Bitcoin was up over 20% year to date Thursday morning.

Data suggests that the recent price rise is being driven by U.S. investors buying bitcoin on spot and derivatives exchanges. Meanwhile, there are now more "whales" swimming in this global sea than since mid-2019. And bitcoin custodial startups are reporting an uptick in users.

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It's suspected much of this activity is driven by the impending halving event, which for some sober minds, is nothing more than an act of arithmetic. Here's the story:

Top Shelf

American BuyersData indicatesAmerican buyers are fueling bitcoins rally.On U.S. exchanges, spot premiums are showing stronger buy-side pressure relative to other markets. Further, exchanges licensed to offer bitcoin futures to American investors are rallying while their unlicensed competitors are not. Su Zhu, CEO of Three Arrows Capital, said American investors should give us a strong base given that U.S. tax policy means nobody sells spot for small profits.

Call Me Ishmael, Is That A Whale?The number of Bitcoin addresses holding more than 10,000 coins rose tothe highest level since mid-2019.These 111 so-called whales contribute to the bullish narrative surrounding the top crypto by marketcap. Some of these addresses may belong to high-net-worth individuals or groups, who are diversifying into bitcoin amid the ongoing coronavirus pandemic and ahead of the mining reward halving, said Wayne Chen, CEO of Interlapse Technologies.

Custody During COVIDBitcoin wallet startups are reporting anuptick in users and profitsamid the market disruption caused by COVID-19. An event like that [pandemic] makes people think about how they are storing their bitcoin,"Will Cole, Unchaineds chief product officer, said.

Parental HelpIntercontinental Exchange, theparent company to Bakkt, spent close to $300 millionhelping the bitcoin warehouse acquire loyalty rewards provider Bridge2 Solutions. Bakkt announced it would acquire Bridge2 in February, while simultaneously raising a $300 million Series B funding round with participation from Microsoft's M12, PayU, Boston Consulting Group, Goldfinch Partners, CMT Digital and Pantera Capital.

Mining MoneyArgo Blockchain, a bitcoin mining firm listed on the London Stock Exchange, reported an11-fold increase in revenuesfrom the year before. The company attributed its success to cutting off its consumer-facing arm and focusing on mining some 1,330 bitcoin last year.

Validating TopazTop-five mining pool OKEx Pool will trial Ethereum 2.0s new testnet. Collaborating with Prysmatic Labs, the mining pool dedicated to proof-of-work consensus models will become a validator for the experimental proof-of-stake Topaz testnet. (Decrypt)

Static EtherEthereans are hodling. Data firm Glassnodes has found more than 77% the outstanding ETH supply has not moved in six months. (The Block)

Open to OperateSan Francisco-based cryptocurrency exchangeOKCoin is now cleared to operate in Japan,a nation known for its tight licensing requirements. The exchange began the arduous process of applying for regulatory approval in 2017. CoinDesk's Nathan DiCamillo breaks down why they went through the ringer.

Blockchain for UBIA Zurich-based startup has built a proof-of-personhood protocol to disseminate universal basic income (UBI) to the unbanked. Encointer, backed by the Web3 Foundation, plans to distribute a cryptocurrency for use within a designated locality among willing participants. (Decrypt)

Is Bitcoin Boring?Despite the enthusiasm leading into Bitcoins third halving event, expected in less than two weeks, on a technical level nothing really changes. The BlocksMike Orcuttdigs into the cultural significance of this mundane happening, when Bitcoins code automatically splits its mining subsidy.

Class ActionA district court judge has granted preliminary approval to a$25 class-action claimmade against Tezos. Litigants are suing Tezos alleging its initial coin offering violated U.S. securities laws. (Paywalled)

On FireBlockchain startup Fireblocks reported $30 billion in digital asset transfers using its services. Launched less than a year ago, the company will also open new offices in Singapore and Hong Kong. (Forbes)

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Whales and American Buyers Drive Bitcoin Rally - CoinDesk

Stoners and gamers have turned to Bitcoin during the coronavirus lockdown, as web-based sales of both essentials increased during the pandemic.

Revenue for video game and cannabis sales using bitcoin saw a 50% increase among the 100 e-commerce merchants surveyed by Blockonomics. The research states:

Cannabis orders are up: people are buying more weed than ever, with revenue up over 50%. I mean, what else are you going to do at home?

Likewise, the lockdown has also turned people towards video games as a means of distraction. The data do not specify whether the people buying cannabis were the same people buying video gamesbut experience suggests there might be a slight overlap.

Two other business sectors also saw an increase in bitcoin-based sales web-hosting, and nutritional supplements. The Blockonomics article states:

Nutritional supplements also saw an increase of revenue of up to 50%, as people continue to look for alternative ways to stay healthy (possibly in response to empty food shelves at the grocery store).

While web-hosting services saw a marked increase in revenue, the same cannot be said for all digital products. In fact, 75% of respondents said they witnessed a decrease in bitcoin-based revenue during the lockdown.

No website that offered digital products saw an increase in revenue, 25% of respondents reported no change in revenue, while the remaining 75% saw decreases.

So even though everyone is staying home, that has not manifested in a transparent boost to typical digital products. As the article speculates, this can likely be explained by people putting a greater focus on buying essential physical goods, which are at threat of being lost in a potential supply-chain slowdown.

Almost half of the store owners surveyed revealed they were holding on to any bitcoin they received, while over 10% said they were continuing to buy even more. The article states:

Our e-commerce store owners continue to be major believers of Bitcoin: 44.9% of the respondents have decided to hold on to 100% of their Bitcoin during this time, with 10.2% additionally buying Bitcoin.

So, as gamers and cannabis users continue to part with their BTC, store owners are only too happy to hold on to it. That might have something to do with bitcoins 102% increase in value over the past month and a half.

This article was edited by Sam Bourgi.

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Covid and Chill? Bitcoin Used to Buy Weed & Video Games Amid Lockdown - CCN.com

Another week, another round ofCrypto Tidbits. Bitcoin has been one of the best-performing assets in financial markets over the past week, managing to rally as high as $9,500 over 25% higher where it started this week. Altcoins, interestingly, have underperformed the market leader, with Ethereum and XRP both gaining around 10% over the past seven days.

Cryptos strength this week comes as the stock market hasstarted to stagnate in the 2,800-2,900 point range, seemingly playing with the idea of a reversal as the economic outlook remains dismal, with a total of 30 million Americans filing for unemployment over the past month.

Jerome Powell, Chairman of the Federal Reserve, went as far as to say that the U.S. economy is currently in its worst rut in history due to the outbreak of COVID-19. The recovery will not be V-shaped, Powell added, asserting that it may take a while for life to return to pre-virus levels due to the long-lasting effects of the shutdown of the worlds biggest economic powerhouse.

Whatever the case, analysts are still bullish on Bitcoin.

Roch Rosenblum, the co-head of trading at GSR, remarked to Bloomberg that the ongoing BTC rally is predicated on the macroeconomic environment:

This latest run past$8,000is as much about positive macro sentiment as it is about the upcoming halving. Were starting to have a lot more certainty, as more countries begin to share their plans to reopen the economy in May.

Chart from Coin360.io

This optimism was echoed by Zac Prince, a co-founder of crypto startup BlockFi, who said that the current market dynamics are driving a bolstered interest [for] digital currency. These dynamics he was referencing was the Federal Reserves commitment to money printing and the growth in stablecoins.

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Crypto Tidbits: Bitcoin Hits $9ks, a16z Raises $500M Crypto Fund, Ethereum 2.0 Nears - newsBTC

Bitcoin-friendly electronics giant Samsung is teaming up with digital currency payment platform Swipe to add a cryptocurrency payment feature to its Samsung Pay wallet.

Users of the Samsung payment app can now settle their transactions using cryptocurrencies by adding the Swipe Visa debit card into their Samsung Pay wallet. The collaboration allows cardholders to fund their Swipe card with crypto and use it for payments anywhere Visa is accepted. Users can pay through their smartphones, smartwatches, or any other device that runs Samsung Pay at over 50 million locations across the globe.

Swipe chief executive Joselito Lizarondo says that the partnership helps prioritize the needs of their customers in a time of a global pandemic.

This integration and relationship with Samsung will open cryptocurrency adoption and make transactions with our Visa card in Euros converted by crypto seamless. Given the current COVID-19 situation, and people steering away from physical products like cash and in some instances cards, a digital solution really helps put our clients needs first.

The move highlights Samsungs continued effort to integrate cryptocurrencies into its ecosystem. Recently, the electronics giant added Tron in the Samsung Galaxy Store allowing users in the US and UK to download decentralized applications on their phones.

Featured Image: Shutterstock/H_Ko

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Bitcoin-Friendly Samsung Powers Swipe Visa Integration for 50 Million Locations, Expanding Cryptosphere - The Daily Hodl

Bitcoin, Ethereum, and Ripple bears took control this Thursday to correct this Wednesdays bullish action. The price action of the coins look like this:

Alternative.mes fear and greed index has kept steady around 40, and the current market sentiment is still in the fear region. This indicates that there is still some upside potential for Bitcoin.

ETH/BTC has gone up from 0.0239 to 0.0241 but has failed to keep pace with the green Ichimoku cloud. Bulls must gather enough momentum to break past the 0.0243, the SMA 50 and 0.0248. On the downside, there are healthy support levels at 0.0239 and 0.0235. The MACD shows increasing bearish momentum, while the Elliott Oscillator has had six straight red sessions.

BTC/USD is currently consolidating in a flag formation below the $9,000 level. The price is sitting just below the upper curve of the 20-day Bollinger Band. On the upside, the price faces strong resistance levels at $9,161.75 and $9444.58. This means that the price can go up to the $9,000-level before encountering resistance. On the downside, there are two healthy support levels at $8,616.20 and $8,191.90. The RSI indicator is hovering at the edge of the overbought zone, showing that the asset is a bit overpriced and may face short-term bearish correction.

The daily ETH/USD chart is consolidating below the $215-level within the triangle formation. The price faces three strong resistance levels at the upward trending line, $224,78 and $232. On the downside, healthy support levels lie at $206.50 and $198. The RSI is hovering right next to the overbought zone, while the Elliott Oscillator has had eight straight green levels.

XRP/USD fell from $0.2178 to $0.217 in the early hours of Saturday. This Friday, the price encountered resistance at the 20-day Bollinger Band upper curve and fell down. The widening of the jaw shows increasing price volatility. If the bulls gain back momentum, theyll need to overcome resistance at the $0.225 line and the SMA 200. Following that, the next resistance level of note lies at $0.2377. On the downside, there are two healthy supports at $0.2125 and $0.203. The Elliott Oscillator has had eight straight green sessions, while the MACD shows increasing bullish momentum.

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Top 3 Price Prediction Bitcoin, Ethereum and Ripple: Consolidation period starts as bulls and bears cancel each other out - FXStreet

U.K based fraud detection firm, Cifas, warns investors on the skyrocketing cases of fraud involving Bitcoin payments and donations. The firm states the current program by the World Health Organization (WHO) to donate BTC directly to its wallet is one of the websites facing the highest cases of Bitcoin fraud.

According to the report, there has been an increasing case of phishing and Bitcoin-related fraud as the world adjusts to the CoronaVirus pandemic. The epidemic has seen a number of donation websites come up in a bid to fight the spread of the virus but fraudsters have taken up this opportunity to scam users off their money.

Cifas claims the WHO emailing and texting service have been cloned by fraudsters to ask for donations from unknowing citizens. Bitcoin scams boosted on the WHO plea, some asking users to send their donation to a BTC address not registered to WHOs COVID-19 Solidarity Response Fund.

Furthermore, fraudsters send users a WHO-like email using the address ([emailprotected]) to make the scam look more realistic. The detection firm asked users not to send any donations to suspicious-looking addresses but only to donate on the official WHO pages.

Notwithstanding, phishing scams have also graduated to target institutions and companies using Her Majestys Revenue and Customs (HMRC) job retention scheme to scam people. In a statement released earlier in the week, HMRC urges everyone to be vigilant during this period. The statement further reads,

Companies to beware of unsolicited emails, texts or phone calls that are requesting financial details or other sensitive information and claim to come from the HMRC or similar authorities.

Summary

Article Name

Bitcoin Fraudsters On The Rise Using WHO Addresses To Solicit Fake COVID-19 Donations

Description

U.K based fraud detection firm, Cifas, warns investors on the skyrocketing cases of fraud involving Bitcoin payments and donations. The firm states the current program by the World Health Organization (WHO) to donate BTC directly to its wallet is one of the websites facing the highest cases of Bitcoin fraud.

Author

Lujan Odera

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Coingape

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Bitcoin Fraudsters On The Rise Using WHO Addresses To Solicit Fake COVID-19 Donations - Coingape

The growth of the Bitcoin market has brought forth a new type of trader the Bitcoin, or cryptocurrency, trader. These traders thrive on high risk and big volatility, and know-how to master the new and nascent digital asset markets. However, they also have a good eye for opportunities across the board.

The Bitcoin market has also started melding with traditional ways of trading thanks to derivative trading and CFDs becoming popular among the Bitcoin community members. Now, these traders who may have found their niche in Bitcoin are happy to jump across to other traditional markets too, especially in this time of the Covid-19 pandemic. Lets find out why they consider opportunities outside the crypto trading space.

The Covid-19 impact on the traditional markets has been drastic. Stock indices have dropped substantially, the May futures for Oil have dropped to a never before seen price of zero and below, but then there is gold which is pushing new heights while certain forexes have fallen to new lows.

Strangely, after the Bitcoin fall in March, the coin has rebounded and stayed relatively stable in the range of $7,000 $9,000. Bitcoin is known for its volatility, and this is what attracts the Bitcoin investors, but they have been forced to look elsewhere.

But, being savvy crypto investors, these traders have been looking for a place where they can use their Bitcoin and digital assets to make trades within the legacy markets which do not often cross over with the cryptocurrency side of things.

It is clear why Bitcoin traders want to make this jump to traditional legacy markets as these are now the ones presenting the best trading opportunities, but it is less certain as to how they can manage this. Looking at the options, there are not too many good ones for people who have Bitcoin to make trades on traditional assets.

Most cryptocurrency exchanges such as Binance, BitMEX, and Bitfinex have almost no interest in offering their users a chance at markets other than Bitcoin, and a few altcoins. But even with altcoin offerings, there is not much attraction as these markets have more incalculable risks at a time like this.

More so, major CFD and forex brokers do not offer the kinds of leverage and options that Bitcoin traders are used to, and more than that, they usually have strict and stringent Know Your Customer procedures in order to start trading and, of course, there are basically none that offer a chance to use Bitcoin to make such trades or fund accounts which leads to the need to use wire transfers making it far less global as well.

With all that said and done, there are Bitcoin traders who have managed to cash in on the volatile, yet favorable, market conditions in the legacy market, and done so quickly, and easily, and with their Bitcoin.

PrimeXBT, a Bitcoin-based exchange offers a strong value proposition and entry into the traditional markets. The award-winning platform not only opens up the world of Bitcoin trading, but it also gives access to the worldwide market from a single, Bitcoin funded, account.

It is also quick and efficient as PrimeXBT only requires a simple signup, email confirmation, a small funding of your PrimeXBT wallet with BTC and you are ready to start trading over 50 global markets including commodities, such as Gold, Silver and Oil, Indices, Forex currencies and of course, Cryptocurrencies.

The decision to not require KYC documents also works in favor of traders who want to get trading quick as there is no wait time but it also offers enhanced privacy and data protection. Recently, there has been a spate of data leaks and hacks which have led to peoples sensitive information, like their passports and residency information leaked to the dark web, and sold off. This is why PrimeXBT respects user privacy and requires no individual information from clients.

More so, the platform not only allows for traders to use Bitcoin to fund their traditional trading, it adds high leverage that has become so popular and common in Bitcoin trading. High leveraging allows traders to make big profits by essentially allowing the trader to open positions much larger than their own capital. It is of course risky, but when markets are like they are, it is a good chance to multiply profits up to 1,000 on stock indices, forex, and commodities.

What makes PrimeXBT even more inviting is that its trading terminal is extremely user friendly, and for Bitcoin traders who want to enter into the traditional side of things, it is easy to customize the terminal and make it comfortable for what they are used to. But even more than that, there are advanced trading tools that come alongside the built-in charting software. The offering of long and short positions is vital for traders to profit when markets are dropping, while there are also hedge positions and stop-loss orders to use.

Finally, this is a scary, but exciting, time to trade and that is another reason why PrimeXBT is such a good option as they not only have bank-grade security that uses address whitelisting, two-factor authentication and Cloudflare DDoS Protection, but also offer 24/7 customer support chat and are always available on email and Telegram should things not work out.

Signup and start trading global markets in just 40 seconds with PrimeXBT. Fund your account with Bitcoin and trade from as low as $10.

Disclosure:This is a sponsored post brought to you by PrimeXBT. For more information on our rates for sponsored posts, please see ouradvertising page.

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PrimeXBT: Why Bitcoin traders switch to other markets - CryptoSlate

This week has been one of the best so far this year for BTC prices. Since the same time last weekend, it has surged by 17%, outperforming traditional stocks and commodities yet again.

Observers and analysts have noted that Bitcoins yearly moving average is back up from its 2018 slump, and is approaching its previous all-time high.

This does not mean that prices are approaching ATH, but the accumulation of the averages over the year is.

BTC yearly MA [@YassineARK]Speaking of moving averages, this weeks rally has resulted in BTC crossing the long-term 200-day moving average. The last time this happened with such a large daily candle was in mid-January when BTC surged from $8,900 to top out at $10,400.

The 200 and 50-day moving averages have served as support and resistance levels throughout Bitcoins life cycle, and trading above both is generally very bullish.

The weekly chart is also looking positive at the moment with seven green candles in a row. The last time this happened was in March 2019, just before the big rally to $14,000. BTC is also trading above both the 200 and 50-week moving averages which is extremely healthy.

The next major resistance zone is around $9,700, but Bitcoin really needs to top its previous high of $10,500 for a real bull run to be registered. Forming a lower-high at the moment could result in further downsides and the resumption of the downtrend.

This weeks rally has also had the effect of increasing Bitcoins dominance as it outperforms its altcoin brethren.

BTC dominance has been on a downward trend since September 2019, and it has remained below 70% for most of this year.

BTC dominance has increased two percent this week to 66.5% according to the charts. This means that it has gained at the expense of altcoins which have all lost long-term ground, despite enjoying gains in price this week.

Altcoin traders have been looking at the charts noting that a climb in BTC market share is bad for altcoins as they have weakened in terms of satoshi values. Altcoin Sherpa [@AltcoinSherpa] has correlated these BTC dominance gains with the seasons, adding;

BTC.D has risen hard in the summers the last few years, crippling altcoins during this time. June is a good time to exit all altcoins IMO.

Bitcoins halving appears to be driving momentum at the moment and is only ten days away now.

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As a leading organization in blockchain and fintech news, BeInCrypto always makes every effort to adhere to a strict set of editorial policies and practice the highest level of journalistic standards. That being said, we always encourage and urge readers to conduct their own research in relation to any claims made in this article.This article is intended as news or presented for informational purposes only. The topic of the article and information provided could potentially impact the value of a digital asset or cryptocurrency but is never intended to do so. Likewise, the content of the article and information provided within is not intended to, and does not, present sufficient information for the purposes of making a financial decision or investment. This article is explicitly not intended to be financial advice, is not financial advice, and should not be construed as financial advice. The content and information provided in this article were not prepared by a certified financial professional. All readers should always conduct their own due diligence with a certified financial professional before making any investment decisions. The author of this article may, at the time of its writing, hold any amount of Bitcoin, cryptocurrency, other digital currency, or financial instruments including but not limited to any that appear in the contents of this article.

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Bitcoin Yearly Moving Average Price Closes in on All-Time High - BeInCrypto

Last updated: 20th January 2018

Before owning any bitcoin, you need somewhere to store them. That place is called a wallet. Rather than actually holding your bitcoin, it holds the private key that allows you to access your bitcoin address (which is also your public key). If the wallet software is well designed, it will look as if your bitcoins are actually there, which makes using bitcoin more convenient and intuitive.

Actually, a wallet usually holds several private keys, and many bitcoin investors have several wallets.

Wallets can either live on your computer and/or mobile device, on a physical storage gadget, or even on a piece of paper. Here well briefly look at the different types.

Electronic wallets

Electronic wallets can be downloaded software, or hosted in the cloud. The former is simply a formatted file that lives on your computer or device, that facilitates transactions. Hosted (cloud-based) wallets tend to have a more user-friendly interface, but you will be trusting a third party with your private keys.

Software wallet

Installing a wallet directly on your computer gives you the security that you control your keys. Most have relatively easy configuration, and are free. The disadvantage is that they do require more maintenance in the form of backups. If your computer gets stolen or corrupted and your private keys are not also stored elsewhere, you lose your bitcoin.

They also require greater security precautions. If your computer is hacked and the thief gets a hold of your wallet or your private keys, he also gets hold of your bitcoin.

The original software wallet is the Bitcoin Core protocol, the program that runs the bitcoin network. You can download this here(it doesnt mean that you have to become a fully operational node), but youd also have to download the ledger of all transactions since the dawn of bitcoin time (2009). As you can guess, this takes up a lot of memory at time of writing, over 145GB.

Most wallets in use today are light wallets, or SPV (Simplified Payment Verification) wallets, which do not download the entire ledger but sync to the real thing. Electrum is a well-known SPV desktop bitcoin wallet that also offers cold storage (a totally offline option for additional security). Exodus can track multiple assets with a sophisticated user interface. Some (such as Jaxx) can hold a wide range of digital assets, and some (such as Copay) offer the possibility of shared accounts.

Online wallet

Online (or cloud-based) wallets offer increased convenience you can generally access your bitcoin from any device if you have the right passwords. All are easy to set up, come with desktop and mobile apps which make it easy to spend and receive bitcoin, and most are free.

The disadvantage is the lower security. With your private keys stored in the cloud, you have to trust the hosts security measures, and that it wont disappear with your money, or close down and deny you access.

Some leading online wallets are attached to exchanges (such as Coinbase and Blockchain). Some offer additional security features such as offline storage (Coinbase and Xapo).

Mobile wallets

Mobile wallets are available as apps for your smartphone, especially useful if you want to pay for something in bitcoin in a shop, or if you want to buy, sell or send while on the move. All of the online wallets and most of the desktop ones mentioned above have mobile versions, while others such as Abra, Airbitz and Bread were created with mobile in mind.

Hardware wallets

Hardware wallets are small devices that occasionally connect to the web to enact bitcoin transactions. They are extremely secure, as they are generally offline and therefore not hackable. They can be stolen or lost, however, along with the bitcoins that belong to the stored private keys. Some large investors keep their hardware wallets in secure locations such as bank vaults. Trezor, Keepkey and Ledger and Case are notable examples.

Paper wallets

Perhaps the simplest of all the wallets, these are pieces of paper on which the private and public keys of a bitcoin address are printed. Ideal for the long-term storage of bitcoin (away from fire and water, obviously), or for the giving of bitcoin as a gift, these wallets are more secure in that theyre not connected to a network. They are, however, easier to lose.

With services such as WalletGenerator, you can easily create a new address and print the wallet on your printer. Fold, seal and youre set. Send some bitcoin to that address, and then store it safely or give it away. (See our tutorial on paper wallets here.)

Are bitcoin wallets safe?

That depends on the version and format you have chosen, and how you use them.

The safest option is a hardware wallet which you keep offline, in a secure place. That way there is no risk that your account can be hacked, your keys stolen and your bitcoin whisked away. But, if you lose the wallet, your bitcoin are gone, unless you have created a clone and/or kept reliable backups of the keys.

The least secure option is an online wallet, since the keys are held by a third party. It also happens to be the easiest to set up and use, presenting you with an all-too-familiar choice: convenience vs safety.

Many serious bitcoin investors use a hybrid approach: they hold a core, long-term amount of bitcoin offline, while having a spending balance for liquidity in a mobile account. Your choice will depend on your bitcoin strategy, and your willingness to get technical.

Whatever option you go for, please be careful. Back up everything, and only tell your nearest and dearest where your backups are stored.

For more information on how to buy bitcoin, see here. And for some examples of what you can spend it on, see here.

(Note: specific businesses mentioned here are not the only options available, and should not be taken as a recommendation.)

Authored by Noelle Acheson. Wallet image via Shutterstock.

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Bitcoin 101: What is Bitcoin? - CoinDesk

Could China take over the Bitcoin (BTC) ecosystem? Its a very real possibility, and it could happen very quickly because China controls more than half of the worlds Bitcoin mining operations upward of 65% of the computing power to mine Bitcoin. No other country is anywhere near that number. Additionally, according to Genesis Minings recent The State of Crypto Mining 2020 report, 60% of Bitcoin owners have a real concern about that Chinese majority and what it could mean for the stabilization of the cryptocurrency.

And they should be worried. China owning more than half of mining operations could result in a disruption to the system, instability to the Bitcoin blockchain or even a takeover of the entire system. Bitcoin was not built to be a controlled currency.

So, why is Chinas vast mining network a concern? In order to understand the potential threat in Chinas majority control, we need to look at a fundamental attribute of how the Bitcoin ecosystem works: decentralization.

The founder of Bitcoin, Satoshi Nakamoto, had a vision for a currency that wouldnt be subject to a third party such as a bank, but that could be democratically exchanged from individual to individual. The Bitcoin ecosystem works because of the community behind it: the miners who add blocks to the chain and the nodes that scan transactions to make sure they adhere to the Bitcoin protocol. Theres no one entity that governs Bitcoin and thats the point.

Even though Bitcoin has a strongly decentralized network, it could still be threatened. If someone were to control over 50% of the power used in mining operations, they could possibly disrupt the entire system through whats called a 51% attack, or majority attack. A majority control would allow the attacker to alter transactions, double spend Bitcoin for their own gain or even block other miners from mining.

Which is why its concerning that Chinese mines are running 65% of the global hashing power used to mine Bitcoin. Its certainly more than 51%.

It takes a lot of energy to mine Bitcoin, so it would make sense that miners would set up their rigs in places where energy and labor costs are cheap. Because China is a center of international trade, lead times and production costs for almost all goods are lower than in other countries, and this also holds true for mining farms and miners. But while a number of mining farms do run on sustainable resources such as hydroelectric power, many rely on coal to fuel their mining. While coal may be cheaper than other fuels such as gas and oil, its still more expensive than alternative options such as hydroelectric and wind power, and its unsustainable and detrimental to the environment.

Having 65% of the worlds mining located in China is a concern. Even though Chinese mines work independently, the majority of the power is now located in one country. And the fact that the Chinese government has control over all of its industries is also a concern. If the government decides that it wants to take over the Bitcoin ecosystem, it could leverage its power over the countrys mining companies and simply take over a majority of the computing power, executing a 51% attack. Suddenly, the decentralized system would be centralized under one country.

While this could be a very real scenario if all the right pieces fell into place, its probably a long shot. New players in the mining market are increasingly setting up shop in the European Nordic states, Canada and the United States. The running costs there, which include cheaper energy options such as hydroelectric and wind power, along with a lack of government oversight that would let companies plan their strategies freely make those locations attractive for investors looking for a more sustainable opportunity.

Additionally, its unclear what Chinas future will be with Bitcoin. It, along with all cryptocurrency, has been banned in the country for years. Though mining had been allowed to continue, the industry as a whole was on the chopping block last year. Even though the Chinese government suddenly announced at the end of 2019 a commitment to developing blockchain technology and allowed mines to continue to operate, the government still hasnt reversed its ban on cryptocurrency. Even though China could take over Bitcoin, it just might not want to.

Still, Chinas overwhelming number of miners, mining pools and companies is something the Bitcoin community needs to be aware of. At the same time, the community can ensure that decentralization continues within the ecosystem by making sure its keeping its own mining operations diversified. As I mentioned above, were seeing new mining farms cropping up in new geographies, which will continue to distribute resources and mining power across the globe.

Its yet to be seen what the future of Chinese mining will be. But the Bitcoin community, which values transparency and democracy, will work to ensure that it remains open and available to all.

The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Philip Salter is the head of mining operations at Genesis Mining, the worlds largest cloud crypto mining operation, where he leads the software development, data engineering and research teams. Salter started his career as a software developer for BSI Business Systems Integration AG. Salter is an avid miner and crypto enthusiast based in Germany.

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US Bitcoin Holders Worry About Chinese Control of the Mining Network - Cointelegraph