Category Archives: Cryptocurrency
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Cryptocurrency mining has become an important source of income inVenezuela, a country ravaged by hyperinflation, but it has also become hazardous as police are cracking down on people they suspect of using too much electricity.
Venezuelans have turned to cryptocurrencies as inflation has ravaged the official bolivar, which has lost 99.4% of its value since 2012. As a result, mining has become more lucrative, and a way for people to earn money to pay for basic living expenses,according to CNBC.
One miner, who agreed to speak only anonymously, became a miner because his $43 monthly salary couldnt support his family. He began mining illegally by using government computers where he worked, and eventually quit his government job to mine at home.
Another miner who has since fled to the U.S. said mining kept him out of poverty in Venezuela. He said one mining rig will produce enough income to feed a family.
Another woman who works three jobs said mining produces 80% of her $120 monthly income. She said mining has allowed her to support herself and her daughter.
One man said the easiest way to acquire commodities in Venezuela is to use cryptocurrency to buy things on purse.io. He said he orders staples like soap and deodorant and has a courier deliver them to his office.
Miners often turn to online forums to learn how to mine.
Also read: Venezuelan authorities destroy bitcoin mining center as crackdown continues
While mining has become a necessity to many, it has also become dangerous since it is illegal and police arrest people they suspect of using too much electricity. Subsidized electricity in Venezuela keeps the cost of mining down, but the government monitors its use carefully.
In 2016, two men in Valencia were arrested on charges of energy theft and possessing contraband. Since then, arrests have increased. One police official said the offenders are exploiting resources without documentation. A Reddit post said miners in the country are being arrested and charged with terrorism, money laundering and other crimes.
One 23-year-old who said he earned $20 a day mining Ethereum when the currency was at its price peak said he lives in fear of being arrested. Another miner said he was approached by intelligence officials who asked him why he was consuming so much power from his home. He said he moved to another location.
Still another miner said he conceals his electrical footprint by splitting his mining equipment across three locations. He pays neighbors to use their electricity for his mining.
Joe Lubin, Ethereum co-founder, said cryptocurrencies, despite their volatility, are integral to survival in places where natural currencies are spiraling out of control.
Featured image from Shutterstock.
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Venezuela Cracks Down On Cryptocurrency Mining – CryptoCoinsNews
Digital currencies such as bitcoin and ethereum have blown traditional investments out of the water since the year began. Bitcoin, which is the largest cryptocurrency by market cap, is up 373% year to date through Aug. 30, while ethereum, the second largest digital currency by market cap, has surged an almost unimaginable 4,737% year to date. For comparison, it’s taken the S&P 500 more than four decades to return what ethereum has in a matter of eight months.
But the real story is just how much money has been poured into cryptocurrencies over the past eight months. Since the year began, the aggregate market cap of all cryptocurrencies has jumped from $17.7 billion to a record $161 billion as of Aug. 29 — that’s an 810% climb.Bitcoin, the kingpin of the group, and its recently spun-off bitcoin cash, are pretty much responsible for around half of those market-cap gains.
Image source: Getty Images.
What on Earth has the investment world going so crazy for digital currencies? Fundamentally, it has a lot do with the underlying blockchain technology that many of the largest market-cap cryptocurrencies use. Blockchain is a decentralized digital ledger that securely records transactions. Some pundits believe it could represent the future of peer-to-peer or business-to-business transactions. In fact, more than 150 organization, including some well-known businesses, are currently testing ethereum’s blockchain on a pilot or small-scale basis.Ethereum appears best suited to appeal to big business, but the SegWit2X upgrade at bitcoin (bitcoin recently split into two currencies, bitcoin and bitcoin cash) should allow for faster processing times, lowering transaction fees, and greater capacity, which should appeal to enterprises.
Some investors simply like the idea of cryptocurrencies as a means of getting around traditional central bank-backed currency. In effect, bitcoin and other digital currencies act as a dream currency for libertarians. Quite a few well-known businesses also currently accept bitcoin to some capacity, adding validity that digital currencies may be here to stay.
We also can’t overlook momentum. Since most financial institutions have been kept on the sidelines, this run higher in cryptocurrencies is almost entirely due to the expectations of retail investors. As long as someone is willing to pay more, emotions and lofty expectations could drive bitcoin, ethereum, and its peers, higher.
Image source: Getty Images.
Finally, look to the weakening U.S. dollar as a reason digital currencies are so strong. A weaker dollar is great for U.S. exports, but it’s not so good for the American consumer or investor. Investors looking to maintain or grow their wealth may opt to move their money out of dollars and into a safe-haven commodity. Traditionally, gold has been this safe haven, but bitcoin and other cryptocurrencies have filled this role more recently. Gold is truly a finite commodity, but bitcoin’s protocol also limits the number of coins that can be mined, giving it a “finite” feel as well.
Though these digital currencies have returned mouthwatering gains for investors, there’s also the genuine possibility that this is a bubble just waiting to burst.
While arbitrary, this writer has seen an overwhelming number of cryptocurrency advertisements both online and in print suggesting that people invest in bitcoin. Generally, when we see an influx of ads surrounding a rapidly appreciating investment, it’s often emblematic of a bubble. Some of the fastest appreciating investments, including marijuana stocks, have had their valuations crater not too long after the calls to “invest in marijuana stocks” ramped up over the past couple of years.
Second, there’s not much in the way of “fundamental” data for investors to dig into to determine a fair valuation for cryptocurrencies. Without any government backing, there’s virtually nothing to tether the movement of digital currencies to other than the short-term emotions of investors. Blockchain technology is still too new to really get a bead on its usefulness for enterprises, meaning today’s cryptocurrency valuations may make little sense.
Image source: Getty Images.
There’s also clear evidence of overvaluation apparent in bitcoin-based equities that stock market investors can buy. For example, the Bitcoin Investment Trust (NASDAQOTH:GBTC) owns 173,014 bitcoin, which are valued at $4,577 as of Aug. 30. On an aggregate basis, this means Bitcoin Investment Trust owns $791.9 million worth of bitcoin. However, the market cap of the ETF run by Grayscale was $1.55 billion by 3 p.m. ET on Aug 30. That’s a 96% premium to what’s actually owned within the ETF. This premium makes no sense whatsoever!
Just as maddening, First Bitcoin Capital Corp. (NASDAQOTH:BITCF), which recently had its stock temporarily halted by the Securities and Exchange Commission for two weeks, is up over 24,000% over the trailing-12-month period. The company, which describes itself as developing cryptocurrencies, blockchain technology, and operating cryptocurrency exchanges, has virtually no assets, other than a mineral deposit in Venezuela from when it focused on being a gold mining company, and it generated a meager $46,236 in revenue in all of fiscal 2016. Yet First Bitcoin Capital has a market cap of $540 million. Wrap your hands around that.
I would strongly encourage investors who are seeking safe-haven assets to consider buying gold or silver to protect against a further decline in the dollar. Gold has a long history of being used as a viable currency, and it has a variety industrial and commercial uses. The same cannot be said for bitcoin, ethereum, or any digital currency.
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The Aggregate Cryptocurrency Market Cap Is Up 810% Year to Date – Motley Fool
Mark Mobius is sensing danger in the explosive growth of cryptocurrencies.
Governments will begin clamping down on digital currencies because of their use in illicit financing, with terrorist groups to drug dealers contributing to their rise, Mobius, executive chairman at Templeton Emerging Markets Group, said in an interview in Hong Kong Monday.
Cryptocurrencies are beginning to get out of control and its going to attract the attention of governments around the world, Mobius said. Youre going to get a reversion back to gold because people are going to wonder, can I really trust these currencies?
And the crackdown may have already started — at least in China, home to the majority of bitcoin miners.
The Peoples Bank of China said Monday that initial coin offerings are illegal and that all related fundraising activity should be halted immediately. The central bank said it has completed investigations into organizations and individuals who have conducted so-called ICOs, and have ruled that such activities disturb financial order and will be banned.
In the U.S., both banks and regulators are studying distributed ledger technology. Federal Reserve officials have made a couple of formal speeches on the topic in the past 12 months, but have voiced reservations about digital currencies themselves.
Mobius isnt the only one voicing concern. Bank of America Merrill Lynch was cautious around bitcoin in July, saying there were a lot of obstacles, such as theft and hacking risks, that make it unlikely it will gain the status of pledgeable collateral.
Read more: Some Investors See Bitcoin Better Than Gold, Morgan Stanley Says
Bitcoin fell more than 10 percent on Monday, after news of the PBOC curbs. While the cryptocurrency is still up more than 360 percent this year and is still within striking distance of its record, its also prone to wild swings. Bitcoin surpassed the price for an ounce of gold for the first time in March.
Investors have poured hundreds of millions of dollars into the digital currency market this year alone, with the dollar value of the 20 biggest cryptocurrencies around $150 billion, according to data from Coinmarketcap.com.
People need a means of exchange and they need to trust that, said Mobius, who was interviewed before Chinas announcement. Right now the trust is good — with bitcoin people are buying and selling it, they think its a reasonable market — but there will come a day when government crackdowns come in and you begin to see the currency come down.
With assistance by Shery Ahn, and Angie Lau
If youre as confused about Bitcoin and other cryptocurrencies youre not alone.
By Team CommerceMashable Shopping2017-09-02 12:00:00 UTC
In essence, cryptocurrencies are decentralized digital currencies that can be sent to anyone through the internet. They arent affiliated with any particular country so theres no central bank that verifies these transactions. Instead, cryptocurrency miners use special software that creates a public record of each transaction and gives the miner a payment in return.
If you know what youre doing, you can make a lot of money mining this digital currency. But how does it work and whats the best way to do it? You can learn all of this from the Beginners Guide to Cryptocurrency Mining.
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Not too long ago, Chinese regulators voiced their concerns regarding cryptocurrency ICOs and the amount of money that companies have raised throughthoseevents. There is plenty of reason to be concerned overthe lack of regulation, asmost of these companies do not have a license to issue securities. It now appears the Chinese regulators are seeking to warn the public aboutthe risks pertaining to ICOs. They are advising the general public to report any suspicious ICO activity to the police. Things are not looking good for ICOs in China.
Various governments around the world have not taken too kindly to the concept of cryptocurrency ICOs. Given the hugeamount of money raised by projects without regulations or licenses in place, there is valid reason for concern. Some of these ICOs may pose a genuine risk to investors. Chinese regulators are very concerned about this way of raising a lot of money and want to address the hidden financial risks it presents.
According to Reuters, Chinese citizens are being asked to report suspected crimes to the police. In particular, theyare instructed to report any suspicious ICO activity to the authorities as quickly as possible. It is a bit unclear what would classify an ICO as being suspicious, since virtually every project will run into some issues along the way. Sites get hacked, information is leaked, or deadlines are not met. All of those events are suspicious in nature, although it is difficult to hold companies accountable for their actions (or lack thereof).
Chinese regulators are preparing new rules on digital currency offerings. It is certainly possible cryptocurrency ICOs mightbe suspended in China altogether until the new regulations are in place. No one knows for sure when that will happen exactly, though. Regulatory effortslike these can take anywhere from a few weeks to months or even years before they are fully implemented. With 65 ICOs organized in China to date and around US$400 million having been raised, these projects will face a lot of scrutiny from officials. They also highlight the dire need for proper ICO regulation in China and the rest of the world.
No one can deny these coin offerings have shaken up the financial industry quite a bit. They have disrupted the economic order and created relatively large hidden risks, according to a Chinese spokesperson. Those are some very serious comments which will hinder the growth of ICOs in China for the foreseeable future. Suspending suchfundraising efforts will have a similar effect. China is known for focusing on regulation first and foremost, even at the cost of stifling innovation a bit. The same issues have affected Bitcoin exchanges recently.
Similarly to Bitcoin, ICO tokens are a legal gray area for the time being. Over in the United States, a lot of these tokens may be labeled as securities, which couldspell disaster for companies conductingICOs in the past, present, and future. For the time being, it is unclear what the future will bring for cryptocurrency ICOs in China, but things are not looking all that great. If ICOs wereofficially suspended in the country, raising funds would become a lot more difficult, to say the least.
Suspending ICOs across China will be very difficult, though. Companies couldtry to prevent Chinese users from contributing money, but those measures wouldbe bypassed with relative ease. The same applies to projects barring U.S. investors, as all they do is introduce a short form and IP blocks. That block can easily be bypassed with a VPN or proxy connection, though. For the time being, raising funds with cryptocurrency is still somewhat legal in China, although things may change pretty quickly.
An official for Russia’s nationallegislature believes that new laws regulating the exchange of cryptocurrencies will be complete by the end of the fall.
Anatoly Aksakov, who leads the State Duma’s financial markets committee, told Russian media this week that next steps involve the formation of a dedicated working group to address the issue.Further, he said that he would be meeting with officials from Russia’s central bank and the Ministry of Finance in the coming days.
Should all the pieces come together Russian officials have been working on some kind of law related to the tech since as early as 2014 lawmakers could complete work on a legislative passage over the next several months, according to Aksakov.
He said (in translated comments):
“If we agree on the main approaches in the coming week, I think that by autumn, by the end of the fall session, we will be able to adopt this law in order to provide a legal space for the development of this market.”
The comments come amid a flurry of news out of Russia on the cryptocurrency front. The country’s deputy finance minister, for example, said earlier this week that he thinks bitcoin trading should be restricted to qualified investors. The chief internet advisor to president Vladimir Putin, meanwhile, unveiled the formation of a new blockchain and cryptocurrency advocacy group earlier this week.
Image Credit:ID1974 / Shutterstock.com
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Russia Could Pass Cryptocurrency Law This Year, Senior Lawmaker Says – CoinDesk
Fortune convened some top cryptocurrency entrepreneurs, venture capitalists, bankers, and others to chat about the future of digital money at Fortunes Brainstorm Tech conference in Aspen, Colo. last week. A select group met at the Aspen Institute for a breakfast roundtable discussion on Wednesday morning.
Headliners on the panel included Balaji Srinivasan, CEO and cofounder of 21.co, a cryptocurrency startup that has raised more in traditional VC funding than almost other one. Another was Peter Smith, CEO and cofounder of Blockchain, a U.K.-based cryptocurrency wallet company that recently raised $40 million from GV, the venture capital arm of Alphabet, parent company of Google (goog). And Kathleen Breitman, CEO and cofounder of Tezos, a blockchain startup that this year raised more than $200 million in an initial coin offering, or ICO, and which counts celeb investor Tim Draper among its backers.
The crew of experts weighed in on everything from the longevity of Bitcoin, the original cryptocurrency and blockchain, or cryptographically secured public ledger, to the latest trend of hosting so-called token sales to fund projects, especially on Ethereum, a rival blockchain to Bitcoins, to the future of a decentralized web. Here are some of the predictions we heard.
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Most people who are enthusiastic about cryptocurrency appear to agree that Bitcoin and its newer rival Ethereum have staying power, though they may be more bullish on one versus the other. “In terms of 5 to 10 years, Bitcoin and Ether will be around I bet,” Balaji Srinivasan told the room of more than 70 people.
Peter Smith said his company, Blockchain, which was early to Bitcoin, has only just started to warm up to newcomer Ethereum. In contrast, Mike Cagney, CEO and cofounder of SoFi, a personal finance company, said during a separate session on the main stage that he was hotter on the latter technology.
Bitcoin “has some purpose but its application for commercial transaction is limited right now,” Cagney said. “The blockchain and Ethereum, on the other hand, have absolutely fascinating infrastructure applications, he continued, mentioning the possibility to overhaul title insurance, which involves policies related to real estate, as one example.
Bitcoin and Ethereum may have stolen the show at this point, but the innovation wont end there. Expect more winners on the horizon.
Kathleen Breitman is hopeful that Tezos, her own blockchain bet, will fill a niche that solves problems with extant blockchains. In particular, she and her projects developers are designing Tezos to automatically push software updates out to the network, thus, in theory, avoiding the divisive feuding over upgrades that has wracked systems like Bitcoin over the past few years.
No one can say how many tokens and coins and blockchain protocols will eventually win out, but the experts seem to think theres room for a multitude. “Its likely that another one or two dominant ones we havent seen yet in the market,” Smith projected. “Another really dominant coin could come out this year or next year.
For the time being, token sales might seem like a fantastic way to raise a lot of money quickly and with few questions asked. Will this lead to riches for some? Undoubtedlyindeed, it already has. And rip-offs for others? Almost certainly.
Smith said he presumes that market manipulation and insider dealing is rampant among purveyors of initial coin offerings. Were cautious about it in the short term, Smith said of his company. But you have to temper that with the idea that every new technology is going to be like that in the beginning.
Brad Garlinghouse, CEO of Ripple and a former executive at Yahoo, voiced his less forgiving concerns about the sector on a separate panel. Heavily regulated markets are typically heavily regulated for a reason, he said. Frauds are happening, people are going to jail.
The days of making a pilgrimage to the homes of the holders of purse strings are coming to an end. In a world where anyone can participate as an investor online, physical location matters much less.
It used to be you had to come to Silicon Valley, walk up Sand Hill Road, network with individuals, Srinivasan said about entrepreneurs seeking funding, often strolling up a strip to the west of Palo Alto that long has been associated with venture capital firms. ICOs change all that.
Projects are already getting funded this Kickstarter-like new way. Breitman said she that when she set up Tezos token sale, she aimed to get as many people who wanted to participate in the ecosystem to contribute. The company raised more than $200 million to date and, according to her, more than 30,000 Tezos wallets have been opened.
Elena Kvochko, chief information officer of the security division at Barclays, said that her bank has had talks with regulators about Bitcoin, blockchains, and their ilk. The rule-sticklers appear to be open to the idea as long as know your customer laws are obeyed, although its still early days.
Meanwhile, as governments settle on sets of rules of the road, countries like Switzerland, Singapore, and Estonia are jostling to develop frameworks that easily accommodate the new technology, Srinivasan said. Theyre seeking to displace geographic incumbents and become hubs for a new wave of business financing. If youre a U.S. person or business, you have a good deal to be concerned about, Smith said.
Breitman added that until the rules are agreed upon, its best to be transparent about what one is doing.
As cryptocurrency prices fluctuate wildly, speculators have been having a field day. However, theres reason to believe the markets will become more stable, as Bitcoin gradually has over the past couple of years (despite its still big price swings), Smith said.
In order for these computer coins to catch on big-time, they need a use-case that beats traditional money. Ideally, this ought to be better than merely buying drugs, as Jeff John Roberts, Fortune reporter and the sessions moderator, noted.
Srinivasan proposed one possible scenario. Imagine that all your waking hours are spent in the Matrix, he said, referring to a virtual reality in which everyone is enmeshed in the future. As people from all over the world meet and interact, they will need a medium of exchange. To transact, you cant just hand over a dollar bill, Srinivasan said. You need an international currency for that.
It might take a while but theres going to be more of a need to transact across borders than there is today, he said.
Whenever a consumer swipes or dips a credit card, payment processors charge a fee.
Nicko van Someren, chief technology officer of the Linux Foundation, pointed out that the fee companies like Visa or Mastercard charge exceeds the cost to clear or settle transactions. These businesses can potentially process transactions quicker and cheaper, he contended.
One potential outcome of the adoption of alternate systems, like Bitcoin, is to provide companies with the impetus to improve their services. Bitcoin is good because it will make banks move toward the real cost of handling these transactions, van Someren said. (By extension, in Ethereum’s case, one could imagine upstart companies built on it forcing giants like Amazon, Facebook, or Dropbox to reconsider or improve their respective offerings.)
Smith, meanwhile, was less optimistic about incumbents ability to adapt to such change. I dont think be lot of room for banks to simply adjust their price models, he said.
In BriefFinancial institutions have been taking a good hard look at blockchain, and now, six of the world’s biggest banks have decided the best way to take advantage of the decentralized, distributed digital ledger technology is by partnering on their own cryptocurrency.
Security is one of the most critical aspects of banking and finance. Not only do banks need to keep money secure, they also have to keep transaction records safe, all while not slowing down the verification process.
Thats why banks and other financial institutions have been taking a good hard look at blockchain, a decentralized, distributed digital ledger technology first created to support the bitcoin cryptocurrency. Now, six of those banks have decided the best way to take advantage of blockchain is by partnering on their own cryptocurrency.
The digital coin, which they are calling the utility settlement coin,was developed back in 2015 by financial services firmUBS, and its purpose is to enable the clearing and settling of transactions worldwide over a blockchain. The six new banks Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG, and State Street join UBS, BNY Mellon, and several others already on the project.
The distributed ledger is one of the most innovative technologies out there, Lee Braine from Barclaystold The Financial Times. From reducing risk to improving capital efficiency in financial markets, we see several benefits of this project.
The new cryptocurrency is slated for a limited back end run by 2018, and the banks have been in discussions with central bank regulatorsregarding the cryptocoin.
While blockchain technology can be used for a variety of purposes distributing aid,fighting climate change,tracking electricity in the grid, etc. its potential for disruption is perhaps still greatest in the world of finance. Projects like the utility settlement coin, which can test the tech on a bigger scale, will be essential if that potential is to be reached.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in a number of cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.
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