171113 Bitcoin’s Next Milestone

MilestonesBitcoin roars back to life after a tumultuous weekend where prices dropped from last Wednesday’s high of over $7800 to this weekend’s low of $5414, a 33% fall. Ouch!  The Bitcoin Gold fork is now behind us.  The Bitcoin Segwit2X fork has been canceled.  Bitcoin Cash struggles to remain afloat after a huge uptick this weekend.  In it’s rise to legitimacy and value, Bitcoin must reach some new milestones before its next leg up.

In the world of patents, inventors know that a patent isn’t worth nearly as much when you first are awarded the patent as when you have won in court against a patent challenger.  As Bitcoin matures with age, as these different challenges come to pass, as Bitcoin expands its use cases and market cap, it becomes more and more a fact of life and less a matter of speculation.  Every day that goes by makes Bitcoin a better investment.  Every challenge it weathers strengthens Bitcoin’s ability to stay.

There was some disturbing information regarding Bitcoin’s use cases.  It seems that after an entire year, Bitcoin’s use cases have not increased.  The only increase has been in speculative Bitcoin investments.  From personal experience, that feels about right.  While there is little information about new uses for Bitcoin, there are thousands of new Bitcoin owners hoping to profit from the investment opportunity.  There have been some very good ideas circulated regarding Bitcoin uses, however.  For example, sending money abroad, safely and fast.  People from Venezuela have been using Bitcoin to send money home without fees or the hassle of VISA or Mastercard.  The people of Catalonia, looking for a new currency in their fight for freedom from Spain, may adopt Bitcoin as their currency.  These would be huge boosts to Bitcoin’s viability.

Here are three milestones we should be on the lookout for. Anyone of these would be a home run.

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  1. Any of the big banks such as Goldman Sachs, Bank of America, or Morgan-Chase accepting Bitcoin to buy, hold and sell for their customers.  That would signify a huge influx of big investor dollars into Bitcoin. Every billion dollars increases the price of Bitcoin by $60.00.  A big bank coming into the Bitcoin market would lead, at a minimum, some $40B into the Bitcoin market.  That would raise the price of Bitcoin by $2400.00.
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  2. Any large retailer announcing that they now accept Bitcoin payments such as Starbucks, Subway, or Amazon online.  That would be huge.  Some exchanges have already started offering Merchant services; that is to say, provide resources that a merchant would seek were they to begin accepting Bitcoin.  For example, any merchant that would not want to become a speculator in Bitcoin would want to accept it and sell the Bitcoin without holding onto it for any length of time. Exchanges are offering merchants the ability to convert Bitcoin as soon as it is received.
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  3. A country or region switches from their local currency to Bitcoin, e.g. Catalonia or Venezuela.  Even Catalonia which only represents about 20% of the Spanish economy would generate $200B in GDP.  If Bitcoin were used to represent that economy, the market cap for Bitcoin would rise considerably.
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Anything that expands the uses of Bitcoin is a good sign.  We continue to publish Bitcoin application ideas in the hopes of fostering new and exciting Bitcoin opportunities.

 

Bitcoin Gold Goes Live

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In one hour, forty-two minutes and thirty seconds Bitcoin Gold goes live.  At that point, people take their Bitcoin Gold (BTG) – seriously.  At the moment, Bitcoin Gold is trading at $406 and Bitcoin is trading at $6139.  What will happen short-term and long-term?

Short-term, I don’t believe anything remarkable happens.  Bitcoin will continue to rebound from last night’s low of $5500.  Bitcoin Gold will hover around the $400 mark.  There is a place for both coins to exist in a win-win situation.  At the moment, there are speculators moving money around and both markets fluctuate as a result but in times to come both currencies will find their own levels as their roles become clear.

Bitcoin Gold Goes Live 171112

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In a little over four hours, Bitcoin Gold begins trading.  The creators of Bitcoin Gold have an admirable goal – to keep Bitcoin decentralized. From Bitcoin Gold’s own white paper:

The purpose for doing this is to make Bitcoin mining decentralized again. Satoshi Nakamoto’s idealistic vision of “one CPU one vote” has been superseded by a reality where the manufacture and distribution of mining equipment have become dominated by a very small number of entities, some of whom have engaged in abusive practices against individual miners and the Bitcoin network as a whole.”

They seek to accomplish this by changing the Proof of Work algorithm which will, in their opinion, prevent such practices.  That remains to be seen.  The fork, which happened October 23, 2017, was uneventful.  What happened at that moment in time was simply that a snapshot was taken of the Bitcoin network so that when Bitcoin Gold goes live, an equal amount of Bitcoin Gold will be issued to every Bitcoin owner in the network at that time.  If you owned 10 Bitcoin (BTC) at the time of the fork, you now own an additional 10 Bitcoin Gold (BTG).  The community is divided as to whether or not Bitcoin Gold is/will be stable.  That remains to be seen as well.

Best advice while we wait for the outcome of the Bitcoin Gold launch:  do nothing.  Let the networks sort themselves out first.  Any other move would be pure speculation, and, you’re bound to get it wrong.  Nothing ever goes the way you’d expect it to. There is the possibility that both coins persist.

171105 Month Old Bitcoin Gold ($7535)

Month old Bitcoin Gold does not disappear,
Papa Bitcoin roars ahead, what has it to fear? — Allen Lubow

A fork called Bitcoin Gold happened October 23, 2017, at block 491,407, which had been planned since before the last Bitcoin Cash fork.  There is a very good article telling the whole Bitcoin Gold story here.  Bitcoin Gold tries to solve the problem of Bitcoin mining being too specialized.  A specially designed computer gives professional miners a huge advantage over just anyone with a computer.  That means fewer miners.  Ordinary folk would not attempt to out-compute a miner’s equipment.  If you owned any Bitcoin at the time of the fork you received an equal amount of Bitcoin Gold.  It is still not clear which exchanges honor Bitcoin Gold or help you retrieve it from the Private Key which you have. It would be the same key as the Bitcoin that you owned at the moment of the fork.

Bitcoin continues to do well on its merry path into the stratosphere.  Bitcoin Gold hit a high of $486 and then fell to about $150 where it has remained.  Here’s the real problem, as illustrated by the Bitcoin Gold (BTG) Twitter account.  Eighty-one percent of the world’s Bitcoin mining pools occur in China. Screen Shot 2017-11-05 at 8.50.30 AMWhat happens if China decides to shut down Bitcoin mining? Bitcoin Gold is designed to remove the advantage of special mining equipment in the hope that more mining operations appear around the globe.  China has already shown what it can do with a heavy hand regarding cryptocurrencies.  But will this prove to be enough of an incentive to buy Bitcoin Gold instead of Bitcoin?  I doubt it.  There would have to be some sort of incident that illustrated to everyone just how serious this Chinese monopoly can be.

 

171026 Bitcoin Gold

bitcoin-goldsOn October 23, 2017, there was a Bitcoin blockchain fork.  A new cryptocurrency, Bitcoin Gold or BTG, was created cloning the existing blockchain of Bitcoin to get it started.  For every Bitcoin you own, you were given an equal sum of Bitcoin Gold.  The thinking behind Bitcoin Gold tries to solve the problems of Bitcoin mining.  Among other things, Bitcoin mining uses an incredible amount of energy and is very wasteful of computing power as well.  It remains to be seen what value Bitcoin Gold has.  It’s too early to know.  Moreover, it was reported that the site was down due to a denial of service attack.  We’ll know in a couple of weeks how it fares.

Remember how a shortened game of Monopoly was played, when you didn’t have a lot of time?  The properties were dealt out to all the players at the beginning of the game so that you didn’t have to go around the board, again and again, buying properties one at a time. Bitcoin Gold is sort of the same thing; Bitcoin with a jumpstart.