Bitcoin Energy Usage Less Than Fiat

Bitcoin and similar algorithms that rely on PoW or mining are notorious for being power hungry, wasteful and unsustainable. Many argue that in reality the fiat system as a whole still uses more energy or resources to keep the system running. First of all fiat takes time, energy and money to produce the currency. Then there is the energy to run the ATM and SWIFT network, transport and store the cash. The argument is that as a whole fiat takes more energy and resources to function compared to Bitcoin.

This may be true but Bitcoin will continue to consume more energy to produce less coins as difficulty spikes.

On top of that there are more efficient algorithms that use less power to mine. There are also newer PoS/Proof of Stake algorithms that use almost no power especially compared to mining.

It may well be true that Bitcoin as a whole uses less energy than fiat but it doesn’t mean we should accept the status quo of wasting energy.

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.

Nasdaq Plans To Become Cryptocurrency Exchange

This is huge news with the CEO of Nasdaq saying they would consider becoming a cryptocurrency exchange.   One caveat is that Adena Friedman said she is waiting for the market to mature.   I anticipate she sees the threat to cryptocurrency as the fact that we don’t know for sure which currencies will be around in the coming years.  She is waiting for the dot-com like bubble to burst which is an excellent strategy for managing the risk.

The fact that Nasdaq would even contemplate this plus the big money from Wall Street going into cryptocurrency is a very positive sign of where the industry is heading.  The coins that survive the bust will become incredibly valuable and I think Bitcoin is one of them dispute its many issues and drawbacks.  It is a tricky call, with one risk of course being hardforks.  After more Bitcoin scams and hardforks will people possibly lose interest in Bitcoin or will it increase interest in the real Bitcoin?

Either way it may be a bumpy and turbulent ride, but cryptocurrency is looking like its about to create its own economy.  Trading cryptocurrency is not the issue though, as we still wait the “messiah coin” which will hopefully resolve the many issues that we have today.  I’d like to see a coin that does everything right or most things right rather than focusing on just a single aspect.

The time will come and the market will follow.  Everyone hold on things are about to keep getting interesting in 2018!

Why Hardforks In Cryptocurrency Are Bad

I’ve always felt this but hardforks are simply bad, even if in the rare case they intend to fix a problem with the original currency.  Most currencies which have issues like Bitcoin are simply not just a “single problem” but a collective bunch of inherent problems.   But most often it is so clear like is the case with Bitcoin Gold that the team just copies and counterfeits a coin to unjustly enrich themselves.

Risks and Issues with Hardforks

  1. Loss of value, normally the original coin is at least temporarily devalued when a hardfork is done.  People wonder which coin will survive or be more popular?
  2. Confusion leading to scams and fraud.  Which is the real Bitcoin or real Bitcoin Gold?
  3. Many forks don’t make a wallet (more evidence of bad intention) and more likely that fraudsters will make a wallet that steals your coins (eg. John Dass and the Bitcoin Gold team).
  4. Community frustration and division.

Instead of hardforking it is much better to do what Cloakcoin or Litecoin did and the many others did by just copying it, making changes and starting their own blockchain.  This ensures the process won’t allow fraud, confusion or devaluation of the original coin and no harm comes to the community that way.

All these coins have stolen value from the main coins like Bitcoin and then people ask why the value went down?  If Bitcoin was not hardforkable I think it should be several times the value we see now, almost certainly 2/3s or more of the crypto market cap.

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.

Neo, the Ethereum Competitor from China. How does it stack up?

Some friends have asked me for my thoughts, I admit I haven’t paid much attention to Neo myself but I am happier with this project, the team, architecture, planning and thought that has gone into it.

First of all, Neo, in my opinion has the technical superiority and is the better and faster coin to use everyday.  It has similar features such as the digital asset/smart contract option and API.   Neo is based on C# basically the fastest and most efficient programming language.  Ethereum is based on my arch nemesis, Java which I’ve always found to be efficient, slow, buggy and riddled with security issues (which is one thing that makes me very nervous about major bugs or hacks impacting the Ethereum network and blockchain in the future).

My belief is that because Neo is seen as Chinese based that it has scared away investors and this is the only reason why we see Ethereum as #2 or #3 in terms of market cap.  Neo is not far behind and if more attention and awareness shifts towards it I believe it’s only a matter of time before it overtakes Ethereum.

I’ve also seen much more evidence that the Neo team cares about the community by actively participating in discussions.  By comparison I can see endless complaints about issues that the ETH community has on their own forums with seemingly no response from the team.  Another factor is that the NEO team seems to be a professional and experienced team.  The ETH founder is only 18-years old and originally from Russia (nothing against Russia I am long there and we have many wonderful clients from there and around the world!).  I am highlighting that both teams are overseas but the fact that Neo is entirely Chinese and based inside China is probably the stumbling block for its growth.

What is wrong with Neo?

One big issue that I believe will be a huge problem is the fact that Neo is not divisible.  You cannot buy a fraction of a Neo.  This will be a huge problem even at it’s current value of $108 USD.  What if you want to buy a bag of chips or a USB stick?  It completely fails as a currency even though it’s otherwise superior to Ethereum.  How about if you want to invest in an ICO and you want to send .5 Neo?  No, not going to happen so Neo has set itself on the path to self-destruction in my opinion.  I’m very disappointed as otherwise it has done everything much better than Ethereum but shoots itself in the foot over the inability to ever be a real currency or used in daily transactions and this will only worse as the value increases.   This in itself almost makes the currency fail and is major stumbling block.  I also take issue with Neo’s GAS which will become another huge issue just like Ethereum, it is confusing and annoying.  See my blog post about how a $5 transaction in ETH cost me over $105 in gas fees!

Don’t get me wrong on this issue, I am long China, but with all the news coming out of China I believe it scares people away from this currency.  This aspects actually draws me towards it, in China there is such high regulation that the kind of scams I see many other developers pull is much harder to do even compared to Japan.

I would be all over Neo if the coin was divisible.

Would I invest in Neo?

Not at these levels, but I also won’t buy more Ethereum for similar reasons.  I do think Neo is a much better implementation of the Ethereum concept minus one huge issue with the currency division not being possible.

The hype on this digital asset/smart contract sounds great but in practice I am strongly against directly mixing currency and other assets in the same technology especially after Ethereum’s parity issue (we’ve seen nothing yet and I believe most of these smart assets will experience huge issues in the future).

Neo could still very well be an Ethereum killer but suffers from GAS and non-divisible currency.

Cryptocurrency vs the Current Financial System Which is more evil?

Hello internet friends!

So I’ve had a lot of questions and concerns from friends and family about cryptocurrency with so many scary and dire predictions and proclamations in the MSM.

If you’ve heard the news lately you may think it would be crazy to ever get into cryptcurrency because the news says it’s a dangerous bubble, pyramid scheme, illegal, used to finance criminal activity, used to finance terrorism, is completely anonymous and 200% evil.

While there are definitely some truths to the MSM articles like most issues in life I feel it is with an agenda and not an accurate reflection of the true picture, reality and future of cryptocurrency.

To give you an idea of my perspective to be honest when my wife first told me about Bitcoin I said “there is PayPal”, “it will never be anything”, and there will be “lots of fraud and scams”.  I was right about the third one at least (1/3) :)

The Main Points The Media Makes About Cryptocurrency and How They Fair Against Fiat Currency

  1. Cryptocurrency facilitates illegal transactions, terrorism, money laundering by being anonymous and without regulation.
  2. Cryptocurrency is a bubble and pyramid scheme that won’t last.
  3. Investing in it is too speculative and risky.
  4. There are lots of scams.
  5. Coins are worth nothing because they were created from nothing.
  6. Cryptocurrency can and will be banned.

The reality as I see it in comparison to fiat

  1. While I am sure it is true crypto has been used for illegal purposes the same can be said of fiat cash ever since the beginning of time.  Cash can be used anonymously and is used that way each day.  I think this is a moot point since almost anything in the world with legitimate and good purpose can and will be used for illegal activities.
  2. I do believe crypto will have a serious crash in line with the 1929 Wall Street stock crash or the 2008 financial crisis but that didn’t stop stocks and I believe the same of crypto.
  3. This is a broad term, there are literally thousands of coins which serve completely different purposes.  There is no doubt some have stronger fundamentals and will last while others are truly worthless for various reasons.  There is also massive speculation in our traditional financial system, whether the US housing crisis that put people under water, penny stocks and failed stocks, bonds and mutual funds.
  4. This is absolutely true, there have been a lot of scams in the crypto world, however there are scams with fiat such as fake money, debit/credit card skimming etc.
  5. This is true, just as it was of fiat money but this depends on the time period.  It’s arguable that back when the gold standard existed that fiat had a certain value and was backed by gold, but today the world is freely printing money out of thin air or “nothing”.
  6. I do believe it will be banned in some countries, primarily what we’ve seen is exchanges getting shut down in China and Korea but it hasn’t stopped cryptocurrency from sky rocketing.

The Universal Truth

While the media does make some valid points, they are really blown out of perspective.  Cryptocurrency does have issues, as does fiat but what I suspect this really is about is the fact that our modern banking and financial system is at risk.  Since most cryptocurrencies are decentralized, no one person, organization typically has any control over them.  You cannot freeze an individual, organization or country’s assets anymore.  In times of war, duress or even genocide such as Myanmar it would be possible for the underbanked to use a cryptocurrency such as XLM (Stellar Lumens from the creator of XRP/Ripple) to safe guard your money across borders and against unjust seizure.  With cash or wire there would likely be no time to do such a thing if your city is being razed by the Burmese army.

There is significant risk in the future for cryptocurrency’s which really haven’t seen a seriously long, sustained correction.   Yes there have been flash crashes and drops of 25% in a day but they usually all come back higher than ever.  This is a bull market without question.  On that note I’d like to point out that the financial side of the crypto world functions almost entirely like the current financial system.

Take for example the dominant US dollar, it is still one of the most commonly used settlement currencies in the world which is a way it has artificially held value regardless of how the US economy has performed.

In the crypto world I feel Bitcoin/BTC is on top because it is the main currency used on trading exchanges.  In fact on most exchanges you have to convert your other coins into BTC usually to buy into other coins.  You can place traditional Limit and Stop Market orders as well.  In this sense the crypto world has volatility because it’s a fast changing world with new coins, players and buyers/sellers are coming in and out of the market.  You can see people taking profits when some coins surge, just as you would with traditional stocks.  If the currency or project behind the currency hasn’t changed in a negative way there’s usually no reason to worry or panic.  Instead seasoned investors will wait for the pullback to buy more of their favorite coins.

The Final Word

I think the death of cryptocurrency is highly anticipated and overstated.  I do agree the weak coins and ICOs will die, but the coins with strong fundamentals will not be going away.  Cryptocurrency is here to stay and there’s no way it can be stopped, it can be regulated and this will somewhat shape the future but we’re now in a period where more regular people will not only invest and trade in cryptocurrency but it will be used as commonly as everyday debit and credit, something that obviously banks and government will take issue with.  The answer is truly that you can’t fight the market or will of the people, there are solutions and ways for there to be a win-win but the bankers won’t let their market without a fight.

2018 Year of the Dogecoin Prediction as it crosses the 1 cent mark!

I’ve held Dogecoin for some time and never really considered it the “internet meme joke based currency” that some consider it and recently bought more as  I saw it approaching the 1 cent mark.  Those days are gone with a Christmas Present of Dogecoin crossing the 1 cent mark!  In fact it is been surging lately despite naysayers predicting its demise for various reasons.  One huge thing Dogecoin has always had is a loyal and large community who uses the currency.

dogecoin-2017-2018-47percent-surge

Now that Litecoin has hit the $300 USD territory and many other altcoins are very expensive clearly others have seen the value and potential in Dogecoin.   In fact I believe it is undervalued and in the past 7 days Doge has nearly doubled to reach the 1 cent mark and market cap of 1.2 billion!  It’s a huge milestone and for those who remember way long ago, there was a point where Doge was equivalent in value to Bitcoin!

I believe 2018 is Doge’s time to shine and it is definitely going to head into Litecoin territory (possibly the tens of dollar range in 2o18).  Essentially the Dogecoin client looks the same as Bitcoin’s and Litecoin’s.  In terms of technology though Dogecoin is more like a derivative or little cousin of Litecoin in the sense they both use Scrypt technology.

This is a good thing because I’ve never had delays or issues with sending or receiving Litecoin or Dogecoin, whereas Bitcoin can be slow and Ethereum is a nightmare to use (it is the worst wallet/client/network I have ever used and I absolutely dread Ethereum).

I think amazing things are going to go down for Dogecoin holders, likely not as big as long-time Bitcoin holders but I think in the coming years, Dogecoin users will be handsomely rewarded as the value skyrockets.

Another reason Dogecoin is rising is because of research, awareness and it is also a plain good buy compared to a lot of other much more expensive altcoins I firmly believe Dogecoin is largely undervalued.  Dogecoin is a long-time crypto whose stability has been tested and proven for years.

I’m bullish on Dogecoin so long as the developers keep working on and marketing this currency and if they cap the supply.  I don’t think it will take much for Dogecoin to see meteoric rise so long as those conditions are met.