Tag: Bitcoin

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.

Hype: a manipulator of the Bitcoin market

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

From time to time some people get on their high horse about the potential for manipulating the price of bitcoin. And there may be a compelling argument for thinking this. Michael K. Spencer thinks there is, or at least there was.

He writes, “as Bitcoin’s volatility rose from a minority pre 2015 to a hype “get rich” story of 2017 and into 2018 that went a bit mainstream, it was clear to me Bitcoin’s price was and is, incredibly manipulated.” He cites the idea of a ‘Bitcoin World’ that “has its own terms, norms and what’s considered normal might not actually be accurate.”

In his opinion, “Bitcoin’s price was clearly manipulated and vulnerable to pump-and-dump schemes,” and then adds, “The positive social network effect had grave consequences to a sort of collective fraud taking place.” However, as he says, he has been willing to play devil’s advocate with this topic while personally being able to see both sides of the story.

Crypto turns from cool to not so cool

The downturn in the market price certainly had the effect of making Bitcoin less cool than it had previously seemed to many. There was also the issue of the media’s approach to cryptocurrency, which has been either exceedingly negative to overly positive, and in a nutshell, all over the place. There is also the accusation that the crypto-focused media is corrupt and that the mainstream financial media has created a series of clickbait articles that are deliberately negative about Bitcoin and have thus engendered mistrust of crypto amongst readers.

What Spencer is talking about is the manufacture of hype “in an era of existential innovation that always seeks to re-create the wheel, in this case the value, money, transactions, digital assets and investment communities on the blockchain.”

Did the hype scam us all?

He points to a Bitwise study that claims 95% of “spot bitcoin trading volume is faked by unregulated exchanges.” The takeaway question from this and the media behaviour is: Did the hype make the public feel that cryptocurrencies were bigger than they really are?

Spencer also points to another Bitwise finding. In a March 2019 report it said that “substantially all of the volume” reported on 71 out of 81 exchanges was wash trading. This refers to the practice of buying and selling the same stick simultaneously to give the appearance of market activity.

All these factors raise concerns over the potential for abuse of the manipulation of the price of Bitcoin, and as Spencer writes, “If a lot of Bitcoin’s movement was “faked” or was and is falsified data, than essentially companies like Coinbase and Binance grew up in the hype with a heart of a lie.”

It’s certainly food for thought, even if you are a crypto supporter.

JP Morgan still has Cryptophobia

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

It may have seemed that with the announcement of the JPM Coin, the banking giant had overcome its ‘cryptophobia’. However, I cam across a story last week that indicates it is still some way from showing crypto the love.

Cryptoraves, a company that is working on the tokenization of social media, had its bank account shut down last month by JP Morgan, without any explanation whatsoever.

In the long run, JP Morgan told them they were working in a “prohibited industry.” But that is as much information as Cryptoraves could wring out the stone that is the bank.

Cryptoraves was surprised to receive a letter saying, “After a recent review of your account, we have decided to end our relationship with you.” That is like ending a relationship by text. It is rather harsh, all the more because it doesn’t provide any reason for the break-up. Who wants a bank that treats its customers like this?

And is Cryptoraves really operating in a “prohibited industry”? Go to its website and the first thing you see is that you can get “FREE TOKENS.” People use the tokens to boost their credibility on social media. For example, a Twitter user can request free tokens and send them to other Twitter users. The tokens have no actual value, therefore they are not securities in the regulatory sense.

Cryptoraves has published an assessment of where it thinks the issue with JP Morgan arose: “We did send two wire transfers to Gemini to buy ETH and LOOM in order to cover future blockchain fees. We suspected that these transactions flagged our account, but the Chase rep would not confirm this. They would not give us a reason for the closure. We called the number in the letter and the agent told us to visit a branch for these details. Visiting our branch resulted in no other details except when our branch rep pressed the agent (yep as the primary course of action, our rep called the same phone number), they said we were operating in an ‘prohibited industry’. I guess JPM’s own blockchain department didn’t get the memo?”

Furthermore, Cryptoraves had had a 15-year relationship with the bank and praised its service. There is a suggestion that the timing of the account closure is connected to the launch of the JPM Coin, but that may just be a bit of a conspiracy theory. What is clear though is that banks are still making it difficult for crypto-related companies and crypto owners, especially when something as innocuous as a transfer can result in your account being closed.

JP Morgan surprises us with a stablecoin

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

When JP Morgan announced the launch of its very own stablecoin, the industry was somewhat shocked. Was this not the big bank that loathed cryptocurrencies? The move got people excited, both in traditional banking and in the crypto community. But is the JPM Coin really as big a deal as everyone seems to think it is.

Naturally, the industry pricks up its ears when JP Morgan speaks, and any of its previous explorations of the blockchain have produced similar interest. As Ben Jessel, head of enterprise blockchain at Kadena remarks, “In the last few weeks, blockchain innovation managers’ phones across Wall Street investment banks have been ringing with executives inquiring about JP Morgan’s stablecoin and how they should be responding.”

That’s because enterprise blockchain technology has been the way that big companies have sought to harness blockchain technology to meet their needs as large organisations. JP Morgan’s move has made others question what to do next — is this the time to jump in and be first in the fast-follower line?

Initially, the JPM Coin seems exciting, because it suggests that Wall Street is beginning to “blur the lines between institutional banking and the brave new world of cryptocurrency,” as Jessel suggests. But the reality is not so simple.

Faster, cheaper settlements

JP Morgan’s stablecoin seeks to solve two problems in financial markets today: the expensive and inefficient process of settlement and the volatility involved in holding money in cryptocurrency. Settlement is expensive for banks for a number of reasons: first, payments are rarely made in real-time, which means that in many cases funds that should be paid are not actually made available until the end of the day. For the banks, this means billions of dollars can be tied up and can’t be used.

Blockchain speeds the process up, making the process less expensive for banks and reducing the liquidity trap, i.e. funds being tied up in the process of settlement.

JP Morgan’s stablecoin neatly connects the dots between the aspects of settlement and volatility management by providing digital cash that can be used and enabling the ability to redeem the coin at a stable rate. This may sound like a big deal, but in fact all it means is that any counterparty would be paid by JP Morgan issuing a digital certificate. At its most fundamental, JP Morgan is promising to credit the account of a user when presented with a digital certificate that has a redemption value of a dollar.

Having said all this, JP Morgan’s new ‘Coin’ is not an insignificant development. Don’t forget, this is an industry where they still use fax machines, so in that context, the JPM Coin is actually a pretty big deal.