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Bitcoin Has Crashed–What Now?

Bitcoin (BTC) has crashed. No one really knows why but in my model we should be in for “good” news on the China trade war or some such China-related information that is strong for the Chinese currency. This is only a theory but if it is correct, bitcoin will either rally vertically if no news breaks or the news will appear very soon. This is being written at 12 p.m. GMT September 25 and the news ought to be out there by no later than the end of the week.

If I’m wrong and there is no such news and the price stays down or falls more still with no positive trade war news then my bitcoin theory, which has served so well, will be severely challenged. In any event, bitcoin has crashed. The dreaded flag has broken to the downside and the bottom is anyone’s guess. The decision what to do next comes back to the schism between believing BTC will be worth $100,000-plus a coin or $0 a coin. You have to pick your side.

Way back before this year’s rally, I stated there is another way of looking at this price action. In commodities a big bubble is followed by a series of smaller and smaller echoes of the initial price shock which erupt over time as the years pass.

Each new price eruption is smaller than the last until the original bubble is all forgotten about. If this is your model, this BTC bubble echo is now dead and BTC will fall back to the $2,000-$3,000 range or even lower. Then after a year or two there will be another small vertical and on this pattern will go, until bitcoin is all  but forgotten.

Today In: Money

The alternate model is the tech boom, where the original bubble was replaced by another bigger rally, one we have still not seen the end of. Is bitcoin a commodity or a value added instrument? Bitcoin isn’t like gold or copper, where a price rise creates a glut.

Or is it? For me this is a very tempting model because I experienced it as a youngster and saw it play out all the while everyone continued to wish for the return of the moment when copper or gold went to the moon. However, bitcoin is not going to flood the market as miners pour resources into a race to over produce.
Bitcoin protects itself from exactly the economic reason why high prices are the solution to high prices.The choice is clear for players in this game of speculation, steer clear or buy the dip. I’ll be buying the dip but not in a hurry. This is the chart of what has happened:

Bitcoin has crashed

Credit: ADVFN

The flag got broken to the downside and it’s clear as day that a lot of people took this as a cue to get out, causing a panic. I’ve put some levels equivalent to some zones where the price might settle. I will be buying a little in the coming days and more if we hit $6,000 and a lot if we see $4,000.

Meanwhile, there was been a strange crash in hash rate before this price fall, so everyone is free to link that up with this fall. There may have been a BTC miner who needed to sell a big chunk of BTC and in this fragile market with everyone staring at the same delicate chart pattern, it doesn’t take much to create an avalanche. I must admit to staring at this chart before it crashed thinking I should sell.
This would have been a good move but experience has taught me that you can win on the exit but lose on the reentry. It’s great missing a fall but you can also miss the rally which can end up even more painful. This is the basic lesson of the randomness of markets. Back the direction you believe is the long-term outcome and buy the dips or don’t play at all. Bitcoin is like backing Apple when it was on the edge of going bust: do you believe in the future or not?

If you do, you hold forever and buy the dips. The only thing you mustn’t do with the position is let that put your finances at risk or hurt your sanity. As a believer I will buy this dip, in the same way as I bought the last, little and often. For those who don’t believe in the long term you should stay well clear.Be among the first to get important crypto and blockchain news and information with Forbes Crypto Confidential. It’s free, sign up now.

—-Clem Chambers is the CEO of private investors website
  ADVFN.com

and author of
Be RichThe Game in Wall Street

and
Trading Cryptocurrencies: A Beginner’s Guide

Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.

I am the CEO of stocks and investment website ADVFN . As well as running Europe and South America’s leading financial market website I am a prolific financial writer. I wrote a stock column for WIRED – which described me as a ‘Market Maven’ – and am a regular columnist for numerous financial publications around the world. I have written for titles including: Working Money, Active Trader, SFO and Technical Analysis of Stocks & Commodities in the US and have written for pretty much every UK national newspaper. In the last few years I have become a financial thriller writer and have just had my first non-fiction title published: 101 ways to pick stock market winners. Find me here on US Amazon. You’ll also see me regularly on CNBC, CNN, SKY, Business News Network and the BBC giving my take on the markets.

Source: Bitcoin Has Crashed–What Now?

26.6K subscribers
Check out the Cryptocurrency Technical Analysis Academy here: https://bit.ly/2EMS6nY In this video we discuss the recent Bitcoin crash, and the affects that Bitcoin crash may have on the Bitcoin market over the coming days. Bitcoin crashed nearly $2,000 yesterday while we were livestreaming, and found support around the Bitcoin support level of $11,700 as expected. Whether Bitcoin will continue it’s march ever higher from here, or if Bitcoin has now started a longer Bitcoin correction is yet to be seen, but we do know that Bitcoin has finally had opportunity to consolidate the gains Bitcoin has made over the past few weeks. – – – If you enjoyed the video, please leave a like, and subscribe! – – – Follow me on Instagram & Twitter: @cryptojebb Join the Discord! https://discord.gg/59jGjJy #Bitcoin #BitcoinToday #BitcoinNews I am not a financial adviser, this is not financial advice. I strongly encourage all to do their own research before doing anything with their money. All investments/trades/buys/sells etc. should be made at your own risk with your own capital. Spare Change? BTC 127eLjKTBKU9HTFhYowCDC4D3JBxonVk15 ETH 0x5115ACa82edf204760fE3B351c08a48d6004D89B LTC LSKXx3fQRK5LMowGznVvo6A9NtmtaQaoqP Please do not feel obligated to donate, though donations are appreciated!

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Bitcoin Warning As Serious Security Vulnerabilities Uncovered

Bitcoin developers have been trying to make the world’s most popular cryptocurrency more useful for payments, with the somewhat controversial Lightning Network one of the most popular projects.

However, serious security vulnerabilities have this week been discovered on the bitcoin Lightning Network, which could result in users losing their funds if nodes are not upgraded.

“Security issues have been found in various Lightning projects which could cause loss of funds,” wrote software developer, Rusty Russell, who authored the majority part of bitcoin’s Lightning Network protocol specification, in a post shared via a Lightning Network mailing list. “Full details will be released in four weeks, please upgrade well before then.”

The specifics of the vulnerability will be disclosed on 27 September, a common software security practise to both prevent bug exploitation and give developers time to patch problems.

The vulnerability appears to be related to the lightning-ready bitcoin wallet Eclair, which Russell also advised users to update.

The Lightning Network, first proposed by Thaddeus Dryja and Joseph Poon in a 2015 white paper, creates a layer on top of the bitcoin blockchain, where transactions can be passed back and forth before being added to the underlying blockchain.

Today In: Money

This should mean bitcoin transaction speeds are increased while costs are significantly reduced.

There are now a few different Lightning-ready wallets available, as well as companies that are able to process them on behalf of merchants.

However, low user numbers mean bitcoin lightning nodes currently lose money when they process transactions, according to recent reports.

When sending a Lightning payment, two parties deposit the funds at one bitcoin address, a so-called channel, in which they can exchange funds a limitless number of times.

This maintains bitcoin’s security but means small, regular payments don’t need to be added to the underlying blockchain until the channel is closed.

Questions have been raised about what Lightning Network adoption will mean for the bitcoin price, with much of the price dependent on transaction fees picked up by miners.

Most are though confident that with increased bitcoin adoption the price will continue to rise.

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I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com. Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

Source: Bitcoin Warning As Serious Security Vulnerabilities Uncovered

By Daniel Chechik, Ben Hayak, and Orit Kravitz Chechik A mysterious vulnerability from 2011 almost made the Bitcoin network collapse. Silk Road, MTGox, and potentially many more trading websites claim to be prone to “Transaction Malleability.” We will shed some light and show in practice how to exploit this vulnerability.

Blow To Bitcoin As Top Accountants Make Serious Facebook Warning

bitcoin, bitcoin price, Facebook, libra, image

Bitcoin and cryptocurrencies have been largely ignored by the world’s regulators over the last ten years, with only some small attempts to protect investors from wild bitcoin price swings and dodgy crypto exchanges.

The bitcoin price, up some 200% so far this year, has somewhat recovered after a terrible 2018 largely due to interest in bitcoin and cryptocurrencies from some of the world’s biggest tech companies, including social media giant Facebook which unveiled its planned libra cryptocurrency project last month and is scheduled for release some time in 2020—if the sandal-hit company can convince regulators of its merits.

Now, forensic accountancy firm BTVK has warned the bitcoin and crypto “wild west” could be coming to an end, with global regulators closing in on bitcoin and cryptocurrency exchanges as a result of the spotlight brought by Facebook’s libra project.

“Laws are in development as we speak,” Alex Hodgson, senior consultant at BTVK, told the Telegraph newspaper following the release of its report into bitcoin and cryptocurrencies. “Facebook has well-publicized issues in the past, and in response to that [regulators] are going above and beyond.”

“If cryptocurrency markets were like the ‘wild west’ in their early years, that period may be coming to a close as lawmakers look to toughen up the way in which markets are policed,” the report authors wrote. “In the meantime, it would be wrong to assume that investigators are powerless in the world of virtual currencies. They have many tools, old and new, at their disposal which mean that cryptocurrency markets should not be seen as a safe hiding place.”

Facebook is still reeling from a data-sharing scandal that saw many of its most senior executives hauled before governments around the world to answer questions on Facebook’s use of data and its work with third parties, such as Cambridge Analytica.

Earlier this month, U.S. president Donald Trump sent the bitcoin and cryptocurrency industry for a loop when he tweeted his opposition to bitcoin, cryptocurrencies, and Facebook’s libra, suggesting they are all “unregulated crypto assets” that can “facilitate unlawful behavior, including drug trade and other illegal activity.”

Following his comments, other senior U.S. officials echoed his comments, while U.S. senators called Facebook’s libra plans “unacceptable.”

Elsewhere, former International Monetary Fund managing director Christine Lagarde, who is set to replace Mario Draghi as president of the European Central Bank (ECB), earlier this year warned that bitcoin and cryptocurrencies are “shaking the system”—something that could signal a change in the ECB’s approach to bitcoin and crypto.

bitcoin, bitcoin price, Facebook, libra, chart

The bitcoin price has rallied hard this year but global regulators are “closing in.”

In the U.K. bitcoin and cryptocurrencies were placed under the oversight of the country’s banking regulator in January with it expected to issue final guidance sometime over the next couple of months.

Meanwhile, a government panel in India has recommended a ban on all “cryptocurrencies created by non-sovereigns” due to “serious concern [there is a] mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these cryptocurrencies.”

The report out of India does support the possibility of a state-issued digital currency in India, however.

Follow me on Twitter.

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk

Source: Blow To Bitcoin As Top Accountants Make Serious Facebook Warning

This Awful Bitcoin Stat Guarantees It’s Not Crypto’s Future: Mathematician

With all the hype about blockchains and their many uses, we shouldn’t forget the original purpose for the Bitcoin blockchain and Nakamoto’s great leap forward.

Blockchains and cryptocurrencies were created to be decentralized currencies, replacing or complementing fiat currencies. For the most avid crypto fans, crypto is the future of currency and will eventually handle full-scale economies. We dream of the day that we laugh and tell our kids and grandkids that we had physical wallets, paper currencies, and things called “credit cards” (“Grandpa, seriously, you are so old!”).

Preparing the Crypto Economy for Mass Adoption

So what has to happen in order for us to run economies on the blockchain?

There are several hurdles we still need to clear, like getting the value of these currencies to be stable, handling privacy in a sensible way, and getting confirmation speeds fast enough for point-of-sale transactions.

By far the most glaring hurdle, however, is throughput. We need to be able to handle many, many more transactions per second than any current blockchain is capable of. At 13 transactions per second (a high estimate), Bitcoin can handle just over a million transactions per day. For niche, small economies, this might do the trick. But it certainly won’t do it for, say, the US economy.

Let’s put this into perspective. In 2017, the US gross domestic product (GDP) was almost $20 trillion. GDP isn’t a great measure of how much money changes hands during the year, but for our purposes, it’s close enough. If about $20 trillion changed hands in the US in 2017, then about $54 billion changed hands every day (20 trillion divided by 365). Ignoring how slowly Bitcoin processes transactions, if it were to handle $54 billion in transactions in one day, transactions would have to be on average about $54,000 (54 billion divided by 1 million).

What? Your everyday transactions aren’t $54,000 on average? Of course not. Between 2012 and 2017, US consumers spent roughly $80 per transaction online.

bitcoin is bad for payments

Bitcoin doesn’t look like a candidate to replace credit cards in the online payments realm. | Source: Statista

In 2016, transactions on Amex credit cards averaged about $141, and those on Visa averaged about $80. While it is true that corporations tend to transact in higher dollar amounts, it’s still likely that the crypto community is still a few orders of magnitude away from being able to handle all the transactions in an economy on a single blockchain.

If, based on the statistics I just gave, we assume that transactions are about $100 on average, then $54 billion would change hands every day in roughly 540 million transactions (54 billion divided by 100). That boils down to about 6,000 transactions per second on average. If we take into account the fact that most people transact during the day, a quick recalculation yields about 10,000 transactions in an average daytime second (instead of dividing by 24 hours of the day, divide by 16 to account for about 8 hours of sleep).

This estimate is probably about right. There are roughly 324 million people in the United States, and about 5 million businesses. If we assume that people and businesses, on average, transact 1.5 times per day, then we have about 500 million transactions per day (329 million entities multiplied by 1.5). This is close to our estimate of 540 million daily transactions from before, which gives about 10,000 transactions per daytime second in the United States.

Bitcoin Would Need to Increase Transaction Capacity By Four Orders of Magnitude to Replace Visa

Mastercard, Visa, Bitcoin

With Bitcoin’s staggeringly-limited transaction capacity, it’s unrealistic to believe it can rival Visa or Mastercard – much less both. | Source: Shutterstock

Getting back to the original question, how many transactions per second does a blockchain have to be able to handle in order to support the United States economy? Our rough calculation of 10,000 transactions per second is almost certainly not enough, but it does give a base from which we can work. To give perspective, Visa processes about 1,700 transactions per second on average but at peak times it can handle up to about 24,000 transactions per second. Their max limit is just over an order of magnitude higher than the average, in order to handle high-volume days like Black Friday or the post-Christmas wave of returns.

Taking Visa’s data as an example, since 10,000 transactions per second is our rough estimate for the average, we’d probably need to be able to handle around 100,000 transactions per second to really kill it (one order of magnitude higher than the average, similar to Visa). That’s a lot. More precisely, that’s about 10,000 times faster than Bitcoin—a whopping difference of four orders of magnitude.

To me, this says that our methods of finding consensus on a blockchain are simply not fast or powerful enough to actually use crypto as a viable currency. We need innovations in infrastructure, hardware, and consensus algorithms in order to even hope to reach this threshold.

Bitcoin Is Not the Future of Crypto

bitcoin

Derek Sorensen believes Bitcoin is definitely not the future of crypto. | Source: Shutterstock

That is to say that, barring some major changes and improvements, Bitcoin is almost certainly not the future of crypto.

Technologies like the Lightning Network attempt to solve the scalability problem, but do so awkwardly and ineffectively. Opening channels to transact off-chain ties up money in extremely inconvenient ways. In practice it incentivizes users to open a single channel with a centralized liquidity provider on the blockchain, rather than opening many channels. This effectively creates unregulated, centralized banks, and in my view goes against the core principles of blockchain technology. Even worse, because transactions are done off-chain and channel data can’t be deterministically rebuilt, if a Lightning node crashes, both parties can easily lose funds. It may genuinely be one of the worst ideas in cryptocurrency.

Notwithstanding, the blockchains of the future may not be so far off. New research in math shows promising results in the mathematical foundations of consensus that could produce blockchains with 50,000 transactions per second or more without compromising safety or decentralization. Every day, a new paper comes out or a crypto startup launches a new product.

There are plenty of bright minds working on securing the crypto dream. I guess in twenty years if you’re paying for your groceries with crypto you’ll know that we succeeded.

About the Author: Derek Sorensen, Pyrofex Research Mathematician, has an MSc in Mathematics and Computer Science from the University of Oxford and is set to start his PhD this fall at the University of Cambridge, where he will study logic and topology. His work at Pyrofex is in formal verification, which includes research on the theory of consensus and setting up mathematical frameworks to prove theorems about code.

Source: This Awful Bitcoin Stat Guarantees It’s Not Crypto’s Future: Mathematician

1 million BTC mining machines are expected to switch back on in China in May

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