Category: Bitcoin

Do we need to know the identity of Satoshi Nakamoto?

On By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

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I’ve been thinking about this question over the last few weeks. I was prompted to do this by Craig Steven Wright and the battle between him and others, such as Hodlonaut, on Twitter. Then there was the announcement that Binance was delisting Bitcoin SV (BSV), a cryptocurrency that is connected to nChain, a Wright-affiliated blockchain and Coingeek run by Calvin Ayre.

The problem people have with Wright is that he claims to be Satoshi Nakamoto, or one of the people behind Satoshi and the creation of Bitcoin. Wright’s dramatic claim was backed by Gavin Andresen, former Bitcoin Core Lead Maintainer and executive director of the Bitcoin Foundation. However, Wright has never provided he is Satoshi, or one part of ‘him’, but that hasn’t stopped the claim.

Last week John McAfee also claimed to know the identity of Satoshi and boasted that it had been extremely easy to work out. But, for personal reasons, McAfee declined to reveal who it is. I use the present tense because McAfee claims to correspond with Satoshi, unless he talks to him via the services of a psychic medium. He certainly didn’t suggest it was Wright, but on the other hand he didn’t mention him at all, so perhaps, perhaps, perhaps?

Wright, like McAfee, is known for making big claims, and he has been called out on quite a few of them by big hitters in the crypto world, including Vitalik Buterin of Ethereum, Grag Maxwel of Blockstream and Changpeng Zhao, the CEO of Binance. Even Charles Sturt University (Wright’s alma mater) informed Forbes that Wright had never received a PhD from the university, although Wright claimed he had.

Wright, like McAfee, lives for publicity; It is his oxygen. And by hitting back when he claims he is Satoshi, the crypto community is feeding his addiction by talking about him and sending Google Search trends soaring with searches about him and BSV.

If we want the crypto industry to be taken seriously, we need to focus less on personalities like Wright and McAfee, who potentially discredit it with fiction, and ask ourselves, do we really need to know the identity of Satoshi Nakamoto. Is it not possible to admire the Bitocin network without knowing the identity of the person/s behind it? Does not knowing for sure the identity of the creator/s give the technology less legitimacy? Perhaps one of the Gods can give us an answer to that question.

What will drives Bitcoin’s future price?

On By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

In mid April Adamant Capital published an important paper, “Bitcoin in Heavy Accumulation”. It has been publishing these reports for some years now and as it says in the introduction, each time they did so was when Bitcoin was down 80% from an all-time high. In April 2019 it is 75% down from its 2017 high, and this is a good point for investors to enter the market according to Adamant Capital.

According to Adamant, Bitcoin is in an “accumulation phase” right now and its researchers expect BTC to trade at a range between $3,000 and $6,500 until there is a new bull market that “permanently cements the denarian cryptocurrency as a multi-trillion dollar asset.”

The market does appear to be picking up momentum and while it is still experiencing some slight setbacks every few days, the outlook feels brighter. But what is going to drive the price of BTC for the next five years? Adamant Capital suggests there are three key drivers that are worth our attention.

Hold on to decentralisation

Bitcoin must hold on to its promise of a decentralised ‘currency’. But, it also needs to work on its scaling and add more protocols. The Adamant report states, “Bitcoin stays close to its roots of being a lightweight, robust, and universally accessible protocol.” Watch out for Lightning Network developments as well as Taproot and Schnorr signatures that will “improve privacy and smart contract functionality on the network.”

Bring BTC closer to the financial industry

Adamant Capital point to the “financialisation” of BTC and how this may drive the price. For example, in 2017, LedgerX launched a physically settled bitcoin futures platform and CME launched its own bitcoin futures product. In 2018 we have seen partnerships between the New York Stock Exchange and Blockstream o create a cryptocurrency data feed and announced their bitcoin futures platform BAKKT and in 2019 Fidelity Digital Custody, Nasdaq bitcoin futures, and a crypto asset custody solution from Northern Trust are all expected to launch. These are just a few examples and not the whole picture. The report says: ““Bitcoin’s qualities of political neutrality, unparalleled security, globally accessible liquidity, and predictable financial policy are provably improving,” and adds, “As it matures, we expect for Bitcoin to disrupt the $100 trillion investment vertical of Liquid Store of Value, and become a globally used digital gold and reserve asset.”

Millennial power

And the last driver is the millennial generation. According to the report, this is the largest growing demographic in the world, whose disposable income is expected to supersede all other generations by 2029. This generation witness the effect of the banking crash and have also grown up with technology, so it is easier for them to get their heads around the concept of cryptocurrencies, and Adamant Capital suggests they will boost Bitcoin adoption and thus its price.

The report concludes by saying, “Supported by over 10 years of infrastructure development, we believe the stage is set for mass market adoption in the coming 5 years.” And, for those of you thinking of investing, it also suggests that this phase is an important moment of opportunity, because it won’t be long before BTC is widely recognised as a “portfolio hedging instrument and reserve asset, and will begin making significant inroads as a payment network.”

Should we focus more on bitcoin’s use case than its price?

On By mehranmuslimiblogIn Bitcoin, Blockchain, crypto, EthereumLeave a comment

The crypto rollercoaster has morphed into ride with only slight dips and rises this month. It seems s if every few days traders need to take a rest and the bitcoin price sags a bit, The majority of the leading altcoins appear to follow what happens with bitcoin, although not uniformly.

As we head into next week, it’s hard to predict what we might see, although the weekends tend to bring some dips, suggesting that on Friday traders think about exiting the market for a couple of days. Jim Preissler writing at Forbessuggests: “Heading into the new week, expect possible dips to still be well supported at $4,700 in BTC and $154 in ETH. $5,800 and $187 could be tough resistance.’

As Preissler points out, XRP does not seem to have benefited from the latest crypto rally as much as BTC. ETH and LTC and there appears to be resistance at the $0.38 mark. ETH has been consistently outperforming XRP since February and it doesn’t look like there is going to be much change there.

Omkar Godbole at Coindesk suggests that what is needed to move the market along is a breach of BTC’s new resistance level of $5.200. As I write on 17th April, we have a slight glimpse of that as BTC touched $5,200.14. The market-leading cryptocurrency picked up a strong bid at lows below $4,200 on April 2 and jumped to 4.5-month highs above $5,300 on April 8, confirming a bullish reversal. However, over the last couple of days that rally paused, which Godbole attributed to BTC being overbought amongst other factors. But momentum seems to moving in an upward direction again. And, as Godbole has pointed out, “the longer duration outlook will remain bullish as long as prices are trading above $4,236.”

For the moment, bitcoin is trading above that level, but are we too focused on price?

As more real life use cases for bitcoin appear, such as the news that UK’s largest travel agency Corporate Traveller is now accepting bitcoin for payments, and the town of Innisfil in Ontario accepts BTC to pay property taxes, it is to be hoped that the public sees more advantages to using bitcoin for a range of payment purposes. That should encourage more belief in the cryptocurrency, and boost the number of people owning e-wallets and joining exchanges to purchase crypto. Slowly, slowly, cryptocurrency is edging forward toward mass adoption. We are a long way from that yet, but there’s no need to panic. It takes time to adjust to the new, even when the use case and the benefits are clear to a few. Just think back to the beginning of the Internet and the length of time it took the average consumer to feel comfortable with it. When people understand the benefits of using bitcoin and focus less on the price it is trading at, I believe that is when we’ll see a sea change in the crypto market.

The bitcoin rally: fact or fantasy?

On By mehranmuslimiblogIn Bitcoin, cryptoLeave a comment

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It was perhaps unfortunate that the most recent bitcoin rally happened to coincide with 1st April, also known as April Fool’s Day in a number of countries. The tradition of the day is to see if you can fool people into believing the story you tell them. Some newspapers are expert at it: the UK’s Guardian newspaper is renowned for its April Fool stories, such as the discovery of the island of ‘Sans Serif’, which any printer would immediately have spotted as a hoax. So, it’s unsurprising that there were those who thought the bitcoin rally was also some kind of 1st April joke, as Bloomberg reported.

 

But it wasn’t a joke, as the surge went on past noon on 1st April, the cut-off time after which one cannot play any more pranks. It continued to increase in price with some dips until 9th April, when we saw a almost all the major cryptos go red again, but only slightly.

 

Multiple theories about bitcoin surge

There have been other theories. One analyst, Tone Vay, suggests there is no particular trigger; it’s just normal speculation: “Shorts are liquidated, there were short squeezes, more people jumped onto the hype, and a lot of news media always look for a trigger to cause big drops and big rises. I would say more than half the time they are just trying to match news to something that it did not necessarily need news to happen.” Bloomberg also put forward the idea that it could be down to algorithmic trading. This is a method where automated software detects trends and determines when trades should be made. And Reuters suggested that a 20,000 BTC order was spread across United States-based crypto exchanges Coinbase and Kraken, as well as Luxembourg’s Bitstamp was the trigger for the surge. Some even connected it to the UK’s interminable Brexit situation and to people selling off GBP in case the UK crashes out of the EU and the Pound falls through the floor. Meanwhile the bulls were in the press talking about the end of the so-called ‘Crypto Winter’ and predictions about bitcoin hitting big figures were in the headlines.

 

The problem for the average person looking at the bitcoin market is this: who should you believe? It really is a tough call, even for those who know the market fairly well.

 

Not everyone is bullish on bitcoin

And then there are those who will tell you not to trust in what you are seeing. Brendan Coffey at Forbes claims that the “smart money” expects bitcoin to drop. He points to the  weekly Commitment of Traders  report from the Commodity Futures Trading Commission. This says “says that while small speculators (classified as non-reportable in the report) increased their long positions 18% and shrunk their short positions 27% compared to last week, large traders – hedge funds and other large speculators – raised their short bets almost 45%.” Also, large trader long positions in bitcoin were trimmed back by 24% this week, which is a bearish manoeuvre.

 

What does this mean for the price of bitcoin. Coffey suggests it may not create a big rise or fall. However, he does advise taking a look at the last bitcoin rally in 2017, when bitcoin futures first launched as well. These futures allowed people who were sceptical about bitcoin to bet against it, and he indicates that while we are seeing short-term gains, the longer-term picture may prove more challenging. Why?  He says, “As a purely speculative investment with a heavy amount of non-trading professionals betting on it, bitcoin has tended to display classical chart patterns.” And according to his charts, there is still a “thick blue line of resistance” to overcome. That stands at about $6,000, “but expect the sellers to come in at $5,500 and continue to sell on moves into the $6,200 area,” Coffey says. His reasoning, which is perfectly logical, is that people who “got caught holding bitcoin when it plunged will want to get out with what they put in.”

 

The answer would seem to be that the current bitcoin rally is both fact and fantasy. Yes, we have seen it surge to over $5,000 from hovering around $4,000 just a few days earlier. The fantasy bit? It is going to be some time, if it ever happens, before it reaches $50,000, even if that is the prediction of a crypto guru!