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Half-Measures? Facebook Warning Users of State Sponsored Attacks



In perhaps a subtle stab at the NSA and other surveillance agencies, Facebook has joined Google in informing users when it suspects they are being victimized by state-sponsored hacking.

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Users who fall into this category will now receive a warning when they login to Facebook along with information regarding “approved logins,” a form of two-factor authentication Facebook uses. Approved logins work like many two-factor systems, sending a text message to the user with a login authorization code.Like

Facebook isn’t disclosing how it differentiates between a state-sponsored hack and a regular hack, but it also advises users to replace their operating systems when such compromises happen.

More likely than not, the thinking goes, the Facebook account is not the only thing the malicious actor has access to at that point. Certain things, no amount of password hygiene can prevent. With catch-all nexuses now in existence which make copies of all traffic and then proceed to try and decrypt it, it’s difficult anymore to know exactly how much privacy anyone can expect online. More and more the cultural attitude veers toward expecting none.

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Also read: Mark Zuckerberg Confirms Facebook’s Foray into Augmented Reality

Services like Facebook and webmail have been huge contributors to the problem, in that their business models rely on knowing as much as possible about their userbase. Thus, users are encouraged to surrender details and trust that the companies, such as Facebook, are not somehow vulnerable to compromise. In any case, no one can fault Google and Facebook for being loyal enough to their users to let them know. It’s unclear as of yet what backlash there might be from various regimes as a result.

Speaking to TechCrunch, Facebook Chief Security Officer said, “We do this because these types of attacks tend to be more advanced and dangerous than others, and we strongly encourage affected people to take the actions necessary to secure all of their online accounts.”

Certain countries like Israel, Saudi Arabia, China, Iran, and even the United States and the United Kingdom would certainly like to know more about the social media goings-on of their citizenry. In recent times, Palestinian resistance movements have been organized via social media, rather than locally, and Mossad could gain serious insight into the plans of Palestinian activists simply by gaining access to their Facebook accounts.

New, decentralized, cryptographically unbreakable systems are required so long as repressive regimes exist. Facebook’s actions are only anecdotally in the right direction since the existence of centralized servers means that they must eventually answer to the authorities if they want to stay in business at all. Alternative models which have no central point of failure and are difficult to trace from hub to spoke would be better in terms of promoting human freedom.

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Futures Trading – Bullish or Bearish for Bitcoin?



Writing anything against the price rise in bitcoin is like keeping your head in a guillotine and expecting it to be unhurt. However, at times, one’s got to do what one’s got to do. So, at the risk of ruffling a few feathers among the bitcoin enthusiasts and staunch supporters, I will put forth my two cents on why the latest rally in bitcoin is looking bubbly. Only time will tell whether my argument proves to be correct or falls flat on its face, similar to the ones proclaimed by the legendary investors.

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Key points

  1. Bitcoin’s rally is looking like a bubble
  2. Futures trading will pit the bulls and the short sellers against one another
  3. Introduction of Nikkei futures trading turned out to be bearish for the Japanese stock market
  4. Sell 50%  bitcoin holdings at the current levels and stay in cash

We had recently warned that bitcoin is topping out in the short-term. While bitcoin fell after our article, the dip was more of a buying opportunity rather than the indication of a top that we were referring to. Whoa, there goes my forecasting capability out of the window.

However, does the rise above $16000 and a market capitalization of above $300 billion make us change our view? Not really. I now believe that we are about to make an intermediate top.

The common gripe among the cryptocurrency enthusiasts is that being a new asset class, bitcoin is not understood by many traditional investors (include me also in this list) who keep questioning its incessant rally. On the other hand, the traditional investors point that the price has gone well ahead of its fundamentals.

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There is going to be a big clash between these two school of thoughts with the launch of bitcoin futures.

What can happen after the launch of bitcoin futures trading?

I will try to explain how things will play out according to my opinion.

The launch of bitcoin futures trading will provide an opportunity to the institutional investors to diversify their investments into a new asset class. Nevertheless, it is difficult to fathom how many will buy, especially when the cryptocurrency has risen more than 16 times this year.

Until now, most of the money used to be on the long side of the trade. Some of the sharp falls were a result of profit booking or due to investors not stepping in to buy at lower levels due to the negative news flow. There was never an overhang of short sellers on bitcoin prices, which is going to change from December 10 and December 18.

So, with every part of the rally, there will be an equally bearish short seller who will see an opportunity to benefit from the fall in bitcoin prices. Money will be made both on the way up and the way down.

Will the short sellers jump into the fray at once?

Difficult to say, but my anticipation is that the short sellers are unlikely to jump in to sell bitcoin futures aggressively, especially since bitcoin is backed by a strong upward momentum. Large short sellers are likely to dip their feet with small short positions and watch.

As now we have traders willing to take both sides of the trade, we expect the pace of the ascent to slow down and short positions to start accumulating on every rise. Volatility is also likely to increase in the short-term.

Introduction of futures trading is not always bullish

Though we don’t have an apples to apples comparison for cryptocurrencies, we can look at how the Japanese stock markets were affected by the introduction of Nikkei futures trading in Osaka Securities Exchange.

The Japanese stock market was riding high on the back of a bubble in asset prices, which also boosted the prices of Nikkei stock exchange. The index rose 10 times from 1975 to 1990.

Nikkei futures trading started in Osaka Securities Exchange in 1988 and the Nikkei stock average peaked in end-1989. The descent was equally sharp as the ascent.

Some may point that the crash in Nikkei happened only two years after the futures trading started. However, one must keep in mind that it took 15 years for the Nikkei to rise 10 times while bitcoin has risen 16 times this year itself. Therefore, the fall is also going to be equally vicious.

Signs of excesses in bitcoin

  1. Almost every cryptocurrency trader(other than subscribers) believes that this time it is different and one can make tons of money within a short span of trading in cryptocurrencies. After all, the Winklevoss twins have become billionaires by starting with just $11 million four years back. There is a firm belief that bitcoin is the future, hence, every fall will only rally higher than the previous one. See, all the analysts’ targets.
  2. Analysts are beating one another in announcing targets on bitcoin. I believe the maximum is $1 million by 2020, by John McAfee. Let’s see if there is any analyst brave enough to top this one, especially in the medium-term time frame of 2-3 years.
  3. A vertical rally. 16 times increase in value within a year is evidence enough that the rally is overheated. Expecting the same pace of rally in the future is like asking Usain Bolt to complete the marathon with the same speed that he runs the 100 metres race.
  4. The institutional investors will be eager to jump in to buy bitcoins and once those billions start pouring in, there is no end to the rally. This is not true because the large institutional investors are hugely risk averse. Their money is made in compounding about 15%-25% consistently over the years. It is unlikely that most will enter the fray until bitcoin’s volatility reduces considerably.
  5. Consider the world’s population of 6 billion and the fact that there will only be 21 million bitcoins mined. Additionally, out of that, millions are either lost or are locked away with only a few millions in circulation. So, the price rise is justified. Well, if Leonardo da Vinci had a few hundred thousand paintings in the market place, his paintings wouldn’t have fetched millions. So, this argument of only 21 million bitcoins that will ever be mined doesn’t hold ground.

OK, so if bitcoin is in a bubble, what should one do with it?

For people who don’t own bitcoin currently, please stay away from it, until you see a large correction.

For the others who own bitcoins, 50% of the positions should be closed right away, above $16,000 levels before the futures trading starts. The other 50% of the position should be held. This can be sold when bearish patterns develop on bitcoin because no one can point the top in a bubble.

Likely scenarios to play out if bitcoin falls

There are two possible scenarios that I believe can happen.

  1. Bitcoin falls and drags the sentiment down for the whole cryptocurrency universe. It doesn’t take a long time for the sentiment to get sour. In such a case, people who have been hoping that altcoins will rally when bitcoin falls will be in for a rude shock.
  2. The second scenario is that the current investors in bitcoin will face a stiff resistance from the short sellers. When the existing whales are unable to influence bitcoin prices like before, they are likely to jump to the altcoins because they don’t have to counter short sellers there. In this case, the altcoins recover sharply.


The best way is to cash your bitcoins into dollars and sit out. Once the dust settles down, there will be many opportunities to earn money because cryptocurrencies, as an asset class is here to stay.

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Can Stellar Become the Next Major ICO Platform?



If you’ve been paying attention to ICOs, you’ve probably noticed a consistent trend: the vast majority of token raises are built on Ethereum. The protocol has quickly emerged as one of the blockchain community’s undisputed leaders. And just like that, of cryptocurrencies were born.

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Although there’s little evidence to suggest that startups are thinking about abandoning the ether platform, a new kid on the block is proving just as worthy of consideration.

Stellar Payment Network

Stellar actually isn’t all that new. It was founded in 2014 as an open platform for developing financial products. Though largely flying under the radar amid the latest crypto boom, Stellar has earned a market cap of nearly $3 billion. That’s enough for 11th spot on the CoinMarketCap chart of leading cryptocurrencies.

Stellar made headlines last month after Smartlands became the first company to launch a token on the payment platform. Smartlands, which markets itself as the platform for agriculture, touted Stellar’s superior transaction protocol and massive reach. Proceeds from the ICO will fund the development of the company’s Asset Based Tokens, which are offered on the Smartlands platform.

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With Smartlands latching on to Stellar, market participants are curious to see whether more ICOs will follow suite. As it turns out, Stellar has a number of unique advantages that could make it the ideal platform for future token raises.

Stellar for ICOs: The Rationale

ICOs have raised $3.5 billion and counting this year. Although most token raises continue to be delivered through Ethereum, there is a strong case to be made for Stellar.

1. Cheaper and faster

One of Stellar’s most defining attributes is its ability to avoid the gas problem facing Ethereum and other cryptocurrencies. As ether prices march toward $500, transactions are becoming more expensive. Stellar does not need gas to execute programs and has a miniscule transaction fee (i.e., fraction of a penny). The Stellar network is also able to process 1,000 transactions per second, making it ideal for token raises with a strong transaction component.

2. Customizable

As we’ve mentioned before, there’s no shortage of industries represented in the ICO market. Projects are diverse in scale and nature, making customization an essential feature of the underlying infrastructure. Stellar allows token issuers to customize their accounts, payments, tokens and special offers.

3. Decentralized Exchange

As the number of cryptocurrencies continues to rise, a platform that enables efficient trading will be viewed more favorably by the investing public. As Lindsay Lin describes on the Stellar blog, any token created on the platform can be bought and sold via Stellar’s decentralized exchange. Companies that launch their ICOs on the Stellar network do not need a third-party cryptocurrency exchange to make their token available. This is an extremely attractive value proposition at a time when crypto-market liquidity is going through the roof.

4. Security Features

The Stellar system doesn’t offer the same breadth of features as Ethereum. This was done on purpose to limit risk and keep the bad actors from exploiting the program. As an added layer of security, token issuers can choose which nodes are allowed to validate their transactions. Security often comes at a cost, but Stellar has taken a reasonable approach to protecting its infrastructure.

5. The Team

Stellar is backed by one of the strongest teams in the industry, with co-founder Jed McCaleb already building two cryptocurrency companies. For those who are unfamiliar with McCaleb, he created Mt Gox, the now defunct exchange that at one point handled nearly three-quarters of global bitcoin transactions. After the Mt Gox debacle, he went on to found what would eventually become Ripple. The Stellar team currently consists of 12 employees, four board members and eight advisers. It’s advisory group is, shall we say, stellar. It includes the founders of Y Combinator, AngelList, WordPress and Apache Software. The chief scientist of White Ops is also involved in the project.

Of course, none of these attributes diminishes Ethereum’s capabilities as a superior programming platform. Its smart contract applications continue to be a major draw for prospective token raises. As the ICO Ratings page clearly shows, Ethereum remains very much in the driver’s seat.

That being said, keep your eye on the Stellar network. We wouldn’t be surprised if more ICOs are launched on this platform in 2018.

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.

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Is Bitcoin a Currency or a Commodity?



Bitcoin has quickly asserted itself as an alternative asset deserving of our attention, but if you’re a stickler for details, the real debate is whether it is a currency, commodity or something else entirely. Up until recently, this debate wasn’t given much thought. After all, cryptocurrencies are meant to solve many of the problems plaguing the current system of fiat money. Naturally, then, they are currencies.

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Not so fast.

Bitcoin as a Commodity

Investability is one of bitcoin’s most defining characteristics. With a market cap of more than $160 billion, the cryptocurrency allows investors to take capital or gain exposure in meaningful ways. As mainstream adoption catches on, bitcoin investments will also make their way into traditional vehicles, such as ETFs and futures. In this vein, it has many of the same characteristics as commodities.

Bitcoin is often called digital gold because it behaves very much like a commodity. As a divisible resource, it is considered portable, scarce, secure and durable.  The following chart courtesy of BTCS provides a clear illustration of how bitcoin stacks up to the physical commodities gold and silver.

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Some investment circles are also beginning to treat bitcoin as a hedge against uncertainty. Although the author believes this is characterization is a tad premature, bitcoin has one characteristic that very few assets have: no correlation. To the author’s knowledge, this feature was first identified by ARK Invest in its highly influential whitepaper Bitcoin: A disruptive Currency.

Whereas most asset classes are correlated, bitcoin’s price is completely independent of outside forces. That means it is not affected by the performance of other markets, regardless of their composition. That means bitcoin behaves independently of stocks, bonds, commodities and even currencies. Investors have already realized and capitalized on these unique benefits, and this is reflected in bitcoin’s price point.

LendEDU Survey

Student and personal loan marketplace LendEDU has been conducting surveys on how consumers perceive cryptocurrencies. This past month, it commissioned a new survey of 564 respondents who have already invested in bitcoin. One of the questions that caught our attention was whether investors classify bitcoin as a commodity or a security.

Less than one-third (31.56%) viewed bitcoin as a commodity, compared with 39.54% who saw it as a security. Interestingly enough, 28.9% of respondents said they were unsure how to classify the cryptocurrency.

It’s interesting to note that “currency” wasn’t listed as one of the responses. While it’s reasonable to assume that many associate bitcoin with digital currency, most investors seem to hold a different opinion.

Further, the LendEDU survey found that 21.81% of respondents described bitcoin as “a long term store of value, like gold or silver.” Meanwhile, a mere 8.16% said they plan on using bitcoin “for transaction or repurchases” instead of as an investment.

The vast majority of poll takers have held bitcoin for more than one year, which means this is likely a rich crowd.

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. 

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