Monthly Archives: May 2017

We have come a long way since the days of a barter system. It hasn't been necessary to have a specific good and trade it for some other specific good for a long time. For most of written history, there were only two types of currency: fiat or commodity. Fiat currencies have been the dominant currency since the 1970s, when the U.S. ended the Bretton Woods system and abandoned the gold standard.

Fiat currencies are great because they don't require physical commodity reserves and countries can control their own money supply. Currencies can be valued constantly against each other in floating exchanges. As for integrity and widespread implementation, governments are generally trustworthy and are a central regulating force that ensures transactions are fair, accurate, and not manipulated.

Today, with the advent of cheap computing power and networked systems (i.e., the Internet), there is a new contender to the currency game. The new guy to disrupt the duopoly of currency is the cryptocurrency. These are Bitcoin and its peers that have only become feasible in the last twenty years or so.

What Cryptocurrencies are, and their benefits

Cryptocurrencies exist only in computers. This shouldn't scare you, though, because the majority of most fiat currencies also only exist as numbers in a computer system. They require distributed systems to ensure integrity and reliability, and they can be a good alternative to national currencies. They are, in the simplest terms, digital records held by many parties that track how much currency any single wallet holds.

Some of the benefits of cryptocurrencies include decentralisation, deregulation, anonymity, increased transaction transparency, and the facilitation of cross-border trade. Cryptocurrencies are not based in any single country or jurisdiction, because the ledgers and servers are spread out over the globe. Since there is no central bank, the system is distributed and therefore not easily manipulated either by large institutions or by governments. This means there is little regulation and more freedom on who spends how much on what and where. This benefit is enhanced by the fact that there is less private information attached to each transaction. There are even cryptocurrencies whose main goal is to provide an untraceable, secure, and anonymous means of payment.

Payments are transparent because every transaction can be verified by anyone. This means fraud is more difficult because there are many copies of the transaction record available for anyone to see. Furthermore, everyone knows how much every wallet contains (though real names are not included). The public balances come from the way in which balances are implemented in the technology.

As for cross-border trade, since cryptocurrencies are non-national, anyone can pay anyone anywhere without needing to convert currencies. This raises interesting questions on conversion and payments, as owning 1 BTC (Bitcoin's currency symbol) in France and owning 1 BTC in Thailand are not the same. If converted to a local currency, it means much different buying power in the two host countries.

How they work

There is a distributed ledger or a publicly viewable list of transactions. Since they are distributed, there is more than one copy (there are actually a lot of copies). There are "miners", who are like the keepers of the system.

Whenever a transaction is made, the keepers of the system broadcast the transaction to everyone. The transaction is placed in a pool of pending transactions, whose order of addition to the chain is determined by competing miners. Participants choose a transaction and solve a math problem linking it to the last recorded transaction. Whichever miner can solve their problem first gets to add their transaction to the end of the chain, effectively determining a unique order.

If two miners finish different blocks at the same time, the blockchain branches. Each node keeps its own copy of the transaction set and works from that. Once the next block is solved, all nodes switch to the transaction set used by the last solve.

Since transactions are simply messages with the sender, receiver, and an amount, it is essential that all transactions are signed. This is completed using the sending wallet's private key, and the signature is unique for each transaction, so it cannot be duplicated. Furthermore, a message cannot be altered or the resulting signature will no longer be valid. Even more, since transactions are lumped together in blocks, if one transaction changes, the hash output of the entire block changes, and hence doesn't link correctly with the next block - i.e., it is not possible to modify blocks undetected.

Balances are not stored in the system, but they are based on previous transactions (basically add prior transactions A + B + to determine if you have enough for transaction 1). This requires that "unspent" transactions be added every time one wants to send money, but it does not require the processing of the entire blockchain (that would be rather inefficient).

Where does Cryptocurrency get its value

Like fiat currencies, cryptocurrencies have no intrinsic value. They're just numbers stored on a system somewhere, much like the way modern digital banking treats national currencies. Fiat currencies then derive their value from the collective faith of a society using them. If A believes B will accept USD, then A will accept USD for whatever they want to trade, too. B will only accept USD if s/he thinks C will also take USD, and from this collective faith, the value of USD arises.

Cryptocurrencies are similar. They are only worth as much as everyone deems them to be worth. One advantage for national fiat currencies is that a central authority issues and regulates them, and one can generally trust the government in this regard. Furthermore, governments require that taxes be paid, and they will usually only accept their own currency for this. Hence, to be a citizen of a country, one must deal with the national currency. This is a good basis to simply use the same currency for every transaction within the country.

Major Price Gains (and a major adoption event)

One major reason for the generally increasing value of cryptocurrencies is more widespread interest. While cryptocurrencies may not be prevalent, they do have a following on the Internet, and many people will ask for cryptocurrencies donations or payments. If the demand for such currencies increases faster than units are added the price will rise.

Looking at the charts of the four largest cryptocurrencies after conversion to USD, it looks like there has been a significant increase recently in all four (not all the same scale, as these are the lifetime charts). This is a phenomenon that is clear in 2017.

Fears over capital restrictions and government spying may be pushing up the price. A renewed interested in privacy, especially after the Snowden leaks, might be a reason. The increasingly watchful eye of Big Data by both Google (NASDAQ:GOOG) et al. and the banks and credit card companies may be a reason. The wider general acceptance is almost certainly a reason.

Chart Source: Highcharts.com

Chart Source: Highcharts.com

Chart Source: Highcharts.com

Chart Source: Highcharts.com

Government Acceptance?

This acceptance extends to governments. Most notably, Japan, a market highly accepting of innovative technologies, recognised Bitcoin on April 1st, 2017. It is also set to standardise blockchain technology. This acceptance by the world's third largest economy is a huge boon to cryptocurrencies. There is a clear uptrend for the four largest cryptocurrencies around the time of recognition. Russia is also attempting to legitimise, as it would help the government crack down on money laundering.

Why is cryptocurrencies value always fluctuating against national currencies

It is important to note that national fiat currencies are valued against other currencies based on the state of the issuer's economy. If it is expected that many people will want to buy Korean products, there is more demand for KRW. This means each KRW costs more JPY, whether the central bank of Korea does anything or not. Cryptocurrencies are really no different, but they fluctuate much more.

Looking at any charts of cryptocurrencies against a national currency (usually the USD, but it doesn't matter), one can see there are huge fluctuations. Since there is no central authority, there is no one to stabilise cryptocurrencies against national currencies. One of the libertarian goals of many cryptocurrencies is exactly this fact: market forces are the only forces that influence the value.

Advocates of a global cryptocurrencies system argue that as it becomes more popular the value should stabilise on its own. The main driver of upside movements so far has been more interest, i.e., more demand. It is somewhat similar to real estate. If someone buys 100 acres in a secluded area, it may not be worth much at first. However, if the area starts to become populated, the original owner can divide the 100 acres, unchanged in physical size, into smaller pieces, each worth as much as the original 100 acres. However, there is an upper limit to the divisions, because people can't build houses on one one-hundredth of an acre (let's ignore building up for this example).

Cryptocurrencies may appreciate over time, but there is also an upper limit to the number of units that are available in a currency. For example, Bitcoin miners will no longer receive coins for solving the blockchain linking problem around 2140. This is when the supply is expected to hit 21 million BTC, which is the set upper limit. At this point, coins will probably start to fall out of circulation without a replacement.

Each cryptocurrency has an associated "market capitalization", or what the entire exchange would trade for in a national currency equivalent. This can be a determinant in which system to use because someone trying to move large amounts wouldn't be able to trade on a small exchange or currency.

Differences between Various Currencies

Note: the charts in this section reflect MARKET CAPITALIZATION over the last year (as of May 17, 2017). The previous section was prices over the last few years. These are not in exact lockstep because the number of coins (units) increases with time.

There are many cryptocurrencies out there. They have different features for different users. This is actually one major problem for widespread adoption - without a dominant currency, which one should people adopt? Small ones inveigle people with potentially large gains, but big ones have a better chance of acceptance by more people. Being early on a new social network could give you star status later, or you could forever be confined to a quiet corner of the social media space.

Here are the four largest ones, each with a market capitalisation over 1B USD.

Bitcoin (BTC, MC: ~30B USD) - by far the largest and most well-known, this is the cryptocurrency that really kicked off the revolution. Its market cap (MC) is around 30B USD, and it has reached 350k transactions per day on busy days. The currency has an upper limit on the number of possible coins (21 million), but you can trade as little as one one-hundred-millionth of a BTC, so you don't have to worry about it becoming too expensive to do daily transactions.

Chart Source: Highcharts.com

Litecoin (LTC, MC: ~1.6B USD) - this cryptocurrency's main feature is that it is much faster to transact. Since each transaction takes so much calculation, BTC transactions take upwards of 10 minutes to confirm. This is not feasible for paying on-the-go. LTC gets the time down to about 2.5 minutes, though that is still much longer than the seconds it takes for credit cards or cash.

Chart Source: Highcharts.com

Ethereum (ETH, MC: ~8B) - ETH is the second largest cryptocurrency by market cap, sitting at about 8B USD. ETH was originally designed to be a platform and not really a cryptocurrency. The transaction time is on the order of 10-15 seconds for confirmation, which is a huge improvement. ETH are also released every year, so there is no hard upper limit of ETH like with other cryptocurrencies. This means that not all the coins are in the hands of early miners.

Chart Source: Highcharts.com

Ripple (XRP, MC: ~7.2B USD) - XRP has no public ledger, but instead uses an "iterative consensus process". The result is a much shorter transaction time (a few seconds), and it uses much less computing power. Ripple is its own exchange, and hence there is no fear of an exchange vanishing (like the fiasco that was Mt. Gox).

Chart Source: Highcharts.com

There are many more cryptocurrencies, and here I mention a couple with interesting features. This is by no means an extensive list, as there are literally hundreds of CCs. These are just a couple that have interesting features (both I and others (1, 2) think they're interesting).

Chart Source: Highcharts.com

Chart Source: Highcharts.com

Chart Source: Highcharts.com

Dangers to Widespread Adoption

The greatest barrier to widespread adoption is acceptance. If you can't use it to buy a coffee at your local shop or a train ticket at the station, no one will use it. The first step in expanding acceptance is for large companies to accept them, and some do. Here is a list, longer than one might expect, of companies that accept at least Bitcoins. Unfortunately, there are not many big names on there. Once your local shops start to accept it, it will become more feasible for the average person to adopt it.

Another major problem is fragmentation. Currently, Bitcoin is the largest one, but there are many competitors that take market share. One must be adopted as a standard - people don't want to use five different currencies, all fluctuating against each other, in their everyday life. Businesses also don't want to have to set up all the tech to accept five different currencies and always adjust their prices.

It not only exposes businesses to wild fluctuations between customer cash inflow and material buying cash outflow, but sovereign nations will also be open to the fluctuations of the global market without a means to control the money supply in their own economies. This is something hardcore libertarians champion, but the average person is probably not interested in his country losing control of such an important affair as the economy.

Technical issues are another issue. Of course, it is possible that a bank's electronic accounting system fails, but CC systems are very new. Do we really want to risk a potentially catastrophic meltdown of our economy because there was some exploit? At least with fiat currencies, people can still trade physical notes of cash to buy food and water even in a disaster.

Conclusion

So, what do we make of cryptocurrencies? They are an interesting technological novelty for now. If they can be completely secured, beyond doubt, and many people start to adopt them, it is entirely possible the future will be transacted in cryptocurrency. At this time, though, they are really only useful as a speculative investment tool for early capital gains or FX traders who think they can guess the direction.

Follow this link:
Cryptocurrency - Everything You Need To Know In 2017 - Seeking Alpha

For the time being, people are waiting for an official explanation from DirectBet.

There are a lot of Bitcoin gambling platforms all over the world. Unfortunately, not every single company can remain in business over time. For DirectBet.eu, the decision to shut down was made rather hastily. Nearly 24 hours later, no one seems to know why the decision was made in the first place. It is possible mounting Bitcoin transaction fees forced the companys hand.

A lot of Bitcoin gamblers are shocked to learn DirectBet has closed down. The news comes as a total surprise to the entire community. In fact, the company was still running promotions a few hours before making this drastic decision. No one knows for sure why the company is halting their services. Speculation is running rampant, though. Many people claim the mounting Bitcoin transaction fees are to blame for this sudden decision.

It is never good to see such a popular platform disappear all of a sudden. The company has built up a solid reputation over the past few years. They also offered gambling opportunities for a lot of different sports. Although other platforms offer similar services, DirectBet was a platform near and dear to the hearts of many. Especially people who bet on golf will have a hard time finding a different platform. There are a lot of other companies to choose from, although they will all need to step up their game.

Moreover, the reason why DirectBet was so popular was due to them accepting altcoins. Users who wanted to gamble with Dash or Litecoin could make use of the platform without issues. Very few gambling platforms accept payments other than Bitcoin these days for some reason. In doing so, they miss out on a big opportunity, as altcoin gambling is getting more popular. Companies active in the world of cryptocurrency gambling will want to look at integrating altcoin support in the future.

For the time being, people are waiting for an official explanation from DirectBet. Their approach to cryptocurrency gambling was the right one. Users do not have to create accounts whatsoever, which makes it all the more appealing. It will be difficult to fill the void left behind by this company, that much is certain. Gambling and cryptocurrency are two peas in a pod. Anyone looking to enter the market should do so right now.

Continued here:
Cryptocurrency Gambling Platform DirectBet.eu Shuts Down Although The Reason Why Remains Unclear - newsBTC

NEM and its token XEM have made significant gains over the past few months. Some analysts including Koji Higashi, the co-founder of IndieSquare based in Japan, have attributed the increase in the market cap of NEM and price of XEM to the exponentially growing alternative cryptocurrency (altcoin) market in Japan.

A major factor that has allowed NEM to transform into one of the most popular altcoins in Japan is its development team and company composed of Japanese founders and talents. NEM was initially developed and introduced in Japan by Makoto Takemiya, the co-founder and CEO of Soramitsu, the company that has also introduced the Iroha blockchain project to the Linux foundations Hyperledger Project.

Takemiyas involvement in some of the largest and most prominent blockchain projects and consortia as well as the Japanese governments legalization of bitcoin led to a surge in interest toward altcoins such as NEM that originated from Japan.

Japanese roots are acting as validation points for local Japanese altcoin traders. Specifically, NEM and Ripple are the two most popular altcoins in Japan in terms of demand and trading volumes. Higashi explained that local investors are demonstrating an increasing level of interest toward the two altcoins because of NEMs Japanese origin and Ripples association with Japanese banks.

In regard to NEMs strong brand in the Japanese market and community, Higashi wrote:

NEM is popular thanks to the strong backing of the platform from the Zaif exchange, one of the biggest exchanges in Japan along with bitFlyer and coincheck. NEMs private blockchain solution developed by Zaif with NEMs core developers is called MIJIN and it has established itself as a strong brand in the crypto space in Japan.

While NEM gained its image over a long period of time through organic growth, on April 21, Ripple announced the formation of the Japan Bank Consortium and that its participating banks that include the most influential financial institutions in Japan will be using Ripple-powered payments platform to facilitate both domestic and international transactions. The announcement of Ripple and its partner banks led to surge in demand for its native token XRP.

The Ripple team stated:

In order to address these emerging needs, banks have come together to launch the Japan Bank Consortium for cross-border and domestic payments which enable a flexible and efficient payment system. It is the worlds first case to implement Ripple solution in a cloud environment.

However, Higashi strongly emphasized that the Japanese altcoin market is attracting not-so-smart money from investors that have little to no actual understanding of the purpose, vision, philosophy and technical specifications of cryptocurrencies including NEM, Ripple and others. He went as far as to say that the Japanese market is leading a bubble for the global altcoin market.

Another thing to note about this new trend is that the general lack of understanding or appreciation of the technology by many of new users. This is no surprise and all of us have been there at one point but the new wave of Japanese investors seem to be exhibiting a whole new level of incomprehension and misguided decision making in my opinion, said Higashi.

To NEMs credit, it has maintained its strong brand image in Japan with its impressive achievements and long-term objectives.

On January 5, Umar Jundi Alfaroq, the community communications & marketing agent for NEM Association Malaysia, laid out the following achievements of the NEM team in 2016:

The release of NEM Apostille was a major announcement and achievement for NEM as it enabled the transfer and creation of digital certificates. That widened the applicability of NEM and its technologies across various industries.

As for this year, the price of NEM remains high and XEM is maintaining an upward momentum due to the tight partnership between Mijin and NEM. Many commercial projects based on Mijin, NEM and Apostille technologies are currently being developed and the Japanese market is anticipating such objectives in 2017.

Featured image from Shutterstock.

Original post:
NEM Gains 500% in May as the Fifth Largest Cryptocurrency; Factors & Trend - CryptoCoinsNews

Bitcoin continues to set new record highs on a daily basis, and taking a host of altcoins along with it as investor demand for alternatives to equities remains strong.

Source: Coinmarketcap

Bitcoins market cap surpassed $37 billion today when the price hit $2271.16, commanding more than a billion in trade volume in a 24-hour period, according to coinmarket.com. The total value of the coin market is now at $81.3 billion, as the last two days added more than $10 billion to the capitalization.

Bitcoins value has almost doubled in the last month, even while its market share has fallen below 50%, thanks to the gains of other cryptocurrencies. Bitcoins gains have been steadier than most of the altcoins, but collectively, altcoins are rising at a faster pace.

Rising demand for bitcoin by Chinese and Japanese investors combined with falling stocks and other factors to push bitcoin to newheights. Because the Japanese yen holds the largest share of bitcoin trading, Asian tradingpushes the prices higher.

The Nikkei Asian Review today reported, Bitcoin going mainstream as Japanese business signs on, signaling bitcoins growing popularity in Japan, which recently recognized bitcoin as a method of payment.

Asian interest in bitcoin increasingly carries over to other currencies, as indicated by the gains for Ripple and NEM, the two most popular altcoins in Japan in terms of demand and trading volumes.

Japanese regulators also decided to abolish the 8% consumption tax on transactions of bitcoin bought from exchanges, which is set to go into effect in July this year.

Todays announcement that a majority of bitcoin miners have reached a consensus to deploy the Segwit2Mb protocol upgrade for bitcoin also bodes well. Bitcoins rise has benefited from an alleviation of the fear that a hard fork will be needed dividing bitcoin into two currencies to improve bitcoin transaction times. A successful deployment of an alternative scaling solution indicates the hard fork that would have resulted in two separate currencies in order to speed up bitcoin transactions may not be required.

Wences Casares, CEO of bitcoin wallet Xapo and a member of PayPals board of directors one bitcoin would hit $1 million before the next ten years while speaking at the Consensus 2017 conference in New York.

Ethereum, the largest altcoin, hit more than $16 billion market capitalization with a $179.68 price, followed by Ripple at more than $13 billion. The top three cryptocurrencies bitcoin, Ethereum and Ripple are the only players to boast more than $10 billion market cap.

Ethereum has witnessed the fastest growth of any digital currency ever. Not even two years old, the platform is now worth more than $16 billion with its trading spaces consistently attracting more online active users than even bitcoins.

Ripple, designed for enterprise use and can be used by institutions for on-demand liquidity for cross-border payments, also continues to post rapid gains. Banks and payment providers that use XRP will secure better access to emerging markets at lower settlement costs.

Ripple recently committed to placing 55 billion XRP in a cryptographically secure escrow account at the end of the year, addressing concerns that it will eventually sell its 61.68 XRP as it seeks to strengthen XRPs exchange rate against other currencies.

NEM, number four commands a $2.299 billion cap, followed by Litecoin at $1.575 billion and Ethereum Classic at $1.02 billion.

There are now six cryptocurrencies with more than $1 billion market caps.

Aside from bitcoin, the rotation shifts fairly frequently among the billion dollar players. A day ago, Litecoin, Monero, and Dash displaced Ethereum and NEM, with gains of 15%, 20%, 25%, respectively.

NEM, number four, commands a $2.299 billion cap, followed by Litecoin at $1.575 billion and Ethereum Classic at $1.02 billion. There are now six cryptocurrencies with more than $1 billion market caps.

NEM has also made significant gainsover the past few months. A major factor that has allowed NEM to transform into one of the most popular altcoins in Japan is its development team and company composed of Japanese founders and talents. NEM was initially developed and introduced in Japan by Makoto Takemiya, the co-founder and CEO of Soramitsu, the company that has also introduced the Iroha blockchain project to the Linux foundations Hyperledger Project.

Litecoin, one of the oldest altcoins, gained visibility this month because of its successful activation of SegWit, a scaling solution that circumvents the need for a hard fork.

Featured image of luxury yacht from Shutterstock.

See the rest here:
Billion Dollar Cryptocurrency Club Swells to Six Members - CryptoCoinsNews