Cryptocurrency Mining – What It Is, How It Works And Who’s Making Money Off It

Cryptocurrency Mining - What It Is, How It Works And Who's Making Money Off It

Cryptocurrency Mining – What It Is, How It Works And Who's Making Money Off It

NVIDIA Corporation's second-quarter earnings released earlier this month, though exceeding expectations, elicited cautionary reaction from the investor as well as analyst communities. Traders bid down the stock by over 5 percent on Aug. 11.

One of the reasons cited for the negative reaction was cryptocurrency contributing to much of the outperformance.

Why should it be a cause for alarm?

Analysts Blayne Curtis and Christopher Hemmelgarn of Barclays believes revenue stream from cryptocurrency is fickle. Therefore, the analysts were not in favor of assigning a multiple to it, as it has the potential to become an eventual headwind.

Rival Advanced Micro Devices, Inc. Also had a similar tale to tell. The company indicated that cryptocurrency demand remains strong, while also suggesting that the demand might not last forever.

What Is Cryptocurrency?

Cryptocurrency, as the name suggests, is a form of digital money designed to be secure and anonymous in most cases. It uses a technique called cryptography — a process used to convert legible information into an almost uncrackable code, to help track purchases and transfers.

Giving a simple definition, Blockgeeks says it is just limited entries in a database no one can change without fulfilling specific conditions.

Cryptography is a technique that uses elements of mathematical theory and computer science and was evolved during the World War II to securely transfer data and information. Currently, it is used to secure communications, information and money online.

Cryptocurrencies allow users to make secure payments, without having to go through banks.

Some cryptocurrencies include bitcoin, Bitcoin Cash, Ethereum, DigitalNote, LiteCoin and PotCoin.

Bitcoin has the distinction of being the first cryptocurrency, having been introduced in 2009. Since then, this class of cryptocurrencies mushroomed, with more than 900 currently active.

How Cryptocurrencies Work

A cryptocurrency runs on a blockchain, which is a shared ledger or document duplicated several times across a network of computers. The updated document is distributed and made available to all holders of the cryptocurrency.

Every single transaction made and the ownership of every single cryptocurrency in circulation is recorded in the blockchain.

The blockchain is run by miners, who use powerful computers that tally the transactions. Their function is to update each time a transaction is made and also ensure the authenticity of information, thereby ascertaining that each transaction is secure and is processed properly and safely.

As payment for their services, miners are paid physically minted cryptocurrency as fees by vendors or merchants of each transaction.

The value of the cryptocurrency fluctuates based on demand and supply, although there is no fixed value for it. Buyers and sellers agree on a value, which is fair and is based on the value of the cryptocurrency trading elsewhere.

Since there is no intermediary like bank involved in the transaction, as it is a peer-to-peer transaction, the transaction fee that is associated with credit cards is eliminated. The identity of the buyer and seller are not revealed. However, each and every transaction is made public to all the people in the blockchain network.

One can acquire a cryptocurrency through exchanges found online or trade it for traditional currencies.

Assume X wants to buy an item valued at $10,000 and he realizes that the seller Y accepts cryptocurrency, say bitcoin, as a form of payment. X scouts around to find the prevailing exchange rate, say $1,000 per currency. X gets Y's public Bitcoin address from Y's website, although both parties remain anonymous to each other.

X can now instruct his Bitcoin client or the software installed on his computer to transfer 10 bitcoins from his wallet to Y's address. X's Bitcoin client will electronically sign the transaction request with his private key known only to him. X's public key, which is a public information, can be used for verifying the information.

When X's transaction is broadcast to the Bitcoin network, it would be verified in a few minutes by miners. The 10 bitcoins will now be transferred to Y's address.

Mining

Cryptocurrency mining includes two functions, namely: adding transactions to the blockchain (securing and verifying) and also releasing new currency. Individual blocks added by miners should contain a proof-of-work, or PoW.

Mining needs a computer and a special program, which helps miners compete with their peers in solving complicated mathematical problems. This would need huge computer resources. In regular intervals, miners would attempt to solve a block having the transaction data using cryptographic hash functions.

Hash value is a numeric value of fixed length that uniquely identifies data. Miners use their computer to zero in on a hash value less than the target and whoever is the first to crack it would be considered as the one who mined the block and is eligible to get a rewarded.

The reward for mining a block is now 12.5 bitcoins.

Earlier, only cryptography enthusiasts served as miners. However, as cryptocurrencies gained in popularity and increased in value, mining is now considered a lucrative business. Consequently, several people and enterprises have started investing in warehouses and hardware.

As enterprises jumped into the fray, unable to compete, bitcoin miners have begun to join open pools, combining resources to effectively compete.

Bank of New York Mellon Corp has been running an internal blockchain platform for U.S. Treasury bond settlements since early 2016, a Marketwatch report quoting Morgan Stanley said. The private nature of the platform has kept it out of the regulatory purview. Once the bank decides to roll it out to clients and use it commercially, regulatory oversight might come into the picture.

A complete mining kit consists of graphics cards, a processor, power supply, memory, cabling and a fan, which would cost between $2,400 and $3,800 on Amazon.com, Inc. According to Bloomberg.

The top three mining hardware, according to 99bitcoins.com, are Avalon6, AntMiner S7 and AntMiner S9.

Given that existing GPUs aren't powerful enough, now miners are flocking to application-specific integrated circuits, or ASICs. To circumvent this shortcoming, Nvidia and AMD are said to be working on GPUs, which could be used specifically for the purpose.

The two companies who are dominant in consumer-grade mining hardware are Canaan and Bitmain. Bitmain, based in Beijing, does mining as well as manufactures mining hardware.

Mining Pools And Their Share Of Mining

Mining pools including bitclub network

Mining pools are concentrated in China, which boasts of 81 percent of the network hash rate.

Why Mining Chips Are A Fickle Revenue Stream

For companies such as AMD and Nvidia, which have dominant positions in the gaming chip market, a focus away from their core business may not be a prudent course of action.

As seen, these companies may have to bring out new GPUs designed exclusively for this purpose to pose a real threat to the ASIC chips, which are predominantly manufactured by the Chinese, who are notorious for their low-cost market positioning. How viable is the spend on such exclusive chips is a moot point.

Additionally, national governments and exchanges are mulling over regulation of the whole realm of cryptocurrencies. Japan has recently introduced legislation to protect users after Tokyo-based Bitcoin exchange Mt Gox collapsed in 2014. Similarly, introducing taxation such as capital gains tax on Bitcoin sales may also impede the cryptocurrency industry.

Author: Shanthi Rexaline , Benzinga Staff Writer

August 21, 2017 8:59am

Posted by David Ogden
Entrepreneur

David Ogden – Http://markethive.com/david-ogden

Understanding Cryptocurrency – How It Works, What Drives It, Should You Buy It

Understanding Cryptocurrency - How It Works, What Drives It, Should You Buy It

Understanding Cryptocurrency – How It Works, What Drives It, Should You Buy It

Cryptocurrencies have caught on in the mainstream and have made thousands of people millions of dollars. The most recent boom of Bitcoin now means that if you had invested just $500 8 years ago, you would now be a multi-millionaire. This meteoric rise in the biggest cryptocurrency by market cap has drawn a lot of attention. However, to the everyday man who is used to dealing with hard cash and actual value, cryptocurrencies can seem like an unknown and often unintelligible world. With terms like hash rates, data mining, market capitalization, and ultimately the fear of instability, there’s a little bit of a harsh learning curve to the technology.

In this article, I’m going to try to give a beginner’s guide to cryptocurrencies, explain how they work, what moves the prices, and whether you should invest.

What are cryptocurrencies?

Cryptocurrencies are essentially digital mediums that can be exchanged, just like government currencies, that use cryptography, or digital security measures, to secure the exchange of digital information and control the creation of new units. Explained even more simply, cryptocurrencies are digital coins that fluctuate in value similar to stocks with their exchange being backed by digital security measures.

Cryptocurrencies are digital currencies or money that is then exchangeable for physical money, like dollars. They’re comparable to how most apps have some form of digital money, like “orbs” in a mobile game that cost some amount like ” $10 for 1000 orbs.” In this instance, each in-game “orb” would be worth 1/1000th of a dollar. Even though these orbs are just data on your mobile device or on some server, they have some inherent worth equatable to dollars. In an extremely general context, this is what a cryptocurrency is.

So, how do they work?

In essence, cryptocurrencies provide a viable method of owning a unique digital currency which presents some ever fluctuating value. Each coin or currency, like Bitcoin, Ethereum, or Litecoin, are fully self-contained digital systems that both track and control each unit of cryptocurrency.

Each individual coin of a cryptocurrency acts like data moving through a network. Some cryptocurrencies can be valued as small as just 1 cent and others as big as 1 billion dollars. Some currencies are controlled by one entity, which is referred to as a centralized currency, and others are controlled by the public, which are decentralized. There are positives and benefits to each variation, but the stress should be placed on the fact that no cryptocurrency is identical to the next.

What drives them?

One of the most prominent aspects of cryptocurrencies is the fact that there isn’t a third part that verifies the transaction of crypto coins. To avoid this, cryptocurrencies use timestamping methods to verify each transaction. Bitcoin, which is the most popular crypto and largest by market cap, uses a proof-of-work scheme, which is commonly referred to as mining. In essence, mining Bitcoin means tasking a computer with solving some complex problem. When the problem is solved, the computer account is rewarded with a portion of Bitcoin relative to the amount of work it put in to solve the problem. This verification network gives Bitcoin value and backs up transactions. By having this in place, someone couldn’t just write code and give themselves x amount of bitcoins.

In many ways, cryptocurrencies are like stocks. Positive news about a certain coin’s security or general acceptance can drive the price up. The same is inversely true if coins are deemed unuseful in certain applications. Part of what has played into Bitcoin’s rise is that many retailers accept Bitcoin as currency. This makes the cryptocurrency easily translatable to physical value, thus influencing the price per Bitcoin accordingly.

The true answer to what drives cryptocurrencies is obviously much more complex due to the number of factors that go into the “value” of a currency.

Should you invest?

The answer to this question is likely the same for whether you should invest in stocks. While cryptocurrencies have experienced astronomic growth in recent years, these gains aren’t necessarily guaranteed to continue. You should only invest in cryptocurrency if you are willing to take on some risk. With that said, there are currencies that are more stable than others.

Litecoin, which is often regarded as the silver to Bitcoin, has been found to be a very stable currency of growth in recent months. Whereas Bitcoin, currently trading at all time highs, is known to make corrections of 30%, represents a large loss if you were to invest now.

The volatility of cryptocurrencies presents opportunities for day traders, and the significant long term growth of cryptos present great opportunities for long term investors.

You should do a significant amount of investigation into what cryptocurrency you want to invest in, just like any stock, before you buy. Buying can be done on many secure mobile apps or other online platforms. A quick Google search of where and how to buy cryptocurrencies can yield you with this information with ease.

To summarize, cryptocurrencies are often decentralized digital currencies that draw value from security, anonymity, and authentication measures that fluctuate much like stocks that can be traded and exchanged for “true value” currencies. While it may still sound hard to understand, a little bit of research into crypto can go a long way. Cryptocurrencies are here to stay, and while awareness of them is growing with the general public, people with actual knowledge about how they work is still very small. By taking the time to research and understand, you present yourself with an opportunity to excel in a technologically growing industry.

David Ogden
Entrepreneur

Author: TREVOR ENGLISH

David Ogden – Http://markethive.com/david-ogden

What Would Happen if Cryptocurrency Became More Popular Than Cash

What Would Happen if Cryptocurrency Became More Popular Than Cash?

t's not outlandish to think that our current financial system will soon be replaced by cryptocurrency, and the shift will bring about some big changes to the global economy.

THE FLIPPENING

For a time, Bitcoin seemed unassailable in its dominance of the cryptocurrency market, being the first digital currency to really take root and establish itself in the mainstream. Since then, a host of worthy competitors have emerged, and there’s a real possibility that the balance of power could flip.

Many who have been regularly following developments in the cryptocurrency market refer to the tipping point where one digital currency supersedes another as “the flippening” We almost saw this occur in May 2017, when Ethereum’s market cap approached Bitcoin’s amid a surge in popularity.

When individuals have significant amounts of money invested in one cryptocurrency over another, it’s no surprise that tensions run high when they go head to head. However, these squabbles over which coin is best might be distracting us from a more pressing issue.

Some observers would argue that the true flippening isn’t a case of competition between two different forms of cryptocurrency at all. The sea of change yet to come could have more far reaching consequences, if and when digital currency as a whole becomes more popular than conventional fiat currency.

NEW MONEY

There would be some major advantages to an all-cryptocurrency future: its value can’t be manipulated as easy as fiat currency, and it lends itself to the concept of universal basic income. In fact, several different programs, such as uCoin and Cicada, are already using cryptocurrency to distribute UBI.

In a future where our transactions with shops and services are likely to be handled by automated systems, cryptocurrency removes many of the intermediaries that would take their own cut. There are many benefits for the individual, but the flippening stands to pose some major challenges for the global economy in its current form.

Should cryptocurrency manage to jump ahead of fiat money in terms of usage, cash won’t be able to close the gap. That’s the trick to the flippening — once changeover takes place, the losing party loses value and can’t do anything about it.

If everyone begins using cryptocurrency, infrastructure would need to be developed with that in mind. It might not take too long for cash to become incompatible. At this point, it remains to be seen whether established financial institutions could pivot to that new status quo in time.

At the highest level, governments will be hit hard, as they will no longer exercise the same level of control over the country’s currency. The idea of printing more money has been raised time and time again in response to financial turmoil, but that option disappears once currency has to be mined.

The flip from fiat money to cryptocurrency is a very real prospect, and it could well change the face of how our society spends and saves.

David Ogden
Entrepreneur

David Ogden Cryptocurrency Entrepreneur

Author: Brad Jones

David Ogden – Http://markethive.com/david-ogden

U.K. Authorities look to Deem Bitcoin as Cash to Facilitate Cryptocurrency Seizures

A new report, published by the N8 Policing Research Partnership, states that law enforcement faces various challenges when it comes to cryptocurrencies and that, although these challenges are mostly driven by the lack of knowledge and tools, they would be lessened if bitcoin were categorized as cash. This would facilitate seizures in the cryptocurrency, which the report states facilitates money laundering and criminal activities.

The report starts by associating bitcoin with cybercrime, using WannaCry’s global ransomware campaign and its effects on the NHS as an example of how bitcoin facilitates criminal activities. According to the report, cryptocurrencies facilitate criminal transactions and crimes. It reads:

“Cryptocurrencies (mainly Bitcoin) have become a popular choice of criminals. They are facilitating criminal transactions and also crimes such as money laundering, extortion (following data breaches), blackmail (the threat of DDOS attacks) and fraud.”

It even states that cryptocurrencies such as monero and bitcoin have become a popular choice for criminals, adding that according to Europol 3% of all money laundering globally is now done through cryptocurrencies. Notably, back in July a report from the European Commission to the European Parliament and Council found that terrorists and criminals are rarely using cryptocurrencies, although it added that the lack of regulations pose the threat of them being misused.

Notably, N8’s report recommends the U.K. Home Office, an organization that oversees law enforcement agencies in the country, to classify bitcoin as a form of cash, to make it easier to seize the cryptocurrency. It states:

“A recommendation has also been made to the Home Office regarding a potential legislative amendment to categorise bitcoin as cash for the purpose of cash seizure legislation”

Moreover, as a result of its research, it found that U.K. law enforcement has significant knowledge gaps when it comes to cryptocurrencies, and as such a training program is recommended to improve development.

The report also says that bitcoin’s underlying technology, blockchain technology, poses “some potentially interesting opportunities for investigators”, and therefore it is essential to adopt a strategic training approach to law enforcement in the country.

How researchers got to their conclusion

As part of the report two scenarios were conducted: one in which researchers purchased items from dark web marketplaces using bitcoin and monero, and then executed a mock warrant, and a sextortion scenario in which officers analyzed transaction data on the blockchain to then execute a mock warrant and seize bitcoins.

It found that the lack of regulations for bitcoin ATMs in the U.K. is a vulnerability that can help criminals launder money. Regarding exchanges, it noted that these have been attempting to comply with international money laundering standards, conducting KYC (Know Your Customer) checks. It adds that further industry collaboration is needed as criminals can still bypass these checks.

Finally, the report notes that a number of tools are available for law enforcement to trace bitcoin transactions in the blockchain, but adds that these require knowledge and expertise. Some companies offer user-friendly alternatives, but access to these alternatives is limited in the U.K.

Whether the U.K. Home Office will approve legislation that will categorize bitcoin as cash is unclear.

David Ogden
Entrepreneur

Author: Francisco Memoria

David Ogden – Http://markethive.com/david-ogden

Is Investing in Bitcoin and Other Cryptocurrencies Worth the Gamble

The Technology Behind Cryptocurrencies

The creation of Bitcoin back in 2008 fueled the exponential growth of the cryptocurrency ecosystem, facilitating the creation of a rich diversity of coins and applications that many would deem revolutionary. Those who invested in cheap coins at the outset are reaping huge returns on their capitals, dwarfing the average returns one can acquire in the stock markets. Think about it; if you had bought $1,000 worth of Bitcoin in 2010, you’d be worth a staggering $35 million now. The possibility of earning colossal returns has attracted many to the arena, and this begs a crucial question: Is the hype on cryptocurrencies warranted or it is just a game of Russian Roulette?

The birth of Bitcoin – the first digital cryptocurrency that is decentralized by design – gave rise to a technology with the potential to redefine the very fabric of our status quo. This technology is called the Blockchain, which underpins Bitcoin’s protocol.

“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.” — Leon Luow, Nobel Peace Prize nominee

Blockchain is essentially a distributed, digital ledger where every transaction is broadcasted publicly and recorded chronologically. The database is ever growing, expanding in tandem with the amount of transactions made on the network. The decentralized nature of Blockchain technology ensures that transactions are immutable and thus immune to change, offering full transparency for each and every transaction. Add to that the traits of increased security, higher efficiency, error-resistant and reduced transaction costs, it leaves no doubt as to why many are excited about Blockchain’s possible use cases. The utility of Blockchain technology is endless, with an ever-growing list of governments, industries and companies looking to further explore its usage.

Hotbed for Money Making

The birth of a revolutionary technology would always entail those looking to capitalize on its profitability. Blockchain is no different. Investors, traders and speculators can get in on the action by buying cryptocurrencies, which are digital currencies manifesting as variant applications of the Blockchain technology. There are over 900 coins available, with each offering a slightly different approach to solving a range of problems. Many early adopters have made a great sum of money, by buying the coins cheaply at its outset and realizing them much later on. Based on the statistics provided by ICOSTATS, the return on capital of 40 cryptocurrencies since their inception stands at a staggering 6703%! In order for you to earn similar rates of returns in the stock market, it will take you approximately 957 years.

These stellar returns inevitably attract many who are looking to earn multiples over their capital. Given the extreme technicality of cryptocurrencies and the underlying Blockchain technology, many do not fully understand the fundamentals of what they’re investing in. The immaturity of the current infrastructure – stemming from the relative infancy of the cryptocurrency industry — results in an inefficient price discovery mechanism, thereby creating an extremely volatile market environment. This poses huge risks for those looking to invest in a comprehensive list of coins.

Simply entering the market with the hopes of massive short-term gains without understanding the coins and their technology is akin to playing a deadly game of Russian Roulette. The radical volatility of the coins’ prices may significantly put your capital at risk. Just to draw a picture, Bitcoin’s price lost 40% of its value in a matter of days in December 2013, and at the start of this year, Bitcoin lost approximately 34% of its value in a week. While this can spell doom for many, there are those that find gratification by profiting from the intense gyration of prices.

The Verdict?

Nine years after Bitcoin kickstarted the technological revolution, the ecosystem centered around Blockchain technology has flourished and is looking ever so promising. New coins solving real world problems are launched at a tremendous pace, with new functionalities and applications pushing the boundaries of this nascent technology. With increasing user adoption and a keen interest by nations and corporations, it is only a matter of time before Blockchain technology becomes ubiquitous in our lives.

A flip side of this emergent technology is the great risks associated with investing in cryptocurrencies, especially for those with a short-term horizon and an absence of understanding in the coins they have invested in. Truly, the extraordinary volatility unique to cryptocurrencies creates a superficial impression of high stakes gambling in the eyes of many. Armed with the right understanding and knowledge of Blockchain technology, you would begin to appreciate its innate beauty.

David Ogden
Entrepreneur

Author: Aziz Bin Zainuddin

David Ogden – Http://markethive.com/david-ogden

Malta Entrepreneur has Installed the Country’s First Cryptocurrency ATM

Malta Entrepreneur has Installed the Country's First Cryptocurrency ATM

Malta Entrepreneur has Installed the Country’s First Cryptocurrency ATM

A Malta entrepreneur has installed the country’s first cryptocurrency ATM. The installation has occurred just days after local media reported that a start-up had launched a crowdfunding campaign to finance the country’s first bitcoin ATM.

The Cryptocurrency ATM Has Been Installed Days After a Crowdfunding Campaign Was Launched to Fund a Rival Terminal

A local Malta entrepreneur, Gabriel Cretu Torica, has installed the country’s first cryptocurrency ATM. The terminal has been installed outside a store in Sliema and facilitates bitcoin purchases and balances checks via QR codes.

Mr. Torica discussed the advantages of bitcoin and the speed of cryptocurrency ATMs, telling local media that “online exchanges often ask for ID verification, and that can waste up to 24 hours”. Mr. Torica also believes that the bitcoin ATM will inspire greater adoption of bitcoin in Malta. “Many people are still suspicious of bitcoin… I’m sure this will change over time as people realize the benefits”, he said.

Ivaj, a start-up and bitcoin cryptocurrency advocacy group championing bitcoin adoption throughout Malta, had already started a crowdfunding campaign seeking to raise finances for the purchase and installation of the island’s first cryptocurrency ATM. The crowdfunding campaign hopes to raise $6,000, with plans to install a second bitcoin ATM if more money than requested is received. If the campaign falls short Ivaj co-founder, Leon Siegmund, has pledged to provide the remaining required funds. Mr. Torica has stated that his bitcoin ATM had already been purchased but not installed when he heard about the crowdfunding campaign – which prompted him to contact local press.

The crowdfunding campaign is still active and has so far raised 6% of its total goal, currently having raised $368 from only 6 backers. The campaign will finish approximately one month from today. “We believe in Bitcoin’s potential and decided to invest time and effort in bringing the first Bitcoin ATM to Malta in order to unleash these opportunities to individuals, and society as a whole,” Leon Siegmund previously told The Times of Malta. “We’ve already identified a few potential locations, but it’s too early to discuss them now. What I can say is that it will either be in Valletta or in Sliema.”

Malta’s Government Has Previously Focused on Attracting Cryptocurrency Investment From Businesses

Malta’s central government has recently expressed great interest in embracing bitcoin, with the cabinet of malta approving the first draft for a national strategy designed to promote cryptocurrency and blockchain technology across the nation during April. Despite the bold rhetoric, the island still lacks basic infrastructure that will allow increased user adoption, as evidenced by the crowdfunding campaign for the nation’s first bitcoin ATM.

Malta’s government has predominantly focussed upon attracting cryptocurrency based businesses to register on their shores. Several government agencies participated in a conference hosted by PKF Malta this week that sought to “[bring] together a think tank of professionals representing a cross section of the market ranging from start-up success stories to crowdfunding, blockchain, [and] bitcoin.” The conference featured keynote speakers from Silicon Valley, and an audience predominantly comprised of representatives from Malta’s business and academic sectors.

David Ogden
Entrepreneur

Author: Samuel Haig

David Ogden – Http://markethive.com/david-ogden

The crypto-currency craze

In the late 1990s, as investors woke up to the promise of the internet, shares in any company with dot.com after its name soared to giddy heights.

Then the bubble burst.

Now there are warnings of another technology investment bubble – this time related to the fascination with crypto-currencies such as Bitcoin.

On the Tech Tent podcast this week, we examine the phenomenon of ICOs – Initial Coin Offerings – which have seen over $1bn raised so far this year from investors who get little more than a token and a vague promise of involvement in a new business.

The term ICO – designed to mirror the IPO that sees a firm issue shares and float on a stock exchange – seems to mean different things to different people. Early versions were simply ways of getting a new crypto-currency off the ground, but now many are promising to use the blockchain technology that underpins Bitcoin and similar currencies to create businesses.

Among the ICO projects listed by Smith + Crown, which researches the crypto-currency scene, is a business raising money to create the world's most lucrative lottery based on blockchain, and another that promises to rent out high-quality office space using digital tokens.

On Tech Tent, we talk to an entrepreneur who is boldly going into uncharted territory with this new investment technique. Pavlo Tanasyuk is the founder of Spacebit, which aims to create what he calls "a distributed space agency unshackled by state or national sponsorship".

Next month, he will invite investors to take a stake in this venture, which he describes as a crypto version of Elon Musk's Space X. He will only accept payment in Bitcoin, Ethereum or other crypto-currencies and in return backers will get tokens and a role in deciding how the business is run.

But the finance blogger Frances Coppola has compared ICOs to the tulip fever of the 16th Century and other investment bubbles.

"The enthusiasm for ICOs is coming off the back of the Bitcoin and Ethereum booms," she says.

She warns that such schemes are completely unregulated, and fears that many who invest in them simply won't understand what they're getting into.

"There will be scams in this – I'd be astonished if regulators aren't looking at this."

Even Pavlo Tanasyuk concedes there is plenty of risk attached to this kind of investment. "Ninety-five per cent won't deliver – but we will. It's important to set an example. We're doing something real and have a strong management team in place."

When the dot.com bubble burst, it became clear that many investors had not really understood what the firms they were backing actually did or the nature of the technological challenges they faced. Today, the world of crypto-currencies and the blockchain looks even more impenetrable.

Consider this description of one project, Neverdie, which has already raised more than $2m (£1.5m) in an ICO: "A virtual reality infrastructure platform that bridges virtual worlds with popular MMORPGs [massively multiplayer online role-playing games] on the Ethereum blockchain."

Doubtless those who have bought the coins that are meant to fund this vision have read the white paper describing the project, and the disclaimer at the end: "Neverdie Coins and Teleport Tokens do not represent ownership in any real-world companies. These tokens are designed to activate virtual utilities."

Real money is going into a virtual world and if it disappears in a puff of virtual smoke, no regulator will be there to cry foul. Let's hope those who back these kind of ventures are going into them with their eyes open.

David Ogden
Entrepreneur

Author: Rory Cellan-Jones

David Ogden – Http://markethive.com/david-ogden

Bitcoin is booming because a split in the cryptocurrency has been narrowly averted

Bitcoin has risen as much as 28% over the past 24 hours, driven by news that an imminent split in the cryptocurrency has been narrowly averted. The price of bitcoin nearly hit $3,000 late on July 20, within spitting distance of its all-time high, set last month.

The remarkable rally took place as bitcoin’s miners coalesced around one of several competing proposals that would increase the number of transactions that can be processed on the network. The issue has gained urgency in recent months, because one of the measures, known as Bitcoin Improvement Proposal 148 (BIP 148), would lead to a split in the cryptocurrency on Aug. 1 if implemented.

The price rallied as bitcoin’s miners began broadcasting their support for a less radical proposal, BIP 91, in increasing numbers yesterday. This proposal avoids the so-called “hard fork” by stopping short of altering the hard-coded limit on transaction capacities that is the bone of contention within the bitcoin world, while offering slightly enlarged transaction capacity.

The threshold for activating BIP 91 is 80% of all the processing power on the bitcoin network. That was achieved in the early hours of July 21. Currently 97% of the processing power on the network, which is largely controlled by miners, is voting in favor of BIP 91.

But it’s not settled yet. Although enough miners have signaled support for their preferred proposal—a process akin to broadcasting a preference over the network—enough of them must now run the software that implements this proposal within the next two and a half days. Failure to maintain a simple majority of the processing power, also called the hash rate, would mean BIP 91 does not activate. This would put the bitcoin world back at square one, with just a week to go before the potentially destabilizing hard fork on Aug. 1.

There are also still signs that the fundamental disagreement that led to this showdown—a “civil war,” as some call it—is far from resolved. The fight is between bitcoin’s miners and the influential programmers who contribute to bitcoin’s open-source code, known as the “core developers.” The core devs say bitcoin is at risk of being controlled by a cartel of miners who, by virtue of their huge investments in processing power, are able to dictate what changes are made to the code—anathema to bitcoin’s decentralized founding ethos. But the miners, and other heavy users, like payment processors, point out that the bitcoin network could be abandoned if it doesn’t enlarge its limited capacity soon.

The architect of BIP 91, James Hilliard, a miner himself, told industry publication CoinDesk: “This is where mining centralization makes things easier, because I can just message everybody on WeChat and help them if needed.” That may be so, but it won’t comfort the parts of the bitcoin world concerned with centralization of the cryptocurrency, even if the current fix to bitcoin’s problems goes according to plan.

David Ogden
Entreprener

Author: Joon Ian Wong

David Ogden – Http://markethive.com/david-ogden

3 reasons cryptocurrency prices are in free fall

Whether it be Bitcoin or Ethereum, every cryptocurrency has suffered massive losses over the past several days. Prices have dropped to as low as 64 percent, bringing the entire cryptocurrency market cap down to $70 billion from $110 billion.

Ethereum’s price has gone from $400 right down to $151 in about a month, leading investors to panic sell. On the other hand, Bitcoin, which dominates the cryptocurrency market is down about 36 percent from its high (it’s currently trading around $1,894). Investors are finding it hard to hold onto cryptocurrencies at such a low price — especially amateur investors who bought them at a much higher price.

So what is causing the prices to dip so low? Could they go any lower? Could the market rebound from here?

Here are a few possible causes for the recent price tumble:

1. August 1st is looming

The infamous crypto “civil war” is around the corner. The debate on whether or not to increase the Bitcoin block size has been going on for a few of years now, with disagreement between the miners and nodes.

On August 1st, we could see a split, with part of the Bitcoin network supporting a change in protocol and the other part sticking to the current protocol. The result could be a massive devaluation of Bitcoin. This particular concern is making investors nervous, and some are liquidating their BTC into fiat, which could be the cause for this free fall.

As the Bitcoin price falls further, it will take down most of the major currencies with it. It is safe to say August 1st is not only Bitcoin’s independence day, but also a big day for all the blockchain based currencies.

2. Post-ICO “startups” are cashing out

Many blockchain-based companies have managed to raise millions of dollars in ETH — through initial coin offerings (ICOs) without even having a product. Nearly $700 million was raised in total last month through ICOs on the Ethereum platform.

Needless to say, most of these so-called startups are not worth the money they have raised. For instance, the BAT ICO raised $25 million in less than a minute, Cosmos raised $16 million, Status raised $95 million, and Bancor raised $153 million. One thing these companies are good at is marketing and writing fancy white papers.

Serious startups may hold onto Ethereum when they receive their funds, but those that are looking to make a quick buck could immediately cash out. This trend could also cause honest companies to liquidate their ETH and hold their funds in fiat (because, well, less volatility).

This could be one reason the Ethereum price is feeling downward pressure. EOS, for instance, which raised $200 million worth of ETH earlier this month, has apparently been offloading its ETH to Bitfinex. EOS is not alone; TenX, which listed Vitalik Buterin as an investor, raised 200,000 ETH ($67 million at the time) in its token sale, has sold nearly 30 percent of that ETH cache already. It is not clear whether TenX’s ETH are being sold on open exchanges or directly to individual investors, but they are going off TenX’s smart contract address.

From a startup’s perspective converting ICO funds (ETH) into fiat isn’t a bad thing at all, as Jeremy Epstein explained recently on VentureBeat. It helps them stay away from a highly volatile market and focus on their project.

Still, given that many ICO project developers have no incentive whatsoever to deliver on their promises following a big fundraise, we need an ecosystem to regulate these irrational multimillion-dollar seed funding rounds — and it needs to be set up quickly. The system must ask for provable business models. The projects must have use cases, users, flowing revenue, and even profits. Also, a working prototype would be nice.

3. We’re seeing market manipulation and amateur panicking

The cryptocurrency market is as unregulated as it can get. Things that would result in jail time on the stock market are legal here. In such a scenario, it’s no surprise that big players are manipulating the markets for their own gain. It’s no longer rare for people to run bots to buy and sell cryptocurrencies.

Amateur investors, on the other hand, want to make quick profits. Once the price starts falling, these investors tend to panic sell. The combination of market manipulation and panic selling may be a reason behind the current price fall. One might argue that the market is going through its long term growth correction, but there is a chance it could be in for a deeper fall. The market could swing either way.

The bright side

Cryptocurrency is here to stay. While most of the current coins might disappear in the years to come, a few of these startups hold the potential to disrupt the entire financial system as we know it.

Some analysts are very bullish on this market and say it is still in the nascent stage with very few investors. Once the cryptocurrency market goes mainstream, the market cap will grow and so will the prices of coins.

David Ogden
Entrepreneur

Author: Anupam Varshney

David Ogden – Http://markethive.com/david-ogden

Cryptocurrencies Took A Hit, But Some Experts Say Now Is the Best Time to Buy

Cryptocurrencies took a hit Tuesday, with bitcoin and ethereum dropping significantly. However, many experts are advising investors to hold, and some are even advising people to buy now.

BLACK CRYPTO TUESDAY

Tuesday, July 11, was a rough day in the cryptocurrency world, with very few of the Top 100 Coin Market Cap list cryptocurrencies in green. At the time of this writing, bitcoin was still leading the market after plummeting by 8.8 percent on Tuesday; by Wednesday morning it climbed back a little, hovering above $2,300. Ethereum Classic fell by 18.4 percent, opening Wednesday just above $200. All of the other major cryptocurrencies did worse except for Litecoin, which dropped a relatively modest 11.4 percent.

However, it’s important to see this problem in context and remember where we were before this period of explosive growth that began just half a year ago. On January 1, 2017, bitcoin closed at $997.69; on January 3, ethereum closed at $8.35.

So while this is the first time since May that the price of ether has dropped below $200, for example, the values are still significantly higher than they were just months ago, and they have retained most of their 4,500 percent growth from this year.

HANGING IN

Some analysts predicted that July would be a critical month, given the ongoing Bitcoin network scaling issue. However, although this is certainly a time of turbulence in cryptocurrencies, many experts are advising investors to stand fast — and some are even saying that now is the best time to buy.

“This is the time for all those who thought they have missed the boat to get on board.” — Samuel Dwomfour

Initial coin offering (ICO) consultant Murray Barnetson told Coin Telegraph that holding remains the best choice even though things might still get worse, should people start to panic. ICO expert Priyabrata Dash agreed that the scaling issue underlies the overall drop in major cryptocurrencies, but told Coin Telegraph that August may well be positive.

Bitcoin Powpow’s Edward Cunningham also spoke to Coin Telegraph: “We have all known that July was going to be a bumpy month due to the BTC possible split drama which only adds to the ICO’s dumping for liquidity — let’s hope beginning August the trend changes and heads North. In the meantime, hold as best you can.”

Ghana Blockchain Institute president Samuel Dwomfour is among the experts who think now is a good time to buy. “I’m not perturbed at all. This is the time for all those who thought they have missed the boat to get on board,” he told Coin Telegraph.

David Ogden
Entrepreneur

Author: Karla Lant

David Ogden – Http://markethive.com/david-ogden