Bitcoin hits 3-year peak, nears record high on U.S. ETF approval
reuters.com
reuters.com
Over 100k transactions in mempool (waiting to be confirmed)
Awaiting the propaganda wave in response to my comment...
One could be a regular visitor to r/bitcoin and have no clue that there is a huge political battle going on amongst the users, miners and developers.
True story, I'm one of those visitors. Off to go read up on some stuff, apparently.
Makes me wonder what other communities are oblivious to moderators influence.
What seems to be mostly adolescents continually scream 'censorship' without knowing the meaning of the word. Without that moderation, you get the cesspool funded by Roger Ver.
The meaning of the word, according to Wikipedia:
Censorship is the suppression of free speech, public communication or other information which may be considered objectionable, harmful, sensitive, politically incorrect or inconvenient as determined by governments, media outlets, authorities or other groups or institutions.
If members of a subreddit are engaging in the suppression of ideas they consider objectionable, that is censorship. Smart people understand that there is no actionable defense against such censorship, but lacking an actionable defense doesn't diminish its status as censorship to something lesser. Similarly, it's still censorship whether done by the government, reddit, or Bob's Corner Bakery.
The segwit softfork may fix some things that make side chains more feasible, but that undersells it severely. It mainly solves a bug in bitcoin that prevents a good implementation of Lightning Network (which is not a side chain), and it also upgrades on-chain transaction capacity by doubling it, while solving another bug in Bitcoin (quadratic scaling of sigops) which make such a capacity increase safer.
More information here: https://bitcoincore.org/en/2016/01/26/segwit-benefits/
Mike Hearn would disagree with you, and he knows a lot about how Bitcoin works.
https://medium.com/@coolbearcjs/the-mike-hearn-experiment-ha...
The same Mike Hearn that recently announced the failure of his R3CEV venture to deliver a blockchain solution for banking?
https://twitter.com/Beautyon_/status/834152812405735425
The same Mike Hearn that tried and failed to push through a fork of the bitcoin network called Bitcoin XT that allowed for a personally controlled black-list?
https://cointelegraph.com/news/bitcoin-xt-fork-can-blacklist...
Yeah. That guy. He has an agenda, and it hasn't been aligned with bitcoin for quite some time.
The blacklist article is pure FUD, seemingly written with the sole intent of smearing Hearn.
For instance we have a solution for the transaction malleability issue - Flexible Transactions - which causes a tiny fraction as much technical debt while offering big benefits in future-proofing. Why bother with Segwit when we have a better solution?
But that's neither here nor there because Segwit doesn't even solve the actual problem that everyone wants fixed right now - block size. The small, one off, slow to deploy solution offered by Segwit isn't a scaling solution at all. It's likely that take-up of Segwit wallets will be fairly gradual which means it'll probably never even prevent the blocks being full. Even if it does we'll be back in the same hole in a few months time anyway because of the small one off change. What's needed is a solution which actually fixes the problem.
That solution is the lightning network, which the transaction malleability fix of the segwit patch fixes and makes possible.
Letting miners decide when to increase block size is a long term solution. Segwit is not.
If their hardware is viable for an altcoin then it seems like increasing the Bitcoin block size would not be in their best interest. Why not maximize shortterm Bitcoin profits and hedge long term profits with altcoins?
Miners are playing a game of chicken to milk the fees while hoping users don't swerve to another chain.
The computational costs of larger block sizes are borne on the entire network, however the effects are most severe for miners as larger blocks tend to increase the profitability of large geographically-close pools in comparison to small pools [1]. This is why segwit is only an increase to ~2.1MB.
[1] http://bitfury.com/content/5-white-papers-research/block-siz...
The higher the tx backpressure, the higher the fees. The larger the block size, the lower the pressure regardless of overall tx volume.
However, miners can't simply apply the limit to themselves without a consensus rule. There is code in Bitcoin Core to apply a soft limit, but as long as there is any fee pressure, ignoring transactions leads to a disadvantage compared to other miners, so in practice all miners tend to always use the maximum permitted block size. Most proposed schemes for increased or variable block size still enforce the same size across all miners for this reason.
Incorrect. The most severe effects are on the nodes.
As segwit generally improves the protocol (makes it more efficient, fixes a transaction malleability issue, increases capacity and gives way to proposed future improvements) and doesn't require a hardfork, I think it makes sense to apply that first.
And if with segwit and all the improvements it enables the capacity still doesn't prove to be enough for the future growth, we can hardfork to dynamically increase the block size.
But for now, we need to do something. Why not do the thing that's simpler to put into effect and provides more benefits?
Larger blocks are not actually necessary with other layered solutions to bitcoin. The people who are pushing big blocks are mostly uninformed of this reality.
In an era of Chinese fabricated asics running on state subsidized energy, I fail to see node centralization as a priority.
https://www.telstra.com.au/support/category/broadband/fix/ho...
> Connection type : upload bandwidth
> ADSL : Up to 1Mbps
> ADSL2+ : Up to 1Mbps
> Cable (Base Plan) : Up to 1Mbps
> Cable (Speed Boost) : Up to 2Mbps
> nbn™ Fixed Network (Base Plan) : Up to 5Mbps (only available in a small proportion of locations)
> nbn™ Fixed Network (Very Fast Speed Boost) : Up to 20Mbps (only available in a small proportion of locations, and only to business customers)
> nbn™ Fixed Network (Super Fast Speed Boost) : Up to 40Mbps (only available in a small proportion of locations, and only to business customers)
> nbn™ Fixed Wireless : Up to 5Mbp (only available in a small proportion of locations)
Welcome to the world outside of your bubble. A node currently takes up about 35% of the upload bandwidth of an internet connection. At a minimum.
> I fail to see node centralization as a priority.
And therein lies your problem. While you continue to hold to that belief, you will find that the direction of bitcoin will go contrary to your desires.
Because the way I see it, both SegWit and BU are under 30% activated, and the most plausible future is the status quo.
Without a good understand of what drives Bitcoin's use it is hard to tell if this is an investment bubble or legitimate organic growth. I will say I don't run across all too many sites that support payment via Bitcoin, I know they exist, but it hasn't expanded to be commonplace.
But I've read the drug market on e.g. Tor is alive and well. So maybe that drives a lot of this trading.
No data supports this. For some reason articles occasionally still make this claim, but no sources support this.
In fact I am aware of a study that reports the opposite: that Bitcoin commerce is no longer driven by "sin" activities but instead by legitimate enterprises: https://papers.ssrn.com/sol3/papers2.cfm?abstract_id=2808762
http://web.archive.org/web/19990508170650/http://www.xoom.co...
I used to use Xoom but every six months when I'd go to do a transfer they'd need more security verification and it got tiresome. Although that was a few years ago, maybe it is better now.
The amount of new bitcoins that are being made available is just 12.5 every 10 minutes, this is a mere 1,800 BTC a day, or around USD 2 million. If the main use for bitcoin is store of value or long investments, the available "old" bitcoins are not going to be that many. In my opinion this is the main driver of the price.
More noteworthy is the assumption people have that BTC (or any other early-adopter-deflationary-investment-coin) is able to serve as a currency ecosystem when it's inherently deflationary, thus discouraging the usage of it for anything but speculative hording (which assumes there is a demand by something other than hoarders..) - or rapid short term use, which has proven ineffective and untimely for micropayments [1].
http://www.coindesk.com/lightning-duplex-scalable-bitcoin-mi...
The people of Venezuela or Kenya would say the same thing about their local currency.
Furthermore, for all intents and purposes, the technology behind bitcoin is already obsolete. So if the obsolescence hasn't affected it yet, there is no reason to believe that further obsolescence would hurt it.
there won't be a need to move your funds anywhere else.
Bitcoin is inherently deflationary as coin creation slows to 0.
>Volatility
Volatility is due to uncertainty and speculation. If Bitcoin survives and is used significantly for transactions volatility will decrease (it already has but not enough).
Bitcoin is inherently deflationary as coin creation slows to 0.
There is a huge barrier to switch. Bitcoin has common mindshare. Why would someone want to use an asset with far less mindshare?
The history of altcoins over the past 6 years supports these points.
I'm not convinced that the deflationary spiral argument applies to what I view as a settlement layer, but it's definitely concerning to Bitcoin's future. I will agree that as long as bitcoin is seen as more of a commodity than a transaction layer, it will have a questionable future.
Especially in black market type transactions this is hugely beneficial.
That said, a lot of the infrastructure is only on the Bitcoin front still - only a few exchanges offer other cryptocurrencies.
It's also good to remember that the tech world is built on all sorts of 'objectively obsolete' technologies.
Hardware, and electricity investment is not static for miner upkeep. A fun feature of most cryptocoins is the ever increasing demand for hashing power, forcing miners to constantly consider the value of their real costs versus the real value of the protocol they apply their equipment to.
So by design, the network effect of cryptocoin miners will flock to whatever the current best design is on any given day.
If there's a shift, it can quickly turn into a flood, since much of the value of bitcoin is based on speculation, rather than more robust demand from use as a payment vehicle.
And yes, I do pay taxes on my Bitcoin payments. It's somewhat annoying to keep track of everything, but my accountant mostly takes care of it for me. I probably end up losing ~2% to overhead (very little of which is due to Bitcoin itself), which is unfortunate but comparable to even the cheapest traditional services.
As far as I can tell there is simply nothing else to do with BTC as of now ... sure you can use it in some shops and you can buy plane tickets from Air Baltic with BTC - but those purchases are always actually more expensive to cover for the volatility of the BTC value and of interest only for users who think its fun to actually use BTC in the real world.
Probably it will either establish as an illegal clandestine super-national currency or it will be hijacked by banks for whatever weird theoretical purpose.
The darknet markets certainly bring some demand, but it's high-velocity. You don't need to hold BTC, only transact in it.
The remittance market does seem to be there, but it's still in its infancy. Maybe only a small fraction from this.
Similarly, actual e-commerce is quite limited. Bitcoin offers few advantages over PayPal and credit cards for the large majority of consumers. There's only a subset of international transactions and other fringe situations where it makes sense.
I think the other significant market, after the speculators, are those that are ideologically motivated to hold Bitcoin.
Except that if you're doing something illegal you pretty much do need to hold onto it unless you have a way of laundering it to a national currency.
There might even be enough of a legitimate bitcoin economy you could mostly do it, assuming you weren't a really big time criminal. Those guys have ways to launder the profits anyway.
Like many bitcoin users, Alberto, the miner who makes $1,200 daily, imports food from the U.S. through Amazon's Prime Pantry service. This would be impossible with bolivars because almost no one outside of Venezuela accepts them as payment, and the growing scarcity of U.S. currency has made purchasing foreign goods with dollars increasingly difficult. Though the Seattle-based retail giant doesn't accept bitcoins itself, plenty of intermediary companies do. Alberto purchases Amazon gift cards through the cryptocurrency-friendly website eGifter, using software to mask the location of his computer, and then routes his orders through a Miami-based courier service.
http://reason.com/archives/2016/11/28/the-secret-dangerous-w...
http://www.econtalk.org/archives/2017/02/jim_epstein_on.html
This is a good sign overall. Even if BTC isn't the right answer as a currency.
I'm pretty confident Coinbase will still be here in 10 years with no major breach. And I'm also fairly confident that even if there were a major breach, I wouldn't personally lose any Bitcoins or money.
MtGox has never been reputable. It was the biggest, and it worked, but it has always been sketchy. I say this as a MtGox user through 2011-2013. And yeah I stopped using it about a year before it got shut down because other exchanges more reputable than MtGox started appearing and it was more and more obvious MtGox had serious internal issues (delays in processing transactions, one of their bank account seized by the feds in 2013, etc.)
People bought drugs on SilkRoad back when the price was $2 / bitcoin. Those must have been some of the most expensive drugs in history !
Saying the computer was free is misunderstanding what "free" means. If the computer were free, he/she would have paid $0 for it and would still have the bitcoin.
OP's point seems to be that inflation of bitcoin value is built in, effectively resulting in de minimis velocity and seeking out of alternative stores of value which are more stable. Bitcoin is how I would design a currency if I wanted it to self implode.
They don't feel bad, of course, and nobody feels sorry for them. But you can drive yourself insane if you spend too much time thinking about the wide variation in outcomes if you'd made slightly different investment choices.
Not to mention it's not clear that features are the most important part of a digital currency. Scaleability, reliability, and simplicity could all end up being more important. Even branding meaning the name itself could be significant for the growth curve.
What alleged problem do you think Bitcoin is trying to solve?
Bitcoin is making value transfers cheap, fast and accessible.
As for the third, you've clearly not dealt with wire transfers very much. Dealing with SWIFT for example is infinitely more difficult than using bitcoin.
The problems are central banking and related problems: demonetization, devaluation, hyperinflation, bank bail outs from taxpayers, etc.
That's a social problem which would be solved by cryptocurrencies.
I can also recommend this podcast on the topic of current real world applications of Bitcoin: http://www.econtalk.org/archives/2017/02/jim_epstein_on.html
It's hard to get a hold of, it's hard to store securely, it's hard to transport, and it's hard to get people to accept it.
If you're really considering gold or Bitcoin, you very likely care about many of those things, and you'll see that Bitcoin has distinct advantages for several of those problems, with a lot of potential to improve.
Do you have any links or can you explain how people lost fortunes due to inflation? I've read a lot of economics and this is news to me.
Cryptocurrency came about as a direct result of a broken political / financial system which effectively rewarded failure and financially punished those who could least afford to be punished.
For example (in certain parts of Europe, and probably elsewhere too) merchants have to pay a fairly high fixed cost to have credit card terminals in their place of business, and also pay a cut of each transactions to Visa or Mastercard. This is a considerable cost to small business, which have to pass this along to consumers. Now of course most consumers don't use bitcoin or other altcoins to pay for stuff today, however the fact that there's even the possibility of eliminating these types of middlemen is very exciting, and unthinkable even a few short years ago.
Not to mention the very exciting possiblities offered by blockchains and smart contracts, even if the original projects that spawned them fail completely (bitcoin and ethereum).
BTC simply shifts all the cost of dealing with fraud to the customer.
-More complex codebase, which makes assessing vulnerabilities more difficult, and security more difficult.
-Ethereum broke trust and "code is law" when self-interested parties were able to rewrite history. Transaction malleability is a terrible property for a "store of value." It leaves the currency open to government interference, manipulation, etc.
-Ethereum has an inflationary schedule. Given a choice between holding an inflating or deflating asset, it seems straightforward which to choose.
-The utility of a given currency is dependent on the number of holders (like Metcalf's law)
-The hashrate and mining power securing bitcoin's network is far greater.
What features of JavaScript prevent you from writing buggy code?
These are features that run intentionally counter to modern economics.
It is deflationary because strong currencies displace weak ones: Any individual person will want to hold value in a currency that's deflationary; they get greater value from it the longer they hold it. Is that good for the 'economy'? It's a matter of study. But it's the only thing out there that's deflationary (even gold is currently 2%/yr inflation by newly-mined metal). The fact that Etherium chose not to have this is a nod to the economic theories against deflationary currencies. It will help them with economists and politicians, but it works against them in adoption by individuals.
And it works for everyone the exact same way regardless of circumstances. It makes no social judgements. It has no bias. It runs by the rules. Good people can use it for good things. Bad people can use it for bad things. Rich people. Poor people. Oppressed people. Free people. The fact that Etherium broke their own rules makes them flexible in adversity, but it also makes them untruthworthy. Sure a network could always vote to change the rules, but having a culture of doing so means eventually someone with real power (guns and politicians) will make you change it their way.
While both those might help 'mainstream' adoption, mainstream already has money and electronic transfer systems. It'll be easier for them to fix the 3-day hold period with some new laws about 'you must trust X' than to literally move people off the dollar.
Bitcoin is a direct and overt competitor with the world order of money. Etherium is in a tough middle ground; not quite getting the best of either.
Agree 100%. Mutability itself isn't a problem--our financial system does fine with it. But the ad hoc way rules were created ex post facto by parties with unchecked conflicts of interest is, in my view, a permanent black mark on the project.
If bitcoin disqualifies itself through certain failings, second tier contenders hold value through their optionality as an alternative.
Ethereum isn't technically any more malleable than Bitcoin. You might say it's more socially malleable, but governments can't force the community to make any particular decision, any more than they can with Bitcoin.
Ethereum's supply is currently inflating at 13% annually. Bitcoin was at 9% just before last summer's halving, and when it had a $1 billion market cap it was inflating at 33%. If Ethereum succeeds with proof of stake its inflation will drop below 2%, less than Bitcoin has now.
Bitcoin's hashrate is much higher, but that's misleading since Ethereum has a completely different hashing algorithm, running on different hardware. If you compare how much each chain pays for security, the difference is roughly equal to the difference in their market caps.
A turing complete virtual machine is infinitely complicated--it can run anything. The implementation is "trivial" compared to the infinite surface area. The number of spec-pages is not a useful metric.
Social malleability is just as bad as technical malleability.
Ability for a community to set and agree to new rules is healthy for a blockchain and it makes it more likely that Ethereum can evolve and successfully hardfork to POS mining in the future.
Anyone who claims otherwise is confused or trying to sell you something.
Rebuttal: a) This isn't a technological feature/fault of Ethereum. What you really mean to say is that 1) Ethereum foundation broke trust by supporting a fork 2) Most Ethereum users chose to go with the fork.
Technically you can be with ETC (the unforked version of ETH).
b) Bitcoin can be forked too, there is nothing technological safeguard in there in it for it to be not forked, because it's literally impossible to build a technology which can't be forked(unless enforced by the govt).
c) The DAO fork was made possible by a bunch of factors: 1. The money the hacker stole was locked in a contract where he couldn't touch it for 30 days. This bought Ethereum foundation time to do something about it. If Polo gets hacked tomorrow, there is nothing Ethereum foundation can do anything about. 2. ETH is based on accounts model, rather than bitcoin's UTXO model. This means Bitcoin can't go with a fork even if they wanted to even if somehow DAO was implemented in an n-lock transaction for 30 days.
d) Ethereum gets crap for breaking "trust" when as a bitcoin holder I would have totally supported a fork to prevent MtGox or Bitfinix's funds being recovered from the thieves.
The fundamental question which everybody who is pondering over this argument on Ethereum needs to answer is this, "If you're using technology X, and a certain malicious entity/bug has affected a significant majority of the other users of technology X,then would you be willing to make attempts to thwart the actions of the malicious users."
Ethereum people showed that they would prefer such an action. Bitcoiners who don't have any stake in this, love to criticize Ethereumers for this.
By that definition of a 'bug', all bugs work perfectly as designed. I mean what is your definition of a bug then?
The DAO's code allowed a person to ask for money to be taken out before the balance was fully updated, this resulted in the attacker taking money out over and over and over.
This clearly was not the 'intent' of the creators or any of it's investors.
All code has bugs, but you dont go asking Satoshi to give your bitcoins back you sent them to the wrong address. "Oops that was not the intent".
In practice, where some percentage of coins inevitably goes lost every year, this still reduces to a deflationary schedule.
Meanwhile, Bitcoin with its hard limit on coin supply, will likely experience some miner incentive perversions when rewards become dominated by fees rather than coinbase.
If you are into this stuff, there is some interesting research on this: https://freedom-to-tinker.com/2016/10/21/bitcoin-is-unstable...
I hope I am not misunderstanding but it sounds like you are saying people will use bitcoin no matter how long tx time is or how high fees go?
As a major player in Bitcoin I think it imperative that you guys understand that is not true, users will stop using and new users will never join if it takes too long or is too expensive. I feel the exchanges could have a huge part to play in responsibly forking the system to 2 mb and beyond as a signal to miners and offer confidence to users that there coins are safe no matter what, not all this "We have no official stance" stuff which instills neither confidence nor the feeling there there is even anything important that needs "fixed". You guys should be the front line demand this upgrade, why aren't you?
Long-term "hodlers" also probably don't care if it takes a full day and a $100 fee to cash out their $100K of profit.
People who actually use the Bitcoin blockchain could all be scared away and BTC would still be $1,000.
Bitcoin wants to be digital gold, ether wants to be digital oil that is used to power smart contracts. This is a good way to explain it to the average person.
So I think ETH can be both digital oil (or digital solar, if you want to be PC) and digital gold.
Bitcoin OTOH has a monetary policy incredibly clearly defined by a jesus-like figure who has now disappeared. Inflation is fixed and total supply is set at 21 million. Even if some group decided they wanted to change this there are enough people who are committed to 21 million that they will just maintain whatever fork still enacts satoshis original monetary policy. This is non-negotiable and results in a truly inflation-proof currency.
As it is, it's currently worth more than I bought it for.
The more capabilities a language has, the more likely it will be compromised. Complex contracts will continue to be exploited like the DAO, which will put a damper on Ethereum's growth.
Now that Ethereum's weaknesses have been exposed, the exchange rate has stabilized at about 90 ETH per BTC [2].
Mr. Market says Ethereum has lost nearly two-thirds of its value compared to Bitcoin.
There will be many cryptocurrencies with different capabilities alongside off-chain vehicles with other interesting and useful capabilities.
Maybe Bitcoin is the slow, steady, reliable, non-inflationary and boring reserve currency that is a long-term store of value and a safe harbor during stormy weather.
Perhaps Bitcoin isn't judged by whether people use it to pay for their dry cleaning, but as the backbone of a new digital economic system.
[1] http://www.coindesk.com/understanding-dao-hack-journalists/
But it is easy to underestimate the widespread adoption and trust in Bitcoin. Bitcoin will always be the standard cryptocurrency store of value. There may end up being 10 other globally useful blockchains, but they will all use Bitcoin as their base store of value and medium of value exchange.
- it is not feasible to write or verify safe "smart contracts" without having excellent code analysis skills. Similarly to cryptography you really have to get it right. This is on top of the security problems of bitcoin (securing your computer, securing the exchange, understanding and persecute any crime committed against you)
- the DAO hack was not handled well by the community, to me it seems everyone is in it to make some quick money, or maybe for the lulz? There was a fork, and now you get to experience a massive cognitive dissonance when moving between /r/ethereum and /r/ethereumclassic; nothing constructive can come out of this.
- the blockchain technology makes it quite difficult to build practical apps (judging from my experience building a tic tac toe game for two players on a private blockchain, and the quality of the stuff that was out there last time I checked).
Some very smart people have thought about this, and it's probably far from perfect. But just throwing a VM in there isn't going make things better. Ethereum has had to make some radical changes to their initial idea. I think what we saw not just with the DAO but in fact most valuable contracts demonstrates quite well that it wasn't the most suitable design imaginable.
But things will move on, and new coins will appear to take its place. It has been quite obvious for several years now however that any new cryptocurrency will be bootstrapped from Bitcoin, not from USD. That is one of the reasons I keep an interest in it.
My only interest in the project is to see how far a sophisticated scam can go. Can the higher quality commenting on HN spot the scam? Not yet! How far can smoke and mirrors trick an educated audience? It's a very interesting project in this regard
This would combine the ridiculous volatility of bitcoin with the all-day tradeability of an ETF. What could go wrong?
Except the Bitcoin ETF isn't leveraged like the example ETF. To borrow a term from your linked article, "It’s a wolf in wolf’s clothing." The example ETF is designed to be volatile, it is clear up front, and anyone investing knows it. The Bitcoin ETF isn't designed to be volatile, it just is because of the volatility of Bitcoin. If the Bitcoin ETF is marketed as a buy and hold type investment, then the volatility is a problem.
>Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments.
[1] - http://www.direxioninvestments.com/products/direxion-daily-j...
It makes the volatility clear. It tells you not to buy and hold. Would a Bitcoin ETF have those same type of warnings?
>...should not be expected to track the underlying index over periods longer than one day.
You shouldn't hold a leveraged ETF for very long because it will become unhinged from a layman's expectation of performance. AKA if I buy $SSO this morning and sell it this afternoon, I will get double the S&P's returns. If I buy $SSO this morning and sell it in June, I may get 1.5x returns or 2.5x returns or anything in between.
This bitcoin ETF won't behave like that so it should be fine, it's a volatile investment, investors should do their DD.
No need to speculate. The answer is yes, the COIN ETF has all the appropriate warnings. The risks are quite clearly spelled out in the S-1 as is standard with these sorts of things: https://www.sec.gov/Archives/edgar/data/1579346/000119312517...
GBTC [0] has been trading since March 2015 [1], as of today is up 714% since inception [2]. My understanding is that nothing serious has gone wrong, so far, in nearly two years.
Also, for some, "ridiculous volatility" is a desirable feature for some portion of their portfolio.
[0] https://grayscale.co/bitcoin-investment-trust/ [1] http://www.investopedia.com/articles/investing/073015/bitcoi... [2] https://grayscale.co/bitcoin-investment-trust/#market-perfor...
GBTC is a bad way to trade bitcoin and the chart in reference [2] you posted shows exactly why. A good BTC tracking ETF would have NAV = market cap, but here you can see that NAV and market cap are unlinked (as are returns for GBTC vs bitcoin) and people are generally paying way over NAV (in some cases over 50%!) to own GBTC. This is presumably due to unsophisticated traders buying GBTC without understanding that they're getting a terrible deal.
In summary, yes something is seriously wrong with GBTC and has been wrong for the entire life of the product.
To clarify, I'm not saying I'd touch GBTC. I certainly would not ever buy it. Nor would I consider buying any ETF or ETN claiming exposure to Bitcoin. I have no desire to shoulder such substantial counterparty risk, fees, and tracking risk (among many other issues, these are simply my top three).
I agree that GBTC is a terrible way to trade Bitcoin. Same as how many other ETFs, ETNs, mutual funds, and other financially engineered products are fantastically terrible ways to gain exposure to various assets. They apparently meet some people's needs, though. I don't understand it, but so what? I don't judge. Good for them.
Unlinked is putting it mildly. The gigantic rally in bitcoin after the drawdown in January was almost entirely missed by GBTC. For example if you bought on 01/11/17 and sold on 02/02/17, instead of enjoying the 29% gains of bitcoin (~$778 to ~$1004), you were treated to a loss of 1% ($109.50 to $108.50).
http://www.coindesk.com/okcoin-international-markets-margin-...
My expectation is that it will be rejected, and the price of bitcoin will crash back to about USD$700 or so, and continue its long march upwards. It's important to recognize that that crash would still mean that bitcoin has almost doubled in value vs the US dollar in the past year. It has doubled in value over the past six months.
Don't get me wrong, I'd love for it to be approved. But for that reason, I don't think it will be.
As long as the rules are laid out ahead of time I'm not sure why the SEC would object.
Both ATH were surpassed in the last hour.
Do the article authors have at least 0.01% understanding of what bitcoin is? Or what web is? I'm very suprised of technical incompetence of authors writing about technical stuff in top newspapers.
http://data.bitcoinity.org/markets/price/2y/USD?c=e&t=l
And you can download the data-points if you want.
Foreign currencies have lost anywhere from 30%to 99% of their value against the US dollar since 2013. Beginning around 2002 and ending around 2011, many foreign governments carelessly amassed substantial infrastructure debts that now they are struggling to pay off (due to economic weakness for these foreign economies and the surging US dollar), creating a cycle of inflation and currency depreciation, making Bitcoin more attractive to own for people and businesses in these countries. Bitcoin is rising because citizens and businesses have lost faith in the competence of their governments, and rightfully so. America is an exception in that it's well-managed and strong economically and fiscally (especially relative to these foreign economies), which explains the flight to the US dollar, and also Bitcoin.
For example, in 2013, depositors at Cyrus' largest bank lost 48% of their savings above 100,0000 Euros:
NICOSIA, Cyprus (AP) — Depositors at bailed-out Cyprus' largest bank will lose 47.5% of their savings exceeding 100,000 euros ($132,000), the government said Monday.
The figure comes four months after Cyprus agreed on a 23 billion-euro ($30.5 billion) rescue package with its euro partners and the International Monetary Fund. In exchange for a 10 billion euro loan, deposits worth more than the insured limit of 100,000 euros at the Bank of Cyprus and smaller lender Laiki were raided in a so-called bail-in to prop up the country's teetering banking sector.
http://www.usatoday.com/story/money/business/2013/07/29/bank...
A second factor may be the rise of global authoritarianism, unrest, and unease, reducing confidence in keeping money in banks, and assets that face geopolitical risk...Bitcoin, because it's decentralized, is immune to geopolitical risk. As long as you have your wallet, you have your wealth.
The US dollar is unique because it's the world's benchmark of wealth. The Forbes 400 list is benchmarked in dollars, not Yen or Euros. The US dollar is not only a reserve currency, but everything (such has oil, gold, etc.) is denominated in US dollars, not Euros, Francs, Pounds, or Yen. This allows the US to persistently run trade deficits without hurting its 'wealth', unlike other countries that wold lose wealth in the form of high inflation and currency depreciation if they did the same. This makes the debt clock almost meaningless, and had someone in 2000 sold short US treasuries in anticipation of high inflation, they would have lost their shirt despite the national debt surging since then.
Wrong!
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Hearn tried to fork bitcoin, and learned the hard way that the people who use bitcoin didn't like his direction. He then had a whiny rage-quit, and has been throwing rocks from over the fence ever since.
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