What is cryptocurrency?

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated maths problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets. 

Cryptocurrencies and applications of blockchain technology are still nascent in financial terms and more uses should be expected. Transactions including bonds, stocks and other financial assets could eventually be traded using the technology.

What are the most common cryptocurrencies?

  • Bitcoin: Bitcoin was the first and is the most commonly traded cryptocurrency to date.  The currency was developed by Satoshi Nakamoto in 2009, a mysterious figure who developed its blockchain. It has a market capitalisation of around $45 billion as of July 2017.
  • Ethereum: Developed in 2015, ethereum is the currency token used in the ethereum blockchain, the second most popular and valuable cryptocurrency. Ethereum has a market capitalisation of around $18bn as of July 2017. However, ethereum has had a turbulent journey. After a major hack in 2016 it split into two currencies, while its value has in recent months reached as high as $400 but crashed briefly to as low as 10 cents.
  • Ripple: Ripple is another distributed ledger system that was founded in 2012. Ripple can be used to track more kinds of transactions, not just of the cryptocurrency. It has been used by banks including Santander and UBS and has a market capitalisation of around $6.3 billion.
  • Litecoin: This currency is most similar in form to bitcoin, but has moved more quickly to develop new innovations, including faster payments and processes to allow many more transactions. The total value of all Litecoin is around $2.1 billion.

Why would you use a cryptocurrency?

Cryptocurrencies are known for being secure and providing a level of anonymity. Transactions in them cannot be faked or reversed and there tend to be low fees, making it more reliable than conventional currency. Their decentralised nature means they are available to everyone, where banks can be exclusive in who they will let open accounts.

As a new form of cash, the cryptocurrency markets have been known to take off meaning a small investment can become a large sum over night.

But the same works the other way. People look to invest in cryptocurrencies should be aware of the volatility of the market and the risks they take when buying.

Because of the level of anonymity they offer, cryptocurrencies are often associated with illegal actvity, particularly on the dark web. Users should be careful about the connotations when choosing to buy the currencies.

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Singapore sees first lawsuit over bitcoin, Latest Business News

Singapore’s first legal dispute involving the cryptocurrency bitcoin has erupted over trade proceeds worth around US$3.78 million (S$5.15 million).

An electronic market maker is suing Quoine, one of the world’s major bitcoin exchange operators, over trades that were allegedly wrongfully reversed, which resulted in proceeds being deducted.

The market maker, B2C2, said it placed orders on Quoine’s platform to sell ethereum – another cryptocurrency – for bitcoin at the price of 10 bitcoin for one ethereum.

The orders were filled in a series of trades on April 19, resulting in B2C2 paying 309.2518 ethereum for 3092.517116 bitcoin.

The bitcoin was credited into B2C2’s account that day.

But the next day, the trades were reversed by Quoine, which is incorporated here, and the proceeds allegedly “misappropriated” from the account without authorisation.

Quoine told B2C2 it was entitled to do so because the trades were “mostly trades with huge mark-up over fair global market price”, the suit said.

B2C2 claims Quoine had “acted fraudulently” because the agreement stated that an order, once filled, is “irreversible”.

It is seeking to recover 3084.78582325 bitcoin from Quoine in the High Court.

Quoine, a fintech firm that offers cryptocurrency-related services, was co-founded by Mr Mike Kayamori, who has held senior roles at Mitsubishi Corp and Softbank Group.

ABNORMAL RATE

No dollar value for that amount of bitcoin was provided in the lawsuit, but according to cryptocurrency exchange CoinDesk, that amount translates to US$3.78 million based on an exchange rate of US$1,226.94 for one bitcoin on April 19.

Quoine, in turn, claims B2C2 is “being opportunistic and seeking to profit from a technical glitch”. It said the trades were executed at the “abnormal rate” of 10 bitcoin for one ethereum, about 125 times higher than the actual market price then because of a technical glitch.

It said the average market price that day was only about 0.03929075 bitcoin for one ethereum.

The glitch severely disrupted Quoine’s ability to retrieve actual market prices for bitcoin and ethereum.

It said the glitch arose because it was reconfiguring passwords for its critical systems to fend off persistent attempts by hackers to read more…

Feds eye crackdown on digital coin investments

A new approach to fundraising by startups that uses digital currencies like bitcoin is sparking concern among lawmakers and regulators, and calls for tougher rules.

At issue are initial coin offerings, where new companies or smaller projects seek to crowdfund — or raise investment funds from the public — through crypto online currencies.

While many of these offerings are well-intentioned, others are scams and some have weak security making them susceptible to hacks.

That’s led to growing calls for new regulations to protect investors and consumers.

The Securities and Exchange Commission is already taking notice.

The agency on Tuesday made public an investigation it conducted on digital coins sold by “The DAO” — an online leaderless group that used a cryptocurrency called Ethereum.”

Hackers targeted the group in May of last year after one of the highest-profile initial coin offerings. That attack destroyed the group and the value of its coins, leading many to lose money.

In its report, the SEC concluded that the coins offered by DAO were securities — publicly tradable debt like bonds. And the agency said U.S. securities laws may apply to the tokens.

“Foundational principles of the securities laws apply to virtual organizations or capital raising entities making use of distributed ledger technology,” the SEC wrote.

The agency said DAO users were investing money in the coin offerings with the expectation of making profits.

The SEC held that because DAO tokens were securities, the group needed to
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Will Bitcoin Cash Impact the Bitcoin Price? Traders Split on Possible Fork

Bitcoin traders may soon be able to bet on their preferred version of the blockchain.

As if a years-long debate over the network’s technical roadmap wasn’t dramatic enough, Tuesday could see yet another twist in bitcoin’s scaling debate. That’s when a group of miners and developers say they will go as far as to create an alternative network to prove bigger blocks are the best solution for increasing network capacity.

Called Bitcoin Cash (BCC), the effort will effectively fork bitcoin’s existing software and transaction history, and in the process, give every bitcoin user new cryptocurrency tokens on a new blockchain with different rules.

Should users own 2 BTC, this means they’ll now be able to claim 2 BCC on the Bitcoin Cash blockchain, a move that could generate millions of dollars in new value for traders.

Not without precedent, a similar event took place on ethereum last summer, when members of that community created a new cryptocurrency to protest a design decision by developers.

Yet if you were expecting that sort of uncertainty to be scaring away traders, according to Ripple gateway operator Rafael Olaio, the end result is anything but. Given the creation of the new network, Olaio and others expect traders to hold steady before claiming their new funds.

He told CoinDesk:

“People want to double their coins. Nobody is selling bitcoin.”

Overall, analysts offered a variety of opinions on what could develop in the days and months ahead, commenting on what they believe could be the immediate and long-term impact of the creation of a new, widely traded cryptocurrency bearing resemblance to bitcoin.

However, it’s important to note that not all traders believe Bitcoin Cash will meet this definition.

Arthur Hayes, founder of crypto derivatives trading platform BitMEX, for example, noted that “theoretically” the launch of Bitcoin Cash should cause bitcoin’s price to drop. Still, he questions whether this indeed will happen given that, historically, traders have not been kind to assets that have attempted to fork away from bitcoin.

“There have been many similar distributions based on bitcoin ownership that caused no such drop in price, including bitcoin clams, byteball, etc. I think the Bitcoin Cash distribution will have minimal to no impact on the bitcoin price,” he said.

Hayes continued:

“I don’t believe most holders expect longevity of this chain past the point at which they immediately dump their ‘free money’ to purchase bitcoin.”

Consumer confusion

Perhaps the biggest concern among traders, however, was not how the two assets would compete given a level playing field, but read more…

Ethereum Classic Price Technical Analysis – Can ETC/USD Gain Pace?

Key Highlights

  • Ethereum classic price after finding support below $13.50 against the US Dollar started a recovery.
  • There was a break above a crucial bearish trend line with resistance near $14.00 on the hourly chart of ETC/USD (Data feed via Kraken).
  • The price is still below the $14.50 resistance and the 100 hourly simple moving average.

Ethereum classic price is attempting an upside break versus the US Dollar and Bitcoin. ETC/USD has to gain momentum above $14.50 for further gains.

Ethereum Classic Price Resistance

During the past week, ETC price mostly struggled and traded below the $15.00 and $14.00 supports against the US Dollar. The price traded as low as $13.23 where it found support and later started recovering. It managed to move above the 23.6% Fib retracement level of the last decline from the $16.40 high to $13.23 low. There was even a break above a crucial bearish trend line with resistance near $14.00 on the hourly chart of ETC/USD.

However, the upside move was capped by the $14.50 resistance and the 100 hourly simple moving average. Moreover, the 38.2% Fib retracement level of the last decline from the $16.40 high to $13.23 low prevented further gains. Currently, the price is forming a short-term descending channel with resistance at $14.00 on the same chart. Once there is a close above the $14.50 resistance and the 100 hourly simple moving average, there can be more gains.

Ethereum Classic Price Technical Analysis ETC USD

On the downside, the $13.50 support and the last swing low near $13.23 might continue to hold declines. No doubt, buyers lacking momentum, and it won’t be easy to break the $14.50 resistance. The next major resistance is around the 50% Fib retracement level of the last decline from the $16.40 high to $13.23 low at $14.78.

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Is Kazakhstan the next cryptocurrency hotspot?

Back in 2014, Kairat Kelimbetov, then-head of Kazakhstan’s National Bank suggested that Bitcoin could be “a form of financial pyramid scheme.” The common belief among Kazakhstani officials was that cryptocurrencies could undermine the country’s already struggling tenge.

The tenge absolutely was struggling, though.

Nearly 80 percent of the Kazakhstan National Bank’s reserves, deposited from customers, are not kept in tenge, the country’s national currency.  Though the number is lower for businesses, the fact that most of the bank’s reserves are in dollars, euro, and other currencies is not encouraging for the country’s national currency. Even still, with the tenge having fallen over 70% between 2008 and 2014 due to rampant corruption and low oil prices, media rumors of a BTC ban were circulating the Central Asian nation throughout 2014.

Things began to change, however, and as cryptocurrencies increased in popularity and other countries began to relax their positions, the Kazakhstan government followed suit.  The Kazakhstani even saw their first BTC ATM in late 2015.  Seeing the need for change, the government began the race to regulate cryptos in 2016, allowing the National Bank “leverage to monitor the situation,” according to Daniyar Akishev.

In June 2017, Kazakhstan announced plans to begin selling blockchain based bonds. The idea was to provide investors with a low-cost, commission-free, and speedy medium for purchasing bonds. While not necessarily a new idea, it was a landmark event for Kazakhstan in the blockchain race.

Showing an even greater commitment to the government’s efforts to adapt to the technology taking root across the world, President of Kazakhstan Nursultan Nazarbayev announced that “It is high time to look into the possibility of launching the international payment unit. It will help the world get rid of monetary wars, black-marketeering and decrease volatility at markets,” at the 10th Astana International Forum (AIF). According to Nazarbayev, “All countries should be represented there equally. This is a difficult question but it should be solved.” This signaled a distinct shift in ideology from officials’ 2014 decry of the subject.

Supportive cryptocurrency regulation in Kazakhstan

From that surprising announcement, a fresh movement was seemingly born. In mid-July, working with Deloitte, Kesarev Consulting, Waves Platform, and legislation firm Juscutum, the Astana International Financial Center (AIFC) announced that the coalition would be working together to develop supportive cryptocurrency read more…

Is Bitcoin about to split? 4 possible scenarios

Bitcoin as we know it might never be the same again from August 1 as the possibilities of fork become more pronounced than ever before. The hottest news in the cryptocurrency industry right now is that the Bitcoin blockchain will be split into two. A group in the Bitcoin community has announced a plan to split off from the Bitcoin network to create a new version of the cryptocurrency called Bitcoin Cash.

The splitting group made up of investors, developers, miners and Bitcoin users submit that Bitcoin cash is a continuation of the Bitcoin project as peer-to-peer digital cash in line with the original vision of Satoshi Nakamato. This piece provides insight into why Bitcoin is being faced with the possibilities of a split as well as the scenarios that could play out around the split.

Bitcoin is far from perfect

Bitcoin is a smart store of value and a means of exchange that offers a superior value proposition to fiat currencies. Bitcoin is scarce, durable, portable, divisible, storable, fungible and difficult to counterfeit – features that fiat currencies can’t easily claim. Yet, despite the obvious pros of Bitcoin, it mostly serves as an investment and store of value in today’s economy instead of being a means of exchange.

The main problem delaying the mass adoption of Bitcoin is two-pronged. To start with, the Bitcoin blockchain network is currently too slow to be viable to power the bulk of economic transactions. The Bitcoin blockchain processes about six transactions per second; in contrast, VISA alone processes more than 1,600 transactions per second on its network.

The slowness of the Bitcoin network is the reason behind the second problem ailing Bitcoin – Bitcoin usage attracts expensive transaction costs. Each Bitcoin transaction includes a transaction fee – the transaction fee is the payment that encourages miners to include a transaction in the read more…

Is Blockchain Ready to “Cross the Chasm”? Lessons from the Internet

 

Earlier this year, IBM conducted the largest study to date on the state of adoption of blockchain.  The study interviewed almost 3,000 C-Suite executives from over 80 countries and 20 industries to learn about their company’s blockchain plans.  Survey responses where classified into three groups: explorers, investigators and passives.

Explorers are already involved in blockchain pilots and experiments.  They make up an average of 8 percent across all industries, with higher activity in certain industries like financial services.  25 percent of organizations are investigators, – considering but not yet ready to deploy blockchains, and 67 percent are passives, – not considering blockchains so far.

These survey results are not surprising for a technology as new and complex as blockchain.  With such technologies, you typically have a relatively small number of early adopters.  A larger number of followers are waiting to learn from the early adopters’ experiences, while the laggards are not yet sure what the technology is about or if it applies to them.

The IBM study analyzed the responses of the explorers, in an attempt to figure out what’s driving them to embrace blockchain at this early stage.  Their responses suggest that they view blockchain as a kind of trust accelerator, helping to build trust in several ways: increased transactional transparency, higher data quality and accuracy, increased trust in transaction reliability, and improved security against fraud and cybercrime.

Traditionally, intermediaries have taken on the role of trust keepers, adding costs, delays and complexity to the processing of transactions.  Explorers expect blockchain to reduce transaction costs by eliminating intermediaries; increase transaction speed by reducing clearing time; and simplify and automate business processes, especially processes that deal with interactions across companies and governments.

They also see blockchain as enabling the creation of platforms for business model innovation and new ways of working.  Platforms are all about scale and network effects, where the whole is much greater than the sum of their parts.  Platforms require the formation of multi-sided ecosystems, including partners and developers on the supply-side, and users and customers on the demand-side.  The greater trust, security and efficiencies inherent in blockchain platforms could be competitive differentiators in the formation of such multi-sided ecosystems.

Blockchain has the potential to transform our economic and social systems.  It’s a foundational innovation, like the Internet, whose full transformational impact will play out over decades rather than years, because such innovations must overcome many barriers, – technological, organizational, governance, political.  Their adoption process is thus gradual, incremental and steady, unlike the hockey stick adoption we typically associate with disruptive technologies.   The impact of blockchain could well be enormous, but its full transformational impact will take considerable time.

Crossing-the-chasmThe IBM survey study reminded me of Crossing the Chasm, Geoffrey Moore’s 1991 bestseller, now in its third edition.  Crossing the Chasm applies what’s known as the diffusion of innovations model to the development of high-tech markets, paying particular attention to the transition from early to more mainstream adopters.

According to Moore, “the point of greatest peril in the development of a high-tech market lies in making the transition from an early market dominated by a few visionary customers to a mainstream market dominated by a large block of customers who are predominantly pragmatists in orientation.  The gap between these two markets, all too frequently ignored, is in fact so significant as to warrant being called a chasm, and crossing this chasm must be the primary focus of any long term high-tech marketing plan.  A successful crossing is how high-tech fortunes are made; failure in the attempt is how they are lost.”

What will it take to help blockchain across this chasm, – from the explorers/early-adopters who are already involved in blockchain pilots, to the investigators/followers who are considering blockchain but waiting for results and assurances before jumping in?  How long will it likely take?

As with similar such questions, let’s look at the lessons learned from the decades-long evolution of the Internet for inspiration and guidance.

ARPANET, – the early packet switching network that first implemented the TCP/IP protocols, – was developed by a small number of researchers in the 1960s and 1970s.  It then evolved into what became known as the Internet in the 1980s.  The Internet’s early adopters arrived in two phases.  First came universities, supercomputing centers and other research communities in the early and mid 1980s.  Then came commercial early adopters, who were only allowed to use the Internet toward the end of the 1980s.  Their numbers grew rapidly over the next few years, and by the mid-1990s the Internet was being embraced by a much larger number of mainstream users, – having successfully crossed its chasm.

What helped take the Internet from early adopters to mainstream users?  Three main reasons stand out for me: standards, applications and governance.

Standards:  Through the 1980s, an increasing number of university, government and research networks embraced TCP/IP as their networking standard.  The advent of routing technologies enabled these various TCP/IP networks to eventually coalesce into one Internet or network of networks.  e-mail was the Internet’s first major application.  Its protocols, – e.g., SMTP, POP, IMAP, – were standardized in the mid-1980s, enabling its users to easily communicate with each other.  A few years later, the Web’s open standards, – HTML, HTTP, URLs, – made it possible for any PC connected to the Internet to access information on any web server anywhere in the world.  The easy-to-use, graphical Mosaic web browser released in 1993, played a major role in the popularization of the Internet.

Applications:  A killer app is an IT application whose value is easy to explain, because while relatively mundane in nature, it turns out to be unexpectedly useful in business and/or everyday life.  e-mail and the Web are great examples of killer apps, having played a crucial role in the mainstream adoption of the Internet.  Everybody could easily appreciate the ability to easily communicate with anyone, or to access information anywhere in the world.  Many other applications quickly followed across a variety of industries.

Governance:  Much of the success of the Internet and World Wide Web is due to the international organizations created to oversee their evolution, including IETF – the Internet Engineering Task Force, ICANN – the Internet Corporation for Assigned Names and Numbers, and W3C, – the World Wide Web Consortium.  In addition to developing standards and organizing technical, industry and policy activities, these various organization make available open source implementations of their software releases, thus encouraging collaborative, open innovation.

Let’s now turn to blockchain.  Last year, the World Economic Forum (WEF) published its annual list of the Top Ten Emerging Technologies for 2016, and named The Blockchain as one of the technologies in the 2016 list.  The WEF report compared the blockchain to the Internet, noting that “Like the Internet, the blockchain is an open, global infrastructure upon which other technologies and applications can be built.”

But, is blockchain ready to transition from its early adopters to a more mainstream market?  Let’s look at where we stand with blockchain in each of the three areas that helped the Internet across.

Standards:  There are already a number of blockchain platforms in the marketplace; more are in development.  All are generally based on the original design released in 2009 by Satoshi Nakamoto, but the platforms differ, depending on the applications they are designed to support.  There seem to be two fairly distinct blockchain design points.  One is primarily focused on blockchain as the underlying platform for Bitcoin and other cryptocurrencies; the second is focused on blockchains as a general purpose platform for transaction applications, – a kind of Internet 2.0.

The cryptocurrency-oriented platforms are mostly based on public, permissionless blockchains and proof-of-work systems.  The more general purpose platforms, – e.g., Hyperledger, – are aimed at supporting business applications, and are mostly based on private or permissioned blockchains, akin to the Internet encompassing private intranets.  Some blockchain designs straddle both camps, like Ethereum, which includes support for the Ether cryptocurrency and for distributed transaction applications like smart contracts.

Realizing the Potential of Blockchain, a recently released WEF report by Don and Alex Tapscott, wrote that “As with all disruptive technologies, competing interpretations of Satoshi’s vision have emerged… there is no shared taxonomy or categorization of the space: Does blockchain refer to the bitcoin blockchain or the technology in general?  Is it big ‘B’ Blockchain or little ‘b’ blockchain?  Is it a currency, commodity or technology?  Is it all of these things or none of them?”

There is an urgent need for blockchain standards, at least at the fabric level, the equivalent of the TCP/IP layer.  “While these groups attack the problem from different angles and with different agendas, each shares a common goal to make this technology ready for prime time – by building infrastructure, developing standards and making it scalable.”

Applications:  Since blockchain is all about the creation, exchange and management of valuable assets, its applications are like to be considerably more complex to develop than Internet applications.  “Launching this type of application requires massive collaboration among companies, governments and other entities,” said the WEF report.  “Similarly, this resource will need constant care and tending to onboard more and more users over time.  It illustrates the profound differences between managing information creation versus value creation activities.  The latter require deep negotiation, contractual and jurisdictional understandings, and the ongoing stewardship of application-level ecosystem.”

Governance:  “Like the first generation of the internet, this second generation promises to disrupt business models and transform industries… pulling us into a new era of openness, decentralization and global inclusion.  However, this extraordinary technology may be stalled, sidetracked, captured or otherwise suboptimized depending on how all the stakeholders behave in stewarding this set of resources – i.e. how it is governed,” adds the WEF report in a strong cautionary note.  “How we govern the internet of information as a global resource serves as a model for how to govern this new resource: through a multi-stakeholder approach using what we call global governance networks.

Is blockchain ready to cross the chasm from its early adopters into a wider marketplace?  Not quite yet.  Much remains to be done.  Given all the attention and activity, this important transition should be able to take place in the not too distant future.  But, as Geoffrey Moore reminds us, crossing this chasm is “the point of greatest peril” for a high-tech innovation.

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Top Cryptocurrencies price weekly prediction – next days will be rough For the crypto market

 

CRYPTOCURRENCIES PREPARE FOR A STRONG WEEK

It seems evident most of the top 10 cryptocurrencies are in a good position for some notable gains over the next seven days. Even though we will see one Bitcoin hard fork materialize on August 1st, it is doubtful this will harm the price in a negative manner. Do not be mistaken in thinking Bitcoin Cash tokens come free of charge, though, as they may effectively subtract value from the actual Bitcoin price until the market stabilize.

That being said, we do see the Bitcoin price has dipped a whopping 0.19% over the past 24 hours. That in itself means very little as far as the world’s leading cryptocurrency is concerned. In fact, as long as Bitcoin doesn’t move by 5% or more over the course of 24 hours, there is absolutely nothing to be concerned about. A minuscule change such as this one means absolutely nothing.

Despite the Bitcoin price “dip”, most altcoins are doing quite well. Ethereum is finally showing some life signs after weeks of declines. The 5.67% gain in the past 24 hours is quite substantial, as the price seems to be heading toward US$200 once again. It is still a far cry from US$400, though, and the currency is not out of the woods just yet. Future declines in value may still be  a big part of Ethereum as there is still some funds in circulation which may be dumped across exchanges in the near future.

Other top currencies are showing small gains as well. Litecoin is up by 189%, whereas NEM, Dash, and IOTA all report gains below 1%. The big winners are XRP – up by 3.47% – as well as Stratis – up by 2.99% – and Ethereum Classic, which increased by 1.45%. The bigger question is when people will realize Ethereum Classic is the true, immutable Ethereum chain without SEC scrutiny, highly controversial ICOs, and a blockchain which can be rolled back when founders’ money is stake. Only time will tell if the ETH/ETC correlation will ever see proper momentum, as for now, all the hype and focus is still in Ethereum’s camp. read more…

Bitcoin is Trading at Extreme Premium in Stock Market

The demand toward Bitcoin is also increasing at a rapid rate in the public stock markets. Some ETFs and instruments including Bitcoin Investment Trust are being traded with extreme premium rates.

Barry Silbert-led Digital Currency Group’s subsidiary company Grayscale Investments operates one of the most frequently traded and popular publicly quoted securities based on Bitcoin price.

Each share of Bitcoin Investment Trust (GBTC) represents 10 percent of Bitcoin price and at the time of writing, GBTC is being traded at $417.

The public stock market

In the US stock market, accredited traders and institutional investors are buying into Bitcoin with instruments such as GBTC.

Although many investors have moved onto regulated trading platforms, such as Kraken, Coinbase’s GDAX and the Winklevoss twins’ Gemini, a large portion of accredited investors still read more