Tag Archives: Bitcoin

JPMorgan Busted Over Bitcoin Fraud… Seriously!

Oh, the irony…

https://s16-us2.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2Fmedia.salon.com%2F2013%2F02%2Fjamie_dimon.jpg&sp=0b75c357def09705e3b7052650b2dcb9Jamie Dimon has come a long way in seven months…

From “Bitcoin is a fraud” in September to “Busted for Bitcoin fraud” in April.

Reuters reports that JPMorgan Chase & Co has been hit with a lawsuit in Manhattan federal court accusing it of charging surprise fees when it stopped letting customers buy cryptocurrency with credit cards in late January and began treating the purchases as cash advances.

Simply put, the bank switched from charging regular interest rates to charging, higher, cash advance rates on purchases of cryptocurrencies without notice to customers about the change.

The named plaintiff in the lawsuit, Idaho resident Brady Tucker, was hit with $143.30 in fees and $20.61 in surprise interest charges by Chase for five cryptocurrency transactions between Jan. 27 and Feb. 2, his lawsuit said.

With no advance warning, Chase “stuck the plaintiff with the bill, after the fact of his transactions, and insisted that he pay it,” the lawsuit said.

Hundreds or possibly thousands of other Chase customers were hit with the charges, Tucker said.

The lawsuit is asking for actual damages and statutory damages of $1 million.

Full Docket below…

Source: ZeroHedge

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Bitcoin Battered To Fresh Lows After Twitter Joins Crypto Ad Ban

Facebook started it – banning crypto/ICO ads on Jan 30th, then came Google – copying Facebook’s ban on March 14h; and now, less than a week later, Twitter is virtue-signalling support for the crypto-crackdown, planning its own ban on ads.

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Sky news reports that Twitter is preparing to prohibit a range of cryptocurrency advertisements amid looming regulatory intervention in the sector.

The microblogging platform is following similar moves by Facebook and Google which have restricted financial advertisements due to concerns about illicit activities.

Sky News understands that the new advertising policy will be implemented in two weeks and currently stands to prohibit advertisements for initial coin offerings (ICOs), token sales, and cryptocurrency wallets globally.

The reaction was swift, just as we have seen to the other crypto ad bans… smashing Bitcoin back below $7500 (into mystery-dip-buyer territory)…

https://www.zerohedge.com/sites/default/files/inline-images/2018-03-18_8-12-11.jpg?itok=FtGpXfUk

But Ethereum and Ripple have been the worst performers since the crypto ad bans began…

https://www.zerohedge.com/sites/default/files/inline-images/2018-03-18_8-22-14.jpg?itok=I7yeDVvG

Reportedly, Twitter has experienced an influx of fake accounts pretending to advertise cryptocurrency giveaways, often by users posing as famous crypto sphere personas like Litecoin’s Charlie Lee.

… is food next?

Source: ZeroHedge

“Stocks No Longer Make Sense To Me” – Here’s Why Quants Are Embracing Bitcoin

Since bitcoin first seeped into the public consciousness in 2013, the stereotypical image of the cryptocurrency trader is the 25-year-old tech bro who uses phrases like “YOLO” and “FOMO” when describing his trading strategy and general investing philosophy.

In more recent years, the image of the mom-and-pop crypto trader has taken hold, as Mrs. Watanabe – the archetypal Japanese and South Korean house wife once known for trading foreign exchange – has migrated to trading bitcoin and ethereum.

But as the Financial Times pointed out in a story about financial professionals dabbling in crypto markets, the hoodie-wearing twenty something described above isn’t entirely representative of the crypto community. In fact, many former Wall Street professionals – some with backgrounds working at hedge funds or quantitative trading shops – have embraced cryptocurrency trading.

And while the allure of obscene returns is obviously one reason for the attraction, one venture capitalist interviewed by the FT offered an even more revealing answer:

He embraced crypto after becoming disillusioned with traditional markets, which “no longer make sense” thanks to nearly a decade of central bank intervention.

“I’ve been out of the stock market because it stopped making sense to me,” he says. Central bank support for the markets plus the trend of passive investing have turned it into a game with unclear rules.

“Over the past few years or so, everyone has just been buying indexes and they haven’t been doing price discovery. They’re just investing in a trend of something going up and up and up,” he says.

Until very recently, volatility in global stock markets had fallen to one of the lowest levels in history – making life difficult for quantitative traders who leverage up and play for small moves.

But in the crypto market, circumstances couldn’t be more different. Such high volatility is essentially a quantitative traders’ dream.

“In a days worth of cryptocurrency movement you have a week or a month of equity market movement or a decade of country debt,” he said.

Another apt description came from a hedge fund trader who said financial professionals are drawn to bitcoin for the same reasons they’re drawn to the poker table.

“It’s fun,” one hedge fund trader said, adding that she did not want “fomo,” the acronym for ‘fear of missing out’. One London-based banker was more blunt: it was gambling for people who could afford to lose a bit of money. “That’s it. Nothing else.”

We’re not sure the surprising number of people who bought bitcoin on their credit cards last year would agree.

Source: ZeroHedge

Bitcoin Going Down! And I Can’t See the Bottom


“As we approach the 8400-8500 level, watch for volume to pick up. One of two things will happen, it will reverse sharply or drive through that level to find another level of value below. If we stall here and a lull in the market occurs, price will consolidate, and then move lower”

Bitcoin May Fail But We Now Know How To Do It

Taleb: Bitcoin Is “An Excellent Idea” And “Insurance Against An Orwellian Future”

Foreword to the book It may fail but we now know how to do it by Saifedean Ammous

Let us follow the logic of things from the beginning. Or, rather, from the end: modern times. We are, as I am writing these lines, witnessing a complete riot against some class of experts, in domains that are too difficult for us to understand, such as macroeconomic reality, and in which not only the expert is not an expert, but he doesn’t know it. That previous Federal Reserve bosses, Greenspan and Bernanke, had little grasp of empirical reality is something we only discovered a bit too late: one can macroBS longer than microBS, which is why we need to be careful on who to endow with centralized macro decisions.

What makes it worse is that all central banks operated under the same model, making it a perfect monoculture.

In the complex domain, expertise doesn’t concentrate: under organic reality, things work in a distributed way, as Hayek has convincingly demonstrated. But Hayek used the notion of distributed knowledge. Well, it looks like we do not even need that thing called knowledge for things to work well. Nor do we need individual rationality. All we need is structure.

It doesn’t mean all participants have a democratic sharing of decisions. One motivated participant can disproportionately move the needle (what I have studied as the asymmetry of the minority rule). But every participant has the option to be that player.

Somehow, under scale transformation, emerges a miraculous effect: rational markets do not require any individual trader to be rational. In fact they work well under zero-intelligence –a zero intelligence crowd, under the right design, works better than a Soviet-style management composed to maximally intelligent humans.

Which is why Bitcoin is an excellent idea. It fulfills the needs of the complex system, not because it is a cryptocurrency, but precisely because it has no owner, no authority that can decide on its fate. It is owned by the crowd, its users. And it has now a track record of several years, enough for it to be an animal in its own right.

For other cryptocurrencies to compete, they need to have such a Hayekian property.

Bitcoin is a currency without a government. But, one may ask, didn’t we have gold, silver and other metals, another class of currencies without a government? Not quite. When you trade gold, you trade “loco” Hong Kong and end up receiving a claim on a stock there, which you might need to move to New Jersey. Banks control the custodian game and governments control banks (or, rather, bankers and government officials are, to be polite, tight together). So Bitcoin has a huge advantage over gold in transactions: clearance does not require a specific custodian. No government can control what code you have in your head.

Finally, Bitcoin will go through hick-ups (hiccups). It may fail; but then it will be easily reinvented as we now know how it works. In its present state, it may not be convenient for transactions, not good enough to buy your decaffeinated expresso macchiato at your local virtue-signaling coffee chain. It may be too volatile to be a currency, for now. But it is the first organic currency.

But its mere existence is an insurance policy that will remind governments that the last object establishment could control, namely, the currency, is no longer their monopoly. This gives us, the crowd, an insurance policy against an Orwellian future.

By Nassim Nicholas Taleb

How To Survive The Crypto Crash

Summary

  • Did a bear market in cryptocurrency just start?
  • Many people are convinced that cryptocurrency will crash sooner or later and investors should at least consider the possibility that this could happen.
  • What to do if you believe in the future of cryptocurrency and are currently invested?
  • Having experienced the previous Bitcoin bear market from the end of 2013 until 2015, I will share some lessons I learned.

Down from a maximum market capitalization of about $800 billion, the cryptocurrency market has been falling to less than $600 billion in a less than 2 weeks. At moments like these, it can seem like the sky is falling. Almost all cryptocurrencies have fallen dramatically in a very short time period. The big three Bitcoin (COIN), Ethereum and Ripple are all down more than 25% from their all time highs. At the time this article gets published it could already be very different, but fact is that we reached a period of extreme volatility. What should investors who believe in the future of cryptocurrency do?

A short retrospective: the previous cryptocurrency bear market

When looking at the total market capitalization of cryptocurrency, it seems that the market has exploded in 2017. Though cryptocurrencies (especially Bitcoin) have a longer history, it was only during the previous year that the market really took off. Just look at the graph below, it makes you feel that cryptocurrency was virtually non-existent before the beginning of 2017.

https://static.seekingalpha.com/uploads/2018/1/16/48701726-1516124905075807_origin.png

Source: coinmarketcap

This makes us almost forget that cryptocurrency already experienced some dramatic downturns in the past. It is barely visible in the graph above, but let us take a look what happens when we zoom in on the time period from the end of 2013 until 2015.

https://static.seekingalpha.com/uploads/2018/1/15/48701726-15160452614827032_origin.png

Source: coinmarketcap

As we can see from the graph, from the end of 2013 total market capitalization of more than $15 billion dropped by about 75% to a bottom of around $4 billion in 2015. I think it is fair to say that this was a major bear market. Though there were heavy fluctuations in the price of cryptocurrency during this bear market, the entire process was much more gradual than you would expect of a market crash. Keep in mind that during this time period, a very big percentage of the cryptocurrency market capitalization consisted of Bitcoin only.

We can learn from this that, contrary to what many people are claiming, the expected ‘crash’ in cryptocurrency might as well prove to be a long bear market instead like in 2013-14.

My own experience during this bear market

At the end of 2013, I bought a limited amount of Bitcoin. Before buying I read a lot about the topic and I believed in the future of cryptocurrency. On top of this, I saw that the value of Bitcoin was booming and would not mind to get a quick win if the value kept rising quickly. But my main intention was to stay invested for a longer period of time.

At first, the value of my investment went up quickly. But of course, I did not foresee the huge bear market which started not long after I invested. At one point in time, my investment was down by about 75%. The only way I was able to stomach this bear market was by mentally writing off the entire investment. I still believed in Bitcoin though and had hope that it would recover eventually. It goes without saying that I am very happy that I didn’t sell in desperation. In hindsight, this probably means that I managed my risk tolerance in the right way, if I would have bought more Bitcoin I would have likely sold a big part of it during the downturn. A crash in cryptocurrency is different from a stock market crash: good companies still continue to pay dividend and make profit, even if their value drops dramatically. Bonds will still pay their coupon rate as long as the debtor doesn’t default. Cryptocurrency does not produce any of such income and can theoretically go to zero.

This is the reason why it is so important to manage your risk tolerance: honestly consider a worst case scenario and only buy cryptocurrency with money you can truly miss. Never buy crypto with borrowed money! You have the potential to win big, but might also lose much more than you own. People who went into debts to buy Bitcoin at the end of 2013 likely got slaughtered.

What options do investors have?

I am assuming that people who are invested in cryptocurrency believe in the long term viability of it. This article is not written for short term traders. There are a couple of things you can do when the crash or the bear market arrives.

https://static.seekingalpha.com/uploads/2018/1/16/48701726-15161240675535822.png

Option 1: Sell

The first option is to sell, wait until the crash is over and maybe invest again. This strategy has the glaring downside that you might mistime and miss a lot of profit. Even worse, there might be no crash or bear market at all. But this option is especially attractive if your risk exposure is relatively high or if you are already sitting on huge profits.

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Option 2: Buy the dip

If you truly believe in your investment, you can buy the dip. The difficulty of this strategy is that it stretches your exposure to risk. You might end up with a much larger risk than you intended, so be careful! When the market recovers quickly, this might be a winning strategy though.

https://static.seekingalpha.com/uploads/2018/1/16/48701726-15161243622205718.png

Option 3: Wait and postpone the decision

It is said that doing nothing is often the best strategy when it comes to investing. Re-evaluation of the potential options is something which most investors do all the time, and when you are not sure, not doing anything seems like an attractive choice. Make sure your exposure to risk is within your tolerance when choosing this option!

https://static.seekingalpha.com/uploads/2018/1/16/48701726-15161244456837752.png

Option 4: Protect your capital

This can be done in different ways: buying put options for instance is a way to ensure you will no longer be affected by a huge downturn. Diversifying your investment between multiple cryptocurrencies is also a solid strategy to not depend on a single cryptocoin. You could also buy put options on Bitcoin and go long a different cryptocurrency if you believe the second will outperform. Also, consider your exposure to stocks, bonds and cash. There are many possibilities to diversify, but no single one is the best, they all have their advantages and disadvantages.

Lessons learned

1. The predicted crash, if it arrives, might actually prove to be a long lasting bear market.

2. Only stay invested if you would be able to stomach a 100% loss of your crypto investment.

3. Never, and I really mean never ever, buy cryptocurrency on credit. If you did so, make this undone as soon as possible.

4. Surviving a possible crash is all about managing your risk tolerance.

5. Consider protecting your investment by diversification or buying protection.

6. Timing the market is very difficult. Do not invest to get rich quickly (unless you are a trader and really know what you’re doing).

7. If you do not believe a crash or a bear market is coming, by all means invest! But be sure to manage your risk tolerance and at least consider the possibility of a crash. It will happen eventually.

By Giesbers Investment Strategy | Seeking Alpha

This Cryptocurrency Mining Rig Doubles As A Space Heater

The intensifying energy consumption of the bitcoin network is becoming a concern for environmentalists who have begun to question whether digital currencies should be considered a socially responsible investment. As we pointed out last month, Digiconomist’s Bitcoin Energy Consumption Index stood at 29.05TWh.

That’s the equivalent of 0.13% of total global electricity consumption. While that may not sound like a lot, it means Bitcoin mining is now using more electricity than 159 individual countries, including Ireland and Nigeria.

https://i1.wp.com/www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/12/13/2017.12.25chart.JPG

As the share of the world’s electricity consumed by miners of bitcoin and other cryptocurrencies rises, miners will likely face pressure – both economic and social – to find efficiencies wherever they can.

https://i1.wp.com/www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/12/13/2017.12.25map.JPG

In anticipation of this trend, a crypto startup called Comino is marketing a mining rig that also functions as a heater.

Back in October, the Next Web published a report about the company and their new product, the Comino N1. In launching the product – priced at an affordable $5,000 per rig – the company is hoping t make it easier for novices and those who have only a glancing familiarity with crypto technology to start mining coin.

https://i2.wp.com/www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/12/13/2017.12.25miner_0.JPG

A reporter from The Next Web tested out the miner – and found that it both the heating and mining functions worked well. He even used it to heat his room during the winter.

After running the crypto-heater for a little over a month now, we are finally ready to share our experience with the device…

Once we installed the mining rig in our office, which practically included connecting the crypto-heater to the internet via the web-based dashboard system developed by Comino, it automatically created a wallet and began mining Ethereum. As easy as this.

Of course, if you already have a wallet, you still have the option to connect it to the dashboard. You can also connect any other mining rig to the Comino dashboard, in case you want to follow all of your mining efforts in one place.

Among other things, the online dashboard shows a number of statistics the Comino developers had programmed to monitor, including the current and average hashrate at which the miner is solving cryptographic puzzles, the current and average temperature at which it operates, as well as the unpaid balance of Ethereum you’ve accumulated. It also shows stats for the temperature of each separate GPU.

Throughout this one-month trial, the only issue I experienced with the miner was that – for some reason – its ambient temperature sensor inaccurately picked up the temperature of the GPUs inside (which had just taken a break from mining); this prevented the device from booting up again, until it cooled down a little.

And in case you were wondering about how reliable the Comino was as a heater : it certainly kept the temperature high enough to save some energy on heating bills, but not enough to make you turn on the air conditioner. Which is exactly what you want from a a machine that was built to bank on crypto.

The Comino N1 maintains an average hashrate of about 200 MH/s, and an average temperature of approximately 60 Celcius – about 140 degrees Farenheight.

Since installing the miner on Nov. 16, TNW reported that it has so far transferred a total of 1.2 ether to the company’s designated wallet. Since Ethereum is currently trading around $700 a coin, the miner would pay for itself in eight months, assuming the value of Ethereum doesn’t crash, or that an influx of new mining capacity decreases the miner’s efficiency.

Source: ZeroHedge