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.

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.

Donald Trump USA Bans Nicolas Maduro’s Petro Coin

The USA’s President Trump has officially banned the Petro Coin.  This is actually encouraging and not unexpected.  To me it speaks volumes that it can work but is working, otherwise there would be no point in banning it.  Apparently it will also be possible to exchange Petro for the Russian Ruble.  As I suspected I feel strongly that the initial funding largely consisted of China, Russia and Iran and that more support will be ongoing once the coin is launched.

As an investor I am a bit frustrated with this ICO (as I am with most these days) because it took way too long to find information about it and individual investors have been locked out.  They really do risk alienating the audience they were targeting as I am getting frustrated and losing interest fast.  However, the prospects for this first state backed coin remain high and will either boom or bust I predict.  And there will probably be a lot more booming considering what is at stake and the support that Venezuela has.

If the US thought the Petro Coin would be worthless and had no hope of succeeding it’s unlikely they would ban it.  Regardless of what we may personally feel, this is a strategic tactic by the US to stop the first country to try to evade sanctions placed on it.  It will be another precedent if Petro succeeds and other sanctioned countries can freely trade in this similar way or ecosystem created by Venezuela.

Ironically Venezuela is helping to keep the cryptocurrency dream alive which is becoming your own bank and that no one has the right to freeze, take or prevent the spending of your money.

SEC Helps and Hinders ICO’s with Reg-A+

Basically the SEC is making it easier for cryptocurrencies to legally IPO with an ICO if that makes sense.  They have lifted the caq from 50 million to 75 million and a few ICOs have already launched under this rule.  The SEC’s aggressive pursuit of cryptocurrency projects, traders and exchanges will either have one of two effects in my opinion.

  1. The SEC could create a strong cryptocurrency ecosystem if it is fair with its rules and regulations.  This would be positive for the US cryptocurrency market.
  2. The SEC could completely alienate cryptocurrency users, traders and exchanges and force the majority of money to move offshore and this would be disasterous for the US economy but not necessarily cryptocurrency in the longterm.

It is concerning that the SEC seems to be going after even large firms and ICOs like tZero.  If they are trying to show no one will be exempt they’re doing a good job but they’re also giving incentive to ICOs and related business to move away from SEC jurisdiction.  Another concern is that the SEC as a branch of the US government can now legally and literally censor ICOs.  If an ICO is coming out that restores free speech and the US government doesn’t like this do you think they will be allowed to ICO by the SEC?  It could lead to far more than just financial consequences very quickly.

Only time will tell where things head but so far I suspect things are heading out of the SEC jurisdiction and people, especially investors, may view US cryptocurrency companies as a ticking time bomb or at least a liability.

 

Washington Org Warns Of Petro Coin Threat

Based on an article from Brookings Institute they have a dire warning for all cryptocurrency users!  They first take a shot at the very idea of it helping Venezuela in the first paragraph “the idea that the petro can ameliorate an economic crisis rooted in the bolívar’s volatility seems unbelievable”.  It goes on to say it is a threat to all cryptocurrency “petro will not only fail to cure Venezuela’s economic woes but will also weaken the integrity of cryptocurrencies writ-large”.  And my last but most favorite quote is what I think it’s really about “As Turkey, Iran, Russia, and other sanctioned countries deal with their severe economic impacts, they might pursue the same fraudulent strategy as Venezuela: create a cryptocurrency tied to a government-controlled asset, raise money in violation of sanctions, and proceed to manipulate that cryptocurrency’s value to maximize profit.”

While they do make some valid points governments around the world create their own currency usually without any backing of gold or resources out of thin error and continue to manipulate their currencies all the time.   To call Petro Coin over any other coin or ICO doesn’t seem to be based on anything other than political views. I think the article is highly biased and that Brookings is essentially the mouth piece for Washington and cannot be taken seriously.

The fact that Petro raised over 700M USD is significant and is less likely to be a scam than the other 90% of ICOs out there.  If I want to offer criticism of Petro I am frustrated that they don’t have their own top level domain for it and that they didn’t allow individual investors to get in on the coin.  As an investor when things are difficult and information is not easy to find I get frustrated and lose interest.  I think that is really the biggest risk to the Petro Coin.  I also disagree with larger countries sanctioning smaller countries who do not do their bidding since it just ends up creating poverty and suffering for the average person.

I am long Petro Coin if they can get more organized and get out better information.  Petro Coin stands to succeed if not for the reason that there are powerful backers of it.  Historically this been enough for the weakest of states, currencies and assets to continue floating on.  It’s also the same principle of what makes Bitcoin work, people have invested into it in different ways and it continues to be used although I do agree all cryptocurrencies essentially need an overhaul and they are certainly lacking in ease, functionality and security but his will be resolved in time.

 

How Governments Should Handle Crypto and ICOs

First of all after seeing so much confusion, panic and misinformation in the news, it is about time each country made a dedicated website for cryptocurrency.  The winners will be the countries who clearly communicate their policy, laws and intentions on handling cryptocurrencies.

Now in all fairness things are moving so fast, governments have genuine reason to fear cryptocurrency (aside from illegitimate reasons…) with most ICOs being absolute scams.  The real reason is of course is that governments can no longer vote or control who can fund themselves, the internet and public will judge.  However, there are still good reasons to have regulation or at least accountability so ICO fraudsters cannot hide overseas and disappear with the coins they collect.  This is my position where I feel the majority of token ICOs have no intention of completing their projects.

Getting back to what government should do, it’s not only ICOs but also the laws surrounding the purchase, use and trade around cryptocurrency.

The first country(s) to make fair, easy and favorable laws surrounding ICOs and cryptocurrency may find itself literally walking into digital gold and could be the next Hong Kong or Singapore of the crypto-finance world.  It’s up for grabs until countries clarify and cement their policies with crypto.

The first step if I were a regulator would be to hold public consultation and establish a staterun/government website domain to encourage discussion.  I also imagine it will be a hard case for government going after their citizens or businesses because they could simply leave the country with their crypto.  I think this is one element that business and government doesn’t like, that they can no longer control what people do with their money.  Typically governments and banks work hand in hand to achieve specific goals but with cryptocurrency, much like the world-wide web (initially) they are trying to find a balance and also ways to reign in control.

This time is very different, there is a lot at stake for governments, banks, people and business.  If a government moves too aggressively against the crypto world it could find itself sidelined and in financial ruin while their citizens and businesses will flock to countries that treat them better.

One of the first known examples of staterun conspiracy to harm cryptocurrency is Poland’s recent Youtube campaign: https://cryptoslate.com/polish-central-bank-caught-funding-anti-cryptocurrency-youtube-campaign/. They can’t be the only one and we know because of the well-timed press-conferences from various countries that threaten to ban ICOs or the currency outright.  On that note, as an investor this gives me more confidence than ever.  If crypto isn’t a big thing, then governments wouldn’t be talking about it.  The fact they warn so much about crypto suggests that governments and banks are well aware it is here to stay.

It could be that some governments are just playing games and waiting to see how things play out.  Perhaps internally if they see their attacks on crypto don’t kill it then they’ve already accepted that they will stop the fight against crypto.  Personally I think they are well aware that they cannot stop it and are maybe buying time so they can launch their own like Japan, Russia and China have announced.

I don’t think there’s a direct comparison but this standoff reminds me of the anti-piracy fight.  It used to be a fringe and underground element, but with crackdowns it actually has become more prevalent and easy for people to engage in piracy. Don’t get me wrong, crypto is not at all illegal or wrong (as compared to piracy) but the governments are essentially treating the crypto world the same way.  Much like the rule of investment after your strategy fails, trying again “won’t be different this time” I believe.

What do you think, how can governments handle crypto better and how would you react to bans and other aggressive action against crypto and related businesses?

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.

2017 and Beyond The Future of Cryptocurrency and Government Financial Regulations

Governments, banks and other large entities have all been murmuring, talking and hinting what the future of cryptocurrency could be or specifically the block chain. They all agree “blockchain” is good, there is no one against it but there has been a lot of confusion about the internet thinking this is equates to government and corporate backing of decentralized cryptocurrencies. I believe this couldn’t be the truth, in fact there have been lots of issues for companies exchanging cyrptocurrency for cold hard cash being unable to wire etc.

The excuse you hear from the big players are concern over fraud, money laundering, etc.. all of which happens in the current fiat monetary system. The true issue behind all the fuss is simply that these decentralized cryptocurrencies allow unhindered free trade around the world regardless of which country you are citizen of and where you are, no one can sanction you or freeze your assets in cryptocurrency. Further, it is of course a huge threat to the current financial system and governments around the world who depend on third party “reserve” banks to print their money. It’s bad news for their monopoly on finance and business transactions worldwide.

Bitcoin Exchanges in China are being shutdown: https://www.usatoday.com/story/money/2017/09/14/china-orders-bitcoin-exchanges-shut-down-report-says/665209001/
Russia says Bitcoin is illegal: https://www.reuters.com/article/us-russia-bitcoin/russian-authorities-say-bitcoin-illegal-idUSBREA1806620140209
Bitfinex sued Wells Fargo for blocking their wires: https://bravenewcoin.com/news/wells-fargo-sued-for-suspending-bitfinex-wire-transfers/
US SEC says they want to regulate coins: https://themerkle.com/sec-may-be-looking-for-ways-to-regulate-the-cryptocurrency-ico-market/
JP Morgan’s CEO Jamie Dimon calls Bitcoin a fraud: https://www.bloomberg.com/news/articles/2017-09-12/jpmorgan-s-ceo-says-he-d-fire-traders-who-bet-on-fraud-bitcoin

The part in China is most significant because the action in China has coincided with drops in value of the major currencies, as well as Chinese users doing a lot of mining and trading in crytocurrency.

When we take some examples above, this is the general consensus among bankers and government worldwide. They all like blockchain and want to make their own currencies that they control and centralize, but they are certainly against the decentralized ones and as new banking, taxation and other government intervention roles out surrounding cryptocurrency it will be very interesting to see where things head.

I personally think the decentralized currency will always exist and it can and will coincide with other mainstream offerings from banks and governments. There will be a place for both just as cash from other countries is traded for other items whether gold, silver or even electronics and oil. Trade will continue but through a different method of settlement and transfer.

One thing is for sure until we see how things break in terms of government regulations and how their own cryptocurrency’s play out, the value of the original decentralized currencies like Bitcoin, Litecoin, Etherum et al will have wild fluctuations as people react to news that threatens these currencies the same way people would read the news about Greece’s debt and haircut on the bonds they sold. In fact many watch the crypto market including the ICO (Initial Coin Offerings) and note they do seem to function as any other traditional market would in terms of news and advancements.

I believe we are seeing a financial revolution, all currency will soon be crypto and physical cash before we know it may all be stop being used.
The only question is how fast does it all happen and how does the difference between centralized banks and decentralized crypto users play out?