Monday, June 14, 2021

Some historical context on the future of Bitcoin

by Simon Black, Sovereign Man:

On March 29, 1879, a widely circulated newspaper called the American Register published a scathing editorial stating that “it is doubtful if electricity will ever be [widely] used” because it was too expensive to generate.

Several months later, the Select Committee on Lighting and Electricity in the British House of Commons held hearings on electricity, with experts stating that there was not “the slightest chance” that the world would run on electric power generation.

It’s not that electricity didn’t exist at the time. It did. Serious study and research had been devoted to electricity since the 1600s.

But even by 1879 it was still considered an expensive fantasy.

The Scaling Debate and Hard Fork Highlight Several Key Differences Between Bitcoin and Gold

by Michael Krieger, Liberty Blitzkrieg

You know stuff’s going down when I write two posts in a row about Bitcoin, something which almost never happens anymore. In Friday’s piece, Is the Bitcoin Civil War Over? Here’s How I’m Thinking About Bitcoin Cash, I discussed a potential strategy that “big blockers” might attempt to execute should the 2x part of Segwit2x not happen later this year. Today, I want to discuss how the entire episode has actually served to highlight one of Bitcoin’s (and cryptos in general) huge competitive advantages in the realm of monetary-type assets, but also examine why gold is still important.

There’s been a lot of FUD written at length about the whole scaling debate, in addition to the fair observation that network splits cause confusion and can be bad for the Bitcoin “brand.” As I mentioned in Friday’s piece, I don’t see this being the case with Bitcoin Cash (BCC), since I don’t think there will be any real debate about which one is Bitcoin and which is an alt-coin. Interestingly enough, although the nastiness of the scaling debate has left a bad taste in a lot of people’s mouths, it’s also highlighted one of Bitcoin’s greatest strengths.

Earlier today I came across a tweet from an account I had never seen before, but it was simply genius in its poignant simplicity.

What this person is referring to is how the lack of support for BCC from several popular wallet providers/exchanges like Coinbase and Bitstamp, has led to a flood of requests from Bitcoin holders to move their coins off the exchange in order to access the BCC if desired after August 1st. This is essentially akin to a run on the bank, and any third party playing games with their customers’ assets will be exposed in due course. The fact that it’s so easy for a Bitcoin holder to initiate a withdrawal from a third party holding their asset is a huge advantage of Bitcoin versus gold and other traditional monetary safe-havens. It doesn’t take long to see why if you think things through.

Storing your own Bitcoin private keys is very much like holding actual gold or silver in your possession. One thing that hardcore gold bugs like to say over and over is “if you don’t hold it, you don’t own it.” At the end of the day, I think that’s right. It’s also what makes a gold backed digital asset less appealing than you might think at first glance.

When you hold your own Bitcoin private keys, not only do you have possession, but you also have a spendable asset. Gold can never replicate this competitive advantage. If you trust someone else to hold your gold, you’re exposed to counter-party risk. You are trusting someone else to secure your asset and be honest. You don’t need to do that with Bitcoin. Likewise, if China, Russia or any other government launch a gold-backed digital currency, you’re trusting the honesty of governments to have the gold they say they do. We know governments lie constantly, so I think it’d be completely foolish to trust such a monetary regime, and we don’t have to.

Before gold bugs start turning red in the face and cursing my name, let me finish. This is not to suggest that Bitcoin is a substitute for gold, or that I think the advent of crypto-currencies makes gold irrelevant as an asset. If I really felt that way, I wouldn’t still own precious metals. In fact, whenever the next economic criss happens I think gold will do exceptionally well, particularly versus stocks and bonds, as the traditional financial world will not rush headlong into cryptos as a safe-haven asset (though some will). Most funds probably aren’t even set up to be allowed to do that, so they’ll go to what has always worked and what they’re comfortable with, and that is precious metals.

We don’t need to be binary when it comes to the question of gold and Bitcoin. Gold has advantages Bitcoin will never be able to surmount, including thousands of years of history and genuine immutability. On the flip-side, Bitcoin has advantages gold will never be able to totally overcome. Namely, it’s an easily spendable asset that you can hold in your possession with zero counter-party risk. Moving large amounts of Bitcoin around is trivial compared to gold, which is an undeniably important attribute in the world we live in. You still need someone else’s help to move gold from a vault in let’s say Zurich to one in Singapore. You have to ask permission. Such permission is unnecessary with Bitcoin.

Read More @ LibertyBlitzkrieg.com

Will ICOs Take Down Wall Street The Way Bitcoin May Take Down Central Banks and Fiat Currencies?

by Jeff Berwick, The Dollar Vigilante:

I’ve said it many times in the past. Blockchain technology is the biggest evolution since the internet.

We’ve seen bitcoin quickly become a challenge to fiat currencies and central banks.

We’ve seen Ethereum change the very nature of apps into dapps or decentralized apps. And, it’s barely even begun yet.

And now we are seeing ICOs, Initial Coin Offerings, change how companies are formed and funded.

ICOs, similar to bitcoin, threaten entire industries.

It threatens the traditional investment banking industry… could that be why Jamie Demon hates it so much? Ya think? Over $3 billion has been raised by ICOs in the second quarter of 2017 surpassing the total funds raised via traditional equity financing for the first time.

It threatens the traditional stock exchanges.

And it certainly threatens the government regulators.

And the businesses that are being built with the ability for their tokens to be tradeable without third parties will threaten almost every other traditional business sector in the world.

To say all of this is a massive paradigm shift is an understatement.

ICOs have proliferated in the last year and, so far, on average, they have performed very well for investors.

ICOs remove the stranglehold on investment capital that has been monopolized by the big investment banks and made prohibitively expensive and restrictive by criminal government regulators.

The Chinese government has, as we’ve seen, been one of the first to, as Christine Lagarde puts it, “banned the initial, um, offer of, um, bitcoins.”

And, I have zero doubt that the criminal SEC will soon violently attack those who peacefully and voluntarily participate in the ICO market.

But, like with bitcoin, they can’t stop it. They can only do what all governments do; threaten violence and extort people who try to make the world a better place.

So, there will definitely be a lot of bumps along the road… the same as there will be for bitcoin… as governments and central banks try to stop progress from occurring.

And, there will be plenty of failures, scams, and drama as always occurs in the free market.

But, there will also be investment opportunities potentially of a lifetime.

Read More @ TheDollarVigilante.com

Bitcoin Markets Really Like CBOE Futures, Prices Spike Sharply

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by David Dinkins, Coin Telegraph:

Despite speculation that Bitcoin futures would make the famously volatile asset easier to short, the launch of CBOE futures trading this evening sparked a huge rally for the currency. Futures trading began at 5 PM Central time on December 10 at a price of $15,000, matching the price of one Bitcoin on the Gemini exchange.

As of press time, roughly five hours later, the price of Bitcoin has risen to $16,800 on Gemini. Futures expiring in January 2018 are trading at $18,500, a $3,500 rise. This rapid rise in the futures price has already triggered two “circuit breakers” and is threatening to trigger a third. CBOE has implemented so-called circuit breakers to give traders a chance to pause and reconsider in the event of large price movements. Any gain or loss of more than 10% triggers a two minute stop to trading, while a move of 20% or more will cause trading to pause for five minutes.

 

As we reported earlier tonight, CBOE’s launch of its Bitcoin futures product (which trades under the “XBT” ticker) caused such a sharp increase in demand that the exchange’s website went down almost immediately. In the last five hours, about 2,000 contracts have traded hands. Each contract represents one Bitcoin, implying a trading volume of greater than $30 mln in just a few hours. This is especially noteworthy considering Wall Street traders generally only work Monday through Friday. Odds are good that tomorrow will be a very big day, indeed.

Read More @ CoinTelegraph.com

Elon Musk: Bitcoin Has ‘Quite Brilliant’ Structure, Paper Money is Going Away

by Ana Alexandre, Coin Telegraph:

Technology entrepreneur and Tesla CEO Elon Musk said that Bitcoin’s (BTC) structure is “quite brilliant” and that digital currency is “a far better way to transfer value than pieces of paper.” Musk made his remarks during an interview on advisory services firm ARK Invest’s podcast on Feb. 19.

In response to a question about whether Bitcoin becomes the only native cryptocurrency of the Internet, Musk said that “the Bitcoin structure was quite brilliant,” and that he thinks that “one of the downsides of crypto is that computationally it is quite energy intensive. So there have to be some kind of constraints on the creation of crypto. But it’s very energy intensive to create the incremental Bitcoin at this point.”

Coinbase halts Bitcoin Cash transactions amidst accusations of insider trading

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by Shannon Liao, The Verge:

Coinbase has launched an internal probe to identify whether its employees engaged in insider trading of Bitcoin Cash shortly before the cryptocurrency was officially introduced to the exchange yesterday. Increased trading led to a spike in Bitcoin Cash’s valuation, and just four hours after its introduction, Coinbase suspended trading of the digital currency.

Coinbase’s ethics policy prevents employees from “trading on ‘material non-public information,’ such as when a new asset will be added to our platform,” wrote Coinbase CEO Brian Armstrong in a Medium post today. That includes sharing that information with friends and family. In the hours before Coinbase added Bitcoin Cash to its exchange, the price of the cryptocurrency had already begun to rise. The price for a single Bitcoin Cash coin soared past $8,000, or more than double its price a day earlier.

Armstrong warned, “If we find evidence of any employee or contractor violating our policies  —  directly or indirectly   — I will not hesitate to terminate the employee immediately and take appropriate legal action.”

Coinbase’s swift shutdown of Bitcoin Cash support came in the midst of many on Twitter raising suspicions last night about the unusual spike of Bitcoin Cash prices.

Back in August, bitcoin split into two, creating Bitcoin Cash, in what’s called a “hard fork.” The fork was backed by one bitcoin group that wanted to combat bitcoin’s high transaction fees and the size limit that made mining larger blocks of data invalid. Bitcoin users who controlled their own private keys benefited from the split by keeping the bitcoin they had along with an extra amount of Bitcoin Cash.

When the fork occurred, several trading platforms like CEX.io offered support for the new currency. But to users’ chagrin, Coinbase rejected Bitcoin Cash, with the company’s director of communications writing in a Medium post that “it is hard to predict how long the alternative version of bitcoin will survive.”

Now, Coinbase has decided to enable support for Bitcoin Cash, which has become the third largest cryptocurrency after Bitcoin and Ether in terms of market cap. Although Bitcoin Cash has seen less extreme growth in valuation than Bitcoin, which skyrocketed past $15,000 per coin this month, Bitcoin Cash’s value has steadily risen. It’s currently worth around $4,154, up from $1,500 last month.

Read More @ TheVerge.com