AuthorTopic: P O O F ! Goes The Crypto  (Read 7398 times)

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A new hack serves as a reminder of Bitcoin’s structural flaws
« Reply #15 on: December 22, 2017, 02:23:10 AM »
https://www.salon.com/2017/12/21/a-new-hack-serves-as-a-reminder-of-bitcoins-structural-flaws/

A new hack serves as a reminder of Bitcoin’s structural flaws
The latest string of hacks and alleged insider trading raise questions about cryptocurrency institutions


Nicole Karlis12.21.2017•1:11 PM

A virtual heist hit a Bitcoin exchange in Seoul — again.

Youbit, a South Korea cryptocurrency exchange, announced it was closing its doors after digital robbers stole an undisclosed number of bitcoins. The exchange was hacked for the first time in April, when an estimated 4,000 bitcoins were stolen. While bitcoin has dramatic, sometimes hourly fluctuations in value, at today's going exchange rate of $15,000 USD per bitcoin, such a hack would equate to around $61 million lost; although in April, the same sum of bitcoin would be worth only around $4 million, as they were trading near $1,000 per bitcoin back then.

This more recent hack took a reported 17 percent of Youbit's assets, according to a Reuters report. The precise amount was not specified. The Reuters report also noted that the Korea Internet & Security Agency (KISA) is investigating the cyberattack.
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The previous hack of Youbit in April was reportedly linked to a hacker group in North Korea. Indeed, North Korea is suspected to be the culprit in this latest hack, though that remains unconfirmed.

This also marks the second time this week that North Korea has been blamed for a cyberattack.

The hack of Youbit comes at a moment of truth for cryptocurrencies. In the past month, bitcoin reached its highest value ever. That, and the announcement that both the Chicago Board of Exchange and the Chicago Mercantile Exchange would allow futures trading in Bitcoin, also gave the currency mainstream appeal.

Youbit isn’t the only cryptocurrency exchange to suffer a PR nightmare. CNBC reported yesterday that Coinbase, a U.S.-based exchange, was under scrutiny for alleged insider trading. On Dec. 19, the value of Bitcoin Cash — a currency which spun off of bitcoin — started to rise immediately prior to Coinbase’s announcement that it would be supporting it, a coincidence that raised suspicion. Brian Armstrong, Coinbase’s co-founder, wrote a Medium post detailing the company’s trading policy, and announced that an investigation had been launched.
 
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“Given the price increase in the hours leading up the announcement, we will be conducting an investigation into this matter. If we find evidence of any employee or contractor violating our policies — directly or indirectly — I will not hesitate to terminate the employee immediately and take appropriate legal action,” he wrote.

While reports such as these might make one skeptical of the structural underpinnings of cryptocurrency, one expert says it might not be the cryptocurrency that is flawed — but rather the institutions exchanging and holding the cryptocurrency.

“It’s not the inherent security of bitcoin that was attacked, it was the security of the organizations that are keeping track,” Clifford Neuman, Director of USC's Center for Computer Systems Security, told Salon.

Neuman explained that these exchanges are no different than banks, but they are subjected to fewer regulations, which could be linked to their unforgiving vulnerabilities.

“If the exchange holds funds on behalf of its customers, either in its own Bitcoin wallet, or in Bitcoin wallets that it manages on behalf of its customers, then a hack to the system managed by the exchange can allow the attacker to obtain private keys associated with the bitcoin accounts or otherwise cause transactions to be initiated,” he said.

Yet some argue that the lack of regulation surrounding bitcoin is precisely the source of its appeal. Economist Joseph Stiglitz argued recently that bitcoin is "successful only because of its potential for circumvention, lack of oversight." Yet if the lack of regulation surrounding bitcoin is part of its appeal, it is also a drawback: hacks, insider trading, dramatic fluctuations, and a lack of a "bank" or somewhere to put one's money have become the norm.

More worrisome is the process of tracking and penalizing the criminals who orchestrate these hacks. And given that cyber-thieves may be orchestrating hacks from across the planet, or working under the guise of state intelligence agencies, it is unclear if many are even in the grasp of law enforcement.
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Offline RE

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Bitcoin Plummets Below $14,000; Peter Schiff Says 'Mark It Zero'
« Reply #16 on: December 22, 2017, 03:31:35 AM »
http://www.zerohedge.com/news/2017-12-21/crypto-carnage-continues-bitcoin-down-5000-record-highs-schiff-says-mark-it-zero

[size=18pt][b]Bitcoin Plummets Below $14,000; Peter Schiff Says 'Mark It Zero'[/b][/size]

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Update: 1005ET: The carnage across cyrptocurrencies has escalated with Bitcoin back to a $13K handle, Ethereum back below $700, and Bitcoin Cash below $2,600...

Bitcoin is now almost $6,000 off its record high...

For those who are keeping track...

Related Video
A Rival Bitcoin Was Just Created From Within
 

X

 
  • $0000 - $1000: 1789 days
  • $1000- $2000: 1271 days
  • $2000- $3000: 23 days
  • $3000- $4000: 62 days
  • $4000- $5000: 61 days
  • $5000- $6000: 8 days
  • $6000- $7000: 13 days
  • $7000- $8000: 14 days
  • $8000- $9000: 9 days
  • $9000-$10000: 2 days
  • $10000-$11000: 1 day
  • $11000-$12000: 6 days
  • $12000-$13000: 17 hours
  • $13000-$14000: 4 hours
  • $14000-$15000: 10 hours
  • $15000-$16000: 5 hours
  • $16000-$17000: 2 hours
  • $17000-$18000: 10 minutes
  • $18000-$19000: 3 minutes
  • $19666-$14000: 4 days

ETH and BCH in trouble too...

In fact almost the entire crypto space is collapsing with Ripple the only gainer for now...

There continues to be no obvious catalyst for the run.

Volume is heavy in futures tonight too...

 

The question is - which happens first - Bitcoin $10,000 or Gold $1,300?

*  *  *

After an exuberant few days following Coinbase's adoption of Bitcoin Cash, the forked currency has collapsed back below $3,000...

For the 4th night in the last 5, someone has started slamming Bitcoin at around 8pmET, pushing the biggest cryptocurrency back below $15,000 for the first time in two weeks...

Catalysts for the drop are unclear other than systematic selling pressure as Asia opens. There was chatter about the lack of security in South Korean local exchanges, but it is unlikely that is the cause for now.

Since CME launched its futures contract, Bitcoin has been under pressure and renowned market watcher Peter Schiff is pretty clear where he thinks this ends up...

As CoinTelegraph reports, speaking to RT this week, renowned analyst Peter Schiff, credited for predicting the 2008 housing market collapse, issued a foreboding warning to investors buying Bitcoin at current prices.

Even with a shaky week, Bitcoin is hovering around the $15,000 mark, after a two-month bull run that saw the price rise by more than 200 percent.

Schiff says those trying to ride the bubble are too late:

“People who got it years ago, even people who got it at the beginning of the year have the opportunity to cash out and make a lot of money. But people who are buying it at these prices or higher prices are going to lose practically everything.”

The old adage, “buy on the rumor and sell on the news,” seems to be the perfect way to sum up Schiff’s sentiments on the current attitude of green investors trying to make a quick buck out of Bitcoin:

“These currencies are going to trade to zero or pretty close to it when the bubble pops. Right now, the only reason why people are buying Bitcoin is because the price is going up. When it turns around, they are not going to sell it for the same reason."

He also voiced by now common criticism of Bitcoin Core’s transaction functionality, noting the low speed and high cost of transactions on the network:

“There is no value in Bitcoin, you can’t use it as money. It’s too slow, too expensive and too vulnerable.”

Still with gold's recent weakness, we are sure Peter has more than  a small ax to grind on this one.

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Offline RE

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Bitcoin plunges below $12,000, heads for worst week since 2013
« Reply #17 on: December 22, 2017, 10:30:07 AM »
How low can we go?

RE

https://in.reuters.com/article/us-global-bitcoin/bitcoin-plunges-below-12000-heads-for-worst-week-since-2013-idINKBN1EG0AA

Bitcoin plunges below $12,000, heads for worst week since 2013
Jemima Kelly, Gertrude Chavez-Dreyfuss


5 Min Read

NEW YORK/LONDON (Reuters) - Bitcoin plunged by a quarter to below $12,000 on Friday as investors dumped the cryptocurrency in manic trading after its blistering ascent to a peak close to $20,000 prompted warnings by experts of a bubble.

It capped a brutal week that had been touted as a new era of mainstream trading for the volatile digital currency when bitcoin futures debuted on CME Group Inc (CME.O), the world’s largest derivatives market on Sunday.

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Friday’s steep fall bled into the U.S. stock market, where shares of companies that have recently lashed their fortunes to bitcoin or blockchain - its underlying technology - took a hard knock in early trading.

The biggest and best-known cryptocurrency had seen a staggering twentyfold increase since the start of the year, climbing from less than $1,000 to as high as $19,666 on the Luxembourg-based Bitstamp exchange BTC=BTSP on Sunday and to over $20,000 on other exchanges.

Bitcoin has fallen each day since, with losses accelerating on Friday.

In the futures market, bitcoin one-month futures <0#XBT:> on Cboe Global Markets were halted due to the steep price drop, while those trading on the CME BTCF8 hit the limit down threshold.

In the spot market, bitcoin fell to as low as $11,159, down more than 25 percent on the Luxembourg-based Bitstamp exchange BTC=BTSP, its largest one-day drop in nearly three years. For the week, it was down around a third - its worst performance since April 2013.
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“After its parabolic-like rally, a crash was imminent and so it has proved,” said Fawad Razaqzada, market analyst at Forex.com in London. “Investors may have also been put off buying bitcoin at those elevated levels amid repeated warnings from experts about the way it had climbed near $20,000.”

“A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes,” said Charles Hayter, founder and chief executive of industry website Cryptocompare in London. “A lot of traders have been waiting for this large correction.”

“With the end of the year in sight a lot of investors will be taking profits and saying thank you very much and closing their books for the holiday period,” he added.

Warnings about the risks of investing in the unregulated market have increased - Denmark’s central bank governor called it a “deadly” gamble - and there have been worries about the security of exchanges on which cryptocurrencies are bought and sold.
FILE PHOTO: A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/Illustration/File Photo

South Korean cryptocurrency exchange Youbit said on Tuesday it is shutting down and is filing for bankruptcy after it was hacked for the second time this year.

Coinbase, a U.S. company that runs one of the biggest exchanges and provides digital “wallets” for storing bitcoins, said on Wednesday it would investigate accusations of insider trading, following a sharp increase in the price of a bitcoin spin-off hours before it announced support for it.
CRYPTO-RIVALS

As rival cryptocurrencies slid along with bitcoin, the total estimated value of the crypto market fell to as low as $440 billion, according to industry website Coinmarketcap, having neared $650 billion just a day earlier.
CME Group Inc149.49
CME.ONasdaq
-1.39(-0.92%)
CME.O

    CME.O

But other cryptocurrencies surged this week, with investors moving into cheaper digital coins, rather than cashing out of the sector.

Ethereum, the second-biggest cryptocurrency by market size, soared to almost $900 earlier in the week, from around $500 a week earlier. Ripple, the third-biggest, has more than quadrupled in price since Monday.

Stephen Innes, head of trading in Asia-Pacific for retail FX broker Oanda in Singapore, said that there have also been moves out of bitcoin into Bitcoin Cash, a clone of the original cryptocurrency. Oanda does not handle trading in bitcoin.

“Most of it is unsophisticated retail traders getting burned badly,” Innes said on bitcoin’s recent retreat.
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While some say the launch by CME and its rival Cboe Global Markets of bitcoin futures over the last two weeks has given the digital currency some perceived legitimacy, many policymakers remain sceptical.

Bitcoin is known to go through wild swings. In November, it tumbled almost 30 percent in four days from $7,888 to $5,555. In September, it fell 40 percent from $4,979 to $2,972.

To view a graphic on Bitcoin moves this year click on this link reut.rs/2BVVXQd
Reuters Graphic

Reporting by Gertrude Chavez-Dreyfuss in New York and Jemima Kelly in London; Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Keith Weir and Susan Thomas
Our Standards:The Thomson Reuters Trust Principles.
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Offline RE

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Wolf Richter on Bitcoin Mania
« Reply #18 on: December 26, 2017, 06:52:19 AM »
<a href="http://www.youtube.com/v/tGARD4AI7_4" target="_blank" class="new_win">http://www.youtube.com/v/tGARD4AI7_4</a>
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Offline RE

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https://wolfstreet.com/2017/12/28/im-in-awe-of-how-far-the-scams-stupidity-around-blockchain-stocks-are-going/

I’m in Awe of How Far the Scams & Stupidities around “Blockchain Stocks” are Going
by Wolf Richter • Dec 28, 2017 • 1 Comment   


This can happen only during the very late stage of a bubble.

It just doesn’t let up. UBI Blockchain Internet, a Hong Kong outfit whose shares trade in the US [UBIA], filed with the SEC to sell an additional 72.3 million shares owned by its executives. In other words, it isn’t selling the shares to raise money for corporate purposes, but to allow its executives, including CEO Tony Liu, to bail out.

This is happening after the company – which sports zero revenues and a disconnected phone number in its SEC filings – managed to get its shares to spike briefly by over 1,100%, pushing its market capitalization to $8 billion.

UBI Blockchain didn’t do an IPO. Instead, in October 2016, it acquired a publicly traded shell company registered in Las Vegas, called “JA Energy.” It then changed the name and ticker symbol to what they’re now.

Over the six trading days starting on December 11, 2017, its shares soared over 1,100%, from $7.20 to $87 on December 18, as the word “blockchain” in its name and sufficient hype and speculator-idiocy took hold. By December 21, shares had plunged 67% to $29. They closed on Wednesday at $38.50. At this price, it still has a ludicrous market cap of $3.64 billion.

by Cboe

In its prospectus for the share sale, filed with the SEC on December 26, UBI explains the overcooked spaghetti of its dreamed-up activities:

    UBI Blockchain Internet Ltd. business encompasses the research and application of blockchain technology with a focus on the Internet of things covering areas of food, drugs and healthcare. Management plans to focus its business in the integrated wellness industry, by providing procedures for safety and effectiveness in food and drugs, but also preventing counterfeit or fake food and drugs. With the advancement of the blockchain technology, the Company plans to trace a food or drug product from its original source within the context of the Internet of Things to the final consumer.

It explains that “management is uncertain that the Company can generate sufficient revenues in the next 12-months to sustain our operations. We shall need to seek additional funding to continue our operations and implement our plan of operations.”

It added that “due to the uncertainty of our ability to meet our financial obligations and to pay our liabilities as they become due,” the auditors in the financial statement for the year ended August 31, 2017, questioned “our ability to continue as a going concern.”

For the year, UBI had an operating loss of $1.83 million on zero revenues. It had $15,406 in cash, and: “In order to keep the company operational and fully reporting, management anticipates a burn rate of approximately $220,000 per month, pre and post-offering.”

    Without any additional funding, the Company will be unable to operate. Therefore, if we are unable to generate sufficient revenues, we must raise additional capital in order to continue operations in order to implement our plan of operations.

Alas, all of the shares will be sold by existing shareholders. The company “will not receive any proceeds from the sale of the common stock by the selling stockholders.” So even after the sale of the shares, it will have no cash to operate on.

The selling shareholders are the CEO Tony Liu and five other “individuals.” Speculators who buy these shares will hand their money to those individuals – not the company. And the company still has nothing, no revenues, no business model, no cash….

This wasn’t the only outfit to leverage the word “blockchain” to create hype and extract billions from gullible speculators.

There’s Longfin [LFIN]. The company went public in the US on December 13, 2017. In its SEC filing, it said it had revenues of $298,786 in the year 2017 and was sitting on $75 in cash. What sent the stock soaring 2,700%, from $5 to $142.82 in a few days, and gave it briefly a market capitalization of over $7 billion, was the December 15 announcement – an elegant and apparently very effective mix of gobbledygook, hype, and silliness that started out like this:

    Longfin Corp., a leading global FinTech company, announces the acquisition of Ziddu.com, a Blockchain-empowered solutions provider that offers Microfinance Lending against Collateralized Warehouse Receipts in the form of Ziddu Coins.

What actually happened, according to Longfin’s SEC filing: Longfin bought an asset called “Ziddu.com” from Meridian Enterprises, a Singapore corporation, 95% of which is owned by Longfin’s CEO and chairman.

On Wednesday, Longfin shares closed at $59.95, down 58% from its peak a few days ago.

This total insanity over outfits claiming to have a blockchain-related activity has been an ongoing movement over the past few weeks and months.

Shares of Digital Power Corp., a dotcom-bust survivor, if barely, soared 880% from $0.56 on November 21 to $5.50 on December 18, though it shares have since plunged to $4.05. The company makes lowly power supplies for computers, but after it announced that it would aim its power supplies at cryptocurrency miners, its shares took off.

There is a gaggle of others with similar trajectories: Beverage-maker Long Island Iced Tea soared 280% within seconds after it announced that it would change its name to Long Blockchain; also Riot Blockchain, Seven Stars Cloud Group, Siebert Financial Corp, among others. They all have minuscule or no revenues, though their combined market capitalization is many billions.

That these companies get away with this, that in fact speculators fall for this crap, that they’re stupid enough to bet what are in aggregate many billions of dollars in a matter of seconds after “blockchain” flashes across their screens, is a sign of just how far the global flood of liquidity has befuddled the minds of these speculators and turned them into knee-jerk betting automatons. This phenomenon happens only during the very late stages of a bubble. But going back over the last three bubbles and crashes, to 1987, I have never seen anything this crazy. This is truly awe-inspiring.

Leverage is the great accelerator on the way up and on the way down. Read…  Peak Good Times? Stock Market Risk Spikes to New High
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12 changes that could shake up the blockchain world in 2018
« Reply #20 on: January 01, 2018, 03:09:30 PM »
https://venturebeat.com/2018/01/01/12-changes-that-could-shake-up-the-blockchain-world-in-2018/

12 changes that could shake up the blockchain world in 2018
Jeremy Epstein, Never Stop Marketing@jer979   January 1, 2018 12:45 PM


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If there is one thing I have learned in the last two years in the cryptocurrency world, it’s that things change so quickly in this sector, it can humble anybody. Anyone who says he knows what he is talking about, doesn’t!

Still, it’s New Year’s Day, so what the heck? I’ll put my neck out there with 12 predictions for 2018:
1. Ripple will lose its luster

People will realize that Ripple is a cool business but that it doesn’t actually require a protocol token to work. There are a number of other protocols (including some VERY high market cap ones) that also don’t require a token to work.  The market will start to weed them out. That said, Ripple will be a valuable company because of the service it provides. It just won’t be a valuable protocol. The protocol multiples are much higher. Disclosure: I previously owned XRP, but don’t hold any now.
2. The Lightning Network will face the big test

Either Lightning will work and Bitcoin will regain its prominence as THE default cryptocoin in the world, or it will fail miserably and Bitcoin will continue to fall further and further behind as a coin of relevance. If that happens, Bitcoin Cash becomes the “real” Bitcoin.

To me, it’s a coin toss. I’m playing catchup on this one as I sold a lot of my BCH when it came out in favor of BTC, thinking SegWit2x would happen, but I was wrong. Ouch.
3. The privacy wars will begin as people recognize the difference between pseudonymity and anonymit

When they do, the competition will intensify for adoption of a “privacy” coin like

    Zcash (disclosure: They’re a client and I’m biased)
    Monero (which seems to be the privacy coin of choice on the Dark Web).
    Dash has amazing marketing (Amanda B. Johnson is probably the best in the business) but questions abound about the reputation of some of the leadershp team, weaknesses within the masternode setup and possibly even legal implications.
    PIVX which has a fun team and is really fast plus can integrate with Slack.

I predict that one or two of these coins will be recognized as the next Bitcoin within the mainstream media. There are a lot of factors here that will determine the winner, but I it will come down to whose security mentality is superior. We’ll only know that after a few big attacks.
4. The DAO market will take off

The DAO market, currently led by companies like Aragon, Colony, District0x, and DAOStack — will soon have a few proof-of-concept DAOs running. It’ll be interesting to hear the metrics they report in terms of set up time, user base, types of activities/DAOs in operation, etc. These protocols have massive opportunity (as I wrote previously on VentureBeat), though the vision in this market may be way ahead of the tech.

If there are 50 or so legit projects in pilot in 2018, then this sector is on a fast pace. I’m planning a pilot DAO of my own, by the way, so I’ll be updating readers about what the process looks like from the inside.
5. More decentralized AI startups will emerge

Last month, blockchain-based AI-as-a-Service startup SingularityNet’s ICO sold out in 60 seconds, pulling in $36 million. It set the $36 million cap after receiving requests for $360 million worth of its tokens from investors. There will be more ICOs like this one. Since money attracts money, we will see a lot of people leaving high priced AI jobs at big tech firms like Google and Facebook to pursue billion-dollar paydays at the next crypto-AI protocol. We will probably see 10 crypto AI ICOs that are at least $50 million. For more on decentralized AI, see my earlier article here.
6. Ethereum will be the standard … or not

By now, we all know that CryptoKitties brought the Ethereum network to its knees. Ethereum cofounder Vitalik Buterin knows it too and is very aware of the challenges he and his team face.

I had the opportunity to spend time with Buterin and Ethereum developer Vlad Zamfir a few weeks ago, and — although I think the “Vitalik as Wunderkind” narrative is dangerous — I walked away from our conversation very impressed. These two are very thoughtful, articulate, open-minded, and brilliant. There are a ton of things that need to be done to prepare Ethereum to handle the scale and speed the community will need (as I have outlined before), but these two are both smart and humble enough that they could do it.

That said, with all of Ethereum’s issues, there is room for other, newer blockchains like NEM, QTUM, EOS, or AION to start closing the gap, if not overtake the platform. If we see more than 100 projects built on any one of those platforms, I think we’ll be seeing the emergence of an Ethereum contender. If not, Ethereum will keep its hold on the lead.
7. Interoperability protocols will remain immature

I’m rooting for interoperability players — like Polkadot, Cosmos and new entrants like Lamden and Metronome — that will enable transactions and information exchanges between different blockchains. But I think it will be a while before they really get off the ground. In the long term, they’ll enable a multi-blockchain world. But in the short term, they’ll increase the load on key blockchains like Ethereum and Bitcoin and so won’t likely get much love from those communities just yet. I expect them to be a bit quiet for the time being. For more on this sector, see my earlier story.
8. We’ll see more Crypto Valleys beyond Zug

I lead a quarterly trip to “Crypto Valley” in Zug, Switzerland as part of the Crypto Explorers Association. The next one is January 29, which is sold out, but applications are open for the April trip. See the site for details.

We’ve been approached by governments in places like Oman and Panama that want to set up Crypto Valleys in their geographies and use CryptoExplorers as a way of introducing themselves to the world. They have studied what Zug has done to drive innovation and job creation and they want to do that themselves.

That tells me governments in tier 2 or tier 3 locations see blockchain/crypto as a way to “leapfrog” tier 1 economies in the way Estonia did in the 1990s, going straight to a digital first country. (You can read about my experiences as an e-citizen of Estonia here.)

These new Crypto Valleys will try to become blockchain-first locations. And I think we will see two or three of them make it. I’m not talking about Dubai, Singapore, Tel Aviv, or Berlin. I’m talking about unexpected places like Bratislava, Florianopolis, Panama City, and Muscat.
9. Crypto will go mainstream

Three of the top 10 retail brokers in the U.S. will allow you to buy 1-5 cryptocurrencies directly from their websites, just as you do today with stocks or mutual funds. Coinbase, currently the most popular exchange for crypto newcomers, only supports four currencies at the moment. Unless it wants to start losing ground, it will need to improve its infrastructure and execute a plan for world domination.
10. ICOs will go mainstream

I think we will see the first legitimate ICOs take place on Indiegogo in February, or March at the latest. I predict that, over the course of the year, we will see at least nine more, for a total of 10 in 2018. (Here is Indiegogo’s original announcement.)
11. Reverse ICOs will intensify

Kik did the first reverse ICO; now YouNow is about to do one. I think we’ll see at least 15-20 more reverse ICOs in 2018. A “reverse ICO” is when an existing company decentralizes itself and issues tokens to its members to stimulate a circular economy. This is as opposed to a ICO from a brand new startup project. All this activity will require the services of a new type of professional — the tokenization consultant — so expect to see that role catch on in 2018, too. For more on reverse ICOs, see here.
12. Regulation will get more serious

I’m cautiously optimistic U.S. authorities will be relatively lenient on blockchain startups so as not to impede innovation. But companies that are negligent or outright deceptive will get shut down. ICOs will have to adhere to KYC/AML policies, and their solutions will have to scale. If you look at SEC Chairman Jay Clayton’s letter from December 12, he is pretty clear about the importance of crypto-innovation, and he deserves credit for that. But he is also putting decentralized projects on notice, saying essentially that ignorance of the law is not a defense. I think this is a healthy balance.

The bottom line: If you thought 2017 was crazy, get ready for a lot more upheaval in 2018. This crypto thing is just getting started. Happy New Year!

Jeremy Epstein is CEO of Never Stop Marketing and author of The CMO Primer for the Blockchain World. He currently works with startups in the blockchain and decentralization space, including OpenBazaar, IOTA, and Zcash.
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Offline Palloy2

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Crypto mining and outside control of markets
« Reply #21 on: January 04, 2018, 05:45:07 PM »
After a power cut, when my computers came back on, my Minergate "balance" had gone to zero. I think it was only a theoretical balance and maybe not a real one, so it might suddenly reappear later.

Clearly a lot of money is going IN to cryptos at the moment. It hardly seems like normal trading. So there must be some heavy hitters in there - maybe Goldman Sachs and co?  Why not?

https://www.zerohedge.com/news/2018-01-04/anatomy-crypto-nightmare-ripple-ceo-now-richer-zuckerberg
Anatomy Of A Crypto-Nightmare: Ripple CEO Is Now Richer Than Zuckerberg
Tyler Durden
Thu, 01/04/2018

Having soared 36,000% last year and continuing its crazy run in 2018, Ripple has surged ahead of Ethereum as the second-largest cryptocurrency by market cap.

    Bitcoin $246BN
    Ripple $143BN
    Ethereum $97BN

 Leaving Mike Novogratz breathlessly berating the craziness as Ripple's CEO is now the 5th richest man in the world.

But it is Tom Luongo that is most-concerned at this "crypto-nightmare" and for good reason.

Amidst all of the bullish talk about cryptocurrencies we know that a strike back from the banking system and its owners is coming.  In fact, the attack as I see it is well underway.

And it began with the attack on the credibility of Bitcoin Cash and it’s continuing with the insane pump of Ripple and any coin which has direct ties to old money.  What I want to posit today is how the next crash in the cryptocurrency markets can, and likely will, play out.

To lay this out you have to believe a few things are true.

    The major money center banks have all been trading Bitcoin and other alt-coins for a long time. They have substantial books to push and pull the price.
    The futures market is used to control the price during daytime hours in the U.S. and Europe.
    Bitcoin’s failure to implement ‘Segwit 2x’ and its current dysfunction was intentional in order for Blockstream to offer a ‘solution’ to a ‘problem’ that needn’t have existed.
    Lightning Network is simply a backup control plan in case Ripple isn’t adopted by the marketplace as the crypto-settlement and exchange layer. It creates a second layer of centralization off-chain.
    Legislation and regulation to date has been designed to allow money to flow into the crypto-markets but not back out again.

Ripple, otherwise known as ‘BanksterCoin’ among we crypto-enthusiasts is the stalking horse of the cryptocurrency industry.  It’s meteoric rise in price coincides with Bitcoin’s peak and subsequent meandering.  It was done, timing-wise, to see articles like these (here, here and here) written as we ring in the new year.

The Bitcoin Trap

Look at the situation in Bitcoin.  After the failure to implement the New York Agreement, something that didn’t have to be an all-or-nothing proposition, Bitcoin spiked from $5000 to a high near $20,000 in less than a month.  Transaction fees soared, exchanges became illiquid, getting alt-coins off some exchanges was difficult as many were revealed (at least in the short term) to not have supply of the underlying assets people were ‘trading’ in their pools.

Services like Changelly and Shapeshift have much smaller lists of coins available for easy exchange than they did a month ago.  Try buying tokens like WAVES, STEEM, Golem, NEO or Komodo on these services.  You can’t.  They can’t source actual tokens or the gateways to exchange them are down.

The best way to kill a market is to get retail investors buying the peak and selling into it. Such is the stuff bear markets are made of.  It’s imperative to break retail investor sentiment down.  That’s how markets are brought to heel.  Then rotating out of that market into the next market you want to promote.  This is what the banking industry does with its sell-side ‘analysis’ all the time.

I have a rule, when Goldman-Sachs says “Buy” I sell and vice versa.  In my Universe, rightly or wrongly, Goldman and their ilk are still trading against its recommendations and its clients.  And if it’s not allowed to do so anymore *wink* *wink* because of Dodd-Frank then in the unregulated crypto-markets you should bet that they, J.P. Morgan and the rest of them are.

So, it’s easy to believe in an irrational pump of Bitcoin to $20,000 and the subsequent rotation out and into Ripple, boosting its price and profile, while leaving ‘teh newbz’ hanging at the top.  Add in Bitcoin futures trading to help the tail wag the dog, insane transaction fees that have everyone wondering what’s so great about this Bitcoin if it costs $30 to move $100 and you have a set-up for carnage.

The spike to $20,000, in my opinion, was created by the very hinckey roll-out of rival Bitcoin Cash by Coinbase last month.  The goal there was to sow confusion and undermine Bitcoin Cash as an alternative to Bitcoin.  Again, if you want control over the entire market, you do so by killing off real competition.

See, folks, all of this confusion and carnage comes from not having any kind of centralized control. But, hey, there’s this new cool thing called Ripple which solves all of that and the price is going bonkers!

Trap Set.
To Ethereum and Beyond

That’s the past.  That’s where we are as we enter 2018.  Now what?

In response to this, Ethereum begins another push towards $1000.  Now, Ethereum has its own problems that are technology-based.  Ultimately, its blockchain is only as secure as the code of the tokens issued on it.

We’ve seen this in reality a couple of times, including the hack because of bad code that forced a fork of the Etherum blockchain which created Ethereum Classic (ETC) and Ethereum (ETH).

While I fully believe that one (or many) of these Ethereum-based projects is likely to create another event like that one, the pure cynic in me says, “Why wait?”

If you were the bad guys wouldn’t that be your plan in the first place?  Create a crypto-project using ERC-20 tokens that resolve and clear on the Ethereum blockchain with the intention of breaking it.  Invite investor money in, say fifty million dollars.  A reasonable, but not insane amount of money.

Then let the code run until such time that it will cause maximal damage to Ethereum and the whole crypto-community.  The token goes up four or five times because that’s simply what is happening across the space.

At that point you’ve created a $200+ million meltdown and negative headlines galore.

At this point Bitcoin is neutralized and controlled, Ethereum is discredited and something like that would cause a major panic which is exploited by the same prop trading desks that blew the bubble up in the first place.

If you time that with a spike in Ripple, the banker-acceptable coin, and crash it too, you’ll take down most of the industry in almost no time.  The psychological damage from a scenario like this will create bear market not unlike the one created post Dot-Com bubble.

And like that bust, only those companies that are willing to play ball with Wall St. and Washington D.C. will be promoted and allowed to thrive.

Trap Sprung.

If you don’t think Wall St. isn’t thinking in these terms then you aren’t a serious crypto-investor.  This is the nightmare scenario, or one like it.

The Slipstream Solution

This is why I continue to bang on about the need for decentralized exchanges where the kind of manipulation described above is harder, if not impossible, to pull off.  I fundamentally do not believe most of the ‘liquidity’ that exists on exchanges like HitBTC, Bittrex, GDAX, etc. exists.

Between the false liquidity created by Tether and the potential for running fractional reserves it’s not hard to posit. It doesn’t take the weight of the entire Bitcoin market to raise the price.  It just takes one guy willing to buy the ask.  Once sellers lift their offers in response to a wave of buying things go up quick, especially with programmatic, algo-driven trading.

These exchanges who are not holding all deposits as smart contracts off-exchange with 100%+ reserves like BitShares are vulnerable to major price rises creating liquidity problems, which only adds to the perception that the industry is amateur-hour.

Another solution aside from Bitshares is Komodo’s BarterDEX, which exclusively trades through cross-chain atomic swaps and has no need for a third party intermediary.   Both of these, to me, represent where the industry needs to go to avoid us ending up with Ripple and Goldman still running the show.

Remember, no one is operating BitShares’ exchange.  It’s completely blockchain-based.  It has a fully-tradeable profit-token, OBITS, which distributes monthly profits from the exchange back to the token holders (current yield is around 4%). There is no central pool of liquidity that requires ever-growing ties to credit-providers.  The network only manages assets that have been deposited onto it.

Projects like AriseBank (full disclosure I bought into its ICO), I think, deserve a look.  AriseBank partnered with BitShares to provide the back-end technology to facilitate currency-swaps and brokerage services.  This is billing itself as the world’s first truly decentralized bank, designed to compete directly with the major banks and provide a new business model for banking altogether.

So, as 2018 plays out we as traders and investors need to be aware of the dangers of centralized liquidity and move our liquidity off of them, supporting projects that will build the kind of infrastructure Bitcoin’s initial design was supposed to support.

So many people who have gotten into cryptocurrencies in 2017 will not have an exit strategy in 2018 when the fan gets hit.  As we saw in the peak in December getting your money into or off of Coinbase was a nightmare.

Viewing the market structure through this lens provides a way to siphon off some of the energy the banks are propelling cryptos with to not only fatten your wallets but bring validity and stability to the markets and businesses that will carry on the fight before it’s yet another case of “Meet the new boss, same as the old boss.”
"The State is a body of armed men."

Offline RE

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Re: Crypto mining and outside control of markets
« Reply #22 on: January 04, 2018, 06:06:07 PM »
After a power cut, when my computers came back on, my Minergate "balance" had gone to zero. I think it was only a theoretical balance and maybe not a real one, so it might suddenly reappear later.

Clearly a lot of money is going IN to cryptos at the moment. It hardly seems like normal trading. So there must be some heavy hitters in there - maybe Goldman Sachs and co?  Why not?

Don't you have a Batt backup system for your computers? ???  :icon_scratch:  I'm never offline due to power outage.

It's definitely the TBTF Banks manipulating the crypto market, they're the only ones with enough funny money to drive those prices up so high.  The crash will be mighty impressive when it comes.

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Offline Palloy2

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Re: Crypto mining and outside control of markets
« Reply #23 on: January 04, 2018, 06:46:12 PM »
Quote
RE: Don't you have a Batt backup system for your computers?

I do, but it didn't work. The computers are resilient in that they come back on and reboot automatically. I have a deep-cycle 12 V battery and inverter system for longer term back-up. Then a gas-fueled generator for even longer term.
"The State is a body of armed men."

Offline RE

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Re: Crypto mining and outside control of markets
« Reply #24 on: January 04, 2018, 07:51:46 PM »
Quote
RE: Don't you have a Batt backup system for your computers?

I do, but it didn't work. The computers are resilient in that they come back on and reboot automatically. I have a deep-cycle 12 V battery and inverter system for longer term back-up. Then a gas-fueled generator for even longer term.

So what failed in the backup systems?

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Offline Palloy2

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Re: Crypto mining and outside control of markets
« Reply #25 on: January 05, 2018, 04:04:24 PM »
Don't know, perhaps the UPS battery has collapsed again. I would eliminate the UPS altogether but it has a good spike filter on it and there has been lots of lightning these past few days.  25 mm of rain last night and the frogs were driving me mad with deafening mating calls.
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South Korea plans to ban cryptocurrency trading, rattles market
« Reply #26 on: January 11, 2018, 02:35:37 AM »
https://www.reuters.com/article/us-southkorea-bitcoin/south-korea-plans-to-ban-cryptocurrency-trading-rattles-market-idUSKBN1F002B

#Business News
January 10, 2018 / 3:59 PM / Updated an hour ago
South Korea plans to ban cryptocurrency trading, rattles market
Cynthia Kim, Dahee Kim


FILE PHOTO: A copy of bitcoin standing on PC motherboard is seen in this illustration picture, October 26, 2017. REUTERS/Dado Ruvic/File Photo

SEOUL (Reuters) - South Korea’s government said on Thursday it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation’s police and tax authorities raided local exchanges on alleged tax evasion.

The clampdown in South Korea, a crucial source of global demand for cryptocurrency, came as policymakers around the world struggled to regulate an asset whose value has skyrocketed over the last year.

Justice minister Park Sang-ki said the government was preparing a bill to ban trading of the virtual currency on domestic exchanges.

“There are great concerns regarding virtual currencies and the justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges,” Park told a news conference, according to the ministry’s press office.

After the market’s sharp reaction to the announcement, the nation’s Presidential office hours later said a ban on the country’s virtual coin exchanges had not yet been finalised while it was one of the measures being considered.

A press official at the justice ministry said the proposed ban on cryptocurrency trading was announced after “enough discussion” with other government agencies, including the nation’s finance ministry and financial regulators.

Once a bill is drafted, legislation for an outright ban of virtual coin trading will require a majority vote of the total 297 members of the National Assembly, a process that could take months or even years.

The government’s tough stance triggered a selloff of the cryptocurrency on both local and offshore exchanges.

The local price of bitcoin plunged as much as 21 percent in midday trade to 18.3 million won ($17,064.53) after the minister’s comments. It still trades at around a 30 percent premium compared to other countries.

Bitcoin BTC=BTSP was down more than 10 percent on the Luxembourg-based Bitstamp at $13,199, after earlier dropping as low as $13,120, its weakest since Jan. 2.

South Korea’s cryptocurrency-related shares were also hammered. Vidente (121800.KQ) and Omnitel (057680.KQ), which are stakeholders of Bithumb, skidded by the daily trading limit of 30 percent each.

Once enforced, South Korea’s ban “will make trading difficult here, but not impossible,” said Mun Chong-hyun, chief analyst at EST Security.

“Keen traders, especially hackers, will find it tough to cash out their gains from virtual coin investments in Korea but they can go overseas, for example Japan,” Mun said.

Park Nok-sun, a cryptocurrency analyst at NH Investment & Securities, said the herd behavior in South Korea’s virtual coin market has raised concerns.

Indeed, bitcoin's BTC=BTSP 1,500 percent surge last year has stoked huge demand for cryptocurency in South Korea, drawing college students to housewives and sparking worries of a gambling addiction.

“Some officials are pushing for stronger and stronger regulations because they only see more (investors) jumping in, not out,” Park said.

By Thursday afternoon, the Justice Ministry’s announcement had prompted more than 55,000 South Koreans to join a petition asking the presidential Blue House to halt the crackdown on the virtual currency, making the Blue House website intermittently unavailable due to heavy traffic, the website showed.
REGULATORY CONUNDRUM

There are more than a dozen cryptocurrency exchanges in South Korea, according to Korea Blockchain Industry Association.

The proliferation of the virtual currency and the accompanying trading frenzy have raised eyebrows among regulators globally, though many central banks have refrained from supervising cryptocurrencies themselves.
Vidente Co Ltd18000.0
121800.KQKOSDAQ - Korea Secs Dealers Association Quotation
-7,700.00(-29.96%)
121800.KQ

    121800.KQ057680.KQ

The news of South Korea’s proposed ban came as authorities tightened their grip on some cryptocurrency exchanges.

The nation’s largest cryptocurrency exchanges such as Coinone and Bithumb were raided by police and tax agencies this week for alleged tax evasion. The raids follow moves by the finance ministry to identify ways to tax the market that has become as big as the nation’s small-cap Kosdaq index in terms of daily trading volume.

Some investors appeared to have taken preemptive action.

“I have already cashed most of mine (virtual coins) as I was aware that something was coming up in a couple of days,” said Eoh Kyung-hoon, a 23-year old investor.

Bitcoin sank on Monday after website CoinMarketCap removed prices from South Korean exchanges, because coins were trading at a premium of about 30 percent in Asia’s fourth-largest economy. That created confusion and triggered a broad selloff among investors.

An official at Coinone told Reuters that a few officials from the National Tax Service raided the company’s office this week. The official, who spoke on condition of anonymity, said that Coinone was cooperating with the investigation.

Bithumb, the second largest virtual currency operator in South Korea, was also raided by the tax authorities on Wednesday.

“We were asked by the tax officials to disclose paperwork,” an official at Bithumb said, requesting anonymity due to the sensitivity of the issue.

The nation’s tax office and police declined to confirm whether they raided the local exchanges.

South Korean financial authorities had previously said they are inspecting six local banks that offer virtual currency accounts to institutions, amid concerns the increasing use of such assets could lead to a surge in crime.

($1 = 1,069.9600 won)

Additional reporting by Hyonhee Shin; Editing by Shri Navaratnam and Jacqueline Wong
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Offline RE

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Mnuchin Warns Against Bitcoin Becoming the Next ‘Swiss Bank Account’
« Reply #27 on: January 12, 2018, 11:09:58 AM »
So much for anonymity in crypto.  ::)

RE

https://www.bloomberg.com/news/articles/2018-01-12/mnuchin-warns-against-bitcoin-becoming-next-swiss-bank-account

Mnuchin Warns Against Bitcoin Becoming the Next ‘Swiss Bank Account’
By Saleha Mohsin
January 12, 2018, 5:56 AM AKST Updated on January 12, 2018, 7:01 AM AKST

    U.S. Treasury chief warns against a new ‘Swiss bank account’
    No concern about Russia’s use of virtual money: Mnuchin

White House Frustrated About Trump's 'Shithole Countries' Comment
Wells Fargo's 4Q Earnings Hit by Litigation Charges
U.S. Treasury Secretary Steven Mnuchin says he’s "concerned consumers could get hurt" by cryptocurencies.

U.S. Treasury Secretary Steven Mnuchin said he will work with the Group of 20 nations to prevent cryptocurrencies such as bitcoin from becoming the digital equivalent of an anonymous Swiss bank account.

Speaking to the Economic Club of Washington on Friday, he said wants to ensure “bad people cannot use these currencies to do bad things.”

Under U.S. law, “if you have a wallet to own bitcoins, that company has the same obligation as a bank to know” you as a customer, Mnuchin said. “We can track those activities. The rest of the world doesn’t have that, so one of the things we will be working very closely with the G-20 is making sure that this doesn’t become the Swiss bank account.”

Mnuchin said U.S. authorities, including the Federal Reserve, were studying the pros and cons of issuing digital dollars instead of hard cash, but “the Fed and we don’t think there’s any need for that at this point.”
Russian cryptocurrency

Mnuchin also said that he is “not at all” worried that Russia may use cryptocurrencies to help its banks avoid international sanctions. An adviser to President Vladimir Putin is reported to have said that sanctions against Russia have created a need for digital currencies as officials there fear expansions in 2018.

Virtual currencies such as bitcoin, which has soared in price in recent months amid a rush by investors to buy the instrument, could help bypass any such U.S. measures because they allow users to remain anonymous.

See here: Russia’s Oligarchs Brace for U.S. List of Putin Friends

Russian Prime Minister Dmitry Medvedev signed a decree last month allowing the government to classify purchases by the Defense Ministry, Federal Security Service and Foreign Intelligence Service as state secrets.

“This idea that Russia or Venezuela can thwart the pressure from sanctions just by developing their own cryptocurrency is silly,” said lawyer Erich Ferrari of Ferrari & Associates in Washington. “It’s like trying to do it by using cash. Yes you can do it more easily with cash, but it doesn’t mean you’re evading. It’s harder to get caught.”
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Offline azozeo

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Re: P O O F ! Goes The Crypto
« Reply #28 on: January 28, 2018, 04:28:28 PM »
https://www.rt.com/business/417198-coincheck-exchange-hack-reparations/

RT News
The losses of 260,000 customers of Coincheck, deprived of their money in what appears the to be the biggest crypto heist in history, will be repaid over $425 million. Even that sum does not cover all the damages.

The Japanese cryptocurrency exchange platform Coincheck suspended trading and withdrawals on Friday, as hackers had stolen more than 500 million NEM worth up to ¥58 billion ($532 million). As the news broke the token price plunged more than 15 percent from the day’s high of around $1.02, down to $0.85.

On Sunday, Coincheck said the users affected by the illicit transfer would receive reparations for all the lost tokens. But the payments are to be made at the average price over the period from “the suspension of new purchases and sales of NEM on the Coincheck platform” till the reparations announcement, rather than Friday’s peak.

Affected clients will thus receive around ¥88.549 for each stolen token. With the total of 523 million lost coins, the exchange platform will have to repay about ¥46.3 billion of the virtual money.

The timing and procedure of the compensation has not been decided yet, Coincheck said in a statement. To prevent such incidents in the future, the platform is currently “overhauling and strengthening” security measures and is trying to register with the Japanese government’s financial regulator, the Financial Services Agency, as a Virtual Currency Exchange Service Provider.

It is still unclear who was behind the hack and how it was perpetrated.

It is not the first time that a digital currency exchange has had to reimburse clients after a security breach. Another major exchange, Bitfinex, repaid customers who were affected by $72 million hack in August 2016.


I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline RE

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How Do You Hide Stolen Cryptocurrency?
« Reply #29 on: February 04, 2018, 07:53:09 AM »
https://www.zerohedge.com/news/2018-02-03/how-do-you-hide-stolen-cryptocurrency

How Do You Hide Stolen Cryptocurrency?

by Tyler Durden
Sat, 02/03/2018 - 19:11


The anonymous nature of digital wallets continues to stymie investigators in last week's theft of 58 billion yen ($530 million) worth of NEM cryptocurrency from a Tokyo exchange, the biggest cryptocurrency heist in history.

Authorities know which user accounts were affected by the Jan. 26 hacking, and the accounts holding the pilfered funds can be immediately identified because the virtual coins are traceable. And, as the Nikkei writes, if the Coincheck exchange case were a regular bank robbery, identifying the bank accounts holding the stolen money would let law enforcement easily return the funds to victims.

But individuals who open a bank account must identify themselves, and no such requirement exists for opening a digital wallet. Anyone can obtain an anonymous digital wallet as easily as walking into a store and paying cash for an actual wallet.

That helps explain why Coincheck and the NEM Foundation, the international organization that manages and promotes the currency, are having trouble identifying the owners of the wallets and demanding the restoration of funds.
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The foundation, which tags the NEM coins, could rewrite the blockchain virtual ledgers and forcibly return the stolen funds to Coincheck. But the NEM group has pledged never to rewrite blockchain records, so even those "transactions" resulting from a hack will remain valid.

    The Tokyo Metropolitan Police Department had received communication logs maintained by Coincheck as of Thursday. The logs are being analyzed for any violation of Japanese anti-hacking laws, but the investigation is expected to encounter challenges similar to those in past cybercrime cases.

In 2015, servers belonging to the state-run Japan Pension Service sustained a cyberattack in which computer viruses were used to obtain names, identification numbers and other data belonging to some 1.25 million people. The next year, travel agency JTB suffered a data breach affecting 6.79 million customers. In both cases, the hackers may have infiltrated systems via offshore servers, but no suspects have been named to date.

When Mt. Gox went bankrupt in February 2014 after a massive amount of cryptocurrency went missing from its exchange, it took about a year and a half for authorities to arrest CEO Mark Karpeles, who was suspected of falsifying account data. Investigators went as far as crunching data in servers located in the U.S.

Meanwhile, on Saturday, the infamous Coincheck exchange said it was preparing to announce a timeframe when yen withdrawals can begin. All yen deposits registered to customer accounts are being stored in a customer-specific account in a major financial institution, the exchange said adding that cryptocurrencies registered to customer accounts have been transferred out of hot wallets and are being stored in cold wallets, etc. And Google translated in its entirety:

    As we are announcing at the release on January 30, 2018, we are currently undergoing verification and verification of technical safety etc. accompanying Japanese yen withdrawal, and we are preparing for resumption We are. Based on the confirmation / verification that we are doing with the cooperation of outside experts, we will inform you of the timing of resumption of Japanese yen withdrawal.

    The Japanese yen held by the customer in the account is preserved in the customer exclusive account of the financial institution. Also, with respect to the virtual currency (BTC / ETH / ETC / LSK / FCT / XMR / REP / XRP / ZEC / LTC / DASH / BCH) which the customer has in the account, evacuate from the hot wallet, We keep it.

    We are sorry for the inconvenience for a while, thank you for your consideration.

Meanwhile, someone is half a billion richer following the Coincheck theft, and nobody has any clue who it is.


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