Tag Archives: Cryptocurrencies

Conflation of Bitcoin and Blockchain, by John R. Skar

While you may not know all the in and outs of cryptocurrencies and blockchain technology, it’s important to realize that they are distinct concepts. Blockchain, while used in many cryptocurrencies, also has uses entirely separate from them. From John R. Skar at lewrockwell.com:

There it is again! That smooth, subtle and seamless transition conflating cryptocurrencies, like bitcoin, with the blockchain technology. There are thousands of blog posts and news articles about bitcoin and cryptocurrencies, but the great majority fail to clearly distinguish between the technology and the digital currency that is created and transmitted by it.  In a “Bitcoin Primer” published by Coinlab, “The term Bitcoin refers to both the digital unit of stored value and the peer-to-peer network of computers transmitting and validating transactions of these units.”

In another bitcoin primer, we read “Bitcoin is a decentralized peer-to-peer payments network and a virtual currency that essentially operates as online cash.”

To some degree, it is understandable.  The original bitcoin white paper by Satoshi Nakamoto described a digital currency produced on a unique-to-bitcoin blockchain platform.  They were as inseparable as Siamese twins and many bitcoin enthusiasts share exactly that view of the world.

Conflation creates confusion, however, particularly when discussing valuation.  Allowing bitcoin to ride the coattails of the blockchain technology is misleading at best. A typical example of conflation comes from trying to compare the valuation of bitcoin to the franchise value of Mastercard and VISA.  “Quite simply, Bitcoins have value because a growing group of people believe that the underlying Bitcoin technology has value.”

Bitcoin as “coin” does not equate to VISA as transmittal medium.  Blockchain is the proper comparison.  I think that might be what Warren Buffet and Jamie Dimon are getting at when they call bitcoin a fraud.  They certainly are not referring to blockchain technology, which they know has potential to improve their businesses in many ways.  They just aren’t falling for the conflation.  In fairness, some people do try to clearly distinguish between cryptocurrency and blockchain. My point is that in most cases we should strictly confine the discussion to one or the other or at least clearly try to avoid the conflation.

To continue reading: Conflation of Bitcoin and Blockchain

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Bitcoin Drops to $5,860, Lowest since October 2017. True Believers with Fake Hopes Got Cleaned Out by Early Movers, by Wolf Richter

Cryptocurrency prices go down as well as up. Who knew? From Wolf Richter at wolfstreet.com:

Down 70% from the peak. This is just not fun anymore.

Bitcoin dropped to $5,860 at the moment, below $6,000 for the first time since October 29, 2017. It has plummeted 70% in six months from the peak of $19,982 on December 17. There have been many ups on the way down, repeatedly dishing out fakes hopes, based on the ancient theory that nothing goes to hell in a straight line (chart via CoinMarketCap):

If you’re a True Believer and you just know that bitcoin will go to $1 million by the end of 2020, as promised by a whole slew of gurus, including John McAfee – “I will still eat my dick if wrong,” he offered helpfully on November 29 – well you probably don’t need this sort of punishment. You’re suffering enough already. And I apologize. I feel your pain. I was a true believer too a few times, and every single time it was a huge amount of fun, and I felt invincible and indestructible until I got run over by events.

With 17.11 million bitcoins circulating today, if bitcoin were at $1 million today, it would amount to a market cap of $17 trillion. But new bitcoins are constantly being created out of nothing (“mined”) by computers that suck up enormous amounts of electricity. And by the end of 2020, there will be many more bitcoins, and if the price were $1 million each, the total would amount to about the size of US GDP.

This doesn’t even count all the other cryptos that would presumably boom in a similar manner, amounting perhaps to half of global GDP, or something.

People who promote this brainless crap are either totally nuts or the worst scam artists. But I feel sorry for the True Believers whose fiat money got transferred and will continue to get transferred from them to others.

So OK, there’s still some time left. It’s not the end of 2020 yet. And True Believers still have room for the fake hope of a $1-million bitcoin.

But at the moment, bitcoin is even worse – incredibly – than one of the worst fiat currencies in the world, the Argentine peso, which has plunged “only” 35% over the period during which bitcoin plunged 70%. That takes some doing!

There is always some reason or other that is cited for the drops: The endless series of hacks into exchanges during which crypto tokens and coins just vanish. Nervous regulators cracking down on the scams surrounding cryptos, initial coin offerings (ICOs), and how they’re being promoted. Or advertising platforms such as Facebook, Google, and Twitter, and email newsletter platforms restricting ads and promos about cryptos and ICOs.

To continue reading:

The End of the Debt-As-Currency Era, by Jeff Thomas

The end of that era can’t come too soon. From Jeff Thomas at internationalman.com:

Gold is the currency of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves.

—Norm Franz, Money and Wealth in the New Millennium

We are nearing the end of the debt-as-currency era.

This is quite a broad statement and, of course, since debt is the foremost currency of our day, it would be quite understandable if the reader were to regard such a prognostication to be utter nonsense.

Indeed, many would say that, without debt, the world couldn’t function. Debt has always existed and always will. However, in eras past, debt often played a much smaller role, and those eras were marked by greater progress and productivity.

We’re now living in the era of the greatest level of debt mankind has ever created. In fact, we’ve come to regard it as “normal.” Most governments are far beyond broke. And they won’t be saved by confiscation or taxation, as their people and corporations are just as heavily in debt. For this reason, a collapse is inevitable. And, since the severity of a collapse is invariably directly proportional to the severity of the debt, when it arrives, it will be a collapse that eclipses all previous collapses.

The present uncontrolled level of debt is made possible through the ability of central governments to create more currency at will. And this is only possible through the existence of a currency that is fiat in nature—that has no inherent value.

Aristotle was right on the mark when he stated that for something to be appropriate as money, it must have intrinsic value—independent of any other object and contained in the money itself.

The great majority of what passes for money today is digital, although, for daily use, paper currency is still widely used. But it must be said that paper currency is also fiat, having a far lower intrinsic value than the denomination printed on it.

To continue reading: The End of the Debt-As-Currency Era

Collapse of Cryptocurrencies in Q1: Even the Biggest Crashed 67% to 88%, by Wolf Richter

What goes up a lot can come down a lot. From Wolf Richter at wolfstreet.com:

But nothing goes to heck in a straight line.

I don’t think there has ever been an entire sector that skyrocketed as much and collapsed as quickly as the cryptocurrency space. The skyrocketing phase culminated at the turn of the year. Then the collapse phase set in, with different cryptos choosing different points in time.

It doesn’t help that regulators around the world have caught on to these schemes called initial coin offerings (ICOs), where anyone, even the government of Venezuela, can try to sell homemade digital tokens to the gullible and take their “fiat” money from them and run away with it. There are now 1,596 cryptocurrencies and tokens out there, up from a handful a few years ago. And the gullible are getting cleaned out.

And it doesn’t help that the ways to promote these schemes are being closed off, one after the other.

At the end of January, Facebook announced that, suddenly, “misleading or deceptive ads have no place on Facebook,” and it prohibited ads about ICOs and cryptos.

On March 14, Google announced that it will block ads with “cryptocurrencies and related content,” including ICOs, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice. Its crackdown begins in June.

On March 26, Twitter announced that it would ban ads of ICOs, cryptocurrency exchanges, and cryptocurrency wallet services, unless they are by public companies traded on major stock markets. It will roll out its policy over the next 30 days.

On March 29, MailChimp, a major email mass-distribution service, announced that it will block email promos from businesses that are “involved in any aspect of the sale, transaction, exchange, storage, marketing or production of cryptocurrencies, virtual currencies, and any digital assets related to an Initial Coin Offering.” This broadened and tightened its policy announced in February that promised to shut down any account related to promos of ICOs or blockchain activity.

To continue reading: Collapse of Cryptocurrencies in Q1: Even the Biggest Crashed 67% to 88%

“Blockchain” Stocks Completely Disintegrate, by Wolf Richter

For some, this may be like closely examining a fatal car crash. From Wolf Richter at wolfstreet.com:

Black Friday for them. Meet the OTC’s “skull and crossbones.”

I’ve never seen a sector skyrocket and totally collapse this fast – in four months – as these newfangled “blockchain stocks.” Now they’re surrounded by debris and revelations of scams. These fly-by-night or near-failure outfits used the hype of “blockchain” and the whole media razzmatazz about cryptocurrencies to manipulate up their stocks, sometimes by several thousand percent in a matter of days.

I vivisected some of these outfits and their stock manipulation schemes on the way up. And on January 25, I documented Phase One of the collapse. This is now Phase Two of the collapse. And dip buyers are still not through getting crushed.

UBI Blockchain International got totally mangled. When I last wrote about UBIA on January 25, it was down 93% from the peak six weeks earlier. Since then, all heck has broken loose. On Friday, OTC Market, where the shares had been demoted to, slapped a “skull-and-crossbones” icon next to the ticker and no longer displays a quote.

It started out so promising: Over the course of a few days in mid-December, UBIA skyrocketed 1,500% to $115 a share intraday.

  • December 28, I tarred and feathered the company, its executives, their shenanigans, and their Chinese connection [for details, read, I’m in Awe of How Far the Scams & Stupidities around “Blockchain Stocks” are Going].
  • January 9, the SEC halted trading in UBIA, for two reasons: lacking “accuracy” in disclosures and funny trading activity. The trading halt froze the share price at $22.
  • January 23, when trading resumed, shares plunged further.
  • January 25, when I last wrote about it, they were at $8.25, down 93% from the peak.
  • February 9, the company disclosed in its quarterly SEC filing that it had zero revenues and a quarterly loss of $1.24 million. It repeated that its ability to go on as a “going concern” depended on getting new financing and its “ability to achieve and maintain profitable operations.” Fat chance.
  • February 15, shares closed at $6, down 95% from the peak.

Friday, February 16, OTC Markets Group stopped displaying quotes of UBIA, labeled the shares “Caveat Emptor (Buyer Beware),” and placed the skull-and-crossbones icon next to the stock symbol. It told investors to “exercise additional caution and perform thorough due diligence before making an investment decision in that security.”

To continue reading: “Blockchain” Stocks Completely Disintegrate

Terrified of Bitcoin, banks forced to innovate for the first time in 40+ years, by Simon Black

One indication that banks are virtually arms of governments is the slowness with which they innovate…just like governments. From Simon Black at sovereignman.com:

Yesterday morning, several banks in Australia started rolling out a new payment system they’re calling NPP, or “New Payments Platform.”

Until now, sending a domestic funds transfer in Australia from one bank to another could take several days. It was slow and cumbersome.

With NPP, payments are nearly instantaneous.

And rather than funds transfers being restricted to the banks’ normal business hours, payments via NPP can be scheduled and sent 24/7.

You can also send money via NPP to mobile phones and email addresses. So it’s a pretty robust system.

Across the world in the United States, the domestic banking system has been working on something similar.

Domestic bank transfers in the Land of the Free typically transact through an electronic network known as ACH… another slow and cumbersome platform that often takes 2-5 days to transfer funds.

It’s pretty ridiculous that it takes more than a few minutes to transfer money. It’s 2018! It’s not like these guys have to load satchels full of cash onto horse-drawn wagons and cart them across the country.

(And even if they did, I suspect the money would reach its destination faster than with ACH…)

Starting late last year, though, US banks very slowly began to roll out something called the Real-time Payment system (RTP), which is similar to what Australian banks launched yesterday.

[That said, the banks themselves acknowledge that it could take several years to fully adopt RTP and integrate the new service with their existing online banking platforms.]

And beyond the US and Australia, there are other examples of banking systems around the world joining the 21st century and making major leaps forward in their payment system technologies.

It seems pretty clear they’re all playing catch-up with cryptocurrency.

The rapid rise of Bitcoin and other cryptocurrencies proved to the banking system that it’s possible to conduct real-time [or near-real-time] transactions, and not have to wait 2-5 days for a payment to clear.

To continue reading: Terrified of Bitcoin, banks forced to innovate for the first time in 40+ years

 

Largest Cryptocurrencies Plunge 50%-80%, $372 Bn Gone in 1 Month. Will it Hit the US Economy? by Wolf Richter

There seem to be fewer and fewer articles touting cryptocurrencies. Maybe it’s time to buy, at least for a trade. That’s not a recommendation, by the way. From Wolf Richter at wolfstreet.com:

This is not like the dotcom crash – though it’s even more brutal.

Cryptos are having another bad-hair day, one in many, with just about all the largest ones crashing 12% to 25% this morning.

It’s crypto mayhem for those who’re watching their wealth evaporate, after having gleefully watched it balloon in multiples of 10 or 100 in a matter of weeks and who expected to be billionaires by year-end. At the time, which was just a few weeks ago, they’d touted whitepapers full of intelligent-sounding gobbledygook as to why these price surges were based on fundamentals, and how these cryptocurrencies would change the world.

By now, there are a gazillion of these cryptos. Anyone can issue new tokens. According to coinmarketcap.com, there are now 1,513 of them out there, about 100 more than last time I pooh-poohed them on January 17. They multiply like rabbits, and as long as there’s anyone out there still silly enough to put real money into them, the issuers of these new tokens are going to get rich. The reason why there are scams is because scams work.

Total market capitalization, according to coinmarketcap.com, is now at $335 billion. This is down by 52%, or by $372 billion, in just one month from the peak on January 4, an era when market cap was headed to $2 trillion by the end of 2018, and when RBC Capital Markets prophesied it would reach $10 trillion over the “longer term.”

To continue reading: Largest Cryptocurrencies Plunge 50%-80%, $372 Bn Gone in 1 Month. Will it Hit the US Economy?