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

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.

Shining A Light On XRP Giveaway Scams

If you follow the money you’ll inevitably find people who want to steal it. Scammers have been targeting owners of XRP, Ripple’s native token, and this has been increasing since December 2018, according to Thomas Silkjaerwriting for Forbes.

What is a giveaway scam?

The term ‘giveaway scam’ is yet another new term to enter the crypto lexicon. Simply put, the term covers attempts to defraud people by convincing them that if they send funds to a project they will get more back than they put in, typically via an ‘airdrop’. The scammers usually impersonate the customer support element of exchanges or other websites, but more dangerously, they put up fake profiles on social media channels, such as Twitter, Facebook and Telegram, the latter being the preferred channel for crypto-related projects and especially ICOs. Vitalik Buterin, the Ethereum founder, has been very outspoken about these scams, and not least because his name has frequently been used by scammers to set up fake accounts.

How to report fake accounts

There is a way to report these fake accounts. Go to Bithomp and you can submit what you think is the “scam/fraud XRPL account”. Bithomp then investigates the accounts and if they find that they are fraudulent, they “add a warning to their block explorer service and expose the addresses via an API.”

How many XRP giveaway scams are there?

Silkjaer looked into the XRP ledger to see just how many ‘bad actors’ have been involved in this activity. He identified around 150 accounts connected to scammers or potential scammers. The number of payments received totalled 1,830 and the amount received 2.8 million XRP. He believes that there are just two major scam groups involved in giveaway scams, because “some payment destination tags have multiple relations, meaning that the same destination tag has been used by more than one account.”

A bit of advice

So, here is the standard advice if you believe that you may be being targeted by XRP scammers: If the offer seems too good to be true, it probably is. Don’t send funds to an unknown address, or at least be cautious.

The bitcoin rally: fact or fantasy?

Image result for bitcoin

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!

 

 

 

 

 

 

 

 

 

Will IEOs become the next big trend?

While it is true that ICOs are not quite yet dead, they enjoy far less hype than they did in 2017. And as interest in initial coin offerings wanes, a new player has arrived on the scene in the form of the Initial Exchange Offering (IEO). What is this beast, you may ask, and how does it work?

The Fetch.AI project is an IEO that has received a lot of media attention, not least because it raised $6 million in 22 seconds. The fundraiser was held on the Binance exchange. BitTorrent also raised $7.2 million in 18 minutes via an IEO. These heady figures are bound to draw the attention of those who feel the air has almost completely leaked out of the ICO balloon.

An alternative to the ICO

However, the need to raise money for blockchain-related projects remains. Which is where the IEO comes in — as an alternative to both the ICO and private placement. With the latter, the project raises funds via a private investor, rather than going to the public with tokens. The downside of choosing private placement is that there needs to be a very high level of interest in the project by investors with very deep pockets, such as those who funded Telegram to the tune of $850 million.

How does an IEO work?

An IEO is “an agreement with an exchange on an initial placement via the exchange,” writes Maria Stankovich on Medium. It is possible to simplify this explanation even further and say it is a token sale held on an exchange, which acts as an intermediary. And that is one key difference between the IEO and the ICO.

The exchange, it could be Binance or one of the others, assesses the project from a technical perspective to ensure it is legitimate, and they look at how attractive they believe the project will be to the exchange’s clients and a wider audience as well. If they are satisfied with the quality of the project, they make an announcement about the token sale on the exchange.

The upside for token buyers is that unlike with an ICO, they don’t need to send funds to purchase tokens via a smart contract; they can buy them directly from their personal account on the exchange.

The benefits of an IEO

There is a big benefit here for the project needing to raise funds, in that an exchange has a ready-made base of potential investors. It also means that the token is listed on an exchange — something that many ICOs have struggled with, despite promises to their followers. And the investors feel a higher level of trust, because the sale is taking place via the exchange that they already have confidence in. They also don’t need to go through more KYC, exchange fiat for crypto etc etc. It’s easier for everyone.

And of course the exchange benefits, or they wouldn’t do it. They potentially get a whole bunch of new customers who want to buy tokens. And these token buyers may stay to become long-term users of the exchange.

At the moment, only a handful of exchanges are offering IEOs. These include Binance, EXMO, GBE, Bittrex and Huobi. The Gibraltar Blockchain Exchangeis another leader in IEOs, and has conducted seven of them so far, using its GBX Grid — Token Launch Centre tool.

It is early days for IEOs, but the way forward seems promising: after all, unlike with an ICO, any proposed project will go through a more rigorous analysis before the sale begins, and that should boost investor confidence in the mechanism and the project.