Ripple Shows How Disrupted Tech can be…Disrupted

Only a few weeks ago everyone was patting themselves on the back for “buying the dip in Ripple”.  If you bought the late September drop at 18 cents you were quite happy by early October when the price hit 28 cents. Easy call right? I mean, Ripple is obviously going to take over all banking.

But then, this happened:

“IBM’s Stellar Move: Tech Giant Uses Cryptocurrency in Cross-Border Payments”

Top chart below is Stellar and the bottom is Ripple. As you can see Ripple fans don’t like this news. This is only one little news item and certainly does not seal either companies fate. So, who cares? Read below.

Ripple price down on Stellar IBM News

Read Wikipedia about Stellar, and you see this tidbit:

“At launch, Stellar was based on the Ripple protocol. After making several changes to critical consensus code, the Stellar network forked.”

This is the problem with investing in anything crypto right now. You can take pretty much any coin/token and copy it to make your own. All these people investing in ICO’s think they are Warren Buffet because basically all ICO’s go up. Its a brand new market that is very rapidly saturating. Don’t believe me? Just scroll through this list of ICO’s. Very few of these will be winners long term. The ones that do start to win can just be cloned.

Think thats just ICO’s? I’d disagree. Governments are copying Bitcoin. I’m not sure what that does to the price, but I have a feeling the market doesn’t anticipate competition from the ruling class. See here for example:

Whats my point? The market now is pricing in all things crypto going up. The market does not appear to be concerned about competition both private and public. Its dang near 100% that crypto is the future, but its 100% impossible to state which coin or token is “the one”. So don’t put all your eggs in one basket.

North Korea is Mining Bitcoin But So Is….Fidelity?!?

There is a story here about North Korea using excess coal reserves to mine Bitcoin.I’m not really sure what the value of Bitcoin is to them if they lose all of their trading partners. I guess its all Black Market stuff they would be buying – I’m just not sure the Bitcoin black market is big enough to satisfy the needs of a sovereign nation. That being said I’m totally ignorant on the subject.

What I want to note here is the dichotomy between North Korea, our arch enemy, and Fidelity – a darling of Wall street and all that America stands for. Read here about Fido.

They’re both mining Bitcoin! If both the bad guys and the good guys see the utility in Bitcoin then what does that make Jamie Dimon?

I would have thought the news about Fidelity mining bitcoin would have pushed the bitcoin price up a bit more – but some rumors out of South Korea (the “good Korea”) banning ICO’s put a bit of a damper on things. I would note that at the time of this writing Bitcoin recovered to ~$4,200 USD but ethereum had not regained $300. Certainly this ICO news (if verified) would hit Ethereum harder than Bitcoin.

Whats the #1 Use for Bitcoin? Moving Money.

Currently the #1 use for Bitcoin and other crypto is the ability to store and move your money without intrusion. There is no other safer, easier method to transport funds around the world than Bitcoin. Governments are out for your wealth and will seize it first and ask questions later. If you’re caught with a bunch of legit cash you are presumed guilty of some crime pretty much automatically.

Someone didn’t tell these guys:

Cash seizure at airport (from Reddit):

I went to the airport today to head to San Francisco to buy a car I’d found on Craigslist. I find my gate and am strolling past it to go grab a bite to eat while I wait to board when I hear my name softly called from behind me. I turn around to see two guys I’ve never met.

They introduce themselves as what I think I remember to be DEA. We step into a stairwell to have words. They ask to search my bags, my person, etc. I complied to all. After a few minutes of them asking what I’m doing and me asking what hell they’re doing, they say they suspect me of dealing drugs. I tell them I’m not a drug dealer, that I don’t do drugs, that I can pass any test they wanna give me, yada yada yada.

They keep pressing and I eventually say something to the affect of ‘Is this about the cash in my bag? Did TSA see my cash and tell you guys to question me or something? I read the laws before coming here and there is nothing illegal about flying domestically with ANY amount of cash.’ They said it’s drug money, I told them they’re wrong and I can prove it. They said the car doesn’t exist, I told them they’re wrong and I can prove that too. I even showed them text messages the seller and I had exchanged. They said I can’t show where the money came from, I told them I can show them whatever transaction receipt they need. The money was pulled from a retirement account. I myself didn’t have the physical receipt on me (because why the fuck would I?), but I assured them that my accounts manager can show them whatever the fuck they wanna see. They didn’t care and took my cash anyway.

I missed my flight, was questioned for nearly 4 hours, was paraded through my hometown airport in fucking handcuffs, was charged with NOTHING, and was STILL robbed of nearly $20,000! Currently waiting to hear back from several different attorneys (it’s 11:00pm where I am).

Anyone have any pro tips on how to get my money back ASAP and also sue the fucking pants off this agency? I’m not a rich man, but I’m willing to spend more than I lost if it means I win and am able to get my stolen funds back while also telling the DEA or Uncle Sam or whoever to kiss my fucking nuts.

TL/DR…DEA (I think) seized my money in what certainly seems to be an illegal seizure. Want to get my money back and hopefully get some people fired along the way.

EDIT—- they called in a search dog while I was being interrogated. The dog casually strolled past 1 bag that didn’t belong to me, strolled past my bags with no reaction, and strolled past a fourth that also didn’t belong to me – no reaction to any bag. The handler took the dog around the corner and out of sight, said or did who knows what, came back in the room, PHYSICALLY PICKED UP MY TWO BAGS AND SHOOK THEM A LITTLE, and then the dog walked over and basically mimicked what the handler did. The dog grabbed my bags individually, shook them around in his mouth, and was then rewarded with a treat of some sort. While waiting for the dog to arrive, the DEA guy said the dog was gonna sniff my money, not my person or whatever. I told him I’d seen a thing on Dateline or something where 4/5 bills $20 or larger tested positive for cocaine traces and that there’s no way they can take my money based on a dog saying it smells like drugs. There’s an 80% chance of it happening. He told me to ‘shut up.’ No joke.

UPDATE — got ahold of a local attorney that offered to take the case pro bono. He said that since I can prove the money was legally earned, was withdrawn from my retirement account just a couple days ago, and that the money was all $100 bills and were still wrapped in the $10,000 bands that had the bank name and the date stamped on them, that immediately throws out the hit or whatever it’s called when the dog grabbed and shook my shit. Attorney told me go get bloodwork done today to show that I’m not a drug user.

He was a prosecutor for 23 years before going into criminal defense. He said there’s only like 1 or 2 scenarios where someone has a legitimate shot at suing the DEA, and that my case falls into that very unlikely category. He said I could likely expect a 100% return of the forfeiture within the next few weeks, or that we can forgo that option and instead attempt to sue the agency (which could end up taking a couple years).

Regardless, things are looking up.

My Favorite:

Sri Lankan arrested for trying to smuggle 1kg of gold in his rectum

A Sri Lankan man who raised suspicion by the way he kept looking around in an airport departure lounge was found to be carrying nearly 1kg (2.2lb) of gold stashed in his rectum.

The 45-year-old, who was headed for India, was arrested at Colombo airport on Sunday after customs officials noticed “suspicious movements”, said customs spokesman Sunil Jayarathne.

The man was carrying 904.77g of gold worth 4.5m rupees (£22,000), but was freed after a payment of 100,000 rupees, he said. Such methods of smuggling were not unusual, he said.

“The gold was wrapped in plastic bags inserted in to his rectum,” Jayarathne said, adding that there were four bags.

This is not the first such detection and this is a common method of smuggling.”

Morgan Stanley is On the Other Side of Jamie Dimons Bitcoin Trade

Bitcoin prices are heading higher today which some are attributing to the ECB (Euro. Central Bank) saying that Bitcoin and crypto was outside of their jurisdiction. I’d point out that regulating and taxing are two different things. I also don’t think that regulation is bad per se – there are a lot of scam artists out there.

Something I found quite a bit more interesting was that Morgan Stanleys CEO said Bitcoin was “more than a fad” shortly after news came out that former Morgan Stanley CEO John Mack is looking into launching an ICO. If this is true its a huge boost to the credibility of crypto, ICO’s and could pave the way for other big names to enter.

This is in sharp contrast to JP Morgans CEO Jamie Dimon who has been shredding Bitcoin the past several weeks.

Be Careful When Trading Bitcoins for Cash – Bad Things Can Happen

I was at an airport killing some time talking to a random guy. He mentioned his neighbor was robbed the previous night. The story he told me was that this guy was “big into trading Bitcoins”  and met some strangers at the local Starbucks to give some bitcoins in exchange for cash. Well, these guys followed him home and robbed him at gunpoint.

This highlights some of the problems when using LocalBitcoins.com or other such site. Yes, the transaction is anonymous but you run a really high risk of dealing with criminals. Plus if you’re a seller you could be in legal trouble as the government might label you a moneytransmitter, which requires extensive licensing.

Curiously the story was in the news, but doesn’t mention anything about Bitcoins.

Yorba Linda, CA Man Robbed at Gunpoint:

Orange County sheriff’s deputies are searching for four suspects accused of robbing a man at gunpoint in front of his Yorba Linda home.

The victim was approached by four men as he returned home around 9 p.m. Tuesday on Channing Lane, officials said.

One of the robbers was armed with a gun and demanded cash from the homeowner. Unconfirmed reports say the victim was robbed of up to $25,000.

The suspects, who officials said were wearing hoods and baseball caps, fled the scene with the money and the victim’s phone in what was believed to be a red four-door car.

The victim was not hurt in the crime.

Anyone with information on the suspects or the robbery was urged to contact the Orange County Sheriff’s Department.

 

Pirate Bay Leverages Torrent Network to Mine Bitcoin – Thieves Not Happy

I have to hand it to Pirate Bay for thinking this scheme up. It makes sense for them. Hilariously the users of Pirate Bay are complaining. The people stealing digital content are unhappy they are being taxed.

Im also curious why Pirate bay wouldnt move to an ethereum model where users pay in ether what they download. Seems more inline with what they are doing versus bitcoin mining. Maybe thats stage two.

When it comes to the Pirate Bay, it’s usually movie studios, music producers and software creators that get annoyed with the site — you know, copyright and all that. But in an interesting twist it is now users who find themselves irked by — and disappointed in — the most famous torrent site in the world.

So what’s happened? Out of the blue, the Pirate Bay has added a Javascript-powered Bitcoin miner to the site. Nestling in the code of the site is an embedded cryptocurrency miner from Coinhive. Users who have noticed an increase in resource usage on their computers as a result of this are not happy.

The issue is a very new one, with users only noticing a CPU spike starting later on in the day yesterday. Needless to say, the reaction has not been good — even from the Pirate Bay’s own moderators. Over on Reddit, there are complaints about “100% CPU on all 8 threads while visiting TPB,” and there are also threads on the PirateBay Forum.

As noted by TorrentFreak, a quick delve into the HTML of the PirateBay reveals what’s going on.

An administrator and “supermod” on the PirateBay Forum, Sid is far from impressed:

ffs [That’s addressed to Winston not you lot.]

That really is serious, so hopefully we can get some action on it quickly. And perhaps get some attention for the uploading and commenting bugs while they’re at it.

He offers the following advice for anyone concerned about the latest addition:

Until it is fixed (and I would expect it to be fixed sooner rather than later) noscript will block it from running, as will disabling javascript.

Blocking/disabling javascript will compromise site functionality in several ways:

– scrolling back though pages of comments won’t work

– posting comments won’t be possible

– viewing the file list won’t work

The website for the Javascript miner even recommends against doing what the Pirate Bay is doing — that is, sneaking the miner in under the radar without telling anyone:

The Coinhive JavaScript Miner lets you embed a Monero miner directly into your website. The miner itself does not come with a UI — it’s your responsibility to tell your users what’s going on and to provide stats on mined hashes.

While it’s possible to run the miner without informing your users, we strongly advise against it. You know this. Long term goodwill of your users is much more important than any short term profits.

Bitcoin tops Nasdaq in survey of world’s most crowded trade

Its popular now for investors to buy each and every dip in Bitcoin price, but also for hedge fund managers to talk about what a bubble Bitcoin is. Who knows which side is right – maybe its both.

I will say this chart from Bespoke Investments caught my eye:

My main issue with this is that Bitcoin is in its infancy and starting from zero. Many saying “its a bubble” follow the bitcoin price from 6 cents to the current level and say that simply based on the percentage return makes it a bubble.

Whats clear is that if you are a money manager it has to be painful if you missed this ride up.

From the Nasdaq:

Bitcoin tops Nasdaq in survey of world’s most crowded trade

     ft.com
Source: ft.com

Ominous omen? Bitcoin, the crypto currency that has exploded higher this year, has overtaken the also-buoyant Nasdaq Composite as the world’s most crowded trade, according to a closely watched survey released on Tuesday.

Some 26 per cent of investors polled by Bank of America Merrill Lynch in the first week of September said betting that bitcoin will rise is the most crowded trade of them all. That puts it ahead of 22 per cent voting for the Nasdaq and 21 per cent pointing to an anti-dollar wager. Nasdaq was pinned at about 30 per cent in the August survey.

Bitcoin has been garnering more mainstream appeal of late and has been catching the eye of risk-loving retail traders. It has surged from $968 to the dollar at the end of 2016 to above $5,000 last month, according to Coindesk data. It traded at $4,352.58 on Tuesday.

Notably, other crowded trades in recent history have not ended too well. The dollar was at the top for much of the start of this year, according to BofA Merrill. The currency has tumbled 10 per cent against six major trading partners since December 30.

 

 

From CNBC:

Bitcoin’s nearly five-fold climb in 2017 looks very similar to tech bubble surge

  • David Ader, chief macro strategist at Informa Financial Intelligence, shows how bitcoin’s gains resemble that of the Nasdaq Telecommunications Index before the tech bubble burst.
  • Bitcoin has gained nearly 400 percent this year, helped by increased interest from institutional investors.
  • However, digital currency expert Chris Burniske points out the market value of bitcoin is still a fraction of what stocks were during the dot-com boom.

Short seller Andrew Left targets Grayscale’s Bitcoin trust  

When charted, bitcoin‘s rapid gains resemble how stocks surged into the tech bubble before collapsing.

David Ader, chief macro strategist at Informa Financial Intelligence, matched a graph of the Nasdaq Telecommunications Index at its peak in 2000 to bitcoin’s five-year run to all-time highs.

“This is the price chart for an overly frothy market, in my opinion. I just don’t see anything quite as comparable to this in bubblelicious terms,” said Ader, a former top-rated bond market strategist.

Bitcoin climbed more than 3.7 percent Thursday to a record of $4,802.74, up nearly five times in price this year and about 67 percent higher for August, according to CoinDesk.

Source: Informa Financial Intelligence

“I think it’s going to come to a sorry ending,” Ader said. “I don’t know anybody who’s actually used a bitcoin for any purpose legal or otherwise. This looks like an overly frothy market and frothy markets lose their froth.”

Ader said he used the Nasdaq telecom index since many of those stocks led the Nasdaq composite’s overall gains during the tech bubble. The Nasdaq telecom index shot up more than 700 percent from 1995 to 2000, before collapsing 90 percent in the next two years. The index remains about 75 percent below its record high.

Bitcoin’s meteoric surge this year comes as many on Wall Street are becoming more interested in the digital currency and the blockchain technology behind it. New digital asset investment funds are rolling out and the Chicago Board Options Exchange is planning to launch bitcoin futures.

Many investors also bought bitcoin this month after it survived a relatively uneventful split on Aug. 1 into bitcoin and bitcoin cash, an alternative version supported by only a few developers. Bitcoin cash is up about 180 percent from its Aug. 1 low, to Thursday’s price of $588, according to CoinMarketCap.

However, bitcoin could split again this fall because there’s another upgrade proposal, and others have warned that the speculative forces behind bitcoin could quickly turn against it.

Here are a few of the alarm bells sounded this summer:

By percent change, analysis from Bespoke Investment Group shows how bitcoin’s surge has already well surpassed that of any major stock market bubble.

Source: Bespoke Investment Group

That said, some well-respected names on Wall Street have also issued positive reports on the digital currency.

Lee and Moas both reason that bitcoin can climb to those levels if even a fraction of the trillions of dollars in gold or other traditional investments move into the digital currency.

Bitcoin has a market value of about $78 billion, and digital currencies overall are worth $170 billion, according to CoinMarketCap.

That makes the value of all digital currencies less than 5 percent of the more than $4 trillion inflation-adjusted value of stocks during the tech and telecom boom, said Chris Burniske, author of the upcoming book, “Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond.”

“If people think this is the ‘big bubble,’ then they don’t have an appreciation for how big the idea of cryptoassets really is,” he said.

Many digital currency enthusiasts agree there is speculation in the digital currency. But they note that, just like the dot-com bubble, companies that were able to utilize the underlying technology then became global giants.

More Rumors of China Banning Bitcoin Exchanges

Caixin (Chinese news source) re-upped on the news of some type of Bitcoin Exchange banning. This was after rumors late last week which we talked about here.

While its not clear just what is happening – its even murkier when you’re english speaking and reading second and third degree sources. In times like this I think its best to look at the Bitcoin market itself. In trading there is a saying that the news doesn’t matter – its the reaction to the news that matters.

Here is the Chinese Bitcoin exchange Huobi as of this morning. I’d say the Chinese traders don’t see Armageddon on the horizon.

BTC Price on Chinese Bitcoin Exchange Huobi

Will the China ICO Ban Hurt Bitfinex

Its now widely known that China banned ICOs and even asked that ICO’s give money back to investors.

Where this could bring major problems is to exchanges and other entities that use Tether for funding. Tether, as I understand it, could be swept up in the ICO ban and could well be affected by this and China is a huge trading market.

Currently cryptos on Bitfinex like Bitcoin, Ethereum and Litecoin are all trading at a significant discount to US exchanges. Here is a shot between kraken at top and bitfinex on bottom, you can see a ~$200 price difference:

Kraken Bitfinex Bitcoin
Large Price Difference between Kraken and Bitfinex on ICO ban China

It should be noted that OKCoin is down around $4,080 at this time – so its possible that its just asian exchanges being hit harder by the ICO ban.

It will be interesting to see what the shakeout from this China ICO ban is over the next few days. I have a feeling there will be some casualties.

The IRS has Been Tracking Bitcoin

Coindesk reports that the IRS uses some software from “Chainalysis” to help trace Bitcoin. Its widely known that the IRS has been going after Coinbase to dump data on its users after it said that only 802 people reported Bitcoin gains in 2015.

While I’m sure most US citizens pay their taxes on Bitcoin gains there is no doubt that regulation will just increase as the US hunts down whats “theirs”.

When it comes to hunting down revenue the IRS is amazing. All the “know your client” regulation being imposed on crypto exchanges is feels much less about “fighting terrorism” than it does collecting taxes. After all,  banks are some of the most regulated organizations on the planet and they still launder billions annually. 

My point is that you are wise to pay your taxes on crypto earnings and avoid an expensive headache that is sure to come your way if you don’t.