cloakcoin.com-Forbidden-ConfigError

They call their encryption ENIGMA which I am not sure is a joke or if they aren’t aware of the ENIGMA encryption box in Germany that was compromised during WWII?  I would more so be worried that it is a read between the lines joke or a hint that the team is doing something more than they claim?  Sorry but I just can’t get over the fact that they would not know about the Enigma box from Germany that was decoded.

For my second point I do like the privacy aspects but this is where I have concerns.  On one head they tout privacy, but then to have more privacy they obfuscate transactions by using other clients wallets?  Why would you allow a third-party and random strange to process or handle any part of the transaction?  I do realize they say it is fully encrypted and obfuscated so the random third party stranger on the network shouldn’t know anything about you or your transaction, but to me it violates the principle of privacy and security.  It reminds me of how everyone believed the TOR network is a good idea and secure, but in reality whoever runs an exit node can spy on other users, including the NSA.  This architecture of Cloak makes me worried that a vulnerability could be found and that privacy could be worse than most other Bitcoin-style coins.  Even if a simple vulnerability was not found, you are essentially passing private information to random strangers on the network, the NSA or other large funded organizations could use this to spy on other users or even perhaps modify transactions and create chaos on the network.

I also find it confusing how they say it is private but you have to enable “ENIGMA” on top of “Cloak Shield” to truly make it private?

Here are the parts I’ve picked on from their website:

Alice’s Cloak wallet then automatically sends a request to the network for other Cloak wallets who have elected to become ENIGMA mixer nodes to obfuscate her transaction. All of this is done privately and securely throughout with no identities or true IP addresses revealed.

Bob has cloaking mode enabled in his wallet and the wallet generates a secure CloakShield encryption channel for communications with Alice’s wallet. Bob’s wallet sends Alice a secure connection, containing encrypted inputs and outputs to commence the transaction.

With this confirmed, Alice, with full anonymity, creates an encrypted ENIGMA transaction containing her true inputs and outputs and Bob’s cloaking (obscured) inputs and outputs. Bob and Alice both sign the ENIGMA transaction before it is submitted to the network for inclusion into a PoS block.

Going back to the concerns I have above, I really don’t like how Alice’s wallet would ever communicate with anyone other than the receiver or the Cloak network.  By introducing Bob, there is the chance that Bob could decipher and identify what Alice is doing.  Of course that’s not what should happen, but I believe it is a huge security whole to involve random third parties in confirming or obfuscating transactions.  The situation reminds me a lot of the vulnerabilities in the TOR network.  Essentially Bob is like an exit node, running transactions for Alice.  Bob shouldn’t know who Alice is or what she is doing, but what if there is an implementation error or other issue?  This could be avoided by not using any random third party.

I think Cloak does a great job but they’ve actually introduced a huge security hole by doing the random, third party, processes the transaction part.  It would be like saying “my data is encrypted so I’ll send encrypted copies to everyone”.  Sure it is encrypted but if someone can ever hack your encrypted data either through bruteforce or an algorithm/implementation error then you are done for.  The best solution is to never send private and sensitive data to an extra, third party.

I do think the Cloak project has worked hard and it has some great ideas but aside from privacy and what I believe are security holes in how they implement it, they have done a great job but it is not a coin that does everything right.

Bitcoin Private

For those who know me, I am very much against forks.  As I’ve stated before they decrease, value, lead to scams and confusion.  This can be evidenced with Bitcoin Gold regardless of who you believe was responsible.  Right off the bat Bitcoin Private is warning of scammers trying to confuse you with a warning on their website.

BitcoinPrivate-BTCP-Scam-Private-Keys

The problem with these types of coins, hardforks or what I think are really counterfeits is that you need to give up the very “private keys” of your real, valuable Bitcoin to claim the “new counterfeit coin”.  This is a huge security problem, regardless of who made the wallet what if the wallet is designed or hacked to maliciously steal your real Bitcoins?  There is no easy and secure way to claim your coins from these counterfeits.   Once you give up your private keys to Bitcoin Cash, Bitcoin Gold, Bitcoin Private they could steal your real Bitcoins.

Now there is a way around it, you could transfer your coins to another wallet but it’s a huge pain and a mistake could cost a novice user all of their Bitcoin.

Now in all fairness I appreciate this team at least has official wallets ready for download, unlike Bitcoin Cash.

Users who have the currency called “ZClassic” are also involved here, which is also another confusing fork of ZCash.

This is what I mean about all of the confusion.  It creates an environment where holders and buyers are easily confused about which is the real “Bitcoin”, which is the real ZCash.  And really, I can’t see any reason why people are forking except as a cash grab and counterfeiting spree.

For this reason I don’t trust Bitcoin Private anymore than I trust the other forks (although I trust Bitcoin Gold the least).  I personally feel there is no good reason to trust any of them.  If they want to make a new or better currency they should really just make their own, or at least copy it under a new name.  But of course forking, creates unwilling participants and owners of the new currency, while enriching and rewarding the hardforkers for their counterfeiting.

For those reason if I had to pick between the two, I think Cloak has our best interests at heart and hardforked coins are just a scam, counterfeit and cash grab by unscrupulous people.

G20 Summit Proposes To Adopt, Regulate and NOT Ban Cryptocurrency

From reading various news articles I’m going to summarize what I think are the few key take aways from the G20 summit in Buenos Aires, Argentina.

I’ve simplified these into two points although they could have been broken down I think it really boils down to two key conclusions.

Cryptocurrency Should Be Adopted

The G20 agrees that cryptocurrency is part of a transition to digital economy and that eventually fiat (cash) will die.  They also recognize the power of cryptocurrency to bring finance and banking to those who normally wouldn’t have had access.  In a way it is gratifying that they are essentially saying between the lines that cryptocurrency and being your own bank are a good thing for everyone.

I also think it is an act of desperation and I will get more into that in my conclusion.

Cryptocurrency Must Be Regulated

There were several discussions regarding the regulation of cryptocurrency.  As we can see and as I suspected, the main drive is to control and tax cryptocurrency.  They want rules around it so that they aren’t cut out of taxes and control as a middleman.  A strong focus was put on preventing criminal activity and money laundering (you know stuff that NEVER happens with our current financial system).

Why have they adopted this position?

I think it’s natural because as I’ve said companies and people will move to whatever country is friendly to them.  It is almost an act of desperation because I think regulators can see cryptocurrency could head underground and out of the reach of any regulators if they keep cracking down.  I am in no way equating cryptocurrency with piracy or illegal activity but I will say this a similar thing that happened in the days of filesharing such as Napster and Limewire etc… Authorities didn’t understand the new economy was digital and that people wanted to download digital copies of their favorite songs and videos.  Because that void was never filled by the RIAA and MPAA, piracy was rampant and their crackdowns only increased it.  Initially piracy was largely underground but then Bittorrent came out as a decentralized filesharing platform and it has not only made the problem worse but virtually unstoppable.

Cryptocurrency with money being at stake I think would become even larger if the crackdowns continue.  Cryptocurrency would then largely be traded directly without the involvement of fiat if regulators, governments or exchanges (such as Bittrex who recently moved overseas to Malta because they offered them a better deal than the threats they were receiving in the USA).

If Venezuela, Russia or China is more friendly in the end people will move their business and crypto to whatever country they trust.  This can happen in an instant so, really, the regulators should treat the relevant parties well or they can pack up with all of their money.  There is no option to “freeze their accounts” for political reasons like the days of the past.

The rough ride is probably far from over as there will be reasons that governments and regulators may make decisions that are contrary to the G20 logic but I think in the end, reason will win out.

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!

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.

NEM Gives Up Chase for $500M USD in Stolen Coins

For no apparent reason NEM has given up the chase for these coins.  In all fairness I don’t think it was ever their issue, the stolen coins were the fault of the Coincheck Exchange’s security and not due to any flaw in the NEM client or network side.  Of course naturally they were interested but one bold prediction is that “hackers would not be able to launder the coins due to lack of liquidity”.  I am not sure if the NEM developers really believed that or if they thought heat on the exchanges would dissuade or slow the thieves down.  I suspect they exchanged the NEM for other coins and then sold them back again clean through multiple exchanges.

I would say this isn’t bad for cryptocurrency because bank heists occur each day and nothing stops one from spending or exchanging the money in real life.  It’s really no different than the initial fears of “e-commerce sites were hacked” just as real life stores have theft and holdups everyday.  It is just a matter of mitigation whether physical or virtual.

But with that aside NEM clearly said they were ending the chase and wouldn’t say much more due to the “sensitivity of the investigation”.  This is something I find a little strange, is it that they did find something but the authorities have forbidden them from disclosing it?

Was this an inside job on the part of Coincheck in Japan or was it something else explosive that they found?  Could it have been a rival currency, bankers or government behind the hack?  Anything is possible and speculation will rightfully run abound until more details emerge.