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China’s Cryptocurrency Mining: Capital, Costs, Earnings

China's Cryptocurrency Mining - Capital, Costs, Earnings

China’s Cryptocurrency Mining: Capital, Costs, Earnings

Most Bitcoin mining operations are in China. As of July 2017, it is estimated that almost 70 percent of all Bitcoin mining is located in China.

Cryptocurrency mining, like other forms of businesses, needs capital to start and runs at an operation cost. Briefly, the startup cost includes the building, facilities and mining equipment.

On the other hand, the operation cost primarily includes electricity consumption, Internet bandwidth, manpower, equipment wear and tear and facilities maintenance.

Cheap electricity and mining machines are the two most critical factors for why mining operations are now thriving in China.

Cheap coal and massive hydroelectric power

It is not surprising that China is leading the world in cryptocurrency mining as its electricity tariff is one of the lowest in the world. Electricity in China is mainly generated by coal, which accounted for 57 percent of the total production and secondly by hydroelectric power – 20 percent.

With China being the world’s third largest coal reserve and coal being the cheapest source of power among the fossil fuels, electricity production costs a lot less than other parts of the world.

However, coal power is not the main source of power that is fuelling cryptocurrency mining, hydroelectric power is.

The largest concentration of miners are located in Sichuan China, estimated to be about 30 percent of the total. In Sichuan, hydroelectric makes up 79.5 percent of the total electricity capacity while fossil fuel makes 19.5 percent and it runs only during dry seasons. In wet seasons, Sichuan energy production exceeds consumption.

As of today, electricity in Sichuan costs around $0.08 to $0.09/kWh for commercial and industrial consumption.

Running a mining plant

A reporter from National Business Daily visited a mining operation and reported:

“The mining operation owned by a company called TianJia WangLuo located inside BaJiaoQi hydroelectric power plant has over 5,800 mining machines totaling more than 40 petahashes of processing power. The mining yields around 27 coins daily. This plant uses 7,000 units of energy an hour, amounting to 168,000 units of energy (kWh) a day, as the national average cost of electricity is about RMB 0.40 ($0.06) a unit, the cost of electricity for the plant is around RMB 6,720 ($1,000) a day.”

The cost of setting up the mining operation is by no means small. According to the plant supervisor, Mr. Lei, the company spent more than RMB five mln ($750,000) to build the plant.

The costs of the mining equipment aren’t small either. Each mining machine costs around RMB 10,000 ($1,500). In total, the capital investment was more than RMB 60 mln ($9 mln).

“This huge investment isn’t borne solely by the company as that is impossible. In fact, some of these machines don’t belong to the company; we operate them on behalf of others. For example, you buy a few machines and give them to me, I operate them for you, and in return, I receive a fixed service charge. In this way, the capital cost can be reduced and so is the risk,” Mr. Lei explained to the reporters.

How much can be earned?

The reporter estimated that this operation has a revenue of over RMB two mln a year. However, the net profit should take into consideration factors such as market price fluctuation, future halving of a number of coins and the changing of difficulty in mining.

The coin that is mined will eventually be traded in the market and cashed at certain time. Thus, the market price will determine how much the net profit is.

Mr. Lei also explained that for his operation, they sell only enough coin to cover their expenses. The surplus is kept for future as this is the long term strategy for his company. He also mentioned that not all mining companies follow this practice.

“In 2013, electricity tariff was high at RMB 0.70 ($0.10) to RMB 0.80 ($0.12) per unit, but at the same time, Bitcoin price was also high, around RMB 8,000 ($1,196). Many mining operations survived the high electricity cost but in 2015, the price fell to RMB 900 ($135), many mining operations closed down. It was a very bad time for the business,” Mr. Lei recalled.

Investment returns

Mr. Lei further told the reporter that the profit usually depends on changing factors but if things were stable and stayed the way they are as of now and you buy a machine, it takes about eight to nine months of continuously running to get the return back.

As a matter of fact, any businesses that have a return on investment of less than a year is considered very good.

“Like ore miners, our jobs are tough, but the people who make big profits are definitely not the miners. In our field, the logic is as the same (as ore mining). The ones who earn the most are the machine sellers and ore traders,” said Mr Lei.

 

By Willie Tan

 

Posted by David Ogden
Entrepreneur

 

Alan Zibluk – Markethive Founding Member

Forget oil, Russia goes crazy for cryptocurrency

Forget oil, Russia goes crazy for cryptocurrency

Forget oil, Russia goes crazy for cryptocurrency

 

MOSCOW (AFP) – Standing in a warehouse in a Moscow suburb, Dmitry Marinichev tries to speak over the deafening hum of hundreds of computers stacked on shelves hard at work mining for crypto money.

"The form of currency we are used to is about to disappear," predicts the 42-year-old entrepreneur, who also works as President Vladimir Putin's adviser on internet matters.

Marinichev is one of Russia's leading crypto-businessmen at the helm of operations in this facility larger than a football pitch located in a former Soviet-era car factory, which collects virtual money on the accounts of its clients.

Individuals, or firms like Marinichev's, provide the computing power to run the so-called blockchain which records the world's virtual money transactions. In return for providing that service they receive virtual money, of which bitcoin is the most popular, as payment – a process bitcoiners call "mining".

Mining farms like this represent a growing craze in Russia for bitcoin and other virtual currencies not backed by governments or central banks that are increasingly used for goods and services on the internet.

The hunt for virtual currencies is accessible "to anyone who may be hardly familiar with computer science," Marinichev said. "It's no more complicated than buying a cellphone and connecting to a mobile network." The practice has become so popular in Russia that computer stores in the country have run out of graphic and video cards developed for gamers but are used by bitcoin miners to boost the processing power of their home computers.

Marinichev this week unveiled a more sophisticated setup, inviting investors to pitch in US$100 million to join a mining club and develop a Russian mining chip called Multiclet through his startup.

"The explosion of virtual currency value has made mining profitable enough to make it a professional activity," said Sergei, a 29-year-old computer scientist who runs half a dozen graphics cards plugged into the electrical grid of the company where he works.

He launched his mining operation in March, when the value of bitcoin and its main competitor ethereum, created by Russian-Canadian Vitalik Buterin, reached record heights on the currency's exchange.

Since the beginning of 2017, bitcoin has quadrupled in value, surpassing US$4,000 at the weekend, while ethereum experienced a rise of 4,500 per cent to hit a record of US$374 in June, later falling to US$268 in August.

While the assembly of a mining operation is easy enough, it consumes a large amount of electricity, which can reach the equivalent of several households' needs.

"All my friends who were interested in Bitcoin or ethereum built their devices and plugged them into their corporate networks, and I did the same," Sergei said. "Others cut into the municipal electrical cables."

Russia has a competitive advantage as an environment for mining, as Marinichev points out in a brochure for prospective investors: electricity here costs just 1.3 US cents per kilowatt hour while long winters save money on cooling systems.

Authorities in Russia were long suspicious of virtual money but have now come to recognise it as a force. A new bill is set to be debated this autumn which aims to regulate the possession and creation of crypto currency in the country.

The legal foundation for virtual money has so far been non-existent in Russia and it is associated with illicit activities like hacking and used to purchase drugs on the dark web.

"There is now an understanding at the highest level in the country that virtual currencies are not an absolute evil but a possible good, especially for the economy," said Marinichev.

Putin in early June even held a meeting at an economic forum with Buterin, the 23-year-old creator of ethereum, who lobbied the Russian president to expand the currency's use in Russia.

Last year, Russia's largest banks tested the platform for some of their transactions. The country's central bank even pondered development of a "national virtual currency".

Though at all-time-high in August at US$116 billion, the global cryptocurrency market is still quite young, volatile and prone to speculation.

Bitcoin, for example, lost almost a third of its value between mid-June and mid-July, before gaining it back over the course of a week. Since then, it has been regularly breaking records.

"The rush to virtual money is not a fad or a fleeting phenomenon. The virtualisation of our lives is a market process that has gone on and will continue," Marinichev said.

In a sign of the times, several cafes and restaurants in Moscow this summer began to accept payments in virtual currencies.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

Source: The Straits Times

Alan Zibluk – Markethive Founding Member

Understanding Cryptocurrency – How It Works, What Drives It, Should You Buy It

Understanding Cryptocurrency - How It Works, What Drives It, Should You Buy It

Understanding Cryptocurrency – How It Works, What Drives It, Should You Buy It

 

Cryptocurrencies have caught on in the mainstream and have made thousands of people millions of dollars. The most recent boom of Bitcoin now means that if you had invested just $500 8 years ago, you would now be a multi-millionaire. This meteoric rise in the biggest cryptocurrency by market cap has drawn a lot of attention. However, to the everyday man who is used to dealing with hard cash and actual value, cryptocurrencies can seem like an unknown and often unintelligible world. With terms like hash rates, data mining, market capitalization, and ultimately the fear of instability, there’s a little bit of a harsh learning curve to the technology.

In this article, I’m going to try to give a beginner’s guide to cryptocurrencies, explain how they work, what moves the prices, and whether you should invest.

What are cryptocurrencies?

Cryptocurrencies are essentially digital mediums that can be exchanged, just like government currencies, that use cryptography, or digital security measures, to secure the exchange of digital information and control the creation of new units. Explained even more simply, cryptocurrencies are digital coins that fluctuate in value similar to stocks with their exchange being backed by digital security measures.

Cryptocurrencies are digital currencies or money that is then exchangeable for physical money, like dollars. They’re comparable to how most apps have some form of digital money, like “orbs” in a mobile game that cost some amount like ” $10 for 1000 orbs.” In this instance, each in-game “orb” would be worth 1/1000th of a dollar. Even though these orbs are just data on your mobile device or on some server, they have some inherent worth equatable to dollars. In an extremely general context, this is what a cryptocurrency is.

So, how do they work?

In essence, cryptocurrencies provide a viable method of owning a unique digital currency which presents some ever fluctuating value. Each coin or currency, like Bitcoin, Ethereum, or Litecoin, are fully self-contained digital systems that both track and control each unit of cryptocurrency.

Each individual coin of a cryptocurrency acts like data moving through a network. Some cryptocurrencies can be valued as small as just 1 cent and others as big as 1 billion dollars. Some currencies are controlled by one entity, which is referred to as a centralized currency, and others are controlled by the public, which are decentralized. There are positives and benefits to each variation, but the stress should be placed on the fact that no cryptocurrency is identical to the next.

What drives them?

One of the most prominent aspects of cryptocurrencies is the fact that there isn’t a third part that verifies the transaction of crypto coins. To avoid this, cryptocurrencies use timestamping methods to verify each transaction. Bitcoin, which is the most popular crypto and largest by market cap, uses a proof-of-work scheme, which is commonly referred to as mining. In essence, mining Bitcoin means tasking a computer with solving some complex problem. When the problem is solved, the computer account is rewarded with a portion of Bitcoin relative to the amount of work it put in to solve the problem. This verification network gives Bitcoin value and backs up transactions. By having this in place, someone couldn’t just write code and give themselves x amount of bitcoins.

In many ways, cryptocurrencies are like stocks. Positive news about a certain coin’s security or general acceptance can drive the price up. The same is inversely true if coins are deemed unuseful in certain applications. Part of what has played into Bitcoin’s rise is that many retailers accept Bitcoin as currency. This makes the cryptocurrency easily translatable to physical value, thus influencing the price per Bitcoin accordingly.

The true answer to what drives cryptocurrencies is obviously much more complex due to the number of factors that go into the “value” of a currency.

Should you invest?

The answer to this question is likely the same for whether you should invest in stocks. While cryptocurrencies have experienced astronomic growth in recent years, these gains aren’t necessarily guaranteed to continue. You should only invest in cryptocurrency if you are willing to take on some risk. With that said, there are currencies that are more stable than others.

Litecoin, which is often regarded as the silver to Bitcoin, has been found to be a very stable currency of growth in recent months. Whereas Bitcoin, currently trading at all time highs, is known to make corrections of 30%, represents a large loss if you were to invest now.

The volatility of cryptocurrencies presents opportunities for day traders, and the significant long term growth of cryptos present great opportunities for long term investors.

You should do a significant amount of investigation into what cryptocurrency you want to invest in, just like any stock, before you buy. Buying can be done on many secure mobile apps or other online platforms. A quick Google search of where and how to buy cryptocurrencies can yield you with this information with ease.

To summarize, cryptocurrencies are often decentralized digital currencies that draw value from security, anonymity, and authentication measures that fluctuate much like stocks that can be traded and exchanged for “true value” currencies. While it may still sound hard to understand, a little bit of research into crypto can go a long way. Cryptocurrencies are here to stay, and while awareness of them is growing with the general public, people with actual knowledge about how they work is still very small. By taking the time to research and understand, you present yourself with an opportunity to excel in a technologically growing industry.

 

David Ogden
Entrepreneur

DAvid Ogden Cryptocurrency Entrepreneur

 

Author: TREVOR ENGLISH

Alan Zibluk – Markethive Founding Member

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

Crypto Asset Firm Launches Investable Index for Top 30 Cryptocurrencies

One of the cryptocurrency world's more tenured fund managers is launching two new products aimed at bringing the emerging asset class mainstream.

Revealed exclusively to CoinDesk, Tim Enneking's Crypto Asset Management is today releasing a new product called CAMCrypto30 – a cryptocurrency index designed to mirror the 30 largest cryptocurrencies by market capitalization. In addition, the firm also announced a new, investable share class for the fund, which will track the cryptocurrencies listed in the index.

If successful, the index could one day be used as a shorthand for discussing cryptocurrency market movements, providing a reference point akin to an equity index. As indices are standard for traditional asset classes, this would allow investors to better analyze and track performance relative to other asset classes in their portfolios.

Index tracking products, such as the new share class, are designed to allow investors to gain broad exposure to an asset class while diversifying their holdings within it.

CAMCrypto30, which was constructed to resemble the Russell 2000 and FTSE 100 indices, is weighted by market cap.

Enneking told CoinDesk:

"We've used those two indices as our model because they are the closest to what seems to be appropriate in the crypto space. Not only is there no real index – there is certainly no investable index."

Unpacking the product

So, what's available today? For one, the index itself, which is separate from the investment vehicle, now has its own website.

An embeddable widget has also been made public for third-party websites to track CAMCrypto30 index data. (Notably, the index will be rebalanced monthly to better track the fast-moving cryptocurrency world, instead of being rebalanced quarterly, as is more typical with equity indices).

Otherwise, investors in the Crypto Asset Management fund are now able to participate in three separate fund classes, each of which provides exposure to a different type of investment.

The new index-tracking I-Class joins two other existing cryptocurrency fund classes: an L-Class, which is used to generate exposure to short-term lending rates, and a T-Class, which is a trading class.

All three classes are issued by two open-ended funds: a U.S.-based master fund, which is structured as a Delaware LLC, and a Cayman Islands-based feeder fund, primarily for international investors. The former, called Crypto Asset Management LLC, is open to accredited investors in the U.S., and is subject to a $25,000 minimum investment.

All Class-I shares, which track CAMCrypto30, have a fee structure of 2.5 percent on funds committed, but fees are not charged on returns, since there is no discretionary management involved in tracking the index.

 

David Ogden
Entrpreneur

David Ogden Cryptocurrency Entrepreneur

 

Author: Ash Bennington

Alan Zibluk – Markethive Founding Member

Changes in European regulations may impact Bitcoin

Changes in European regulations may impact Bitcoin

Changes in European regulations may impact Bitcoin

Some researches were stating that nearly a half of the bitcoin transaction is somehow related to various gambling activities. The reasons behind this are quite simple, the bitcoin provides a greater anonymity for the players and low transaction costs. However, the popularity of the bitcoin in the iGaming sector seem to become even greater this year.

Considering the fact that Poland, the Netherlands, Czech Republic and a few other major European markets are making it unfavourable for the operators to serve the customers via a locally regulated company and illegal to operate without one, the bitcoin casinos may become the best possible substitution in such markets. You may already see some of the popular Bitcoin casinos being listed at the various rating websites. While these websites are still listed in the bitcoin category, BTC casinos may soon take the largest slice of the market share. Let’s check a few European countries one by one to see the possible arguments.
 

Over 250 domains are banned in Poland

Polish government has set a deadline to ban all of the domains of the unregulated gambling companies by the 1st of July 2017. Now over 30 days have passed since then and we can conclude that this practice has been quite effective in terms of cleaning up the Polish market. Until now, it was announced that such gambling giants as 888 casino and poker, Pinnacle betting, Bet365, William Hill and other well known betting and casino operators have stepped out from Poland. Historically, some of the countries were putting such harsh restrictions on the gambling operators that only the richest ones could stay, yet this is not the case in Poland. The government has simply put a very high tax rate (12% on turnover), which already makes it quite risky for any gambling company to operate. And as a cherry on top, the Polish Ministry of Finance requires a company to apply for the local license with its locally established entity that employs local staff too. As a result, only a few unregulated operators are continuing serving the Polish players by offering their services while some subdomains.

We can clearly see an opportunity here for the bitcoin. While the number of competitors have decreased dramatically, generating profits is still not so easy for the locally regulated companies. Also, regulated companies are less likely to compensate their affiliates well or even at all. This is where bitcoin casinos and betting operators may take action and serve Polish customers with having no fears of being blocked by the payment system provider.
 

Czech Republic taxes the highest

Similar to Poland, Czech Republic has introduced a way to the gambling operators to get regulated and has required Internet Service Providers to ban the IPs of the unregulated entities. Instead of taxing the turnover, Czech Republic has decided to implement two types of taxation. Firstly, each of the games that uses randomly generated way of identifying a winner will be taxed at the 35% from the grosh gaming revenue. Even though such a tax rate is already one of the highest in Europe, Czech authorities will still charge a 19% income tax on top of that.

Again, most of the online gambling operators have decided to quit their operations. Needless to say, the bitcoin casinos and betting companies will be able to serve the clients in Czech republic without any local regulation, and this way they could save up quite a lot when compared to the regulated companies.

 

Summing it up

The EU governments are looking into tightening the screws in the iGaming sector. Ultimately, the government has two preventing measures in its disposal: blocking the operator’s IP address and requiring the payment systems to block the operator’s accounts. While the first block can be easily bypassed by various subdomains, avoiding the block on the deposits may be very challenging for the gambling companies that use fiat currencies. However, the bitcoin here seems to be the ultimately answer, and such a large forecasted demand on the cryptocurrencies may send the Bitcoin to the new heights.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Nick James

Alan Zibluk – Markethive Founding Member

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

EVERYONE IS CRAZY FOR ETHEREUM, BUT BITCOIN IS STILL THE BEAST TO BEAT

We’ve come a long way in the eight years since Bitcoin’s original release. Back in 2009, when the pseudonymous Satoshi Nakamoto launched the cryptographically verified digital asset, it was just a curiosity. With time, though, new uses have been found for it, from buying drugs, to transferring money near-instantaneously across the globe. Its value has peaked and troughed to reach considerable worth today – right now, a single Bitcoin is worth almost $2,800, close to its record high of $2,964.
 

The success of Bitcoin has inspired many imitators. That includes the classics, like Litecoin and Dogecoin, along with more contemporary and serious alternatives, like Ethereum and Zcash. They’re all subtly different, and often more volatile, than their Bitcoin foundation.

 

There’s now more than 900 cryptocurrencies in the wild. While many of them hog attention with their potential for larger earnings on less upfront investment, differing features, or philosophy, their futures still rest in the hands of that cryptocurrency created way back in 2009.
 

They are all built off the same core technology as Bitcoin, and susceptible to the same whims of human nature.
 

Bitcoin: The foundation and face of cryptocurrency empires

 

“Bitcoin underpins and backs up the entire crypto economy. When Bitcoin falls, the rest fall, when Bitcoin rises, the rest rise,” the host of the Bitcoin News Show, Vortex, told Digital Trends. “The alt coins are simply an extension of Bitcoin, most of them are even based on its source code.”
 

“Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique.”

There’s many “alt coins,” most with a unique spin. Some use different cryptographic hash functions, others build in smart contracting functionality, while others look to be more centralized. Yet at their core, they are all built around similar technology to Bitcoin, which is partly why their pasts and futures have been, and are, so dependent on the first mainstream cryptocurrency.
 

“Bitcoin will remain the digital gold that backs up the entire crypto-economy,” Vortex told us. “Nothing like bitcoin could ever emerge again as the path to its inception is absolutely unique. It was created anonymously with no pre-mine, no intent for profit, no attachment to any corporation, and essentially donated to the community by its founder.”
 

Although there have been some stumbling blocks over the years, with minor changes required to keep Bitcoin functioning as it should, it’s organic growth, and the lack of a desire to drive profit for its creators, that make Bitcoin so unique.

A quick look at the value charts shows that Bitcoin is leaps and bounds ahead of the competition. Its value was, at the time this article was published, four times greater than the nearest competition. That suggests a confidence in the long-standing currency that is far grander than its contemporaries.

Part of that comes from its very value, which makes large fluctuations in its worth less likely. It’s a sturdier investment than many other currencies – though that doesn’t mean it isn’t susceptible to fluctuation. Its price today is close to double what it was at the start of the year.

Bitcoin also acts as the face of the industry. It’s the original, most publicized, and close to a household name. That means first time investors are likely to consider it over other, more obscure investments. In turn, this popularity gives Bitcoin influence over its competitors. When the world sees Bitcoin doing well, other currencies usually benefits, too.

 

“The entire cryptocurrency market often moves up or down based on what’s happening with Bitcoin,” said Stewart Dennis, CEO of cryptocurrency email system Bitbounce. “If Bitcoin’s value continues to appreciate, that bodes well for the future of other currencies.”

A fork in the road?

 

Predicting the future appreciation of Bitcoin is difficult. As we have seen over the past couple of years, it can tumble back down following major world events. China’s decision to ban financial institutions from using Bitcoin in 2013 saw the currency nearly halve in value over a few weeks. Hacks of major Bitcoin exchange services, and speculative bubbles, have led to other temporary downturns in its fortunes.

Of course, there’s always the competition looking to use one of these disruptions to make an attempt on the crown. The latest is Bitcoin Cash, a “hard-fork” from Bitcoin, designed to offer larger capacity than its predecessor to reduce transaction fees. Does it stand to find success as an alternative top-tier currency where others have failed?

“Anyone at any time can fork Bitcoin as it is open source,” Vortex told us, dismissively. “This is what Litecoin and many other coins did. They forked Bitcoin, tweaked a few things, and called it something else.”

The only difference with Bitcoin Cash, he claims, is that it’s the first currency to attempt to use the original Bitcoin name. Although Bitcoin Cash has quickly become one of the more valuable cryptocurrencies ($400 at the time of writing), Vortex points out that it does not have much support.

“It only has two developers [and] is highly centralized and controlled. The core [Bitcoin] developers want nothing to do with it,” he said.

For the sake of argument, though, let’s assume Bitcoin Cash is successful, or some major calamity caused Bitcoin to fail and fall from grace. What would happen to the market then?

“If Bitcoin were to fall, faith in crypto itself would be lost for many years, at least as a store of value,” Vortex told us. “As a currency however, it would still flourish. Gold is what made and broke nations for thousands of years. Digital gold, or Bitcoin, is what will make or break nations for the next thousand years.”
 

Others, like BitBounce’s CEO, believe that the market itself would recover much more quickly, and that some other coin that would pick up the reins where Bitcoin left off.

“A [Bitcoin] calamity would cause other cryptocurrencies to lose significant value in the short-term,” he said. “But in the medium to long term, it could create an opening for currencies such as Ether to become the most valuable cryptocurrency.”
 

Predicting the future with Bitcoin’s past

Although Bitcoin’s future remains a little uncertain, we can draw something from its past. As the cryptocurrency with the greatest longevity and the most proven track record, we use it to get an idea of what may happen to its younger competitors as they grow and mature.

At the time of writing, Ethereum is one of the more popular, vogue currencies, and in terms of its market capital, is second only to Bitcoin, even if it does trail it by a significant margin. Though it has suffered a recent downturn in value, it reached a new high less than a month ago, peaking just shy of $400 per Ether.

If we look at a graph of its growth and fall and compare that to Bitcoin’s earliest peaks in 2013, the similarities are hard to ignore. The only difference is that Ether has yet to recover in quite the same manner as Bitcoin. While there are no guarantees of such a thing happening, Bitbounce’s Dennis believes it will soon.

“Bitcoin has repeatedly appreciated to an all-time high and then corrected to a lower price for a while, before eventually reaching an even greater high. I see similar trends with other younger currencies,” he told DigitalTrends.
 

Indeed, Dennis sees those currencies one day even eclipsing that of Bitcoin.

“Bitcoin is still important because it started everything and has the widest adoption. However, Bitcoin’s dominance has been fading. Before too long, I expect other currencies to become even more valuable, and have greater adoption than Bitcoin.”

Vortex, however, disagrees. While he believes that Bitcoin will continue to underpin cryptocurrencies and even worldwide economies in the forseeable future, the outcome of other currencies is far less certain.
 

“Nothing is predictable,” he said, but reiterated that Bitcoin’s fortunes will be reflected in those of others currencies.

While he does see that any sort of success in Bitcoin cash would be a potential indicator for more hard-fork currencies being created in the future, “that trick only works a few times” and will ultimately just bring more attention to the original currency that started it all. Bitcoin.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Jon Martindale

Alan Zibluk – Markethive Founding Member

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

Mastercard Eyes Cryptocurrency Refunds in New Patent Application

A new patent application from Mastercard suggests that the global credit card issuer is exploring ways to build refund services for cryptocurrency users.
 

The application, titled "Information Transaction Infrastructure", was published by the the U.S. Patent and Trademark Office (USPTO) on August 3, having been submitted in late January. Vladimir Goloshchuk, who according to LinkedIn previously worked as a senior analyst at Mastercard, is listed as the sole inventor.

 

The application details an infrastructure through which users could verify their identities, which would then be linked to cryptocurrency addresses they elect to disclose.
 

The text of the application points to this being most relevant for situations in which users are submitting payments to merchants from accounts on exchanges, or other services, in which their funds may be held alongside those belonging to others.

 

In the event that a merchant has to send the money back for a refund, they would send it back to an address linked to that user's account – a situation in which the exchange or custody holder might then need to know where those funds are being sourced from and why.
 

To counter this, Mastercard proposes a way for users, through a shared service, to have two kinds of wallets.
 

"The basic principle of the arrangement … is that a user of the shared wallet service has two types of wallet. Firstly, they have a 'public' wallet for on-the-chain publicly visible and verified transactions. The user will make and receive cryptocurrency payments external to the shared wallet service using a public wallet," the application explains, adding:
 

"Using this approach, the refund problem can be addressed – a payment received from the public wallet can be refunded by an equal payment back to the public wallet."
 

The application is the latest from Mastercard, which has filed several patents in the past few years. The company has also developed projects focused on blockchain tech, releasing a set of dedicated APIs last fall.

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

 

 

Author: Stan Higgings

Alan Zibluk – Markethive Founding Member

Grandpa Had a Pension. This Generation Has Cryptocurrency

Grandpa Had a Pension. This Generation Has Cryptocurrency

Grandpa Had a Pension. This Generation Has Cryptocurrency.

Most readers have probably heard of Bitcoin, the digital coin that dominates the cryptocurrency market. It has gained notice both because of its skyrocketing value (from less than a cent in early 2010 to around $2,600 currently) and because it is frequently a key player in hacking- and black-market-related stories, from the looting of nearly half a billion dollars in coins from the Mt. Gox exchange in 2014 to the recent demand for payment in Bitcoin in the WannaCry ransomware attack.

But do you know Ethereum, with a total value of coins in circulation of close to $20 billion? Bitcoin Cash, which split off from the original Bitcoin on Aug. 1, lost about half its value within hours, then nearly quadrupled by the next day? Or, rounding out the Big Four, Ripple — whose currency is known as XRP — which shot up to about 40 cents by mid-May from less than a cent at the end of March? (Full disclosure: I owned but unloaded three of these currencies before writing this article.) Then there are over 800 lower-value and often creatively named coins among those listed on Coinmarketcap.com. One can buy FedoraCoin (its jaunty symbol being the Justin Timberlake-approved hat), CannabisCoin (one guess what it looks like) or, to choose one of many bringing up the rear, Quartz, currently priced around three-thousandths of a cent. (Bad news for those who bought it at just under $2 at the end of May.)

After years as a niche market for technologically sophisticated anarchists and libertarians excited about a decentralized financial network not under government control, digital coins may be on the verge of going mainstream. “It’s the wild, wild West,” said Ron Ginn, 35, founder of a private photo-sharing service called Text Event Pics in St. Augustine, Fla., who has taken all his money out of the stock market and put it into Ripple and real estate. “This is like getting to invest in the internet in the ’90s. I’m obviously very bullish, but I expect to make a couple million dollars off very little money. This is the opportunity of a lifetime. Finance is getting its internet.”

Cryptocurrency has understandable appeal to millennials who came of age during the 2008 financial crisis and are now watching the rise of antiglobalist populism threaten the stability of the international economy.
 

“There’s a low cost for entry, you don’t pay a lot of fees and millennials are the most tech-savvy,” said John Guarco, 22, a recent Duke graduate living on Staten Island who, like most of the people interviewed for this article, asked that names of the coins in which he has invested not be published for fear of being targeted by hackers.

Unlike previous generations, many of these greenhorn investors don’t have pensions or 401(k)’s, are mistrustful of socking money away in mutual funds and are fully accustomed to owning digital assets that have no concrete properties. As traditional paths to upper-middle-class stability are being blocked by debt, exorbitant housing costs and a shaky job market, these investors view cryptocurrency not only as a hedge against another Dow Jones crash, but also as the most rational — and even utopian — means of investing their money.

Sebastian Dinges, 33, the director of operations for Cheeky, a company that makes mealtime products, started his first job after college in 2007. Once he had enough money to invest in the stock market, he said, he “wanted to be risky and get a big return.” Within six months, the market crashed.

“So there’s definitely disillusionment,” he said.

The majority of Mr. Dinges’s holdings are now in cryptocurrency. His skepticism of traditional markets is shared by a number of cryptocurrency enthusiasts in his age bracket who have observed the recent political and economic upheavals.

“I do feel we’ve reached a new level where nobody knows what’s going to happen,” said Gabe Wax, 24, who runs the Rare Book Room recording studio in Brooklyn. “The things we’ve been able to rely on aren’t as reliable and we have a president who knows absolutely nothing about how the economy works, and he’s appointed people who have twisted views about how it works. That, more than anything, is what scares me.”

Mr. Wax was still in high school when the 2008 crisis unfolded, but he was paying attention to the headlines. So was Mr. Guarco, who said cryptocurrency was a “safeguard against the volatility in the rest of the world.”

“Investing in cryptocurrencies is a hedge,” he continued. “We’re entering a period of long-term deregulation and tax cuts to the wealthiest. It’s not the best recipe for stability.”

Mr. Wax also invests in cryptocurrency to shore up his finances as a freelancer in the precarious music industry.

“I constantly feel like I’m looking over the edge of a cliff,” he said. “I don’t like the idea of money just sitting in a savings account — with the way inflation works and how low interest rates are, you’re losing money. There’s less money than there’s ever been in the history of recorded music, so that gives me anxiety. It’s weird to say that owning cryptocurrency soothes that anxiety, because it’s counterintuitive, but it does.”

He is far from the only one hoping cryptocurrency will assuage his financial worries. Internet forums and Twitter accounts devoted to the subject abound with speculators who view digital coins as a lottery ticket, forecasting “moonshots” with, perhaps, irrational exuberance. For office drudges, the underemployed or those crushed by college loans, the slim chance that a $100 investment may someday reap close to $100 million — as would have happened with an investment of that amount in Bitcoin in 2010 — is too enticing to pass up.

But there are plenty of dissenters who are less sanguine about the future of cryptocurrency, arguing that we are in the midst of the biggest bubble yet, fueled by speculative trading in Japan and South Korea, and pointing to previous Bitcoin crashes as justification for their skepticism.

Nevertheless, it’s not just twentysomethings in the gig economy who are losing faith in traditional investment tools. Mr. Ginn quit working at Fidelity Investments the day before the market crash in 2008.

“It’s not investing,” he said of his old job. “It’s just sticking money somewhere. The investment advisory industry has to give out watered-down, averaged-out advice. When you get into mutual funds, you lose a lot of the ability to beat the markets.”

Tom Berg, 44, a founder of BloKtek Capital in Northbrook, Ill., which invests in digital currencies and assets, said: “I got out of the stock market years ago. “My personal opinion was I’m not going to fight for 2 or 3 percent. It’s a conservative place.” By contrast, digital currencies — his preferred term to cryptocurrency, which he says carries the stigma of black-market money laundering — have disrupted the internet and created a major opportunity for those willing to jump in early, Mr. Berg believes. “At first it was an internet of information,” he said. “Then it evolved to an internet of things — social media, I can buy this, I can sell stuff. Now it’s the internet of value.”

In his view, cryptocurrency left the “dark ages” six months ago, when it was still the domain of “a lot of people who believed in anarchy.” He thinks that cryptocurrency is a good five years from going mainstream and that the bubble will burst some time after that, at which point he will sell his assets
 

“If my landscaper ever asks me about crypto, that’s the day I get out,” he said.
 

There are some barriers to mass popularity. Investors must have enough familiarity with and trust of the internet to send money through a cryptocurrency exchange, such as Coinbase or Poloniex. Some of the exchanges also have elaborate and slow identity-verification processes, and certain states do not permit users to invest on them yet. But it’s continually getting easier, and various exchanges allow credit cards for speedy purchases.

Once one has bought digital coins, the threat of hacking remains a serious concern. Even users savvy enough to use two-factor authentication on their phones may not have the know-how to set up “cold storage,” or a system of storing coins offline (such as on a computer or dedicated piece of hardware not connected to the internet). There is no Federal Deposit Insurance Corporation insuring lost money; once it’s gone, it’s gone.

Assuming one’s money is protected, there are, of course, the standard risks of investing, amplified by the volatility of cryptocurrency. It’s common for a coin to fluctuate double-digit percentages within a day, often because of “pump-and-dump” techniques from coordinated users trying to manipulate prices in completely unregulated free markets.

For this reason, none of the investors I spoke with engage in short-term trading but instead choose, in the online parlance of cryptocurrency enthusiasts, to “hodl” (“hold on for dear life,” rather than sell off for temporary gains). Mr. Dinges and his wife recently bought a house in Los Angeles, but he didn’t use his Bitcoins to help with the renovations.

“This is a great opportunity to pull it out and put it toward fixing the house,” he said, “but the future potential is not worth it.”

Mr. Berg would agree, advising BloKtek Capital clients to “set it and forget it” and not fall prey to the temptation to make short-term transactions.

“My wife and I use it as our bank account,” he said. “Every paycheck, we put a percentage into long-term holdings. We do not expect to become rich overnight. That’s a way to become very poor in one hour.” (Though his wife works at his company, it bears mentioning here that the vast majority of cryptocurrency investors seem to be male, and their Twitter discourse tends to be less than refined, with insults often lodged at devotees of rival currencies.)

Even those in it for the long haul, however, admit to monitoring the prices compulsively, scratching the gambler’s itch.

“If I have a moment where the price has left my mind, I’ll want to reinsert it,” Mr. Wax, the record producer, said. “I check it as much as any social media. It’s become as distracting as anything else on my phone.”

As he works in the cryptocurrency world, Mr. Berg maintains an even more observant — and most likely exhausting — regimen.

“I’m always watching the markets,” he said. “The saying is, ‘Crypto never sleeps.’ It’s 24/7, it’s global, it doesn’t have a stock market, it doesn’t have a bell.

“I sleep about four hours a day.”

Beyond its potential long-term financial rewards, many holders of cryptocurrency view it as a vehicle for social change. While many coins have no value beyond serving as a potential alternative currency, or began as larks that have since been popularized by speculators (such as Dogecoin, whose logo is an internet-meme dog and which now has a market capitalization of about $200 million), others — namely Ripple and Ethereum — have meaningful real-world utility and are being adopted by banks and financial institutions.

“The financial gain is fun, but it’s really about improving the world, improving the financial system, transparency, cost, increased speed,” Mr. Ginn said. “It’s the double-sided tape for society. When financial markets collapse, the tape rips people apart and you have a system collapse. Finance got away with it in ’08; it almost took the world down, and nothing changed.” In lieu of more stringent government oversight, he believes that Ripple can help “reduce systemic risk.”

That safety-net altruism drives Yoni Saltzman, 24, who designs robotic mechanisms for aerospace and medical applications. Mr. Saltzman has holdings in four different cryptocurrencies and is working with a small team in New York to develop a digital coin it hopes to introduce within a year. “It’s not just about making money,” he said. “We like the idea of not only changing the world, but saving the world.”

This is, of course, the same vaguely idealistic rationale Silicon Valley executives routinely trot out to justify their ventures, not all of which seem especially concerned with the greater good. In the meantime, those who have boarded the crypto-train frequently proselytize to friends and family. Unsurprisingly, they have more luck with their younger peers. Mr. Guarco, the Duke graduate, has persuaded a few friends to take the plunge.

His older relatives, however, unaccustomed to coins that one can’t pluck out of a lint-filled pocket, are a harder sell.

“They usually respond, ‘Crypto-what?’” he said.

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur
 

Author: Teddy Wayne

Alan Zibluk – Markethive Founding Member

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin Slide Looks Limited Even After Cryptocurrency Splits

Bitcoin might be dividing into two separate blockchains, but its downward slide has so far been contained, signaling confidence the biggest cryptocurrency will come out of the split unscathed.

The debate over how to scale bitcoin came to a head Tuesday as some cryptocurrency miners started using software called Bitcoin Cash and splitting a new blockchain off the old one. Blockchain is the technology used for verifying and recording digital currency transactions.

Bitcoin’s price should reflect the split by discounting the new coin, according to Charles Hayter, who runs the cryptocurrency data platform CryptoCompare. He likened it to a stock trading “ex dividend” — when the buyer isn’t entitled to collect a dividend on the shares.
 

After four days of gains, bitcoin was down $157, or 5.4 percent, to $2,729 at 11:05 a.m. in New York. Earlier in the day, the cryptocurrency fell as much as 8.4 percent, its biggest decline since July 25. Bitcoin cash futures rose 19 percent to $331, according to CoinMarketCap.com.

“The price of bitcoin has risen ahead of the split on the expectation that you’ll get that extra cash from bitcoin cash, so it should drop after the split,” Hayter said. “This has happened before in other blockchains. It’s a trading event where there’s number of hoops you have to jump though and people are trying to make a profit.”
 

Bitcoin Cash started gaining traction in the past week, just as miners fended off another split by rallying behind the scaling mechanism known as SegWit2X. Bitcoin Cash wants to increase the block size — the files in which transactions are recorded — while SegWit2X would transfer some of the operating power outside of the main blockchain. In other words, Bitcoin Cash would be one lane with bigger cars, while SegWit2X would be two lanes with smaller cars.

 

The great majority of miners and developers support bitcoin, while ViaBTC, which has almost 6 percent of bitcoin processing power, is the mining pool backing bitcoin cash.

“There’s a role for both of these coins,” said Cathie Wood, the New York-based chief investment officer at ARK Investment Management, which oversees the first exchange-traded fund with indirect exposure to bitcoin. “One is much more natural for store of value and the other one for a means of exchange.”

 

Some are less bullish. Ryan Taylor, chief executive officer of Dash Core, the sixth-biggest cryptocurrency, sees little chance that bitcoin cash will succeed in the long term.

 

“First, Bitcoin Cash has not solved scaling. It has merely kicked the can down the road with slightly larger blocks, but still lacks a credible technology to scale to massively larger numbers of users,” he said in an email. “Second, bitcoin will retain the network of integrated services that make the bitcoin network useful to businesses and consumers.”

 

Bitcoin holders are set to receive the same amount of bitcoin cash as they have in bitcoin if the exchanges and wallets they use support the new coin. Exchanges including Kraken and ViaBTC have said they’ll support both, while others like Coinbase and Poloniex have said they won’t, citing uncertainty that bitcoin cash will have lasting market value.

 

Kraken said that it’s working on crediting accounts with bitcoin cash, and that its site’s login function is down due to heavy traffic. While some miners are already using the Bitcoin Cash program, the real differentiation of the two blockchains will emerge when they mine more than 1 megabyte in one block, Hayter said. Bitcoin’s block limit is 1MB while Bitcoin Cash’s is 8MB.

“I’m not as concerned about this except for the administrative nightmare that some people are going to have to go through or have gone through already pulling out of the various exchanges that weren’t going to support it,” ARK Investment’s Wood said.

 

Bruce Fenton, founder of Atlantic Financial Inc. and a board member at the Bitcoin Foundation, said both currencies should trade heavily Tuesday.

“There are some very large holders who own bitcoin, who don’t like bitcoin and do like bitcoin cash,” he said. “But you also have a lot of people who can’t stand bitcoin cash, and as soon as they have the ability to get those coins they’re going to sell them on the market.”

“It could be a crazy day,” he said.

 

 

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entreprenuer

 

 

Authors: Camilo Russ & Lily Katz

Alan Zibluk – Markethive Founding Member

Bitcoin Cash Futures Plunge on ViaBTC

Bitcoin Cash Futures Plunge on ViaBTC

 

The creators of Bitcoin Cash believe support for segregated witness was a mistake – and a diversion from Satoshi Nakamoto’s vision for Bitcoin – and they aim to help bitcoin scale by immediately increasing the block size from 1 MB to 8 MB.

Since Bitcoin Cash is forking the Bitcoin blockchain, most bitcoin holders will receive an equal number of bitcoin cash. As long as you control the private keys of your bitcoin wallet – or have your coins on an exchange which has pledged support for bitcoin cash – you will be able to claim your bitcoin cash. If your coins are on an exchange which opposes bitcoin cash – such as Coinbase – there is a good chance you will not receive them.

Although the UAHF has not yet been deployed, ViaBTC enabled traders to trade bitcoin cash futures (under symbol: BCC) by temporarily freezing their BTC balances on the platform.

Despite this move, ViaBTC says they are neutral and only added BCC support because they believed there would be a market for it. And indeed there was; 24-hour bitcoin cash volume surpassed $2 million on July 27, although it has since tapered to about $850 million. HitBTC later added BCC futures as well, although volume is extremely low.

 

Bitcoin Cash Price Chart from ViaBTC

Since its listing, the bitcoin cash price has plunged on ViaBTC. From July 24-25, the value of bitcoin cash futures hovered around $500. By the 26th, it had fallen to $400. Since then, it has continued to skid, falling below $300 on July 31. In the past day alone, the bitcoin cash price has declined 24% against bitcoin, bringing its present value to about $278 according to CoinMarketCap.

It’s important to remember that these are just futures. The actual bitcoin cash coins do not exist yet, so we shouldn’t extrapolate too much from the week that bitcoin cash futures were trading on ViaBTC. Right now, we have more questions than answers about the actual hard fork:

Will investors rush to sell their airdropped bitcoin cash for a quick payday, or will they take a more cautious route in case bitcoin cash gains traction?

Where will bitcoin cash debut in the market cap rankings? If the current price of its futures is any indication, it could vault to 4th place with a market cap of around $4.5 billion.

How will bitcoin cash affect the bitcoin price – and how much has it already? It is likely that bitcoin cash will pull at least some of its value from the bitcoin market cap, but how drastic and immediate will the transfer be? If the bitcoin cash price opens at $300, for instance, will the bitcoin price decline in response?

These are exciting – and anxious – times for bitcoin. Bitcoin cash already has a fairly solid wallet and exchange support, but the real test will be whether the miners get behind it. In any case, it will be extremely intriguing to watch the trajectory of the bitcoin cash over the coming weeks.

 

David Ogden
Entreprenuer

David Ogden Cryptocurrency Entrepreneur

 

 

 

Author: Josiah Wilmoth

 

Alan Zibluk – Markethive Founding Member