As the government in Venezuela cracks down on Bitcoin miners without legal grounds, corruption raises its ugly head. Read more...

The Bitcoin community in Venezuela faces an unusual situation. They are uncertain about their operations as the law enforcement agencies in the country are trying to put a stop to it. Meanwhile, if the cops do come knocking, they are left with two options to shut shop or pay up and hope they take a lenient view and let them operate.

People have found a use for Bitcoin under a variety of circumstances, some of them when faced with a dire need. Venezuelans probably fall into the category of desperate people trying to overcome the countrys failing ecosystem by opting for an alternative currency.

Many news reports in the past few months have offered a detailed description of Venezuelas Bitcoin market and how people are using the digital currency to order essential goods and supplies including medicines from online stores. While Venezuela faces the worst possible inflation, the government seems to be more concerned about curbing the use of Bitcoin.

The Venezuelan government agencies have been cracking down on cryptocurrency businesses and miners. Recently, the countrys largest Bitcoin exchange, SurBitcoin was forced to temporarily suspend services after Banco Banesco froze its accounts. Also, the law enforcement authorities recently arrested Bitcoin miners and confiscated their mining equipment.

The main reason for such a condition to arise is the mismatch between Venezuelas laws and governments interests. As Bitcoin miners continue to exploit the cheap, highly subsidized electricity supplied to the residents, the government feels that the resources are being misused. At the same time, Bitcoin mining is a legitimate activity, and no law in the country states otherwise.

Recently few news outlets published reports of miners being forced to pay bribes, as high as $1000 per piece of confiscated mining hardware. With any viable mining operation running at least 100 hardware units, the extent of bribes collected in one single operation can go as high as $100,000. Few miners have allegedly paid the sum as they were scared of being jailed on various charges including terrorism, money laundering, computer crimes and anything the agents could come up with.

Even people who are remotely involved with Bitcoin businesses are being detained and questioned in Venezuela. All these developments make it quite evident that the government is not comfortable about the rise of an alternative economy while it fails to rein in the one that has gone haywire.

The future of Bitcoin businesses in Venezuela is constantly under threat and unless the situation improves, the country may lose out on much more than Bitcoin.

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Bitcoin Miners in Venezuela Forced to Pay Bribes or Face Arrests as Government Tries to Shut it Down - newsBTC

WASHINGTON - The irrepressible Winklevoss twins, known for having sued Mark Zuckerberg over the idea for Facebook (FB), have suffered a setback from federal regulators in their push to expand the use of bitcoin to a wider universe of investors.

The Securities and Exchange Commission rejected Friday a proposed Winklevoss exchange-traded fund that could have opened the digital currency to larger numbers of ordinary investors. The SEC said the proposal from Tyler and Cameron Winklevoss was inconsistent with rules for securities exchanges designed to prevent fraud and manipulation, and to protect investors.

Bitcoin allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties. About 8 years old, it has yet to be broadly embraced and has been prone to wild price swings.

2017 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Winklevoss twins lose a bid to broaden bitcoin - CBS News

TumbleBit, one of the most promising privacy advancements built on top of Bitcoin, will be implemented in the upcoming Breeze Wallet.

The Breeze Wallet is a bitcoin wallet in development by blockchain startup Stratis, scheduled for release in one or two months. It will serve as a typical bitcoin wallet for desktop computers, but with an added tumbling option. Connected through a TumbleBit tumbler, Breeze Wallet users can mix their coins without needing to trust each other or the tumbler with their coins or their privacy.

We are integrating TumbleBit because its a trustless and secure solution that works with Bitcoin without any forks, Stratis Founder and CEO Chris Trew told Bitcoin Magazine.

Stratis

Stratis is a U.K.-based startup that offers end-to-end solutions for development, testing and deployment of blockchain applications. The company will maintain its own blockchain (the Stratis blockchain), which includes a native token (the Stratis token). Additionally, the company builds tools for existing blockchains, including Bitcoin, Ethereum and BitShares. Stratis projects include a Bitcoin full node in the programming language C#, a Bitcoin software development kit and, indeed, the Breeze wallet, which will hold both bitcoins and the Stratis tokens.

TumbleBit was first proposed by academic researchers Ethan Heilman, Leen AlShenibr, Foteini Baldimtsi, Alessandra Scafuro and Sharon Goldberg. Inspired by its potential, Programming The Blockchain in C# author and Stratis team member Nicolas Dorier started working on an implementation of TumbleBit in C#. He was joined by the co-author of his book, Ficsr dm, who focused on Tor integration.

Now, with the help of dm, Stratis is making the solution available in a convenient and easy-to-use wallet. It is a natural match not only because Stratiss and Doriers implementations of TumbleBit share the same programming language, but also because Stratis has a strong focus on privacy on their own platform, Trew explained.

Regulation is one of the main hurdles for blockchain [technology] and Bitcoin adoption among the financial services industry, he said. The first step of regulatory compliance is privacy of their sensitive financial data. This is one of the reasons for the rise of the private chain and distributed ledger technologies. Our goal is to provide open and public blockchain solutions for the enterprise; to deliver this we must provide transaction privacy on a public blockchain.

Challenges

To realize the privacy features it promises, Breeze Wallet will also introduce a relatively new type of light client. Based on work by Bitcoin Core developer Jonas Schnelli, the wallet will utilize Full Block Simplified Payment Verification, or Full Block SPV.

Full nodes download and verify each block on the blockchain, which can be quite resource intensive. Most light clients therefore only download the specific data thats relevant to them: mostly relating to their Bitcoin addresses. But to do this, they need to share all their addresses with a server or a node on the Bitcoin network.

This server or node and anyone spying on the communication with this server or node learns all addresses that are in the wallet. This makes tumbling coins from one address in a wallet to another address in the same wallet rather pointless.

Instead, dm is currently implementing a type of light client that will download full blocks but immediately discard any data it doesnt need. This requires the wallet to download more data than typical light clients, which is why Breeze Wallet wont be very suitable for mobile wallets anytime soon. But it will be less resource intensive than running a full node and, therefore, easier to use for regular users.

Lastly, one hurdle remains: someone, somewhere, needs to host the tumbler. While this can be done as a hidden service, the TumbleBit developers have been hesitant to do this themselves so far. Such a service may not exactly please regulators and anti-money laundering agencies.

Stratis is now working through the legal and regulatory issues involved with deploying a solution of this type. The ultimate goal is to have a decentralized network of TumbleBit servers. We are working on delivering end-to-end solutions; then we will further develop some of the core components, Trew said.

For more on TumbleBit, read With TumbleBit, Bitcoin Mixing May Have Found Its Winning Answer and Better Bitcoin Privacy, Scalability: Developers Making TumbleBit a Reality.

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Bitcoin Privacy for All: Breeze Wallet Is About to Bring TumbleBit to Life - Bitcoin Magazine

British savers might soon be able to invest in the controversial Bitcoin currency through a stocks and shares Isa.

The American regulator, the SEC, is about to decide whether to permit an "exchange traded fund", which would track the digital currency, to issue shares which would be traded on a US exchange.

If the fund gets the green light, British investors would be able to buy shares through their trading accounts and in theory even their Isa.

The investment fundhas been proposed by the Winklevoss twins, the entrepreneurial pair famous for suing Mark Zuckerberg for allegedly stealing the idea for Facebook.

Exchange-traded funds work by pooling investors' cash and using it to buy the underlying assets - which in most cases are shares or commodities. Thousands of such funds exist, and investors can buy or sell through a broker just as if they were buying any other share.

Bitcoin traders are awaiting the SEC's decision with interest, predicting that if the fund is permitted, it will lead to a surge in demand from investors and thus a rapid rise in the currency's value - which has already risen substantially.

Bitcoin is generally regarded with suspicion by central banks and some governments. It is an unregulated currency in Britain, and its use banned completely in some countries, on the grounds that it is linked to money laundering and other criminal activities.

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Will we soon be able to hold Bitcoin investments in an Isa? - Telegraph.co.uk

Bitcoin is at a critical juncture. Any time now, the Securities and Exchange Commission will issue a decision that could throw open the door to a flood of new capital, and change how many investors regard the digital currency.

The SEC's bitcoin decision, which is over three years in the making, is due by Friday. Here's a plain English guide to what might happen, including why the decision is so important and how it could affect the price of bitcoin.

The agency must decide if the BATS stock exchange can change its rules to offer a bitcoin ETF (exchange traded fund), which would let people buy bitcoin like a common stock. The ETFcalled the Winklevoss Bitcoin Trust ETFis the creation of the Winklevoss brothers, who once fought Mark Zuckerberg for control of Facebook, and now own a large stock of bitcoins.

It's all about liquidity. While there are plenty of places to buy bitcoin, many investment funds can only hold assets that meet certain regulatory standardssuch as approval from the SEC. If the agency approves the ETF application, money managers who want to include bitcoin in their portfolio are likely to jump in. Meanwhile, millions of ordinary people will have an easy new way to buy the digital currency. I can't really phrase it any better than this quote from BitMex , a bitcoin analysis site:

If the SEC approves the Bats rule change, all manner of American muppet retail investors can yolo into Bitcoin via a regulated ETF. The pool of eligible money that can easily obtain exposure to Bitcoin will dramatically rise. There are various predictions about the amount of money that could flow into Bitcoin. In short, it will be Yuge.

The SEC is obliged to make the decision by March 11, which is this Saturday. That means the ruling is almost certain to come out on Thursday or Friday.

According to Blake Estes , an alternative asset expert at the law firm Alston & Bird, the decision will appear on this SEC web page , and everyone will find out at the same time.

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People are calling this a coin toss. Those who think the SEC will approve the ETF point to the skillful work carried out by the Winklevoss lawyers, and to the fact that bitcoin is far more mainstream than it was even two years ago. Today, many more peopleincluding regulatorsare familiar with digital currency and how it works. There is also a sense that a bitcoin ETF is sooner or later inevitable.

Pessimists, on the other hand, can point to two sets of concerns that could lead the SEC to give the thumbs down. The first of these relates to how the Winklevoss intend to run the operation. Some people are uneasy that the proposed ETF would use Winklevoss-controlled businesses to source and store the bitcoins that would back the shares. The other set of concerns lie with bitcoin itself. The digital currency has been subject to wild price fluctuations, driven in part by heists and insider antics. According to Estes, the SEC may worry the agency's approval of an ETF could lead to a bubble inflated by bitcoin novicesa bubble that could then pop.

"Some fear it could be a g ood opportunity for legacy players to find the next sucker to take it off their hands," said Estes.

Bitcoin has been on another tear of late, nudging a record of $1,300 per unitmore than an ounce of gold. Some of this likely reflects investor optimism the SEC will approve the ETF, meaning a future price rise is partly baked-in. Nonetheless, there are broad expectations the short term price of bitcoin will go crazy if the SEC says yes.

If the SEC says no, it will have a negative effect, though probably not a very dramatic one. The reason is there are two other ETF application before the agency. One is called the Bitcoin Investment Trust, and was developed by Barry Silbert, a well known figure in the digital currency world. The other, called SolidX, is distinct in that proposes to insure its bitcoin assets.

As noted above, there is a general feeling that approval for a bitcoin ETF of one type or another is inevitable, and so a rebuff by the SEC to the Winkelvoss proposal would only be a temporary setback.

That's something only you can decidepreferably after a lot of research. Today, many people see bitcoin as another alternative asset class to add to a diversified portfolio. But bitcoin has an extremely volatile history , and has been prone to spectacular crashes, so if you're averse to risk, it's probably not for you.

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Bitcoin May Go Boom: A Guide to This Week's Big SEC Decision - Fortune

By Mariana Zuiga By Mariana Zuiga March 10 at 6:00 AM

CARACAS, Venezuela Venezuela has become widely known as an economic basket case in recent years. But with its cheap electricity and volatile national currency, the country has at least one competitive advantage: Its a good place to make the digital cash known as bitcoin.

Bitcoins are increasingly accepted online for buying real-world goods and services. And, unlike the Venezuelan bolivar, the virtual currency has been going up in value.

Making bitcoins is known as mining, but it requires a powerful computer instead of a pick and shovel. Those computers produce bitcoins by creating elaborate algorithms, but they also suck up a lot of electricity. In many countries, the cost of running a mining terminal can run higher than the value of the actual bitcoins.

Thats not the case in cash-poor, oil-rich Venezuela, where state-subsidized electricity is so cheap its virtually free. But Venezuelas government isnt pleased. Its cracking down on bitcoin mining, even though the country has no laws on the books outlawing the currency or its manufacture.

In November, Venezuelas secret police raided the house of two brothers in Caracas and found more than 90 mining terminals. The agents demanded $1,000 in bribes for each machine, according to the brothers, who spoke on the condition of anonymity because they fear arrest. The brothers said they paid the bribes to stay in business.

This isnt an isolated case and such operations appear to be expanding. In January, Venezuelan federal police arrested four bitcoin miners in the town of Charallave. They were accused of Internet fraud and electricity theft. According to an Instagram post published by Douglas Rico, the director of the federal police agency CICPC, the miners were endangering the stability of the towns electrical service. During that same week, Edward and Erick Tapia Salas were also arrested in Caracas for selling bitcoin-mining machines through a Venezuelan e-commerce site.

Miners have taken to websites such as Reddit to share their fears of being caught. Miners are getting jailed and accused of terrorism, money laundering, computer crimes and many other crimes,read one commentfrom a user who claimed to be Venezuelan. It's getting crazy here and I really don't want to waste my life for money.

Those who keep mining in Venezuela said they have started taking extreme precautions to hide their activities. Luis Len, 25, a business student and bitcoin miner, said miners have learned not to keep all of their computers in one place. If they do, the state power corporation can detect the abnormal amount of electricity the mining terminals use.

That was [the brothers] big mistake, Len said. They were consuming 20 times the normal level of electricity for that house.

Venezuelas crackdown on the bitcoin industry started in March 2016 with the arrest of two miners in the city of Valencia. According to news accounts of their arrest, Joel Padrn, 31, and Jos Perales, 46, were charged with electricity theft and possessing contraband computers.

But miners and bitcoin users are not the only ones at risk. When Padrn and Perales were detained, Daniel Arraez, a 30-year-old economist who was working as a consultant for a Venezuelan bitcoin market called Surbitcoin, was called by the secret police to testify in their case. Padrn had told the agents that he and Perales had exchanged money through Surbitcoin.

Arraez was asked to come to the secret police offices in Valencia. To my surprise, I never returned home, he said. He was placed in the same cell with Padrn and Perales and charged with making illegal transactions and criminal association.

Arraez said his arrest was a way for the government to blame someone else for its ruinous policies, including chronic mismanagement of public utilities. We were only the scapegoats of the disastrous situation in the countrys electricity sector, he said.

After eight months in jail, Arraez was released in October. Hes awaiting a pretrial hearing. Despite having to share a small cell with eight other men and seeing the sunlight only twice a week, he said Venezuelan miners should keep making bitcoins to advance technologically like other countries.

The crackdown has not stopped Venezuelans from using the currency, either. The continued decline of the Venezuelan bolivar has fueled a growing internal demand for bitcoins. According to Surbitcoin, the number of bitcoin users in the country rose from 450 in 2014 to 85,000 last year.

In a country with the worlds highest inflation rate and strict controls on currency exchange, users see bitcoins as a safe alternative to protect their savings. People have also used bitcoins to buy basic products online that have disappeared from Venezuelan shelves.

But the widespread adoption of the currency seems unlikely any time soon: nearly one-third of the population doesnt even have a bank account.

Read more:

Thousands march against Maduro government in Venezuela as crisis deepens

Venezuelas currency is so devalued it no longer fits in ordinary wallets

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Bitcoin 'mining' is big business in Venezuela, but the government wants to shut it down - Washington Post

Bitcoin Magazine

You Really Should Run a Bitcoin Full Node: Here's Why | Bitcoin ... Bitcoin Magazine Bitcoin Magazine is the original source of information, news and commentary about Bitcoin, the blockchain and digital currencies. and more »

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You Really Should Run a Bitcoin Full Node: Here's Why | Bitcoin ... - Bitcoin Magazine

Further investigation into the matter by one Reddit user shows this activity dates back to December 2016.

Network congestion has been a significant problem for the bitcoin network in recent months. As a result, transaction fees continue to rise, It appears someone is deliberately sending 750 bitcoin back and forth every 5 seconds. This process has gone on for quite some time, albeit no one knows for sure what is going on exactly.

More transactions on the bitcoin network result in higher average fees. In that regard, it makes no sense for anyone to spam the network with unnecessary transactions right now. For some reason, one individual is doing exactly that, as a 750 BTC transaction keeps moving back and forth every five seconds. This adds more strain on the bitcoin network as it fills up necessary transaction space in network blocks.

It appears this ping-ponging transaction has been going on for some time now. While no one knows for sure who is behind it, this is definitely a deliberate attempt to push up bitcoin fees. The Bitcoin Core client uses a smart fee estimate, for most bitcoin transfers. However, with this transaction going back and forth, that TX fee is slowly pushed higher and higher. This 750 BTC transaction comes with high fees which affectthe estimate fee on the network.

It is possible a specific miner is responsible for doing so. Not only will they recuperate part of their own fee, but they also force everyone else to pay higher fees. A very elaborate scheme if this is the case, that much is certain. Rest assured there will be a lot of speculation as to who is behind this transaction spree. Pushing up fees is not helping the bitcoin ecosystem at all right now.

Another option is how a mining pool or a group of particular bitcoin supporters is responsible for this behavior. Driving up the fees benefit miners, yet it might be pools purposefully conducting this behavior. Considering the tension between Core and Unlimited is rising, such an attack is not unthinkable. Then again, it goes to show the people behind this attack dont have bitcoins best interest at heart. It is an expensive way to destabilize bitcoin, but to the right people, it may be worth it.

Further investigation into the matter by one Reddit user shows this activity dates back to December 2016. High-fee transactions are sent back and forth without pause for an unknown reason. So far, it is estimated US$30,000 worth of bitcoin has been spent on transaction fees alone. It is a baffling development that raises a lot of questions no one can answer right now.

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Who is Moving 750 BTC Worth of Coins on the Bitcoin Network Every 5 Seconds? - newsBTC

Bitcoin got hit by a wave of selling today. A combination of panic selling and stops being hit took the market right to the long term 11 Gann angle. If you will recall, on 3/3/2017, in this article, we suggested that it might be a good idea to take some money off the table if you were long bitcoin.

The title of that article was that both Bitcoin and Ethereum were at resistance. We pointed out that every time Bitcoin had hit that long-term particular resistance in the past, a selloff had occurred. Well, it took a bit longer than expected (long enough to lull into a false sense of security), but history repeated, as we cautioned.

The (relatively) good news is that Bitcoin (at this writing) touched the 11 of a shorter-term bull setup on the 4 hour chart. This implies that the selloff is likely over.

Ethereum

In the same article dated 3/3/2017 we pointed out that Ethereum was also at resistance. In fact, we suggested a short in that case. That call led to a very profitable trade. However, it turns out there was another shoe waiting to drop, and the passing of time was deceiving. Panic selling coupled with stops being hit led to sharp drop today as well.

As in the case of Bitcoin, as of this writing Ethereum touched the 5th arc on a 4 hour chart, suggesting that the low is (likely) in place.

ETHXBT

This chart is also currently sitting on support at a 3rd arc of a bear setup, and at the end of the 1st square in time, on the 4 hour chart. However, there is reason to suspect this support might fail.

Happy trading!

Remember: The author is a trader who is subject to all manner of error in judgement. Do your own research, and be prepared to take full responsibility for your own trades.

Image from Shutterstock.

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Bitcoin and Ethereum Fell Hard - CryptoCoinsNews

New York Post

Decision on Winklevoss twins' bitcoin fund to be announced New York Post On Friday, the Securities and Exchange Commission will hand down a long-awaited decision on whether to allow the Harvard-educated nemeses of Facebook founder Mark Zuckerberg to launch an exchange-traded fund of bitcoins. The Winklevoss Bitcoin ... How Bitcoin Price Will React to Delays in Winklevoss ETF ApprovalCoinTelegraph How Bitcoin Traders Are Preparing for the SEC's ETF DecisionCoinDesk Investors chained to bitcoin bets as US ETF decision loomsReuters 99 Bitcoins (blog) -MarketWatch -Deutsche Welle -CoinDesk all 67 news articles »

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Decision on Winklevoss twins' bitcoin fund to be announced - New York Post

Bitcoin cold wallets are the best way to store a large amount of coins on. By definition, cold wallets are set up in a way that prevents the theft of your funds as a result of a compromised machine or a Bitcoin stealing malware. This guide will teach you how to set up your own Bitcoin cold storage wallet using Electrum in a few easy steps.

Electrum is one of the best Bitcoin clients available for desktops and laptops. It contains a vast amount of features yet appeals to the average user at the same time. It is the best wallet to use for newbies because it does not require the download of the whole blockchain, since it connects to other user-run servers which already have the whole chain downloaded. The benefit of such a system is the quick set up time, but the negative is that by connecting to random servers there is a potential that someone may find a zero-day exploit and possibly create a malicious server which would steal users Bitcoins.

Such a scenario is highly unlikely but if you have a vast amount of bitcoins, one can never be too careful. Luckily, you can also setup whats called a watching-only wallet using Electrum. These types of wallets are also commonly called offline-wallets because the machine containing the private keys never touches the internet. Lets set up a watch-only wallet using Electrum using 4 simple steps.

In order to set up the wallet we need to download the Electrum client first.Select your operating system, then download and install the appropriate client.

This process needs to be done on an offline machine, meaning a computer that has never been connected to the internet. That is the only way to ensure 110% that there are no possible spyware or any other programs that could possibly compromise the private keys. Create the wallet like you would any other regular wallet and make sure to save the recovery seed phrase.

Navigate to Wallet -> Master Public Keys. The MPK will show up in a small box and will look like this:

Take that master key and copy it onto a notepad, take that .txt file and put it onto a flash drive. Take the flash drive and plug it into the online computer which will contain corresponding watch-only wallet.

Using the master public key from your offline machine, create a new Electrum walletby going to File -> New/Restore. Select a name for your wallet then in the prompts select Standard Wallet -> Use public or private keys. Enter your MPK and Electrum should create the wallet. You will receive a warning saying that the wallet you just created is watching-only. Meaning any Bitcoins sent to addresses of this wallet will not be able to be spent. You would needthe offline wallet to sign transactions in order to successfully spend the coins.

Congratulations! You have just created your first cold storage wallet. Now if you do want to send a transactionyou would need first to create an unsigned transaction using the watching-only wallet. Simply fill out the fields under the Send tab like you normally would and then click preview, a window will popup with the transaction details. Save the transaction by clicking the save button and put it onto your flash drive. What you have is an unsigned transaction, there are 2 things left to do, sign it and broadcast it.

Navigate back to your offline machine and select Tools -> Load Transaction -> From File. Select the transaction you just created. This time the same window will pop up but you will see an option to Sign. Click the Sign button and enter your cold wallet password. Once the transaction is signed you will also see a transaction id at the top of the window. You are not done yet, as now you have to transfer that signed transaction to your online computer and broadcast it to the network.

On your online machine go to Tools -> Load Transaction -> From file. Select that same file but this time the button will change to broadcast. Click that and the transaction will be sent to the network. Now you are finally done, while it may seem like a tedious process of moving a txt file between two computers just to send some Bitcoins, the amount attacking vectors that you are preventing by keeping your wallet offline is well worth the 2 extra minutes of fussing around with flash drives. You coins security is priceless and I hope this guide will entice you to look at your own Bitcoin wallet security more closely, and while you may not set up a cold wallet, at least make sure all your seeds are backed up!

If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.

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How to Set Up a Bitcoin Cold Wallet - The Merkle

For the longest time, it has been known that bitcoin transaction fees would rise once blocks became full on a more frequent basis. In fact, miners have received over 2 BTC in transaction fees in addition to the 12.5 BTC block reward for some recent blocks.

While this increased revenue is great for miners, it could be a bit problematic for individuals and businesses who have depended on cheap bitcoin transactions in the past. Those who became accustomed to almost free on-chain transactions may need to get more creative about how they handle their transactions in the future.

While there are over 300,000 transactions on the bitcoin network every day, its unclear how many of these transactions are made by people who are in desperate need of the properties offered by this peer-to-peer digital cash system. As the costs of transacting on chain continue to rise, those who do not require the level of security offered by the base bitcoin network may seek alternative options.

In the early days of bitcoin, a user would not think twice about moving their own funds between multiple wallets, but this sort of activity now comes at a tangible cost. Similarly, it may not make sense to broadcast all transactions between two regulated, centralized entities, such as Kraken and Coinbase, on a decentralized network.

When it comes to figuring out how many bitcoin transactions are made between centralized entities on a daily basis, its hard to find any clear numbers. Having said that, one bitcoin company was able to provide an interesting data point. CTO Ben Davenport informed CoinJournal that roughly half of BitGos customers transactions are with other BitGo customers.

Presumably some good fraction of the external 50 percent also belong to other services which dont use BitGo (e.g. Coinbase, Xapo, other exchanges which dont use BitGo), Davenport added. So Id estimate as high as 75 percent of transaction flow involving companies is inter-institutional.

The ability for centralized institutions to keep track of their transactions off chain and then settle on chain at the end of the day has been long discussed. Most recently, Jimmy Song, who is the principal blockchain architect at Paxos and was the VP of Engineering at Armory Technologies (the company behind the Armory bitcoin wallet), wrote about the topic on Medium.

In his post, Song noted that companies like Coinbase and Purse could form bilateral agreements where payment arrangements are made off chain and only final settlement eventually takes place on chain. In reality, Coinbase and Purse already have this sort of arrangement where Purse accepts deposits from Coinbase customers via Coinbases internal ledger. In fact, Purse CEO Andrew Lee told CoinJournal that 25 percent of all Purse customer deposits come off chain by way of Coinbase users.

When asked about this concept of doing more transfers between large entities off chain, Lee said this can be a viable option if on-chain fees become too excessive.

As another example, many of the bitcoin withdrawals from Purse are made by individuals located in India. When asked if some sort of off chain agreement with India-based bitcoin exchange Unocoin could make sense for Purse in the future, Lee stated, Yes, we have a partnership [with Unocoin] already. If fees continue to go up, things like that will make sense.

Lee added that he thinks on-chain fees are still too high right now and some sort of protocol-level improvement still needs to be implemented.

In a recent interview with Bitcoin Magazine, BitPay CEO Stephen Pair also claimed his company is getting creative when it comes to dealing with full blocks.

In addition to the sort of setups where centralized institutions are trusting each other with off-chain payments, there are also trustless options in the works. While legal contracts may work for regulated institutions like Coinbase, the less-regulated portions of the bitcoin industry, such as darknet markets, will desire a more trustless approach. This is where smart contract systems such as the lightning network come into play.

With the lightning network, the off-chain transferring system described above is essentially made trustless through the use of smart contracts. The bitcoin transfers can be constructed in such a way that cheating or defaulting on promises is outlawed by the code. Less efficient versions of the lightning network are already possible today, but these systems could be approved by the activation of Segregated Witness.

There are also other solutions, such as Blockstreams Liquid and Stashs use of voting pools, which allow a collective group of centralized institutions to hold and transfer ownership of user funds in a single multisig address.

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Higher Fees May Force Bitcoin Companies to Get More Creative with Their Transactions - CoinJournal (blog)

BitPay refers to this decision as a result of fees having increased to bid for the limited supply of space per bitcoin block.

Mounting bitcoin transaction fees make this payment method far less appealing as of late. Things have gotten so bad BitPay made some intriguing changes. As of today, the company charges a minimum transaction fee. This new invoice minimum is a direct response to the increasing cost of miner fees. Not a positive development for the bitcoin sector by any means.

Having payment processors charge a minimum invoice amount is not a good thing. After all, bitcoin is meant to allow for both small and large transactions at any given time. While small payments through bitcoin has been possible for some time now, things are changing. Transaction fees continue to rise, which causes a lot of problems for cryptocurrency enthusiasts.

Unfortunately for the bitcoin sector, BitPay may not be the only company to make such a drastic decision. If fees continue to mount, other companies will introduce minimum transaction limits too. Right now, the average transaction fee is US$1, an obnoxiously large amount. In parallel, one could argue using bitcoin is becoming far more expensive than traditional payment methods. It appears we are taking three steps backward in quick succession.

The decision by BitPay will receive a lot of criticism, though. The minimum invoice amount is now US$1 instead of US$0.04. In most cases, this will not make much of a difference. However, it sets a dangerous precedent for the future, Then again, with transaction fees rising, it will still cost US$2 to make the US$1 payment. Solving this transaction fee problem will be a different matter entirely, that much is certain.

BitPay refers to this decision as a result of fees having increased to bid for the limited supply of space per bitcoin block. While that is certainly true, it seems a solution is further away than before. With competing branches of development, no real progress is being made. Rather than trying to work together, both concepts continue to oppose each other. Until common ground is found, bitcoin fees will continue to mount at an accelerated pace.

The company also stated the following:

Merchants who wish to test BitPays payment system with smaller amounts can continue to create low-value invoices under $1.00 using BitPays fully functioning testnet environment. For individuals testing transactions, the BitPay wallet app includes a testnet wallet setting as well. Since testnet payments rely on bitcoin addresses from the Bitcoin testnet, they are not subject to the same confirmation times and fee levels as the Bitcoin livenet.

If the bitcoin transaction fees continue to mount, things look very bad for the cryptocurrency ecosystem. Bitcoin is the only currency of its kind with some level of mainstream traction. However, if consumers feel they need to pay too much to use bitcoin, they will stop using it sooner rather than later. At this rate, things may return to the 2012-era of bitcoin, where it had no mainstream traction and was hardly ever used. That is not something to look forward to by any means.

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Bitpay Raises Minimum Transaction Amount To Cope With Growing Bitcoin Fees - newsBTC

Patients at the A&E department of Londons Royal Free Hospital, which has partnered with DeepMind Health. Photograph: Alamy Stock Photo

Googles AI-powered health tech subsidiary, DeepMind Health, is planning to use a new technology loosely based on bitcoin to let hospitals, the NHS and eventually even patients track what happens to personal data in real-time.

Dubbed Verifiable Data Audit, the plan is to create a special digital ledger that automatically records every interaction with patient data in a cryptographically verifiable manner. This means any changes to, or access of, the data would be visible.

DeepMind has been working in partnership with Londons Royal Free Hospital to develop kidney monitoring software called Streams and has faced criticism from patient groups for what they claim are overly broad data sharing agreements. Critics fear that the data sharing has the potential to give DeepMind, and thus Google, too much power over the NHS.

In a blogpost, DeepMind co-founder, Mustafa Suleyman, and head of security and transparency, Ben Laurie, use an example relating to the Royal Free Hospital partnership to explain how the system will work. [An] entry will record the fact that a particular piece of data has been used, and also the reason why, for example, that blood test data was checked against the NHS national algorithm to detect possible acute kidney injury, they write.

Suleyman says that development on the data audit proposal began long before the launch of Streams, when Laurie, the co-creator of the widely-used Apache server software, was hired by DeepMind. This project has been brewing since before we started DeepMind Health, he told the Guardian, but it does add another layer of transparency.

Our mission is absolutely central, and a core part of that is figuring out how we can do a better job of building trust. Transparency and better control of data is what will build trust in the long term. Suleyman pointed to a number of efforts DeepMind has already undertaken in an attempt to build that trust, from its founding membership of the industry group Partnership on AI to its creation of a board of independent reviewers for DeepMind Health, but argued the technical methods being proposed by the firm provide the other half of the equation.

Nicola Perrin, the head of the Wellcome Trusts Understanding Patient Data taskforce, welcomed the verifiable data audit concept. There are a lot of calls for a robust audit trail to be able to track exactly what happens to personal data, and particularly to be able to check how data is used once it leaves a hospital or NHS Digital. DeepMind are suggesting using technology to help deliver that audit trail, in a way that should be much more secure than anything we have seen before.

Perrin said the approach could help address DeepMinds challenge of winning over the public. One of the main criticisms about DeepMinds collaboration with the Royal Free was the difficulty of distinguishing between uses of data for care and for research. This type of approach could help address that challenge, and suggests they are trying to respond to the concerns.

Technological solutions wont be the only answer, but I think will form an important part of developing trustworthy systems that give people more confidence about how data is used.

The systems at work are loosely related to the cryptocurrency bitcoin, and the blockchain technology that underpins it. DeepMind says: Like blockchain, the ledger will be append-only, so once a record of data use is added, it cant later be erased. And like blockchain, the ledger will make it possible for third parties to verify that nobody has tampered with any of the entries.

Laurie downplays the similarities. I cant stop people from calling it blockchain related, he said, but he described blockchains in general as incredibly wasteful in the way they go about ensuring data integrity: the technology involves blockchain participants burning astronomical amounts of energy by some estimates as much as the nation of Cyprus in an effort to ensure that a decentralised ledger cant be monopolised by any one group.

DeepMind argues that health data, unlike a cryptocurrency, doesnt need to be decentralised Laurie says at most it needs to be federated between a small group of healthcare providers and data processors so the wasteful elements of blockchain technology need not be imported over. Instead, the data audit system uses a mathematical function called a Merkle tree, which allows the entire history of the data to be represented by a relatively small record, yet one which instantly shows any attempt to rewrite history.

Although not technologically complete yet, DeepMind already has high hopes for the proposal, which it would like to see form the basis of a new model for data storage and logging in the NHS overall, and potentially even outside healthcare altogether. Right now, says Suleyman, Its really difficult for people to know where data has moved, when, and under which authorised policy. Introducing a light of transparency under this process I think will be very useful to data controllers, so they can verify where their processes have used or moved or accessed data.

Thats going to add technical proof to the governance transparency thats already in place. The point is to turn that regulation into a technical proof.

In the long-run, Suleyman says, the audit system could be expanded so that patients can have direct oversight over how and where their data has been used. But such a system would come a long time in the future, once concerns over how to secure access have been solved.

Originally posted here:

Google's DeepMind plans bitcoin-style health record tracking for hospitals - The Guardian

With bitcoin on a tear, Mira Kwon decided theres more money to be made elsewhere. A little over a month ago, the University of Maryland economics graduate began pouring more than $2,000 into a different crypto-currency called dash.

Bitcoin is expensive, Kwon, a mother, investor, Korean interpreter and U.S. Army veteran, said in a telephone interview. I think dash has a bigger growth rate.

So far, its worked. Dash has risen to $46 from $15.20 when Kwon started, according to prices at CoinMarketCap. With a market value of $326 million, dash has become the third-largest crypto-currency, behind bitcoin and ether. Other digital currencies are on the move, too, including monero and zcash, to name some of the 700-plus out there. Investors who feel they missed out on bitcoin are seeking a different path to crypto-riches.

They think theyve missed most of the move, so they are starting to look at other coins that could be their ticket, said Adam Wyatt, chief operating officer of the crypto-currency researcher BullBear Analytics.

Trading crypto-currencies is speculative. Characteristics that may give each version value include a restricted supply, the willingness of merchants to accept it as terms of trade, technical features and ultimately the faith investors put in it.

Chris Burniske, an analyst at Ark Investment Management LLC, sees signs that some investors are cashing out of bitcoin and putting funds into so-called alt coins, varieties that havent gone up as much. His company operates an exchange traded fund with 5 percent of its assets in blockchain -- the database technology underlying bitcoin -- and peer-to-peer computing.

Bitcoin fell 0.5 percent to 1,239.35 Tuesday in New York. Its up 30 percent this year.

Others are trying to hedge as bitcoin approaches possible speed bumps: The first bitcoin-based exchange-traded fund is expected to be rejected or approved by U.S. regulators by March 11, and the price has risen in anticipation of new investor interest in the digital currency. A decision -- one way or the other -- could lead to more volatility.

With a rejection, probably the entire crypto-currency market as a whole could drop, said Alex Sunnarborg, an analyst at researcher CoinDesk, said in an interview.

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Another issue facing bitcoin is network speed, which has been sluggish.At high congestion times, bitcoin transactions have taken hours to clear. While thats faster than a traditional cross-border money transfer through a bank, its too slow for some users. Bitcoin developers are having trouble agreeing on ways to scale up the network, and the deadlock is pushing some investors to look at the alternative coins.

This creates tension and uncertainty, said Leah Stephens, a Kansas City-area writer who has investments in crypto-currencies such as steem, dash, monero and bitcoin. Many traders are hedging in alt coins because of these reasons.

Other coins have features that bitcoin lacks: Dash transactions are confirmed much faster, so it may be better for payments, Kwon said. Many of the coins that are on a tear -- such as dash, monero and zcash -- offer extra privacy protection.

What I think you are seeing is dash emerging as a true challenger to bitcoin in the market, said Ryan Taylor, director of finance at the team that developed dash. We are doing it by adding features customers really like. What you are seeing is recognition on the part of the users.

Smaller markets also present major disadvantages: The currencies tend to be less liquid, and more volatile. Large holdings of dash, for example, are concentrated in several thousand hands, Burniske said.

Not that thats deterring investors like Kwon, who are partial to crypto-currencies because they reduce dependence on money regulated by central banks.

We need some alternative currency other than fiat currency, and bitcoin is too slow and expensive, Kwon said.

Continued here:

Investors Who Missed Bitcoin Rally Go for Dash, Ether, Monero - Bloomberg

It is not surprising various Chinese bitcoin exchanges make a joint statement at this crucial time in cryptocurrency history. Albeit most platformsalready had their withdrawals suspended for quite some time, it looks like that period will be extended. OKCoin, BTCC, and Huobi all made similar statements as part of a coordinated PR campaign to let the public know about this withdrawal delay extension.

About a month ago, the PBoC sat down with various Chinese bitcoin exchange owners to discuss their guidelines regarding AML. At that time, it was decided nearly all exchanges would delay bitcoin withdrawals for a month until the companies could get everything sorted out. That decision is anything but a popular one, yet people understood the reasoning behind it. Ever since that time, no one has made a big fuss about these withdrawal delays, which is somewhat surprising.

Fast forward to today, and an update regarding the withdrawal delays has been provided by these Chinese exchanges. Unfortunately, the news is not all that positive, as it appears further delays are in order. OKCoin, BTCC, and Huobi have all announced they will delay the withdrawals once again, as they need to make some more changes based on feedback provided by the regulatory authorities. This is not entirely unexpected given yesterdays PBoC statement.

Since none of the Chinese bitcoin trading platforms want to violate national anti-money laundering laws and regulations, the companies will make additional changes. OKCoin, BTCC, and Huobi all wantto conduct their business in accordance with national regulation, which means they will have their work cut out for them. All internal systems of these three exchanges will be upgraded further in the coming weeks to ensure they are fully compliant with the law.

It is important to note these extended withdrawal delays are not a form of punishment handed down by the PBoC by any means. The central bank of China has indicated they have concerns regarding AML precautions taken by some exchanges, yet they will not put any company out of business for doing so. Instead, these trading platforms will need to implement some changes that will allow them to conduct their business in a proper manner moving forward.

While some people will see this news as a reason to sell off their bitcoin, the impact of this withdrawal delay extension will be minimal. It only affects Chinese exchanges on the .cn domain name, rather than the likes of huobi.com and OKCoin.com. Moreover, users will not lose any funds during this process, as they can still convert bitcoin to CNY if they feel the need to do so. That being said, the sell off when the first withdrawal delays were announced was rather minimal, thus this situation should be no different by any means.

All affected Chinese exchanges will do their best to ensure services are restored as quickly as possible. Once regulatory approval has been granted, bitcoin withdrawals will be made available once again. All things considered, the news will cause some minor annoyances, but will not diminish the demand for bitcoin in China by any means. It is normal the government wants to ensure bitcoin is not used for money laundering and funding terrorist activities. In the long run, this delay will give bitcoin more legitimacy in China, which can only be a positive thing.

If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.

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Major Chinese Exchanges Announce Extended Bitcoin Withdrawal Delays - The Merkle

Bitcoin price is in the middle of a pullback from its longer-term climb but might be ready to resume the uptrend if support holds.

Bitcoin Price Key Highlights

Bitcoin price is in the middle of a pullback from its longer-term climb but might be ready to resume the uptrend if support holds.

Technical Indicators Signals

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. In addition, the 100 SMA is holding as dynamic support at the moment and might be enough to keep losses in check. A continued pullback, however, could last until the $1100 channel support closer to the 200 SMA dynamic inflection point.

If bitcoin price continues to slide below that level, a longer-term downtrend could be in the cards. Stochastic is on the move down to show that sellers are on top of their game at the moment while RSI is also heading south so price action could follow suit.

Once both oscillators hit the oversold areas and turn higher, buyers could return and push price back up to the channel resistance at $1250 and beyond. The gap between the moving averages is widening to suggest strengthening bullish momentum.

Market Events

The US dollar is strongly supported these days, thanks to expectations of a March Fed rate hike and overall risk aversion. This has weighed on higher-yielding assets like commodities and bitcoin. Still, an event risk for this behavior is the NFP report due on Friday since it could make or break tightening speculations.

Analysts are expecting to see a 188K rise in hiring, slower than the earlier 227K pickup. Another factor worth watching is the average earnings index as this would be considered a leading indicator of spending and inflation. The COIN ETF approval by the SEC is also another catalyst for bitcoin volatility this week.

Charts from SimpleFX

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Bitcoin Price Technical Analysis for 03/08/2017 Support at $1100? - newsBTC

Today marks the official release of Bitcoin Core 0.14.0, the fourteenth generation of Bitcoins original software client launched by Satoshi Nakamoto eight years ago. Overseen by Bitcoin Core lead maintainer Wladimir van der Laan, this latest major release was developed by nearly 100 contributors over a six-month period.

Bitcoin Core 0.14.0 features a significant list of improvements. Compared to some previous releases, however, most of these concern internals of the software: performance improvements that take place under the hood but may not be very noticeable for everyday users.

That said, here are some of the more notable changes.

Assumevalid Blocks

Whenever a new node bootstraps on the network, it syncs the entire blockchain. It downloads and verifies all blocks that were ever mined, and verifies all transactions in all of these blocks. Unfortunately, this can take quite some time. Even new, high-end laptops often require more than a full day to catch up. For older or lower-grade machines, it takes even longer.

Assumevalid significantly speeds up this process. In essence, Bitcoin Core 0.14.0 nodes assume that all transactions up to a certain block are valid. While a syncing node still verifies the proof of work for all blocks, and records the entire transaction history, it no longer checks signatures and similar data for each individual transaction.

The assumption as to which block is valid is configurable. By default, its block 453354 for Bitcoin Core 0.14.0. But users who do want to fully verify every single transaction, even those dating years back, still can.

Its also worth noting that, as opposed to a checkpointing system that establishes that a specific block must be part of the blockchain, the assumed valid block is not necessarily binding. A Bitcoin Core 0.14.0 node will readily switch to an alternative blockchain without the assumed valid block, if that alternative blockchain is longer.

Improved Fee Estimation

As Bitcoin blocks have been filling up, particularly over the last year, not all transactions sent over the network fit into the very next block. As a result, miners usually prioritize transactions that include the most fees. Transactions that include more fees have a higher chance of being included in the very next block or shortly thereafter. Transactions that include lower fees are outbid and take longer to confirm.

Of course, not everyone needs their transactions to confirm as quickly. Users who send bitcoins to an exchange because of rapid price movements may be in a rush to have their transactions confirmed. Meanwhile, users who move bitcoins between their own wallets may be more patient.

Since Bitcoin Core 0.10.0, users have been able to adjust their fees accordingly. They can manually include higher fees if they are in more of a rush, and lower fees if they are not. Bitcoin Core 0.11.0 and 0.12.0 both refined the fee estimation software, and Bitcoin 0.14.0 now includes another set of improvements, which in particular makes the algorithm more robust in edge case situations.

Additionally, the default confirmation target was decreased from 25 blocks to 6 blocks; most transactions made from Bitcoin Core should confirm within an hour even if the user doesnt touch the fee settings.

Opt-In Replace-by-Fee for Sending

In addition to the improved fee estimation, Bitcoin Core 0.14.0 users have another option to speed up their transactions.

First introduced a year ago with the release of Bitcoin Core 0.12.0, Bitcoin transactions can be marked with a replace-by-fee flag. Senders of a transaction can replace their initial transaction with a newer transaction that includes a higher fee. This allows them to skip the line and have their transaction confirmed faster.

Up until this point, Bitcoin Core only included opt-in replace-by-fee in the node behavior: it accepted and forwarded transactions with replace-by-fee flags (instead of rejecting them as double-spends). But Bitcoin Core users could not utilize opt-in replace-by-fee to bump their own fees; so far only users of wallets like Electrum or GreenAddress could.

Now, opt-in replace-by-fee has been added as a remote procedure call (RPC) option in Bitcoin Core 0.14.0. This means that users working from the command line, or on applications built on Bitcoin Core, can utilize replace-by-fee, too.

Manual Pruning

Bitcoins blockchain isover 100 gigabytes in size and at its current rate is growing about 50 gigabytes each year. All that data needs to be stored, which can present a significant burden for users running a full node.

Thats why Bitcoin Core 0.11.0 introduced blockchain pruning. Users can get rid of older blocks once they are verified, so running a full node doesnt require as much disk space.

But up till now, users could only prune starting from a fixed number of blocks. With pruning set at 1000 blocks, for example, Bitcoin Core kept exactly the latest 1000 blocks. Whenever a new block was added, the oldest block was discarded, to keep the total at 1000.

Unfortunately, this meant that certain applications relying on Bitcoin Core couldnt really utilize pruning. For example, a payment processing application for merchants that want to accept bitcoin but prefer not to rely on external services like BitPay or Coinbase may in some cases need to figure out whether a valid payment was made in an older block. If that block is already pruned, the application cant do its job.

Bitcoin Core 0.14.0 therefore allows for more specific pruning. Instead of keeping a set number of blocks, users can prune the blockchain starting from a specific point in time, a specific block height, and keep all blocks that were created since.

Combined with another new feature called importmulti, Bitcoin Core 0.14.0 can import and timestamp addresses, for example, from the aforementioned payment processing application. Using the timestamps to establish when a specific address was created, Bitcoin Core knows from which point in time blocks are relevant for the application and wont prune these blocks.

Block Relay Improvements

Whenever a new block is mined, it is transmitted over Bitcoins peer-to-peer network, until each node received it. Unfortunately, latency on this network can benefit pooled mining as well as geographic clusters of miners, incentivizing a more centralized mining topology.

Increasing block propagation speed has therefore been a central point of focus for the Bitcoin Core development team for some years now, and Bitcoin Core 0.14.0 includes another batch of improvements.

Perhaps most important, Bitcoin Core 0.14.0 nodes forward blocks to their peers sooner. Where nodes would previously verify a block in its entirety before sending it to connected nodes, Bitcoin Core 0.14.0 starts the forwarding process as soon as the proof of work checks out.

While many miners today do use alternative relay networks as well, increasing speed on Bitcoins peer-to-peer network reduces the reliance on these networks and even benefits these relay networks where they connect to the peer-to-peer network.

And

As mentioned, the improvements listed above are really only the tip of the iceberg. Bitcoin Core 0.14.0 includes a list of additional performance improvements, varying from low-level RPC changes, to changes in the graphical user interface (GUI), and anything in between. For a full overview of all improvements, see the Bitcoin Core 0.14.0 release notes.

You can download Bitcoin Core 0.14.0 from bitcoincore.org or bitcoin.org.

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Bitcoin Core 0.14.0 Released: What's New? - Bitcoin Magazine

On Thursday Bitcoin gained parity with gold for the first time, only to surpass it shortly after. The cryptocurrency reached a high of $1281.21 by 1 p.m. EST on the BTCUSD exchange, according to MarketWatch. The mainstream media is likely to hype the story, inspiring many to sing the praises of Bitcoin as a better investment than gold or other precious metals.

But before you trade your gold coins or silver bullion for Bitcoin, remember that cryptocurrencies have little in common to precious metals when it comes to value and volatility. Goldmoney contributor, Stefan Weiler, explains the problems of comparing precious metals vs cryptocurrencies.

Real vs. Abstract Units

The main value difference is that gold and silver have the advantage of being real, physically measureable natural elements as opposed to abstract, man-made currencies, which includes fiat currencies. Consequently, gold and silver have mass and weight measureable to determine their units (grams, troy oz, etc.). Bitcoin doesn't have this characteristic. Weiler makes the point that an "abstraction can only be measured in units of itself." So "weighing" Bitcoin's value against gold is literally impossible.

Weiler articulates the problem with a strict comparison of units between Bitcoin and gold: "when comparing units of gold to units of Bitcoin, one must first define what unit it is measured against. Is it gramskilogramsor tonnes? Or are we measuring it in the rather obscure measure of troy ounce?"

Weiler uses the market capitalization of two companies (Apple (NASDAQ:AAPL) and Seaboard Corp (NYSEMKT:SEB)) as an analogy to illustrate how unit size/amount can misrepresent prices:

Comparing the price of 1 Bitcoin vs 1 troy ounce of gold is a little bit like comparing the shares of Seaboard Corp. (USD 4,179 per share) to those of Apple Inc. (USD 116 per share) and concluding that Seaboard Corp is worth 35 times as much.

Considering only the price of both companies' stocks, rather than including the issued stocks (i.e. units) when measuring overall value leads to a misrepresentation of value. Weiler argues a similar distortion occurs when comparing gold and Bitcoin.

Downside Volatility Risk

Cryptocurrency proponents see it as the medium of exchange and store of value for the future. However, there are problems with Bitcoin's volatility when measuring just the downside deviations as opposed to the standard deviation. The approach "provides a better idea of the risks" of Bitcoin for becoming as widely adopted as money, Weiler states.

In his analysis, Weiler determines that "Bitcoin's volatility significantly exceeds that of both gold and currency," adding that "at times, Bitcoin's volatility declines for a short period and can even approach the volatilities of gold and currency, but tends to shoot up violently shortly thereafter."

Such volatility makes it hard for merchants who may want to exchange Bitcoin for currency after a transaction. The downtime for exchange can take an hour, exposing retailers to this downside risk in the interim.

Even given how impressively Bitcoin has performed given its short existence, it still has serious limitations with respect to utility and as a store of wealth when compared to gold and precious metals. Keep this in mind before giving in to the temptation to trade in your gold coins for Bitcoins.

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Don't Weigh Bitcoin's Price Against Gold's | Seeking Alpha - Seeking Alpha

The worlds most famous cryptocurrency is trading at record highs, but is it a bubble?

Looking at a chart of bitcoins price as it climbed and eventually overtook its long-held, previous all-time high, set in the final months of 2013, its easy to see why some people think its a bubble in danger of popping.

But Vikram Mansharamani, who wrote a book about identifying bubbles, says the bitcoin market exhibits fewer than two of the five major features of a fully inflated bubble. He lays out his argument in a LinkedIn post, which Ive summarized in the scorecard below.

Another blogger has weighed in with his own interpretation of the market using Mansharamanis framework and concludes that trade in the cryptocurrency is a tad frothier. Whereas Mansharamani gives bitcoin half mark for reflexivitythe idea that an assets rising price increases demand for it, which investors like George Soros subscribe toSG Kinsmanns analysis gives bitcoin a full point for reflexivity. The argument for doing so? Transaction volumes and fees, which indicate demand, have risen along with the price.

Still, that puts bitcoin at just two out of five marks for bubble indicators.

Bubble or not, bitcoin investors are in for some price action this week. The US Securities and Exchange Commission only has five more days before it must issue a decision on a bitcoin exchange-traded fund, which could really open the floodgates of demand for bitcoinor bring the price crashing back down.

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The case against calling it a bitcoin bubble - Quartz