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Crypto Conspiracies – Fact or Fiction?

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The following is a collection of speculative internet conspiracy theories and should not be taken as fact, or as the opinions of Hacked.

Cryptocurrency was born in mystery, and much of its young life thus far has been enveloped in the same enigma which followed its anonymous creator.

Such beginnings make fertile ground for conspiracy theories, and the noble denizens of the internet have not failed us on that regard.

There are probably too many crypto-conspiracies for any common journalist to cover in the space of one article; but we’ve got time for a few particularly juicy ones.

Before you go reaching for your tinfoil hat, be aware that some of these are tinged with a shadow of truth. Often times the theatre of the conspiracy theory distracts from the real issue at its core.

Bilderberg Bitcoin Conspiracy

This conspiracy has a few moving parts, but it can be summarized thus: The Bilderberg Group are really the ones behind Blockstream and the Lightning Network, and are responsible for crippling BTC so they can then control it via their own private methods.

If you remove the Bilderberg aspect from this equation then what you have is a fairly reasonable complaint. Depending on how you view it, you could easily make the case that Blockstream’s handling of Bitcoin has been poor; and big questions still remain over the Lightning Network’s ability to be truly decentralized.

Even back in 2016 community members were voicing these concerns, with Nodecounter releasing announcements like this:

“These Blockstream-paid Bitcoin developers (for the Bitcoin ‘Core’ software) are enforcing a limit on how much information can be transacted in Bitcoin. This is limiting the number of transactions to just 3 per second, approximately. Blockstream is concurrently developing a ‘solution’ to this problem, called the ‘Lightning Network’. This ‘solution’ is to be placed on top of the crippled Bitcoin network to allow it to scale. Blockstream will monetize the Lightning Network in the form of fees required to use their service.”

So where do the Bilderbergs come into it?

Well, in 2016, then president of AXA, Henri de Castries, invested $55 million in the Blockstream project. However, Henri was also president of another group – the Bilderbergs.

Another source of Blockstream’s funds was Digital Currency Group, which was headed up by Glenn Hutchins – Hutchins is also on the board of directors for the Federal Reserve.

So if we follow the money trail, then one could easily draw connections between the mainstream financial elites and Bitcoin.

Financial institutions have slowly started to dip in to the crypto pot in recent years; and the downside is that they bring their own methods along with them. Such shared interests and investments are common in the everyday business world – but crypto was supposed to be open-source; community driven and decentralized.

If one small group alone – Bilderbergs, or merely whales – can dictate the direction of Bitcoin, then what does that say for the ideals of the original whitepaper?

Corporate interference in blockchain and crypto tech is a growing concern which should worry us all, whether the Bilderbergs are involved or not.

NSA and SHA-256

According to this conspiracy, the NSA are behind the creation of Bitcoin is one that has been floated for years. The core proposition is that the NSA invented Bitcoin and have been using it as a way to observe and spy upon the population for years – with crypto users taking the role of guinea-pigs in a socio-economic experiment conducted by the government.

This theory hangs on the fact that the SHA-256 hashing algorithm used by Bitcoin was originally invented by the NSA, and published in a National Institute of Standards and Technology (NIST) paper in the early 2000s.

It’s certainly true that the NSA was involved in the creation of the hashing algorithm, but that should come as no real surprise – the Tor Browser was created by the American military, and firms like IBM and Microsoft have been collaborating with government agencies on tech projects for years. IBM’s dealing with government groups (both domestic and foreign) goes back all the way to World War 2.

While it’s no stretch to imagine the government running rampant over basic human liberties, it’s also important to remember that governments want good cryptography to exist just as much, or more than, everyone else. And assuming the NSA could leave a backdoor in Bitcoin, how long would it be before it was discovered by the legions of hackers who pull open the hood of Bitcoin on a daily basis?

Another factor to take into consideration is that the Bitcoin code is freely available online in open-source form, and has been studied and pored over for almost a decade now.

Additionally, in 2016 the NSA revealed they were switching their cryptography methods to bolster them against the actions of hackers using quantum computing methods. This was accompanied by an announcement that they no longer considered SHA-256 to be secure.

Satoshi Nakamoto or CIA

In a video released by a group of anti-secrecy campaigners, it is alleged that the name Satoshi Nakamoto is actually a Japanese translation of Central Intelligence. According to this conspiracy, the idea is that Bitcoin has been a CIA project all this time, and they decided to play a joke on us by dropping hints about the name.

The truth about the translation of the name itself is not too far off: Satoshi is a Japanese name meaning wise, clear-headed, observant. While Nakamoto is a surname descending from the Ryukyu Islands of southern Japan which means of central origin, or one from the middle.

Whether this constitutes proof in your eyes is completely up to you, but you should know that several Satoshi Nakamotos have been found both in America and Japan; including one Satoshi who claimed he was the enigmatic inventor of Bitcoin. However he was soon revealed to be no more than a lathe machinist.

Whatever your view of the conspiracies surrounding cryptocurrency, you’d be hard pressed to deny that they make for intriguing reading. More conspiracies are born every day; and it seems the lifespan of cryptocurrency may forever be enshrouded in the same mystery that characterized its invention, and its inventor.

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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4.3 stars on average, based on 57 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Cryptocurrencies

2018: Year of the Crypto Fund

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A protracted bear market in cryptocurrencies has not deterred hedge funds and other institutional players from entering the digital currency space. According to new research, 2018 is shaping up to be a record year for crypto funds, with the number of new ventures growing steadily.

Crypto Funds on the Rise

A total of 96 cryptocurrency funds have launched this year, according to Crypto Fund Research, putting the market on track to outperform last year’s pace of 156. The Rohnert Park, California-based research firm expects there will be a total of 165 crypto hedge funds launched this year.

“We expected a large number of new crypto funds to launch in 2018 to satisfy growing investor demand.” said Josh Gnaizda, founder of Crypto Fund Research. “However, the pace of new fund launches is a bit surprising given the dual headwinds of depressed prices and less than favorable regulatory conditions in many regions.”

If 2017 was “the year of bitcoin,” 2018 is shaping up to be the year of the crypto fund, Gnaizda says. There are now 466 cryptocurrency funds around the world, with more than half coming into existence over the past 18 months.

Pantera Capital, one of the earliest and most well known funds, boasts a lifetime return of 10,000% investing in digital assets.

Crypto funds are also proving popular among Chinese investors, who are barred from investing in digital assets in their home country. As Hacked reported in June, Chinese nationals have made Singapore their destination of choice for launching token investment funds.

The researchers claim that crypto hedge funds are the fastest growing segment of the market, accounting for more than half of the total. A total of 252 funds are located in the United States, followed by 34 in Hong Kong and 29 in the United Kingdom.

Protracted Bear Market

Although the rise of crypto hedge funds is evidence that more investors are taking interest in digital currencies, failure rates are likely to rise if bear-market conditions persist.

“While volatility in the crypto markets can attract some investors to sophisticated crypto funds. It remains unclear if the industry can support such a large number of funds, with limited track record, if we experience an extended bear market,” Gnaizda added.

The cryptocurrency market is once again becoming synonymous with bitcoin as traders cut ties to more speculative altcoins and tokens. At the time of writing, bitcoin’s dominance rate, or the share of the total market capitalization held in BTC, was 51.9%.

After a minor recovery, coin values were down again on Monday. According to CoinMarketCap, the total value of all coins in circulation is $210.5 billion. Last week, the market bottomed near $207 billion, the lowest in a year.

A look at the technical charts reveals little evidence that a bullish reversal is imminent. However, fundamental developments have been positive with banks and stock exchange operators announcing big plans to enter the 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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4.6 stars on average, based on 602 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Altcoins

Predicting Bitcoin Returns with Momentum Effect and Investor Attention Effect

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Yale economists have proposed a new model for predicting bitcoin’s future valuation based on historical price data and Google search queries. According to the researchers, momentum and investor attention are the two key factors that can enable market participants to accurately predict future returns.

Predicting Bitcoin

In a newly published study called “Risks and Returns of Cryptocurrency,” economists Aleh Tsyvinski and Yukun Liu claim the Momentum Effect and Investor Attention Effect can accurately predict the future valuation of leading cryptocurrencies like bitcoin, Ethereum and Ripple XRP.

The Momentum Effect

The Momentum Effect essentially states that cryptocurrency prices are more likely to continue rising following a significant breakout. For example, a large rally in bitcoin one week is likely to generate continued growth the following week. In this vein, momentum applies to cryptocurrencies in the same way it does to stocks, bonds and currencies, though the size of the rallies are usually much larger tha conventional assets

“Momentum is actually something simple,” Tsyvinski said in an interview with CNBC. “If things go up, they continue to go up on average, and if things go down, they continue to go down.”

The researchers believe that the best strategy for making money in crypto is to buy an asset after its price has already spiked and sell it just seven days after purchase. Using this strategy, a trader can still make an average of 11% on bitcoin even if they bought it following a 20% increase.

Tsyvinski explained that the Momentum Effect was stronger for bitcoin than for Ethereum or XPR, although still statistically significant for the latter two.

The Investor Attention Effect

The level of interest and hype around cryptocurrencies also plays a significant role in predicting price movements, the researchers claim. The Investor Attention Effect measures Google and social media search trends for terms like “bitcoin” “Ethereum,” and “cryptocurrency.” The higher the search results, the greater the chances of rising prices.

“For weekly returns, the Google search proxy statistically significantly predicts 1-week and 2-week ahead returns,” the report says.

This is not unlike what Hacked has reported several times before: Google search trends for crypto keywords are positively correlated with rising values. In June, we reported that Google searches for “bitcoin” had fallen to nine-month lows, a sign that first-time buyers were no longer flooding the market.

Google search trends gave “bitcoin” a perfect score of 100 back in December, around the time that BTC was trading at all time highs. Our view at the time was the following:

“Bitcoin’s bull market was largely predicated on the arrival of new traders buying cryptocurrency for the first time… Without new first-time buyers entering the market, bitcoin could face a prolonged lull period characterized by sideways movement and false breakout patterns.”

That outlook has largely panned out in the midst of multiple peaks and troughs.

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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4.6 stars on average, based on 602 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Research

Over Half Of All ICOs Failed In Q2 2018 Market

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Icorating.com, a high-quality source for independent research into the ICO market, has published their quarterly analysis of ICOs.

There are several important findings in the report, but perhaps none more notable then the fact that 50% of ICOs failed in Q2. Icorating.com attributes this mainly to the fact that half of the projects couldn’t raise more than $100k.

Another important finding was the fact that only 7% of all announced ICO tokens were able to be listed on exchanges. They also found that there was an average 6-day listing time increase compared to last year for tokens on exchanges.

The general view of this report seems to be an increasing bifurcation of success and failure. The projects that hold successful fundraises raise enormous sums, (with EOS being the most obvious example). The ones that don’t, tend to flame out.

This is reinforced by data in the report that the top projects raised an average of $50,000,000 during the ICO. While this is an eye-popping sum, it’s worth noting that the report mentioned that average ICO duration increased by 10%. This is presumably indicative of an ICO market that is becoming less of a Wild West.

Interestingly, the actual number of projects who had an already-operating business represented only 15% of the total ICOs.

Although there does seem to be a common view in the crypto landscape that the days of just holding an ICO with a white paper and idea alone are over, the data in the report showed that whether or not an ICO was held by an existing business in Q2 had zero impact on whether or not the fundraiser was successful.

Whether this is a reflection of a still-new market that has not yet adopted accepted funding norms remains to be seen. But it does give hope to promising projects without sufficient capital, (which in theory was the entire purpose of ICOs in the first place.)

That said, projects in the idea stage did tend to aim for (and raise) less money then those with existing businesses. Specifically, these idea stage projects raised an average of $4.5 million USD/raise.

The vast majority of funding for projects came from North America, 64.67% to be exact. Asia-based projects meanwhile showed an increase in funds raised, but also showed fewer projects seeking capital overall.

This could suggest an approach of “quality not quantity” in the region, although the truth of this remains to be seen as the projects rollout.

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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