Wednesday, September 18, 2019

Bitcoin $10,000: What Does It Mean?

by James Corbett, The International Forecaster:

What matters is that the world has transitioned from a pre-World Wide Web economy to a World Wide Web economy, and we are still dealing with the ramifications of that.

Bitcoin $10,000? Already? It seems like just a few months ago that I was writing about the price of one bitcoin surpassing the price of one ounce of gold. Oh wait. I was. “Bitcoin Over Gold: What Does It Mean?” was written in March 2017. Fast forward 8 months and here we are with the price of one bitcoin topping $10,000. $10,138.06 as I type these very words, to be precise. But what’s in a number? By the time you read these words the price could very well have leapt to $15,000 and it could just as easily have plunged to $1,000. (If you’re curious you can check the current price here.)

Don’t believe me? Then you clearly haven’t been watching the bitcoin price at any point over the past 5 years. Exhilarating spikes and dizzying plunges happen all the time. When it comes to crypto trading, volatility is the name of the game.

This, of course, is manna from heaven for the financial press, which can now generate a seemingly never-ending stream of “Oh My God! Bitcoin Is Exploding!” and “Oh My God! It’s A Crypto Bloodbath!” stories, just swapping out one story for the other every day or two (sometimes multiple times a day). But all of these stories are a sham.

Case in point: ZeroHedge’s story from earlier this week, “Crypto Carnage Continues As The Fed Warns Digital Currencies Could ‘Pose Serious Financial Stability Issues.'” They manage to invoke the “bloodbath” description in the very first sentence to discuss the “clawback” from bitcoin’s flirtation with $11,000 earlier in the week. As you may have noticed, bitcoin plunged back down to $9,000 on Thursday morning, prompting traders to claim (for the 198th time, in case you’re keeping track) that the end was nigh for this silly experiment in internet play money.

To illustrate their point they invoked this chart (complete with plunging red arrows to help the reader understand what downward movement on a chart looks like).

Scary looking, I suppose. Until you put it in context. When you look at the full history of the bitcoin price chart, do you notice that 24 hour blip that was being hailed as a “bloodbath?” Neither do I. (Maybe we need some red arrows from the ZeroHedge team to help us see it.)

In fact, the article gets even better. It goes on to explain that “there is no immediate catalyst” for this “carnage” and then includes a lengthy section on how the price could hit $20,000 by the end of the year. That’s quite a lot of base-covering for a site claiming to have zero hedge.

Now, don’t get me wrong: this isn’t meant as a hit piece on ZeroHedge. If anything, ZH is one of the few sites that is willing to print a range of stories on bitcoin, from the absurdly bullish to the absurdly bearish and everything in between, so it’s not a bad place to hear from both the bitcoin boosters and the crypto critics. But this example article does demonstrate some very important things about the bitcoin phenomenon:

  1. Anyone’s random guess about the future price is as good as anyone else’s.
  2. Spikes and plunges seldom bear any direct relation to any identifiable news stories or events.
  3. People are so hungry for information that articles will be churned out (and consumed by eager readers) despite the fact that they are devoid of any substance whatsoever.

Here’s the fact of the matter: bitcoin is in a speculative bubble right now. The price is being driven up by intense interest from people who are just hearing of cryptocurrencies for the first time, people who have been on the sidelines but can’t bear to feel they’re missing out on the opportunity of a lifetime, and, more importantly, banksters and fraudsters.

It is the latter two categories of bubble blowers that, unsurprisingly, have a lot of bitcoin watchers (even some dyed-in-the-wool bitcoin die hards) wary.

The banksters are finding their way into the market in the usual way: derivatives. Why waste your time buying and selling bitcoin directly like a regular, day-trading chump when you can be a high-falutin’ 21st century Gordon Gekko trading bitcoin derivatives? Well, never fear! The good folks at the CME and CBOE Futures Exchanges are going to be launching bitcoin futures trading later this month in a move that was just approved by the CFTC.

And then there are the fraudsters. If you haven’t heard of the tethercoin/Bitfinex disaster-in-waiting, there are any number of resources online to get you up to speed. Suffice it to say, Mt. Gox was not the only super shady exchange scam in bitcoin history and it certainly won’t be the last.

Combine all of this with the inevitable (and not undeserved) Tulipmania comparisons and the stage seems perfectly set for yet another installment of the quarterly bitcoin crash. But every quarterly crash in the past has been followed by exponential growth that has brought bitcoin to new heights. Will this time be any different? Are we about to see another +20% “correction” and another period of exponential growth? Or the bursting of the bubble altogether? Or no correction at all on the way to $20,000?

Well, here’s my controversial answer: It doesn’t matter.

That’s right, it doesn’t matter. If you’re investing in bitcoin because you want to make some quick bucks, you’re an idiot. Now to be sure, there are a lot of millionaire idiots out there, and if all you want in life is lots of zeroes in your bank account, then have fun. Maybe you’ll buy low, sell high, cash out with a lot of Federal Reserve Notes and live “happily” ever after (by which I mean “until the Federal Reserve Notes become toilet paper”). Or maybe you’ll buy in at the top and lose everything. Again: it doesn’t matter.

Why not? It’s like saying that the story of the internet revolution was the story of what happened to this or that trader during the dot-com bubble. Yes, maybe Trader A made a fortune and Trader B lost it all and Trader C broke even, but on the world-historical scale, it doesn’t matter. What matters is that the world has transitioned from a pre-World Wide Web economy to a World Wide Web economy, and we are still dealing with the ramifications of that. The first bubble of speculative investment surrounding that transition and its inevitable popping is now a footnote in that history, just as the daily price movement of bitcoin (measured in fiat dollars) will be a footnote in future history.

Read More @ TheInternationalForecaster.com

Bitcoin Soaring After CFTC Approves Futures Trading: First Trade To Take Place Dec.18

from Zero Hedge:

Bitcoin is back over $10,000 after the the CFTC confirmed what had been previously reported, namely that it would allow bitcoin futures to trade on two exchanges, the CME and CBOE Futures Exchange, also granting the Cantor Exchange permission to trade a contract for bitcoin binary options.

The CFTC announced that through a process known as “self-certification,” CME and Cboe stated that their contracts comply with U.S. law and CFTC regulations. The US commodity regulator also said that the it held “rigorous discussions” with the exchanges that resulted in improvements to the contracts’ designs and settlement.

As to when the first bitcoin futures will cross the tape, the CME said it has self-certified the initial listing of its bitcoin futures to launch Monday, December 18, 2017.

Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,” said CFTC Chairman J. Christopher Giancarlo. “As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets. In working with the Commission, CME, CFE and Cantor have set an appropriate standard for oversight over these bitcoin contracts given the CFTC’s limited statutory ability to oversee the cash market for bitcoin.”

Market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority. There are concerns about the price volatility and trading practices of participants in these markets. We expect that the futures exchanges, through information sharing agreements, will be monitoring the trading activity on the relevant cash platforms for potential impacts on the futures contracts’ price discovery process, including potential market manipulation and market dislocations due to flash rallies and crashes and trading outages. Nevertheless, investors should be aware of the potentially high level of volatility and risk in trading these contracts.”

In response to the news, Bitcoin has surged back over $10,000…

… and lifted the entire crypto space higher.

As trading on these DCMs evolves, the Commission will continue to assess whether further changes are required to the contract design and settlement processes and work with the DCMs to effect any changes.

 

Once the contracts are launched, Commission staff will engage in a variety of risk-monitoring activities.  These activities include monitoring and analyzing the size and development of the market, positions and changes in positions over time, open interest, initial margin requirements, and variation margin payments, as well as stress testing positions.  Commission staff will additionally conduct reviews of designated contract markets, derivatives clearing organizations (DCOs), clearing firms and individual traders involved in trading and clearing bitcoin futures.

 

The CFTC will also work closely with the National Futures Association (NFA). NFA has issued an investor advisory on this topic to its members, including futures commission merchants and introducing brokers that are involved in the trading of any virtual currency futures product, and will closely monitor its member firms trading this product. If the Commission determines that the margin the DCOs hold against bitcoin futures positions is inadequate, it can take measures to require that the margin held at the DCOs be increased, including requiring that they use a longer margin period of risk to generate margin requirements.

 

As with all contracts offered through Commission-regulated exchanges and cleared through Commission-regulated clearinghouses, the completion of the processes described above is not a Commission approval. It does not constitute a Commission endorsement of the use or value of virtual currency products or derivatives.  It is incumbent on market participants to conduct appropriate due diligence to determine the particular appropriateness of these products, which at times have exhibited extreme volatility and unique risks.

Read More @ ZeroHedge.com

 

 

 

Nobel Laureate Stiglitz Says Bitcoin Should Be “Outlawed”

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by Pam Martens and Russ Martens, Wall St On Parade:

Bitcoin has soared this year by more than ten-fold, defying all of the Wall Street veterans who have compared it to the Tulip Bubble and/or a Ponzi scheme. That doesn’t mean that Bitcoin is a legitimate investment; it just means that bubbles have no set expiration date.

The Nobel laureate economist, Joseph Stiglitz of Columbia University, appeared on Bloomberg television yesterday and had this to say about Bitcoin:

“One of the main functions of government is to create currency. And Bitcoin is successful only because of its potential for circumvention, lack of oversight. So it seems to me it ought to be outlawed. It doesn’t serve any socially useful function.”

Consider the remarks Stiglitz made yesterday to our more detailed assessment along the same lines back in 2014. We wrote:

“The business writers at Reuters are also dead wrong on Bitcoin being like other currencies whose ‘value depends on people’s confidence in it.’ Let’s take the U.S. dollar. Backing the use of the U.S. dollar as a world currency is the following: a Congress made up of 435 Representatives in the House and 100 Senators in the Senate; 535 people elected from all over the United States who have the power to tax the income of every American receiving wage, dividend, interest or even Social Security income at whatever rate they see fit in order to pay the Nation’s bills and debt obligations to other countries.

“There are two big mechanisms underlying the confidence in the U.S. dollar. Unlike many other countries which have a not-so-foolproof system of collecting taxes, in the United States Federal income tax is deducted from workers’ paychecks and sent off to the Federal government by the employer before the worker gets his hands on his paycheck. Every worker, therefore, becomes part of the store of value in the U.S. dollar.

“Next comes the billions in taxes owed on interest and dividends. Those are reported to the Internal Revenue Service under the individual’s social security number by the financial institution or company declaring the interest or dividends, leaving no escape hatch for not reporting and paying the taxes owed.

“When an individual or a financial institution tries to game the system to dodge paying their share of taxes to support the roads, schools, tunnels, bridges, national parks, and Federal law enforcement protections provided with those taxes, the government has both the ability and eager willingness to lock you up and/or make a public spectacle of you. Just yesterday, Credit Suisse was outed by Senators Carl Levin and John McCain and the U.S. Senate’s Permanent Subcommittee on Investigations for aiding and abetting tax cheats. In 2009, Swiss bank UBS was outed on similar charges and paid $780 million to settle the matter.

“A digital currency that is backed with nothing tangible, that has no legislated power of taxation to support the currency, that has no Federal regulation over the people offering the currency, that has no independent, taxpayer-financed police to prevent counterfeiting of the currency, is not even a Tulip Bubble. A tulip is a tangible thing. This is just a bubble.” (Read the full article here.)

Unregulated currencies also have the habit of being used to facilitate crime. In 2013, the U.S. Department of Justice shut down an online outfit called Silk Road that used Bitcoins as an exclusive payment mechanism. On November 18, 2013, Mythili Raman, Acting Assistant Attorney General of the Criminal Division of the Justice Department, testified as follows before the U.S. Senate Committee on Homeland Security and Governmental Affairs:

“…the Department took action against one of the most popular online black markets, Silk Road.  Allegedly operated by a U.S. citizen living in California at the time of his arrest, Silk Road accepted Bitcoins exclusively as a payment mechanism on its site. The Department’s complaint alleges that, in less than three years, Silk Road served as a venue for over 100,000 buyers to purchase hundreds of kilograms of illegal drugs and other illicit goods from several thousand drug dealers and other criminal vendors.  The site also purportedly laundered the proceeds of these transactions, amounting to hundreds of millions of dollars in Bitcoins.  In addition to arresting the site’s operator and shutting down the service, the Department to date has seized over 170 thousand Bitcoins, valued as of this past Friday, November 15, 2013, at over $70 million. A separate indictment charges Silk Road’s operator with drug distribution conspiracy, attempted witness murder, and using interstate commerce facilities in the commission of murder-for-hire.  With regard to the murder-related charges, the indictment alleges that the Silk Road operator paid an undercover federal agent to murder one of the operator’s employees.”

Read More @ WallStOnParade.com

Bitcoin: Coinbase cryptocurrency broker loses bid to stop US tax probe

by Joel Rosenblatt, The Independent:

Around taxpayers reported bitcoin gains in a period when more than 14,000 users bought, sold, sent or received at least $20,000 worth of the cryptocurrency

Coinbase lost a bid to block an Internal Revenue Service investigation into whether some of the company’s customers haven’t reported their cryptocurrency gains.

US Magistrate Judge Jacqueline Scott Corley in San Franciscoruled that the tax agency’s demand for information isn’t overly intrusive. The price of bitcoin has been soaring and crossed $10,000 Tuesday.

With just 800 to 900 taxpayers reporting bitcoin gains from 2013 through 2015 in a period when more than 14,000 Coinbase users have either bought, sold, sent or received at least $20,000 worth of bitcoin, “many Coinbase users may not be reporting their bitcoin gains,” she wrote. “The IRS has a legitimate interest in investigating these taxpayers.”

The company, one of the world’s largest virtual currency exchanges, has been sparring since last year with the IRS over its summons — and continued to resist turning over the information even after the agency scaled back its request in July. Coinbase and industry trade groups contend the government’s concerns about tax fraud are unfounded and that its sweeping demand for information is a threat to privacy.

The company said it’s glad that the government and the court narrowed the scope of the summons.

“Coinbase started this process more than 12 months ago, and while today’s result is not the complete victory we hoped for, it does represent a substantial and unprecedented victory for the industry and the hundreds of thousands of customers that would have been unfairly targeted if it weren’t for our action,” the company said in a statement posted on its blog.

Last year, analysts said similar demands could be made of other digital-currency companies if the IRS widens its investigation.

“The government has sensed a windfall — any company that has a plethora of wealthy users might be in the sights,” Charles Hayter, chief executive officer of market tracker CryptoCompare, said in an email. “If there is tax to be paid the government is going to go after it if it makes an example” or a return on investment.

The IRS persuaded Corley last year to order Coinbase to approve its summons for customer records from a three-year period for an investigation into whether taxpayers failed to report income.

Read More @ Independent.co.uk

Bitcoin, Terence McKenna and the Future of the Internet

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by Michael Krieger, Liberty Blitzkrieg:

We have millions of people who are warehoused in almost a larval state in their apartments, watching tv, paying for their medical plans, and glued to this mindless opera of cultural decay that’s recited day after day in front of them. I mean, it’s horrible to imagine — and this is a creation to some degree of the world corporate state, that probably has to be addressed. 

– Terence McKenna, The Internet is the Cure for TV (1994)

I know the title of this post seems strange in light of several factors. First, it’s been nearly twenty years since the dot-com bubble burst and it’s estimated that 3-4 billion people globally, or roughly 50% of the world’s population, already surf the web. Second, it’s become increasingly trendy in 2017 to highlight all the bad things about the internet, with social media typically singled out for the most intense and visceral criticism. Although I acknowledge some very real downsides of social media such as unhealthy obsession and addiction, most of the outrage we’ve seen this year has been focused on “fake news” and “Russia meddling.” In other words, most of the hysteria’s been political in nature, and would barely be registering anywhere near its current decibel level had Hillary Clinton won the election.

All of a sudden, there’s this insistence that social media is especially dangerous because it fosters the creation of echo chambers rife with tribal confirmation bias. Spaces where people with the same views simply talk to one another, and whoever’s willing to be the loudest and most aggressive at signaling to their tribe becomes the most popular. I don’t deny that this phenomenon exists, but like with anything else, you have to accept the bad with the good, and in the long-run the good far outweighs the bad. The main reason so many are having a panic attack right now is because the internet and social media allowed the public to talk to one another directly without being force-fed corporate media narratives and they decided to reject the chosen one, Hillary Clinton.

As such, the “very smart people” and “experts” have concluded the problem is with the voter, as opposed to the terrible candidates on offer or the corrupt system itself. This is the real reason for the current obsession with “fake news” and dangerous social media echo chambers. The elites are simply frustrated that their methods of propaganda no longer work as more and more people talk to each other online.

In contrast, I’m in the Masha Gessen camp when it comes to what actually happened during the 2016 election. Here’s what she said in a recent interview:

 

I want to really think differently than the very consistent liberal-media line of, Well if they just knew better they would vote differently. They’re under-informed, they’re under-educated. I think it really misunderstands something, which is that, just because people are not acting rationally in accordance with what you think is rational, doesn’t mean that they’re not acting rationally. And I think there’s perfectly rational voter behavior in voting for Trump. For economic reasons and social reasons. 

Life is getting worse. You are less comfortable in your own house, in your own town, in your own skin. Your outlook for the future is worse with every passing year. And you conscientiously voted for people through this entire time. So it is actually an established fact that the system did not work for you. This representative democracy thing. And so you go and lob a grenade at it, when the grenade becomes available. And that is rational.

As such, it appears Trump’s election was indeed a rational response by an electorate fed up with the way things were going and faced with an unacceptable alternative. If that’s the case, then this entire narrative that the internet and social media leads to irrational choices because the unwashed plebs are talking to one another is completely wrong. In contrast, Trump’s election was a cry for help and a form of protest from a public that’s been abused and lied to by its own government for decades. I know several Trump voters personally, and not a single one of them really likes Trump, they just wanted to throw that democratic grenade at the system, which is their right as citizens. These were not votes for Trump as much as they were votes against Hillary. Period, end of story.

If that’s right, then the conventional wisdom that the internet and social media is destructive because it perpetuates “fake news” and leads to irrational outcomes is wrong. This isn’t to say Trump’s a good choice for President, but that his election was more than anything else a response to a discredited and corrupt status quo which refuses to reform or offer decent choices. If it wasn’t Trump in 2016, it would be someone worse down the road, and yes, there’s worse. Tom Cotton would be one example. In the long run, it’s probably for the best that we take the medicine now.

In the early days of social media platforms such as Twitter and Facebook everyone was brimming with optimism, yet after Hillary lost they suddenly became the biggest threat to society. While I have plenty of concerns about these platforms when it comes to censorship and privacy/surveillance issues, I remain in awe of the implications of people across the world easily talking to one another in real time and forming global networks. We’ve become so accustomed to social media at this point many of us already take for granted how extraordinary and revolutionary it really is. Nothing like this has ever happened before in human history, and it’s hard for me not to be extremely optimistic about its impact on life here on earth over a longer time horizon.

At this point, I want to offer a couple of real world examples to demonstrate what I mean. In yesterday’s piece, I quoted from an excellent article penned by Caitlin Johnstone. She’s an Australian woman who most of us never heard of two years ago, yet she consistently puts out some of the best commentary about U.S. politics by anyone, anywhere. How’s this possible and what does it mean?

Read More @ LibertyBlitzkrieg.com

My Crazy $17,000 Target for Bitcoin Is Looking Less Crazy

by Charles Hugh Smith, Of Two Minds:

The basis of this admittedly crazy forecast was simple: capital flows.

I think we can all agree that bitcoin (BTC) is “interesting.” One of the primary reason that bitcoin (and cryptocurrency in general) is interesting is that nobody knows what will happen going forward.

Unknowns and big swings up and down are characteristics of open markets.It’s impossible to forecast bitcoin’s future price because virtually all the future inputs are unknown.

We’ve lived so long with managed markets that only loft higher that we’ve forgotten that unmanaged markets are volatile and full of unknowns. We’ve forgotten that markets are reflections of all sorts of things, from human emotions to herd behavior to changes in the underlying Mode of Production, i.e. how stuff gets done, made, distributed and paid for.

Last May, when bitcoin was around $580, I distributed a back-of-the-envelope forecast of $17,000 per bitcoin to my subscribers and patrons ($5/month or $50 annually). (In June, I presented the case to subscribers of PeakProsperity.com, where I’m a contributing writer.)

The basis of this admittedly crazy forecast was simple: capital flows. There is around $300 trillion in financial “wealth” sloshing around the global economy, and another $200 trillion in real estate. (The sum of financial wealth is now much higher, due to the extraordinary gains in global markets.) I reckoned that if a tiny slice of that financial wealth flowed into bitcoin–1/10th of 1%– the inflow of capital would push bitcoin to around $17,000 per coin.

If 1% of all that wealth sloshing around looking for yield and safety decided to find a home in bitcoin, the forecasted price was an insane $170,000.

Compared to this, $17,000 per BTC looked almost conservative. But since bitcoin was under $600 at the time, $17,000 looked pretty darn crazy. But the math looked compelling to me: $300 trillion in mostly mobile capital sloshing around an inherently unstable system, and little old bitcoin was worth a meager $9 billion. Given that the total number of bitcoin was limited to 21 million, it didn’t seem much of a stretch to imagine a tiny sliver of all that capital flowing into BTC.

I heard many reasons why my scenario didn’t hold water. Fair enough: the future is unknown, I could have been completely wrong, and BTC could have dropped back to $60 or $6.

I repeated my analysis to my subscribers and patrons in December 2016, when BTC had reached $900.

So now we know bitcoin didn’t go to $60, or zero; it has climbed to $9,500 or so, a bit over halfway to my rough and unsophisticated back-of-the-envelope forecast of $17,000. Could BTC suddenly drop to $7,000? Of course it could; given its history, we should expect dizzying declines of up to 30% or more.

The interesting thing to me is that nobody knows what will happen going forward. Not knowing is refreshing. So is the opportunity to be right or wrong. This is what investing is supposed to be about.

There are all sorts of scenarios out there. Some will be right, some will be wrong, some will be half-right, and in all likelihood, stuff will happen that nobody predicted.

Here is a chart prepared by Tuur Demeester way back in 2013. It’s interesting because nobody has a crystal ball, so we’re all guessing based on what we expect to happen and what we see as the primary dynamics in play.

For what it’s worth, here are my notes to subscribers/patrons from last May/June. To me, this was more or less stating what I took to be obvious. As for all the quibbles about centralization and decentralization: yes, yes, yes and yes–I realize fiat currency issued by banks has certain features of decentralization and that bitcoin is vulnerable to the dominance of (or manipulation by) self-serving players. But the question boils down to: what matters most going forward?

Musings Report #21 5-21-16 (emailed to subscribers/major patrons)

Unlike precious metals, crypto-currencies are easy mediums of exchange: you can send or receive bitcoin as easily as you send or receive dollars with PayPal, Dwolla or similar services. The great problem going forward for many people will be transferring their remaining financial wealth out of depreciating currencies in their homeland to some other currency in another more stable country.

When governments clamp down on bank transfers and impose other capital controls, this will become increasingly difficult in conventional channels. Should demand for bitcoin rise, the price will skyrocket. Right now all 17+ million bitcoin in existence are worth about $8 billion–a drop in the bucket of the world economy’s $200+ trillion in financial assets and a tiny sliver of gold’s global $7 trillion valuation.  It would take very little to push bitcoin’s valuation to $80 billion, and this would still be a very thin slice of total financial assets.

Musings Report #22 5-28-16 (emailed to subscribers/major patrons)

The primary reason to follow crypto-currencies such as bitcoin and Ethereum’s ether currency is that they are outside the control of the self-serving exploitive elites that control the credit money issued by central banks and states.

Crypto-currencies are revolutionary because they are independent of central banks and an easy medium of exchange. Gold and silver are independent forms of money, but other than silver coins, the precious metals don’t lend themselves to acting as mediums of exchange in an increasingly digital world.

The key point here is the current financial system is highly centralized, while crypto-currencies are decentralized. Should a government decide to recapitalize bank losses with a bail-in, i.e. expropriating depositors’ money to cover banks’ losses, as was done in Cyprus, the depositors have no recourse: the state sends the order to the banks and the depositors’ accounts are legally robbed.

While some people believe the government will be able to outlaw the use of crypto-currencies, or expropriate bitcoin just like it does with regular bank accounts, the decentralized nature of crypto-currencies makes this more difficult than in a system dominated by five Too Big To Fail banks and a central bank.

Another reason to follow the growth of blockchain applications (the technology underpinning bitcoin) is that these big banks have jumped on the blockchain and “smart contracts” technology of Ethereum. The politically potent banks recognize that they must either adopt these technologies or they will wither on the vine, and they will not look kindly on any government effort to outlaw the technologies that are their future.

The last reason to follow crypto-currencies is their potential to gain value. In a currency-swap, bitcoin acts solely as a medium of exchange between yuan and dollars. But due to the structural limit on the total number of bitcoin that can be created/mined (21 million, of which 17 million are in circulation), bitcoin is a store-of-value currency as well as a medium of exchange.

Global financial assets total $294 trillion.

All the gold in the world is currently worth about $7 trillion.

Read More @ OfTwoMinds.com

Bitcoin as collateral? New Blockchain Fintech company to create lending network grounded on cryptocurrencies

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by Kenneth Schortgen, The Daily Economist:

One of the biggest questions in the cryptocurrency market has always been how could a de-centralized digital currency facilitate lending in a similar fashion to how central banks do using sovereign currencies?  Some companies like GoldMint are in the process of trying to create lending facilities using the old ‘Pawn Shop’ method out of their gold backed cryptocurrency, but as yet this paradigm only works for resource backed cryptos.

Now on Nov. 26 a company known as SALT Lending announced that they are ready to provide the platform to facilitate lending using unbacked cryptocurrencies like Bitcoin as their collateral.

In a world drowning in debt, consumers and institutions can borrow and lend against any collateral: Houses, stocks, gold, watches, diamonds, government bonds — the possibilities are endless. 

But there is one asset class the traditional lenders won’t touch with a ten-foot pole: cryptocurrencies and other crypto assets. And yet, because of their digital and transparent nature, these assets would be the easiest to collateralize. 

Enter SALT Lending, the first blockchain-based lending network. It aims to use blockchain technology to securely collateralize crypto assets and provide fiat money loans against them. 

Read More @ TheDailyEconomist.com