Čvn 19

Such Currency, Much #Fail: Dogecoin Transactions 300% Higher Than Bitcoin Cash

· June 18, 2018 · 10:00 pm

Dogecoin (DOGE) processes three times as many transactions as Bitcoin Cash (BCH) per day, data shows this month — as Bitcoin’s (BTC) hash rate expands to an all-time high. 


Unlikely Success?

Figures reproduced on Twitter by social media commentator Armin van Bitcoin confirm the curious rise of DOGE, which has seen renewed attention this year after its surprise use in a chain swap project with Ethereum.

As of June 15, the Dogecoin network’s daily transaction numbers outran Bitcoin Cash by a ratio of three to one. Against BCH’s 12,700 transactions, Dogecoin saw 38,400.

DOGE currently trades at under $0.002, having lost around half its value since April, when prices reached their most recent peak of $0.0056. The altcoin’s highest-ever price continues to be $0.017 from January, while holders continue waiting for a previously-promised hard fork later in the year.

Bitcoin Hashrate Hits All-Time High

The latest performance continues a trend which has captured cryptocurrency industry attention in 2018 — Bitcoin Cash having lost out to Bitcoin’s Lightning Network in April when its node count surpassed the number of available BCH nodes for processing transactions. Lightning had begun its mainnet existence at the beginning of the year, while BCH had debuted in August 2017.

At the same time, despite downward market pressure deflating prices, Bitcoin continues to exhibit increasingly strong fundamental network statistics.

Running data from Blockchain.info reveals the Bitcoin network hash rate reached its highest level in history earlier in June, capping an upward trend which continues to rise.

As Bitcoinist reported Monday, naysayers calling the beginning of the end for Bitcoin continue to be confined to traditional banking circles, while warnings of further price slides do not reflect sentiment beyond that of trading circles. 

What do you think about Dogecoin’s transaction numbers and Bitcoin’s hash rate? Let us know in the comments section below! 


Images courtesy of Twitter/@ArminVanBitcoin, CoinMarketCap.com.

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Bitcoins Seized From Bankrupt BitGrail by Italian Authorities

· June 15, 2018 · 9:00 pm

Authorities in Italy have seized bitcoins from the company wallets of controversial exchange BitGrail as part of standard pre-bankruptcy proceedings. BitGrail was hacked in February 2018, with $170 million dollars’ worth of Nano stolen — which subsequently lead to a major price crash for the coin.


BitGrail’s blog was updated today, June 15, 2018, with the following announcement:

On June 5, 2018, pursuant to the Tribunal of Florence orders, the Bitcoins contained in the company’s wallets were seized and brought under control of the judicial authorities pending further Court decisions in the prebankruptcy proceeding.

A news update on the website in May declared BitGrail would reopen on May 2, 2018, but was closely followed by an announcement stating the Italian court of Florence had issued a deed “requesting the immediate closure of BitGrail” and that BitGrail would comply.

Hack vs. Insolvency

BitGrail’s problems came to light in February 2018 when it reported 17 million Nano (previously RaiBlocks) — equivalent, at the time, to $170 million dollars — stolen in a hack. At the same time, reports surfaced that the exchange could be insolvent and may have been for a number of months.

Nano refused to fork its blockchain in response to the hack stating:

We now have sufficient reason to believe that Firano has been misleading the Nano Core Team and the community regarding the solvency of the BitGrail exchange for a significant period of time.

BitGrail stuck with its hacking claim, later posting on its blog that, though it wasn’t responsible, it would “meet its users half-way” by offering a settlement agreement and repayment plan for victims of the purported Nano hack.

As the news of the hack and the potential insolvency of BitGrail broke, Nano’s price began to fall — eventually crashing from $30 USD to $2.50 USD. Many investors had been encouraged to use the BitGrail platform as one of only two exchanges listing the coin until it was added to the popular exchange Binance.

BitGrail was prevented from reopening on May 2, 2018, by a court order initiated by BonelliErede — the firm assisting the 3000+ investors who became victims of the BitGrail/Nano hack.

Nano Is Moving Forward

BitGrail and Nano have argued publicly and legally over the cause of the hack and the insolvency issue. The Nano Foundation concluded in April that there was a bug in the exchange software at BitGrail.

Nano is moving on. Colin LeMahieu, Lead Developer, said in May:

While the BitGrail situation is extremely unfortunate, it has not impeded the project. We allocated significant resources towards both determining what exactly happened, as well as investigating legal options, but as far as protocol development and overall project milestones are concerned, we have continued to move forward.

Were you affected by the BitGrail hack? Tell us your story in the comments below! 


Images courtesy of Shutterstock, CoinMarketCap.com.

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Factors That Will Push Bitcoin’s Price Higher Are Gathering Steam

· June 12, 2018 · 10:30 pm

The hacking of exchanges and relentless attacks from financial powers have, in the short run, adversely affected the price of Bitcoin. However, once the news about these adverse effects fades, investors will be able to turn their focus to several bright ongoing developments.


What Doesn’t Kill Bitcoin Makes It Stronger

The recent spate of crypto exchange hacks, ongoing regulatory issues, and reports of an investigation into possible price manipulation have sent the price of Bitcoin – and nearly every other cryptocurrency – tumbling. Despite these setbacks, the growing consensus is that, given Bitcoin’s inherent resiliency, developments taking place in both technical and financial arenas will enable Bitcoin’s value to retake its ascending trajectory with even greater intensity.

For example, frequent exposure to hacking will eventually make Bitcoin and other cryptocurrencies immune to such attacks. As Forbes put it, hacking may be adversely affecting Bitcoin in the short term, but in the future, the cryptocurrency will rise stronger as a result. In this regard, Christian Ferri, President and CEO of BlockStar, declared:

As in every technology, hacking will be painful for some in the short term; but it will be a major driver in strengthening the crypto ecosystem, making it more secure, which is key for mass adoption.

Moreover, giant financial actors, including exchanges and big banks, are investing heavily and hiring talent to build Bitcoin trading capabilities.

For example, NASDAQ is planning to launch a futures market for cryptocurrencies. In fact, the stock exchange has already joined forces with Gemini, a digital asset exchange, to improve market surveillance to detect market manipulation and fraudulent trades. Additionally, a NASDAQ-powered cryptocurrency exchange platform – DX.Exchange – will be launched sometime this month.

In parallel, The New York Times reports that ICE, the parent company of the New York Stock Exchange (NYSE), is working on its own online trading platform that will allow large Wall Street investors to trade cryptocurrencies.

Goldman Sachs is already ahead of the curve, having begun offering clients the ability to trade Bitcoin futures via one of its New York desks last month. According to The New York Times:

Goldman will begin using its own money to trade Bitcoin futures contracts on behalf of clients. It will also create its own, more flexible version of a future, known as a non-deliverable forward, which it will offer to clients.

Bitcoin Transactions Becoming Cheaper and Faster

Bitcoin Transactions Becoming Cheaper and Faster

On the technical side, Bitcoin has already advanced significantly in solving a key issue – scalability. Technological improvements that include SegWit, Lightning Network, and Atomic Multi-Path Payments over Lightning, and now Bitcoin Core 0.16.0, are already solving the issue of scalability and transaction fees costs.

Recently, Bitcoin enthusiasts celebrated the launch of Bitcoin Core 0.16.0, which among novel features, introduced full support for SegWit. Prominent Bitcoin exchanges, such as Coinbase and Bitfinex immediately started to implement SegWit and, as a result, transaction fees are now lower and faster, thus facilitating near-instantaneous low-value Bitcoin payments. At the present time, nearly 40% of all Bitcoin transactions are processed using SegWit.

In addition to SegWit, many exchanges are using a new technique to increase efficiency – batching transactions. Batching further increases the efficiency of Bitcoin transactions by over 75 percent by clustering multiple outputs into a single transaction.

For a digital currency that has “died” 300 times and counting, Bitcoin’s future is looking pretty bright, indeed. Innovative techniques are making Bitcoin transactions more efficient, and its exposure to hacking attempts will make it stronger. Lastly, major financial institutions are becoming increasingly interested in trading Bitcoin. These are crucial factors that are amalgamating to drive Bitcoin’s value to new highs.

What do you think are the main factors that will eventually drive Bitcoin’s value higher? Let us know in the comments below.


Images courtesy of Shutterstock

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South Korea Claims $28M Tax From Bithumb But Finds No ‘Illegal Activity’

· June 8, 2018 · 8:00 pm

South Korea’s National Tax Service (NTS) has requested $30 billion won ($28 million) in taxes from major cryptocurrency exchange Bithumb in a move which has gained positive feedback from the community.


Bithumb ‘Will Not Object’ To Tax Bill

Local media reported on June 8 that Bithumb, which posted revenues of 427 billion won ($397 million) in 2017, will pay the bill following an audit from South Korea’s Internal Revenue Service (IRS).

As a result of the audit, which occurred in April, the IRS also confirmed that investigators had not found “any illegal activities such as tax evasion.”

An NTS official said:

The IRS has conducted a tax investigation against Bithumb for the 2014 to 2017 business years. […] We understand that Bithumb has decided to pay the related taxes without any objection to the imposed tax amount.

Cryptocurrency commentators received the news warmly on social media, noting that Bithumb getting the all-clear from regulators marked a positive step forward for South Korea’s exchange industry.

South Korea Stabilizes Crypto

Earlier this year, the government moved to clamp down on exchange operators, banning multiple accounts and forcing users to link their exchange account with their bank account. Foreign accounts were also halted, along with provisional warnings from authorities that exchanges would soon need to respond to tax obligations from the previous 2017-18 tax year.

The boon for Bithumb, meanwhile, comes as Seoul continues to consider reversing its previous ban on ICOs. A National Assembly committee dedicated to studying the ‘Fourth Industrial Revolution’ recommended during a meeting on May 29 that it plans to “establish a legal basis for cryptocurrency trading, including permission of ICOs.”

Also among its recommendations was making “improvements” to the “transparency” of the local cryptocurrency industry, along with “establishing a healthy trade order,” local news outlet Business Korea reported.

What do you think about Bithumb’s tax bill? Let us know in the comments section below.


Images courtesy of BigStockPhoto

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PayTabs CEO: ‘Cryptocurrency is Here to Stay’

· June 7, 2018 · 9:00 pm

Plenty of people remain skeptical about cryptocurrency’s future. PayTabs’ CEO, Abdulaziz Al Jouf, is not one of those people. 


‘It is out of their control’

The cryptocurrency market is notoriously volatile and still remains largely unregulated — but that doesn’t mean it should be dismissed as a failed project. According to the CEO of the Saudi-based payment processing and fraud prevention company PayTabs, Abdulaziz Al Jouf, “cryptocurrency is here to stay.”

Al Jouf believes cryptocurrencies will continue to exist and gain popularity, as none of the core problems which originally provoked Bitcoin’s creation — namely, centralization and a lack of transparency in traditional finance — have been solved. He explained to Arabian Business:

There are different dimensions and different directions where this will go. Keep in mind that until today, central banks are trying hard to ban [cryptocurrency] because they feel it is out of [their] control.

If you think back to why cryptocurrency launched, it is because of the massive collapse in 2011… [It aimed] to make sure currencies and money is protected everywhere.

While cryptocurrency is still a long way from mainstream, traditional finance hasn’t exactly regained the trust of the masses after the economic crisis — and is almost certainly never going to regain the trust of cryptocurrency proponents.

Crypto Enthusiasts Express Concern That Banks Could Take Over Bitcoin

‘Making Extra Bucks’

Al Jouf also believes cryptocurrency will stick around as a popular way to speculate and make money by trading in a volatile market. He explained:

People still use it for the fun of making extra bucks. Of course it’s risky and anything new is risky. There’s a lot of hype on how to make money out of it. I’m sure you heard that if you had bought x amount of bitcoin… You’re a billionaire today. But in reality, there’s a big issue on how to get this money out of the cryptocurrency industry.

Plenty of companies are already working on solving this issue — including Al Jouf’s. As more regulatory-compliant solutions come into play, cryptocurrency will only be further solidified as a viable means of value transfer, speculation, and investment.

Bitcoin volatility

‘Blockchain is not doing anything’

Finally, Al Jouf noted his opinion that blockchain technology is currently not doing anything of value for the real world. He told Arabian Business:

Blockchain [in its current form] is not doing anything. We need to implement it somewhere on our surface. You see a lot of people talking about blockchain, but there’s the question of why do you need to use blockchain and how you can implement it in your business. In Europe, many companies completely shifted their businesses to blockchain. We need some time in the region to see [that]… I see it progressing in some areas, but it will require some time.

During that time, expect companies all over the world to nevertheless continue implementing blockchain solutions in the race to launch the first true killer app. If and when that happens remains to be seen.

Do you agree that cryptocurrency is here to stay? Let us know your thoughts in the comments below! 


Images courtesy of Shutterstock, Wikipedia Commons, AdobeStock.

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Block.One Starts Mainnet – EOS Tokens Rise

· June 5, 2018 · 10:00 pm

Block.One, the developer of the EOS blockchain platform, has raised more than $4 billion through a yearlong sale of EOS tokens, which makes it the largest fundraising of its kind, as The Wallstreet Journal reports.


This is more than twice the size of the next largest coin offering ever of Telegram, which raised $1.7 billion, and larger than all but two of the world’s initial public offerings on stock exchanges so far in 2018. Block.One still owns 10% of all EOS tokens, adding approx. $2 billion to its balance sheet, making it one of the most well-capitalized blockchain companies worldwide.

EOS is a so-called platform token, which represents an operating system – comparable with Microsoft’s Windows OS for computers or Google’s Android for mobile phones – for the blockchain. The best known platform-token so far is Ether, the token for the Ethereum platform. The rivalry between the two systems is also a fundamental discussion between “Proof of work” (PoW) and “proof of stake” (PoS), which are two algorithms by which a cryptocurrency blockchain network aims to achieve distributed consensus.

Cryptocurrency PoW mining

PoW-based cryptocurrencies use computationally intensive puzzles in order to validate transactions and create new blocks. New tokens are created by “mining”, which equals use of energy. It makes those networks slow and expensive. There are ideas discussed at the moment how to mitigate those problems, but the general problem – that new tokens are created by mining, which imposes costs and limitations – cannot be changed. In contrast, in PoS – based cryptocurrencies, the creator of the next block is chosen via various combinations of random selection (i.e. the stake). Those platforms have no capacity issue and very little transaction costs.

One of the critical success factors for any of these platforms is to create a vivid ecosystem in a short period of time and to attract programmers and entrepreneurs who intend to build so-called dApps (decentralized apps) on those platforms. In order to boost the EOS ecosystem, Block.One has pledged to invest more than $1 billion in startups building on EOS. The funds are channeled via a variety of partnerships with renowned venture funds like Mike Novogratz’s Galaxy Digital, Eric Schmidt’s TomorrowVentures and Christian Angermayer’s FinLab. Novogratz and Angermayer (via his holding Cryptology Asset Group PLC) are also shareholders of Block.One.

While the best way to profit from the EOS success is to hold EOS token, FinLab, which is listed on the Frankfurt Stock Exchange (international securities number: DE0001218063) is a good indirect way to participate in the EOS success story.


Images courtesy of Block.One, Shutterstock

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‘Big Four’ Australian Bank Beats Bitcoin… in Money Laundering

· June 4, 2018 · 9:00 pm

One of Australia’s “big four” banks, Commonwealth Bank (CBA), has agreed to pay Australian Transaction Reports and Analysis Centre (AUSTRAC) AUS$700M ($530M USD) in settlements for breaching anti-money laundering and counter-terrorism financing laws.


During a period of 3 years, CBA had failed to report 53,506 bank transactions, improperly monitored 778,370 accounts for money laundering red flags, and filed 149 suspicious matter reports late. The scandal resulted in the departure of Chief Executive Ian Narev.

CBA denies knowingly breaching AML laws, arguing that a single coding error had led to the failure to report the 53,506 transactions. However, they did admit responsibility for a lack of proper due diligence.

“Our agreement today is a clear acknowledgment of our failures and is an important step towards moving the bank forward. On behalf of Commonwealth Bank, I apologise to the community for letting them down,” said CBA current chief executive, Matt Comyn.

Illegal transactions: Fiat vs. Crypto

This news is particularly ironic considering the accusations by the mainstream media (and Bill Gates) that Bitcoin and other cryptocurrencies are being used primarily for money laundering and funding terrorism.

Studies conducted by Colombia University Economics professor Edgar Feige have already disproven these claims, citing that almost 50% of the world’s hard currency is utilized to make Illicit transactions like drug and arms trafficking.

A recent panel held by the US Senate Judiciary on modernizing anti-money laundering laws also found that only a small percentage of illicit activity spending is done through cryptocurrency.

The fact remains that cash is offline, and therefore more difficult to trace. Digital cash is recorded on a centralized database, where institutions with their own agendas can easily hide these transactions from the authorities.

By contrast, the immutability of transactions on the Bitcoin blockchain actually makes it harder to move money around without a trace.

A recent study by Qatar University and Hamad Bin Khalifa University revealed that unmasking the users behind these transactions often requires nothing more than a wallet address and a Google search. Qatar University researcher, Husam Al Jawaheri, explained:

The retroactive operation security of Bitcoin is low. When things are recorded in the blockchain, you can go back in history and reveal this information, to break the anonymity of users.

The best drug traffickers can hope for at the moment is using coins like Monero to mask their transactions, however, even Monero has its vulnerabilities.

CBA Implementing Blockchain?

Just 2 years ago, the now-ousted CBA executive Ian Narev acknowledged blockchain’s potential to be “transformational” for customers and in reducing costs, while perhaps not also recognizing its capabilities as an immutable ledger for the Bank itself.

It’s safe to say that a CBA ledger built on the blockchain would’ve made it much more difficult to conceal 53,506 transactions, saving AUSTRAC a lot of time and money investigating the breach.

To date, CBA has spent more than $400 million on anti-money laundering compliance measures.

Do you think the bank would consider using Blockchain technology to improve compliance with AML and counter-terrorism financing laws? Share your thoughts in the comments section below!


Images courtesy of Shutterstock

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Visa Network Crashes as Bitcoin Boasts 99.99% Uptime Since Genesis Block

· June 2, 2018 · 8:00 pm

Visa’s payment system crashed yesterday, preventing credit card usage and payment processing across the entire EU, Ireland, and even in the US. Despite the issue being reportedly resolved, the incident serves to highlight the need for decentralized, stable alternatives where possibilities of the kind are simply non-existent.


In an official statement on Twitter, Visa announced that their payment processing service is experiencing a “service disruption”:

Reportedly, Visa users were experiencing serious issues with their card payments. They were receiving messages stating that there was a “disruption of service,” preventing providers receiving or sending money.

Major Red Flag

Credit card payments weren’t the only service impacted by the Visa outage. The issue also prevented many European customers from transacting with cash deposited in their bank accounts. The Irish Times reported that Irish tourists as far away as the US were unable to access their money.

Personal hassles aside, the outage could have triggered major issues for banking institutions as well. Reports began emerging of people lining up in front of ATMs to withdraw as much cash as possible for fear of a prolonged outage.

Banks like HSBC started tweeting about the problem almost immediately:

Current Problem Resolved, Underlying Issues Remain

Earlier today, almost 20 hours after Visa first acknowledged the outage, the company posted an announcement on their website, claiming that the issue had been resolved:

Visa Europe’s payment system is now operating at full capacity, and Visa account holders can now use Visa for any of their purchases and at ATMs, as they normally would.

Yet, a certain point needs to be stressed. Visa is one of the leading payment solutions providers, with millions of people using its services around the world. While it’s unclear how many of those customers were affected by the problem, one thing is clear – a problem with a single, centralized service provider can potentially leave millions of people unbanked.

Can Crypto Provide an Answer?

In the official announcement, Visa explained that the outage was caused by some sort of “system failure.” The question here is – can we afford to let a “system” and its support team determine whether millions of people across the world will have access to their money?

The problem is much larger than Visa, of course, but this particular incident clearly outlines the need for an alternative – like Bitcoin – that is immune to such “system failures.”

Decentralization could well solve all of these problems and, ironically, Visa is no stranger to the technology. In October 2016, Visa announced that it was working on a blockchain-based solution for cross-border, business-to-business exchange. Similarly, just this past month, MasterCard filed a patent for faster node verification system.

Could all of this be hinting that we are closer to the widespread adoption of cryptocurrencies and their underlying technology?

Amid all of the chaos caused by Visa’s outage, one simple truth emerged:

Do you think decentralization is the solution that major payment processors and card issuers are in need of? Let us know in the comments below!


Images courtesy of DepositPhotos

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ASUS Releases Crypto-Mining Motherboard Supporting 20 GPUs

· June 1, 2018 · 8:00 pm

Altcoin mining has gained huge popularity over the past year as people use high-end GPUs to secure networks, and major computer part makers are taking notice, developing products for this emerging market. Now a manufacturer has released a motherboard that can support 20 GPUs.


Better Hardware for Miners

ASUS announced the H370 Mining Master earlier this week, boasting the ability to support a whopping 20 graphics cards. This motherboard is specifically built for cryptocurrency miners, and the design was done in a way that allows for much more efficient connectivity by letting USB riser cables plug directly into the PCB ports rather than PCIe.

H370 Mining Master

This motherboard aims to make maintenance on fickle GPU mining rigs much easier, as the company stated that this new format is much better than adding GPUs via PCIe. This motherboard also has drastic improvements to diagnostics, an essential tool for miners.

The mining industry already has a razor-thin profit margin, and if your cards aren’t hashing what they’re supposed to be hashing, you’re losing money. High uptime is one of the top concerns for all miners.

Price Spikes for PC Hardware

Ever since the initial big altcoin boom in early/ mid-2017, GPU shortages have been commonplace for most popular online retailers. As manufacturers struggle to keep up with demand, GPU prices have risen hundreds of dollars for top-of-the-line hardware. Gamers have been outraged as well, as they’ve been unable to get the components needed for the latest, and most graphics-intensive, games at reasonable prices.

Cryptocurrency mining rigs

Along with the price gouging, however, cryptocurrency mining has opened a huge potential market for existing hardware manufacturers. Rumor has it that NVIDIA and AMD are working to build their own cryptocurrency mining ASICs to compete with current Bitcoin mining companies. The addition of two major tech giants would definitely provide some much-needed market competition.

Are you mining any coins on your home PC? Are you interested in a motherboard that supports a whopping 20 GPUs? Let us know in the comments below!


Images courtesy of ASUS, Amazon, and Shutterstock.

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4 Lies Your Economics Professor Will Tell You About Bitcoin

· May 31, 2018 · 9:00 pm

Stop trying to reinvent the monetary wheel with Bitcoin, argues Robert Skidelsky, a member of the British House of Lords and professor emeritus of political economy at Warwick University.

[Note: This is an op-ed]


Old Man Yells at Bitcoin

In an article published last week, Skidelsky draws similarities between gold and Bitcoin, concluding that it’s incorrect to perceive flaws in money itself as the cause of “sick” economies. In other words, boom and bust cycles are natural occurrences, and the incumbent financial system is the best humans can do, if only the sluggish economies could just get it together.

Skidelsky argues:

The fact is that human societies have discovered no better way to keep the value of money roughly constant than by relying on central banks to exercise control over its issue and to act directly or indirectly on the volume of credit created by the commercial banking system. 

Old man yelling at Bitcoin

But let’s leave the Keynes versus Hayek debate for another article. Instead, what stands out like a sore thumb is not only the complacency and the knee-jerk reaction to defend the status quo, but doing so through ignorance of Bitcoin’s fundamental properties.

Amusingly, Skidelsky even acknowledges that “the technical details of the new cash-generation systems are difficult to grasp; their inspiration is not.”

A person from the early 20th century might have also said that “the technical details of the airplane are difficult to grasp; their inspiration is not.”

Hence, the mere attempt to improve money is rebuked because all previous attempts have failed to come up with anything better than the paper mill that is today’s financial system. Skidelsky dismisses Bitcoin as merely the latest attempt to use new technology “to stop money from going bad.”

Let’s take a look at some examples of the erroneous statements made by the emeritus of political economy.

Lie 1: It’s Created Out of Nothing

Paradoxically, although it is created out of nothing, it will offer no possibility of money ‘creation.’

First, bitcoins aren’t created out of “nothing.” Second, since it’s already being accepted as a medium of exchange in many places online and across the globe for goods or services, then it’s de facto money. 

A Washington County is Taking Steps to Halt Illegal Cryptocurrency Mining

Furthermore, energy, coding skills, resources, and time spent on software and hardware development and production are just some of the components required to run and maintain the Bitcoin network. It is also underpinned by a globally distributed network of users who all agree to play by the rules of the network for their own benefit.

The more users in this network, the greater the value of Bitcoin will become, according to Metcalfe’s law

Lie 2: No Elasticity

Bitcoin will be ‘mined’ in diminishing quantities until it is exhausted in 2040, having delivered 21 million digital coins. In other words, there is no elasticity in the currency… [T]he currency will run into the same problem as the gold standard: not providing enough money to support a growing economy and population.

First, Skidelsky is off by a century as the last bitcoin will be mined in 2140, though most will enter the supply by 2030.

Second, the problem was never with gold itself but the debasement of gold and thus the distortion of value. For example, most scholars believe it was the “clipping” of gold coins that was largely responsible for the fall of the Roman Empire. The publicly verifiable and immutable ledger of bitcoin ensures that this monetary network can’t be tampered with, unlike with fiat. 

Third, unlike gold, a bitcoin is merely the name of a digital unit (whose value is determined by the market). This makes it highly divisible. In fact, the smallest possible unit is one hundred millionth of a single bitcoin (0.00000001 BTC) — called a ‘satoshi’— making it possible to send tiny fractions of a penny at current market prices. This can’t be done even with digital fiat today, let alone physical cash or metal coins.

This, in fact, makes Bitcoin the most elastic form of money ever created as the 21 billion digital units equal to roughly 2,099,999,997,690,000 (over 2 quadrillion) satoshis according to the calculations presented here. What’s more, new layer-2 applications built on top of the Bitcoin blockchain, such as the Lightning Network, will enable the ability to send even smaller amounts off-chain.

Lie 3: Deflation Will Lead to ‘Hoarding’

This [lack of money supply] would be exacerbated by any tendency to hoard bitcoins.

Hoarding is a pejorative term for saving. If there is no saving, then there is no capital. And there can be no capitalism without capital.  

The “deflationary death spiral” argument against sound money is an overblown theory perpetuated by Keynesian economists, which is refuted here.

In fact, some argue that saving actually leads to greater consumption in the long-run. Saifedean Ammous explains this concept in his book, The Bitcoin Standard, stating:

A society which constantly defers consumption will actually end up being a society that consumes more in the long-run than a low savings society, since the low time-preference society invests more, thus producing more income for its members. Even with a larger percentage of their income going to savings, the low time-preference societies will end up having higher levels of consumption in the long-run, as well as a larger capital stock.

You can also read more about the advantages of having a capped supply in a new report from BitMex Research here.

Lie 4: Inflation

Cryptocurrencies provide no security against inflation.

Skidelsky doesn’t specify which inflation he’s actually referring to – monetary supply inflation vs. price inflation. Though the two are correlated, the latter is an integral feature of fiat currencies whose value is guaranteed to depreciate over time as more money is printed.

inflation versus deflation

Sooner or later, the incentive for governments and central banks to print more money becomes irresistible to the detriment of the population. Inflation is also sometimes referred to as a “hidden tax” that is much easier to impose on citizens as opposed to direct taxation. 

On the other hand, Bitcoin’s monetary supply is not only controlled but is fully transparent and known to all. Even the gold supply cannot be as accurately predicted. Whereas the 21 million digital units that will ever exist are a key property of the Bitcoin protocol that cements its digital scarcity.

Put differently, the millions of people around the world who use Bitcoin today know the supply is capped, which results in more accurate price discovery for goods and services. It is also important to note that people who use bitcoin are doing so voluntarily to store their wealth and move their money.

Bitcoin Is a Revolutionary Idea

With the advent of cryptocurrencies, for the first time in history, humans now have the option to choose their money. This is nothing short of revolutionary since throughout history there was always some central authority, be it the state, the church, or a banking cartel, maintaining a monopoly over money by decree, and ultimately, by force.

Bitcoin is a revolutionary idea

Comparatively, it is fiat currencies that provide no security against inflation. In fact, fiat currency supply is specifically designed to grow indefinitely as emission rate is controlled by a handful of unelected bankers through the artificial setting of interest rates.

Rubber will meet the road as more people realize they can now opt out of this system by buying Bitcoin. The good news is that people now have a choice between trusting bankers or a voluntary decentralized monetary network with no one in charge.

What other myths have you heard about Bitcoin? Share them below! 


Images courtesy of Shutterstock, Pexels, Bitcoinist Archives

Disclaimer: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect those of Bitcoinist.com. Claims made in this article do not constitute investment advice and should not be taken as such.

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