Monthly Archives: July 2017

BBC News

Hackers steal Bitcoin funds from Bithumb exchange traders BBC News Bithumb allows its members to buy and sell the virtual currencies Bitcoin and Ethereum. It is South Korea's biggest cryptocurrency exchange, based on recent trading volumes, and one of the five largest in the world. The breach is reported to have ... Korean Bitcoin Exchange Bithumb Keeps Quiet On Lost Funds, Compensates Hacked UsersCoinTelegraph Bitcoin is already playing a key role in the unsteady financial systems of some developing marketsQuartz One of the world's biggest bitcoin exchanges has been hackedBusiness Insider Fortune -BleepingComputer -The Korea Herald all 73 news articles »

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Hackers steal Bitcoin funds from Bithumb exchange traders - BBC News

transferred to a second wallet on Tuesday night. Photograph: Bloomberg/Bloomberg via Getty Images

The hackers behind the NotPetya ransomware, which wiped computers in more than 60 countries in late June, have moved more than 8,000 worth of bitcoins out of the account used to receive the ransoms.

The transfer has added credence to messages purporting to be from the attackers offering to decrypt every single infected computer for a one-off payment of 200,000, after security researchers suggested they may be state-sponsored actors.

It is possible to see the movement of the ransom payments thanks to the public nature of the bitcoin currency: all transfers are recorded on the public blockchain, although the real-world identities of the individuals or organisations behind a particular payment address can be near-impossible to discern.

Currently, the blockchain records that the bulk of the ransom money, 7,872 worth of bitcoin, was simply transferred to a second wallet on Tuesday night, but two smaller payments, of 200 each, went to accounts used by two text-sharing websites, Pastebin and DeepPaste.

Around 10 minutes before the payments were made, someone made posts on both those sites claiming to be able to decrypt hard disks infected with the malware in exchange for a payment of 100 bitcoins.

The 200,000 offer has created more uncertainty about the motivations behind the ransomware. While it originally appeared to be created with the intention of earning a lot of money through ransom payments, researchers quickly pointed out that a number of features of the software made it appear that the ransom element was a smokescreen, with the real goal being widespread damage.

Significantly, the majority of infections occurred in Ukraine, due to the main attack vector being a compromised version of an accounting program, ME Doc, used to file taxes in the nation. That has led to many, including the Ukrainian government, suspecting Russian involvement as part of the ongoing cyberwar between the two countries.

Hackers offering to decrypt files for money suggests that the cash motivation may be more significant than thought but that too could be misdirection.

While the hackers continue to play games, the Ukrainian cybercrime unit is continuing its investigation. On Wednesday, it announced that it had seized ME Docs servers after new activity was detected there, and said it had acted to immediately stop the uncontrolled proliferation of malware.

Cyber police spokeswoman Yulia Kvitko suggested that ME Doc had sent or was preparing to send a new update and added that swift action had prevented any further damage. Our experts stopped (it) on time, she said.

It wasnt immediately clear how or why hackers might still have access to ME Docs servers. The company has not returned messages from reporters, but in several statements took to Facebook to dispute allegations that its poor security helped seed the malware epidemic.

Cyber police chief Coonel Serhiy Demydiuk previously said that ME Docs owners would be brought to justice, but Kvitko said there had been no arrests.

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Hackers who targeted Ukraine clean out bitcoin ransom wallet - The Guardian

Goldman Sachs is out with a call on bitcoin, and chart analyst Sheba Jafari expects the digital currency could rise as high as $3,915.

That would be 52 percent above Monday's price of about $2,567.

"The market is in wave [four] of a sequence that started in the late-'10/early-'11 lows," Jafari wrote in a Sunday report on charts for the week ahead. We are "eventually expecting one more leg higher; a 5th wave."

"From current levels, this has a minimum target that goes out to 3,212 (if equal to the length of wave I)," Jafari said. "There's potential to extend as far as 3,915 (if 1.618 times the length of wave I). It just might take time to get there."

Bitcoin three-month performance

Source: CoinDesk

Bitcoin has traded in a range between about $2,100 and $3,000 ever since hitting a record high of $3,025.47 on June 11, according to CoinDesk.

Uncertainty about the future of bitcoin itself has kept prices in check lately. Updates to the bitcoin network scheduled for release in the next several weeks could split the digital currency in two if developers don't agree on how to make the updates compatible with each other.

To be sure, Jafari said, "fourth waves tend to be messy/complex," meaning bitcoin could continue trading in a range and potentially fall close to $1,857 before recovering.

On June 12, Jafari said in a note written "due to popular demand" that she was "wary of a near-term top ahead of $3,134." She said traders should "consider re-establishing bullish exposure between $2,330 and no lower than $1,915."

After topping $3,000 for the first time on June 11, bitcoin prices fell more than $800 to a low of $2,185.96 less than a week later. However, bitcoin recovered to end the month at $2,499.98, up 7.2 percent for June and having risen 158 percent for the year so far.

The Goldman reports illustrate how mainstream Wall Street is paying much closer attention to bitcoin, despite high volatility and lack of regulation in the digital currency world. This week, bitcoin and the blockchain technology behind it made the cover of a well-respected investing magazine, Barron's.

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Goldman Sachs says bitcoin could rise another 50% - CNBC

By now most of you probably know what cryptocurrencies are. This year, their prices have been soaring to say the least. The most popular cryptocurrencies nowadays are Bitcoin and Ether. I am not going to describe the specifics of cryptocurrencies, but rather show you how much of the "cryptocurrency effect" there is in the prices of two specific stocks, Advanced Micro Devices (AMD) and Nvidia (NVDA). It is important for investor to be aware of it, because it could strongly impact the future behaviour of these two stocks.

AMD and NVDA both produce graphic cards that are broadly used for gaming purposes. Lately, however, they have been sold like hotcakes for the purposes of crypto mining. Cryptocurrency mining is a process of acquiring cryptocurrencies like Bitcoin or Ether. To put it simply, for mining cryptocurrencies yourself you need a computer, internet, electricity and a good graphic card. Consequently, you need an NVDA or an AMD graphic card.

The total market capitalization of cryptocurrencies has grown substantially in 2017. It now stands at more than $100 billion. For comparison, that is just a little more than the joined market capitalization of NVDA and AMD, which stands at around $98 billion.

Total market capitalization of cryptocurrencies:

Source: coinmarketcap.com

The stocks of both companies have been soaring as well. The reports have been stating that this is partly due to the soaring of the cryptocurrency prices. Therefore, lets have a closer look at the comparison between prices of these two stocks and the prices of Bitcoin and Ether.

Firstly, let me state that in this article I am not going to assess, how the sales of graphic cards to the crypto mining community are affecting the fundamentals of the companies. Instead, I will present how much the price fluctuations of these crypto assets affect the price fluctuations of NVDA and AMD stock.

For a better understanding, a correlation value of 1 represents a perfect positive correlation (moving in sync) and a correlation of -1 represents a perfect negative correlation. Because the prices of cryptocurrencies started soaring in 2017, I divided the calculation periods in two segments. The 1st period shows the correlation from 30.6.2016 until the end of 2016 and the 2nd period shows the correlation from the beginning of 2017 until 30.6.2017.

Advanced Micro Devices (AMD)

Lets have a look at AMD stock performance and the performance of the most popular cryptocurrencies, Bitcoin and Ether. From the reports, one would presume that there would be some noticeable correlation between the stock performance of AMD and the prices of Bitcoin or Ether. When looking at the actual results that is not however the case.

AMD/Bitcoin

Correlation

30.6.2016 the end of 2016

0.755

Beginning of 2017 30.6.2017

-0.115

Source: own calculations

The correlation between AMD and Bitcoin in the 1st period is 0.75. Such a figure represents a relatively strong correlation. Nonetheless, if we look at the correlation between AMD and Bitcoin in the 2nd period the value is -0.115. That shows a very small negative correlation between these two assets. Thus, from the results the correlation between AMD and Bitcoin stopped at the beginning of 2017, when AMD ceased to follow the rapid growth of Bitcoin.

AMD/Ether

Correlation

From 30.6 - end 2016

-0.763

Start 2017 - till 30.6.2017

-0.09

Source: own calculations

If we compare that with AMDs correlation to Ether, it shows a completely different picture. The correlation in the 1st period was -0.763, which is a high negative correlation. Ethers price in 2016 was still a single digit number, especially in the second half of the year when it was not performing well at all. The correlation in 2017 changed to -0.09. This means that the correlation in this period was almost non-existent. When observing each asset individually, we can see that the main reason for this was an immense increase in Ethers price by more than a factor of 30 in 2017 (moving from $8-10$ to more than $300). Yet, the price of AMD stayed more or less flat in the same period.

Summary for AMD

It is true that a lot of demand for AMDs graphic cards is currently coming from the crypto mining community. Nevertheless, if we look at the correlation data we can say that specifically for 2017 there is no firm price performance correlation when comparing AMD to Bitcoin or Ether.

We can conclude that AMD investors, who are thinking that Bitcoin and Ether are in a bubbly territory, can be a bit calmer. Even if there is a bubble in the crypto space and it bursts, according to the correlation AMDs stock would not follow the potential steep downward move. For those investors, who want to own AMD for the sole purpose of obtaining direct exposure to the crypto space this is probably not the best idea when looking at the correlation.

Nvidia

If we now look at the same situation for NVDA we can detect a different pattern. The correlation between NVDA and Bitcoin in the 1st period stood at 0.834, which is a higher value than for AMD and shows a stronger bond between these assets. Even more interesting is the correlation in 2017. It stands at a whooping 0.911. That is definitely a big difference when comparing it to AMD. Such a strong correlation could be a big surprise for NVDAs investors.

NVDA/Bitcoin

Correlation

From 30.6 - end 2016

0.834

Start 2017 - till 30.6.2017

0.911

Source: own calculations

The correlation with Ether shows a similar picture in the 1st period, where it stood at -0.769. However, a noticeable difference is shown in 2017. The correlation in 2017 between NVDA and Ether stands at 0.904, comparable with the NVDA/Bitcoin correlation.

NVDA/Ether

Correlation

From 30.6 - end 2016

-0.769

Start 2017 - till 30.6.2017

0.904

Source: own calculations

Summary for NVDA

This correlation values, especially the ones in 2017, show a strong tie between the performance of NVDA and these two cryptocurrencies. Investors should thus take into account the correlation when investing in NVDA. If the prices of Bitcoin or Ether falls sharply NVDA could follow as well. So, if you are an investor or thinking of investing in NVDA you should probably keep an eye on the prices of cryptocurrencies.

Then again, for investors, who are bullish on cryptocurrencies, this could represent an interesting alternative, of course, depending on the correlations staying at these levels in the future.

Conclusion

We cannot deny the effects of higher Bitcoin and Ether prices on increased interest in mining these currencies. Consequently, there is an increased demand for AMDs and NVDAs graphic cards. On one hand, this segment represents only a fraction of the revenues these two companies make, so looking from the fundamental perspective it is not so meaningful. However, on the other hand, correlation numbers show that in some cases this is substantially affecting the stock prices.

More importantly, due to the big rally these stocks have had in the last months, one needs to be aware of the potential crypto currency effect in them.

In conclusion NVDAs investors need to be prepared for a potential volatile ride, while AMDs can be calmer.

But as we all know current stock prices can on the short horizon tell one thing and fundamentals another. Investors, keep that in mind!

Calculations: The correlation is calculated using the Pearson product-moment correlation coefficient.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Can Bitcoin And Ether Prices Materially Affect NVDA And AMD Stocks? - Seeking Alpha

When the U.S Treasury Department declared in March 2013 that exchangers and administrators of virtual currencies like Bitcoin were "money service businesses" subject to regulation under the Bank Secrecy Act, Reason's Brian Doherty issued a prescient warning.

"What the government cannot stop (and ought not try to stop) it can still interfere with, and ruin lives in the process," he wrote that May. "Those who think it necessary that Bitcoin be regulated, even if they want to be in on making the regulations as sane and harmless as possible, need to remember that every regulation has a punishment attached for violating it."

On Friday, the Treasury's Financial Crimes Enforcement Network charged Phoenix-area neurologist Peter Steinmetz with operating an unlicensed bitcoin exchange.

FinCEN alleges that Steinmetz, along with co-defendant Thomas Costanzo, "enabled their customers to exchange cash for 'virtual currencies' charging a fee for their service" without a federal or state money transmitting license in violation of the Bank Secrecy Act.

Costanzo, whose internet alias is Morpheus Titania, established a localbitcoins.com account to conduct in-person exchanges of cash for bitcoin a month after FinCEN made such exchanges without a money transmitters license a crime, according to the indictment.

While Steinmetz and Costanzo's business failed to attract federal attention for several years, Steinmetz had received $10,000 in Bitcoin funding from an anonymous donor to continue his work researching memory for the Arizona-based Barrow Neurological Institute (BNI).

"It's almost appropriate actually, that a cutting-edge method of funding is used to fund cutting-edge research," he told the Arizona Republic at the time of the donation.

A month later security arrested Steinmetz for carrying a loaded AR-15 into the Phoenix Sky Harbor airport as a protest against the TSA. BNI cut ties with him soon after.

Undercover federal agents in 2015 initiated a series of transactions with Costanzo, paying him roughly $160,000 in cash in exchange for bitcoin over two years. Agents arrested Costanzo on April 20 and got an indictment issued for Steinmetz two months later.

The indictment does not make clear what role Steinmetz played in the bitcoin-for-cash business.

Several men have already been convicted of similar offenses. In April, a New York man pleaded guilty to operating an unlicensed money transmitting business after an undercover federal agent paid him $37,000 for 37 Bitcoins. In May, Missouri tech entrepreneur Jason Klein pleaded guilty to the same crime after making several in-person cash-for-bitcoin transfers with an undercover federal agent.

There has been some legal pushback to these prosecutions.

In 2016, Florida State Circuit Judge Teresa Pooler dismissed state-level charges against Michell Espinoza for selling $1,500 worth of bitcoin to an undercover cop he met via localbitcoins.com, ruling that bitcoin did not count as a "payment instrument" under Florida law.

"Attempting to fit the sale of Bitcoin into a statutory scheme regulating money services businesses is like fitting a square peg in a round hole," Pooler wrote at the time.

Pooler's interpretation of a Florida statute is unlikely to help Steinmetz.

Making the square bitcoin peg fit into the round financial regulation hole could mean as much as five years in prison for Steinmetz. An associated conspiracy charge could cost him even more.

If convicted, Steinmetz could join the "ruined lives" of which Doherty warned.

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Phoenix Neurologist is Charged With Selling Bitcoin Without a License - Reason (blog)

At Commart Joy recently, many of the visitors flocked to the graphic card booth.

The rising popularity of bitcoin has caused a shortage in supply of graphic cards, the main component of the cryptocurrency system, over the past couple of years, according to an executive in the gaming industry.

The value of graphic cards has also been increasing sharply since mid-May, said Somyot Chaowalit, chief executive of JIB Computer Group, a leading computer gaming and IT retail chain.

Graphic cards are a key component of computer systems used for mining the digital currency bitcoin. Users can get returns on their investment from bitcoin faster than other types of investment -- within only five to 15 months.

According to Mr Somyot, some people consider investing in a mining rig -- a computer system used for mining bitcoin -- not very risky. They use at least six graphic cards, at a cost of around 100,000 baht, for a mining rig.

The margin on graphic cards has been growing since the second quarter this year, from 2-3% to 8-10%. However the company needs to reserve the cards to avoid a negative impact on gamers.

Demand for graphic cards is also high in the gaming market.

Meanwhile, graphic card makers recently introduced lower-price graphic cards for bitcoin as they don't come with a display port.

The price is 20% lower than the regular cards, with shorter warranty periods, at three to six months instead of three years.

Mr Somyot said half of JIB's revenue comes from mid- to high-end computers, particularly tailor-made gaming computers, with prices starting from 25,000 baht for a gaming desktop and 40,000 baht for a gaming notebook.

He said this year its revenue is expected to grow 20% compared to an earlier forecast of 15%, reaching 8.2 billion baht.

The company aims to garner 10 billion in revenue by 2018 from the growth of the gaming industry and bitcoin use.

Chukkrit Watcharasaksilp, chief executive of Advice Holding Group, a leading IT chain, said bitcoin's popularity rebounded in Thailand this May after it was first introduced here three years ago.

The most popular graphic cards used for bitcoin are AMD 570 and 580 and NVIDIA 1060 and 1070, which were in short supply, causing a 20% price hike.

The higher prices are predicted to remain until October.

Jarit Sidhu, research manager at IDC's Asia/Pacific, said bitcoin is now accepted in many countries such as Japan, China, Australia, Russia and the US. The price of bitcoin valuation can swing by 30%, he said.

"We have never seen such a long queue of visitors at the computer exhibition as last month at Commart," said Mr Jarit. The computer market has been declining for nearly a decade, he said.

Don Sambandaraksa, a long-time bitcoin enthusiast who has been associated with digital currency since 2013 when bitcoin was priced at US$40, said these days bitcoin can no longer be effectively mined with central processing units or even graphics processing units.

People have created chips that can only do bitcoin hashes and nothing else, he said.

A 1080Ti card costs about $700 and can gain a return on investment (ROI) in some 108 days, said Mr Don. Over a year, it can make $2,300, an annual ROI of about 300%.

As more people flock to buy graphic cards, the less profitable they will be, he said. But it is an indication of the crazy levels of profitability that mining offers, said Mr Don.

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Bitcoin spurs graphic card shortage - Bangkok Post