All posts by btcFinancial

Overall Crypto Coin Market Expanding

Crypto coins are a beast of its own. Attempts have been made to classify Bitcoin and other peer-to-peer decentralized Crypto coins into one asset class or the other. Some analysts (and alongside them, a number of online trading platforms) believe Crypto coins should be seen as part of the Forex market. Others would like to see Bitcoin and Alt coins as a tangible asset and part of the precious metals market. Neither of these attempts are convincing though. The truth is that, while having some similarities with others, Crypto coins are an asset class of their own.

With other coins beyond the original Bitcoin establishing themselves firmly in the overall market and gaining increasingly significant market share, the argument for seeing Crypto coins as an entire “asset class” becomes more convincing by the week. Besides Bitcoin itself, circulating since early 2009, other peer-to-peer Crypto coins have appeared. The first to follow was Litecoin (ticker: LTC) launched in 2010 and improving on a number of Bitcoins experimental features; most importantly faster confirmation (total transaction) time, a better block size capable of processing a sufficiently high number of transactions, lower energy consumption, and a dedicated and publicly known development team and lead developer. Similar things can also be said about DASH, the innovative and privacy-conscious digital cash (ticker: DASH), Z-Cash (ticker: ZEC), Ethereum (ticker: ETH),  Monero (XMR), or Ethereum Classic (ticker: ETC) — all of which have gained significant market share and range from around $300m to $4bn in market capitalization. This is additional to Bitcoin itself (ticker: BTC) which has a market capitalization of over $19bn at the time of writing.

While these market capitalization figures vary widely for specific coins in the top-15 of today’s peer-to-peer decentralized Crypto coins (or simply that new “Bitcoin world”), the most significant aspect is that the overall capitalization of those top-15 Crypto coins is a combined $27.5 billion, and counting. (This figure of the top-15 Crypto coins is up from roughly $7.8bn year-on-year.)

Ripple as a rather proprietary and not truly decentralized token with its $1.2bn market value is not even included in this figure because, unlike the other Alt coins above,  Ripple does not really count as a “Bitcoin flavor”. (It remains to be seen if Vitalik Buterin’s policies for Ethereum will lead ETH in a similar direction and exclusion from “real” Crypto coins.)

With Bitcoin (BTC) having increased in price for most of the current year and currently trading  above $1250, price gains of all the other coins are even more impressive as they clearly do not come from movements between Bitcoin and other Crypto coins but rather from an influx of new money into the Crypto coin asset class.

This includes current demand from investors following more conventional investment styles and accompanying newsletters. It appears to be time for them to jump on the Crypto coin bandwagon in order to profit from possible price gains as this overall asset class evolves and matures. The resulting increase in demand for at least the ten or twenty top-tier Crypto coins has resulted in significant price gains against all fiat currencies like dollars, pounds or euros over the last weeks and months.

Litecoin (LTC), Ethereum (ETH), and DASH (DASH) have seen the highest price increases while proving to be most stable and not as extremely volatile as some other smaller-cap Crypto coins.

Additional fundamental factors for these coins are adding to market expectations of further price increases as these coins are set to fill an increasing number of market niches opening for coins with special features going beyond Bitcoin’s original abilities and uses.

Ethereum Price Getting Additional Boost from OTC Trading in Hong Kong

Ethereum, the world’s second largest Crypto coin by market cap after Bitcoin, has just received another boost in both popularity and usability — and, therefore, likely price as well.

Hong Kong-based trading house Octagon Strategy have just announced that Ethereum can now be traded over-the-counter through their OTC desk. Octagon Strategy say they cater to large-volume buyers like wealth managers, mining consortiums, other institutions, and family offices.

Beyond Etherum trading, Octagon Strategy also support trading in Bitcoin and Dash at the time of writing.

Octagon Strategy’s move is expected to further boost Ethereum’s price.

The price of Ethereum has risen from around $20 in early March to over $54 and is now trading at just under $50.

 

Altcoins Rally on Back of Bitcoin Blockchain’s Limitations

A number of popular Alt coins have posted significant gains over the past days and weeks, rising dramatically in both dollar terms as well as price against Bitcoin.

Notably Ethereum and Dash have increased in price considerably, with Litecoin having literally exploded in price a few days later, ending March more than 350% higher over last month.

While this Alt coin rally may be based in part on so-called pump-and-dump action in large Crypto coin exchanges, a deeper look reveals a more serious and fundamental background to these moves in various Alt coin prices.

Bitcoin’s ability to process transfers of value, while ingenious in its decentralised nature and overall technical implementation as a prototype, appears increasingly weak in light of payment volume. Recent weeks and months have shown significant delays caused by these shortcomings in “bandwidth of the Bitcoin blockchain” and resulting “traffic jams’ in payment confirmation (or clearing transactions).

Other decentralised Crypto coins based on Bitcoin’s model use different “block sizes” and also shorter “block time” intervals and are capable of processing much higher volume. This lets the do a much better job at processing payments. As a result, overall transaction confirmation time — which has always been particularly slow for Bitcoin — is usually much better with other coins sporting faster block time and, therefore, faster confirmation (completion) of payments.

These features which are different from the original Bitcoin model make Crypto coins like Litecoin, Dash, or Ethereum more attractive and are an increasingly important selling point on the overall Crypto coin market. Users of Bitcoin are aware of this, often from own experience, as issues with confirmation times for Bitcoin payments have become more frequent over the past few months. Price moves boosting the price of popular Alt coins like Litecoin, Ethereum and Dash are therefore a normal market reaction to these coins’ being more future-proof and their better ability of clearing transactions fast.

On top of the above factors, Litecoin is also likely to receive an important modification, called Segregated Witness or “SegWit” and csv support, allowing new features to be added in the near future. Litecoin’s price increase — which has been particularly sharp, catapulting LTC from roughly BTC 0.00190 to over BTC 0.00850 or from about $3.91 up to $9.29 — signals that these new features would be warmly welcomed by worldwide Crypto coin users. SegWit support in Litecoin would make the “second Bitcoin” actually the first to support these features. They are even likely to also be added to Bitcoin itself, albeit at a significantly later date.

These facts show that many of the Altcoin price moves most notably seen during the last months are, indeed, based on fundamentals rather than technical price factors, let alone questionable pump-and-dump action on Bitcoin exchanges.

Bitcoin Mempool Shows BTC Blockchain Lagging

Bitcoin’s Mempool, or the measure of transactions waiting for confirmation or “payment completion”, has been increasing steadily over the last few months and is at very high levels since the end of 2016.

Mempool or “traffic jam” information for the Bitcoin blockchain is publicly available at the blockchain.info website and gives information on how likely it is that transactions in bitcoins may suffer a delay.

Bitcoin mempool growing to all-time highs
BTC Mempool or volume of “transactions waiting”

The extent of possible delays in Bitcoin has already resulted in other Crypto coins like Litecoin, Ethereum or Dash to gain more attention by worldwide Crypto coin users and merchants. Both groups are likely to suffer when payments are delayed and will be looking for better, as in faster, solutions for transmitting payments. This has already given a number of the more popular Alt coins significant price moves because of better expectations of future mass adoption.

Delays in Bitcoin payments can also be avoided by adding higher transaction fees to payments and gaining priority over other waiting transactions this way. Recommended fees are increasingly over 100 satoshis per Byte. Figuring out and using the correct fee for payments in Bitcoin is unpopular though and not likely to be used by most regular users.

The Top Six Reasons for Using Bitcoin, Alt coins

Bitcoin, along with all other decentralised peer-to-peer Crypto currencies, has a number of significant advantages going in favour of using it. These range from being free from “political risk” (national currencies) and “counter-party risk” (paper assets held at banks or brokerages) to providing some degree of financial privacy (not anonymity though unless additional measures are implemented), giving its owner back the control they deserve over what’s rightfully theirs.

The pros for using Bitcoin, Litecoin, Dogecoin, or any other P2P Crypto coin are summed up in the list below.

  • Bitcoin has value of its own due to steadily increasing worldwide demand
  • Bitcoin cannot be shut down due to its structural nature of decentralisation
  • Bitcoin cannot be — and never has been — “hacked” due to the secure nature of its underlying cryptographic technologies
  • An increasing number of countries are reckognising Bitcoin’s legality and general utility for economic and/or technical development
  • Bitcoin has proven legitimate simply by the fact of user adoption by hundreds of millions worldwide
  • In a world of high political risk and troubled banks internationally, Bitcoin as a new and wholly independent asset class provides an additional option

The Bitcoin Financial Revolution

More than its unit price against dollars, Bitcoin is of interest for reasons quite different from just speculative profits (or losses) from its infamously volatile movements.

First and foremost, the mathematical achievement of solving the “Byzantine General’s Problem” in the process of inventing the blockchain as Bitcoin’s underlying technology is Bitcoin’s most outstanding achievement.

At the same time, the economic potential opening up because of Bitcoin and this overall  breakthrough in decentralization and organizational opportunity flowing from it is what really will matter in a greater context. Having a decentralized ledger is what makes worldwide Bitcoin transactions possible. It has also allowed setting up numerous other decentralized peer-to-peer Crypto coins. Roughly two hundred to three hundred coins similar to Bitcoin have come and gone as of this writing. These alternative or Alt coins use decentralized ledgers similar to Bitcoin’s blockchain. In the case of Alt coins, these are often called block indexes, and Alt coins use the same or one of a number of different encryption algorithms. The underlying technology of Alt coins is largely the same used in Bitcoin though. This entire enabling technology will prove to be a major enabler whose true potential has not even been realized by most people, including many Bitcoin aficionados. It holds the potential for directly bringing together random people from all corners of the world without any middleman (or institution) in order to engage in trade or any other form of exchange.

Once this truly powerful concept has been fully grasped by all involved in the Bitcoin and wider Crypto currency field, it will not really matter what the actual price of one Bitcoin in dollars or similar is at a particular date. True, early adopters of Bitcoin or other Crypto coin, more specialized for a certain use case, will profit from accompanying price increases if they manage to get in and out at the right time. In light of what an actually free market for worldwide exchange of value could mean, short-term profits may be a “nice thing” for sure, but the overall benefits to all present and future Crypto coin users will outweigh these by far.

Misconceptions About Blockchain Technology and Bitcoin

There is a fundamental difference between the open and decentralised Bitcoin system and all other projects — whether in industry or government-backed ones — that are now claiming to “discover Blcokchain technology”, albeit 5+ years later than Satoshi Nakamoto…

These days, every would-be innovator and their grandmother believe it is “posh” to “do Blockchain technology” or what they believe to be it.

The most ridiculous attempt (so far) came out of that great City, where the Bank of England has ridiculed itself by presenting their shallow idea of “RSCoin” while claiming that this would be a “better Bitcoin”. Curiously, they have been echoed by some puppet newspapers in Britain who were fast to applaud the idea and “explain” why RSCoin, for being “backed by the trust of governments”, would be a “so much better Bitcoin”. Those explainers have only discredited themselves as to neither understanding Bitcoin technology nor doing proper news research (which would have shown why a scheme like that is stupid right away).

They should understand — or at least research until they do understand — that Bitcoin’s strength stems from solving the Byzantine General’s Problem and that this discovery is at the heart of Bitcoin technology as well as every other decentralised Crypto coin’s technology. Satoshi Nakamoto’s discovery is what made Bitcoin possible at all.

Bitcoin sacrifices a certain part of ledger efficiency for the sake of real-life decentralisation. This is made possible by using an autonomous and truly decentralised Blockchain recording Proof-of-Work calculations performed by miners who are also autonomous. As and added security feature, they are also anonymous. That way, they provide for a global, autonomous, censorship-free, and secure network.

If these features are not needed, then why use “Blockchain” technology in the first place, wasting efficiency features without any real need?

What “RSCoin” and similar not properly thought-out schemes are proposing is, in fact, a single-entity clearinghouse (run, not surprisingly, by the Bank of England in this case). The Bank of England apparently believes to be gaining some institutional advantage by pursuing this ridiculous venture, all the way failing to understand what it is they are really doing.

“RSCoin” is nothing more than a scheme built around a single-entity clearinghouse. A structure like this is known to be extremely vulnerable against all kinds of attacks, and it has already been said that cracking into this “would be a lot of fun”.

Bitcoin experts are also on record saying a single-entity clearinghouse is a ridiculously anachronistic and insecure idea that should have died two decades ago.

That would have been in the mid-1990s. The City of London’s “finest” are trying to build it now, in 2016, though. Funded by taxpayer money at that. They are also applauded by those parts of the British press even more stupid than that.

Well done.

 

Banks Increasingly Unusable for “Fraud Protection” Reasons

Just use your credit or debit card online or at a “real” ATM, and you’ll be almost as likely to run into some issues as you are to complete the desired transaction without trouble.

Problems range from “fraud alerts” triggered by legitimate every-day transactions at a local cash machine to payments for a simple (and common) Amazon order being “rejected” for obscure reasons.

While these all prove unfounded at closer scrutiny and can sometimes be resolved relatively easily, these unwarranted “arrests of your payment card” are very annoying — to say the least. Often they are also an outright violation of applicable Terms and Conditions. Banks apparently do not care though and continue their “policy” of doing as they please or deem appropriate when it comes to protecting their affairs.

If so, this can only mean banks are obsessed with fear and, in fact, are on the verge of being unable to deliver on services they owe customers under the various parts of their bank services contract.

With banks increasingly going overboard with what they believe to be “Fraud Protection”, using Visa, Mastercard or similar bank-issued “plastic” is increasingly useless for bank customers.

Alternative payment systems need to develop further, and having them in less-incompetent hands than your average retail bankers is also desirable.

Privately operated Crypto coins will possibly earn more user trust and prove to be the better option for payments and transactions very soon.

Depending on the type of Crypto coin, this is already becoming a de-facto phenomenon: particularly Litecoin, Peercoin, Dogecoin, and most recently Ethereum, appear to be good candidates for reaching widespread user acceptance apart from Bitcoin itself.

Get It, While You Can!

The Raspberry Pi single-board computer, originally just a small British hacker project, has gained tremendous popularity throughout the computing community for a wide range of applications.

Among both Bitcoin-related as well as DIY or life-hacker projects, it is common to stumble upon a Raspberry-Pi-recommendation in a recipe’s ingredients list. You may actually be hard-pressed to find Bitcoin or Alt coin miners and similar specialist hardware not using a “Pi” as a controller unit these days.

Another popular use for Raspberry Pis is Bitcoin cold storage, i e running a small, offline or “cold” and ultra-secure machine for crypto coin Private Key storage. Apart from its low price, a key suitability reason here is safety. Just like “dumb printers” without Wi-Fi capability, Raspberry Pis come equipped with only some rather basic functionality not including Wi-Fi or similar security risks.

Until now, or Raspberry Pi version Raspberry Pi 2 Model B (Quad Core CPU 900 MHz), that is.

The Raspberry Pi project has just revealed its latest model, a revised Raspberry Pi single board computer with somewhat, though not fundamentally, improved performance. One of the latest version’s key “features” is rather a bug when it comes to security considerations: the Raspberry Pi 3 Model B now has built-in Wi-Fi hardware for “improved” connectivity.

This may or may not be a “nice-to-have” for many Pi users, but the fact is that this dilutes the original Raspberry Pi concept of having a *simple* single-board computer that can be equipped with extra features (such as Wi-Fi or graphic interfaces or any sort of *peripherals*) when and *if* needed. From a professional or from a systems engineering point of view it does not make any sense whatsoever to load a single-board computer core unit with specialty peripherals like Wi-Fi, or maybe a CD or HD drive for that matter — which all are a specialty for a reason: security!

It, therefore, turns out that the Raspberry Pi 3 Model B is not an upgraded but a dumbed-up (as opposed to dumbed-down) version of a previously highly attractive little machine.

The obvious solution for the security-aware — as well as health-conscious and EMF averse — user is to buy the “old” or previously common Raspberry Pi 2 Model B (Quad Core CPU 900 MHz) that does not attempt to tell you what’s good for you if it isn’t and does not have built-in security leaks or potential backdoors by design.

While there may be users or potential Raspberry Pi buyers out there who appreciate the added Wi-Fi capability of the Raspberry Pi 3 model, anyone considering a “Pi” for Bitcoin cold storage or similar applications where a hardened machine is a pre-requisite should buy the existing or “old” Raspberry Pi 2 Model B (Quad Core CPU 900 MHz) model before the “Pi” makers might come up with the idea of stopping Raspberry Pi 2 Model B (Quad Core CPU 900 MHz) production.

Paper Wallets and General Bitcoin Security

With every security breach making it into the news, some people get the impression that Crypto currencies “weren’t safe” or even “had failed” or similar. Depending on the nefarious intent behind these headlines (as in the case of established banks bashing Bitcoin as part of their agenda) this may or may not scare potential users from even thinking about using Bitcoin.

The reality is that in the Credit Card Industry over 40% of profits have to be spent for “fraud prevention” (meaning they cannot prevent most cases of fraud anyway and need the amount for compensation). Still, this hasn’t prevented anyone from using credit cards nor similar “electronic” forms of payment — yet.

Crypto coins are quite different though. The level of security only depends on whether or not prudent steps are taken by the user individually. Unlike credit cards where trust has to be given to third parties, the very nature of peer-to-peer technology means that everyone is in control of their own funds and security.

Increasing security for your Bitcoin holdings is always easiest through the use of Paper Wallets: simply move all portions of your savings to Cold Storage (i e into your paper wallet) and only keep smaller amounts needed for spending in a Desktop wallet, online wallets, or less-secure exchange portfolios and similar places.

(A paper wallet is a simple piece of paper run from your printer — preferably a “dumb” one without Wi-Fi or similar security loopholes — containing your public address for deposits along with its private key for retrieval.)

That way, you are not only “your own bank” but (at least!!) as safe as one as well.