Thursday, August 5, 2021

Why Governments Can’t Stop Bitcoin: Atomic Swaps & Decentralized Crypto Exchanges


from SmaulGld:

Crypto currencies are decentralized products traded largely on centralized exchanges. Cryptocurrency proponents note that an advantage of cryptocurrencies like bitcoin and litecoin is that reliance on or trust in a third party is not required to transact. Centralized exchanges, however, themselves may make it hard to open an account or may place restrictions or ban the withdrawing of funds or cryptos. Centralized exchanges can also be be hacked or closed by governments. Thus, centralized exchanges may run counter to one of the advantages of transacting in cryptocurrencies.

Centralized exchanges provide places for price discovery to take place. On a centralized exchange the operator of the exchange buy and sells its crypto inventory on behalf of its users. The potential for abuse exists, especially absent regulation. A centralized crypto exchange can operate a fractional reserve system of trading and credit user accounts with crypto currencies that may or may not exist at the exchange. The exchange may rely on the knowledge that many account holders may not withdraw their crypto currencies. The possibility of this type of practice most likely was one of the reasons for China’s decision to close crypto exchanges.

Regulated centralized exchanges, however, hold promise as a way of integrating the entire crypto currency space with the existing financial system. In “Crypto Currencies Fiat Strenghteners or Killers?” we noted that solutions like tenx and others that allow for a variety of crypto currencies to be brought onto Visa cards so that they may be spent worldwide.

Fidelity Investments recently provided its nearly 70 million customers with an integration option whereby they could access their coinbase accounts on their Fidelity dashboards. Coinbase accounts as of this writing were at 10.5 million. If crypto currencies are to become fiat strengtheners, heavily regulated exchanges are necessary to track transactions and collect taxes.

Enter Decentralized Exchanges

Decentralized exchanges don’t require users to provide indenitfying information and their servers reside in different locations. A decentralized exchange holds no assets or customers funds and therefore there is nothing to sieze or central location to shut down. Using a decentrazlized exchange users can buy and sell crypto currencies with other users on the platform or off platform in person. Decentralized exchanges make it extremely difficult to track transactions and collect taxes.

Currently, the volume of crypto currency trading on centralized exchanges is vastly greater than volumes trading on decentralized exchanges. With the closing of the Chinese cryptocurrency exchanges, however, decentralized exchanges have seen an increase in trading volumes.

The number of decentralized exchanges are proliferating. Here are just a few of them:

Local bitcoins
Shapeshift’s Prism
Open Ledger
Ether Delta

Priced in Fiat or Bitcoin?

Crypto detractors say that Bitcoin and other cryptocurrencies derive their value from the ability to convert into fiat currency to purchase goods and services. Some go as far as to say that this makes cryptos themselves an extention of debt based fiat currencies. If cryptos inevitably become fiat strengtheners with full integration into the banking system, that point of view has validity.

If however, governments crack down on crypto currencies and don’t embrace centralized crypto currency trading, increased trading may occur on decentralized exchanges and the crypto ecosystem may instead of pricing cryptocurrencies and tokens in fiat pairs, price them only in Bitcoin or Ether.

Atomic Swaps

Atomic swaps allow users to by-pass even decentralized exchanges and transact with each other, even if the transaction involves different cryptocurrencies. Atomic cross-chain trading allows users to trade cryptocurrencies on different blockchains. For example atomic swappers holding alt coins like Litecoin can trade with holders of Bitcoin (or vice versa) at an agreed ratio (currently about 75-1; just like the gold silver ratio). Atomic swaps can occur using digital signatures that act as a functioning escrow that prevent one party from sending coins to anther party and not receiving the bargained for swapped coins in return.

Developers are currently testing atomic swaps. Charlie Lee, creator of Litecoin, recently tweeted his success in an atomic swap involving Bitcoin and Litecoin.


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“It’s Not Politics, It’s Survival” – Bitcoin, Local Currencies Are Taking Over In Venezuela

from ZeroHedge:

Anybody who believes that central banks are essential pillars of economic stability that deserve the untrammeled authority to issue currencies, which they presently enjoy, should take a close look at what’s happening in Venezuela.

Central bankers have tended to dismiss the notion of private currencies as an idea embraced only by techno-libertarian wingnuts (they have invariably described bitcoin as a “store of value” that’s “not yet big enough to threaten the economy.”

But in Venezuela, the collapse of the bolivar has forced locals to turn to alternatives like bitcoin and local community-issued currencies with fixed exchange rates. The rapid erosion of the bolivar’s value made everyday transactions like buying groceries and paying cabbies untenable – customers had to pay with large, cumbersome stacks of bolivars that were difficult to transport.

Patricia Laya, a Venezuela-based reporter, tweeted a photo of the 5,000 bolivars – the maximum amount – she was able to withdraw from an ATM in Caracas. They’re worth around $0.05. Laya stated that she had waited 20 minutes in line to obtain $0.05 in hyperinflated currency worth little to no value, according to CCN.

Even though bitcoin transactions can take hours – even days – to settle, local merchants have readily embraced the digital currency.

A Venezuelan student named John Villar said he uses bitcoin more than bolivars because it’s literally the only viable option.

“This is not a matter of politics. This is a matter of survival,” said Villar.

Villar said he has bought two plane tickets to Colombia, his wife’s medication, and paid his employees with bitcoin in the past month. Villar emphasized that he intends to continue utilizing bitcoin like the majority of Venezuelans, according to CCN.

In Venezuela, the majority of the population has lost trust in the government, the central bank and the banking system, which has clearly helped predispose Venezuelans to bitcoin.

In addition to bitcoin, communities are beginning to launch local currencies, the revival of an idea that the late Hugo Chavez became a proponent of late in life where Venezuela would adopt a series of 10 community currencies like the ones currently being issued by pro-government forces.

In one Caracas neighborhood, several shops have started accepting the panal, according to the Associated Press.

The panal, which means honeycomb in Spanish, can be spent in just a few stores. But residents of one neighborhood desperate for spending cash said they welcome the idea proposed by pro-government groups.

“There is no cash on the street,” said Liset Sanchez, a 36-year-old housewife who plans to use her freshly printed panals to buy rice for her family. “This currency is going to be a great help for us.”

Amid triple-digit inflation and a currency meltdown, there has been a run on cash in Venezuela.

Buying common items such as toilet paper, or paying a taxi driver, requires stacks of the official currency, called the bolivar.

To be sure, not everybody agrees that these alternative currencies are necessary or even helpful.

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The Primary Difference Between Ethereum And Bitcoin: A Beginner’s Guide

from Quora

Today’s hype surrounding Bitcoin, Ethereum, cryptocurrency, and blockchain technologies rivals the dot-com bubble in the 90s. There is a lot of money pouring into this space, and it doesn’t seem to be slowing down anytime soon.

Unfortunately, while the masses may be able to say, “Yeah, I’ve heard of Bitcoin,” a large percentage of people still aren’t quite sure what it is—and are even more confused about Ethereum.

If you’re even remotely interested in this space, consider this your beginner’s guide.


The easiest way to define Bitcoin is to call it a “digital dollar.” That’s really all it is—minus all the formal regulations that come with a bank (which is what makes it such a disruptive concept). It’s not a technology. It’s not a company. It’s your money, held in a digital form.

Anyone can create an account to buy and sell Bitcoin through websites like Coinbase. The price of Bitcoin then fluctuates based on supply and demand. However, now people are beginning to convert their Bitcoin into what are called “tokens,” which companies issue during an ICO, or Initial Coin Offering, which allows people to invest in a company by purchasing tokens with their Bitcoin. Based on the supply and demand of those tokens, their price (just like a share of stock after a company holds an Initial Public Offering, otherwise known as an IPO) goes up or down. These tokens operate on a secondary market, separate from the rise and fall of Bitcoin’s market as a currency.

Some people buy Bitcoin because they want to store their money somewhere other than a bank. Some buy Bitcoin as an investment, believing that its price a few months or years from now will be substantially higher than it is today. And some people purchase Bitcoin as a means of investing in companies that raise money through an ICO, since equity in those companies cannot be purchased with traditional currency. You can only purchase tokens with Bitcoin or Ether, which is Ethereum’s cryptocurrency.


Ethereum is another cryptocurrency, and one many people see as potentially overtaking Bitcoin as the dominant coin in the market.

In any economy, currency is relative. Since Bitcoin has been the leading coin since the beginning, the price of every other “altcoin” (and there are a lot of them) is measured against Bitcoin. Take Litecoin, for example. It is a currency that has its own market and holds its own merit, but while Bitcoin is priced at over $3,000 per, Litecoin currently sits around $45 per. So, while it has its own value, it is by no means a market leader.

What makes Ethereum different is its technology, not the fact that it’s yet another cryptocurrency. Ethereum’s coin value is referred to as “Ether,” and just like Bitcoin is bought and sold, and used by investors to buy into ICO opportunities.

The difference between Ethereum and Bitcoin is the fact that Bitcoin is nothing more than a currency, whereas Ethereum is a ledger technology that companies are using to build new programs. Both Bitcoin and Ethereum operate on what is called “blockchain” technology, however Ethereum’s is far more robust. If Bitcoin was version 1.0, Ethereum is 2.0, allowing for the building of decentralized applications to be built on top of it.

In a nutshell: it’s great for innovation.

Furthermore, there is heavy support behind Ethereum’s technology in what is called The Enterprise Ethereum Alliance. This is a super-group of Fortune 500 companies that have all agreed to work together to learn and build upon Ethereum’s blockchain technology—otherwise referred to as “smart contract” technology. In this case, “smart contracts” mean that demanding business applications can automate extremely complex applications.

What has so many people—including me—excited about Ethereum’s technology is its potential to impact IoT projects and processes. It’s by no means a perfect technology yet, but it has absolutely opened the door for all sorts of unique innovations. For example, my firm, Chronicled, recently worked with a 3D-printing company, Origin, to develop a ‘smart tag’ for sneakers and luxury goods that could guarantee their authenticity. This was done leveraging Ethereum’s blockchain technology.

All in all, and if you’re as curious and excited about this space as I am, the major difference between Bitcoin and Ethereum is their separation of roles—and the fact that they are aiming at parallel but different goals. This article on the topic summed it up perfectly, by citing that early adopters are beginning to see the separation as such: “Where Bitcoin is disrupting currency, Ethereum is disrupting equity.”

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Cryptocurrency Chaos: Bitcoin, Litecoin and Ethereum All Keep Surging To New Record Highs With No End In Sight

by Michael Snyder, The Economic Collapse Blog:

The cryptocurrency revolution is the biggest story in the financial world right now. In recent days I have spent a lot of time writing about Bitcoin, but the truth is that all of the major cryptocurrencies have been on an unprecedented run lately. In fact, some of them have been rising much faster in price than Bitcoin has. So even though Bitcoin is now worth almost 18 times as much as it was at the beginning of 2017, that actually pales in comparison to how fast Litecoin has been rising. Of course not all of these cryptocurrencies will eventually succeed. There are about 1000 different cryptocurrencies in existence at the moment, and most of them will inevitably fail. But for now virtually every cryptocurrency is soaring, and the total market cap for all cryptocurrencies combined is rapidly approaching half a trillion dollars.

Let’s start our discussion with Bitcoin. As I write this, a single Bitcoin is worth $17696.99, and that is absolutely astounding considering that the price was sitting at just about $1,000 as 2017 began.

We have seen the price of Bitcoin double over and over again, and this last cycle only took 22 days. At this point Bitcoin is so hot that people are actually mortgaging their homes in order to get money to invest…

Securities regulator Joseph Borg says he has seen people doing everything from running up credit card debt to mortgaging their homes to pour money into the cryptocurrency.

It’s easy, from one angle, to see why. Bitcoin started out the year being worth $1,000. On Nov. 20, Bitcoin set a new record by passing the $8,000 mark. As of mid-morning Tuesday, it was worth over $17,000. Very few investments double their value in just 22 days.

Of course Bitcoin and other cryptocurrencies don’t actually have any intrinsic value at all. They only have value because people think that they have value, and right now we are witnessing one of the wildest “financial manias” in recorded history.

In fact, Bitcoin mania has now actually surpassed the infamous Dutch Tulip bubble of 1636 and 1637 according to one analyst

One month later, the price of bitcoin has exploded even higher, and so it is time to refresh where in the global bubble race bitcoin now stands, and also whether it has finally surpassed “Tulips.”

Conveniently, overnight the former Bridgewater analysts Howard Wang and Robert Wu who make up Convoy, released the answer in the form of an updated version of their asset bubble chart. In the new commentary, Wang writes that the Bitcoin prices have again more than doubled since the last update, and “its price has now gone up over 17 times this year, 64 times over the last three years and superseded that of the Dutch Tulip’s climb over the same time frame.”

Can Bitcoin defy financial gravity and continue to climb higher in price?

We shall see.

Meanwhile, the fifth largest cryptocurrency, Litecoin, has more than doubled in price since Sunday afternoon. And overall, the price of Litecoin has been rising much, much faster than Bitcoin so far this year…

Litecoin (LTC) has proved the underdog and is currently dominating crypto charts. In the past 24 hours, the price of Litecoin has surged over 45% hitting a new all-time high of $255.40, according to CoinMarketCap. The 24-hour trading volume for Litecoin has crossed $4.68 billion while the market cap has surpassed $13 billion. Currently the cryptocurrency is trading at $245.51.

An interesting fact is that if we closely look at the stats since the beginning of 2017, when Litecoin traded at a mere price of $4.3, the token has appreciated investors’ money almost twice as much as bitcoin has done. If to calculate the returns as on the existing date, it turns out that during the afore-mentioned period Litecoin has gained more than 5500 percent against Bitcoin’s 1800 percent.

5500 percent in a single year is absolutely crazy.

There are some people out there that have made absolutely extraordinary amounts of money investing in cryptocurrencies, and another one that is extremely hot right now is Ethereum

Ethereum, the number two digital currency by market capitalization, topped $600 today to set a new all time high. According to CNBC, the surge comes as UBS announced they will head an Ethereum-based Blockchain initiative along with Barclay’s, Credit Suisse, KBC, Swiss stock exchange SIX and Thomson Reuters. The initiative is designed to help these companies comply with new European Union trade data standards that go into effect in 2018.

Ethereum now has a total market cap of more than 60 billion dollars.

That makes Ethereum more valuable than General Motors or Aetna.


After seeing all of the money that has been made, many are racing to learn how to invest in cryptocurrencies, but it is never wise to invest after a giant bubble has already formed. According to banking giant UBS, Bitcoin is “the bubble to end all bubbles”, and they are not optimistic about where things are headed…

UBS Wealth Management is not a believer in bitcoin becoming a legitimate currency even as the launch of futures lead some investors to believe the cryptocurrency will become a more stable market.

“The bubble to end all bubbles continues. Cryptocurrencies only have value if accepted as currencies. However, they cannot be used for the most important transaction in an economy, and cryptocurrency supply can only rise and never fall (making them a poor store of value),” global chief economist Paul Donovan wrote in a post Monday. “To date, using cryptocurrencies requires (effectively) a simultaneous asset sale and purchase of goods or services.”

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Watch Someone Explain Why Bitcoin Is More Legit Than the Dollar in One Minute


by Josie Wales, The Anti Media:

Business mogul and Bitcoin enthusiast John McAfee appeared on CNBC Fast Money this week to respond to J.P. Morgan CEO Jamie Dimon’s claims that Bitcoin is “a fraud,” and he managed to shut down Dimon’s allegations in just over one minute.

“I would like to say this, Mr. Dimon: I respect you, sir, for your position. People who rise to your position are not idiots,” McAfee began. “However, sir…you called Bitcoin ‘a fraud.’ I’m a Bitcoin miner. We create Bitcoins. It costs over one thousand dollars per coin to create a Bitcoin. What does it cost to create a U.S. dollar? Which one is the fraud? Because [the dollar] costs whatever the paper costs, but it costs me and other miners over a thousand dollars per coin – it’s called ‘proof of work.’”

McAfee then went on to explain the amount of computing power and electricity that goes into creating the digital currency. “Surely there’s some value in the work that we did to create the coin,” he said, also pointing out that Bitcoin’s fluctuating value is nothing to sound the alarm over. “The fact that Bitcoin is consistently growing in its use and its value has to say something. You know, sure it will rise and fall and it is highly volatile, as all new technologies are. At the same time, it is certainly not a fraud,” he said.

When Fast Money’s host asked him about his infamous Twitter bet that Bitcoin will surpass $500,000 in three years, McAfee simply replied, “Oh, I don’t lose bets.”

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Bank of England may issue its own ‘bitcoin’


by Robert Mendick, Australian Financial Review:

The Bank of England could approve its own bitcoin-style digital currency within the next year, The Sunday Telegraph can disclose.

A research unit set up by the Bank is investigating the possible introduction of a crypto-currency linked to sterling.

If approved, a virtual currency issued by the bank would pave the way for a revolutionary shake-up of high street banking.

A Bank of England-issued digital currency could allow British citizens to keep their money – in digital form – with the central bank itself, dispensing with the need for a retail bank. Big-ticket transactions, such as buying a house, could happen in nanoseconds.

The research unit was set up in February 2015 and, according to a Bank of England spokesman, could report back within the next 12 months.

The bank has been trialling technology for digital transactions, using the same methods that underpin Bitcoins and other crypto-currencies.

The value of a bitcoin has risen sharply in the past year. It was worth about £720 in January, peaking at almost £15,000 in mid-December, before falling back dramatically to below £10,000 in the immediate run-up to Christmas. The volatility – and apparent popularity – of bitcoin will intensify pressure on the Bank of England to make a decision on an alternative digital currency of its own.

The currency would be pegged to sterling and underpinned by the bank, making it far less volatile than bitcoin.

Mark Carney, the Governor of the Bank of England, told the Treasury select committee before Christmas that he had held talks with other central banks about launching digital currency. “I have participated in discussions with the major central banks on this issue,” he said, adding that those meetings would resume in January.

The bank carried out a successful test of a new digital payment method – called “distributed ledger” or “blockchain” technology – in the summer, that demonstrated the viability of making payments between two central banks. The technology is the same as is used in Bitcoins.

Mr Carney told the committee in his evidence: “The underlying technology is actually of a fair bit of interest. We are working with it at the Bank of England.”

He said the “most interesting application that would be beneficial for financial stability and efficiency” would be using the “blockchain” technology for “settlements” between central banks.

Some senior figures inside the Bank appear to be pushing for a wider roll-out of crypto-currency.

Richard Sharp, a member of the Bank’s financial policy committee and a former Goldman Sachs banker and Conservative Party donor, said there were “significant uncaptured efficiencies for consumers” if digital currency became widely available. He suggested the current “gold rush” for Bitcoins would speed up the industry.

In March 2016, it emerged that computer scientists at University College London had devised a crypto-currency known as the RSCoin with backing from the Bank of England.

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One Year Ago Bitcoin Surpassed Gold In Value Per Unit… Look At How Things Have Changed!

by Jeff Berwick, The Dollar Vigilante:

This time last year, we published an article titled “Bitcoin Is Now Good As Gold, Actually It’s Better”.

Now, this was back when a single bitcoin traded around $1,280.

There were quite a few haters back then who commented on the vblog we did for that same article saying these things:

In the last year, bitcoin has since hit $20,000 per coin and corrected back down to around $10,000 as of today.

Around 9 months after the above comments, I put out another video on December 15th suggesting that people begin rotating crypto profits into some of the forgotten gold stocks that have good upside potential.

And just as absurd as the comments from 9 months earlier, people began making statements in the video comments like;

“Gold will never go up, bitcoin will never go down” and this guy:

At the time of the video, bitcoin was trading at $17,700 and has since fallen 45%.

In fact, within two days of the video, bitcoin hit its all-time high near $20,000 and has come down dramatically since.

But, this just goes to show the madness of crowds and how sentiment can change dramatically so quickly.

One year ago, I was virtually assaulted for suggesting bitcoin was “as good as gold” and most of the commenters said bitcoin was in a bubble and “tulip mania” when it was near $1,300 while stating that gold was the best investment.

Nine months later and bitcoin had risen to $17,700 and I was lambasted for even stating that bitcoin could ever go down again… and nearly everyone commented that gold would never rise again.

This is why you shouldn’t be taking your investment advice from Youtube commenters! In fact, I often use it as a gauge of public sentiment and if everyone thinks something is going to go up… then it will almost surely go down. And, vice versa.

Your average person, after all, is an indoctrinated, vaccinated, fluoridated brainwashed slave that has been the target of mind control in the government indoctrination camps and via television programming their entire lives.

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Lead Fraudster Of Fraudulent JP Morgan Says Bitcoin Is A Fraud?

by Jeff Berwick, The Dollar Vigilante:

Bitcoin and virtually all of the cryptocurrencies have had a very sizeable, and much needed and expected pullback this week.

There have been two main focal points for the pullback.

Rumors and speculation of a Chinese government attack against the free market have caused most of the consternation.

But, secondly, and most laughably, were comments from Jamie Demon (they spell it Dimon so as to not be too obvious about his backing), the lead fraudster of the virulently fraudulent company, JP Morgan, who said that bitcoin is a “fraud!”

This, coming from a man whose entire industry, of banking, is based on the fraud of fractional reserve banking which is only made “legal” by the fraud of government which is based solely on extortion, which they call taxation.

And, based on a currency, which is created by the fraudulent Federal Reserve which is a central bank which is a tenet of communism and is an outright ponzi scheme whose sole purpose is to impoverish nearly everyone in society and to enrich the 0.00001{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

So, to have Jamie Demon say that bitcoin, which is just math, is a fraud, comes at the height of incredulity.

Not to mention, this is no different than the CEO of Barnes and Noble calling a fraud for the pure fact that it has technologically innovated Barnes and Noble into the dustbin of history… as bitcoin, or at least cryptocurrencies, as a whole, will soon relegate central banking and fiat currencies.

Just look at the US dollar from the cryptocurrencies point of view and you can see that it is the Federal Reserve Note, not bitcoin, which is the fraud.

If the US dollar were a cryptocurrency it would be the one called the fraud.

The US dollar has/is:

No max cap. In other words, it can be inflated to infinity… as opposed to bitcoin which has a hard limit of 21 million bitcoins that will ever be created.

Pre-mined. One of the death knells of a cryptocurrency is that it is pre-mined. In general, this means that the creators of the currency create the currency and give it to themselves before allowing others to purchase it. This is the height of fraud in the cryptocurrency space but this how all US dollars are created. They are pre-mined by the Federal Reserve before they are allowed to “trickle down” to the rest of us poor slaves.

No transparency. Unlike bitcoin, the US dollar has very little transparency as to where it came from and which potentially criminal organization, like the US federal government, IRS or any of the other three letter agencies it has flowed through.

Not backed by cryptography. While bitcoin and all cryptocurrencies have proof of ownership through very secure cryptography the owner of “dollars” can be anyone who is friends with the Federal Reserve.

Not open source. Unlike bitcoin, which anyone in the world can review their code, the dollar is not open source and therefore all manner of fraud can be perpetrated in the system.

You don’t control your private keys. With bitcoin and other cryptocurrencies you hold complete control of your currency by holding your private keys. With dollars, any criminal government agency or the central bank can take control of your dollars at any time.

Not voluntary. While using and owning bitcoin is completely voluntary, usage and acceptance of US dollars are backed by violence. If you do not accept dollars you can and will be kidnapped and thrown in a cage. Should you try to escape you most likely will be killed.

So, which currency is the “fraud” again?

Or is it more likely that Jamie sees bitcoin as a serious risk to his criminal business model?

After all, JP Morgan filed a patent – which is also a criminal act to use violence against others using your ideas – for a “bitcoin killer” competitor to bitcoin in 2013.

Things aren’t going all that well for the US dollar, after all. Year-to-date, this has been the worst performance for the US dollar from January to September since 1986.

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