The Commish
by ilene - November 30th, 2018 7:35 pm
The Commish
Courtesy of Joshua M Brown
Last night I had the pleasure of attending a talk put on by Andrew Ross Sorkin and the New York Times in their auditorium on 41st Street. Andrew’s special guest was Securities and Exchange Commission Chairman Jay Clayton and the conversation was about blockchain technology, crypto currencies, distributed ledgers, initial coin offerings and a lot more.
I want to say a couple of things about what I saw and heard at the event…
We are in good hands with both of our Jays. As regular readers know, I’m not a Trump fan. However, between his Fed Chairman pick, Jay Powell, and his choice for SEC Chairman, Jay Clayton, I feel that the investor class and market participants in general are in good hands. Jay Clayton is an accomplished securities and corporate attorney and genuinely has an affection for our capital markets and an appreciation for the rules he’s been sworn to uphold.
Clayton is open-minded…: We have a commissioner who is open to the idea of new technologies being used within our markets to make trading more efficient, and who has taken his time to learn about all of the optimism and skepticism surrounding crypto currencies. He’s done the research himself and is completely engaged in the subject matter.
…but he’s also a constructionist: In one of my favorite exchanges of the night, when asked about whether or not our regulatory capabilities were up to snuff in the age of blockchain, Jay shared his view that the people who created our current securities laws in the 1930’s were geniuses. These rules have withstood the test of time and have been in place to foster the growth of our economy to more than $20 trillion. “I think the new technologies ought to be able to adapt to our rules, we shouldn’t change our rules every time there’s new technology.” He’s speaking generally about the two main types of rules the SEC enforces: Those dealing with the offering and sale of securities to the public and those dealing with the secondary markets that securities trade in.
Bitcoin is a currency, not a security or a commodity: His view of what Bitcoin actually…
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Bitcoin Surges Most Since July, Back Above $4000
by Zero Hedge - November 28th, 2018 8:15 am
Courtesy of ZeroHedge. View original post here.
While it is certainly premature to say 'the bottom is in', buying pressure across cryptos has been strong in the last 24 hours – raising total market cap by over $11 billion for the biggest jump since July.
Down, but not out…
image courtesy of CoinTelegraph
Bitcoin is back above $4000…
But it's not just Bitcoin – the cryptospace is a sea of green this morning…
Notably, Litecoin has erased the weekend's carnage and the rest of the cryptospace is getting close…
In news for institutional crypto exposure, CoinTelegraph reports the world’s second largest stock exchange Nasdaq and U.S. investment firm VanEck yesterday announced a partnership to jointly launch a set of “transparent, regulated and surveilled” digital assets products. The announcement echoes yesterday’s report from Bloomberg, citing “two people familiar with the matter,” that Nasdaq would be rolling out a Bitcoin (BTC) futures contract as early as Q1 2019.
The chairman of the world’s largest stock exchange, New York Stock Exchange (NYSE)’s Jeffrey Sprecher has also this week said he believes the survival of digital currencies as an asset class is “unequivocal.”
It appears – for now – that Michael Moro was right.
The CEO of cryptocurrency trading companies Genesis Trading and Genesis Capital Trading, said that the Bitcoin (BTC) price could bottom at $3,000 in an interview with CNBC Nov. 23. Speaking on CNBC’s “Squawk Box,” Moro suggested that the leading cryptocurrency will lose another 30 percent before bottoming at $3,000. Moro said, “You really won’t find [the floor] until you kind of hit the 3K-flat level.”
Moro addressed small resistance levels, saying that he does not think the BTC price can stabilize in “the mid-3s,” also noting that the $4,000 level was tested twice in the previous days. Moro dispelled fears of bitcoin trading bots amoung some of the other rumors that are running rampant in…
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Cryptogeddon: Bitcoin Battered Below $4000 As Long Liquidations Continue
by Zero Hedge - November 24th, 2018 8:16 pm
Courtesy of Zero Hedge
Amid a series of liquidations of large long positions, Cryptocurrencies have crashed to fresh 2018 lows today with Bitcoin blowing through the $4000 level.
It's a sea of red…
With the majors down 8-13%…
But, as CoinTelegraph reports, Michael Moro, the CEO of cryptocurrency trading companies Genesis Trading and Genesis Capital Trading, said that the Bitcoin (BTC) price could bottom at $3,000 in an interview with CNBC Nov. 23.
image courtesy of CoinTelegraph
Speaking on CNBC’s “Squawk Box,” Moro suggested that the leading cryptocurrency will lose another 30 percent before bottoming at $3,000. Moro said, “You really won’t find [the floor] until you kind of hit the 3K-flat level.”
Moro addressed small resistance levels, saying that he does not think the BTC price can stabilize in “the mid-3s,” also noting that the $4,000 level was tested twice in the previous days.
The crypto trader said that long-term investors are more poised to handle BTC’s slump and wait until the price rebounds, while at the same time advising not to buy the cryptocurrency at the dip:
“This is about the fifth or sixth 75 percent-plus drawdown that we’ve seen in the 10-year history of Bitcoin.
And so if you have that [long-term] lens, I don’t believe institutional investors really ultimately care where the price of Bitcoin ends in 2018, simply because they’re looking at things three to five years out.”
When asked about what the low price of Bitcoin could mean for miners, Moro suggested that the cost to mine one Bitcoin will go down because “the hash rate has dropped.”
The recent cryptocurrency market decline has resulted in a similar drop in mining profitability and forced Chinese operators to sell their mining devices at a loss. Some mining machines are being sold on the second-hand market for merely 5 percent of their original value.
Bitcoin’s price has kept falling, along with the rest of the crypto market,…
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One year later
by ilene - November 23rd, 2018 6:11 pm
One year later
Courtesy of Joshua M Brown
We’re officially at the one year mark from the day everyone in America temporarily went crazy for Bitcoin.
The story goes: Bitcoin prices had doubled from $3,000 to 6,000 in the fall of 2017 and had become a gigantic, raging mania across the Internet and social media globally. The olds had begun to hear bits and pieces about it from the evening news and their local newspapers, but then on Thanksgiving, when their sons and daughters, nephews and nieces brought personal stories of large gains to the table, it was game on.
This is a real article from 11/22/2017:
Bitcoin would double and then double again over the next month toward it’s all-time high just below $20,000. And then Chicago listed a futures contract that (finally) allowed professionals to short it. Game over. Fever broken. The ensuing 12-month period has been a veritable clinic in wishful thinking, bitter denial and intellectual ass-covering, from the Valley to The Street.
It was the perfect bubble. They’ll be studying it in finance courses forever.
(Narrator: it stopped.)
I documented my own experiences with Bitcoin during 2017 here on the site. I had a lot of fun and met some great people during the mania. I was extremely lucky to have gotten a peek behind the curtain in early December – there was no Wizard of Oz after all – and this enabled me to call bullshit on the whole thing. You can see all the comments and links here as my views evolved. This is one of the main reasons I blog, by the way – to keep an accurate record of how my own attitudes change along with market developments.
I ended up getting even more bullish on the technology but bearish / skeptical / ambivalent about the prices of coins. So far, this has been a reasonable viewpoint. I think blockchain’s big impact is going to be on the expense side of corporate and government balance sheets, not on the revenue line. It strikes me as an efficiency thing more than as a growth thing. I may change…
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Bitcoin’s high energy consumption is a concern – but it may be a price worth paying
by ilene - November 9th, 2018 2:12 am
Bitcoin's high energy consumption is a concern – but it may be a price worth paying
Shutterstock
Courtesy of Steven Huckle, University of Sussex
Bitcoin recently turned ten years old. In that time, it has proved revolutionary because it ignores the need for modern money’s institutions to verify payments. Instead, Bitcoin relies on cryptographic techniques to prove identity and authenticity.
However, the price to pay for all of this innovation is a high carbon footprint, created by Bitcoin mining.
Fundamental to that mining process is a peer-to-peer network of computers, referred to as validators, who perform Proof of Work. In essence, this involves computers solving computationally-intensive cryptographic puzzles that prove blocks of transactions, which are recorded in a public asset ledger, known as a blockchain. This ledger is publicly viewable by all computers, which helps the system achieve consensus in an unreliable network of participants.
Validators are called miners because the computer, or node, that successfully validates one of those blocks is rewarded with “mined” Bitcoin. Thus mining is also the process by which Bitcoin adds new coins to the network.
But these processes consume a vast amount of power.
In my 2016 article, Socialism and the Blockchain, I estimated Bitcoin mining’s annual energy use at 3.38 TeraWatt hours (TWh), which I equated to the total 2014 annual consumption of Jamaica. Recent estimates show the currency’s annual consumption rising exponentially, currently reaching an incredible 55TWh. Indeed, a new paper in Nature Sustainability suggests that the energy costs of mining cryptocurrencies exceed the costs of mining physical metals. Furthermore, the paper estimates that Bitcoin emitted between 3m and 13m metric tonnes CO? in the first half of 2018. A team in Hawaii even suppose that, if Bitcoin’s adoption continues to rise, within a couple of decades, such emissions could help push global warming above 2°C.
The energy costs of mining Bitcoin, it has been estimated, now exceed the costs of mining actual metals. shutterstock
However, both the study in Nature and the team in Hawaii make assumptions about…
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Bitcoin Volatility Collapses To 2-Year Lows – More Stable Than The S&P 500
by Zero Hedge - November 7th, 2018 6:25 pm
Courtesy of ZeroHedge. View original post here.
Bitcoin, like most cryptocurrencies, has experienced tremendous pain in 2018, but there is a silver lining developing – in stark contrast to the violent swings in global equity markets, wild price swings have been absent in daily Bitcoin flows in the last month or so.
image courtesy of CoinTelegraph
Measured on a weekly basis, absolute levels of Bitcoin volatility is probing levels not seen since late 2016, right before the most massive pump and dump in modern times took the coin from $700 to almost $20,000 within 12 months.
"Volatility has been a major characteristic of the digital currency, which turned 10-years-old last week, throwing up major hurdles to its emergence as a mainstream asset class," said Reuters.
Bitcoin volatility sinks to a near two-year low
However, even more noteworthy is the fact that Bitcoin is now less volatile intra-month than the S&P 500 (October saw Bitcoin's high to low range of 11.3%, smaller than the 12.9% range in the S&P 500)…
And on a weekly basis, Bitcoin remains notably less volatile than stocks…
Many of Wall Streets' seasoned institutional traders were skeptical about Bitcoin's ability to store a value from the start, with most of them stayed clear and watched the spectacular rise, then fall of the coin.
From the high of roughly $20,000 in late December 2017, the coin collapsed 70% to the 6,000 handle, where it currently trades lifeless today.
During the collapse, regulators across the world emphasized price instability when issuing warnings to gullible retail investors who mistakenly listened to CNBC's cryptocurrency research desk's 24/7 pump.
Institutions are still waiting for more guidance on how regulators will handle bitcoin products such as exchange-traded funds, leading most compliance segments within firms to heavily restrict their trading desks from buying.
Oliver von Landsberg-Sadie, CEO of BCB Group, a cryptocurrency prime broker, warned Reuters, that a decline in trading volumes over the last three months had been a key factor in declining volatility.
…
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Initiative Q is not the new Bitcoin, but here’s why the idea has value
by ilene - November 6th, 2018 3:15 pm
Initiative Q is not the new Bitcoin, but here’s why the idea has value
shutterstock.
Courtesy of Brendan Markey-Towler, The University of Queensland
Could free units of a new digital currency end up being worth thousands of dollars?
Initiative Q, which is aggressively marketing itself on social media, wants you to think so. It urges you to sign up now, and get your friends to do so as well, to maximise the value of your free “Q” currency. This has invited comparisons to pyramid schemes and suspicions about its legitimacy.
It’s not a scam. It also won’t make you fabulously wealthy. It is, nonetheless, an interesting idea.
I want to use institutional cryptoeconomics – the study of the basic rules governing emerging economic systems such as cryptocurrencies – to show you how Initiative Q is an interesting experiment, criticisms of its marketing methods aside. If you sign up, you might help the world discover a remarkable new payments system.
Cryptocurrency basics
Initiative Q’s marketing explicitly draws comparisons with the best-known cryptocurrency: “Think of it as Bitcoin seven years ago.” The implication is this is the next Big Thing in internet money.
You might think of it as Bitcoin, but know it is not like Bitcoin in most important respects. initiativeq.com
Yet Initiative Q also states it is not developing a cryptocurrency.
The basic definition of a cryptocurrency is simply any form of digital money consisting of entries in a cryptographically secure virtual ledger, rather than physical coins and notes. In this sense “Q” can be thought of as a cryptocurrency.
However, cryptocurrency is increasingly defined further as using a decentralised system to manage and secure the virtual ledger that records transactions.
Bitcoin, for instance, uses blockchain technology to “distribute” the virtual ledger across a network and “decentralise” the process of coming to agreement on how to update it.
Blockchain protects a cryptocurrency from manipulation by hackers or governments, but it comes with costs.
What makes Q different
…
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Bitcoin turns ten – here’s how it all started and what the future might hold
by ilene - October 30th, 2018 5:23 pm
Bitcoin turns ten – here's how it all started and what the future might hold
Courtesy of Jack Rogers, University of Exeter
A mysterious, anonymous entity known as “Satoshi Nakamoto” posted a white paper on October 31 2008 entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”. It was the first time that the concept of Bitcoin entered the world. But outside of the cypherpunk mailing lists – those promoting the use of privacy-enhancing technology – this event was hardly noticed. Ten years on, who hasn’t at least heard of the cryptocurrency?
On just nine pages, the white paper explained how the Bitcoin system would work. Many attempts at electronic cash had already been made going right back to computer scientist David Chaum’s “Digicash” developed in the 1980s. Using an intricate dance of cryptography, Digicash enabled people to pay each other online anonymously, yet prevented users from sending the same money to two different people at the same time (the so-called “double spending problem”).
For a while, Digicash caught on. Even the likes of Deutsche Bank adopted it, and a growing list of merchants started accepting it. Compared to the credit-based systems of Visa, Mastercard and later Paypal, at least some people could see the benefits of a currency that allowed micropayments with extremely low transactions fees. Anyone with libertarian tendencies loved the idea of using a currency outside the control of any authority.
But Visa and Mastercard upped their game and won the battle for payment dominance. It seemed the struggle was over, but some cypherpunks refused to give up. Adam Back created “Hashcash” in 1997, which together with Wei Dai’s “b-money” (both cited in Nakamoto’s white paper) and Nick Szabo’s “Bitgold” were the last significant efforts to create an online cash system before Bitcoin. The idea fizzled out following the dotcom bust of 2000-02. It was only brought back to life by Nakamoto in 2008.
Nakamoto’s vision
Previous attempts came close to creating secure digital cash, but there was always one major problem they encountered: the need for a trusted third party like a bank to maintain the system in some way. Nakamoto’s white…
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What Could Possibly Go Wrong? Crypto Miner Offers Junk Loan With 12% Coupon
by Zero Hedge - October 27th, 2018 9:45 pm
Courtesy of ZeroHedge. View original post here.
Investors' insatiable demand for yield has pushed issuance of the riskiest types of debt, i.e. "leveraged loans", to record highs in 2018 (as risky loans cannibalize the market for junk bonds due in part to the bankers selling these loans claiming they can 'magically eliminate all risk', even as some companies hit leverage ratios as high as 15 times earnings, by packaging them into "diversified" CLOs and other structured debt products)…
…Debt investors are turning to ever-murkier areas of the debt market, despite warnings from former Fed Chair Yellen and others who have expressed concerns about the systemic risks posed by the $1.6 trillion in outstanding leveraged loans, where rising interest rates could trigger a spike in defaults.
And in the latest indication of just how irrationally exuberant investors (and, more to the point, the bankers who are enabling them) have become, Bloomberg reports that bitcoin-focused companies are using some of their assets as collateral for junk syndicated loans that allow investors in risky debt to gain some exposure to the asset bubble du jour of yesteryear – aka cryptocurrencies, which have remained mired near their lows even as other alternative currencies (gold) have seen prices – and volatility – picking up.
Coinmint, which is in the process of converting a disused aluminum smelter near the US-Canada border formerly owned by Alcoa into the world’s largest digital-currency mining center, has decided to fuel its ambitious expansionary plans (even as crypto prices have sagged far below their highs from late 2017) with a $50 million loan over 5 years to purchase and install servers and miners at its sprawling mine. For the privilege of borrowing, the company, which has negligible revenues given that it's key asset – the crpto mine – has yet to open for business, is willing to pay 12% a year in interest, according to BBG's sources.
Coinmint's smelter-turned-mine in Massena, NY.
As BBG points out, the high rate and the opportunity to gain crypto exposure (which could pay off if bitcoin prices ever embark on…
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Grocers: Get ready to join the blockchain party
by ilene - October 18th, 2018 10:29 pm
Grocers: Get ready to join the blockchain party
Five people died and more than 200 got sick during a 2018 E. coli outbreak, the largest in more than a decade. The bacteria was traced to contaminated romaine lettuce. (Shutterstock)
Courtesy of Sylvain Charlebois, Dalhousie University
In the wake of this year’s large E. coli outbreak, Walmart notified its leafy green suppliers that they must be using blockchain technology to trace their products before the end of 2019.
Walmart, one of the world’s largest retailers, has been piloting blockchain projects with IBM for the past 18 months. It is banking on this relationship to put pressure on the entire sector to give consumers what they want from the food industry: more transparency.
In Europe, Carrefour also recently began using blockchain to track food products on several of its product lines.
The whole idea is to better manage food recalls, farm to fork and back, and also to tackle the intricate issue of food fraud, which is receiving an increasing amount of attention.
Meanwhile, many others are wondering if the investment is worth it. Consumers tend to want many things from the food industry without paying for them.
The power of blockchain
Blockchain is about data, but it is mostly about accountability through enhanced digitalized transparency. With blockchain everyone knows what’s happening all at once.
To use a simple analogy, think of blockchain as a hockey rink. All the data is on the ice, protected by the boards so that it can’t be altered. Everyone participating in a blockchain is in the stands. The activity on the ice lets everyone else know who is buying from whom, when, at what price and volumes.
As a result, a recalled product can be traced back in seconds instead of taking days. It took investigators days to trace the source of an E. coli outbreak to contaminated romaine lettuce. They had to look through documents to find the source and the potential causes, all the way up the food chain. It would have been managed quite differently with blockchain.
Food safety is an obvious driver for…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
