Have Bitcoin futures done crypto a favour?

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Yukio Noguchi, a very famous Japanese economist and advisor to Waseda University’s Business and Finance Research Centre, claims that Bitcoin’s price will not see another massive surge, because we can now trade in Bitcoin futures.

Noguchi is not against Bitcoin. In fact, he sees the current Bitcoin price as a ‘good thing’, because it brings makes it cheaper than bank transactions when used as a system of payment and this is something he welcomes. Japan, of course, offers more opportunities for people to spend Bitcoin than any other country, so Noguchi is more familiar with this practical aspect of the Bitcoin use case than others who only have a theoretical knowledge.

Bitcoin futures trading caused price drop

His argument is that the introduction of the futures market at the end of last year, when Bitcoin’s price skyrocketed to almost $20,000, is the instrument that caused the drop in value to about a third of what it was in early December 2017. He started talking about this back in January, when he said, “Bitcoin prices were a bubble, to begin with, and now we’re seeing a return to normal values,” and the San Francisco Federal Bank backed his thinking.

Federal Bank backs Noguchi theory

He uses a paper published by the Federal Reserve Bank of San Francisco, “How Futures Trading Changed Bitcoin Prices“, authored by Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak, and Patrick Shultz as support for his claim, and quotes this passage in particular:

“From Bitcoin’s inception in 2009 through mid-2017, its price remained under US$4,000. In the second half of 2017, it climbed dramatically to nearly US $20,000, but descended rapidly starting in mid-December. The peak price coincided with the introduction of bitcoin futures trading on the Chicago Mercantile Exchange. The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence. Rather, it is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset.”

The Japanese economist also believes that the market is moving towards a situation where traders will be able to short-sell Bitcoin futures and that this will contribute to keeping the price down even more.

Bitcoin price drop is a blessing in disguise

However, all this doesn’t mean that he sees a decline in the popularity of Bitcoin. The answer is a resounding no, because as mentioned above he believes its boosts the practical use case for Bitcoin. Noguchi says that as the Bitcoin price drops it becomes a more attractive way of sending money and quotes costs based on Japanese banking.

According to his calculations, sending money via Mitsubishi UFJ Bank costs you 432 yen ($3.90) for any amount above 30,000 yen ($271). But with the current value of Bitcoin, it’s cheaper to send via a regular bank transfer than BTC, unless the value of BTC falls to 675,000 yen (that’s $6,000 today). Noguchi claims that when BTC returns to that level, it will finally be trading at what in his estimate is a normal value.

If we don’t see any further surges in Bitcoin price, will this dramatically change the way people start to look at Bitcoin and its use case? Last year, people bought it to make money, but perhaps we will soon see people view Bitcoin as an alternative currency for payment that is cheaper and more efficient than fiat currencies. Perhaps that is the change of perception that Bitcoin needs to mature.

Is crypto’s 2018 a total washout?

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So far, 2018 hasn’t been the best year for cryptocurrencies. The bearish sentiment that followed the euphoria at the end of 2017 seems to be running the show, but is this the end of cryptocurrencies, or merely the downside that comes before a resounding turnaround in fortunes?

Yoni Assia, CEO of eToro believs that selling your ryptocurrency now is like selling Apple stock back in 2001, when it was falling in value. It is easy to see why many people are selling off their holdings, especially if you didn’t get into crypto s a long-term investment, but if you do take a longer view of the market, then perhaps there is a good reason to hold on to those crypto assets for a while longer and see how it all plays out.

If we look at Bitcoin’s past trends, it doesn’t seem over ambitious to claim that there is likely to be an upswing towards the end of 2018. If that happens and you sell now, then you stand to lose money.

ICOs are the real ‘bubble’

Assia told Business Insider that one thing to look at in the crypto market is the number of startups issuing tokens in ICOs. He believes that “95% of them will end up as nothing, because that’s startup funding.” What he means is that the majority of tokens will simply fade away, leaving the strongest ones to lead the crypto market. These are probably going to be Bitcoin, Ethereum, Litecoin and a few more.

Dominik Schiener, creator of IOTA said earlier this year that he expects less than 10 of the 1,400 crypto projects that have started in the last year to survive. That’s quite a radical figure.

Neither Assia or Schiener are sceptical about crypto; they are both supporters of the sector, but what they are saying is that as with the dotcom era, many projects will get funding but not survive. However, those that do are likely to transform the world and make their investors big money.

What Assia is really saying is that it is ICOs that are ‘the bubble’, not cryptocurrencies or the blockchain. Many of them simply aren’t viable. But their demise will pave the way for true cryptocurrencies to succeed in the future.

We may not be in quite the same situation as Apple stock holders were in 2001, but it has a ring of familiarity. Still, if we remember that correctly, after that massive sell-off, Apple’s stock went on to gain a staggering amount of value, and who is to say that crypto won’t do exactly the same. It might look like a washout at the moment, but give crypto time and you might be glad you held on to your assets.

Building new nations on the blockchain

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Have you ever considered starting your own country? The constant stream of ‘bad news’ from around the world might well inspire you to create a new nation, not necessarily a utopia, but one that follows a different set of rules and is more efficient and less corrupt than many existing countries.

Bitnation

The blockchain has provided an opportunity to do just that. Bitnation was formed in 2014 and says it is Governance 2.0. You are welcomed to the Internet of Sovereignty, also known as Bitnation Pangea. And here you can create your own Decentralised Borderless Voluntary Nation (DBVN). Choose your Code of Law and Decision Making Mechanism, write a Constitution and provide Governance Services to Citizens. That promises to take up quite a bit of your spare time!

The Free Republic of Liberland

There is also the Free Republic of Liberland with its motto of “To live and let live.” It’s actually a micronation that claims a disputed plot of land on the western bank of the Danube River, between Croatia and Serbia. Its official language is English and it has a flag, a coat of arms, a constitution and laws. It prides itself on offering all its citizens personal and economic freedom and it is accepting applications for citizenship – you can even take a trial to play for its football team. Its economy runs on donations of Bitcoin and Bitcoin Cash and its founder Vit Jedlicka says, “If you are a cryptocurrency enthusiast and disappointed by the attitude of your country towards the emerging crypto assets, becoming a ‘citizen’ of Liberland can be an option for you.”

The Floating Island Project

And then, if you’re a fan of the sea there is the Floating Island Project in French Polynesia, which puts the concept of ‘seasteading’ at the heart of its philosophy. Founded by The Seasteading Institute, it aims to found an indefinite number of floating cities in and around French Polynesia, with the target-year for the establishment of its first city being 2022. The inaugural island will accommodate 300 houses and be making use of its very own cryptocurrency, named Varyon (VAR).

All of these nations are blockchain based, and each one believes that “we can do better with technology and innovation rather than ideology, politics and argumentation.” And, as Vit Jedlicka said, “It’s easier to create a new country than try to fix an existing one.”

Will existing governments tolerate the building of new nations n the blockchain? Only time will tell, but these first few could inspire many more people to create a micronation where innovation and new ideas can breathe. They may not be viable in the long run, but perhaps people will get sufficiently tired of the old nation-states to consider supporting them.

 

Apple co-founder Steve Wozniak hopes bitcoin will become a single global currency

  • Twitter CEO Jack Dorsey recently said he believes bitcoin will become the single currency worldwide, something that Wozniak hopes will happen.
  • “I buy into what Jack Dorsey says, not that I necessarily believe it’s going to happen, but because I want it to be that way, that is so pure thinking,” Wozniak told CNBC.
  • Wozniak bought bitcoin when it was $700, over $6,700 less than where the cryptocurrency was trading on Monday.

Twitter CEO Jack Dorsey recently said he believes bitcoin will become the single global currency, something that Apple co-founder Steve Wozniak hopes will happen.

“I buy into what Jack Dorsey says, not that I necessarily believe it’s going to happen, but because I want it to be that way, that is so pure thinking,” Wozniak told CNBC on Monday.

Wozniak bought bitcoin when it was $700, over $6,700 less than where the cryptocurrency was trading on Monday, according to data from CoinDesk.

He recently sold all but one bitcoin, saying that he only wanted to experiment with the technology and not be an investor. “The Woz,” as he is often affectionately referred to, also owns two ether, the cryptocurrency associated with the Ethereum blockchain platform.

While Wozniak said that he may not necessarily believe what Dorsey predicted, he still called bitcoin “pure.”

“Bitcoin is mathematically defined, there is a certain quantity of bitcoin, there’s a way it’s distributed… and it’s pure and there’s no human running, there’s no company running and it’s just… growing and growing… and surviving, that to me says something that is natural and nature is more important than all our human conventions,” he told CNBC.

The cryptocurrency is not actually issued by a central authority, unlike traditional currencies such as the U.S. dollar. Instead, there is a complex mathematical and cryptographic underpinning to the blockchain, the technology that underlies bitcoin. The bitcoin network is maintained by a number of players and that is why it is often referred to as decentralized.

Wozniak founded Apple with Steve Jobs in 1976 and was behind the launch of the company’s first personal computers. He spoke to CNBC at an event at the Money 20/20 conference in Amsterdam, Netherlands, hosted by Feedzai.

There are now over 1,000 cryptocurrencies in existence, but Wozniak said that bitcoin is the only one that remains “pure” because others have had to give up some of the aspects that makes bitcoin what it is, such as decentralization.

“Only bitcoin is pure digital gold… and I totally buy into that. All the others tend to give up some of the aspects of bitcoin. For example, being totally decentralized and having no central control. That’s the first one they have to give up to try to have a business model.”

Source https://www.cnbc.com/2018/06/04/apple-co-founder-steve-wozniak-hopes-bitcoin-will-become-global-currency.html