Category Archives: Cryptocurrency
One of the biggest debates in trading is whether or not cryptocurrencies are in a bubble.
A look at history provides guidance in the current debate.
In the late 1990s, when a similar debate was raging over the potential bubble of internet stocks, a business article quoted an elderly couple whod quit their jobs to day trade.
P/Es [price to earnings ratios] dont matter, the wife was quoted as saying. And she was not alone in her view of the market.
During the late 1990s, EBAY traded at P/E ratios of several thousand; AOL traded at the relatively modest P/Es of a few hundred.
Those were the exceptions since most internet stocks were losing money and had no P/E.
P/E ratios measure currentshareprice relative to per-share earnings.
The current P/E ratio of the S&P 500 is approximately 25.
Back in the 90s, when Warren Buffett refused to invest in internet stocks because of the difficulty in valuing them, he was accused of being a dinosaur.
During the dotcom bubble, even the now venerable Amazon was mocked by traders saying, They lose $5 per book but theyll make it up in volume.
While Amazon turned the corner and then some thousands of companies used the same model to extinction.
Bill Gates started Microsoft in 1973; the company went public in 1986, and this was after nearly a decade of increasing profits. At the time, such a trajectory was required before approval to go public was granted.
In the late 1990s, all you needed to go public was a dot com at the end of your name. Barely established companies many less than three years old with little or no revenue, routinely went public.
In 20/20 hindsight its blindingly obvious, but at the time, when traders believe P/Es no longer matter, when companies go public on the strength of their dot coms, and when the advice of a legendary investor is ignored because it challenged the status quo, youre in a bubble.
All of this, mind you, was a matter of public record: P/Es are found right next to the stock price; all public companies provide extensive financial records; and Buffets comments were broadcast widely (but simply ignored by most traders).
The internet was in a bubble; all it took was for someone to be honest with themselves to recognize it.
Starting in 2003, and continuing for the next half decade, property values in most major American urban areas routinely increased 10-20% every six months. This often happened without any new construction in the area. The same property with the same properties around it would increase in value fueled by nothing more than perception.
The more real estate prices increased; the more desperate people became to buy real estate new buyers and those who already owned property.
The whole thing was fueled by irresponsible loans. Business reporters were well aware of liar loans.
Liar loans is a slang term for stated income loans. These were loans granted on the strength of a borrowers stated income without the necessary documents to prove it.
Theres only one reason why someone would state an income without verifying it: it is not their real income.
If nothing more than perception is increasing real estate values by unsustainable amounts, and this is all fueled by fraudulent loans, youre in a bubble.
In the late 1990s, you could hardly go to a party without someone regaling you with tales of the killings theyd made on the latest hot internet stock. In 2003 and beyond, the same could be said of the latest real estate deal. Though I wasnt around at the time, society parties in the roaring 1920s were likely filled with stories of the latest score on the stock market.
In all three cases, internet stocks, real estate, and stocks became a fad or an intense and widely shared enthusiasm for something, especially one that is short-lived and without basis in the objects qualities.
The best example of this comes from the so-called tulip mania, one of the first recorded speculative bubbles in history. Tulip mania was repeatedly referred to by Gordon Gekko in the 2010 movie Wall Street: Money Never Sleeps.
Suddenly, and without any good reason, in 1636 tulip prices in Europe increased exponentially before crashing spectacularly in 1637.
In the late 1990s, the answer to most concerns about internet stocks was that the internet was so powerful it would change the paradigm. Companies could justify exorbitant P/Es because the internet was going to allow them to grow at multiples wed never seen before; at least thats what the bubble participants kept repeating.
At one time, approximately one hundred automobile makers manufactured cars, most setting up shop in Detroit.
Today, three Chrysler, General Motors and Ford have survived. A few of the others were swallowed up by one of these three, but most faded into the dustbin of history as failed enterprises.
No one would disagree that automobiles and the internet have changed the world in profound ways, but this does not mean that each industry was not susceptible to a bubble.
While the jury is still out on cryptocurrency, it too may very well change the course of human history, but its still susceptible to a bubble.
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cryptocurrency Archives – Page 6 of 6 – The Industry Spread
Learn the fundamentals of investing in crypto
If you have toyed with the idea of utilising blockchain technology to dabble in cryptocurrencies, whats holding you back? If its lack of knowledge, there are plenty of resources out there that will purport to help. But theres only one that will give you the edge Cryptocurrency Investment Fundamentals.
Written by Australian innovator and cryptocurrency entrepeneur Beau Stoner, it is the go-to online course for anyone serious about exploring crypto investment opportunities. You dont have to be a tech genius to navigate this easy-to-follow tutorial. It will talk you through Bitcoin, Ethereum, Bitcoin Cash and Ripple as well as the Blockchain revolution behind them. A global YouTube sensation in cryptocurrency, Beau Stoner is an experienced Bitcoin investor.
He developed one of the worlds highest-rated cryptocurrency courses after attracting a global online following. Hosted by Udemy.com, Cryptocurrency Investment Fundamentals is rated 4.9 stars out of 5 making it the market-leading course for anyone interested in cryptocurrencies and crypto assets. With 471 ratings, this rich vein of information is the perfect starting block for anyone keen to learn more.
There are lots of reasons why people invest in cryptocurrencies without first assessing the risks. Some are attracted to Bitcoin because it restores anonymity lost through increased use of debit and credit cards. Its also a great alternative to traditional currencies because transactions are instant. Others see it as a get-rich-quick scheme. But to truly benefit from crypto, you have to understand how it works.
As Beau, founder of Cryptocurrency Australia, is keen to point out:
To avoid the most common pitfalls, you need to know the fundamentals first. I developed my course to teach potential investors about the risks as well as the benefits.
Cryptocurrency Investment Fundamentals explains in plain language how cryptocurrency exchanges work, how to set up an account and, importantly, how to negotiate Australian regulations. Many people go into cryptocurrency blind. They dont understand anti money laundering laws or know their obligations and rights as a consumer.
Cryptocurrency Investment Fundamentals will teach you how to buy and sell cryptocurrencies. It will show you how to store alternative currencies and use digital wallets. That is not all. This vital resource will also help you look after your online investments.
The internet is a virtual shark tank. There are any number of scams targeting cryptocurrency investors. Add to that the ever-present threats of hacks, phishing and pump and dumps, and you will understand the need to fully understand the crypto landscape before you invest.
Getting in quick is key to making a killing in cryptocurrencies. That is why Cryptocurrency Investment Fundamentals shows you how to identify a savvy investment. It will also teach you how to use key investment strategies to see the best returns. The motivational course is also designed to help you understand Australian-specific cryptocurrency tax and superannuation regulations.
The nine-segment training package, delivered in a chapter-style format, also offers information on how to find resources that will further increase your knowledge on investment fundamentals. It will even point you in the direction of thriving cryptocurrency communities.
If you are interested in cryptocurrencies, learn the basics before you invest. Beau says: I specifically developed this course to help students learn all about the fundamentals of cryptocurrencies, which is absolutely essential. Hundreds of hours of research have gone into the course to give students the absolute best introduction to cryptocurrencies and foundational blockchain technology.
Almost one thousand people have already studied Beau Stoners ground-breaking crypto course. Discover what it can do for your crypto investment opportunities today.
Courses | Cryptocurrency Australia
The emergence of cryptocurrencies into the mainstream discussion of financial investment has seen an increasing number of our clients considering whether cryptocurrencies, such as Bitcoin, may be acquired by their self-managed super fund (SMSF).
Cryptocurrencies are based on blockchain technology. Blockchain, in simple terms, is technology that allows records of truth without the need for a trusted intermediary, such as a bank. This allows information to be recorded on ledgersand verified through different users on the blockchain. This technology can be used to support cryptocurrencies, which function through blockchain systems and are similar to a digital currency.
The appeal of cryptocurrencies has a nexus with blockchain technology, as they theoretically have the potential to provide a decentralised currency that can be used as a replacement for or addition to current global currencies. This has driven interest in cryptocurrency investment and has created the need for new regulation of cryptocurrencies in Australia.
You can read more here.
The increasing number of investors into the cryptocurrency market in Australia is problematic for superannuation fund regulators, who now must determine how to monitor and regulate Australians who are keen to diversify their SMSF through cryptocurrencies.
The rules applied to traditional SMSF investment also apply to cryptocurrencies, with regulators focusing on whether SMSFs are providing a genuine retirement-directed investment. In determining whether SMSFs may be able to invest in cryptocurrencies, the Australian Taxation Office (ATO) will focus on two limbs:
The sole purpose test requires that a SMSF is maintained for the purpose of providing a retirement benefit for members. This limb can be satisfied where it can be shown that the individuals associated with the SMSF are not receiving any present day benefits, such as rebates or commissions, in relation to the investment.
Further, it is critical that the SMSFs cryptocurrency is held securely in a public IP address, and that evidence is maintained to show that the cryptocurrency belongs to the fund (and not to the individual who may be the registered owner).
This limits which cryptocurrencies can attract SMSF investment, with Australians opting to use more transparent currencies such as Bitcoin and Ethereum to avoid any issues of establishing currency ownership for audit purposes.
A significant issue facing crypto-investors is the high risk nature of cryptocurrencies, as SMSF trustees are required to exercise due diligence in relation to all investments made under the SMSF. Further, investment in crypto-currencies must be contemplated under the investment strategy of the fund, and perhaps under the trust deed (where that is prescriptive as to investments open to the fund).
It seems likely that SMSF investors incorporating cryptocurrencies into their investments have used cryptocurrencies to diversify their investments, rather than solely invest in cryptocurrency. It is difficult to see that a strategy allowing the whole or a substantial part of a funds assets to be invested in cryptocurrencies would be available to a prudent superannuation fund trustee.
The emergence of cryptocurrencies as a genuine financial investment has created new obstacles for SMSF regulators and investors alike, who now must navigate a volatile frontier of high risk investment and limited regulation.
The Government will inevitably provide further guidance regarding the regulation of cryptocurrencies, but until then, investors are faced with the challenge of investing in a financial asset that is not comprehensively regulated under the current legislation.
As it stands, Australians eager to diversify their SMSF with cryptocurrencies are able to do so, provided certain conditions are met. With the Government yet to provide any substantial guidance through regulation, this will be a space to watch.
Cryptocurrency is a common phrase in the tech world. Even though it has attracted thousands of subscribers, some arent aware of what a cryptocurrency wallet is.
Cryptocurrency wallet is software where you store your digital currency. The difference between losing your currency and safeguarding it depends upon the type of wallet you use. There are several types of cryptocurrency wallets. There are web-based services, offline services, and app-based services.
What is a Cryptocurrency Wallet and what are the Best Wallets?
A cryptocurrency wallet is a software you use to send and receive cryptocurrency tokens. These wallets let you check your balance of different coins.
Blockchain works uniquely. When the ledger gets updated, it goes across all nodes on blockchain structure. Besides, the wallets hold a record of transactions.
In the crypto ecosystem, the phrase ledger means database. But, a node is what crypto geeks refer to individual computers that operate and maintain blockchain.
Cryptocurrency wallets do not cut money like PayPal accounts or your average wallet. This is the difference between other online accounts and cryptocurrency wallets.
Importance of Protecting Crypto
Investing in cryptocurrencies isnt a bed of roses. You need to get a safe crypto wallet and deposit cash in it. This is the amount you will use in exchange to buy other coins. There are different entities involved in the crypto investment. They are all supposed to be working for the process to be natural. If any stops, the entire process is paralyzed.
Your hard drive, a removable disk, or your mobile phone is your bank vault in cryptocurrency industry. This has been brought by decentralization. Well, decentralization has eliminated middle-men in which investors have faith. But this comes with misfortunes. Still, having faith means you are responsible for ensuring your cryptocurrency is secure.
Cryptocurrency WalletsMyceliumMycelium wallet
This bitcoin wallet is convenient and easy to use. It was launched in 2008. It has had a strong history within the Bitcoin and cryptocurrency ecosystem. This app has an appealing interface which is easy to use. The taps provide options between different tasks.
It protects the Bitcoin address and the Private Keys by providing an all-in-one Bitcoin wallet security system using HD. HD, in other words, is Hierarchical Deterministic wallet security.
Be it as it may, this app uses the Microsoft Reference Source License. The MRSL helps to keep technology safe by providing unlimited for the underlying tech code.
The downside with the wallet is volatile transaction fees and unreliable customer service.
Tags: Wallet, Cryptocurrency wallet, Cryptocurrency, Even Though
by Mary Ann Callahan
If you are here, then you have probably grown curious enough to find out more about the next big investment opportunity everyone has been screaming about. Techies call cryptocurrency the money of the future or digital gold, and skeptics refer to it as a bubble that will burst anytime soon or the biggest digital scam ever.
Needless to say, beyond the initial noise that surrounded the global rise of cryptocurrencies, there seems to be a growing interest and increasing curiosity about the potentials of these digital coins. New investors are attracted by the fact that cryptocurrency has managed to turn many who have been bold enough to put in their money into billionaires. This has raised a nagging question of what cryptocurrency is and what exactly you need to know before investing.
In clear and simple terms, cryptocurrency refers to digital money. Now, there are a lot of technical jargon and complex explanations that will be thrown at you if you seek a deeper knowledge into the origin and how crypto coins came to be.
So, well skip the part about the technology behind it and simply state that the first cryptocurrency which is Bitcoin was the product of Satoshi Nakamotos attempt to create a peer-to-peer electronic cash system. A genius creation, all the same, functions on blockchain technology and is completely decentralized, which means it is independent of banks, governments, and other institutions. Cryptocurrencies are also independent of any form of physical asset backing.
To buy or sell Bitcoin or any other cryptocurrency, you need to sign up for an exchange platform and begin trading. There are a number of options available to you if you decide to get in on the trade with cryptocurrency, be the market leader Bitcoin or any prominent altcoin. Still, each coin has its own specific value and dynamics, which you must understand before investing.
Asides the obvious fact that Bitcoin and other digital coins are hugely profitable, there are a lot of advantages that you stand to benefit from in buying cryptocurrencies over holding traditional assets and physical cash.
Stability: many people have probably told you about the highly volatile nature of cryptocurrencies, how they can be sky-high today and plummet to a disappointing low tomorrow. To be fair, they are right in their assessment, and its a known fact that digital coins are quite volatile. But, in the long run, having cryptocurrencies as a global store of value offers an advantage to people who live in regions with less monetary and political stability. The fact that cryptocurrencies are decentralized means the value of your investment is independent of the political and economic situation of any country. It is a world currency of some sort, and its value is universal, making it an excellent choice for investors whose traditional currency is quite unstable.
Anonymity: cryptocurrency offers a way to carry out transactions without leaving any digital or physical footprint. Transactions with digital coins are encrypted, which is the direct opposite of what operates with normal cash or credit card transactions. This eliminates the risk of frauds in form of counterfeit cheques and other illegalities that commonly plague regular transactions, as well as security challenges such as hacks, which can lead to huge losses.
Universally acceptable: as mentioned earlier, a decentralized system independent of political control means cryptocurrencies can be used globally without restrictions. Thus you can buy cryptocurrencies and hold them no matter where you are as long as you have access to the internet. With a global increase in the general acceptability of Bitcoin, some even foresee its potential to replace regular money in the near future and become a much more global form of exchange. However, this also leads to governments paying more attention to cryptocurrency regulation.
The answer to that question depends pretty much on your own view. Undeniable is the fact that cryptocurrencies are great investment options with huge potential for returns on investment. But whether you gain or lose when buying and selling digital coins depends on various factors, just like every other profitable business out there. The volatility of the coin makes it a lot easier to make huge profits but equally makes losing all your investment quite possible.
Trading cryptocurrencies and making profit from it isnt an automatic get-rich-quick scheme. There is a need to take your time to learn the process and understand how it works. Whether you decide to put your money in it at the end or not, should depend on your confidence in your ability to make it work more than anything else.
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What Every Investor Should Know Before Buying Cryptocurrency …
Cryptocurrency, what do you imagine? Pile of paper currency? You imagined right and wrong. While there are individuals whove made millions and companies whove made billions. Also, there are people who lost millions and companies gone bankrupt.
A couple of reasons. The price fluctuations, poor infrastructures and investing skills, and hack attacks. That being said, in this post, you will learn everything if you dont want to lose your money to some cyber criminal.
They say more than success stories, it is the failure stories that teach a lot. If you are aiming to become an investor or have your own company you should know about these hacks. As part of this guide, we will share the biggest hack attacks that changed the course of this industry and the problem that caused it. You can mitigate the problems and avoid the loss.
Lets get started.
The year 2013, Mt. Gox is the biggest bitcoin exchange platform in the world with a 70% market share. Max Karpeles, the founder of Mt Gox was on top of the world back then.
Fast forward to 2018.
The rate at which Mt Gox was growing, Mt Gox has captured more than 95% of the bitcoin exchange market by now. Max is sitting on a pile of 100-dollar bills, just like Joker did in the Dark Knight Rises.
Amazing isnt it?
Nope. Mt. Gox is nowhere in the market. Its disappeared in thin air. No ones talking about it. No newcomers know that it even existed.
The castle Max built was so mightly that he didnt notice small cracks in the foundation of the castle. Just a year later when Mt. Gox was at top of the world, in 2014, it got hacked. 70% of the bitcoin exchange market share, and the funds, all gone in a snap.
What went wrong? Lets peep into it.
Mt. Gox was a clear winner before it went extinct. But there were some foundational problems in Mt. Gox since the beginning.
Mt Gox has been busy developing a lot of features and that led to a lot of versions of the core platform. Keeping a record of the changes made became a tedious task. Therefore, tracing back at the time of bug fixes was a next-to-impossible task.
This exactly led to affect Mt.Goxs core software to exist with bugs and not perform as expected. This problem couldve been solved with the help of VCS (version control software), but there wasnt any back in those days. Heres why a VCSs are important for any product-based company:
With a lot of code changes in the core, software led to disfunctioning of the software. Mt.Gox did not have a testing policy that could do the needful. A leader in Bitcoin exchange simply throws away code that hasnt been tested, sounds pathetic? Yes, it does.
A lot of changes in code, without testing, comes to the CEO for approval. Only Max had the right to approve any code change. This did not go well with the number of changes that were made in the codebase. Max is a great programmer, but approving these many changes that too without testing was not good. Soon, he choked up and ended up being over-occupied. Considering his designation, it was not good for the company and himself.
A lot of code changes, lack of testing, code change approvals, led to a poor management. How do you expect a human being to outperform so much work without mistake? Max is a great programmer, no second thoughts about that. But when it comes to the role of a businessperson or decision maker, Max was not up to the mark. Max as a CEO went full-length busy and failed to foresee a disaster nearing.
It was 19th June when Bitcoin price fell down to one cent, and it was a sign to incoming disaster.
This was not a complete system failure. Instead, there was an attack that led to a price crash. The hackers got access to auditors computer and transferred a huge number of Bitcoins to their addresses. Furthermore, they used the same exchange platform to sell all the Bitcoins, so that they can disappear with the fiat money.
This led to the price drop, only within the system. But till then, it was too late for the company to withstand the blow. By this time, the companys spine was severely damaged to survive. Way over $8.7 million was stolen and by the time the company could adjust the propellers, the ship was already directing towards another disaster.
Fast forward 2014
In 2014, Mt. Gox system went slow and so slow that US banking authorities froze Mt Gox for violating the norms. On 7th Feb 2014, the company halted all the Bitcoin transactions to crawl back to the problem.
Upon a deep investigation, MtGox team found out that the core software was under a transaction malleability attack.
What is this now, youd ask.
As you must already know that blockchain has a tremendous ability to encrypt the data that cannot tamper by anyone, not even the owner of the blockchain. The blockchain encrypts the data using the cryptographic hash function.
But theres a loophole here.
If someone hacks into the blockchains core software and tamper the transaction just before it enters the blockchain, it can create a disaster. The hacker can alter the transaction and let it enter the blockchain. Once it enters the blockchain, it has no threat of being caught. Anyway, theres no way to trace back to the source of the transaction.
The hackers can flea with the money they stole from the transaction and no one will be able to anything for this. The send wouldnt even know that their money was stolen unless the company declares it upfront.
If you look at the code of a particular transaction, youd see signature data of a transaction that goes along with the input data in the blockchain. Guess what?
This signature data can be manipulated, which further can change the transaction ID. Furthermore, changing the transaction ID will technically eliminate the original transaction from existence and make it look as if it didnt even happen.
Tony owes 5BTC to Mark and Mark requests 5BTC from Tony. Tony initiates the transaction by sending 5BTC to him and the transaction waits in the queue for approval. Amidst this waiting period, Mark can alter the signature and hence the transaction ID and steal 5BTC from that transaction.
After this, Mark would tell Tony that he has not received the payment. Tony would confirm it by looking at the transaction. From his end, the transaction would be shown as pending. To this, Tony would reinitiate the transaction and this time Mark wouldnt do any tampering. This way, Mark would get 10 instead of 5 BTC.
Theres another catch here. Since Mark is aware of Tonys sending address, he could easily figure out the transaction and tamper data of only that. This was not the case with data tampering happened in MtGox. Hackers tampered data of all the transactions they can roll their eyes on.
This is exactly what happened behind the scenes in the MtGox hack attack in 2014. Hackers took advantage of the mismanagement and were able to bag $473 million worth BTC for free. Furthermore, this was almost 7% of the worlds supply of Bitcoin at that time, that was stolen from MtGox.
After the attack, the graph showing the price crash is terrible to look at. By the time Bitcoin started becoming a mainstream, Mt Gox underwent this attack. Everyone thought after this attack, Bitcoin would not survive for long. Sure, immediate effects werent good enough and the price went down like a steep valley.
Mt Gox declared bankruptcy after this attack and price crash. However, later it was discovered that the Bitcoin that were stolen were being laundered through another exchange, BTC-e. Alexander Vinnik, the owner of BTC-e has been accused of laundering the stolen Bitcoins. The Greek court has moved this case from their national jurisdiction to the US regulatories. If the accusation is right, he will be sentenced to 55 years of prison.
Bitcoin, as a network of the blockchain, was powerful enough to withstand the attack.
Another hack attack that happened recently ripped the industry one more time. This time it was $80 million or 4700 BTC. On Dec 6th, 2017, around 00:18 GMT, Solvenian exchange platform was hacked.
Announcing about the attack, CEO of NiceHash, Marko Kobal appeared on Facebook live. He addressed the followers and announced about the attack. As you would expect, he refrained from revealing much about the attack. The only thing he said was that an employees computer was compromised that led to the heist.
NiceHash suspended all the transactions for next 24 hours to reverse analyze what went wrong and know what exactly couldve saved the platform from attack. In a press release, this is what Marko said,
Importantly, our payment system was compromised and the contents of the NiceHash Bitcoin wallet have been stolen. We are working to verify the precise number of BTC taken. Clearly, this is a matter of deep concern and we are working hard to rectify the matter in the coming days. In addition to undertaking our own investigation, the incident has been reported to the relevant authorities and law enforcement and we are co-operating with them as a matter of urgency.
Sure, there have been many cryptocurrency hacks. But in our opinion, there hasnt been any attack as Mt Gox. It tore apart the industry and faith of investors that their money is safe in this decentralized platform.
The key thing here to note is that all these attacks were on exchange platforms. It is nearly impossible to attack a blockchain and steal funds from there. Like Mt Gox, if someone tries to alter transaction ID and steal money from the transaction before it gets confirmed. Its impossible without an exchange platform. Because thats the only medium where hackers can get hold of a transaction. If there werent exchange platforms, there would be a 100 percent safe fund transfer experience. There is no room for a hacker to phish and steal anything from the network.
Furthermore, there have been attacks like the DAO on Ethereum (detailed analysis-based guide coming up), that led to the birth of whole new blockchain, Ethereum, and Ethereum classic. The original blockchain had to fork out (hard fork) and form a whole new blockchain platform.
That being said, you are now well-informed to take an educated decision and invest in cryptocurrency or create a cryptocurrency exchange platform or create a cryptocurrency. There has been enough attack on this amazing new space where everything is possible.
That being said, we made it to the end of this guide. We are sure that we helped you understand the reasons why a platform gets attacked and how you can avoid it. Share this post on your social media platforms to help more people understand about this.
SAN FRANCISCO Pete Roberts of Nottingham, England, was one of the many risk-takers who threw their savings into cryptocurrencies when prices were going through the roof last winter.
Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened.
I got too caught up in the fear of missing out and trying to make a quick buck, he said last week. The losses have pretty much left me financially ruined.
Mr. Roberts, 28, has a lot of company. After the latest round of big price drops, many cryptocurrencies have given back all of the enormous gains they experienced last winter. The value of all outstanding digital tokens has fallen by about $600 billion, or 75 percent, since the peak in January, according to data from the website coinmarketcap.com.
The virtual currency markets have been through booms and busts before and recovered to boom again. But this bust could have a more lasting impact on the technologys adoption because of the sheer number of ordinary people who invested in digital tokens over the last year, and who are likely to associate cryptocurrencies with financial ruin for a very long time.
What the average Joe hears is how friends lost fortunes, said Alex Kruger, a former banker who has been trading in the cryptocurrency markets for some time. Irrational exuberance leads to financial overhang and slows progress.
It is hard to know how many cryptocurrency investors are now in the red, with holdings worth less than the money they put in. Many who have lost money in recent months had gotten into the markets before the big run-up last year, and their holdings are still worth more than their initial investments.
But by many metrics, more people put money into virtual currencies last fall and winter than in all of the preceding nine or so years. Coinbase, the largest cryptocurrency brokerage in the United States, doubled its number of customers between October and March. The start-up Square began allowing the users of its mobile app, Square Cash, to buy Bitcoin last November.
Almost all of the new customers on Coinbase and Square would be in the red if they bought cryptocurrencies at almost any point over the last nine months and held on to them.
The damage is likely to be particularly bad in places like South Korea and Japan, where there was minimal cryptocurrency activity before last year, and where ordinary investors with little expertise jumped in with abandon.
In South Korea, the biggest exchanges opened storefronts to make investment easier for people who didnt feel comfortable doing it online. The offices of one big exchange, Coinone, had just one customer walk in during a two-hour period in the middle of the day last week. An employee, Yu Ji-Hoon, said, The prices of the digital tokens have fallen so much that people seem to feel upset.
Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $25,000 loan. Her investments are now down about 90 percent.
I thought that cryptocurrencies would be the one and only breakthrough for ordinary hardworking people like us, she said. I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around.
In the United States, Charles Herman, a 29-year-old small-business owner in Charleston, S.C., became obsessed with virtual currencies in September. He said he now felt that he had wasted 10 months of his life trying to play the markets.
While he is essentially back to the $4,000 he put in, he has soured on the revolutionary promises that virtual currency fanatics made for the technology last year and has resumed investing his money in real estate.
I guess I thought we were sticking it to the man when I got on board, Mr. Herman said. But I think the man had already caught on, and had an exit strategy.
Much of the anger that investors feel is toward the smaller virtual currencies, or alt coins, that entrepreneurs sold in so-called initial coin offerings. These coins were supposed to serve as payment mechanisms for new software the entrepreneurs were building.
But almost none of these companies have delivered the software they promised, leaving the tokens useless, except as speculative assets. Several coins have been exposed as outright scams.
I think Id like to see most alts go to zero before I feel like the whole space isnt overpriced, Mr. Herman said.
Bitcoin has generally held on better with investors. It is down about 70 percent from all-time highs, rather than the 90-percent losses that lesser-known digital tokens have suffered. But it, too, has struggled to win much use beyond speculative investments.
We also saw that Bitcoin isnt ready for mass adoption and day-to-day use, Mr. Herman said.
Despite this pessimism, the social networks where cryptocurrency fanatics gather to trade information are full of people talking about their intention to hold on to their coins, in the hope that they will recover once the technology has time to catch up with the hype.
Tony Yoo, 26, a financial analyst in Los Angeles, invested more than $100,000 of his savings last fall. At their lowest point, his holdings dropped almost 70 percent in value.
But Mr. Yoo is still a big believer in the idea that these tokens can provide a new way to transact online, without the big corporate middlemen we rely on today. Many of the groups that raised money last year are still working on the products they promised, with lots of serious engineers drawn to the projects.
Theres just so much more behind this new wave of technology and innovation that Im sure will take over our society in due time, Mr. Yoo said.
With prices down so much, he said he was actually looking to put more money into the markets.
That thinking has been encouraged by the people who invested in Bitcoin in 2013, when it first topped $1,000. That bull market was followed by a crash in which the price of Bitcoin dropped more than 80 percent. But after a long fallow period, the price recovered. Even with recent losses, the value of one Bitcoin was hovering around $6,300 on Monday up more than 500 percent from the peak of 2013.
Five years ago, I was broke, unemployed, and ashamed to use my real name, Ryan Selkis, a popular virtual currency personality, wrote on Twitter last week. For the new fanatics, stick around for your own 14 month, 85% downdraft and youll not regret it.
Twitter is also filled with complaints, like the one from a user named @Notsofrugaljoey, who wrote: Its really hard to stomach losing all my hard earned money. Just broke down and cried.
On Reddit, a user in the United Arab Emirates posted a picture of the $100,000 loan that he had taken out in December to buy cryptocurrencies and that he will now be paying back out of his salary for the next three years.
Mr. Roberts, the British investor who has seen most of his $23,000 vanish, is holding on to his coins in case they turn around. But for now he has stopped trading and is looking for another job.
Im living off the little savings I have left still in my bank account, Mr. Roberts said. Ive made a mistake, and now Im going to have to unfortunately pay the cost for the next few years.
Follow Nathaniel Popper and Su-Hyun Lee on Twitter: @nathanielpopper and @esuhyuni.
Nathaniel Popper reported from San Francisco, and Su-Hyun Lee reported from Seoul, South Korea.
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Cryptocurrency Rankings | CryptoSlate Biggest Gainers 24h Min. $50k Volume
GLOBAL MARKET CAP $191.88B
24H VOLUME $15.38B
COINBASE INDEX 2401.84
BTC DOMINANCE 54.15%
TOTAL CRYPTOS 1830
TOTAL TOKENS 1,006
TOTAL PoW COINS 564
TOTAL PoS COINS 379
Ordered by Market Capitalization
Displaying 1-100 of 1830 total cryptos
A worldwide cryptocurrency and digital payment system
Decentralized platform that runs smart contracts
The digital asset for payments
Peer-to-peer electronic cash
Connecting banks, payments systems and people
Infrastructure for decentralized applications
Peer-to-peer Internet currency
Fiat currencies on the Bitcoin blockchain
Platform for complex programmable transfers of value
A secure, private, and untraceable cryptocurrency
Cross-protocol for digital entertainment
Open-source distributed ledger protocol
Decentralized platform that runs smart contracts
Distributed smart economy network
Blockchain built for enterprise
Digital asset exchange
A self-amending cryptographic ledger
Cryptocurrency with groundbreaking privacy
Ethereum-based financial technology
Product ID Management
Powering decentralized exchange
Bitcoin fork using Equihash algorithm
Open and progressive cryptocurrency
Private untraceable cryptocurrency
Decentralized autonomous organization on the Ethereum blockchain
Peer-to-peer digital currency
Decentralized global blockchain
Blockchain based social media platform
A Revolutionary Blockchain Architecture
Scalable blockchain platform
Scalable blockchain platform with througput of thousands of TX/s
Interconnecting blockchain network
Blockchain-powered customizable tokens platform
Decentralized prediction market
High-Performance Public Multi-Chain Project
Decentralized private cloud
Secure and anonymous cryptocurrency
Interactive protocol of multiple byte assets
Invoice and trade finance platform
Scalable blockchain applications
Making cryptocurrency accessible to everyone
Social media tokens that reward all content creators
Enterprise blockchain development platform
Ethereum-based token for dental Industry
Low-latency payment platform
Ethereum mobile client
Open-source cross platform cryptocurrency
International blockchain assets exchange
Open source blockchain technology suite
Decentralized platform based on blockchain technology
Mobile blockchain network
Token on the Nxt blockchain
The world’s first autonomous data network
Blockchain-powered loyalty point system
First Japanese cryptocurrency
Tokenized gold on Ethereum
Decentralized ecosystem for the Kik platform
Infrastructure for online service providers
Decentralized oracle network
Global blockchain acquiring
Traceable business ecosystem
Creating a bright and colorful blockchain world
Decentralized Cloud Computing Blockchain Network
End-to-end encrypted communications platform
World’s first decentralized data marketplace
Distributed hosting platform
Token for creating smart tokens
Multi-tier blockchain system
Cryptocurrency debit card
Decentralized gaming platform
A blockchain-based virtual reality world
Cryptocurrency and Blockchain service platform
Private cross-chain smart contracts
Advanced blockchain platform
Private financial transactions
Democratization of power
USD-backed stablecoin you can exchange and trust
Global Decentralized Marketplace for Virtual Assets
Private, decentralized, fast, open source, community-driven coin
Decentralized tip platform
Cryptocurrency debit card
Autonomous trading investment platform
All-in-one blockchain solutions
Decentralized exchange and open protocol
Cryptocurrency Rankings | CryptoSlate
Bitcoin fell sharply on Wednesday after the U.S. Securities and Exchange Commission (SEC) delayed a decision on a proposed bitcoin exchange-traded fund (ETF), which would have been the first financial product of its kind.
Cryptocurrency markets fell as a result. Bitcoin was down around 6 percent from 24 hours ago at 4:12 p.m. New York time, trading at just over $6,300, according to data from CoinDesk.
Investment firm VanEck teamed up with Solid X, a financial service company, earlier this year in a bid to launch an ETF that is backed by actual bitcoins rather than futures. An ETF is a financial product that tracks the price of an asset and is listed on an exchange. It means that investors don’t actually have to buy the underlying asset.
ETF’s are seen as a way for institutional investors to get into cryptocurrency investing in a safer way than buying bitcoin on a crypto-asset exchange.
This is VanEck’s third attempt to push a bitcoin ETF through, having been rejected by the SEC twice previously. On this occasion, the SEC said that it is pushing out its decision until September 30.
See the article here:
Bitcoin price falls after SEC postpones key ETF decision
Wall Streets main regulator is boosting its scrutiny of brokerages that deal in cryptocurrencies, according to two people familiar with the matter, the latest sign that authorities want to know more about a burgeoning market that they fear might be full of misconduct.
Brokerages have been peppered in recent weeks with questions from Securities and Exchange Commission examiners about their business practices and how they deal with clients, according to one of the people, who requested anonymity to discuss the review. Among other things, the SEC is seeking specific information about fees generated from trading, financing and initial coin offerings. The agency is also gathering data on investment advisers involvement, another person said.
Cryptocurrencies have gotten increasing attention in the past year from regulators including SEC Chairman Jay Clayton, who has said he believes the ICO market is rife with fraud. The agencys enforcement unit has sued firms that it says violated securities laws through coin offerings, and Bloomberg News has reported that Justice Department lawyers have opened a criminal probe into whether traders are manipulating the price of Bitcoin and other digital currencies.
Its predominantly smaller brokerage firms that deal with virtual tokens. No Wall Street banks currently trade cryptocurrencies.
The SEC review, being led by the Office of Compliance Inspections and Examinations, follows requests seeking information from hedge funds about how they price digital investments. It comes as industry self-regulators like the Financial Industry Regulatory Authority and the National Futures Association question member companies about their dealings in cryptocurrencies.
Theyre trying to understand the whole ecosystem, John L. Jacobs, executive director of Georgetown Universitys Center for Financial Markets and Policy, said of regulators inquiries. Theyre still wrestling with how to make sure that this an organized efficient marketplace.
Natalie Strom, a spokeswoman for Clayton, declined to comment.
OCIEs primary function is conducting examinations with the goal of protecting investors and ensuring market integrity. When the units inspectors spot signs of misconduct, they typically refer findings to the SECs enforcement division for further scrutiny that can lead to formal investigations, fines and other penalties when wrongdoing is found.
The cryptocurrency and ICO markets have grown rapidly and present a number of risks for retail investors, OCIE said in a February report outlining its exam priorities for this year. Areas of focus will include, among other things, whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation.
To be sure, some brokerages and money managers have reported their involvement to regulators and have asked for guidance to ensure theyre complying with the law. Others have been less forthcoming, and the regulatory landscape is complicated by legal wrangling over which assets should be considered securities under the SECs jurisdiction.
In addition to asking brokerages about whether theyve been involved with ICOs, the SEC has also been questioning firms over their clearing agreements, as well as personnel and other in-house matters, one of the people said. Finra, the front-line brokerage regulator overseen by the SEC, sent firms a notice last month asking them to notify the agency if they get involved with digital assets.
NFA, the industry-funded regulator for the derivatives industry, notified the Commodity Futures Trading Commission last month that it plans to require that firms dealing in the cryptocurrency derivatives and cash markets make additional disclosures.
This seems to be transitioning from where the house is on fire to incorporating supervision of the intermediaries, said Jeff Bandman, principal at Bandman Advisors whose clients include crypto firms.
With assistance by Matt Robinson
Brokers Cryptocurrency Deals Are Focus of SEC Review …