Bitcoin weekly news summary (25.10.14 – 18.10.14)

Bitcoin weekly news summary (25.10.14 – 18.10.14)

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After a few rough weeks, it seems that this week, Bitcoin's price finally stabilized (well… sort of) and trading volumes had declined significantly. On the other hand, in the traditional stocks and commodities markets, the winds raged.
Leading equity indices in the U.S experienced the worst trading week for years, and despite a quick upward correction, many claim that we have not yet seen the end of the markets wild volatility

These uncommon trading weeks, which we have seen recently in both markets, are a convenient point to pause for a moment and examine the mutual effects, if any, that these markets have on each other. A new study conducted by the Bitcoin hedge fund Pantera Capital examined Bitcoin's price correlation with the world's major stock indexes and other leading financial assets (such as oil, 10Y treasuries, gold and more) this study showed mathematically what those of us who followed closely already knew

Bitcoin has its own rhythm

While most traditional financial assets are closely related to one another, either in the direction or the magnitude of their movement, their correlation with Bitcoin's price is almost zero

This has of course a positive aspect regarding Bitcoin's financial independence, but also some negative aspects to those of us who are waiting for the stock markets to collapse and Bitcoin's alternative economy to rise. Or maybe there is another option and the data collected so far is not showing the whole picture. Because let's face it, since Bitcoin emerged to the world (2009-2010 and later) stocks and bonds markets world-wide knew only one direction. Up
It is quite possible that when a significant downtrend begins we will see the much anticipated rise in the inverse correlation between Bitcoin's price and the markets in full force. Either way, according to many, Bitcoin's price has now reached a fair equilibrium price and perhaps is even slightly underpriced, especially now when the potential growth is in its peak

Evander Smart, a CCN reporter, believes that two key factors will push Bitcoin's price up in the next two years and will crown 2016 as Bitcoin's big year

First of all, the fact that the reward for mining a Bitcoin block will half by mid 2016, therefore reducing the number of Bitcoins minted with each block from 25 Bitcoins to only 12.5 Bitcoins.Experience (and economics) has shown that given a situation in which all other variables in a system remain the same (in our case will should look for: usability, investments and global adoption), We should expect that a 50% percent decline in supply will immediately raise the value of Bitcoin. Of course, this information is known to all, and therefore it is expected that the effect will begin well before the deadline

Second, the poor state of the European Union in particular, and the world's economy in general, may cause governments to reach back into the bank accounts of their citizens (Cyprus 2013 style) and significantly increase the demand for Bitcoin as a safe haven out of the governments reach. This obviously is expected to send the price up. Doubters may be surprised to hear that even as we speak emergency laws and regulations are being passed through the E.U to allow that kind of a government intervention in a crisis scenario

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Regulation 

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This week, the comment period for the BitLicense proposal has come to an end with Circle and BitPay commenting. The two companies, both leading in the Bitcoin world, expressed from the start their sheer resentment over the strict conditions and requirements being asked from Bitcoin companies in the state of New-York, as presented in the BitLicense proposal.Both companies expressed their frustrations to these requirements and said that they are expected to stifle Bitcoin's innovation and load a heavy burden on the back of the companies.
Words like: impractical, impossible and simply unnecessary were used.Circle had already announced that if the BitLicense proposal will pass they will have no other choice but to exclude their services from NY customers.Despite all this, Ben Lawsky, the Commissioner in charge of the proposal on behalf of the NYDFS, believes Bitcoin has a bright future in New-York. Apparently we will have to wait and see where things go from here

In other news, now out of all times, when we need Bitcoin to look good in the eyes of legislators, Bitcoin is in trouble with the law in Australia.Local police raided a branch of "Brisbane café" suspected of ties with drug traffickers and seized a Bitcoin ATM in place. The raid came after two years of police work and was one of 19 raids that took place all across the country. The police are now conducting an investigation to examine whether the confiscated ATM served the drug gang for money laundering purposes.According to the company that operates the ATM, the confiscation of the device is considered "collateral damage" in the war against crime and that the people who were arrested have no connection to the company or the ATM.
The ATM in response: 01000110 01000011 01001011 01010101

More on the borderline between Bitcoin and Government, the popular Bitcoin exchange, Bitstamp, announced this week that in further to an earlier message delivered on their behalf regarding the compliance with regulatory requirements and maintaining Anti-Money Laundering laws, they have decided that users who have not undergone the process of identification and verification of their accounts and fail to do so during the next 28 days (since the 16th of October) are in risk of their accounts being foreclosed and transferred to government officials.Bitstamp is aware that some users may not appreciate the new demand and take their businesses elsewhere, and yet, they prefer to play it safe as they put it ,in order to protect the entire system's integrity

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The Alts

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The past year has no doubt been the great year of the Alt-coins. Hundreds of new coins were issued, and more continue to appear each day. The staggering amount of the new coins sometimes makes it difficult to spot the real gems hiding in the thicket of the digital currencies. Such a gem – literally – is going to appear very soon to the cryptographic scene: GEMS

Gems is an innovative combination of a social messaging application and decentralized cryptography technology. The best way to describe how Gems will look, according to project's main developer Daniel Peled, is just to imagine another service we all know quite well, Whatsapp. Only with one important change. In contrast to Whatsapp, in Gems the user name is also a digital address that can receive and store Bitcoins and the local currency of the app: GEMS
The app's inherent currency is actually what enables the decentralized-ownership-mechanism in the application and makes Gems an application which is owned by the users themselves.Unlike in traditional social applications, where the revenues remains solely in the hands of the developers, in Gems, the revenues will trickle down to the end users and will make them real partners in the application's business model

Users in Gems will be incentivized to support and grow the network and in return will receive Gems-coins, which in turn can be converted into Bitcoin or any other currency
Gems infrastructure will be built on top of the CounterParty protocol which in turn is built on top of the Bitcoin protocol. This way the application developers don't need to worry about the strength of the network and the constant need for mining and infrastructure maintenance

Unlike many criticisms, which are often heard on new and unnecessary Alt-coins, Gems will have a real engine that will give its currency value. In Gems, the users can choose whether they want to watch advertisements and receive Gems in return. This mechanism would require advertisers who want to buy advertising space in the application to do so by purchasing Gems and distributing them directly to the end users, thus supporting the value of the currency. As the network's user base grows, the more it will be worth for advertisers to advertise and more Gems will be purchased and distributed to the users. This mechanism is expected to provide constant support to the value of the currency

In the long run, Gems will allow independent developers to use the network and build additional applications on top of it, thus enabling developers to leverage the strength of the social network. If you are interested in taking part in the Gems pre-sale that will take place soon, be sure to visit the project's website

Still with Counterparty, another platform that has chosen to be built on the protocol, Swarm, announces its first start-up cycle. Swarm is a distributed crowd-funding platform for start-up companies, and this week after a stringent screening process they have announced the first 5 companies who will try to raise funds through the platform. Not surprisingly, the five selected companies are all engaged in the same field – decentralization. Good luck to all

So every Alt-coin aims to grow and gain value and one day be as big as Bitcoin and maybe even more (other than those who come just to take our money and run). The AltCoin-Herald gathered for us a number of must-things that all new currencies have do in order to get, and hopefully overtake, the king of digital currencies: First, the currency must be such that people do not buy and sell it only to eventually get more Bitcoins. To do this it must first be a tradable medium of exchange and capable of maintaining value for its holders.Secondly, it should be directly convertible to fiat currencies. Almost all digital currencies are quoted in units of Satoshi (one millionth of a Bitcoin) and are not traded independently. Separation from Bitcoin's value would give the currency a place of honor in the market and will allow it to grow

The crypto-currencies market is growing faster than ever, First or not, if Bitcoin won't catch up soon with the technological gaps that have already opened between him and some of the new coins, it is only a matter of time before he would lose the lead
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But the struggle is not just between Alts and Bitcoin .The Alts scene itself shows some action as well. Such a struggle is taking place (or soon will be) between two other digital currencies. One is more familiar, the other, not so much. NHZ, Next Horizon, is planning to put up a fight with its source coin NXT (NHZ is actually a fork of NXT)
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NHZ was built while recognizing the unique characteristics of NXT and its great potential, but had spared no criticism on its origin coin, especially regarding NXT's initial and controversial distribution. Next Horizon is going to make a broad and fair distribution that would last several years and will operate on the principles of fair compensation to members who contribute to its network. NHZ is already preparing the ammunition and recently presented a detailed road map that shows its future plans and developments. We'll keep you posted
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Still with the Alts. This week was certainly an interesting week in the Weed currencies nicheCannabisCoin, which aims to create a stable means of barter for medical marijuana, and is also the lead (and oldest) coin in the Marijuana-backed currencies group, displayed a powerful week and rose sharply in price. This was the result of a steady and continuous activity by the key developer of the project who continues to work diligently to achieve the goal

The rest of the marijuana-based currencies weren't left indifferent (quite surprising actually when you think about it) and sharp increases in their prices were not late to come. But as always, after a good High, comes the Down. Already during the writing of these lines, sharp realizations are taking place and prices plunge back to the abyss. Apparently the road for a stable trading in marijuana-backed digital currencies is still long
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Crash & Burn

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Here it is, happening to us again. And again, the writing was on the wall. MintPal collapses and with it its customers' money

Mintpal had been disabled only a few months ago after suffering from a huge theft of 2 million $, and was able to return to life only for a short period of time after Moolah announced that it is acquiring the operations of the exchange and plan to make it a safer and more efficient trading arena. Well, so much for that
That same Moolah completely contradicted herself this week with an announcement that shook off its earlier statements and now Moolah claims that it never acquired Mintpal but only took the management of it

Things were starting to really get complicated after the resignation of Moolah's CEO, Alex Green, who is now suspected in connection with criminal activities. Green is now accused by the community, which has achieved enough incriminating evidences, that he is actually the Bitcoin scammer, Ryan Kennedy, who is associated with a of number of cryptography thefts.Green whereabouts' are unknown at the moment and he is suspected of stealing roughly 3,700 Bitcoins from customer accounts who were transferred to a private accounts owned by him

Apart from hundreds of clients who have suffered from the collapse of Mintpal, the Syscoin project which made ​​its ICO using Mintpal's platform also fell as a victim and now lacks about 750 BTC to finance its project development. Syscoin involved legal authorities on the matter
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And as if Mintpal was not enough, another familiar company in the cryptographic scene, Bitcoin Trader, collapsed this week after the company's management disappeared abruptly and with it, again, client funds

Problems in Bitcoin Trader began a few months ago, after the company refused to meet demand from its customers to perform a financial due diligence and ended this week with a sour note when customers started reporting that the funds withdrawal option is not working anymore. After a deafening silence Bitcoin Trader's CEO finally left a message saying that the company was the victim of a theft which drained the company of its assets, including those of its customers. Bitcoin Trader actually managed to build a reputation of a serious and recognized company in the field and despite the concerns of some of its customers it always kept payments on time. The company even sponsored some important Bitcoin events such as the Annual Bitcoin Conference in Amsterdam and the North America Bitcoin Conference

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Funding and news around the world

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On with some more positive news, Bitnet announced this week it raised 14.5 Million $ on a series A roundBitnet intends to enter the Bitcoin payment processing arena and try to take on industry-leading companies like BitPay and Coinbase. The investors behind Bitnet are a group of veterans in the traditional payment processing industry and they intend to leverage their rich experience to aggressively penetrate the market. As evidence, Rakuten, Japan's largest retailer also took part in the funding and plans to use Bitnet's software to process Bitcoin payments in the future
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Not far from Japan, back in Australia, a company named Bitcoin-Group has announced its plans to offer its shares to the public and be listed at the local stock exchange, the ASX. If succeed, it will be the first Bitcoin company ever to do so.Bitcoin Group is mainly engaged in Bitcoin arbitrage services but according to the CEO after the IPO they are planning to shift their focus mainly to the mining businesses and for that they have already made ​​contact with several mining equipment companies and have signed an agreement for electricity supply. Besides Bitcoin Group, (if indeed they succeed in their IPO and meet the target of 20 million Australian dollars), two other Bitcoin companies are listed on the Australian ASX: DigitalBTC which is engaged in Bitcoin mining. And the e-commerce platform Bitcoin-Shop
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And in China, it seems that the ever looming threat of a Bitcoin ban is not going to stop anyone. This week, Yuanbao, a Chinese Bitcoin exchange announced it will offer its customers a new loan serviceThe offered loans are backed by the customers' digital currencies balance, which is held at Yuanbao as collateral. With this new service Yuanbao is allowing its customers to leverage their holdings without having to sell their digital currencies. Borrowers can borrow fiat currency (the local Yuan) up to 60% of the value of their digital holdings.The loan periods ranges from 15 days to one year and a range of attractive interest rates ranging between 10% and 30% makes sure there will always be someone willing to lend
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We conclude this weekly summery with an announcement of a new and exciting project: The BlockNet

It is clear to us all that the hyper inflation which characterized the Alt world in the last year won't last for much longer. Logic implies that in the long-term equilibrium there is likely to occur a significant consolidation process in this sector and only a few coins will remain to take all the glory (and value). But perhaps there is a way to split the crypto-cake among a greater number of participants

The Blocknet project has set itself a target to become the "Internet of the Blockchains" and build a platform that will enable cross-exchange between blockchains in various currencies and enabling direct communication between them using a P2P protocol. The mind behind the Blocknet idea is Dan Metcalf, Xcurrency's main developer

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The Blocknet will be build using the X-Bridge protocol's core technology which was developed at XC, (even so it will not give the XC currency an advantage over any of the other currencies that will participate in the network)

The BlockNet's vision is to become a true peer to peer and completely decentralized and trustless network that would allow direct communication between the different Blockchains.
Blocknet is also aiming to function as a decentralized digital currencies exchange. Among the selected currencies that are planned to be part of the Blocknet project you can find: Xcurrency, NextHorizon, BitSwift, UtilityCoin and many more

More on the program: a built-in reputation system, deployment of ATMs, an issuing platform for digital assets, Private chat, Cloud storage and many more features

The Blocknet ITO (initial token offering) will take place on the 29th of October. If you are interested in learning more, visit here

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Until next week

sources: CoinDesk, Altcoin Herald, CCN

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