Category Archives: Markethive-Social

Banks are AFRAID of the Digital Coin called BITCOIN

Banks are AFRAID of the Digital Coin called BITCOIN

  

Banks begin to see that the are losing GRIP on the financial sector more and more.

Many years they have been profiting from all the possible ways to send money or use your own money in their bank. Sooner or later this story is going to end, and it is about time for the Good of everybody. International Transfers of money have been used many years at a cost of almost 5 towards 10 % of the deposit. That’s easy money to just sent it from bank A to bank B. with many millions of transactions going on every day. You can understand they gain a lot of money this way. With Bitcoin this is FREE transaction costs, yes you heard it correctly. you sent free from 1 person to another

What is this BITCOIN?

Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.

               

 

Why transaction costs are free.

  • in the first place because you don’t need the inter-mediator called BANK.
  • It is based on aa Open-source that means the code is available for everybody.

The battle to control how people pay for stuff is heating up and Goldman Sachs wants a piece of the action. In its first publicly announced bitcoin-related investment, Goldman said on April 30 that it co-led a $50 million financing round for Circle, a bitcoin startup led by serial tech entrepreneur Jeremy Allaire. The startup offers a new digital wallet meant for everyday consumers. China’s IDG Capital Partners was the other lead investor on the round, which brings Circle’s valuation to what Fortune estimated at $200 million.

So why Banks want to get into this?

“They want to get people to think of transferring value as something as easy and utilitarian as sending an email”. They have no idea yet how they are going to get revenue out of this, But they notice more and more people begin to distrust them, so they search new terrains to try to get a new part of the cake. But by offering the service for free, there’s little prospect for turning a profit anytime soon.

The recent cash infusion will focus on international expansion and greater adoption of the service for both bitcoin and other currencies, such as the US dollar and Chinese yuan.
Circle offers free money transfers for people who download the app by hooking up their bank accounts or bitcoin wallets to the service. Unlike services like Venmo and PayPalthe app can send money to people with any digital wallet, not just Circle account holders.
While money transfers at traditional banks can cost $15 to $60 and take two to three days to clear,
Circle transfers the money instantly.
SO What can we do to take advantage of this?
 
One of the companies that offer to give you FREE money is the following, so take advantage of it and transfer to another Bitcoin wallet if you have other company that you trust.To be honest, I am new into this, But here is TIP. what i have already at this moment, we gonna keep investigating this deeper and find the best players available in this field in followup articles.
 
Chuck Reynolds

As Bitcoin Price Surges, Phishing Attacks on Cryptocurrency Wallets Intensify

As Bitcoin Price Surges,
Phishing Attacks on Cryptocurrency Wallets Intensify

Today's Bitcoin to US Dollar exchange rate has reached $902, the first time Bitcoin price has gone above the $900 mark since January 2014, almost three years ago. Nobody knows what's driving this sudden surge of Bitcoin popularity, but cyber-criminals won't bother looking into macroeconomic factors when deciding that the market is ripe and ready for the taking again.

Bitcoin price surge reverberates through cybercriminal landscape

Over the past couple of months, as the Bitcoin price was slowly coming out of the $200-$400 price range where it spent almost two years, cyber-criminals took notice.

The first to do so were ransomware authors, who had to cut down the ransom demands they asked from victims. They had to do this because a ransom of 2 Bitcoin that once meant $400, all of sudden became $1,200, or more, a sum that very few users could afford to pay.

But ransomware victims are occasional Bitcoin users. A more lucrative operation is the phishing market sector, where crooks have yet again turned their full attention to Bitcoin wallet services.

The culprits behind these phishing pages targeting Bitcoin users are your regular career phishers. The Cisco OpenDNS team has tracked the operators of some of these Bitcoin phishing sites to numerous other phishing domains, used for collecting credentials for other services, such as Google, Dropbox, Apple, Amazon, and others.

What Any Cryptocurrency Needs to Achieve Mass Adoption

    5 Things Any Cryptocurrency Needs to Achieve Mass Adoption

Bitcoin, the giant in the world of cryptocurrency, continues to defy all expectations of an early demise and rises higher and higher in value and use. Its adoption as everyday money, however, remains negligent among the common people, almost eight years after the digital currency first emerged.

While the title of “ the first cryptocurrency” is no longer up for grabs, the title of “digital cash” still remains unclaimed, ready to be seized by another up-and-coming digital money. In order to become the common medium of exchange for large swaths of the world, a cryptocurrency first needs to fulfill a few crucial requirements.

Easy and inexpensive transactions

Forget about cryptocurrency for a second. Right now, regular people use either cash or card for day-to-day transactions.

Cash has no transaction costs but requires you to be physically present and have adequate change, and card transactions are relatively instant, though final confirmations often happen the next day, although fees are relatively high it is enough to disincentivize very small transactions. Any cryptocurrency wanting to make inroads with the common people has to beat this by having faster and cheaper transactions.

Bitcoin already offers this advantage, though the margin by which it does is growing slimmer by the day, and even now it may not be enough to entice the public to abandon traditional financial means. Any cash or card replacement has to be better by a large enough margin to warrant a change.

The same goes for fees. Cash has no fees. Other money transfer tools, like cards and bank accounts, are able to charge a fee because they are able to function across great distances with greater efficiency. Cryptocurrency has those same advantages over cash, and as such can be expected to have an associated transaction fee. However, that fee must be significantly lower in order to entice your average consumer away from banking systems. Large companies can afford to make major payment changes in order to save a few cents per transaction because of scale, but regular people cannot.

Improvements to Bitcoin’s basic model

Bitcoin retains an enormous lead in adoption ahead of other cryptocurrencies. Compared to traditional financial systems, Bitcoin provides enough benefits and improvements to warrant a switch. If a currency wants to beat Bitcoin as the new money, it has to be objectively better. Faster or more inexpensive transactions, more anonymity, a better governance structure, and other features are needed to set another coin apart to justify its use and adoption. If a cryptocurrency does similar things as Bitcoin in the exact same way, its chances of taking over as the digital money of the future will be extremely slim.

A streamlined Bitcoin substitution mechanism

Right now, Bitcoin maintains a massive lead in adoption over every other cryptocurrency. That lead was earned on the promise and hype, not of Bitcoin alone, but of cryptocurrency and of the Blockchain technology itself.

Attempting to best the great front-runner of digital currency from scratch, and without a truly staggering level of difference between the two, simply won’t happen. The only way to compete with Bitcoin, as previously mentioned, is to provide at least as much utility, and a large chunk of Bitcoin’s utility is its adoption lead. What another cryptocurrency needs, then, is an easy and efficient way to be used in Bitcoin’s place such as an automatic exchange built into the wallet.

An easy fiat currency conversion system

Like it or not, the world still currently runs on government-issued fiat currency. Living entirely off of cryptocurrency, without any method of conversion into fiat, it is extremely difficult at the present time, and not a viable option for most people. The average person will need an easy way to buy and offload a cryptocurrency for it to be a practical option for them. Most cryptocurrencies are only easily accessible through first acquiring Bitcoin. In order to become dominant and widely accessible, that crippling reliance on Bitcoin needs to end.

An aggressive adoption campaign targeted at the common people

Finally, in order to entice the world at large, the digital currency needs to presented in a way that resonates with most people. While some technical users will care about hash rates, cryptographic keys, smart contracts, and ring signatures, the common folk will not. They need to be reached with the language of cheaper fees, faster access to funds, more security, less paperwork, etc. The only way anyone will know why cryptocurrency makes sense for them is for someone to tell them why. In order to achieve that, a successful marketing campaign is needed.

The cryptocurrency world, while new, is wildly diverse. However, in terms of a tool for everyday use in financial transactions, Bitcoin has almost exclusive reign. In order to dethrone the king of digital cash, any competitor has to bring their A-game.

Chuck Reynolds
Contributor

 

Cryptocurrencies Like Bitcoin Are Beginning to Integrate Into the Global Economy

Cryptocurrencies Like Bitcoin Are
Beginning to Integrate Into the Global Economy

 

 

Bitcoin has been around for a while, but it is just beginning to seep into the international banking system that some evangelists believe it was constructed to destroy. Before we dive into the weeds,

What is a Cryptocurrency?

It is essentially both a commodity and a currency. There is no physical aspect to it – it is simply bits on a computer protected behind layers of advanced encryption. Cryptocurrency functions as a commodity because it only has value because people say it has value. It most resembles gold — in that it acts as a natural hedge against catastrophe. I sold my one Bitcoin the day of the Brexit referendum when it looked like the UK would stay, and the very next day, Bitcoin was trading for about $200 more than I sold it for.

Cryptocurrency is virtually impossible to fabricate, as a record of every transaction that coin was ever a part of is encoded into each unit into what is called a blockchain. This blockchain technology is weaving its way into every orifice of the banking industry and beyond, as it is the greatest innovation to date for ledgers. Get use to hearing the word. They’re becoming so widespread that Business Insider reported on a new cryptocurrency hedge fund based out of San Francisco today, per Rachael Levy:

A 27-year-old has raised $10 million for an unusual hedge fund – with the support of venture capitalists like Andreessen Horowitz and Union Square. This builds on the other big news in this space from the week: a Taiwanese blockchain consortium is integrating itself into the country’s regulatory structure. Per CoinDesk: A consortium of Taiwanese financial institutions developing blockchain services is on the verge of entering a newly created safe-haven for FinTech startups.

Announced discreetly earlier this month, the Amis blockchain consortium currently consists of six local financial institutions and the Industrial Technology Research Institute of Taiwan, but has aired plans to go international. Having already constructed a consumer-facing, peer-to-peer payments platform using Microsoft’s Azure blockchain-as-a-service platform, the consortium’s CEO, Alex Liu, told CoinDesk the move to the sandbox is part of the group’s plans to eventually commercialize its proof-of-concept in a global market.

This news is sure to dismay the more libertarian-minded early adopters of cryptocurrency, who believed that they had discovered an avenue outside of the international banking system. We’ve since seen that there is a ceiling to how mainstream they can get when operating outside the bounds of laws that business must work within. At the very least, the news out of Taiwan will provide us with a proof of concept as to how this would work under a regulatory structure. Most blockchains are being developed in-house, and the writing is largely on the wall for cryptocurrencies like Bitcoin: adapt, or J.P. Morgan will build a better model for themselves.

Chuck Reynolds
Contributor

The rise and fall of Bitcoin mining

The rise and fall of Bitcoin mining

Earlier this month, fans of Bitcoin,
the world’s most popular digital currency
were caught in a whirl of panic as one group threatened to corner the market for new bitcoins.

GHash.io, a Ukraine-based collective of Bitcoin miners, recorded a massive spike in its computing power. Almost overnight, an organization that didn’t exist as recently as last summer suddenly controlled 42 percent of all the world’s ability to create bitcoins.

Reading influential forms like Bitcointalk.org and Reddit’s r/bitcoin page that day, one would be forgiven for coming to the conclusion that the development signaled the imminent collapse of the Bitcoin economy. Some went as far as advocating for commencing a distributed denial of service attack (DDoS) on GHash, aimed at temporarily crashing the group’s servers, as a form of protest against the organization’s dominance.

The fear was over something called a “51 percent attack.” An entity that controls over half of the processing power on the entire Bitcoin network can use that power to engage in a whole mess of shenanigans, like getting away with spending a single Bitcoin an infinite number of times or preventing other Bitcoin users’ transactions from going through. At 42 percent, GHash was short of the full amount it would need to cause serious trouble, and the group has since taken steps to drop its processing power down to an even less threatening level.

The collective backlash to the incident, however, is indicative of a creeping unease about powerful mining pools. The pools are a group of secretive organizations not only responsible for the creation of nearly every Bitcoin that comes into existence, but also for organizing the more than 60,000 Bitcoin transactions that occur every single day.

The largest Bitcoin mining pools are multimillion dollar businesses, and their operators have become some of the most powerful individuals within the world of cryptocurrency. Their seemingly inevitable rise may be one of the best examples of how a system held up by its techno-libertarian boosters as joyously anarchic and decentralized is becoming increasingly formalized, structured, and dare we say, corporate.

How Bitcoin mining works

Jeff Garzik may be the textbook definition of a Bitcoin early adopter. After reading a Slashdot article about the currency in mid-2010, he dove head-first into the world of virtual currency. He joined Bitcoin’s core development team, a small group of programmers who worked tirelessly to improve the technical integrity of the Bitcoin network. In the early days, he sent software patches directly to Satoshi Nakamoto, the enigmatic and pseudonymous creator of the currency who later vanished without a trace.

“I was one of the first people in the U.S. to get specialized hardware for Bitcoin mining,” Garzik boasted with a sly chuckle. ‟At first, I was able to use it to mine with some success, but eventually it would take me four weeks before I ever solved a block. And that was if I got lucky.”

The difficulty Garzik faced in mining on his own, even in those early days using the most cutting-edge hardware available anywhere, is a perfect example of why solo mining was bound to become a fool’s errand.

Nakamoto’s 2008 essay outlining the concept for Bitcoin wasn’t the first time someone had proposed creating a decentralized virtual currency, but it was the first time anyone had come up with a good solution to the problem of double spending. If a Bitcoin is, in reality, just a file sitting on a hard drive somewhere, what’s to prevent someone from making five copies of that file and then sending it to five different people, disingenuously telling each recipient their copy is the only one? Without a way to independently verify the legitimacy of each transaction, the element of scarcity necessary to attach a real-world value to a string of ones and zeroes flies out the window. Bad money chases out the good and the virtual currency becomes instantly worthless.

Mining bitcoin is analogous to buying lottery tickets.

Nakamoto solved this problem by creating a public ledger, called the blockchain, into which every Bitcoin transaction in existence is recorded. Adding new pages, called “blocks,” to that ledger requires computational heavy lifting from computers connected to the Bitcoin network. In order to entice people to do this work, Nakamoto proposed a process of validating transactions, dubbed ‟mining,” where all computers on the network running a specific piece of software compete to solve a complex mathematical equation. The first person to publish the correct answer “discovers” the block and gets to collect the brand-new bitcoins.

Because there’s a limited amount of space in each block, such that the entire worldwide Bitcoin network can only handle seven transactions each second, people can tag on an additional fee on their transactions to entice miners to put their transaction in the next available block and avoid possibly having to wait. These additional fees are added onto the bounty received by the person who discovers the block.

Mining is a zero-sum game. While every mining computer connected to the network is trying to solve the next block, only one of them will actually be rewarded for accomplishing the task. The result is a technological arms race, with miners aiming extremely specialized, extremely high-powered computer systems at the problem in an attempt to get there first.

As more computing power is put to the task of discovering new blocks, the difficulty of the problems those computers are required to solve rises correspondingly:

As the price of a Bitcoin increases, mining becomes more attractive as a money-making activity, which leads to more people wanting to get into the mining game. But as more people join the network, mining becomes more difficult, necessitating people to spend more on mining hardware, which further increases the difficulty of mining. This cycle goes on forever until the field becomes so competitive that it’s difficult to get a return on any investment in mining hardware.

The solution to this problem is collective action—hooking up with a large group of other miners to form a pool.

“Mining bitcoins is analogous to buying lottery tickets. Solving a block is like winning the lottery because a lot of it is essentially random,” Garzik explained. ‟Having more computer power is like buying more lottery tickets. Joining together in a pool is like a whole bunch of people throwing their lottery tickets into a big pile and divvying up the spoils if anyone the group comes up with the winning number.”

Since running the equipment required to effectively mine Bitcoin (and keeping it cool enough to prevent overheating) requires a large amount of power, pools allow miners to maintain a steady flow of income and make a rational cost-benefit analysis of whether mining is going to be a money-making or money-losing proposition.

The realization that pools were the ideal way to structure mining hit the Bitcoin community in a wave. The first pool, a French operation dubbed Slush’s Pool, opened for business in late 2010. The following year saw the creation of 18 more.

“Pools are an inevitable result of the way Bitcoin was set up,” Garzik said. ‟If you want a steady income stream, you have to organize mining this way.”

The necessity of Bitcoin mining pools

When Peter Louis started Triplemining with a few friends in 2011, the primary goal wasn’t to make money.

Just as being rewarded with freshly minted bitcoins is merely an inducement to convince people to actively maintain the network, Leurs argues his Belgium-based mining pool is a labor of love aimed at protecting the network, rather than a pathway to earning virtual millions:

“We currently operate our pool as a hobby, and we do it out of ideology,” he told me. “We’re not making any profits on our pool, we can barely pay for the five servers we are currently operating to run the pool (and that’s excluding the backup servers). We are putting tons of energy in handling support emails and working on our servers just to keep our pool up and running. We’re all doing this unpaid and after our full-time day jobs. Other pools are run by people doing this as a full-time job as they earn enough of profits by running the pool (or indirectly by selling related services). We are doing this as a hobby, to ensure that Bitcoin remains properly protected.”

Triplemining only has about 1,000 users actively mining on a regular basis, but they’re able to discover a block every few days. At the current exchange rate, that single block could be cashed out for just over $22,000 U.S. Divided a thousand ways, that’s not a huge amount of money—not enough to retire on, certainly—but it covers the cost of running the machines and justifies having to wake up at 4 am every so often when the system crashes.

Bitcoin mining is a zero-sum game.

While Louis's pool is essentially a passion project, there’s no mistaking the larger pools for anything other than big businesses hungry for growth with an eye toward the bottom line.

‟The pool size matters. The larger the pool, the more blocks will be found, and the more stable your payouts will be,” Louis explained. ‟However, in the long run, the chance of finding a block is equal for everybody, and all pools should reward the same payout on average in the long run. There is a minimum critical mass, however, if your pool is too small, then people will abandon it if it doesn’t find any blocks in a reasonable time.

“Most people want daily payouts, so larger pools do attract more people. This is unfortunate, as more diversity in the pools is better for Bitcoin in the end.”

Since the mining software allows individual miners to switch between pools with a click of the mouse, it’s simple for people to move from one pool to another. GHash, the pool whose power was so enormous it posed an existential threat to the currency, is less than six months old. GHash grew so quickly thanks to its relationship with another company, Cex.io.

The success of Cex, which is run by the same people who manage GHash, is predicated on the assumption that there are a lot people out there who see Bitcoin mining simply as an investment vehicle. If all you want to do is spend money on a mining rig and then reap the rewards, a lot of the technical challenges that come with it suddenly seem like unnecessary headaches. Cex lets people effectively rent mining hardware they never have to see or actively deal with. If someone hires Cex to mine in their name, the only problem they’ll have is how to spend their money.

As both the value and public profile of Bitcoin has skyrocketed over the course of 2013, an ever-growing number of people suddenly saw Bitcoin mining as the closest they’d ever get to legally printing their own money. Cex turned out to be the simplest way to get there. Until the uproar earlier this month, when the massive backlash forced the company to change its exclusivity policy, all of Cex’s processing power was poured directly into GHash.

Leurs worries that services like Cex could destroy Bitcoin’s individualistic ethos. ‟For me the real problem is …[Cex]. People rent hashing power, so they basically give a lot of money to one company to obtain a large quantity of mining power,” he said. ‟Should GHash ever misuse their position, people can respond by changing their miner not to point to that pool, quickly punishing them for their abuse. However, with Cex, all the mining power is centralized in their data center. Should they ever decide to abuse their … power, there is much less we can do, as the [mining power] is under their direct physical control. I therefore strongly recommend for miners to not rent hash power, but run their mining rigs themselves.”

Louis insists he isn’t accusing Cex or GHash of any wrongdoing because, at the end of the day, their business model depends on a very large number of people putting their trust in the security of the Bitcoin network. Any action that compromised that network would only damage Cex in the long run. However, in light of prior accusations that GHash engaged in double-spending shenanigans at a Bitcoin gambling site, there’s a sense that further centralization of mining operations creates a larger opportunity for someone to cause trouble.

While the 51 Percent Attack is a well-known problem in the community, there’s already evidence that miners will start streaming out of a pool as soon as it comes perilously close to hitting that magic number. However, some have speculated a far lower processing power threshold is necessary for a pool to start seriously undermining the system for its own personal gain.

Last year, a pair of Cornell computer scientists described something they called a ‟selfish-mine” attack. Using a complex strategy of selectively waiting to notify the network about the blocks they’ve solved, powerful pools can game the system to earn a significantly greater share of new bitcoins than their computer power would typically allow. This trick basically leads other pools to waste time attempting to find blocks that have already been located, while the “selfish miner” reaps all the rewards.

While author Emin Gun Sirer admits there’s no hard evidence anyone has actually attempted this tactic, a group’s ability to successfully carry it out grows as its size increases. ‟Above 33 percent, selfish miners do not need to race against the other pools; their sheer size means that they themselves will be able to follow up on their own blocks and earn excess profits,” he explained.

This tight-lipped attitude is common among mining pools, especially toward the larger end of the spectrum. The Daily Dot reached out to over a dozen groups but only received responses from two of them. ‟I think that there is really no incentive for these pool operators to talk to the media,” speculated Daniel Cawrey, a contributing editor at the indispensable cryptocurrency news site CoinDesk. ‟For many countries, mining is in a gray area policy-wise, and these pool operators are doing quite well financially staying out of the limelight.”

The future of Bitcoin mining

Despite having just scored a major victory for Bitcoin miners across the United States, Russ Smith wasn’t particularly enthused about his own future as a virtual currency creator.

Last year, Smith, who runs the consulting firm Atlantic City Bitcoin, sent a letter to the U.S. Treasury Department asking for clarification on whether individual Bitcoin miners had to register as money transmitters. In December, the Treasury responded by declaring miners were not money transmitters and therefore don’t have to jump through a litany of hoops like carrying high levels of insurance and subjecting themselves to regular audits. Many smaller miners feared the costs of meeting these requirements would put them out of business.

Bitcoin is becoming increasingly formalised, structured, and dare we say, corporate.

Even so, in an interview a few weeks later, Smith admitted he had strongly considered getting out of the mining game altogether. Despite the regular income pools provide, he complained that breaking even on mining is an increasingly difficult proposition for anyone but the largest players. “More people who have struck out on their own in Bitcoin mining recently have lost money recently than made money,” he said with a sigh.

He added that securing the specialized equipment necessary to compete has become a hassle. “It’s very hard to get Bitcoin mining hardware these days, you pretty much have to build it yourself,” he said. ‟The companies have no incentive to deliver units that they can operate themselves. Many companies didn’t deliver at all and some have disappeared with the money…. Why should a vendor sell you a piece of equipment that they can just plug in themselves and start making money?”

In a sense, miners like Smith are victims of their own success. Through mining, they’ve maintained the health of a network that needs their hard work to survive. In return, they’ve been rewarded with an asset that’s quadrupled in value in the past six months alone. But that increase has brought an influx of new people who see mining less as an opportunity to make history than as a way to make money. These new entrants have professionalized the industry to a point where it’s barely recognizable to the handful of gearheads who plugged their home computers into the system back when Bitcoin was a secret club known only to a select few.

To hear Cawrey, the CoinDesk editor, tell it, the rise of the pools was an unavoidable result of that professionalization. ‟While it’s making the network more powerful … the level of concentration of these major players is a concern,” he insisted. ‟Years ago we had a lot more banks in the United States than we do now and that consolidation has created a lot of problems. I’m not saying its a perfect analogy, but I’m afraid something like that could happen to Bitcoin.”

Chuck Reynolds
Contributor

 

Why Bitcoin scares banks and governments

Why Bitcoin scares banks and governments

Bitcoin offers an alternative to the conventional, state-sanctioned banking system.
Maybe that's why powerful institutions are so wary of it

Among the many unpleasant discoveries made by those who stashed their cash in Cypriot banks is that the island's government could stop them moving their money elsewhere. Capital controls are supposed to be a thing of the past, a figment of the pre-globalised world. But it turns out that when banks are threatened, the gloves come off.

One of the side-effects of this rude awakening seems to have been a surge of interest in a virtual currency called Bitcoin. And people are buying and selling this virtual stuff for what we laughingly call real money via more than 40 online exchanges such as Mt Gox, though when I last looked Mt Gox was temporarily offline as a result of a denial-of-service attack that might have been the work of any number of possible suspects: cyber vandals; hackers hoping to sow uncertainty in the market to bring prices down and make a killing; or, for all we know, even the US government, which takes a poor view of people minting their own currency, even if it is virtual.

The Bitcoin phenomenon is one of the most intriguing things to have happened in cyberspace since the invention of the peer-to-peer networking that undermined the music business and enabled developments such as Wikileaks. It's an invention of a mysterious – and, to date, unidentified – programmer who called himself Satoshi Nakamoto and claimed to be a 36-year-old Japanese male. He launched Bitcoin on 3 January 2009 and disappeared entirely from the net in April 2011, saying that he was moving on to other things. A Pulitzer prize awaits the journalist who unmasks him. At the moment, all we have is the verdict of Dan Kaminsky, a leading internet-security expert who examined the Bitcoin code and concluded that "Nakamoto" was "a world-class programmer with a deep understanding of the C++ programming language" who also "understands economics, cryptography, and peer-to-peer networking. Either there's a team of people who worked on this or this guy is a genius."

Advertisement

The basic idea behind Bitcoin is to use a combination of public-key cryptography and peer-to-peer networking to create a virtual analogy of gold, that is to say, a substance that is scarce (if not absolutely finite) and fungible. Nakamoto devised a software system that enabled people with access to powerful computers to "mine" Bitcoins (effectively by solving very complex mathematical puzzles) and then securely used the resulting "coins" for online trading. He also arranged things such that the number of Bitcoins can never exceed 21m and that they will become progressively harder to "mine" as the years go by.

To the average punter, who knows nothing of cryptography, this sounds like a scam. Ditto the average reporter, though Reuters's Felix Salmon has recently written a terrific account of the phenomenon. A better way of viewing it would be as a radical experiment triggered by the catastrophic failure of our banking system. This system was, you will recall, supposed to be based on trust. And then we discovered that that trust had been systematically abused and flouted by all of the institutions involved – not just the commercial banks, but also the central banks, regulators, and governments that were supposed to ensure that public trust in the system was warranted.

"The root problem with conventional currency," wrote Nakamoto in 2009, "is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts." In contrast, everything in Nakamoto's system "is based on crypto proof rather than trust".

Bitcoin raises all kinds of interesting questions. Is it a bubble? At the moment, almost certainly yes. Is it legal? In some countries, notably the United States, probably not. Is it technically breakable? Probably, yes, not because it's badly designed, but because everything based on software will have vulnerabilities. Is it innovative? Spectacularly so. Will the authorities in every jurisdiction hate it? Emphatically yes, and they will use Bitcoin's affordances, for example, money-laundering, to justify their hostility, but basically it's just because they can't stand the idea of a currency that can't be debased to political order. Nothing changes.

Chuck Reynolds
Contributor

Tips for Traveling while Spending mostly BitCoin

Tips for Traveling while Spending mostly BitCoin

The past weeks have seen India’s Prime Minister Narendra Modi defend his unexpected demonetization effort that began on Nov. 8, causing tremendous disruptions throughout the Indian economy. According to Reuters, “nearly half of India’s 202,000 ATMs were shut on Friday,” after the announcement withdrawing 500 and 1,000-rupee notes. Over 80% of the currency in circulation has effectively been banned.

Hundreds of thousands of people waited outside their banks as “anger intensified” across India. Accounts in Mumbai described prices jumping by a factor of ten in return for accepting the old cash notes. Meanwhile, Finance Minister Arun Jaitley is quoted in Bloomberg as calmly stating that “there are long, but orderly queues” at the banks. “A big regret is that people are getting inconvenienced, ”Jaitley said. It is a vastly different perspective from the countless images of disorder on the streets.

 

A man walks past a display cabinet containing models of Bitcoins in Hong Kong on August 3, 2016.

According to a Credit Suisse report on Securities Research & Analytics from June of this year, “As data becomes the new currency, financial institutions will be willing to forego transaction fees to get rich digital information on their customers.” “The elimination of these fees will further accelerate the move to a cashless economy as merchant payments will also become digital.” Credit Suisse also estimates that at least 90% of Indian consumer purchases are made in cash.

"We can gradually move from a less-cash society to a cashless society," said Modi during his most recent speach on national radio. He encouraged daily wage earners by saying, "This is the chance for you to enter the digital world." He spoke in Hindi, urging them to use mobile banking apps and credit cards. Modi also pushed young people to teach others how to use digital payments. The Indian government has publicly declared its larger concerns regarding tax evasion and the black market. These sentiments can be seen overseas, as well.

UBS analyst Jonathan Mott believes Australia needs to follow India’s example by eliminating Australia’s $100 and $50 bills. According to a note he sent to his clients earlier this month, demonetization would be “good for the economy and good for the banks.” He cites potential benefits as reductions in crime and welfare fraud, as well as a “spike” in bank deposits. Citibank, meanwhile, is one of the first major banks to announce that it was going cashless at some of its Australian branches.

Earlier this year, the Sydney Morning Herald released a series of articles promoting cashless ideologies, some of which appear to be written by officials from Australia’s Department of the Treasury. Alex Hawke, Assistant Minister to the Treasurer, suggests that eliminating cash will “save billions.” Elites within governments, media, banks and academia have formed a unified front that push “cashless” as good for everyone. Legitimate concerns are brushed off through fear-mongering campaigns about fraud and terrorism.

In reality, governments and the wealthiest ranks of society would mainly benefit from a cashless society because all savings would be in the banking system, and they have full regulatory control over the banks. The middle class is already deeply enmeshed in digital technology. With fewer obstacles to impose capital controls or engage in Civil Asset Forfeiture, social inequality could become exacerbated. At the same time, none of these measures actually prevent new underground cash or digital black markets to appear.

It is mainly a cynical move to limit big banks’ exposure from their real efforts involving risky bets with the global economy. Legitimate banks have been caught repeatedly manipulating interest rates, creating fake accounts and predatory lending for profit, compromising trust on an institutional level.

Watch On Forbes: Getting Rid Of Pocket Money

Author Don Tapscott asks, “Rather than re-distributing wealth, could we pre-distribute it? Could we democratize the way that wealth gets created in the first place?” More people need to be engaged in the economy while ensuring that they get fair compensation in the process. Silicon Valley has attempted to do this via digital aggregators of services. Tapscott claims that the so-called “sharing economy” is a lie. New startups Uber and Airbnb have capitalized on old models of centralization to protect billions of dollars from the actual workers who get exploited.

Profits are amassed rather than truly being shared. Another innovation on the blockchain is the concept of smart contracts, which could be beneficial for prosperity by offering fair compensation. Middlemen would be cut out of the loop. Agreements based on reputation and written in software code would self-execute when certain conditions are met, all without the dependence on disproportionately powerful intermediaries.

Money and influence would come back into the hands of such people who offer their services, create music or write independent news, for example. A healthier balance of power could be achieved for a freer society. Technological advances allow for more opportunities, especially in the third world where they are desperately needed. Personal data as a new asset class can enable people to own and monetize their raw data rather than giving it all away in return for “access” to big banks or social media websites.

Customers themselves are actually servicing the companies by providing their information. Corporations rely on capturing everyone’s data to make a profit through the use of targeted ads and more, all of which undermine basic privacy rights. Uneven access to money causes a negative feedback loop in which imagined scarcity leaves billions hungry and unable to make a living. There has been massive wealth creation in the digital age, yet there is growing social inequality because centralization is asymmetrical by design.

It is not just the malcontents who are ideologically bent on defending privacy that stand to benefit from the blockchain. Heavily centralized institutions are also becoming attractive targets because of their size. They are increasingly easier to hack, as well as slow to adapt in an increasingly faster era. Wall Street giants JP Morgan and Citi, as well as Microsoft and IBM, have all announced projects utilizing different blockchains that could smooth internal operations by eliminating whole days or weeks from contract processing times. Their security would also be greatly enhanced. The limited options facing the elites in their respective countries include being replaced or their quiet embracement of decentralized ideologies.

Chuck Reynolds
Contributor

Bitcoin And The Cashless Future

Bitcoin And The Cashless Future

Modern societies rely entirely on big intermediaries, such as banks, to establish trust in their economies. Overall, they have done a good job fulfilling their function. However, there are problems that stem from old business models clashing with new technology. Inherent to the old model is centralization, which is buckling under its own weight.

In 2009, Bitcoin was anonymously released in the wake of one of the largest financial shocks in history. It is a digital cryptocurrency that is not regulated or issued by any government or private entity.

Although it has very little intrinsic value and was originally worth pennies on the dollar, there is major interest in its underlying blockchain technology due to its decentralized and pseudonymous nature. Bitcoin can be purchased through an online exchange using traditional currency, either whole or in fractions. A digital wallet is needed in order to safely store the Bitcoin due to the possibility of online exchanges being hacked. Private wallets allow users to store Bitcoin and safely create backups on a smartphone or offline. Bitcoin was the world’s strongest currency in 2010, 2011, 2012 and 2013, outperforming even gold. In 2014 it was the world’s worst worst-performing NYC.

Recommended by Forbes

The upward trend continued in 2015 and 2016. It is currently priced within $700 per Bitcoin, well below its 2013 peak of over $1,200.

Watch On Forbes: Blockchain And The Evolution of Money

Bitcoin’s purpose is to establish trust and allow transactions across a global ledger, specifically with no need for a third party. Trust is created through peer-to-peer collaboration and cryptography rather than a singular authority figure. Every transaction is shared across millions of computers. Blocks are calculated and mined every 10 minutes with an updated list of transactions. These are linked together to form a chain of time-stamped blocks that represent the whole history of the blockchain. This is a clever tactic against hackers, who would have to compromise every computer on the blockchain using high levels of cryptography while everyone is watching.

Bitcoin “miners” contribute their computational resources in order to make the system work. In exchange, they receive some Bitcoin. The blocks increase in complexity and halve their size on a scheduled basis. This disinflationary process increases the amount of energy needed to complete future calculations. Many individuals have pooled their resources together and contribute to a framework that allows new privacy tools such as Bitcoin to be open to criticism, which is needed for innovation. It is this global network of developers continually making adjustments and improvements to Bitcoin’s functionality.

It is important to note the lack of confidentiality when it comes to Bitcoin, even though real identities aren’t attached to any blockchain. It is not entirely anonymous, although attempts to make it more private are currently being developed by an energetic community. Addresses can still be linked to other transactions. By residing entirely on the public domain, there is no point of authority that a government can bully and coerce into submission using laws like FISA and looming threats of prosecution.

Bitcoin has therefore been unfairly branded through illegal activities such as hacking and portrayed as anti-government, but these labels are missing the most basic point, which is that it enables people to be in full control of their own financial activity. “While modern networks have made it easier to use aged financial infrastructure, particularly in a digital context, they have not created new infrastructure,” writes Spencer Bogart, the author of a Sept. 22 report from Needham & Company, an investment banking and asset management firm.

Bitcoin, on the other hand, is new infrastructure for digital value exchange,” “The price of Bitcoin benefits from two main sources of demand: its value as a ‘digital gold’ and its utility as a payments channel.” The investment report also shows that Bitcoin liquidity has steadily grown as its volatility has declined. Its daily price volatility is now comparable to oil and it has even fallen below that of popular Internet IPOs.

Emerging markets from developing countries have been particularly fond of Bitcoin due to a combination of unstable currencies and more financial crises. Capital controls and excessive costs for cross-border transactions also make Bitcoin more appealing as a fast and low-cost alternative. Remittance plays a big factor in Bitcoin’s popularity abroad. It is costly and time consuming for immigrants to send money across borders. A borderless currency such as Bitcoin allows distant families to access funds within mere minutes using only a 2% transaction fee instead of the 10-20% banks generally charge.

There are many recurring problems with centralization planning around the world. Working-class votes for Brexit and Trump are a symptom of this. However, it is not simply limited to the United States or Europe.

Chuck Reynolds
Contributor

A Few Things Any Cryptocurrency Needs to Achieve Mass Adoption

A Few Things Any Cryptocurrency Needs
to Achieve Mass Adoption

 

Bitcoin, the giant in the world of cryptocurrency, continues to defy all expectations of an early demise and rises higher and higher in value and use. Its adoption as everyday money, however, remains negligent among the common people, almost eight years after the digital currency first emerged.

While the title of “ the first cryptocurrency” is no longer up for grabs, the title of “digital cash” still remains unclaimed, ready to be seized by another up-and-coming digital money. In order to become the common medium of exchange for large swaths of the world, a cryptocurrency first needs to fulfill a few crucial requirements.

Easy and inexpensive transactions

Forget about cryptocurrency for a second. Right now, regular people use either cash or card for day-to-day transactions.

Cash has no transaction costs but requires you to be physically present and have adequate change, and card transactions are relatively instant, though final confirmations often happen the next day, although fees are relatively high it is enough to disincentivize very small transactions. Any cryptocurrency wanting to make inroads with the common people has to beat this by having faster and cheaper transactions.

Bitcoin already offers this advantage, though the margin by which it does is growing slimmer by the day, and even now it may not be enough to entice the public to abandon traditional financial means. Any cash or card replacement has to be better by a large enough margin to warrant a change.

The same goes for fees. Cash has no fees. Other money transfer tools, like cards and bank accounts, are able to charge a fee because they are able to function across great distances with greater efficiency. Cryptocurrency has those same advantages over cash, and as such can be expected to have an associated transaction fee. However, that fee must be significantly lower in order to entice your average consumer away from banking systems. Large companies can afford to make major payment changes in order to save a few cents per transaction because of scale, but regular people cannot.

Improvements to Bitcoin’s basic model

Bitcoin retains an enormous lead in adoption ahead of other cryptocurrencies. Compared to traditional financial systems, Bitcoin provides enough benefits and improvements to warrant a switch. If a currency wants to beat Bitcoin as the new money, it has to be objectively better. Faster or more inexpensive transactions, more anonymity, a better governance structure, and other features are needed to set another coin apart to justify its use and adoption. If a cryptocurrency does similar things as Bitcoin in the exact same way, its chances of taking over as the digital money of the future will be extremely slim.

A streamlined Bitcoin substitution mechanism

Right now, Bitcoin maintains a massive lead in adoption over every other cryptocurrency. That lead was earned on the promise and hype, not of Bitcoin alone, but of cryptocurrency and of the Blockchain technology itself.

Attempting to best the great front-runner of digital currency from scratch, and without a truly staggering level of difference between the two, simply won’t happen. The only way to compete with Bitcoin, as previously mentioned, is to provide at least as much utility, and a large chunk of Bitcoin’s utility is its adoption lead. What another cryptocurrency needs, then, is an easy and efficient way to be used in Bitcoin’s place such as an automatic exchange built into the wallet.

An easy fiat currency conversion system

Like it or not, the world still currently runs on government-issued fiat currency. Living entirely off of cryptocurrency, without any method of conversion into fiat, it is extremely difficult at the present time, and not a viable option for most people. The average person will need an easy way to buy and offload a cryptocurrency for it to be a practical option for them. Most cryptocurrencies are only easily accessible through first acquiring Bitcoin. In order to become dominant and widely accessible, that crippling reliance on Bitcoin needs to end.

An aggressive adoption campaign targeted at the common people

Finally, in order to entice the world at large, the digital currency needs to presented in a way that resonates with most people. While some technical users will care about hash rates, cryptographic keys, smart contracts, and ring signatures, the common folk will not. They need to be reached with the language of cheaper fees, faster access to funds, more security, less paperwork, etc. The only way anyone will know why cryptocurrency makes sense for them is for someone to tell them why. In order to achieve that, a successful marketing campaign is needed.

The cryptocurrency world, while new, is wildly diverse. However, in terms of a tool for everyday use in financial transactions, Bitcoin has almost exclusive reign. In order to dethrone the king of digital cash, any competitor has to bring their A-game.

Chuck Reynolds
Contributor

Trump Picks Cryptocurrency and Blockchain Advocate as Budget Chief

Trump Picks Cryptocurrency and Blockchain
Advocate as Budget Chief

Bitcoin Caucus co-founder Mick Mulvaney is the US'
next Director of Office of Management and Budget.

It seems the election of Donald Trump could spell great news for American blockchain startups and cryptocurrency users. President-elect Trump has added to his cabinet an active and vocal supporter of cryptocurrencies and blockchain which means that there will be at least one powerful voice in the US government that will resist further efforts to legislate the technology into oblivion.

Trump picked Congressman Mick Mulvaney, Tea Party Republican, as his administration’s Director of Office of Management and Budget. He is considered a staunch fiscal conservative that wishes to drastically limit the federal government’s spending on social programs.

                                         

Just this September he was among the founders of the bipartisan Blockchain Caucus. Commonly called the Bitcoin Caucus by American media, it is meant to help congressmen stay up to speed on cryptocurrency and blockchain technologies, and develop policies that advance them.

Mick Mulvaney

“Blockchain technology has the potential to revolutionize the financial services industry, the U.S. economy and the delivery of government services, and I am proud to be involved with this initiative,” Mulvaney said in a statement back then.

Mulvaney is also a supporter of Coin Center, a non-profit research and advocacy center focused on public policy issues facing cryptocurrency technologies, which raised over $1 million earlier this year.

“For the past two years we have worked with Representatives Mulvaney and Polis to educate their colleagues through briefings and other events, and the new Congressional Blockchain Caucus will be a wonderful new platform to continue these efforts,” Jerry Brito, executive director of Coin Center said at the time. “Their forward-thinking leadership on blockchain technology in Congress is unmatched.”

Chuck Reynolds
Contributor

How Marketing Turned the EpiPen Into a Billion-Dollar Business

How Marketing Turned the EpiPen Into a Billion-Dollar Business

In a 2007 purchase of medicines from Merck KGaA, drugmaker Mylan picked up a decades-old product, the EpiPen auto-injector for food allergy and bee-sting emergencies. Management first thought to divest the aging device, which logged only $200 million in revenue. Then Heather Bresch, now Mylan’s chief executive officer, hit on the idea of using old-fashioned marketing in part to boost sales among concerned parents of children with allergies. That started EpiPen, which delivers about $1 worth of the hormone epinephrine, on a run that’s resulted in its becoming a $1 billion-a-year product that clobbers its rivals and provides about 40 percent of Mylan’s operating profits, says researcher ABR|Healthco. EpiPen margins were 55 percent in 2014, up from 9 percent in 2008, ABR|Healthco estimates.

 

             
 

How Mylan pulled that off is a textbook case in savvy branding combined with a massive public awareness campaign on the dangers of child allergies. Along the way, EpiPen’s wholesale price rose roughly 400 percent from about $57 each when Mylan acquired the product. “They have done a tremendous job of taking an asset that nobody thought you could do much with and making it a blockbuster product,” says Jason Gerberry, a Leerink Partners analyst.

But while EpiPen has given countless parents a sense of security that their children can go out in the world safely, the device’s soaring price—up 32 percent in the past year alone—has forced some families to make difficult choices in order to afford the life-saving medicine. The price increases are among the biggest of any top-selling brand drug, according to DRX, a unit of Connecture that tracks drug pricing. After insurance company discounts, a package of two EpiPens costs about $415, DRX says. By comparison, in France, where Meda sells the drug, two EpiPens cost about $85. “There is a danger with that,” says George Sillup, chairman of the pharmaceutical and health-care marketing department at Saint Joseph’s University. If the company raises the price too much, “that could create some backlash.”

The company sees it differently. “Mylan has worked tirelessly over the past years advocating for increased anaphylaxis awareness, preparedness, and access to treatment,” Mylan spokeswoman Nina Devlin said in a statement. She said the company doesn’t control final retail prices for EpiPen and offers coupons that eliminate co-pays for most patients. Bresch declined to comment for this story.

The CEO has made no secret of her strategy to increase demand for EpiPens by getting them stocked for emergency use in more schools and other public places. (So-called entity prescriptions allow for this.) “We are continuing to open up new markets, new access with public entity legislation that would allow restaurants and hotels and really anywhere you are congregating, there should be access to an EpiPen,” Bresch said at a conference on Sept. 17.

Over the past seven years, Mylan has hired consultants who had worked with Medtronic to get defibrillators stocked in public places. Bresch, the daughter of Senator Joe Manchin (D-W.Va.), turned to Washington for help. Along with patient groups, Mylan pushed for federal legislation encouraging states to stock epinephrine devices in schools.

In 2010 new federal guidelines said patients who had severe allergic reactions should be prescribed two epinephrine doses, and soon after Mylan stopped selling single pens in favor of twin-packs. At the time, 35 percent of prescriptions were for single EpiPens. The U.S. Food and Drug Administration had changed label rules to allow the devices to be marketed to anyone at risk, rather than only those who’d already had an anaphylaxis reaction. “Those were both big events that we’ve started to capitalize on,” Bresch said in October 2011.

In 2013, the year following the widely publicized death of a 7-year-old girl at a school in Virginia after an allergic reaction to peanuts, Congress passed legislation encouraging states to have epinephrine devices on hand in schools. Now 47 states require or encourage schools to stock the devices.

Since 2012, Mylan has helped popularize its brand by handing out free EpiPens to more than 59,000 schools. Last year it signed a deal with Walt Disney to stock EpiPens in Disney’s theme parks and on cruise ships. And Mylan spent $35.2 million on EpiPen TV ads in 2014, up from $4.8 million in 2011, according to researcher Nielsen. Mylan disputes the ad spending figures but declines to offer alternatives.

In part because of Mylan’s efforts, the number of patients using EpiPen has grown 67 percent over the past seven years. Many kids with allergies own multiple sets, for school and home. And for doctors, who write prescriptions for the name they know best, the EpiPen brand “is like Kleenex,” says Robert Wood, a pediatric allergist at Johns Hopkins University School of Medicine.

So far rivals haven’t been able to break Mylan’s market grip. Sanofi’s Auvi-Q, introduced in 2013, is in the shape of a credit card and—unlike EpiPen—gives step-by-step audio instructions. But Sanofi priced Auvi-Q about the same as EpiPen, and the product struggled initially to gain insurance coverage. Sanofi says 9 out of 10 patients with commercial insurance can now receive coverage for Auvi-Q prescriptions. Yet in the first half of 2015, EpiPen had about an 85 percent share of epinephrine prescriptions vs. only 10 percent for Auvi-Q, according to Symphony Health Solutions data compiled by Bloomberg.

Still, allergy sufferers without generous health benefits feel the pain. Denise Ure, a social worker in Seattle, has a peanut allergy so severe that the last time she ingested a nut crumb in 2011, she needed three EpiPens and was hospitalized. Ure says she cried last year when she found out a prescription for two EpiPens would cost her about $350. “I was terrified because there’s this life-saving medicine that I needed, and I couldn’t afford it,” she says. Ure now carries two EpiPens she got in Canada, where they cost about half as much.

The biggest threat to EpiPen could come from Teva Pharmaceutical Industries. It settled a patent lawsuit in 2012 allowing it to market a generic version of EpiPen as early as this year if it wins FDA approval. Mylan isn’t too worried. Predicted Branch in August: “You would not see the traditional market loss because of just the brand equity with EpiPen.”

The bottom line: When Mylan bought EpiPen in 2007, the devices had $200 million in annual sales. Today revenue exceeds $1 billion.

Chuck Reynolds
Contributor