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Hal Finney, while paralyzed by ALS, wrote code for a bitcoin wallet using only his eyes

It's important to remember Bitcoin's roots, and the amazing effort from brilliant people, like Hal, who contributed to this new technology. If you're feeling down, this is an absolute must read. I have it saved, and read it every once in awhile, enjoy.
"And of course the price gyrations of bitcoins are entertaining to me. I have skin in the game. But I came by my bitcoins through luck, with little credit to me. I lived through the crash of 2011. So I've seen it before. Easy come, easy go." - Hal Finney, March 19, 2013, 08:40:02 PM
Bitcoin and me (Hal Finney)
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I thought I'd write about the last four years, an eventful time for Bitcoin and me.
For those who don't know me, I'm Hal Finney. I got my start in crypto working on an early version of PGP, working closely with Phil Zimmermann. When Phil decided to start PGP Corporation, I was one of the first hires. I would work on PGP until my retirement. At the same time, I got involved with the Cypherpunks. I ran the first cryptographically based anonymous remailer, among other activities.
Fast forward to late 2008 and the announcement of Bitcoin. I've noticed that cryptographic graybeards (I was in my mid 50's) tend to get cynical. I was more idealistic; I have always loved crypto, the mystery and the paradox of it.
When Satoshi announced Bitcoin on the cryptography mailing list, he got a skeptical reception at best. Cryptographers have seen too many grand schemes by clueless noobs. They tend to have a knee jerk reaction.
I was more positive. I had long been interested in cryptographic payment schemes. Plus I was lucky enough to meet and extensively correspond with both Wei Dai and Nick Szabo, generally acknowledged to have created ideas that would be realized with Bitcoin. I had made an attempt to create my own proof of work based currency, called RPOW. So I found Bitcoin facinating.
When Satoshi announced the first release of the software, I grabbed it right away. I think I was the first person besides Satoshi to run bitcoin. I mined block 70-something, and I was the recipient of the first bitcoin transaction, when Satoshi sent ten coins to me as a test. I carried on an email conversation with Satoshi over the next few days, mostly me reporting bugs and him fixing them.
Today, Satoshi's true identity has become a mystery. But at the time, I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I've had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.
After a few days, bitcoin was running pretty stably, so I left it running. Those were the days when difficulty was 1, and you could find blocks with a CPU, not even a GPU. I mined several blocks over the next days. But I turned it off because it made my computer run hot, and the fan noise bothered me. In retrospect, I wish I had kept it up longer, but on the other hand I was extraordinarily lucky to be there at the beginning. It's one of those glass half full half empty things.
The next I heard of Bitcoin was late 2010, when I was surprised to find that it was not only still going, bitcoins actually had monetary value. I dusted off my old wallet, and was relieved to discover that my bitcoins were still there. As the price climbed up to real money, I transferred the coins into an offline wallet, where hopefully they'll be worth something to my heirs.
Speaking of heirs, I got a surprise in 2009, when I was suddenly diagnosed with a fatal disease. I was in the best shape of my life at the start of that year, I'd lost a lot of weight and taken up distance running. I'd run several half marathons, and I was starting to train for a full marathon. I worked my way up to 20+ mile runs, and I thought I was all set. That's when everything went wrong.
My body began to fail. I slurred my speech, lost strength in my hands, and my legs were slow to recover. In August, 2009, I was given the diagnosis of ALS, also called Lou Gehrig's disease, after the famous baseball player who got it.
ALS is a disease that kills moter neurons, which carry signals from the brain to the muscles. It causes first weakness, then gradually increasing paralysis. It is usually fatal in 2 to 5 years. My symptoms were mild at first and I continued to work, but fatigue and voice problems forced me to retire in early 2011. Since then the disease has continued its inexorable progression.
Today, I am essentially paralyzed. I am fed through a tube, and my breathing is assisted through another tube. I operate the computer using a commercial eyetracker system. It also has a speech synthesizer, so this is my voice now. I spend all day in my power wheelchair. I worked up an interface using an arduino so that I can adjust my wheelchair's position using my eyes.
It has been an adjustment, but my life is not too bad. I can still read, listen to music, and watch TV and movies. I recently discovered that I can even write code. It's very slow, probably 50 times slower than I was before. But I still love programming and it gives me goals. Currently I'm working on something Mike Hearn suggested, using the security features of modern processors, designed to support "Trusted Computing", to harden Bitcoin wallets. It's almost ready to release. I just have to do the documentation.
And of course the price gyrations of bitcoins are entertaining to me. I have skin in the game. But I came by my bitcoins through luck, with little credit to me. I lived through the crash of 2011. So I've seen it before. Easy come, easy go.
That's my story. I'm pretty lucky overall. Even with the ALS, my life is very satisfying. But my life expectancy is limited. Those discussions about inheriting your bitcoins are of more than academic interest. My bitcoins are stored in our safe deposit box, and my son and daughter are tech savvy. I think they're safe enough. I'm comfortable with my legacy. [edited slightly] - Hal Finney
submitted by Sk33tshot to Bitcoin [link] [comments]

Thoughts on the current downturn


The current downturn in the cryptocurrency markets itself isn't very surprising. There have been many bubbles before, and there will be at least one more bubble after this. What surprises me about this cycle is how quickly the market has collapsed. Whereas previous cycles fell slowly after the long middle period where prices stalled, this time the bottom fell out in the course of a week. This post will review the consequences of the new market reality.

Bitcoins are holding up well
Perhaps the biggest shock of this cycle is how the price of bitcoins has held up so well compared to that of other coins. In June 2017, when we were deciding whether this pool could be a profitable business and how many people we should hire if it could be. We determined that the average case where the coins would settle was bitcoins at $1574, ETH at $110, and LTC at $30. ETH and LTC have already surpassed the average case decline we had projected, while BTC is holding above twice the projected bottom.

The reason for BTC holding up so well isn't obvious. Almost every other coin is superior to BTC in some way. For example, LTC and BCH are much cheaper to send money with, ETH is used for contracts, and Monero has anonymity.

I don't think that bitcoins will hold up for much longer. I think that the capitulation to $980 is still ahead, and the price after capitulation will be $1500 or so. The BTC network still hasn't reckoned with the lack of a realistic plan to increase its block size. At some point, the lightning network is going to be shown as a technical marvel that works well when people are running nodes, but that it's too difficult for ordinary users and that money transmission regulations will not permit most businesses to run nodes. The Core developers are still pressing on with their effort despite the money transmission regulations.

Right now, growth is being driven by people willing to experiment. Eventually, the lightning network will run out of hobbyists to adopt it and its growth will cease, because normal businesses like us won't touch it due to the legal risks. At that point, people will realize that there is no "Plan B" for Bitcoin, and perhaps that will cause capitulation and force the Core to reevaluate their path forward.

We should reevaluate how coins are valued
Another change in this crash from the previous crashes is the complete lack of news to explain it. During the $32 -> $2 downturn, it was quite possible that nobody would ever adopt cryptocurrencies. During the $266 -> $69 downturn, many believed that Mt. Gox's unreliability and instability would lead to the death of the industry. During the $1160 -> $160 bubble, China banned bitcoins every week. But during the past two weeks, there has been no news of any importance.

In particular, ETH prices are absurd. I really don't understand how people think that ETH is priced anything close to its real value. Gas prices continue to rise and people think it's worth 6% of what it was a year ago? If I were paid in dollars, I would be changing them to ETH as fast as I could right now.

Since these prices don't make sense with what many people and I think are the fundamentals, then we need to reevaluate our views on how coins are valued. It's quite possible that the idea that things like transaction capacity and features [i]don't actually matter[/i].

There was one news article that caught my attention a while back. It proposed that, during 2017, a lot of the buyers into coins came from "ordinary people" who knew very little about cryptocurrencies. These people talked about coins at parties and bought what their friends bought. Someone like me, who spends most of his time at home writing code for this business, who is not married, and who has fewer friends than the average person, would not have been exposed to enough instances to make a connection if it were true that someone talked about bitcoins at every social event. I'd also venture that many of the people discussing bubbles in Internet forums also engage in less socializing than the average person, so reading theories about what happened from them leads to inaccurate conclusions.

During the next bubble, I'm going to more strongly consider social issues rather than technical issues and see whether that increases the accuracy of my predictions.

IPOs of mining manufacturers were too slow
One way to predict that this would not be a quick recovery into another bubble like the first 2013 collapse was to look at the IPOs from the mining manufacturers. Businesses don't issue IPOs when they have plenty of money - why would you give up potential profits to get money now if you don't need it? Instead, executives at the companies were really smart and saw that the writing was on the wall. Their problem was that they moved too slowly to sell their stakes. I don't think that the IPOs will be able to raise sufficient capital at this point and they will probably be cancelled. Bitmain or one of the other big mining manufacturers will likely go out of business.

Mining manufacturing is an interesting business because there is zero demand for your product during times like these. The industry basically resets every few years with new companies. The bitcoin difficulty just fell 15% during the last period, and the market is flooded with the miners that were just shut down. Why would anyone buy a new miner when all these old miners are being given away at any cost?

It doesn't make sense that anyone would ever invest in these IPOs or in the rumored Coinbase IPO. All of these stocks are 100% dependent on the cryptocurrency market recovering. If cryptocurrencies settle at these prices indefinitely, Coinbase will be unable to support its operations and will collapse, so you'll lose a lot more money than if you invested in coins (which have no chance of ever being completely worthless anymore.) If cryptocurrencies increase in value, they will go up by 100-1000x and Coinbase's stock will go up by 5x or 10x. In both cases, buying an IPO in the cryptocurrency world never makes as much sense as buying the coins themselves. Either buy coins or buy stocks in some unrelated industry to diversify.

"Manipulation" is a buzzword people use to explain things they don't like
Whenever prices fall, people start complaining about "manipulation." They experienced a huge drop, so the people selling must have been "manipulating" the market to cause them to lose money. The latest theory is that Bitfinex is not being honest with its Tether reserves. Bitfinex clearly violated the law by serving US customers and not shutting down when it was insolvent, but there isn't any evidence that Tether is going to fail due to fraud.

Note that Tether may fail due to banks discontinuing Tether's accounts, but that is different than fraud where a misrepresentation is being made.

I don't believe that the cryptocurrency markets are "manipulated" like most people think. There are some scams, especially those where people create ICOs and don't deliver a product. I doubt that the SEC will bring any charges against Bitfinex, and most of these complaints about "manipulation" are simply people complaining because they lost money.

Businesses will start to fail
Now I can get to the consequence that I think is the most important to understand in predicting how the next cycle plays out.

One of the reasons that the next bubble is a while away is because there have not yet been a lot of businesses that have failed. One of the unfortunate aspects of cryptocurrency, and one that significantly delays its development, is how the bubble cycle causes good ideas to fail. For example, the ETCDEV team, which contributed to Ethereum Classic development, recently folded due to bankruptcy. While I don't hold much love for people who are willing to overlook something as heinous as the DAO theft, the ETCDEV team did seem like it would be a significant contributor to developing ETC, and that won't happen now.

In fact, it's more likely that honest, ethical businesses will fail during this coming down cycle than scammers and fraudsters. It doesn't cost much to be a scammer - you just register some fake accounts and announce a new project, then disappear with all the money. Operating an honest business is expensive. It will cost us $15,000 just to comply with the 1099-MISC regulations next month. That's why, as prices fall, we should expect disreputable people to start to again outnumber law-abiding citizens in this industry. We can already see that happening as people with criminal records like Craig Wright, Roger Ver, and Charlie Shrem are dominating the conversation more and more.

As prices fall, businesses will need to make a decision. Many of them will decide to "pivot" - which essentially means that the company is shutting down and is creating a new firm in a different industry. This was common in 2015. Remember that the level at which a company should quit working in cryptocurrencies is not determined by whether they are making money, but by whether they are making as much money as they could in another field. Most of the time, companies that "pivot" don't return to whatever they were doing before, because they either find the "pivot" field to be lucrative, in which case it makes sense to keep at it, or they go bankrupt in that field too and close down permanently.

They key issue with these "pivots" and outright bankruptcies is that talent leaves the industry and is permanently gone. It takes at least 6 months for a programmer to join a project and become familiar with a codebase, during which time that person's productivity is significantly reduced. The cost of training a new hire is often as much as that person's salary for an entire year, given that other people in the company need to slow down to train the new person. When people leave a company, they don't just come back if times get better. They get new jobs, with new responsibilities, and that knowledge is lost.

Suppose that there is a company that has created an amazing Ethereum-based marketplace that will eventually gain millions of simultaneous customers. The marketplace reaches completion, but in the downturn the company is forced to shut down until the market turns around again, because all their customers are gone. Even if the owner of the company retains the software and is available and willing to restart when the next bubble begins, years have passed and new employees are needed. It will take 6 months to get all the employees hired, another 3 to get them minimally trained, another 1 to upgrade all the development environments, packages, and tools that became obsolete during the stoppage to get everything up to current standards, and another 2 to redo the website design to do the same thing with different colors and designs because the Internet for some reason changed its mind on what makes "attractive" webpages again.

If the downturn lasts two years, then this project could have been out [i]three years earlier[/i] if it weren't for the bubbles. Not only that, but the project's suspension itself contributed to the long duration of the bubble cycle. There would have been more activity in cryptocurrencies if this system had been available.

This effect is why I believe that as prices decline, the length of the upcoming downturn will increase significantly. Over the next weeks and months, we're going to start to hear of promising projects fail, and that's going to reduce the value of coins, cascading into other projects' feasibility, and creating a ripple effect of "pivots" and bankruptcies.

This is why I think that the first 2013 bubble had a much different outcome than the second 2013 bubble. In the first 2013 bubble, prices never collapsed after the long period of stability, and businesses were able to keep moving forward during that time. During the second 2013 bubble, prices collapsed after that period of stability that ended in August 2014, and one can look back at news articles form the day listing failures and "pivots" that occurred in the subsequent months.

If it weren't for bubbles, the industry would be years ahead of where it is now. The smartphone, for example, rose from unknown to market saturation in 10 years. After 10 years, where are cryptocurrencies, which also arose in 2008? About 6 or 7 years behind where they could be, because every bubble requires a reset with new companies, given that most of the work from the previous bubble is wasted.

There will be a next bubble
Finally, there will definitely be a next bubble - of that, I'm 100% certain. If you're not sure of that, then consider a scenario where you live in a world that already uses cryptocurrencies for all transactions. One day, a government decides that it's going to create its own currency, which it will be able to inflate at will, and which will take hundreds of times longer to conduct transactions with.

Do you think people would use that currency?
submitted by MattAbrams to BitcoinMarkets [link] [comments]

An extensive guide for cashing out bitcoin and cryptocurrencies into private banks

Hey guys.
Merry Xmas !
I am coming back to you with a follow up post, as I have helped many people cash out this year and I have streamlined the process. After my original post, I received many requests to be more specific and provide more details. I thought that after the amazing rally we have been attending over the last few months, and the volatility of the last few days, it would be interesting to revisit more extensively.
The attitude of banks around crypto is changing slowly, but it is still a tough stance. For the first partial cash out I operated around a year ago for a client, it took me months to find a bank. They wouldn’t want to even consider the case and we had to knock at each and every door. Despite all my contacts it was very difficult back in the days. This has changed now, and banks have started to open their doors, but there is a process, a set of best practices and codes one has to follow.
I often get requests from crypto guys who are very privacy-oriented, and it takes me months to have them understand that I am bound by Swiss law on banking secrecy, and I am their ally in this onboarding process. It’s funny how I have to convince people that banks are legit, while on the other side, banks ask me to show that crypto millionaires are legit. I have a solid background in both banking and in crypto so I manage to make the bridge, but yeah sometimes it is tough to reconcile the two worlds. I am a crypto enthusiast myself and I can say that after years of work in the banking industry I have grown disillusioned towards banks as well, like many of you. Still an account in a Private bank is convenient and powerful. So let’s get started.
There are two different aspects to your onboarding in a Swiss Private bank, compliance-wise.
*The origin of your crypto wealth
*Your background (residence, citizenship and probity)
These two aspects must be documented in-depth.
How to document your crypto wealth. Each new crypto millionaire has a different story. I may detail a few fun stories later in this post, but at the end of the day, most of crypto rich I have met can be categorized within the following profiles: the miner, the early adopter, the trader, the corporate entity, the black market, the libertarian/OTC buyer. The real question is how you prove your wealth is legit.
1. Context around the original amount/investment Generally speaking, your first crypto purchase may not be documented. But the context around this acquisition can be. I have had many cases where the original amount was bought through Mtgox, and no proof of purchase could be provided, nor could be documented any Mtgox claim. That’s perfectly fine. At some point Mtgox amounted 70% of the bitcoin transactions globally, and people who bought there and managed to withdraw and keep hold of their bitcoins do not have any Mtgox claim. This is absolutely fine. However, if you can show me the record of a wire from your bank to Tisbane (Mtgox's parent company) it's a great way to start.
Otherwise, what I am trying to document here is the following: I need context. If you made your first purchase by saving from summer jobs, show me a payroll. Even if it was USD 2k. If you acquired your first bitcoins from mining, show me the bills of your mining equipment from 2012 or if it was through a pool mine, give me your slushpool account ref for instance. If you were given bitcoin against a service you charged, show me an invoice.
2. Tracking your wealth until today and making sense of it. What I have been doing over the last few months was basically educating compliance officers. Thanks God, the blockchain is a global digital ledger! I have been telling my auditors and compliance officers they have the best tool at their disposal to lead a proper investigation. Whether you like it or not, your wealth can be tracked, from address to address. You may have thought all along this was a bad feature, but I am telling you, if you want to cash out, in the context of Private Banking onboarding, tracking your wealth through the block explorer is a boon. We can see the inflows, outflows. We can see the age behind an address. An early adopter who bought 1000 BTC in 2010, and let his bitcoin behind one address and held thus far is legit, whether or not he has a proof of purchase to show. That’s just common sense. My job is to explain that to the banks in a language they understand.
Let’s have a look at a few examples and how to document the few profiles I mentioned earlier.
The trader. I love traders. These are easy cases. I have a ton of respect for them. Being a trader myself in investment banks for a decade earlier in my career has taught me that controlling one’s emotions and having the discipline to impose oneself some proper risk management system is really really hard. Further, being able to avoid the exchange bankruptcy and hacks throughout crypto history is outstanding. It shows real survival instinct, or just plain blissed ignorance. In any cases traders at exchange are easy cases to corroborate since their whole track record is potentially available. Some traders I have met have automated their trading and have shown me more than 500k trades done over the span of 4 years. Obviously in this kind of scenario I don’t show everything to the bank to avoid information overload, and prefer to do some snacking here and there. My strategy is to show the early trades, the most profitable ones, explain the trading strategy and (partially expose) the situation as of now with id pages of the exchanges and current balance. Many traders have become insensitive to the risk of parking their crypto at exchange as they want to be able to trade or to grasp an occasion any minute, so they generally do not secure a substantial portion on the blockchain which tends to make me very nervous.
The early adopter. Provided that he has not mixed his coin, the early adopter or “hodler” is not a difficult case either. Who cares how you bought your first 10k btc if you bought them below 3$ ? Even if you do not have a purchase proof, I would generally manage to find ways. We just have to corroborate the original 30’000 USD investment in this case. I mainly focus on three things here:
*proof of early adoption I have managed to educate some banks on a few evidences specifically related to crypto markets. For instance with me, an old bitcointalk account can serve as a proof of early adoption. Even an old reddit post from a few years ago where you say how much you despise this Ripple premined scam can prove to be a treasure readily available to show you were early.
*story telling Compliance officers like to know when, why and how. They are human being looking for simple answers to simple questions and they don’t want like to be played fool. Telling the truth, even without a proof can do wonders, and even though bluffing might still work because banks don’t fully understand bitcoin yet, it is a risky strategy that is less and less likely to pay off as they are getting more sophisticated by the day.
*micro transaction from an old address you control This is the killer feature. Send a $20 worth transaction from an old address to my company wallet and to one of my partner bank’s wallet and you are all set ! This is gold and considered a very solid piece of evidence. You can also do a microtransaction to your own wallet, but banks generally prefer transfer to their own wallet. Patience with them please. they are still learning.
*signature message Why do a micro transaction when you can sign a message and avoid potentially tainting your coins ?
*ICO millionaire Some clients made their wealth participating in ETH crowdsale or IOTA ICO. They were very easy to deal with obviously and the account opening was very smooth since we could evidence the GENESIS TxHash flow.
The miner Not so easy to proof the wealth is legit in that case. Most early miners never took screenshot of the blocks on bitcoin core, nor did they note down the block number of each block they mined. Until the the Slashdot article from August 2010 anyone could mine on his laptop, let his computer run overnight and wake up to a freshly minted block containing 50 bitcoins back in the days. Not many people were structured enough to store and secure these coins, avoid malwares while syncing the blockchain continuously, let alone document the mined blocks in the process. What was 50 BTC worth really for the early miners ? dust of dollars, games and magic cards… Even miners post 2010 are generally difficult to deal with in terms of compliance onboarding. Many pool mining are long dead. Deepbit is down for instance and the founders are MIA. So my strategy to proof mining activity is as follow:
*Focusing on IT background whenever possible. An IT background does help a lot to bring some substance to the fact you had the technical ability to operate a mining rig.
*Showing mining equipment receipts. If you mined on your own you must have bought the hardware to do so. For instance mining equipment receipts from butterfly lab from 2012-2013 could help document your case. Similarly, high electricity bill from your household on a consistent basis back in the day could help. I have already unlocked a tricky case in the past with such documents when the bank was doubtful.
*Wallet.dat files with block mining transactions from 2011 thereafter This obviously is a fantastic piece of evidence for both you and me if you have an old wallet and if you control an address that received original mined blocks, (even if the wallet is now empty). I will make sure compliance officers understand what it means, and as for the early adopter, you can prove your control over these wallet through a microtransaction. With these kind of addresses, I can show on the block explorer the mined block rewards hitting at regular time interval, and I can even spot when difficulty level increased or when halvening process happened.
*Poolmining account. Here again I have educated my partner bank to understand that a slush account opened in 2013 or an OnionTip presence was enough to corroborate mining activity. The block explorer then helps me to do the bridge with your current wallet.
*Describing your set up and putting it in context In the history of mining we had CPU, GPU, FPG and ASICs mining. I will describe your technical set up and explain why and how your set up was competitive at that time.
The corporate entity Remember 2012 when we were all convinced bitcoin would take over the world, and soon everyone would pay his coffee in bitcoin? How naïve we were to think transaction fees would remain low forever. I don’t blame bitcoin cash supporters; I once shared this dream as well. Remember when we thought global adoption was right around the corner and some brick and mortar would soon accept bitcoin transaction as a common mean of payment? Well, some shop actually did accept payment and held. I had a few cases as such of shops holders, who made it to the multi million mark holding and had invoices or receipts to proof the transactions. If you are organized enough to keep a record for these trades and are willing to cooperate for the documentation, you are making your life easy. The digital advertising business is also a big market for the bitcoin industry, and affiliates partner compensated in btc are common. It is good to show an invoice, it is better to show a contract. If you do not have a contract (which is common since all advertising deals are about ticking a check box on the website to accept terms and conditions), there are ways around that. If you are in that case, pm me.
The black market Sorry guys, I can’t do much for you officially. Not that I am judging you. I am a libertarian myself. It’s just already very difficult to onboard legit btc adopters, so the black market is a market I cannot afford to consider. My company is regulated so KYC and compliance are key for me if I want to stay in business. Behind each case I push forward I am risking the credibility and reputation I have built over the years. So I am sorry guys I am not risking it to make an extra buck. Your best hope is that crypto will eventually take over the world and you won’t need to cash out anyway. Or go find a Lithuanian bank that is light on compliance and cooperative.
The OTC buyer and the libertarian. Generally a very difficult case. If you bought your stack during your journey in Japan 5 years ago to a guy you never met again; or if you accumulated on and kept no record or lost your account, it is going to be difficult. Not impossible but difficult. We will try to build a case with everything else we have, and I may be able to onboard you. However I am risking a lot here so I need to be 100% confident you are legit, before I defend you. Come & see me in Geneva, and we will talk. I will run forensic services like elliptic, chainalysis, or scorechain on an extract of your wallet. If this scan does not raise too many red flags, then maybe we can work together ! If you mixed your coins all along your crypto history, and shredded your seeds because you were paranoid, or if you made your wealth mining professionally monero over the last 3 years but never opened an account at an exchange. ¯_(ツ)_/¯ I am not a magician and don’t get me wrong, I love monero, it’s not the point.
Cashing out ICOs Private companies or foundations who have ran an ICO generally have a very hard time opening a bank account. The few banks that accept such projects would generally look at 4 criteria:
*Seriousness of the project Extensive study of the whitepaper to limit the reputation risk
*AML of the onboarding process ICOs 1.0 have no chance basically if a background check of the investors has not been conducted
*Structure of the moral entity List of signatories, certificate of incumbency, work contract, premises...
*Fiscal conformity Did the company informed the authorities and seek a fiscal ruling.
For the record, I am not into the tax avoidance business, so people come to me with a set up and I see if I can make it work within the legal framework imposed to me.
First, stop thinking Switzerland is a “offshore heaven” Swiss banks have made deals with many governments for the exchange of fiscal information. If you are a French citizen, resident in France and want to open an account in a Private Bank in Switzerland to cash out your bitcoins, you will get slaughtered (>60%). There are ways around that, and I could refer you to good tax specialists for fiscal optimization, but I cannot organize it myself. It would be illegal for me. Swiss private banks makes it easy for you to keep a good your relation with your retail bank and continue paying your bills without headaches. They are integrated to SEPA, provide ebanking and credit cards.
For information, these are the kind of set up some of my clients came up with. It’s all legal; obviously I do not onboard clients that are not tax compliant. Further disclaimer: I did not contribute myself to these set up. Do not ask me to organize it for you. I won’t.
EU tricks
Swiss lump sum taxation Foreign nationals resident in Switzerland can be taxed on a lump-sum basis if they are not gainfully employed in our country. Under the lump-sum tax regime, foreign nationals taking residence in Switzerland may choose to pay an expense-based tax instead of ordinary income and wealth tax. Attractive cantons for the lump sum taxation are Zug, Vaud, Valais, Grisons, Lucerne and Berne. To make it short, you will be paying somewhere between 200 and 400k a year and all expenses will be deductible.
Switzerland has adopted a very friendly attitude towards crypto currency in general. There is a whole crypto valley in Zug now. 30% of ICOs are operated in Switzerland. The reason is that Switzerland has thrived for centuries on banking secrecy, and today with FATCA and exchange of fiscal info with EU, banking secrecy is dead. Regulators in Switzerland have understood that digital ledger technologies were a way to roll over this competitive advantage for the generations to come. Switzerland does not tax capital gains on crypto profits. The Finma has a very pragmatic approach. They have issued guidance- updated guidelines here. They let the business get organized and operate their analysis on a case per case basis. Only after getting a deep understanding of the market will they issue a global fintech license in 2019. This approach is much more realistic than legislations which try to regulate everything beforehand.
Italy new tax exemption. It’s a brand new fiscal exemption. Go to Aoste, get residency and you could be taxed a 100k/year for 10years. Yes, really.
Portugal What’s crazy in Europe is the lack of fiscal harmonization. Even if no one in Brussels dares admit it, every other country is doing fiscal dumping. Portugal is such a country and has proved very friendly fiscally speaking. I personally have a hard time trusting Europe. I have witnessed what happened in Greece over the last few years. Some of our ultra high net worth clients got stuck with capital controls. I mean no way you got out of crypto to have your funds confiscated at the next financial crisis! Anyway. FYI
Malta Generally speaking, if you get a residence somewhere you have to live there for a certain period of time. Being stuck in Italy is no big deal with Schengen Agreement, but in Malta it is a different story. In Malta, the ordinary residence scheme is more attractive than the HNWI residence scheme. Being an individual, you can hold a residence permit under this scheme and pay zero income tax in Malta in a completely legal way.
Monaco Not suitable for French citizens, but for other Ultra High Net worth individual, Monaco is worth considering. You need an account at a local bank as a proof of fortune, and this account generally has to be seeded with at least EUR500k. You also need a proof of residence. I do mean UHNI because if you don’t cash out minimum 30m it’s not interesting. Everything is expensive in Monaco. Real Estate is EUR 50k per square meter. A breakfast at Monte Carlo Bay hotel is 70 EUR. Monaco is sunny but sometimes it feels like a golden jail. Do you really want that for your kids?
  1. Set up a company in Dubaï, get your resident card.
  2. Spend one day every 6 month there
  3. ???
  4. Be tax free
US tricks Some Private banks in Geneva do have the license to manage the assets of US persons and U.S citizens. However, do not think it is a way to avoid paying taxes in the US. Opening an account at an authorized Swiss Private banks is literally the same tax-wise as opening an account at Fidelity or at Bank of America in the US. The only difference is that you will avoid all the horror stories. Horror stories are all real by the way. In Switzerland, if you build a decent case and answer all the questions and corroborate your case in depth, you will manage to convince compliance officers beforehand. When the money eventually hits your account, it is actually available and not frozen.
The IRS and FATCA require to file FBAR if an offshore account is open. However FBAR is a reporting requirement and does not have taxes related to holding an account outside the US. The taxes would be the same if the account was in the US. However penalties for non compliance with FBAR are very large. The tax liability management is actually performed through the management of the assets ( for exemple by maximizing long term capital gains and minimizing short term gains).
The case for Porto Rico. Full disclaimer here. I am not encouraging this. Have not collaborated on such tax avoidance schemes. if you are interested I strongly encourage you to seek a tax advisor and get a legal opinion. I am not responsible for anything written below. I am not going to say much because I am so afraid of uncle Sam that I prefer to humbly pass the hot potato to pwc From here all it takes is a good advisor and some creativity to be tax free on your crypto wealth if you are a US person apparently. Please, please please don’t ask me more. And read the disclaimer again.
Trust tricks Generally speaking I do not accept fringe fiscal situation because it puts me in a difficult situation to the banks I work with, and it is already difficult enough to defend a legit crypto case. Trust might be a way to optimize your fiscal situation. Belize. Bahamas. Seychelles. Panama, You name it. At the end of the day, what matters for Swiss Banks are the beneficial owner and the settlor. Get a legal opinion, get it done, and when you eventually knock at a private bank’s door, don’t say it was for fiscal avoidance you stupid ! You will get the door smashed upon you. Be smarter. It will work. My advice is just to have it done by a great tax specialist lawyer, even if it costs you some money, as the entity itself needs to be structured in a professional way. Remember that with trust you are dispossessing yourself off your wealth. Not something to be taken lightly.
“Anonymous” cash out. Right. I think I am not going into this topic, neither expose the ways to get it done. Pm me for details. I already feel a bit uncomfortable with all the info I have provided. I am just going to mention many people fear that crypto exchange might become reporting entities soon, and rightly so. This might happen anyday. You have been warned. FYI, this only works for non-US and large cash out.
The difference between traders an investors. Danmark, Holland and Germany all make a huge difference if you are a passive investor or if you are a trader. ICO is considered investing for instance and is not taxed, while trading might be considered as income and charged aggressively. I would try my best to protect you and put a focus on your investor profile whenever possible, so you don't have to pay 52% tax if you do not have to :D
Full cash out or partial cash out? People who have been sitting on crypto for long have grown an emotional and irrational link with their coins. They come to me and say, look, I have 50m in crypto but I would like to cash out 500k only. So first let me tell you that as a wealth manager my advice to you is to take some off the table. Doing a partial cash out is absolutely fine. The market is bullish. We are witnessing a redistribution of wealth at a global scale. Bitcoin is the real #occupywallstreet, and every one will discuss crypto at Xmas eve which will make the market even more supportive beginning 2018, especially with all hedge funds entering the scene. If you want to stay exposed to bitcoin and altcoins, and believe these techs will change the world, it’s just natural you want to keep some coins. In the meantime, if you have lived off pizzas over the last years, and have the means to now buy yourself an nice house and have an account at a private bank, then f***ing do it mate ! Buy physical gold with this account, buy real estate, have some cash at hands. Even though US dollar is worthless to your eyes, it’s good and convenient to have some. Also remember your wife deserves it ! And if you have no wife yet and you are socially awkward like the rest of us, then maybe cashing out partially will help your situation ;)
What the Private Banks expect. Joke aside, it is important you understand something. If you come around in Zurich to open a bank account and partially cash out, just don’t expect Private Banks will make an exception for you if you are small. You can’t ask them to facilitate your cash out, buy a 1m apartment with the proceeds of the sale, and not leave anything on your current account. It won’t work. Sadly, under 5m you are considered small in private banking. The bank is ok to let you open an account, provided that your kyc and compliance file are validated, but they will also want you to become a client and leave some money there to invest. This might me despicable, but I am just explaining you their rules. If you want to cash out, you should sell enough to be comfortable and have some left. Also expect the account opening to last at least 3-4 week if everything goes well. You can't just open an account overnight.
The cash out logistics. Cashing out 1m USD a day in bitcoin or more is not so hard.
Let me just tell you this: Even if you get a Tier 4 account with Kraken and ask Alejandro there to raise your limit over $100k per day, Even if you have a bitfinex account and you are willing to expose your wealth there, Even if you have managed to pass all the crazy due diligence at Bitstamp,
The amount should be fractioned to avoid risking your full wealth on exchange and getting slaughtered on the price by trading big quantities. Cashing out involves significant risks at all time. There is a security risk of compromising your keys, a counterparty risk, a fat finger risk. Let it be done by professionals. It is worth every single penny.
Most importantly, there is a major difference between trading on an exchange and trading OTC. Even though it’s not publicly disclosed some exchange like Kraken do have OTC desks. Trading on an exchange for a large amount will weight on the prices. Bitcoin is a thin market. In my opinion over 30% of the coins are lost in translation forever. Selling $10m on an exchange in a day can weight on the prices more than you’d think. And if you trade on a exchange, everything is shown on record, and you might wipe out the prices because on exchanges like bitstamp or kraken ultimately your counterparties are retail investors and the market depth is not huge. It is a bit better on Bitfinex. It is way better to trade OTC. Accessing the institutional OTC market is not easy, and that is also the reason why you should ask a regulated financial intermediary if we are talking about huge amounts.
Last point, always chose EUR as opposed to USD. EU correspondent banks won’t generally block institutional amounts. However we had the cases of USD funds frozen or delayed by weeks.
Most well-known OTC desks are Cumberlandmining (ask for Lucas), Genesis (ask for Martin), Bitcoin Suisse AG (ask for Niklas), circletrade, B2C2, or Altcoinomy (ask for Olivier)
Very very large whales can also set up escrow accounts for massive block trades. This world, where blocks over 30k BTC are exchanged between 2 parties would deserve a reddit thread of its own. Crazyness all around.
Your options: DIY or going through a regulated financial intermediary.
Execution trading is a job in itself. You have to be patient, be careful not to wipe out the order book and place limit orders, monitor the market intraday for spikes or opportunities. At big levels, for a large cash out that may take weeks, these kind of details will save you hundred thousands of dollars. I understand crypto holders are suspicious and may prefer to do it by themselves, but there are regulated entities who now offer the services. Besides, being a crypto millionaire is not a guarantee you will get institutional daily withdrawal limits at exchange. You might, but it will take you another round of KYC with them, and surprisingly this round might be even more aggressive that the ones at Private banks since exchange have gone under intense scrutiny by regulators lately.
The fees for cashing out through a regulated financial intermediary to help you with your cash out should be around 1-2% flat on the nominal, not more. And for this price you should get the full package: execution/monitoring of the trades AND onboarding in a private bank. If you are asked more, you are being abused.
Of course, you also have the option to do it yourself. It is a way more tedious and risky process. Compliance with the exchange, compliance with the private bank, trading BTC/fiat, monitoring the transfers…You will save some money but it will take you some time and stress. Further, if you approach a private bank directly, it will trigger a series of red flag to the banks. As I said in my previous post, they call a direct approach a “walk-in”. They will be more suspicious than if you were introduced by someone and won’t hesitate to show you high fees and load your portfolio with in-house products that earn more money to the banks than to you. Remember also most banks still do not understand crypto so you will have a lot of explanations to provide and you will have to start form scratch with them!
The paradox of crypto millionaires Most of my clients who made their wealth through crypto all took massive amount of risks to end up where they are. However, most of them want their bank account to be managed with a low volatility fixed income capital preservation risk profile. This is a paradox I have a hard time to explain and I think it is mainly due to the fact that most are distrustful towards banks and financial markets in general. Many clients who have sold their crypto also have a cash-out blues in the first few months. This is a classic situation. The emotions involved in hodling for so long, the relief that everything has eventually gone well, the life-changing dynamics, the difficulties to find a new motivation in life…All these elements may trigger a post cash-out depression. It is another paradox of the crypto rich who has every card in his hand to be happy, but often feel a bit sad and lonely. Sometimes, even though it’s not my job, I had to do some psychological support. A lot of clients have also become my friends, because we have the same age and went through the same “ordeal”. First world problem I know… Remember, cashing out is not the end. It’s actually the beginning. Don’t look back, don’t regret. Cash out partially, because it does not make sense to cash out in full, regret it and want back in. relax.
The race to cash out crypto billionaire and the concept of late exiter. The Winklevoss brothers are obviously the first of a series. There will be crypto billionaires. Many of them. At a certain level you can have a whole family office working for you to manage your assets and take care of your needs . However, let me tell you it’s is not because you made it so big that you should think you are a genius and know everything better than anyone. You should hire professionals to help you. Managing assets require some education around the investment vehicles and risk management strategies. Sorry guys but with all the respect I have for wallstreebet, AMD and YOLO stock picking, some discipline is necessary. The investors who have made money through crypto are generally early adopters. However I have started to see another profile popping up. They are not early adopters. They are late exiters. It is another way but just as efficient. Last week I met the first crypto millionaire I know who first bough bitcoin over 1000$. 55k invested at the beginning of this year. Late adopter & late exiter is a route that can lead to the million.
Last remarks. I know banks, bankers, and FIAT currencies are so last century. I know some of you despise them and would like to have them burn to the ground. With compliance officers taking over the business, I would like to start the fire myself sometimes. I hope this extensive guide has helped some of you. I am around if you need more details. I love my job despite all my frustration towards the banking industry because it makes me meet interesting people on a daily basis. I am a crypto enthusiast myself, and I do think this tech is here to stay and will change the world. Banks will have to adapt big time. Things have started to change already; they understand the threat is real. I can feel the generational gap in Geneva, with all these old bankers who don’t get what’s going on. They glaze at the bitcoin chart on CNBC in disbelief and they start to get it. This bitcoin thing is not a joke. Deep inside, as an early adopter who also intends to be a late exiter, as a libertarian myself, it makes me smile with satisfaction.
Cheers. @swisspb on telegram
submitted by Swissprivatebanker to Bitcoin [link] [comments]

The Great Bitcoin Bull Market Of 2017 by Trace Mayer

By: Trace Mayer, host of The Bitcoin Knowledge Podcast.
Originally posted here with images and Youtube videos.
I just got back from a two week vacation without Internet as I was scouring some archeological ruins. I hardly thought about Bitcoin at all because there were so many other interesting things and it would be there when I got back.
Jimmy Song suggested I do an article on the current state of Bitcoin. A great suggestion but he is really smart (he worked on Armory after all!) so I better be thorough and accurate!
Therefore, this article will be pretty lengthy and meticulous.
As I completely expected, the 2X movement from the New York Agreement that was supposed to happen during the middle of my vacation flopped on its face because Jeff Garzik was driving the clown car with passengers willfully inside like Coinbase,, Bitgo and Xapo and there were here massive bugS and in the code and miners like Bitmain did not want to allocate $150-350m to get it over the difficulty adjustments.
I am very disappointed in their lack of integrity with putting their money where their mouths are; myself and many others wanted to sell a lot of B2X for BTC!
On 7 December 2015, with Bitcoin trading at US$388.40, I wrote The Rise of the Fourth Great Bitcoin Bubble. On 4 December 2016, with Bitcoin trading at US$762.97, I did this interview:

As of 26 November 2017, Bitcoin is trading around US$9,250.00. That is an increase of about 2,400% since I wrote the article prognosticating this fourth great Bitcoin bull market. I sure like being right, like usual (19 Dec 2011, 1 Jul 2013), especially when there are financial and economic consequences.
With such massive gains in such a short period of time the speculative question becomes: Buy, Hold or Sell?
Bitcoin is the decentralized censorship-resistant Internet Protocol for transferring value over a communications channel.
The Bitcoin network can use traditional Internet infrastructure. However, it is even more resilient because it has custom infrastructure including, thanks to Bitcoin Core developer Matt Corrallo, the FIBRE network and, thanks to Blockstream, satellites which reduce the cost of running a full-node anywhere in the world to essentially nothing in terms of money or privacy. Transactions can be cheaply broadcast via SMS messages.
The Bitcoin network has a difficulty of 1,347,001,430,559 which suggests about 9,642,211 TH/s of custom ASIC hardware deployed.
At a retail price of approximately US$105/THs that implies about $650m of custom ASIC hardware deployed (35% discount applied).
This custom hardware consumes approximately 30 TWh per year. That could power about 2.8m US households or the entire country of Morocco which has a population of 33.85m.
This Bitcoin mining generates approximately 12.5 bitcoins every 10 minutes or approximately 1,800 per day worth approximately US$16,650,000.
Bitcoin currently has a market capitalization greater than $150B which puts it solidly in the top-30 of M1 money stock countries and a 200 day moving average of about $65B which is increasing about $500m per day.
Average daily volumes for Bitcoin is around US$5B. That means multi-million dollar positions can be moved into and out of very easily with minimal slippage.
When my friend Andreas Antonopolous was unable to give his talk at a CRYPSA event I was invited to fill in and delivered this presentation, impromptu, on the Seven Network Effects of Bitcoin.
These seven network effects of Bitcoin are (1) Speculation, (2) Merchants, (3) Consumers, (4) Security [miners], (5) Developers, (6) Financialization and (7) Settlement Currency are all taking root at the same time and in an incredibly intertwined way.
With only the first network effect starting to take significant root; Bitcoin is no longer a little experiment of magic Internet money anymore. Bitcoin is monster growing at a tremendous rate!!

For the Bitcoin price to remain at $9,250 it requires approximately US$16,650,000 per day of capital inflow from new hodlers.
Bitcoin is both a Giffen good and a Veblen good.
A Giffen good is a product that people consume more of as the price rises and vice versa — seemingly in violation of basic laws of demand in microeconomics such as with substitute goods and the income effect.
Veblen goods are types of luxury goods for which the quantity demanded increases as the price increases in an apparent contradiction of the law of demand.
There are approximately 16.5m bitcoins of which ~4m are lost, ~4-6m are in deep cold storage, ~4m are in cold storage and ~2-4m are salable.
And forks like BCash (BCH) should not be scary but instead be looked upon as an opportunity to take more territory on the Bitcoin blockchain by trading the forks for real bitcoins which dries up more salable supply by moving it, likely, into deep cold storage.
According to Wikipedia, there are approximately 15.4m millionaires in the United States and about 12m HNWIs ($30m+ net worth) in the world. In other words, if every HNWI in the world wanted to own an entire bitcoin as a 'risk-free asset' that cannot be confiscated, seized or have the balance other wise altered then they could not.
For wise portfolio management, these HNWIs should have at least about 2-5% in gold and 0.5-1% in bitcoin.
Why? Perhaps some of the 60+ Saudis with 1,700 frozen bank accounts and about $800B of assets being targetted might be able to explain it to you.
In other words, everyone loves to chase the rabbit and once they catch it then know that it will not get away.
There are approximately 150+ significant Bitcoin exchanges worldwide. Kraken, according to the CEO, was adding about 6,000 new funded accounts per day in July 2017.
Supposedly, Coinbase is currently adding about 75,000 new accounts per day. Based on some trade secret analytics I have access to; I would estimate Coinbase is adding approximately 17,500 new accounts per day that purchase at least US$100 of Bitcoin.
If we assume Coinbase accounts for 8% of new global Bitcoin users who purchase at least $100 of bitcoins (just pulled out of thin error and likely very conservative as the actual number is perhaps around 2%) then that is approximately $21,875,000 of new capital coming into Bitcoin every single day just from retail demand from 218,750 total new accounts.
What I have found is that most new users start off buying US$100-500 and then after 3-4 months months they ramp up their capital allocation to $5,000+ if they have the funds available.
After all, it takes some time and practical experience to learn how to safely secure one's private keys.
To do so, I highly recommend Bitcoin Core (network consensus and full validation of the blockchain), Armory (private key management), Glacier Protocol (operational procedures) and a laptop (secure non-specialized hardware).
There has been no solution for large financial fiduciaries to invest in Bitcoin. This changed November 2017.
LedgerX, whose CEO I interviewed 23 March 2013, began trading as a CFTC regulated Swap Execution Facility and Derivatives Clearing Organization.
The CME Group announced they will begin trading in Q4 2017 Bitcoin futures.
The CBOE announced they will begin trading Bitcoin futures soon.
By analogy, these institutional products are like connecting a major metropolis's water system (US$90.4T and US$2 quadrillion) via a nanoscopic shunt to a tiny blueberry ($150B) that is infinitely expandable.
This price discovery could be the most wild thing anyone has ever experienced in financial markets.
The same week Bitcoin was released I published my book The Great Credit Contraction and asserted it had now begun and capital would burrow down the liquidity pyramid into safer and more liquid assets.
Thus, the critical question becomes: Is Bitcoin a possible solution to the Great Credit Contraction by becoming the safest and most liquid asset?
At all times and in all circumstances gold remains money but, of course, there is always exchange rate risk due to price ratios constantly fluctuating. If the metal is held with a third-party in allocated-allocated storage (safest possible) then there is performance risk (Morgan Stanley gold storage lawsuit).
But, if properly held then, there should be no counter-party risk which requires the financial ability of a third-party to perform like with a bank account deposit. And, since gold exists at a single point in space and time therefore it is subject to confiscation or seizure risk.
Bitcoin is a completely new asset type. As such, the storage container is nearly empty with only $150B.
And every Bitcoin transaction effectively melts down every BTC and recasts it; thus ensuring with 100% accuracy the quantity and quality of the bitcoins. If the transaction is not on the blockchain then it did not happen. This is the strictest regulation possible; by math and cryptography!
This new immutable asset, if properly secured, is subject only to exchange rate risk. There does exist the possibility that a software bug may exist that could shut down the network, like what has happened with Ethereum, but the probability is almost nil and getting lower everyday it does not happen.
Thus, Bitcoin arguably has a lower risk profile than even gold and is the only blockchain to achieve security, scalability and liquidity.
To remain decentralized, censorship-resistant and immutable requires scalability so as many users as possible can run full-nodes.
Some people, probably mostly those shilling alt-coins, think Bitcoin has a scalability problem that is so serious it requires a crude hard fork to solve.
On the other side of the debate, the Internet protocol and blockchain geniuses assert the scalability issues can, like other Internet Protocols have done, be solved in different layers which are now possible because of Segregated Witness which was activated in August 2017.
Whose code do you want to run: the JV benchwarmers or the championship Chicago Bulls?
As transaction fees rise, certain use cases of the Bitcoin blockchain are priced out of the market. And as the fees fall then they are economical again.
Additionally, as transaction fees rise, certain UTXOs are no longer economically usable thus destroying part of the money supply until fees decline and UTXOs become economical to move.
There are approximately 275,000-350,000 transactions per day with transaction fees currently about $2m/day and the 200 DMA is around $1.08m/day.
What I like about transaction fees is that they somewhat reveal the financial health of the network.
The security of the Bitcoin network results from the miners creating solutions to proof of work problems in the Bitcoin protocol and being rewarded from the (1) coinbase reward which is a form of inflation and (2) transaction fees which is a form of usage fee.
The higher the transaction fees then the greater implied value the Bitcoin network provides because users are willing to pay more for it.
I am highly skeptical of blockchains which have very low transaction fees. By Internet bubble analogy, may have millions of page views but I am more interested in EBITDA.
Bitcoin and blockchain programming is not an easy skill to acquire and master. Most developers who have the skill are also financially independent now and can work on whatever they want.
The best of the best work through the Bitcoin Core process. After all, if you are a world class mountain climber then you do not hang out in the MacDonalds play pen but instead climb Mount Everest because that is where the challenge is.
However, there are many talented developers who work in other areas besides the protocol. Wallet maintainers, exchange operators, payment processors, etc. all need competent developers to help build their businesses.
Consequently, there is a huge shortage of competent developers. This is probably the largest single scalability constraint for the ecosystem.
Nevertheless, the Bitcoin ecosystem is healthier than ever before.
There are no significant global reserve settlement currency use cases for Bitcoin yet.
Perhaps the closest is Blockstream's Strong Federations via Liquid.
There is a tremendous amount of disagreement in the marketplace about the value proposition of Bitcoin. Price discovery for this asset will be intense and likely take many cycles of which this is the fourth.
Since the supply is known the exchange rate of Bitcoins is composed of (1) transactional demand and (2) speculative demand.
Interestingly, the price elasticity of demand for the transactional demand component is irrelevant to the price. This makes for very interesting dynamics!
On 4 May 2017, Lightspeed Venture Partners partner Jeremy Liew who was among the early Facebook investors and the first Snapchat investor laid out their case for bitcoin exploding to $500,000 by 2030.
On 2 November 2017, Goldman Sachs CEO Lloyd Blankfein (, "Now we have paper that is just backed by fiat...Maybe in the new world, something gets backed by consensus."
On 12 Sep 2017, JP Morgan CEO called Bitcoin a 'fraud' but conceded that "( could reach $100,000".
Thus, it is no surprise that the Bitcoin chart looks like a ferret on meth when there are such widely varying opinions on its value proposition.
I have been around this space for a long time. In my opinion, those who scoffed at the thought of $1 BTC, $10 BTC (Professor Bitcorn!), $100 BTC, $1,000 BTC are scoffing at $10,000 BTC and will scoff at $100,000 BTC, $1,000,000 BTC and even $10,000,000 BTC.
Interestingly, the people who understand it the best seem to think its financial dominance is destiny.
Meanwhile, those who understand it the least make emotionally charged, intellectually incoherent bearish arguments. A tremendous example of worldwide cognitive dissonance with regards to sound money, technology and the role or power of the State.
Consequently, I like looking at the 200 day moving average to filter out the daily noise and see the long-term trend.
Well, that chart of the long-term trend is pretty obvious and hard to dispute. Bitcoin is in a massive secular bull market.
The 200 day moving average is around $4,001 and rising about $30 per day.
So, what do some proforma situations look like where Bitcoin may be undervalued, average valued and overvalued? No, these are not prognostications.
Maybe Jamie Dimon is not so off his rocker after all with a $100,000 price prediction.
We are in a very unique period of human history where the collective globe is rethinking what money is and Bitcoin is in the ring battling for complete domination. Is or will it be fit for purpose?
As I have said many times before, if Bitcoin is fit for this purpose then this is the largest wealth transfer in the history of the world.
Well, this has been a brief analysis of where I think Bitcoin is at the end of November 2017.
The seven network effects are taking root extremely fast and exponentially reinforcing each other. The technological dominance of Bitcoin is unrivaled.
The world is rethinking what money is. Even CEOs of the largest banks and partners of the largest VC funds are honing in on Bitcoin's beacon.
While no one has a crystal ball; when I look in mine I see Bitcoin's future being very bright.
Currently, almost everyone who has bought Bitcoin and hodled is sitting on unrealized gains as measured in fiat currency. That is, after all, what uncharted territory with daily all-time highs do!
But perhaps there is a larger lesson to be learned here.
Riches are getting increasingly slippery because no one has a reliable defined tool to measure them with. Times like these require incredible amounts of humility and intelligence guided by macro instincts.
Perhaps everyone should start keeping books in three numéraires: USD, gold and Bitcoin.
Both gold and Bitcoin have never been worth nothing. But USD is a fiat currency and there are thousands of those in the fiat currency graveyard. How low can the world reserve currency go?
After all, what is the risk-free asset? And, whatever it is, in The Great Credit Contraction you want it!
What do you think? Disagree with some of my arguments or assertions? Please, eviscerate them on Twitter or in the comments!
submitted by bitcoinknowledge to Bitcoin [link] [comments]

What is Halving?

What is Halving?
Cryptocurrency is a digital asset and its value is determined mostly by the demand for it. One of the ways of coin generation is mining. This is a computational process of creating new blocks of coins and as a result, the miner receives a reward for each mined block. Halving is the periodical reduction of the block mining reward issued by half.
Halving is a big day for every crypto coin and should be considered from two points of view: miners and the network itself.
From the viewpoint of those who are engaged in the mining process, then for them, the halving is a negative and stressful process. Cause while using the same computing power, the miner begins to receive a smaller reward. If to talk about halving from the network’s point of view – it is an exclusively positive process. It allows limiting emissions and therefore not only supports the currency rate but encourages its growth. This controlled level of monetary inflation is one of the main differences between cryptocurrencies and traditional fiat currencies, which, in fact, have an infinite circulating supply.
Bitcoin became a pioneer in the halving process. So after the first halving in 2012, BTC reached a record rate of $1.000 by November 2013. After the second halving in 2016, Bitcoin took off again and reached its rate of $20.089 on December 18, 2017, after which its price fell. However, since February 2019, Bitcoin begins to grow so the number of its transactions.
When is the next halving?
  • 5 November 2019 Monero (XMR)
  • 8 April 2020 Bitcoin Cash (BCH)
  • 20 May 2020 Bitcoin (BTC)
  • 4 August 2023 Litecoin (LTC)
Famous quotes
“When the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For Litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine”. — Charlie Lee (Litecoin Founder)
“In terms of the price, the halvening should be priced in because everyone knows about it since the beginning. But the thing is people kind of expect the price to go up. So a lot of people are buying in because they expect the price to go up and that’s kind of a self-fulfilling prophecy. So, because they’re buying in, the price does actually go up”. — Charlie Lee (Litecoin Founder)
“Halving always kind of a shock to the system”. — Charlie Lee (Litecoin Founder)
Interesting facts
  • The halving principle was developed by Satoshi Nakamoto in order to keep Bitcoin inflation under control.
  • Halving can be applied to all cryptocurrencies with the Proof-of-Work consensus algorithm where mining is allowed.
  • The reward for the BTC block began with 50 BTC and then fell to 25 at the end of 2012 and to 12.5 BTC in 2016. The third block halving in the Bitcoin network will occur on May 2020 and the size of the reward will decrease to 6.25 BTC.
Hope this article was useful for you. You are always welcomed to share your opinion in the comments below.
And remember no matter which crypto coins halving right now, you can always change the coins on StealthEX. Just go to and follow these easy steps:
✔ Choose the pair and the amount for your exchange. For example ETH to BTC.
✔ Provide the recipient address to which the coins will be transferred.
✔ Move your cryptocurrency for the exchange.
✔ Receive your coins.
For all requests message us via [[email protected]](mailto:[email protected])
submitted by Stealthex_io to NewbieZone [link] [comments]

"What is Halving?" A new article from StealthEX

Cryptocurrency is a digital asset and its value is determined mostly by the demand for it. One of the ways of coin generation is mining. This is a computational process of creating new blocks of coins and as a result, the miner receives a reward for each mined block. Halving is the periodical reduction of the block mining reward issued by half.
Halving is a big day for every crypto coin and should be considered from two points of view: miners and the network itself.
From the viewpoint of those who are engaged in the mining process, then for them, the halving is a negative and stressful process. Cause while using the same computing power, the miner begins to receive a smaller reward. If to talk about halving from the network’s point of view – it is an exclusively positive process. It allows limiting emissions and therefore not only supports the currency rate but encourages its growth. This controlled level of monetary inflation is one of the main differences between cryptocurrencies and traditional fiat currencies, which, in fact, have an infinite circulating supply.
Bitcoin became a pioneer in the halving process. So after the first halving in 2012, BTC reached a record rate of $1.000 by November 2013. After the second halving in 2016, Bitcoin took off again and reached its rate of $20.089 on December 18, 2017, after which its price fell. However, since February 2019, Bitcoin begins to grow so the number of its transactions.
When is the next halving?
  • 5 November 2019 Monero (XMR)
  • 8 April 2020 Bitcoin Cash (BCH)
  • 20 May 2020 Bitcoin (BTC)
  • 4 August 2023 Litecoin (LTC)
Famous quotes
“When the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For Litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine”. — Charlie Lee (Litecoin Founder)
“In terms of the price, the halvening should be priced in because everyone knows about it since the beginning. But the thing is people kind of expect the price to go up. So a lot of people are buying in because they expect the price to go up and that’s kind of a self-fulfilling prophecy. So, because they’re buying in, the price does actually go up”. — Charlie Lee (Litecoin Founder)
“Halving always kind of a shock to the system”. — Charlie Lee (Litecoin Founder)
Interesting facts
  • The halving principle was developed by Satoshi Nakamoto in order to keep Bitcoin inflation under control.
  • Halving can be applied to all cryptocurrencies with the Proof-of-Work consensus algorithm where mining is allowed.
  • The reward for the BTC block began with 50 BTC and then fell to 25 at the end of 2012 and to 12.5 BTC in 2016. The third block halving in the Bitcoin network will occur on May 2020 and the size of the reward will decrease to 6.25 BTC.
And remember no matter which crypto coins halving right now, you can always change the coins on
submitted by Stealthex_io to CryptoBeginners [link] [comments]

What is Halving?

What is Halving?
Cryptocurrency is a digital asset and its value is determined mostly by the demand for it. One of the ways of coin generation is mining. This is a computational process of creating new blocks of coins and as a result, the miner receives a reward for each mined block. Halving is the periodical reduction of the block mining reward issued by half.
Halving is a big day for every crypto coin and should be considered from two points of view: miners and the network itself.
From the viewpoint of those who are engaged in the mining process, then for them, the halving is a negative and stressful process. Cause while using the same computing power, the miner begins to receive a smaller reward. If to talk about halving from the network’s point of view – it is an exclusively positive process. It allows limiting emissions and therefore not only supports the currency rate but encourages its growth. This controlled level of monetary inflation is one of the main differences between cryptocurrencies and traditional fiat currencies, which, in fact, have an infinite circulating supply.
Bitcoin became a pioneer in the halving process. So after the first halving in 2012, BTC reached a record rate of $1.000 by November 2013. After the second halving in 2016, Bitcoin took off again and reached its rate of $20.089 on December 18, 2017, after which its price fell. However, since February 2019, Bitcoin begins to grow so the number of its transactions.
When is the next halving?
  • 5 November 2019 Monero (XMR)
  • 8 April 2020 Bitcoin Cash (BCH)
  • 20 May 2020 Bitcoin (BTC)
  • 4 August 2023 Litecoin (LTC)
Famous quotes
“When the mining rewards get cut in half, some miners will not be profitable and they will shut off their machine. If a big percentage does that, then blocks will slow down for some time. For litecoin it’s three and a half days before the next change, so possibly like seven days of slower blocks, and then after that, the difficulty will readjust and everything will be fine”. — Charlie Lee (Litecoin Founder)
“In terms of the price, the halvening should be priced in because everyone knows about it since the beginning. But the thing is people kind of expect the price to go up. So a lot of people are buying in because they expect the price to go up and that’s kind of a self-fulfilling prophecy. So, because they’re buying in, the price does actually go up”. — Charlie Lee (Litecoin Founder)
“Halving always kind of a shock to the system”. — Charlie Lee (Litecoin Founder)
Interesting facts
  • The halving principle was developed by Satoshi Nakamoto in order to keep Bitcoin inflation under control.
  • Halving can be applied to all cryptocurrencies with the Proof-of-Work consensus algorithm where mining is allowed.
  • The reward for the BTC block began with 50 BTC and then fell to 25 at the end of 2012 and to 12.5 BTC in 2016. The third block halving in the Bitcoin network will occur on May 2020 and the size of the reward will decrease to 6.25 BTC.
And remember no matter which crypto coins halving right now, you can always change the coins on StealthEX. Just go to and follow these easy steps:
✔ Choose the pair and the amount for your exchange. For example ETH to BTC.
✔ Provide the recipient address to which the coins will be transferred.
✔ Move your cryptocurrency for the exchange.
✔ Receive your coins.
Follow us on Medium, Twitter, Facebook, and Reddit to get updates and the latest news about the crypto world. For all requests message us via [email protected]
submitted by Stealthex_io to StealthEX [link] [comments]

Another Bitcoin hard fork & potential civil war has been avoided - no suspensions will occur. Additional info on other forks including upcoming Bitcoin Cash fork and Bitcoin "Gold" also inside

Last month, we notified you that there was the potential for a civil war to break out as a direct result of another "OG" Bitcoin fork, named SegWit2X, particularly due to (affiliated with the Bitcoin Core development group) unusually breaking from its neutral stance and naming-and-shaming companies and organizations that supported SW2X even as an alternative, including and Coinbase. The group behind the implementation of SegWit2X, which builds on the ideas of SegWit, has announced that its upcoming implementation around the middle of the month will not go on.
With this sudden change of course, we are now no longer preparing for suspending Bitcoin trading around the middle of the month. We'll also talk about two other forks that users have mentioned or will likely mention below.

Bitcoin Cash is forking - use additional caution

Unrelated to the above dispute between SegWit2X and SegWit without 2X, Bitcoin Cash developer groups are currently planning on updating their difficulty adjustment algorithm in a few days on November 13th. One of the main differences of the Cash chain is that it has a slightly different method of adjusting difficulty, where if there's a period with huge gaps between new blocks, an emergency difficulty adjustment will occur to rapidly lower difficulty ahead of the standard difficulty retargeting of every 2048 2016 blocks. This helped stabilize it in its early days in August and September, but has later proven to be rather erratic. With the new difficulty adjustment algorithm selected, difficulty retargets will occur with every block similar to other altcoins like Ethereum and Vertcoin, based on a moving average of how long the last 144 blocks took to make. In Portal terms, stable hashrate goes in, stable difficulty comes out. Rapid hashrate changes goes in, rapid difficulty changes comes out.
To implement this change, a hard fork is necessary. As seemingly all parties are in agreement with the change, and with supporters of the Cash chain like exchanges and online wallets preparing for this, we will not suspend Bitcoin Cash trading on /GlobalOffensiveTrade due to a low risk of an accidental chain split and economic impact. It's not an unwise idea to use extra caution during this time, but if you're a Cash enthusiast, you're probably already prepared. An eye will be kept on the transition just in case something does go wrong.

Bitcoin "Gold" - is banned on /GlobalOffensiveTrade

As the new dispute between SW w/o 2X and SW2X broke out, another fork of Bitcoin, called Bitcoin Gold, was beginning to be talked about. Its main idea is to shove the middle finger at ASICs (special boxes meant for mining) like Litecoin (early on, at least) and Vertcoin and similar altcoins, and to restore the viability of mining with typical graphics cards, as was commonplace during the first Bitcoin boom of 2012/2013/early 2014 and with Ethereum in early/mid 2017, with both instances causing widespread supply shortages. This was also an idea that some supporters of the Bitcoin Core developer group were tossing around a little while before the Cash fork occurred, but there were no solid plans as Gold was not a thing yet.
On paper, Gold would seem like a good fork for those that wanted to wave the middle finger at ASICs, but problems quickly became apparent with its execution. Namely, a premine operation was uncovered, where the developers of the Gold chain would be the exclusive miners of Gold until public release, and then presumably resell those coins after public release as a means to fund development, or just to make quick Benjamins. Coinbase, in its FAQ on its position on Gold, also stated that the source code was not open for public viewing for public review, thereby making it a security risk.
As a result, we will be banning Bitcoin Gold on /GlobalOffensiveTrade.

An overview of what's going on with Bitcoin and /GlobalOffensiveTrade:

  • "OG" Bitcoin trading will continue to be allowed now that SegWit2X implementation has been called off
  • Bitcoin Cash trading will continue to be allowed through an upcoming fork to alter how difficulty is determined. Use extra caution, but there are next to nil risks of significant economic impacts
    • "Bcash" is not a valid or official name, and will still result in your post or comment being removed
  • Bitcoin Gold trading is banned due to security concerns stemming from the code not being open source, as well as extensive pre-mining to the tune of 100,000 coins - your post or comment will be removed
  • Our bait-and-switch policies involving Bitcoin remains unchanged: if you do not explicitly specify which variant of Bitcoin you want, it will be assumed that you want original Bitcoin and not Bitcoin Cash (including if you say just BTC). If you want Bitcoin Cash instead of original Bitcoin, you must explicitly say so, either by stating "Bitcoin Cash", "BCC", or "BCH"
    • Bait-and-switch attempts involving sending Bitcoin Cash instead of original Bitcoin, or vice versa, are still bannable under rule 4
submitted by wickedplayer494 to GlobalOffensiveTrade [link] [comments]

Why Am I making less that before-Market Trends Explained!!

Hi folks recently I had been following reditt and it's pretty funny to see people jumping into crypto currency mining without understanding the basics and how markets in general work.I would like to answer some of these questions here
Q1.Why is Nicehash payment soo low compaired to couple of months back.Even after bit coins has recoverd in value since
A- 4 Reasons
1.Sudden Influx of new miners into nicehash and into the mining game in general due to the bull run (up market) in crypto currencies that we say in the past couple of months .On the day A Video on NH by Youtuber austin Evans was relseased we recorded a sudden increase in the global hashing power,which was never seen before .AFTER EVERY SUDDEN RISE THERE IS A SUDDEN FALL.-economics 101
2.Remeber NH doesn't mine a single coin it mines algorithim that can be shared by multiple coins and you are generally paid based on several factors like Btc/$ rates,current rates of other mined currencies like ZCASH (equihash),ETH (daggerhashimoto),etc and most importantly the SUPPLY (no.of gpus pointed at HN) Vs. DEMAND (No.Of buyers buying the hashing power coming out of the gpus).Since more people discoverying about the eazy 1 click "Sell hashing power" feature on NH and have no idea about the complicated "buying hashing power" section leads to more SUPPLY less DEMAND = LOW PAYOUTS
3.On NH You are only decrypting a gpu supported algorithm which is shared by many coins,all of these coins also known as alt coins are pegged against Bitcoins which is inturn by most people pegged against the dollar.So the change in the value of any one of these factors ie.Hashing PoweAlt coin demand and difficulty/Bitcoins value/Dollar fiat currency value can change your daily payout.
4.zcash,eth and other gpu mined coins still didnot fully recover to the value it had a couple of monts ago its recovering very slowly
4.Low Demand from buyer of hashing power due to uncertanity in the mining world due to Changes been made into the bitcoin system on August 1
August 1 Uncertanity = Scared Market = Low demand =Bear Run (down market).Read more only about that
Note- Nicehash payouts has increased around 30% as bitcoin rates to dollar rate had also shown a similar up trend,since you are paid in mBtc or bitcoins in general never compare your NH Bitcoin payments with fiat currency ($€£¥,etc) because that $10 that you hold in btc now can be $30 in the future if bitcoin rates rises in the future.Happened in the past with my friends who sold a lot of mined bit coins in 2013 for mere dollars ,the value of those bit coins are now in millions.Then again if Btc crashes your held $10 in bitcoins can fall to mere 0.
Since sometimes history repeats holding mined or bought btc for some time is more profitable than selling now.The price of btc will standardise one day if more and more people start adopting btc payments and there will be marginal profits to be made then by trading or mining coins (eg .modern fiat currency trading or gold trading).Again it's just a speculation based on historical analysis.
Q2.When will my GPU's become FREE
A1.NOW,ie.if you scored your cards before gpu prices skyrocketed if you sell them now the money you made till now by mining will be free+extra premium for the cards.Mosr cards come with 3yrs warrenty so that helps with the sale
Your GPU ROI is paid the day you make 40% of what you paid for your gpu by mining ,the other 60% of the ROI can comes from selling your cards.These days even used cards are sold for 110% the price of the Box price as new cards are sold for 150-200% the original price.
Price of mining/gaming grade GPU is at all time high now even though Gtx 1070/1080 and Amd RX cards are nearing the 2nd half of there life cycle .We see new faster and cheaper cards every 2 years or the price of your mining cards will keep going down from now on as new surplus stock of these cards will be out in August-September and New mining cards are coming out around September aswell.Better invest in new cards to stay ahead in the mining game.
Q3.They why dont You sell your cards You are Mining right?
A1.Im under the assumption that Bitcoins will one day touch $5000 mark one what ever I'm mining now if compared to the my investment and the current market I will be making my ROI in 1year plus or maybe never as difficulty of mining increases every now and then but I think bitcoin is a very functional form to currency it can add a lot of value to our society (FUN FACT-Do you know private bank can print free money,Google it up) bit coins patches all the problems with out current centralised money system making us slave for the govt.Bitcoins is the future of money
So if i follow this single idea of bit coins getting to $5000 one day my $100 is btc today will be around $280 approx. Or could be $50 .
YOU CAN NEVER ACCURATELY SPECULATE IN AN OPEN MARKET.So Stop fantasizing about getting rich quick by mining if you can do it then so the guy living next door.Have trust on crypto coins use them to buy stuff that helps making the whole currency valuable and your coins as well.
Q4.Mining Via NH vs Mining Altcoin directly vs Mining bit coins vs trading coins.
A1.Mining Via NH-Hassle free,Paid in btc,auto switching,optimised and stable than all.Saves a lot of time=More hashing time=more earning. You do pay a small % as frees but that's negligible compared to the time it saves.
Mining Directly - Hasselous,manual setup,non noob friendly,you get to keep all the profits plus you are mining an alt coin directly so if your cards are good at one or two coins then more profit here plus you are look the market and mine anything that high today Or would increase in a couple of days and sell later for a huge profit.Smart human auto switching makes you more money than NH. It's more fun but takes more time.
Mining Bitcoins-No You can't,too difficult to mine btc with gpu the Chinese got a lot of the bitcoin mining mega farms.
Trading coins-Always profitable bought bit coins last month,sold yesterday making a sweet $3000 profit in 3 weeks.Buy now and sell later will always make you some profit since bit coins are finite in number like gold,you can't create new bit coins out of thin if bitcoin catches and more people know about it it's value can go though the roof.
Q4.Any better way to mine? ASIC vs Bitman miners vs Gpu rigs
A4. Now folkes asic miners (bitman miners) eta can mine better than any gpu in the market they are specifically built for mining a certain algorithm(coin) ie.No auto switching .So if the coin falls in value you are left with the most advance and expensive door stopper in the world.No one would touch the hardware and it's value could be zero in a day.Usually these miners loose all it's value in 1 yr or 2 as difficulty increases
Not so with GPUs.Say I have 2 gtx1070 and a gtx 970 bought for say $1300 (same price as a asic miner) mining 24/7 and I earn some bit coins (surely a bit less than mining on an asic) but again next year say all my cards become unprofitable by mining then I'm still the owner of with a super advance and a very expensive gaming rig on which I can do multiple display and also multiple instance of gaming. I can sell the 1070 and 970 to a gamer with 2yr warranty on those cards and I can make the reminder as gaming never falls out of favour.Remeber these cards can still decrypt other stuff like Wi-Fi passwords and physical stimulation and calculations in minutes,that's how hard mining has got and difficulty will increase overtime.
Q.Any suggestions ?
A.I can share my plans
Gameplan 1=Buy Newer cards quick in September ,Enjoy higher mining payouts,others will follow,mining hardware increases in price,then market crashes for sometime,you made your money,sell your cards for 100-150% the original value.Live happy every and after
Gameplan2-Buy bit coins today,wait till the prices reaches another all time high ,happens every year,Sell and don't forget to live happy every and after,
A happy man is some one with no money to worry about. -My Father said to me the day I started mining.
submitted by Miningforbeer to NiceHash [link] [comments]

Bubble-watch chart apologia

An explanation of the bubble-watch chart, to warn the naive and pacify the critics
I got my prices from the daily weighted price on
A quick look at the log chart for bitcoin shows two obvious patterns:
Pattern 1: The price has risen exponentially over time.
Pattern 2: There have been bubbles in the price at regular intervals.
The bubble-watch chart is an attempt to answer the following question:
"Assuming both patterns hold for the remainder of 2014, how would the price behave?"
To answer that question, first let's introduce the "lower boundary" curve. This curve is defined by line segments on the log chart that have the following properties:
  1. One line segment per bubble.
  2. Line segments are positioned with their endpoints on the "troughs" on either side of each bubble.
By using these line segments we can see changes in the exponential slope over time. In particular, notice that the slope was very high at the beginning and then the June 2011 bubble came along. Then the slope was very low, until the April 2013 bubble. Here is a bar chart to show how the slope has changed over time:
Second, let's graph the difference between the ln(price) and the y value of the lower boundary curve:
At this point we have mathematically separated the two patterns. We have an exponential slope component that looks like this:
... and we have the above graph showing the periodic bubbles.
To answer our question of what would happen during the rest of 2014 we need to extrapolate each component.
To extrapolate the exponential line, I am going to show two scenarios:
  1. Middle scenario. This scenario assumes that the lower boundary line during the July 2014 bubble will have the same slope as the average slope over the whole price history.
  2. Low scenario. This scenario assumes that the lower boundary line will have the same slope as the line had during the August 2012 bubble. This is based on the theory that says that the lower boundary curve is too high relative to the long term exponential trend. The curve can be expected to revert to the trend sometime soon, which requires having a slope that is lower than average.
To extrapolate the bubble, I am going to just shift the last three bubbles forward in time, so that they all peak on 2014-11-30. This lines them up with the pop of the most recent bubble.
On the delta chart, they look like this:
Put both components together by adding them and you get this:
And when you convert back from exponential to regular, you get this:
Here it is with two different proposed extensions to the lower boundary line:
Some things to point out:
  1. There may not be another bubble.
  2. The next bubble may not look like the previous 3 bubbles.
  3. Bitcoin is an experiment. Do not risk more than you can afford to lose.
  4. The lower boundary for December is not finished being defined until the trough after the December peak is in our rear view mirror. Until that happens, the December lower boundary can continue moving down if the price continues going down. When the price stops going down, the lower boundaries will stop changing. See here for a description of my handling of the moving lower boundary.
  5. I am long bitcoin but will be taking some profit this summer if we have a bubble. I plan to use my chart to help give me a rational expectation for the size of the next bubble to improve my chances of selling at the correct time.
  6. This model assumes that the two patterns hold. I think that it is a reasonable assumption. There have been 7 bubbles over a four year period, over which both patterns have stayed true. The market penetration is still very small. The infrastructure is still getting built out. The bitcoin protocol is still improving. The investor money is still piling in. Does all of this guarantee that the patterns will hold for one more round? No. Do they mean that it is rational to compare the actual price to a model based on the assumption of a summer 2014 bubble? In my opinion, yes.
Bonus chart:
This chart shows the duration of 3 post-bubble phases for each of the last 7 bubbles:
The "Goin' down" phase starts at the pop and ends at the shift from downtrend to uptrend.
The "Struggling" phase starts at the beginning of the uptrend and ends on the day that the bubble rejoins the "lower boundary" line.
The "Goin' up" phase starts at the date the bubble rejoined the "lower boundary" line and ends at the peak.
On the difficulty of forecasting the next peak price
The bubble chart illustrates a very consistent pattern in the history of the price of bitcoin. We can use this pattern as a basis for expecting the next bubble to occur in the summer of 2014. How high will that bubble be? History offers relatively less confidence in making this prediction. Two sources of variability contribute. The historical bubbles have come in a variety of sizes. The slope of the lower boundary at each prior bubble has varied as well.
This chart overlays the lower boundary from two prior bubbles, and the average lower boundary for all prior bubbles:
You can see that eventual lower boundary for the December bubble is an open question.
These two sources of variation make should motivate a healthy dose of humility when estimating the peak of the next bubble. There will be much less uncertainty this summer when the bubble is getting close to peaking. (Still plenty of uncertainty though!!!)
How to recognize that the December bubble is over
By definition, the December bubble is over when the price touches the lower boundary. This allows us to look in the rear view mirror and say when the December bubble was over after the fact, but I think we can do better.
Here are the historical ratios between the minimum price and the price when the green phase started:
These values are all pretty similar. The average is 1.19. Standard deviation is .24. Assuming for simplicity that this represents a normal distribution around the average, we get a 95% confidence at average + 2 standard deviations, or 1.67.
For the December bubble, assuming the minimum is already in our rear view mirror, the minimum price post peak was 392. Multiply by 1.67 to get $656. So we can say with some confidence that if the pattern holds, by the time the price gets to $656 we have moved into the "Goin' up" phase.
Comparing the slope of the price during the bubble
Here is a chart which compares the slopes of the last four bubbles and the current slope of the price:
The slope of the price is obtained this way:
  1. Using the ln(price) value, for every day, subtract the ln(price) from 7 days prior. This shows how much the price goes up (or down) in 7 days, on a log chart. Using an interval smaller than 7 days made a graph that was a bit jumpy, but you could play around with different intervals.
  2. The graph has been smoothed with a 3 day moving average to go easier on the eyes.
I added an asterisk to the end of the line to represent the "pop" that happened at that point in time.
Chart revision notes 2014-07-31
submitted by moral_agent to BitcoinMarkets [link] [comments]

Analysis of Difficulty Control in Bitcoin and Proof-of-Work Blockchains

Date: 2018-12-27
Author(s): Daniel Fullmer, A. S. Morse

Link to Paper

This paper presents a stochastic model for block arrival times based on the difficulty retargeting rule used in Bitcoin, as well as other proof-of-work blockchains. Unlike some previous work, this paper explicitly models the difficulty target as a random variable which is a function of the previous block arrival times and affecting the block times in the next retargeting period. An explicit marginal distribution is derived for the time between successive blocks (the blocktime), while allowing for randomly changing difficulty. This paper also aims to serve as an introduction to Bitcoin and proof-of-work blockchains for the controls community, focusing on the difficulty retargeting procedure used in Bitcoin.

[1] S. Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System,”, p. 9, 2008.
[2] D. Kraft, “Difficulty control for blockchain-based consensus systems,” Peer-to-Peer Networking and Applications, vol. 9, no. 2, pp. 397–413, 2016.
[3] R. Bowden, H. P. Keeler, A. E. Krzesinski, and P. G. Taylor, “Block arrivals in the Bitcoin blockchain,” arXiv:1801.07447, Jan. 2018.
[4] A. Cox, “Some Statistical Methods Connected with Series of Events,” Journal of the Royal Statistical Society. Series B (Methodological), vol. 17, no. 2, pp. 129–164, 1955.
[5] F. Tschorsch and B. Scheuermann, “Bitcoin and Beyond: A Technical Survey on Decentralized Digital Currencies,” IEEE Communications Surveys & Tutorials, vol. 18, no. 3, pp. 2084–2123, 2016.
[6] C. Dwork and M. Naor, “Pricing via Processing or Combatting Junk Mail,” in Advances in Cryptology - CRYPTO’ 92, pp. 139–147, Berlin, Heidelberg: Springer Berlin Heidelberg, 1993.
[7] A. Back, “Hashcash - A Denial of Service Counter-Measure,”, no. August, pp. 1–10, 2002.
[8] N. I. o. S. and Technology, “Specifications for the Secure Hash Standard - FIPS PUB 180-2,” Computing, vol. 2, pp. 1–71, 2002.
[9] R. Gallager, Stochastic processes: theory for applications. 2013.
[10] N. L. Johnson, S. Kotz, and N. Balakrishnan, Continuous Univariate Distributions, Vol. 1, vol. 2. Wiley-Interscience, 2nd ed., 1994.
submitted by dj-gutz to myrXiv [link] [comments]

Updated FAQs for newcomers

TL:DR: Don't bother mining if you want to get rich yo. You're way too late to the party.
Welcome to the exciting and often stressful world of bitcoin! You are wondering what looks like a once in a lifetime opportunity to get rich quick. Of course you guys probably heard about this "mining" process but what is this?
Simply put, a bitcoin mining machine that performs complicated calculations and when deemed correct by the network, receives a block which contains 25 bitcoins (XBT). This is how bitcoins are generated. So your brain instantly thinks, "Holy shit, how can I get on this gold rush?"
Before you proceed further, I would like to explain the concept of mining further. Bitcoin is limited 21m in circulation. It is coded to release a certain number of blocks at a certain time frame, ie: this year the network will release close to 500,000 bitcoins. What this means is that the more people (or specifically the amount of mining power) mine, the less each person gets. The network tries to keep to this time frame through the process of difficulty adjustments which makes the calculations harder and this happens every 2 weeks. So every 2 weeks, you get less bitcoins with the same hash rate (mining power) based on what the difficulty changes are. Recently, the changes have been pretty staggering, jumping 226% in 2 months. You can see the difficulty changes here.
Now, why are these changes so large?
A bit of a simple history. Bitcoin's algorithm runs on SHA-256. This algorithm can be solved using many hardware, from CPU to GPU and dedicated hardware (Application Specific Integrated Circuits). When bitcoin first started, mining on CPU was a trivial process, you can pretty much earn 50 XBT (the block size then) every few hours between Q1 and Q2 of 2010.
In late 2010, due to the difficulty increase that is reducing the effectiveness of CPU mining, people started to harness GPU mining. Only AMD GPU's architecture design are better optimized for bitcoin mining so this is what the community used. Immediate improvements of more than 10x was not uncommon.
In time of course, GPUs reached their limit and people started to build dedicated. In the same vein as the CPU to GPU transition, similar performance increase was common. These ASICs can only perform SHA-256 calculation so they can be highly optimized. Their performance mainly depends on the die size of the chips exactly like CPU chips.
In general, think of bitcoin mining's technological advancement no different to mining gold. Gold panning (CPUs) vs pickaxes (GPUs) vs machinery (ASICs) and we are still in the ASIC mining race.
ASIC mining started with ASICMiner and Avalon being first to the market, both producing 130nm and 110nm chips. The technology are antiquated in comparison to CPUs and GPUs which are now 22nm with 14nm slated for Q1 next year by Intel but they are cheap to manufacture and with performance gains similar to the CPU to GPU transition, they were highly successful and popular for early adopters. At that point in time since there were less competing manufacturers and the low batch runs of their products, miners became really rich due to the slow increase in difficulty.
The good days came to an end mid August with an unprecedented 35% increase in difficulty. This is due to existing manufacturers selling more hardware and many other players coming onto the market with better hardware (smaller die). Since die shrinking knowledge and manufacturing process are well known along with a large technological gap (110nm vs 22nm), you get an arms race. Current ASIC makers are closing in on our technological limit and until everyone catches up, the difficulty jumps will be high because it is just too easy to get a performance increase. Most newer products run at 28nm and most chips are not well optimized, so it will be around another 6 to 9 months before we see hit a hard plateau with 22nm or 14nm chips. The estimated time frame is because manufacturing chips at 22nm or 14nm is a more difficult and expensive task. In the meantime most manufacturers will probably settle at 28nm and we will reach a soft plateau in about 3 months.
Now, you might ask these questions and should have them answered and if you have not thought about them at all, then you probably should not touch bitcoin until you understand cause you are highly unprepared and probably lose lots of money.
No. If you have to ask, please do not touch bitcoin yet. You will spend more on electricity cost than mining any substantial bitcoin. Seriously. At all. A 7990 would produce a pitiful 0.02879 XBT (USD $14 @ $500/XBT exchange rate) for the next 30 days starting 23 Nov 2013 at 35% difficulty increase.
And if you think you can mine on your laptop either on a CPU or GPU, you are probably going to melt it before you even get 0.01 XBT.
Probably not because you probably forgot that GPUs and CPUs produce a ton of heat and noise. You can try but I see no point earning < $20 bucks per month.
No, because your machine will probably not mine as much as buying bitcoins. This situation is called the opportunity cost. While you can still make money if XBT rise in value, it is a fallacy.
IE: if you start mining on 1 Dec 2013, a KnC Jupiter running at 450Gh/sec (KnC lies as not all chips run at 550Gh/sec) will yield you a total revenue of 9.5189 XBT with a profit of 0.7859 XBT in profit by 30th Jan 2014 at a constant difficulty increase of 35%. The opportunity cost is: 8.5910 XBT @ USD $580/XBT with USD $5,000 which is the cost of a KnC Jupiter. This is the best you can earn and it's a bloody optimistic assumption because:
The only circumstances where you will earn money is when XBT exchange rates is so high that it makes the opportunity cost pales in comparison. Unfortunately this is not the case. If XBT stabilized at 900/XBT today (20 Nov 2013) then we might have a good case.
The risk is just generally not worth it. Unless you have at least a hundred thousand and can make a contract with a manufacturer for a lower cost, do not bother. Just wait until the arms race is over then you can start mining.
Okay, go buy an AsicMiner USB Block Erupter. They are cheap and pretty fun to have.
Sure, just read the answer below on who NOT to go for. You are doing bitcoin a service by securing the network and you have our (the users') gratitude.
You can check out the manufacturers and their products below along with a calculator here.
If you still insist on buying, do not to go for BFL. Their track record is horrid and borderline scammish. KnC fucked up a lot with defective boards and chips. Personally, I think CoinTerra is the best choice.
Alternatively, you can go on the secondary market to buy a delivered product. You can get a better deal there if you know how to do your "return on investment (ROI)" calculation. Personally, I will go for a 45%-50% difficulty increase for the next 3 months for my calculations and a 2% pool fee.
However, most products on ebay are sold at a cost much higher than it should. is a cheaper place because everyone knows what are the true value is so you will find less options. If you are unclear or need assistance, please post a question.
I actually do not use any of the pools recommended to the left because I think they lack features.
My favourite is Bitminter (Variable fees based on features used; max 2%). It has all advanced features for a pool, very responsive and helpful owner on IRC. Variable fees is good for those who do not need a large feature set, even with all features turned on, it is still cheap.
Eligius (0% fees) has high value for money but lacks features. It has anonymous mining which might be attractive to certain subset of people but not for others. Many other community member and I disagree highly with the opinions of the owner on the direction of bitcoin. I do use his pool for now but I do so only because I share my miners with a few partners and anonymous mining allows us to monitor the machines without using an account. Bitminter uses only OpenID which is problematic for me.
BTC Guild (3% fees) is another big pool and is fully featured and does charge a premium for their fees. That said, they are the most stable of the lot. I do use them but do so only because my hoster uses them for monitoring. I try not to use them because a pool with a very large hash rate (they are the largest) presents a large vulnerability to bitcoin's network if compromised.
All of them pay out transaction fees.
submitted by Coz131 to BitcoinMining [link] [comments]

The post-bubble recovery has begun.

I'm going to argue, using publicly available statistics, that we are currently witnessing a recovery in interest in Bitcoin, which will be accompanied by a rise in prices.
The peak in Bitcoin interest was on April 2013, after which we entered a period of decline. Peak client downloads was on April 10, peak price was on April 10, and most other measurable indicators peaked back then as well. We then entered a long period of slump, which we're now leaving behind us.
Alexa stats for show a decline until late July, after which figures begin to rise again.
Wikipedia visits show a decline until july, after which figures have stabilized.
Client download stats show a decline until july, and figures are now slowly recovering.
Google trends shows Bitcoin declining until july, when the trend stabilizes, with august showing a cautious recovery.
Price of course shows a similar trend, with a depth in early July, followed by an ongoing recovery.
Explanation is as following. After the second big bubble, people were expecting Bitcoin to fade into the background. What happened however was that Bitcoin stabilized around a price of about 100 dollar, and the project continued to operate as normal. The only people who lost money so far are people who stepped in during the height of the bubble, that is, during a short period between April the 1st and April 12.
This is currently leading to a new surge in public interest, as it becomes clear that the Bitcoin project has a clear solid base of a large number of enthusiasts who hold onto their coins during times of crisis. It is only now that regulators are becoming seriously interested in Bitcoin, as it has survived two large bubbles and retains its functionality.
A few things have happened since then that have helped increase Bitcoin's credibility:
-Sale of Satoshi Dice for a large sum shows that Bitcoin is treated seriously in gambling markets.
-The growth of ASIC companies, and subsequent increase in difficulty makes it difficult for any government to hijack the project.
-The ongoing process of decentralization, with much of the Bitcoin trade now active outside of Mt Gox, which remains responsible for the April 2013 crash when its servers were unable to cope with the demand. As Mt. Gox keeps struggling with problems it will continue to fade into the background, with more sites taking Bitstamp as their point of reference.
-The failure of alternative cryptocurrencies to raise their market share at the cost of Bitcoin. Litecoin today is still where it was in April, and has been declining since early July. Other big alt-coins have shown vulnerability to 51% attacks, and thus only Bitcoin and Litecoin are now taken seriously. Ironically, the vulnerability of cryptocurrencies contributes to the success of Bitcoin, because division amongs cryptocurrencies threatens all their legitimacy.
In conclusion, Bitcoin is no longer treated as a hype, but rather as a newly emerging technology that has to be taken seriously.
submitted by rational to Bitcoin [link] [comments]

A Word to Bitcoin investors

Hello /cryptocurrency investors. I've been circulating this around my circles to assist with people who are realizing bitcoin as a investment, have fear of missing out and need help with an informed decision.
Here we go:
1) Get yourself setup
I've been spending my week helping friends [email protected] (For turning Dollars to Bitcoin)
2) Research
RSI Hunter
So, lets' look at the Last two big BTC spikes this year.
Low point - high moon - correction
July 16 -> Sept 02 (48d) -> Sept 15 Correction $1856 -> $4907 -> $2950 (2.6x) (1.6x) Sept 15 -> Nov 08 (54d) -> Nov 12 Correction $2991 -> $7737 -> $5730 (2.6x) (1.4x) 
Hypothetically, this can happen:
Nov 12 -> Jan 02 (51d) -> Jan 10 Correction $5730 -> $14898 -> $9932 (2.6x) (1.5x) 
3) Monitor the real-time Order Book stats on your exchange of choice, or here:
Under Orderbook, focus on the BTC volume at the bottom of the table:
When the number of "Asks" start climbing past the amount "Bids"
Indicates the start of a crash event
When the number of "Bids" start climbing past the amount "Asks"
Indicates the start of a honeymoon
So Whats' going on?
At the end of Year, people are looking to hide their Capital Gains to make themselves look better come tax time.
The largest bitcoin exchange in the U.S., Coinbase, added about 100,000 accounts around Thursday's Thanksgiving holiday, to a total of 13.1 million on Friday. They've been having technical difficulties handling the traffic.
Tomorrow, The Big Bang Theory's "BItcoin" episode is going to make mainstream news headlines.
The last time we hit a "bitcoin meets mainstream" event like this, was April 2013:
And resulted in a 3.5x correction. If this happens, we'd be seeing BTC correct itself at around a price of $4000 USD, in mid January, a similar price to what we had in mid-August 2017.
If we have a lot of people entering the market at this stage, it'll definitely move hard and fast.
Alts will rise as BTC freefalls, then have their own correction.
People start to feel the weight of their wallet after the high of the New Year Season, and will start to realize they made a decision on something that should take 6 months of solid researching.
Dopamine does not last forever~
See you all on the other side ;)
submitted by codecx81 to CryptoCurrency [link] [comments]

Where Litecoin's difficulty headed, you may ask?

So, I've been talking to a few miners about where the network difficulty is headed, now that ASICs are taking over the network completely. It got me curious about what the similarities might be between the velocity of hashrate increases during the same time period in Bitcoin's lifespan, and if there were...what we might be able to expect as technology improves between now and this time next year, based on what has happened to Bitcoin. I consulted for the evidence.
ASICs started shipping for Bitcoin toward the end of January of 2013, almost exactly as was the case for Litecoin this year. Here is a chart which shows the growth curve of network hashrate for both, between February 1st and August 1st (today). I find it incredibly interesting that they're so similar in velocity.
Bitcoin Feb 1, 2013 - Aug 1, 2013
21.8TH - 271.19TH (1,143% increase)
Litecoin Feb 1, 2014 - Aug 1, 2014
80.63GH - 742GH (820% increase)
There are a lot more Scrypt coins in existence than there were SHA-256 coins, at the same time in Bitcoin's development. Be that as it may, the percentage increases between the two, during the same time period of their development, are very close.
So...given the similarities in the trajectory, where might Litecoin be headed over the rest of the year? Let's look at how Bitcoin finished out 2013.
Bitcoin Aug 1, 2013 - Dec 31, 2013
271TH - 10,910TH
Holy. Crap. In the space of five months, from summer to New Year's, Bitcoin increased 3,925% in its network hashrate.
What if the trend continues, and Litecoin follows the same trajectory and experiences a similar gain in network hashrate?
Litecoin Possible Hashrate Gain: Aug 1, 2013 - Dec 31, 2014
742GH - 29.8TH
When the Bitcoin network had reached 29.8TH/s, the difficulty was at 244,000.
Now, math is not the strongest in the hopefully I haven't screwed any of these numbers up and feel free to correct me if I'm wrong on any of it.'s looking to me like if the trend continues, Litecoin's difficulty is going to go ballistic over the second half of 2014...and then supernova in 2015. The difference is, I believe that the ASIC devices for Scrypt will eventually hit a wall that SHA-256 devices didn't, due to the memory requirements and the limits of how small die sizes can shrink. It actually IS still ASIC-resistant, but it remains to be seen, at which point that resistance will assert itself.
Anyway, if you don't think this is going to have an affect on miner selling behavior or the price of the coin...I disagree.
(Edited to correct some bad math. Shame on my public school education.)
submitted by FreeJack2k2 to litecoin [link] [comments]

Bitcoin 2017 a Comprehensive Timeline

Some of the most notable news and events over the past year:
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submitted by BitcoinChronicler to btc [link] [comments]

Week's Top News + Ripple's xRapid, BTC Difficulty - Today's Crypto News Bitcoin Cash Crash August 1st - Digital Gold Live Bitcoin ATM at the 2013 Convention by Lamassu Bitcoin Trading Robot ➨ Way Better Than Mining/Harvesting Bitcoins The BCH difficulty adjustment algorithm is broken. Here's how to fix it.

August 2013 by Radoslav Albrecht. Jede Währung hat ein Symbol und eine bestimmte Bezeichnung. So gibt es auch ein Bitcoin Zeichen. Doch zuerst ein paar grundsätzliche Themen. Welche Symbole, Zeichen und Kürzel gibt es überhaupt? Ein alternatives Bitcoin Zeichen . Währungskürzel. Das Währungskürzel ist eine standardisierte Abkürzung aus drei Buchstaben. Diese Abkürzung existiert für ... Mining difficulty rose a mere 3.08%, the lowest percentage seen since the negative growth in February of 2013. For another week and change, making a living from mining bitcoin would be just a touch less harrowing. The news comes roughly two weeks after one of the largest jumps in mining difficulty history. On June 29, the difficulty rose a ... Every single time, a long-term upward move for Bitcoin ensued. These moves had the magnitudes of: $14 – $1177: January 2013; $230- $783: January 2015; $540- $20,000: August 2016; $3200- $13,788: December 2018; Therefore, if the same is to happen next week, we could see a similar upward move transpire and the Bitcoin price reach a new all-time ... Bitcoin network difficulty, one of Satoshi Nakamoto’s masterstrokes, is rising again in response to increasing competition among miners. In fact, the difficulty is again at the level it was when the price was above $8,000. Miners Still Keen on Bitcoin Despite Recent Volatility Bitcoin 2013. Posted on June 3, 2013 by thomashartman1. I’m putting together some thoughts about the may Bitcoin conference. Stay tuned. Share this: Twitter; Facebook; Like this: Like Loading... Related. About thomashartman1 I am a crypto currency enthusiast, trader, and software developer. Contact: thomas AT standardcrypto DOT com. View all posts by thomashartman1 → This entry was posted ...

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Week's Top News + Ripple's xRapid, BTC Difficulty - Today's Crypto News

Published on Aug 9, 2013 ... Talking about bitcoin: mining difficulties and future predictions - very detailed bitcoin analysis - Duration: 21:31. Florian Uhlemann 3,626 views. 21:31 . Live ... We are miners from 2013 looking to create community and help train and learn together as blockchain tech changes so quickly. Leave your thoughts in the comments, call in, ask us anything. Thank ... David Gzesh discusses online gambling at the Bitcoin 2013 Conference in San Jose, CA, May 19, 2013, hosted by the Bitcoin Foundation. For more information on... Bitcoin Q&A: Difficulty targeting and the "death spiral" by aantonop. 14:45. Bitcoin Q&A: What is the appeal of sound money? ... 08. Bitcoin Q&A: Decentralised exchanges with fiat by aantonop. 7 ... The Bitcoin Cash difficulty adjustment algorithm (DAA) was activated in a rush on Nov 13, 2017 to fix some extreme mining profitability and hashrate swings that occurred starting August 1st.