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2017: The ‘Butt’ of Bitcoin’s Joke

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David Gerard is the author of the book “Attack of the 50 Foot Blockchain” (Amazon US, Amazon UK), editor of the news blog of the same name and a contributor to crypto parody forum r/buttcoin

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.


coindesk 2017 year in review banner e1512937286501 2017: The Butt of Bitcoins Joke

The bitcoin world is relentlessly optimistic, in the face of all news, positive or … differently positive.

It’s no surprise then that in 2017 anything called a blockchain was quickly used as evidence of the impending world domination of bitcoin. “Could” becomes “will” becomes “is” … even though “could” is a word that often means “doesn’t” and tends to end up meaning “won’t.”

This is how we get to a state of affairs where the only Reddit subforum where you have any chance of talking sensibly about cryptos ends up being the one with “butt” in the name.

New to crypto? Don’t worry, you too can learn the tools to deflect relentless advocates and company interests. Just ask yourself, “Wait, what’s the evidence this is even a thing?”

The results may surprise you…

Business Blockchain™

The first thing to know is it’s not just bitcoiners who were being creative and aspirational.

Blockchain was great again in 2017, or Blockchain™ at least, where consultants did their best to convince people that a transaction ledger in a Merkle tree was a fantastic new innovation in business data processing, and not a structure we’d had since 1979 or software (Git) we’d had since 2005.

(Git users: “Why yes, we’ve been using, uh, blockchain-related technologies since 2005, and …”)

But, Blockchain™ did offer one key innovation. The trouble with “the cloud” or “NoSQL” is that these are specific technologies with measurable effects. Blockchain™ doesn’t suffer this limitation!

A Blockchain™ doesn’t even have to be a blockchain (e.g. Estonia’s much-touted KSI Blockchain™) and you can even claim a Blockchain™ when you’re running it as a database cluster with you as the only user (e.g. the World Food Programme’s Building Blocks).

You see, we learned that distributed trustless immutable ledgers are vastly more efficient and easier to implement if you don’t distribute them very far and aren’t too strict on the trustless bit. Immutability turns out not to have a huge market in practice either!

In Distributed Ledger Technology™ will be a new and disruptive paradigm in which transactions are recorded on a single node at the hub of the network, with controlled access to this node to ensure security and privacy.

Distributed Ledger Technology™ is powered by smart contracts, which came along for the hype ride, even if adding immutable scripts so you couldn’t fix bugs in your simplified version of Git is obviously stupid.

Paper gains

How about the markets though? Those have to be good. The price is through the roof!

Oh dear, dear. This isn’t normal securities trading! Think you can assume your crypto exchange is basically competent and its systems well maintained? Think again. “I know PHP – how hard could running an exchange be?” isn’t the best starting point.

You also can’t assume a crypto exchange isn’t going to mess you around. All manner of shenanigans that are completely illegal in proper security trading – bots painting the tape, wash trades, spoof orders, just front-running your customers – are completely normal in crypto. Your threat model is not just the other traders, it’s literally the platform you are putting your money and coins into.

That is if you’re even lucky enough to use real money… That’s right, some of the world’s largest exchanges don’t anymore offer that luxury.

Take Tether, an increasingly famous as the Eurodollar-like USD substitute token for crypto exchanges. There are just under a billion of those, and they’re being put to good and productive economic use for margin lending to bitcoin buyers. You can rest assured that every one of those Tethers is backed by an actual dollar. Definitely™.

What’s that? You got in early? I’m genuinely happy for you.

Ignore bitter naysayers like me pointing out that your paper gains don’t exist until you’ve not only cashed out but finally succeeded in getting your actual money from the exchange, through the delays and withdrawal limits.

Hopefully, you’ll still have a bank account by the end of it.

Just be sure that you’ve actually made money, though, and remember two-thirds of holders haven’t locked in a penny of tangible profit. This means I have personally realized more actual money from bitcoin than a supermajority of bagholders, without touching one.

The most difficult part of crypto trading is maintaining clear, evidence-based thinking when that would imply your paper balance is worth a fraction of what you’ve told yourself for months or years.

But, nevermind, your exchange will be just fine. It’s backed by venture capitalists you can Google!

Good luck, sir. I just hope it doesn’t go consistently down for maintenance whenever the price is crashing! Oh wait… How does this keep happening? Never mind, I’m sure it will be fine.

What’s for dinner

But David, it’s not about what’s here today. It’s about the principles, the ideology!

In crypto, you can’t just issue money like a government! Because if a government issues money carelessly, competent people tell them to slow down, because in the real world this is a widely-understood problem.

Crypto has no such barriers to issuance, as we discovered with the first altcoin. More recently, there was the arrival of bitcoin cash, which boldly eschewed professional graphic designers who could make an official logo that was robustly reusable (they tend to want payment in legacy fiat). So, if you reuse it on a white background, it appears to say “B Cash.”

Just like that, 21 million more bitcoin cash(es). But don’t worry, we’re sure that everyone will resist the urge to create free money, especially businesses.

We have Silicon Valley, after all, to vet the latest and greatest. There’s no way they’ll get disrupted?!

ME: Why am I doing this book rubbish, I could just set up an ICO and…
WIFE: No.
ME: But it could be…
WIFE: No.

Times are changing

Oh, you’re just focusing on the negative, you might say.

What about all the positive change! The money dedicated to science! The discussion of World-Changing™ concepts! (Cut to pictures of Zimbabwe…)

You’re right, there were smashing successes… The National Health Service in the U.K. took its first foray into the healthcare blockchain in May, when the WannaCry ransomware shut down emergency rooms across the country and introduced the British public to bitcoin.

Bitcoin also had huge success killing off the last scraps of its legitimate merchant interest. Fortunately, sidechains and the Lightning Network will definitely solve bitcoin’s scaling problems in 2014, 2015, 2016, 2017, 2018.

Then my personal favorite, the New Inquiry’s Bail Bloc initiative actually asked people to mine monero for a bail bond charity, eventually posting an FAQ where they directly suggested you mooch electricity from your employer or school to mine.

The logic here was truly innovative: Potentially commit a crime to … pay bail for people accused of committing crimes. The upside? If the way the industry is going is any indication… it may have a burgeoning market!

But always remember: all of the above is actually good news for bitcoin, the one true, digital, comedy gold.

Disagree? CoinDesk is looking for submissions to its 2017 in Review series. Email [email protected] to pitch your idea and make your views heard.

Artist’s impression of the ethereum ecosystem on Nov. 7,  2017. Picture: LukeBam06, Creative Commons Share Alike license. 

The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

For more details on how you can submit an opinion or analysis article, view our Editorial Collaboration Guide or email [email protected].

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.



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Bitcoin Futures Are Here: The Story So Far

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The week ahead will give better future indication of Bitcoin derivatives products as yesterday at 6 p.m. EST, the Chicago Board Options Exchange (CBOE) allowed bitcoin futures to begin trading under the symbol “XBT.” Chicago Mercantile Exchange (CME) is set to allow futures trading in the cryptocurrency of their own accord on December 18, 2017. Bitcoin futures were up over 20 percent leading into the U.S. market open. Current appetite for the futures contracts seems to show a stronger preference for near-term bitcoin futures priced above the current spot rate. According to the CBOE twitter feed, over 800 contracts were traded in the first two hours.

47c7ff34bce0ce6132eef3b1762bee2b qpW6O3p.original Bitcoin Futures Are Here: The Story So Far

Image source: CBOE delayed quotes dashboard as of 3:53 PM. EST

At least one outage plagued the CBOE in early trading, including two minutes of downtime from 8:31 p.m. EST to 8:33 p.m. EST, while the CBOE stated at 11:34 p.m. EST that there would be a 5-minute hiatus if the front month (January expiration) rose above 30 percent.

aacb07bdb3c7a85bd2ae1dfae8bd6be9.original Bitcoin Futures Are Here: The Story So Far

Image Source: www.cboe.com

These deliberate halts in trading are known as “circuit breakers” and are meant to protect the market from unmanageable volatility.

While we wait to see how futures trading unfolds in the U.S. markets today, here are some of the notable events that got us into a world of bitcoin futures.

October 31

The CME Group gave bitcoin investors around the world a bit of a Halloween treat when they announced plans to allow bitcoin futures to be traded on their exchange. The Chicago Mercantile Exchange’s announcement notably coincided with the anniversary of the publication of Bitcoin inventor Satoshi Nakomoto’s original 2008 white paper on the cryptocurrency.

Cryptocurrency enthusiasts took this as a signal of mainstream acceptance of the asset class, and bitcoin closed the day (according to historical data provided by www.coinmarketcap.com) at $6,468.40. When futures trading opened last night, bitcoin was trading at $14,901.70.

December 1, 2017

Regulators gave bitcoin futures the green light for the CME Group as well as for self-certification by the CBOE Futures Exchange (CFE) as well as for the Cantor Exchange’s new contract for bitcoin binary options. The exchanges assured the CFTC that the new products were compliant with the self-certification process rules, and the CFTC refrained from halting the self-certification. CFTC Chairman J. Christopher Giancarlo stated in a press release:  

Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past…[a]s a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets.

December 4

The CBOE announced it would launch futures trading in bitcoin under the symbol “XBT” on Sunday night, December 10, 2017, at 6 p.m. EST. This move was seen as a manoever to beat the earlier announcement from the competing CME that they would allow futures trading in bitcoin beginning December 18, 2017. Not surprisingly, the CBOE’s usage of the exchange platform Gemini, owned by the Winklevoss twins, may allow the newly minted “Bitcoin Billionaires” to further capitalize on the successes of the cryptocurrencies.

December 5

A Natixis Investment Managers Survey of 500 global investors managing more than $19 trillion of assets has found that “nearly two-thirds [of survey participants] said Bitcoin was in a bubble, and this was a month before the cryptocurrency surged above $10,000 last week.”

Also bearish on bitcoin was Stephen Roach, a Yale University economist who told CNBC’s “The Rundown” that exchange legitimization makes bitcoin “somewhat dangerous [for investors],” citing a “lack of intrinsic underlying economic value to the concept.”

December 6

S3 Partners, a data research and analytics firm, sent this note to investors on GBTC ETF, the only ETF which trades bitcoin. In the note, Managing Director of Predictive Analytics at S3, Ihor Dusaniwsky, suggested that bitcoin as an asset would be “ripe for a pullback once the CBOE futures contracts go live” but also cautioned that the fees for shorting the GBTC ETF will be extremely high. While futures contracts would enable easier and safer access to both long and short positions, Dusaniwsky noted, futures trading would also carry premium costs for all GBTC ETF investors, stating:

Long GBTC holders may feel the pain of its 53% asset premium shrinking, while short sellers will probably be incurring a 50%+ stock borrow fee — both sides will be paying a premium in order to ride the Bitcoin rollercoaster once the CBOE futures start trading.

Also on December 6, 2017, trading volume for BTC nearly doubled from 6.9 billion to 12.7 billion and crosses the 10 billion volume threshold for the first time since Bitcoin crossed $10,000 (November 28, 2017). Whether this run up was related to the prospect of bitcoin futures or just normal market machinations is unclear.

deb392bbded99dba8b52ed18a74f7f5e.original Bitcoin Futures Are Here: The Story So Far

Screenshot of historical data from Coinmarketcap.com (link above)

December 7

The Futures Industry Association, an industry organization whose primary members consist of the largest clearing houses and clearing firms for futures in the world, published an open letter it had sent to the CFTC chairman on December 6, 2017, decrying the lack of “a healthy dialogue between regulators, exchanges, clearing houses and the clearing firms who will be absorbing the risk of these volatile, emerging instruments during a default.” This is in spite of the fact that the letter also admits that, “Under law, exchanges may self-certify a product for trading by the close of business one day and then list the product for trading the next day.This process does not require CFTC approval or input…”

Also on December 7, in a joint interview with former Mayor Michael Bloomberg, Chairman and CEO of Goldman Sachs, Lloyd Blankfein, stated that, “We’ll [Goldman Sachs] see. If it works out and it gets more established and it trades like a store value and it doesn’t move up and down 20% and there’s liquidity in it, we’ll get to it.”

That same interview includes the suggestion that, according to an unnamed source with knowledge of Goldman Sachs plans, the investment bank plans to help clear bitcoin futures contracts for certain clients when the derivatives go live and that “the decision to clear client trades will be made on a case-by-case basis.” Goldman Sachs “will act in an agency capacity” and “won’t serve as a market-maker or build inventory in the derivatives.”

December 8

As the normal trading week came to an end, Coinbase and its exchange platform GDAX sent a reminder from Coinbase CEO, Brian Armstrong, to its users via blog and email to “invest responsibly,” also noting that “there may be downtime which can impact your ability to trade.” While seemingly innocuous, it appears the Coinbase team was preparing for a surge in trading volume that would crash its platform. At 10 p.m. on December 10, 2017, Coinbase tweeted that it would be offline for one hour of scheduled maintenance to “help to prevent slow performance and login issues during larger traffic surges.”

Conclusion

The market on Bitcoin Futures is open for business. After 14 hours of premarket bitcoin futures and a full day of trading from both European and U.S. investors, “XBT” seems to be functioning as planned. While spectators of the past week have foretold of everything from rosy outlooks to apocryphal warnings, we, at least for the moment, seem to be on a path toward embracing cryptocurrency futures as a new wave of derivatives.



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Bitflyer CEO Says Japan and Leverage Is Leading Bitcoin Markets Higher

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JapanBTC11 1068x1068 Bitflyer CEO Says Japan and Leverage Is Leading Bitcoin Markets Higher



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Bitcoin’s value is higher than ever before, and the Japanese yen has been the top currency used within bitcoin’s global trade volume over the past year. According to the CEO of the Tokyo-based trading platform Bitflyer, Yuzo Kano, the current bull run is being bolstered by market movers utilizing leverage.   

Also read: This App is Trying to Predict the Bitcoin Bubble Bursting Using AI

Bitflyer CEO Believes ‘Japan Is Leading the Market Higher’

logo h 300x74 Bitflyer CEO Says Japan and Leverage Is Leading Bitcoin Markets HigherThe price of bitcoin has been on fire in 2017 gaining new all-time highs month after month. Every day global exchanges are swapping billions worth of bitcoin, but one particular exchange from Tokyo has been dominating the pack. Bitflyer created in 2014 by Yuzo Kano is one of the world’s top exchanges and usually captures the second and third position among exchanges globally. The Japanese yen has also been dominating the world’s trade volume and at times can be over 60 percent of global BTC trades. At the moment the yen is leading by 43 percent ahead of the U.S. dollar, and the euro. According to Mr. Kano, lots of Japanese traders are fuelling the market by purchasing with leverage of up to 15X based on their initial deposit.

Mr. Kano details in an interview with the Financial Times that a significant amount of demand is stemming from large holders and Chinese mining organizations.

“People who’ve owned them for a long time and have made a fortune — They have ¥10bn, and they’re selling a little,” explains Kano.

I think Japan is leading the market higher

yen Bitflyer CEO Says Japan and Leverage Is Leading Bitcoin Markets Higher
This week the Japanese yen is dominating bitcoin’s global trade volume by 40-48 percent. At times the currency has commanded over 60 percent.

‘No Matter How Big the Position We Can Close It Out’

Bitflyer CEO Yuzo Kano 750x422 300x169 Bitflyer CEO Says Japan and Leverage Is Leading Bitcoin Markets Higher
Mr. Kano the CEO and founder of Bitflyer believes Japan is leading the global demand.

Out of all the Japanese exchanges, Bitflyer captures the lion’s share of BTC volume compared to other operations within the country. According to global statistics, Bitflyer captures over 70-80 percent of the country’s share of volume at any given time. A few times this year Bitflyer and other trading platforms have also seen far higher prices than the global average. Last week when the price came close to the $17K range, Japanese exchange prices were $1,000-500 higher. Bitflyer’s options and leverage markets trade bitcoin at 75 percent in derivatives and 25 percent BTC which Mr. Kano says is fueled by frequent traders and arbitrageurs.

Even though leverage markets are dominating Mr. Kano’s explains in his interview that he doesn’t fear the risk of a significant market panic which could suck up actual liquidity.

“We have a huge amount of liquidity. No matter how big the position we can close it out. If bitcoin rose 20-fold in a day, then I don’t know. But a day with a 30 percent fall would be no problem,” Mr. Kano emphasizes.

Margin trading and leverage options have been growing increasingly popular over the past few years, and when China dominated the markets, they also dealt with a lot of leverage positions. Mr. Kano also reveals Bitflyer is aiming to cater to U.S. investors and hopes to attract them with the company’s significant liquidity. The exchange recently was approved to receive the Bitlicense in New York and will tend to U.S. customers with its latest cryptocurrency exchange venture.   

What do you think about Mr. Kano saying that bitcoin markets are being pushed higher by leverage and arbitrageurs? Let us know in the comments below.


Images via Shutterstock, and Bitflyer. 


Do you like to research and read about Bitcoin technology? Check out Bitcoin.com’s Wiki page for an in-depth look at Bitcoin’s innovative technology and interesting history.



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PR: Swissborg Crypto Wealth Management ICO Raised 10 Million Usd in One Day

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Swissborg Real Decentralized Wealth Management on the Blockchain 696x298 PR: Swissborg Crypto Wealth Management ICO Raised 10 Million Usd in One Day

This is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com does not endorse nor support this product/service. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release.

ssBorg ICO raised 10 million USD in one day.
The tokensale is live now with 5% bonus.

Lausanne, Switzerland:

SwissBorg ICO started on December 7th. The project has already raised over $10 million in the first 12 hours and has successfully passed a soft cap of $5 million. Tokens are available for purchase at the price of $0.1 per 1 CHSB token.

Inspired by the open-source philosophy, SwissBorg is leveraging on a new type of open protocol utility: “proof of meritocracy” aiming to revolutionize the wealth management industry.

A core feature of the CHSB Token is giving holders the ability to choose the direction in which the network will develop. The CHSB token is used to generate a Referendum token, called the “RSB token”. For each DAO’s direction, the RSB token is used by the holders to make decisions on the referendum proposals. The voting power will be calculated based on the amount of CHSB tokens each user holds when the referendum announcement is made.

The type of reward will depend on the Referendum. ETH, CHSB or ERC-20 Tokens can be offered during Referendums.

SwissBorg is a decentralized wealth management platform based in Lausanne, Switzerland with a team in Japan and Canada. The project promotes community-centric values, where individuals, institutions and DAOs (Decentralized Autonomous Organizations) will benefit from a democratic, transparent, and trustworthy, investment platform. The investment team is planning to actively manage crypto-wealth with best-of-breed technologies (blockchain & AI). The company is managed by an international team with 90+ years of cumulative experience between them, from the varied backgrounds of private banking, hedge-fund management, and algorithmic and quantitative trading all the way to Wall Street.

Contact Email Address
[email protected]
Supporting Link
https://swissborg.com/en/

This is a paid press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.



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Bitcoin Gold Defies Gravity, But Price Rally Looks Weak

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Bitcoin gold is defying gravity today, but analysis suggests the upturn in prices may be ephemeral.

The cryptocurrency, which was created via a hard fork of bitcoin in mid-November, topped out above $500 levels soon after launch, but since then has gradually been losing weight as the most unloved of the bitcoin clones.

However, the world’s seventh largest cryptocurrency by market value bounced up to $288.68 early this morning (as per UTC) before falling back to $240 levels, according to CoinMarketCap. Currently, BTG is holding well above the yesterday’s low below $200 ($253 at press time), and has appreciated by 9 percent over 24 hours.

Even so, the price chart analysis indicates the strong bid tone seen today could be short-lived.

4-hour chart

btg 4 hour Bitcoin Gold Defies Gravity, But Price Rally Looks Weak

Despite the bullish price-relative strength index (RSI) divergence and bullish price-stochastic divergence (marked by dotted lines), BTG is still stuck inside the falling channel. Thus, the odds are high that the cryptocurrency will resume its downtrend in the next 12–24 hours.

Daily chart

btg daily Bitcoin Gold Defies Gravity, But Price Rally Looks Weak

  • BTG has managed to defend the ascending trend line (higher lows).
  • The rebound from the trend line seen today is encouraging, but the job is only half done. Only a bullish break of the falling channel would signal a bearish-to-bullish trend change.
  • The 10-day moving average (MA) is still sloping downwards, suggesting a bullish move in the short-term will easier be said than done.

View

  • BTG is looking likely to fall below today’s low of $219 and extend losses to $150 (Nov. 20 low).
  • Only a close (as per UTC) above the falling channel resistance would confirm a bearish-to-bullish trend change and yield a sustained rally to possibly $330–340 levels.

Chinese gold decoration image via Shutterstock

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.



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