Category Archives: Cryptocurrency

Jump to:A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world.

A Bitcoin can be divided out to eight decimal places, so you can send someone 0.00000001 Bitcoin. This smallest fraction of a Bitcoin the penny of the Bitcoin world is referred to as a Satoshi, named after the pseudonymous creator of Bitcoin.

Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved. Unlike traditional payment networks such as Visa, the Bitcoin network is not run by a single company or person. The system is run by a decentralized network of computers around the world that keep track of all Bitcoin transactions, similar to the way Wikipedia is maintained by a decentralized network of writers and editors.

Bitcoin was introduced in 2008 by a creator who goes by the name Satoshi Nakamoto, who communicated with the rest of the world only by email and social messaging. While several people have been identified as possibly being Satoshi, the identity of the real Satoshi has not been confirmed.

Satoshi created the original rules of the Bitcoin network and then shared the software with the rest of the world in 2009. The inventor largely disappeared from the public two years later. Once Satoshi had released the software, anyone could download and use it. This means Satoshi has no more control over the network now than anyone else.

The computers involved in Bitcoin mining are in a sort of computational race to process new transactions coming onto the network, solving complex math problems that require quintillions of numerical guesses per second. The winner of that race generally the person with the fastest computers gets a chunk of new Bitcoins. Since miners can earn rewards but are independent, this process is meant to incentivize participation and maintenance.

There is generally a new winner about every 10 minutes, and this will continue until there are 21 million Bitcoins in the world. At that point, no new Bitcoins will be created. The network is expected to reach that cap in 2140.

Every Bitcoin in existence was created through this method and initially given to a computer helping to maintain the records. In Bitcoins early years, a crypto enthusiast could mine coins by running software on a laptop. But as the digital assets have become more popular, the amount of power necessary to win the race and generate Bitcoins has soared. A single Bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, or enough energy to sustain the average U.S. household for 73 days, according to some estimates.

The original blockchain was the database on which all Bitcoin transactions were stored. It was named blockchain because the transactions coming onto the network were grouped into blocks of data and then chained together using sophisticated math.

After the Bitcoin blockchain had operated for a number of years, successfully storing every Bitcoin transaction and surviving numerous attacks from hackers, many programmers and entrepreneurs wondered if its design could be replicated to create other kinds of secure ledgers unrelated to Bitcoin.

Companies and governments that dont rely on currency have since begun using blockchain technology to store their data. Banks are building blockchains that can track payments between accounts, while governments are experimenting with using blockchains to store property records and votes.

Founded in San Francisco in 2012, Coinbase allows people and companies to buy and sell various digital currencies, including Bitcoin. In April 2021, Coinbase became the first major cryptocurrency company to list its shares on a U.S. stock exchange.

Coinbase set itself apart from other early blockchain businesses by becoming one of the first to get a new special license, called the BitLicense, to run a virtual currency company in New York. In addition to providing the brokerage service for small investors, Coinbase also runs an exchange called GDAX, which is tailored to larger investors.

The most well-known cryptocurrencies are Ether, Dogecoin and Tether.

Ether is the virtual currency used on the global computing network Ethereum, which operates according to rules defined by Ethereum software. Those rules allow the Ethereum network to be programmed to complete certain types of computing tasks, with every computer on the network completing the tasks simultaneously to ensure they are done correctly. Generally, the tasks involve money.

The creator of Ethereum, Vitalik Buterin, has likened the network to a global smartphone that can be programmed to operate according to the apps built on top of it. The apps are called Dapps because they are run by a decentralized network of computers.

Mr. Buterin was inspired by Bitcoins success to create Ethereum. But he set out to build something that could do more than Bitcoin: He wanted to build a system that would make it possible to program more complex financial transactions. With Ethereum, two companies can conduct transactions, such as settling a stock option on a shared computer, that allows them both to check the records.

Dogecoin was created as a parody of cryptocurrency in 2013 by two friends who had met in a chat room. Named after a meme of an expressive dog, Dogecoin was meant to mock the self-serious cryptocurrencies of the time, many of which never took off. The joke did, though, and it spawned a community of enthusiasts who have kept it alive for years.

Tether is the largest stablecoin, a type of cryptocurrency that is typically pegged to an existing government-backed currency. It is roughly half-invested in a type of short-term corporate debt called commercial paper.

DeFi is an umbrella term for the part of the crypto universe that is geared toward building a new, internet-native financial system, using blockchains to replace traditional intermediaries like banks and trust mechanisms. It has allowed crypto businesses to move into more traditional banking territory, offering services such as lending and borrowing.

Investors can earn interest on their holdings of digital currencies often a lot more than they could on cash deposits in a bank or borrow with crypto as collateral to back a loan. Crypto loans generally involve no credit checks since transactions are backed by digital assets.

To send or receive money in the traditional financial system, you need intermediaries like banks or stock exchanges. In DeFi, those middlemen are replaced by software. As people trade directly with one another, blockchain-based smart contracts do the work of making markets, settling trades and ensuring that the entire process is fair and trustworthy.

An NFT is basically a way to claim ownership of a digital file: You can think of it as a certificate of authenticity you might get if you buy an expensive sculpture. The sculpture can be copied, forged or even stolen, but because you have the certificate of authenticity, you can theoretically prove that you are the owner of the original.

NFTs make digital artworks unique and, therefore, sellable. Artists, musicians, influencers and sports franchises can use them to monetize digital goods that were previously cheap or free. The technology also responds to the art worlds need for authentication and provenance in an increasingly digital world, permanently linking a digital file to its creator.

The technology for NFTs has been around since the mid-2010s but became mainstream in late 2017 with CryptoKitties, a site that allowed people to buy and breed limited-edition digital cats with cryptocurrency. Since then, investors have begun buying and trading NFTs, often for eye-popping prices.

To promise holders that every $1 they put in will remain worth $1, stablecoin issuers hold a bundle of assets in reserve, usually short-term securities such as cash, government debt or commercial paper.

Stablecoins are useful because they help lock in value at the time of transaction. This is important since cryptocurrencies are volatile and prone to price fluctuations. They form a bridge between traditional money and crypto, and are exploding in popularity as a practical and cheap way to make transactions in cryptocurrency.

But many stablecoins are built more like slightly risky investments than like the dollars-and-cents cash they claim to be. And, so far, they are slipping through regulatory cracks.

Regulators are concerned about stablecoins because they have exploded in popularity very quickly, and because many are backed by traditional reserves, they could and trigger a kind of bank run that would potentially pose risks in the wider financial system. There is also no consistent oversight of issuers or a standard for reserves, and as such different stablecoin issuers have different types of reserve backing, including more or less cash, treasuries, commercial paper, etc.

There are a few kinds of stablecoins, including these digital assets backed by traditional reserves, others are collateralized by crypto and, finally, algorithmic stablecoins. The risk in algorithmic stablecoins which depend on a mathematical formula devised by issuers and investor interest to maintain stability was demonstrated in May when Terra/Luna crashed after the assumptions the algorithm was premised on did not pan out in the market and investors fled.

At its core, web3 aims to replace centralized corporate platforms with open protocols and decentralized, community-run networks. The term has been around for years, but it has become trendy in the past year or so. Packy McCormick, an investor who helped popularize web3, has defined it as the internet owned by the builders and users, orchestrated with tokens.

Web3 is seen as the next evolution of web1 (the era in the 1990s and early 2000s during which the internet was made up of blogs, message boards and early portals like AOL and CompuServe) and web2 (a phase starting around 2005 or so, characterized by social media behemoths like Facebook, Twitter and YouTube).

Proponents envision that web3 will take many forms, including decentralized social networks, play-to-earn video games that reward players with crypto tokens, and NFT platforms that allow people to buy and sell pieces of digital culture. The more idealistic ones say web3 will transform the internet as we know it, upending traditional gatekeepers and ushering in a new, middleman-free digital economy.

But some critics believe that web3 is little more than a rebranding effort for crypto, with the aim of shedding cryptos reputation as a place for rogues and rebels and convincing people that blockchains are the next phase of computing. Others believe its a dystopian vision of a pay-to-play internet in which every activity and social interaction becomes a financial instrument to be bought and sold.

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Cryptocurrency and Bitcoin: Here's What to Know - The New York Times

The values of cryptocurrencies like bitcoin and ethereum have plunged in recent months. And with the crash, some celebrities who have advertised cryptocurrencies have come under fire for encouraging people to invest in them.

Emily Stewart, senior correspondent at Vox, wrote about the relationship between celebrities and financial products and services. She spoke with Marketplace host Kai Ryssdal about the endorsement relationship. The following is an edited transcript of their conversation.

Kai Ryssdal: Celebrities endorse stuff all the time. Why is that money endorsement relationship kind of different?

Emily Stewart: Well, I think its one thing if a celebrity tells you to buy a bag of chips, right? You dont like the chips, theyre gross, fine. But when its your money, its a little bit of a different story. Its obviously a little bit higher stakes than chips that you dont like.

Ryssdal: Can we talk then about specifically crypto, which is the thing that honestly, you know, back during the Super Bowl and Matt Damon and fortune favors the brave and all this. And now crypto is tanking and Im going, How do you feel now, Matt Damon? He probably isnt too worried about it, but the people who bought crypto because Matt Damon said fortune favors the brave are kind of out of luck.

Stewart: Right. I mean, I think it goes without saying, you know, not always a great idea to follow celebrities into any investment. Celebrities are rich, for reasons having nothing to do with their crypto investments. Whether that be Reese Witherspoon or Tom Brady or Larry David, I would venture to guess that these people have investment managers who probably tell them not to do a ton of crypto. But, you know, we really did see, I think, at the beginning of the year and late last year just a ton of celebrities really diving into crypto. And it really kind of mainstreamed crypto in a way that to me felt a little bit different. And I think a lot of people, you know, got really excited and kind of didnt realize that crypto has historically gone through these boom and bust cycles. And right now we are in a bit of a crypto winter, I guess.

Ryssdal: Does it work? I mean, does Tom Brady doing whatever that weird plug in ad thing was, I dont even remember, but does that make people buy crypto?

Stewart: I mean, its hard to say. You know, Morning Consult did a survey that found that about 20% of investors and 45% of crypto owners said that they would invest in cryptocurrency if famous people endorsed it. That was behind financial advisers and family members or business reporters. But thats not nobody. And I think kind of more broadly, like I said before, there is this mainstreaming of it. Like maybe I didnt see the Tom Brady ad or the Larry David ad and then buy bitcoin or whatever. But it does kind of put it more into the water stream in a way that maybe I start to think about it.

Ryssdal: So look, the first time I heard about that Matt Damon ad which, you know, many Super Bowl ads are released, you know, a day or two in advance, whatever but even if you didnt watch the Super Bowl, you saw that Matt Damon fortune favors the brave ad somewhere in your social feed. And thats got to be the multiplier.

Stewart: Right. Thats the thing, its kind of everywhere. And you see this stuff all the time, where just maybe, you know, its not a single commercial that youve saw, but just, it kind of gets in there. Even last year, I had friends who never in their lives asked me anything about investing suddenly saying, like, Hey, but I need to make some quick money. Do you think I should get into crypto? And the answer there is like absolutely not. And if youre asking me about it, it is way too late.

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Whats up with celebrities and cryptocurrency? - Marketplace

Well, one thing is for sure: Nothing is going to be the same in the crypto market after this year.

Perhaps the most jarring example of the bearish crypto market this year has been the complete collapse of Terra (LUNA).

As you can see, its not pretty. The coin lost 98% of its value or around $40 billion, in a matter of hours.

While this drop was shocking for a lot of crypto investors (and rightfully so), it just goes to show that value destruction can happen to even the biggest cryptos out there.

The sister token to TerraUSD (UST) an algorithmic stablecoin pegged the U.S. Dollar exposed a major fault within the crypto industry: under-collateralization.

However, my team and I dont see this as fault. Instead, we see it as an opportunity of what to look for and what to avoid.

I firmly believe cryptos and blockchain in general represent some of the most promising innovations of our time. But just like the internet before it, this shift wont happen overnight.

Long-term, I am extremely bullish on cryptocurrencies. But this cryptocurrency bubble must reach its natural conclusion the same way the dot-com boom of 2000 did with an enormous crash.

While this may be the beginnings of the big one for cryptocurrencies, this crash isnt the end. Its far from it.

This is the beginning of the Cryptocurrency Revolution. Its the end of bad cryptos just built on hype and the emergence of strong ones made with world-changing tech.

We have strong cause to believe this, including using Gartners Hype Cycle. It teaches us that new technologies go through five phases:

The stages are represented graphically in the following chart.

We believe cryptos are somewhere in the Peak of Inflated Expectations phase. Big-name cryptocurrencies will begin to fail, and the mainstream media will begin writing about these failures.

Over the coming months to years, well enter the Trough of Disillusionment. This is where thousands of cryptos will fail. And several hundred billion dollars of value will be wiped out.

Investors who are smart here will make millions.

After the Trough of Disillusionment comes the Slope of Entitlement, swiftly followed by the Plateau of Productivity.The big money is made in these phases.

There, the wheat is separated from the chaff, and true visionaries and innovators in a new technology emerge.

During the internet era, this durable growth phase started in 2003. In that time, companies like Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), Facebook and Alphabet (NASDAQ:GOOGL) used the internet to create second- and third-generation products and services that would go on to change the world.

Cryptos will follow the same path.

You could do a lot worse than buying Bitcoin at this price. But theres a much bigger opportunity at hand

Indeed, you could domuch betterin several of Bitcoins smaller cryptocurrency cousins.

In fact, there are a handful of very small coins that could soar more than 31 times that of Bitcoin.

Thats right. If youre poised to make $10,000 in BTC, you could make 31 times that $310,000 in its tiny cousins.

Or if youre poised to make $100,000 in BTC, you could make $3.1 million instead.

The million-dollar question is:What are the best cryptocurrencies to buy today that have enormous long-term upside potential?These are the ones that could help you achieve total financial freedom in a very short time.

I urge you to learn about this huge story. Ill teach you about the transformative technology of altcoins. And Ill share how to leverage this undercurrent of cryptocurrency innovation to set yourself up for life-changing returns.

Right now, theres a fuse being lit under the altcoin market. And itll set off one of the largest explosions of wealth in modern history. People who invest modest stakes in altcoins will make millions of dollars.

To truly realize the magnitude of this opportunity, you must understand that altcoins are different than how most perceive them.

These assets arent fantasy internet money. And many are about to skyrocket thousands of percent.

Theyre investments in one of the most valuable, most revolutionary technologies ever created.

And theyll generate a multi-trillion-dollar tsunami of wealth for their owners.

Remember; the underlying technology behind Bitcoin and altcoins isthe blockchain.

You can think of cryptocurrency and the blockchain like a virtual ledger.

But I prefer to say blockchain technologies are justreally, really, reallyvaluable software programs.

Now, if youve paid attention to the stock market over the past30 years,you should be ready to jump out of your chair and buy altcoins with both hands right now.

Thats because software programs are the oil of the 21st century. They are one of the greatest forces for wealth creation on Earth.

In the 20th century, the discovery of oil deposits around the world minted millionaires faster than anyone could count.

It was one of the fastest, biggest accumulations of wealth in history. People went from being broke to having more money than their grandkids could ever spendvirtually overnight.

When I say software programs are of the greatest forces for wealth creation, Im not talking about conventional wealth creation. That takes 30 years to save up $1 million.

Im talking about wealth creationon steroids, where Investors can make $30 million inone year. I know that sounds outlandish, but lets look at the amazing facts right in front of us.

Bill Gates became one of the worlds richest men because of software programs. Just think about the Microsoft (NASDAQ:MSFT) spreadsheet program we call Excel.

How much time did Excel save the human race a billion years, 10 billion years?

Excel is now the worlds most popular spreadsheet program. By allowing us to automate calculations and financial analysis, it has saved us incredible amounts of time. We no longer have to do single calculations by hand.

One person running Excel can do the work of a million accountants from days past.

Software programs have incredible power. And its spread across all industries.

Over the past 30 years, software programs have created an explosion of efficiency and human productivity. Great software can help you make smart business decisions, find travel deals, talk to loved ones, and get a cheap ride home.

It has massively improved our ability to communicate, share information, complete transactions, and gather and analyze data.

Think about health care, education, transportation, manufacturing, energy production, food production, retail, banking, you name it. Computer programs have allowed us to do it all much more efficiently.

Good software has saved us so much time, money and frustration. Its no wonder its kicked off one of the largest, fastest accumulations of wealth in human history.

In 1986, computer program leader Microsoft went public. Shares are up more than 1,185% since then.

Computer program leader Oracle (NYSE:ORCL) went public in 1986 as well. Oracle founder Larry Ellison is one of the worlds richest people, worth over $90 billion.

In 1998, Larry Page and Sergey Brin founded Google and created the worlds most valuable search engine program. Both are now worth more than $90 billion each. And their early backers made billions, as well.

Software programs have become the worlds ultimate wealth creators. Thats because we all place enormous value on their ability to save us time and headaches. And its also because theyve made us massively more productive.

Which brings me to my million-dollar point.

Blockchain technology is about to unleash an epic new wave of computer program wealth.

Real altcoins arent anything like fantasy internet money, as theyre portrayed in the press. Investments in the best of them are investments in the next generation of revolutionary software programs.

Big picture, blockchain allows for disintermediation across all industries. Its arguably the most disruptive technology since the internet. And at its core is its centralized and immutable ledger.

This ledger enables innately untrustworthy entities to create trustworthy systems, all without the need for any central authority.

Blockchain enables folks to remove the middleman from legacy systems and replace them with a collective ledger.

Now why would we do that? Because middlemen are often unnecessary profit-takers.

Further, theyre sometimes subject to corruption (see: the financial crisis of 08).

By removing and replacing them with an automated and incorruptible technology, we can make todays systems and processes cheaper, faster, and more trustworthy.

The applications here are theoretically infinite. One that Wall Street is currently drooling over is decentralized finance (DeFi). With cryptocurrency, we can create a new era offinancethat doesnt involve big banks as profit-taking intermediaries.

And DeFi is the future.

After all, its intended to disintermediate banks, like Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), and Wells Fargo (NYSE:WFC). Those are multi-hundred-billion-dollar companies. The disruption opportunity is huge.

But theres a much, much bigger opportunity in disintermediating technology titans like Alphabet and Amazon, who are trillion-dollar companies.

Thats why I love the idea of dApps, or decentralized applications.

DApps are software applications built on the blockchain. And this can be anything. Think a video media application like YouTube, a driver-rider app like Uber (NYSE:UBER), a music streaming app like Spotify (NYSE:SPOT).

These apps are coded on the blockchain. And therefore, theres no central authority that runs and profits from the app, either via subscription sales or digital ads. By removing that central authority, dApps create a new generation of truly free software applications.

Oftentimes, these dApps have underlying cryptocurrencies. Theyre used as a form of in-app currency or incentive token for developers and blockchain participants.

The appreciating value for these cryptos represents the economic value of the dApp. Instead of developers profiting from digital ad sales, they make money by owning the dApps cryptocurrency. And that rises in value as more folks use the platform.

I firmly believe that dApps will disrupt everything. The future YouTubes, Ubers and Spotifys will be dApps. In fact, most, if not all, apps in the future will be dApps.

During the internet craze of the late 90s and early aughts, the companies that succeeded did something very simple.

They didnt reinvent the wheel or create brand-new industries.

They just digitized what was already workingin the physical world.

Malls were working. So,Amazondigitized malls and turned intothedigital mall.

Movie theaters were working. So,Netflixdigitized movie theaters and turned intothedigital movie theater.

The winning playbook in the dot-com boom was astoundingly simple. Find something thats working in the physical economy anddigitize it.

And the winning playbook in the Cryptocurrency Boom will be equally simple. Find something thats working in the digital economy anddecentralize it. The cryptocurrencies that dothisthe best will turn into 100X investment opportunities over the next decade.

When you shift your perspective on altcoins, you realize that theyre not fantasy internet money. Theyre investments in systems that make our lives easier, more productive, and more efficient.

Investing in the best altcoins now is like taking an early stake inAdobe (NASDAQ:ADBE) in 1998. It created the hugely popular PDF program. And the stock has soared 3,809% since then.

Thats why well be holding an emergency briefing on June 14 at 7 p.m. Eastern. Well discuss how the phenomenon plaguing the crypto markets recently could spark the minting of a new wave of millionaires.

Despite all the negative headlines weve been seeing, a new day is dawning. And a select few off-the-radar coins will emerge as the new leaders of the cryptocurrency markets.

If you want to get ahead of this phenomenon, sign up for my free Crypto in Crisis event now!

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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Understanding the Wealth-Creating Power of Cryptocurrency - InvestorPlace

By nature, Bitcoin mining is energy-intensive and relies on cheap energy to turn a profit. Bitcoin miners have started to flock to Texas because of the current goldilocks situation for cryptocurrency mining for three main reasons:

While Bitcoin mining has been criticized for being energy-intensive, Texas Governor Greg Abbott, among others, views Bitcoin mining as a solution to other related issues, such as taking advantage of untapped energy, including natural gas (such as surplus gas or associated gas) that would otherwise be flared or vented because of limited infrastructure to transport it to a destination.

Its no secret that for years oil and gas companies have struggled to solve the problem of flaring, not only in Texas but across the U.S. Unlike oil, which can be transported by truck or rail, natural gas requires pipeline infrastructure to deliver it to market. If a driller has no means of transporting its gas, either economically or because there isnt available pipeline infrastructure to do so they flare (or burn) it, and the environmental implications of doing so are substantial.

Instead, cryptocurrency miners can tap into this surplus gas, whether its flared gas or bad netbacks, and divert it to generators, which then can convert the gas into electricity and then use it to power their sophisticated supercomputers and servers. According to Argus Media, Companies see a double benefit reducing the negative impacts of gas flaring and cutting their carbon footprint. According to research from Crusoe Energy Systems, one of the largest Bitcoin miners in the U.S., the process reduces the CO2 equivalent emissions by about 63% compared to flaring. This opportunity to repurpose otherwise stranded energy and monetize it has not only been attractive to Bitcoin miners, but also to oil and gas companies to increase returns on their production while also complying with Environmental, Social, and Governance (ESG) initiativesmore specifically the E component for reducing their carbon footprint.

Regardless of the energy source for the Bitcoin miner, be it the gas that would otherwise be flared or energy sourced by renewables, the Bitcoin miner essentially behaves like a power plant by purchasing power at an agreed fixed price and owning the ability to sell the power back to the grid.

In contrast to Abbotts position that cryptocurrency mining provides financial incentives to build power infrastructure and produce more energy, his opponents argue that doing so would also trigger greater demand and stress on an already unstable power grid.

Abbotts position, however, relies on the belief that if a severe weather event occurred, such as Winter Storm Uri in February 2021, which resulted in substantial surges in power demand, miners would be forced to pause operations when ordered to do so. In other words, miners would halt their operations and return the power to the grid when demand surges. This concept is not only supported by basic humanitarian principles, morals, or ethics that power should be redirected to save human lives but also supported by the dynamic of the market itself. In the event of demand for power surgesas it did during Winter Storm Urispot power prices increase (sometimes dramatically) and therefore the miner would be financially incentivized to sell power back to the grid as opposed to consuming it.

For miners, the benefits are not exclusive to their ability to source cheap power but also the flexibility and optionality to return that power to the grid. For Texas, particularly ERCOT, the states power regulator, the ability for miners to turn off during peak demand prevents the need to turn on less efficient peak demand power plants allowing ERCOT to stabilize the grid more effectively.

According to the Texas Blockchain Council, there are at least 27 mining operations in the state with more on the way. This growth is not only attributable to the points discussed above but also to the larger crack-down on cryptocurrency mining abroad particularly in China, pushing many to flee to the U.S.

Its important to note that China is heavily dependent on dirtier energy sources such as coal, which produces roughly twice as much CO2 emissions as natural gas. Meanwhile, Texas is home to cleaner sources such as natural gas and wind. Moreover, within the U.S., Texas is a leader in the nations wind-powered electricity generation, comprising approximately 26% of the nations total net wind generatio

(Source: EIA)

Altogether these factors have incentivized and attracted Bitcoin miners to Texas with the Lone Star State becoming the fourth-highest hash rate (the measure of how much power is being supplied to the Bitcoin network) of any state, at approximately 14%.

From Rockdale, Texas, home to the two biggest Bitcoin mining companies in the world, to the first city in the U.S. to mine Bitcoin, to Fort Worth, Texas the Lone Star State is welcoming the Bitcoin mining industry with open arms!

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Cryptocurrency In Texas: Why Bitcoin Mining Is Taking Off In The Lone Star State - JD Supra

Cryptocurrency has become increasingly mainstream in recent years, and all aspects of it are now covered daily in detail by the vast majority of media outlets. However, one group of users that has come to rely heavily on cryptocurrency technology not only as an investment opportunity but also because of narrowing options for conducting financial activity are neo-Nazi and white supremacist groups, many of which are involved in criminal activities in the U.S. and worldwide. However, their reliance on and widespread use of cryptocurrency have attracted little or no attention from authorities or the banking industry.

Recent Examples Of Neo-Nazi And White Supremacist Use Of Cryptocurrency

Highlighting how these groups and their followers have been focusing on cryptocurrency, Buffalo shooter Payton Gendron's 180-page manifesto, which he posted on a number of forums such as 4Chan and 8Chan prior to his May 14 attack, included a section titled "About Money: Fiat, Crypto, and Metal." He recommended cryptocurrency as a way to "escape fiat," stating that fiat currency "gives central banks greater control over the economy" and indicating that the central banks are controlled by the Jews. Adding that it "is quite valuable in the way that one can trade online with it easily," he went on to say that it should, however, not be held indefinitely, and should be converted to precious metals, because "Jews hate it when you convert fake money [i.e. cryptocurrency] to real money, therefore you should do it."

Following the attack, the veteran neo-Nazi U.S.-based website Daily Stormer mentioned by Gendron in his manifesto as contributing to his radicalization was removed from its server and went offline. Within days, it had returned with a Rwandan URL and continues to fundraise in Bitcoin and Monero, with a graphic at the top of the page stating "Wanted Fighting Dollars" and "Donate to the Daily Stormer."

Hardly a day goes by that the MEMRI Domestic Terrorism Threat Monitor (DTTM) research team's monitoring does not see a new neo-Nazi or white supremacist group or individual begin to use crypto. They do so for a range of purposes, as discussed later in this article.

In Austria, notable recent examples of how domestic terrorist groups, neo-Nazis, and white supremacists are using cryptocurrency include raising funds for the legal defense of Austrian neo-Nazi rapper Mr. Bond, who was sentenced to prison for 10 years for posting neo-Nazi songs online one of which was used as a soundtrack for a livestream of an antisemitic attack, in which two people were killed. His supporters are accepting 75 different cryptocurrencies to pay his legal expenses.

In the UK, the white supremacist "Patriotic Alternative" organization, a part of the growing far-right fringe in the country, is soliciting donations in cryptocurrency to fund its production and nationwide distribution of stickers and flyers promoting its "DRAMA" campaign for "Demographic Replacement Awareness." Among the cryptocurrency it accepts are Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Monero.

In the U.S., supporters of a popular U.S.-based neo-Nazi group that creates extremist videos and posts on the extremist Gab platform, have begun fundraising in Bitcoin to support the group's activity. Each video they post includes a QR code that goes directly to its Bitcoin address for donations.

In Australia, many influential neo-Nazis now in prison continue to solicit donations in cryptocurrency for their bail, lawyers' fees, and so on. As one prominent neo-Nazi recently posted on Telegram, "Thanks to everyone's generous support, we manage to get together enough funds to cover the extensive 'Hearings, Mentions, Contests, and Bail Applications.'"

Additionally, on the leading neo-Nazi forum Stormfront, which appears to be hosted in the U.S., there has been continuing discussion of and requests for investment in a cryptocurrency for whites, to "serve as a coffer to support pro-White organizations." A forum member wrote, on May 8: "The idea is to create a cryptocurrency that runs on DeFi (decentralized finance) and is sold on DEXes (decentralized exchanges). This will involve an initial offering... to raise money for the project. After that, the goal is to get the coin listed on as many DEXes as possible to increase volume. This coin would have one utility only: [to] serve as a coffer to support pro-White organizations."

Recent U.S. Government Discussion On Possibility That Russians Will Use Cryptocurrency To Evade Sanctions

The Russia-Ukraine war is highlighting the extent to which neo-Nazis and white supremacists have migrated to cryptocurrency. The use of cyber finance in the war has already gotten the attention of government leaders involved in financial regulation, and it has already been a subject of increased discussion. But knowledge of how extremists are using cryptocurrency in the war, as it develops, will very likely prove to be a catalyst for regulations for the crypto industry, which has been a topic of discussion for some time.

At a recent hearing of the House Financial Services Committee, Federal Reserve Chairman Jerome Powell said that the Russia-Ukraine war "underscored the need for Congressional action on digital finance, including cryptocurrencies." Additionally, Senate Banking Committee members pointed out the "growing concerns that Russia could use cryptocurrencies to circumvent the broad new sanctions it faces," in a March 2 letter to Treasury Secretary Janet Yellen. It should be noted that Russian energy committee head Pavel Zavalny did say in an interview that his country is willing to accept Bitcoin in exchange for oil and gas exports.

These and other recent activities culminated in President Biden's signing of a long-awaited executive order addressing the national security risks of "illicit" misuse of cryptocurrency on March 9 and emphasizing the necessity of "regulation, oversight, [and] law enforcement action." However, the order included no concrete enforcement or regulation policies. Hopes that Biden's order would suppress nefarious uses of cryptocurrency were dashed, and some saw it as likely to further delay real action.

Nevertheless, all this activity has not considered the actual role cryptocurrency is playing in the Russia-Ukraine crisis. While it has been used legitimately in the war the response to Ukrainian government requests for donations now totals over $100 million not all cryptocurrency use in the conflict is lawful. The identities of some of those using it, once known, could be a catalyst in the push for regulation.

Forthcoming MEMRI DTTM Study On Neo-Nazi And White Supremacist Use Of Cryptocurrency

A forthcoming major study by the MEMRI Domestic Terrorism Threat Monitor (DTTM) project, which has been researching neo-Nazi and white supremacist use of cryptocurrency for the past two years, includes a chapter about activity in the Russia-Ukraine war. The report, titled "The Eye of the Storm: [Domestic] Terrorists Using Cryptocurrency Part II," and the chapter, detail the platforms where they solicit, transfer, and pay in cryptocurrency, and what they use it for activism, training, planning attacks and more.

Excerpt From The DTTM Study's Chapter On Extremists' Use Of Cryptocurrency In The Russia-Ukraine War

Cryptocurrency is proving indispensable to neo-Nazis in the war for conducting their financial affairs. Earlier this month, the neo-Nazi "Intolerant Ukrainian" channel on Telegram promoted a fundraising campaign accepting "all sorts of cryptocurrencies" to support its members fighting in Ukraine.

Highlighting this type of fundraising, on its Telegram channel, the neo-Nazi accelerationist "American Futurist," which is affiliated with veteran American neo-Nazi James Mason and the violent neo-Nazi Atomwaffen Division, expressed its support for "Ukrainian National Socialist groups such as the Azov Regiment."[1] On February 25, the channel asserted that a soon-to-emerge "anti-Russian insurgency" in Ukraine would "100%" be National Socialist. On February 27, it posted its crypto wallet addresses for people to donate and a guide to donating to Azov in Bitcoin Ethereum, Monero and others.

European Neo-Nazis Are Supporting Fellow Neo-Nazis With Cryptocurrency In The War The Example of Defend Finland and Karpatska Sich

European neo-Nazi and white supremacist groups and their supporters are using cryptocurrency extensively, and are fundraising primarily via the encrypted messaging app Telegram, which is used by almost every major neo-Nazi and white supremacist group worldwide. These groups, from all over the West, are using the platform to promote fundraising campaigns by like-minded groups in both Russia and Ukraine, soliciting donations in Bitcoin, Monero, Ethereum, and others.

Since the start of the war, a Finnish neo-Nazi channel on Telegram, Defend Finland, has been sharing posts promoting the fundraising campaign of the Ukrainian ultranationalist neo-Nazi Karpatska Sich militia. Karpatska Sich, which has been actively recruiting foreign volunteers, promotes acts of mass violence in support of its neo-Nazi ideology, and maintains close ties with groups in Serbia, Hungary, Poland, and the rest of Europe. Its fundraising posts list Bitcoin, Ethereum, and Tron wallet addresses for donating.

Groups across Europe are also promoting the fundraising campaign, including in France. Karpatska Sich is just one of a number of Ukrainian neo-Nazi and paramilitary groups that are directly soliciting donations, as are their supporters; others include Centuria and Freikorps.

Additionally, on April 3, the Russian neo-Nazi Telegram channel "Dear Bozman," that is run by an infamous Belarusian-Russian neo-Nazi, incited Orthodox Russians in Kyiv, Ukraine to attack "multiracial" Russian soldiers, and provided its Bitcoin, Ethereum, and Tether addresses for donations.

MEMRI DTTM Study Documents How Entire Neo-Nazi White Supremacist Movement Uses Cryptocurrency From Old-School David Duke To New Generation Proud Boys

Cryptocurrency use by old-school neo-Nazis such as former KKK Grand Wizard David Duke as well as by new-generation tech-savvy extremists like the Proud Boys increased dramatically after the January 6, 2021 Capitol attack. At that time, major banking and financial institutions shut down these extremists' access to their services, essentially making it the only viable alternative.

Supporters of imprisoned domestic terrorists, including high-profile killers such as Charleston church shooter Dylann Roof and Pittsburgh synagogue shooter Robert Bowers, are using donations in cryptocurrency to pay for their commissary and other expenses. Cryptocurrency is also how they are now paying for their livestreams, podcasts, and websites.

For a better understanding of how these groups utilize cryptocurrency, look at a November 2021 Telegram post by The Base the U.S.-based neo-Nazi organization led by Rinaldo Nazzaro which Australia has designated a terrorist organization soliciting donations with links to its Bitcoin and Monero wallets. In the post, Nazzaro, a former U.S. intelligence contractor and now lives in Russia, wrote that these donations are used for members' travel expenses and training, purchasing "specialized equipment," and networking.

These and other activities that are being funded by cryptocurrency include planning attacks, purchasing weapons, and obtaining drones, thermal imaging equipment, bulletproof vests, and mobile phones. On the ground in real-world battle situations, the extremists are gaining experience in combat, guerilla warfare, explosives, sniper activity and, of course, how to fund them with cryptocurrency. These skills and this experience could ultimately be turned against Western governments. Ukraine could be for these extremists what Afghanistan was for the jihadi movement in the 1980s.

Neo-Nazi Use Of Cryptocurrency In The Russia-Ukraine War May Prompt Authorities To Regulate It

To date, neo-Nazis and white supremacists have had no trouble promoting and sharing their Ukraine-connected cryptocurrency fundraising campaigns. There has been no mention of intervention on the part of authorities or on the part of the crypto industry itself. Most likely, neither is fully aware of the extent of this activity.

*Steven Stalinsky is Executive Director of MEMRI (Middle East Media Research Institute) and co-author of "The Eye of the Storm [Domestic] Terrorists Using Cryptocurrency Part II: Following In Jihadis' Footsteps, Neo-Nazis Turn To Cryptocurrency." Over the past three years he has written extensively about terrorist usage of cryptocurrency and his research on this has been published and discussed in the New York Times, Washington Post, The Hill and for many other publications. He also authored a major 2019 study on jihadi use of cryptocurrency.

[1] The issue of the Azov Battalion, whose roots are undeniably neo-Nazi, has been the subject of much debate. It was incorporated into Ukraine's National Guard, and it has been reported that there are now Jewish fighters in its ranks; in April 2002 it was reported that it was using an anti-armor weapon that Israel helped develop. At the same time, neo-Nazis from around the world have gone to fight with it against Russia, promoted and expressed support for it, and solicited donations for it. From the beginning of the Russia-Ukraine war, the MEMRI DTTM has monitored this massive neo-Nazi support for Azov, including from U.S.-based leaders and groups. It should be noted that according to the Russian narrative, Russia is fighting Ukraine to "denazify" it, with a particular focus on Azov.

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Neo-Nazi Use Of Cryptocurrency In The Russia-Ukraine War May Be Catalyst Prompting Government Regulation - Middle East Media Research Institute

Confidence in the cryptocurrency industry has been fractured more than ever during the current crypto crash, in which investors have lost around $800 billion in fewer than two months. The industry is trying to piece its reputation back together with the glue of transparency, a buzzword that is currently everywhere.

The CEO of San Francisco crypto company Ripple is calling for transparency in Davos, Switzerland, where the World Economic Forum is debating the future of digital assets. The Stellar Development Foundation, a San Francisco nonprofit with a long history of addressing challenging issues in crypto, is also calling for transparency. So is a company with a new cryptocurrency coin and old ties to the Bay Area.

What are they trying to clear up?

Legislators and consumer advocates have warned for years that the industry does not warn consumers of the risks of quickly losing large investments or encountering rampant fraud schemes, even as the buzzy assets are hyped in Super Bowl ads and other high-profile promotions, some in the Bay Area.

In January, Golden State Warriors star Klay Thompson tweeted he was excited to take part of my paycheck in bitcoin thanks to Cash App! Im with bitcoin because I believe its the future of money. The tweet was a promotion for the banking app Cash App in which Thompson and fellow Warriors star Andre Iguodala gave out $1 million in bitcoin.

But giving away bitcoin on Twitter may be over, experts say.

In the current crash, a key part of the industry broke, triggering huge losses. Stablecoins were assumed to be cryptos safe bet because their value is supposed to be aligned with real-world currency. They dont provide the explosive investment potential of other cryptocurrency, but provide a solid medium of exchange for many virtual needs, like long-distance money transfers to people without bank accountants, routine financial transactions, or trading goods and services online. They were supposed to be inviolable.

But Do Kwon, a crypto bro with a severe case of hubris, oversaw the plummet of the stablecoins terra and luna, which were not backed by real-world assets, but tied to one another via algorithms that were supposed to address market fluctuations.

Kwon, a Stanford grad, once dismissed economist Frances Coppola on Twitter by declaring, I dont debate the poor on Twitter, and sorry I dont have any change on me for her at the moment.

He should have listened.

Lunas price fell from $97 on April 25 to $.00016 now. That disaster only made up $40 billion of the recent losses so 5%. But the impact was seismic. The industry told the world it could never happen with stablecoins.

An event as significant as terra and luna is a really big challenge. We know that it sets us back, says Denelle Dixon, CEO of the Stellar Development Foundation. A lawyer for Yahoo in 2007 when the company faced Congressional scrutiny for mishandling data, Dixon is no stranger to Silicon Valleys struggles to safeguard new innovation.

We felt like there was a tremendous amount of momentum in terms of working with governments and traditional companies and bringing them into crypto. But these things set you back, Dixon says, when it comes to the brand attached to crypto generally.

Dixon and others believe transparency about the assets backing up stablecoins is an important first step to rebuilding cryptocurrency.

DenelleDixon

Transparency for stablecoins is crucial to make sure the people participating feel, buy and have access to whatever financial information they need to feel comfortable that it is in fact dollar-backed, Brad Garlinghouse, CEO of Ripple, told Fox Business on May 24. Ripple is a San Francisco company that helps financial institutions with cryptocurrency transactions.

Garlinghouse, whose company has had its own struggles with the Securities Exchange Commission, spoke from the World Economic Forum, where crypto was a key topic. The head of the International Monetary Fund begged investors not to abandon crypto while noting stablecoins that arent fully backed up run the risk of blowing up in your face. Christine Lagarde, the president of the European Central Bank, echoed that thought, saying, Coin issuers should have to back up their coins with as many dollars as they have coins. That needs to be checked, supervised, regulated, according to Fortune.

Regulation is coming, including legislation addressing stablecoins specifically. The Biden Administration cited stablecoins as a key concern in a Treasury report in November. In early May, California Gov. Gavin Newsom also released an executive order calling for crypto regulation.

Veterans of the federal government who have Bay Area ties are lining up behind a new cryptocurrency they say provides that transparency. They include former U.S. Treasurer Rosie Rios, who was previously an Oakland economic development official and consultant to San Francisco. Rios says Silicon Valley must help rebuild trust in the industry.

For anyone investing in crypto, its important to consider its utility and the role that your particular investment is playing both in Silicon Valley and beyond, Rios says. If California wants to continue to be the leader in technology and innovation, we should find ways to encourage cryptos functionality and role in the global economy.

Rios believes that must happen with stablecoins that are actually backed by real-world assets rather than coins just trading as a floating asset.

Rios is a director at Unicorn Hunters, the company building unicoin, a cryptocurrency that will be backed by an investment fund, so holders of the coin could receive dividends from the investments.

Moe Vela, another director of the company, was director of administration for President Obama, where he worked closely with Biden. Vela also worked with Vice President Al Gore in the Clinton White House.

The lack of transparency has caused an unparalleled and incomparable volatility in the investment process, Vela says. I cannot stress how important it is that there has to be a distinction between non-asset backed crypto, the traditional crypto thats collapsing now, and asset-backed crypto.

Regulation of stablecoins and other assets may change crypto in the Bay Area and around the world. Promotions urging the public to plunge in may be over. Transparency and stablecoins time may have come. Just months ago, celebrities were urging consumers to plunge in. Some of those promotions have not aged well.

If Thompson, the Warriors star, had taken his entire paycheck for the season in bitcoin during his Twitter promotion at the beginning of the year, he would have lost $19 million, or about half his salary.

Asked for a comment, the Warriors declined, noting As you know, markets can go up and can go down.

jelder@sfexaminer.com

Originally posted here:
Cryptocurrency is trying to regain your trust | News | sfexaminer.com - San Francisco Examiner

As cryptocurrency makes the rounds across the globe, its buzz has reached Haiti in the form of donations and nascent projects. In this series, The Haitian Times takes a look at a few players and the pros and cons if digital currencies were to take root in Haiti. For definitions of certain terms used, view this glossary.

_____________________________________________________________

WISCONSIN It is worth nothing. It is based on nothing. There is no underlying asset to act as an anchor of safety. So said European Central Bank President Christine Lagarde about the value of cryptocurrencies, during a May 12 television interview, as the crypto market took a nosedive.

To view the full story, please subscribe toThe Haitian Times. You can choose a$60 Annual Subscriptionora$5 Weekly Pass.

When you join The Haitian Times family, youll getunlimited digital accessto high-quality journalism about Haiti and Haitians you wont get anywhere else. Weve been at this for 20 years and pride ourselves onrepresenting you, our diaspora experienceand aholistic view of Haitithat larger media doesnt show you.

Join now or renew to get: Instant access to one-of-kind stories and special reports Local news from our communities (especially New York and Florida)Profiles of Haitians at the top of their fields Downloadable lists and resources about Haitian culture Membership merch, perks and special invitations

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Cryptocurrency in Haiti: The technology behind it - Haitian Times

Bishkek, Kyrgyzstan, May 26, 2022 (GLOBE NEWSWIRE) -- Optima is the ultimate cryptocurrency trading script, and it has the same business logic and an alternative as Binance or Coinbase. Optima helps its clients to launch their cryptocurrency exchange business within three days at affordable prices, where they can list and sell their custom coins.

Additionally, Optima is an Ultimate Cryptocurrency Exchange Script with many coins and unlimited fiat currencies. Optima allows depositing cryptocurrencies, fiat money, and exchange and trade on the spot market.

Optima uses Binance as a liquidity provider. Users can get an exact copy of the order book from Binance Markets. Whenever they place an order, if it matches the orders from the order book, the system will create the same order in their Binance account. Optima offers the multiple features for the crypto enthusiasts:

Optima supports Bitcoin, Ethereum, Ripple, Monero, Litecoin, Binance Coin, and more trending coins, fiat currencies, and all custom ERC-20/BEP-20/TRC-20 based tokens. The source code of Optima is fully open source, which means it can be customized based on your requirements. The core of Optima is based on Laravel Framework 8 and VueJs JavaScript framework for building user interfaces. As a database, Optima uses PostgreSQL or MySQL.

Moreover, Optima has both Public and Private API endpoints. People can connect Optima with trading bots, mobile apps, payment gateways, and more through the API interface. Their highly experienced team provides a smoothly working solution that helps people modify and extend the functionalities, trading rules, and the UI/UX based on their clients requirements.

Further information can be acquired through their main website: https://optima.exchange

Original post:
Optima emerges as the cryptocurrency exchange software with multiple features in the industry. - GlobeNewswire

"But love is blind and lovers cannot see the pretty follies that themselves commit"

Last Friday, the Department of Financial Protection & Innovation issued a warning about "romance scams and cryptocurrency". This warning is similar to one issued this month by the North American Securities Administrators Association (NASAA). The DFPI describes the modus operandi of the romance scammer:

Fraudsters develop fake online profiles on dating apps and other social media sites like Facebook and Instagram. They then reach out to people on the apps and attempt to develop a relationship. The scammer may claim to live in another country, but they are interested in meeting and taking the relationship to another level. They may also suggest you move your relationship to a private channel like email or a chat app. When the time is right, the fraudster poses an urgent request for money, and requests you send money via gift cards, prepaid debit cards, or cryptocurrency.

In some romance scams, the fraudster requests that the conversation continue on another app and lures the person into installing fake apps or encrypted apps on their smartphones that leave them open to theft. Scammers will go very far to make the fake app look very similar to a legitimate app.

Once the person agrees to send money to the scammer, they get them to download the fake crypto trading app. The scheme may continue until the person wants to end the relationship or stop sending money and contacts the app to get out their money out. The person may then find themselves locked out of their account and contact customer support only to be talking to one of the scammers. In some cases, the person may be asked to pay an exit fee to get their money out.

[View source.]

Excerpt from:
Looking For Cryptocurrency In All The Wrong Places . . . - JD Supra

Laser-Eyed Folks Be In Triage Right Now

FG Trade/E+ via Getty Images

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.

To answer this question, first, we shall declare our own stance on cryptocurrencies; you can use that to interpret the rest of this note which will help you decide whether this work is of any use to you!

In short, whilst we are no spring chickens here at Cestrian, neither are we boomers. This gives us, we think, some degree of neutrality as regards the utility and longevity of crypto as an asset class. Nobody here uses crypto as anything other than an investable, tradable security, because no one knows why they would need to actually ever spend it. In consequence, nobody here has ever owned crypto in its native form, preferring to gain exposure to it through funds (Grayscale Bitcoin Trust (OTC:GBTC), Grayscale Ethereum Trust (OTCQX:ETHE), ProShares Bitcoin Strategy ETF (BITO)) or stocks (Coinbase (COIN) at present; Marathon Digital (MARA) and Riot Blockchain (RIOT) in the past). (We can give you all kinds of high falutin reasons for this, but in the end, it's because we just know that we will lose our cold wallets and be that guy combing through the municipal landfill to find what was meant to be his future Lambo but is now just a soggy USB stick covered in carrot mush).

To us, the asset class is something of a curio. We neither see immediate personal utility, so we aren't true believers; nor do we think "bah humbug, this scam will end badly for those pesky kids". Mainly though, as career tech investors we long ago learned that writing off the new-new thing is usually a mistake. So in investing generally we lean toward growth and our interest in crypto is from that angle.

Amongst the laser-eyed community, you will find a clear division drawn between "fiat currencies" and "decentralized crypto". Fiat, they argue, is a scam, being government-controlled, deflatable at will by central bank policy, and so forth. Old folks on the other hand believe that crypto is no more than a grand pump & dump scheme which will inevitably end in disaster because the fundamental value of any particular crypto is zero.

Neither of these extreme views is quite true, of course. The value of any currency is formed only by consensus, just as is the case for the value of any particular security. What is the correct price of the SPDR S&P 500 Trust ETF (SPY)? There is no correct price! The correct price is what market participants are agreeing to pay one another at the current time. You can have an opinion about what market participants may decide to pay one another in the future, and you may invest or trade on the basis of your opinion, but nothing about this calculation is based on any kind of immutable physical reality; it's just opinion.

Actually, the common term 'fiat', usually used to mean currencies not pegged to physical goods like gold, can also be dispensed with here because, what is gold worth? Again, it's just worth what folks agree to pay one another at any particular time.

So let's use a different lens. Let's talk about state-backed currencies like the dollar or the euro or the yen, etc., and then about crypto.

The rise of state-backed currencies was, as the name suggests, a function of the rise of the nation-state. And the rise of the nation-state was a function of the ability of those who sought to obtain and maintain political power to be able to centralize and enforce that power through actual or threatened violence which they deemed to be the sole form of legitimate violence. If you want to read the long-form version of this theory, you could start by reading the OG, Thomas Hobbes, whose Leviathan may have been written in the seventeenth century but remains a pretty darn accurate portrayal of what the state is and why. If you're busy, however, just watch the Clint Eastwood western, Hang 'Em High, which makes all the same points.

State currencies are only valuable because somebody says so. In the Middle Ages, the sovereign. Today, federal governments and market participants.

Cryptocurrencies are only valuable because somebody says so. Since Satoshi never did wield any centralized power, Bitcoin's (BTC-USD) viability comes down to its market participants.

To us, it's that simple.

The question is, will market participants decide that crypto will be worth more, or less in the future? The whole ecosystem just got slammed as risk appetite was reduced, and the minor coins in particular have been roadkill. We suspect most of them will remain that way because they lacked the critical mass to be self-sustaining when trouble hits. Per Hobbes, life has indeed proven nasty, brutish, and short for many of them.

Our own interest is in Bitcoin and Ether (ETH-USD), the two major cryptos by market capitalization. So far they have been damaged by the selloff but no more than your average too-hot-to-handle growth stock. So let's dig into these some.

Now for some other out-loud statements of our own prejudice. We believe that at a minimum, two cryptocurrencies will survive and probably prosper long term.

Bitcoin, because it is the closest to the gold standard amongst crypto. It is truly decentralized, doesn't have a guru (or furu!) type leader espousing its potential to change the world or change your ability to fund your kids' college fees, and it has been around a long time now. Institutions have started to invest in Bitcoin in reasonable number and they have most likely done so as they follow the changing demographic of their clients. If GNUs Not Unix, Bitcoin Is Not Beenz.

And Ether, because although it most certainly does have a founding guru it also actually has utility insofar as you need it for 'gas fees' for transactions on its blockchain... and crucially its blockchain might become a major transaction bus for the Metaverse even as the Metaverse goes mainstream. And by the way we very much believe that the Metaverse is a thing and going to be more of a thing.

Crypto in our view can only be invested in or traded on a technical basis, specifically because it lacks fundamentals. Now, in our own work, we find that trying to invest or trade on technicals is risky in the extreme when dealing with niche assets - which for us means most if not all the altcoins - because the crowd behavior that technical trading methods attempt to measure and predict doesn't take place in a way consistent with those technical methods. Whilst all technical methods differ, generally speaking, they work best in highly liquid instruments that are freely traded by both institutions and retail alike. We like to use the Elliott Wave / Fibonacci method in our work - not because we believe it is the unique or supremely valid method but because we've found success with it. And the more liquid, the larger, the less related to fundamentals of the instrument, the better we find the method works. Take SPY - the S&P500 proxy ETF - for instance. Since the 2016 lows, we find it has moved with textbook clarity according to wave & Fibonacci principles - the extensions up and retracements down have (so far! let's see how the rest of 2022 plays out) been very predictable in this system. You can open a full-page version of this chart, here. (And before you ask, yes we did call the bottom in March 2020 and yes the top in November 2021, in our subscriber service Growth Investor Pro where those articles can still be found).

SPY Chart (TradingView, Cestrian Analysis)

So let's take a look at whether either Bitcoin or Ether can be traded using this method. Best guess is that Bitcoin suits the method better than Ether, because it is larger, better known and has more institutional involvement.

First, the past. From the 2018 lows, BTC puts in a Wave 1 up followed by a Wave 2 down that troughs a little below (our) ideal 0.786 retracement. It then puts in a monster Wave 3 up peaking at the 5.618 extension of Wave 1, which is crazy and rarely seen in our world. For comparison, the recent highs in SPY, the Invesco QQQ ETF (QQQ) and ARK Innovation ETF (ARKK) represented the 1.618, 2.618 and 3.618 extensions of their respective prior wave 1s up. Yes, that spooked us out too but it's true. So 5.618 up is truly extended and investors would have reasons to be fearful at that point. Then comes a Wave 4 down troughing at a textbook 0.618 retracement of that Wave 3 - and then a new Wave 5 higher that peaks just above the prior Wave 3 high. So from the end of 2018 to early November 2021, we can say, yup, this method seems to work quite well.

BTC Chart (TradingView, Cestrian Analysis)

Let's look at the 'hard right edge' now though. Can we use the method to forecast what happens next? In this method, at least as we use it, we like to find a Wave 1 up and a Wave 2 down that conforms to type (specifically a 0.786 retracement of the W1 up) to give us confidence in projecting the period to come. We don't have that yet in BTC. We think that BTC is in a 'larger degree' Wave 2 down, like this (full page version, here)

BTC Chart II (TradingView, Cestrian Analysis)

So far that Larger Degree W2 down found support at the 0.618 retracement of the Larger Degree W1 up. That might prove to be the bottom of the wave but (1) the 0.618 level was breached once already and (2) that A, B, C corrective pattern you see in light blue - if you want a really high confidence statement to say a correction has ended, you want to see A = C, i.e., the price drop in the A-leg is the same as the price drop in the C-leg. We don't have that yet. A=C would put BTC in the mid-12000s. Countering that you could say, well, that's below the 0.786 retracement level (17,200) so that's not likely - but countering that you could say, well, the last substantial W2 down in BTC - the drop into the Covid crisis - troughed below the 0.786 too. Because crypto be like that - super volatile.

Supporting that analysis would be - look at the volume profile. The first high volume node (where a whole lot of volume was transacted) doesn't start until the 14,200 area - that will likely prove stronger support than the present price which has nothing but low volume nodes around it (indeed the whole move up from the mid-14ks to the high 60ks can be seen to be a fairly low-volume exercise, which can explain why the instrument was so easy-up as well as why so easy-down).

Our conclusion on BTC for now is: we do believe it will ride again, we aren't sure the selling is done yet, and whilst we hold some BITO recently acquired, we will likely take short term profits should they arise rather than trying to play long-longtime from here. If the 0.618 retrace holds firm then we would change our view but our gut is, a bear rally now, then another leg down, then a true move back up.

Ether?

Ether Chart (TradingView, Cestrian Analysis)

It may amuse you to see exactly the same pattern as BTC! The Wave 3 up was an even crazier extension but the big Wave One up and the big Wave Two down are now at the same place, i.e., trying to find support at that 0.618 retracement of the larger degree wave one up (that means around 1867 may prove to be of support) but with risk to the downside because the A-B-C correction hasn't concluded (yet) at A=C. If A=C that puts ETHUSD at around 800, again below the 0.786 retracement. So for Ether we think - there can most certainly be some short term upside but speaking for staff personal accounts we will probably not be treating that as a real move up until such time as support is really proven, i.e., with multiple retests, the rest of the market also moving up, etc.

Our own view is that Bitcoin and Ether are here to stay and that they are investable. If you were minded to open new positions in both - directly or via proxies such as GBTC and ETHE - we can see the sense in starting now but we would suggest not betting the farm, instead waiting to see if this is just temporary respite from selling until a lower low forms support.

If we got a 0.786 retracement in these two cryptocurrencies, we would be much more inclined to start layering in bigger allocations in the hope of enjoying the next major ride upwards.

Cestrian Capital Research, Inc. - 23 May 2022

The rest is here:
Is Now A Good Time To Invest In Cryptocurrency? - Seeking Alpha