Hedge Funds in Traditional Finance Sector are Beginning to Invest in Bitcoin

Large-scale hedge funds in the traditional finance sector are beginning to enter the bitcoin and cryptocurrency markets.

This week, former major US-based investment management firm Legg Mason chairman and principal fund manager Bill Miller, who oversaw $728 billion in assets during his stay at the company, revealed that he had invested half of his personal hedge fund MVP1’s assets in bitcoin.

In an interview with CNBC, Miller disclosed that MVP1 has $2.2 billion in assets primarily for high profile investors, individuals, and mutual funds. 50 percent of MVP1’s $2.2 billion is invested in bitcoin by Miller’s hedge fund.

“What we’re studying is ways in which we can mitigate risk to the overall fund and the portfolio. It won’t be 50 percent of the fund for that much longer, which does not mean necessarily that we’re going to be selling it [bitcoin],” said Miller, adding that he is not interested in other cryptocurrencies. “Most of those cryptocurrencies, if monetary history is any guide, will be worthless.”

Last month, another multi-billion dollar hedge fund Man Group revealed that it will include bitcoin into its “investment universe” upon the launch of CME’s bitcoin futures exchange. Man Group CEO Luke Ellis said:

“Conceptually digital currencies are an interesting thing. It’s not part of our investment universe today – it could be. If there is a CME future on bitcoin, it would be.”

Ellis noted that the difference between a digital currency like bitcoin and a traditional currency is that the former has no central entity backing the asset. However, he emphasized that the lack of a central authority supporting it does not invalidate cryptocurrencies.

“There is a big difference between a digital currency and a traditional currency… Traditional ones are supported by governments who have armies and taxmen that can make people follow their rules, and digital ones don‘t. But that doesn’t invalidate digital currencies at all,” Ellis said, sharing a similar sentiment as the researchers at Bank of Finland, which previously described bitcoin as something that “cannot be regulated. There is no need to regulate it because as a system it is committed to the protocol as is and the transaction fees it charges the users are determined by the users independently of the miners’ efforts.”  

Hedge funds from the traditional finance industry have started to invest in bitcoin and the cryptocurrency market because the recent listing of bitcoin futures by Cboe and CME, and the strong performance of the cryptocurrencies have further validated, legitimized, and matured the global cryptocurrency market.

At the time of reporting, the cryptocurrency market valuation remains above $400 billion and is rapidly moving towards the $1 trillion level. The daily trading volume of the cryptocurrency market is also larger than that of the New York Stock Exchange, the largest stock market in the world. Currently, the cryptocurrency market and its exchanges are trading nearly $44 billion on a daily basis.

It has become increasingly challenging and difficult for hedge funds, investment firms, and banks to dismiss bitcoin as a result. Even JPMorgan and Goldman Sachs, two of the biggest investment banks in the global finance market, have expressed their optimism toward bitcoin futures and shared their intention to clear bitcoin futures on behalf of their customers by the end of 2018. On December 21, it was revealed that Goldman Sachs intends to set up a trading desk for bitcoin, according to sources knowledgeable on the matter.

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CIO of Hedge Fund BlockTower Capital Reveals 3 Biggest Cryptocurrency Investment Risks

Ari Paul, CIO of cryptocurrency hedge fund BlockTower Capital, recently sat down with Business Insider’s Sara Silverstein to discuss the three main risks associated with investing in cryptocurrencies.

Ari Paul, CIO of cryptocurrency hedge fund BlockTower Capital

1. Investment Risks

The first area of risk, according to Paul, is investment risk, by which he predominantly refers to the volatility of cryptocurrencies. All anyone has to do is take a look at Bitcoin’s performance over the past month to understand what he is talking about. Bitcoin started off the month trading at just under $10,000 – a point of tremendous growth in and of itself – and in less than three weeks it more than doubled in value, peaking at just over $20,000.

Everybody was all about the bitcoin. CBOE and CME Group rolled out Bitcoin futures, Nasdaq said it would be following suit in 2018, there was even talk about Bitcoin ETFs once again becoming a possibility. Bitcoin had finally arrived on the mainstream financial stage and it was all going to be gravy from there.

Until it wasn’t.

Since its peak, Bitcoin has tumbled more than 40%, to a low of just over $12,000 as of this morning. Does this mean that the Bitcoin bubble has finally burst? Considering that Bitcoin has “crashed” and recovered after a so-called “bubble” at least three times previously – once in 2011 and twice in 2013 – I think it’s a little early to be throwing in the towel.

My point – and the point that Paul makes in the interview – is that these massive price swings are one of the biggest risks in cryptocurrency investment. Just like stocks and equities, any cryptocurrency can fall. Maybe they rebound, maybe they fall all the way to zero. It’s a crapshoot and a risk that investors need to understand and be willing to take.

Keeping your cryptocurrencies safe

2. Operational Risks

The next area of risk is operational risk. In a nutshell, operational risk is anything having to do with how you interact with your cryptocurrencies. This can include storage, transferring, converting, etc.. The most significant point of risk in this area, however, is storage. Where and how cryptocurrencies are stored has a lot to do with how secure they are.

Talking about storing cryptocurrency, Paul stated:

[It’s] a tremendous target for hackers, it’s a target for thieves, including insiders, and in a large operation, and there’s potentially no recourse. So you have to be really, really careful that you’re storing cryptocurrency securely. And that’s a serious concern.

Currently, there are three primary methods of storing cryptocurrencies that most investors use:

  1. On an exchange
  2. In a software wallet
  3. In a hardware wallet

Storing Your Cryptocurrencies on an Exchange or Online Wallet

While definitely the most convenient storage method, especially if you are an active trader and/or have many different cryptocurrencies in your portfolio, keeping your coins on an exchange is the absolute most insecure way of storing them.

Paul and Silverstein discuss storing cryptocurrencies on Coinbase as an example, but as far as online wallets and exchanges go, they are the exception rather than the rule. They insure their users’ crypto and fiat deposits against losses due to physical or cyber security breaches as well as employee theft.

Most exchanges and online wallets do not insure their users’ deposits, however, so if the exchange or wallet gets hacked or the owner decides to close up shop one day and head off to a non-extradition country with your coins, you’re unlikely to ever get them back.

Storing Your Cryptocurrencies in a Software Wallet

Software wallets are applications that you download and install on your computer or mobile device. There are several Bitcoin software wallets to choose from and each altcoin (alternative cryptocurrency) generally has its own software wallet client as well.

That last sentence illustrates the main problem with software wallets. Aside from Exodus and Coinami, there really are very few proven multi-currency software wallets available. If you only dabble in one or two cryptocurrencies, it doesn’t pose a real problem, but if you have a large diversified portfolio of crypto assets, having to download and install a software wallet for each one individually can be a real inconvenience.

Another drawback to software wallets is that it is easy to lock yourself out of them. If you forget your password or lose your seed key or private keys, there is no password reset function. Barring the slight chance that a crypto recovery service might be able to unlock it for you, those coins are gone, never to be recovered.

Like the online wallet, there is still a chance that a software wallet can be hacked. Granted, it is more difficult, but it can still happen. All it takes is for your computer or mobile device to become infected with a keylogger and a trojan virus and a would-be hacker can see your password as you type it and can later go back and access your wallet with you never being the wiser until the next time you open it up.

Storing Your Cryptocurrencies on a Hardware Wallet

Unlike the two “hot wallet” options above, the hardware wallet is the only “cold wallet” featured in this list. The terms “hot” and “cold” refer to whether or not the wallet maintains an internet connection. A hardware wallet is a physical device contains software that allows users to store one or more cryptocurrencies. The main benefit of a hardware wallet is security. Because you only need to connect it to the internet when you want to transfer coins, it is inherently less vulnerable to being hacked than online or software wallets.

Although hardware wallets are the best bet from a security standpoint, they suffer from the same drawback as software wallets. You still need to remember your password (a pin number) to gain access. If you forget it or lose your private keys, there is no reset function.

Trezor, Ledger, and KeepKey are three of the most popular examples of hardware wallets. All three have easy to use browser interfaces and support multiple cryptocurrencies.

laws regarding cryptocurrencies

3. Regulatory Risks

The last area of risk that Paul discusses is regulatory risk. The laws regarding cryptocurrencies are far from standardized. What is accepted and legal in one country may be illegal in another. For example, the president of Belarus announced today that cryptocurrencies and ICOs would now be legal in the country.

On the other hand, in China, ICOs are banned outright and, in countries that bother to classify it at all, bitcoin is considered a financial asset rather than a form of currency. The U.S. has some of the strictest regulatory guidelines on ICOs, resulting in many ICOs not being open to U.S. investors.

Then there is the issue of taxes. Is it taxable? If it isn’t considered a currency, how is it taxed? Do you only pay taxes on the cryptocurrencies you convert to fiat currency or are like-to-like transactions taxable as well?

The cryptocurrency space is a regulatory minefield and it is important that you be aware of the laws and regulations regarding cryptocurrencies in your country. After all, ignorantia juris non excusat – ignorance of the law is no excuse.

Still Thinking About Investing in Cryptocurrencies?

So what is the takeaway from Ari Paul’s interview? When you distill it down to the basics, it’s really quite simple:

  1. There is no ‘sure thing’ in cryptocurrency investing so investors need to understand and be prepared for the fact that prices are going to fluctuate – often dramatically;
  2. Store your cryptocurrencies securely and – I can’t stress this enough – keep your password and private keys stored in a safe, secure location like a fire safe or safety deposit box ;
  3. Do your due diligence and make sure you understand the laws and regulations regarding cryptocurrency investing in your country.

I would add one more item to the list and it is something that applies to any kind of investing – don’t invest more than you can afford to lose.

Do you agree with Paul’s assessment of cryptocurrency investment risks? Is there anything that you would add to the list? Let us know in the comments below.

Images courtesy of AdobeStock, Business Insider, Wikimedia Commons

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Coinbase Accused of Technical Incompetence After Hoarding Millions of UTXOs

Coinbase Accused of “Technical Incompetence” After Hoarding Millions of UTXOs

The Coinbase development team has been accused of “technical incompetence” after amassing millions of UTXOs through careless housekeeping. Unspent Transaction Outputs, or UTXOs, are the change that’s left after sending a bitcoin payment. Wallet providers are supposed to sweep these crumbs up and bundle them in with future transactions. Coinbase, it transpires, has been hoarding its, creating an expensive digital mess, and raising questions as to its readiness to implement scaling solutions.

Also read: A Ledger X Bitcoin Contract is Still Pegged for $50K Amid This Week’s Price Decline

Coinbase: Dust Collectors Par Extraordinaire

Unspent Transaction Outputs aren’t something individuals generally have to worry about. Every time a user sends a transaction, the wallet is supposed to package up the shrapnel in the most efficient way possible. Smart use of UTXOs is like using the change in your pocket to buy a beer. Conversely, if you were to break a $20 bill every time you bought a drink at the bar, you’d finish the night with pockets weighed down with change.

Coinbase seems to have accumulated an insane amount of UTXOs, which is consequently taking its toll on the bitcoin blockchain. The more UTXOs there are, the bigger the size of the transaction in bytes. This was well explained in a piece Jameson Lopp published on The Challenges of Optimizing Unspent Output Selection. In it, the Bitgo engineer wrote:

Although a bitcoin transaction can contain hundreds of inputs and hundreds of outputs, this comes at a cost. The more inputs and outputs a transaction has, the larger the data size of the transaction.

Lopp lists four reasons why it’s beneficial to optimize UTXOs: preventing blockchain bloat, supporting high transaction volume, privacy, and minimizing transaction fees. Inefficient use of UTXOs leads to fuller blocks, further exacerbating the scaling problems that have been blighting bitcoin. Coupled with Coinbase dragging its heels over Segwit, this latest revelation has caused some controversy.

Segwit’s defining feature is its ability to compress transaction data, thereby reducing fees by between 30 and 40%, but Coinbase has been conspicuously absent from the Segwit party. There’s been talk of them implementing Segwit in 2018, but that’s about as precise as they’ve got.

Coinbase Accused of “Technical Incompetence” After Hoarding Millions of UTXOs
Each bitcoin transaction is made up of inputs and outputs.

Going OTT with UTXOs

Coinbase has one wallet containing 265 BTC with 1.5 million UTXOs, and on several occasions in the past year has sent transactions where the fee was greater than the coins. One data analyst, LaurenMT, opines that neither Segwit nor Lightning Network would help here – the best solution, he advocates, is bigger blocks. That’s the model most famously used by bitcoin cash, and as anyone who’s been following the scaling debate knows, Coinbase isn’t big on big blocks.

To have over a million Unspent Transaction Outputs associated with one address – regardless of the amount of bitcoins it contains – is astonishing. LaurentMT pointed out that this would mean the combined transaction fees for all of the UTXOs would cost more than the value of the coins in the wallet.

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Podcaster Trace Meyer was particularly scathing of Coinbase and its failure to batch transactions and consolidate UTXOs, concluding: “Bitcoin needs less whining & more competent coding”.

Coinbase has had a tough week, what with accusations of insider trading and the ire of traders who lost money when Gdax shutdown as bitcoin cash hit an all-time high. It is an exchange that moves at its own pace. This cautious approach often makes Coinbase last to the races: last to add Segwit, last to distribute bitcoin cash, and last to add altcoins.

“By being thoughtful blockchain engineers we can at least prevent the UTXO set from growing faster than is needed,” wrote Jameson Lopp in 2015. Coinbase seems to have missed the memo, and this failure to clean up its digital dust is costing the company money – while doing nothing for the blockchain that everyone relies on. Before Coinbase can look at Segwit, it needs to examine its existing codebase and put its house in order.

Do you think Coinbase has an engineering problem or are people over-reacting? Let us know in the comments section below.

Images courtesy of Shutterstock.

Express yourself freely at Bitcoin.com’s user forums. We don’t censor on political grounds. Check forum.Bitcoin.com.

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PressCoin vs Civil, Steemit, WikiTribune, and De-Correspondent

PressCoin aims to change the state of the public sphere with a range of interconnected platforms, built on the blockchain, powered by the NEWS utility token. The ICO is underway.

Introduction and Summary

It is worth noting at the outset that PressCoin has stated that it unequivocally supports all initiatives to fix the news industry and will be keen to assist and partner will all these exciting initiatives. Two of these initiatives, Civil and Steemit are cryptocurrency based.

Interestingly all these new innovations have social interaction built into them, lessons which appear to have been learned from the social networks. This is also a feature of PresssCoin.

All five offer logged in privileges and all seek to facilitate interaction between readers and writers. By contrast over the past 12 months, a large number of news publishers have dropped comments altogether.

One Solution Steemit, like PressCoin, provides rewards to readers and content submitters for their contributions to the news system. And one solution, Civil, like PressCoin intends to build a marketplace for content. However none of these innovators have systems that can operate at a news-enterprise level for publishers – and none establish a new economic foundation to recreate the existing news media economy at a systemic level. 

Before we turn to our survey of recent innovations in the news content space it is worth briefly introducing PressCoin’s systemic approach to resolving the news crisis. Much more can be found out about the PressCoin solution on the PressCoin Blog and via the PressCoin.com homepage. To invest and purchase PressCoin to help the largest ever crowd-funding campaign to address the News Crisis visit the PressCoin ICO page.

PressCoin’s Systemic Approach to Addressing the News Crisis

PressCoin is an ambitious project to build an alternative global media ecosystem, owned by the people, serving the needs of the people, and built ground up on principles of cooperation, collaboration, and partnership.

PressCoin’s business strategy rests on these legs:

  • Shared Design Philosophy –  Open Collaboration, Partnership, and Decentralization
  • Shared Technology Infrastructure – Seamless media technology cloud, underlying big-data systems, advanced APIs for engagement and analytics
  • Shared Business Services – Consumer Data Intelligence, Monetization, Enterprise Sales, Ecosystem Partnerships, Strategic Relations
  • Shared Developer Network – This fertile playground for agile experiments in the news/media/journalism sphere
  • Shared Fiat/Crypto Financial Services Infrastructure – Built on Cointype
  • Shared Venture Arm – Foster disruption within the ecosystem

PressCoin’s Systemic Approach to Addressing the News Crisis

At a practical level PressCoin plans to dramatically lower the cost of high-quality publishing solutions to enterprise publishers whilst providing them with access to crypto powered markets to share – on a market basis – content, traffic and reader data.

But now let’s talk about the alternatives.

Medium vs. Civil

Medium predates all the other journalism enabling initiatives and so it gets to go first. Here’s how Wikipedia describes Medium:

Medium is an online publishing platform developed by Evan Williams [one of the founders of Twitter], and launched in August 2012. It is owned by Medium Corporation. The platform is an example of social journalism, having a hybrid collection of amateur and professional people and publications, or exclusive blogs or publishers on Medium, and is regularly regarded as a blog host.

Medium is also pretty successful. It’s the 495th ranked website in the world on SimilarWeb. It hosts hundreds of writers and features some very nice UX features. Its revenue model is membership based and members are “empowered” to reward writers. Writers have very limited monetization avenues and a lot utilize crowd-funding systems like Patreon to commercialize their work. PressCoin’s flagship publication Insurge Intelligence, founded by Nafeez Ahmed is presently hosted on Medium.

Medium vs. Civil

So, what is Civil? At present, it is a work in progress. But it looks as if it will be a blockchain-based decentralized version of Medium, a new place for journalists to ply their trade and possibly earn some money. The big difference between the two is that Civil plans to launch a Cryptocurrency to provide a means for writers to be supported by readers.

Both solutions are great as far as they go but neither aspires to provide a systemic solution to the media industry’s revenue woes. In other words both Medium and the soon to be revealed Civil are mostly a consumer product, bordering on the prosumer.

Facebook vs. Steemit vs. Reddit

Of course, we all know what Facebook is, the mother of all content aggregation businesses. Facebook’s goal has been to connect everyone, and with its 2B+ users, it certainly has. And in doing so it has monetized content created by others spectacularly efficiently. Its ubiquitous news feed now earns it a fifth of global digital advertising revenue, in many cases by simply providing a portal to other publisher’s content.

And for new publishers, Facebook has become the main avenue to reach readers. Initially it enabled this to happen organically and publishers built up massive reader bases for their Facebook portals, then in January 2015 it decided to charge publishers for distributing content via their own pages, a change which resulted in many publishers having no choice but to double down and to start paying Facebook to reach their own readers.

Reddit.com is a lively forum for discussing everything under the sun where you vote others posts up and down. It has a very original world wide web vibe to it and is inclusive, free and fiercely independent.

So… what is Steemit?

Wikitribune was founded by Wikipedia founder Jimmy Wales

Think decentralizing the Facebook model, and creating an alternate, blockchain-based Facebook, where everybody gets paid for participating. Like Reddit Steemit’s interface is a popularity contest of sorts for surfacing great content.

Steemit is an interesting beast. It launched as an ICO in March 2016 and now has 450,000 accounts, 19 million monthly visits and a bunch of engaged users talking about everything under the sun. Interestingly, “Where does steemit money come from,” is a commonly googled question, and the answer is difficult to understand. There is no evidence of any business model on the site itself.

Shortly after it debuted the Steem currency went to $3 and it’s now nearly back at that level, valuing the market at $1 Billion. And in December Steem Dollars a currency pegged to the US Dollar have spiked to over $20 in value. Quite what is going on with that is hard to understand, and it is far from obvious what lies behind all this wealth beyond a large user base. Notably, it would appear that it is not that easy to join the steemit community at the moment, possibly because of the recent inflation in Steemit Dollars.

But who cares, doesn’t everyone benefit?

It certainly seems that way, except, for a couple of things. Firstly Steemit doesn’t solve the media industry revenue problems as content from existing content producers is still getting shared on Steemit. For Steemit’s own content producers it is a partial solution, albeit a fairly odd one. The community understandably spends a lot of time discussing itself.

Steemit is definitely focused on the individual consumer, or at a stretch the prosumer content creator. And it is definitely not a news-enterprise solution, nor is it meant to be.

#FakeNews Media vs WikiTribune vs De Correspondent

Wikitribune was founded by Wikipedia founder Jimmy Wales

Wikitribune was founded by Wikipedia founder Jimmy Wales, in response to a call from the World Wide Web’s inventor Tim Berners Lee to the news crisis.

Its Beta was launched in November after a phase of crowdfunding to provide funds to get it established.  Its intention is to become a new digital newspaper like platform, with content submitted and edited by a combined force of volunteer and professional editors and reporters. At this stage, it is very much evolving in the spirit of its namesake and actively seeking to enlist and organize an army of volunteers.

From a content POV, its point of difference is that it intends to provide source verification for everything it reports. And this would appear to be a very useful approach to take particularly when news events are breaking, and you need a balanced, verified view of the goings-on. They plan to also focus on verified recordings, and incorporate transcriptions into their workflow.

So Wikitribune is definitely a great attempt at helping clean up accuracy in one aspect of the journalism industry – breaking news. And as a news by-the-people-for-the-people resource within the broader journalistic and news media ecosystem, it is an addition that we wholeheartedly support!

Wikitribune will be dependent on donations and volunteers to grow. As such it is not providing solutions to the existing global news industry, but rather seeking to provide a safety net for an informed democracy.

Dutch news start-up De-Correspondent

The Dutch news start-up De-Correspondent – also established by crowd-funding – is a reporter’s dream. A publisher built by writers for readers who value quality thoughtful content from subject specialist reporters. Its model is reader/member funded through recurring donations. Its signature feature is facilitated opportunities for informed readers to help shape the news agenda through newsletters inviting direct engagement with reporters. This feature has produced some remarkable Scoop stories and is being closely watched around the world.

De-Correspondent’s approach to comments is also unusual. Commenters have to be subscribers, and this appears to result in very thoughtful reader engagement. There is much more to the publication’s well thought out approach that can be explored on the site. The original Dutch language publication – with some English translations – will shortly be joined by a New York-based English Language version.

In a way, De-Correspondent can be seen as being a structured, writer collective version of Medium from which all of journalism can learn a great deal. PressCoin’s Insurge Intelligence platform team are great admirers of the approach.

However, De-Correspondent, like all these other innovative solutions, does not provide a solution to help resolve the immediate revenue crisis facing the existing text-based news industry – an industry which continues to provide the vast bulk of reliable online news content.

For this, here is PressCoin “an ambitious project to build an alternative global media ecosystem, owned by the people, serving the needs of the people, and built ground up on principles of cooperation, collaboration, and partnership.”

The PressCoin ICO opened on Monday, Dec. 11. PressCoin is selling $100 mln in NEWS tokens, the largest ever crowdfunding effort to address the news crisis.

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Creating a Decentralized Digital Global Economy – Dai Goes Live

MakerDAO has been working towards creating a cryptocurrency that will support a stable, decentralized digital global economy. The result is Dai, the first fully-decentralized stablecoin on Ethereum.

MakerDAO was formed three years ago with a big vision of creating a stable, decentralized digital global economy. It has worked its way out of the grassroots to finally launch Dai, a promising cryptocurrency that promises stability in currency valuation.

Understanding Dai’s Valuation

Dai is currently worth 1 USD. It is designed to have low volatility against the world’s leading national currencies, such as the Euro and USD. MakerDAO has two mechanisms to ensure that this happens.

For starters, Dai has an autonomous system of smart contracts that monitors the market’s dynamics and responds accordingly. This system is designed to be independent so that no one can alter its mechanism. As such, even MakerDAO cannot alter the system, hence ensuring that no one can manipulate Dai’s value for self-gain while inconveniencing other Dai users.

Secondly, Dai is backed a secured asset that is held in the Maker smart contract. Initially, this collateral will be pooled Ether that users will hand over to generate Dai. Users can retrieve their collateral by paying off the debt of the Dai that they initially received as well as a minor stability fee.

Getting Dai

Unlike Bitcoin, which you have to mine or purchase, you can get Dai coins by either making them or buying them. To create Dai, you have to log onto the MakerDAO platform and send Ether to the Collateralized Debt Position (CDP). Making Dai is quite easy, and you can learn more about it here.

You can also always buy Dai coins if you are not in a position to create one. You can always find Dai sellers here.

Take Advantage of Dai

Dai promises to be a stable currency for all uses, especially now that global currencies can be so volatile. It is ideal for people seeking to secure their finances as well as those seeking to take advantage of the booming popularity of digital currencies. Many people are excited of the potential of Dai. Joey Krug, the co-founder of Augur, said:

When people ask me what the biggest remaining challenges in the space are I tell them scalability and stablecoins. I’m really excited about Maker and Dai as I think stablecoins are key to any sort of financial contracts on Ethereum. Even if you’re right, but still have the volatility of Ether, you can’t speculate on many long term speculative events. I’m excited to be able to use Dai within Augur’s markets!

Dai is still in its early stages, and its stability is expected to attract many users in the near future. The MakerDAO team is still working to improve the currency, and you can keep track of the development here. You can also get in touch with the brains behind Dai here.

Do you think that Dai will live up to its expectations? Would you invest in Dai? Share your thoughts in the comments below.

Images courtesy of Dai Foundation and Pixabay.

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MATRIX: A Safer, Faster and More Flexible Intelligent Blockchain.

December 22, 2017 – MATRIX AI Network today launched the MATRIX project, a new generation Blockchain that leverages the latest AI techniques to revolutionize the cryptocurrency landscape.

With a fusion of Blockchain and AI technology, MATRIX has built a revolutionary cryptocurrency that supports significantly boosted transaction speed, superior accessibility to general users, enhanced security under malicious attacks, and highly flexible operations.

Owen Tao, CEO of MATRIX, said:

The MATRIX intelligent Blockchain is a game changer in Blockchain technology. […] MATRIX differentiates itself from previous Blockchains by offering breakthrough technologies in building AI-enabled autonomous and self-optimizing Blockchain networks, which feature multi-chain collaborations and decoupling of data and control blocks.

As a result of the extreme congestion on both the Bitcoin and Ethereum Networks, ICO investors or contributors have faced significant challenges with cryptocurrency transfers which causes substantial hitches in trade transactions. The MATRIX Blockchain, via a unique dynamic hierarchy generation mechanism, enables the delivery of a superior transaction speed with the goal being to outperform the VISA system and deliver a remarkable throughput of 1million transactions/second.

MATRIX also aims to majorly combat and reduce cases of cryptocurrency fraud and theft with reports of such incidences increasing over the past few months. Earlier this year, January, 1 BTC (Bitcoin) had an average value of $969. Eleven months later, 1 BTC is set to break through the $20,000 barrier. With alternate coins also exploding in a bullish digital currency marketplace, individuals with dishonest intentions have also crowded the crypto space, adding more menace to the digital currency market.

The DAO attack has also demonstrated how smart contracts can be exploited and MATRIX has equipped its Blockchain with a powerful AI security engine that can identify bugs and vulnerabilities in smart contracts.

The MATRIX Blockchain also offers an ease-of-use to the Blockchain community, allowing a user base which is 3500 times bigger than that of Ethereum to design smart contracts without having programming expertise. With the MATRIX Blockchain, smart contracts are easily implemented with natural languages, and its more extensive use guarantees the liquidity MATRIX tokens.

MATRIX offers a flexibility that is welcome to Blockchain technology and by the crypto community. MATRIX provides a higher flexibility that affords the dynamic adjustment of parameters as required to adjust to the ever-changing and improving cryptocurrency market needs.

With most Blockchain projects having to deal with the hard fork community splitting and digital asset devaluation challenge, MATRIX offers evolutionary parameter optimization without triggering hard fork while also offering the intelligent integration of public and private chains with AI-based coordination.

MATRIX AI Network Timeline

September 2016 – Project Inception

January – May 2017 – Successful sculpturing of Blockchain design

Sep 2017 – First edition AI testing

Q1 2018 – MATRIX Initial coin offering

Q2 2018 – MATRIX Initialization

Q3 2018 – Light Speed Network Launches

Q4 2018 – AI-secured Intelligent Contracts

Q4 2019 – Mining & More Apps

For more information:

Business White Paper: http://bit.ly/bizwp
Technical White Paper: http://bit.ly/technwp
Visit our website: https://www.matrix.space
Email us: public@matrix.space
Follow us on Facebook: https://www.facebook.com/MATRIXAINetworks
Follow us on Twitter: @matrixainetwork

Images courtesy of MATRIX

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The SEC Crackdown on Suspicious Cryptocurrencies Is Getting Serious

The SEC Crackdown on Suspicious Cryptocurrencies Is Getting Serious

The U.S. Securities and Exchange Commission (SEC)’s investigation over shady behavior in the cryptocurrency market will only continue, said former chairman Harvey Pitt.

Also Read: Popular Chat App Kakao’s Exchange Upbit Claims Number One Spot in South Korea

Tighter Regulation on the Horizon

SEC this Tuesday halted trading of The Crypto Co. over manipulation concerns after a massive stock leap. And the regulatory body’s cracking down on suspicious cryptocurrencies will only continue, according to former chairman Harvey Pitt who said Thursday on CNBC’s “Fast Money”:

“We’re in line for some serious regulatory responses to all of this and that will be forthcoming after the first of the year.”

Pitt disclosed that further regulation is on the way. “Everyone else is investing in it, and the price seems to be going up,” Pitt said. “That’s a real problem because there’s a lack of education and knowledge on the part of many of the people who are actually doing the investing.”

The SEC has been highly critical of tokens that operate like securities. Back in August, the regulator suspended trading in three stocks over concerns about the issuing companies’ ICOs.

Pitt identified many cryptocurrency offerings as “offerings of securities,” which therefore fit under the SEC’s legal authority. For him, that means insider trading is a very real possibility. He added:

“There absolutely can be insider trading. When people have advanced knowledge of the offerings of these interests and take advantage of the offering long before it occurs.”

The SEC Crackdown on Suspicious Cryptocurrencies Is Getting Serious

Caution for Pump-and-Dump Schemes

Coupled with the SEC’s crackdown, the Financial Industry Regulatory Authority (FINRA) this Thursday warned investors of bitcoin cold-calling scams as well.

“Beware of potential stock scams when considering the purchase of shares of companies that tout high returns associated with cryptocurrencies, such as bitcoin,” FINRA wrote in the statement.

The most common scenario in which an investor can get duped is the “pump-and-dump” scheme, said Gerri Walsh, FINRA senior vice president for investor education. “Pump and dump” is a form of securities fraud common among penny stocks, in which shareholders attempt to artificially inflate the price of stock through misleading statements.

At a time when attaching “blockchain” to a company name is a surefire way to blow up stock values, there is plenty of incentive for these schemes.

SEC Crackdown on Suspicious Cryptocurrencies Is to Get SeriousFINRA issued a guideline to inform investors that investors could use FINRA BrokerCheck® to check the professional background of the individuals involved in selling the investment. The regulator warns investors to be wary of stocks with huge spikes in price, which could signal manipulation or fraud.

“We warn investors to look behind the name of the company, look behind the ticker of the stock. Take a look at a company’s filings,” Walsh said. She recommended investors look at the SEC’s list of trading suspensions to check whether the company has been deemed a threat to investors.

“There can be legitimate ways to get involved. Our concern with investors is they might field a call from a less legitimate actor,” she added.

Are you an emotional investor? Have you ever been duped in the crypto world? Leave your thoughts in the comments below!

Images via Shutterstock, Barchart.

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Belarus Legalizes Cryptocurrencies and ICOs – Tax-Free for Five Years

Belarus Legalizes Cryptocurrencies and ICOs - Tax-Free for Five Years

The president of Belarus, Alexander Lukashenko, has signed a decree which legalizes cryptocurrencies, initial coin offerings (ICOs), and smart contracts. All crypto transactions and related income, including from mining, will be tax-free for the next five years.

Also read: South Korea Clarifies Position After Reports of Possible Ban on All Crypto Transactions

Legalizing Crypto Transactions and ICOs

President Alexander Lukashenko announced on Friday that the decree “On the Development of Digital Economy” has been signed. He explained, “the main goal of the document is to create such conditions that global IT companies would come to Belarus, open their representative offices, development centers, and create popular products in the world.”

Belarus Legalizes Cryptocurrencies and ICOs - Tax-Free for Five Years
President Alexander Lukashenko’s announcement on Friday.

The decree also legalizes cryptocurrencies, ICOs, and smart contracts. Reuters wrote, “Belarus has legalized transactions in cryptocurrencies,” reiterating that it is “part of a drive to foster private sector growth and attract foreign investment by liberalizing parts of its Soviet-style economy.” The news outlet added:

The decree legalizes initial coin offerings and transactions in cryptocurrencies, including their exchange for traditional currencies on Belarussian exchanges. while all trades will be tax-free for the next five years.

Belarus Legalizes Cryptocurrencies and ICOs - Tax-Free for Five Years“Individuals will be able to store, change, buy, donate, bequeath, mine, and also exchange cryptocurrencies and tokens for fiat currencies,” Rusbase elaborated. In addition, it is not necessary to declare cryptocurrency profits and income from their operations since they are tax-free until January 1, 2023.

News.Bitcoin.com reported in November on the first Belarusian cryptocurrency exchange gearing up to launch in the spring of next year.

Unprecedented Benefits for HTP Residents

The decree creates unprecedented conditions for residents of the Belarusian High-Tech Park (HTP), which news.Bitcoin.com explained in last month’s article. It allows HTP residents to “become firms that mine and exchange cryptocurrencies,” Sputnik wrote, noting that:

Belarus has created unique conditions for the world to regulate the sphere of cryptocurrencies, both for ordinary citizens and for companies and investors in this sphere.

Legal entities in HTP can attract investments by issuing their own ICO tokens as well as buying and selling them through crypto exchanges, Rusbase detailed.

Earlier this month, the Ministry of Finance and the National Bank of Belarus said that they do not support the legalization of cryptocurrencies “because it can entail serious risks in the financial market,” Belapan reported. A source in the state administration told the publication, “It is impossible to supervise over cryptocurrencies and trace their movement.”

What do you think of Belarus’ move to legalize crypto and ICO activities and make them tax-free? Let us know in the comments section below.

Images courtesy of Shutterstock, Al Jazeera, and Lukashenko’s press service.

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Bitcoin Futures: Any Port in a Storm

Red sky at night, sailor’s delight. Red sky in the morning, sailors take warning. It is morning at sea for bitcoin futures. Sails are on the horizon. Some have the colors of merchant ships; others are flying the king’s standard.

The Long and Short of Bitcoin Futures

The Long and Short of Bitcoin Futures

The Chicago Board Options Exchange (CBOE) priced bitcoin (BTC) futures on Sunday, December 10.  The Chicago Mercantile Exchange launched bitcoin futures on December 18th. NASDAQ, Cantor, and Nodal also intend to launch bitcoin futures. TD Ameritrade customers will be able to buy bitcoin futures in their accounts.  The merchant ships have treasure to store, and the admiralty wishes to collect taxes. The merchants will sail away to return another day, but the king’s men will stay, and taxes will be paid.

Traders have the opportunity to “go long” the bitcoin futures and own the right to profits or the charge of losses above or below the $15,000 CBOE strike price. Those orders will be matched at auction to “shorts” – those who wish to sell futures for an immediate payout in dollars.

LedgerX initiated a long-term equity anticipation security (LEAP) on November 18 with a strike price of $10,000 when bitcoin (BTC) was trading at about $7750. That contract, priced at $2250.25, allowed the holder to buy bitcoin for $10,000 until December 28, 2018. That $2250.25 invested for a few weeks is worth at least $6500 “intrinsic value” (BTC $16,500 12/11/17) plus “time value” on a contract that does not expire for another year.

The CBOE has a 44% margin requirement or $6600 at a strike price of $15,000. Profit or loss on the future is dependent upon price movement of bitcoin above or below that level. But the bitcoin futures trade as securities separate from the bitcoin price. The XBTF8 CBOE bitcoin future, which expires in March, reached a high of $19,330 while bitcoin was trading at less than $17,000. It took BTC ten days to reach $10,000 after LedgerX priced its Long Term Equity Anticipation Securities (LEAPS) at that price.

Will the high in the XBTF8 set Sunday be a self-fulfilling prophecy and propel the price of bitcoin higher? Or will those who have long doubted the legitimacy of bitcoin at last be able to profit from their predictions of doom by selling the futures short? A CBOE member may short up to 5000 contracts. For each $1000 drop in the value of the bitcoin contract, such an investor would experience a $5 million gain in account value.

Separating Bitcoin from the Blockchain

Separating Bitcoin from the Blockchain

Bitcoin is a blockchain performing the most primitive of mathematical functions in a highly complex way. Bitcoin counts. What once is counted, cannot be uncounted. Bitcoin has counted more than 500,000 blocks without a breaking the chain. The longer the chain, the harder to trace back to the start of its encrypted maze. Its length and strength are trusted more with each additional block. This simplest of arithmetic, repeated every ten minutes for nearly nine years, has been trusted with over $250 billion. The more bitcoin secures, the more it is trusted.

“Trust” is cited four times in the first paragraph of the white paper Satoshi Nakamoto wrote in 2008 to describe “a purely peer-to-peer version of electronic cash….” He states that our current fiat currency system depends upon “trusted third parties to process electronic payments” and proposes a system that eliminates the need for trust by eliminating the possibility of reversing a transaction. Since every cryptographic “block” in the bitcoin “chain” is a lockbox that cannot be unlocked without first unlocking its successor, the more blocks in the chain, the more secure each predecessor becomes.

Each block in a chain can contain and secure any information its creator desires. But bitcoin records only bitcoin transactions. Blockchain, as a continuously growing list of encrypted records, has been applied beyond currency to more the complex requirements financial accounting, industrial logistics, and electronic recordkeeping. Blocks can be “permissioned” so that only certain digitally identified individuals may access the information within.

Banks, regulators, and technology firms have joined Consortium to support its Corda distributed ledger platform on the Amazon Web Services marketplace. IBM Global Financing has moved all the information of 4000 partners and suppliers to the IBM Blockchain. In Sweden, Georgia, and Ukraine, property registers are being stored with blockchain. Several states have changed laws to allow blockchain technology to be used in real estate transactions.

New York Federal Reserve President William Dudley has previously stated:

It’s really very premature to be talking about the Federal Reserve offering digital currencies, but it is something we are thinking about.

Looking Beyond Bitcoin

Looking Beyond Bitcoin

Bitcoin was blockchain’s Kitty Hawk, and bitcoin.org was its Wright brothers. Passengers signed up, more wings were added, and now the simplest of aircraft flies better than ever. According to Nakamoto’s estimate:  “A block header with no transactions would be about 80 bytes.” The average bitcoin block size is now over the one-megabyte capacity originally coded into the algorithm at creation. Bitcoin can process approximately seven transactions per second, while Visa can process 17,000. Passengers on the bitcoin airline were restricted to a one-megabyte carry-on, and the time to add new wings for additional passengers lengthened to a point where some were unable to fly. They looked for alternatives.

Bitcoin Cash (BCH $1400 12/11/17) presents an eight-megabyte transaction capacity that is scalable to 32MB, non-reversible transactions, and each with a unique digital signature.  BCH is made for speed.  BCH multiplies bitcoin’s transaction speed and significantly reduces the average transaction fee. Though few merchants accept Bitcoin Cash as payment compared to the ever-growing list that accepts bitcoin (Overstock, Virgin, Dell, Intuit), Bitcoin Cash may now have a more important function than as spendable currency.

When bitcoin fell $2000 in market value after the SegWit2X failure, Bitcoin Cash rose by $2000. Those wishing to exit BTC, upon disappointment that they would receive no free coins from the failed fork had few convenient alternatives for an exit. Selling BTC to buy fiat currency (Dollars, Euro, Yen, Yuan) would involve banks, transaction fees, traces of large movements of cash, and most important, at least 48 hours of time. Selling BTC to buy BCH may have made much more sense in terms of cost, anonymity and time.

Again, when the bitcoin bloodletting was over, BTC rose by $2000 and BCH fell by $2000. Both recovered to trade in new higher ranges. While the market price performances of most other crypto-currencies have lagged that of the original digital coin, bitcoin has broken out and now appears to be forming the handle of a “cup-and-handle” chart pattern.

Half of the world’s population does not have access to banks. No banks, no cash, no Visa. Where there are no banks, barter is common as a form of commerce. Indigenous people take what they can gather or produce to markets in villages, towns, and cities to trade for their immediate needs or for their country’s fiat currency. Bitcoin makes barter digital. For those who long to barter their wealth with other like-minded individuals, the dream of a purely anonymous transaction in a market where concerns of trust have been eliminated has been realized.

Have you traded CBOE or CME bitcoin futures? Is Bitcoin Cash a solution until Bitcoin can be scaled properly? Let us know what you think in the comments below.

Images courtesy of AdobeStock

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PR: BlockMesh Disrupts the Global Communications Industry – ICO Will Launch 28 February, 2018

BlockMesh Global Communications Industry

This is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com does not endorse nor support this product/service. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release.

Republic of Mauritius, BlockMesh, a software company based in Mauritius – utilizes the latest innovations in mesh networking technology to create cost-free communication networks and aim to disrupt the global communications industry in 2018.

Mesh technology is a telecommunications system that can work outside of regular cellular tower range due to the peer-to-peer mesh network it enables. By creating a network powered by Bluetooth – or WIFI, if available – the mesh network sidesteps typical cellular and data costs imposed by the incumbents.

BlockMesh are creating a new paradigm for the way we use communications networks, access the Internet access and use our smart devices. The network is based on the Ethereum blockchain which means that it is completely decentralized which puts in in direct conflict with the monopolistic incumbents. The mesh network will not be owned and operated by a few people but instead by everybody that uses it. The decentralized blockchain technology that powers cryptocurrencies like Bitcoin makes it possible to undertake such a dramatic shift in Internet access.

Many people do not use all of the Internet Bandwidth they pay for. BlockMesh imagines a world that makes all of this excess bandwidth available to others who would pay for it with a cryptocurrency token. People who’ve joined the BlockMesh network would earn these tokens – Mesh Tokens – for sharing their bandwidth.

Once launched, BlockMesh will also pay its users in cryptocurrency to use the app. So, instead of only paying to use cellular data, its users will also get paid to allow data such as text messages and voice calls to pass through their devices.

Bjorn Guido, Founder of BlockMesh stated that, “At BlockMesh we harness the power of the Internet of Things to provide interpersonal communication which isn’t just free to use, but actually rewards users in cryptocurrency to use it. Our network will be made up of the excess bandwidth that exists across the world. This will allow your smart television, your Wi-Fi router, iPad – basically, anything that has internet connectivity – to form part of our global revolution. Instead of your data being an expense it becomes an asset by earning you extra money.”

Having recently announced its integration of the Bancor Protocol™ – the Smart Token™ standard for continuous liquidity which will ensure immediate convertibility following its Token Sale in Q1 2018 – it’s team are confident of further large announcements before its ICO (Initial Coin Offering) in January.

The ICO presents the opportunity to become a part of the BlockMesh company by purchasing a ‘coin’ which represents your stake in the company. Once this investment round is closed, the funds are used to further develop the app and launch the technology.

A new era in mobile communication has arrived, visit the website for more information and read the BlockMesh whitepaper for a detailed understanding of the concept and technology. For complete information about this ICO, please visit: https://blockmesh.io/

Media Contact:

Prometheus Industries Pty Ltd.
Attn: Matthew Schulz
+27 (0) 82 697 0607

Supporting Link

This is a paid press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

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