Bitcoin in a Bubble, But Digital Coins Have Value

Recently billionaire Mark Cuban called bitcoin a bubble. Now he plans to put money into Unikrn, a digital coin offering.

Cuban sent an email to CNBC saying he was doing it. “I want to learn more about them,” he was reported as writing. I “haven’t signed the paperwork yet. But it’s likely it will happen.”

Unikrn is an esports online betting site launching a September sale of tokens. Cuban said bitcoin was in a “bubble” yet said the blockchain behind bitcoin was valuable.

 

Digital Currencies Go Up Then Down

Yesterday we wrote about how some daytraders might be starting to treat cryptocurrencies like dot.com stocks back in the later 1990s.

Today as if on schedule, the larger cryptocurrencies including Bitcoin moved down hard and fast. Bitcoin moved down some 17 percent, while smaller competitors slid as well.

Ripple, went down some 13 percent to 26 cents. Ether moved down too, though Ether’s downturn actually happened on June 21 as part of a so-called flash crash.

Ether’s price since the beginning of the year has gone up a lot. And Bitcoin is up about 150 percent.

“When people fixate on price movements over a single day, my recommendation is zoom out of the price chart and look at the broader trend,” Peter Van Valkenburgh, director of research at Coin Center, reportedly said. This may be good advice.

Chipmakers continue to give back higher highs. Nvidia Corp.moved down 1.1 percent and Advanced Micro Devices Inc. gave back 0.6 percent.

The bottom line here seems to be that cryptocurrencies have somehow turned into investments objects rather than “money.” And our daytrading comments emphasized the way these “currencies” are being treated.

There is a general sense, based on rapid rises, that one can accrue a great deal of value if in early enough.

In a sense the real reason for coins’ value is being set aside. When one collects these coins for their so-called value, the other parts are ignored.

In fact, this is probably all to the good from the standpoint of some producers, especially the big banks that don’t really want most of what cryptocurrencies have  to offer.

These larger entities would be glad to talk about accrual rates rather than the peer-to-peer independence that such coins offer – which presumably will be stamped out at some point, if possible.

The larger issue indeed is that the coins that will ultimately succeed the most are the ones that maintain the basic business model.

Those who confuse “value” with transactional credibility are likely going to end up at some point with currencies that have neither.

Cyber Investing: The Dot.Com of the ‘Teens

This is a very good possibility – that bitcoin is producing day traders.   Bitcoin has just about doubled this year and may go up farther. And while it may go up even more it is still in the hands of very few people.

Meanwhile rival Ethereum has gone up some 4,000 percent from $7 last December. It is now more than $300. Marketwise, cryptocurrencies have gone from $20 billion in January to $110 billion now.

As stocks become even more expensive, trading has moved toward digital currencies. In the 1990s, new technology attracted a whole group of individuals who traded with considerable discipline – until the market finally ground down.

But until then, dot.com stocks attracted considerable attention, and now the same attention is being paid to cybercurrencies.

“Large amounts of bitcoin are heavily concentrated in the hands of a few people. People that get in now [can] only buy fractional pieces,” Alex Sunnarborg, research analyst at CoinDesk reportedly said. “I definitely think more and more retail investors have gone into it. There is definitely a lot of fear of missing out.”

The trouble is that sooner or later many cybercurrencies will collapse just like dot.com stocks.

This is going to happen no matter what. And when it does, a lot will change because the crash won’t just bring down cybercurrencies but will have a considerable effect on a lot of other investments.

But in the meantime, the idea that cybercurrencies are increasingly becoming the dot.com stocks of the ‘teens is a very likely idea.

 

China Building Cryptocurrency, But Control Still Complicates the Process

A white paper in the Tsinghua Financial Review says the People’s Bank of China (PBoC), China’s central bank, has created and is trying out its own digital currency,

Eventually the currency may be available alongside the yuan. Such a currency would have ‘‘practical and far-reaching historical significance.’ It could help with fraud and also help those who are unbanked with a currency.

Finally it could help China’s central bank increase control over money. Because of all these possibilities, other banks are looking at digital currencies too.

The Bank of England, the Bank of Canada, and Deutsche Bundesbank with others have been trying out digital currencies. The interest is widespread and thus one wonders if bitcoin was initially merely an experiment suggested in a white paper.

Certainly the currency came along at the right time from a central bank point of view as it has the ability to swap out paper currency entirely. Central banks are looking at the possibility of doing without a paper currency and a cryptocurrency provides a potential future.

There are problems with cryptocurrencies having to do with its resistance to central bank money issuance. But China plans to integrate the cryptocurrency with its  central bank processes. This might make the currency easier to handle but it will also less many of the advantages of a normal cryptocurrency.

Additionally China has plans to get rid of anonymity. Thus every transaction made using a cryptocurrency will be immediately available to central bank auditors.

Basically China is taking a private money and creating a quasi public one out of it. The result may be good for China’s banking establishment but certainly much of what makes cryptocurrencies attractive will be discarded if China does issue its own crypto-money.

And there are other issues. Such money offers peer-to-peer transactions. And that means that China cannot entirely control who transacts with whom. For the forseeable future, China will not be able to control its currency nearly as much as it wants to. No doubt it will keep trying.

Dubai Collecting More and More Information About You

The government of Dubai and ObjectTech are creating digital passports for busy Dubai International Airport.

ObjectTech will deal with Dubai’s Immigration and Visas Department to provide biometric verification using blockchain. The end result will be the “world’s first ‘gate-less border’” – without paper passports.

This doesn’t mean your information won’t be available. It will offered up through blockchain copied via numerous different nodes. This is how you will be tracked electronically rather than via  paper.

Dubai is committed to this technology though it probably has not asked passengers if they wish to have their passport information constantly stored and available whether they wish it or not.

Is this a compelling endorsement of blockchain technology or one more attempt to build a profile of who you are and where you are going.

Dubai has plans to use blockchain for numerous information services. But Dubai is a run by a royal family and the idea that it has access at any time to some of your most intimate data is at least unnerving.

The program is moving ahead, and doubtless most people won’t complain about it, but over time Dubai will collect a good deal of information about you. Meanwhile you will have little or no information about the royal family.

 

Crypviser Is an Encrypted Messenger and More

Governments want to read all your communications. How did we go from a time and place where your communications were private to the open door of today?

We need to take back our messaging. Right now applications like WhatsApp, Telegram, Facebook Messenger and others have vulnerabilities. Many have government-mandated back doors.

But all this may be changing. Crypviser is a Blockchain-based messenger with encrypted chat, audio and video, etc. Crypviser can help just about anyone that is at risk of eavesdropping.

Data on the device is also encrypted.  Crypviser includes an “intelligent intrusion detection” system to combat third-party listening.

Additionally, Crypviser is launching CVCoins via crowd sale until June 30, 2017. CVCoins (CVC) have a discount of five percent  and up to 10 million coins are available.

Morgan Stanley Wants Cryptocurrency Regulation

Bitcoin has gone up a great deal this year. It is near $2800 as of this writing. But according to Morgan Stanley it will continue to rise only if it is regulated.

The idea is that investors will have to give up some of its autonomy in order to profit further.

Specifically the bank has gotten many phone calls about investing in cryptocurrencies, But believes that  “governmental acceptance would be required for this to further accelerate, the price of which is regulation.”

This is mainly because much big money is bound up with government itself. In other words, government buys and sells government bonds in order to retain solvency.

Government will not issue bonds without controlling the money that back the bonds. Thus bitcoin will have to give up control in order for its investors to participate.

Of course no one controls bitcoin, so in some way, bitcoin will have to be re-jiggered. This will make bitcoin something other than bitcoin.

But if the new bitcoin is not like the old bitcoin, then people may not use it. Instead they will use something else.

This is a great problem for finance and its central banks. Cryptocurrencies are threatening central banks in ways that central banks have difficulty combating.

The future will be a great deal different than the past. Free markets are necessary for cyptocurrencies and therefore regulation will only complicate matters.

The future is now uncertain. And probably will be for a long time.

India Wants to Regulate Cryptocurrencies but Only as a Prelude to Something Worse

The Indian government is talking about regulation for Bitcoin and other cryptocurrencies. India supposedly wants to have a plan within six months.

Dna, India’s English news firm owned by Diligent Media Corporation, has reported on the upcoming regulatory decisions “The issue of whether virtual currencies or bitcoins should be banned, regulated or self-regulated has been deliberated for some time,” it explained.

In April, the government began to study Bitcoin and will soon have results. It is also studying cryptocurrencies generally.

Sathvik Vishwanath, CEO and co-founder of Unocoin, is reported to have said: “This won’t be a decision as such, but a recommendation, based on what has been told to us in the closed-door meeting.”

Co-founder of the leading Indian bitcoin exchange Zebpay, Sandeep Goenka, concurs about the government’s next step. He told Bitcoin.com: “They are setting up a task force which will take 6 months to come up with recommendations.”

It may sound as if India is embracing digital currencies but only on the way to asserting more control.

This is because India radically reduced paper currencies over the past year. The idea was to deprive the black market of cash, but the reality is that many poor people without bank accounts have had a terrible time raising cash necessary to pay their bills.

The government sees this as a necessary evil since it wants all Indians, even the poorest, to have bank account. This is on the way to doing away with cash entirely.

This is seen as the future according to the government, but once everyone has a bank account – and uses it – there is almost no limit as to high government can raise fees and taxes. People chained by their bank accounts will have no way of objecting.

This is not just happening in India but around the world. Governments generally want to go cashless. In India the middle classes have not launched serious objections because the middle classes are not enamored of India’s general corruption. They may only figure it out when it is too late.

India is bolstering and regulating cryptocurrencies, or at least that’s the plan. But given India’s larger strategy, sooner or later the government will collide with private currencies. It wants to control money, not let it expand freely.

First it will regulate currencies and then it will control them. Otherwise the India central bank will lose clout. The power that comes from control is very important. Without it, India will move backwards (or forwards) towards freedom.

This may happen anyway, but not without a prolonged fight.

Attacks on Cryptocurrencies Have Just Begun

Congress wants cryptocurrencies declared at the nation’s border. We’ve written about this law previously, The Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2017 demands that a host of cryptocurrencies be declared.

What has attracted the most attention is the cryptocurrency disclosure requirements themselves. A person with more than $10,000 worth of bitcoin must inform authorities.

Thus terrorism, a far-fetched rational to say the least, is driving the consideration.

Joe Ciccolo of Canada-based BitAML reportedly said that, “Earlier this decade, we saw a push to include ‘prepaid access’ such as gift cards. Law enforcement went so far as to pursue card readers to scan prepaid access devices for their balance. Now that digital currencies have gained traction, they’ve been included in the same conversation. As in the past, I suspect there will be strong opposition from across the financial services community.”

Others called the legislation unnecessary.

Civil asset forfeiture would be part of the bill, making cryptocurrencies subject to confiscation. In the past, innocent people have their funds removed and there is no reason to think things have changed.

Writer Simon Black said reportedly, “So, theoretically if you leave the US with more than $10,000 in bitcoin or ether, you’d have to confess this fact to the authorities or otherwise face the aforementioned penalties, ie prison time, civil asset forfeiture, etc.”

At least one person is forthrightly against the legislation: Theo Chino. Chino has reportedly been trying to educate congressmen.

“This ‘over-criminalization’ of bitcoin, based on common misunderstandings of the technology and its economic nature should be worrisome to the bitcoin and technology communities,” he said reportedly.

This particular bill may not go anywhere, but attacks on cryptocurrencies have just begun.

The Full Resolution of Cryptocurrencies May Never Occur

Sovereign Man reports about a potential federal law that is “almost too ridiculous to believe.”

A new bill was brought before US Senate, “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017.”

Cash, bitcoin even prepaid mobile phones, retail gift vouchers, etc. are seen as needing regulation.

The government want to used civil forfeiture to seize your assets – to take what they want without a trial.

“Money laundering” is the nomenclature they use to justify this new bill.

Too much cash? Anything over $10,000 is a government no-no.

In this bill the “misuse” of $10,000 allows them to seize ALL of your assets.

There are criminal penalties too. If you don’t fill out the right paperwork you can get up 10 years in prison. And they will try to increased the frequency and severity of wiretapping as well.

Stock brokers. Casinos. Currency exchanges. Precious metals dealers. All of these types of businesses will have to  report to the government under new laws.

Cryptocurrencies are included under this bill. And that includes bitcoin, even thought there is no one single entity that issues bitcoin.

The Senate is make Bitcoin core software part of a money laundering operation. It’s basically just a war against cash, and one that is ratcheting up in the US as well as overseas.

The bottom line when it comes to many cryptocurrencies is that it is private money, that does not have a single issuer.

Of course if you read the major blockchain newsletters, you will find there is not a huge amount of discussion regarding these issues. Most articles actively call for regulation and seem to think it is necessary for the better functioning of private money.

They don’t discuss the way cyrptocurrencies have been developed – so that government can’t take them over.

You have the unusual situation of many newsletters in this area, actively suggesting regulation of what has been set up specifically not to be regulated.

That’s plain weird … and worse.

It may even result in governments changing laws to ensure that cryptocurrencies cannot function as planned.

But say that happens. People will just stop using the given currency and go on to something else. Or they may simply transact peer-to-peer. In such cases, building cases against individuals will be difficult indeed.

Until cryptocurrencies either cease to be popular or change to accept government interference, they will continue to undermine the status quo, There is only so much the government can do.

It is not a lot, unless you basically want to declare the entire currency illegal. Even then, people may simply continue to use it on a peer to peer basis.

That is why we have predicted the coming cyber war, either metaphorically or in reality.

Money is the root, the base, the heart of civilization and now, thanks to “new” money, it has been changed into something that is a good deal freer than the old currencies, including the US dollar.

Permit me to issue and control the money of a nation, and I care not who makes its laws!

This quote, apocryphal or not, expresses the strength of central banking and the control is exercises over certain kinds of money,

This is at the very heart of the upcoming war, which is in the process of being joined. A group of very powerful people want to control the new money just the way they have controlled the old money.

There will be a great deal of controversy and probably worse before the matter is resolved. And ultimately we may never see its full resolution.