Cryptocurrencies are collapsing
coinmarketcap.com
coinmarketcap.com
1. China cracking down harder: https://www.nytimes.com/reuters/2018/01/16/business/16reuter...
2. South Korea cut off access to banks by cryptocurrency exchanges in December, and access to exchanges by foreign traders. As a result the prices in the country spiked, and the largest price aggregator CoinMarketCap removed Korean exchanges from the index because they were skewing the averages. This caused ~$150B to appear to have suddenly vanished, gapping prices down. This is when the sell-off began in earnest. Then recently the South Korean Minister of Justice said he wants to shut down exchanges, but then the PM says that would require a vote in the National Assembly on new legislation. They are consulting with Japan (who are positive on crypto) and China (who are not) to create a new regulatory framework. http://www.koreaherald.com/view.php?ud=20180116000817
3. Indonesia just banned cryptocurrency transactions, stating only their native currency is legal tender. http://www.thejakartapost.com/news/2018/01/15/bank-indonesia...
4. France's central bank has been whining about cryptocurrency for some time and finally convinced the Minister of Finance to make a public statement and authorize a draft of new regulations. https://www.express.co.uk/finance/city/905169/bitcoin-France...
5. A speculative theory: the Bitcoin futures contracts are about to expire, and some investors will have bet on lower BTC prices. There could be large market players deliberately pushing prices down to meet those futures bets. Or just market makers wanting to get in at a lower price point.
Let it rest for a while and I believe it will have more races up-and-down the 10k-22k range so people can enjoy their gambling ;)
In general things are only as valuable as the "market" is willing to pay for them.
Sure, I was agreeing / checking my understanding was correct :)
The bitcoin network adjusts the block difficulty (effectively the energy required to mine 1 BTC) every 2016 blocks such that the rate of creating blocks is fixed at one block (currently 12.5 BTC) every ten minutes.
If the dollar value of energy required to mine 1 BTC is significantly less than the current dollar value of a bitcoin then it is likely more hash power will be added to the network by the bitcoin farms, further increasing the network's hash rate, and as a consequence the block difficulty and therefore the price of the energy required to mine 1 BTC.
The difference between the price of bitcoin versus the price of bitcoin as it would be if it was only used as a medium of exchange rather than a speculative asset.
This post about XRP applies to roughly every other cryptocurrency too: https://www.reddit.com/r/Ripple/comments/7pzd7f/heres_what_w...
2 sentences later
> Also, please don't ask for financial advice or price predictions short or long term. You have to make your own decisions.
This contradiction undermined the point of whole article for me.
http://hivergent.com/you-shouldnt-invest-in-ripple-and-not-b...
Nitpick:
Butcoin is not, to my knowledge, legal tender anywhere. What Indonesia has done is declare that all transactions in Indonesia must be denominated in rupiah. This is far more restrictive than most Weatern nations where private parties may accept anything they want as payment, but must accept legal tender in certain circumstances.
That's not what legal tender means in the UK and the misunderstanding causes some problems.
If I have a debt, and I attempt to pay in legal tender, and my creditor refuses to take it, I can say I've discharged the debt.
It has no use, in the UK, when I'm buying stuff in a shop.
http://edu.bankofengland.co.uk/knowledgebank/what-is-legal-t...
They even warned people on the Ripple website not to speculate on it.
Trying to read this short-term things is uninformative.
Oh, in the time I typed the sentence above it went from 11.94k to 11.99k.
Or maybe it’s a dead cat bounce. It’s amusing either way.
I wonder how much technical analysis can be done to predict this.
Just HODL!
It is a wild ride. The reason this is a correction and not a collapse can be easily understood if you zoom out your charts enough so that you can see the ancient times of November 2017.
BTC is by far the most volatile asset at the moment (excluding other crypto currencies and some exotic real currencies). I think the reason people talk about crashes so quickly is that no one has a clue what's going on. Is it a broad-based move? Is it a few speculators? Is it a conspiracy? For stocks, at least the regulator knows very quickly who sold and if there's something fishy going on. For BTC, no one knows which makes it more confusing.
1. Bitcoin remains speculative and volatile. This will cause it to be adopted by smaller businesses that can "do things that don't scale". We won't see big businesses support mainstream crypto payments until the demand is high enough to justify the risk.
2. Bitcoin itself is a clamped network, as such the fees are very high. You can't sell Lemonade at your stand with Bitcoin if the fees are much greater than the cost of a cup of lemonade.
Other cryptocurrencies aim to solve these problems.
The lightning network is essentially instituting central banking all over again, this time with bitcoin. "Oh so you want to transfer coins quickly? Better keep them at well connected exchange so it can be instantaneous, and you'll only be transferring between exchanges by the way."
Transactions can be routed through multiple channels, you don't need to open a channel to every single wallet you want to transact with. That would not be a Lightning network, it would just be payment channels.
> The lightning network is essentially instituting central banking all over again, this time with bitcoin. "Oh so you want to transfer coins quickly? Better keep them at well connected exchange so it can be instantaneous, and you'll only be transferring between exchanges by the way."
Not even close to central banking, LN transacts real Bitcoins, not IOU's, so they can't print more base money or more debt-based money. There's also no trust needed (no counter-party risk and you can route around censorship attempts)
Of course, trusting your counterparty requires you to know who they are, have stable addresses and so on.
The simplest case is a unidirectional channel. To pay you a series of micropayments, I send a series of transactions with each one slightly larger, so each is the sum of all my payments. You can only submit one such transaction to the blockchain. I lock my funds so you don't have to worry they won't be available.
Bidirectional channels and networking are elaborations on this idea. In bidirectional channels the main risk is that your counterparty will submit an obsolete state; there has to be a delay and you have to monitor the chain so you can submit a more recent state if that happens. You don't have to know who the counterparty is.
(Your analogy to a ledger with account balances is precisely correct for Ethereum, but Bitcoin actually has a somewhat different model.)
> (Your analogy to a ledger with account balances is precisely correct for Ethereum, but Bitcoin actually has a somewhat different model.)
My understanding is that in bitcoin it's a log of transactions -- a ledger. Ethereum is instead addresses holding totals -- more like an account statement.
I guess I've been misusing the term "ledger." You're exactly right for Ethereum. Bitcoin has transactions with "unspent outputs." Each transaction can have multiple inputs and outputs; to make a transaction you collect unspent outputs from previous transactions, use them as your inputs, and typically make two outputs, one to the payee address and one that holds the change.
1 point by fgonzag 0 minutes ago | edit | delete [-]
I know you can chain multiple channels. I've read the paper. Anyone with a relatively basic math background can see the problems the lightning network will not work as a "decentralized" network.
So you'll end up with many hubs, and you'll have to open a channel from your wallet to a hub (or multiple hubs) if you want to be able to pay or receive payments from (insert random wallet here). These hubs will take a cut to process payments. The more hops you have between two wallets, the more fees you'll have to pay (as you'll have to pay a fee for each hop). We just turned into VISA and Mastercard.
That's without mentioning the high capital reserve requirements that hubs will be forced to have, and how easy it would be to DDOS a specific hub by abusing the nLoc timer, especially since the transaction can only be forced to close if the only pending acknowledgement is from the originating wallet. Every other hop can essentially hold off for 1 day.
Not only is the "network" part of LN referring to the ability to chain multiple channels together to make payments several hops away if needed, but why would exchanges be the only one you could transfer to?
Currently on mainnet a VPN vendor is really the only major player, and it's expected that most vendors will have a lighting node, as all it requires is an always online server...
Not to mention that transacting over LN has no counterparty risk, and "keeping a graph of every connected wallet" is not an impossibility... It uses the TOR protocol which runs over IP, which are both the kinds of networks of channels you imply are impossible here...
It sounds like you read the first 2 paragraphs of the paper and decided to stop. Read more, and these details will be explained in excruciating detail.
Why is that remotely relevant? Why would I want my wallet 'connected' to any wallet I'm not going to transact with?
This post on reddit would be a good place to get understanding of the current LN status.
There is also a risk with accepting credit card payments, which is part of the reason why businesses don't actually process credit card payments themselves. They outsource that to a specialized third party that deals with the risks, like Stripe. The same thing is true for Bitcoin; almost every online store uses BitPay, who take care of the claimed volatility risk.
(Also, there was a pretty stable three-year period for Bitcoin from early 2014 to late 2016 or so. Widespread adoption failed to materialize, so it's not like "once it's stable it will miraculously be adopted by everyone".)
> the fees are very high
Yep. Fees, delays, and unreliability are the actual problems of the moment.
Under the hood how do they do that? Are are they converting your BTC to USDT on-deposit, then additionally from USDT to BTC on-withdrawal?
Currency is an abstraction. It is a social contract to value something at a certain level. That contract is enforced at the highest levels in our county which is why it works so well.
But make no mistake, $100 can buy stuff because only because we all agree to value it at about the same level. If the government collapses, that piece of paper's only worth is how much warmth it will give you when you set it on fire.
Which private company has such a power and credit backed by gigantic land & properties, all the resources from those land, super control from police, military forces?
Present value of legitimate tender is printed on it's face and legitimate government CAN force it. Never, ever confront to big brother.
Don't be childish. Grow up. If you are not humble, the market will humble you.
Prices around expiration dates can get quite volatile, as traders with large positions maneuver to maximize profit or minimize loss.
It actually shows that Bitcoin has lost a lot of value against altcoins since the early December top.
Here is another view on 1h, 24h and 7d price change of the top 10 coins:
I think the whole thing is a scam and that it is incredible the willingness of people to be scammed. Yes I see merit in a decent online currency that works like cash but securely, however, these crypto things are speculative tulip stocks in a book-keeper's window and the people that have bought into it are very much in a cult of their own devising. It is comical. When fools rush in.
The Washington Post had it right in 2015 even though they didn't even use the neologism "hodl":
> - Hey, do you want to hear about the future? It's a digital currency called Bitcoin that lets you spend or move your money online without paying any fees. - Sounds great. How does it do that? - Well, Bitcoin saves you money by making transactions irreversible. - So ... if I get scammed, I got scammed? There's nothing I can do about it? - Yes. - Okay, but is it at least easy to use? - The thing is, I don't actually use it. I just hoard it. I'm waiting for some greater fools to push up the price by using theirs. - Oh. - Yeah. So you should buy some Bitcoins and use yours.
This is nothing but a scam. We don't want people to be scammed.
How does it do that? Irreversible transactions allow the currency to be decentralised, but I don't think they were even intended to be a means of saving money.
> So ... if I get scammed, I got scammed? There's nothing I can do about it?
Cash has much the same problem.
Perhaps that's because we've seen this pattern (and it's knock-on effects on the wider economy) three times in the last 20 years?
Is it possible your rose colored glasses are just the other side of the spectrum to the against view?
Past experience would suggest a double digit move either way isn't surprising. But equally, it's not correcting anything as there's no meaningful book value to correct to.
These are likely just fairly arbitrary moves that will be followed by other arbitrary moves.
As the markets are almost completely opaque, unless you're the person dumping, attempts at attribution are mostly futile.
>> the tokens which hold no technical value will disappear.
But yes, 95% of them will slowly go away
NEO = REGULATION
It may not be a single cause (like a single article) but it could be that the overall sentiment of the web is decreasing, which is causing people to get scared and sell their coins. One would have to actually calculate this.
But this oscillation is very real. For example, we can see positive sentiment come out, and other humans make it their job to fill the web with counteracting negative sentiment, etc. There are many complex factors that go into the price, and the web is merely a fraction of the input into the algorithm.
edit: finally, after 2h delay!
cryptowat.ch only shows the 24 hour change and that matches coinmarketcap.com's value.
# Name Symbol Market Cap Price Circulating Supply Volume (24h) % 1h % 24h % 7d 1 Bitcoin BTC $237,388,220,556 $14,126.10 16,804,937 $12,931,700,000 0.13%