Tag Archives: blockchain

Winklevoss Twins Await Imminent SEC Decision on Bitcoin ETF

Winklevoss Twins Await Imminent SEC Decision on Bitcoin ETF

They’re one of three groups vying to gain regulatory approval. A bitcoin ETF could attract $300 million in assets in a week OC Set to Issue Digital Currency. Tyler and Cameron Winklevoss will know within days whether they’ve won approval to begin offering their bitcoin-based exchange traded fund, with the digital currency’s record rally hanging in the balance.

Officials from the U.S. Securities and Exchange Commission met with the twins on Feb. 14 to discuss their proposal for an ETF based on the digital currency, according to a short notice of the meeting published on Feb. 22. A decision is due by March 11. The 35-year-old twins want to trade the security on the Bats BZX Exchange Inc.

 

An approved ETF would make bitcoin investing simple for small traders and institutions, while potentially boosting the digital currency just as it’s hitting new highs almost daily. Some $300 million could pour into a bitcoin ETF in its first week, Spencer Bogart, head of research at venture-capital investor Blockchain Capital, said in an interview. “I’d be very surprised if it did anything but a double from whatever levels it is at beforehand,”

Bitcoin rose as high as $1,255.53 on Thursday, an intraday record, passing the price of an ounce of gold. It has gained 28 percent this year, as investors worried about global uncertainties and speculated on a more relaxed regulatory environment for the currency under President Trump. Hopes for the ETF have been a factor as well. The Winklevoss Bitcoin Trust is one of three such vehicles seeking regulatory approval — and the advantages that come with being first. The others are Bitcoin Investment Trust, a creation of Barry Silbert, who had previously built a market for selling shares in private companies, and SolidX Bitcoin Trust.

Digital Asset Services, the sponsor of the Winklevoss ETF, declined to comment. Silbert and Ivan Brightly, chief operating officer of SolidX, also wouldn’t comment. The Winklevoss twins may be best known for accusing Facebook founder Mark Zuckerberg of stealing their idea for a social-media network, a case they ultimately settled.

Long-Term Edge?

SEC approval could give enormous power and riches to the winner for years to come. Just look at gold: SPDR Gold Shares ETF started in 2004, has more than four times higher the market value of iShares Gold Trust ETF, started in 2005.Trading bitcoin now is no easy thing. Investors have to open bitcoin wallet accounts, then purchase bitcoins via online exchanges. Or they can invest in Bitcoin Investment Trust, which trades over the counter, often at a hefty premium to the cryptocurrency. The last possibility is Ark, which operates an ETF with 5 percent exposure to blockchain — the database technology underlying bitcoin — and peer-to-peer computing.

With a publicly traded ETF, small investors could just call their brokers or buy shares online. Approval is by no means certain. On BitMEX, a contract betting on approval of the Winklevoss Bitcoin Trust spiked to an all-time high of 70 percent on Feb. 28, before crashing to 53 percent on March 1. Neena Mishra, director of ETF Research at Zacks Investment Research, pegs the chances at 40 percent.

Regulatory Question

The biggest unknown is whether the regulators will conclude that bitcoin, a digital currency created on and managed by computers, lends itself to being a part of an ETF at all. Whether it’s secure enough, for example. Exchange Mt. Gox had many of its bitcoins stolen several years ago. Last summer, a project running on a blockchain technology similar to bitcoin’s got hacked and lost millions of dollars of investors’ funds. Bitcoin has similarities to currencies, as well as commodities like gold — since there’s a limited number, it could be considered a scarce resource. What ultimately matters is how the SEC sees it.

“Bitcoin is not a stock, it’s not a bond, it’s not a hard asset like precious metal, it’s not a commodity future,” Ben Johnson, director of global ETF and passive strategies research at Morningstar Inc., said in an interview. “It’s a technology that’s very much in its infancy, and it’s not something that in my mind lends itself to being packaged as an ETF.” A SEC rejection of the Winklevoss proposal could help one of the other bitcoin ETFs seeking regulatory approval to get the nod this year by making the agency’s concerns public and allowing them to adjust their proposals accordingly.

Bitcoin Investment Trust, which filed in January to list on the NYSE Arca, already trades over the counter. Bank of New York Mellon is the trust’s transfer agent. And SolidX has a big differentiator: It promises to ensure its bitcoins from loss — something that could boost its chances of approval, Zacks’ Mishra said.

The Winklevoss’s ETF, which first filed with the SEC in July of 2013, has amended its S-1 filing multiple times over the years to address regulators’ concerns. It’s represented by attorney Kathleen Moriarty, who is known for helping bring ground-breaking new ETFs to market. The twins have also secured State Street Bank & Trust Co. as the administrator of the trust. They already operate the Gemini cryptocurrency exchange, catering to institutional and retail investors.

“All that adds up,” Eric Balchunas, an ETF analyst at Bloomberg Intelligence, said in an interview. “If they are going approve one, it’s going to be Winklevoss first. And they kind of deserve it.”

Chuck Reynolds
Contributor

Markethive

Bitcoin’s “creator” races to patent technology with gambling tycoon

Bitcoin’s “creator” races to patent technology with gambling tycoon

The man who last year made global headlines by claiming to be Satoshi Nakamoto, the creator of bitcoin, is working with a fugitive online gambling entrepreneur to file scores of patents relating to the digital currency and its underlying technology, blockchain.Craig Wright, the Australian computer scientist who made the Satoshi claim, has the backing of Calvin Ayre, a wealthy Canadian entrepreneur, according to people close to Wright and documents reviewed by Reuters. Ayre has been indicted in the United States on charges of running online gambling operations that are illegal in many U.S. states – an accusation he rejects.

Wright’s expertise combined with Ayre’s support make a potentially formidable force in shaping the future of bitcoin and blockchain, the ledger technology that underlies digital currencies. Wright and his associates have lodged more than 70 patent applications in Britain and have plans to file many more, according to documents and emails reviewed by Reuters and sources with knowledge of Wright’s business. The patents range from the storage of medical documents to WiFi security and reflect Wright's deep knowledge of how bitcoin and blockchain work.

“The bitcoin blockchain can be scaled up to replace all existing payment system networks to become the world's single global economic infrastructure.”

Craig Wright, computer scientist

Their total compares with 63 blockchain-related patents filed globally last year and 27 so far this year by multinationals from credit card companies to chipmakers, according to Thomson Innovation. Neither Wright nor Ayre would comment for this story on their business relationship, details of which are revealed here for the first time, or their goals. But their interest in bitcoin and blockchain highlights two key trends.

First, an increasing number of entrepreneurs believe blockchain, which can circumvent the need for big financial intermediaries, will challenge traditional payment systems. Various banks are investing large sums of money exploring how blockchain could revolutionize payment systems and cut costs. Bitcoin involves sending payments directly, securely and potentially anonymously between two people's digital wallets, whereas all mainstream transactions, including those using intermediaries like Paypal and credit card lenders, run through banks and usually require named accounts and verification.

Second, blockchain has the potential to defy authorities trying to enforce borders and national regulations – and it already does so in areas such as online gambling. In internet chatrooms, some online gamblers say that using bitcoin enables them to disguise their identity and transactions. The confidentiality conveyed by the currency is one source of its popularity. Bitcoin hit a record high this week, partly because of speculation that the first bitcoin exchange-traded fund is set to receive U.S. regulatory approval. After a sharp rise this year, the cryptocurrency reached more than $1,200 per bitcoin.

Ayre said last year that he saw a “growing convergence” of bitcoin and online gambling, according to the website CalvinAyre.com. Documents reviewed by Reuters show Wright’s links to online gambling go back decades and that bitcoin grew out of code originally developed with gambling in mind. Early bitcoin code, seen by Reuters and analysed by a computer coding consultant with no ties to Wright or any blockchain-related project, contains unimplemented functions related to poker.

 

Vision for Bitcoin

Wright’s vision for bitcoin, though, goes much further than gambling, according to his research papers and interview transcripts. It remains unclear whether he is Satoshi Nakamoto or not, and even whether Satoshi is one person or a group of people. But some of the documents, including two folders of computer code for early versions of bitcoin, support Wright’s claims that he was closely involved in the development of the cryptocurrency before it became public in 2009.

Whatever Wright's original role, he has suggested bitcoin could have widespread applications. In a paper from November 2015, also reviewed by Reuters, he wrote: “The bitcoin blockchain can be scaled up to replace all existing payment system networks to become the world's single global economic infrastructure.” The paper is unpublished, but it gives an insight into the global scope of his plans for the technology. While it's far from clear the two will be successful in their patent applications, bitcoin and patent experts say Wright's project represents the single largest filing of bitcoin-related intellectual property they've seen. "It's certainly bullish," said Justin Hill, a patents expert with law firm Olswang. "With the ambition comes the risk."

THE ANTIGUA CONNECTION

Reuters has previously reported that Wright was filing patents through a company called EITC Holdings, which is based in Antigua. Ayre lives in Antigua, and EITC Holdings is headed by associates of Ayre, according to one source close to Wright and one with direct knowledge of his business, as well as corporate documents reviewed by Reuters. Australian Stefan Matthews, who began working for Ayre in 2011, was a director of EITC Holdings until at least late 2016. It isn't clear if he's still associated with the company. Canadian Robert MacGregor, another long-term Ayre associate, was a director of EITC Holdings until mid-April 2016. The documents do not disclose the shareholders of the company.

Matthews and MacGregor appear with Wright in a June 2015 photograph seen by Reuters. Neither man responded to requests for comment. Sources familiar with the company said they had gone to some lengths to avoid their roles in EITC being discovered.

“I see a growing convergence of Bitcoin, online gaming, virtual reality and gamification technologies.”

In September, Ayre posted on his Facebook page that Wright was his “crazy/smart friend.” Photos on Ayre's Facebook page show him and Wright boating and swimming together in what Ayre identifies as Indian Arm, a fjord near Vancouver, the previous month. A spokesman for Ayre, Ed Pownall, said Ayre was living in Antigua while trying to clear his name and was not doing “any interviews at the moment, on legal advice.” Pownall added that Ayre “wanted you to know the information about him is incorrect.” He declined to specify what information he was referring to.

The range of patent applications lodged by Wright and colleagues is wide. Five, registered on Dec. 14, were made by EITC Holdings with the bland description “computer-implemented method and system,” public filings show. One, registered on Dec. 28, was described as “Determining a common secret for two blockchain nodes for the secure exchange of information” – apparently a way to use the blockchain to exchange encrypted data. Other applications by Wright and his associates relate to sports betting and a blockchain-based operating system for simple electronic devices.

Emails from Wright to Ayre’s associate Matthews, reviewed by Reuters, set out plans to file 150 patents. A person with direct knowledge of Wright’s businesses said he and associates ultimately aim to file closer to 400. None has been approved so far and it’s not clear whether the patents would be enforceable if granted, but Wright’s associates have been quoted as saying the patents could be sold “for upwards of a billion dollars.”

They face stiff competition from other players who are spending significant sums to explore blockchain’s potential. About 70 banks (and Thomson Reuters) have joined a company called R3, which is examining whether blockchain could cut costs in the way financial markets execute transactions. A spokesperson for R3 did not respond to requests for comment.

PwC, a consultancy, said more than $1.5 billion was invested in blockchain companies in 2016. Whoever wins this intellectual property race, the rush to patent applications poses a threat to the original conception of bitcoin as a technology available to all. “What was started by Satoshi as an open source project is going to be far from an open project by the time all the commercial projects weigh in,” said Nigel Swycher, CEO of London-based Aistemos, an IP analytics company. “People will try to use patents as one of many ways to protect their interests.”

THE CODER

Details about Wright’s links to the online gambling industry have emerged from previously unpublished information from the Australian Tax Office (ATO), which is investigating Wright over his claims for tax credits relating to bitcoin ventures. In 2014 Wright told the ATO that he had been producing software for online casinos and other gambling businesses when he was writing computer code that later helped to develop bitcoin.

A 2015 video, reviewed by Reuters, shows Wright being interviewed by three ATO officials. Wright is clad in a waistcoat and tie, fielding questions about his complex businesses and claims for tax breaks. At one point he is quizzed about his work for Bodog, the online gambling network set up by Ayre. Wright clams up and says he cannot disclose any details because of “contractual obligations.”

The ATO declined to comment on Wright, saying that its investigation into him was continuing. A person close to Wright told Reuters that Wright began working for Bodog in 2010. Ayre had set up Bodog in the 1990s. It expanded into entertainment and proved so lucrative that Ayre featured in the 2006 “billionaires” issue of Forbes magazine.

Ayre chose to base his gambling business in Costa Rica. But much of its revenue came from players in the United States, where online gambling was and is illegal in many states. In February 2012, the U.S. Attorney’s Office in Maryland indicted Bodog, Ayre and four other people (Wright not among them) for allegedly conducting an illegal gambling business between 2005 and 2012. They were also indicted for moving funds from overseas to pay winnings to gamblers in the United States.

MOVE TO BRITAIN

Wright’s involvement with bitcoin was initially lucrative. He worked on computer code with an American cybersecurity consultant named David Kleiman, and by 2011 the pair had amassed 1.1 million bitcoins, worth more than $1 billion at today's prices. Their activities were described by Wright in his interviews with the ATO, of which Reuters has reviewed the transcripts. Kleiman died in 2013.

Wright lost money when an online currency exchange ran into difficulties, according to documents reviewed by Reuters. Wright left Australia and relocated his business ventures to Britain. In 2015, associates of Ayre began setting up companies which are now involved with Wright and bitcoin and blockchain. In September 2015, EITC Holdings, the Antiguan company that has filed scores of patents, was incorporated, originally under the name NCrypt Holdings.

That month, two companies – The Workshop Technologies and The Workshop Ventures – were incorporated in Britain with Ayre’s associate MacGregor as their sole director. According to the person with direct knowledge of the patent filings, Wright now works for The Workshop Technologies and MacGregor is his boss. The Workshop Technologies did not respond to requests for comment.

In May 2016, MacGregor presented Wright to the world as the creator of bitcoin through a coordinated media campaign with the BBC, the Economist and GQ magazine. However, when the cameras rolled, Wright failed to convince experts he really was Satoshi – and the bitcoin world dismissed him as a crank.

The publicity misfire led people with knowledge of Wright to speculate at the time that he would stop making bitcoin and blockchain patent applications. Wright did drop from public view. But he continued to produce papers, handwritten notes, and voice recordings about patent applications, many of which have been reviewed by Reuters, for colleagues at The Workshop Technologies to convert into patents, according to the person with direct knowledge of Wright’s businesses.

In September last year, a relaxed-looking Wright resumed making visits to the company’s premises in central London, according to the source, who saw him there several times.

In Antigua, meanwhile, Ayre began construction in October of a $25 million call centre, saying it was part of his vision for bitcoin and online gaming. Speech notes provided by Ayre’s spokesman, Pownall, show that Ayre said at a launch event: “I see a growing convergence of Bitcoin, online gaming, virtual reality and gamification technologies, and progressive countries like Antigua are poised to take advantage of this convergence by developing a truly global services industry.”

According to an overview document and presentation slides reviewed by Reuters, in 2015 Wright planned to propose to the Antigua government that the island adopt bitcoin as its official currency. It is unclear which government department Wright approached, or indeed whether he made the proposal as planned. Requests for comment from three ministries in the Antiguan government produced no response.

“Bitcoin is not just a currency,” Wright wrote in his proposal for Antigua to adopt bitcoin. “It's a new backbone and commercial foundation for the internet.”

Chuck Reynolds
Contributor

Markethive

How Blockchain Is Changing Finance

 How Blockchain Is Changing Finance

  

Global Financial System

Our global financial system moves trillions of dollars a day and serves billions of people. But the system is rife with problems, adding cost through fees and delays, creating friction through redundant and onerous paperwork, and opening up opportunities for fraud and crime. To wit, 45% of financial intermediaries, such as payment networks, stock exchanges, and money transfer services, suffer from economic crime every year; the number is 37% for the entire economy, and only 20% and 27% for the professional services and technology sectors, respectively. It’s no small wonder that regulatory costs continue to climb and remain a top concern for bankers. This all adds cost, with consumers ultimately bearing the burden.

It begs the question: Why is our financial system so inefficient? First, because it’s antiquated, a kludge of industrial technologies and paper-based processes dressed up in a digital wrapper. Second, because it’s centralized, which makes it resistant to change and vulnerable to systems failures and attacks. Third, it’s exclusionary, denying billions of people access to basic financial tools. Bankers have largely dodged the sort of creative destruction that, while messy, is critical to economic vitality and progress. But the solution to this innovation logjam has emerged: blockchain.

How Blockchain Works
Here are the basic principles underlying the technology.

Distributed Database
Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.

Peer-to-Peer Transmission
Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.

Transparency with Pseudonymity
Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.

Irreversibility of Records
Once a transaction is enteredin the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network.

Computational Logic
The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.

Blockchain was originally developed as the technology behind cryptocurrencies like Bitcoin. A vast, globally distributed ledger running on millions of devices, it is capable of recording anything of value. Money, equities, bonds, titles, deeds, contracts, and virtually all other kinds of assets can be moved and stored securely, privately, and from peer to peer, because trust is established not by powerful intermediaries like banks and governments, but by network consensus, cryptography, collaboration, and clever code. For the first time in human history, two or more parties, be they businesses or individuals who may not even know each other, can forge agreements, make transactions, and build value without relying on intermediaries (such as banks, rating agencies, and government bodies such as the U.S. Department of State) to verify their identities, establish trust, or perform the critical business logic — contracting, clearing, settling, and record-keeping tasks that are foundational to all forms of commerce.

Given the promise and peril of such a disruptive technology, many firms in the financial industry, from banks and insurers to audit and professional service firms, are investing in blockchain solutions. What is driving this deluge of money and interest? Most firms cite opportunities to reduce friction and costs.  After all, most financial intermediaries themselves rely on a dizzying, complex, and costly array of intermediaries to run their own operations. Santander, a European bank, put the potential savings at $20 billion a year. Capgemini, a consultancy, estimates that consumers could save up to $16 billion in banking and insurance fees each year through blockchain-based applications.

To be sure, blockchain may enable incumbents such as JPMorgan Chase, Citigroup, and Credit Suisse, all of which are currently investing in the technology, to do more with less, streamline their businesses, and reduce risk in the process. But while an opportunistic viewpoint is advantageous and often necessary, it is rarely sufficient. After all, how do you cut cost from a business or market whose structure has fundamentally changed? Here, blockchain is a real game changer. By reducing transaction costs among all participants in the economy, blockchain supports models of peer-to-peer mass collaboration that could make many of our existing organizational forms redundant.

For example, consider how new business ventures access growth capital. Traditionally, companies target angel investors in the early stages of a new business and later look to venture capitalists, eventually culminating in an initial public offering (IPO) on a stock exchange. This industry supports a number of intermediaries, such as investment bankers, exchange operators, auditors, lawyers, and crowd-funding platforms (such as Kickstarter and Indiegogo). Blockchain changes the equation by enabling companies of any size to raise money in a peer-to-peer way, through global distributed share offerings. This new funding mechanism is already transforming the blockchain industry. In 2016 blockchain companies raised $400 million from traditional venture investors and nearly $200 million through what we call initial coin offerings (ICO rather than IPO).

These ICOs aren’t just new cryptocurrencies masquerading as companies. They represent content and digital rights management platforms (such as SingularDTV), distributed venture funds (such as the DAO, for a decentralized autonomous organization), and even new platforms to make investing in ICOs and managing digital assets easy (such as ICONOMI). There is already a deep pipeline of ICOs this year, such as Cosmos, a unifying technology that will connect every blockchain in the world, which is why it’s been dubbed the “internet of blockchains.” Others are sure to follow suit. In 2017 we expect that blockchain startups will raise more funds through ICO than any other means — a historic inflection point.

Incumbents are taking notice. The New York–based venture capital firm Union Square Ventures (USV) broadened its investment strategy so that it could buy ICOs directly. Menlo Park venture capital firm Andreessen Horowitz joined USV in investing in Polychain Capital, a hedge fund that only buys tokens. Blockchain Capital, one of the industry’s largest investors, recently announced that it would be raising money for its new fund by issuing tokens by ICO, a first for the industry. And, of course, companies such as Goldman Sachs, NASDAQ, Inc., and Intercontinental Exchange, the American holding company that owns the New York Stock Exchange, which dominate the IPO and listing business, have been among the largest investors in blockchain ventures.

As with any radically new business model, ICOs have risks. There is little to no regulatory oversight. Due diligence and disclosures can be scant, and some companies that have issued ICOs have gone bust. Caveat emptor is the watchword, and many of the early backers are more punters than funders. But the genie has been unleashed from the bottle. Done right, ICOs can not only improve the efficiency of raising money, lowering the cost of capital for entrepreneurs and investors, but also democratize participation in global capital markets. If the world of venture capital can change radically in one year, what else can we transform? Blockchain could upend a number of complex intermediate functions in the industry: identity and reputation, moving value (payments and remittances), storing value (savings), lending and borrowing (credit), trading value (marketplaces like stock exchanges), insurance and risk management, and audit and tax functions.

Is this the end of banking as we know it? That depends on how incumbents react. The Blockchain is not an existential threat to those who embrace the new technology paradigm and disrupt from within. The question is, who in the financial services industry will lead the revolution? Throughout history, leaders of old paradigms have struggled to embrace the new. Why didn’t AT&T launch Skype, or Visa create Paypal? CNN could have built Twitter since it is all about the sound bite. GM or Hertz could have launched Uber; Marriott could have invented Airbnb. The unstoppable force of blockchain technology is barreling down on the infrastructure of modern finance. As with prior paradigm shifts, blockchain will create winners and losers. Personally, we would like the inevitable collision to transform the old money machine into a prosperity platform for all.

Chuck Reynolds
Contributor

Markethive

A Brief History of Blockchain

A Brief History of Blockchain

  

   Blockchain Innovation

Many of the technologies we now take for granted were quiet revolutions in their time. Just think about how much smartphones have changed the way we live and work. It used to be that when people were out of the office, they were gone because a telephone was tied to a place, not to a person. Now we have global nomads building new businesses straight from their phones. And to think: Smartphones have been around for merely a decade. We’re now in the midst of another quiet revolution: blockchain, a distributed database that maintains a continuously growing list of ordered records, called “blocks.” Consider what’s happened in just the past 10 years:

  • The first major blockchain innovation was bitcoin, a digital currency experiment. The market cap of bitcoin now hovers between $10–$20 billion dollars and is used by millions of people for payments, including a large and growing remittances market.
  • The second innovation was called blockchain, which was essentially the realization that the underlying technology that operated bitcoin could be separated from the currency and used for all kinds of other interorganizational cooperation. Almost every major financial institution in the world is doing blockchain research at the moment, and 15% of banks are expected to be using blockchain in 2017.
  • The third innovation was called the “smart contract,” embodied in a second-generation blockchain system called ethereum, which built little computer programs directly into blockchain that allowed financial instruments, like loans or bonds, to be represented, rather than only the cash-like tokens of the bitcoin. The ethereum smart contract platform now has a market cap of around a billion dollars, with hundreds of projects headed toward the market.
  • The fourth major innovation, the current cutting edge of blockchain thinking, is called “proof of stake.” Current generation blockchains are secured by “proof of work,” in which the group with the largest total computing power makes the decisions. These groups are called “miners” and operate vast data centers to provide this security, in exchange for cryptocurrency payments. The new systems do away with these data centers, replacing them with complex financial instruments, for a similar or even higher degree of security. Proof-of-work systems are expected to go live later this year.
  • The fifth major innovation on the horizon is called blockchain scaling. Right now, in the blockchain world, every computer in the network processes every transaction. This is slow. A scaled blockchain accelerates the process, without sacrificing security, by figuring out how many computers are necessary to validate each transaction and dividing up the work efficiently. To manage this without compromising the legendary security and robustness of blockchain is a difficult problem, but not an intractable one. A scaled blockchain is expected to be fast enough to power the internet of things and go head-to-head with the major payment middlemen (VISA and SWIFT) of the banking world.

This innovation landscape represents just 10 years of work by an elite group of computer scientists, cryptographers, and mathematicians. As the full potential of these breakthroughs hits society, things are sure to get a little weird. Self-driving cars and drones will use blockchains to pay for services like charging stations and landing pads. International currency transfers will go from taking days to an hour, and then to a few minutes, with a higher degree of reliability than the current system has been able to manage.

These changes and others represent a pervasive lowering of transaction costs. When transaction costs drop past invisible thresholds, there will be sudden, dramatic, hard-to-predict aggregations and disaggregations of existing business models. For example, auctions used to be narrow and local, rather than universal and global, as they are now on sites like eBay. As the costs of reaching people dropped, there was a sudden change in the system. Blockchain is reasonably expected to trigger as many of these cascades as e-commerce has done since it was invented, in the late 1990s.

How is technology transforming transactions?

Predicting what direction it will all take is hard. Did anybody see social media coming? Who would have predicted that clicking on our friends’ faces would replace time spent in front of the TV? Predictors usually overestimate how fast things will happen and underestimate the long-term impacts. But the sense of scale inside the blockchain industry is that the changes coming will be “as large as the original invention of the internet,” and this may not be overstated. What we can predict is that as blockchain matures and more people catch on to this new mode of collaboration, it will extend into everything from supply chains to provably fair internet dating (eliminating the possibility of fake profiles and other underhanded techniques). And given how far blockchain come in 10 years, perhaps the future could indeed arrive sooner than any of us think.

Until the late 1990s, it was impossible to process a credit card securely on the internet — e-commerce simply did not exist. How fast could blockchain bring about another revolutionary change? Consider that Dubai’s blockchain strategy (disclosure: I designed it) is to issue all government documents on blockchain by 2020, with substantial initial projects just announced to go live this year. The Internet of Agreements concept presented at the World Government Summit builds on this strategy to envision a substantial transformation of global trade, using blockchains to smooth out some of the bumps caused by Brexit and the recent U.S. withdrawal from the Trans-Pacific Partnership. These ambitious agendas will have to be proven in practice, but the expectation in Dubai is that cost savings and innovation benefits will more than justify the cost of experimentation. As Mariana Mazzucato teaches in The Entrepreneurial State, the cutting edge of innovation, particularly in infrastructure, is often in the hands of the state, and that seems destined to be true in the blockchain space.

Chuck Reynolds
Contributor

Markethive

Business Development Executive Job Description

Business Development Executive Job Description

A business development executive is a senior manager tasked with the job of helping his or her business grow and therefore, they are high-level sales professionals. Their priority is to assist their companies that acquire new customers and sell additional products or services to existing ones; this means the role is a crucial one for any business with the ambition to expand or the necessity to diversify its clientele. It also means that effective business development managers are in high demand in nearly every job sector there is, including business-to-business, business-to-customer, and even non-profit organizations. 

The Business Development Executives Working Environment

In the vast majority of cases, business development executives work in traditional office environments. They are expected to dress in professional business attire and work 9 am to 5 pm, occasionally putting in overtime hours to meet deadlines or sales quotas. Because networking is critical in this position, business development managers must often travel to conferences, business meetings, and industry events. So, company cars are a standard bonus amongst business development executives, and business trips around the country or even around the world are an occasional necessity for many businesses. 

Business development executives occupy senior roles at their organizations, they typically work according to their own initiative and have few superiors to answer to. In most companies, if the executive can deliver new clients and high sales volumes consistently, their day-to-day methods and schedules will be left largely up to them. 

Business Development Responsibilities

A business development professional has three primary responsibilities:

  1. Identifying new sales leads
  2. Pitching products and/or services
  3. Maintaining fruitful relationships with existing customers

When it comes to generating leads, day-to-day duties typically include:

  • Researching organizations and individuals online (especially on social media) to identify new leads and potential new markets
  • Researching the needs of other companies and learning who makes decisions about purchasing
  • Contacting potential clients via email or phone to establish rapport and set up meetings
  • Planning and overseeing new marketing initiatives
  • Attending conferences, meetings, and industry events

When it comes to the challenge of actually selling, other typical duties include:

  • Preparing PowerPoint presentations and sales displays
  • Contacting clients to inform them about new developments in the company’s products
  • Developing quotes and proposals
  • Negotiating and renegotiating by phone, email, and in person
  • Developing sales goals for the team and ensuring they are met
  • Training personnel and helping team members develop their skills

To keep healthy relationships with clients, this mostly requires socialization. So from simple chats on the phone to lunches and events or conferences, business development managers must be sure to keep their customers happy. Of course, as with all office jobs, documentation is also a big part of the work. Business development professionals are also obligated to write reports and provide feedback to upper management about what is and is not working.

Business Development Executive Skills

To be an effective business development executive, an individual must be:

  • Socially adept
  • Good with numbers
  • Able to provide quality leadership to a large team of sales people

The skills you need to excel in this position include:

  • Strong communication and IT fluency
  • Creative talents and the ability to solve tough problems
  • In-depth knowledge of the industry and its current events
  • The ability to handle pressure and meet deadlines
  • Skill in prioritizing and triaging obligations
  • Attention to detail
  • Excellent time management and organization

Business Development Education and Career Development

Though there are rarely formal qualifications, many organizations require a degree from their applicants. For those hoping to eventually attain this position, business or math’s degrees are extremely beneficial, and may even help students acquire work through a graduate training program.

Many entrants, however, begin working as salespeople or marketers before being promoted, and there are also many apprenticeships available in the sector. For those in junior roles, additional Level 2 qualifications in Business Principles, Sales Management, and Marketing can help young professionals advance their careers much more rapidly than they otherwise would. 

After gaining industry experience and familiarity with the sector, professionals can also boost their resumes by obtaining Level 3, 4, and 5 diplomas in sales and marketing courses. In the UK, the Chartered Institute of Marketing is an excellent resource for learning these advanced degrees. 

Contracting Vs Permanent Positions

While both contracting and permanent in-house positions are available to business development executives, the latter is far more common in the workplace today. For those who can manage to make it work, a freelance business development offers a host of advantages. So if you are considering setting your sights on a contract-based career, here are some things to keep in mind:

Pros of Contracting

  • Flexible scheduling and hours
  • Option to work from home and/or remotely
  • Ability to work in diverse industries and experience a wide variety of company cultures
  • Freedom to choose and turn down projects
  • The possibility of higher pay for those who are successful
  • Complete independence and not having superiors to answer to

Cons of Contracting

  • Irregular and inconsistent pay
  • The necessity to do much more bookkeeping, invoicing, quoting, etc.
  • Limited job security
  • No team and a limited ability to delegate tasks to others
  • The need to regularly acquire new clients

Business Development Challenges

Business development executives face a number of challenges in their work. These includes:

  • Managing underperforming team members
  • Suffering from downturns in the industry and/or economy
  • Losing clients to superior competitors
  • Responding to negative press about the company and/or products
  • Dealing with customers unsatisfied with the quality of the product or service

Business Development Executive Salary

Salaries for business development executives vary with experience and level of responsibility. Starting positions typically pay about £26,000 annually, but rise to about £30-40k with several more years of experience. After promotions to upper executive positions, senior business development managers make upwards of £60,000. No matter what industry interests you most, there is likely to be a need for business development managers in the sector. This job is an excellent opportunity to enter a wide variety of professional fields. If you think it might be a good fit for you, view our Business Development Telegraph Jobs to learn about the career opportunities available in your region.  

Chuck Reynolds
Contributor

Markethive

What Does A Biz Dev Person Actually Do?

What Does A Biz Dev Person Actually Do?

Grand Unified Theory of Business Development, Biz Dev is simply about pursuing opportunities for long-term growth from customers, markets, and relationships.  Sounds simple enough, but has anyone ever set out to describe what a “Biz Dev Person” actually does?  How do they spend their day?  What should you look for when hiring someone for a Biz Dev role?

While Business Development may still mean many different things to many different people, at it's core I believe a Biz Dev job is focused on 3 activities:

  • Customers: Find new ones and extract more value from current ones.
  • Markets: Figure out where new customers “live” (both geographically and in terms of "buying mindset") and find a way to reach them.
  • Relationships: Build and leverage relationships founded on trust and integrity to facilitate opportunities.

“Well,” you might say.  ”That sounds pretty straightforward.”

Yes, it does sound that way.  In the simplest of terms, business development may be about figuring out how to sell more to customers or finding new customers to whom to sell.  But to suggest that “that’s all there is to it” is to suggest that running a marathon just requires putting one foot in front of the other for 26.2 miles.  Of course, training for and running a marathon requires a unique approach to making sure you don’t peter out before the finish line.  Similarly, business development requires a unique combination of skills to ensure that the value you derive from an opportunity persists for the long haul:

The Biz Dev Skillsets: Strategy, Sales, and Relationship Management

  • Strategy: How should you go about pursuing an opportunity?  How do you know which path is best?  Just because an opportunity is in front of you, doesn’t mean it’s a good one.  Understanding the fundamental drivers of your business, and the business of your customers, partners, and competitors is critical to being able to make wise decisions in the pursuit of long-term value.  Being able to assess an opportunity for its potential to create long-term value, determine the paths available to you to pursue it, and understand the trade-offs and risks of one path vs. another, are core Biz Dev functions.
  • Sales: Whether you're selling a product or the idea of a partnership, almost every business development role has some element of sales.  The process of navigating through an organization, identifying decision-makers and uncovering their unmet needs, and concisely demonstrating the value of what you can offer are core sales skills needed whether you're selling a product, service, or partnership.
  • Relationship Management: From How to Win Friends and Influence People to Never Eat Alone, much ink has been spilled on the importance and value of strong, respect-based relationships.  Business development requires not only having an expansive network to help you facilitate a deal, but also a deep understanding of how to build and maintain new relationships to leverage them when needed.  Relationships with partners, customers, colleagues, and even the media, can all be crucial factors in not only getting in the door to a biz dev opportunity but keeping it open.

“Hey, Wait a second,” you’re asking.  ”You forgot about partnerships?  Isn’t business development all about partnerships?”  In short, no, it's not. Partnerships are a common course to pursue a given business development opportunity, but they are but one option amongst many when evaluating the path to creating long-term value.  And though scouting, signing, and developing partnerships is an everyday task in many business development roles, the skills required for partnerships are really an amalgam of all other Biz Dev skills – a mix of sales, relationship management, and strategy.  As frequently as they arise in the day job of business development, partnerships are only one potential outcome of Biz Dev done right.

How Biz Dev Roles Change by Company Size

Does the role of business development change as a company that matures from a startup to enterprise?  Yes and no.  In the early stages of any company, the role of business development is often left to the founder, CEO, or an early hire.  The role of forging partnership deals does take on an increased priority, as the decision of which potential path to pursue an opportunity often favors the sharing of resources that's incumbent in partnerships.  But the day-to-day activities of business development remains the same: at a startup or a large company alike, whom ever plays the role of "biz dev guy/gal" must be constantly evaluating the best path to create long-term value, whether it an option built in-house or pursued in partnership with others.

At larger companies, the role of business development may be divided across a broader array of individuals.  Sure, teams of people with "Business Development" on their business cards may focus on the full spectrum of activities, from sourcing business development opportunities to evaluating the opportunity's potential to create long-term value and following through on the execution.  But just as often, the individual functions of the business development role may be split across an organization: a member of the sales team may source feedback from customers, who passes along an opportunity to create a new product to the Product Management team, who works with Finance to size and evaluate an opportunity and Operations to assess the resources needed to pursue it.  Perhaps none of those individuals consider themselves to be serving a "Business Development" function, but in total, they are a collective BD team that seeks to create long-term value for their organization in very much the same way as an individual who plays every part.

“Pure Biz Dev”

In my view, a “pure” Biz Dev job will have some combination of all of the above skillsets – identifying and strategically assessing an opportunity to create long-term value and then executing on a path to pursue that value.  But whether you're playing Biz Dev as a team sport or an individual contributor, the interplay between Strategy, Sales, and Relationship Management informs the potential for a company's growth path.   Business Development is a function that is varied, complex, and exciting – although the nature of Biz Dev may be ambiguous to some,  the importance of the role should be clear to all.

Chuck Reynolds
Contributor

Markethive

PascalCoin Is A Cryptocurrency With a Deletable Blockchain

PascalCoin Is A Cryptocurrency
With a Deletable Blockchain

PascalCoin Piques People’s Interest

Every now and then, cryptocurrency developers come up with a rather intriguing concept. PascalCoin is a great example of one such project, as this cryptocurrency offers a deletable blockchain, effectively solving one of the data storage problems bitcoin has been facing for several years now. It is time we take a closer look at this altcoin, as it shows a lot of promise.

It is not difficult to see why PascalCoin has been seeing a boost in popularity as of late. Although the project was announced in August of 2016, it looks like its potential is finally coming to fruition, After all, PascalCoin is the first cryptocurrency that does not require a blockchain of historical operations to be downloaded by the end user. Despite this “odd” function, there is no way to double-spend one’s coins. Rather than using the blockchain as found in the bitcoin ecosystem, PascalCoin makes use of a technology called SafeBox. This hash mechanism is modified every time a new block in generated by the PascalCoin blockchain. SafeBox is updated with the new block operations, after which it generates a new Safebox hash. Even if the blockchain up to that point were to be deleted, there is still a proof of all transactions and wallet balances.

Controlling the Safebox hash is the utmost priority for the PascalCoin team. A total of five new accounts is created per network block, which effectively helps to keep the hash size as small as possible. For those who want to find out more, it is well worth checking out the project’s white paper on GitHub. By removing the need to download and store an entire blockchain, the PascalCoin developers could be onto something. Other than the SafeBox feature, PascalCoin focuses on being a cryptocurrency that can appeal to the masses. It offers quite a few similarities to how bank accounts work, with easy to remember account names instead of wallet addresses. This is another intriguing development that makes cryptocurrency more approachable by the average person on the street. It remains to be seen whether or not PascalCoin can achieve its goal, though.

Looking at the PascalCoin trading charts, it is evident this cryptocurrency has become the new hot commodity among altcoin traders. That being said, the fact its blockchain can be deleted and its convenient wallet addresses are the only “proper features” for the time being. There are no merchants or platforms accepting PascalCoin as a payment option, indicating this altcoin still has a long way to go before it can rival bitcoin. One final thing that sets apart PascalCoin fro other altcoins is how it seemingly favors mining with a NVIDIA GPU. Most altcoins use algorithms which make using an AMD graphics card far more convenient. PascalCoin is doing things a bit differently, although a new miner for AMD cards was released not too long ago. An intriguing take on things, although it remains to be seen whether or not PascalCoin will still be relevant a few months from now.

Top Bitcoin Communities

The latest bitcoin, cryptocurrency, and technology

Staying up-to-date about all things bitcoin can be quite challenging these days. Different communities exist all over the Internet, each of which aims to provide the latest news and insights to the masses. Cryptocurrency continues to baffle the mind of many people, here are some excellent starting points to become a part of the bitcoin community.

Bitcoin On Google+

When it comes to using social media for bitcoin news and information, a lot of people tend to overlook Google+. Although Google’s social network is far less popular than Facebook or LinkedIn, it has a vibrant bitcoin community. The largest cryptocurrency group on Google+ consists of several thousand members and continues to grow every single day.

The Bitcoin Groups on Facebook

It comes as no surprise Facebook is home to many bitcoin enthusiasts as well. Although it is not easy to find the best group, there are quite a few to choose from. Do keep in mind some of these groups may suffer from affiliate-oriented posts every now and then, although moderators do what they can to keep spam to a bare minimum.

Cryptocointalk

One of the many cryptocurrency-related forums in existence today is called Cryptocointalk. Albeit it is less so popular than Bitcointalk, CCT is quite informative and contains quite a few educative threads. Moreover, there is an open discussion related to altcoins, which can be of use to particular cryptocurrency enthusiasts. Their news section is also worth checking out, as it features new content every day.

Bitcointalk

The go-to place for any bitcoin discussion is Bitcointalk, the infamous messaging board which is home to tens of those of enthusiasts. Ranging from news to technical discussions and mining support to altcoins, it is hard to think of any resource that can’t be found there. People interested in spending Bitcoin may want to check out the marketplace section, although one always needs to tread carefully when dealing with unknown people on the internet.

 /r/Bitcoin and /r/BTC

Reddit is the front page of the Internet and has not one, but two major bitcoin communities. On the one hand, there is /r/Bitcoin, where most of the news, technical discussions, and political debates can be found. Some discussions are not allowed, though, such as talking about altcoins or highly controversial topics.

A result of this strict “regulation” of the primary bitcoin subreddit caused a second community to be created a few years ago. In the /r/BTC subreddit, there is a lot of talk about Bitcoin Unlimited and blockchain news. Do not be mistaken in thinking there is no strict rule in /r/BTC either, as political debates often turn into heated discussions rather quickly.

Chuck Reynolds
Contributor

Markethive

London Scene Round Up: PutinCoin vs.TrumpCoin

London Scene Round Up:
PutinCoin vs. TrumpCoin

 Great few weeks in the fintech capital.

ICOs remain the investment vehicle of choice for crypto-entrepreneurs

While VC and seed investment levels may have dropped recently there is no doubt the preferred fundraising method remains an ICO as a simpler, lower friction and faster means for entrepreneurs to raise capital. It has been another great month for ICOs with a couple of Blockchain Gaming opportunities, Contingency and Etheroll and with EdgeLess starting in the few days the gaming sector promises a great deal of disruption ahead.

Coupled with Lykke a crypto asset exchange, Humaniq 4.0 banking for unbanked, Melon Project for asset and Intellisys for fund management and with Chronobank just finishing, February 2017 has been a pivotal month and a major step forward for the evolution of a Capital Markets 2.0 economy. Best of all the good news is March is lining up to be an even stronger month for launching new Blockchain businesses that will create more havoc and disruption across a wide range of industries and bring about new business models and ways of exchanging products and services as value.

We will soon see a TRUMPCoin

With the plethora of crypto altcoins and Colored coins that cover almost every industry from music and entertainment, porn, supply chain, recruitment and time itself will we see a TrumpCoin increase in value when Donald the businessman finds out Vladimir Putin already has one. Will he use TrumpCoin to Trump PutinCoin?

I am not sure about the investment value of PutinCoin though given its value and MarketCap but I intend to buy TrumpCoin with its slogan “Let’s rebuild America” is encouraging and suggests his fans will start buying coins by the dozen. The Donald is sure to be very happy as of writing this article, TrumpCoin at number 102 and PUTINCoin at 109 on the long list of crypto coin tokens. Game on then.

Satoshi spotted again

I caught up with Vittalark Buttering at Liverpool Street station just by the thriving fintech hub of Shoreditch. He was looking anxious as usual.

Cointelegraph: So, Vittalark, how is it going? I have seen you since England France at Twickenham.
Vittalark Buttering:
I saw him you know, I chased him through the crowd for 40 minutes and then I lost him near the men’s toilet under the West Stand. We have the same rucksacks with a “Bitcoin Sold Here” sticker on them.

CT: Where are you off to now?
VB:
I found out that on a Friday Satoshi likes to get a pedicure at the Chinese FooSpar near Spitalfields Market run by Mr. Woo. I sent Mr. Woo one BTC and asked him to tip me off when Satoshi comes in. Vittalark then gets out his iPhone and shows me the text. The text reads: “Mr. Vit, it’s Woo here, ‘him is here’, socks are off, you cum quick, his feet in water with fishies now.”

VB: You see it is him.
Vittalark then called Mr. Woo “Mr. Woo it is Vittalark here. Just to let you know I am on my way woo be with you in five minutes, don’t let him have his shoes and socks until I get there.” And then Vittalark was gone, last seen running up Bishopsgate towards Spitalfields with his rucksack flapping his Bitcoin Sold Here sticker visible as he is clearly in a rush. Good luck, Vittalark, I hope Mr. Woo will help you get your man. I look forward to the day we can see a selfie of Vittalark and Satoshi together at last.

IBM announces HyperLedger Fabric Composer

I spent a great day at IBM Labs Hursley this week the centre of Hyperledger activity to learn more about IBMs Blockchain plans, I see them as one of the strongest and most complete Blockchain offerings available. As a cross-industry distributed ledger technology, Hyperledger is maturing fast and sits alongside Intel’s SawtoothLake and Iroha (named after a Japanese poem) that can cover most organizational and industry needs. A permissioned distributed ledger technology that doesn’t use a token and where nodes act as notary validators and where block size and consensus can be adjusted to the user requirement.

I have to say I like the look of HyperLedger, especially SawtoothLake that offers core infrastructure to support and underpin a strong IoT offering (as in Smart Planet, Smart Cities) that comes with a more economic consensus model called POET (Proof of Elapsed Time) and another partner Blockchain Iroha that offers a special link to mobile using clever APIs that open the door to Blockchain/5G integration with an extensive library of IOS and Android dev apps which will be a real game changer delivering low latency, scalable and high throughput Blockchain, when 5th Generation wireless data-comms finally rolls out.

The HyperLedger Fabric is a solid offering and fits together nicely and with the new fabric composer, it is now easier to link smart contracts, with inputs and applications. It doesn’t take too much imagination to realize that with SawtoothLake with Intel’s hardware expertise, and Iroha in toe will be part of the next generation of IoT support infrastructure enabling billions of devices to write transactions back to the secure digital ledger, at speed and scale. Should be a real winner.

ChocoholicCoin just in time for Easter

I came across Gill at the Chocolate Hotel in Oxford Street the center of London’s west end shopping district as she barged me out of the way to get to the new dark chocolate orange cups that had just gone on sale. It turns out this rather rotund lady is a chocoholic entrepreneur who goes by the name of Gillian Sweeting aka @LondonSweetLady. I decided to find out her plans to flood the London Markets with chocolate and ChocoholicCoins.

CT: What’s the big idea behind ChockieCoin?
LSL:
No its ChocoholicCoin for people who can’t get enough, who want to make sure they don’t lose out at Easter when the “easter bunnies” deliver everyone’s chocolate eggs.

CT: How does it work?
LSL:
In two ways, you leave ChocoholicCoins for the fairies who control the bunnies to make sure they come to your house and if you get caught short you can eat them.

CT: No, seriously!
LSL:
This is very serious, when you buy chocolate with our Coin you can scan the QR code on the back and see exactly where the cocoa came from, who processed it, packed it and shipped it. All production and supply chain activities are recorded on the Blockchain so they can’t be tampered with and their provenance checked.

CT: Can’t someone steal and eat the Chocolate when it’s en route?
LSL:
Not really the cartons are also tagged with sensors and any attempts to move them from their journey, open the carton or try to eat them triggers our operations center where Fred presses the RED Button that gives the perpetrator an 11,000 volts jolt.

OK, then ChocoholicCoin sounds really interesting especially the bit about paying off the fairies albeit it can all end badly as I imagine 11,000 volts would also melt the chocolate.

Chuck Reynolds
Contributor

Markethive

What Bitcoin Traders Should Know About Technical Analysis

What Bitcoin Traders Should Know About Technical Analysis

Evaluate the CryptoCurrency Market

While bitcoin traders have many tools they can use to evaluate the cryptocurrency market, one of the most tried-and-true methodologies is what's called technical analysis. Using this approach, traders can get a better sense of market sentiment and identify key trends, and, with this information, make better-informed predictions. Technicians (sometimes called 'chartists') take a practical approach, looking at a security’s history (using price charts) and applying various analytical tools to get a better sense of how the market feels about that particular security.

While 'fundamental analysis' – the counterpart to technical analysis – is more interested in determining what a security 'should' be worth, technicians are only concerned with a security’s actual price movements. By looking at bitcoin’s price history, technicians attempt to identify well-known patterns such as 'support' and 'resistance'.

Laying the foundation

To get a better understanding of technical analysis, it is important to grasp the basic concepts of Dow theory, which has provided the foundation for this practical method for evaluating securities.

Dow Theory provides a few basic assumptions:

1. The market discounts everything. All past, current and future information is already factored into existing asset prices. In the case of bitcoin, this would include variables such as past, current and future demand, as well as any regulations affecting the digital currency. The current price reflects all existing information, including the knowledge and expectations of all market participants. As a result, technicians seek to interpret what the price is saying about market sentiment to make educated predictions about what prices will do going forward.

2. Prices movements are not completely random. Instead, they frequently follow trends, which can be either short-term or long-term. Once a security forms a trend, it is more likely to follow that trend than go against it. Through technical analysis, technicians seek to identify trends and profit from them.

3. 'What' matters more than 'why'. Technicians focus more on a security's price history than the specific variables that have created this price movement. While any number of factors could have caused a security's price to move in a certain way, technicians take a more direct approach by looking at supply and demand.

4. History has a tendency to repeat itself. Market psychology is predictable, and traders often respond the same way when provided with similar stimuli. Digital currency markets, for example, have frequently provided bullish responses to key events such as news evidencing rising adoption or greater visibility.

Identifying trends

Identifying trends, or the general direction in which a security is moving, can be very helpful for bitcoin traders. However, singling these trends out can be a challenge. Digital currencies can be highly volatile, and looking at a chart of bitcoin's price movements will likely show a series of highs and lows. However, technicians know that they can look past the volatility and identify an uptrend when they see a sequence of higher highs and higher lows. In contrast, they can single out a downtrend when they identify a string of lower lows and lower highs.

There are also sideways trends, in which a security experiences little in the way of upward or downward movement. Traders should know that trends come in many lengths, including short-term, intermediate, and long-term.

Moving averages

One technique bitcoin traders can use to more easily identify trends is to use 'moving averages', which help smooth out a digital currency's price fluctuations so market participants can get a better sense of where the price has been going.

The most basic kind of moving average is the 'simple moving average', which is determined by calculating a security’s average price over a specific time period. Traders might look at what bitcoin has done over a five-day or 20-day period, for example. A similar tool that bitcoin traders can use is the 'exponential moving average', which gives greater emphasis to more recent price values when calculating an average.

By analyzing moving averages, traders can get a better sense of when momentum shifts. For example, if a five-day moving average falls below a 20-day moving average, this development could point to a bull market turning bearish. Should the opposite take place, with the shorter average rising above the longer average, the converse is true.

Chart 1: A five-day moving average (SMA 5) repeatedly surpassing a 20-day moving average (SMA 20):

Support and resistance

Another crucial tool is the analysis of support and resistance levels. By identifying these levels, bitcoin traders can help get a better sense of the supply and demand surrounding the digital currency. The support level is effectively the price at which a large number of traders are willing to buy a security since they believe it is 'oversold' (ie sold at a price below its perceived true value). As the security approaches this price, market participants step in and purchase it, creating a 'floor'.

For example, if bitcoin prices trade above $1,000 for several days, any retreat to this price level might prompt market participants to believe the currency is oversold and therefore start buying.

Chart 2: Support level (in green):

The counterpart to support is resistance, which is a price level where a large number of traders are motivated to sell a security because they think it is 'overbought' (ie overvalued due to many traders buying at excessively high prices).

For example, if bitcoin prices trade below $1,000 for several sessions, moving toward $1,000 might prompt a significant number of traders to enter sell orders for the security, thereby creating resistance.

Chart 3: Resistance (in green):

Bitcoin sometimes fluctuates between levels of support and resistance, which work together to create a range. This is called 'rangebound trading' and creates opportunities for traders to buy bitcoin when it is near the bottom of the range and sell when it is close to the top.

Chart 4: Ranges of support and resistance:

However, should bitcoin prices exit a trading range, this can result in robust trading activity, significant volatility and a new trend.

For example, if bitcoin prices break through a price level that previously served as resistance, this price frequently ends up serving as a support level. Alternatively, the opposite could happen, with the digital currency’s price falling below support, resulting in this level becoming a new resistance level.

Volume's key role

Bitcoin traders should keep in mind that volume plays an important role in evaluating price trends. High volume points to strong price trends, while low volume indicates weaker trends. If bitcoin prices experience a large gain or loss, traders should be sure to examine volume.

For example, if bitcoin enjoys a long uptrend and then declines sharply one day, it is worth checking out a volume to get a better sense of whether this downward movement represents a new trend or simply a temporary pullback. Generally, rising prices coincide with increasing volume. If bitcoin prices enjoy an uptrend, but the currency’s upward movements take place amid weak volume, this could mean that the trend is running out of gas and could soon be over.

Chart 5: Volume rising as the price climbs:

Criticisms of technical analysis

While technical analysis can be a valuable tool in a bitcoin trader's arsenal, those considering using it can benefit from being aware of the criticism brought against this particular approach. Much of this criticism comes from the 'efficient market' hypothesis, which is the idea that market prices reflect all available information.

If this assertion is valid, then there is no value to be had from conducting analysis in an effort to determine when securities are undervalued or overvalued. An Efficient market hypothesis has both its critics and advocates and arguments can be made either for or against the idea. At the end of the day, it is up to each individual bitcoin trader to consider both sides and determine what they believe.

Key considerations

By leveraging technical analysis, bitcoin traders can gauge market sentiment, identify trends and potentially make better-informed investment decisions. However, there are a few key variables they should keep in mind. For starters, technical analysis is a very practical approach, looking only at a security’s price and volume. As a result, relying on technical analysis could potentially cause a trader to either miss out on opportunities to buy bitcoin when it is undervalued or, alternatively, purchase the digital currency when the price may be inflated, at least according to the fundamentals.

To manage this risk, bitcoin traders can potentially combine fundamental analysis with technical analysis. For example, if a bitcoin trader concludes that technical indicators and patterns are telling him to buy, he can help affirm this by evaluating some fundamental data, such as the approaching SEC ruling on the Winklevoss ETF. Alternatively, a bitcoin trader could leverage fundamental analysis to determine whether bitcoin is undervalued or overvalued and then harness technical analysis to calculate the best point to either buy or sell the digital currency.

Chuck Reynolds
Contributor

Markethive

How to Avoid Losses When Bitcoin Price Goes Up and Down

How to Avoid Losses When Bitcoin
Price Goes Up and Down

Reinventing Remittances with Bitcoin

If you’re just joining the Bitcoin train, it’s probably hard to imagine what the world of early 2014 was like. The largest Bitcoin exchange at the time, Mt. Gox, had just imploded and about $450 mln in customer funds had gone missing. The market reaction to this catastrophic failure was both immediate and prolonged: Bitcoin price would tumble down a series of cliffs from a $1200 peak to a $180 floor over the next 12 months, shaking all but the hardiest of investors.

Using Bitcoin as a mode of transmission rather than a store of value

Preventing such a precipitous loss of value was one of the primary goals of Bitreserve, the startup launched by Halsey Minor in late 2013. Unlike most of the community, the founder of CNET wanted to emphasize Bitcoin’s use as a mode of transmission rather than a store of value, which immediately put him at philosophical odds with purists and crypto-anarchists.

Bitreserve’s product strategy was to mimic the function of a Bitcoin wallet, while actually storing your coins’ value in your preferred fiat currency. Sending Bitcoin to a Bitreserve wallet would instantly peg it against, say, the US Dollar price at the time of transmission. If the USD price for Bitcoin was $1,100 and you deposited 1 BTC, your Bitreserve account balance would read “$1,100” in perpetuity. When you wanted to spend some of those Bitcoins, Bitreserve would look up the USD-BTC price at that moment, and dynamically convert your dollars to Bitcoins as needed.

This meant that you avoided losses if the Bitcoin price happened to fall, but the converse was also true. When the price started to rise — as during the bull markets of late 2016 and these recent weeks — your money would be left behind, languishing in its fiat prison. Bitreserve raised close to $10 mln before going through a major revamp in mid-2015. Anthony Watson, the former CIO of Nike, took over the CEO position, and rechristened the company “Uphold.com.” It maintained the original vision of Bitreserve but did so with greater reach and a brighter color palette.

Importantly, they launched the Uphold Connect API, which allowed startups to build their own third-party financial products on top of their expanding network. Uphold was now essentially a wallet-as-a-service platform, allowing young entrepreneurs to build verticals without making large investments in the underlying infrastructure.

Two of those entrepreneurs were Antonio Garcia and Ruben Galindo Steckel, the founders of AirTM. “A year ago, [these] two young guys from Mexico City interned at Uphold’s San Francisco office,” writes Tim Parsa, Uphold’s head of Global Strategy and Markets, on the company blog. “A few months later they presented an idea for an app built on top of Uphold’s open API.”

“Human ATM” and pegged currency balances

AirTM combines two interesting ideas: Abra’s “human ATM” concept and Uphold’s pegged currency balances. It currently enables the flow of funds and exchange of currencies in some 62 countries, including Mexico, Argentina, Venezuela, the US and China. Co-Founder Ruben Galindo Steckel explains that their focus is in helping people in “harsh currency regimes” who are in need of basic financial services.

AirTM works by first connecting its customers with local “cashiers” in their country who can accept their cash deposits. Once the customer hands over their cash, the cashier will then send an equivalent amount of BTC to that customer’s balance on AirTM/Uphold. Once “in the cloud,” the customer can manage their funds as they see fit. This strategy allows AirTM’s users to maintain their money in any currency they desired, which in the case of Argentina and Venezuela, usually means anything other than their own.

Having cashiers that are based in one or more of their supported countries allows AirTM to essentially facilitate self-service remittances. As long as the sending customer has money in the cloud, they can forward it to any beneficiary anywhere in the world. That beneficiary will then coordinate with their own local community of cashiers to receive funds in their desired currency. One of the biggest surprises about AirTM is the average size of their transactions. According to Co-Founder Galindo Steckel, it’s just $36.

The global average remittance size is much higher, close to $200. The fact that AirTM’s average is small seems to indicate that they’ve found a way to sustainably facilitate micro-remittances via Bitcoin. That segment that has proven to be largely unreachable for traditional remittance providers like Western Union, whose $4 flat fees force customers to wait and batch their transactions instead of sending them as needed.

When asked what other services AirTM had in store for its users, Galindo Steckel lists “debit cards, microloans and a mobile app” as near-term improvements that the team was already hard at work on.

Chuck Reynolds
Contributor

Markethive