Bitcoin Blog a1

Thursday, July 20, 2017

Bitcoin and the Fed, Plus Possible Fork?

On the 12th, while Janet Yellen was testifying to congress, a bitcoin enthusiast held up a sign saying “buy bitcoin.”

In another post, we can see he included a bitcoin address. I don’t know why he did this. It seems like a cheap trick to make a little money. Regardless, someone has taken this to the next level and created a downright scam. Here on Reddit, someone photoshopped the bitcoin address, and replaced it with what we can only assume is their own bitcoin address.

Also, there are some interesting things happening with a possible fork, here is one of the bitcoin blogs I follow for more. Read my past article on this topic here. The gist is that a fork may happen on August 1st, but probably not. Either way, I would make sure you have your bitcoin in your wallet in time for the fork. If the fork goes through, to my understanding, you will basically have those coins in two blockchains. Now, this doesn’t mean the value of your BTC and alternative chain BTC will double, but it would be like having two different cryptocurrencies.

Tuesday, July 11, 2017

Video: Mt. Gox Memories

Kind of cute little video I found on youtube, enjoy!













To end, George Santayana once said,  "Those who cannot remember the past are condemned to repeat it."

Friday, July 7, 2017

Short update: Reddit News

I haven’t had much time to report on Cryptocurrency news lately (and I probably won’t for another month or so), but here are some interesting things I have found lately. Apparently Bithumb, a large cryptocurrency exchange, was hacked. Here is a Reddit link to learn more.

Also on the subject of Reddit, here is a list of the top cryptocurrency subreddits.  You might notice number 1 and number 6 are both Bitcoin related. This is due to a raging battle between two ideologies. /R/Bitcoin is known to censor opposing points of view, they don’t allow people to discuss Segwit or Bitcoin unlimited (read more on this here). /R/BTC doesn’t seem to censor differing opinions. The BTC community also complains about the hostility found on /R/Bitcoin. I personally have experienced that too (As well as people who think they understand economics, but really don't).   

Lastly, here is a link to an interesting thread in Reddit about which coins people don’t own and why. Sometimes is difficult to get real criticism and this might be a good place to get some.

Friday, June 23, 2017

Don’t use Yobit

As you may have noticed, lately my blog has been getting a lot of spam comments. I just want to make it clear I don’t endorse these websites or products. In fact, I recommend staying away from many of them.

Specifically, I contacted the support team at Yobit, one of the worst spammers. It looks like it is just some guy with an affiliate link, but the company was unwilling to do anything about it. In addition, the support team clearly does not speak English as a first language. In short, stay away from Yobit. Support is lacking and they empower spammers.




Friday, June 16, 2017

The Atlantic and The Fed

The Atlantic recently published an article on cryptocurrency  ponzi schemes. Its a little funny, but I started reporting on Bitcoin ponzi schemes in 2014. As well as my failed attempt at being an investigative reporter (another link).

The Atlantic and my blog couldn’t be more different. The Atlantic is generally very wordy or even sesquipedalian at times. My articles are very short. Shorter than anywhere else sometimes. SEO experts are saying longer is better now days, but I don’t listen. Regardless, its interesting to see more mainstream media outlets reporting on what I have been doing for years.


In other news, the Bitcoin community has some interesting reactions to the Fed announcing a rate hike. The Bitcoin community always has colorful thoughts on fiat. This Reddit post states, "USD is a huge pre-mine SCAM!" For context, a pre-mine means refers to a cryptocurrency that had coins in existence, prior to being mineable by the public. The post links a video of Janet Yellen ( Chairman of the Fed) announcing a .25 % rate hike to the federal funds rate. The idea of the comparison between a pre-mine and the rate hike is the Fed alters the money supply in order to change the federal funds rate. Likewise, in a pre-mine, developers manipulate the cryptos supply in order to benefit themselves.

I’ll hopefully publish some more material later this month. In the meantime:

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Sunday, June 4, 2017

Bitcoin: Currency or speculative asset?

In Forbes, there is an article asserting Bitcoin is an asset, not a currency. Its two main criticisms were Bitcoin’s slow transaction time (calling into question its use as a medium of exchange) and its instability (which calls into question its store of value). Because it doesn’t meet 2 of the 3 defining characteristics of money, it therefore is not money (the last characteristic is a unit of account, which bitcoin is clearly very good at, see here for more).

Now, I think the author’s assertions about transaction times are misguided. If you want to transfer USD across the country, it can easily take days depending on how you do it. This length of time transactions take doesn’t make USD not a currency.

The author does have a point, Bitcoin does fluctuate quite a bit in value. But to this I might ask, how much fluctuation is too much? Regardless of all the fluctuation, Bitcoin still has an actively traded price and a value. Is Bitcoin an excellent store of value? Well, perhaps not the most stable, but ultimately, I think it is.

Overall, the author claims bitcoin is an asset, rather than a currency. He states: “Rather it is a commodity asset that one trades, like gold or silver, in hopes that its value will rise and yield a trading profit.“ I disagree with this idea. Bitcoin is not like gold or silver. First, gold and silver are physical. More importantly, Bitcoin’s source of value isn’t intrinsic, but is derived from belief in its value. Gold and silver both have fundamental values, they have uses besides that as a tool of speculators, whereas Bitcoin has an unclear fundamental value. It’s not that it doesn’t have a fundamental value, it's just not as clear (see past articles of use of bitcoin and other blockchain technologies). Overall, I reject the idea that Bitcoin is something to invest in. Rather, I assert, it’s something to invest with. I use services like Btcpop to invest my bitcoin to make a return. I don’t, however, invest my fiat in Bitcoin. As Warren Buffet said, that would be like investing in checks:

"Stay away. Bitcoin is a mirage. It's a method of transmitting money. It's a very effective way of transmitting money and you can do it anonymously and all that. A check is a way of transmitting money, too. Are checks worth a whole lot of money just because they can transmit money? Are money orders? You can transmit money by money orders. People do it. I hope bitcoin becomes a better way of doing it, but you can replicate it a bunch of different ways and it will be. The idea that it has some huge intrinsic value is just a joke in my view." Source


While I agree Bitcoin in its present form is not the future, it symbolizes the future. It is a step toward the future, a world where physical currency is no longer needed.  Certainly the technical limits of bitcoin prevent it from global adoption, but perhaps another cryptocurrency can do that.

Saturday, May 27, 2017

Is Poloniex is the next Mt. Gox?

Some people on the internet are saying Poloniex is the next Mt. Gox.  (As you probably know, Mt. Gox was the first big failed bitcoin exchange.) Well I don’t know if this is true, but if people think it is true, it may become true.

Cryptsy was an interesting example of unjustified fears becoming reality. Cryptsy had cryptocurrency stolen from them. This meant that if everyone withdrew their digital currency from Cryptsy, they wouldn’t have enough to cover all the deposits with them. (This meant they were operating similar to a traditional bank with fraction reserve banking.) Or in other words, they didn’t have the cash on hand to pay everyone that has deposited money (Cryptsy, however, was insolvent as well). They continued business as usual and did not announce the theft for fear of causing a scare. As Cryptsy made money, their capital was essentially restored. (In banking terms, Assets - Liabilities = Bank’s capital).  Once Cryptsy made enough money, they would no longer have to worry about a run on the “bank.”  An unrelated, unjustified rumor caused people to question Cryptsy. People simply questioning Cryptsy caused a mass panic which caused Cryptsy to fail and the stealing to come to light.

Now people are questioning Poloniex, just like they questioned Cryptsy in the past. Just the questioning of Poloniex could cause a scare, which could cause people to withdraw their Cryptocurrency. If enough people withdraw, it could bring to light other problems with Poloniex which could bring the exchange down. However, if there is no real issue, this might not affect them.

An additional reason Poloniex could be in trouble is that upward prices also increase credit risk. If a lender has traded cryptocurrency for fiat, the increase in price may make it difficult to repay a loan denominated in crypto. So if Poloniex has borrowed from his users, this may be an issue.


Lastly, it looks like many people are very delayed in when they can withdraw their money from Poloniex. This is a bad sign, and could be a sign of eventual shut down. Ultimately, I don’t think Poloniex will shut down right now, but only time will tell.