Bitcoin gained prominence because its peer-to-peer payment system allows people to conduct financial transactions that can’t be censored by third parties. Users are free to transact with anyone, as long as they control their own private keys. Photo: Bloomberg
Every time a government sets out to abolish something people like, the well-liked thing moves to where it can’t be stopped. This has happened with prohibition, gambling, the war on drugs and digital piracy. Now it’s happening in China, where the government has been trying to crack down on bitcoin.
As part of an effort to control capital outflows, the Chinese central bank required bitcoin exchanges to suspend withdrawals until they could update their compliance systems. Trading on the exchanges took a big hit, but the bitcoin activity resurfaced on less formal over-the-counter venues. Here’s a chart showing trading volume at LocalBitcoins, a site where users post “advertisements”—like on Craigslist—to buy or sell bitcoin for local currency:
[Bloomberg]
Click here for enlarge
Blocking LocalBitcoins would be no solution, in part because people can use virtual private networks to access it anyway. Also, plenty of trading happens on lesser-known sites and on micro-messaging services such as WeChat and QQ. The latter already have their own payment systems, allowing users to build chatbots to automate trading activity. For those who prefer a more familiar trading interface, decentralized exchange software such as Bitsquare can construct an order book based on outstanding offers accumulated from other participants.
China is not alone. Peer-to-peer trading took off in Turkey after the country’s only bitcoin exchange ceased to operate, and in Venezuela after the leading exchange had its bank account closed. Russia has some of the most active unofficial bitcoin markets in the world, thanks to the country’s longstanding regulatory uncertainty.
Although centralized exchanges provide benefits, such as bringing together large quantities of buyers and sellers and guaranteeing payment, they’re not necessary for the currency’s existence. Bitcoin users don’t own physical coins, or even digital ones. They own permanent transaction histories recorded on a global ledger, replicated by participants all around the world. Even if a government shuts down every bitcoin node in its country, a bitcoin user can still transact as long as a single node is accessible overseas.
This puts regulators in a tough spot. It’s hard to control something that exists nowhere and everywhere at the same time. With peer-to-peer transactions, there are no servers to shut down, no kingpins to arrest, no warehouses to bust. Regulators can only go after local bitcoin exchanges and service providers, effectively impairing their own ability to see what’s going on.
Attempts to stamp out Bitcoin serve only to remind users why a decentralized currency needs to exist in the first place. Bitcoin gained prominence because its peer-to-peer payment system allows people to conduct financial transactions that can’t be censored by third parties. Users are free to transact with anyone, as long as they control their own private keys. The fact that many people still give third-party service providers custody of their bitcoin accounts is mostly a relic of our existing acclimation to banks. When regulators try to restrict bitcoin exchanges, they reduce trust both in the government — which can’t seem to keep its hands in its own pockets — and in any kind of third-party financial service provider that might be beholden to the government.
The best way to curb the use of bitcoin is to convince people that they don’t need the cryptocurrency. If Visa and Mastercard started processing payments for darknet markets and remittance customers, the demand for bitcoin would fall off a cliff. But that’s about as likely as China offering to ease capital controls. The US, for its part, could reform money laundering rules that effectively bar a subset of the population from the banking system. When regulations create barriers that prevent legitimate businesses from serving certain customers, less-legitimate businesses rise to meet the demand outside the regulatory system.
Markets can’t be regulated out of existence. The next best thing might be to let them operate in the open. Bloomberg
Elaine Ou
Saturday, February 25, 2017
Bitcoin Prices Have Surged to an All-Time High
In Brief
Bitcoin is a digital currency that allows users to conduct monetary transfer securely and anonymously.
The value of the currency has been steadily surging lately and is currently enjoying its highest value ever.
Tales From the Cryptocurrency
Bitcoin is a term we often hear tossed around in the headlines. We know that it deals with money, online transactions, and just maybe the deep web. Back in 2014, the Washington Post established that only 24% of the American public was aware of what bitcoin actually was. Meaning that almost three-quarters of the country had no idea. But maybe they just might want to start paying attention, especially now since it is at its all-time high value.
Bitcoin was introduced in 2008 by an anonymous group of programmers under the name of Satoshi Nakamoto and was eventually released to the public in 2009 as an open-source software. Unlike other online payment services like PayPal and Venmo, Bitcoin is a peer-to-peer network that takes place privately between two users—meaning there is no intermediary involved. The cryptographic virtual currency is completely decentralized from any external influence while all transactions with the currency are accounted for through a blockchain ledger.
While bitcoin is thoroughly anonymous, the blockchain ledger has all transactions available publicly. Therefore, theoretically, if you know the time and date of a particular transaction, you may be able to match someone’s online address to their identity. On the other hand, all transactions made through bitcoin are encrypted with military grade cryptography, ensuring that all deals are secure. Sending and receiving bitcoins is as easy as sending an email, but does that mean it’s worth it?
Time to Invest?
With all that said and done, Bitcoin has made it far since it’s substantial price drop in 2013. Since then Bitcoin has stabilized around a margin of $250, with most experts believing it was doomed. However, it seems to have returned to a relatively stable rise since last year. This time last year bitcoin was valued at $367, with its steady rise, it is now valued at 1,177.18. Many speculate as to what is causing the recent trend from Congress to WallStreet to even sheer luck.
References: TechCrunch, Blockchain
Neil C. Bhavsar
@Neilcogen
Bitcoin is a digital currency that allows users to conduct monetary transfer securely and anonymously.
The value of the currency has been steadily surging lately and is currently enjoying its highest value ever.
Tales From the Cryptocurrency
Bitcoin is a term we often hear tossed around in the headlines. We know that it deals with money, online transactions, and just maybe the deep web. Back in 2014, the Washington Post established that only 24% of the American public was aware of what bitcoin actually was. Meaning that almost three-quarters of the country had no idea. But maybe they just might want to start paying attention, especially now since it is at its all-time high value.
Bitcoin was introduced in 2008 by an anonymous group of programmers under the name of Satoshi Nakamoto and was eventually released to the public in 2009 as an open-source software. Unlike other online payment services like PayPal and Venmo, Bitcoin is a peer-to-peer network that takes place privately between two users—meaning there is no intermediary involved. The cryptographic virtual currency is completely decentralized from any external influence while all transactions with the currency are accounted for through a blockchain ledger.
While bitcoin is thoroughly anonymous, the blockchain ledger has all transactions available publicly. Therefore, theoretically, if you know the time and date of a particular transaction, you may be able to match someone’s online address to their identity. On the other hand, all transactions made through bitcoin are encrypted with military grade cryptography, ensuring that all deals are secure. Sending and receiving bitcoins is as easy as sending an email, but does that mean it’s worth it?
Time to Invest?
With all that said and done, Bitcoin has made it far since it’s substantial price drop in 2013. Since then Bitcoin has stabilized around a margin of $250, with most experts believing it was doomed. However, it seems to have returned to a relatively stable rise since last year. This time last year bitcoin was valued at $367, with its steady rise, it is now valued at 1,177.18. Many speculate as to what is causing the recent trend from Congress to WallStreet to even sheer luck.
References: TechCrunch, Blockchain
Neil C. Bhavsar
@Neilcogen
Thursday, February 23, 2017
Bitcoin Price Sets New All-Time High
The price of bitcoin has reached a new all-time high.
Bitcoin prices hit a high of $1,172.09, according to the CoinDesk Bitcoin Price Index (BPI) – surpassing a level first set more than three years ago in November 2013, when the BPI reported an average price high of $1,165.89.
The move followed a morning of price gains, coming amid the longest period ever in which bitcoin's value has stayed above $1,000.
Prices first began to inch upward today at 9:00 UTC on Wednesday, with bitcoin prices reaching a high of $1,100, staying above that level since. Today's price high represents an increase of more than 4% since the start of the day's trading.
At press time, the average price of bitcoin is $1,170.72, BPI data shows.
A number of factors of buoyed prices – and positive trader sentiment – in recent weeks.
Perhaps most notably, traders have taken a largely bullish tack on the prospects that the US Securities and Exchange Commission (SEC) will approve the first-ever bitcoin ETF. The SEC has a deadline of 11th March to make their final decision, which has already been subject to delays.
The surge past the all-time high also follows a period of uncertainty and change within the global bitcoin market.
January's defining markets storyline was the growing involvement of the People's Bank of China, China's central bank, in the domestic bitcoin exchange space. A warning issued to exchanges led to the imposition of trading feesand, later, withdrawal delays at China's leading bourses.
That month opened with a push above the $1,000 line, though the days to follow would see a dramatic fall back below that figure.
An AI-run hedge fund has created a #cryptocurrency for its human data scientists
An AI-run hedge fund has created a #cryptocurrency for its human data scientists http://bit.ly/2l03lgZ #Blockchain #AI #Crowdsourcing
#PrisonersDillemma #DataScience #Network #GameTheory
‘Why is tech positive-sum and finance zero-sum?’
12,000 data scientists were issued 1 million crypto-tokens to incentivize the construction of an #ArtificialYntelligenceHedgeFund. Here’s why.
Money was invented to solve the coincidence of wants problem and facilitate transactions. But as fiat currencies continue to lose relevance into the 21st century, cryptocurrency presents solutions far beyond money transfer. Cryptocurrency can now be used to incentivize cooperation in populations.
With cryptocurrency, money can now be software. There can be programmed rules for how money behaves. The ability to program money seems subtle, but small changes to the rules of money can have large effects on the behavior of the holders of that money. For a historical example of primitive money software influencing a population, see The Wörgl Experiment of 1932. For a modern example, consider how bitcoin incentivized thousands of people around the world to mine it.
The stock market presents a situation similar to the prisoner’s dilemma. The market would be better off if market participants collaborated, but rationally they don’t. Regular money simply does not incentivize them correctly. Regular money is too low-tech.
Imagine the #PrisonersDilemma in a world that exists entirely on a #blockchain.
Now suppose the prisoners are issued a cryptocurrency similar to a normal money except for one small change: it is programmed to self-destruct whenever anyone goes to prison. By defining the money in this way, the prisoners’ fates are now financially bound. Prisoners in this scenario realize that if they don’t keep the other prisoner out of jail, they will lose all of their money with certainty.
This new cryptocurrency results in a world where citizens have a financial incentive to collaborate to keep each other out of jail. The prisoners are still motivated by self-interest but they now live in a universe where the money nudges them to collaborate in pursuit of that self-interest.
"The higher the scientists sit on the leaderboard, the more Numeraire they receive. But it’s not really a currency they can use to pay for stuff. It’s a way of betting that their machine learning models will do well on the live market. If their trades succeed, they get their Numeraire back as well as a payment in bitcoin—a kind of dividend. If their trades go bust, the company destroys their Numeraire, and they don’t get paid.
The new system encourages the data scientists to build models that work on live trades, not just test data. The value of Numeraire also grows in proportion to the overall success of the hedge fund, because Numerai will pay out more bitcoin to data scientists betting Numeraire as the fund grows. “If Numerai were to pay out $1 million per month to people who staked Numeraire, then the value of Numeraire will be very high, because staking Numeraire will be the only way to earn that $1 million,” Craib says.
It’s a tricky but ingenious logic: Everyone betting Numeraire has an incentive to get everyone else to build the best models possible, because the more the fund grows, the bigger the dividends for all. Everyone involved has the incentive to recruit yet more talent—a structure that rewards collaboration."
#PrisonersDillemma #DataScience #Network #GameTheory
‘Why is tech positive-sum and finance zero-sum?’
12,000 data scientists were issued 1 million crypto-tokens to incentivize the construction of an #ArtificialYntelligenceHedgeFund. Here’s why.
Money was invented to solve the coincidence of wants problem and facilitate transactions. But as fiat currencies continue to lose relevance into the 21st century, cryptocurrency presents solutions far beyond money transfer. Cryptocurrency can now be used to incentivize cooperation in populations.
With cryptocurrency, money can now be software. There can be programmed rules for how money behaves. The ability to program money seems subtle, but small changes to the rules of money can have large effects on the behavior of the holders of that money. For a historical example of primitive money software influencing a population, see The Wörgl Experiment of 1932. For a modern example, consider how bitcoin incentivized thousands of people around the world to mine it.
The stock market presents a situation similar to the prisoner’s dilemma. The market would be better off if market participants collaborated, but rationally they don’t. Regular money simply does not incentivize them correctly. Regular money is too low-tech.
Imagine the #PrisonersDilemma in a world that exists entirely on a #blockchain.
Now suppose the prisoners are issued a cryptocurrency similar to a normal money except for one small change: it is programmed to self-destruct whenever anyone goes to prison. By defining the money in this way, the prisoners’ fates are now financially bound. Prisoners in this scenario realize that if they don’t keep the other prisoner out of jail, they will lose all of their money with certainty.
This new cryptocurrency results in a world where citizens have a financial incentive to collaborate to keep each other out of jail. The prisoners are still motivated by self-interest but they now live in a universe where the money nudges them to collaborate in pursuit of that self-interest.
"The higher the scientists sit on the leaderboard, the more Numeraire they receive. But it’s not really a currency they can use to pay for stuff. It’s a way of betting that their machine learning models will do well on the live market. If their trades succeed, they get their Numeraire back as well as a payment in bitcoin—a kind of dividend. If their trades go bust, the company destroys their Numeraire, and they don’t get paid.
The new system encourages the data scientists to build models that work on live trades, not just test data. The value of Numeraire also grows in proportion to the overall success of the hedge fund, because Numerai will pay out more bitcoin to data scientists betting Numeraire as the fund grows. “If Numerai were to pay out $1 million per month to people who staked Numeraire, then the value of Numeraire will be very high, because staking Numeraire will be the only way to earn that $1 million,” Craib says.
It’s a tricky but ingenious logic: Everyone betting Numeraire has an incentive to get everyone else to build the best models possible, because the more the fund grows, the bigger the dividends for all. Everyone involved has the incentive to recruit yet more talent—a structure that rewards collaboration."
Bitcoin vs Dash digital cash - Which will achieve mass adoption first? (video/podcast)
Bitcoin is an amazing technology that captured the imaginations of many people. Various individuals were stunned at the idea that mathematical algorithms could form the basis of our money, rather than central bankers and corrupt politicians, as is normally the way today. People were seduced by the idea of sending value around the world in a matter of minutes, a currency uncontrolled and uncontrollable by authority, and sending micropayments to websites to read their articles - instead of having to tolerate clickbait content beholden to advertisers. Bitcoin has delivered on some of those promises, however, it's 8 years on and it still seems to be far from mainstream adoption.
If we take a step back from the hype and the dream of Bitcoin - still alive in the minds of many of us - we can see that Bitcoin has a few key problems. The main problem is, it's too hard to use. People have to use long addresses which look like computer errors, to know the right transaction fee to send their cash or risk their transaction being at the back of a queue of 80,000, they have to generate new addresses for security, make paper wallets or buy a Trezor if they really want to be secure - and if they lose their wallet, or get hacked, they might just lose their life's savings. Does that sound like a currency which is ready for mass adoption?
Now, I don't know any digital currency which is ready for mass adoption - but I do know one which might be close. Dash "Digital Cash" is a currency which started in 2014, and the team is actively working on the problem of user experience, devising a system where people can log-in from any computer with a username and password, send currency using something like looks like a name, have their money secured while still retaining control, and not worry about losing their retirement fund just because they misplaced their private keys. Even now, Dash has the functionality of instant payments, and of private payments.
In this short episode, Kurt presents the case of why Dash might reach mass adoption before Bitcoin. Join me in another paradigm-shattering, central-banker-unseating, digital revolution episode of ... The Paradise Paradox!
To download the audio, right click here and press ‘Save as’
View the full shownotes here: Bitcoin vs Dash: The Paradise Paradox Episode 154
Wednesday, February 22, 2017
Bitcoin Price Nears All-Time Record High in New Age of Stability
Bitcoin price is just $60 off a new all-time high Tuesday, having surpassed $1100 to rival 2013’s record of $1155.
At press time, the price was hovering around $1110, having managed to stay above the psychological barrier of both $1000 and $1100 without any significant plunge.
A mere $60 separates current levels from achieving a new benchmark for the Bitcoin economy. Graphs from both Coinmarketcap and Coin Dance make for exciting reading.
BTC Charts
Price
Continued support from traders, a strong outlook and more favorable regulations have all helped create a more stable environment for the cryptocurrency in recent months.
Investor confidence has also increased, as Bitcoin proves its resilience to geopolitical factors - especially from China - which previously sent prices surging and tumbling in equal measure.
Nonetheless, the sentiment is increasing about the approval of the first Bitcoin ETF in the US in March. If it goes ahead, commentators say, Bitcoin price could soon find itself well north of $1155 - perhaps by as much as 65 percent
At press time, the price was hovering around $1110, having managed to stay above the psychological barrier of both $1000 and $1100 without any significant plunge.
A mere $60 separates current levels from achieving a new benchmark for the Bitcoin economy. Graphs from both Coinmarketcap and Coin Dance make for exciting reading.
BTC Charts
Price
Continued support from traders, a strong outlook and more favorable regulations have all helped create a more stable environment for the cryptocurrency in recent months.
Investor confidence has also increased, as Bitcoin proves its resilience to geopolitical factors - especially from China - which previously sent prices surging and tumbling in equal measure.
Nonetheless, the sentiment is increasing about the approval of the first Bitcoin ETF in the US in March. If it goes ahead, commentators say, Bitcoin price could soon find itself well north of $1155 - perhaps by as much as 65 percent
Bitcoin is closing in on its all-time high
Buying early on in US trade has run bitcoin up 0.7%, or $7.50, to $1,115 a coin. Wednesday's bid has the cryptocurrency higher for a ninth straight session and threatening its all-time high of about $1,140.
The recent strength in bitcoin comes amid speculation the Securities and Exchange Commission will approve at least one of the three proposed bitcoin-focused exchange-traded funds despite analyst concerns that none will be approved.
Bitcoin has soared more than 40% since bottoming out on January 11 following word that China was going to begin cracking down on trading of the cryptocurrency. That rally has come despite news that China's largest exchanges would begin charging a flat fee of 0.2% on all transactions and that two of China's largest bitcoin exchanges were blocking withdrawals.
For the year, bitcoin is up about 18%.
BitcoinMarkets Insider
Get the latest Bitcoin price here.
The recent strength in bitcoin comes amid speculation the Securities and Exchange Commission will approve at least one of the three proposed bitcoin-focused exchange-traded funds despite analyst concerns that none will be approved.
Bitcoin has soared more than 40% since bottoming out on January 11 following word that China was going to begin cracking down on trading of the cryptocurrency. That rally has come despite news that China's largest exchanges would begin charging a flat fee of 0.2% on all transactions and that two of China's largest bitcoin exchanges were blocking withdrawals.
For the year, bitcoin is up about 18%.
BitcoinMarkets Insider
Get the latest Bitcoin price here.
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