Bitcoin Prices Skyrocket on Zimbabwean Exchange During Economic Turmoil

Emerging Markets

According to various reports, the African country of Zimbabwe is suffering from severe economic hardships similar to the inflation and currency crisis in Venezuela. Furthermore, demand for bitcoin is skyrocketing as the country’s only exchange is seeing bitcoin trades at US$6150 per BTC at the time of writing.

Also Read: Increased South African Bitcoin Adoption Highlights Need For Taxation Clarity 

Economic Hardship Causes Bitcoin Prices to Soar on Zimbabwe’s Trading Platform Bitcoinfundi

Bitcoin Prices Skyrocket on Zimbabwean Exchange During Economic TurmoilBitcoinfundi prices on September 29, 2017.

Zimbabweans are dealing with an economic crisis at the moment, as the country is seeing a wave of food and fuel shortages across the country. The nations’ currency is practically worthless, and Zimbabwe’s central bank is draining the reserves of individual forex markets. This is leading the country’s citizens towards finding alternative stores of value like hoarding gasoline, food and medical supplies, certain commodities, and now the digital asset bitcoin.

For instance, the country’s lone bitcoin exchange Bitcoinfundi has seen bitcoin trades at an 85 percent premium. Earlier this week, one bitcoin reached a high of $7200 on the trading platform and the current price per BTC on the exchange is $6150. The prices on Bitcoinfundi have been well above the $4200 global average. However, Zimbabwean Localbitcoin’s BTC prices are roughly the same as the global weighted average, with a much smaller premium. Even though there are Localbitcoin sellers available, the shortage of physical cash leaves only a few trading options on the table for Zimbabweans. Citizens in Zimbabwe using Localbitcoins have to use alternative payments like Skrill, Moneygram, or Paypal.   

Some Believe Zimbabweans Could Benefit from Bitcoin

Zimbabwe’s economy has been suffering for years, and during this time many individuals and organizations suggested that bitcoin could help. Last year the Zimbabwe-based economist, Philip Haslam, explained that he believes Zimbabweans could benefit from bitcoin. “The thing about bitcoin is once you import it into the country, you don’t have the problem of the currency eroding and perishing like you have with notes — It’s a system that allows for privatized banking,” Haslam explained.

Furthermore, the wallet provider, Bitmari, has been spreading cryptocurrency awareness across the country as well. Bitmari is also working with female Zimbabwean farmers and helping them raise bitcoin to help with the farming efforts. Bitmari’s payment platform also claims to significantly lower the cost and increase the speed of remittance payments throughout the African Diaspora through bitcoin. The company recently partnered with a well-known African financial institution, the Zimbabwe Bank of Agriculture.

Bitcoin Prices Skyrocket on Zimbabwean Exchange During Economic TurmoilZimbabwe’s cash shortages are causing significant lines at banks, and local ATMs.

Zimbabwe’s Failing Economy Will Take Time to Improve, but the Country’s Citizens are Listening to Bitcoin Proponents  

Zimbabwe’s economic situation seems like it will get worse, before it gets better as investors in the country are removing themselves from Zimbabwean-based assets. Furthermore, citizens are dealing with serious currency problems with the government’s bond notes, and the USD has three different values within the country. As the country continues to deal with economic hardships, many Zimbabweans believe bitcoin could be the answer to their problems. Gauging by the current demand for bitcoin in Zimbabwe, they are probably right.

What do you think of Zimbabwe’s failing economy and the country’s bitcoin demand? Let us know in the comments below. 


Images via Shutterstock, Newzimbabwe.com, and the Bitcoinfundi index. 


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PR: Famous Football Player Hal Robson-Kanu Invests in Sandcoin Project in Russia

This is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. Bitcoin.com does not endorse nor support this product/service. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the press release.

Hal Robson-Kanu, English Premier League and Wales national team player, recently joined the ranks of investors of the Sandcoin project. Apparently, the sportsman is familiar with cryptocurrency and similar asset markets and monitors it regularly. This time, he expressed interest in the Sandcoin ICO.

According to Ruslan Pichugin, CEO of Sandcoin, he held a telephone conversation with Robson-Kanu and received an invitation to London to conduct further negotiations. The famous football player also turned out to be familiar with the construction business. His intention to invest in Sandcoin is based on a confidence that Russia is a promising market in this regard.

In London, Sandcoin representatives met with Robson-Kanu and top managers and agents in the football industry, who also showed interest in the project. Robson-Kanu said that he has been investing in the market for several years and looking forward to it.

The Sandcoin project tokenizes assets from the real industrial sector. The blockchain runs on the Ethereum platform. The source of the construction materials is a sand quarry located 60 kilometers from Moscow and 10 kilometers from the construction site of the central ring road. The mining will be carried out on a site of more than 100 hectares in Moscow Oblast.

According to geological analysis, the estimation of the quarry potential is at least 14.4 million square meters of sand. A licence for the development of this site has been obtained from the Russian Federal Subsoil Resources Management Agency. From October 2017 to April 2018, the preparatory work is scheduled, which includes construction of the necessary infrastructure. The mining operations at the quarry are planned for May 2018. Over the following  two years, the Sandcoin team plans to develop a second quarry for sand production.

One SND token is equal to one cubic meter of building sand. The cost of one m3 of construction sand is $5-5.5. At the crowdsale, the price of an SND token was $1.25-2.00. At the preliminary stage of attracting investment, Sandcoin attracted 1500 Ethereum (about $450,000). There will be 3,170,000 SND tokens emitted for sale in the ICO. The company plans to attract about $4 million investment.

The project team expects the value of a SND token to reach four times the current ICO price in 2018. The buyout of tokens will begin in the summer of the mentioned year. The company plans to buy 10% of the existing SND tokens annually.

Press Contact Email Address
Ronzhin.k.a@gmail.com
Supporting Link
http://en.sandcoin.io


This is a paid press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.

Markets Update: Bitcoin Prices See Some Uptrend During the Weekend

Markets and Prices

The price of bitcoin has been trending higher since our last markets update and is currently hovering around the $4,275 – $4,295 zone on September 30 at 11:00 pm EDT. The decentralized cryptocurrency has climbed roughly 2 percent on a daily basis over the course of last week as buyers steadily chew through market resistance.

Also read: Cayman Investment Forum Focuses on Rise of Bitcoin and Failing Dollar

Bitcoin Markets Feel a Quick Upwards Rush

Bitcoin markets and traders betting on bitcoin’s uptrend had an active week closing out the month of September. Currently, traders and bitcoin proponents seem optimistic, as there have been a few positive announcements this week like 11 Japanese exchanges being approved by the FSA. News from China seem optimistic as cryptocurrencies are expected to be regulated on October 1. Bitcoin trade volume has ticked up a tad capturing $1.3B in daily trade volume, with global Localbitcoin’s trade volumes at an all-time high. Since the announcement of Chinese exchanges closing, Localbitcoin’s volumes in China have been the highest in recorded history.

Markets Update: Bitcoin Prices See Some Uptrend During the Weekend

Technical Analysis   

Bitcoin’s price has been ascending higher over the course of the day, reaching a high of $4,340. The price has been meeting some resistance around this range and is being pressed downwards at the time of writing this. Technical indicators show the 100 Simple Moving Average (SMA) is still well above the 200 SMA which means some upside is still in the cards. Order books show deep resistance at the $4400 territory and buyers will have to work a touch harder to move past the sell walls.

Markets Update: Bitcoin Prices See Some Uptrend During the WeekendBitcoin price on Bitstamp on Saturday, September 30, 11 pm EDT.

The Relative Strength Index (RSI) oscillator is meandering south at the moment, showing buyers are tiring out from the day’s spike. The two-week daily trendline is on the upswing, and we may see some consolidation between the $4150 – $4300 range over the course of the next 48 hours. If the support is broken and the Displaced Moving Average (DMA) breaks between $4150 – $4000, it’s possible markets could get bearish again.

Regulations and More Regulations

Currently, regulators from all around the world are more talkative than ever when it comes to bitcoin and other cryptocurrencies. The U.S. Securities and Exchange Commission has been upping its regulatory action over the course of the past few weeks, mostly geared towards Initial Coin Offerings (ICO) that violate federal securities laws. The regulatory agency charged an ICO with fraud as the startup purportedly claimed its tokens were backed by real estate and diamonds. Additionally, three companies this week, CME, Grayscale, and Van Eck associates withdrew or stopped pursuing mainstream investment funds based off of bitcoin derivatives.

The Verdict

Overall the market seems upbeat, but the heated drama within the ‘community’ is hotter than ever. The battle between Core supporters and Segwit2x supporters has become a match of wits, choice words, and blatant insults strewn across social media. Over the next two months, things in bitcoin land are sure to get interesting as the 2MB hard fork approaches and the suspicious launch of the Bitcoin Gold project nears.

Bear Scenario: At the moment, bitcoin is fighting to get back to the $4300 zone, and bears are trying to push it lower. Markets have been fairly volatile over the past two weeks and intra-range traders will easily make profits off future scalps and breaks. If DMA goes below $4150 or $4K, then it’s possible that we could see some shorts around $3800 – $3900.

Bull Scenario: Buyers work hard today and push the price up to the $4340 territory, but they have to work harder and break the key zone of $4400. If this is attainable, we could see some smoother sailing as the price coasts upwards. With the November fork approaching, it’s likely traders will be moving more back into bitcoin, and we could see a price lift from this event. Over the next few weeks, prices in the $4800 – $5000 range again could very well happen from this vantage point.

Where do you see the price of bitcoin heading from here? Let us know in the comments below.

Disclaimer: Bitcoin price articles and markets updates are intended for informational purposes only and should not to be considered as trading advice. Neither Bitcoin.com nor the author is responsible for any losses or gains, as the ultimate decision to conduct a trade is made by the reader. Always remember that only those in possession of the private keys are in control of the “money.”


Images via Shutterstock, Coin Dance, and Bitstamp.


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IMF Chief Lagarde Tells Central Bankers:

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Christine Lagarde, head of the IMF, warns central bankers that bitcoin is rising. She has told them not to discount digital currencies, because they are gaining more adoption and traction. Lagarde addressed this issue in a conference Friday in London. She said digital currencies might give existing currencies “a run for their money.”

Also read: Cayman Investment Forum Focuses on Rise of Bitcoin and Failing Dollar

An ABC News article quoted her: “In many ways, virtual currencies might just give existing currencies and monetary policy a run for their money. The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve.”

Digital Currencies are Still in Their Infancy

IMF Chief Lagarde Tells Central Bankers: "Not Wise to Dismiss Virtual Currencies"Christine Lagarde

Lagarde went on to say that digital currencies will not replace the current currencies anytime soon. She believes bitcoin is still too volatile. This is why many institutional investors are still waiting on the sidelines. However, the time will come when they decide to jump in.

“For now, Lagarde said, digital currencies are unlikely to replace traditional ones, as they are ‘too volatile, too risky, too energy intensive and because the underlying technologies are not yet scalable.’”

She also mentioned that high profile cases of exchange hacks, like the Mt Gox debacle, has caused mainstream investors to be wary of big investments into the space.

Technical Innovations Will Push Bitcoin Into the Limelight

Nonetheless, Lagarde said there will inevitably and undoubtedly be more technical innovation. These digital currencies will continue to grow and thrive. She said, just like the internet, cryptocurrencies will scale and quickly slither their way into the mainstream consciousness. In other words, central bankers should not ignore the technology or underestimate it. The ABC news article quoted her:

Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays, so I think it may not be wise to dismiss virtual currencies.

Furthermore, Lagarde believes computers will be able to assist governments and other organizations. They will be able to set policies, perform bureaucratic tasks, spot bubbles, and manage other aspects of the financial system.

Mainstream Awareness and Other Perspectives

IMF Chief Tells Central Bankers Not to Underestimate Bitcoin

From the mainstream perspective, Lagarde represents a growing number of influential people who recognize the power of bitcoin and blockchain. However, there are still those who disagree or believe bitcoin is bound to break. People like Jamie Dimon and Jordan Belfort recently called bitcoin a fraud. Not to mention, China recently banned ICOs and acted to ban some bitcoin exchanges.

However, these comments and actions did not harm bitcoin. For every negative comment or publicity, there are positive comments and activities. For instance, Japan recently endorsed 11 exchanges and became Asia’s dominant bitcoin hub. The love of bitcoin and cryptocurrency seems to be accelerating at a greater pace despite significant push back.

Do you think the central bankers will respond to Lagarde? Will the mainstream fully embrace bitcoin soon? Let us know what you think in the comments below.


Images via Shutterstock, Marieclaire.fr (cover photo), and Forbes


At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

Regulation

On the 28th September, the Australian Securities & Investments Commission (ASIC) published a document providing regulatory guidance for businesses that may be engaging in operations pertaining to initial coin offerings (ICOs). The release seeks to clarify the circumstances under which different types ICO may be subject to the Corporations Act, and identify the legal requirements of different types of ICOs.

Also Read: Stargroup Network Upgrades – Bringing Bitcoin to 2,900+ Australian ATMs

ASIC Hopes “To Assist Businesses to Understand Their Potential Obligations Under the Corporations Act”

Australian Securities & Investments Commission Issues Guidance for Initial Coin Offerings

This week, the Australian Securities & Investments Commission published a media release seeking to clarify the regulatory requirements of ICOs operating in Australia. ASIC has avoided adopting a one size fits all regulatory approach to ICOs, stating “whether the Corporations Act applies to an ICO will depend on the type of ICO offering and what rights attach to the coins from the ICO itself, underlying coins or tokens used in the ICO… In Australia, the legal status of an ICO is dependent of the circumstances of the ICO, such as how the ICO is structured and operated, and the rights attached to the coin (or token) offered through the ICO.”

ASIC concludes “that ICOs have the potential to make an important contribution to the options available to businesses to raise funds and to investment options available to investors”, however, specifies that “an ICO must be conducted in a manner that promotes investor trust and confidence, and complies with the relevant laws.” The regulator also states that “crowdfunding using an ICO is not the same as the ‘crowd-sourced funding’ (CSF) that will be regulated by the Corporations Act from 29 September 2017,” emphasizing the need to “ensure the public is not misled about the application of… CSF laws to an ICO.”

Under the Corporations Act ICOs May Be Seen to Comprise Either an Offer of Shares, a Managed Investment Scheme (MIS), or an Offer of a Derivative

Australian Securities & Investments Commission Issues Guidance for Initial Coin Offerings

A share is defined as “a collection of rights relating to a company.” The release states “most shares issued by public companies are ‘ordinary shares’, and carry rights regarding the ownership of the company, voting rights in the decisions of the body, some entitlement to share in future profits through dividends, and a claim on the residual assets of the company if it is wound up.”

ASIC states that “when an ICO is created in order to fund a company… if there appears to be ownership of the body, voting rights in decisions of the body or some right to participate in profits of the body shown in the white paper – then it is likely that the coins could fall within the definition of a share.” ASIC concludes that where it appears that an issuer of an ICO is actually making an offer of a share, the issuer will need to prepare a prospectus.”

The statement appears to imply that companies failing to provide sufficient information through a prospectus will be subject to scrutiny under the same rules governing Initial Public Offerings, however, ASIC specifies that “no such protection exists for ICOs made without a prospectus.”

Managed investments schemes are defined as when “people contribute assets… to obtain an interest in [a] scheme[,]… the assets are pooled together with one or more other contributors… [, and] the contributors do not have day-to-day control over the operation of the scheme.” ASIC states that if “the value of the digital coins acquired is affected by the pooling of funds from contributors or use of those funds under the arrangement, then the ICO is likely to fall within the requirements relating to MISs.”

ASIC’s Guidelines Have Been Welcomed by Several Representatives of the Australian Blockchain and Fintech Industries

Australian Securities & Investments Commission Issues Guidance for Initial Coin Offerings

For a detailed definition of a derivative, ASIC refers to section 761D of the Corporations Act, however, cites “options and futures” as “examples of derivatives.” ASIC suggests that smart contracts may be subject to derivatives licensing laws.

Danielle Szetho, CEO of Australia’s fintech industry association FinTech Australia, stated that “the guidance ASIC has released is a positive step to ensure a viable future for ICOs in Australia, and sits alongside other positive initiatives such as removing double taxation on digital currencies and driving international blockchain standards.” CEO of blockchain consultancy firm ICOPromo, Sergei Sergienko, echoed Ms. Szetho’s position, describing ASIC’s handling of ICO regulations as comprising “a calm and measured approach to help provide guidance to interested parties in Australia.”

What do you think of the Australian Securities & Investment Commission’s regulatory guidelines for ICOs? Share your thoughts in the comments section below!


Images courtesy of Shutterstock and data.gov.au


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Introduction To

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The Satoshi Revolution: A Revolution of Rising Expectations, Chapter 1 (part 1).
by Wendy McElroy

Section One: The Trusted Third Party Problem
Chapter One: Listening to the Past

“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”
Satoshi Nakamoto

A trustless system is one that does not depend upon the intentions of its participants, who may be honorable or malicious. The system functions in the same manner regardless of intentions. The blockchain, with a peer-to-peer protocol that is also transparent and immutable, is trustless. Intentions become important only when there is an intermediary who must be trusted. The third party’s good or bad motives become a determining aspect of the transaction and place the other parties at the mercy of his honesty. This is the trusted third party problem.

On a small scale, the problem will always exist because there are times when a middleman is useful or necessary. The ideal third party is trusted, trustworthy and competent. Some people are dishonest, however. They steal, overcharge, lie or otherwise betray their customers’ confidence in order to make profit over a fee. If the swindling is a one-time event and other third parties are available, the damage is limited. The two people take their business elsewhere, consider suing, report the swindler to business watchdogs and warn others.

An occasional dishonest third party is not the problem Satoshi Nakamoto addressed when he used Bitcoin as a lever to upend the world. It is the institutionalized and constant corruption of governments and central banks from which the average person cannot escape. Almost everyone who worked over-the-table, ran a business, bought goods from stores, accepted government benefits or paid taxes had to accept a fiat that constantly plunges in value due to inflation. Almost everyone who used credit, accepted checks, took out loans, conducted commerce or did business abroad needed to use banks that stole like drunken muggers.

To the average person, the situation looked hopeless. Competiting with the government-banking cartel was illegal and severely punished. No speedy, safe and private alternative existed for transferring funds across borders…or across town. Attempts to reform or remove the system seemed doomed. Reform was impossible because monetary policy had rotted to its core and needed to be uprooted, not improved; removal was inconceivable because the monopoly was deeply entrenched and all-powerful. People’s need for money became a straitjacket.

And, then, Satoshi Nakamoto. And, then, the blockchain and bitcoin. Not just a new currency but a new concept of money was created, and in a form that cannot be inflated because it is fixed at 21 million units. The supply of bitcoin can only decrease as some coins are inevitably lost, for example, by people who forget a password. Satoshi noted, “Lost coins only make everyone else’s coins worth slightly more. Think of it as a donation to everyone.”

Peer-to-peer transactions go through a middleman called a miner but no trust is required as the transaction is released only when “proof of work” is rendered; this consists of a miner solving complicated math. The solution is costly in computer power and time-consuming to produce but easy for others to verify. Satoshi commented, “With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.” The soundness and propriety of the blockchain’s protocol itself is assured by the use of an open source that is visible and verifiable to all. Satoshi’s private currency snaps the monopoly of governments and central banking.

There is precedent for this in theory and in practice.

Precedent in Theory

Friedrich A. Hayek is the most respected Austrian economist of the late 20th century. In The Denationalisation of Money: An Analysis of the Theory and Practice of Concurrent Currencies (1976), he argued vigorously for private and competitive currencies to displace government issued ones. Hayek asked a key question. “When one studies the history of money one cannot help wondering why people should have put up for so long with governments exercising an exclusive power over two thousand years that was regularly used to exploit and defraud them. This can be explained only by the myth” of the necessity of government money “becoming so firmly established that it did not occur even to the professional students of these matters…ever to question it. But once the validity of the established doctrine is doubted its foundation is rapidly seen to be fragile.” (A slightly revised edition entitled Denationalization of Money: The Argument Refined was published in 1978.)

Governments know it is hugely profitable to debase the currency as long as people have no alternative but to accept it and they put the full weight of bureaucracy behind currency manipulation. But the system is fragile because it relies on people not understanding that debasement is theft and not having a choice. Otherwise, the status quo crumbles. The 1974 Nobel laureate pondered why public understanding was so elusive. “[W]hy [is] a government monopoly of the provision of money…universally regarded as indispensable” and what would happen “if the provision of money were thrown open to the competition of private concerns supplying different currencies.” (Hayek’s specific proposal for private currency is explored elsewhere in this book.)

With eerie prescience, Hayek argued for currencies to be developed by entrepreneurs who could innovate new forms of money just as they innovated in other areas. One of the drawbacks of governments’ monopoly on money was that it imposed a freeze on the sort of invention now running free in cryptocurrencies.

The voluntaryist historian Carl Watner observed, “No one can tell in advance what form these monies might take because no one can know for sure what choices individuals would make or what new technologies might be discovered. Laws forcing people to use the Federal Reserve System money have frozen monetary developments at a certain stage….Just imagine if Congress had protected the Post Office by passing laws that would have prevented people from communicating via the internet. We would never have experienced the marvels of e-mail.”

Along with Hayek, the Austrian economist Murray Rothbard wrestled with the question of “why do people so vigorously resist private currencies?” His book, For a New Liberty: The Libertarian Manifesto offered an explanation. “If the government and only the government had had a monopoly of the shoe manufacturing and retailing business, how would most of the public treat the libertarian who now came along to advocate that the government get out of the shoe business and throw it open to private enterprise?” Rothbard predicted they would attack the libertarian with outrage for depriving them of the only possible source of shoes. People were thoroughly indoctrinated to believe that government was necessary and daily life could not function without it.

Hayek and Rothbard are unusual among economists in that they embrace private money. Even free market zealots rarely champion free market currencies and private banking. Instead, they debate marginal issues such as fractional reserve banking which amounts to a trivial reform. Or they argue for the need to restore a gold standard. But if the gold standard is applied to existing fiat, then it means trusting governments and banks to be transparent; it means trusting them to act directly against their own interests, which they have historically refused to do. The trusted third party problem remains untouched and it is the root of all other corruption, including currency manipulation. An inherently corrupt institution cannot be reformed; it must be swept away or totally avoided.

What could convince the public and economists that private currencies work as well or better than government issued ones? One way is to point out that they already have worked better by providing real examples from the past and drawing parallels to cryptocurrencies.

America is Born into Private Currency

Early America offers powerful lessons about private currencies.

The British colonies naturally used British currency, but the homeland’s monetary policies created an appetite for alternative monies. Rothbard explained in A History of Money and Banking in the United States: The Colonial Era to World War, II (2002), “Great Britain was officially on a silver standard….However, Britain also coined gold and maintained a bimetallic standard,,,,In 17th- and 18th-century Britain, the government maintained a mint ratio between gold and silver that consistently overvalued gold and undervalued silver in relation to world market prices.” Great Britain’s policies created a robust market in substitutes for its own money.

Gresham’s law ruled colonial money as it rules all currencies. The law states: if two types of money are valued the same by law even though the market values of one is higher than the other, then the more valuable money will disappear from general circulation and be used for other purposes like hoarding or foreign trade. That is the meaning of the phrase “bad money drives out good.” Full-bodied silver coins began to disappear from circulation within the colonies, which turned to lighter silver, commodity-based money such as cotton or foreign and privately minted coins. These monies were parallel currencies with Spanish pieces of eight being particularly popular.

The first privately-minted American coin was the Granby or Higley Token that was struck by Dr. Samuel Higley of Connecticut in 1737. Samuel died shortly thereafter and his brother, John Higley, produced the copper coins from 1737 to 1739 inclusive. Valuing the tokens at three pence each, John is said to have spent most of them at the local bar until the barkeep refused to accept any more. Then he cast coins with one side reading “Value Me as You Please” and the other side stating “I Am Good Copper.” No value was stamped on the coin, which was common practice in those days. The coins circulated widely for many years even after John ceased minting largely because goldsmiths used them as a reliable alloy with which to make gold jewelry. Later metallurgical analysis of the Granby found the coins to be 98-99% pure copper.

The Granby benefited from what the Austrian economics icon Ludwig von Mises (1881-1973) called the Regression Theorem. In The Theory of Money and Credit, Mises wrote, “The theory of the value of money as such can trace back the objective exchange value of money only to that point where it ceases to be the value of money and becomes merely the value of a commodity.”

Economics Professor Jeffrey Rogers unpacked the concept. Today’s purchasing power of money “draws on yesterday’s, and yesterday’s…and so on….How far back does the regression…go?….[L]ogically, Mises explained, for a commodity money it goes back to the day before the commodity first started being used as a medium of exchange. On that day it had an exchange value or purchasing power due only… as an ordinary commodity (for consumption or for use as a productive input) and not for use as a medium of exchange. For…the U.S. dollar that became a fiat money by terminating the redeemability of what had been a claim to a commodity money…the historical chain goes back to the day before termination, and thence back to the day before that commodity became a medium of exchange. Application of the logic to a new fiat money,” is with reference to the official rate of redemption for an established fiat money.

In short, the value of a money is a composite of the demand for it as a medium of exchange and the demand for it as a commodity.

Bitcoin’s relationship to the Regression Theorem is important since critics often dismiss cryptocurrencies as money or currency because they violate the theorem. Most bitcoin enthusiasts react in one of three ways: they don’t care; they claim the theorem does not apply to the digital age; they insist it does apply to bitcoin, but in a misunderstood manner.

The economist Robert P. Murphy explained how bitcoin emerged as a medium of exchange without being tied to a commodity or redeemable in a fixed amount to an established fiat. The article “Why Misesians Need to Tread Cautiously When Disparaging Bitcoin” argued, “[T]he very first people to trade for it did so because it provided them with direct utility because they knew there was at least a chance that it would serve to chafe the governments of the world….[T]he early adopters of Bitcoin were doing it for ideological reasons, not for pecuniary reasons.” The ideology and the freedom it provided were the ‘commodity’ value of bitcoin‘.

Bitcoin enthusiast Jeffrey A. Tucker took a different tack. In a Foundation for Economic Education article entitled “What Gave Bitcoin Its Value?,” he pointed to the purpose Mises’s theorum served; it helped answer the question of why certain commodities emerged as currencies while others did not. Tucker ascribed the emergence of salt rather than gravel, as a currency to a widespread desire for salt and its direct utility.

Tucker then linked bitcoin not to a hard good but to a hard service which fills a deep need and has direct utility: the blockchain as a payment system. “Bitcoin is both a payment system and a money. The payment system is the source of [non-monetary] value, while the accounting unit merely expresses that value in terms of price. The unity of money and payment is its most unusual feature, and the one that most commentators have had trouble wrapping their heads around….This wedge between money and payment has always been with us, except for the case of physical proximity. If I give you a dollar for your pizza slice, there is no third party. But payment systems, third parties, and trust relationships become necessary once you leave geographic proximity. That’s when companies like Visa and institutions like banks become indispensable.”

The non-monetary worth of bitcoin resides in its payment system that does not require a trusted third party and, yet, has no geographical limitations. Otherwise stated, for Tucker the blockchain is the independent root with intrinsic value from which bitcoin as a medium of exchange emerged. The Regression Theorem applies to bitcoin, but it needs to be expanded to include services in order for the theorem to fit the digital age.

The private currencies of early America offer many such lessons. The history of the NYC goldsmith and silversmith Ephraim Brasher (1744-1828), for example, demonstrates a means by which privately-minted coins circulated widely through the colonies without being restrained by doubts about their purity and weight. Many private minters had reputations within their own communities but circulation was often limited to those communities. Brasher offered a solution. He became renowned for testing coins upon which he stamped “EB” if they were sound. Backed by his reputation, coins migrated far and wide.

The need for minters to be of good reputation highlights an advantage bitcoin has as a currency. It sidesteps the entire issue of the verification of purity or weight. Unlike physical coins, bitcoins cannot be shaved down, counterfeited, diluted by alloys or negated by the reputation of miners who release them or of users who exchange them. A bitcoin is a bitcoin is a bitcoin and no one can alter that fact. But cryptocurrencies do compete with each other for acceptance. Reputation is important to the competition and it is established largely by feedback from the Internet-connected community.

[To be continued next week]


Wendy McElroy has agreed to ”live-publish” her new book exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

A Closer Look at the Suspicious Activity Involved With the Bitcoin Gold Fork

Interview

Just recently news.Bitcoin.com reported on a planned hard fork on the Bitcoin network slated for October 25 called Bitcoin Gold (BTG). There’s a lot of controversy surrounding this fork as the BTG team is very unorganized and the project is also tied to those perpetuating the NO2x movement.

Also read: Another Fork? Bitcoin Gold Project Plans to Fork Bitcoin Next Month

Bitcoin Gold: A Very Unorganized Plan to Hard Fork Bitcoin With Connections to the NO2x Movement

A Closer Look at the Suspicious Activity Involved With the Bitcoin Gold ForkRobert Kuhne seems to be one of the Bitcoin Gold team leaders.

There’s been a lot of quarreling happening in the bitcoin space between Core software supporters and Segwit2x proponents. Because Segwit2x developers and miners plan to raise the block size to 2MB, a group of Core supporters started a movement called “NO2x.” The NO2x group does whatever it can to persuade people to join their fight against Segwit2x, and a few cryptocurrency luminaries are also backing the movement. One member of the NO2x movement, Robert Kuhne, appears to be one of the leaders of the Bitcoin Gold team. Kuhne uses the handle “rbtkhn” in the Slack channel and answers a lot of questions asked by visitors and the crypto-media. Kuhne’s official Twitter page where he calls himself “[NO2x],” also advertises the website btcgpu.org directly under his name proudly displaying that he’s involved with the project.

There are also many other flaws involved with the project that hopes to hard fork the Bitcoin network in just a few weeks. As we reported earlier, the team does not have a testnet of the network created, so miners can’t test the system. Further, unlike the Bitcoin Cash network, the BTG project still implements the same per-block difficulty adjustment as bitcoin (BTC) in its code, and has no signs of an Emergency Difficulty Adjustment (EDA). Additionally, unlike the website’s claims, there is no replay attack protection added to the protocol, even though the team is adamantly against Segwit2x not adding replay protection. Another disturbing aspect of the BTG project is the implementation of a pre-mine within the code called the “PoW retargeting change for BTG hard fork pre-mine period.”

A Closer Look at the Suspicious Activity Involved With the Bitcoin Gold ForkIt seems Bitcoin Gold plans to pre-mine 1600 blocks.

An In-Depth Interview With Bitcoin Gold Lead Developer H4x3

Last night news.Bitcoin.com received some responses to the questions we sent to the anonymous lead developer of the BTG project, “H4x3.” The developer explains that the website is under active development at the moment, and official information concerning the project can be found at the official Twitter page.  

Below is the full transcript of the lead developer’s responses to our questions sent before our prior post.  

Bitcoin.com (BC): Why are you planning to fork bitcoin on October 25 and are you planning to change the algorithm to Equihash?

H4x3: Yes, we are implementing a proof-of-work change to Equihash – a GPU-minable algorithm – because we believe in Satoshi’s “one CPU one vote” vision. The current situation, where one erratic company in a totalitarian jurisdiction that is very hostile to Bitcoin has near monopoly domination over the manufacturing and distribution of the mining hardware that is required for the security of the global network, is unacceptable to anyone who understands the importance of decentralization to Bitcoin.

Bitcoin Gold can be thought of simply as a replication of the Bitcoin protocol and coin distribution that utilizes on a different type of computer hardware for security. This replication of Bitcoin on different hardware can serve as an insurance policy or backup plan in case the original SHA256 mining network is crippled or destroyed. The same “backup plan” rationale has been used as one of Litecoin’s value propositions, however Bitcoin Gold serves this function better than Litecoin because it has the exact same coin distribution and money supply as Bitcoin; Litecoin ownership is much more narrowly distributed, making it unsuitable for use as a universal store of value and reserve currency.

BC: Does your team have anything against Bitcoin Core, Segwit2x, or Bitcoin Cash protocols?  

H4x3: We have nothing against Bitcoin Core. On the contrary, we know that the best security and most important innovation in the world of cryptocurrency is coming from the Bitcoin Core team. That’s why Bitcoin Gold will follow the Core roadmap for on-chain scaling, layer-two scaling, and stronger privacy and fungibility. If a situation that Bitcoin protocol evolution gets blocked ever occurs again, where one faction of miners colluded to prevent the entire Bitcoin community from using the opt-in Segwit block size increase, Bitcoin Gold will implement the new features.

Anyone can fork Bitcoin at any time for any reason, and the community will ultimately decide whether that fork has any value. Many in the community believe that Bitcoin Cash and 2X are attacks on Bitcoin, while others believe these forks are useful and well-intentioned. We will not make moral judgments of our competitors or pretend to be able to read their minds, but we will criticize their poor engineering decisions and explain why Bitcoin Gold is superior.

A bad attribute of these other two forks is that they are designed to leech SHA256 hash power from Bitcoin. By choosing to keep the same PoW algorithm as Bitcoin, they have both positioned themselves as permanent adversaries of Bitcoin. To make matters worse for Bitcoin Cash, they implemented an “emergency difficulty adjustment” which has caused wildly oscillating hashrate, unpredictable block confirmation times with up to twelve hours between blocks, and increased the rate of inflation so much that the BCC block reward halving may occur in 2018 instead of 2020. Furthermore, Bitcoin Cash deleted Segwit from their fork while not even having an alternative fix for transaction malleability. Many believe that Segwit was deleted just to make a political statement against Bitcoin Core, as no persuasive technical rationale for deleting it has been given.

We would like to compliment Bitcoin Cash on two points. Firstly, we appreciate that they implemented replay protection to protect innocent users and businesses from accidentally losing money. Segwit2x, on the other hand, has refused to implement replay protection by default, which unnecessarily puts the whole ecosystem at risk and imposes undue burdens on all cryptocurrency businesses. Secondly, we respect Bitcoin Cash for being the first fork of Bitcoin to succeed in establishing an independent existence as a new cryptocurrency. Since its creation on August 1, BCC has traded at between 6% and 22% of Bitcoin’s value – not bad for a brand new coin.

BC: Do you think there is community support for a bitcoin with GPU capabilities?

Absolutely. Bitcoin Gold has already seen a tremendous amount of interest from the Cryptocurrency community, even without having started any major marketing campaign. In just two weeks we have already got 1,600 Twitter followers and 400 new Slack members, from Latin America to Southeast Asia to Russia and all of the usual hotbeds of Bitcoin activity. Satoshi’s vision of “one CPU one vote” is a powerful concept that a large part of the community finds compelling, and this vision doesn’t need to be supported by paid propaganda campaigns. With Ethereum planning to abandon proof-of-work altogether in favor of a new proof-of-stake system, many current ETH miners have already expressed a desire to switch their GPUs to a Bitcoin Gold pool as soon as possible. And when we consider the millions of new people who will join the Bitcoin community in the next few years and may be interested in mining, GPUs will be easily accessible for everyone, which is not the case for ASICs.

Bitcoin Gold it is still evolving. We are very open to feedback from experts and the community. And we are committed to as much transparency as possible, while respecting the reasonable expectations of privacy of the people involved in this open source effort.


As we stated in our previous report, news.Bitcoin.com is investigating this project and we plan to keep our readers informed if the BTG team plans to fork the Bitcoin network. As of right now the project is incomplete and involves suspicious activity in regard to the current drama between Core and Segwit2x camps. Members of the cryptocurrency community also believe people should approach this project with caution as its considered a “scam” attempt filled with numerous flaws.

What do you think about the Bitcoin Gold project? Do you think the plan is legitimate or do you think it’s a big joke or “troll” against Segwit2x? Let us know what you think in the comments below.


Images via Shutterstock, Twitter, and Github. 


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The Bitcoin ETF Holy Grail — Another Firm Attempts the Odds Against SEC

News

According to public records, another company has filed with the U.S. Securities Exchange Commission to create two bitcoin exchange-traded funds (ETF) based on Bitcoin derivatives. ETF firm Proshares Capital Management aims to get its bitcoin-futures products listed on the New York Stock Exchange (NYSE) with a proposed maximum aggregate offering price of $1M per ETF.

Also read: Ledger Holdings Generates $11.4 Million to Open U.S. Bitcoin Options Exchange

U.S. Firm Proshares Files for Two Bitcoin ETFs

The Bitcoin ETF Holy Grail — Another Firm Attempts the Odds Against SECThe Proshares Trust II was filed with the SEC on September 27.

Proshares is an ETF management firm that launched in 2006 and offers over 140 alternative funds that cover a broad spectrum of investments. The company has products listed on the NYSE, Chicago Board of Options Exchange (CBOE), Nasdaq, and other mainstream trading platforms. Now the Maryland-based business is creating its “Proshares Trust II” a bitcoin ETF that derives its Net Asset Value (NAV) from derivatives rather than holding the currency in reserves.

Proshares further states in its Form S-1 filing that the Bitcoin-based funds are not appropriate for all investors and investing in the shares involves significant “risks.”

“The funds are not appropriate for all investors and present many different risks than other types of funds, including risks relating to investing in bitcoin futures contracts, exposure to bitcoin, and, in the case of the Inverse Fund, risks associated with the use of leverage,” explains Proshares S-1. “The performance of the bitcoin futures contracts in which each fund invests, and therefore the performance of the funds, can be expected to be very different from the price of bitcoin.

The value of a fund’s investments in bitcoin futures contracts may not be correlated with the price of bitcoin and may go down when the price of bitcoin goes up (and vice versa).

Other Mainstream Bitcoin Investment Vehicles and Attempts

The Proshares ETF filing follows other companies trying to create these bitcoin-based mainstream investment vehicles. Just recently, the U.S. Commodity Futures Trading Commission approved the firm Ledger X’s Swap Execution Facility for bitcoin options. Additionally, the well-known CBOE Holdings Inc. plans to add bitcoin futures to their product list. However, financial management firm, CME Group, said it would stop its plans to list bitcoin futures. The recent filing also follows Grayscale Investments and Van Eck Associates withdrawing proposals for two U.S. based funds.  

Bitcoin Technology and Regulatory Guidelines Continue to Evolve

The Bitcoin ETF Holy Grail — Another Firm Attempts the Odds Against SECProshares says it understands that bitcoin is a nascent technology and explains how different the bitcoin economy is throughout the entire S-1 filing. For instance, the firm says “bitcoin is a new technological innovation with a very limited operating history, and the price of bitcoin on the bitcoin exchange market is highly volatile, which could have a negative impact on the performance of Bitcoin Futures Contracts and the performance of the Funds.”

Bitcoin is available for trading 24-hours a day and, as such, the price of bitcoin may change dramatically when the market for bitcoin futures contracts is closed or when shares are not available for trading on the exchange.

In addition to emphasizing that bitcoin is still a very new technology, Proshares also notes that regulatory guidelines towards the decentralized asset are still in the gray area too.

“The global regulatory landscape for bitcoin and other digital assets has been inconsistent and continues to evolve,” Proshares concludes. The U.S. regulatory landscape may give Proshares some trouble with its filing submitted this past Wednesday due to the recent proposal withdrawals of other U.S. ETF attempts. According to Van Eck Associates, the SEC asked the firm in a formal letter to withdraw its trust amendment until bitcoin derivatives instruments exist.   

What do you think about Protoshares filing for two new bitcoin-based ETFs? Let us know in the comments below.


Images via Shutterstock, Proshares, and the SEC S-1 filing. 


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Conferences

The financial ecosystem is changing radically. The Cayman Investment Forum  recognizes this, and hopes to address concerns about this new financial world. The founders of the event believe either bitcoin or gold will represent the future store of value. They are pursuing this thought by having their elegant conference focus on the monetary paradigm shift and the failing US dollar. The event falls on October 11 at the Cayman islands. 

Also read: Overstock Launches ”SEC Compliant” ICO Trading Platform

The Cayman Forum website elaborated more on the nature of the event: “Money may be about to change, again. This investment forum will look at money, its history, the reserve currency of the world, money in the shadows, the reserve currency of history, and cryptocurrency. A persuasive case can be made that we are on the cusp of a new monetary era. Prominent examples of the changing nature of money include: cryptocurrencies are just watercooler conversations, central banks halted and then reversed a 20-year streak of selling gold, Sweden is nearly cashless…and India blazed a path to electronic-currency by demonetizing 95% of cash in circulation.”

Conference Speakers: Addressing the Failing US Dollar or “Shadow Money”

Jeffrey Snider

The conference represents an alternative view of investment, trading, and finance, especially in regards to the current digital age. Speakers include investor Tuur Demeester, who is a known cryptocurrency enthusiast. He is the founder and editor-in-chief of Adamant Research, and is published regularly for various publications. Other speakers include Jeffrey Snider, who specializes in looking into the collapsing mainstream economy.

Most of the speakers have a history of criticizing the current financial system and actively want it to collapse. They see cryptocurrencies, especially bitcoin, as undermining legacy finance. For instance, Jeffery Snider sees the current monetary system as a system of “shadow money.” The forum website elaborated on his perspective:

This vast body of shadow ‘money’ has various aliases: eurodollars, wholesale funding, credit-based capital.  Like dark energy it is not directly observed and its existence is disputed.  Mr. Snider will reveal the bewildering true story of money that first assimilated the global economy, and then, on August 9, 2007 began to decompose and with it our finances, economy and politics.

Conference Praise Bitcoin; Bitcoin as Investment Instrument or Money?

Cayman Investment Forum Focuses on Rise of Bitcoin and Failing Dollar

The interesting aspect of the conference is the debate over whether gold or bitcoin will act as the primary store of value after the dollar collapses. According to the event article, two factions exist: one that believes cryptocurrencies will prevail and one that sees gold as the winner. Some of the speakers believe that cryptocurrency is also a store of value and not money.

This is cetainly one of the common arguments that predominates the bitcoin ecosystem, as some on the blockstream team appear to want bitcoin as “digital gold,” rather than a payment system. It will be interesting to see how the discussions of the conference turn out. In either case, the bitcoin ecosystem is growing as alternative summits and conferences spur more interest in digital currencies and blockchain.

What do you think about this alternative investment conference? Do you believe the monetary paradigm is going to change rapidly, slower than expected or not at all? Let us know what you think in the comments below.


Images via Shutterstock and Cayman Investment Forum


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Regulation

Ukrainian lawmakers previously said that the legal status of bitcoin and other cryptocurrencies could be determined by last week. However, a unified position has not been reached among regulators. Deputy Governor of the National Bank of Ukraine (NBU), Oleg Churiy, explained why lawmakers cannot reach consensus on cryptocurrency.

Also read: Russian Regulators Disagree on Crypto Regulation, Postpone to Next Year

No Common Position

Ukraine Cannot Reach Consensus on Cryptocurrency - Central Bank Explains WhyThe Central Bank of Ukraine.

Early this month, Ukrainian lawmakers agreed to settle on the legal status of bitcoin and other cryptocurrencies in Ukraine by the end of last week. “But there is no progress in developing a unified position,” Financial Club wrote.

At the Ukrainian Financial Forum organized by the ICU group last week, NBU Deputy Governor Oleg Churiy explained the challenges lawmakers faced. On the legalization of cryptocurrencies in Ukraine, he said the regulators have only been able to create a working group to work on this issue so far. He was quoted saying:

Today there is no legal status in Ukraine…We have a working group at the level of state authorities. We are trying to work out a common position.

Not a Currency, But Not Prohibited

Ukraine Cannot Reach Consensus on Cryptocurrency - Central Bank Explains WhyNBU Deputy Governor Oleg Churiy.

Churiy explained that regulators worldwide are met with two primary questions concerning how to regulate cryptocurrencies; the first is “what is it?” and the second is “what to do with it?” He asserted that many regulators have not even answered the first question so they never moved on to the next question.

The deputy governor pointed out that there are a few approaches taken by other countries. Japan, for example, fully legalized cryptocurrencies, while many countries do not have a legal framework for them. There are also those that totally prohibit them, and some that partially allow them.

The regulators “look at each other, [and] do not quite understand what to do,” Churiy revealed. In addition, “when we communicated with the IMF about cryptocurrency, they referred [us] to the directive of the European Central Bank,” he conveyed, adding that “it’s really not clear what to do.”

Nonetheless, Churiy maintained that in Ukraine:

We can say that this [cryptocurrency] is definitely not a currency…because there are very different participants: there is no central issuer of this ‘currency’ or ‘asset’. We also cannot recognize this as a means of payment, since the only legal tender in Ukraine is the national currency…[However] There is no regulation, no law, where it is stated that it is prohibited.

There Is Also a Tax Issue

Ukraine Cannot Reach Consensus on Cryptocurrency - Central Bank Explains Why“In addition to ‘what is this’ and ‘how to regulate it’ there is still a tax issue,” Churiy was quoted by Financial Club. He noted that Ukrainian citizens are obligated to declare their income and pay taxes but the government does not have the tools for administering tax payments related to cryptocurrencies.

Last month, three Ukrainian lawmakers declared their bitcoin holdings, collectively worth $47 million. “I do not know how they will pay taxes, but at least they made the first step,” Churiy commented. Another important issue he brought up is financial monitoring, stating that “the FATF [Financial Action Task Force] has certain requirements for cryptocurrencies.”

Ukraine Cannot Reach Consensus on Cryptocurrency - Central Bank Explains WhyChairman of the Verkhovna Rada Committee on Financial Policy and Banking Sergey Rybalka.

Early this month, People’s Deputy Oleksiy Mushak suggested that cryptocurrency could be taxed are investment income, such as “5% on the difference between purchase and sale,” adding that it may be necessary to license and register cryptocurrency exchanges in 2-3 years.

While there is not yet a consensus, People’s Deputy of Ukraine and Chairman of the Verkhovna Rada Committee on Financial Policy and Banking Sergey Rybalka said on Wednesday that work has begun on a cryptocurrency bill. According to him, opinions and suggestions were collected from representatives of the NBU, the Ministry of Finance and other state bodies and experts in order to draft a bill on cryptocurrency.

When do you think the Ukrainian lawmakers will reach consensus on cryptocurrencies? How do you think they will classify bitcoin? Let us know in the comments section below.


Images courtesy of Shutterstock, Picssr, Cnbc, and NBU.


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