Will Bitcoin Block Size Reduction Argument Cause Another Crypto Conflict?

Things have been busy in crypto land this week and the big debate over Bitcoin’s block size has only just been usurped by JP Morgan’s attempt to launch its own completely centralized crypto coin. The block size issue is an important one so we’ll delve a little deeper into that.
Another Crypto Conflict Imminent?
Bitcoin Core, the enigmatic code that runs the world’s largest decentralized currency, has a highly calibrated and specific set of instructions and protocols. Any attempt to deviate from them is usually met with brimstone and fire from the developers and community. When they disagree a hard fork usually occurs and there have been a lot of them over Bitcoin’s short ten year lifespan.
The highly controversial proposal discussed this week came from Core developer Luke Dashj who suggested decreasing the size of the blocks from their current 1Mb to 300Kb. In theory this may increase adoption by reducing costs associated with network participation.

Another example: This patch would enforce a very simple softfork, reducing #Bitcoin block sizes to ~300k between Aug 1 and Dec 31. It demonstrates how one can make a truly TEMPORARY softfork.https://t.co/sukdk2zJpR
(DO NOT RUN THIS IN PRODUCTION EVEN IF YOU SUPPORT A UASF)
— Luke Dashjr (@LukeDashjr) February 7, 2019

Since the Bitcoin network has grown so large now (over 200Gb) running a full node, which stores and updates a copy of the entire blockchain, is extremely resource intensive and costly. The reduction in block size would alleviate these expenditures but would require the majority to move to a soft forked version of the existing BTC chain.
The decentralization case is a strong one; if data centers are required to run full nodes then the network effectively becomes centralized. Blockstream’s strategy chief Samson Mow told Hard Fork;
“This is also why most Bitcoin users do not want huge blocks, because then full nodes could only be run in data centers, which perfectly defeats the purpose of having a decentralized network,”
Some of the community have backed this notion and still advocate for a smaller block size to reduce the potential centralization of running full nodes. The counter argument is that this ‘minor tweak’, as some have described it, will result in a huge disruption to a well-functioning system.  The demise of Bitmain has already reduced centralization concerns and smaller blocks would be of greater benefit to miners who can earn more from transaction fees. The crypto community on twitter has also had their say as the debate rages on;

The crypto community is tired of being tortured by a Bitcoin that refuses to scale and remains in constant limbo. Live or die: scale or go off-chain, huge blocks or teeny ones. This is crypto fatigue. Just get it over with, and deal with what happens. https://t.co/lI8RPPBwJD
— Joel Valenzuela (@TheDesertLynx) February 13, 2019

Bitcoin guru John Carvalho added; “Right now, there isn’t a lot of support for [block size] adjustment ideas because many see it as a controversial and sore topic. We all still feel the bruises from the Segwit2x/No2x/BCash debates,”
There has also been a big push to the Lightning Network which could be affected as proponents of the recently forked Bitcoin SV noted;

I'm shocked the core devs want to reduce the block size from 1MB to only 300KB.
I'm flabbergasted!
Do they not understand along with killing mainnet adoption they're also killing LN adoption???
How the fuck are you going to onboard billions of people if you shrink???#Bitcoin
— Mike Relentless [SV] (@mikerelentless) February 13, 2019

The most pertinent comment though highlights that infighting such as this can only cause longer term damage to Bitcoin and the entire ethos of decentralized currencies;

Stop this madness! Last thing Bitcoin needs is yet more contentious forks in this key year for adoption! A soft fork to "reduce the block size" is a hard fork in all but name. This will split off from the established consensus, cause massive drama, and damage trust in Bitcoin. https://t.co/54tzz4UIli
— Cøbra (@CobraBitcoin) February 11, 2019

Changes to the established code and network are always a hot potato in the crypto world, and block size is top of that tree. Bitcoin has a long way to go before it can truly be considered autonomous and decentralized and these debates are part of that evolution process for the nascent technology. However, with markets battered and bruised, another public crypto conflict between rival factions will cause more damage than good in the short term for Bitcoin and its brethren.
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No, The Boss of Bitcoin Isn’t Dead, but You Can’t Call Him Either

It has been 10 years now since Bitcoin (BTC) was first created. The original cryptocurrency has existed for all this time with minimal changes to its code base and zero adjustments to its governance model.
Why then is it so hard for some in the mainstream media to develop even a basic understanding of Bitcoin? Just this week, two completely independent publications have reported on the decentralised fintech innovation as if there was some overarching authority controlling the disparate network.
Stop the Press! Bitcoin is a Protocol, Not a Company…
Earlier this week, two big news stories broke in the Bitcoin space.
The first concerned the founder of the Canadian cryptocurrency exchange QuadrigaCX. Gerard Cotten passed away last December, taking with him the secrets to control US$145 million worth of digital assets owned by the exchange and its customers.
The story was picked up by more than just the traditional crypto news platforms and many mainstream publications around the world deemed it interesting enough to cover. Of course, mistakes are often made when non-specialists write on technical topics.
Austria’s Strazburg 24 decided to run with the headline, “Bitcoin-Chef nimmt Passwörter mit ins Grab”, or “Bitcoin boss takes passwords with him to the grave.” I am sure I do not need to point out how misleading the wording of this title is.
Bitcoin has no boss. It exists without central control from any single authority. Even if BTC’s founder, the anonymous Satoshi Nakamoto, was identified and died, the headline would still not be accurate. Such errors by mainstream media do a spectacularly poor job of presenting Bitcoin in an honest, accurate light. Proliferating non-factual statements about the technology can only delay its eventual adoption.
Other reporters seem to be labouring under the same misconception too. In this second example, The Times of Israel reported on the appeal by the Hamas group for individuals to donate Bitcoin to their cause. The story has since been edited, likely due to the high numbers of people Tweeting about the error:

Times of Israel article reads, "There was no immediate reply from Bitcoin."
In case it wasn't already abundantly clear that mainstream journalism is trash.https://t.co/Xnby3WQpCM #Bitcoin #Journalism pic.twitter.com/q63ye9Hhyf
— BashCo (@BashCo_) February 4, 2019

As you can see from the above Tweet, the story originally featured the line:
“… there was no immediate reply from Bitcoin.”
Despite how poor of a representation this is of Bitcoin in the mainstream press, the image of one of the publication’s writers attempting to contact “Bitcoin” the entity is an amusing one indeed.
Jokes aside, the effort from the cryptocurrency community to shame The Times of Israel for its shoddy reporting must be commended. If mainstream media publications print misinformation it is our duty to call them out on it and that is exactly what happened.
That said, it is not just the mainstream media that seems confused by this incredibly basic facet of the most successful digital currency by market capitalisation. Others are apparently having the same issue too:

Someone can help? pic.twitter.com/MpJxy0Cc5z
— Crypto Rand (@crypto_rand) February 6, 2019

If anything, examples like that above, if serious, highlight the need to tackle the spread of false narratives relating to Bitcoin in the mainstream media. Clearly, this individual has been grossly misinformed about the nature of the Bitcoin protocol.
 
Related Reading: Bitcoin Acceptance: The Changing Face of Mainstream Media Coverage
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QuadrigaCX Reportedly Didn’t Lose Access to Bitcoin Funds – is it More Than a Mistake?

QuadrigaCX, a Canadian cryptocurrency exchange, is in serious trouble – its customers cannot access $150 million worth of crypto funds after the owner and CEO, Gerald Cotton, died of Crohn disease in Jaipur, India. He was the only individual who had access to the”cold wallet reserves.”
The exchange reached out to Nova Scotia Supreme Court while seeking creditors’ protection.
However, many analysts now believe that QuadrigaCX could be nothing but a well-orchestrated exit scam. The shift in opinion comes after independent investigators claimed that the exchange was deceptive about having bitcoin cold wallets at the first place.
Research: QuadrigaCX Pitted Traders against Each Other
Researchers at Zerononcense identified bitcoin wallets allegedly associated with QuadrigaCX after collecting pieces of evidence from the exchange’s former customers. Researchers were able to trail bitcoin trades – from verified customers’ accounts to those owned by QuadrigaCX. In the report, Zerononcense listed 31 of these bitcoin wallet addresses.

The publishing site @Medium has removed @ProofofResearch's important work on Quadrigacx without explanation. It's now on his own blog, which is censorship-resistant. Please circulate. https://t.co/IMZYQl85BQ cc @davidgerard
— (((Frances Coppola))) (@Frances_Coppola) February 5, 2019

Furthermore, the researchers found that QuadrigaCX used highly deterministic wallets to manage client funds. These wallets would enable the exchange to generate millions of unique bitcoin wallet addresses from a single, original clustered wallet address. Zerononcense claimed that it had recognized one of such grouped addresses with the help of WalletExplorer.com, a service which is supposedly good at “address clustering.”
The researchers further verified that each of the 31 addresses as mentioned above had deposited funds into the clustered address at some point in time. The overall customer deposit information revealed that “none of the withdrawal addresses provided by customers led to a wallet that could be considered anything comparable to a ‘reserve’ wallet.”
Zerononcense provided some sample withdrawal transaction ids that interlinked customers’ wallet addresses. The researchers found cluster wallets that were granting the customers’ withdrawal requests were waiting from deposits from other customers’ wallets. In some cases, the Quadriga cluster wallets had received funds from the portfolios of other crypto exchanges.
Therefore, it is likely that Quadriga was pitting traders’ positions against each other to fulfill deposit/withdrawal requests.
“QuadrigaCX did not have a designated hot or cold wallet to send the customer their funds,” wrote Zerononcense. “In specific, they were forced to aggregate funds from disparate, disorganized locations in order to ensure that the withdrawal was successful.”
Ethereum Cold Wallets Missing Too
Separate research shared by My Crypto CEO and Founder Taylor Monahan revealed a similar case for Ethereum. She shared QuadrigaCX’s three ether wallet addresses. Two of these wallets made huge withdrawals to addresses associated with other top exchanges such as BitFinex, ShapeShift, and Poloneix. Between 2015 and 2017, Quadriga had made withdrawal worth approx $22 million, adjusted according to ETH/USD rate change.

tl;dr: I'm seeing NO indication of Quadriga ever having cold / reserve wallets for ETH.
— Taylor Monahan (@tayvano_) February 5, 2019

“Oh, and just in case you weren’t shaking your head enough, don’t forget that Quadriga ran an exchange with KYC,” added Monahan. “They have a pile of user’s KYC data. They could turn around and open an exchange account with any of that KYC data to move money.”
Whether it is more than an unfortunate mistake of the exchange to grant the CEO full control over user funds or not can only be confirmed after an official investigation is confirmed.
Until then, no details of the investigation can be definitively proven.
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SBI Group’s “strategic” partnership with Ripple and R3 could reshape the payments industry as a whole

Opinion:
SBI Group is a humungous financial services company based in Japan, which has investments in sectors like Information Technology, Biotechnology, life science, mobile/wireless, environment, and energy.
SBI Holdings, Inc., together with its subsidiaries, engages in the online financial service businesses and investment activities in Japan and internationally.
The most important and well-known in the cryptocurrency realm is the joint venture partnerships with the likes or Ripple or R3 and many more.
SBI Holdings has completed a circle of partnerships which might seem random on the surface but has more to it. These partners include Ripple, a U.S. based company that is trying to disrupt the banking and financial sector as a whole through its blockchain-based payment products and solutions, and R3, an enterprise blockchain software company which is involved in research and development of DLT.
SBI + Ripple
Ripple has over 200 partnerships with various banks and financial players which are spread across the world. Ripple is leveraging its proprietary products like xVia, xCurrent, and xRapid to process payments in a more fast, secure and transparent way than the traditional ones.
SBI Group partnered with Ripple and created a joint venture called “SBI Ripple Asia Co., Ltd.” to provide a next-generation payment platform powered by DLT [Distributed Ledger Technology] to financial institutions and remittance transfer providers in Asia as a joint venture of SBI Holdings and Ripple, a US FinTech venture.
Moreover, the JV promotes to create a next-generation settlement platform for international and domestic use which will largely reduce the remittance cost and the time required for the payments to be completed.
One of the important outcome out of this partnership was MoneyTap, which makes use of Ripple’s xCurrent DLT technology to facilitate inter-day banking transfer, which provides a 24-hour/7 payments service to all the customers in Japan.
SBI Group’s CEO, Yoshitaka Kitao has always been very bullish when it comes to XRP and plans to make use of the cryptocurrency to capture Japan’s financial industry. Kitao had stated:
“XRP is faster, cheaper and more scalable than any other digital asset. I strongly believe it will become the global standard in digital currencies.”
Ripple and R3 have settled their legal dispute on September 10, 2018, which provided a path for the joint venture between R3 and SBI.
SBI + R3
R3, an enterprise blockchain software company which leads a consortium of over 250 banks and financial industries, central banks, in research and development of distributed ledger technology partnered with SBI Holdings to create a JV called “SBI R3 Japan Co. Ltd.” on January 28, 2019.
R3 is concerned with the development, maintenance, and marketing of their application “Corda” which is an open source blockchain project which allows the building of interoperable blockchain networks that transact in privacy utilizing their smart contract technology.
The company recently announced that Corda network was live and that XRP will be used as a currency to settle transactions.
SBI Holdings plans to make use of the partnership of Ripple and R3 to extend a solution across all the sectors of the industry which is not only faster but secure and tamper-proof.
Recent reports by SBI Holdings stated:
“R3-Ripple solution: Become a global standard for financial operations such as international money transfers and trade finance”
Strategic Partnerships
SBI plans to make use of these partnerships not just to disrupt the traditional financial systems but also use these across all industries, which include real estate, healthcare, supply chain, Forex industry, global cash management, etc.
Entry of XRP into either one of the above-mentioned markets, especially the “Forex industry” could make a huge difference in how we perceive XRP and the price, as a result, would sky-rocket to unfathomable amounts.
Most importantly, will Ripple lose its grip on the remittance industry to R3? The recent partnership of R3 with SBI puts R3 in a more comfortable position as compared to Ripple. However, this is not the full story, but just a glimpse of what SBI might be planning behind closed doors.
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Financial Advisor: Major Banks are 3,233% More Expensive Than Bitcoin

A financial professional paid $10 to his bank for making more than six saving withdrawals. Later, he admitted that using Bitcoin could have been cheaper.
Short the Bankers
Pat Chirchirillo, a financial advisor at Philadelphia-based McAdam Financial, found a 3,233% different between the cost of withdrawals in banks and Bitcoin. From the look of it, he overreached his withdrawal limits, per a Federal rule called Regulation D which limits per saving account withdrawals by month. As a result, his bank – Bank of America – charged him a $10 fee as an act to ensure that Chirchirillo uses his savings account for just saving.
However, he took the opportunity to compare the banking system with cryptocurrencies like Bitcoin.
“Bank of America just charged 10 dollars because I made more than [six] transfers between savings and checking this month,” tweeted Chirchirillo. “[Six] transfers with crypto would cost about 30 cents. That’s 3,233% more expensive.”

Bank of America just charged 10 dollars because I made more than 6 transfers between savings and checking this month. 6 transfers with crypto would cost about 30 cents. That's 3,233% more expensive
Long Bitcoin, short the Bankers @APompliano #disruption #RentSeekingMiddlemen
— Pat Chirchirillo (@PatChirchirillo) January 30, 2019

“Long Bitcoin, short the Bankers,” he added.

Comparing Regulation D with Cryptocurrency Protocols
Regulation D is a way of the Fed to ensure that people practice savings more than spendings. The protocol also warrants that banks have a proper amount of currency reserves. This law applies only to people with savings accounts and excuses checking account holders. Like always, breaking it lands a penalty/fee on the concerned savings account holder.
On the other hand, a common cryptocurrency protocol such as that of bitcoin does not cater to the Federal securities laws. Its entire purpose is to settle and record payments over a decentralized network, using a native token which can be Bitcoin, Ether, XRP, or even a stablecoin. In it, the transactions are entirely peer-to-peer. For every settlement that occurs in a cryptocurrency network, users voluntarily add a fee for miners to speed-up their transaction confirmation time.
Also, in cryptocurrency networks, each transaction consists of inputs which determine how much resources it would require to get verified. For instance, sending 1 Bitcoin which has four inputs would require fee than sending 1 Bitcoin which has one input.
75 Bitcoin Transactions in $10
In retrospective, cryptocurrencies are much more accessible than banks. Using a bitcoin network, it would take Chirchirillo as low as 75 transactions to pay a $10 fee. In the case of banks, as mentioned above, it just took six.
Banks are still considered too expensive. It is never a piece of good news when 1.7 billion people still do not have access to essential financial services. The Financial Clinic, a business coaching nonprofit, recommended its customers to rely on alternative payment mechanism than banks. The clinic’s executive director Mae Watson Grote had told New York Times in 2014:
“When I sat down and looked at my clients’ bank statements and saw that they had paid $110 in fees, I often ended up sending them to the check casher instead.”
Only now, in 2019, a financial advisor sent people to cryptocurrencies instead.
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Naval: Killer App of Crypto is Socialism, Venezuela is a Prime Example

The killer application of crypto is socialism, said Naval Ravikant.

The killer app for crypto is Socialism.
— Naval (@naval) January 26, 2019

The prominent entrepreneur, who co-founded AngelList, a website dedicated to matching startups with investors, emphasized the use case of crypto at a time when socialism is failing in Venezuela. However, he didn’t specifically mention the country.
Venezuela: A Socialist Evil
Every sensible witness agrees that Venezuela, which is sitting atop the world’s largest oil reserves, has turned into a humanitarian disaster. Former president Hugo Chavez and its “Fifth Republic Movement” overtook the nation with the dissolution of social democratic parties and movements. He hijacked the political language through a discourse that established the idea of “people” and “anti-people.”
Chavez and his allies were able to enforce Scandinavian social-democracy whereby economic and social policies intervene to promote social justice within the framework of a capitalist economy and liberal democracy. The results were confident in the early days. Venezuela achieved an impressive Human Development Index, offered free education, and used government resources to tackle poverty.
But the good things could not sustain. People supported the idea of confiscation of economy’s strategic areas such as telecom, electricity, and oil. Things started to move in the opposite direction when the Chavez government also began expropriating other regions, including valves, paper, rice, meat, fruit juice, hotels, coffee, etc. The policy didn’t go well while catering to a dynamic, global market. The cases of top-level corruption surged thanks to an increase in favoritism inside the government. Meanwhile, a faltering economy led to the birth of black markets. It reduced people’s dependency on the local Bolivar as they started acquiring dollars to settle cross border deals.
When oil prices plummeted, the chips went down for Venezuela whose overspending had already created an economic deficit. They responded by printing more Bolivar currency, leading to inflation, which further led to price controls, and then to shortages. Protests followed. Repression ensued. A democracy destroyed.
What Venezuela got, in the end, is hyperinflation, scarcity of goods, despair, and hunger.
Breaking Free
Naval proposed crypto as a solution to the failure of Marxist-based economies. But whether or not a cryptocurrency would be centralized or state-backed (like Petro), he didn’t specify. A follower later decrypted Naval’s one-line tweet, which the celebrated entrepreneur endorsed openly.
“I think he means it’s the best the insurance policy against Socialism,” wrote the follower, “but curiously an “evil” bitcoin could be envisioned wherein authoritarianism prevails and monitors all transactions, automatically taxes, etc.
Venezuelans self-admittedly started mining cryptocurrencies and sold them on local exchanges to meet their economic ends. Oscar, a citizen, offered an insight into the inflation and its impact on Venezuelans.
“I don’t want to drag this topic a lot, but Venezuelans don’t have tools to exchange their Bolivares easily,” he wrote on CoinSpice. “They have to depend on the black market to get the dollars in cash or PayPal. Some might exchange using international bank accounts, but it’s minimal for the common people to access this. It is where Bitcoin came in. As BTC volume started rising in Local Bitcoins, it started to become as a price marker for USD/Bolivares exchange rates.”
Dash, an alternative cryptocurrency project, received a warm welcome from Venezuelan when it launched its p2p payment services in the region.
“We are seeing tens of thousands of wallet downloads from the country each month,” Ryan Taylor, the CEO of the Dash Core Group, told Business Insider at the time of launch in August 2018. “Earlier this year, Venezuela became our number two market even ahead of China and Russia, which are of course huge into cryptocurrency right now.”
What’s Next
Venezuela is now looking at a power shift. With the US, Europe and a majority of Latin American nations supporting the “fairly” elected president Juan Guaido, the country could see the overthrowing of its dictator Nicolas Maduro. The political development does not necessarily contribute to how crypto adoption would fare in Venezuela. But, people have already accepted it as a tool to combat anything that smells like inflation.
Then they ask, what its use case is.
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Venezuela Denied Access to Overseas Gold: This is Why Bitcoin is Important

As part of an international effort to wrest power from Nicolas Maduro in Venezuela, the Bank of England has denied the nation access to gold deposits stored with the institution. Such instances highlight just why a permissionless store of value like Bitcoin is important on both the global and personal level.
Several members of the international community, led largely by the US, recognised Juan Guaido as the rightful president of the South American country on Wednesday. However, Maduro continues to hold onto power and has the backing of the military. This has led to the withholding of Venezuelan assets stored overseas, such as the $1.2 billion worth of gold currently sitting in the Bank of England’s vaults.
Could Bitcoin be the Ultimate Check on International Power Abuse?
There is currently an effort being made to strangle Maduro’s leadership economically. According to a report in Bloomberg, Venezuela holds around $8 billion overseas. Members of the international community are attempting to withhold as much of this figure as possible from the regime and are looking for ways to funnel it to the leader they would prefer to be in control of the nation – Guaido.
In this world, those who control the money have the power. The level of pressure the US and other leading economies can exert on regimes they disagree with for whatever reason is staggering. This is incredibly worrying for democracy in parts of the world that may not share the same values with those more powerful nations, or possess assets that these countries could benefit from.
It makes little difference whether you believe Maduro to be the rightful (or even a good) president of Venezuela or not. The fact that the most powerful members of the international community can exert such pressure through control of assets should certainly not be considered trivial. This is why Bitcoin is important.
In extreme cases, Bitcoin can be stored and transacted using memory alone.
Since it is entirely decentralised and requires permission from no single entity to use, Bitcoin has the potential to become an incredibly powerful asset class indeed and might ultimately serve to curb the relentless hegemony of nations like the US.
Many times in history, governments have attempted to exert control outside of their own jurisdictions. This is usually done under the guise of peace-keeping and protecting citizenry but often has far more sinister implications for democracy. Elected governments can be brought to their knees through economic sanctions, forcing the will of the more powerful nation or group of nations without ever having to fire a shot.
Multiple leaders who did not pander to the will of more powerful governments have been undemocratically replaced and there seems little to suggest that such power plays will end any time soon. This presents an opportunity for Bitcoin to create a much fairer global economic system. One that is accessible by all and entirely resistant to censorship. If certain members of the international community continue to abuse their power outside of their jurisdictions, it seems highly likely that those oppressed will eventually be forced to embrace Bitcoin as a check on global hegemony.
Just as individuals can choose to exit their own economies using cryptocurrency, so too can nations elect to exit the current global financial system. As more begin to realise this, the balance of power internationally could be edging closer to an upheaval the likes of which have never been seen previously.
 
Related Reading: Venezuela Formally Releases Petro, Will It Aid the Country’s Economic Recovery?
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Why Bitcoin Won’t Fail the “Tests of Financial Services” Forever

In an interview at the World Economic Forum in Davos earlier, the senior adviser to the governor of the Bank of England weighed in about the threat posed to the current financial status quo by Bitcoin and other cryptocurrencies. Huw van Steenis largely dismissed the blockchain-backed fintech innovation on the grounds that Bitcoin had not yet achieved the kind of traction that more traditional forms of value storage or mediums of exchange had.
Van Steenis stated that he did not see Bitcoin as being capable to pass the “fundamental tests of financial services”. However, what he seems to be missing in his rudimentary analysis is that Bitcoin has emerged in a post-internet world meaning that all it will take mass adoption is a solid track record of greater utility and enough information reaching the global public to dissuade them away from ascribing value in government-issued fiat currency.
Technological Adoption Occurs Faster than Ever Today, Why Will Bitcoin be Different?
The main reason Van Steenis cites for his stated lack of concern over Bitcoin’s ability to threaten his very raison d’être is that it does not serve as a means of exchange and does not hold value well. Presumably, although not mentioned explicitly in the interview, the Bank of England adviser prefers government-issued fiat currency over Bitcoin in terms of its ability to serve these monetary functions.
However, if we look closely at how fiat currency works, we see many more issues with both the premise that it serves as a good store of value and that it is a suitable medium of exchange. Firstly, the idea fiat currency is a solid store of value is questionable at best. Think about your own life. How much have you seen basic commodities increased in price over the years?
The alpine town of Davos, Switzerland, where the WEF is held each year.
Banks print money both directly and indirectly through lending, enriching themselves at the expense of the population. That is Van Steenis’s institution’s entire business model. The purchasing power of the pound, dollar, or yuan is perpetually decreasing. It may go up slightly from month to month but over a long-term chart, the trajectory is always downwards. How again is this to be considered a store of value?
Compare this to Bitcoin’s sound monetary policy. It requires much more than a banker authorising the printing of currency or to make loans with money the bank never had to create additional Bitcoins. In terms of a basis for a store of value, this is far superior to anything we as a species have known before. There is nothing in the world that people can categorically say how many there will ever be with reasonable certainty – apart from Bitcoin.
Of course, the purchasing power of Bitcoin swings wildly at the moment. This is to be expected since people are still coming to terms with the technology and perpetually questioning whether something so new and innovative could really replace fiat currency. The more people learn about Bitcoin and the longer it successfully serves its purpose as a peer-to-peer, decentralised value transfer system, the greater faith will be generated in it. Taken on face value, it is far easier to trust open-source code that anyone can verify than it is a global network of shadowy banking elites making deals us mere mortals will likely never know about.
Thanks to the internet, there has never been as much information that directly challenges the status quo either. This is encouraging the formation of a society that is much more equipped to question those things taken as norms – one of these is money itself.
However, it is not just in terms of a potential future store of value and sound money that Bitcoin outperforms fiat currency. Even as a medium of exchange, the financial innovation trumps government-issued money. Of course, you cannot send funds from one side of the planet to the other in minutes using the current legacy financial systems. Even when it appears you have done just that, in reality you are relying on a massive network of trust. One bank allows you to access the money sent before it is really there because they trust where it is coming from.
With Bitcoin, many people complain that it does not allow instant value transfer. Yet, if you are willing to exercise the amount of trust that banks do every day, it is as close to instant as is feasible using today’s technology. Think how long it takes to see that an “unconfirmed transaction” has appeared in your Bitcoin wallet- just seconds.
If you trust the sender, zero confirmations might be enough for you to be happy you have indeed received funds. Alternatively, if you lack trust in the party sending the money, you can elect to wait for as many confirmations as you like. Even if you were to wait for hundreds of confirmations, the BTC would have still arrived in your wallet much faster than a fiat currency could ever move from bank to bank.
However, fiat currency can also be used in a peer-to-peer fashion (for now) in the form of cash. People will say that Bitcoin can never travel as fast as when you had someone ten bucks in a bar or shop. However, in reality, it already serves this purpose far better than paper money can. People blindly trust most peer-to-peer cash transactions. Do you spend any time checking a bank note that you receive from a supermarket in your change? Of course you do not. However, there are many fraudulent notes in existence, perhaps if we were to receive a pile of high value notes, we would be more careful but for small value transactions, people take convenience over security and get on with their day without rigorously checking their money for authenticity.
With Bitcoin, we are at the beginnings of a massive experiment in decentralised cash. Given market price discovery dynamics it would be frankly ridiculous and immensely reckless for enough value to have swamped into the market to make prices as stable as the dollar, pound, or yuan. That is not to say that it will never. As discussed, the fundamentals of Bitcoin are sufficiently strong to make it a real threat to the current financial status quo, whether Van Steenis has realised this (or cares to admit it) or not.
 
Related Reading: Messari CEO: Killer Use Case For Bitcoin Is Still Money, Digital Gold
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Is Apollo (APL) a Scam? Evidence Mounts to Suggest So

According to a lengthy Reddit post from earlier today, Apollo (APL) has all the hallmarks of a massive scam to enrich its creators. The allegations, coming from Reddit user RossyRoffle, state that there are many red flags with the project, suggesting that the “all-in one cryptocurrency” is nothing more than vaporware dressed up as ground-breaking tech.
The major points of contention in today’s post focus around the lack of development towards grandiose ambitions, an former alleged scam artist being behind the cryptocurrency project, a slew of fake news being sold to followers as fact, and a harsh policy of censorship in community groups for anyone discussing the claims made by those behind Apollo.
Apollo (APL) Comes Under Fire on a Variety of Fronts
Seemingly exasperated by the reported censorship experienced on Apollo’s community platforms, a Reddit user known as RossyRoffle has attacked the cryptocurrency for several reasons. The post from earlier today states that despite the grandiose Bitcoin, Ethereum, and XRP-killing claims of those behind Apollo, the project offers very little of substance.
On Apollo’s own website, visitors are presented with a slick video stating that Apollo is optimised for a variety of applications – be it token creation, private transfers, smart contract use, file sharing, multi-signature support, and a host of others. Basically, if you have ever heard of a cryptocurrency project claiming to have created something innovative, Apollo can do it – apparently.
RossyRoffle refutes all of this in their post. They state that Apollo is nothing more than a fork of NXT with a lower block time. There are some other “insignificant” code changes too but apparently these barely extend past name changes for existing functions of the more established NXT chain. The poster even goes on to highlight that the website itself was built using Wix – hinting at the lack of experience of those behind the alleged scam.
That’s not all, however. RossyRoffle states that the founders of APL are attempting to aggressively pump the price up to enrich themselves. Claims are cited that the platform will render XRP and ETH entirely obsolete. In addition, the poster provides some addresses to show how much APL the founders are dumping on the market as the price rises due to the “fear of missing out” created by those behind the operation.
“Here are some APL Founder-held addresses if you’d like to watch them get rich in real-time: APL-4BUY-KK5W-B3KC-DMHBM and APL-NZKH-MZRE-2CTT-98NPZ.”
Along with the grandiose claims of the project itself, fuelling this so-called “FOMO” is allegedly a programme of fake news and harsh censorship. The poster highlights completely unsubstantiated claims that the team has secured thousands of real-world buying locations. Those who question this on the official Telegram channel (and other platforms) are immediately banned.
This aggressive censorship apparently extends to other questions that seem to be genuinely seeking a better understanding of the APL technology, including:

“Isn’t the privacy of this coin exactly the same as NXT? Can someone explain how it is any better?”
“Why do you keep banning people for asking legitimate questions?”
“How do you plan to implement sharding in Q1 when their is no code in the Github for it yet?”
“You guys think the privacy of this coin is really better than Monero?”

The Reddit poster goes on to challenge their readers to join the Telegram group and ask a question. I tried and did not even get the opportunity to put anything to the team – presumably a result of a slew of requests to join the group following the original post:

Another of the issues highlighted in the post that creates an air of doubt around the project is the founder’s past. According to RossyRoffle, Steve McCullah previously launched a fake Kickstarter campaign to fund a documentary in South America in search of undiscovered dinosaur species. They go on to allege that McCullah disappeared after raising just sort of $30,000.
Of course, cryptocurrency scams like those alleged above are nothing new and pump-and-dump schemes have become an industry norm for smaller cap coins. However, the major difference with this effort according to RossyRoffle is that everything about the project is fraudulent and the entire thing serves only as a vehicle to enrich its founders, rather than an orchestrated effort from a third-party group to pump up a tiny cap coin to make a quick buck.
 
Related Reading: Crypto Pump and Dump Schemes Encourage Traders to Play Digital Chicken
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Crypto Developer Quits Haven Protocol (XHV), Is it Dead?

Privacy-focused, stable-coin-of-sorts crypto, the Haven Protocol (XHV), appears to have been disbanded. According to Tweets from those involved in the project, one of the lead developers has disappeared with the only access to the code repository, halting development for months.
The news broke via the project’s Discord channel, with the announcement that one of the marketing team, known as @News.Cutter, was leaving the project owing to the lack of communication and prolonged silence from an anonymous developer known on Twitter as @Havendev. However, the only other cited developer on the Haven Protocol website, @Donjor, has since taken to Twitter to state that the resignation is premature, they still expect to receive access to the repo to continue development.
Haven Dev Silent for Months, Despite Updates to Crypto Road
Map
Earlier today, a member of the marketing team for niche privacy-and-stability-focused crypto, Haven Protocol, announced the so-called death of the project and their own departure from it. You can see the full post to the Haven Protocol Discord channel in the Tweet below:

Looks like $XHV exit scammed, stay safe guys pic.twitter.com/DYxy02xyuE
— UZI (@LilUziVertcoin) January 21, 2019

According to those involved with the project, the lead developer, known as @Havendev, has enjoyed unique access to the Haven Protocol’s code repository for months. The developer has been silent both on Twitter and in terms of direct communication with community members since November last year. This has brought the integrity of the developer and wider project into question.
Since the above Discord message has circulated on social media channels, many have opined that the project is indeed bound for the scrap heap.
One Reddit user called Cryptonote-Social  stated:
“Yup, this thing is dead. stick a fork in it.”
Another responded with:
“Crazy if you think about it that the team hadn’t heard back from the dev in 3 months but continued anyway like it was business as usual.”
Curiously, the privacy-focused crypto had received fairly extensive amendments to its planned road map as recently as mid-December. In an update posted to Medium, security and centralisation issues were mentioned as the reasoning behind the delays to the main net release of the cryptocurrency.
All Might Not be Lost for “Abandoned” Cryptocurrency
Despite how damning the announcement by @News.Cutter looks for the Haven Protocol, the other cited lead developer has not given up all hope. They posted the following to the group’s Discord channel in response to the disgruntled crypto developer’s resignation post:

pic.twitter.com/65zYUdh7j1
— Donjor (@donjordev) January 21, 2019

In one Tweet, Donjor appears to confirm that the aloof crypto developer in possession of the code repo is now back in contact with the team, after immense pressure. However, the wording is suitably ambiguous to make confirming or denying this difficult at this point.

The pressure from the community after @CutterNews's post has been extreme and @haven_dev has stated that he will share the code with us. And we can have control over the governance fee. Pretty hectic way of going about this but hopefully will be good for $XHV long term.
— Donjor (@donjordev) January 21, 2019

For now, it remains unclear exactly why @Havendev has withheld the code repos. There seems to be no financial incentive to do so, despite the use of the term “exit scam” in the above Tweet. Since the development team remains anonymous, a myriad of scenarios (both nefarious and innocent) could have occurred that would delay communication between members. However, if there does turn out to be a reasonable explanation behind the prolonged silence, confidence in the project going forward will be incredibly difficult to muster once again, particularly given how rife with scams the cryptocurrency space is.
 
Update: Havendev has since responded in the team’s Discord channel, stating:
“Haven development has been ongoing… in light of the insane amount of FUD…I will prepare [the code] and hand it all to the team so that they can hire new devs to work on it.”
This was followed by a pledge to continue development on Haven Protocol where possible. Havendev also stated that they would prepare the handover by the end of this week.
 
Related Reading: About Half of 2017’s ICOs Have Failed Already
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Crypto Ecosystem Needs to Evolve as Coinbase Censors Accounts

The entire premise set in motion by Satoshi Nakamoto ten years ago was one of a decentralized peer to peer currency beyond the control of governments, banks and mega corporations. Fast forward to 2019 and we have yet to achieve that goal as banks are still controlling the inflow and outflow of fiat to crypto, and huge exchanges are still controlling user accounts.
Coinbase Censoring Merchant Accounts
They don’t come much bigger than Coinbase which has set itself us as the standard and king of crypto exchanges. In the early days the exchange was seen as a good thing for the industry providing a relatively easy on-ramp for laypeople to get into crypto. Today it has grown in size and wealth beyond imagination and rules the realm with an iron fist.
A quick Google search will return thousands of results on complaints about Coinbase and frozen or closed accounts, and lost funds from disgruntled users and the company does not rank very well on review websites. A few days ago reports emerged that Coinbase had started censoring accounts beginning with the merchant account of social media platform Gab’s founder Andrew Torba.

As predicted: the on ramps and off ramps (exchanges) are going to start censoring not only companies, but also individuals. @coinbase has now banned both Gab's merchant account and Andrew Torba's personal account.
Decentralized exchanges are the future. pic.twitter.com/LXkjblrdgu
— Gab.com (@getongab) January 4, 2019

According to Breakermag.com Gab is a platform that welcomes those that have been banned my mainstream social media. This has caused it to be on the wrong end of stick from payments providers such as PayPal, BitPay and now Coinbase. Granted, Gab had a merchant payment account which a decentralized exchange cannot help or facilitate.
The problem lies in US policy which forces companies to practice suppression and censorship. This is partly why so many other exchanges and crypto companies refuse to deal with US customers, that and the fact it has one of the harshest personal tax laws on the planet. Thirdly is the ever increasing cost of covering subpoenas as pointed out by Kraken;

Peek at our Compliance team's 2018 Transparency Report. You can see why many businesses choose to block US users. Cost of handling subpoenas (regardless of licenses) is quickly becoming a barrier to entry. Inquiries up 3x YoY. pic.twitter.com/YbyLEqhOUf
— Kraken Exchange (@krakenfx) January 5, 2019

The land of the free appears to be the complete opposite and censorship laws run deep. This is not the first time the crypto industry has run up against American policy, in April last year the merchant account of Wikileaks was closed by Coinbase at the behest of the government.
Decentralized exchanges will be the answer for individuals but are not the solution for merchant accounts. Organizations may need to form their own body and method of financial exchange to free themselves from states that wish to oppress them. Relying on crypto exchanges such as Coinbase is evidently not the way forward.
 
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Crypto Volatility Returns, Is It a Sign of The Market Bottom?

Back in the latter half of 2017 many of the cryptocurrencies experienced wild price swings with double digit pump and dumps several times a week. This volatility was seen to be the detractor of wider spread adoption, though easy to make, or lose, a quick buck for day traders and speculators.
Then the bears got hold of markets and smashed them for the duration of 2018 before things started to level out at what many thought was the bottom. Another big dump occurred in November sending crypto markets further back to a yearly low of $100 billion total market capitalization.
In the past couple of weeks, however, that pattern of pumping and dumping has resumed which could be a possible indicator that markets have found their bottom. Since the big slide last month, which resulted in 50% of the market being wiped out in less than ten days, crypto markets have been up and down like the proverbial yoyo.
Market capitalization has been pretty much range bound between $100 billion and just below $150 billion, which is 50% of the entire market. Chart patterns are displaying unnatural spikes indicating that whales could be loading up and then dumping again just as quickly.
Another Big Pump Follows a Big Dump
Just a few hours ago one of these pumps occurred as $10 billion flooded into crypto markets in less than an hour. Yesterday markets dumped $5 billion.
Market cap surged from $121 billion to $131 billion at 15.30 UTC. After dumping double digits just a day or two some of the major cryptocurrencies are pumping similar amounts again today.
Ethereum, Bitcoin Cash, EOS, and Litecoin are all up over 15% on the day at the time of writing. Earlier in the week BCH dumped over 20% in a single day and the rest were not far behind. Could this pump and dump volatility be a sign of the market bottom?
It is too early to tell at the moment since this type of activity has only been occurring for the past few weeks. Big swings in prices and higher daily trade volumes indicates that interest is returning to crypto following several months of lethargy. This may only be interest from speculators and day traders but that was the case before the big bull-run last year.
Of course if we had a crystal ball we would all be loading up on rock bottom priced crypto assets safe in the knowledge that they won’t be dropping any further. Unfortunately for us in crypto land, it is a luxury we do not have, all we can do is keep guessing and reading those wild predictions.
 
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Bitcoin May Breach $333,000 By 2023: Why This Prediction Isn’t Crazy

There’s no denying it, the crypto industry is known for its eccentric individuals, statements, and startups. John McAfee, for example, promised to consume his family jewels if Bitcoin (BTC) doesn’t reach $1 million apiece by 2020’s end. While McAfee’s call is by far the most bizarre, especially what he wagered, he isn’t the only industry insider to expect for BTC to break out of its quintuple digits cell.
In the end, these predictions may be headline-seeking, but there are a number of catalysts that could push BTC far beyond current price levels.
Market Cycles Predict Bitcoin Could Surpass $333,000 By 2023
Filb Filb, a prominent crypto analyst that often touts zany charts, recently took to his Twitter feed to release another one of his (in)famous charts. The chart, which highlighted Bitcoin’s entire history as a liquid asset, accentuated the asset’s multi-year cycles, which were created by the Bitcoin issuance (halving) cycle.

"This time it will be Different" $btc pic.twitter.com/godjk3P2pw
— fil₿fil₿ (@filbfilb) December 27, 2018

Basing his prediction off the previous cycles, Filb noted that BTC could bottom at anywhere between $2,500 and $3,100 over the next year. And if the cards play out correctly, once the halving occurs in ~500 days, the Bitcoin price could begin its next run beyond $10,000. If the asset’s historical action is any indication, BTC could eclipse $332,733, once the effects of the halvening hit the supply and demand of crypto markets.
Why This Bitcoin Call Isn’t Too Zany
Trace Mayer, one of the earliest Bitcoiners and an anti-establishment proponent, recently explained his personal take on Bitcoin’s value proposition, specifically from a long-term point of view. The diehard, who began publicly advocating for cryptocurrencies in 2011, told The Crypto Sphere that as the financialization of Bitcoin occurs, BTC will become a “huge player” on the global stage.
Mayer explained that with the advent of Lightning Network and other innovative protocols, coupled with the eventual influx of Wall Streeters, BTC will become the de-facto go-to investment for any intelligent consumer. Mayer even quipped that holding BTC will easily outpace an IRA or 401k, as the latter investments may get nationalized over time, or get printed straight out of existence (hyperinflation).
This wasn’t the only bullish catalyst that the “hard money” apostle touted, telling his interviewer that there “simply isn’t enough [crypto] to go around,” claiming that there’s only 0.17 BTC for every active consumer in this market. And as global economies begin to sag under inflating worldwide debt figures, more consumers will continue to flock to cryptocurrencies en-masse.
Related Reading: Bitcoin and Crypto are Solutions to the $164 Trillion Global Debt
Speaking on the deteriorating state of macro markets, Mayer noted:
“In the play Hamlet by Shakespeare, [he writes that] neither borrower nor lender be. We have way too much debt globally. It came largely in response to having too much debt and a failure starting in 2007… Now we have publicly-traded corporations borrowing money to buy back shares, but the productivity of the globe isn’t enough to service this debt. So people are going to fail [to pay] this debt.”
Perfectly segwaying into his cardinal point, Mayer noted that this financial crisis, which is rapidly festering, will drastically alter the globe’s power and influence structure. And as traditional markets flounder, the investor noted that psychologies will shift, as fractional reserve-based money becomes antiquated and equity-based money (like BTC) takes over. This, of course, is hyperbitcoinization exemplified, and could single-handily propel the cryptocurrency beyond the limits of human rationale.
This isn’t an unpopular opinion by far, as pundits like Tim Draper and John McAfee have claimed that the collapse of fiat will push BTC well past the all-time highs it established in late-December 2017.
Yet, there remain a number of roadblocks in Bitcoin’s way, namely scalability and a lack of suitable infrastructure. As it stands, exchanges and platforms supporting cryptocurrencies would likely crumble if millions were to unload fiat simultaneously. Moreover, the decentralized networks themselves would likely undergo a catastrophic period of congestion, where transactions grind to a near-halt. But, these (to-be) issues haven’t gone unchecked, as there are dozens, if not hundreds whose raison d’etre is solving these issues at any cost, and by any means necessary. So have no fear, [maybe] hyperbitcoinization is near.  
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What Happens after a Great Crypto Recession? Path to Recovery

Eighteen years ago, on March 10, 2000, the Nasdaq Composite Index established a then-intraday peak at 5,132.52 before closing that day at 5,048.61. The day marked the beginning of what the world now calls a “dotcom bubble,” which eventually washed billions of dollars off the market, a market movement uncomparable to crypto.
The financial markets in 2018 are going through a deja-vu experience while looking at the bursting of a “crypto-bubble.” Like Nasdaq 100 which boomed on the hype around the internet, the cryptocurrency market built its hype around the potential of the blockchain, raking in billions of dollars in investments for funding the fantasies of startups and corporates. On one day, the total market capitalization of the cryptocurrency market had touched the $800-billion mark. But eventually, the bubble got burst, and now the crypto market is valued at $100 billion – more or less.
Reincarnation
Generally, a burst bubble doesn’t come back to life. But in the financial space, they do reincarnate more than any other market.
Between Nasdaq 100 and Crypto 2018, the economy has suffered much more severe market crashes, followed by slow recovery periods. Notorious bubbles such as John Law’s Mississippi scheme, the 1925 Florida land boom, metals in the 1970s, biotech in the 1980s, and real estate stocks in the 2000s, saw investors losing an ample amount of money. However, the underlying assets of every bubble eventually exceeded the levels at which they had burst.
The Nasdaq index at press time is itself settled around 6,462.11, down from its 2018 peak at 8109.69, much against the prediction of analysts that predicted its end following the 90’s crash. It is only because of the companies inside the index that understood the pulse of consumers and kept innovating their products per demands. While the ones that didn’t innovate, or oversold their ambitions against the limited application of their ideas, ate dust.
It is pretty much the same story with the cryptocurrency space. The crash is now vacuuming out the unworthy players of its market while the ones that still promise to innovate per market demand holds some value.
Googles and Apples of Crypto
Bitcoin, a blockchain-based payment and settlement system, has lost more than 80% of its market cap to the 2018 crash but it is still holding relevance for its potential adoption as a store of value – just like Gold. The valuation of Ethereum, a decentralized supercomputer, is down more than 85% but its smart contracts technology could still be utilized at a larger scale, providing that the project innovates.
There are also dozens of similar examples, ranging from XRP to IOTA, which are building real-world blockchain solutions, entering partnerships with the mainstream financial giants, and whatnot.
The projects are not inflating as a standalone idea, but there is also an infrastructure of human resources and users being created around it. The year 2018 saw a growth in people working inside the crypto space, 2.5 times more than the much-hyped 2017. The year also witnessed the number of crypto users almost doubling from 17 million to 35 million. Technological issues got debated and resolved because of active community development. Institutional players set up their offices inside the crypto space to build solutions for the industrial expansion and its potential adoption among consumers and investors alike.
What Happens to Crypto
Crypto expects to recover, much less wildly after the end of every bear cycle. The technical solution it brings, mainly for the commercial space, intends to stay with both improvements and setbacks in hindsight. The question about whether or not a cryptocurrency asset would one-day be worth millions of dollars cannot yield a correct answer. In the end, the investors – both retail and institutionalized – will line up after projects which they believe would bring innovation to the internet-of-value space.
What happens after a great crypto depression? Well, the market doesn’t repeat its mistakes and recovers more organically than before. Only, it takes more time to regain its glory.
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Bitcoin Will Likely Survive the Crypto Winter Before Any Other Crypto Asset

Exactly one year ago, the price of bitcoin had reached its all-time high – at almost $20,000 – that paved the way for some enthusiastic bullish calls. Mike Novogratz, a former Goldman Sachs official, predicted that the digital currency would touch the $40,000-mark. Fundstrat CEO Thomas Lee said bitcoin would establish a new high at $25,000. Some analysts even predicted that it would overreach its upside targets by jumping anywhere between $50,000 to $1 million.
However, at press time, Bitcoin value is standing at a meager $3,500, still lurking toward its downside targets.
Not Bitcoin Fault
For a digital currency that had everything going right for itself, especially when it comes to regulation and institutional adoption, bitcoin was let down more by its surroundings than its own fundamental or technical faults. As it boomed, Bitcoin became a prime example of how a store of value asset should look like. Those who believed in its long-term prospects held it closer while others used it as money to purchase cheaper crypto assets, commonly known as ICO tokens.
The speculators thought that purchasing ICO tokens would give them an early mover advantage in projects that promised to be better than bitcoin. But as more than 50% of these projects failed to deliver onto their promises, or turned out to be vaporware/scams, all the long investors lost money as well as the opportunity they could have had with bitcoin.
The ICO projects, meanwhile, covered their operational as well as leisure expenses by selling bitcoins they had raised, adding a negative pressure on the digital currency against an unspecified demand. The year 2018 saw ICO tokens crashing because of lack of underlying revenue models, and bitcoin because the ICO projects took it for a deadly ride.
As usual, bulls had not thought of such a scenario to take place, for they were relying on the adoption while predicting majestic upside targets for the digital currency.
What’s Next for Bitcoin
ICO market is almost dead, said Novogratz during one of his recent interviews. His analogy was based on the legal actions taken by the US Securities and Exchange Commission (SEC) against projects that raised funds without obtaining approval from their office. And indeed, even in the absence of the SEC’s scrutiny, investors have visibly learned their lesson after losing millions to dim blockchain projects. Bitcoin is merely facing the heat of the overall crypto market, despite being the one that continues to stick to its long-term motives.
The year 2019, therefore, is an essential year for the digital currency, for it marks the beginning of an earnest market where investors are more professional and learned. They will enter the space after getting equipped with its fundamental factors, primary the launch of mainstream investment products like futures and ETFs. And most importantly, they won’t be giving their bitcoin holdings to any run-of-the-mill blockchain project, not unless it has a concrete business model for long-term.
Bitcoin will move to its proper direction, eventually to attain the status of digital gold. There are bumps expected anyway, because of the ongoing economic slowdown as US Dollar improves. But when the value will move from the FIAT reserves, it will likely move to markets like gold, stocks, and indeed, crypto.
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