80% of all Bitcoins Will Have Been Mined In a year From now

The World Bitcoin Mining

is in for quite a reality shock in about a year from now. As most people are well aware of, the amount of bitcoins being mined every day is much compared to a few years ago. What is even more intriguing is how the vast majority of BTC has been mined already. In January of 2018, 80% of all 21 million BTC will be mined and brought into circulation. A significant milestone that should not be overlooked by any means.

Inching Closer To 80% Of All Bitcoins

It is quite interesting to think about how far bitcoin has come since its inception. With a  hard limit of 21 million BTC to be generated by 2140, a lot of people assume there are still a lot of coins to be mined for the next few years. While that is true up to a certain extent, we are getting closer to 80% of the finite supply being brought into circulation already. Said milestone will take place roughly 365 days from now.

It remains a bit unclear as to what this will mean for the price per individual BTC, though. Asa mining becomes more difficult and less profitable unless continuous new investments take place, the price per existing bitcoin should go up in value. Moreover, with “only” 4.2 million coins to be generated after January 2018 = over the course of nearly 122 years – the demand for bitcoin should increase as well. However, neither of these factors are a given, as the cryptocurrency market does not operate like more traditional models.

At the same time, the 80% milestone could force some miners to shut down their operations. We have seen some major mining difficulty spikes over the past few weeks, and that trend will continue for quite some time. A higher mining difficulty requires more hash power and electricity to mine the same amount of bitcoin. For a lot of miners, January 2018 may become a good time to call it quits once and for all.

Should that happen, however, things will become even more intriguing. If there were fewer miners, it is expected the mining hardware manufacturers will take an even larger stake in the bitcoin mining process. Companies such as Bitmain and Bitfury have brought a lot of mining hardware online over the past few years. With more energy-efficient hardware still being developed, it is not unlikely a certain degree of centralization will occur in the mining world.

One of the lingering questions being asked aloud is whether or not we will ever see 100% of bitcoin’s entire supply be mined, to begin with. The final 5% could prove to be challenging, as the trade-off between costs and earnings will make it seem far less attractive to do so. It will take a very long time to mine the 21st million BTC, that much is already a given at this point. In fact, most people alive today in the bitcoin world will never that happen.

The coming year could become a very important one for Bitcoin as a whole. Albeit there are no guarantees or certainties, once 80% of the supply is mined, things will change eventually. Whether that will be in positive or negative fashion, remains unknown at this point. We live in very exciting times, especially when one has grown fond of the concept of bitcoin and cryptocurrency.

Chuck Reynolds
Contributor

Bitcoin Price Growth, Global Adoption Depend on Japan’s Confidence in Bitcoin

  

Bitcoin Price Growth, Global Adoption Depend on Japan’s Confidence in Bitcoin

As long as Japan does not fail in what seems to be an effort that is making Bitcoin bigger, the world's top digital currency would always be a success. One latest example is the adoption of the AML/KYC rules for Bitcoin exchanges in the country. Like China, Japan is now impacting meaningfully on the Bitcoin market whenever the third largest economy in the world comes out with a move that causes a change.

Bitcoin price affected

With the recent development in which Japan recognized Bitcoin as a legal method of payment starting Saturday, April 1, the Bitcoin price has seen a steady climb over the $1100 range by the start of Monday. The recovery from the dip where the Bitcoin price had been over a week ago when the deadlock over the scalability issue had heightened has been attributed to a growth in Bitcoin demand from Japanese consumers after the government passed a law which basically says officially that Bitcoin users will not be taxed directly.

Rather, it brings up the issue of AML/KYC which caused a heated debate. Some users are in favor of it preferring exchanges operating legally so that they can be law-abiding, pay taxes on behalf of users and guarantee some form of protection for users’ money.

New law

Japan’s new law has been on debate for months following the collapse of the Mt. Gox Bitcoin exchange. The law’s passing brings Bitcoin exchanges under Anti-Money Laundering/Know Your Customer rules as it is the case in China. The exercise in verification will expectedly increase trust in Bitcoin and probably forestall a recurrence of the Mt. Gox case.

Coincheck's Kagayaki Kawabata told Cointelegraph:

"While market cap and usage of cryptocurrency is scaling significantly in past few years, Bitcoin and cryptocurrencies are something that can't be ignored. The Mt. Gox incident took place in Tokyo. This experience I think has made Japan decided to regulate them in order to protect the customers. I think other countries will follow Japan if this new regulation works out."

Tax issues

The AML/KYC process will also serve as a link between the government and Bitcoin which is what many people believe is still missing for the ecosystem to grow into a regulated market. For Bitsquare's Ken Shishido, the development is a result of years of industry effort in lobbying policy makers and not necessarily the government taking a proactive approach nor wanting to make Bitcoin bigger and better.

Tax implication is not finalized yet but it is a huge deal that consumption tax is now officially exempted, he adds. From China to Japan and other countries, it is now clearer that governments are on the way of recognizing Bitcoin as a financial instrument. But to make the digital currency go mainstream everyday users need to support it as a common practice.

Why Japan Matters

Japan does not seem at all worried by the general attitude of some countries to digital currencies like Bitcoin. The country’s level of confidence in Bitcoin is overwhelming despite the negative history it has had with the digital currency. Based on this level of trust and interest in the currency, the success of the ongoing experimentation will help show how possible legislations can work with Bitcoin.

It will go a very long way to draw other countries that are still skeptical about Bitcoin into the fold as well be a good form of advertisement to the wider global community – especially governments. The legality of the state is always a boost for the justification of Bitcoin. For a big economy like Japan to trust Bitcoin as a payment method speaks volumes. It is a sign that it could be a significant tool that could bring advantages over sentiments that point to negativity.

Shishido says:

“Not sure other developed countries will follow suite anytime soon but maybe countries like Singapore, Hong Kong, Estonia, Switzerland and etc. If some countries do recognize it as a legal tender, it will be a game changer. Japan’s legal status is “currency-like property with consumption tax exemption. If one country recognizes it as a legal tender, all United Nations country will need to acknowledge, too.”

One other factor to note about Japan's impact on the Bitcoin price is that when it happens, the price increase tends to be usually real – it would correct at some point but not to its initial take-off point. Relatedly, one of the countries picking up on a similar move is Mexico which is working on the first draft of a fintech law that will make its central bank define the regulation that will apply to digital assets such as Bitcoin based on two criteria: widespread adoption of the public and the protocols, rules and mechanisms that allow their generation, identification, division and control.

Chuck Reynolds
Contributor

Bitcoin’s value is set to soar –
three predictions for the future
of the cryptocurrency

Utah Software Engineer Mints Physical Bitcoins

Bitcoin and digital currency more broadly is one of the most divisive concepts of our time. The idea of a currency which is not controlled by a state or a corporation and which maintains such a high level of privacy for its users is a much-needed relief for some and a threat to the whole economic and political system to others. One thing is certain: its value has soared over the past 12 months from just over $400 per bitcoin a year ago to over $1,350 in recent weeks.

Here are three predictions for the future of bitcoin…

Bitcoin will be closer to £3,000 by the end of the year

As bitcoin is primarily used for trading or transferring value, the value of bitcoin is controlled by the total value of goods in transit tied to bitcoin as the payment medium. As more and more trade is taken up using bitcoin as the transaction medium, the value of bitcoin will rise to equal that trade.

With non-digital currencies, this valuation fluctuation can be controlled by the government or state monetary authority controlling supply (through variation in the amount of currency created) and controlling demand (through setting interest rates). However, governments cannot control the supply of bitcoin so as the currency becomes more widely used, a continuous increase in the value of bitcoin is predicted. This theory is born out of research undertaken by the World Economic Forum.

Money laundering poses a big threat

While many will associate the use of bitcoin with the purchasing of illicit materials from sites such as the now defunct Silk Road, there are now potentially much more lucrative opportunities for criminals. The dark or shadow economy is estimated to take up somewhere in the region of 17 percent of the world’s total GDP. Due to the level of anonymity bitcoin provides, there is a huge opportunity for its use to avoid anti-money laundering legislation. Any increase in use here would result in a reflected uplift in the value.

Governments will try to control bitcoin (and fail)

As bitcoin becomes more pervasive, we predict governments will try to control it, try to understand more detail about how it is being used and try to monitor its use in the dark economy. However, because of the structure of bitcoin, and the encryption and anonymity which is baked into blockchain there is very little opportunity to control this. The only clear way for nation states to control the distribution of the currency would be for them to buy up the supply and stockpile bitcoin, as many have done with gold.

Regardless of what bitcoin is being used for, the key takeaway is that it is being used more and more widely and that this expanding use is resulting in a corresponding uplift in value which shows no sign of slowing anytime soon.

Chuck Reynolds
Contributor

 

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Trade Coin Club

Bitcoin prices have recently fallen from Parity with Gold, so it could be a good time buy. Now for people who purchased bitcoin when it was over 1,000pounds per coin, they are facing a loss. To be honest this is quite normal with chryptocurrencies which are more volatile compared with fiat currencies. The long term futures for the likes of of popular chryptocurrencies such as bitcoin and Etherium are good.

Rather than question and worry that you might have purchased at the wrong time and now you are facing a loss, you might want to consider a way of putting your bitcoins to work for you. Just as you can trade fiat currencies and earn money when prices rise and fall, you can do the same with chryptocurrencies.

I recently joined Trade Coin Club, which allows members to trade bitcoins and earn revenue from an automated trading systems which follows the top ten popular chryptocurrencies. You do not need to have any experience either of chryptocurrency or trading this is all taken care of on you behalf. Once you have purchased a membership, a proportion of the amount you paid is traded on the system 5 days a week and the income you gain can be withdrawn or traded in     the following week.  

The lowest membership fee will cost you 0.36 bitcoin or around 300 pounds, and to protect you from loss only part of this money is traded. I believe this is a great way to put you bitcoin to work with a minimum of risk.

David Ogden
Entrepeneur 
                           

Make Money when Bitcoin Crashes

Last week the Winklevoss Twins had their Bitcoin ETF denied and panic selling ensued, it’s a good time to talk about what to do when the prices drop sharply in a short period of time. Bitcoin was at a high of almost $1300 and within hours had dropped below $1000. It appears to have slowed down around there, now having climbed back up to over $1100.

If you’re business-minded, you already see where the opportunity was here. If you had been able to get anyone to sell you bitcoins at around $1000 as it fell, you’d already have made more than $100 on each one. That’s a tidy, fast profit. Bitcoin traders love the volatility of the market.

Now of course there is a problem with this, in that you have to know when to sell and buy, and most people do not have the time for this.

The solution that many people are turning to is Trade Coin Club which has an automated trading system which not only trades in bitcoin but other popular Cryptocurrency such as Ether or Dash plus others. This creates many more opportunities to put your bitcoin to work and earn more bitcoins as the markets move up and down.

So how do you get started. The first step is to purchase some bitcoin. Then transfer them to Trade Coin Club, Minimum 0.3 Bitcoin or up to 5 Bitcoin. Once you have bitcoins in your trading wallet, you need to set your level of risk and put on a trade on Monday. Your coins will be traded until Friday and you can see the results prior to setting a new trade on the following Monday.

Trade Coin Club cost nothing to start with, however once you start making a profit you will start to incur some regular charges. You can also earn commissions for introducing other people to help offset these charges.

I have previously traded currencies but Cryptocurrency are a more volatile investment which is why Trade coin club have a built in stop loss system to protect you bitcoins and reduce possible losses.

If you have any questions, I suggest suggest you join without obligation and I will be happy to contact you and discuss the matter further

 

David Ogden
Entrepreneur

 

 

6 Mar / 2017

Earn Free Bitcoin

The use of Bitcoin is spreading throughout the world and the price has reached a level that the coins are becoming more valuable than gold. The present price can lead people to think that they cannot afford to purchase bitcoin. This is not  true however and you do nor  have to  purchase one coin, you can purchase  just part of one down to 0.00000001

I have been collecting bitcoin for the past couple of months by completing online surveys as part of a daily routine nad have been rewarded for each survey with between 100-900 bits which equates to £0.5 to 1,25 per day. this might seem like small change, however every bit counts and I now have over £100 worth of bitcoin, which will only appreciate in value.

I was skeptical in the beginning as I have filled in surveys in the past and not being paid. but this survey works and more money is added to cryptocurrency wallet every day.

I am also looking forward to joining a new investment opportunity which will allow me to trade cryptocurrency and share in profits.  The combination of both earning bitcoins with one company and then trading in Cryptocurrencies would seem to offer a good opportunity, for anyone who has time on their hands, to create some savings.

David Ogden
Entrepeneur

 

 

 

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Dutch and Korean Mainstream Media Extensively Cover Bitcoin Rally

Bitcoin is sustaining a strong price rally, maintaining its stability at the US$1,020 margin. Within seven days, the price of bitcoin rose by 9%, pushing the demand for the digital currency in exchanges worldwide. As a result, bitcoin began to gain extensive coverage by mainstream media in South Korea, Belgium, and the Netherlands.

Extensive Coverage in Belgium and the Netherlands

In the Netherlands, de Volkskrant, leading daily morning newspaper with a circulation of nearly 250,000 nationwide and De Telegraaf, the largest Dutch daily newspaper with a circulation of 430,000, provided extensive coverage on bitcoin and its recent price rally to their mainstream audience ever since bitcoin reached the $1,000 milestone.

Analysts at De Telegraff offered insightful and accurate assessment of bitcoin’s rising value, stating that current global economic instability and uncertainty led to the increase of demand for bitcoin. Researchers at the firm also mentioned China’s role in bitcoin’s recent price rally, explaining that investors, traders and households purchased bitcoin to move the Chinese yuan out of the country.

De Telegraff stated:

Bitcoin has in recent months was sought after by investors due to the uncertainty in the international economy. According to analysts, the popularity of bitcoin is enhanced by strong demand from China, where virtual currency investors are seeking for an interesting alternative to the yuan.

While tightening regulations and capital controls initiated and imposed by the Chinese government indeed played a vital role in pushing the price of bitcoin, experts like Vinny Lingham told users and investors that it is important to consider the impact of the Federal Reserve’s increase in interest rates on bitcoin.

The global economy is dependent on the US dollars directly and indirectly. Currencies like the Chinese yuan and South Korean won depend on the performance of US dollars and thus, when the US dollars rise in value, they decline in price.

Inevitably, when the Fed raised rates in December, the demand for bitcoin surged in countries like China and South Korea due to the rising number of investors and traders seeking for alternative assets to avoid currency devaluation.

De Tijd, a major newspaper in Belgium with 41,000 in circulation, also provided coverage on bitcoin on its online media outlet, emphasizing bitcoin’s strong performance throughout the year. Analysts at De Tijd noted that bitcoin was worth less than $500 in the beginning of 2016 and it reached a 3-year high price on the first day of trading in 2017.

South Korea: Fed Rate Hikes, Bitcoin Demand Rises

The South Korean economy is slowly recovering from controversies surrounding President Park’s involvement in bribery and other serious offenses.

When the Fed announced its plans to raise interest rates last month, mainstream media outlets in South Korea expressed their concerns with the decreasing value of the South Korean won. Such coverage led to increasing demand for bitcoin within the country and ultimately, extensive coverage from mainstream media.

Mainstream media coverage in leading countries like the Netherlands and South Korea are exposing millions of people to bitcoin on a daily basis. If bitcoin continues rise in price, it will aid mainstream adoption of the digital currency in the long run.

Image from Shutterstock.

 

Chris Corey Chief Marketing Officer 

Markethive 

Joseph Young on 03/01/2017​

2016 Review: There’s New Momentum For Bitcoin and the Blockchain Industry

https://markethive.com/chriscorey/page/mycrypto

2016 set the bull charging again. A combination of events, beginning with bitcoin’s popularity as a hedge that protects assets from the forces afflicting traditional markets, set the stage for the price more than doubling in 2016. The good news on the price front tempered the volatility that has historically plagued the cryptocurrency, helping to solidify its role in society.

The positive news on the price front facilitated the continuing venture capital investment in bitcoin that was evident throughout the year. Venture capital investment in bitcoin in the last three years topped $927 million.

Bitcoin was also the best-performing currency this year, climbing 21% in USD value. Its performance surpassed that of the U.S. dollar and the Israeli shekel.

Moving Mainstream

The currency has moved from an investment commodity to everyday use, according to Coupofy.com, a digital marketing concern that provides online coupons for retailers.

Overstock, the online retailer that has been one of bitcoin’s most visible supporters among U.S. businesses, in December became the first publicly-traded company to issue stock over the Internet, distributing more than 126,000 company shares using the bitcoin blockchain.

Through a subsidiary called tØ, Overstock created a blockchain-based technology to facilitate trading financial securities.

Bitcoin also moved deeper into the financial mainstream in 2016. In May, derivatives giant CME Group launched two bitcoin benchmark indexes. Intercontinental Exchange Inc., a CME Group rival which owns the New York Stock Exchange, also announced plans to launch a real-time price index for the bitcoin.

Price Surge Began Early

Bitcoin’s price rose to just below $500 after the U.S. Federal Reserve Bank raised its fund rate by 25 basis points in late 2015. The bitcoin price tracked the U.S. dollar rally against other fiat currencies.

The negative start of the 2016 stock market demonstrated bitcoin’s value as a hedge against more volatile investment options. Bitcoin was one of the few winning investments in the worst first week of the year for U.S. stocks in early January. The Dow Jones Industrial Average and the S&P 500 had their worst first weeks in history. Bitcoin, gold, the yen and natural gas were in growth modes.

Bitcoin’s price in January surged more than $20 in a 10-hour period to scale beyond $450. The climb did not occur in a straight line, however.

After falling to $360 in January, the price rebounded past $400 in February.

Fed Rate Hike Doesn’t Spook Bitcoin

The Federal Reserve Bank’s 2016 rate increase announcement in March had little impact on bitcoin. Half the market passively accumulated via limit orders placed just below price while the other half actively sold at market price.

The Federal Reserve’s early rate hike did not have a telling impact on bitcoin price.

The release of the code for Segregated Witness (SegWit) in April, an upgrade to the bitcoin protocol designed to enable more transactions within a single block of the blockchain, helped push bitcoin past $460.

In June, the price soared beyond $570, reaching a near two-year high. It hit $750 by mid-November.

Geopolitical Events Support Bitcoin

Global political events worked in bitcoin’s favor, beginning with the June U.K. Brexit referendum. After the U.K. pound (GBP/USD) dropped to $1.32, the U.S. dollar and gold rallied while bitcoin achieved a $140 gain.

Bitcoin prices were impacted by Britain’s referendum to exit the European Union.

The climb was not uniform.

Bitcoin’s price crashed in August as the Bitfinex exchange suffered a security breach that led to the theft of an unconfirmed number of bitcoins. The big exchange further announced a shutting down of its website and trading in ominous signs reminiscent of Mt. Gox.

Bitfinex got back online after advising users that they would lose 36% of their assets. The exchange levied a 36% price on all of its users, whether or not they were victimized individually by the hackers. The attack led some to believe the industry had not come up with a way to ensure security.

Others viewed the Bitfinex episode as proof that the bitcoin network is capable of withstanding negative events.

The Surge Continues

The price struck a new yearly high of $794.39 on the Bitstamp Price Index (BPI) in late December as the surge continued.

Financial adviser Martin Tillier observed that bitcoin’s previous price hikes were mysterious, but the current one is due to the devaluation of China’s currency.

Because there are logical reasons for the current price surge, the market is acting as a forward discounting mechanism and some degree of appreciation is now built into the price, Tillier noted. In addition, the interest from traders combined with the ability to short the currency allows the market to check upward spikes naturally, simply by attracting sellers.

Bitcoin gained more value than all other currencies in 2016, driven by China’s crackdown on the yuan, isolationist rumblings in the U.S. and the U.K, and increasing acceptance by consumers and businesses, according to Bloomberg.

By the time the price surged 79 percent since the start of 2016 to $778, it reached its highest level since early 2014, according to data compiled by Bloomberg. At that point, bitcoin quadrupled the gains posted by Russia’s ruble and Brazil’s real, the world’s top two hard currencies.

Hard Fork Debate Continues

Drama engulfed the bitcoin industry over the hard fork solution to address the bitcoin block size. The issue caused longtime developer Mike Hearn to announce his departure from bitcoin in December of 2015.

Bitcoin Classic – a successor to Bitcoin-XT – appeared on the scene as a possible new implementation of the bitcoin protocol.

Many in the industry celebrated the new solution, despite the reality that the coding was not complete, and that the main developer on the project once noted that he was an average C++ programmer. This didn’t stop industry leaders like Coinbase CEO Brian Armstrong from championing the technology.

The scaling debate is set to continue in 2017.

The main controversy around Bitcoin Classic centered around two opposing viewpoints. Those seeking to increase the maximum block size from 1 MB to 2 MB claimed that it is necessary to keep transaction costs down and continue the growth of the system.

Those against the block size increase argued that important technical issues were not properly addressed.

The core development team decided to take a clear direction, yet some miners, exchanges and start-ups pushed back.

The Classic camp, consisting of entrepreneurs, wanted a more immediate fix to expanding the network by increasing the block size. The Core camp, consisting of miners, didn’t want to increase the block size since some miners will be less likely to earn mining rewards.

Mining pools representing at least 70% of the total hashing power of the bitcoin network and some of the largest bitcoin exchanges said they would not support Bitcoin Classic or any “contentious hard-fork.”

Bitcoin Price Holds

When the bitcoin reward halving occurred in July, there were no price drops. Parties were held worldwide.

There was concern about miner profitability since miner rewards were cut in half from 25 to 12.5 bitcoins.

The bitcoin price eventually resumed its upward trend. One factor noted at the time was the devaluation of the Chinese yuan, driving Chinese investors to bitcoin.

In January 2017, the foreign currency cap for the amount of foreign currency that a Chinese citizen can convert ($50,000) will be reset for the new year. Inevitably, the surge in capital outflows could weaken the yuan further, setting off a market reaction that could lead to further demand for safe assets such as bitcoin.

Other factors cited were India’s demonetization drive, the unexpected Trump U.S. Presidential election victory and the U.K. Brexit referendum.

Blockchain Continues Its Surge

Investment in blockchain technology reached new highs in 2016.

Digital Asset Holdings, the New York firm developing blockchain solutions for the financial services industry, announced two new investors. IBM and Goldman Sachs joined 13 other investors with the funding scaling beyond $60 million.

Blockstream, a startup developing blockchain sidechains, raised $55 million in Series A funding, bringing the total capital raised to $76 million.

The R3 blockchain consortium which is testing blockchain technology for securities settlements and payments continued to make news. In late 2015, 12 banks joined the group. The consortium also opened membership to non-bank financial companies, including clearing houses, exchanges, standards organizations and infrastructure providers.

In November of 2016, some banks, including Goldman Sachs, one of the earliest members of the R3 blockchain consortium, reportedly chose not to renew membership with the working group.

VISA and blockchain technology partner BTL announced in September plans to invite a select group of European banks to participate in a blockchain project that will see inter-bank payments made via transfers over the distributed ledger.

Microsoft and Bank of America Merill Lynch in September announced a collaboration with the aim to “fuel transformation of trade finance transacting” with blockchain technology. The biggest changes would mean reduced transaction settlement time and newly automated processes.

R3 and 12 member banks in October trialed Ripple’s native digital currency token XRP, using the fintech startup’s blockchain technology, for cross-border payments. The trials were conducted at R3’s lab in an effort to demonstrate cost-cutting and increased efficiency of cross-border payments using Ripple’s digital asset.

Microsoft’s blockchain-as-a-service (Baas) endeavor gained new partners, including BitPay, for the service that will be made available for its Azure cloud platform.

Bitcoin entrepreneur Jeff Garzik started Bloq, a code-for-hire service to develop features for blockchain software and provide access to blockchain support. The company charges $3,000 to $5,000 per month. PriceWaterhouseCoopers agreed to sell the service to its customers.

New Blockchain Applications Emerge

Blockchain technology continued to find new applications in 2016.

Early in the year, General Motors tweeted news of its collaboration with Lyft to create self-driving vehicles. The announcement came as the industry was awaiting Ford and Google to announce a partnership for self-driving vehicles. Both of projects promise ripe grounds for smart contracts, blockchain-powered contracts that can tie IoT and vehicle finance together.

Blockchain is allowing musicians to monetize their work and engage with fans more directly. By embedding music in the blockchain, those involved in its creation can get paid immediately in cryptocurrency. Hence, the blockchain has the potential to change the way the music industry operates.

Several initiatives were announced to use blockchain technology to connect energy grids, delivering more efficient and environmentally sustainable energy. One company, L03 Energy, is building an “open source cryptographically secure” blockchain to manage transactions across a microgrid.

The hype surrounding blockchain technology has led to numerous pilots and prototypes deployed in 2016.

PriceWaterhouseCoopers, a provider of audit and assurance, tax and consulting services, teamed with Z/Yen, a London-based commercial think tank that promotes societal advancement through better finance and technology, to study the potential of blockchain technology in wholesale insurance.

Walmart and IBM partnered in October to manage the supply chain for Chinese pork on a blockchain, ensuring consumer confidence in the food industry. Teaming up with Tsinghua University in Beijing, it is hoped that by digitally tracking the movement of pork in China on a distributed ledger, food disasters will be prevented.

The issue of institutions hyping blockchain technology without bitcoin continued to be an area of debate in 2016. While many financial institutions expressed interest in blockchain technology but not bitcoin, some observers pointed out that the institutions ignore the fact that a cryptocurrency is needed to support a blockchain. One observer claimed that hyping the blockchain while denigrating bitcoin is an effort to blunt bitcoin’s challenge to traditional currency.

Ethereum Makes Waves

2016 was also a big year for Ethereum, which continues to make waves on the cryptocurrency landscape, with developers introducing new applications that take advantage of its smart contract and crowdsale capabilities. The market cap for ether, the crypto asset and token of the Ethereum network, soared above $1 billion.

As Ethereum grows, it earns media coverage which in turn fuels its growth. It attracted interest from major financial companies that are using it for private blockchains and smart contracts.

The Ethereum ecosystem continues to grow.

In May, the Gemini exchange, founded and operated by Tyler and Cameron Winklevoss, gained the approval from the State of New York via the Department of Financial Services to offer ether trading.

Ethereum witnessed some growing pains in 2016. In June, the distributed autonomous organization (DAO) was breached when an attacker drained the ether contained in the DAO into a child DAO.

In response, Ethereum developers proposed a soft fork to be followed by a hard-fork. Miners unanimously supported the fork. The discussion and debate around the DAO vulnerability raised questions about trust and the human factor in the realm of distributed ledger technology.

Ethereum’s price jumped when the fork took effect in July. The clean resolution to the attempted heist was possible due to a new, decentralized governance model where those with a stake in the system cast their decisive votes.

Regulatory Activity Increases

While regulatory actions are not generally viewed as positive for any industry, regulations in 2016 were supportive in some ways.

A European Court of Justice ruling exempted bitcoin from value added tax (VAT), which was hailed as a victory by bitcoin advocates. The case was between the Swedish Tax Authority and the nation’s Revenue Law Commission. It commenced after a Swedish citizen asked for clarification of VAT on bitcoin.

Regulatory actions in Russia, a country that has not been supportive of bitcoin, improved in 2016. The Internet Development Institute (IRI) of Russia prepared a roadmap titled “Economics and Finance” which included a proposal for regulating blockchain.

Deputy Finance Minister of the Russian Federation stated in October that the spread of bitcoin in Russia does not represent a threat to the country’s financial ecosystem at its current rate of adoption. As such, the plan to ban the cryptocurrency was put on hold. The Ministry of Finance initially proposed a 4-year prison sentence for bitcoin users late last year. In what could be seen as a move to bring respite, the Ministry then proposed a 2-year “corrective labor” sentence – a combination of penal detention and forced labor – for bitcoin adopters earlier this year.

Bitcoin’s increasing adoption and prominence has led to regulatory moves by several countries in 2016.

document by the federal tax authority in Russia in December revealed its first official stance on the legal status of cryptocurrencies. It noted bitcoin cannot be blocked or banned since cryptocurrencies can be deemed foreign currency transactions according to Russian laws.

State regulatory initiatives in the U.S. increased in 2016, indicating growing awareness of bitcoin.

Lawmakers in the State of Wyoming proposed a bill to require that cryptocurrency be treated the same as fiat currency under the state’s money transmitter’s act. The purpose of the bill is to encourage bitcoin-friendly companies to want to do business in the state.

The New York State Department of Financial Services in June approved Ripple Labs’ BitLicense application to sell and obtain XRP – the native digital asset of the Ripple Consensus Ledger, a platform used by financial institutions and companies.

North Carolina Gov. Pat McCrory signed a law that defines “virtual currency” and clarifies what activity triggers licensure. The law defined the term “virtual currency” and the activities that trigger licensure. Virtual currency miners and blockchain software providers will not require a license for multi-signature software, smart contract platforms, smart property, colored coins, and non-hosted, non-custodial wallets.

The State of Illinois sought comment on a guidance document it released on whether a money transmitter license is needed to engage in selling decentralized digital currencies. The document says the department does not require such a license since virtual currencies have not been adopted by governments as currency.

The document outlined the Department of Financial and Professional Regulation (IDFPR) interpretation of the state’s Transmitters of Money Act and seeks to establish the regulatory treatment of decentralized digital currencies.

IRS Summons Coinbase

One of the more alarming regulatory developments in the U.S. occurred in mid-November, when the IRS summoned Coinbase to provide information about its customers to facilitate the federal agency’s investigation into possible tax evasion by users of virtual currencies at any time between Jan. 1, 2013, through Dec. 31, 2015.

A federal judge approved the IRS summons, which Coinbase said it would oppose.

Mergers And Acquisitions Continue

Mergers and acquisitions continued in 2016.

Early in the year, Barry Silbert’s Digital Currency Group, an initial investor in Coindesk, acquired the publication as a whole, with editorial and business teams at CoinDesk to merge with Digital Currency Group’s events platform to form a new subsidiary based in New York.

In January, the largest ever deal of its kind in the bitcoin industry saw leading European bitcoin exchange Krakenacquire bitcoin exchanges Coinsetter and CaVirtEx.

There were also industry casualties.

KnCMiner, after winning a lawsuit against complainants who had sued over late or failed delivery of one of the company’s previous iterations of bitcoin mining hardware, filed for bankruptcy ahead of July’s mining reward halving.

The Swedish company’s CEO Sam Cole cited energy taxes and uncertainty about the future of the bitcoin mining market.

BitLendingClub in December decided to close its service designed to help small businesses in emerging markets due to regulatory pressures, the company informed customers in a blog on its website. The blog noted the company worked hard to build a platform to provide the greatly needed service.

The blog did not expand on what regulatory pressures it was facing.

Controversies Aplenty

The Silk Road saga continued to haunt bitcoin in 2016. Ross Ulbricht’s defense filed an appeal. The defense will argue that the court prevented crucial evidence from seeing the day of light.

A federal court sentenced a Utah man, Curtis Clark Green, whose faked murder helped law enforcement put an end to the Silk Road Marketplace.

In May, Norway police made their largest drug bust ever when they arrested 15 people selling drugs on what they claim is the second version of the Silk Road marketplace that the U.S. FBI closed in 2013.

Other controversies emerged. The Securities and Exchange Commission (SEC) sought judgments against Homero Joshua Garza, GAW Miners and ZenMiner, LLC, claiming they engaged in selling fraudulent investments in virtual currency mining operations.

The SEC ordered the defendants to pay $10,384,099 in disgorgement plus prejudgment interest, along with civil penalties. The SEC charged Garza, GAW Miners and ZenMiner with securities fraud and conducting a Ponzi scheme in January. The motion seeks permanent injunctions prohibiting the companies from engaging in future violations.

As an often misunderstood cryptocurrency, controversial bitcoin headlines are never too far.

Another drama surrounded the identity of bitcoin’s founder, Satoshi Nakamoto. A text analysis of Australian Craig’ Wright’s writing by a specialist working with the U.K.-based International Business Times determined that the Australian is most likely not Satoshi Nakamoto. The company used a technique that compares texts written by Wright with anonymous texts believed to be sent by Nakamoto, including the original bitcoin white paper.

The darknet continued to poke its unwelcome head in 2016. The late February terror attacks in Brussels caused French Interior Minister Bernard Cazeneuve to cite the darknet as a terrorist tool and call for measures to improve intelligence expertise in technologies terrorists use.

Ransomware Attacks Expand

Ransomware attacks quadrupled this year over last year, averaging 4,000 per day, according to the U.S. Justice Department, The Wall Street Journal reported in a front-page story. This is because ransomware has become easier to deploy and more profitable than other scams, and bitcoin is more widely used.

Nearly one-third of bitcoin trading platforms have been hacked, reported Reuters, while about half have closed up shop in their first six years.

Also read: Bitcoin Classic releases new code that could double the block size in bitcoin

Bitcoin Questions Remain

Bitcoin’s dual role as a commodity and a currency can create financial recovery disputes when a company that pays for services using bitcoin goes bankrupt.

Bitcoin’s identity as a form of money also remains undecided. A bankruptcy court judge ruled in February in one such case, stating that the cryptocurrency is not the same as U.S. currency, but making it clear that he wanted the ruling confined to a specific legal framework.

Miami judge ruled that bitcoin isn’t real money, so someone accused of laundering it shouldn’t be convicted of money laundering. This was the argument that attorneys used in asking a Florida judge to dismiss money laundering charges against Michell Espinoza, a Miami man who police say sold and laundered $1,500 worth of bitcoins to undercover detectives.

Crypto Innovations Continue

There were new cryptocurrency innovations in 2016. Zcash, a “zero-knowledge proof” alternative to bitcoin, publishes its payments on a public blockchain, but the sender, recipient, and amount of a transaction remain private. It works like bitcoin with the guarantee of anti-forgery assurances. No one can counterfeit Zcash, or spend the same Zcash “coin” twice. But thanks to its “zero-knowledge feature”, any spender or receiver can also choose to keep their Zcash payment entirely secret.

Bitcoin’s Outlook Positive

report by Denmark-based Saxo Bank claimed bitcoin’s price could rise by 165% to more than $2,000 due to an economic stimulus expected from incoming President Donald Trump. The bullish bitcoin outlook was one of 10 Saxo Bank “Outrageous Predictions for 2017.”

Bitcoin is poised to grow in 2017.

The Trump-promised fiscal spending binge is expected to add to the approximate $20 trillion of U.S. national debt, tripling the current U.S. budget deficit from about $600 billion to $1.2 trillion to $1.8 trillion.

The spending will cause U.S. growth and inflation to skyrocket, forcing the Federal Reserve to accelerate its hikes and the U.S. dollar to soar to new heights.

This creates a domino effect in emerging markets and China in particular, leading people globally to seek alternative currencies and payment systems that are not tied to central banks. Central banks engage in exhausted monetary policies that are in full financial repression mode.

Images from Shutterstock and Ethereum.

Chris Corey

CMO Markethive Inc

Lester Coleman on 31/12/2016

 

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