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Is Bitcoin Driving Gold Prices Lower?

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Bitcoin’s record-setting advance since the start of the year has left other asset classes out in the cold. As gold continues to struggle below $1,300, some analysts have noted an inverse correlation between the two asset classes.

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Battle of the Safe Havens?

Gold has long been valued as a safe haven and store of value capable of shielding against economic, financial and geopolitical risks. Although the yellow metal has lost much of its luster, it remains the go-to haven asset for investors concerned about the future. Case in point: gold has risen several times this year on geopolitical tensions between North Korea and the West.

At the same time, gold has been unable to break above $1,300 a troy ounce with any real conviction. Gold futures traded on the Comex division of the New York Mercantile Exchange appear to have peaked north of $1,350 in September before crashing back down.

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Indeed, 2017 has been a frustrating year for bullion, with prices following a predictable pattern of peaks and troughs. That being said, the metal has still managed to add around $100 since the beginning of the year.

Bitcoin, on the other hand, has enjoyed unrivaled success, culminating in a yearly gain of around 1,200%. The world’s most traded cryptocurrency spiked above $19,500 last week in anticipation of the first-ever cryptocurrency futures contract. Prices have since pulled back, but remain strongly bullish as institutional capital enters the market.

Although bitcoin cannot be entirely described as a safe haven, it is being used exactly in this way by investors. Its finite supply and shrinking producer base over time give it unique attributes that haven-seeking investors may find appealing.

Strategist Weighs In

As CCN reports, ACG Analytics analyst Larry McDonald believes the growth of bitcoin could weigh on gold prices more acutely in the near future. According to McDonald, the cryptocurrency asset class is equivalent to roughly a quarter of liquid tradable gold. That figure has increased manifold over just one year ago. As the $450 billion cryptocurrency market grows, it may continue to eat away at the yellow metal.

Meanwhile, Phillip Streible of RJO Futures said bitcoin futures will play an important role in how gold is priced. Speaking to CNBC’s Power Lunch, Streible said gold stands to benefit should bitcoin futures go bust. At the same time, bullion may continue to lose its shine should bitcoin and the crypto asset class more generally push higher.

“Bitcoin has stolen a large market share of gold,” Streible said.

There were no signs of a crash on day one of CBOE’s bitcoin futures contract. After initial volatility, the contract provided a boost to the spot price, eventually sending BTC/USD above $17,000. That being said, the rally wasn’t nearly as convincing as the one that occurred last week. With its latest upsurge, bitcoin controls more than half of the total cryptocurrency market when evaluated on total capitalization. In terms of volume, it accounts for roughly half, according to data provided by CoinMarketCap.

Institutional traders will soon get their fill of bitcoin futures. CME Group is planning on launching its own contract on Dec. 18. Nasdaq is reportedly working on its own bitcoin-linked derivatives product for next year.

On Monday, the Security and Exchange Commission’s public filing system also showed two new applications for a bitcoin exchange-traded fund (ETF). REX and VanEck have each submitted a proposal to the securities regulator to create their own bitcoin ETF. Some analysts say it is only a matter of time before cryptocurrency enters the multi-trillion-dollar ETF market.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Opinion

Stellar Lumens: Analysis for a HODL (or Non-HODL)

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2018 is off to a fast start for many coins, with the past couple of days being a thorn in an otherwise positive trend. Stellar Lumens was a coin that I have always been curious about. XRP was a marketing unicorn. It was perfectly palatable for the government, and it was designed to do things that were government friendly. The co-founder of XRP went on to found Stellar Lumens, a company that has a very similar system to Ripple, but a different marketing plan altogether. Let’s go into it.

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Leadership

Jed McCaleb is the brains of this company. He was also the brainchild of Mt. Gox, the exchange that was tragically hacked after his departure. If we are talking about big guys in the industry, I don’t think we are going to find many more like this guy. He’s an American success story that also builds government friendly cryptocurrencies. I am hoping this is our Rocky Balboa, because we certainly need one in 2018. I haven’t seen many people step up to the plate and talking on behalf of blockchain, so I do believe the void is certainly open for these folks to join in. Garlinghouse is already the darling of CNBC, there is room for more!

Purpose

There are three in my opinion. They are first trying to get into the micropayment space with a rapid settlement software and ledger system. They are focusing on “banking the unbanked”. The costs for using their services are low, no matter what the amount that is being transacted. Sounds like a fork in Ripple! Oh, because it is. The vision is that holding lumens could be a way for people to store their money in something that isn’t a closet anymore. There are roughly 2B “unbanked” that could be considered a target market.

Compliance-focused. These guys want the banks to be able to use them! This is the McCaleb special sauce in my opinion. He is making sure that all of his stuff is always working with the powers that be, not against them. The network is set up for banks to plug themselves in, put in a clients money, and Lumens will spit it out the other side to anyone, anywhere, in any currency. Great middleman! Ripple is the institutional version, Lumens is the use case version. I believe this is why Jed left.

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Lumens also built an excellent platform for design. If you want Raiden’s take, I think Mr. McCaleb saw that a platform is going to be a hell of a lot more important than a instrument of exchange. He has built a platform that is incredibly easy to design your own tokens on, that are so transparent that it can help you toe the line of the law. When the USA is just ramping up for their own regulations on ICOs, and you have Mr. McCaleb on the sideline with a  straight edge token maker, I think there could be some sweet music. I am not a tech person, so I will yield to others in it’s comparison to Ethereum. It has been advertised as a more advanced version of what is available. AKA, a newly paved road with custom car dealerships.

Competitors

Depends on which purpose. Personally, banking the unbanked is being worked on (and touted) by every cryptocurrency out there. They have debit cards, QR codes, CELL PHONES for it. There is a huge market for it, but the reason swaths of humanity are unbanked is because it is difficult to access basic services, including the education on cryptocurrency account set-up, payment and management. This is an “eventually” problem that will be solved. If this was the only part of this coin, I would move on. I am going to be leaving “banking the unbanked” up at the top. This doesn’t excite me. I am going to be talking about their near sighted solution cases moving forward.

The platform for creation is something I like very very much. I love when things can be worked on by entrepreneurs. When things are developed on a platform, their work is as good as being nailed into the walls of the block chain. I want to attract the most amount of smart people to use the coins I own, as their ingenuity in various forms will create a desire for the coin. Ethereum and NEO are the platforms I would say compete with Lumens right now.

Ethereum, which does have a Silicon Valley presence, has been around for quite some time, and the prospect of lightning is anyone’s guess as to effectiveness. I personally never bet against Ethereum, regardless of competitors. I just bet on all platforms.

NEO, “Chinese Ethereum,” is also an advanced platform that currently boasts the most robust way for developers to create. They have the best paint brushes at the moment, in this author’s very humble opinion. I don’t believe the NEO team is going to be focusing on the US ACO market just this moment (I could be wrong). I think NEO could very well be the advanced Chinese Lumens. No real need to deviate from that market for them…

Target Market 

This is the best target market anyone can ask for, and it is the reason I am writing about this coin. Business. High quality businesses that can transact in tokens quickly and compliantly for uses with every day transactions.

Let’s do an example: With Lumens I can have my bank send them USD, Lumens then encrypts that USD on XLM, and sends it off to the bank across the world in China. The bank gets that payment in Yuan, deposited directly to my friend. This target market is not being drooled over like it should. Decentralists will do their own thing, but for me USD is what puts gas in the tank. It will be that way. I want someone to play nice with my USD, and the keepers of my USD. Strong points to Lumens here.

Weaknesses

All friends of Raiden know I hate large supplies. This coin is designed for a specific use, and that use is certainly not being a $30,000 coin. 103B. That means it’s going to take a massive wave of adoption before we start seeing some price appreciation.

I want their vision to be a little more geared toward beating Ethereum. I think banking the unbanked will take significant amounts of time, and will require a lot of all hands on deck to get going. If we could shelf this goal for after we figure out whats going on with primary offerings in America, we may have more resources to speed up the process of such a noble goal.

Strengths

This is an American company solving an American problem. There are no hurdles to jump here! We have a gigantic market of investors/businesses that need a platform that they can begin to toy around with. If they can successfully offer tokens that will require payment in XLM, this is now a very good investment. This is the Ethereum Model, and look how well its doing from way up there.

Jed McCaleb. I think this darn guy is the one who saw the bureaucratic needle in the haystack and decided to jump in. The government friendly cryptos will always win over the anti-government cryptos. I am not going to the bonfire with those people, I want to make money this year. I have said this before. Americans want something simple, at their doorstep. This is beginning to sound like just that.

Technical Jargon 

  • Current Price 1/15/18- $.63
  • Current Supply- 17,890,569,956 XLM
  • Total Supply- 103,590,302,054 XLM
  • Market Cap- 11,447,227,515 USD
  • Market Cap Rank- 9

Partnerships

IBM. This is the big one. You may not know this, but IBM essentially controls every single corporate office in America. Their software, wiring, and hardware is what keeps most places up and running. IBM has used them for settlement, while they clear the transactions that they are doing thousands and thousands (and thousands) of. Baby steps partnership right now. However, this is already a working relationship. IBM is not a company to discount in the new wave of technology. Their technical infrastructure in American professional society is second to absolutely none. This partnership alone can tell you many things about Stellar Lumens. It is quite interesting IBM is also hiring Ethereum Developers.

Overall

I sold off some of the portions I had before the sell-off a week ago. It performed well for me, but I was going to be migrating back to my ETH. Now that I have done some real digging here, I love what this is. It is Jed McCaleb. I trust that man. I have no idea of his coding experience, or overall involvement in the nuts and bolts of any currency he has worked on behalf of. However, this man is preparing an American Noah’s Ark. This is the boat that he thinks everyone will get on, AND B2C BUSINESS OFF OF. The most important thing is the business part, hence the caps. If we are talking about a warming up ICO/ACO market in the United States, there is no better place to be apart of than a mass customization shop that can give you a filled out form to hand into the government. That hasn’t been mastered yet, even on the exchange side. I just really hope they focus on the platform first. Business comes first to set up their store fronts. People go shopping second. Lumens is a coin with customers and a lonely target market. I can’t think of that being a bad thing.

 

I am not recommending you buy XLM, or any of the currencies I have listed. You must look into each and every investment, and analyze all angles based on your savings and risk tolerance. A lot of people ask me thoughts on currencies. No currency is made for everyone. I would have to know income, savings, investment background, risk tolerance, and the list goes on. This is the reason why no one can ever recommend something to you through a long term price prediction. I want you to make money. I wish you the best of luck.


A look at the mountain range.

Disclaimer: The author holds investment positions in the cryptocurrencies discussed in this article. 

Image courtesy of Pexels and Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Music: One Overlooked Use Case

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So far in this year, Ethereum has been the crypto star appreciating over 80% to a recent record of $1402. All this suggests that more and more applications are being created. We know this by the demand for Ether, the gas that drives the Ethereum network.

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The reason behind the explosion of Ether demand was confirmed by Ethereum co founder Steven Nerayoff in a CNBC interview where he claimed the number of Ethereum projects today is more than 10 times year ago levels.

One of those areas is the music business and there are several names appearing on the ICO list to add to your research agenda.

Why The Music Business Needs Help

Music may live forever but the business side has been in trouble for a long while. Over the last decade there have been only three years when the global value of music sales increased. The combination of digital music and outright pirating through peer-to-peer sharing has much to do with the long-term trend.

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Throughout the world there are 69 copyright and royalty societies given the responsibility of documenting, collecting and distributing music royalties. That means collecting a few pennies whenever a song is played on the radio, Internet or anywhere else. Four of the largest of these is in the US, followed by Japan, Germany and Britain. Their operations are truly byzantine.

Experts in the music-publishing field confirm the time between music usage and royalty payment can run close to 24 months. Even then not all royalties are distributed. According to my sources, there are often millions of dollars collected by royalty authorities everywhere that never make it to the entitled recipients. That sort of practice borders on criminal behavior but copyright and royalty societies operate in a sub-rosa manner making it difficult to understand their policies.

In the past just 4 major record labels controlled over 80% of the industry. These giants could afford a full time legal department to pursue royalty issues dominated the music industry. Today, however, independent labels represent almost one-third of the market. This means less democracy in the business with the young independent artist at a particular disadvantage.

Of course, musicians aren’t the only group of artists loosing out on their pay. There are writers, poets and painters that go largely unprotected.

The music business is just easier to track because it has more data. Yet in spite of all the information, the music industry is widely recognized for its lack of transparency. Blockchain technology has the ability to disrupt long-standing industry practices.

ICOs To The Rescue

The number of Ethereum based white knights is starting to appear on the horizon promising to rattle the industry and hopefully restore some democracy on behalf of the independent artist.

One simple business model comes from a startup SingularDTV who is attempting to build their ecosystem on top of Ethereum. Here is the basic value added proposal.

SingularDTV tokenizes the artist work. In doing so the artist is turning their music into a financial asset. Anyone who buys into an artist’s token owns a share of the creation and its income stream. The more people consume an artist creation, the higher goes the token price.

Only time will show if SingularDTV succeeds with this model. The consequence of this model is how it eliminates many of the middlemen and nefarious influences in the industry. Instead of singing on a street corner for bread, an artist could raise money upfront without relying on an advance from a record label.

According to SingularDTV, distributing content via blockchain would allow artists to skirt streaming platforms like Spotify to earn royalties on their own terms. Now that is true democracy.

SingularDTV may stand out a bit in the news due its recent ICO success in raising $8 million but they aren’t the only player in the music game. Names like Voise recently raised $1 million as well as Soundchain, Blokur and Opus to name a few.

I am no longer a registered investment advisor, which means I don’t go around making investment recommendations. So I will only suggest this group to put on your list of late night reading. Next time, I will take a closer look at more of these names.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Opinion

Dogecoin Was a Joke Coin. Was It Really?

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Dogecoin is perhaps the most controversial altcoin on the market today.  The mascot of this altcoin is a Shibu Inu dog, a Japanese breed. The enthusiasts of Dogecoin call themselves shibes and are extremely fond of the meme.  Akin to bitcoin and its counterparts, Dogecoin can be mined and used to conduct monetary transactions. The limit of Dogecoin is set at 100 billion coins whereas that of bitcoin is set at 21 million coins. Unlike Bitcoins, Dogecoins do not require ASICs for the mining process. The algorithm type of Dogecoin is Scrypt.

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The Origin

The story goes that Jackson Palmer was fed up with the hype created by bitcoin since its inception in 2009. Like many, he was also cynical about bitcoin’s relationship with the Silk Road website. Dogecoin was finally created on Nov. 27, 2013 by Palmer and Billy Markus. Palmer and Markus launched the official website on Dec. 6, 2013 after there were rumors that the crypto-coin was being used to fund illegal activities online. It was initially launched as a parody coin. After its went public, Dogecoin made it to news headlines and numerous blog posts. At one point, it even became the seventh largest cryptocurrency by market cap.

Dogecoin

The mascot

Dogecoin vs. Bitcoin

The main difference between bitcoin and Dogecoin lies in the encryption algorithm. The algorithm used to mine bitcoin is SHA-256 while that of Dogecoin is Scrypt. Thus, the mining of the Dogecoin blocks is more computer-grade hardware friendly. The time taken to confirm a transaction on Dogecoin blockchain is only about 1 minute, which is significantly less than bitcoin’s. Even though bitcoin has the highest market cap and volume among all the existing cryptocurrencies, Dogecoin has traveled a long distance since its first step in 2013. The altcoin has a remarkably fast initial coin production schedule.

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Dogecoin and Litecoin

The first noticeable similarity between Dogecoin and Litecoin is the algorithm. Dogecoin is actually based on a fork of Litecoin, the LuckyCoin protocol. Hence, the ‘joke’ coin is often mined with Litecoin on devices that support the Scrypt algorithm. The Dogecoin wallet is also alike the Litecoin Core wallet. Both can be used to store and spend tokens. If a person has locked up their wallet then they will lose an insignificant amount. Dogecoin is supported by many merchants and can thus be used to purchase goods and services. Reports say that currently, Dogecoin is the most widespread token.

Dogecoin Markets

Jubi and Poloniex are the more popular crypto exchanges that support Dogecoin. The digital currency was quite popular among Chinese investors before the country banned crypto exchanges. Other popular cryptocurrency exchanges that support Dogecoin are Bittrex, Kraken, YoBit and GitHub. One of the easier ways of getting Dogecoin is through Changelly, where a person can get several Dogecoin in exchange for a Litecoin. Many countries may start to support Dogecoin during economic and political crises. As an example, Venezuela is a leading region when it comes to Dogecoin since its national currency collapse.. Currently, the volume of Dogecoin is 13,190 BTC and the market cap is 112,469 BTC (as of Jan. 9, 2018).

There are basically three ways of making money with Dogecoin:

  • If quality articles or funny comments or art is posted online (on Reddit) then, a person can receive tips via Dogecoin. They are automatically added to the digital wallet. The person can then use it to buy products or services and even tip others.
  • It is extremely easy to conduct transactions using Dogecoin, just like transactions of fiat currency. Besides USD, EUR numerous online platforms have plugins that accept DOGE as payment. Anyone from a writer to a business developer can benefit from Dogecoin.
  • Trading Dogecoin is just like trading any other cryptocurrency or fiat currency. A vast number of crypto exchanges now support DOGE. The market of Dogecoin is highly volatile.

In March 2017, the founder of Dogecoin told CoinDesk: “New features aren’t being implemented into dogecoin because there’s no active development anymore. Eventually, it will become outdated. And with that, the network will organically wind down.”

“I have a lot of faith in the dogecoin core development team to keep the software stable and secure, but I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over 2 years has a $1B+ market cap.”

Jackson Palmer, creator of Dogecoin

Jackson Palmer worries that the rapid success of cryptocurrencies will actually deter people from investing in more legitimate projects. “The bigger this bubble goes, the bigger negative connotation it’s going to have,” he said. “It’s going to be like the dot-com bust, but on a much more epic scale.”

Many crypto connoisseurs now suggest that it is time to shift the focus from bitcoin to other cryptocurrencies like Litecoin, Ethereum, Ripple, IOTA, and Dogecoin. With the rapid increase in the value of Dogecoin, more and more cryptocurrency traders are embracing this altcoin. Therefore, even amid some speculation, the future of Dogecoin looks bright.

Initially dubbed as the ‘joke’ coin, Dogecoin broke $1 billion market cap last week. This, more than anything, shows that it is high time to be serious about the altcoin. After all, is really difficult to kill a cryptocurrency. The core developers are quite determined to keep the crypto-coin alive as long as there is interest in cryptocurrencies and the chance of developing and updating the existing technology.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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