Category Archives: Bitcoin

Start your day with what's moving markets in Asia. Sign up here to receive our newsletter.

A recurring challenge for bitcoin and other cryptocurrencies is how to make them work in the real world. A Singapore-based startup says the answer is its Visa card.

Exclusive insights on technology around the world.

Get Fully Charged, from Bloomberg Technology.

TenX is pitching its debit card as an instant converter of multiple digital currencies into fiat money: the dollars, yen and euros that power most everyday commerce. The company said it takes a 2 percent cut from each transaction and has received orders for more than 10,000 cards. While transactions are capped at $2,000 a year, users can apply to increase the limit if they undergo identify verification procedures.

Source: TenX via Bloomberg

Tenxs bid to make digital currencies easier to spend comes amid massive volatility and infighting within the cryptocurrency community. Bitcoin, the most popular, slumped after reaching a record in June amid concerns about a split in two, only to recover as fears faded. The company has built an app that serves as a digital wallet connected to the Visa card so that when its swiped at a cafe or restaurant, the merchant is paid in local currency and the users crypto account is debited.

Source: TenX via Bloomberg

Youre mixing two worlds that are night and day, co-founder Julian Hosp said in an interview. When the user spends the cryptocurrency, we have to instantly switch these currencies to fiat and pay to Visa straight away. Its a lot of pathways."

Hosp said transactions are processed immediately and it doesnt impose any charges on top of the conversion fee that is set by cryptocurrency exchanges, which typically is 0.15 to 0.2 percent. The card now supports eight digital currencies, including the lesser-known dash and augur, and aims to offer about 11 of them by the end of the year.

TenX currently processes about $100,000 of transactions a month. By the end of 2018, its targeting $100 million in monthly transactions and a million users.

TenX has an advantage in moving early, but the startup can expect competition in the future from major financial institutions and venture capitalists with deeper pockets and direct access to clients and databases, said Mati Greenspan, a Tel Aviv, Israel-based analyst at social trading platform eToro.

Its an incredible concept, said Greenspan. At the end of the day, its going to depend a lot on customer relations. Are they meeting the customers expectations? Can somebody else do it better?

TenXs efforts to make digital currencies spendable come as it joined the many blockchain-based startups taking advantage of initial coin offerings. ICOs are a cross between crowdfunding and an initial public offering that firms use to raise funds by issuing digital tokens rather than stock.

In itstoken sale last month, TenX raised $80 million with about half to be used to expand operations while the rest will provide liquidity for a cryptocurrency exchange in the works, said Hosp.

The company had previously raised $120,000 from angel investors and $1 million in a seed round led by venture capital firm Fenbushi Capital, which lists Ethereums co-founder, Vitalik Buterin, as a general partner. TenX isnt expecting to become profitable in the next two years as it focuses on expanding services.

One thing we want to offer in the end, is that you can switch cryptocurrencies within the app, said Hosp. If we do this, we can become the market maker, which can bring in a lot of revenue.

Read more:
Singapore Startup Takes Bitcoin Into Real World With Visa ... - Bloomberg

Bollywood news recently reported celebrities are going bonkers for bitcoin. Famous Indian entertainers have been tweeting and commenting positively about bitcoin. They appear to find the currency fascinating, and see its potential for future growth. Some of the celebrities include,Shilpa Shetty, Raj Kundra, R. Madhavan, Huma Qureshi Neha Dhupia, Vir Das, Nargis Fakhri, and Prachi Desai, according to a recent Bollywood news article.

Also read:The Curious Cases of the Alphabay Kingpin and Hansa Takedowns

Bollywood celebs have likely gotten attracted to bitcoin because of its explosion in India. After the Indian government instigated demonetization efforts, alternative forms of currency have spread like wildfire, especially bitcoin. There are now multiple digital exchanges based out of India. The Bollywood News site explained:

There are several online portals in India where one can buy and sell Bitcoins. Some of the popular portals are, Coinsecure, Zebpay, Unocoin, BTCXIndia. According to MSN, there are approximately one million Bitcoin users or enthusiasts in India alone, from all walks of life.

Celebrities have also likely been influenced by Indian bitcoin hero, Amit Bhardwaj. He is thefounder of Amaze Mining & Research Ltd and the Author of Bitcoin for Beginners. He has been into cryptocurrency since 2012, according to Bollywood news. His work and dedication to bitcoin seems to have grown in recent years, and several Indian celebrities have tweeted about him and promoted his book. Bhardwajs influence seems to have specifically sparked much enthusiasm from Indian superstars.

This news of Bollywood chiming in on Bitcoin also comes alongside recent news the Indian government is deciding how to regulate bitcoin. Their focus on the digital currency has caused a groundswell of interest everywhere in India. Well known Bollywood names have now flocked to the scene and added fuel to the blazing bitcoin bonanza. It will be interesting to see how the digital currency craze in India grows into the future.

Do you believe bitcoin will continue growing in India? Is Bollywoods promotion of bitcoin good news? Let us know in the comments below.

Images via Shutterstock

Show the world how cutting-edge you are with abitcoin T-shirt, hoodie, bag, key-ring, even a Trezor hardware wallet.Shipping all over the world, quality merchandise and, of course, a payment system that makes people say wow!

See original here:
Bollywood Celebrities Embrace Bitcoin - Bitcoin News (press release)

Bitcoin prices surged this week as an overwhelming majority of miners, the computer operators who maintain its network, backed a software upgrade that will boost the speed of processing transactions, likely averting a split that could have resulted in multiple versions of the digital currency.

Through an online voting mechanism, miners representing 99% of the cryptocurrencys computing power, backed a new piece of software, known as Segregated Witness, or SegWit, that would boost bitcoins processing power without altering the underlying software, The Wall Street Journal reported Friday.

See: Bitcoin may have reached a tipping point, now that Downtown Josh Brown has invested

The debate leading up to the vote marked a split that largely pitted miners and entrepreneurs, who wanted to increase block size and maximize bitcoins value as a payments network, versus developers who fear larger block sizes will increase operating costs for miners, driving some out and leading to more centralized control, wrote the Journals Paul Vigna.

Bitcoin prices dipped early this week on fears over a potential split. Bitcoin BTCUSD, -2.80% One bitcoin traded at $2,813 at midday Saturday, according to Coinbase, up nearly 40% on the week.

Excerpt from:
Bitcoin surges as miners avert split for now - MarketWatch

With the bitcoin development community embracing a software upgrade known as SegWit2x that aims to increase the networks transaction capacity, a split of the cryptocurrency appears to be avoided. As proponents of the change celebrate, heres what some have to say about what may be next.

Were going to see greater utility of the network. Now people can use bitcoin as a way to transit value more easily, more quickly, more cheaply. And that tends to attract in new users to the network."

Going forward, there will probably be open-blockchains like bitcoin, which tends to move more slowly or conservatively, but there will be other blockchains like ethereum that may move more quickly and introduce a larger surface area for developers to build on top of. I think both of those things complement each other, not compete with each other."

Its a great step for bitcoin. There were a lot of question marks, obviously this has been in contention for quite some time now, but reaching consensus for how to scale bitcoin further is a huge step, clearly. SegWit activating and allowing things like Lightning Network is going to be huge for allowing more activity with existing user base, and down the line once we start to expand the blocksize, well be able to expand the number of users on the network."

Exclusive insights on technology around the world.

Get Fully Charged, from Bloomberg Technology.

The fact BIP91 came through is a good signal that everyone wants to be growing this network further. And theres a lot of ways that its accomplished, but the fact there is way forward is encouraging. Youll never know what happens between now and a few months down the line, in the cryptocurrency space especially, but Im encouraged everything we saw in the past few weeks. A lot of question marks are starting to get answers."

The BIP91 lock-in would be extremely significant for bitcoin and one of the first steps towards scaling the network. Work and discussion around scaling bitcoin has been ongoing for years - with the first dedicated conference around the topic beginning in 2015."

After BIP91 locks in, approximately two weeks later SegWit should go live. Beyond that, there is still risk that bitcoin could split into different chains supporting different maximum block sizes (like a SegWit 1MB chain and a SegWit 2MB chain)."

Read more about how bitcoin and blockchain work.

Bitcoin doesnt have a Turing-complete language like ethereum, but there are some new interesting things that will enable to do be done once SegWit is implemented."

She gave a few examples:

With assistance by Lulu Yilun Chen

Read the original:
What's Next for Bitcoin After Digital Currency Split Is Averted - Bloomberg

Photograph by Getty Images

Digital currency bitcoin on Friday averted a split into two currencies after its network supported an upgrade to its software that would enhance its ability to process an increasing number of transactions.

Bitcoin's miners have signaled their support for the so-called Bitcoin Improvement Proposal (BIP) 91, avoiding a split of bitcoin into two blockchains. The miners represent a network of computer operators who secure the blockchain or a public ledger of all bitcoin transactions

BIP 91 is the first step toward a larger effort to upgrade bitcoin through a software called SegWit2x. On Friday, the support for BIP 91 reached nearly 100%, exceeding the required threshold of 80%, according to analysts and market participants.

Some investors have warmed to bitcoin, wooed by its explosive performance and potential to compete with gold and government-issued money as a means to store value. Demand for bitcoin has grown in eight years to a market capitalization of more than $40 billion.

But fears about the bitcoin split dampened demand for bitcoin in recent weeks. After hitting record high near $3,000, bitcoin dropped as low $1,830 on the Bitstamp platform. On Friday, it traded at $2,647.

For more about bitcoin, watch :

The software upgrade attempts to address the bitcoin network's limitations in processing millions of daily transactions. Bitcoin's network has not kept pace with its growth and is unable to process all the transactions fast enough.

"BIP 91 unleashes the next wave of innovation because it has been a little bit stagnant of late for bitcoin," said Rob Viglione, co-founder of ZenCash, a digital coin focused on privacy and security.

Before BIP 91's endorsement, some bitcoin investors feared it could split into two independent currencies because core developers of the network and the miners each wanted different ways to increase bitcoin's scale.

Get Data Sheet , Fortunes technology newsletter.

A compromise between the two groups has been reached through SegWit2x.

"Bitcoin now has a clear run to add features that allow for faster transactions with lower costs," said Charles Hayter, chief executive officer of digital currency analytics firm Cryptocompare.

The upgrade to bitcoin's network will not occur until autumn, said Viglione, because several things need to happen before the new software is activated.

Market participants have complained about the delay in transactions. Analysts say a single bitcoin transaction costs on average 83 U.S. cents to execute, which means micropayments are not feasible on the network.

The network is also limited to roughly seven transactions per second. In comparison, Visa on average handles 2,000 transactions per second.

Read the original:
Bitcoin Averts Split Into Two Currencies - Fortune

Bitcoin (OTCQX:GBTC) (Pending:COIN) (OTCPK:BITCF) (OTCPK:BTSC) and other cryptocurrencies have skyrocketed in value recently:

And I see a lot of misconceptions. Since cryptocurrencies are very hyped up currently, most people investing in these things are not very sophisticated. So where to start? Valuing a currency is difficult. I will start by laying out the different types of asset classes and how I think about valuing them. A currency has several characteristics:

Now as far as cryptocurrency is concerned, the same rules apply. I am going to assume the reader knows the technical side of bitcoin, and I will only focus on the economic aspects.

So how do we value a cryptocurrency? This seems problematic since a large amount of speculators have poured in a ton of money with the only purpose of selling their coins later for a profit. Which would basically make this a pyramid scheme if no legitimate buyers come in with the goal of actually using cryptocurrencies for transactions.

First let's define what value means. We ran into a little problem right away here since the first bullet point of this article already states that currency has no intrinsic value. I would say something has value if it helps filling our needs and wants. Generally this is expressed in monetary terms. Obviously there are things that have intangible value like friendship, etc. So let's just focus on assets that are actually transacted on a market for money. I can see three different types of asset classes:

The most common way to value a currency is in terms of another currency. So the Japanese Yen would be valued in terms of USD or EUR for example. A more convoluted way would be to look at total goods and services being transacted in that currency or value it in terms of bags of rice or grain. But if you use bags of rice to measure a currency, then those bags of rice would actually turn into a currency as well. Obviously there is a grey area between the currency asset class and the commodity asset class. How to proceed?

The main difference between a currency vs. the other two asset classes is that the supply demand dynamic is very different. For example, if I go on vacation to Mexico and need to buy pesos, I don't look at what the fair value is. I just look at the general exchange rate and try to buy as close to that as possible. This is the same for cryptocurrencies. This is very different than when I buy a house or a barrel of oil. There is a certain price cap at which I would never be a buyer with those asset classes. This is not really the case for currencies (with some extreme exceptions of course). It makes no difference to me if bitcoin is at $20, $200 or $2,000 if I want to exchange it for a bag of weed on one of the dark web marketplaces.

So in order to value a currency, we have to look at what fundamental factors other than speculation cause the supply and demand to be in equilibrium. And how much money from other currencies needs to flow in to get supply and demand in equilibrium determines its fair value relative to those other currencies. This is very important to keep in mind. Since we don't need to know what drives supply and demand to value a house or a barrel of oil. We just need to figure out how much rent it could produce or what the marginal cost is and at what price these two assets can be reasonably used. If oil goes to $1,500 per barrel (with other asset values staying constant), I would not buy it to fill my gas tank, and would probably switch to an electric car. And I would not speculate on it since demand will likely fall of a cliff if oil gets this expensive, cratering the price. And I would probably start buying canned food since the survival of civilization depends on low oil prices.

Or as Warren Buffett likes to say: Mr. Market is there to serve you not to guide you when valuing those assets. But with currencies you want to know if people buy it to use it (in that case, it has value) or just buy it to speculate (in that case, it would look more like a pyramid scheme).

Due to the lack of sensitivity for price paid for another currency and the large % of speculative money compared to money that flows in only to buy goods using bitcoin, the total market cap is very unreliable to see how many people use bitcoin for transactions. Why is that? Allow me to give an extreme and unlikely hypothetical scenario to get this point across.

Let's say that in a given day there is one person using bitcoin for practical reasons who wants to make a number of transactions with a total value of $1 million. So he goes to CoinDesk to exchange a total amount of $1 million. Let's also assume that all the miners have been hoarding their bitcoins and there are only ten bitcoins whose owner is willing to sell. And let's also say that there are no other buyers or sellers in this day.

And they are sold all in one chunk to make it easy.

Another very other important assumption in this hypothetical scenario, no price is high enough to create more sellers (let's assume willing sellers are all on vacation at the time). So no matter how high the bitcoin value goes, the number of bitcoins available stay at 10 in this day. So now this $1 million is fighting for 10 bitcoins. And in order to fill the order, the price would have to shoot up to $100,000 per bitcoin.

So now the market cap is $100,000 * 16.5 million bitcoins, right? That would be a market cap of $1.65 trillion. But there was only an inflow of $1 million, which is a fraction of $1.65 trillion. So obviously there is a problem here. If those other speculators would wake up the next day, there would need to be an inflow of $1.65 trillion if they wanted to actually cash in.

Or you might say they simply use bitcoin to make transactions and cash in that way. But there is one little problem with that which I will explain below.

Consider bitcoin's main value currently. Since it is not that widely used (especially by B2B companies), it is very volatile and salaries and suppliers are generally not paid in bitcoin, and merchants need to sell their bitcoin after making a transaction. So usually the time between when a buyer buys bitcoin and when the merchant sells it to pay his bills and wages is pretty short. The main way it is used (other than speculating) is that most hold their bitcoins for a short amount of time to make transactions that are difficult or not possible with regular currency. This is very important to keep in mind.

Let's consider another hypothetical scenario to show why this matters. In this world, bitcoin is not used for speculating at all. This is basically another extreme since now all bitcoins would be available to buy for the above user who wants to buy $1 million worth of goods with bitcoin. The hype has passed. And coins are only used for making transactions (mostly on dark web marketplaces).

The average holding period is one week given the limited number of vendors willing to accept them. So there is exactly one week between a person buying coins to make a transaction and the merchant who accepts this transaction selling them again for fiat currency.

Now there are 21 million coins in existence. And nobody hoards them to speculate. All the holders are immediately willing to sell them for any price (economics is easy with all those assumptions!).

To make this easier, let's say that there was a break and this is the first week bitcoin is being used again (this is unrealistic but makes it more intuitive to understand). So no sellers from the previous week.

In week one, $10 million flows into the bitcoin economy and every bitcoin holder sells their coins. Bitcoin value would edge up until it reaches about $0.50 per coin. And the total market cap of bitcoin would now only be ~$10 million. Very different from the above $1.65 trillion.

How would price discovery work? Let's say that they are bought each hour in fixed chunks of $10 million divided by 168 (number of hours in one week), or blocks of $60,000 per hour. So the first transaction would be $60,000 bidding against 21 million coins, and since no seller is anchored at any price, they will be sold for a very low price.

This process will be messy at first. If they are sold for a lower price than $0.50, there will be shortage later on. And there would be a need for arbitrage. So the price might be only $0.15 at day 4, but on day 7, the price might be $15 if the last blocks of fiat currency bid against a much smaller amount of bitcoins. It would take some time for the market to learn that weekly volume is about $10 million. So arbitrageurs might hold coins at any time to smoothen out demand. So possibly the fair value in this case would be a bit higher than $0.50 since at any time a % of coins are taken out of circulation by traders.

So why is length of holding period important? Well, the amount of coins available would slowly decrease while the market is discovering demand. In the second week, there would be $10 million of coins gradually being sold by merchants, and they would again be bought by buyers of goods (assuming that every week $10 million of goods are being transacted).

But if merchants would hold on for two weeks, then the market cap of bitcoin would double. Since there are no sellers for two weeks now. So $20 million would bid at 21 million coins, and market value of one bitcoin would stabilize at around $1 when the merchants' coins flood back in.

So what can we conclude from this? If on average bitcoins would take longer and longer to be sold back for fiat currency, it's value would go up. Even if total transaction volume stays the same. This would only happen if bitcoin would be very widely accepted. And there is a bit of a problem with that. Bitcoin and other cryptocurrencies are very useful to use in markets that sell illegal goods or services or for hackers to get their ransom from locking up computers. The illegal drug market has exploded in size. In 2013, the Silk Road was estimated to generate about $100 million in sales annually. There are now several marketplaces that have replaced Silk Road that are each larger in size. The main advantage here is that due to the ease of leaving good and bad reviews, it is much easier to buy quality drugs. A lot of vendors even offer customer service!

But for completely legal markets, bitcoin or other cryptocurrencies seem very impractical. I would need to pay more transaction costs (both for buying coins and making the transaction), there is more volatility, and if I lose my password, there is no central authority to get a new password! This last point is especially annoying since this has happened twice to me in the past 10 years. If I used bitcoin, I would have lost several thousand USD. It is very telling that in Venezuela and Zimbabwe they now use USD instead of cryptocurrency. Bitcoin caught on very, very quickly on dark web marketplaces, yet there seems to be little interest in it in countries with hyperinflated currencies. Even if they are used in countries like Venezuela, they are not used for transactions due to the high transaction costs currently. But are used instead to evade capital controls.

That said, there does seem to be a use for remittances, underage gambling, and illegal drugs. If we assume that governments won't successfully crack down on this, this could be a large market.

And, of course, there are a lot of people arguing that fiat currencies inflate over time. And that deflation is the main selling point of cryptocurrencies. But here is a problem since if there is large deflation, it encourages speculation, and if there is a lot of speculation, the currency will be very volatile. This will discourage people to use it (or hold it for long if they use it).

And with regular currencies, you can buy investments to protect against inflation, so this should really not be an issue. For example, the S&P 500 generated 7% annual returns after inflation in the past 100 years. So, yes, you would have lost a lot of money if you held US dollars in your bank account, but you would be rich if you had put it in stocks instead. This is not yet an option for cryptocurrencies.

The current market cap of bitcoin is about $44 billion. And the current market cap of all the cryptocurrencies is close to a $100 billion. Now, I know for a fact that those other cryptocurrencies are rarely used for actually transacting goods and services since most vendors do not accept them. And most people who buy cryptocurrency don't seem to use it. They buy it to speculate. Since bitcoin has a clear network effect advantage here, I will focus on that.

What is total addressable market (TAM) of bitcoin? The illegal drug market is about $400 billion a year and the total online gambling market is about $40 billion a year. And the total remittance market is about $500 billion. So a TAM of $940 billion. But it is obviously not realistic they take 100% market share. For one, it would be very easy to detect $400 billion in illegal drugs going through the postal system. And financial institutions are not just going to sit on their ass and let some Internet currency take away their billion-dollar businesses. But let's say Bitcoin capture 50% market share here. Or about $470 billion.

Now, here is why I bored you with the above hypothetical examples. The fair value of bitcoin will not be $470 billion. Because holding period is going to be very important here. Often people do not hold bitcoin for a long time; they will use it as a transmission mechanism. For example, for remittance, they buy $500 worth of bitcoin, and then send it to their relatives who then exchange it for an equivalent of $500 in their local currency. So holding period is often short. Same with gambling, the gambling platform would likely convert it to fiat currency right away after the deposit due to its volatility. But let's be generous here and say the average holding period is a month. That would imply the TAM of bitcoin would be about $470 billion/12 months = $39 billion.

If the holding period is only a day, fair value would only be $1.3 billion.

This would imply that cryptocurrencies are in bubble territory. The only way there is significant upside is if cryptocurrencies replace fiat currency in a significant way. But as we have seen with Venezuela and Zimbabwe, even if there is hyperinflation in a country, its inhabitants can always use another more stable fiat currency. Which is easier.

Bitcoin's value depends on it being decentralized. A way to destabilize bitcoin would be to do a 51% attack. This would mean that you need more than the total amount of mining rigs (mostly ASIC chips) that currently mine bitcoin. Generally bitcoin fanatics don't think this will happen. But this will change the moment bitcoin would get seriously big. For example, if 20% of the US economy is dependent on bitcoin, Russia might be willing to shell out $10-15 billion to destabilize it. Which is a small amount given that Russia is a $1 trillion + economy.

What would it cost to do a 51% attack currently? The Hashrate is about 6 million TH/s currently. Hashrate means total amount of computing power each second that is mining bitcoin currently. A 14 TH/s mining rig costs $3,000. So hardware would cost about $1.2 billion (assuming no bulk discount). Now there is real estate, electricity and labor costs as well. So let's be very conservative and double that to $2.4 billion. That is pocket change for countries like China or Russia to destabilize a foreign government. Russia's annual government revenue is $200 billion. So this number would have to grow by 20-30x before it would become prohibitively expensive to destabilize it.

There is kind of a problem here if transaction volume does not reach a critical mass before most of the bitcoins are mined out. When current mining rigs expire and transaction volume is not significantly higher, there will probably be a drop-off in the number of mining rigs and this will increase the risk of a 51% attack. Or miners will have to raise transaction costs, which will discourage people to use bitcoin. Currently transaction costs are quite high.

Based on the above, I would stay far away from bitcoin and other cryptocurrencies. There are simply too many obstacles, and it seems the current valuation is too high. I would probably enter if bitcoin was valued below $50 a coin. Which might happen soon given that most coins are hoarded currently. And all those speculators might get impatient and want to sell. And if that happens and there is no significant legitimate demand for non-investment purposes, the price could easily get below $50 again.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Continue reading here:
How To Value Bitcoin - Seeking Alpha

The new code update called BIP 91 has been locked in with 93.8 percent of miners showing support for the proposal in the last 24 hours, according to Coin Dance, a site which tracks bitcoin blocks.

It is essentially a software update that miners need to run. So 93.8 percent of miners are signaling their intention to run it.

There will now be a two-day grace period for miners to prepare for the activation of BIP 91. Following that, there will be an adjustment period which could take two weeks. The actual increase of the block size might not take place until November.

And there could be some potential issues. For example, one bitcoin developer Bryan Bishop, said that miners might not upgrade their software, even though they are signaling that they will.

And there is still a bit of caution in the market.

"It's premature to say the worst is over. But we have reached one important milestone down the road in bitcoin scaling. And there are a few more milestones coming up," Bobby Lee, CEO of BTCC, a bitcoin exchange told CNBC by phone on Friday.

See original here:
Bitcoin nears record high price after 'milestone' in fierce debate over its future - CNBC

Bitcoin has risen as much as 28% over the past 24 hours, driven by news that an imminent split in the cryptocurrency has been narrowly averted. The price of bitcoin nearly hit $3,000 late on July 20, within spitting distance of its all-time high, set last month.

The remarkable rally took place as bitcoins miners coalesced around one of several competing proposals that would increase the number of transactions that can be processed on the network. The issue has gained urgency in recent months, because one of the measures, known as Bitcoin Improvement Proposal 148 (BIP 148), would lead to a split in the cryptocurrency on Aug. 1 if implemented.

The price rallied as bitcoins miners began broadcasting their support for a less radical proposal, BIP 91, in increasing numbers yesterday. This proposal avoids the so-called hard fork by stopping short of altering the hard-coded limit on transaction capacities that is the bone of contention within the bitcoin world, while offering slightly enlarged transaction capacity.

The threshold for activating BIP 91 is 80% of all the processing power on the bitcoin network. That was achieved in the early hours of July 21. Currently 97% of the processing power on the network, which is largely controlled by miners, is voting in favor of BIP 91.

But its not settled yet. Although enough miners have signaled support for their preferred proposala process akin to broadcasting a preference over the networkenough of them must now run the software that implements this proposal within the next two and a half days. Failure to maintain a simple majority of the processing power, also called the hash rate, would mean BIP 91 does not activate. This would put the bitcoin world back at square one, with just a week to go before the potentially destabilizing hard fork on Aug. 1.

There are also still signs that the fundamental disagreement that led to this showdowna civil war, as some call itis far from resolved. The fight is between bitcoins miners and the influential programmers who contribute to bitcoins open-source code, known as the core developers. The core devs say bitcoin is at risk of being controlled by a cartel of miners who, by virtue of their huge investments in processing power, are able to dictate what changes are made to the codeanathema to bitcoins decentralized founding ethos. But the miners, and other heavy users, like payment processors, point out that the bitcoin network could be abandoned if it doesnt enlarge its limited capacity soon.

The architect of BIP 91, James Hilliard, a miner himself, told industry publication CoinDesk: This is where mining centralization makes things easier, because I can just message everybody on WeChat and help them if needed. That may be so, but it wont comfort the parts of the bitcoin world concerned with centralization of the cryptocurrency, even if the current fix to bitcoins problems goes according to plan.

Read next: Bitcoins civil war threatens to blow up the cryptocurrency itself

More:
Bitcoin is booming because a split in the cryptocurrency has been narrowly averted - Quartz

Bitcoin jumped Thursday to its highest price in almost four weeks as digital currency developers appeared to come closer to an agreement that would prevent a split in the cryptocurrency.

Bitcoin rose more than 15 percent, to $2,675.67, its highest level since June 25, according to CoinDesk. As of 1:33 p.m. ET, the digital currency traded near $2,648. It's up about 4 percent for July and more than 170 percent higher for the year.

Bitcoin three-month performance

Source: CoinDesk

Developers need to agree on activating an upgrade known as Segregated Witness by Aug. 1 in order to prevent the digital currency from splitting, or forking. Coinbase's GDAX exchange has said it might pause bitcoin trading if the currency splits.

"Bitcoin is rallying largely because the probability of Segregated Witness being activated is increasing as more miners signal that they will activate it," said Ari Paul, CIO of BlockTower Capital, a cryptocurrency investment firm. Not every miner has to agree, but at least 80 percent need to.

The move higher also came amid increased interest in the digital currency world from Wall Street. Forbes reported Tuesday that bitcoin is a top holding of investor Bill Miller's hedge fund.

"The institutional interest in this space has picked up again, not that it really died off too much," said Brian Kelly, a CNBC contributor and founder of BKCM, which runs a digital asset management strategy for clients. "Institutions are looking to get back in in a meaningful way."

Ethereum also jumped more than 18 percent, to near $230, its highest since Tuesday, according to TradingView charts of Coinbase data. Ethereum plunged below $200 over the weekend.

The gains in Ethereum came despite news Wednesday that hackers stole more than $30 million in Ethereum from wallets as the result of a security flaw. Earlier in the week, thieves stole more than $7 million in Ethereum by hacking the initial coin offering for CoinDash.

Read the rest here:
Bitcoin leaps 15% to highest in nearly a month on increased confidence in currency's future - CNBC

The principle is a sophisticated form of technical analysis widely followed by traders that analyzes cycles of sentiment in an attempt to predict market performance five waves typically signals a coming downturn.

Regarding bitcoin, "under the Elliott Wave model, what we're seeing, we're making a final fifth wave from six cents," the younger Prechter told CNBC in a phone interview Thursday. "It does not imply it will go to zero. It does not imply it will go to six cents. I do think it will happen to the clones [newly formed digital currencies]."

The Elliott Wave for bitcoin

Source: The Elliott Wave Theorist

In September 2010, Elliott Prechter wrote in The Elliott Wave Theorist about bitcoin when it traded at 6 cents. Very few in the financial world seriously considered the digital currency at the time.

"It proved to be the buying opportunity not just of a lifetime, but so far of all time," Prechter said.

Bitcoin hit a record of $3,025 in June, 50,000 times its price in 2010. The digital currency traded near $2,652 Thursday, more than twice where it started the year.

Bitcoin (July 2010 - July 2017)

Source: CoinDesk

As a result of the meteoric price surge, Wall Street has started paying closer attention to bitcoin in the last several weeks.

For example:

To Prechter, the forecasts for bitcoin to rise dramatically resemble calls in 1999, just before the burst of the dotcom bubble, for the Dow Jones industrial average to reach 100,000.

He said the excitement surpasses the tulip bulb mania in The Netherlands in the early 1600s.

As Investopedia tells it, tulip bulbs became such a prized commodity that by 1636 they were being traded on many Dutch stock exchanges and "many people traded or sold possessions to participate in the tulip market mania."

"Like any bubble, it all came to an end in 1637, when prices dropped and panic selling began," according to the article. "Bulbs were soon trading at a fraction of what they once had, leaving many people in financial ruin."

"Technology has advanced greatly, but human psychology is still the same"

Source: The Elliott Wave Theorist

Some analysts have also compared the excitement around bitcoin and other digital currencies to the Beanie Babies craze in the 1990s.

Prechter also pointed to the challenges bitcoin and its rival ethereum are facing in order to expand their reach.

Bitcoin faces an Aug. 1 deadline for developers to agree on a system to upgrade the network and prevent the currency from splitting. Meanwhile, transaction fees ran up to $5 in June and are still near $2.

In June, some sales of new digital currencies clogged the ethereum network, creating a backlog of orders. Separately, ethereum prices briefly plunged from above $300 to 10 cents on one exchange before recovering.

To be sure, Prechter told CNBC that a mania "can be both a mania and a revolution at the same time."

Like many digital currency enthusiasts, he sees significant potential in the cryptocurrencies for automating the banking and legal industries.

"The distant future of crypto is bright," Prechter said in the report. "Crypto tech is like the internet in 1999: It was poised to take over the world, but the NASDAQ still fell almost 90% during the dot-com bust of 2000-2002."

But bitcoin may not be part of that future.

"It's too soon to know if Bitcoin is Facebook or MySpace," Prechter said.

Continue reading here:
Bitcoin bubble dwarfs tulip mania from 400 years ago, Elliott Wave analyst says - CNBC