Tag Archives: cryptocurrencies

The Unsinkable Popularity of Blockchain Technology

This is the fourth article in the Bitcoin series published by Impakter, and the third I wrote. Articles on cryptocurrencies are welcome, if you have something to say and you’re an expert, please contact me. 

Here is the opening:

The 2018 Bitcoin sell off has been so violent so far – from a high of $20,000 in December 2017 to below $6000, and now hovering around $9500 – that it is a wonder the blockchain technology underpinning Bitcoin has not suffered a setback.

On the contrary. The New York Times recently reported a surge in interest in Bitcoin and blockchain technology among millennials, and especially among students in major universities.

Despite Professor Nouriel Roubini’s outburst on CNBC (he predicted Bitcoin’s value would fall to zero) and the warning by the European Central Bank’s President Mario Draghi that Bitcoin and other cryptocurrencies are “very risky assets”, highly respectable people in banking and academia circles continue to be interested in virtual currencies. Many still believe digital currencies can replace legacy/fiat currencies, thanks to the blockchain technology that underpins them. For example, Stanford University recently held a successful three-day conference exploring the architecture and security of blockchain software.

The star is NYU Stern finance professor David Yermack who was probably the first to launch a course on Bitcoin and digital currencies back in 2014 and among the first to be called by the Bank for International Settlements (BIS) in Basel for consultations. He no doubt helped to shape the current BIS’ view on digital money, arguing for a strong case for cryptocurrency intervention – recently echoed (February 12) by the three major European regulators who warned EU residents against the risks of crypto investment.

Read the rest on Impakter, click here.

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Filed under Digital Revolution, Tech

Can Cryptocurrencies Ever Become Reliable Means of Exchange?

This is the third article in the Impakter magazine series about Bitcoin. Written by my sociologist friend Hannah Fischer-Lauder, it explores the question of what is needed to make cryptocurrencies usable as means of exchange. Here’s the beginning:

On 23 January, Stripe, the major firm that supports Bitcoin payments – it does so for more than 100,000 businesses online –  announced that it would start winding down its support immediately and stop all transactions by 23 April.

A thunderbolt in a clear blue sky that caught many Bitcoin investors unprepared, did it mark a watershed in the history of digital currencies?

The above describes Stripe services (September 2015) SOURCE: Kineticgrowth.com

If Bitcoin cannot be used as a means of exchange in a potential market of 100,000 businesses, then, surely, it is the end of its role as a currency – after all, enabling transactions is one of the two fundamental roles of currencies. The other is acting as a store of value. And we all know how that went, with Bitcoin’s infamous volatility.

Let’s put the Stripe decision in perspective.

Read the rest on Impakter, click here.

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Filed under Business, Economics

Bitcoin World: What Next?

I’m starting a series on cryptocurrencies, this is the first article, just published on Impakter:

ICOS: THE RISKS AND HOW TO ADDRESS THEM

 



Recent good news got lost in the midst of a flurry of bad news that shook the Bitcoin world at the end of January, causing a meltdown, with Bitcoin losing two-thirds of its value since hitting a peak of $20,000 in mid-December. Professor Roubini told Bloomberg that Bitcoin is “much worse than the Tulip mania”, that it’s the “mother of all bubbles”. At the time of writing, Bitcoin is still crashing, with no end in sight, though it is still significantly higher than the $900 value recorded a year ago (January 2017).

Among the avalanche of chilling events: the $530 million hack of Coincheck, a Japanese cryptocurrency exchange followed by a raid on the exchange by the Japanese authorities to check whether they had enough funds to repay customers; the Facebook ban on cryptocurrency ads; India’s Finance Minister declaration that cryptocurrencies would not be recognized as legal tender; the subpoena U.S. regulators sent to two of the world’s biggest cryptocurrency players, Bitfinex exchange and Tether, arousing suspicions of price manipulation; the announcement by major American banks (JP Morgan Chase, Bank of America and Citigroup) followed by a UK bank (Lloyds) that, starting in February, they would no longer allow their clients to purchase Bitcoin with credit cards; South Korea Customs Service’s disclosure of illegal Forex tradings of some $600 million worth of cryptocurrencies; North Korea accused of hacking cryptocurrencies and stealing billions of wons;  the finding by a leading cyber security firm that hackers make on average $100 million a year stealing from “miners”.

And yet amongst the wreckage there was some optimistic news. One was the declaration on 31 January from the South Korea Finance Minister that there was no plan to outlaw digital coin trading, which countered an earlier ban announced by the Minister of Justice in September last year.

The other came from the South China Morning Post that announced on January 31 that the Hong Kong authorities would not ban cryptocurrencies but launch in March “a campaign to educate the public” highlighting that “cryptocurrencies have fluctuated in price, are not backed by any physical commodity or the issuer, and are subjected to hacking risks.” Leo Weese, chairman of the Hong Kong Bitcoin Association, is strongly supportive: “We should know the difference between what makes a good ICO [and what doesn’t]” he said, “and how we differentiate between scams and legitimate projects.”

He has good reason to feel this way: ICOs (Initial Coin Offerings) are the vital lymph of cryptocurrency exchanges and for them to function well, there needs to be trust in their legitimacy.

Read the rest on Impakter, click here.

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Filed under Digital Revolution, Economics, politics

Bitcoin: The First Digital Ponzi Scheme

If you had invested $100 in Bitcoin in 2011, two years after it was invented, and if you had held onto it through the 2014 crash, when Mt. Gox, the biggest Bitcoin exchange, collapsed, today you’d have (almost) $4 million in your pocket.

That’s what the Winklevoss twins of Facebook fame and founders of the Gemini exchange did: They are, historically, the first believers and biggest investors in Bitcoin and today, now that they’ve turned bitcoin billionaires in 2017 (the only ones so far), they continue to believe in it, saying they won’t give it up, that “long-term, directionally, it’s a multi-trillion dollar asset”.

2017 was a special year. By December, the valuation of Bitcoin and the 700+ digital currencies that it has spawned had grown explosively, from less than $1,000 per bitcoin to over $15,000. 2018 is not looking so good, market cap is falling, but still high:

As shown above: By end 2017, total market capitalization (value) of all digital currencies exceeded $750 billion, though it is now falling fast and stands well below that value (520 billion on January 17, 2018): this is still and extraordinary multiple (16 times) of where it was a year ago SOURCEGLOBAL MARKET CAPITALIZATION CHART 28 April 2013 TO 17 January 2018 

On 17 January, Bloomberg spoke of a 26% slump noting that “traders brave the volatility” though some (rightly) worry about the growing threat from government regulations.

SO WHERE ARE WE GOING WITH BITCOIN?

To find out, read the rest on Impakter, click here.

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