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Op-Ed

Will 2018 Live Up to the Cryptocurrency Craze?

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2018 review

The world of cryptocurrencies, especially Bitcoin and Ethereum, has experienced an extremely volatile market in 2017. The Cryptocurrency craze created by the skyrocketing prices of Bitcoin has intrigued the ‘ordinary’ to follow the news wire and even trade the crypto assets. Many see cryptocurrency trading as an easy way to earn money. But, the highly volatile market demands the trader to have some knowledge of the technical and fundamental aspects in order to be successful.

Blockchain technology will keep disrupting more avenues

The term “blockchain” has been doing the rounds across several financial circles and markets. Analysts and financial speculators are convinced that blockchain technology will be at the heart of all emerging technological advancements next year along with artificial intelligence, machine learning, and robotics. Apart from this, blockchain technology is expected to to give way to a more cyber secure environment in the near future, which will be a critical development for the sector.

The last quarter of 2017 saw major corporate and financial institutes announce plans for blockchain related projects. Many renowned banks, financial institutions and other market players like Deutsche Bank, NASDAQ, DBS Bank, U.S. Federal Reserve, Wall Street and ASX have already started the process of implementing the blockchain technology in the transaction process. Talks around many institutions are about incorporating bitcoin and other such cryptocurrencies to purchase and sell day-to-day commodities. For example, a person can refuel his or her car by paying in bitcoins. This wide-scale blockchain adoption can be attributed to the level of security it possesses, almost unparalleled with any other system.

What to expect in 2018?

2018 is expected to be a breakthrough period for blockchain development and adoption. It is expected that zero-trust security models will re-emerge next year, as enterprise systems scramble for finding new ways of authentication. Hence, blockchain holds the key to fool-proof cyber security, providing a concrete system for data and funds accessibility.

Some interesting applications of blockchain and Internet of things (IoT) are expected to debut next year, contributing hugely to the cyber security sector.  2017 saw significant hack attacks on financial institutions, the banking sector, and even the cryptocurrency exchanges. Blockchain can be the key component to remedy this situation. It is slated to become the sole implementer of the zero-trust policy, which will pave the way for cybersecurity in the future.

What about bitcoin and other cryptocurrencies?

There is considerable speculation making its way through the markets about the future of bitcoin and other cryptocurrencies. Although it is difficult to predict the future of the market, the trader has several tools at their disposal to understand where the market is headed. In the following sections, we will focus on the year 2018 and what potential developments could influence price action for the major cryptocurrencies.

To recap: the shift from 2016 to 2017 saw the growth of the bitcoin bubble. The question now is: will the bitcoin bubble continue to grow in 2018? By the looks of it, bitcoin still has legs to grow. The flood of countless other altcoins on the market suggests demand for cryptos will remain high for the foreseeable future. Of course, this is not a prediction, but an observation about where the market could potentially go in the near future.

And more security threats?

Along with growth in the number of cryptocurrencies there has also been a rapid increase of threats and hacks of the crypto coins and cryptocurrency exchanges. It is well known that the totalitarian government of North Korea is financing at least some of these hacks. Recently, South Korean exchange Youbit faced multiple security breaches, leading it to eventually declare bankruptcy.

Meanwhile, crypto firm NiceHash recently reported the loss of about $64 million worth of bitcoin. Till now, it has been estimated that nearly 980,000 bitcoins (more than $15 billion based on current prices) have become the victim of burglary. So, the security issues have not been completely resolved when it comes to the safety of trading cryptocurrencies. Presently, South Korea and a few other nations are thinking about implementing taxes and some regulations to curb the cyber attacks and to regulate excessive trading. Every dark cloud has a silver lining. The silver lining, in this case, is the steps being taken to improve the security system of exchanges that will hopefully allow for a safer trading of cryptocurrencies in 2018.

There is also the issue of scalability of the most renowned cryptocurrencies—bitcoin and Ethereum. The forks have managed to increase the block size, which in turn has increased the speed of the transactions. The cryptocurrency software developers look forward to completely solving the transaction issues. It remains to be seen whether this will require more forks, and whether the blockchain community will embrace the newly created coins.

Also, some more currencies to trade…

Some cryptocurrencies other than bitcoin and Ethereum to look out for in 2018:

  • Litecoin (LTC): Litecoin was created in 2011 and currently shows a market cap north of $18 billion. Litecoin creator Charles Lee wants is putting more effort into his crpyo asset in 2018. One of his chief motivations is increasing transaction speed.
  • Monero (XMR): The creator of Monero is anonymous, just like that of bitcoin. With Monero, all the details of the transaction are saved on the public ledger but it is difficult to connect the sender to the receiver or to the size of the transaction. This means that the transaction details are completely untraceable. This has made it more vulnerable as it is easier for the hacker to escape.
  • Neo: Neo is often considered to be the “Ethereum of China”. The creator of Neo is Da Hongfei, the CEO of Onchain. Erik Zhang is the co-founder.
  • Cardano (Ada): Cardano was created in October 2017 and already has a market cap above $12 billion. The blockchain developer Input Output Hong Kong (IOHK) created this cryptocurrency. The next phase of Cardano’s framework is going to be released in 2018.
  • Ripple (XRP): Ripple was developed by Ryan Fugger, Jed McCaleb and Chris Larsen in 2012. Ripple has played a crucial role in linking banks and corporations to the blockchain technology and thus cryptocurrencies.
  • Iota (MIOTA): Iota, unlike other cryptocurrencies, does not have any trading fees, blocks or miners. The objective of Iota is to become the support for machine-to-machine payments in the IoT (Internet of Things) economy.
  • Bitcoin Cash: Bitcoin cash has come a long way since its altcoin days. Created on August 2017, it is one of bitcoin’s most recent forks.

Several cryptocurrencies are gaining popularity rapidly, a sign that the crypto craze will continue to grow in 2018. Investors should keep a close eye on the market cap of altcoins, as this provides a good bellwether of underlying demand for cryptocurrencies not named bitcoin.

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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4.5 stars on average, based on 9 rated postsHira Saeed is a tech geek girl with a passion to write on latest technology trends. She is the Founder of Tech Geeks community in Pakistan and also runs her copywriting and social media agency, Digital Doers. Follow her on @heerasaeed.




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Market Overview

Comparing Nasdaq and Bitcoin: What Lessons Can We Learn?

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Bubbles

Over the past few months, lots of people have talked about the similarities between the .com bubble in the early 2000s and the bitcoin market today. It seems that the further down the bitcoin market goes; the more people are using this analogue to help them stay in the game for the long-run.

One of the influential people in the crypto space who often refers to this comparison is Teeka Tiwari at Palm Beach Research Group. While he usually compares the Nasdaq during the late 1990s with the total cryptocurrency market cap, we are here going to compare the Nasdaq during that same period with the market for bitcoin specifically.

Nasdaq vs Bitcoin

In the image above, the top chart is a weekly chart of bitcoin, while the bottom chart is a monthly chart of the Nasdaq 100 Index from 1989 to 2004.

As we all know, the crypto market tends to behave like the stock market on steroids. Moves are larger, and trends change faster in crypto compared to in stocks. It therefore makes more sense to compare these two charts using different timeframes, which is why I have chosen the monthly chart for Nasdaq while bitcoin is represented with a weekly chart.

There are a few interesting things to take note of regarding this comparison:

The Nasdaq found support following the crash in 2000 and 2001, and has later gained more than 600%. The Nasdaq has, in other words, returned more than three times as much for investors than the broader S&P500 index has done.

One explanation for why all financial bubbles have so much in common is that the one thing that causes them – human fear and greed – never changes.

What was different during the dot-com bubble back in the early 2000s was that communication was slow and ineffective compared to the high-speed Internet connections we have today on our phones and laptops. This is one of the reasons why it took the Nasdaq a few years to rise 1,700%, while bitcoin managed to achieve the same return in just a few months.

Similarly, it took the Nasdaq 30 months to fall 78%, while bitcoin lost 70% in just one and a half month.

Another thing both markets have had in common is that when they were down 70% from the top, many people completely lost faith in the future of these markets.

It has been pointed out by observers that even the arguments these people used against investing in the said markets were largely the same: No underlying value, too much volatility, too much regulations/lack of regulations/bad regulations, lack of social responsibility from the market actors, etc.

In hindsight, it has become clear that only the investors who had the mental clarity to ignore all this noise during the early 2000s were able to catch the 600% move that followed in the Nasdaq.

Diversification saved investors

When we are talking about ignoring noise and riding out the storm, let’s not forget that many of the companies that made up the Nasdaq in the early 2000s did eventually go out of business. Betting everything on a single company, in many cases, ended up being a catastrophe for the investor, despite the fact that the sector as a whole did incredibly well. This really made the benefit of diversification clear to everyone.

We can assume that the same is true for the cryptocurrencies of today. Some will emerge and become hugely successful, while others will slowly but steadily decrease in value and become irrelevant. Which ones they are is extremely difficult to tell at this early stage, but the lesson to be learned is clear: Diversification may be the only free lunch we will ever get in the world.

Featured image from Pixabay.

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 34 rated postsFredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.




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Op-Ed

Is Manipulation Behind Bitcoin Cash’s Absurd Rally?

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Although you wouldn’t know it by today’s prices, bitcoin cash (BCH) has topped the crypto market leader board this month. The digital currency more than doubled over the span of 18 days, and in doing so far outpaced the broader market. But a closer examination of the value drivers suggest manipulation could be partly responsible for the rally.

As a reminder, the author has no vested interest in smearing BCH as I believe it to be one of the more advantageous coins on the market today. That said, the circumstances surrounding the most recent rally are peculiar to say the least.

What’s Up with Bitcoin.com?

A Hacked user informed me earlier this week that Bitcoin.com has been using the “BCH” ticker next to the word “bitcoin”. Normally, the ticker “BTC” is reserved for bitcoin, which is the original blockchain we all know about. Instead, the website quotes “BTC” next to the term “bitcoin core”.

In other words, BCH is quoted next to bitcoin and BTC is referred to as bitcoin core. See here for yourself:

 

For most readers of Hacked, the distinction is easily discernible, but for new traders the difference isn’t easily gauged.

The first question I have is, how many people bought bitcoin (BCH) thinking they were receiving actual bitcoin (BTC)?

Bitcoin.com describes itself as the “premier source for everything bitcoin.” Although the website doesn’t appear to offer a full-fledged trading platform, users can purchase bitcoin and bitcoin cash using the following link.

It is unclear how long the website has been referring to BCH as bitcoin. For those of us who’ve been following the market for some time, the way BTC and BCH are quoted is certainly strange.

Antpool

A large cryptocurrency mining group by the name of Antpool has also been accused of pumping BCH in recent weeks. The pool announced about six days ago that it is responsible for confirming more than 8% of all bitcoin cash transactions. In addition to confirming those, Antpool is also said to be burning BCH on a daily basis in order to reduce supply and boost prices.

Of course, crypto pumps do not require such elaborate setups to achieve their goals. Pump-and-dumps can be orchestrated rather easily through a chat group on social media. But Antpool does have a large and privileged position in the BCH ecosystem, which has raised suspicion over its recent actions.

Bitcoin Cash is Overbought, According to Tom Lee

Fundstrat’s Tom Lee recently weighed in on the bitcoin cash phenomenon, concluding that the cryptocurrency was overbought. In his view, investors should stick with bitcoin if they had a choice between Core and Cash.

In a segment on CNBC’s Fast Money, Lee said:

“I prefer not to pick winners and losers when we’re looking at cryptocurrencies like bitcoin/bitcoin Cash… Both have merits but if I was putting new money to work today… I would be a lot more interested in buying a lagger that could attract inflows rather than something that’s potentially overbought.”

Bitcoin cash added around $1,000 to its value between Apr. 6 and 23, with prices peaking near $1,600. The cryptocurrency corrected sharply lower on Wednesday and was still declining as of Thursday’s early-morning session. At the time of writing, BCH/USD was down 4.6% at $1,268.

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 462 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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Decentralization

JP Morgan’s Surprise Cryptocurrency Fees are a Reminder of Why Decentralization Is Sorely Needed

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JP Morgan Chase & Co has been hit with a class-action lawsuit by cryptocurrency traders over allegations of unannounced fees and higher interest rates on purchases of digital currencies. Though the allegations have not been proven, extra fees are a tactic routinely employed by traditional banking institutions. In the case of JP Morgan, this has karma written all over it given the way its chief executive has ridiculed digital assets by associating them with fraud.

Class Action Lawsuit

Traders from across the United States are seeking statutory damages of $1 million for unannounced interest charges and fees on cryptocurrency transactions between January and February of this year. The named plaintiff in the lawsuit is Brady Tucker, an Idaho resident who paid a total of $163.91 in fees and surprise interest charges over a six-day stretch.

According to information obtained by Reuters, the lawsuit accuses the bank of violating the U.S. Truth in Lending Act, a piece of legislation that requires credit card issuers to inform customers in writing of any notable change in fees.

The lawsuit asserts that Tucker tried to resolve the dispute by calling Chase’s customer support service directly. His request was turned down, prompting him to seek legal help. According to Bloomberg, the case in question is Tucker v. Chase Bank USA NA, 18-cv-3155, U.S. District Court, Southern District of New York (Manhattan).

The Growing Case for Decentralization

Depending on who you ask, the allegations against JP Morgan are akin to cryptocurrency fraud not unlike the kind Jamie Dimon talked about while ridiculing bitcoin. But the irony in Dimon’s comments extend far beyond Chase’s latest dealings.

As the actions of Chase bank and other financial institutions have clearly demonstrated over the years, those who control the size and growth rate of fiat money cannot be trusted to do the right thing. As Nassim Taleb argues in The Black Swan, banks have a tendency of losing as much money as they make in the long run due to shady business practices and high-risk ventures. Decisions like these are easy when you are Too Big to Fail.

Decentralization, like the kind advocated by blockchain startups and cryptocurrencies, allows users to trade directly with each other without having to go through a (predatory) middleman. Decentralized systems not only help participants avoid unnecessary fees, red tape and other forms of unwanted intervention, they are virtually impossible to shut down. In this vein, decentralized currencies give people a fighting chance in their battle against never-ending inflation. As we’ve argued before, this is not only a prudent fight, but a noble one as well.

Cryptocurrencies that rely on decentralization offer society a unique value proposition unlike anything we’ve seen in recent history. What’s more, their adoption is not contingent upon us leaving the realm of traditional finance – at least, not yet. That’s because cryptocurrency started off as an obscure and esoteric asset class but has since become a value store for investors. Tomorrow, it will become a viable medium of exchange accepted worldwide.

That said, we are still in the very early days of the crypto revolution and it may be a while still before we can conclusively prove people like Dimon wrong. But crypto backers and investors should take comfort in knowing that big banks rarely lead in disruption these days. They have the resources to play catch-up, which they are clearly doing with blockchain.

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 462 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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