Category Archives: Bitcoin

(NewsNation Now) In a growing trend, cities and even some states are offering incentives to get people to move in.

As an example Tulsa, Oklahoma, officials are offering $10,000 in an innovative program to bolster the citys economy.

The NorthwestArkansasCouncil is investing more than $1 million to attract top talent to the region through its Life Works Hereinitiative. In the northwest corner of Arkansas, the initiative is offering $10,000 to relocate to the region and that money can come as cash or in the original cryptocurrency Bitcoin.

Bitcoin has grown in both popularity and in value. It is currently valued at around $43,000 per coin. But five years ago, the price was less than $500 for one Bitcoin.

The Northwest Arkansas Council believes this crypto craze will help attract tech professionals and entrepreneurs to the region.

If you are chosen for the Arkansas initiative, not only do you get the Bitcoin, you also get a free bike. Perhaps just a coincidence, as The Ledger, a 230,000-square-foot entrepreneurialhub accessible only by a bicycle, is set to open in the area.

Its a trend that technologist Fred Brandon believes will continue to grow as more regions accept this new technology.

We see so much adoption, you know, in mainstream now. Whether were talking about NFTs, were talking about metaverse, were talking about blockchain technology as a whole, Brandon said.

Applicants for the programs will face tough competition though. In Tulsa, the exclusive initiative might be harder to get into than an Ivy League school, with applicants coming from all over the world. Only 2% of the 25,000 applicants get the cash for the program.

Regardless of those numbers, its a tactic Brandon says more cities will use in the future, just like Arkansas is trying to do.

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Arkansas lures tech workers with free Bitcoin and a bike - NewsNation Now

The below is from a recent edition of the Deep Dive, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

In recent weeks, much of our analysis has been focused on the consolidation period currently occurring in the bitcoin market, with a particular focus on realized price as an indicator of lackluster capital flow. As shown by the chart below, the realized market capitalization of bitcoin, which can otherwise be thought of as an aggregate price paid for every coin on the network, has increased by $87 billion since the beginning of August.

While significant in absolute terms, given that the realized market capitalization of bitcoin was a mere $90 billion at its peak following the 2017 bull market, in relative terms realized cap has not meaningfully increased since early fall of 2021.

A look at the 30-day rate of change of realized price gives additional context to this dynamic.

To dig deeper into the dynamic of price and realized price, we can examine the Delta Gradient indicator. The metric gauges market momentum relative to capital inflows.

As per Glassnode,

The momentum of a market can be considered by assessing the rate of change of price, or the verticality over some period. The simplest example is a parabolic advance, whereby the rate of price appreciation increases in magnitude as a result of market momentum.

The Realized Price reflects the aggregate price at which each coin in the supply last moved. Steeper increases in the Realized Price indicates a true and organic capital inflow is occurring, as every coin that is spent on-chain and sold, has a buyer with fresh capital. The steepness of this curve therefore represents a rational baseline for sustainable value growth.

The Delta Gradient is calculated as the difference between the gradient of the spot Price, and the gradient of the Realized Price. This metric therefore measures the relative change in momentum between speculative value, and true organic capital inflows.

Statistical normalization is then applied to bring historical values, and log-scale price changes into a consistent scale.

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Aggregate Bitcoin Price Has Increased By $87 Billion In Last Five Months - Bitcoin Magazine

Its always a pleasure to hear from Dr. Craig Wright, and last week, Nigel Smith checked in with the Bitcoin inventor to cover everything from the recentKleiman v Wright trialto the current BSV ecosystem.

Kleiman vs. Wright & COPA

Dr. Wright said theoutcome of the trialwas very good and that Ira Kleimans claim to be the only shareholder of W&K Info Defense Research LLC is a form of fraud and is blatantly false.

Moving on to the COPA case, Dr. Wright said that it wont happen for probably another year or more. He defended taking people to court to settle issues, mentioning that Plato and Aristotle both promoted the idea as a means to understand the power of democracy and the Western legal system.

Dr. Wright described Twitter (and Facebook), one of the litigants on the COPA side, as the greatest threat to Western democracy outside of Russia and China getting together with weapons. He described recent tactics by COPA as nothing more than scammers delaying the end of their scams.

BTC as a Ponzi scheme and proof of stake

Describing BTC as a classic Ponzi scheme, Dr. Wright again pointed out that it makes no sense to buy and hold something because you think other people will buy and hold it. This is profit-seeking without work and operates in a very similar way to classic pyramid orPonzi schemes.

Getting into proof-of-stake, Dr. Wright overlooked it as a way to stop competition. Whereasproof-of-workalways allows for new entrants to innovate and come in and compete, proof of stake does not. Eventually, this leads to an oligarchy where the holders of the coins control the system with no way for new entrants to compete.

Elon Musk & Nick SzaboDr. Wright is not a fan

Dr. Wright isnt one to shy away from slaughtering sacred cows, and Tesla CEO Elon Musk did not escape unscathed. Dr. Wright said he felt he was a con artist who is playing with us when he claims he wants to terraform Mars and put humans there.

DismissingElons claimthat Nick Szabo contributed the most to the ideas behind Bitcoin, Dr. Wright claims that Szabo is incapable of coding and has a history of espousing amateur or debunked ideas such as digital gold.

The Lightning Network & BTC Core

Laying into the Lightning network, Dr. Wright describes how the U.K., European, and American legislation dictates that you need to keep records when processing transactions. However, Lightning is designed to lose records and make transactions anonymous. Therefore, by default, Lightning will violate the legislation which is due to be enforced this year.

Dr. Wright then reiterated what he said in 2008. He told Bitcoin would end up in data centers and that home users wouldnt be able to run nodes. He emphasized the competitive nature of Bitcoin, the need to trust the market, and classical liberalism. He likened the BTC centralized planners to communists desiring to build a system they control while claiming to be libertarians who love freedom.

Smith agreed, calling the BTC core camp faux libertarians. Dr. Wright called them anarcho-collectivists behaving like cult members, pointing out the red laser eyes and groupthink in the BTC camp.

Students of Dr. Wright will be familiar with his disdain for the idea thatcode is law. He once again pointed out the need for the actual law, mentioning that if you were to operate a node in an anarchic system without law, a warlord could simply take your node and make it his.

Student Questions

Neil Smith then opened the podcast to students to ask questions. The following is a summary of them.

If you program shares for smart contracts, do you still need intermediaries for things like credit checks?

There will still be controls in place. Removing controls in the name of democratizing finance leads to crashes, after which we put the controls back.

What do you want to do with your money?

Dr. Wright wants to bring billions of people into the digital economy. He wants to do so not for altruistic reasons but because he is doing so for a profit. By getting these people online and using Bitcoin, Dr. Wright expects to make money while helping these people.

What do you see with Web 3.0 and metaverse?

Several patents on this concept have now been granted to Dr. Wright. He emphasized that the ownership of all of this needs to be sorted out properly. Using NFTs as an example, he mentioned that they have lots of potentials but that the current market is full of useless JPGs and other collectibles.

What do you think of BTC evolving into a hedge against inflation?

Dr. Wright said its not a hedge against inflation. Its a risk asset, and as the interest rate increases, BTC goes down in value as people flock to bonds.

Ryan X. Charles new project

Ryan X. Charles joined the stream to talk about his new projects. The main theme of these projects is theSocial Bitcoin Web(SBW). This is an attempt to fight back against the Silicon Valley censorship that is rife in todays world.

Ryan noticed that this had gotten worse during the pandemic. He noticed the coordination of the social media companies in their censorship and decided to form a solution.

Ryans projects intend to implement an SPV wallet into the web. For example, one of the projects will allow you to copy videos rather than links to web pages, making them extremely difficult to censor. This will also have the ability to charge for the videos unless the user wants to make them free. This can get even more complex, with users licensing the video with the right to resell the video, etc.

Were going to redo the 1990s but with Bitcoin this time, Ryan said.

Learn more about Bitcoin investments with this new ebook, Investing in Blockchain: Better data for a better world.

Watch: CoinGeek New York panel, Blockchain: The Future of Technology Building on Achievements of the Past

New to Bitcoin? Check out CoinGeeksBitcoin for Beginnerssection, the ultimate resource guide to learn more about Bitcoinas originally envisioned by Satoshi Nakamotoand blockchain.

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A catch up with the inventor of BitcoinDr. Craig Wright - CoinGeek

In the world of cryptocurrency, bitcoin is still the Big Kahuna, but things are looking are little shaky.

The currency, which began use in 2009, is the largestcryptocurrency by market capitalization, weighing in at $790.8 billion, according to CoinMarketCap.

However,its market share has dwindled to 37.8% compared with 61% a year ago.

Ethereum, whichwas conceived in 2013 by programmer Vitalik Buterin,came in second with a market cap of$372.3 billion.

Next up is BNB. Launched in 2017 as an ERC-20 token on the ethereum blockchain, BNB has a market cap of$76.4 billon.

Cardana, which wasfounded in 2015 by ethereum co-founder Charles Hoskinson,was the fourth largest by market cap, coming in with$47.9 billion.

Solana was fifth in the crypto market cap hit parade with a$43 billion tally.

Ethereum, solana and cardana and others crypto like polkadot that are catching up with bitcoin because their platforms are used for non-fungible tokens (NFTs), decentralised finance (DeFi) and other use cases.

XRP,a real-time gross settlement system, currency exchange and remittance network created by Ripple Labs, came in sixth with a market cap of$35.7 billion.

Terra ,a public blockchain protocol, was the seventh largest cryptocurrency, with a$27.9 billion total.

Polkadot, an open source, blockchain platform and cryptocurrency that allows for distributed computing, was the eighth largest. The market cap came to $1.4 billion.

Coming up next in ninth place was the meme coin Dogecoin with a market cap of $1.1 billion.

Dogecoin was created by software engineers Billy Markus and Jackson Palmer, who decided to create a payment system as a "joke", making fun of the wild speculation in cryptocurrencies at the time.

And, finally, avalanche came in with the tenth largest crypto by market cap, with $537.2 million.

Avalanche is a high throughput smart contract blockchain platform.It is said to be fast, low cost, and environmental friendly.

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Bitcoin Is Still The King of Crypto, But For How Long ? - TheStreet

Shark Tank investor and chairman of O'Shares and Beanstox Kevin O'Leary aka Mr. Wonderful has shared his plans to invest in mining company stocks, but with a specific focus on companies that use sustainable energy. During a recent interview, O'Leary shared a few interesting snippets of stories from his recent travels to the Middle East, where he looked for ways to invest in Bitcoin mining and also floated the idea of starting his own mining operation sometime later this year.

The Canadian businessman shared his plans in an interview with Anthony Pompliano, noting that Bitcoin mining will see huge capital inflows over the next two, three years. O'Leary says he's been able to talk to investors across various jurisdictions, especially in the Middle East and the lesson learned from these travels is that a host of investors are looking at investments in Bitcoin mining through their sovereign funds.

While he predicts a majority of countries will eventually begin mining Bitcoin, O'Leary believes investors will want to look at ways in which mining activity supports environmental sustainability. He reasons that this is because funds will want to steer off recent controversy relating to Bitcoin mining and its adverse impact on the environment.

Once a sovereign fund decides it is going to invest in Bitcoin, it's going to want to mine it sustainably and ethically, he said. He notes that ESG (Environmental, Social, and Governance) demands and other compliance issues are top of the list for these investors. Other than that, these non-financial factors are a part of his own considerations before investing.

It's also the approach O'Leary will look to apply when deciding how he's going to invest in the sector, he noted. The celebrity investor also revealed that he has for a long time envisioned running a crypto mining operation, noting that he would probably do it in this calendar year.

On what mining companies need to do to attract investors, O'Leary says regulatory compliance is a must. The companies also need to ensure they involve the local communities, with a proper and clear understanding of how some of the returns go back to the community.

He also noted that a lot of institutional capital will be flowing into crypto mining over the next couple of years, following the likes top existing mining companies like Marathon Digital Holdings, and Riot Blockchain.

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Kevin O'Leary Believes Bitcoin Mining Will See Boom in Institutional Investment in Coming Years - Gadgets 360

Craig Kirsner isn't your typical retirement planner.

The president of Stuart Estate Planning Wealth Advisors in Florida has an affinity for cryptocurrencies even though he can't recommend them to his mostly septuagenarian and octogenarian clients. While Kirsner's clients could, in theory, multiply their money with a bit of luck, they could also see their hard-earned nest eggs disappear if cryptos come crashing down.

"There's a lot of speculation," Kirsner told Insider in a recent interview. "I mean, frankly, people are buying to make money, and there's people making a ton of money in this stuff. It's also speculation, just like any higher-risk assets, with higher upside and higher downside."

Crypto may be taboo at Kirsner's job, but that doesn't keep him from investing in it on his own. The wealth adviser said he kept 5% of his net worth in cryptocurrencies, even though he knows it could go to zero.

Despite the risks, Kirsner is proud to HODL "hold on for dear life" to bitcoin, which he says he's owned "for the past four or five years," through every twist, turn, and bear market the world's largest cryptocurrency has recently experienced.

Like other bitcoin bulls, Kirsner was convinced the token would approach $100,000 in 2021, in part because of concerns about a weaker dollar as the Federal Reserve rapidly printed money. He told Insider in September that he believed bitcoin would hit $90,000 in the year's final four months, but that prediction never came true. Bitcoin topped out at $68,990 in early November.

Kirsner said his bitcoin price target fell flat because of the Fed's response to rapidly rising inflation. The US central bank began to hint that it would need to hike interest rates sooner than expected; those hit risky assets like high-flying stocks and cryptos hardest.

"Now more and more, crypto has been following the ups and downs of the stock market, and the stock market has been following for years the ups and downs of the Federal Reserve's policies," Kirsner said.

Kirsner continued: "Just like the market has taken a hit over the last couple of weeks as it digests news of a non-accommodative Fed and rising interest rates, bitcoin is reacting as well, along with all highly appreciated assets. Everything's taken a pullback."

In theory, digital assets like bitcoin should be a hedge against inflation in reality, that appears not to be the case. Bitcoin is down 36% since October inflation data came out on November 10. But that's because bitcoin is less of a hedge against inflation and more like a hedge against the US dollar, Kirsner said, adding that the nation is approaching $30 trillion in debt.

"Obviously there's a growing amount of people that are not happy with what's happening in politics and everything," Kirsner said. "So maybe they're reaching for something that's out of that control."

Kirsner is confident that investors will increasingly turn to bitcoin as adoption rates climb, leading to higher highs for the cryptocurrency. As investing stalwarts like MassMutual enter the crypto market, Kirsner believes it's only a matter of time before a wider variety of investors warm to digital coins, he said.

The multibillion-dollar question: If crypto really is the future, which tokens will fare best?

Predicting which altcoins commonly defined as non-bitcoin cryptocurrencies will be around in a decade is like guessing in 2000 which technology firms would survive the tech bubble. Though prognosticating with a high degree of certainty is impossible, Kirsner is willing to try.

Below are seven altcoins Kirsner said he was bullish on in 2022, along with their symbols, their market capitalizations, their use cases, and his thesis for each. Kirsner said he owned three of them ethereum, cardano, and litecoin and may soon build positions in the other four.

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7 Altcoins to Watch in 2022 As Bitcoin, Crypto Rebound - Business Insider

Bitcoin price is slowing down as it sticks close to a crucial support level with no volatility in sight. Ethereum and Ripple are following the big cryptos lead and consolidating, showing no directional bias whatsoever.

Bitcoin price has been hovering around the $41,672 barrier for nearly two weeks and shows no signs of moving away. There is a possibility BTC will swing below Mondays low at $39,628 before it kick-starts an uptrend.

In such a case, investors can expect Bitcoin price to make a run-up to the weekly open at $43,096. Clearing this hurdle will put BTC on the path to retest the yearly open at $46,224. In a bullish case, the big crypto will move higher and retest the 200-day Simple Moving Average (SMA) at $48,663.

BTC/USD 4-hour chart

While things are looking undecided for Bitcoin price, a four-hour candlestick close below $39,487 will indicate that things could head lower. In this case, BTC will likely revisit the $36,684 support level before it kick-starts another uptrend.

Ethereum price managed to produce four daily candlestick closes above the weekly support level at $3,061, leading to a 12% ascent. This uptrend fell short of retesting the 200-day SMA and retraced lower.

The pullback is currently retesting the same weekly support level, anticipating a move higher. A quick bounce off this barrier will send ETH to retest the 200-day SMA at $3,484. Clearing this barrier would open the path for the smart contract token to tag the 2-day supply zone, extending from $3,675 to $3,862.

ETH/USD 1-day chart

Regardless of the potential bullish outlook, if the big crypto crashes, Ethereum price will follow. A breakdown of the $3,601 support level will send ETH to retest the subsequent barrier at $2,712, where buyers can attempt an upswing again.

A daily close below this barrier, however, will end the bullish thesis and explore the possibility of a crash to $2,440.

Ripple price has retested the daily demand zone, extending from $0.694 to $0.753 roughly four times over the past month. XRP price needs to see bullish momentum off this barrier since multiple retests have weakened the structure, threatening a breakdown.

An uptick in buying pressure could see Ripple retest the $0.817 hurdle or the 50-day SMA at $0.834. Any move beyond this barrier could allow XRP price to retest the 200-day and 100-day SMA confluence at $0.96.

XRP/USD 1-day chart

If Ripple price breaks down below the said demand zone, there is a good chance it will revisit the $0.604 support level. Here, buyers can band together and make a comeback. However, a daily candlestick close below this platform will invalidate the bullish thesis by creating a lower low.

In this situation, the Ripple price will likely tag the $0.518 barrier and collect the sell-side liquidity resting below it.

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Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Crypto markets cling to the idea of a bullish breakout - FXStreet

Investment bank Cowen is known for its focus on disruption, with deep dives into themes that are transforming sectors from retail, to transportation and payments.

In 2021, the cryptocurrency space truly established itself as a disruptor, capturing the attention of investors and analysts with the remarkable returns from the assets and the buzz created around decentralized topics like central bank digital currencies, decentralized finance, NFTs and the metaverse.

Cowen's already been at the forefront of the cryptocurrency space in many ways, helping bitcoin mining companies go public, leading financing for crypto startups and covering crypto within their Washington research group.

This year, they've upped the ante with the launch of their own coverage of the bitcoin mining sector.

"It's a new space, nascent industry," Stephen Glagola said. Glagola is Cowen's equity research analyst for cryptocurrencies and digital assets. "A lot of education and work still needs to be done in terms of just getting everyone on the institutional side up to speed on bitcoin mining and cryptocurrency in general," he said.

"I would say bitcoin mining is the start of broader coverage for Cowen," he added.

Glagola spent over eight years covering the media and entertainment sectors and providing stocks recommendations on the likes of DraftKings and LiveNation. He was also featured in Insider's 2021 list of rising stars in equity research.

Bitcoin is a completely different business model, Glagola said. He's spent almost every waking hour of the last few months getting up to speed on the business model.

"I would say I characterize the bitcoin mining industry as a commodity business at the end of the day, with a new technology wrapped around a new technology," Glagola said.

But Glagola doesn't want to be making a broad call on the commodity itself. Instead he's focused on the micro company-specific factors that will drive those businesses over the next 12 to 24 months.

"I really wanted to focus on really enlightening investors on the economics of these businesses, and just really hone in on the mining economics," Glagola said.

Bitcoin's value is determined by supply and demand, Glagola said. It's impossible to value it using a classic discounted cash flow model, because there is no cash flow.

"We know the supply curve is fixed, we know the production schedule of bitcoin," Glagola said. "The value is really going to come from the demand curve, which is variable."

The lack of understanding about the microeconomics of miners and the importance of the supply and demand curve means investors are underappreciating miners as an investment opportunity, according to Glagola.

Miners that have cost leadership and production scale can provide asymmetric upside to volatile bitcoin prices, he said.

If bitcoin prices fall, the least efficient products on the network fall off, absorbing the decline.

The miners that continue to operate will benefit from a decreasing cost of production, which creates some downside protection, Glagola said. This decreasing cost of production could come from a fall in hash rate, or downward difficulty adjustments.

"The most efficient producers actually can maintain fairly healthy margins, even on a decline in the bitcoin price," Glagola.

Many of the most efficient producers are the listed US public companies, Glagola said.

"The least efficient producers will take that hit initially if the price were to see any type of significant drawdown," Glagola said.

Alternatively, if bitcoin is rising, miners experience leveraged upside. This is because bitcoins are being produced at a much lower cost than the spot rate, Glagola said.

There's an upside benefit from already operating at scale, he added.

Bitcoin miners appear well positioned for this current market environment and can offer investors the opportunity to weather some of bitcoin's volatility .

Since hitting an all-time high of $68,789 in November, bitcoin has fallen by 39% and is currently trading around $41,800 - its lowest in several months.

Bitcoin mining stocks can operate with very healthy margins even if bitcoin trades in the range of $30,000 to $40,000 due to the current cost of production, Glagola said.

The challenge currently is that mining company stock prices still remain heavily correlated to the value of bitcoin itself, he added.

"What I've seen in my correlation analysis is that the more bitcoin held on the balance sheet, a higher percentage of your market cap , the higher correlation there tends to be with the stock," Glagola said.

However, this correlation doesn't take away from the businesses with strong fundamentals.

Glagola sees these strong fundamentals in companies, such as Stronghold Digital Mining and Iris Energy. These are also two companies that Cowen helped take public.

They are both execution stories, Glagola said.

"We have confidence in both management teams at both companies," Glagola said. "But it really is that both are being [discounted] because of higher perceived execution risk and I think it's really just a matter of both the management teams executing on their plans that they've laid out to investors over the next 12 months."

Link:
Bitcoin Mining Stocks With Over 80% Upside & Sell-Off Protection, Cowen - Business Insider

A man who claims he's the creator of Bitcoin says his private keys to 14m of Bitcoin SV were deleted by hackers in 2020 and now he's suing developers to forcibly give him access to internet coins he "owns but cannot access."

Craig Wright (yes, him again) is suing 15 people and one Swiss company in the hope of forcing them to "re-write or amend the underlying software code" so Wright can get his hands on a large amount of Bitcoin SV.*

The High Court of England and Wales recently ordered Wright to pay the court security for costs in case he loses, with the resulting judgment shedding light on yet more English litigation involving Wright and Bitcoin.

Master Clark, the procedural judge, summarised the main case as follows:

Wright claims the defendants "owe fiduciary and tortious duties" to "re-write or amend the underlying software code to enable [Tulip Trading] to access the Bitcoin." It appears the judge may have confused Bitcoin (as in BTC, the original) with Bitcoin SV ("Bitcoin Satoshi Vision", a fork of a fork from the original Bitcoin.

Continuing his run of bad luck, Wright's Tulip Trading** Ltd lost its bid to avoid having to pay security for costs. This is a legal procedure where if a judge believes a claimant might not have assets inside the jurisdiction that can be used to pay the other side's legal costs if they win, the claimant has to pay a substantial sum to the court, which passes it to the defendants at the end of the case or returns it accordingly. If the claimant doesn't pay, the case is halted.

The 15 defendants include Bitcoin vlogger Roger Ver, Swiss company Bitcoin Association for BSV, and a list of other cryptocurrency enthusiasts, all of whom Wright says are developers involved in Bitcoin Core and Bitcoin Cash ABC, whatever that is.

They've all refused Wright's demands, though a firm called nChain Ltd is "said to be working on a modification to the existing BSV client software, which would enable someone who owns but cannot access the BSV to regain control of them."

Wright claims he is the pseudonymous founder of Bitcoin, Satoshi Nakamoto, and has spawned a global litigation-themed pantomime in his wake as various people say, "oh no you're not," Wright says, "oh yes I am," and lawyers around the world bank fat fees from all the arguing. Last month, he had to pay 70m in Intellectual Property rights after technically winning a court case against the estate of a deceased business partner. Wright had told a Miami jury that he and David Kleiman co-created Bitcoin (BTC) through a professional partnership called W&K Info Defense Research.

Back in 2016 Wright made posts on his blog that were roundly ridiculed by people after his "proofs" at the time turned out to be nonsense.

*1 Bitcoin SV is currently worth 81 according to a graph generated by Coinmarketcap, a website owned by UK-banned cryptocurrency speculation business Binance.

**Keen students of history will note that one of the earliest stock market crashes was when the Dutch tulip bubble occurred in the 1630s. An investment website explains the link: "The Bitcoin market is frequently compared with tulipmania, in that both prompted highly speculative prices for a product with little clear utility.

"Bitcoin prices tend to crash after significant gains, exhibiting many signs of a classic bubble."

We have no information on whether Wright knowingly called his Seychellois company Tulip Trading as a nod to this, though maybe the man just likes colourful flowers.

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I own that $4.5bn of digi-dosh so rewrite your blockchain and give it to me, Craig Wright tells Bitcoin SV devs - The Register

At Expensivity, Bernard Fickser, who has explained how to sell non-fungible tokens (NFTs) now offers The Truth About Cryptocurrencies: A Clearheaded Guide to the Crypto World. (January 15, 2022) For your convenience, we are serializing his work, which can be read in whole here. Heres Part 2:

This first section is for those who want to begin investing in crypto right away. But it is also for those who simply want to understand cryptocurrencies without investing in them. Later sections will present the underlying theory and history of crypto, as well as reasons to take crypto seriously but also to be cautious. Yet it helps to see how cryptocurrencies actually behave in practice, and nothing beats buying some crypto at an exchange, setting up a crypto wallet, and then sending some crypto from one wallet to another. So, in a clearheaded guide to the crypto world, its good to start with a practical section like this

To be a successful crypto investor, however, youll also need a general grasp of cryptocurrencies, The later sections of this article therefore provide a solid overview of cryptocurrencies. If you want to dig still deeper into the crypto world by investing in or even creating non-fungible tokens, you should also read ourcompanion piece on non-fungible tokens.

In explaining crypto investing, well focus on investing in Bitcoin and Ethereum, the two most popular cryptocurrencies with the highest market capitalization (all the other cryptocurrencies together dont have the value of these two). Investing in other cryptocurrencies is straightforward, and simply means going to exchanges or websites that handle them, buying those cryptocurrencies there, and then procuring the appropriate (crypto) wallets that allow you to move such currencies from wallet to wallet. Specific (crypto) wallets have specific private keys and are designed to work with specific currencies.

For Bitcoin and Ethereum, the exchange Im going to recommend isCoinbase. In our Expensivity article onthe 10 best crypto exchanges, we rank Coinbase as best for first-time cryptocurrency investors. Hence, to buy bitcoins and ether (note thatfor Bitcoin the plural is either bitcoins or bitcoin, butfor Ethereum the plural is simply ether; note also that these are abbreviated respectively as BTC and ETH), simply sign up for an account at Coinbase and transfer funds to the account with which to buy these cryptocurrencies.

Unlike a few years ago, government regulation and IRS intrusion into the crypto world has since gotten much more extensive, so youll need to verify that you are who you claim to be (KYC, or Know Your Customer, is a big deal these days with the exchanges). Once you are signed up and have funds in place, you can buy your first bitcoins and ether. As it is, Bitcoin is at the moment trading around $50,000 per BTC ( a month ago it was at an all-time high of almost $70,000) and Ethereum is trading above $4,000 per ETH, so its likely you will only be buying fractional bitcoins and ether.

Next, get yourself a Bitcoin wallet (I recommendElectrum) and an Ethereum wallet (I recommendMetaMask). Coinbase will now allow you to transfer cryptocurrency to those wallets and from there you can transfer cryptocurrency to still other wallets. You are now good to go in having these cryptocurrencies available to you for the purposes of buying, selling, and investing.

Using the these wallets is straightforward, but do a Google search on these or any other wallets you choose to use if you get stuck. Once you set up a crypto wallet, youll be given a sequence that looks like this (which happens to be the one associated with my MetaMask wallet):

Thats the public address of the wallet. Its readily copied to your clipboard. Youll need such an address for people to send you crypto or to send yourself crypto from an exchange.

Associated with any crypto wallet is a 12-word seed phrase, which you obtain when you set up your wallet. If you lose the seed phrase, you lose your wallet and everything in it. Its typically advised that you write down the seed phrase on paper and keep it entirely away from digital storage.

Unfortunately, paper is easily misplaced, and reports abound of people losing incredible amounts of cryptocurrency by forgetting or misplacing their seed phrase. I therefore prefer to record the seed phrase in an image file, and then hide the image among a vast horde of other images where it gets tucked away inconspicuously unless you know what youre looking for.

NOMENCLATURE: In the crypto world, youll see references to cryptocurrencies as well as to tokens. Cryptocurrencies are encrypted digital currencies that are native to particular blockchains and thus specifically created for them. For instance, bitcoins make up the currency native to the Bitcoin blockchain, and ether make up the currency native to the Ethereum blockchain. A unit of a cryptocurrency is typically referred to as a coin.

Cryptocurrency blockchains can also allow transactional protocols or smart contracts. These are computer programs that run on cryptocurrency blockchains and allow for the creation of exchange mechanisms that transact units distinct from but also derived from the underlying cryptocurrency. Such derivative units are called tokens, and they can act like cryptocurrencies in their own right, but also serve other purposes (as, for instance, vouchers, rewards, or rebates).

The Ethereum ERC-20 standard, at the time of writing, supports 200,000 different tokens. One such token is theBasic Attention Token, which functions like a cryptocurrency but also like anopen-source,decentralizedad exchangeplatform. Although the analogy is imperfect, it can help to think of the relation between tokens and cryptocurrencies as the relation for financial instruments between derivatives (such as options and futures) and underlying securities (such as stocks and bonds). Tokens are thus built on top of crypto.

Even though theres a valid distinction here, many writers ignore it, describing the coins that make up a cryptocurrency also as tokens. In a sense, a coin native to a cryptocurrency is also built on top of it, so by that token (pun intended), tokens are the more general notion and encompass the coins that make up a cryptocurrency. Thus one will read (in Yahoo Finance) that Solanas token is the fifth-largest cryptocurrency by market cap. The distinction is valid, but it is often breached.

Also, one more bit of nomenclature at this early point in our discussion. In the crypto literature, youll often find reference to altcoins. These are coins or tokens other than Bitcoin and Ethereum, the latter being the gold standard of the crypto world, other coins/tokens thus being treated as second-class citizens. For now, Bitcoin and Ethereum so dominate the crypto world that the altcoin designation seems justified.

How much crypto gets lost or stolen? According toBusiness Insider, People have lost roughly $140 billion in Bitcoin because they forgot their passwords or got locked out of accounts, and would-be millionaires are struggling to access their wallets. That report was issued in January of 2021, when the price of Bitcoin was about half of what it is now. So with Bitcoin sitting at $60,000 per bitcoin, and thus a total market cap of around $1 trillion, total Bitcoin losses exceed $250 billion, which means that over 25 percent of all bitcoins have gone missing. Imagine if a quarter of your bank account simply went missing.

The case of James Howellsis particularly poignant. He began Bitcoin mining early in the game (in 2009; Bitcoin was founded in 2008). In 2013 he inadvertently threw away the hard drive with the credentials to his Bitcoin wallet. The hard drive ended up in a landfill and he knows roughly where in the landfill it is. But the city wont let him exhume the hard drive. On it is the information that will allow him to claim 7,500 bitcoins, valued at half a billion dollars (i.e., $500,000,000) at Bitcoins recent peak price.

As you start buying cryptocurrencies and moving them around between exchanges and wallets, it will feel like you are moving money remotely in the same way as with your bank through its smartphone app. But this similarity is deceiving. Crypto wallets are vulnerable to amnesia (forgetting your access credentials, typically referred to as your private key or the seed phrase that allows you to reconstruct the private key). And they are vulnerable to theft (someone stealing your private key and making off with all the crypto in your wallet). Moreover, there are no laws to redress this sort of amnesia or theft. Its on you to keep your credentials safe and intact. Thats a lot of responsibility. That means theres no safety net. And people pay the cost.

Working with a crypto exchange offers some safety against amnesia in that an exchange will have reliable ways of identifying and contacting you, such as through your email account or cell number. But theft remains a big problem. A crypto exchange may feel like a bank, but it is not a bank. The big difference is that with a bank, you have a trusted third party that islegally liablefor your deposited funds. Moreover, theFederal Deposit Insurance Corporationinsures your deposits at a given bank for up to $250,000.

With crypto, whether through an exchange or through a wallet, you are much more on your own. If hackers steal the private key to your crypto wallet, you lose all the crypto in that wallet. Similarly, if hackers break into your account at a crypto exchange, you lose whatever they choose to remove.Even at Coinbase, hackers in the fall of 2021 stole cryptocurrency from 6,000 of its customers (largely through phishing attacks).

If a crypto exchange as a whole is hacked, all the crypto assets of the exchange may be compromised. The hacking ofMt. Gox, an early Bitcoin exchange, stands out to this day. Its bankruptcy almost ruined confidence in Bitcoin. In being hacked, Mt. Gox ended up losing 650,000 BTC, worth over $40 billion at Bitcoins recent peak price. People who owned those BTC lost them.

Ive had a Coinbase account since 2016, and in that time Ive seen Coinbases security measures become ever more stringent. Thats encouraging, and it keeps me from being too worried about losing the crypto that I have in my account there. But the recent theft from 6,000 of its customers is less encouraging.

In any case, banks provide additional safety nets that are lacking in the crypto world. If somebody steals your debit card information and starts unloading the money in your bank account, once you catch it, the bank will stop the fraud and, if you are under the $250,000 FDIC limit, will reimburse you for your loss. Ive experienced this myself when someone stole my debit card information at an airport, and then started buying large items at Best Buy and Walmart. By the time I caught on to what was happening, $2,000 had been removed from my account. Yet the bank, once I pointed out the theft, restored all those stolen funds. Nothing and I mean NOTHING like that exists on a crypto exchange.

If you accidentally wire money from your bank to the wrong account or wire the wrong amount of money, your bank will be in a position to reverse the transaction. With crypto, all transactions are irreversible, so once you send crypto, the only way to get it back is by asking the party that received your crypto to give it back. And often that party will be anonymous, so good luck with that.

If you have crypto in a wallet and somebody learns your 12-word seed phrase or the associated private cryptographic key for the wallet, they can transfer all the crypto in the wallet to one of their own crypto wallets, and youll have no recourse for retrieving the cryptocurrency that was transferred. Even the legal system is unclear about what it means to steal cryptocurrency. Thats because cryptocurrency theft simply moves around bits electronically on a peer-to-peer network according to agreed upon protocols, and those bits have no legal standing as claims on property.Cryptocurrency theftis a multibillion dollar a year problem, and there is no clear system of legal redress.

Given these caveats, if you still want to invest in crypto, Im going to propose two approaches. One is simple (dollar cost averaging), and the other requires more work (trend trading). Im going to assume that you are investing in crypto because, despite extreme volatility, you see the price continuing to go up. In other words, Im going to assume you are bullish on crypto, and thus will be going long on it.

The alternative to being bullish on crypto is being neutral or bearish about it. If you are neutral, you may just ignore it. If, on the other hand, you are bearish on crypto, thinking that it is ultimately going to crash and burn, or even if you think it is going to go down significantly in the short term, then you will likely want to sell crypto short. Short selling crypto, especially with its extreme volatility, is, however, a recipe for losing a lot of money.

Short selling requiresmargin trading,which Coinbase no longer allowsbecause of recent regulatory changes in the U.S. (Coinbase is based in San Francisco). On the other hand, Binance, based in the Cayman Islands, does allow margin trading and thus short selling of crypto. Heres a briefvideo on how to short sell crypto at Binance, but engage in short selling crypto at your own peril.

In this light, its worth noting the attitude toward crypto of the hedge fund managers who successfully shorted mortgage-backed securities back during the financial crisis of 2007-08 (such as Michael Burry, played by Christian Bale in the filmThe Big Short). They made billions when the housing market collapsed in 2008.These same hedge fund managersthink that Bitcoin, and crypto in general, is a bubble that ultimately will deflate to zero. Even so, they are unwilling to short Bitcoin on account of its volatility as well as their inability to predict the details of its expected demise.

One final point, which well examine in more detail later, is the inequality with which crypto wealth is distributed. Those who have made the most money off of crypto have gotten in early when the cryptos valuation was low and have profited as its price skyrocketed. Satoshi Nakamoto, the pseudonymous inventor of Bitcoin, is thought to havemined 1.1 million bitcoins. All these bitcoins have to date gone unused (did Satoshi die and are they forever lost?). Satoshis stash of bitcoins represents about 5 percent of all bitcoins that have or will ever be mined (the total being 21 million). At Bitcoins peak price to date, that represents about $70 billion. Satoshis case is extreme but not unique among crypto founders.

In going long on crypto, you are taking a bullish attitude toward it, thinking that over time it will, on average, continue to rise. In that case, your simplest strategy isdollar cost averaging(abbreviated DCA). In this strategy, you set aside a fixed amount of money and invest it in equal portions at regular intervals until the amount is used up.

In the limiting case, this strategy involves nothing more than putting aside a fixed amount for crypto and investing it all at once, such as when it has taken a huge dip after a historic high. Thus, after April of 2021, when Bitcoin hit over $60,000, it came down to about $30,000 that July. If you had been fortunate to invest in Bitcoin at that time, then you would have doubled your money when in October of 2021 Bitcoin went back up over $60,000.

In actual practice, however, dollar cost averaging means setting aside a sum money, dividing it into more than one equal portions, and investing each portion at regular intervals. For instance, suppose youve got $6,000. Lets say you want to invest that amount in a given cryptocurrency, spreading it out over the next four weeks, and so $1,500 per week. Lets say that the first week this cryptocurrency is valued at $100 per unit, the next week it goes up to $150 per unit, the next week it is down to $50 per unit, and the fourth and final week it is back to $100 per unit.

In that case, you obtain 15 units of the cryptocurrency the first week, 10 the second week, 30 the third week, and 15 the fourth week. Thats a total of 70 units of the cryptocurrency in the fourth week. Because the cryptocurrency in the fourth week is back at $100 per unit, and because you now own a total of 70 units, the value of the cryptocurrency you acquired over the last month is now $7,000, up $1,000 from what you had to invest at the start.

Note that in this four-week window, the cryptocurrency went up as much as it went down from the starting point, but you ended up gaining because you made back with extra during the low more than you lost during the high. If youre going long, you always make money by buying low and selling high, and dollar cost averaging allows you to come out ahead as long as buying high doesnt too much outweigh buying low.

As it is, the consistent pattern, at least for Bitcoin and Ethereum, is that however high these cryptocurrencies have gotten and however much they fall in value, they always eventually rebound and reach new unprecedented heights. If this pattern continues (no guarantees here), it means that dollar cost averaging will make you a return at whatever point you start using this strategy (even if you start at a high because youll be making losses back as you invest during the intervening lows and as the currency goes to its next unprecedented high). Or course, dollar cost averaging will make you that much more money the further down in the fall from the last high you start.

One caveat with this strategy: Dont use this strategy with money that you cant afford to lose or that you may need to reclaim for some urgent need. If you use this strategy, set aside the money you will use, and invest it according to your plan at the regular intervals specified by your plan. To make this strategy work, you need to stay the course with it.

Even so, recognize that your ability to stay with your DCA strategy may require some courage on your part given the extreme volatility of crypto. This volatility, when it hits a low, may convince you that youve invested in a sinking ship, in which case youll be tempted to jump ship. To counter this temptation, you may want to automate the investment at each interval and ignore the investments as they are happening in real time. With an investment strategy, its also good to have a strategy for dealing with your own psychological reactivity to unpleasant drops that may tempt you to lose heart.

In trend trading (akatechnical analysis), you try to capitalize on market momentum as the price goes up or as it goes down. You therefore want to buy as the market is low and sell as it is trending up (toward a peak). Conversely, you want to sell as the market is high and buy as it is trending low (toward a trough). Full-orbed trend traders will thus want to have short selling in their arsenal (so that they can sell the asset in question high even if they dont own it).

Trend trading looks for patterns in the price movement of an asset and attempts to profit by exploiting those patterns. Does trend trading work? Economist Eugene Famasefficient market hypothesissuggests that it shouldnt work because prices of assets are supposed to reflect all available information about the asset. But Famas subsequent work suggests that extreme momentum tilts of the sort one sees with cryptocurrencies may be exploited through trend trading.[1]

If you are going to be a trend trader, you really need to do your homework and develop for yourself the tools for spotting trends in the momentum of cryptocurrencies that you can exploit for profit. Some of these tools may be off the shelf, others you may need to build for yourself, and all of them will need to be continuously monitored, adapted, and updated. This can easily become a full-time job.

Its best to start by simulated trading (often still called paper trading) to see how well your system for exploiting trends really works and if it is capable of delivering a profit. And even if you are successful with simulated trading (showing a virtual profit), you need to make sure you stay the course with your trading strategy once your own money is on the line (and thus stand to see a real profit or loss).

If you want to do trend trading, you need to do your homework. A good place to start is Glen GoodmansThe Crypto Trader. For a deeper dive into the type of pattern analysis (also known as charting or technical analysis) that underlies trend trading, the locus classicus is Thomas SchabackersTechnical Analysis and Stock Market Profits, with the latest understanding of this field captured in Edwards et al.sTechnical Analysis of Stock Trends(11th edition, 2019).

Unlike dollar cost averaging, trend trading is not something you can just jump into. You first need to learn the ropes. In trend trading there are lots of moving pieces to keep track of. Youll need to be able to get in and out of trades quickly. This will requireconditional orders(such as stop and limit orders) where you can automate buys and sells when prices of the crypto in question reach certain ranges within certain time frames.

One final caveat: As with dollar cost averaging, the money you set aside for trend trading should be an amount you can afford to lose, especially in the early going. Even the best trend traders make plenty of mistakes in spotting and timing trends. As a trend trader, you expect to be losing on some trades and then hope to be making it back with more on others. But if trend trading were a magic bullet, you would see a lot more successful trend traders. The fact that you dont is itself telling.

Heres Part 1: Some brute facts about Bitcoin and other cryptos. Crypto is transforming money and finance. Like the computer, you dont need to use one but youre wise to know the basics. Start here. Crypto functions much like cash, avoiding or minimizing the increasing ability of government or other big institutions to snoop on who you give money to.

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If You Want To Stick a Toe in Bitcoin's World Read This First - Walter Bradley Center for Natural and Artificial Intelligence