Jan 14

Bitcoin mining difficulties set to create further price volatility.

Bitcoin has taken a real pounding recently – with the price dropping temporarily under $180 USD.

This is incredibly significant as it is a breach of the 1000 Chinese Yuan. This is a significant barrier as over 65% of all bitcoin trades are carried out in this currency.

This price has caused some real issues for mining operations – which quite simply are no longer profitable. The difficulty of mining will reduce in time to a level where it makes it more profitable, however, this will itself cause it’s own issues.

The bitcoin infrastructure is designed to release a new bitcoin mining block (25BTC) every 10 minutes – the mining process is what maintains and keeps the network functioning correctly.

As mining difficulty takes time to adjust the time between block creation briefly reached 12 minutes. As the difficulty hasn’t immediately adjusted this will probably cause two things to happen. Firstly many miners will choose to down tools rather than spend their valuable fiat currency on electricity and hardware maintenance costs. Secondly many miners are so heavily invested they will continue to produce unprofitable blocks – probably holding them until such a time as the price starts to improve or stabilize. There will probably then be a frenzied sell off as mining operations take profits.

What ever happens the immediate future does not look bright for the bitcoin community.

What are your thoughts regarding the recent price drop and how this will affect the future of bitcoin?

Jan 04

Is Coinbase spying on you?

Coinbase has a leading light in the world of Bitcoin for over the past two years. With their help several major mainstream corporations have been brought into the Bitcoin fold, with Mozilla (Firefox), Time Magazine and The United Way amongst some of the names now working with them. However, it seems they are bringing another well known feature to the consumer’s digital currency world: Spying.

Based in the United States of America and being located in the California’s Bay Area, brings both positive and negatives to a company such as Coinbase. They can take advantage of quick and easy integration with the US banking/financial systems and is a clearly a huge plus. Hhowever, potential for government over-regulation and data mining is a huge negative. One of bitcoins main selling point is it’s anonymity. Many corporations, much bigger and more powerful than Coinbase such as Google, Amazon, Yahoo and microsoft have been forced to succumb to the United States governments demand domestically. So is Coinbase becoming the next “chip off the old block?” Let’s see.

Coinbase has effectively banned all it’s Bitcoin account holders from using online gambling websites, even though online gambling is not in itself illegal. According to some Reddit users, when Coinbase customers removed their BTC from SatoshiBet.com, a popular online gambling site, they found their Coinbase account would later be closed due to breaches of the “Terms of Service” agreement violations clause.

According to another Reddit user, Coinbase has taken down the accounts of those who have allegedly bought cannabis products online with coins purchased from the service – even though the user in question themselves denies it.

“I have been a long time Coinbase customer, buying 1-3 times per month, I got an e-mail today saying they are banning me from using their services because of a ToS violation. I emailed them back to ask what the violations were and they told me that they had evidence that I used some of the BTC I bought for cannabis/cannabis seeds. They gave me a specific BTC transaction and said it was for drugs and wouldn’t listen to anything I had to say.”

ACcording to another Coinbase member if you purchased your BTC at  LocalBitCoins.com that was grounds for account closure.

“Because I buy a few bitcoins a week from Coinbase (although sometimes I will go months without buying any) I was flagged as having enough volume to potentially be a Money Services Business (MSB). The Coinbase ‘compliance team’ mounted an investigation against me. They determined ‘they had reason to believe’ I am selling Bitcoins on LocalBitcoins, even though they haven’t said what that reason is, and therefore are suspending my account.”

Coinbase has explained that they’re just trying to comply with the anti-money laundering and drug laws in the USA. So by partaking in online gambling, using LocalBitCoins.com, or even buying marijuana online is not illegal everywhereyou will be banned from the service. This is the cost of doing business in the United States of America.

So if you are going to use bitcoin, is this something you should just have to expect and accept? Does this open the door to corporations overseas to offer similar services with more privacy and consumer protections and not ever increasing “Terms of Service” agreements? Will this damage Coinbase in their market in the long run? Why has Coinbase competitor BitPay not micro-managed domestic regulatory and legal issues in the same invasive way?

Coinbase used to be a trusted Bitcoin account holder, and seems to be heading towards being just a mother hen owned by government interests and unethical domestic regulations.

What do you think of Coinbase now and in the future? What should Bitcoin corporate account holders expect when it comes to regulation and oversight? Share using the links above and comment in the box below.

Dec 26

The rise and rise of Ripple XRP

Have you noticed the recent increase in the price of XRP whilst bitcoin and litecoin have remained in the doldrums. What could have caused this?

I was unfortunate enough to invest in XRP when the exchange rate to the USD meant that one XRP or ripple was priced at around $0.04. Subsequently after the bitcoin price crash my holdings value fell to around $0.01. Feeling a little burned I decided to focus my attention on things other than crypto-currencies – whilst quietly keeping an eye on the bitcoin price.

The bitcoin price appears to have bottomed out and hopefully will start returning to growth again soon. It has been one of the worse performing investments of 2014. What I didn’t realise though was that this trend was being bucked by bitcoins less well known cousin – the Ripple (XRP.)

Quietly whilst I wasn’t paying attention to the wider world of crypto-currencies the ripple price has started to creep up – more than doubling since i looked and cried at the $0.01 price and as we speak it seems to be holding or increasing.

So what is different about XRP and Bitcoin – and why are they both behaving so differently? Well, despite both essentially being crypto-currencies – they do have some significant differences. Firstly, XRP unlike  Bitcoin is pre-mined – this means that there are no new coins to be made – and all that aren’t in public hands are actually held by Ripple labs. This personally concerns me as there has to be a degree of trust towards the currency issuer – they hold the balance of power unlike bitcoins whereby most coins are distributed very far and wide. However, by choosing select partners to work with, the ripple XRP protocol has actually attracted attention and investment from several interesting sources which may have played a part.

Multiple gateways are opening every month this year, banks are signing up, Earthport, praise from executive level Federal Reserve members. They increased from 8 to 80 employees this year. They are now backed by Google Ventures and Andreesen Horowitz. They have 3 second transaction time, Codius smart contracts … and not one ounce of bad news (So far.)

I personally am going to hold onto my ripples and my bitcoins and see what happens. I have however got rid of my dogecoin and litecoin holdings.

 

 

 

 

 

Written by Tony Oliver.

Dec 11

Microsoft to acccept Bitcoins

Microsoft has started accepting payments made using bitcoins. Bitcoins can now be used to add funds to Microsoft accounts that can then be spent on a wide range of Microsoft services.

Bitcoins can be used to buy content such as games and videos on Xbox game consoles, add apps and services to Windows phones or to buy Microsoft software.

Microsoft made no formal announcement about backing of bitcoins. Instead, it simply added a page to its customer support pages detailing how the virtual cash could be used to top up a Microsoft account.

Currently bitcoins can only be used by customers in the USA. In addition, bitcoins must be used in fixed amounts. More details can be found on Microsofts blog here:

http://blogs.microsoft.com/firehose/2014/12/11/now-you-can-exchange-bitcoins-to-buy-apps-games-and-more-for-windows-windows-phone-and-xbox/

Bitcoins are slowly making their way into mainstream businesses, and now Paypal, Dell, Expedia, Newegg and many other firms accept payments made with them. Bitpay processes bitcoin payments for over 50,000 firms.

Dec 07

The Russian Government, RT (Russia Today) and Bitcoins

img_53138_max-keiser-precious-metals-going-higher-im-a-buyer1

Max Keiser on the Keiser Report

RT (Formerly Russia Today) is a cable and satellite TV network funded by the Russian State. In the United Kingdom it has repeatedly fallen foul of the state broadcasting regulator OFCOM. The issues relate to repeated violations of principles relating to impartiality. RT states that the service offers a Russian perspective on world events.

A well known show on the RT channel is Max Keisers – The Keiser report. Max Keiser is one of the biggest proponents of Bitcoins and cryptocurrencies on UK television. It is quite clear that the Russian perspective is that people of the world should be using Bitcoins. You would think that therefore the Russian government would have a warm and accepting attitude towards bitcoin trading in its own territories.

However, Russian attitudes towards bitcoins as an alternative to its own particular brand of fiat currency is souring as the Russian economy continues to struggle.

The Russian rouble has already lost over 40% of it’s value against the dollar in the last year alone. This would appear to be a direct result of western action to destabilise its currency after relations hit a recent low after the conflict in Ukraine.

Gulf states have continued to overproduce oil possibly in an attempt to undermine the Russian economy possibly in an attempt to prevent the United States developing its own energy infrastructure and becoming an energy exporter. Regardless of the motivation for these actions the effect on the Russian economy is very real.

Sanctions have initially targeted President Putins inner circle and a range of russian oligarchs and billionaires. Recently efforts have been stepped up and attempts are being made to lock Russian firms out of international markets through a range of sanctions covering everything from banking and finance to food markets.

Russia now seems to turning increasingly anti-bitcoin as it seeks to bring in legislation to prevent legitimate bitcoin businesses within the Russian Federation.

“People can play with their chips, and they can call them money, but they can’t use these surrogate currencies as tender,” Deputy Finance Minister Aleksey Moiseev told journalists in Moscow.

Currently only two countries have explicitly banned bitcoins – Equador (who are working on their own version) and Bolivia. Will Russia become the third state to do so? In the meatime – the very countries who Russias pro bitcoin propaganda is aimed at seem to be taking a much more laid back attitude with a United States congressman Steve Stockman  proposed a new bill to the Congress called the “Cryptocurrency Protocol Protection and Moratorium Act,” short named CryptPMA. The bill calls for a five-year moratorium on regulation targeting cryptocurrencies in the United States.

Sep 17

Using Bitcoin in Bangladesh is now an offence punnishable by up to 12 years in prison.

It has been reported by the AFP (Agence France-Presse)  that use of crypto-currencies such as bitcoin is now illegal in Bangladesh and punishable by up to 12 years in prison.

This announcement comes on the back of a surge in interest in the currency. It comes on the back of the recent formation of the Bangladeshi chapter of the bitcoin foundation.

Bangladesh is the latest of several developing nations to completely ban or restrict the use of bitcoins. Bolivia and Ecuador in South America have also banned bitcoins (although Ecuador is apparently producing it’s own digital currency.)

In my opinion these extreme steps just validate the fact that bitcoin is indeed a disruptive technology with the real potential for change. Otherwise there would not be the need to legislate against it.

Sep 16

Is the bitcoin price in long term decline.

At the dizzying heights of this time last year – gold and bitcoins if only for a short while were at parity. Since then bitcoin has gone on into what seems like long term decline – if its price is an indication of its popularity. Bitcoin took several blows in the last year when China took steps to distance its banking system from the currency. Then the silk road got shut down. There were several major bitcoin thefts. Then there was all that unpleasant business involving MT Gox. However, A little look at the statistics shows quite a different story for the future of the digital crypto-currency.

The following data has been extracted from the blockchain.info website and gives you some different picture of what is going on here.

Firstly lets look at overall market capitalization. It still stands at slightly less than half of what it was – but does appear to have levelled off.  This appears to me to be a natural correction to the bubble that was created by the frenzy surrounding bitcoin take up in China and media coverage last year. Screenshot (3)

The total number of daily transaction seems to show relatively stable and slow growth.

Screenshot (4)

 

If you exclude popular addresses it shows even more stable positive growth.

Screenshot (5)

The amount of unique bitcoin addressees also shows steady growth.

Screenshot (6)

Transactions in USD seem to have remained relatively stable.

Screenshot (7)

The price as we know hasn’t done anything positive for a long time.

Screenshot (8)

The difficulty of making new bitcoins continues to grow ever more difficult.

Screenshot (9)

The size of the blockchain grows very steadily. Doubling in one year. However, the growth seems linear and shouldn’t exceed the rate at which average HDD seem to grow anytime.

Screenshot (10)

Do you have any thoughts regarding where bitcoin prices might head or what the underlying reasons behind the price decline are?

Sep 15

Richard Branson says he thinks bitcoin is working

Richard Branson talks about space travel and bitcoins.

Sep 14

Alex Jones and Max Keiser on the bitcoin revolution

Viva la revolution

Sep 14

An explanation for my 9 month absense.

I’m really sorry everyone that I stopped maintaining this site. I had a bereavement in the family in early December and my life took a few unexpected turns which resulted in me not being able to give this site the time it deserved.

 

Well, I’m happy to say I am back and that you can expect a lot more from me to come.

Very sorry.

Tony.