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

Kin plans to fork Stellar Lumens instead of using ERC20 Ethereum Coins

The first thing I remember about Kin is that they are Canadian and they raised a lot of money in their ICO.  The last thing I remember is that I tried to buy it and couldn’t find any proper safe exchange to buy it on (they were on what I consider essentially scam exchanges).  I also wasn’t able to gain access to their website (it was broken) so on that basis I will give my thoughts about the project and ideas behind it.

First of all I agree with their assessment of Ethereum  as being like dial-up internet.  But this raises the question of planning and management.  Slow transactions, lack of security and fraud have been synonymous with Ethereum since it debuted.  What I am getting is this choice is rather rush and sudden.  With such a big team why did no one think of the implications before doing ERC20 tokens or was it just a crash grab first and project as an afterthought?  What happens to the value of those ERC20 tokens that so many people bought?  They will become worthless and they are now a megacorporation who is going to make their own private blockchain for payments.  I resent the fact that they could contribute to the downfall of good ICOs and the few real tokens out there.

With that said I think KIN/KIK could kill it in a good way.  Yes they are centralized but if they do it right and are trustworthy in the end (maybe like a PayPal). The good news is that I do believe Stellar/Ripple are a good base for things, it is a fast and relatively secure network, albeit without privacy and first party wallets.  I think Kin has the right idea but possibly wrong execution based on their initial entry.  I have a  high standard of trust or ICOs a good part of that is the team, their decisions and how they treat their investors.  Time will tell how well they execute this one but I hope it works out and that investors do not lose their money.  I, for one am glad that I wasn’t able to buy KIN as they are now about to dump it and make it worthless.

Here’s my experience with the KIK/KIN team (nothing working and no response after they collected millions of dollars):

Kin-Kik-NoReply

Kin gave me the inspiration to realize how bad Ethereum was when trying to buy their tokens and they wanted to charge me about $100 in fees!

Kin-Kik-NoReply1

$98 in fees to buy KIN:

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.

ICOs Still Going Strong in 2018

Despite the slow start and bearish sentiment of the cryptocurrency market this year, apparently ICOs have been going strong.  Various reasons are plentiful for why the ICO market remains this strong and it has me scratching my head.

Some say that serial investors are cashing out and then reinvesting into new ICOs.  Others say new investors from outside the traditional cryptocurrency world are coming into the market.

I am not sure what to think, as someone like myself is shying aware from most ICOs based on my experience that I feel 99% of these are scams and won’t ever deliver anything.  I think most of them are the next dot bombs and it is absolutely right to panic and sell these worthless Ethereum ERC20 tokens.

In ICOs the traditional due diligence is simply not enough.  It is easy to weed out people without IT or business experience.  And from that you have to weed out who has valid experience and qualifications?  Working for big name companies does not make you qualified to deliver on an overly ambitious project, but it does of course help attract investors.  I’ve seen enough big names including the Telegram ICO to be unimpressed (the Telegram ICO tells you to send money and then e-mail them to confirm the transaction……..how on earth will they build a proper blockchain if they can’t make their own API for transactions?).

Sorry for the rant but seriously what is driving the ICO market despite all the bad news?  I suspect it is people in the cryptocurrency world and I suspect they are miners who are thinking “my coins aren’t worth that much at the moment why not invest some of my spare ones into ABC scam ICO in the hopes that it grows and acts as a hedge to my underperforming cryptocurrency”.

That’s the best I can do and I suspect that is what is happening.  There are of course the institutional and whale investors who play a role but it’s unclear to what extent.

Telegram Raises 1.2Billion in unnecessary ICO

I’ve checked their website but not the whitepaper (it took forever and never loaded-why use a PDF and a slow server?) and I’m shaking my head.  There is little to no background on the website about exactly why this coin is needed, what it does or what it solves.

Granted they do say it is fast, allows decentralized apps but there are little details that are discernible to me.  I remain unconvinced that it is really anything but a cash grab like most ICOs are.

It’s hard to figure out if they are trying to be an Ethereum or a currency and how they would do things better?

Based on the website having just about 2 paragraphs of information I am very skeptical but time will tell.  I’m certainly not going to invest based on this information.  The question really remains is why would Telegram even need the money?

Surely they would already have enough to do this project and it should already be done based on their resources.  For that reason alone it reminds me of another regret from FINOM.  FINOM convinced me because they have existing projects up, running and making money and it turned it to be a scam (I never received my tokens and see no evidence of anything being delivered in terms of performance).

Telegram looks to be about the same, they have a working application that is successful.  Why do you need to collect money at all if it’s not just a cash grab?

I think that is the litmus test for judging ICOs which appear to come from trustworthy teams and successful projects.  If they should already have the money and resources and are doing an ICO, they chances are it’s only to collect your coins.

 

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.

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.

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).

 

 

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.

 

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.