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.

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

The truth about crypto crime

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At last somebody has had the guts to stand up at an international event, in this case Money 20/20 Europe and make a statement about crypto and crime.

Former U.S. Federal Prosecutor, Mary Beth Buchanan, speaking during a panel discussion at conference held in Amsterdam, suggested, “we need to get rid of the negative connotations” that currently surround the emerging crypto industry. There will be many blockchain evangelists who will be happy to hear somebody from ‘the law’ speaking up about this, because many are tired of hearing voices in the mainstream media constantly repeating stories about the connection between crypto and crime.

Prosecutor says more fiat money is used in crime

Buchanan told the audience that it was a fact that many more crimes have been committed using fiat currencies; a fact that seems to get lost in MSM reporting. The former prosecutor told Cointelegraph: “I served 21 years at the [US] Justice Department and it’s not fair to say there is a greater amount of crime with cryptocurrencies. In fact I would strongly disagree with that… [what’s more], cryptocurrencies can be traced, unlike fiat currencies [cash].”

Tools to track crypto activities

This may seem a somewhat counterintuitive statement, given that anonymity is one of the key features of cryptocurrencies, but Buchanan told Cointelegraph, “there are now many commercially available tools that law enforcement can leverage to trace how currency has moved on a blockchain.” Two of those tools that she is talking about are Elliptic and Chainalysis. Both firms prevent, detect and investigate cryptocurrency money laundering, fraud and compliance violations. As Elliptic says: “We are the people who find truth in data.”

Given that these tools exist, it seems that law enforcement agencies need to catch up with what is available to them and understand the digital environment better as well. Buchanan certainly seems to believe this. She said: “regulators will need to “update” their practices in order to “keep pace,” as the outdated legislation introduced in the early 20th century for traditional securities is proving itself an awkward fit for 21st century innovations.”

As a matter of interest, Buchanan is now General Counsel for Kraken, one of the leading crypto exchanges, and she strongly advocates for digital currencies, describing, “cryptocurrencies as a “wonderful tool” that provides a “cost-effective” means for the transfer of value globally.”

Lay the myth to rest

Perhaps we can start to lay the myth of crypto and crime to rest now. Yes, crypto has been used for criminal activities that are estimated to have a value of about $72 billion globally. But wait, how much fiat money was used in crime? According to a Cointelegraph report, in the same year that BTC valued at $72 billion was used in crime worldwide, $100 billion in fiat was used in the U.S. alone for the purchase of drugs.

Claiming that crypto is bad because it’s primarily used for criminal activities will soon become an outdated myth if the truth is told often enough.