Daily Archives: February 14, 2017

On February 2, Venezuela's leading bitcoin exchange, SurBitcoin, was forced to suspend operations when its bank account was revoked. According to Rodrigo Souza, who runs SurBitcoin's trading platform, the bank closed the account in anticipation of a nationwide crackdown on bitcoin use in Venezuela after the police raided a warehouse with 11,000 mining computers. SurBitcoin is in talks with other banks, and hopefully it will be operating again soon.

At its core, Bitcoin is a peer-to-peer system that allows users to exchange digital currency without permission from the government or any third party. That's why it's the ultimate libertarian technology. Bitcoin exchanges, like SurBitcoin, however, are subject to government control because they buy and sell bitcoins on behalf of their users and rely on a company bank account to collect and pay out money.

As Souza stressed in an interview last year, exchanges like SurBitcoin aren't actually necessary. They make buying and selling bitcoins more convenient, but users can always revert to peer-to-peer trading. As Souza put it, "how can [the government] stop software running on the internet?"

As he predicted, SurBitcoin's closure has led to a surge in peer-to-peer trading. LocalBitcoins, a site where users connect to buy and sell bitcoins, makes its trade volume public through an API. (See the chart below.) Last week, 464 bitcoins were exchanged in Venezuela on LocalBitcoins, the equivalent of nearly $470,000 dollars based on today's price. That's close to a 50 percent increase in volume since SurBitcoin stopped operating. (LocalBitcoins' previous trading volume peak was 377 bitcoins the week of October 15, 2016, but, at the time, bitcoin was worth almost 40 percent less than it is today.)

SurBitcoin's average weekly trade volume was about 330 bitcoins when it shutdown. So about two-thirds of SurBitcoin's activity has move to LocalBitcoins. (A similar phenomenon is happening in China.)

Why is bitcoin in Venezuela seemingly inexorable? For more, read "The Secret, Dangerous World of Venezuelan Bitcoin Mining." Or listen to this week's episode of EconTalk with Russ Roberts, where I discussed bitcoin in Venezuela and the impact cryptocurrency is having throughout Latin America.

As I told Roberts, I first learned about bitcoin when listening to 2011 EconTalk interview he did with Gavin Andresen, a pioneer in the field. I remember thinking, "this can't possible work." Six years later, in part through my reporting on Venezuela, I'm convinced bitcoin will change the world.

Listen to the interview below. (Bonus link: Nick Gillespie interviewed Russ Roberts in 2014 about his book on Adam Smith.)

See more here:
Peer-to-Peer Bitcoin Trading Surges in Venezuela - Reason (blog)

Trading bots are rather common in the bitcoin world, as very few traders have time to stare at the charts all day. Most people trade bitcoin as a way to generate passive income while working their regular day jobs. With so many people relying on trading bots, the question becomes which one can be trusted and which one should be avoided. Below is a list of known cryptocurrency trading bots, albeit your mileage may vary when using them.

NOTE: The Merkle does not condone the use of trading bots. The Merkle is not responsible for any financial losses sustained while using the software mentioned below. The Merkle is not affiliated with any of these trading bots.

One of the very first automated bitcoin trading bots to ever be created goes by the name of BTC Robot. While it seems to do the job and is quite easy to set up, users mileage may heavily vary when using this tool. Some people seem to be making modest profits, whereas others seem to struggle to get it to work properly. There is a 60-day refund policy, which makes it a no-brainer to try out regardless.

The Gekko trading bot is an open source software solution hat can be found on the GitHub platform. It was last updated a month ago, which seems to indicate it is still being actively developed. Using this automated trading bot seems rather straightforward, as it even comes with some basic strategies. It is not a high-frequency trading bot by any means, nor will it exploit arbitrage opportunities. With a good list of supported exchanges, Gekko could be worth checking out.

One of the more attractive albeit unknown solutions goes by the name of CryptoTrader. The service offers cryptocurrency users automated trading bots running on cloud platforms. Not having to install unknown software is a big plus, albeit it remains to be seen if this platform is legitimate. One intriguing feature is how CryptoTrader features a strategies marketplace where anyone can buy or sell their favorite trading strategy.

Another open-source solution for bitcoin traders goes by the name of Zenbot. Albeit this bot has not seen any major updates over the past few months, it is available to download and modify the code if needed. This marks the third iteration of Zenbot, which is still a lightweight and artificially intelligent bitcoin trading bot. It is also one of the very few solutions capable of high-frequency trading and supporting multiple assets at the same time. According to the GitHub page, Zenbot 3.5.15 makes a 1.531 ROI in just three months, which is quite surprising.

Although technically not a bot in the traditional sense, Tradewave is a platform allowing users to create automated bitcoin trading strategies. Users can connect most of the major exchanges to enable live trading within a few minutes. Moreover, there are quite a few trading strategies shared by community members for other users to try out. Tradewave is not free to use, though, albeit plans start at just US$14 per month.

The Haasbot is somewhat popular among cryptocurrency enthusiasts. On paper, Haasbot does all of the trading legwork on behalf of the user, although some input is required. Haasbot supports all of the major exchanges and is capable of recognizing candlestick patterns. Considering it costs between 0.12 BTC and 0.32 BTC per three-month period to use this tool, one has to be committed to using the software and hopefully make a profit from doing so.

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Top 6 Bitcoin Trading Bots - The Merkle

Banks in the United Kingdom are turning a deaf ear to bitcoin exchanges, despite the governments pro-blockchain position, according to financial writer Roger Aitken, writing in Forbes. Unless the situation changes, the banks will undermine bitcoins progress and drive cryptocurrency entrepreneurs out of the banking system.

Cryptopay, a bitcoin brokerage, recently informed customers that it will no longer support British Pound deposits and withdrawals on account of new bank policies. Such incidents have increased as bitcoin has gained popularity.

Cancellation of GBP deposit and withdrawal facilities limits people to Single Euro Payments Area (SEPA) transfers, making Cryptopays buying and selling useless to most British customers.

A dozen or more U.K. brokerages and bitcoin exchanges have suffered over the past three to four years as banking facilities have become unavailable. Some have closed or resorted to awkward arrangements.

Britcoin, which became rebranded as Intersango, started in 2011. It faced problems with U.K. bank transfers before eventually closing. An August 2012 update noted that bridging the gap between bitcoin and the conventional banking system was costly on account of technical issues, missing transfers, and accounts frozen and closed without warning.

In 2014, Bit121 had a promising start, but banks withdrew their support and the exchange closed.

In Bitcoin We Trust suffered the same fate. It resorted to using postal orders before giving up.

Coinfloor, one of the only U.K. exchanges still operating, uses SWIFT transfers, which incur hefty costs and delays. The minimum transfer is 1,000 (c.$1,250).

CoinJournal, a bitcoin publication, saw its banking services come to an abrupt endafter its U.K. banking provider Barclays terminated its business account. CoinJournal received no official warnings prior to its account closure. Even more alarmingly, Barclays still hasnt given a reason for the extreme action.

CoinJournal believes the decision taken by Barclays to close its business account was an automated call, after seeing a pattern of banking transactions involving prominent bitcoin exchange and service provider Circle.

The decision was likely a result of us using Circle to transfer fiat from ad revenue into bitcoin to pay our writers and some overheads, a representative for the publication told CCN.

Similar scenarios have played out in Australia and New Zealand.

BitNZ, a New Zealand bitcoin exchange, has announced it is closing due to the refusal of New Zealand banks to allow bank accounts to trade bitcoins, and has advised customers to withdraw all funds before April 15, 2017.

The Australian Competition and Consumer Commission is scrutinizing attempts by Australias biggest banks to swallow fintech companies developing technologies like blockchain solutions in the financial sector.

Peer-to-peer services match individual buyers and sellers in the U.K. in lieu of traditional exchanges. Trust is established by reputation.

Once a buyer has paid, usually with a bank transfer the seller sends the bitcoins.

As for other nations, Russia recently relaxed its regulatory position and taken a wait and see approach. It has effectively legalized bitcoin and allowed for exchanges to operate. Switzerland is a more progressive country. It is easy to buy bitcoins through a network of ATMs on the rail system.

In Japan, it is possible to pay electric bills with bitcoin.

The United States has a more complex regulatory framework. But progress is on the horizon since the New York BitLicense took effect in 2015, with other states following a similar approach.

Bitcoin is legal in China, although the central bank recently stopped highly leveraged trading.

The banking sector is clearly at odds with the U.K. government, which is openly pro-blockchain. The situation is peculiar, with the government saying the country is open to bitcoin but the banking sector standing in the way.

Since the financial crisis, the taxpayer has become the majority shareholder in the Royal Bank of Scotland, holding at around 82% of the bank. This would normallytranslate into a certain amount of leverage by the taxpayer.

The U.K. also has a reputation for being a fintech hub, to which the banking sector seems to have taken exception.

For whatever reason, the banks have closed ranks and chosen not to work with bitcoin.

The fact that bitcoin is decentralized and fiat currency is centralized could be at the root of the conflict.

Also read: Blockchain platform Waves raises more than $2m at the start of the crowdsale campaign

Money cannot flow easily from the blockchain economy to the traditional financial sector and vice versa without banks cooperation. The bitcoin sector is not large enough to offer all the goods and services needed to make bitcoin a sufficiently broad means of payment.

Bitcoins volatility also makes it an unsuitable unit of account or store of value. While its a great transfer medium, its price against fiat fluctuates too much for most people.

The bitcoin economy wont expand until bitcoin is better suited as a means of payment. But it wont be better suited without more growth and stability.

Waves, a custom blockchain tokens platform, offers a solution fiat-backed blockchain tokens. It raised $16 million last summer through crowdfunding. Waves can act as a gateway between the blockchain and the fiat world.

Customers pay money into the gateway using a bank transfer or another suitable means, and the gateway issues them the same sum in blockchain tokens

The same exchange occurs in reverse when customers cash out their Waves GBP and have them sent as real GBP to their bank account. Waves essentially serves as a toolkit.

Sasha Ivanov, CEO and founder of Waves, noted that Waves can make money more efficient. By putting fiat money on the blockchain, Waves can make it more transparent and faster, and it can reduce the cost of sending it abroad.

Ivanov thinks Waves can introduce competition and encourage banks to become more accountable. If banks in one sector in one country wont work with Waves, it will work with those in another jurisdiction.

Waves does not immediately solve the problem of U.K. banks hostility to bitcoin, but it suggests the roadblocks are not insurmountable. The answer may be to work around them rather than with them.

Image from Shutterstock.

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Bitcoin's Growth in the UK Continues to Be Stifled by Banks - CryptoCoinsNews