A lot of money is flowing into the digital currency market, and certain exchanges such as Bitfinex, Bittrex and Coinbase are having a hard time keeping up with all the orders.
Bitfinex has quickly implemented deposit fees for deposits under $1,000, and withdrawal minimums of $250 or more. They’ve also increased the confirmations required for deposits, for example, Dash deposits now require 9 confirmations instead of 6, and sometimes even when the 9 confirmations are reached, the funds are still not available. Withdrawals can now take 24 hours to process – a long time to sit and sweat wondering if your money will ever come out.
Perhaps these are just symptoms of a market expanding, with infrastructure not fit to deal with increasing demand. However, it’s possible that they’re indications of greater problems. When it comes to money, it doesn’t hurt to be careful.
If you got into Bitcoin early, it was probably because you saw the long-term potential of a platform that could disrupt the banking and central banking industries, holding governments accountable and limiting their power. You were probably a starry-eyed idealist who believed that real change was possible, by changing the systems that we all use, and hopefully, those stars have not yet left your eyes. If you got in more recently, you might hold the somewhat less principled position of “We’re all getting rich off this Internet nerd money!”
If you’re the second kind of speculator, you might fold as soon as times get tough, your position torn out easily like the shallow roots of a clover. If you’re the first kind, you might persist even when things are looking bad, because you knew that you had very good reasons to enter the market in the beginning.
Conditions have changed for Bitcoin, with high transaction fees from $1-$3, which rule out the microtransactions, small transactions and use for developing nations which idealists once believed made it unique. According to Mike Hearn, the Bitcoin developer who quit in January 2016, there are people on the team who don’t believe in the fanciful visions of its creator, and never saw it as anything more than a potential platform for large settlements. Hearn declared the experiment over, a statement that was easy to overlook for many, considering how often Bitcoin has been pronounced lost.
The team remains prudent and risk-averse, which makes sense for a multi-billion dollar project, but it also means the programmers on the team who are excellent are not free to innovate, which makes Hearn’s departure seem much more sensible in retrospect. With transactions that can take hours and fees 100x its competitors, the project is already years behind. In today’s world where invention and innovation are common, playing it safe can be a death sentence.
In this episode, Kurt presents the case that the Bitcoin experiment is on the path to ruin, likely being sustained by all the points in its favour, such as brand recognition and network effect, but eventually falling further into inutility, and likely causing misery for many. Join me on this value-investing tail of hope, disillusionment and suspense in the next episode of … The Paradise Paradox!
The Story: The prices of digital currencies are going crazy
In late 2013, the price of Bitcoin started exploding, going from around $120, to close to $1200, within 3 months. People in the digital currency realm were stunned and amazed, and many people (including myself) started buying up currencies, chasing the Bitcoin bullet train. “This time it’s different,” we thought. “Who knows if the price will ever come down?” we thought. A few months later, the price came rolling down, eventually settling around $450. A lot of people surely lost a lot of money in those months, buying high and selling low. That was when I learned a simple lesson: the best time to buy an asset is when nobody gives a shit about it.
Now it’s June 2017, and in the past three months we’ve seen Bitcoin shoot up from around $1000 to more than $2500 – even to $3000 in some markets. I see people on social media boasting about their winnings, parading the fact that they have assets worth hacking. I tell them to be careful, that trading at all time highs can be a recipe for disaster. They tell me “The dollar is crashing against crypto!” and “This time it’s different!” I know some will probably lose a lot when the bull market ends, still believing that they’re digital currency genii and know how to pick winners. Others will prudently and consistently take profits, and wait for another opportunity to buy big.
In this episode, I welcome back Luis Fernando Mises, business consultant, entrepreneur, spiritual healer and digital currency investor, to discuss the latest rise in Bitcoin and altcoins, and what pitfalls people should look out for. We talk about ease of use in virtual currency, potential problems with Bitcoin, and spiritual perspectives to be gained when you lose a lot of money. We also discuss the problems with gossip in the liberty movement, how many are focused on the “telenovela” of liberty, and how that energy can be directed into something more fulfilling.
Join us on another bank-breaking episode of … The Paradise Paradox!
The Story: Have government agents infiltrated Bitcoin?
If you created a system that could potentially displace a lot of existing organisations – large, powerful organisations – rendering them obsolete and removing their sources of funding, you could reasonably expect that some people from those groups wouldn’t be too happy about it. They will most likely decide to take action – perhaps even criminal action – in order to protect their interests. That’s why when Bitcoin was created, it made sense that its inventor (or inventors) decided to remain anonymous.
The identity of Satoshi Nakamoto remains unknown, and as far as we know, no longer has anything to do with the project. So they are most likely safe from reprisal. Yet, what about the people who are involved in the project today? If powerful people wanted to slow down or even destroy Bitcoin, how would they do it? The decentralised, anti-fragile nature of the system makes it too strong for an attack using software. But the developers’ identities are public, and the discussion boards are public. Anyone with sufficient resources could begin to corrupt these groups using money, violence, threats of violence, and sowing seeds of confusions in public forums – perhaps even creating entire companies to subtly undermine the integrity of the project.
In this episode, Kurt looks at a couple of historical examples of how “law enforcement” organisations are willing to get their hands dirty for questionable purposes, and speculates how similar strategies could be used to unhinge the Bitcoin community – or other digital currency communities. He discusses how Hoover used the FBI to act out his prejudices against black Americans, how London Metropolitan policemen were involved in sexual relationships as part of their undercover operations, and the types of unusual comments that float around among prominent Bitcoiners, that raise the question of whether Bitcoin has been compromised.
Join me on a journey of infiltration, deception and mystery in the next episode of … The Paradise Paradox!
When a digital currency is mined before it’s released to the public, that may be a symptom of a scam – but it doesn’t prove without a doubt that it’s a scam. It may be an indicator that the creators just intend to boost up the value of the currency a little, sell their holdings, and leave. However, if we find that the creators continue to work on the coin long after any get-rich-quick scheme should have expired, is it still reasonable to say that the coin is a scam?
Amanda B. Johnson is a familiar face to many who are interested in financial technology, and particularly to those interested in cryptocurrency. For months she was the host of The Daily Decrypt, bringing news about new developments in the technology, informing us about the latest altcoins released and the progress of Bitcoin adoption. Eventually she got frustrated when she saw how tedious and stilted the movement was in Bitcoin, and about how awful most of the new coins were. She finished The Daily Decrypt and decided to start Dash Detailed, giving us a weekly report of the progress in Dash – the currency which she figures is the most likely to reach mainstream adoption.
In this episode, Amanda tell us why she’s so excited about Dash, explaining the concept of money as a service, the importance of user experience, how she might market Dash to people who know nothing about cryptocurrency in the future, and why it’s not easy to crack Dash’s privacy features – even when someone controls a masternode. We also talk about the incentives involved in Dash, and how its anonymity features compare to Monero’s.
Join us in the next blockchaining episode of … The Paradise Paradox!
Argentina was once one of the richest countries in the Americas, and in the world. One hundred years ago in Paris, the phrase “rich as an Argentine” was a common phrase. Now, not so much.
Today, Argentina is a country plagued by the whims of corrupt bureaucrats and central bankers. Over the last 60 years, the Argentine peso has been devalued 4 times, now being worth approximately one ten trillionth of what it was worth. Because of this, when Argentinians such as Rodolfo Andragnes heard of Bitcoin, they were particularly receptive to the idea of sound money with no central point of failure – no corrupt bankers that could steal or print their wealth away. These ideas captured the imagination of Andragnes, and in 2013 he decided to start the first Latin American Bitcoin Conference, Labitconf.
Many Latin Americans are excited at the possibilities that it offers, perhaps giving Venezuelans a way to escape the hyper-inflation of the Bolívar, and giving favela-dwellers in the depths of urban sprawling Rio de Janiero an opportunity to build a reputation, trade outside of their direct communities, and grow real wealth.
In this episode, we describe our arrival in Mexico City to attend the third Latin American Bitcoin Conference, and talk about what we expect to happen at the event, and all the interesting speakers we hope to interview.