Tag: Bitcoin

Bitcoin Smashes the legendary $ 15 000 mark. Now what?

Bitcoin has smashed the legendary $ 15 000 mark just after noon (SAST) today, the 7th of December. With every YouTube video and website advertising a wide variety of Bitcoin and other cryptocurrency-related services, the average, normal individual is left to wonder what to make of this exciting and strange phenomenon in our modern tech-society.

Nordea Bank AB, the largest financial group in Northern Europe, had their chief executive calling it a “joke”. Many more finance professionals and long-time players have raised their eyebrows in severe skepticism, and given the nature of the entity, investors have plenty of reasons to be concerned.

Crypto fever has caught on in South Africa as well. As Bitcoin is a currency, it has many different prices connected to various currencies. The Rand-Bitcoin (BTCZAR) price of a single Bitcoin broke through the R 200 000 barrier on the morning of December 7, although volatility remains high with violent fluctuations in every market. On a granular level, the BTCZAR singular price has pushed as far as R 230 000 in individual markets such as Luno, a South African-based Bitcoin exchange.

South African citizens are embracing the plethora of opportunities that Bitcoin presents. Citizens can even pay their traffic fines using Bitcoin through certain companies. A specific company, Fines4U, is not adopting Bitcoin in the more traditional sense which has been seen in other countries such as Japan however, where direct payments are allowed. Rather, this is a creative attempt to accumulate Bitcoin without direct investment. This approach represents a new wave of individual adoption where individuals are thinking out of the box in order to participate in the cryptocurrency mania, with some South African I.T. employers offering their staff bonuses and even salaries in Bitcoin.

Nona Creative, a digital consultancy and product development firm in Cape Town, with the slogan “Web Apps for Humans”, recently purchased a significant chunk of shares in what it claims to possibly be the first Bitcoin equity transaction in the country ever. CEO, Mike Scott, said: “We firmly believe in Bitcoin and wanted to show just how effortless it is to conduct normal business transactions using cryptocurrency.” Clearly, Bitcoin is becoming more and more integrated into our mainstream financial society and shows no signs of becoming irrelevant.

Cryptocurrencies have been carefully crafted to avoid fitting into any conventionally-defined security categories. It cannot be a commodity; it has no physical and tangible form. It isn’t a derivative either; again, it simply sits in cyberspace. Regulators are struggling to even begin regulating cryptocurrencies as they have no geographical source. Korea, for example, has banned the exchange of Bitcoin but is finding it incredibly difficult to enforce the ban and it hasn’t realised a significant decrease in the crazy growth in the relevant local market at all. At the time of writing this, Korea’s local market was valuing a single Bitcoin at $ 19 000.

Bitcoin and other cryptos are here to stay it would seem. They are also near impossible to regulate right now. How can an individual and society as a whole benefit from this new technology?

Firstly, what makes Bitcoin so great? There is clearly a general consensus that cryptocurrencies are simply pockets of hot air. Bitcoin’s price has no grounding in anything besides sentiment. It has no influence on interest rates, inflation trends or any other macro-economic indicators. The true innovation, as propagated by numerous financial and tech experts, is not Bitcoin itself. It lies in the mechanism upon which Bitcoin is built, the blockchain. Not going into the technical details, blockchain technology allows any cryptocurrency to function as a gigantic, collective and completely transparent public ledger. Nobody can lie about their Bitcoin transactions. Every time a crypto is sold or bought, every single holder of all the other Bitcoins in the world has their “ledgers” updated. The future financial applications are fantastic, indisputably so.

Secondly, there is a clear upward trend in the price of Bitcoin, despite the wild volatility levels – rapid up and down price movements are intrinsic to an entity that has no other driving force besides investor sentiment – and more and more people are investing in cryptocurrencies as Bitcoin’s market capitalisation has surpassed Warren Buffett’s total value and the entire New Zealand GDP. There is opportunity in investing here, but around every corner scams and shady businesses have sprung up around the craze. If a website has long, complicated user agreements and makes it easy for a new user to swipe their credit card, it is best to be avoided. Etoro and IQ Option spring to mind as gambling service sites masquerading as legitimate financial institutions, whilst Bitcoin pyramid schemes such as BitClub Network openly admit to being pyramid schemes. Even simply buying and holding Bitcoin is risky, although the clear upwards trend has the world in awe.

Bitcoin has grown close to 1 800% in 2017 alone. Since its inception, it has grown from $ 0.01 in 2009 to $ 15 000 today (2017/12/07), totalling 29 000 000 %. That is 29 million percent. Most of the growth has occurred in 2017. It is the greatest modern investment bubble of our time, because it has no intrinsic value. It is bits of code in cyberspace, at its core. Bubbles can burst, and the brutal price movements make speculation very risky.

The verdict? Avoid the scams and the pyramid schemes. Buying and holding Bitcoin can be good this year end. It has repeatedly defied expectations. But bubbles are always profitable until they are not, and this is a bubble through and through. Caution must be exercised when investing in Bitcoin, and no sane-minded investor should invest a significant proportion of their capital in an entity such as this. Moreover, it would be inadvisable to park cash in the cryptocloud for too long. As for the innovation behind the cryptocurrency mania, it is here to stay and we should welcome it. A worldwide, completely transparent, constantly updated public ledger seems to be a very refreshing concept.

Please note that this article is NOT intended to be used as financial advice and the author cannot be held responsible for any financial or any other losses as a result of Bitcoin-related interactions. Stay safe, don’t gamble.

 

The euro will remain the world’s favourite tradeable currency

With the rise of Bitcoin and general hostility towards so-called fiat currencies, notwithstanding the euroskeptic animosity towards the euro, many people are speculating about the ultimate demise of the euro. However, as French politician Marine Le Pen recently intimated to Der Spiegel, the euro is something of a German creation.

In essence, the euro represents a reincarnated Deutschemark, with bits of Dutch guilders and Belgian francs thrown in. Ever since French Finance Minister Pierre Bérégovoy decided to start fighting inflation in the German style during the 1980s, France also acquired a hard currency hitched to the Deutschemark, leading to the equation Germany + Benelux + France = one European currency. The French almost succeeded in smuggling a very old Gallic monetary unit, the écu, in as the ECU (European Currency Unit) but somehow the ploy did not succeed and today we know it as the euro, officially known to fx traders as the EUR. The public at large have got used to the symbol €.

And let’s not forget about Austria which also joined the monetary Anschluss with aplomb, ditching the Austrian schilling on 1 January 2002 when the euro started to circulate officially in the so-called eurozone.

Even if all the countries in Southern Europe had to go back to trading in their national currencies, the biggest part of the European Union, economically speaking, would still be using a unitary currency. The combined GDP of Germany, Austria, France and the Benelux countries is $7,75 trillion, whereas the total eurozone GDP equals $12,7 trillion. So we see that the original European currency club whose currencies first started to converge in the 1980s constitutes 61 percent of the eurozone’s GDP. If Italy is thrown in, it goes up to almost 77%. Italy has a large economy worth just over $2 trillion of annual GDP. During the dying days of the lira, Italy too started to seriously converge toward hard-currency status, similar to its transalpine neighbours. Parts of Northern Italy are really no different to Germany, with medium-sized businesses being heavily oriented towards exports of specialised machinery and consumer goods, including gold jewellery.

Talk in the British financial press of the “Club Med” countries who are out of sync with Germany and neighbours to the north-west is therefore of no real consequence, as any currency trader knows. Betting against the euro has been, for the most part, like going short the old Deutschemark or Swissie against the dollar, a long-term losing trade if ever there was one.

There are only two really liquid currencies in the world today: the dollar (USD) and the euro (EUR). Traders at the major currency banks like Citi, Deutsche, HSBC, JP MorganChase, UBS and others usually make a market in the EUR-USD pair in “half a yard”, i.e. half a billion euros that may be traded in a split second.

The recent hostility of the USA towards French and Swiss banks like BNP Paribas or Crédit Suisse has probably not been lost on Europeans in general. If ever the world had to go back to a dollar-only system, America could dictate terms (and gargantuan fines!) to everyone else.

So, love it or hate it, the euro is here to stay. If there had been another strong currency in the world, perhaps its future would have been less certain, but given long-term dollar weakness, it is the US currency that may unravel some day in the not too distant future. America has simply accumulated too many huge deficits, including budget and trade deficits, for the dollar not to depreciate over the long haul.

Probably the most stable currency in the world is the Swiss franc (CHF). However, despite Switzerland’s economic prowess and major role in banking, a country of 7 million people will never provide us with a global, tradeable currency.

The size of the global foreign exchange or FX market is $5,3 trillion per day. That is according to the Bank for International Settlements and the global results from the 2013 Triennial Central Bank Survey of Foreign Exchange and OTC Derivatives Markets Activity.

The EUR/USD (about 33% of all trade by volume) is the most actively traded currency pair by far, followed by the GBP/USD (13%) and USD/JPY (12%). Together these pairs alone account for 58% of all forex trade by volume. In their other possible combinations, EUR/GBP (4%), EUR/JPY 2%, GBP/JPY (1%), they account for about 65% of all forex trade.

Taken individually and looking at all the estimated trading volume of all the pairs these typically trade in, the USD is involved in over 71% of all forex trade, the EUR in about 41%, the GBP in about 18%, and the JPY about 16%.

We see then that the euro, while not having the privileged position of the dollar as a reserve currency, is nonetheless the only currency that may rival the dollar in the global currency market. If ever US military adventures in the world could turn a sizeable number of nations against it, the dollar could start to suffer as the preferred medium for oil and other commodity transactions. The only other currency that could remotely replace it as the world’s leading currency would be the euro.

Long-term dollar weakness driven US deficits represent the prime reasons why investors and foreign central banks may eventually lose their appetite for the greenback.

Everyone in Iceland to own cryptocurrency

auroracoinThe cryptocurrency craze that started with Bitcoin is not over. The latest altcoin to enter the market, Auroracoin, wants to take the futurist trend back to its cryptoanarchist roots.

The altcoin was designed specifically for Iceland, and the creator plans to give every citizen of the Nordic country a digital handful of Auroracoins to kickstart their use.

Auroracoin is the brainchild of cryptocurrency enthusiast Baldur Friggjar Odinsson, and he’ll be the one distributing pre-mined coins to the entire population of Iceland at midnight on March 25 in a countrywide “airdrop.”

Each Icelandic citizen—all 330,000 of them—will receive 31.8 AUC through a digital transaction. Citizens all have a national ID number available through a public database, which will be used to verify their identity.

“So I intend to leverage this system so everyone has a chance to verify their ID and get their share of Auroracoins. For most, it will be as easy as logging onto Facebook,” Odinsson told me. “People will have (at least) a year to claim their coins.”

The meaning of this rune symbol is ‘cattle’, a vital aspect of the life of any agricultural community and an important factor in the economy of a group of peoples initially unacquainted with the use of money. The rune represents possessions won or earned and thus also material gain.

Source: Motherboard/praag