How To Buy Bitcoin At 26% Off The Regular Price

Here’s a scorecard on eight ways to own crypto. The most intriguing: a low-cost coin trust available at a nice discount.

Are you interested in virtual currency, now trading at half the price it had last fall? Shop around. Among the many ways to get a piece of the action, there are wide differences in ownership costs. My favorite: a somewhat obscure bitcoin trust to be found in Fairfield, Connecticut.

There are pros and cons to every means of getting cryptocurrency exposure, including the little outfit in Fairfield. This survey covers eight bitcoin bets in descending order of my views on their desirability. You may have a different ranking, especially if you are speculating on a quick turnaround.

#1. Osprey Bitcoin Trust

This quasi-fund (ticker: OBTC), created a little over a year ago, is a knockoff of the much better-known Grayscale Bitcoin Trust. Both trusts are closed-end, in that investors have no right to redeem shares in return for cash or underlying assets.

Osprey is a lot more cost-efficient, with an annual expense ratio of 0.8% versus Grayscale’s 2%. These expense figures incorporate both portfolio management and custody costs.

The trusts trade at discounts to the value of the bitcoins they hold: recently 26% at Osprey, 28% at Grayscale. With either, you are making a bet both on crypto and on that discount. If the discount widens, you’re worse off than you would have been with a coin purchase. If it narrows, you have a windfall.

What might widen the discounts: a continued fall in crypto prices. Bear markets have a way of doing double damage to closed-ends, depressing their share prices even faster than prices decline on the assets they hold. That’s been true of stock funds since the Great Depression and it’s likely to be true of crypto trusts.

It’s happening right now. A 12% fall in bitcoin between Friday afternoon on May 6 and Monday afternoon precipitated a 16% fall in Grayscale’s price.

But the discounts might go away. That would happen if the Securities & Exchange Commission permits exchange-traded funds to hold virtual currencies. Both Grayscale and Osprey have vowed to convert their closed-end trusts to ETFs as soon as such things are allowed.

The ETF structure allows market makers to cash in unwanted fund shares (or buy new shares when shares are sought after) via a swap for underlying assets. That sets up an arbitrage that keeps an ETF’s price close to the fund’s net asset value.

So far the agency has rejected every application for a coin ETF, although last year it did green-light an ETF that holds bitcoin futures contracts. Why the distinction? The futures trade on the heavily regulated Chicago Mercantile Exchange, while coins trade in somewhat murkier venues.

A bearish view of coin trusts comes from Tyler Odean, publisher of Something Interesting, an insightful Substack newsletter on crypto. “The time horizon [for an SEC approval] is long,” he says. “Between now and then the discount is likely to deepen as the number of competitive ways to hold bitcoin also deepens.”

Still, I think the bet in favor of an eventually favorable ruling from the regulators is a reasonable one. Risky, yes, but not as risky as the underlying asset. It’s far more likely that bitcoin will crash another 50% than that the discount will make a comparable move from 26% to 63% (meaning: Your trust collapses from 74 cents on the dollar to 37 cents).

One more concern: liquidity. Osprey has but $100 million of coins in its vault, and its average daily share volume over the past year would be worth $400,000 at today’s share price. Big bettors have to step in cautiously.

#2. Your wallet

You can purchase bitcoins on an exchange, then have them exported to your cold-storage wallet. Market analyst Odean has used this for his long-term bets.

Pros: No counterparty risk. No management fee. If you do it right, no hacker risk.

Con: You might not do it right.

Self-storage entails a fairly elaborate procedure to protect your private key from being lost or stolen. Next week you might walk into an open elevator shaft, so you need some mechanism for survivors to retrieve that key. The computer you use to generate the private and public keys for your coin repository has to be permanently isolated from the internet. The medium on which the secret is stored must be secure; Odean mentions an etched piece of metal as an option.

There are services (Casa, Ledger and others) that make this process less painful, but ease of use comes with some increment of risk.

#3. Exchange storage

You could leave your coins for safekeeping at a coin exchange. If you want that asset segregated, and thus safe from the exchange’s creditors, yours’ll have to pay a custody fee.

At Coinbase Global, where the minimum account size for this service is $500,000, the fee is 0.5% a year. Some customers get a better deal. Osprey, which recently switched its custody from Fidelity Investments to Coinbase, appears to be paying 0.25% or less (its financial statements don’t reveal an exact amount).

If you can stomach some counterparty risk, or you just want assets available for trading, you can leave your coins in a deposit account at no charge. This is the crypto equivalent of keeping your Tesla shares in a margin account. But, unlike stocks at a brokerage firm, coins left with an exchange have no Securities Investor Protection Corp. to back them if the middleman gets into financial trouble.

#4. Foreign ETF

While our SEC bides its time, the Canadian regulator has authorized exchange-traded funds that hold cryptocurrency. One of them is the Purpose Bitcoin ETF, which holds coins now worth just over $1 billion.

Pro: The fund trades at very close to net asset value. The shares that are quoted (in Toronto) in U.S. dollars see $4 million of average daily volume.

Cons: The 1.5% annual expense ratio is a lot higher than Osprey’s. It’s not easy to get your hands on these shares in the U.S., as most brokers will refuse the buy order. On the Fidelity platform you can find Purpose under the ticker BTCC_U:CA, but it takes some digging.

#5. Grayscale Bitcoin Trust

This entity (GBTC) is the elder cousin of Osprey.

Pro: Liquidity. This trust has $20 billion of coins and sees an average daily share volume now worth $140 million.

Con: The stiff fee, 2% a year.

#6. Futures

CME Group’s Chicago Mercantile Exchange lists bitcoin futures contracts, each for five coins. Trading volume, almost all of it in the nearest month, typically runs to $1 billion a day. Settlement is in dollars; no wallets are involved.

Pros: Good liquidity, minimal counterparty risk and the potential for leverage. You can control $2 of crypto by putting down $1 of cash.

Cons: Taxes, trading costs and contango. Bitcoin futures share these three afflictions with many commodity futures.

At tax time you have to declare paper gains and losses on futures, with 40% treated as short-term (at high tax rates).

Rolling over your futures position monthly, which you probably would do in order to stay in the most actively traded contract, will cost you 12 commissions and bid/ask spreads per year.

The contango is a big deal. It means that the futures price at which you’re buying is at a premium to the spot price. On bitcoins the contango is a volatile number usually falling between 3% and 6% annualized. Contango reflects both the cost of financing a stockpile of a commodity and the cost of securing it. In the case of crypto, securing the asset against hackers is not simple (see #2 above).

Futures aren’t bad for day-to-day trading. They are a poor choice for someone hoping to achieve a long-term gain.

#7. Futures ETF

The ProShares Bitcoin Strategy ETF (BITO) holds long positions in bitcoin futures. Here, atop the steep contango of the Chicago trading pits, you have the opportunity to fork over an additional fee: the 0.95% a year assessed by the fund.

ProShares has attracted $900 million for this product. From naïfs.

#8. MicroStrategy

Chairman Michael Saylor has turned this business analytics firm into a crypto betting parlor. The corporation has used mostly borrowed money to acquire 129,200 bitcoins.

The stock had an interesting day May 9. With bitcoin down 14% from where it was Friday afternoon, MicroStrategy shares went down 26%.

Tyler Odean sees these shares as a simultaneous bet on three things: crypto, a mediocre software business and Saylor’s ability to withstand margin calls. He likes the first bet but not the other two.

I aim to help you save on taxes and money management costs. I graduated from Harvard in 1973, have been a journalist for 45 years, and was editor of Forbes magazine from 1999 to

Source: How To Buy Bitcoin At 26% Off The Regular Price

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Massive 2022 ‘All-Time High’ Bitcoin Price Prediction Comes With A Serious Ethereum, BNB, XRP, Solana, Cardano, Luna And Avalanche Warning

Bitcoin and cryptocurrency prices have struggled this year, with the Federal Reserve’s plan to raise rates and potentially trim its balance sheet spooking investors.

The bitcoin price has lost around 40% of its value since hitting an all-time high of nearly $70,000 per bitcoin in November. Smaller cryptocurrencies, including ethereum, BNB BNB -0.9%, XRP XRP -2.7%, solana, cardano, luna and avalanche, have also fallen back—though some are on track to break records in 2022.

Now, a panel of cryptocurrency experts has predicted the bitcoin price will peak at almost $82,000 in 2022 before dropping to just above $65,000 by the end of the year—but warned a more advanced blockchain such as ethereum, BNB, XRP, solana, cardano, luna or avalanche could eventually eclipse bitcoin.

“There’s still plenty of uncertainty about the short-term bitcoin outlook,” Asher Tan, the chief executive of Australia-based crypto exchange CoinJar and panel member said in a statement. Tan has a more conservative outlook on the bitcoin price than the panel average.

“Given the macroeconomic headwinds, it would not surprise me to see bitcoin spend the whole year bouncing around between $30,000 to $60,000—the sort of conditions that are terrible for traders, but rewarding for accumulators with a multi-year timeframe.”

The panel, made up of 35 people from the world of crypto and put together by financial comparison website Finder, has returned a lower average bitcoin price prediction for the end of 2022 than it did in January—at the time predicting the bitcoin price would end December at just over $76,000.

The longer-term panel average has also dipped with bitcoin now forecast to be worth just over $420,000 by the end of 2030, down around 25% from an October forecast of $567,000.

However, some panel members have become more bullish since then. Martin Fröhler, the chief executive of ethereum-based trading platform Morpher gave one of the most bullish end-of-2022 predictions, pointing to “political uncertainty, inflation, and an ever increasing desire to own non-government controlled assets” as likely to push the bitcoin price to a new all-time high.

The continued success of ethereum and recent rallies for other top ten cryptocurrencies such as BNB, XRP, solana, cardano, luna and avalanche may have weighed on the panel’s outlook, with 50% predicting bitcoin will eventually be displaced as the most valuable cryptocurrency.

“Bitcoin is a one trick pony,” said Thomson Reuters technologist and futurist Joseph Raczynski who thinks ethereum has “far grander” potential than bitcoin as “a massive platform of the internet of value.”

“For now, bitcoin really only serves as another currency, akin to a dollar, euro, or pound. Other blockchains that serve a multitude of purposes will likely have a chance to take the throne.”

Others are even more downbeat about bitcoin’s prospects. John Hawkins, a senior lecturer at the University of Canberra, returned one of the bleakest bitcoin price predictions, forecasting bitcoin will be worth just $5,000 by the end of 2025 and dropping to a mere $100 per bitcoin by 2030 as it loses out to ethereum and state-backed alternatives.

“As well as private crypto being replaced by central bank digital currencies, and a general collapse of the speculative bubble, I think bitcoin will lose out to ethereum which has a stronger use case, especially if ethereum ever converts to proof-of-stake and so becomes more environmentally responsible.”

Ethereum’s long-awaited transition to the less energy-demanding proof-of-stake consensus mechanism, abandoning the proof-of-work system pioneered by bitcoin, was expected to happen over the next couple of months but has recently been delayed until the end of this year.

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: Massive 2022 ‘All-Time High’ Bitcoin Price Prediction Comes With A Serious Ethereum, BNB, XRP, Solana, Cardano, Luna And Avalanche Warning

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Cryptocurrencies Are Coming Back From the Brink. Here’s Why

After months languishing in the doldrums, cryptocurrencies are surging. On Monday, Bitcoin breached the $50,000 mark for the first time since May. Other coins — including Ethereum, Cardano’s ADA and Dogecoin — also edged higher.

And it was only a few weeks ago that some strategists were eyeing a possible drop to $20,000 for Bitcoin, months after it had hit an all-time high near $65,000 in April.

Instead, sentiment is rising across the board. Crypto’s latest swings are a sign that Bitcoin miners are back in business after a recent Chinese crackdown. At the same time, there is continued evidence of more mainstream acceptance. All of this is happening as the delta variant’s surge has muddied the timeline for a normalization of interest rate policy.

“There’s been an accelerating background of accumulation of crypto assets in the past couple months,” Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX, wrote in an email Monday. “Institutional flows in Bitcoin and Ether as well as a lot of retail activity in NFTs and gaming” are likely contributing, he added.

Here is a look at what is driving the increase — and what could come next:

A Shift in Sentiment

The cryptocurrency world is populated by a cast of characters whose voices can really influence prices. Lately, bullish noises have been boosting sentiment.

Take Elon Musk. Earlier this year, the billionaire caused heads to spin — and helped prices to boost and then plummet — when he said in March that Tesla Inc. would accept payment for its electric vehicles in Bitcoin but backtracked in May. He made his reversal on environmental grounds, expressing concern about the use of fossil fuels for cryptocurrency mining. Following those comments, Bitcoin lost about a quarter of its value in a week.

But here’s the latest twist: Over the past few weeks, Musk has been striking a more supportive tone. In late July he said he personally owns Bitcoin, Ethereum and Dogecoin and would like to see crypto succeed.

Superstar investment manager Cathie Wood is another influential voice in this space. A noted crypto bull, she told Bloomberg TV in May that she could see Bitcoin reaching a price of $500,000. More recently, she said she thinks corporations should consider adding Bitcoin to their balance sheets.

Hash Rate Signals

About a month ago, all the talk in the cryptocurrency world was of a Chinese crackdown. A ban on Bitcoin mining meant the abrupt shuttering of millions of computers that had been processing the transactions necessary to keep the crypto currency humming. Before the ban, around 65% of the world’s Bitcoin mining took place in China.

As computers went offline, the hash rate — a measure of the computing power used in mining and processing — halved in just two and half weeks.

As well as the practical implications, the aggressive moves by China laid bare the fact that the decentralized currency is still at the mercy of governments, which hit sentiment. Bobby Lee, one of the country’s first Bitcoin moguls, even said that China’s crackdown on cryptocurrencies will probably intensify and may even lead to an outright ban on holding the tokens. And in the U.S., a recent congressional debate over crypto rules added to the uncertainty.

However, the hash rate has rebounded and is up from its July nadir, according to data from Blockchain.com.

That recovery has helped restore confidence in the market that cryptocurrencies can flourish even in the face of opposition from legislators around the world.

Keep Your Eye on Jackson Hole

Prices of cryptocurrencies, like gold, tend to suffer when there is the prospect of interest rate hikes. The emergence of Covid’s delta variant may scramble plans to remove crisis-level monetary policy.

If Federal Reserve Chairman Jerome Powell were to strike a dovish note in his speech at the Jackson Hole conference this Friday, that could boost the currency, Oanda analyst Edward Moya said in a note.

The Kansas City Federal Reserve’s annual event, being held virtually again, is traditionally scrutinized for hints on upcoming changes in stance. Some Fed leaders have used it as a platform to explain new initiatives, as Powell did last year in unveiling a new monetary policy framework.

Even More Mainstream — and Main Street — Interest

Huge financial and consumer firms over the past year have increasingly been embracing crypto, giving the asset more legitimacy and driving up the price. Banks, brokerages and securities exchanges have been gearing up to meet demand. A watershed moment came in April with the U.S. stock market debut of Coinbase Global Inc., a crypto trading venue that’s shooting to establish a digital-money ecosystem.

This summer, there has been growing speculation that Amazon.com Inc. may become involved in the cryptocurrency sector. An Amazon job posting published online in July said the firm was seeking a “Digital Currency and Blockchain Product Lead.” After people found out about the post, Bitcoin surged to about $40,000. Amazon shares gained about 1% in New York. The company went on to say that the “speculation” about its “specific plan for cryptocurrencies is not true,” but the fact that the world’s largest retailer is exploring crypto has big implications for the shadowy and often hard-to-access market.

Walmart Inc. revealed it, too, was looking for some crypto help, with a job posting on Aug. 15 with responsibilities that would include “developing the digital currency strategy and product roadmap” and identifying “crypto-related investment and partnerships.” (As of Monday morning, visitors to the website were given a 404 error message.)

So… Where to From Here?

In these final days of summer, it’s now back in vogue to make $100,000 predictions.

As with any investment — or anything, really — it’s impossible to predict the future. But analysts do have a few estimations on how breaching $50,000 has changed Bitcoin’s prospects, at least in the short term.

Bitcoin is “getting nearer the higher end of what I expect as a new trading range in the low-$40,000s to low-$50,000s,” said Rick Bensignor, chief executive officer at Bensignor Investment Strategies.

Daniela Hathorn, an analyst at DailyFx.com, thinks that it may be a while before we see any further bullish momentum because $50,000 is a key psychological level for the currency.

“A pullback towards the $48,000 area would be the first sign of trouble,” she wrote in a note on Monday. “But the positive trend isn’t in any trouble as long as Bitcoin stays above its 200-day moving average at $45,750. Looking ahead, the key challenge for buyers will be to cement further gains towards $55,000 without losing momentum along the way.”

By: Emily Cadman / Charlie Wells / Joanna Ossinger

Source: https://www.bloombergquint.com/wealth/bitcoin-price-surge-reasons-why-ethereum-cryptocurrencies-are-rising
Copyright © BloombergQuint

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Novelty Coins Representing The Bitcoin Cryptocurrency : Illustration

After a stark plunge Thursday that wiped out $100 billion in market value, the world’s largest cryptocurrency is back near all-time highs Tuesday as corporations like Visa and PayPal join other institutional players in expanding their crypto offerings.

As of 4 p.m. EDT, the price of bitcoin has climbed 2% over the past 24 hours, pushing its market capitalization up to $1.1 trillion–about $40 billion shy from an all-time high on March 13 and pushing gains to roughly $144 billion since a sharp correction on Thursday, according to crypto-data website CoinMarketCap.

‘Analysts are pinning the resurgence to still-booming institutional adoption, including PayPal’s new cryptocurrency checkout service, which launched Tuesday and allows the company’s more than 375 million customers to shop using cryptocurrency at millions of online merchants (PayPal didn’t specify an exact figure, but says the program will expand in the coming months).

Qanda Senior Market Analyst Edward Moya calls the move “another massive cryptocurrency endorsement from Wall Street” and “further proof of mainstream acceptance” just one day after Visa said it will start settling transactions with cryptocurrency partners using a token built on the Ethereum blockchain, which underpins the world’s second-largest cryptocurrency, ether.

Moya notes that bitcoin, which is priced at about $59,080, could struggle to push past $60,000 again but says the recent developments “should be enough to keep the bullish trend going strong.”

Nigel Green, the CEO of $12 billion wealth advisory deVere Group, said in an email Tuesday that growing corporate investments from the likes of Tesla and billionaire Jack Dorsey’s Square are signs that institutions are employing the “buy the dip” mantra popularized by retail investors—meaning they’re loading up on bitcoin when prices plunge.

What To Watch For

Regulation. Though Wall Street is warming up to bitcoin, legendary hedge fund manager Ray Dalio warned last week that he thinks there’s a “good probability” bitcoin could be banned by the U.S. government, similar to how it banned gold nearly a century ago. The Securities and Exchange Commission has been slow to issue regulation for cryptocurrencies.

In an interview with Forbes, SEC Commissioner Hester Peirce said Gary Gensler, President Joe Biden’s nominee to head up the agency,  would likely be “sympathetic to the call for regulatory clarity.” When nations like South Korea started cracking down on cryptocurrency three years ago, prices crashed as much as 80% over the course of one year, though it’s unclear how such a development could affect markets today.

Key Background

Bitcoin prices have skyrocketed over the past year amid booming institutional adoption and inflation fears sparked by unprecedented government spending to combat the pandemic. Last week, billionaire Elon Musk tweeted that Tesla would start accepting bitcoin for vehicle purchases and retaining the cryptocurrency tendered, as opposed to converting it to U.S. dollars. Also this month, Fidelity Investments filed an application for its first bitcoin exchange-traded fund, and banking powerhouse Morgan Stanley said it would open up bitcoin exposure to its wealthy clients, though it’s limiting such funds to investors with “an aggressive risk tolerance.”

Surprising Fact

Bitcoin has surged nearly 800% over the past year. Its return of about 96% this year is more than any sector tracked by the S&P 500.

Further Reading

SEC Commissioner Explains Why A Delayed Bitcoin ETF Has Consequences (Forbes)

Bitcoin Plunge Erases $100 Billion In 24 Hours–Here’s How Long The ‘Bloodbath’ Could Last (Forbes)

Legendary Investor Warns Bitcoin Ban ‘Likely’ As Price Suddenly Soars Toward $60,000 (Forbes)

Follow me on Twitter. Send me a secure tip.

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com

Source: Bitcoin Adds Back $150 Billion As Visa, PayPal Rev Up Crypto Offerings And Institutions ‘Buy The Dip’

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Chamath Palihapitiya says he sees bitcoin going to $200K down the road, and what he discusses what he believes to be the future for Virgin Galactic. I really believe in the business, he says, it’s an incredible team. Subscribe to CNBC PRO for access to investor and analyst insights on bitcoin and more: https://cnb.cx/2BT2E7y
Bitcoin smashed through $40,000 to hit a new record high on Thursday helping to lift the total value of the entire cryptocurrency market above $1 trillion for the first time. The digital coin hit an all-time high of $40,367 at around 1:17 p.m. ET, just a few hours after blowing past the $39,000 level, according to data from Coin Metrics.
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Bitcoin Poised For ‘Massive Transformation’ Into The Mainstream, Citi Says

Bitcoin

Bitcoin could be at the start of a “massive transformation” into the mainstream and on the path to become “the currency of choice for international trade,” according to leading investment bank Citi, which noted the cryptocurrency’s meteoric rise in value in recent years and a growing interest from institutional investors as potentially setting the stage for widespread success.

In a report published Monday, Citi analysts said the world’s most popular cryptocurrency was at a “tipping point” between widespread adoption or a “speculative implosion.”

Bitcoin’s growing use as a payment tool, the increasing availability of digital wallets, and institutional interest from the likes of Tesla and Mastercard have all helped buoy confidence in the cryptocurrency and could see it become the leading medium for international trade in the future, Citi said.

The analysts described Bitcoin as the “North Star” of the blockchain ecosystem, with its underlying technology launching an entirely new domain of the digital economy around it.

However, there are a number of risks and obstacles that could see the Bitcoin bubble burst, the analysts warned, and widespread changes to the market would be required for Bitcoin to be adopted more widely.

Dampened institutional investment in the post-Covid-19 world would remove a key pillar of support for Bitcoin, Citi said, and anticipated regulation and oversight—which runs counter to the anti-establishment ideology underpinning the cryptocurrency—could also “cause many of the most innovative developers and entrepreneurs to exit the ecosystem,” the analysts wrote.

Key Background

Bitcoin is one of the most volatile asset classes around. It has a bumpy and storied history since it was outlined in a paper in 2009, moving from practically worthless to an all time high of over $58,000 a coin in February 2021 (the price has since dropped to around $47,000) with several significant troughs and peaks in between. At its highest, Bitcoin’s market capitalization exceeded $1 trillion. As with the bulk of its history, Bitcoin is still driven by retail investors, who billionaire philanthropist Bill Gates warned not to get drawn in by the “mania” and enthusiasm of Elon Musk who has money to spare should things go wrong.

Crucial Quote

“I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people,” Tesla CEO Elon Musk said on Clubhouse earlier this year.

Tangent

In October, PayPal finally welcomed cryptocurrencies to its platform, believed by many to be a precursor to it moving into the mainstream. PayPal will support four different cryptocurrencies—bitcoin, ethereum, litecoin and bitcoin cash—and will expand the service to Venmo in 2021.

Further Reading

Bitcoin. At the Tipping Point (Citi)

Bitcoin rises 6% as risk assets rally; Citi says at a “tipping point” (Reuters)

Bitcoin’s Long-Term Value Doubted Due to ESG, Tighter Rules (Bloomberg)

Follow me on Twitter. Send me a secure tip.

I am a London-based reporter for Forbes covering breaking news. Previously, I have worked as a reporter for a specialist legal publication covering big data and as a freelance journalist and policy analyst covering science, tech and health. I have a master’s degree in Biological Natural Sciences and a master’s degree in the History and Philosophy of Science from the University of Cambridge. Follow me on Twitter @theroberthart or email me at rhart@forbes.com

Source: Bitcoin Poised For ‘Massive Transformation’ Into The Mainstream, Citi Says

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