Category Archives: Bitcoin

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

Mehmet Ali Ozcan | Anadolu Agency | Getty Images

A rally in bitcoin led the cryptocurrency market higher ahead of a major technical event for the digital coin and as industry participants report an increased interest from institutional investors.

Bitcoin crossed $10,000 on Friday morning Singapore time, the first time it has hit that price since February, according to data from CoinDesk. The cryptocurrency had pared some of those gains and was trading around $9,900.75 as of 1:39 p.m. Singapore time, still representing a more than 6.4% rise from the day before.

The entire market capitalization or value of the cryptocurrency market had jumped by more than $13 billion from the day before, as of around 1:39 p.m. Singapore time. That move had been largely driven by bitcoin which makes up most of that figure. The value of the entire market stood at $268.07 billion.

Industry participants said that a number of factors from supportive central bank monetary policy to increased interest from institutional investors has factored into the bitcoin rally.

Bitcoin suffered two bouts of intense selling in March sending it to a low of around $3,867, a price not seen since March 2019. Since then, the price has rallied over 150%.

Meanwhile, stock markets, which also saw sharp drops in March, have recovered. The Dow Jones Industrial Averageis up 28.4% since its March low.

"Overall markets have been bullish since the March lows and this is across asset classes, including crypto," Vijay Ayyar, head of business development at cryptocurrency exchange Luno, told CNBC. "Money printing by the Fed and other central banks globally have given a lot of confidence to investors that the economy will be supported no matter what."

The U.S. Federal Reserve has announced a number of unprecedented measures to help cushion the economic blow from the coronavirus outbreak. Other central banks around the world, including the European Central Bank (ECB), have unveiled their own stimulus packages. Central bank policies are seen as supportive of risk assets like stocks.

Part of the rise in bitcoin's price since the March low has been anticipation of a technical event known as "halving."

Bitcoin is not issued by a centralized authority like fiat currencies are. That is why it is often called a "decentralized" cryptocurrency. Instead it is governed by code and is underpinned by a technology known asblockchain.

In the world of bitcoin, so-called miners with specialized high-powered computers compete with each other to solve complex math problems to validate bitcoin transactions. Whoever "wins" this race gets rewarded in newly minted bitcoin. This "mining" activity happens in blocks, which is essentially a group of transactions joined into one.

Currently, these miners receive 12.5 bitcoin per block mined.The rewards are halved every few years to keep a lid on inflation. On May 12, the reward per miner will be cut in half again, to 6.25 new bitcoin.

The effect is that the supply of bitcoin coming onto the market is reduced. Previous halving events, which happen every four years, havepreceded big price increases in bitcoin.

"For the past few weeks, we have seen additional players enter the BTC market as prices have trended upward in anticipation of the halving event as bulls saw this as an opportunity to buy BTC ahead of a price pop and what many expect will be significant price appreciation," Matthew Dibb, co-founder of Stack, a bitcoin index fund provider, told CNBC. BTC refers to bitcoin's currency code like USD for the U.S. dollar.

"This has undoubtedly continued into this week and may even carry over the weekend as the halving draws closer."

Dibb said there are other factors at play as well, including more institutional money flowing into bitcoin.

Paul Tudor Jones, a high-profile Wall Street hedge fund manager,revealed in a message that one of his funds holds a low single-digit percentage infutures on the cryptocurrency, Bloomberg Newsreported.

"The news that renowned investor, Paul Tudor Jones, has backed bitcoinpublicly praising the asset for its properties as a store of value has almost certainly helped catalyse BTC's sudden movement into the US$10,000 zone," Dibb said.

"With monetary easing policies and 'unlimited' economic stimuli being recently unveiled across the world, fiat currencies seem set to weaken substantially. This has, in turn, led to bitcoin's narrative as a 'store of value' to gain added traction amongst investors who are seeking to hedge against volatility in traditional markets."

Bitcoin has often been compared to gold as a so-called safe haven asset during turbulent times for other risky assets like stock markets. However, recently, bitcoin has fallen and risen when stock markets have.

Bitcoin has always been known as a very volatile asset subject to huge price swings. In 2017, bitcoin saw somewhat of a frenzy that sent its price from under $1,000 at the start of the year to a record high of over $19,700 in December that year.

However, in 2018 the price of bitcoin came crashing down to just over $3,000 by mid-December.

Dibb believes that the recent rally is different from what was seen in 2017.

"This market is not moving purely on the back of retail speculationand it is primarily Bitcoin which is experiencing gains, not the altcoin market," Dibb said referring to smaller digital coins. "It is only now that we are really beginning to see institutional and accredited investors operating within the Bitcoin space, bringing a level of market maturity and financial understanding which was all but absent from the cryptocurrency sector as late as 2017 and 2018."

However, the risk of a substantial drop remains.

"We have gone from 3K to 10K in 2 months, too fast, too soon. There will be a pullback, and that will determine what kind of crash it is," Luno's Ayyar said.

"We could pull back to 8K, hold, and them move higher to 15K. Or we could go right back down to 3K as well. At this pointthough, one has to be bullish, unless, we see a violent move down. I think the current run up though is part of a larger move up, so don't think we'll see 3K again anytime soon. But if we do run up to 15-20K, then likelihood of a big move down and larger correction is higher."

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Cryptocurrency market jumps by over $13 billion driven by bitcoin as major technical event approaches - CNBC

Bitcoin broke through $9,600 today for the first time since February. (Photo by Chesnot/Getty ... [+] Images)

Bitcoin prices climbed today, reaching their highest in more than two months as the cryptocurrency built upon its recent gains.

The digital asset rose to as much as $9,603.77 this morning, CoinDesk figures showed.

At this price, bitcoin had attained its highest level since February 25th, additional CoinDesk data revealed.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

When explaining these latest gains, analysts pointed to variables like sustained momentum and technical factors.

Denis Vinokourov, head of research for London-based digital asset firmBequant, spoke to these developments, describing bitcoins climb above $9,600 as a continuation of the recent upward trend.

However, he emphasized that the break of previous key resistance level was accompanied by a relatively modest follow through.

In other words, the move higher tripped only a handful of stops which suggests that the bears are just as cautious about betting on the downside, as the bullish camp going all out into the key risk event.

Going forward, the digital currencys position is tenuous, said Joe DiPasquale, CEO of cryptocurrency hedge fund managerBitBull Capital, citing technical analysis.

Having previously identified the $9,500 level as providing key resistance, he emphasized that the $9,500 resistance still stands, in that the daily candle is yet to close above it, and there is an obvious struggle at that price level.

However, the halving has a lot of media and marketing hype behind it, which naturally pushes the price higher as the event comes closer, said DiPasquale.

With so much hype around the halving, the price can go much higher near the event, but we can expect pullbacks at each resistance level, with the next expected around $9,800. On the downside, a post-halving decline towards $8,000 cannot be ruled out.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.

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Bitcoin Prices Rally To Highest Since February - Forbes

With Volatility Comes Opportunity

Cryptocurrencies saw one of their most volatile months in March only to reverse course in April. Federal governments around the world are responding to the Coronavirus outbreak with unprecedented stimulus efforts with no end in sight. This unprecedented response is just one more reason we feel digital assets should make up part of an asset allocation.

As an example, the Bloomberg Commodity Index, which is often used as an investable allocation to commodities for inflation hedging purposes, was down almost 25% primarily due to crude oil trading down almost 43%. Meanwhile, Gold and Bitcoin are up 11% and 22% respectively.

Bloomberg.

I believe there are a number of narratives justifying a bullish move higher for digital assets. The two primary long-term justifications are:

The third and slightly more obtuse reason to appreciate cryptocurrencies is the volatility they offer to speculators. With volatility comes the speculators who bring liquidity, and price discovery, this inflow of capital and speculators then tempers volatility for the next wave of investors, point one above, and users, point two above.

The store of value concept is prone to criticism at times due to the short-term volatile nature of bitcoin and other digital assets, however, for those looking to hedge potential inflation risk with a supply-constrained asset that can easily be traded for fiat currencies, the thinking behind bitcoin as a digital gold is very relevant. In fact, it is not difficult to make the case that bitcoin could be considered far more valuable than gold because of its enhanced utility. Bitcoin has the added benefit of being easier to acquire, transfer, and store than gold. Imagine how much more practical it would be for someone looking to carry all of their worldly possessions from one geography to another. They would be far better off using bitcoin than they would if they were to convert their wealth to gold or some other unwieldy metal. Taking that argument to the next logical step, the added utility should ultimately factor into the overall economic value. To put a finer point on this, as of March 2020, the total estimated market capitalization of gold was about $9 trillion USD. By contrast, the bitcoin market capitalization is around $170 billion. For those without enough room on their calculator, a $9 trillion dollar market cap would value a single bitcoin at well over $400,000 USD.

Gold vs Bitcoin

Let me say that again, $9 trillion vs. $0.170 trillion. If you are anti-bitcoin I appreciate your point of view, heck, I felt the same way when I first tumbled down the proverbial rabbit hole. You may very well be right, but isnt it also conceivable that you might be wrong?

It is important to point out how rare it is to find an investment hedge with such an attractive asymmetry of payoffs. Put simply, a hedge is something you dont think will likely payoff, but just in case the ship hits the sand it will be there for you protecting at some of the losses in the rest of your portfolio. Hedges, if done properly should have nominal cost and big payoffs if in the unfortunate event that they work out. Similar to Pascals ultimate conclusion, the risks of not believing in God were far greater than the costs of believing in God. Or, for the glass half full perspective. The potential rewards are significantly greater than the costs.

Considering an investment in digital assets should be quite similar. Significant potential payoff vs. relatively little cost, even a small allocation of 2%-5% can have a meaningful impact on performance. The upside could be life-changing, if sized appropriately, the downside could be the equivalent to a bad day in the markets. Couple that with the fact that this hedge is both uncorrelated to nearly everything else, and at the same time it lacks the term risk of most hedges, bitcoin doesnt decay like options, or credit derivatives, etc.. Given this, even the bitcoin bears, owe it to themselves to slow down and consider investing a small amount in this asset class regardless of their point of view. If they are right and bitcoin goes to zero, they invested little and the loss is negligible. If they are wrong, the potential payoff could be many multiples of what they invested.

The second most common narrative is, digital assets as a form of currency or medium of exchange. Equally as important as the store of value narrative, though possibly a bit harder to imagine for those of us with access to the traditional banking system. We tend to take for granted the utility that cryptocurrencies provide. I realize, it is difficult to think of digital assets as currency, but just remember, it is big world, not everyone has the access to banking products that we take for granted.

Yes, in the short run, arguing that digital assets are currencies and a medium of exchange opens the door to critics like Peter Schiff, and Roubini ranting about transaction fees, transaction confirmation times, etc. etc. however, once again, this noise obscures the point that bitcoin and other cryptocurrencies have the potential to offer even more utility as a form of money than traditional central bank currencies. Even Facebook recognized the fact that the antiquated bureaucratic, banking system is ripe for disruption, but even they were shut down by the incumbents who fear the loss of control rather than embracing the unlocked potential that free and open capital markets can offer.

The subtle but diminishing utility of the US Dollar

Like the boiling frog analogy, the United States Dollar has historically held a position as the world reserve currency because it offered a number of strong competitive advantages over the alternatives. It was easy to use and backed by a stable government committed to maintaining stability for the currency. Almost anyone around the globe could use and trust in this instrument of trade and commerce. However, over time, fiscal deficits, loose monetary policies and the onerous banking regulations have each steadily chipped away at the US Dollars stronghold as the world reserve currency. With the Bank Secrecy Act, the Patriot Act and many other banking regulations, it is becoming far more difficult for people and institutions to do business with the correspondent banking system. Anti Money Laundering (AML) and Know Your Customer (KYC) requirements steadily become more and more oppressive for even the most reputable people and institutions, this added difficulty encourages participants to seek alternatives. Cryptocurrencies offer an easier-to-use alternate form of payment for goods and services particularly when it comes to cross-border payments.

As an example, a merchant in Nigeria looking to buy construction equipment from a company in Venezuela, historically, would have found it easier to convert to US dollars and send funds via the Swift network. However now, neither company can open accounts with a bank connected to Swift because AML/KYC requirements automatically flag the clients as high-risk accounts creating extra work and risk for the bank to justify doing business with these clients. For the bank, there is no incentive to work with such accounts, only disincentives. These fear-based, guilty until proven innocent attitudes force merchants and individuals to seek more useful alternative monetary options like bitcoin and other cryptocurrencies. Relative to banks, Bitcoin offers an uncensorable, immutable monetary system which can process transactions on a peer to peer system without any intermediary deciding who may or may not participate.

Speculators are vital

Another very valuable and often maligned use case for cryptocurrency is the power of speculation. The speculative nature of bitcoin and other cryptocurrencies is an asset, not a weakness. Like all markets, speculators bring liquidity, adding even more utility to the users of a digital asset. Just like in the futures market for commodities, speculators and hedgers exist in a symbiotic relationship each bringing value to one another.

Until very recently, volatility for all asset classes was hovering at historic lows. Loose monetary policy from major central banks left capital markets desks flush with capital forcing them to compete to squeeze out arbitrage spreads from almost every nook and cranny of the markets. More adventuresome trading desks, in search of volatility, started trading cryptocurrencies over the past few years. The beneficial side effect of this was significantly more liquidity, tighter spreads, and more price discovery. As this first wave of institutions entered the market seeking the instability of wider bid-ask spreads and higher volatility, they ended up paving the way for the next wave of investors seeking more stability and confidence. The speculators pave the way for the investors (store of value camp) and the users (currency or medium of exchange camp) All three groups work together stabilizing and leaning on one another for added utility. Metcalfs law is alive and well in the digital asset realm. The more users who find value in a network, the more valuable the network becomes, enticing more users and so on.

Cryptocurrencies are no different in this regard, though many would argue that cryptocurrencies are only good for speculation, let them rant. They do not understand the other subtle societal benefits cryptocurrencies offer, and to be frank, they dont need to. As of May 4th, the market capitalization of cryptocurrencies was just over $240 billion USD. That is more than a mere experiment. Something very real is happening here, and those who ignore it are likely to face some significant regrets in the future.

The Time is NOW

If any of the points laid out above resonate with you, stop trying to pick your entry point, you never will. Prices will always seem too high and valuations will always be impossible to justify. One thing is certain, there will be moments of regret. The key to this asset class is that it will always deliver unrelenting punishing volatility. The intense feelings of FOMO (fear of missing out) and buyers remorse are almost too much to bear for any sane investor, so follow some simple strategies to make the journey easier.

Given those thoughts, if you are still wondering how much or when to invest, consider the Rule of Three.

So come on in, the water is warm, dip a toe in the shallow end. If you have any questions or would like to learn more about my team and I at Blockforce Capital navigate the volatility, please reach out for more information.

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The Case For Cryptocurrency: Why Even The Most Cynical Bitcoin Bear Should Consider Investing And How To Get Started - Forbes

Economic growth figures are starting to trickle in and, as expected, theyre bad. Really bad. This past week theU.S. reportedQ1 GDP growth as -4.8%.Italys GDP fell-4.5%,Spain came inat -5.2% andFrance trumped thatwith a whopping -5.8%. And thats just warming up Christine Lagarde, head of the ECB,has warned euro-area GDP could fall by as much as 15% in Q2.

And yet stock markets in the U.S. and Europe closed up on the week, in spite of the inevitability the next quarter will be worse still.

You're readingCrypto Long & Short, a newsletter that looks closely at the forces driving cryptocurrency markets. Authored by CoinDesk's head of research, Noelle Acheson, it goes out every Sunday and offers a recap of the week with insights and analysis from a professional investor's point of view.You can subscribe here.

This could be partly due to the concentration of market capitalization nearly 25% of the S&P 500 market capitalization is from five tech companies, which arguably will do relatively well from more people staying at and working from home.

Or, it could be because the stock market has broken all ties with the actual economy. The aforementioned concentration of the S&P 500 is intensifying, fueled by the dominance of passive investing, which means its performance does not reflect that of most of its constituents. And the moral hazard posed by the governments willingness to bail out companies in difficulty suspends the need to scrutinize balance sheets and evaluate viability.

But reality doesnt stay suspended forever, no matter how much we wish it would. Eventually the abrupt slowdown of economic activity will feed through to numbers investors cant ignore, and the current price/earnings (P/E) valuations will start to look absurd.

This is where bitcoin comes in. Its underlying technology and monetary system make it one of the few investable assets that is immune to the economic fluctuations we have ahead.

First, its P/E ratios will never look absurd because it doesnt have any earnings. Nothing to get hit there.

Second, its use will not be curtailed by lack of customer mobility users can transact from anywhere. In fact, logistical constraints could boost interest in bitcoin transactions from those who normally hand over physical cash (although why they would want to if people arent moving around is another question).

Third, its market valuation is not susceptible to artificial support from governments trying to keep investor (and voter) spirits up.

This does not mean bitcoins price will keep going up while other prices come down. We saw back in March that when things get bad in markets, bitcoin also suffers. Its price is driven by sentiment.

But it is also driven by expectations of future adoption and demand, which are unrelated to the drivers of demand for most other investable assets.

In terms of fundamentals, bitcoin has nothing to lose in the upcoming crisis no income, no debt and its future adoption does not depend on happy and confident consumers. Just the opposite, in fact.

The growing awareness of this, combined with heightened media attention due to theupcoming halving, could be one of the reasons behind this weeks recovery. Or perhaps it is being swept along in the wave of inexplicable optimism in traditional markets.

Should that turn south, bitcoin is likely to suffer in the sentiment-driven short term. Longer term, however, fundamentals tend to surface, and those that drive bitcoin are radically different from those that drive traditional markets.

Talk about marching to your own beat.

Not that big a deal

One argument in favor of the bitcoin price rallying after the halving is that of supply and demand. Assuming demand is more or less constant (I know, but work with me here), when supply drops the price should go up. Basic economics you remember that graph from high school, right?

After the halving, there will be fewer new bitcoin entering the market every day. Since miners need to sell part of their hard-won new bitcoins to meet expenses, some of the sell pressure comes from miners. If they are selling fewer bitcoins (because they have fewer bitcoins to sell), then there is less supply meeting a constant demand and the equilibrium price moves up.

Fine, but one part of this model is already obviously unstable demand is not constant, not by a long stretch.

Even so, there is another overlooked weakness: The dent in sell pressure is negligible.

Post-halving, there will be 6.25 fewer new bitcoins entering circulation with every block. Assuming a new block every 10 minutes, that translates to approximately 900 fewer new bitcoins a day.

Considering the number of bitcoins transferred on-chain in April was an average of over 270,000 per day, 900 less wont make much of a difference to the supply curve in that simple basic price equilibrium graph.

Any positive halving impact is more likely to come from increased awareness and trader interest resulting from the media attention. The juxtaposition of what is becoming known as a quantitative hardening against a quantitative easing, combined with growing unease about the latter, is likely to transform this media-fueled attention into a lasting interest from investors, analysts and economists.

What is unclear is whether any price momentum from the halving would be enough to offset a hit to general sentiment from broader macro concern. As always in investing, ones individual time horizon is everything.

Anyone know what's going on yet?

In spite of a stream of bad news on employment, production and earnings, the S&P 500 had its strongest April since 1987, possibly floating on the stimulus laughing gas. European indices also had a good month, as economies started announcing tentative steps towards opening up their economies and electricity consumption started edging up.

As April turned into May, markets started to retreat, perhaps digesting the recent gains and perhaps unnerved by a new anti-China belligerence from the U.S. and earnings warnings from tech companies. Gold continues to play the inflation game but with less enthusiasm and some profit taking it remains to be seen how it would perform if stocks head south again. And West Texas oil had its first positive week in about a month as confidence gathered around the production cuts, although there could well be more turmoil there as the next futures expiries approach.

As you can see in the chart above, bitcoin had a particularly strong month.

The jump this week gave bitcoin its best April in years, with data suggesting this rally is largely fueled by U.S. investors, with growth more in spot volumes than derivatives.

And a lack of foreign reserves has pushed countries such as Lebanon and Turkey towards currency crises, which remind us that a strong dollar impacts much more than just FX markets. Whats happening in Lebanon, where anti-government protests have turned violent and triggered the closure of the capitals banks, will become a textbook example of the risks of centralized finance for years to come.

(Note: Nothing in this newsletter is investment advice. The author owns small amounts of bitcoin and ether.)

Chain links

CoinDesk Research has published its first in a series of deep dives into listed crypto companies. Were starting with Hut 8, one of the largest listed bitcoin miners, and its financials and recent operational shifts reveal some of the hurdles bitcoin miners struggle with in capitalizing their business while maintaining margins.

Preston Pysh looks at investment opportunities in a market increasingly manipulated by government printing, predicting that a break will be triggered either by social unrest or a natural transition to a different form of money. TAKEAWAY: Preston is not a crypto enthusiast (among other things, he hosts the podcast We Study Billionaires), but he is bullish on bitcoin largely as an alternative to an increasingly debased dollar this makes his take particularly interesting for those managing diversified portfolios, which should be everyone.

How many of a projects contributors have to be hit by a bus for the project to stall? Introducing the bus factor, a new metric that measures resilience. Really. TAKEAWAY: Actually, its a cool concept, intriguingly expanded on here by analyst Hasu. The higher the bus factor (the more widely distributed the code development), the easier a network is to replicate. The lower the bus factor (the more concentrated its control), the greater the risk. A couple of years ago Twitter woke up to a mercifully false rumor that Ethereum creator Vitalik Buterin had been killed in a car accident. (It didnt involve a bus as far as I know.) The news pushed ethers price down 15%. These days the impact would probably be different (although please be careful, Vitalik), but the anecdote shows that this is a metric worth watching.

The city of Ya'an, in China's mountainous Sichuan province, is publicly encouraging the blockchain industry to help consume excessive hydroelectricity ahead of the summer rainy season. TAKEAWAY: This highlights how excess energy from hydroelectric and natural gas plants can bring down operating costs for miners, making their sector crucial to the maintenance of the bitcoin network more profitable and less vulnerable to price swings and halvings.

Bitcoin futures and bitcoin options both had their most active day since the crash on March 12, according to derivatives data provider skew.com. TAKEAWAY: To be honest, Im not sure what this means, but it feels significant.

Coin Metrics presents free float supply, which adjusts supply measurement by taking out founding tokens and vested tokens, as well as those that are inactive, burned or probably lost. TAKEAWAY: The result is a measure of circulating tokens, a more reliable gauge of a networks size and liquidity. Bitcoins free float supply, according to Coin Metrics, is over 4 million less (over 20% less) than the reported figure, which implies that its velocity (the transaction rate compared to the amount outstanding) is higher than many have calculated.

Blockchain analytics firm Glassnode has introduced a new metric called Glassnode On-Chain BTC Index (GNI), which aims to link price performance to network fundamentals. TAKEAWAY: Any fundamentals-tracking index is subjective, no matter how much rigor goes into selecting and quantifying the components. However, as long as the methodology is consistent, they can provide valuable information about trends and shifts, and at first glance the GNI does a good job of taking into account the principal value drivers of sentiment, liquidity and network health. The index recently turned from bearish to neutral, which is itself a bullish sign.

Large crypto investors, popularly known as whales, seem to be accumulating bitcoin amid the ongoing price rally. TAKEAWAY: Although an imperfect indicator, this can be interpreted as bullish, as high-net worth individuals or funds appear to be adding to or taking new long positions in bitcoin, perhaps in response to the monetary turmoil in the fiat world.

Genesis Capital* released its Q1 lending report, which highlights more than $2 billion of new loan originations, twice the figure for the previous quarter. This brings their cumulative amount lent to $6.2 billion. TAKEAWAY: Those are substantial figures, which point to a deepening maturation of the space. The report is worth a read, especially as it gives insight into the timeline around the March 12 crash, and how Genesis handled the turmoil. It also confirms that the lender has tightened credit, given the market uncertainty. This is likely to be temporary and comes as a relief the sector needs strong lenders, as leverage can fuel growth but can also bring it tumbling down if it has to unwind suddenly.(*Genesis Capital is owned by CoinDesk's parent company, DCG.)

Leigh Cuen spoke to several crypto custody and wallet providers about the uptick in activity they have seen since the beginning of the lockdown. TAKEAWAY: Growing interest in off-exchange custody solutions implies a growing interest in holding crypto assets, rather than just trading them. Some of the exchanges Leigh spoke to cater mainly to institutional clients, but others have a wider base, which implies that interest in bitcoin is spreading amongst all types of investors.

The second fund of a16zs crypto division has raised $515 million, more than the original target of $450 million and considerably more than the $300 million raised by the first fund, which launched in 2018. The investments will focus on next-generation payments, decentralized finance, new monetization models and the concept of a decentralized internet. TAKEAWAY: While this is a crypto venture fund, investing in startup equity and tokens without the intention to trade, this raise is bullish for the sector as it implies a belief that at least some of the beneficiary blockchain companies will have viable businesses.

Silvergate Bank added 46 crypto customers in the first quarter, bringing the total to 850, largely institutional investors. The number of transactions more than doubled in Q1 vs Q4, and was up more than 3x vs the same period in 2019. TAKEAWAY: One intriguing disclosure in the report was the mention of a lending service called SEN Leverage, currently in pilot mode, which will allow bank customers to obtain U.S. dollar loans collateralized by bitcoin. Crypto as collateral is a fascinating area to watch. On the one hand, the bearer status of bitcoin, its relative liquidity and its ease of transfer make it an ideal collateral from a lenders point of view. On the other hand, current legislation makes it very difficult in practice. This paper by Xavier Foccroulle Menard, posted on SSRN this week, gives a great explanation as to why. (TL;DR: its to do with UCC definitions of collateral guess what, bitcoin doesnt fit.)

Hangzhou-based Ebang International Holdings, one of the leading manufacturers of bitcoin mining equipment, has filed with the Securities and Exchange Commission for an initial public offering of up to $100 million. TAKEAWAY: There does seem to be a trend amongst Chinese companies of trying to list in the U.S.,in a bid to broaden their geographical diversification. Curiously, this could encourage the shift of the epicenter of bitcoin mining away from China and towards the U.S.

CFTC commissioner Brian Quintenz, one of the organizations crypto supporters and who advocated for self regulation in the crypto industry, will not seek renomination when his post ends this month, and will leave the regulatory organization by late October. TAKEAWAY: SEC commissioner Hester Peirce, who has argued in favor of bitcoin exchange-traded funds and also favors a more supportive approach to innovation, is also nearing the end of her term. As far as I know, her plans have not been made clear yet, and we dont know who will be replacing Quintenz but this could mark a subtle change in tone at one of the most powerful securities regulators.

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In advance of her Crypto Across Emerging Markets panel at Consensus: Distributed, Leigh Cuen is writing a three-part column on how cryptocurrencies are used in the developing world. In this first part of the series, she looks at the Middle East.

It is a truth universally acknowledged by pundits on Crypto Twitter that emerging markets are more likely to see revolutionary bitcoin usage, at least in the near future, than Silicon Valley.

However, the term emerging markets encompasses most of the planet, excluding a handful of wealthy nations. For instance, even if fiat-denominated volumes are dwarfed by Asian whales or U.S. institutions, scrappy crypto traders in Turkey have a disproportionate impact on the global bitcoin economy.

Generally speaking, regions with weak states and educated diasporas see more grassroots adoption. For example, Lebanese entrepreneur Michel Haber said most of the 26 remote workers involved with his web services startup, cNepho Global, now prefer bitcoin paychecks.

Haber has already been paying some developers this way with bitcoin from Beirut's grassroots trading networks for two years. Now that most workers would rather receive bitcoin, he encourages colleagues to get mobile wallets.

This is no longer a fringe outlook.

The Arab Weekly ran a column in April about how the collapsed banking system is destabilizing Lebanon. Protests surrounded the central bank in April, and protests around bank branches even turned deadly. The situation continues to simmer.

The peer-to-peer bitcoin market is very robust because the Lebanese banking system has failed and people have more cash than the banks do, Haber said. Because of coronavirus, you can't really wait at the bank anymore. They're not sure the Lebanese bank will actually give them the money.

This doesnt mean bitcoin will easily replace local currencies, however. As witnessed in Iran, once home to a thriving bitcoin mining industry and retail usage, authorities curtailed usability once mainstream adoption grew.

But rather than stamp out demand for cryptocurrency, crackdowns may merely change its manifestation. Some people now use bitcoin for savings and altcoins for transactional alternatives. Markets in places like Iran and Argentina now see increasing demand for stablecoins.

Likewise, Argentinian crypto exchange founder Federico Ogue, CEO of Buenbit and Buendolar, said many users who are buying cryptocurrency for the first time are attracted to dollar-denominated stablecoins.

More coverage on cryptocurrency in the Middle East:

Stablecoin volatility

In regions with volatile currencies and scant access to dollars, demand for stablecoins is up.

According to a bitcoin trader in Iran, who asked to remain anonymous for safety, plummeting oil prices havent increased local demand for bitcoin. This is partially due to government efforts to promote the local stock market. Yet, as the dollar exchange rate fluctuates and paper bills become scarce, Tether stablecoins (USDT) sell for more than a dollars worth of Iranian rials.

The government is trying to push financial market demands into Tehran stock exchange to avoid increasing demands in currency or gold markets, the anonymous Iranian trader said. Local [crypto] exchanges changed [USDT] rates artificially to get more profit, also demand was so high compared to the low supply of USDT in peer-to-peer exchanges.

The most desirable aspect of the stablecoin isnt any stability mechanism or collateral, its simply the network effects. After all, the reason many of these users turn to cryptocurrency is because they want a global asset, regardless of whether that takes the form of paper bills or software.

CoinDesk senior reporter Leigh Cuen hosts the Crypto Across Emerging Markets panel on May 11 at 7:30 p.m. ET at Consensus: Distributed, CoinDesk's first virtual, free conference. Register here.

Dapps

The Middle East is also one of the few regions where decentralized applications (dapps) that arent focused on gambling are still attracting routine users.

Dmail founder Mohamed Abdou, whose Egyptian team built a privacy-centric email service using Blockstack, said the dapp now has 15,000 active monthly users. As such, Dmail raised a $500,000 seed round in April, an amount which goes much further in Cairo than Silicon Valley.

Users will be able to exchange emails, do text chat, voice calls, video calls, invoices and collect fees in crypto, Abdou said of Dmails 2020 roadmap. Although Dmail doesnt collect user information (and therefore doesnt know where users are based), this Egyptian project was inspired by a local context where remittances and international payments offer a lifeline to an economy battered by depleted foreign currency reserves.

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Bitcoin in Emerging Markets: The Middle East - Consensus - CoinDesk

The number of bitcoin ATM locations has been growing rapidly amid nationwide lockdowns and the coronavirus crisis. With hundreds of new machines added each month, there are now more than 7,700 bitcoin ATMs spread all over the world. A new bitcoin ATM operator also installed its first bitcoin machines in April.

Many bitcoin automatic teller machines (ATMs) were installed across the globe in the month of April despite nationwide lockdowns, rising numbers of covid-19 cases, and global economic crisis. According to the bitcoin ATM tracking website Coinatmradar.com, there are now 7,729 cryptocurrency ATMs in 72 countries. Moreover, there are also 148,849 services allowing people to buy (and sell) cryptocurrencies, such as newspaper and mall kiosks.

The country with the most bitcoin ATMs is the U.S., which has 5,749 machines nationwide. Among American cities with the most bitcoin machines are Los Angeles (558), Chicago (292), Atlanta (283), Miami (263), Houston (250), Detroit (246), Dallas (195), Philadelphia (131), Boston (126), and Las Vegas (126).

After the U.S., Canada comes second with 771 bitcoin ATM locations, followed by the U.K. with 296 locations, Austria with 145 locations, Spain with 84 locations, Switzerland with 83 locations, and the Czech Republic with 69 locations. In Canada, the cities with the most bitcoin ATMs are Toronto (249), Montreal (110), and Vancouver (87). Germany, which started regulating bitcoin ATM businesses early this year, now has 34 machines, according to Coinatmradar. One machine is in Berlin, one in Munich, and three in Frankfurt. In March, German financial regulator BaFin shut down unauthorized bitcoin ATMs in the country.

At the beginning of April, there were 7,384 cryptocurrency ATMs, the tracking website details. During the month, 435 machines were added and 69 were closed down, leaving a net increase of 366 ATMs, or a 5% increase from the previous month. Most of the new bitcoin ATMs 351 machines were installed in the U.S., followed by Canada with 12 more machines. Austria, Australia, and Vietnam got two more ATMs each. Slovakia, Hungary, and Slovenia got one more machine each. Meanwhile, one machine was removed from Germany, Mexico, and Malta while the U.K. lost three machines. A number of countries in Asia also have bitcoin ATMs, according to the tracking website. For example, Hong Kong has 57 bitcoin ATM locations, Taiwan has 10 machines, Singapore has eight bitcoin ATMs, Vietnam has six, the Philippines has four, and Thailand has two.

The number of bitcoin ATMs has grown 21% since the beginning of the year. According to Coinatmradar, there were 6,377 machines at the beginning of January. The month saw an increase of 328 bitcoin ATMs. February started with 6,665 machines and 339 others were added during the month. March began with 7,010 machines and 376 were added during the month as the International Monetary Fund (IMF) declared a global recession. In addition, several indicators have shown that the U.S. entered into a recession in mid-March.

There are currently 560 bitcoin ATM operators and 42 producers. Out of all 7,729 bitcoin ATMs, Genesis Coin tops the producer chart with its machines installed in 2,570 locations, followed by General Bytes with 2,283 locations, Bitaccess with 692 locations, Lamassu with 482 locations, and Coinsource with 400 locations. With the rising popularity of bitcoin ATMs, more businesses also want to host them on their premises.

During April, most of the cryptocurrency ATMs installed were Genesis Coin machines (155 ATMs). The next most-installed machines were Bitaccess with 91 new ATMs, followed by General Bytes with 72 ATMs. Meanwhile, six Chainbytes machines were removed in April.

As for operators, Coin Cloud installed 89 bitcoin ATMs, Coinflip added 54 machines, Bitcoin Depot 39 machines, National Bitcoin ATM 27 machines, Bitcoin of America 26 machines, Rockitcoin 25 machines, and Bitstop 19 machines. Meanwhile, U.S.-based operator CMJ installed its first six machines during April.

If you are trying to find the bitcoin ATM nearest to you, the Coinatmradar website provides a map showing where all bitcoin ATMs are in the world. It also gives you the option to view only one-way (buy only) machines or two-way (buy and sell) as well as select to view only the machines supporting specific coins, such as BTC, BCH, ETH, DASH, LTC, ZEC, XMR, and DOGE. In addition, all bitcoin ATM locations are listed by city and country so you can look up all the bitcoin machines near you.

What do you think about the recent surge in bitcoin ATM locations worldwide? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Coinatmradar

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bitcoin ATM Locations Surge to Over 7700 Worldwide Amid Global Crisis - Bitcoin News

Bitcoin has flippened USD on Squares Cash App, sort of.

As reported in the publicly traded fintech companys first-quarter earnings Wednesday, Cash App brought in $222 million on all its other fiat-powered services in Q1. Meanwhile, revenue from bitcoin was $306 million, the first quarter in which bitcoin revenue surpassed all other revenue on the app.

In the first quarter, Cash App gross profit grew 115% year over year, the shareholder letter reported.

Gross profit on Cash App, however, remains to be found primarily outside of crypto. Of Squares $222 million in non-bitcoin revenue, $178 million of that was profit. The Cash App saw one of its best quarters yet for new users in the first quarter of 2020, across its many different services.

Bitcoin profit through Squares Cash App was $7 million in the first quarter of 2020. It earned $8 million in bitcoin profit through the whole of 2019.

Still, on the revenue side, the year-over-year growth in bitcoin sales was steep.

In a filing with the U.S. Securities and Exchange Commission, the company noted:

Bitcoin revenue for the three months ended March 31, 2020 increased by $240.6 million or 367%, compared to the three months ended March 31, 2019. The increase was due to growth in the number of active bitcoin customers, as well as growth in customer demand.

Total revenue from bitcoin in the first quarter was $306 million, versus $65 million in the first quarter of 2019. Square earned $178 million in bitcoin revenue through the prior quarter, the last of 2019.

Total revenue for Square this quarter was $1.38 billion, roughly 43% over what it earned in the first quarter of last year. Square had $535 million in gross profit for the quarter, but a $105 million net loss.

Square CEO Jack Dorsey described a few of the ways that the Cash App has found growth during the COVID-19 crisis.

For example, by making it easy to do direct deposits into Cash App, the firm saw enormous growth, Dorsey said in Wednesday's earnings call. Direct deposit users were more likely to use more of Cash's other services, such as peer-to-peer payments and bitcoin purchsaes. Further, Square collaborated with companies like Twitch and Spotify so fans could directly support their favorite creatives.

"We have reached a very mainstream influencer audience," Dorsey said. "And because of the simplicity, because of how we handled the stimulus check and because of everything you can do within the app including buying stocks and bitcoin and Cash Card, we think we'll benefit and draft off a lot of trust, a lot of love, for what it offers and what it can do. And word of mouth is definitely our friend here."

Zack Seward contributed reporting.

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Bitcoin Revenue in Square's Cash App Tops Fiat Revenue for First Time in Q1 - CoinDesk

On May 7, the decentralized finance (defi) startup General Protocols revealed the team has raised over $1 million from investors. The creators of General Protocols have introduced innovative projects on the Bitcoin Cash network such as Anyhedge, and have also participated in helping forward the Bitcoin Cash Node (BCHN) project and Flipstarter.cash.

The BCH community was pleased to hear that a startup dedicated to the Bitcoin Cash blockchain and decentralized finance (defi) has raised $1 million this week. The company called, General Protocols, is behind the Anyhedge project which is a blockchain-enforced synthetic derivatives protocol for Bitcoin Cash (BCH). News.Bitcoin.com reported on the project during the first week of April. According to the teams press release, the latest funding stems from the cryptocurrency trader Marc De Mesel and a variety of other investors. The team is thrilled to get funding to push the startups goals forward in order to deliver defi to the BCH community.

We are delighted that aligned investors are supporting us in our vision to bring defi to Bitcoin Cash, said John Nieri a.k.a. emergent_reasons, President of General Protocols. We are building a team of dedicated supporters of peer to peer electronic cash here at General Protocols.

General Protocols team members helped with the construction of Flipstarter.cash, a noncustodial fundraising platform. Additionally, the startup also volunteered efforts toward the new Bitcoin Cash full node implementation called BCHN. The project Anyhedge aims to be the first defi protocol on any branch of Bitcoin and the platform will launch in cooperation with Cryptophyls new noncustodial exchange, Detoken.

Further two former Bitcoin.com team members Marcel Chuo and Rosco Kalis have joined the General Protocols company. Kalis is well known for his work on the Cashscript protocol in order to create a new generation of smart contracts on the Bitcoin Cash network. Chuo will handle business relationships and his background includes global expansion and coordinating with well known tech firms like HTC. During the investment announcement for $1 million into General Protocols infrastructure, Kalis said he looks forward to working on the blockchain-enforced synthetic derivatives protocol for Bitcoin Cash.

Im excited to be working on Anyhedge with the great team at General Protocols, Kalis explained during the announcement.

What do you think about the $1 million dollar investment into General Protocols? Let us know in the comments below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, General Protocols, Anyhedge

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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We are at a turning point in history. The coming months will show how institutional investors will react in the medium term to the countless rescue packages in the wake of the coronavirus crisis. One thing is certain: States and central banks have been hard-pressed for solutions. Moreover, it looks like their efforts have been exhausted already at the start. Should investors end up losing faith in the measures taken, the consequences would be far more dramatic than a short-term stock market crash.

No one can foresee today what our future monetary system will look like, but the history of money has been marked sometimes by radical system changes. Todays historical interventions in the free market are unparalleled, especially given their magnitude, and will no doubt in hindsight be seen as the beginning of the end of our current monetary system with its fiat currencies made out of nothing.

Is Bitcoin (BTC) digital gold and a safe haven currency? Yes, now more than ever before.

Bitcoin was created in 2008 in response to the financial crisis, and the present-day chaos on the global financial markets is the first major test of its ability to assert itself as an alternative and a new asset class. However, when liquidity is needed, as it is now, everything is sold, especially risky assets. John Bollinger, the creator of the so-called Bollinger Band, a technical indicator for price developments, rightly noted that in times of crisis, investors will sell whatever they can sell, and only after assets have been turned into cash is an investment made in crisis-proof assets e.g., gold.

In contrast to state-run monetary watchdogs who have been trying to safeguard a continuously functioning market by pumping in avalanches of money (and not just since the coronavirus outbreak), the pricing of Bitcoin is regulated without any intermediary interference and is solely based on supply and demand. There is also a cap to the number of Bitcoins that can be created 21 million and this means that in contrast to traditional fiat currency, no new Bitcoins can be arbitrarily printed.

New Bitcoins are mined in the same way that other commodities are e.g., gold but through a complex and clearly defined process. No one is able to alter the number of newly generated Bitcoins.

It will be a clear advantage for our traditional monetary system to have alternatives to fall back on in the likely event of hyperinflation. Creative instruments, such as helicopter money and similar interventionist measures, are not possible in the same way with Bitcoin, and neither governments, (central) banks nor other institutions are able to manipulate and/or change the parameters of this new decentralized asset class.

Since the hegemonic power of the United States has been also weakening, the topic of reserve currency will at some point be on the table. Already today, it is foreseeable that Bitcoin and other cryptocurrencies will compete with digital currencies issued by state governments.

Is Bitcoin a global digital currency? This might sound like science fiction, but it is actually not that unfounded.

Meanwhile, institutional investors have started to see the attraction of crypto assets. However, in times of crisis, they are often quick to withdraw their capital from risky investments, and Bitcoin is still classified as such by the majority.

Personally, I am convinced that Bitcoin, as well as other digital assets, can only benefit from the current developments and their dramatic long-term consequences.

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

This article was first published in German by the Swiss monthly magazine Schweizer Monat

Marc P. Bernegger founded his first online company in 1999, followed by several tech companies, which he later sold. He got into Bitcoin early in 2012 and has been involved in digital assets ever since. He is a board member at Crypto Finance AG and the Swiss Blockchain Federation, and he is a co-founder of the Crypto Finance Conference in St. Moritz.

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