Bitcoin Blog a1

Wednesday, September 13, 2017

Shine Bright like a Dimon (or not)

Like normal, traditional finance people discredit Bitcoin, this week Jamie Dimon did as well.

Jamie Dimon is the CEO of JP Morgan. Dimon was also the CEO prior to the great recession/ financial crisis of 2008/2009.  Here is the article.

One quote from the article is a little perplexing:

The bank chief said he wouldn’t short bitcoin because there’s no telling how high it will go before it collapses. The best argument he’s heard, he said, is that it can be useful to people in places with no other options -- so long as the supply of coins doesn’t surge. [emphasis added]”

It seems Dimon misunderstands a very fundamental aspect of Bitcoin, the supply of coins is totally predictable. How Bitcoin comes into existence is literally written down and, in essence, set in stone. So attaching uncertainty to the supply of Bitcoin is pointless.

That being said, I think Dimon’s comparison to tulip bulbs does have some merit.  Bitcoin prices have risen dramatically, and it's hard to really justify it. Sure, some speculators say it will keep going up and up.  John McAfee, yes that McAfee, said some slightly crass things about it.

Then again, Dimon did say, “If you were in Venezuela or Ecuador or North Korea or a bunch of parts like that [how about Belize?], or if you were a drug dealer, a murderer, stuff like that [how about a drug kingpin?], you are better off doing it in bitcoin than U.S. dollars.”

Don’t get me wrong, I actually like John McAfee. I watch him debate in the libertarian debates last election cycle.

Lastly, it looks like some redditors want a debate with Dimon. We probably won’t respond. But McAfee would be an ideal opponent.

Monday, September 11, 2017

Ethereum and Eternium

This is a post I meant to publish a while ago about Ethereum. On a slightly related note, I was browsing the play store recently and saw an app that I thought was called Ethereum. I assumed it was an Ethereum wallet and since I’m studying Ethereum, I thought it would be a good idea to check it out. Well, the app was actually called Eternium, and it is actually a Diablo 2 style game. It is pretty decent. Anyways, here is my post of Ethereum.

New cryptos are a dime a dozen and a new currency generally isn’t particularly noteworthy. But sometimes a new currency gets so much attention it warrants my attention. And ETH is now one of those currencies. ETH is most noteworthy due to contracts. Contracts can be set up and executed when particular conditions are met. So a deal between two individuals can be enforced using the ETH blockchain.

In recent news, the price of ETH has raised dramatically. In addition, there is a lot of GPU miners of ETH. This demand seems to be so high, that many AMD graphics cards are out of stock. At this time, AMD cards are preferable for this kind of mining (note, this isn’t a SHA 256 encryption like bitcoin, which is best done with a ASIC).

Another thing to be aware of is that ETH is not the same as ETC. ETC is branded as Ethereum Classic. It is a hardfork from ETH (or ETH is a hardfork form ETC perhaps is a better way to say it). To explain a bit, a hardfork is essentially a point where two currencies are formed out of one. One coin follows a new, different protocol from the other. Up to this point, the blockchains are the same for the two coins, but after a hard fork, this is no longer the case. To my understanding, a hacker stole 50 million worth of ETH. The devs were able to stop this, the money was under restriction for 28 days, by altering the coins code. Some 90% of nodes supported the change. Those that didn’t became ETC. There also seems to be some distrust for ETC. Then again, people using ETC seem to distrust ETH. The point is, be aware of what you are getting into, if you want to get into ETC, just know it's not ETH.

Over the next few weeks I will try to investigate ETH more and show how to get started with it.

Tuesday, August 29, 2017

BCH and taxes, and possible Fraud

There are rumors going around that the recent Bitcoin fork, the creation of Bitcoin Cash (BCH), could be treated by the IRS as a taxable event. Here is an article on the topic. I only have one minor gripe with the article, where it says, "Bitcoin cash recipients could owe tax this year at rates as high as 39.6%". This quote is potentially slightly misleading. To mean it implies that there is something special about BCH that would cause it to be taxed at this rate, however, this is just the highest rate that ordinary income can be taxed at. There is nothing special about it.

So there is no guarantee BCH will be taxed. But it is interesting to think, what would be a tax payer's basis in BCH if its acquisition is not a taxable event? Perhaps part of their basis in BTC could be transferred?  Who knows, this is all unprecedented.

In other news, some people are predicted downward movements in Bitcoin's price. Here is one opinion on the subject.

Wednesday, August 23, 2017

Earthcoin Mining Characteristics and Analysis

Recently there has been more interest than usual on r/earthcoin. I mentioned on the subreddit that earthcoin has some interesting mining characteristics. Many coins, like bitcoin, offer a set reward for solving a block. For instance, miners would originally get 25 bitcoin per block  (excluding any transaction fee rewards). Earthcoin works differently - it matters when the block is mined.

This is best explained from this excerpt from github:

Besides its very fast transaction speed, Earthcoin is unique in the way it is mimcs the seasonal cycles of Earth. The mining rewards system of EarthCoin follows the same type of 365 day cycle as we do in our daily life similar to the earth moving around the sun. And like the equator is moving, so is the amount of coins being released to the miners. For example: in the 1st year of its release, the coins released to the miners were 10,000 per day starting to work to a positive deviation of 2,000 extra coins after 3 months, then falling back to its original 10,000 coins after 6 months to end up with a -2,000 deviation after 9 months. At the end of the year the amount would then return to 10,000.

14 days

In addition to following the equator, EarthCoin also introduced the full moon cycle. This cycle is translated to a double release of coins to all the miners mining for EarthCoins. This is also know as a X2 payout.

31 Days

Earthcoin also incorporated the other well known moon cycle called month. But in this scenario, the amount of released coins is a five fold of normal. This is also known as a X5 payout.
The occurances of these events can be tracked here:

Let's look at the effects of this in more detail. Some people complained that these practices invite volatility in the price of the coin. My response is perhaps not.

Some people might say that rapid increases in supply will lower the price. However, since the supply increases are known beforehand, this might not be the case, as the future increases in supply will already be factored into the current price. This argument basically assumes the Earthcoin market is efficient, which is probably another blog post on its own.

Some people have complained these mining effects result in a bit of an instamine, as more coins were released in the beginning of the life of the coin. This may be true, but I personally don’t think this is a big issue. The dev team seems to be long gone and the effects of any premine/ instamine have probably passed.

Lastly, it is interesting to note that earthcoin has a halving feature, like bitcoin. It sounds like it happens yearly, with a cap of 13.5 billion coins.

Wednesday, August 16, 2017

Approaching Moon?

I’m off on vacation right now, so I don’t have much time to report, but Bitcoin’s price is going crazy. It is over $4,000 at the time of writing this.  In addition, interest rates on margin lending is quite low, meaning the market isn’t confident that Bitcoin will lower in price. Which might mean there is still potential for upward movement. Here we can see margin loan supply on Polo:

Here is another more mainstream article on Bitcoin; however, it does seem to get some information wrong. In particular, it implies that hacking the blockchain is the same thing as hacking a particular exchange, which is totally incorrect. In addition, its criticism that “Bitcoin values are purely dependent upon holders having faith they will continue to have value” is something all currency share. The US dollar has no value except the value that people give to it, and likewise if people universally stopped accepting USD it would lose its value as well.

Also, I made a new page for my ebook, check it out here

Monday, August 7, 2017

Russia and Bitcoin News

I always found it interesting that a large portion of my Audience is from Russia, especially considering Bitcoin's questionable legal status there. I recently found this article on Bitcoin in Russia. Which talks about a few interesting points I did not know. For a preview of some, it appears the Kremlin was interesting in making its own digital currency as well as the idea that Russia is becoming more accepting of Cyprocurrencies. Anyways, enjoy!

Sunday, July 30, 2017

Where should I put my Bitcoin for the fork?

As I mentioned in my last post, there is a possible hard fork in Bitcoin coming up on August 1st. So where should you keep your bitcoin during this fork? Coinbase and many, if not most, exchanges will not honor btcc or bcc or alternative chains. Well, not btcpop they believe the market will determine the best chain and they will credit their users with bcc. Some other services like Xapo are doing something similar. However, due to their invasive privacy questions, I can’t recommend them.

It seems people have caught onto this trend as there is a huge shorting demand for Bitcoin right now on Polo. Polo has margin trading where you can sell bitcoin you don’t own or, more likely in this case, hold it in your wallet during the fork and get BTC and BCC.

I also have two small things I discovered this week. One is a new exchange opening up that is offering tokens to new users, check them out here.

And the other is a game where you can earn dogecoin. Despite my best efforts, I wasn’t able to actually earn any dogecoin… Other players kept eating me and taking it. So it's an interesting idea and game, maybe check it out. It's a bit like a mutliplayer pac-man.