Tag: Bitcoin

A ‘ Crypto Bubble’ with benefits?

On By mehranmuslimiblogIn Bitcoin, Blockchain, Ethereum, FintechLeave a comment

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Michael Casey, chairman of coindesk’s advisory board and a senior advisor at MIT’s Digital Currency Initiative has a different view of the much-discussed ‘Bitcoin Bubble’. While most commentators present a ‘bubble’ as a harbinger of doom, he sees it as a positive situation.

He likens it to the late 1990s dot-com boom, and while he acknowledges that there are some who will disagree with him, he has suggested that what he refers to as the “Pets.com phenomenon” was a constructive event and that we should approach the ‘crypto bubble’ from the same perspective.

How does he reconcile the ‘boom and bust’ of the dot-com era with a positive outlook? Read on and find out.

Yes, he admits that many crypto coins will fail and people will lose money. But, he applies a theory from Carlota Perez, a Venezuelan theorist who wrote about the interplay between technology and capital markets in an influential book called “Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages.”

She claims that bubbles and their collapse are “an integral, in fact necessary, part of the economic dynamics through which transformational technologies take root in society.” Speculation, she says, is unavoidable element during time of technological transformation. Actually, the same could be said of gold, spices and tulips. As Casey puts it, “Whenever a new technology contains a wide-enough accepted promise that it can redefine core aspects of how our economy functions, people start throwing money at it.”

Why do we behave like this? According to the theory it’s because nobody really understands how things will turn out, and who the winners and losers will be. We just know that something big and important is happening, so we all get involved in wild and unstructured speculative behaviour.

Mike Casey believes we should see the ‘crypto bubble’ as “an affirmation that the technology we’re all so excited about it does indeed have huge potential even if it is still too nascent for major, disruptive deployment in the mainstream economy.”

How this will play out, nobody yet knows, but if Casey is right, we can be fairly sure that we’re on the road to building a transformational open-access platform that represents a collective evolutionary step – even if the bubble bursts along the way.

 

 

 

 

The ICO Chill Factor

On By mehranmuslimiblogIn Bitcoin, Blockchain, Ethereum, Fintech, ICO, Initial Coin OfferingsLeave a comment

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Parts of Western Europe have been at the mercy of the “Beast from the East”, an icy wind that swept down from Siberia bringing havoc in its wake. Now a different kind of chilling wind is blowing in from the USA as regulatory bodies talk about putting ICO token trading on ice for 12 months.

As Mike Lempres, chief legal and risk officer at Coinbase put it, “the market is being chilled.” As crypto entrepreneurs in the U.S. shiver, it seems that months of uncertainty about how the country’s regulatory bodies would approach “wanton market growth” is coming to a head, if perhaps not an end.

Events leading up to this include the SEC’s announcement last week that

it is investigating companies and startups associated with ICOs. As a result, which Brady Dale writes about at Coindesk, “entrepreneurs are largely surrendering on the idea that new cryptocurrencies created and sold to investors could be considered so-called ‘utility tokens,’ a term denoting a digital commodity meant to represent the share of a blockchain protocol.”

However, these companies still have a problem: as yet there are no registered broker-dealers capable of trading security tokens in the U.S. Furthermore, and this view comes from a number f ICO founders, when they do issue tokens under a Schedule D exemption, a 12-month lock-up is still required.

A statement from Nick Ayton, CEO of Chainstarter, who was in a panel discussion at the MIT Bitcoin Expo on 17th-18th March, addressed this issue. He predicted that the SEC will view all tokens as a security and stated: “Most exchanges are listing coins that are securities, and our view is a large number of these exchanges are going to be closed.”

Another voice at the conference, that of Gary Genseler, an MIT professor and former CFTC chair, said: “I think it is without a doubt that numerous exchanges will have to seek exemptions under alternative trading system [rules] because many of the exchanges, not all, have tokens that are securities trading on them.”

Currently, the problem is that even when companies want to comply with the rules, they still don’t know what the rules are. There is some knowledge about what is forbidden, but when it comes to avoiding the wrath of the SEC they are operating in the dark.

Munche is cited as the case that alerted some to what was coming from the SEC. This little known ICO received a bunch of subpoenas from the SEC, requesting information typically includes lists of investors, emails, marketing materials, organisational structure, amounts raised, the location of the funds and the people involved and their locations. In the case of Munchee, “what the federal regulators think of as a utility token and not a security token is so small, and the eye of the needle got even smaller,” said Joshua Klayman, legal counsel at Morrison Foerster.

What will be the end effect of this chill factor in the U.S? Well, Mike Lempres of Coinbase told Congress about one potential scenario if the United States doesn’t “provide a clear, thoughtful regulatory environment, the investment can very quickly move to other countries.”  Perhaps that will encourage the government and its regulatory bodies to bring a little sunshine to its crypto companies.

 

 

 

 

 

BTC thieves stealing in the streets

On By mehranmuslimiblogIn Bitcoin, BlockchainLeave a comment

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The whole point of cryptocurrencies is that they only exist online; they’re never going to jangle like small change in your pocket. All of us involved in the crypto world know that online theft is a risk, albeit one that can be mitigated by storing crypto assets in cold storage. Now, with more people taking crypto security more seriously, and better security tools available, we find that the crypto thieves are taking their activities offline. How can they do that?

The answer is: they are targeting those wise investors who store cryptocurrency offline and, in addition to this, they are finding out the identity of these crypto investors and actually attacking them in the street. As Darryn Pollock in Cointelegraph writes: “A number of cases have been reported where Bitcoin owners are being attacked face-to-face by thieves and being forced to deposit huge amounts of digital currency into anonymous wallets.”

He also cites the case of a Russian businessman who was held hostage on the Thai island of Phuket and forced to log in to his BTC account and pay $100,000 for his release.

This is a shocking development, but there are some steps crypto owners can take to avoid a face-to-face mugging. For a start, never brag about your Bitcoin account balance. Don’t post online about how much you have made in an amazingly short period of time. Would you normally tell people how much you have in your bank account? No, we don’t discuss those things, even with close friends. So, why do it with a crypto account?

Another Russian (they seem to be particularly unlucky) called Pavel Rashin was attacked and robbed in his home. They took about $425,000. They didn’t come for his BTC, but he had publicised online that he had recently become a millionaire thanks to his crypto investments. That was enough to make thieves take an interest in him and as he has an online blog, he wasn’t that hard to find.

Of course, if you’re a famous crypto investor, it is impossible to stay out of the news and there have been some high profile kidnappings, including that of the director of a currency exchange in the Ukraine.

Staying safer

So, don’t talk about your crypto assets publicly. Then take a technical step by setting up a multisignatory wallet. Wallets that require confirmation from multiple addresses to make a transaction permit allow the controlling keys to be spread out to different deposit boxes, banks, safes, and other locations. Therefore, even if one key is compromised, you still have control over your funds.

And finally, if you are faced with theft – give them the crypto. Your life is always worth far more.

 

 

Crypto Commandos: The Blockchain Forces vs Big Finance

On By mehranmuslimiblogIn Bitcoin, Blockchain, Economy, FintechLeave a comment

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The last few weeks have seen the forces of Big Finance arranging in battle formation to take on what its ‘generals’ see as the usurper forces on the blockchain.

FUD spreading media

From the initial rumours and misinterpretation of crypto-related announcements from the Far East, the FUD (Fear, Uncertainty, Doubt) statements coming from the international economic summit at Davos to the loud-mouthed Augustin Carstens of the Bank for International Settlements, the institutional forces have been set on destroying Bitcoin and the other coins on the blockchain. It is nothing less than a declaration of war, and those of us who believe in blockchain technology knew it would come one day. How could it not? The blockchain is a threat to the status quo enjoyed by governments and financial institutions since the Medicis got into banking.

Carstens, appropriately portrayed as a ‘fat bastard’ in Cointelegraph, called Bitcoin, “a combination of a bubble, a Ponzi scheme and an environmental disaster.” And he is one of the bankers screaming for more regulation. Of course they want to regulate cryptocurrency. Anything which is outside their control and which might put a dent in their resources is an enemy that must be executed or at least imprisoned. Because that is what regulation will effectively do: it will suck all the revolutionary qualities out of the blockchain and its crypto progeny until its potential to change the world is put back in the box and locked away for good.

It’s a ‘Criminal’ Currency

He’s not the only one who bleats on about the use of cryptocurrency for criminal activities. The mainstream media and the voices it chooses to publish, also keeps coming back to this time and again, demonstrating a massive lack of imagination, not to mention a real paucity of knowledge about the use of cryptocurrency. But, it’s easy to spot why they focus on this: they want to scare the average Joe away from crypto. Perhaps they missed the memo that showed less than one percent of Bitcoin transactions are involved with money laundering. In fact, the big banks handle more dirty money than the blockchain. But, the media doesn’t let that detail get in the way of the ‘criminal’ story.

The Control Freaks

Of course, the FUD coming from the Big Finance forces is emanating from their collective fear of losing control of the established financial system. Without that, how will they line their pockets? It is unthinkable to them that ‘the people’ might have access to an alternative resource that endangers the use of fiat currency. Big Finance may claim that they want regulation in order to protect ‘us’, but those of us who have been supporting blockchain achievements for many years, know that it is the ideology behind the blockchain that instils a terrible fear in the central and national banks.

Two years ago they didn’t care about Bitcoin, neither did the mainstream media; it was for geeks, not for ordinary citizens. But the crypto events of 2017 spurred them into action. A force was coming that had the potential to “replace the current model based on FIAT money and tax collection and change the current economic power system, which earns profits with financial services, interests and transaction fees,” as Abel Colmenares wrote in Cryptocoin News.

Fear is the weapon

Now we can expect crypto regulation to be the buzz topic at the next G20 summit in Argentina, as France and Germany have already announced their intention to push for global Bitcoin regulation. The French Finance Minister, Bruno Le Maire said: “We have a responsibility towards our citizens to explain and reduce the risks.” Lobbyists at the International Monetary Fund are keen to make sure the IMF is on board with ‘world governance’ for cryptocurrencies. All of the arguments in favour of this focus on spreading fear about the new digital currencies without any regard for the benefits it brings.

Paul Gordon, in an article published by Steemit, summed up why Big Finance is waging war against the blockchain: “Cryptocurrencies create two of the most dangerous potentials for individuals and free associations. They create the potential for anonymity and they significantly increase the ability of individuals and free associations to become self-reliant.”

So, far we have just experienced the first skirmish. This may be a protracted war, and whilst the Blockchain Forces may need to rally more troops, the odds are in favour of it winning. Because Big Finance needs the blockchain to evolve, more than people need centralised financial services. This is a war against liberty – which side are you on?