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Crypto: What Will Drive Prices Higher

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I am a big believer in the future of cryptocurrencies. But it seems the creators of these amazing forces have been getting a free pass.  So long as prices were soaring and speculators were reaping outsized returns, who could complain?  At one point the two biggies, bitcoin and ether appreciated in price more than 7,000%.  But what price are we paying in terms of our security.  Just as important, what are we willing to sacrifice for anonymity?

In the soul of every human being on the face of the planet there is disdain for government. In some of us it may be only a passing annoyance over a traffic ticket. In others it might verge on boiling anger over POTUS.  Either way, the idea of gaining control over government holds universal appeal.

It’s this notion of having control that draws so many into the family of cryptocurrency believers.  The sovereignty of bitcoin, ether, Litcoin or anyone of the many altcoins is empowering.  Even if all of your transactions are completely legal, the very possibility of being beyond the reach of any tax authority is compelling.

Of course, if your motives are nefarious. . . . well we won’t go into that.

The Flaws of Government     

Putting your hard earned fiat currencies into crypto may provide an escape from the government that issued that currency, but are you getting better governance?  So far the jury is still deciding.  This is just one opinion but here is what is missing.

Blockchain technology started out as a breakthrough in technology created by highly creative developers but things have moved well beyond that stage. If cryptocurrencies reach the potential they are touted to possess, they have to be treated as a business.  That doesn’t necessitate maximizing profits, but it means being more user centric.   

Speculators want higher prices, users want security, fungibility and ease of use.  These last two are evolving and are low risk aspects.  There is no substitute for security and for all of the anonymity of Private Keys, crypto holders have lost a ton of dough.  What is disturbing to this observer is the appearance of weak governance.

Robbing The Bank  

Some of the worst security is in crypto wallets where last year hackers made off with more than $100 million in ether leaving holders with nothing.  As a believer in crypto and the owner of a few, I am put off every time that I log onto my wallet having to go through countless pages warning of the risks of storing coins in their vault and having my Private Key visible to hackers.  The suggestion is to pay up for one of several separate storage device at a price of about $100.  Of course transfering my crypto to this highly secure device will result in a fee charged by my wallet provider.  

I recently caught a story on a startup company Bitfury that is creating a set of software tools to track suspicious bitcoin activity.  That is very cool, of course, but that is just a startup and narrowly focused on one crypto.  The need is much larger.

Managing The Bank

People put their bucks in banks knowing their deposits are insured by the FDIC.  Banks are among the most heavily regulate business in the world.  Banks are in business to maximize the number of mindless transactions of their customers.

The movers and shakers of cryptocurrencies need to take action.  What has been done about Parity Technologies dating way back to last November? That was when a black swan event took place in the Ethereum ecosystem. A bug was activated in the multi-signature wallet released by Parity Technologies. The bug resulted in users permanently losing access to $150+million in frozen funds.

Democracy Doesn’t Work In Business

Governance in the crypto is as close to a pure democracy as can be found anywhere. Everyone’s voice gets heard.  Unfortunately that makes for slow decision making and most likely the reason why democracy doesn’t work well in business.  

After creating a possible solution to lost, frozen or hacked coins, developers have come up with a proposal dubbed EIP 867.  In simple terms, this creates a process by which requests from aggrieved holders could be submitted in a straightforward and executable format to a specified authority.

Common sense dictates there must be a mechanism for replacement of lost or stolen.  If you put your money in a bank and it is lost, the FDIC has your back covered.  If someone steals your credit card, you call the 800 number.  

However, the opposing point of view is that EIP 867 would threaten the integrity of the Ethereum platform.  According to recent news, this is an issue that is being hotly contested.  With all respect to the important details that may make this so controversial, long term believers in ether and all the other currencies prize security and the comfort of having recourse when bad things happen.

The Days Of Pure Speculation Are Over

In a recent article that addressed the current  stalemate in crypto pricing, I suggested that whatever speculative bubble that ever existed in cryptocurrency was over.  Now comes the time, with prices way off their highs, for long term investors to step up to the plate.  It doesn’t matter if these folks are newly created hedge funds or individuals, nobody is willing to see their funds disappear.  Before cryptocurrencies reach mass audiences, security must improve. The day that happens, prices will go significantly higher.

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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4.4 stars on average, based on 106 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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3 Comments

3 Comments

  1. elliottbailey

    March 2, 2018 at 3:27 am

    Love to hear more about why you feel the speculative bubble culture has gone/wont come back.

    Thanks for the article

    • James Waggoner

      March 2, 2018 at 6:29 pm

      Hello Ellott,

      Thanks for your question. By speculative bubble, I believe Bitcoin and others will be selling a vastly higher prices. What I meant to say is that speculative bubbles include investors who fail to see or choose to ignore the flaws in things like cryptocurrencies. Once those frailties have begun to come into the picture, the element of fear starts. This forces the assessment of risk and real or perceived awareness of loss changes the picture.

  2. Max Power

    March 2, 2018 at 11:42 am

    I was hoping this article would be better than it is.

    1) No attempt is made to discuss WHY there is opposition to a process by which people who have lost their funds can file for rectification of the supposed injustice. There are reasons, not all silly. An attempt should have been made to give this perspective, at least in passing.

    2) The writer says: “Governance in the crypto is as close to a pure democracy as can be found anywhere. Everyone’s voice gets heard. Unfortunately that makes for slow decision making and most likely the reason why democracy doesn’t work well in business.”

    The writer sees the entire world through the lens of Wall Street or something similar. Everything must follow old principles of business to this person, it seems. That is fine, but it is a limited perspective. Bitcoin was created by not a business nor someone wishing to create a business, but a computer science expert working in his basement (or wherever). Ripple is the business world’s answer, and appropriate to that fact, it is centralized and the code itself is held private and not open for public scrutiny. Whatever your opinion of the differences between the two, the reality is that the business/Wall Street perspective of the author here is very firmly in the corner of Ripple. And that is fine, but as a reader, just be aware of the limits of this type of worldview. Bitcoin and the blockchain would never have been invented or at least would not have developed in the same way, if everyone shared the business-centric view of the author. We would have a ‘blockchain’ eco-system developed along the lines of paypal and ripple. Not a decentralized bitcoin created by a bunch of random coders. So just be aware of the limits of this author’s worldview and his distrust of decentralization and democracy; his worldview would create a very different blockchain ecosystem from the one you currently see.

    3) No evidence is offered for the following claim: “Before cryptocurrencies reach mass audiences, security must improve. The day that happens, prices will go significantly higher.” It seems plausible, but it is still a claim, and should be backed up, if not by data, then at least by an argument.

    4) Finally, a bit more editing would go a long way. It doesn’t diminish the validity (or lack thereof) of your arguments, but it is just a bit frustrating to read when ‘s’s and ‘d’s are left off of the endings of a bunch of words.

    Anyways, just a few of my thoughts.

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Altcoins

Selling Pressure Hits Bitcoin, Altcoins Following Large Rally

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Cryptocurrencies declined across the board on Monday, as the market returned to a defensive posture following a $38 billion inflow over the past six days. Losses affected all major assets but were largely concentrated in altcoins and tokens.

Market Update

From a peak of around $230 billion on Friday, the cryptocurrency market cap has fallen back to $218.4 billion. The brisk selloff began around 00:00 UTC on Monday; the market would go on to lose roughly $8 billion over the span of six hours.

Trading volumes have held steady over the last 24 hours with $13.7 billion transacted on virtual currency exchanges.

All major assets were down on Monday, with XRP and Stellar XLM each declining more than 11%. Both currencies were the top performers last week. XRP is currently trading at $0.517 and XLM is sitting at $0.2556.

Ethereum slipped 5.1% to $232. Bitcoin cash was down 7.3% at 464. EOS, which was briefly overtaken by Stellar in the market cap rankings, declined 6.6% to $5.67.

Losses in bitcoin, the largest cryptocurrency by market cap, were more contained. BTC is down 2.1% over 24 hours to $6,607. Bitcoin’s price crossed the 50-day moving average on Friday and is currently testing that key level.

Pullback Expected

A pullback was expected for the leading altcoins after demonstrating spectacular growth over a short period. XRP posted a three-fold increase in price last week while Stellar XLM added a third to its value in roughly the same period. Cardano was also among the top performers a ADA began its long recovery from a 96% retracement.

Fundamentals were a major catalyst behind last week’s rally but appear to be absent from the recent reversal, reinforcing the view that technical re-positioning was largely responsible. Sharp corrections are common for cryptocurrencies after a large run-up in prices.

With the pullback, bitcoin’s share of the overall market has returned above 52%. Bitcoin’s dominance rate approached six-week lows on Sunday as altcoins and tokens outpaced the leading digital currency.

BTC trade volumes are holding above $4 billion, a figure that is generally consistent with rising prices. Bitcoin’s price action this week could be influenced by expiring CME futures contracts. The September futures contract is set to expire on Friday.

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 610 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

Cardano Price Surges Following 96% Retracement

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After a long and brutal correction, Cardano is finally showing signs of recovery. The platform’s native token emerged as one of the biggest winners on Sunday, joining Stellar’s XLM at the top of the leader board.

ADA Price Update

Cardano’s ADA rose by as much as 12% on Sunday to reach a high of $0.093, its best in six days. At the time of writing, ADA was up 7.7% at $0.089, according to CoinMarketCap.

ADA’s daily trade volume has spiked 370% over the past seven days. On Sunday, daily turnover on digital currency exchanges reached $145.9 million. Binance was the biggest spot market for ADA trades, with roughly 40% of transactions taking place on the exchange. Upbit processed nearly a third of the daily turnover.

At current values, ADA has a market capitalization of $2.3 billion, up more than 27% from last week.

Extremely Oversold

While no asset has been spared from the yearlong market downturn, Cardano’s ADA was among the hardest hit. As Weiss Ratings highlighted last week, ADA is among four top-25 coins to have experienced a 90% retracement from its peak. ADA was down a staggering 96% from peak-to-trough, worse than XRP, NEO and IOTA.

Despite experiencing oversized losses relative to the majors, Cardano has been labeled one of the most promising blockchain projects since bitcoin. Founded by Charles Hoskinson, the influential co-founder of Ethereum, Cardano plans to use proof of stake to solve scalability and interoperability challenges. Ouroboros, the proof of stake algorithm employed by Cardano, achieved a significant security breakthrough earlier this year and is now considered “scientifically secure” by the blockchain community.

XRP Factor?

XRP’s three-fold increase since Thursday appears to have paved the way for other cryptocurrencies to follow suit. The market’s total capitalization reached a high near $229 billion on Sunday after XRP briefly overtook Ethereum as the world’s second-largest blockchain.

The market experienced another “flippening” on Sunday after Stellar’s XLM leapfrogged EOS for fifth spot in the value rankings. XLM is back in the no. 6 slot with a market cap of nearly $5.3 billion, but has gained more than 17% over the past 24 hours.

XRP’s price is sometimes considered a bellwether of institutional adoption in blockchain technology. The coin’s sharp and sudden upswing is in direct response to growing institutional adoption of Ripple’s underlying technology as well as the company’s plans to commercialize its cross-border payment platform.

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 610 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

UNICEF and Goldman-Sachs Backed Investors Adopt Stellar; XLM Overtakes EOS

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Stellar (XLM) was the beneficiary of two promising pieces of news over the weekend; first that Goldman-Sachs backed financial platform, Circle, has added XLM to its array of investable assets. And secondly that world aid organization UNICEF has expanded its breadth of donatable currencies to include Stellar (XLM).

Just like with XRP a couple of days ago, two big pieces of news was enough to trigger a flurry of buys for the coin in question. While XRP’s flurry cascaded into 115% growth and an influx of $5 billion to daily trade volumes, XLM’s performance has been a little more understated, but still significant.

Stellar (XLM) Displaces EOS

As sentiment began to turn for XLM last night it’s coin price went on a run that eventually resulted in 28% growth by 10:30 UTC Sunday morning. Stellar’s market cap jumped from $4.3 billion to $5.6 billion in that time, displacing EOS as the fifth most capitalized cryptocurrency in the process.

The overnight surge saw XLM trade at a near two-month high of $0.299126 during this morning’s peak – that’s up from Saturday’s low of $0.233491. And just like we saw with the majority of altcoins during the market surge of the last few days, a significant chunk of the action is coming from the eastern markets.

Over 25% of the day’s trades have come in the form of the XLM/KRW (Korean won) pair, based on the Upbit exchange. Likewise today, Cardano (ADA) can also attribute the majority of its 13% to Upbit’s ADA/KRW pair.

Upbit and Bithumb were the source of the majority of the recent market surge, and even today as the XRP hype dies down, Upbit’s XRP/KRW trades still represent the highest concentration of daily action.

XLM Making Moves

The Circle team announced the addition of XLM to their investment platform via this blog post, in which they detail the addition of EOS (EOS), Qtum (QTUM) and Ox (ZRX) as well as Stellar. The post states:

“These 4 assets were selected specifically based on their potential to contribute powerful infrastructure to the broader crypto ecosystem.”

Details on how Circle decide which assets are beneficial to the broader ecosystem can be read here. XLM, along with the other cryptos mentioned, will be available for individual investment or as part of a pre-packaged array of assets.

Over the weekend the Stellar team also took to Twitter to announce that the French division of UNICEF will now be accepting donations in XLM. The announcement by UNICEF  (French language) details the addition of Stellar as well as XRP in the last few days, taking the organization’s list of acceptable cryptocurrencies to nine.

The current batch of cryptocurrencies is now made up of Bitcoin, Ethereum, Ripple, Bitcoin Cash, Dash, Monero, EOS, Litecoin and Stellar.

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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4.4 stars on average, based on 61 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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