Category Archives: Bitcoin

Hello, again: Thanks for all the feedback from last weeks ETF Wrap. Please, keep it coming.

The Holy Grail for crypto enthusiasts has been a pure-play exchange-traded fund investing in crypto. It doesnt seem that were any closer to getting one, at least before the end of 2021. Gary Gensler,as the new chairman of the Securities and Exchange Commission, seems intent on ensuring that investor protections are in place for moving forward, and rightfully so.

But MarketWatch caught up with Matt Hougan, chief investment officer of Bitwise Asset Management, formerly the chief executive officer of ETF.com, whose new fund may hold some appeal for those pining for a bitcoin ETF. One selling point, is that the fund may retain its attraction even if a bitcoin ETF eventually emerges.

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Weekly performance across the board for ETFs was lackluster as investors have been wrestling with the rising threat of inflation and have gravitated to themes and strategies they that they think will perform better in that environment.

Read: What does inflation mean for the stock market? Its supposed to be a positive but investors are spooked now

See: The biggest inflation scare in 40 years is comingwhat stock-market investors need to know

VanEcks oil-services CL.1, +0.80% fund registered a 2.4% return among the best performers over the week. And evidence of inflation bubbling up appears to be helping boost commodity-focused funds, more broadly, including those for copper HG00, -1.01% as the COVID-19 pandemic loosens its grip on parts of the world, amid a rollout of coronavirus vaccines and treatments.

A recent research report from FlexShares indicates that factors likevalue, size, and dividend yield, tend to post strong gains during economic recoveries like the one the U.S. is experiencing presently.

Given the historic relative outperformance of the size and value factors during an economic recoverywith an average excess return of 15% and 6.5% respectively during this type of environmentinvestors may want to considerETFs with a tilt towards value stocks and a smaller market capitalization, the folks at FlexShares write.

Bitwise Asset Management launched the Bitwise Crypto Industry Innovators ETF BITQ, -7.53% earlier this week.

There are plenty of funds that attempt to leverage from the growth in the crypto and blockchain market, but Hougan makes the argument that this fund is different primarily because its allowed to carry crypto in the title. That may sound like just window dressing but regulators compel a company/sponsor using a specific word in a funds name to put their money where their mouth is.

It is the first ETF that has cryptoin the name and the reason it is able to do that is that it is more than 80% is pure-play, companies, Hougan said.

The ETF pro thought that people are excited about the idea of a bitcoin BTCUSD, +2.52% fund because they are interested in the idea of the worlds No. 1 digital asset but may not want to hold it directly.

Bitcoin is inherently volatile and hard to value, which may be one reason why the SEC has thus far been hesitant to push forward with a ETF-wrapped crypto fund.

On Tuesday, the SEC in a statement said that investors should consider the volatility of bitcoin as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market. The statement was a reference to the growing bitcoin futures market and mutual funds but the message implies that the SEC is moving gingerly in the sector.

On Thursday bitcoin prices on CoinDesk were down 10% at around $50,170, and had hit a 24-hour low of $46,294.12, a month after an all-time high around $64,000. Bitcoins slide accelerated on Wednesday after Musk said that he would no longer accept the crypto at Tesla stores. That has taken the broader digital-asset complex along for the ride lower, with assets tied to Ethereum ETHUSD, +6.56%, the second largest crypto in the world, also in the red. That includes meme asset dogecoin DOGEUSD, +34.33%.

BITQ consists of 30 companies and is market-cap weighted but capped at 10%. It has crypto platform Coinbase Global COIN, -6.53% as its biggest holding. Michael Saylors MicroStrategy Inc. MSTR, -9.93% is another significant component, as well as Mike Novogratzs Galaxy Digital Holdings GLXY, -11.74% and bitcoin miners Riot Blockchain RIOT, -16.18% and Marathon Digital Holdings MARA, -13.96%.

This isnt quite a bitcoin ETF, there are a bunch on file with the SEC, but for many investors who are able to stomach the wild moves of crypto, this could be a an alternative.

This is not a bitcoin ETF but it does hold the companies that are building out the [crypto] infrastructure, Hougan said.

It is worth noting that there is at least one notable entrant in the digital-asset world with a similar fund composition to BITQ.

VanEck Vectors Digital Transformation ETF DAPP, -7.23%, which made its debut last month, aims to give owners exposure to the digital transformation of the economy, and holds a number of the same companies as Bitwise but comes sans the crypto title and with a lower expense ratio at 0.65%, versus 0.85% for Bitwise.

DAPP is down early 16% so far this week.

Tech stocks have been punished in the recent selloff that saw the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite Index all get clobbered on Wednesday. But Cathie Woods Ark Innovation fund has seen the worst of the downturn in equities, reports The Wall Street Journal.

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ETF Wrap: Is a new 'crypto' fund the long-awaited bitcoin ETF in disguise - MarketWatch

Financial technology outfit Square (NYSE:SQ) got 2021 started on the right foot. More than a year removed from the start of the pandemic, revenue from its seller ecosystem (primarily digital payments and related services for merchants) rallied 19% year over year as in-person business transactions slowly started to normalize again. Cash App also had a good first three months of the new year with revenue up a whopping 139% from a year ago as consumers flocked to the digital wallet.

But revenue overall at Square was $5.06 billion in Q1 2021, up an incredible 266% year over year. The reason? Bitcoin (CRYPTO:BTC) transacted through Cash App. Nevertheless, Square is by no means reliant on the cryptocurrency price boom. On the contrary, it's barely a money-making affair -- but one generating lots of buzz and helping its more profitable digital money management and payments business continue its expansion.

Image source: Getty Images.

Much like how things played out last year, Bitcoin's skyrocketing price driven by consumer interest in owning a piece of the digital currency was a boon for Square's headline numbers. Of the $5.06 billion in revenue generated in the first quarter, $3.51 billion was attributable to Bitcoin -- a more than 1,000% increase from Q1 2020 when Bitcoin revenue was just $306 million. Cash App users buying and selling the digital currency was only part of the story. As of this writing, the value of Bitcoin itself is up 720% since the start of 2020.

And yet in spite of the epic rise, Bitcoin isn't what's paying the bills at Square (total net income was $39 million, and free cash flow was actually negative $132 million this last quarter). Rather, it's the Square seller ecosystem and Cash App (excluding Bitcoin) that's really moving the needle and generating progress for Square's bottom line. In fact, when factoring for the $19.9 million in Bitcoin impairment costs realized, the cryptocurrency results were hardly meaningful in the last quarter.

Metric

Q1 2021

Q1 2020

YOY Change

Seller ecosystem revenue

$1.02 billion

$853 million

19%

Seller ecosystem gross profit

$468 million

$356 million

32%

Cash App (ex-Bitcoin) revenue

$529 million

$222 million

201%

Cash App (ex-Bitcoin) gross profit

$420 million

$176 million

139%

Bitcoin revenue

$3.51 billion

$306 million

1,047%

Bitcoin gross profit

$75 million

$6.67 million

1,024%

Data source: Square. YOY = year over year.

Stated another way, Square's revenue was up 44% in Q1 to $1.55 billion when excluding the $3.51 billion in Bitcoin revenue. Besides generating massive buzz in its top-line financial metric, why bother with Bitcoin at all?

It's all about the bigger picture for Square, which is generating lots of new user accounts by offering crypto trading through Cash App. Once in the ecosystem, Cash App (and the closely integrated merchant ecosystem through Square) can monetize some of those users with its much more profitable digital payments and digital wallet services. Thus, cheap marketing with quick payoff is one way to think of Bitcoin at Square.

Longer term, if Bitcoin acceptance as a form of payment among businesses does continue to increase, Square will have the infrastructure and user base already built out to make it a top ecosystem from which merchants and consumers can interact using the digital asset. Bitcoin thus gives Square another arrow in its quiver as it rapidly grows its network of users.

When backing out Bitcoin results, Square sales tally up to $10.7 billion over the last trailing-12-month stretch -- valuing the stock at just over nine times trailing-12-month sales. By comparison, larger peer PayPal and digital wallet competitor Venmo currently trade for about 12.5 times trailing-12-month revenue. Bitcoin or not, Square stock looks like a long-term value right now.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Here's How Much Square Is Relying on Bitcoin - Motley Fool

Henrique Dubugras, co-CEO and founder of Brex

Fresh off last months massive $425M fundraise at a $7.4 billion valuation, Brex, an all-in-one financial services provider for small and medium-sized businesses, is launching one of the first crypto rewards programs for corporates.

With the new offering, Brexs customers, most notably Airbnb, Classpass, a subscription service that provides access to numerous fitness studios, and startup accelerator Y Combinator, will be able to exchange Brex reward points for bitcoin and ether the same way theyd redeem them for miles, gift cards, cash, or travel.

Brexs rewards partner, TravelBank, will power the zero-fee rewards redemption program, allowing users to input the amount of points they want to redeem for crypto that can then be transferred to a cryptocurrency wallet like Coinbases.

Weve always believed in crypto personally says Henrique Dubugras, co-CEO and founder at Brex. But the watershed moment for us was when Square, Tesla and a few other companies started buying crypto [and putting it] on their balance sheets, signaling that crypto is getting mainstream and we need to do something.

Launched in 2017 as a corporate card provider for venture backed businesses, Brex has since expanded to offer small and medium-sized businesses (SMBs) as well as larger organizations an all-in-one finance management platform. Without disclosing the exact number of clients, the company says it onboards thousands of new customers every month. To date, Brex has raised over $940 million in venture capital from Tiger Global, Y Combinator Continuity and DST Global, among others.

A crypto offering could give Brex a notable element of differentiation from competitors that have also been growing at a staggering pace. Last month, Ramp received $115 million in funding at a $1.6 billion valuation. Another competitor, expense reporting startup for small businesses, Divvy, is in the process of being acquired by Bill.com, a cloud software-based platform for SMBs, for approximately $2.5 billion.

But crypto-native companies are already targeting this use case. BlockFi, Crypto.com and Gemini recently announced debit or credit cards with crypto rewards. Bakkt, a crypto venture of New York Stock Exchange-owner ICE, has been actively trying to advertise its all-in-one digital wallet, also supporting loyalty and rewards programs. In March, bitcoin rewards provider Lolli, whose notable partners include Nike, eBay and Sephora, raised a $5 million pre-Series funding from Alexis Ohanian and Serena Williams, among other notable investors. Though these products are retail consumer-oriented, the ever-innovating crypto companies may expand their offerings to businesses and find support among crypto-first clientele in the future.

But Dubugras believes Brexs position as not a purely crypto platform is going to attract enterprises. We support the needs of businesses across the board. We can serve as their primary cash management accountant, primary credit card or primary expense management software versus being a crypto-only provider.

Editors note: Previous version of the story names Coinbase as Brexs partner. Coinbase is not partnering with Brex on the offering. Clients can deposit rewards into crypto wallets like those offered by Coinbase.

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Brex Partners With TravelBank To Launch Bitcoin And Ether Rewards Program For Businesses - Forbes

An Australian computer scientist who claims he created bitcoin has launched a London high court lawsuit against 16 software developers in an effort to secure bitcoin worth around 4bn pounds (A$5.7bn) he says he owns.

In a case that was promptly labelled bogus by one defendant, Craig Wright is demanding that developers allow him to retrieve about 111,000 bitcoins held at two digital addresses that he does not have private keys for.

In his second London lawsuit in three weeks, Wright alleges he lost the encrypted keys when his home computer network was hacked in February 2020. Police are investigating.

Wright, who is bringing the case through his Seychelles-based Tulip Trading firm, concedes he is a controversial figure since alleging in 2016 that he wrote the bitcoin white paper which first outlined the technology behind the digital assets under the pseudonym Satoshi Nakamoto in 2008. The claim is hotly disputed.

The Australian, who lives in Britain with his wife and two of his three children, alleges in his latest lawsuit that developers have breached their duties to act in the best interests of the rightful owner of globally-traded assets.

Our client has always maintained that he created bitcoin to operate within existing laws and that in the event of loss or theft, where legitimate ownership can be proven, the developers have a duty to ensure recovery, said Paul Ferguson, a partner at law firm Ontier, which is representing Wright.

The case is being brought against the developers of four networks Bitcoin Satoshi Vision (BSV), Bitcoin Core (BTC), Bitcoin Cash (BCH) and Bitcoin Cash ABC (ABC) at addresses in continental Europe, the US, New Zealand, Australia and Japan, a court filing seen by Reuters showed.

One of the defendants, Peter Todd, said he and others were not involved in day-to-day network development, that Wright had not proven his ownership and that bitcoin should not be subject to arbitrary seizure.

As this very case shows, if we allow people to get coins seized and reassigned by court order, that puts your coins at risk of being stolen by abuses of those fallible processes, he said by email. Other defendants were not immediately available.

Bitcoin, which surged to hit a record of almost $65,000 in April, was trading at $56,749 on Wednesday afternoon.

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Australian man Craig Wright who says he created bitcoin takes 4bn claim to London high court - The Guardian

The U.S. Securities and Exchange Commission has a blunt message for investors in mutual funds that have holdings in Bitcoin futures: Beware of the risks.

While the derivatives have become increasingly popular, theyre still based on an asset thats highly speculative and volatile, and which trades in a lightly regulated market, the SECs division of investment management said Tuesday in a statement. Investors should weigh their appetite for risk and examine the funds disclosures, the agency said.

Investor protection and assessing the ongoing compliance of these funds is a top priority for the staff, the SEC said.

The warning comes just weeks after Gary Gensler, who taught classes on digital assets at the Massachusetts Institute of Technology, took over as SEC chairman. His early comments have thrown cold water on speculation that the SEC would quickly approve a Bitcoin exchange-traded fund. Last week, he told lawmakers that the cryptocurrency market could benefit from greater investor protection.

Read more: Bitcoin ETF Approval Odds Grow Longer After Gensler Critique

On Tuesday, the SEC said it would consider whether, in light of the experience of mutual funds investing in the Bitcoin futures market, the Bitcoin futures market could accommodate ETFs. The agency also said staff would:

Before it's here, it's on the Bloomberg Terminal.

Originally posted here:
SEC Warns of Bitcoin Futures Risks in Mutual Fund Investments - Bloomberg

For years the Bitcoin industry has been hoping the U.S. Securities and Exchange Commissionwould approve an ETF, which would theoretically allow an easy onramp for a lot more money to flow into the coin. So far though, applicants have been disappointed, despite approvals for similar products in other countries. But with institutional adoption on the rise, could 2021 finally be the year? Bloomberg IntelligenceETF Analyst Eric Balchunas says hes more optimistic than hes ever been. In this Q&A he explains why, and breaks down the landscape.

Joe Weisenthal:So Eric. A Bitcoin ETF is something the community has hoped to see for a long time now. And nobody knows ETFs as well as you. It really feels like the entire industry has been monitoring your work for clues or signs about whether its coming. How has that focus been from your perspective?

Eric Balchunas:It is one of those things that no one really knows, unless you are inside the SEC. But we have been pretty obsessed with this story since the Winklevoss Twins filed for the first one in 2013, so we have been trying to give our takes in real-time and track every little stage. And I will say it does feel like theres been a shift this year. We are more optimistic of an approval than weve ever been.

Joe:Whats changed your thinking? Why does it feel like 2021 is different than, say, 2017 or 2018, the last time there was a lot of hype?

Eric:First is the institutional adoption of crypto is much greater, the money centers are getting involved. Second, you have the intense growth of defaultcrypto products like GBTC which are not ideal for retail investors and the SEC knows this. Finally, theres been a torrent of launches up in Canada which have worked fine and seen a lot of action. Canada has a history of being like six months to a year ahead of the U.S. Last but not least, [Gary] Gensler coming in as chair. He gets crypto, taught classes at MIT on it, albeit he does have some concerns.

Joe:Speaking of Canada, youve posted a lot about what a smashing success those initial launches have been. Can you give some perspective on how much demand there is for those products?

Eric:Some of the stats are insane. First off, Canada crypto ETFs already have $2.3 billion in assets in threemonths. And Canadas market is 1/27th the size of the U.S.so that would be like $60 billionhere! Also, they have taken over the most traded leaderboard up in Canada. There are typically three to four crypto ETFs in the Top 20. Finally, the Ether ETFs that were launched recently have actually seen volume grow (rare for new ETF launch) indicating wide interest. All that action and they have very moderate premiums to NAV too (which is the problem with the OTC trusts like GBTC)

Joe: In the U.S. obviously theres been a bunch of other stuff for regulators to think about. We had the whole GameStop/Robinhood story. There's concern over SPACs and the accounting treatment of them. The talk about Bitcoin's energy impact is growing. And now we have this ransomware attack on the gasoline pipeline. Could regulators decide there's just too much other stuff to deal with right now?

Eric: Totally. Bigger fish to fry for an incoming chair is a huge variable and could delay approval. Gensler also noted that: We dont have a Federal regime overseeing the crypto exchanges and seems to not be totally comfortable with the exchanges yet. All that said, I do think time is now of the essence on this issue due to the increased flows going to these defaultETFs like GBTC and stocks that put Bitcoin on-balance sheet. The more they wait the more it will get messy when they approve given all the cash in these other vehicles. Also the longer they delay the more they will effectively play kingmaker as whoever is out first is instantly wealthy. So I think there's a risk of waiting too long and I think they understand that.

Joe: Interesting. So you mentioned that Gensler gets crypto. What does that mean exactly? Whats his backstory with it for people who are unfamiliar?

Eric: He taught a Blockchain Technologies & Cryptocurrencies class at MIT. We pored over the transcript of the class and he knows his stuff, arguably more than most Bitcoin investors. He even went Full Crypto a few times, calling fiat a social constructbut on the flipside, he was also pretty clear that he thought the crypto markets were ripe with scams and frauds.The transcript was a good insight into his brain on this topic. Here's a link in case anyone interested.

Joe: So presumably theres a huge pot of money to be made for whichever applicant becomes the GLD of Bitcoin (if that analogy makes sense). There are numerous players who want in. Presuming the SEC is eventually open to approving a Bitcoin ETF, how will it judge the various contenders? Or will they all be allowed to go, if and when, the green light is turned on?

Eric: This is the most fascinating part of the story right now. Because whoever gets out first is set for life. In Canada, one issuer had just a one-day head start and ended up getting almost all the volume going forward. We think what they will do is let two to three launch on day one likely an established ETF issuer like VanEck or WisdomTree or maybe Fidelity versus say a newbie. Then theyll line the rest of up like airplanes on a runway and let them launch over the next few weeks. Again, thats just our guess. That is what would make sense for us rather than letting one lucky issuer go first or on letting more than 10 launch on same day, which could create chaos.

Joe: But are there differences in the applications that the SEC would consider?Or are they all kind of the same?

Eric: There are some slight difference but largely they are all the same (which is to say like GLD but for Bitcoin) and the SEC will likely work with them ahead of time to iron out any deal breaker type differences or missing details. That said, VanEck filed for an Ether ETF too and we think that would likely go after the Bitcoin ones.

Joe: Got it. Just two more questions, and then Ill let you go. This isnt an ETF question per se, but you mentioned crypto exchange regulation as something Gensler expressed some dissatisfaction about. It still feels like that space operates in a looser manner than the traditional finance realm with, say, their promotion of specific coins in their advertising. Do you have any sense what the SEC might like to see on the exchange front?

Eric: Weve seen quotes from Gensler recently that he sees some of these tokens and cryptocurrencies as securities and hes interested in cleaning that up since securities fall under the SECs purview. He will likely also look for any fraud or potential for fraud. In terms of the promotion stuff we havent seenanything directly on that but the way the SEC responds to Robinhood could give us some insight into that aspect. All that said, Canada and Europe crypto ETPs are all using these same exchanges for years and there havent been any major issues and premiums/discounts to NAV have been minimal, indicating market makers are able to adequately arbitrage the ETFs and the underlying cryptos. Weve also spoken to market makers and they aren't that worried about it. But Genslers view is the one that matters.

Joe: Got it. Appreciate your taking the time here. Last question, not crypto-related per se, but what else in the ETF world should people be watching right now?

Eric: One thing that is new and developing and is likely going to be bigger than many think is active mutual funds converting into ETFs. We saw the first one ever happen a month ago and therevebeen a couple since and some bigger fish like DFA have some in the works. This will be fascinating to watch since mutual funds have about $18 trillion in assets in the U.S. Some of that will convert. Some wont. How much of it does is the question though.

Joe: Awesome! This was great. Really appreciate your taking the time

For more on this topic, you can check out our Odd Lots episode Inside the Multi-Year Quest to Create a Bitcoin ETF with Greg King, CEO of Rex Shares,from 2018. You can also follow Eric Balchunas on Twitter here.

Before it's here, it's on the Bloomberg Terminal.

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Will We Have a Bitcoin ETF This Year - Bloomberg

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Ill make this one quick, because its pretty straightforward.

If bitcoin doesnt rally if and when stocks are under pressure due to inflationary worries (i.e., now), it will likely set off an excruciating downtrend as king cryptos mythos unravels and people come to terms with what its likely been about all along: selling to the next guy.

A lot of people have infamously written bitcoin is dead articles. Not me. Ive written about why most people don't need bitcoin, about why the evidence is overwhelming that bitcoin trades as a speculative asset, but Ive always left room for the possibility of the seemingly impossible: that bitcoin will one day make a miraculous metamorphosis from a get-rich-quick trade to an inflationary hedge.

Evidence such a day will come is paltry, and the clock is ticking.

Investors were given a heads-up on Monday that nothings changed in bitcoins relationship with the stock market. The most bullish Ive ever been on bitcoin was in October last year when bitcoin rose as the Nasdaq pulled back. When it broke through $20,000, I outlined why it was a clearly bullish technical event. Ive always maintained the most positive thing for bitcoin would be if it rallies during a stock selloff. Apart from that brief moment last year, its never happened, and right now is when it counts.

Bitcoins been billed by its biggest proponents as a store of value in a hyperinflationary environment produced by excessive stimulus from policymakers. Right now, investors biggest concern is inflation produced by excessive stimulus form policymakers, and growth stocks are paying the price for it. If an inflation-driven selloff gets more serious and bitcoin drops too, its faade is going to start eroding quickly.

Bitcoin has utility in its role as a censorship-resistant means of money transfer, but many cryptos can accomplish this goal. It's the gold story that's been the secret to its success. "Digital gold" is the easiest catchphrase to remember, repeat, and fits with the financial narrative dujour of the money-printing generation. But most importantly, its been the most successful story because its been impossible to disprove up until now.

This is the moment everyones been waiting for. The Fed literally doesnt give a damn about inflation, policymakers are dumping everything into the economy they can possibly come up with, and the most reliable stocks of the bull market are breaking down. We just had the biggest bond selloff in history a few months ago and the dollar is in a month-long freefall. Bitcoiners have never been more convinced that destiny is manifest, and many believe crypto canon calls for an extension of gains after last years block halving. Gold is finally rallying, but bitcoins hit a wall.

If it sells off here, the entire story falls apart.

I think it will. For one, as I showed mathematically last month, there is zero evidence that bitcoin is evolving into anything like gold. There's also the technical element. Bitcoin has never plateaued after a new high like this. Crypto bulls believe it implies a basing pattern before a big run, similar to late 2017; their expectations are extraordinarily high. I think the more compelling case is that the chart reflects a first-of-its kind peak for bitcoin that reflects a lack of new buyers as opposed to an intolerably fast extension of price. For bitcoin, a slow rollover is much worse than an explosive blow-off peak, because it could mean that bitcoin finally found an equilibrium of buyers and sellers. Without any utility, that would mark the limit of its reach.

Without the digital gold story, I dont see how bitcoin sustains any price level from recent history. If it doesnt come to fruition ASAP, the subsequent collapse will bring a crypto winter that'll bury the entire asset class for a very long time.

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If Bitcoin Doesnt Rally Soon The Selloff Will Be Devastating - Forbes

Bitcoin SV: The Original Bitcoin

By Makkie Maclang, CoinGeek

Bitcoin will forever be remembered throughout history as the pioneer in digital currencies. Before Ethereum, Litecoin, Binance Coin, Cardano and Tether came into existence, there was Bitcoin. It has been more than a decade since the Bitcoin white paper, entitled Bitcoin: A Peer-to-Peer Electronic Cash System, was published on Oct. 31, 2008 under the pseudonym Satoshi Nakamoto. However, it only reached mass consciousness in 2017 when its value skyrocketed to $20,000.

Bitcoin is a triadic term that denotes a digital coin, a set-in-stone protocol and a public blockchain network. While Bitcoin has since become a household name and blockchain has been gaining ground in the past few years as a viable technology for businesses in various industries, such as healthcare, gaming, social media, marketing, supply chain and real estate, not many people know about their true history and real value.

Bitcoin History

The first ever person-to-person Bitcoin transaction was completed on Jan. 12, 2009 when Nakamoto successfully sent 10 bitcoins to cryptographer and developer Hal Finney. It was a year after, on May 22, 2010, that the first documented Bitcoin transaction was created when early bitcoin mining aficionado Laszlo Hanyecz bought two pizza pies for 10,000 bitcoins - worth about $25 total at that time. Now, 10,000 bitcoins would amount to almost $600 million.

From its humble beginnings, Bitcoins value and popularity steadily started to rise; and people became increasingly curious as to who Nakamoto was as his identity remained a mystery. Public interest was so high that on Mar. 6, 2014, Newsweek published the lengthy investigative article The Face Behind Bitcoin that identified Dorian Nakamoto, a Japanese-American engineer living in California, as the creator of the global phenomenon.

The next day, Satoshi Nakamotos account, which had been dormant since 2009, on the P2P Foundation website suddenly became active. Nakamoto simply replied, I am not Dorian Nakamoto, in one of his old posts dated Feb. 11, 2009. In 2015, a year full of upheaval in bitcoin, Wired and Gizmodo published leaked documents and headline stories claiming the largely unknown Dr. Craig S. Wright was Satoshi Nakamoto - effectively doxing him and threatening the well-being of his business, friends and family. This prompted a media frenzy which culminated in the removal of Gavin Andresen from the helm of Bitcoin Core, and caused a fury of problems for Wright who very clearly did not want to be a public figure at the time.

Story continues

On May 2, 2016, the confusion came to an end when Wright, Chief Scientist of UK-based Bitcoin research company nChain, addressed the world and admitted on BBC News that he was indeed Satoshi Nakamoto.

Over the years, there has been an underlying dispute within the Bitcoin community over the scalability of its blockchain. The conflict reached its peak in 2017. Termed as the Bitcoin scaling war, Bitcoin split into Bitcoin Core (BTC) and Bitcoin Cash (BCH), with advocates of the former labeled as small blockers and the latter big blockers. These labels denote those who did not believe in scaling and opted to keep Bitcoins 1MB block size cap, and those who believed that increasing it is the only answer for Bitcoin to move forward.

For Bitcoin beginners, a blockchain is a distributed ledger that records validated transactions on data blocks, which are then linked together to form a chain. A master copy of the data, updated in near real time, is stored on all nodes (or miners) on the network. All miners also need to agree if ever a change is going to be made, making data practically impossible to be manipulated. Hence, data is distributed and the network is decentralized. In order to scale, the block size limit needs to be raised, enabling each block to contain more data and transactions.

At the height of the scaling war in 2017, Wright could not take what was happening to his creation anymore. With Bitcoin nurturing a reputation for being a network focused exclusively on large, slow and expensive (but presumably unstoppable) transactions, the only viable use cases for the network were becoming evasive savings and large-scale criminal commerce. Against this backdrop, Wright made a fiery, surprise speech at the Arnhem conference in July 2017.

Satoshi Nakamoto didnt like the crime culture of Bitcoin; however, it was the predominant cultural narrative. Hey, we need a lot of distributed nodes, we need to make sure bitcoin cant be censored, and to make sure we cant censor it, we need to make it slow and small enough for people to run their own nodes and create their notion of perfect security, CoinGeek Chief Historian Kurt Wuckert Jr. said.From the moment Wright made his surprise appearance in Arnhem, he steadily returned to the Bitcoin community and became active in order to fix Bitcoin and get it back on track - focusing on the technology, the economics and the culture that makes Bitcoin valuable. In 2018, Bitcoin Cash (BCH) was again embroiled in conflict over the scaling issue. While BCH had scaled its block size limit set to 32MB, many believed that that was enough. Again, some bitcoiners fought against the need for continuing to scale, while others wanted to pursue Wrights vision of infinite scalability. In late 2018, BCH again split and Bitcoin SV (BSV) emerged from the battle.

What is Bitcoin SV (BSV)?

With SV standing for Satoshi Vision, it is clear that BSV is all about restoring Bitcoin to what Wright originally intended it to be. Since its inception, BSV has been dubbed as the original Bitcoin. About a year after the split, the Genesis Upgrade was released on Feb. 4, 2020, which successfully restored Bitcoins original, set-in-stone protocol, as close as possible to how it was designed in the white paper. Aside from scalability, Bitcoins changing protocol and the nature of its governance has been a major issue during the scaling wars. A protocol that is often changed means applications built upon it need to be adjusted as well. Applications would need to stop running and developers would require time and money in order to fully adapt to the new rules. Furthermore, time-locked contracts or escrowed bitcoins were impossible to implement with the shifting sands of the protocol wars - breaking many commercial use cases. With a fixed protocol, developers can now build a variety of applications and platforms on the Bitcoin SV blockchain without having to worry about changes, just like how the Internet protocol created a trustworthy online economy.

What sets BSV apart from other digital currencies?

Unlike other digital currencies where the coin is the product and communities focus on absorbing value for holders of the coin during frothy bull market cycles, BSV is built to allow the external creation of value based on four pillars: a stable protocol, a massively scalable blockchain, security beyond sufficiency and safe instant transactions.

With the original Bitcoin protocol set in stone, BSV provides a rock-solid foundation upon which developers can build whatever application or software that suits their needs. The Genesis Upgrade also unlocked the capability of BSV for unbounded scalability and use of the BSV for monetized, general-purpose computation (like Ethereum but without limits!)

Since then, the BSV network has continued to scale massively; and this is evidenced by its test network recording 16,415,525 transactions in a single block the size of 3.15GB at an average transaction fee of 0.00000197 BSV on Feb. 3, 2021. This proves that micropayments and financial services can be rendered at a very low cost compared to Western Union or PayPal.

Aside from implementing the first ever, fully security-audited Bitcoin node software, BSVs security is also the only variant of bitcoin that can benefit from the economic security inherent to bitcoin as a complete system without arbitrary limits and compounding dependencies. BSV is public by nature and abides by the rule of law.

Per the Bitcoin White Paper, all transactions and changes thereof are broadcasted to all nodes on the network. Their active participation in mining and governance make it impossible for an attacker to successfully conduct a 51% attack, which is the name of an act whereby malicious actors gain control of the blockchain; disrupting and reversing transactions for the sake of theft or vandalism of the blockchain ledger. The public blockchain also prevents criminal activities as evidence of any illegal dealing is publicly accessible. All of these attributes, which other blockchain networks seek to remove from their competing protocols, make instant transactions on BSV uniquely safe and reliable.

Enterprise Blockchain Solutions

The Genesis Upgrade is just the first step towards BSVs grand vision of making it an enterprise blockchain that can be globally adopted by businesses. At present, there are more than 400 projects and ventures being built on the BSV blockchain.

US-based EHR Data, Veridat and VXpass are each developing their own healthcare data management platforms; Norway-based UNISOTs Seafoodchain is already providing solutions to the seafood supply chain; Scotland-based Recycle SV has created an app that streamlines and incentivizes the recycling process; and Australian-based firm LAYER2 Technologies has already successfully tested out voting platform B-Vote to accommodate the countrys entire population.

These are just a small number of projects on the BSV blockchain that spans many countries and industries, and blockchain conferences are continuously being held to foster global awareness.

The Original Bitcoin

Bitcoin has been misused throughout the years and has deviated from its creators original vision. And although more than a decade late, Wright has finally stepped up to rightfully claim what was his and steer the project back toward the creation of more economic and personal freedom. He is doing this by giving the world the tools to do business more efficiently and by giving people ownership of their data with increased privacy and utility - only possible with the power of Bitcoin SV.

See more from Benzinga

2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Bitcoin SV: The Original Bitcoin - Yahoo Finance

Is there a bitcoin supply shortage on exchanges?

Yes and no.

The bitcoin balance on exchanges has received a lot of attention during this bull run because the change in these balances sticks out. In previous bull runs, what can be observed is that, often, with bitcoins price increasing, the bitcoin balance on exchanges has increased. This can be seen in Figure 1 where Glassnode has compiled the addresses of spot exchanges holding bitcoin and aggregated them.

Even with bitcoins price going sideways or down, historically, the trend has been upward. This trend has reversed during this bull run, and since March 2020, the bitcoin balance on exchanges has been in a declining trend. This trend has been going on for over a year now. Compared to that in, or right before, the last bull run, the fall in exchange balance from July to December 2016 lasted only six months, before taking off in 2017 with bitcoins price taking off as well. If the underlying dynamics have not changed, and the exchange balance drop in 2016 and what followed in 2017 is an indication, the prolonged decline in exchange balances this time might be a set up for a major bull run. This is not the topic of this article, but that trend is majorly driven by outflows from Coinbase and thus highly likely by institutional and large investors. This indicates that bitcoins might not flow back to exchanges in bigger amounts any time soon before hitting this cycles top. So the patterns might not repeat as in 2016/2017, and bitcoin could hit a new all-time high with the bitcoin balance on exchanges declining.

Figure 1. Bitcoin: Balance on Exchanges (Stacked) August 17, 2011April 19, 2021

Opposed to Coinbase, for example, Binance has seen strong inflows of bitcoin more recently. This is most likely retail depositing bitcoin on Binance to trade altcoins.

The general bitcoin supply drop on exchanges has led many people in the community (myself included) to talk about a supply shortage or even supply squeeze of bitcoin that will lead bitcoins price to inevitably shoot up at some point, when supply dries up. While it is true that bitcoins supply is dropping, once you look at the supply held on exchanges in USD terms the picture looks a bit different. In Figure 2, both the bitcoin balance on exchanges and the bitcoin balance on exchanges in terms of USD is shown from 2017 onward. From the first glance at the graph, it appears that, in USD terms, we cant really talk about a supply shortage, let alone supply squeeze on exchanges. With bitoins price taking off in 2020, the supply on exchanges in USD has also been shooting up.

Figure 2. Bitcoin balance on exchanges in BTC and in USD January 1, 2017April 19, 2021. BTC Balance on exchanges (Source: Glassnode), BTC price in USD (Source: Investing.com)

Though the supply increase in USD terms this halving cycle looks impressive, particularly compared to that in 2017, it is also interesting to look at the changes in relative terms. In Table 1, you can see the minimum and maximum exchange balance during halving cycle 1 (November 28, 2012July 8, 2016), halving cycle 2 (July 9, 2016May 10, 2020) and the present halving cycle that started on May 11, 2020.

I have calculated how much the supply has increased from the minimum to the maximum 344 days into each halving cycle; as of the time of this writing, we are now 344 days into the third halving (April 19, 2020). You will notice that, in cycle 1, the increase has been quite massive compared to the other ones. As I show in my article, Halving Cycles and the Bitcoin Price, cycle 1 has been rather exceptional in terms of price performance, so that number does not seem that relevant as a guide.

The changes in cycle 2 are more relevant, however. In the present cycle (up until the current date, April 19, 2020), the supply in USD went up roughly six times, while in cycle 2, it increased by nearly eight times. This seems to be a substantial gap, as the gap not only is influenced by the bitcoin balance on exchanges but also by the increase in prices. While the drop in bitcoin balances on exchanges is increasing that gap, an increase in bitcoins price is narrowing it. In the present cycle, bitcoin is outperforming cycle 2 price-wise. Now 344 days into this cycle, bitcoins price increased by nearly 550%, while in cycle 2 it only increased by roughly 307% over the same time span. This means that the gap would have been much bigger with a similar price performance as in cycle 2.

Table 1. Exchange Supply Calculations in USD terms for the halving cycles 344 days into the cycle. BTC Balance on exchanges (Source: Glassnode), BTC price in USD (Source: Investing.com)

To account for that, I have calculated the exchange balance gap for this cycle by adjusting for cycle 2 prices in Table 2. The minimum balance in USD terms on exchanges coincides with day one of this halving cycle. At that time, there were roughly 2,888,135 bitcoin on spot exchanges. This amount of bitcoin is then multiplied by the price of bitcoin at day one during cycle 2. This gives us an idea of how much the minimum balance on exchanges would have been in terms of USD at cycle 2 prices. I have done the same for the maximum balance on exchanges. The maximum balance on exchanges in terms of USD this cycle has been on day 338 with roughly 2,395,780 bitcoin, which is substantially lower than on day one. I have now multiplied this amount of bitcoin with the price of bitcoin 338 days into cycle 2. With that, I have minimum and maximum numbers that are adjusted for cycle 2s prices. These allow me to calculate a hypothetical supply change and to calculate the supply gap between both cycles. Adjusted for cycle 2s prices, the supply on exchanges in USD terms has only increased roughly 3.8 times versus 6.1 times without adjustments. This is a large difference. Compared to the nearly eight times increase in cycle 2 from Table 1, we can really begin to speak about a bitcoin exchange balance supply shortage here.

Table 2. Present Cycle Statistics Adjusted for Cycle 2 Prices. BTC Balance on exchanges (Source: Glassnode), BTC price in USD (Source: Investing.com)

While other factors at play could explain the difference in price performance of the two cycles, the drop in bitcoin supply on spot exchanges is majorly driven by large-scale investors and Coinbase seems to play a key factor.

To conclude, purely looking at the bitcoin balance on exchanges, we can observe a clear trend in this cycle where the supply keeps falling. On the other hand, looking at bitcoins supply in USD terms, the trend is upward, driven by bitcoins price performance. This price performance is, of course, not externally driven and influenced by the supply on exchanges. As I have shown, the gap in USD terms is already substantial without adjusting for prices and, after adjusting for cycle 2 prices, the supply gap in USD terms becomes very large (an increase of nearly eight times in cycle 2 versus an increase of less than four times this cycle). So, once we look at relative terms between the present cycle and cycle 2, there also seems to be a supply shortage in USD terms and not only in terms of bitcoin. Following this, the bitcoin balance on exchanges is an essential metric during this cycle, which warrants a closer look to see where bitcoin is headed next and, as explained earlier, could be a potential setup for a major bull run.

This is a guest post by Jan Wuestenfeld. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.

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Is There A Bitcoin Supply Shortage? - Bitcoin Magazine

Bitcoin may be struggling to break back above $60,000, but Morgan Creek Capital Management's Mark Yusko is aiming even higher.

The investment management firm's founder and chief investment officer predicts the cryptocurrency could reach $250,000 within five years. He says the key is it's so much more than just a token of value something he believes many investors overlook and underestimate.

"It's just about network adoption and increased usage," Yusko told CNBC's "Trading Nation" on Friday. "This is a network and networks grow in an exponential way. This is the fastest network in history to a trillion dollars of value, right on the heels of the FAANGS that took, you know, 15 to 20 years depending on which one you look at."

Yusko bases his $250k target on a gold equivalence. If gold's monetary value is $4 trillion, then digital gold should move up to that total a sum that puts the price at a quarter of a $1 million per coin.

"What people miss is this is a technological evolution of computing power that isn't going away," he said. "It is a powerful computing network that is going to become the base layer protocol for the Internet of value."

It's not just bitcoin that has rallied this year. Litecoin and Ethereum are both up triple digits, while 'meme' crypto Dogecoin has gained more than 13,000%.

Bitcoin is still the gold standard in the crypto world, though, says Yusko. He likens it to the way in which the internet functions. Bitcoin is the base layer protocol like TCP/IP, the foundation that allows computers to connect and communicate, while a crypto like Ethereum is akin to 'www dot', the "toolkit" to build upon that foundation.

"So, yes, there's room for a couple of protocols to survive, but there are 1000s of coins and Doge is in that category that really are useless, they're just utility tokens that have no underlying value or use case and they'll eventually disappear," said Yusko.

Bitcoin is up 98% in 2021. It has struggled in the past month, though, rising little more than 2%.

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This bitcoin misconception could be what takes it to $250,000, according to Morgan Creeks Yusko - CNBC