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Bitcoin rate on the move

By on May 30, 2016 in Bitcoin, Blockchain, Economics, Free Markets

Right now, we see the Bitcoin (BTC) exchange rate skyrocketing. At the moment, the day to day volatility is some 25 percent – with the price of 1 BTC closing in on USD 550.

This might very well be a temporary fluctuation. But there are telltale signs that we might see the BTC price continue to rise.

One reason is that BTC is becoming increasingly popular with the Chinese. CCN.LA writes…

Started by Arthur Hayes, a former Citigroup trader living in Hong Kong, the goal was to create an exchange where people use cryptocurrency to bet on securities not easily accessible to them in their home markets.

Because China restricts exchanging its yuan for other currencies, citizens find it expensive and difficult to invest in overseas securities. Foreign investors are also restricted in trading China stocks.

Link: Bitcoin Derivatives Exchange Expands, Skirting China’s Currency Curbs »

Then, we have the fact that BTC mining is to be slowed down. The Dollar Vigilante explains…

On July 18th of this year bitcoin undergoes a major event that only happens every four years called a “halving”.

Bitcoins are developed through the process of mining. Only 21 million bitcoins can be in existence at any one time. The value of mining is regulated in order to maintain this number. To prevent miners from surpassing this limit, the currency is designed to cut the value of mining in half every four years. It is as if the Federal Reserve slashed the amount of money-printing it does by half.

This could have a major impact on the overall value of the currency. If demand for bitcoin continues to grow while the number of coins that can be mined is drastically decreased, the value should naturally surge. That’s just the law of supply and demand.

Link: Bitcoin Skyrockets And Is Now Up More Than 100% This Jubilee Year »

The Dollar Vigilante also lists these reasons for BTC increasing in value over time:

  • Bitcoin and Blockchain are the Future of Money and Banking
  • Capital Control Crackdowns, Bank Bail-Ins and Worldwide Taxation Schemes to Drive Bitcoin Growth
  • The Coming Debt Jubilee Could Send Bitcoin Easily above $10,000… Maybe $100,000… Maybe More

A bit optimistic, perhaps. But we really should consider what can happen if there is a USD or Euro crisis. (E.g. a debt crisis, a new bank crisis and/or a haircut on bank savings.)

And the fact that BTC is a decentralised currency out of reach of governments control will always give it a role in a free market.

We live in interesting times.

/ HAX

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European Parliament to tackle virtual currencies and Blockchain

By on May 23, 2016 in Big Government, Bitcoin, Blockchain, Economics, EU

This week, the European Parliament will debate (Wednesday) and vote (Thursday) on a report on virtual currencies.

First of all, this is a report – not legislation. But it will be handed over to the European Commission for consideration.

It is interesting to see how the EP seems to think that virtual currencies can be regulated and incorporated in existing regulations and legal frameworks. Of course, a new virtual currency can do that. But when it comes to Bitcoin and other existing currencies – I cannot understand how this is supposed to be done. (And it shouldn’t.)

The EP also seems to believe that virtual currencies have some sort of governing bodies, that could be held accountable in front of the EU and national authorities.

On the positive side, the report states that no special legislation for virtual currencies is needed – for the time being. (“More tailor-made legislation might be needed.”)

Here are some parts of the report that might be of interest. (VC = virtual currencies. DLT = distributed ledger technology = Blockchain.)

19. Welcomes the Commission’s suggestions for including VC exchange platforms in the Anti-Money-Laundering Directive (AMLD) in order to end the anonymity associated with such platforms; expects that any proposal in this regard will be targeted, justified by means of a full analysis of the risks associated with VCs, and based on a thorough impact assessment;

20. Recommends that the Commission draw up a comprehensive analysis of VCs and, on the basis of this assessment, consider, if appropriate, revising the relevant EU legislation on payments, including the Payment Accounts Directive (PAD), the Payment Services Directive (PSD) and the Electronic Money Directive (EMD), in light of the new possibilities afforded by new technological developments including VCs and DLT, with a view to further enhancing competition and lowering transaction costs, including by means of enhanced interoperability and possibly also via the promotion of a universal and non-proprietary electronic wallet;

21. Observes that several virtual local currencies have been created in Europe, not least as a response to the financial crises and the related credit crunch problems; urges particular caution when defining virtual currencies, in the context of any future legislative proposals, with a view to taking proper account of the existence of ‘local currencies’ of a not-for-profit nature, often having limited fungibility and providing significant social and environmental benefits, and to preventing disproportionate regulation in this area, as long as taxation is neither avoided nor circumvented;

22.Calls for the creation of a horizontal Task Force DLT (TF DLT) led by the Commission, consisting of technical and regulatory experts, in order to:

i) provide the necessary technical and regulatory expertise across the various sectors of pertinent DLT applications, bring together stakeholders and support the relevant public actors at EU and Member State level in their efforts to monitor DLT use at the European level and globally;

ii) foster awareness and analyse the benefits and risks – including to end-users – of DLT applications in order to make best use of their potential, including by aiming to identify a core set of attributes of DLT schemes conducive to the general interest, such as non-proprietary open standards, and by identifying standards for best practice where such standards are emerging;

iii) support a timely, well-informed and proportionate response to the new opportunities and challenges arising with the introduction of significant DLT applications, including by means of a roadmap for future steps at EU and Member State level which would include an assessment of existing European regulation, with a view to updating it in response to significant and systemic DLT use where appropriate, also addressing consumer protection and systemic challenges;

iv) develop stress tests for all relevant aspects of VCs and other DLT schemes that reach a level of use that would make them systemically important for stability;

23. Stresses the importance of consumer awareness, transparency and trust when using VCs; calls on the Commission to develop, in cooperation with the Member States and the VC industry, guidelines with the aim of guaranteeing that correct, clear and complete information is provided for existing and future VC users, to allow them to make a fully informed choice and thus enhance the transparency of VC schemes in terms of how they are organised and operated and how they distinguish themselves from regulated and supervised payment systems in terms of consumer protection;

The devil is in the details. (My emphasis above.)

Apparently the EP has found something new to regulate. The fact that its’ members don’t seem to grasp the concept of virtual currencies and Blockchain will not stop them. And that is not an unusual approach when it comes to EP reports…

At best this report is a waste of time. But it can be used by the Commission to justify future legislation.

/ HAX

• The report, 2016/2007(INI) »
• As PDF »
• EP summary »

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“Bitcoin’s nightmare scenario has come to pass”

By on March 4, 2016 in Bitcoin, Blockchain

This week the dire predictions came to pass, as the network reached its capacity, causing transactions around the world to be massively delayed, and in some cases to fail completely. The average time to confirm a transaction has ballooned from 10 minutes to 43 minutes. Users are left confused and shops that once accepted Bitcoin are dropping out.

The Verge: Bitcoin’s nightmare scenario has come to pass »

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The future of digital currencies

By on February 10, 2016 in Bitcoin, Blockchain, Uncategorized

What is actually going to happen is, each virtual currency is going to continue doing its thing. If bitcoin’s current situation becomes a problem, people are going to start using something else. That something else will gain traction. It may even become more popular than bitcoin. Or, when that begins to happen, the bitcoin community is actually going to decide to evolve. This process is necessary for evolution. To think that we need only one virtual currency is short sighted. There are going to be many virtual currencies that have various properties that are suited to their environment better than another. Virtual currencies are going to become some of the human beings’ tools to transmit value between each other, in addition to ancient technologies such as bank transfers or Paypal.

Bitsapphire: The necessities of Evolution »

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A Bitcoin moment? Or not?

By on February 4, 2016 in Bitcoin, EU

The European Union is trying to decide what to make of Bitcoin and other digital currencies.

In general, the EU Commission has decided not to regulate. At least for the moment.

But at the same time, the EU is expanding its’ regulations against money laundering and terrorism funding.

And from that perspective, the recommendation seems to be that it should be required to register when exchanging digital currencies for traditional ones — or the other way around.

Naturally, this is inconvenient. And it might be yet another obstacle on the road to general acceptance of digital currencies.

But it might also be an opportunity to expand the Bitcoin ecosystem and to make it more or less autonomous — so that you will never have to change Bitcoins for fiat money.

But for that to happen, the Bitcoin society needs to get its’ act together. The present uncertainty about technical matters is a killer — that may thwart a coming Bitcoin Moment or kill it off altogether.

/ HAX

EU: Commission presents Action Plan to strengthen the fight against terrorist financing »

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Post Paris: EU to clamp down on Bitcoin, gold and pre-paid credit cards

By on November 19, 2015 in Bitcoin, EU, War on Terror

Tomorrow, Friday, EU interior and justice ministers will meet in Brussels — for an emergency meeting after the Paris terror attacks.

According to Reuters, EU member states “plan a crackdown on virtual currencies and anonymous payments made online and via pre-paid cards in a bid to tackle terrorism financing”.

“They will urge the European Commission, the EU executive arm, to propose measures to “strengthen controls of non-banking payment methods such as electronic / anonymous payments and virtual currencies and transfers of gold, precious metals, by pre-paid cards,” draft conclusions of the meeting said.”

In other words, governments would like to take control of all forms of payments except cash. And with EU rules against money laundering access to cash also can be quite restricted.

It would be very interesting to know how the EU is supposed to “strengthen control” of Bitcoin — as the system is totally decentralized. I doubt that they can.

But they can make life more difficult for ordinary people if clamping down on e.g. pre-paid credit cards and online payment systems.

This EU meeting is being held in panic, with politicians desperate to look as if they are doing something of substance to combat terrorism. So, I guess, they really haven’t thought things trough. And they leave all the details to the European Commission to figure out.

This might result not in an EU directive, but an EU regulation. If that will be the case, measures can quickly be implemented without having to involve the people’s elected representatives in the European Parliament.

/ HAX

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Big Brother and Your Money

By on October 18, 2015 in Big Brother, Big Government, Bitcoin, Economics, EU, Privacy, surveillance, Sweden

Many governments are getting very nervous. They struggle with debt, over spending, currency emergencies and new strains on the economy like the European refugee crisis.

So they are keen to make sure that all tax revenues that can be collected will be collected. And mass surveillance gives them a tool to do so.

Also, the move towards a cash free society makes it easier for politicians and bureaucrats to keep track of you and your money.

For years, we have sent bulk data about European bank transfers to the US security bureaucracy under the pretext of fighting terrorism and organized crime (TFTP). In the EU, plans are to replace this system with a European one — aimed to register, control and analyze all of our bank transfers.

In some high-tax countries with submissive population, like Sweden, information from data retention of telecommunications is already being used for taxation purposes.

And this is not just about taxes. If your government controls all your monetary assets, it owns you. Which might come in handy if, someday, people in power would like to curb opposition, limit your civil liberties — or just make your life very difficult.

With no private economic sphere, people are totally in the hands of their whimsical governments and its functionaries.

When it comes to “regular” surveillance concerns, having access to information about your transactions will provide the authorities with a cornucopia of information about you. More so than just surveillance of your electronic and telecommunications.

The government will always be able to give some reasons for its actions. Sometimes even seemingly rational ones. Like striking down on tax evasion. But even these reasons must be weighed against your right to privacy. Just passively accepting them could be used for introducing live surveillance of everybody 24/7.

It’s your life. And it’s your money. Period. The government should just get out of everybody’s hair.

If people could get themselves together and bring about a broader use of Bitcoins, we can bypass all of this governmental economic Big Brotherism.

/ HAX

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Economic evolution, technology and politics

By on October 15, 2015 in Bitcoin, decentralization, Free Markets, Internet

If you order a Über car in Berlin, you will get a classic Berlin cream coloured Mercedes taxi instead. As in many other places special interest groups, politicians and bureaucrats are trying to stop market progress and competition. Sometimes they give somewhat understandable reasons such as insurance and tax issues. Sometimes they don’t.

But what is interesting is that still you will get a car, even though it might not be a black Über one. The service is being upheld, even if it’s only its interface that is used at the moment.

While it might be possible for local governments to prevent the ride-sharing side of Über (for the moment), the technical aspect of the concept seems to be unstoppable. Using the company’s smartphone app is much more cost efficient for taxi operators than having a telephone switchboard and some sort of local radio operated voice or data system to direct cars. And then there is the issue of not having to handle money or credit cards, as the payment function is already built into the system.

The Über concept also has proven to be popular with customers — as it is seen as easy to use, reliable, safe and hassle free. The same app can be used more or less worldwide

There is an underlying, slow but steady change towards a decentralized sharing economy in the western world. (Witch is was Über is really about.) This is a change of an entire market paradigm, allowing ordinary people to provide all different sorts of services to others. But for this to be a truly free and dynamic market it must be defended against over regulation and old business protectionism. For this to happen, it must be backed up by technical development.

It has been said that politics might overpower money — but that technology beats politics. This has proven to be right e.g. when it comes to the Internet, telecommunications and television. And it will be true when it comes to the emerging sharing economy — that is a yet fragile concept that politicians and bureaucrats cannot really get their heads around. (So they should keep out of it, but they rarely do.)

You can argue that cutting edge technology has become a prerequisite for economic freedom and evolution in today’s society. Which makes the fight for a free and open connected world even more important.

It might also be a good idea to hard-wire the new sharing economy with encrypted, decentralized digital currencies and payment methods, such as Bitcoin.

/ HAX

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