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Showing posts with label crypto currency. Show all posts
Showing posts with label crypto currency. Show all posts

Sunday, May 21, 2017

Bitcoin suddenly becoming the investment of the elite as price soars to over $2300 in some Asian exchanges

When Satoshi wrote his White Paper back in 2008 regarding the creation of a money form that would be secure and outside the control of sovereign entities, the underlying premise was that it would not only change the way commerce was conducted, but also provide the common person a means to store their wealth in an asset that was absent of monetary devaluation.

And while it took about five to six years for Bitcoin to move away from the fringe of society, where it was half seen as a novelty and half seen as the savior from the world's fiat monetary system, its sudden emergence into the mainstream has been incredibly robust and unlike anything ever seen in monetary history.

But as we enter into the second quarter of 2017, what was originally intended for the masses to be used as a medium of exchange has suddenly turned into a speculative investment that is being lapped up by the very institutions that would see it financialized instead of used as a real currency.  And the massive rise in value over just the past five months is threatening to categorize the cryptocurrency as a bubble, and scare away many individuals who might seek an alternative to the dollar, euro, or yen as a way to secure their wealth.

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Bitcoin price established its new all-time high at $2,087 earlier today after surging past its previous all-time high set at $2,050, with demand toward Bitcoin rising from institutional investors in the US, Japan and South Korea. 
At the time of writing, Bitcoin is being traded in Japan and South Korea, the second and third largest Bitcoin exchange markets in the world, at around $2,350, at an 11 percent premium relative to the global average Bitcoin price and the price listed by US-based Bitcoin exchanges. 
Analysts including Charles Hayter, the CEO of CryptoCompare, explained that the Japanese and South Korean Bitcoin exchange markets played a key role as the driving factor of Bitcoin’s recent price surge. In an interview with CNBC, Hayter stated: 
"Arbitrage between the fiat pairs drags markets up or down in line with leading markets. At present, volumes on the KRW and JPY pairs dominate trading with a combined 48 percent market share.” - Coin Telegraph
From a purely fundamental point of view, investors and owners of Bitcoin need to realize that the market is treating the cryptocurrency like a security, and at a time when nearly all other assets such as bonds, stocks, and real estate are at all time highs.  And one of the reasons that Bitcoin is skyrocketing in price and value right now is because institutional players are moving money into what they believe is one of the very few potentially undervalued assets.  But like with any security or investment that receives too much buying in a short amount of time in relation to selling, at some point it will hit terminal velocity, and the fall in price will be just as fast as the velocity in which it rose.

Saturday, May 20, 2017

ZenGold is the newest gold backed crypto-currency to hit the markets as ICO set for May 26

Last week the nation of Dubai announced the creation of a blockchain based crypto-currency that would be backed by physical gold, and would be compliant with the new dictates of Sharia law finance.  And this gold-backed crypto-currency idea was quickly followed by a plan between the Chicago Mercantile Exchange (CME) to do the same with physical gold backed by the UK Royal Mint.

Now a third company is seeking to get off the ground by creating a new gold-backed crypto through an Initial Coin Offering (ICO) on May 26.

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ZenGold, a project developed on Metaverse Blockchain, announces its ICO campaign on Friday, May 26, 2017 3:00 PM (GMT+8). 
ZenGold aims to create crypto assets that are backed by physical gold in order to enable investors to instantly buy and transfer even a very small fraction of gold anywhere in the world while having pertinent asset information securely stored onto an unalterable Metaverse Blockchain. 
The ICO will last for 15 days. The closing date is Friday, June 9, 2017 3:00 PM (GMT+8). The total number of 63.000.000 ZGC tokens will be distributed within the campaign (if the set sum is achieved before the closing date, the campaign will end before June 9). 
BTC, ETH, ETC and ETP will be accepted during ICO campaign. The “Early bird” bonuses (up to 20%) will be announced by ZenGold for those contributing at the early stages of ICO. 
ZGC tokens will enable its holders to use gold as an effective payment mechanism and credit system while benefiting from the transactional functionalities of Blockchain technology. The gold-backed tokens will be minted into existence only by the purchase of an actual gold. Thus 1 ZGC token will always represent the ownership of 1 gram of the physical gold securely stored in Shanghai Gold Exchange. The developing team has set its sights on establishing ZGC token as a better alternative to the traditional form of storing value and making a strong case for reshaping the financial service industry in the future. 
By providing efficient governance and security strategy as well as clear business vision, ZenGold invites the investors to become early holders of ZGC tokens. Those interested can invest via three different channels: 
www.zengold.org(accepting payments in BTC, ETP and ETH).
www.ico365.com(accepting payments in BTC and ETH).
www.btc9.com/ico(accepting payments in BTC). - Coin Telegraph

Bitcoin growing as a currency as UK company to use it as payment at 27 airports

One of the biggest debates in recent weeks as the value of Bitcoin skyrockets to nearly $2000 per coin is whether the crypto-currency is really a medium of exchange, or simply a security that allows one to store their wealth in a decentralized digital wallet.  And while the argument has been strongly on the side of it being a security thanks to Chinese and Japanese investors using it simply as a way to find an alternative to their own devaluing currencies, on May 19 a British company is pulling Bitcoin back onto the currency side of the ledger by allowing its use at all 27 UK airports for extraneous payments such as short and long-term parking.

SkyParkSecure, an airport parking provider in the United Kingdom, is now accepting bitcoin for payments at a number of airports across the region in cities including London, Liverpool, Glasgow and Belfast. 
Are you a frequent flier in and around the UK? A parking provider will now take your bitcoin. SkyParkSecure will automatically convert the fiat pricing of a parking ticket into Bitcoin for quicker and seamless payments directly from your cryptocurrency wallet. 
Based in the North-West of England in Blackpool, SkyParkSecure doesn’t own or operate car parks but acts as a booking platform for airport parking and a host of other travel services including hotels and lounges. The parking provider claims to have facilitated over 1.6 million bookings on its website and ropes in customers with discounted rates. 
Now, SkyParkSecure has laid claim to becoming the first independent UK travel company to accept bitcoin for airport parking. - Crypto Coin News

Friday, May 19, 2017

Bitcoin just $50 away from $2000 and doubling its price in just five months into 2017

With Asian speculators in both Japan and China driving up the price of Bitcoin to all-time record highs, the crypto-currency is now on the cusp of doubling in just the first five months of 2017.

The current Bitcoin price is just over $1950 and could possibly hit $2000 by the end of Friday's market session.

Bitcoin traded for just over $1,000 on 1st January, but has edged up sharply amid increasing media exposure for its technology and those in the wider blockchain tech sector. Indeed, on at least two exchanges - Poloniex and Bitfinex - the price was even hovering just over $1,960. 
Year-over-year, the price of bitcoin is up 300%, having risen to $1,900, up from $453 on 18th May, 2016. At press time, bitcoin's market capitalization (the value of all bitcoins in existence) was $31bn. - Coindesk
Bitcoin's meteoric rise has also helped increase the price and market cap of nearly all other crypto-currencies, such as with Etherium which has risen 1700% also since the beginning of the year.

Saturday, May 13, 2017

Will the future of crypto-currencies be fiat like Bitcoin, or gold backed like the CME is creating?

Despite all the hoopla of crypto-currencies like Bitcoin being the potential future of money, the fact of the matter is they are no different than nearly all other currencies except that they will be limited in production, and outside the control of governments and central banks.  And it is this caveat of being a fiat based currency (backed by nothing) that could find gold backed digital money a more favorable choice for individuals to own.

Last week we wrote about a new gold-backed crypto-currency being created in the country of Dubai, which is pretty certain to be backed by real gold since they are required to follow the new standards laid out by the Sharia Finance Council back in December.  And on May 11 the Chicago Mercantile Exchange has now joined in the movement to put gold and silver on the Blockchain when they signed an agreement with the British Royal Mint to create their own gold backed currency that is expected to also be tied directly to physical gold.


Because of its scarcity, portability, divisibility and current valuation, many people are calling bitcoin the modern "digital gold." And like gold, bitcoin seems to be establishing itself as a popular store of value. 
But now CME Group, one of the world's largest providers of gold futures contracts, wants to bring real, physical gold to a blockchain-based asset, and it has landed a big partnership with the U.K.'s Royal Mint. 
By any standard, CME Group is a juggernaut in the world of high finance. Handling approximately $1 quadrillion worth of derivatives contracts annually, it is an influential player in the global gold market. And having roots in commodity trading since 1898, it is no stranger to the challenges of an evolving marketplace. Which is why the company has now set its sights on blockchain technology. 
According to a blog post by Sandra Ro, CME Group's head of digitization, the new asset will be a token known as RMG (Royal Mint Gold), and backed by physical gold in the Royal Mint vaults. Currently being tested for security and speed, RMG will allow instant transfers of gold to anyone anywhere in the world. And, Ro insists, it will bring a new era of accountability and gold-trading standards, saying, "There is no rehypothecation, there is no lending on that gold, and there will be enough physical gold to represent all the RMGs that are issued." With an initial launch planned for summer of this year, The Royal Mint plans to back the token with up to $1 billion in physical gold bullion. - Nasdaq

Palestine could create a sovereign crypto-currency to help break away from Israeli hegemony

As countries like Japan and Australia rush to embrace crypto-currencies like Bitcoin into their economic and monetary systems, one nation that has lived in poverty and in the shadows of a strong economic power is looking at creating their own sovereign crypto-currency as a means to break away from Israel's hegemony over them.

The Palestinian government, and in particular their Monetary Authority, on May 12 announced that they are looking at a Bitcoin type solution to function as their primary currency for the future.

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Palestinian officials are planning for the territory to have its own digital-only currency within five years, a move designed to safeguard against potential Israeli interference, the head of the Palestine Monetary Authority (PMA) told Reuters. 
Palestinians have no currency of their own and use the euro, U.S. dollar, Israeli shekel and Jordanian dinar in their daily lives. 
But with limited control over money supply and ultimately, inflation, authorities are mulling a bitcoin-style solution, Azzam Shawwa said. 
"That is something we would like to see," Shawwa said. "It will be called the Palestinian pound." 
Shawwa spoke to Reuters on the sidelines of the annual meeting in Cyprus of the European Bank for Reconstruction and Development. The EBRD said during the meeting it would start investing in the West Bank and Gaza via donations 
The PMA says on its website that it aimed to become a "full-fledged and modern central bank" for an independent Palestine. 
But it is unclear how the planned e-pound would skirt the 1994 Paris Protocol agreement which gave the PMA the functions of a central bank but without the ability to issue currency. The protocol recommended the use of the shekel and gave Israel an effective veto over a Palestinian currency. 
There are practical reason why Palestinians might consider a digital currency. The authority has no money-printing facilities of its own so all cash and coins currently come in from elsewhere. 
"If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle," Shawwa said. "So that is why we don't want to go into it." - Reuters

Tuesday, May 9, 2017

At $1700 per coin and climbing, is Bitcoin this year's best performing currency, or best performing investment?

It took barely 48 hours for Bitcoin to jump from $1600 per coin to over $1700, but that is exactly what took place as of this morning on May 9.  But at the same time there was an interesting caveat that also took place that begs the question of whether Bitcoin should be considered the best performing currency to date in 2017, or instead the best performing security (investment).

If Bitcoin is supposed to be a currency that runs in competition to the dollar, yen, euro, etc..., then by all monetary logic it should be moving in opposition to each individual currency that it is priced in.  However when Bitcoin jumped to over $1700 earlier today, it did so when the dollar had strengthened by over 100 bps on the dollar index, meaning that it was moving in tandem, rather than in opposition to the dollar.

Those are the actions of a security rather than than a currency.

Bitcoin Chart:


Dollar Chart:


Another interesting thing to ponder is who exactly is buying Bitcoin right now?  We know from public reports that investors/entrepreneurs like the Winklevoss Twins own between $10 - 25 million worth of Bitcoin as they bid to put the crypto-currency into a financialized ETF, and Billionaire Michael Novogratz has stated that he has put 10% of more of his wealth into both Bitcoin and Ether coin.

So perhaps the question that has to be asked is not if Bitcoin is a currency versus an investment, but what is the market itself saying Bitcoin is based on its price movement, and how it is relating to all the world's currencies it is denominated against.

Wednesday, May 3, 2017

What happens with Bitcoin in Vegas, stays in Vegas as privacy benefits of crypto-currency shield consumer's vices

When used as originally intended, Bitcoin provides a way for users of the crypto-currency to conduct commerce where they are shielded from publicly scrutiny in their transactions.  And in a place like Las Vegas, where any and all vices can be purchased, more and more companies who traffic in vice are using Bitcoin as the means to protect their clients be they famous or common.

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Enterprising businesses and independent contractors in Las Vegas seeking to protect their clientele by hiding the paper trail of their expenses are using cryptocurrencies, including the popular bitcoin, in increasing numbers. 
Bitcoin and similar cryptocurrencies are being used in US gambling capital Las Vegas, Nevada, with ever-increasing frequency, as entrepreneurs and independents alike seek to take advantage of networked financial anonymity. 
While sex workers in the desert mecca of hedonism have been using bitcoin for several years, now businesses, including strip clubs, are implementing the cryptocurrency networks for anonymous transactions. 
Recently, Las Vegas's Legends Room strip club announced that it will not only take bitcoin as payment for all services, but will also create its own proprietary cryptocurrency for clients to use to make payments and also to trade or gift among themselves. 
By setting up their own cryptocurrency, Legends will enable clients to use networked anonymous financial transactions tied to the current exchange rate of bitcoins, which can then be rented or sold. 
"Liquidity: if you own a membership and want to sell it, you can just sell your tokens in an exchange," a club spokesperson told Ibtimes.com. 
Sex workers operating independently are using cryptocurrencies with increasing frequency as well, as the anonymity benefits a trade that finds it necessary to fly under the radar. - Sputnik News
While politicians and law enforcement try to use the argument that crypto-currencies are solely the purview of drug cartels and money launderers, the fact is that many everyday transactions by individuals constitute the need for privacy and/or anonymity, and thus Bitcoin satisfies this requirement no matter what a person may be looking for during a stay in Sin City.

Tuesday, May 2, 2017

Japanese firms rushing in to try to stake claim to Bitcoin exchange license following crypto-currencies legalization

Like a stock IPO, there is nothing greater to corporations, banks, and financiers than the advent of a new industry they can seek to dominate and monetize.  And with Japan recently legalizing Bitcoin as a viable currency within their economy, the number of entities rushing in to stake a claim to the limited number of Bitcoin exchange licenses is growing.

So far at least 18 companies have filed an application for a Bitcoin exchange license, and this will only grow as the crypto-currency's value escalates, and the number of individuals wanting to own some increases.

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Eighteen companies are applying for the new license required to operate a cryptocurrency exchange in Japan. 
The licensing scheme, which Japan introduced in April, aims to ensure exchanges operate in full compliance with financial regulation and anti-fraud procedures.
As a result of the applications, some of which come from extant Japanese exchanges such as bitFlyer, ten new players are slated to debut on the market to meet a forecast surge in demand. 
These include SBI Holdings’ SBI Virtual Currencies, GMO Internet, Kabu.com Securities and Money Partners Group, Nikkei reports on Tuesday. 
Japan is witnessing something of a Bitcoin renaissance in 2017. A giant uptick in trading quickly combined with a cementing of regulatory perspective see business deals come thick and fast. - Coin Telegraph
Perhaps one of the few questions remaining regarding Bitcoin is whether the crypto-currency will eventually function primarily as an alternative form of money, or whether it will become dominated through financialization and speculation as most currencies and commodities are today through derivatives and rigged Forex trading.

Monday, May 1, 2017

With bonds crashing speculators take Bitcoin to nearly $1500

On May 1 the U.S. Secretary of the Treasury came out at a conference and joked that Wall Street has him to thank for the rise in bank stocks since the Administration took over the Oval Office back in January.  However, this was soon followed by almost contradictory comments by President Trump when he told reporters that he was very open to breaking up these same banks Secretary Mnuchin had praised earlier.

As a consequence, the 30 year Treasury bond took a precipitous dive as yields spiked in a single move the highest they have in over nine years.


Interestingly, the winner in all of this appears to be the crypto-currencies as both Bitcoin and Ether soared during the same time bonds were crashing, and Bitcoin alone reached a new all-time close to $1500 a coin.
The price of Bitcoin accelerated its recent exponential trend higher, soaring to daily all-time highs over the past few days, rising above $1,300 on Friday, then pushing $1,400 on Monday, and even above $1,500 on the second-largest BTC exchange, and was last trading just above $1,460 on Coinbase amid a buying frenzy attributed to speculative investment across the cryptocurrency sector, coupled with liquidity problem at some exchanges which were having problems processing fiat-based transactions. - Zerohedge


Wednesday, April 26, 2017

Move over Bitcoin as SEC may choose to allow Ethereum ETF instead

With the SEC announcing yesterday that it was reopening the case for the Winklevoss twins Bitcoin ETF, another crypto-currency is also vying for the same market regulators approval.

And this one might have a better chance of success than the Father of All digital currencies.

Ethereum is a crypto-currency that has the backing of many large S&P 500 companies, and this provides it a much better foundation for approval as an exchange traded fund according to the SEC.

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Then today, in similarly favorable news for holders of Bitcoin's smaller peer, Ethereum, it was revealed that the SEC had quietly begun the process of considering whether to approve an exchange-traded fund for the cryptocurrency ethereum. Recall that ethereum exploded higher at the end of February when it was revealed that a consortium of venerable corporations including JPM, Intel, Microsoft and many others, had created a blockchain alliance based on the ether technology. 
In same ways, whereas bitcoin has been seen as the more venerable, if "renegade" cryptocurrency, ether has developed the reputation of the smaller, better-behaved relative, one which is backed by major banks and corporations, which in the past has distanced itself from bitcoin due to limitations associated with its specific blockchain technology. 
While ether and bitcoin are similar, they are also very different. First of all, none of the big Chinese exchanges lists ether for trading (which means it is only a matter of time before they do) sending it into orbit as the traditional Chinese bubble stampede does. Second, the two biggest ether exchanges are Coinbase and Kraken, both regulated.
Ethereum is backed by almost all household brands who have formed an alliance in support of the platform. Microsoft is a big proponent, with ether’s protocol added to Hyperledger, the open-source cross-industry blockchain development effort headed by the Linux Foundation. 
Whether that makes an ether-based ETF more likely remains to be seen. What we do know is that the backers of the EtherIndex Ether Trust first filed in July 2016, seeking to launch an ETF backed by a cache of ethers on the NYSE Arca exchange, according to Coindesk. NYSE Arca then filed for a proposed rule change clearing the way for the ETF listing in December, according to a notice published in January
Then, in a new notice from the SEC, the agency announced that it has begun considering whether to approve the proposed ETF, opening up a comment period for outsiders. - Zerohedge

Wednesday, April 19, 2017

MIT Professor believes Bitcoin or other crypto-currencies could save financial system

The original idea and concept of Bitcoin was to create a de-centralized form of currency that could not be manipulated, devalued, or financialized by governments or central banks who throughout history have used the power to print money as the means to accumulate wealth and power at the highest levels.  And indeed, the very nature of the world's most current fiat monetary construct has done just that as less than 20 individuals hold more wealth than half the world's population.

This is why gold and silver are and were so important in the past because left to their own devices, they provided individuals, communities, and even nations a stable and often un-inflationary form of money that not only grew productivity, but kept a check on corrupt governments until they seized the power to either 'clip', or replace gold and silver outright.

But in the 21st century the world is rushing headlong into a new paradigm of digital money, and at stake is the age old battle over who controls the ability to 'print' that money.  And according to a Professor at MIT, the advent of Bitcoin or some other decentralized crypto-currency could be the answer to both improving and perhaps even saving the financial system.

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Simon Johnson, a professor at MIT’s Sloan School of Management, says some form of digital currency could fundamentally improve the financial system.
“How do you feel about the way that our existing financial system operates?” Johnson asked the audience at the Business of Blockchain conference, an event organized by MIT Technology Review. “I myself have a lot of concerns. The system we have is not robust—it almost collapsed in the fall of 2008 in the United States, the most sophisticated financial market in the world.” 
In theory, a cryptocurrency such as Bitcoin might make the financial system more stable by providing a way to monitor and trace transactions. Indeed, it may be no coincidence that the paper outlining the concept for Bitcoin was released in 2008, during the financial meltdown. The open-source code for the currency was released several months later, in 2009. Bitcoin was invented by the pseudonymous Satoshi Nakamoto, whose identity remains a subject of great speculation. 
Cryptocurrencies might also remove many of the hurdles that make it harder for poorer people to use the financial system, even in advanced countries, Johnson said: “It is absolutely shameful and really embarrassing that so many people in the United States—one of the richest counties in the history of the world—do not participate in the formal financial system." - Technology Review
In reality a completely Bitcoin based financial system would not be feasible as the 21 million total bitcoins ever to be mined would not fully support both a government and consumer's needs for over 200 countries.  However, a combination of an international trade currency, which would be designated for use by banks and governments only, coupled with a crypto-currency like Bitcoin for use by consumers and businesses that would not be allowed to be traded in financial markets, could solve many of the inefficiencies and corruptions that inevitably spawn over time from the use of a singular form of money.

As former President Calvin Coolidge once said, "The business of America is business", but what he really should have meant was that the government has no place in interfering with business and free markets.  And in a free market, money is determined to be what consumers and producers agree for it to be, and without interference from corrupt men and women who control the means of its production.

Monday, April 17, 2017

Wall Street financialization of Bitcoin continues as CME seeking to allow derivative trading

The CME Group is in the process of finalizing a patent for a Bitcoin derivative contract that would allow Bitcoin miners to hedge their production of Bitcoin currency.

In a new report on April 17, the Chicago Mercantile Exchange (CME) is planning to allow for derivative trading of Bitcoin futures on the nation's largest commodity exchange, and continue Wall Street's financialization of the crypto-currency.

Derivatives giant CME Group is looking to patent a way for bitcoin miners to hedge against operational risks. 
As detailed in a patent application published last week by the US Patent and Trademark Office, the proposed system would receive data from the bitcoin network as a means of keeping contracts up to date - monitoring metrics like network difficulty and price.
CME previously launched a pair of bitcoin price indexes last year. 
The filing is notable as bitcoin mining, the process by which new transactions are added to the bitcoin blockchain, is a kind of commodities production. Miners expend energy and manpower in exchange for newly minted bitcoins. - Coindesk
The largest problem with this of course is that derivatives and futures contracts for both commodities and currencies are allowed to be bought and sold by banks and other entities who have no skin in the game.  And it is this type of trading that has led to the suppression of gold and silver since their prices are determined by benchmark auctions in London, and paper futures contracts at the Comex.

Tuesday, April 11, 2017

Russia potentially changing stance on legality of Bitcoin and other crypto currencies

For the most part, Russia has been vehemently against Bitcoin and any other crypto-currencies, primarily because of their unregulated nature.  And even without the use of decentralized digital money within their borders, the Eurasian power constantly deals with other types of monetary problems that fall under the umbrella of 'money laundering' and other illicit activities.

But on April 11 this may slowly be changing as a Deputy Finance Minster for the government provided a ray of hope for the crypto-currency community as he announced that Bitcoin and other forms of digital money could actually become legalized as early as next year.

Cryptocurrencies may be recognized in Russia by 2018, according to Deputy Finance Minister Aleksey Moiseev. 
Moiseev says monitoring cryptocurrencies could be an instrumental tool against money laundering, and Bitcoin and other digital currencies could be recognized by next year as the central bank works with the government to develop rules against illegal transfers. 
The state needs to know who at every moment of time stands on both sides of the financial chain,” Moiseev said in an interview, as cited Bloomberg. “If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.” 
Last year the idea of a national cryptocurrency had been considered by the Ministry of Finance and the Central Bank, which would see the banning of all other virtual currencies in Russia. The idea had not been discussed by the Kremlin, however, according to Presidential Press Secretary Dmitry Peskov at the time. 
Russian officials had been opposing all virtual currencies, arguing their cross-border nature, transaction anonymity and lack of a supervisory body makes them the perfect vehicle for illegal transactions. - Russia Today
Bitcoin and other crypto-currencies have experienced a wild ride over the past year, with some nations such as India outright banning it completely as the government seeks to bring about their own version of a cashless society, while over in Japan the government has come to fully embrace its use by its citizens and businesses.

Friday, April 7, 2017

As we get closer to tax day in the U.S., the IRS is paying close attention to Bitcoin traders paying their due

Tax day in the U.S. this year is April 18, and ironically it is on a Tuesday rather than Monday because of the recognition of 'Emancipation Day' on the 17th.  However this emancipation is tied to Lincoln's proclamation freeing the slaves back in 1863 rather than every American's emancipation from having to pay income tax or the myriad of other onerous government obligations.

Which brings us to the newest tax that must be paid by individuals who have conducted either commerce, or trade in the crypto-currency known as Bitcoin.  In a ruling by a Federal district court back in 2014, Bitcoin was deemed to be a security rather than money, and as such is to be taxed the same way one does with property.  Ie... if you made a profit from the difference when you bought and sold Bitcoin, you are required to pay taxes on those profits, and record it in your tax return.

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Image use courtesy of Michael Carney/pondodaily
When you file your taxes this year, your accountant might ask if you own any bitcoin.
The popular digital currency recently hit an all-time high of $1,327 per coin, and while there arguably still hasn’t been a “killer app” (a mainstream purpose for a layperson to use bitcoin), its main use right now is as a speculative investment—and it has been a good investment
And if you’ve bought something using bitcoin, or sold something for bitcoin, or traded bitcoin for fiat currency, you should consider making that clear on your taxes.
Believe it or not, the IRS posted official language on digital currency back in 2014; it considers bitcoin to be property. “For federal tax purposes,” the IRS says in no uncertain terms, “virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.” 
If you’ve bought bitcoin simply to hold it as a speculative investment, you don’t need to disclose anything. But as with stocks, income from the sale of bitcoin would be taxed as capital gains, based on the value of bitcoin at the time you sold it. The same goes for if you receive bitcoin as payment, the IRS says: “A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in US dollars.” - Yahoo Finance
It is this recognition of Bitcoin as a security rather than as money that will make it more difficult to use Bitcoin in its original intention as a medium of exchange for goods and services.  Because in every single transaction you make, whether through the paying with or in the receiving of the crypto-currency, you have to keep a record of every transaction, and at the current market value of Bitcoin in U.S. dollars at the time of the transaction.

The IRS has stated recently that they are now planning to single out individuals who buy, sell, or use Bitcoin, and look closely to see if they are or have been recording their use of the crypto-currency on their tax returns.  And unfortunately this scrutiny will cause many who were considering buying some Bitcoin for commercial or investment purposes to think again as the government makes it nearly more trouble than its worth.

Wednesday, April 5, 2017

Bitcoin finally to function as a currency as Japanese retailers rush to allow the digital money as payment

In the opinion of the staff here at The Daily Economist, a large number of Bitcoin advocates over the past few years have sold out the original mission of the crypto-currency as being primarily a form of decentralized money that individuals and entities could use as a medium of exchange for goods and services and instead have welcomed its financialization by both Wall Street type markets, and third party conduits.  By this we mean that Bitcoin has been seen and purchased more as a speculative investment versus used as a form of money.

But with the Japanese government suddenly buying into the crypto-currency last week, and setting forth a regulatory framework to allow it to function as a medium of exchange within their nation's borders, Japanese retailers on April 5 are now rushing in to get on board to accept Bitcoin in their online and brick and mortar stores.

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A few days after Japan recognized bitcoin as a legal method of payment, two of the country’s biggest retailers have sealed cooperation agreements with bitcoin exchanges to begin accepting the digital currency. 
The two leading retail groups, Bic Camera and Recruit Lifestyle, have announced trials of a bitcoin payment option, according to Japanese daily Nikkei. 
Bic Camera, a consumer chain selling electronics, has partnered with the Tokyo-based bitcoin exchange bitFlyer. The retailer will test the digital currency in two outlets. 
Consumers will be able to pay up to 100,000 yen ($900) using bitcoin, getting reward points at the same rate as for cash payments. 
Recruit Lifestyle, the retail branch of human resources conglomerate Recruit Holdings, is cooperating with another Tokyo bitcoin exchange operator Coincheck to include bitcoin payment option into its AirRegi application. 
The step will enable over 260,000 outlets across the country to start accepting bitcoin. Coincheck will process payments made by consumers using the app, converting bitcoins into yen and transferring the funds to the store. 
Japan is poised to become one of the leading cryptocurrency markets. Nearly 4,500 Japanese stores are currently accepting bitcoin while over 700,000 outlets actively use other modes of digital payments. - Russia Today

Tuesday, April 4, 2017

Mexico working on legislation to legitimize Bitcoin as a digital asset and open it up for pension funds

Last week we showed how two Eastern governments were planning to deal with the question of Bitcoin, with one banning it outright and the other looking to integrate it into their monetary system.  Now on March 23 we have a third sovereign government debating the merits of Bitcoin, only in this case the discussion is on how to define the crypto-currency, and then facilitate its use in their financial system that could include acting as an asset holding for pension funds.

The first draft of this financial technology law was presented by the Secretary of Credit and Public Finance of Mexico, Jose Antonio Meade, in the 80th Mexican Banking Association Convention, held in Acapulco on March 23. In accordance with this law, the central bank will define the regulation that applies to digital assets such as Bitcoin. 
This new regulation is part of the National Policy for Financial Inclusion presented by the President of Mexico on June 21, 2016. One of the axes of the policy focuses on the utilization of technological innovations to provide financial services. The government is recognizing how the technological advances have transformed the manner in which people in several industries operate, including the financial sector. It is an official priority of the state to foster the application of technological innovations to reduce the cost of financial services and widen its use among the population. 
BC: What does the bill say about Bitcoin? 
SC: The central bank will define what a ‘digital asset’ is by following basically two criteria. The first criteria is the widespread adoption by the public (high market cap) and the second is the protocols, rules, and mechanisms that allow generation, identification, division and control the replication of such units of account. 
Basically, we are talking about a currency that uses a consensus mechanism and blockchain approved by the Bank of Mexico. 
Persons (including miners) with digital assets, who do not perform operations on behalf of others, are not required to obtain authorization from regulators and can use digital assets in their daily commerce. 
The most important criteria [for a digital asset] will be that the underlying technology is sound and there is widespread adoption by the public or industry. 
The government’s goals are to transit to a digital economy, reduce or eliminate the use of physical cash, make the taxation process more efficient and transparent, create a mechanism to automate regulation/auditing and supervision tasks, expand the coverage of high quality and affordable financial services and more. - Bitcoin News

Sunday, April 2, 2017

Japan in process of setting framework to make use of Bitcoin and other crypto-currencies legal

In late March Japan's Accounting Standards Board began investigating and formulating the regulatory framework on how to integrate Bitcoin and other crypto-currencies into their monetary system.

Building upon legislation that legalized the use of crypto-currencies as far back as 2016, Japan is the largest economy to date to fully accept de-centralized digital currency, albeit with a demand for stringent regulatory oversight to ensure proper taxation, money laundering avoidance, and to protect against the potential of another Mt. Gox incident within Bitcoin exchanges.

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New legislation authorizing digital currency as a legal payment method has come into force in Japan. 
The text of the law was released by Japan’s Financial Services Agency on March, 24.
Earlier this week, the Accounting Standards Board of Japan said that it would begin work on the creation of a framework to help understand how digital currency would be dealt with in the accounting sector. The process is expected to take six months, according to Nikkei.  
Big business is especially concerned; since the country has failed to provide guidelines regarding the accounting process when dealing with cryptocurrencies. 
“There is a risk that companies that hold virtual currency could turn out to have distorted valuations or that huge losses surface suddenly,” Chikako Suzuki, partner at PricewaterhouseCoopers Aarata, told Nikkei Asian Review.
Around $1.7 billion of cryptocurrency, including bitcoin, Ripple, Litecoin and others, was in circulation across Japan two years ago. The 2020 projection is set to be at $9 billion, according to a Fuji Chimera Research Institute study. 
The set of measures, that now has come into force, was drafted as far back as 2015 and passed in 2016 after a year of negotiations. Uncertainty over the legal status of virtual currency was stirred after a multi-million dollar embezzlement scandal and the collapse of the Tokyo-based Mt.Gox Bitcoin exchange. - Russia Today

Wednesday, March 29, 2017

SEC shoots down second financial product to try to put Bitcoin on Wall Street

On March 29 the SEC rejected the second Exchange Traded Product (ETP) in the past 30 days to try to take Bitcoin to Wall Street and financialize the crypto-currency.

Citing the primary fact that Bitcoin is an unregulated currency as the reason for the rejection, in the end for Bitcoin purists the last thing they want is for the currency to become blemished through financialization and being destroyed by derivative trading.

The U.S. Securities and Exchange Commission on Tuesday denied for the second time this month a request to bring to market a first-of-its-kind product tracking bitcoin, the digital currency. 
The SEC announced in a filing its decision denying Intercontinental Exchange Inc's NYSE Arca exchange the ability to list and trade the SolidX Bitcoin Trust, an exchange-traded product (ETP) that would trade like a stock and track the digital asset's price. 
Previously, the regulatory agency said it had concerns with a similar proposal by investors Cameron Winklevoss and Tyler Winklevoss. 
"The Commission believes that the significant markets for bitcoin are unregulated," the SEC said in its filing, echoing language from its decision earlier this month on the application by CBOE's Bats exchange to list The Bitcoin ETF proposed by the Winklevoss brothers. On Friday, Bats asked the SEC to review its decision not to allow that fund to trade. - CNBC

Tuesday, March 28, 2017

As future of Bitcoin continues to be up in the air, investors looking towards other crypto-currencies for less risk

While the future of Bitcoin is still up in the air due to the fight between two conflicting paths on how it should be managed and processed, speculators who have been at the core of recent price moves are now seeking alternative crypto-currencies that may provide less risk.

At the current time Bitcoin is not likely to implode if either of the two camps (Segwit and Bitcoin Unlimited) are successful in overtaking the other in their goals to improve upon the original and outdated blockchain setup, but the outcome will effect confidence in what is still a fringe and slowly maturing alternative form of money.  And as such many of the individuals and institutions who currently are in Bitcoin are appearing not to be afraid to take their profits and invest in other burgeoning crypto-currencies that at this time are less expensive.

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It's been a volatile period for bitcoin investors, as holders of the crypto currency prepare for a potential 'fork' in the blockchain. 
From Friday morning until Monday afternoon, bitcoin was trading under the $1,000 level, and even fell beneath $900 on Saturday. This is significant as, barring the weekend of March 18 and 19, bitcoin has traded above $1,000 since early February and hit a fresh all-time high of around $1,325 on March 10. 
Bitcoin faces a scaling issue, where the number of bitcoin transactions that can happen on the blockchain at any one time is limited. This is creating a backlog of transactions that are needed to be processed and slowing down the system. 
As a result, investors are hedging their bets or selling out of bitcoin, waiting to see whether or not the fork will happen, and if so, which blockchain will be favored by the market. 
Data from Bitfinex indicates around 49 million more coins have been sold than bought, or roughly 5 percent of total coins traded, in the last 30 days. Through March, the number of long bitcoin positions held by investors has decreased from 26,858 to above 23,142, while the number of short positions has increased from 9,820 to 14,731. 
Meanwhile, the market cap of blockchain assets other than bitcoin, such as ether, dash and monero, has more than doubled since March 10 from $3.5 billion to more than $7 billion, according to Chris Burniske, blockchain products lead analyst at ARK Invest. 
"At the same time, bitcoin's market cap has gone from $19 billion to $16 billion. Hence, bitcoin's market cap has lost $3 billion in value while the combined market cap of all other blockchain assets has added more than $3 billion," he told CNBC via email. 
"Given these market indicators, it would appear investors are diversifying their blockchain asset holdings, positioning themselves for a generally rising tide in this emerging asset class." - CNBC