Bitcoin’s Waning Dominance Stirs Warning of Crypto Market Froth

Bitcoin’s Waning Dominance Stirs Warning of Crypto Market Froth

Benzinga

Bitcoin SV: The Original Bitcoin By Makkie Maclang, CoinGeek Bitcoin will forever be remembered throughout history as the pioneer in digital currencies. Before Ethereum, Litecoin, Binance Coin, Cardano and Tether came into existence, there was Bitcoin. It has been more than a decade since the Bitcoin white paper, entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System,’ was published on Oct. 31, 2008 under the pseudonym Satoshi Nakamoto. However, it only reached mass consciousness in 2017 when its value skyrocketed to $20,000. Bitcoin is a triadic term that denotes a digital coin, a set-in-stone protocol and a public blockchain network. While Bitcoin has since become a household name and blockchain has been gaining ground in the past few years as a viable technology for businesses in various industries, such as healthcare, gaming, social media, marketing, supply chain and real estate, not many people know about their true history and real value. Bitcoin History The first ever person-to-person Bitcoin transaction was completed on Jan. 12, 2009 when Nakamoto successfully sent 10 bitcoins to cryptographer and developer Hal Finney. It was a year after, on May 22, 2010, that the first documented Bitcoin transaction was created when early bitcoin mining aficionado Laszlo Hanyecz bought two pizza pies for 10,000 bitcoins - worth about $25 total at that time. Now, 10,000 bitcoins would amount to almost $600 million. From its humble beginnings, Bitcoin’s value and popularity steadily started to rise; and people became increasingly curious as to who Nakamoto was as his identity remained a mystery. Public interest was so high that on Mar. 6, 2014, Newsweek published the lengthy investigative article ‘The Face Behind Bitcoin’ that identified Dorian Nakamoto, a Japanese-American engineer living in California, as the creator of the ‘global phenomenon.’ The next day, Satoshi Nakamoto’s account, which had been dormant since 2009, on the P2P Foundation website suddenly became active. Nakamoto simply replied, ‘I am not Dorian Nakamoto,’ in one of his old posts dated Feb. 11, 2009. In 2015, a year full of upheaval in bitcoin, Wired and Gizmodo published leaked documents and headline stories claiming the largely unknown Dr. Craig S. Wright was Satoshi Nakamoto - effectively doxing him and threatening the well-being of his business, friends and family. This prompted a media frenzy which culminated in the removal of Gavin Andresen from the helm of Bitcoin Core, and caused a fury of problems for Wright who very clearly did not want to be a public figure at the time. On May 2, 2016, the confusion came to an end when Wright, Chief Scientist of UK-based Bitcoin research company nChain, addressed the world and admitted on BBC News that he was indeed Satoshi Nakamoto. Over the years, there has been an underlying dispute within the Bitcoin community over the scalability of its blockchain. The conflict reached its peak in 2017. Termed as the Bitcoin scaling war, Bitcoin split into Bitcoin Core (BTC) and Bitcoin Cash (BCH), with advocates of the former labeled as small blockers and the latter big blockers. These labels denote those who did not believe in scaling and opted to keep Bitcoin’s 1MB block size cap, and those who believed that increasing it is the only answer for Bitcoin to move forward. For Bitcoin beginners, a blockchain is a distributed ledger that records validated transactions on data blocks, which are then linked together to form a chain. A master copy of the data, updated in near real time, is stored on all nodes (or miners) on the network. All miners also need to agree if ever a change is going to be made, making data practically impossible to be manipulated. Hence, data is distributed and the network is decentralized. In order to scale, the block size limit needs to be raised, enabling each block to contain more data and transactions. At the height of the scaling war in 2017, Wright could not take what was happening to his creation anymore. With Bitcoin nurturing a reputation for being a network focused exclusively on large, slow and expensive (but presumably unstoppable) transactions, the only viable use cases for the network were becoming evasive savings and large-scale criminal commerce. Against this backdrop, Wright made a fiery, surprise speech at the Arnhem conference in July 2017. “Satoshi Nakamoto didn’t like the crime culture of Bitcoin; however, it was the predominant cultural narrative. ‘Hey, we need a lot of distributed nodes, we need to make sure bitcoin can’t be censored, and to make sure we can’t censor it, we need to make it slow and small enough for people to run their own nodes and create their notion of perfect security,’” CoinGeek Chief Historian Kurt Wuckert Jr. said.From the moment Wright made his surprise appearance in Arnhem, he steadily returned to the Bitcoin community and became active in order to fix Bitcoin and get it back on track - focusing on the technology, the economics and the culture that makes Bitcoin valuable. In 2018, Bitcoin Cash (BCH) was again embroiled in conflict over the scaling issue. While BCH had scaled its block size limit set to 32MB, many believed that that was enough. Again, some bitcoiners fought against the need for continuing to scale, while others wanted to pursue Wright’s vision of infinite scalability. In late 2018, BCH again split and Bitcoin SV (BSV) emerged from the battle. What is Bitcoin SV (BSV)? With SV standing for Satoshi Vision, it is clear that BSV is all about restoring Bitcoin to what Wright originally intended it to be. Since its inception, BSV has been dubbed as the original Bitcoin. About a year after the split, the Genesis Upgrade was released on Feb. 4, 2020, which successfully restored Bitcoin’s original, set-in-stone protocol, as close as possible to how it was designed in the white paper. Aside from scalability, Bitcoin’s changing protocol and the nature of its governance has been a major issue during the scaling wars. A protocol that is often changed means applications built upon it need to be adjusted as well. Applications would need to stop running and developers would require time and money in order to fully adapt to the new rules. Furthermore, time-locked contracts or escrowed bitcoins were impossible to implement with the shifting sands of the protocol wars - breaking many commercial use cases. With a fixed protocol, developers can now build a variety of applications and platforms on the Bitcoin SV blockchain without having to worry about changes, just like how the Internet protocol created a trustworthy online economy. What sets BSV apart from other digital currencies? Unlike other digital currencies where the coin is the “product” and communities focus on absorbing value for holders of the coin during frothy bull market cycles, BSV is built to allow the external creation of value based on four pillars: a stable protocol, a massively scalable blockchain, security beyond sufficiency and safe instant transactions. With the original Bitcoin protocol set in stone, BSV provides a rock-solid foundation upon which developers can build whatever application or software that suits their needs. The Genesis Upgrade also unlocked the capability of BSV for unbounded scalability and use of the BSV for monetized, general-purpose computation (like Ethereum but without limits!) Since then, the BSV network has continued to scale massively; and this is evidenced by its test network recording 16,415,525 transactions in a single block the size of 3.15GB at an average transaction fee of 0.00000197 BSV on Feb. 3, 2021. This proves that micropayments and financial services can be rendered at a very low cost compared to Western Union or PayPal. Aside from implementing the first ever, fully security-audited Bitcoin node software, BSV’s security is also the only variant of bitcoin that can benefit from the economic security inherent to bitcoin as a complete system without arbitrary limits and compounding dependencies. BSV is public by nature and abides by the rule of law. Per the Bitcoin White Paper, all transactions and changes thereof are broadcasted to all nodes on the network. Their active participation in mining and governance make it impossible for an attacker to successfully conduct a 51% attack, which is the name of an act whereby malicious actors gain control of the blockchain; disrupting and reversing transactions for the sake of theft or vandalism of the blockchain ledger. The public blockchain also prevents criminal activities as evidence of any illegal dealing is publicly accessible. All of these attributes, which other blockchain networks seek to remove from their competing protocols, make instant transactions on BSV uniquely safe and reliable. Enterprise Blockchain Solutions The Genesis Upgrade is just the first step towards BSV’s grand vision of making it an enterprise blockchain that can be globally adopted by businesses. At present, there are more than 400 projects and ventures being built on the BSV blockchain. US-based EHR Data, Veridat and VXpass are each developing their own healthcare data management platforms; Norway-based UNISOT’s Seafoodchain is already providing solutions to the seafood supply chain; Scotland-based Recycle SV has created an app that streamlines and incentivizes the recycling process; and Australian-based firm LAYER2 Technologies has already successfully tested out voting platform B-Vote to accommodate the country’s entire population. These are just a small number of projects on the BSV blockchain that spans many countries and industries, and blockchain conferences are continuously being held to foster global awareness. The Original Bitcoin Bitcoin has been misused throughout the years and has deviated from its creator’s original vision. And although more than a decade late, Wright has finally stepped up to rightfully claim what was his and steer the project back toward the creation of more economic and personal freedom. He is doing this by giving the world the tools to do business more efficiently and by giving people ownership of their data with increased privacy and utility - only possible with the power of Bitcoin SV. See more from BenzingaClick here for options trades from BenzingaCryptocurrency Tax Laws: What U.S. Taxpayers Should Know as Tax Day ApproachesNew Moms and Life Insurance: 4 Common Questions Answered© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Wall Street Uses Old Tricks in $2.4 Trillion Crypto Jungle

The Daily Beast

GettyIf you’re reading this after the midterm elections, it’s either because Democrats were right that they could buck the historical trends and keep their House majority—or it’s because they were spectacularly wrong.The man in charge of defending House Democrats is confident it will be the former, thanks to strong economic growth and a competent COVID response. And what’s more, he thinks Republicans are betting everything on a historical trend that isn’t going to play out.“I got it,” Rep. Sean Patrick Maloney, the chairman of the Democratic Congressional Campaign Committee, told The Daily Beast this week during a phone interview. “There’s a precedent that says you lose a couple of seats. But what is clear to me is that the Republicans think there’s nothing about their brand they need to change in swing districts, and I just think they’re wrong about that.”But the precedent is much worse than “a couple of seats.” On average, the president’s party has lost 30 House seats in modern midterm elections. The trend is even worse during the president’s first midterm election. In 2018, Republicans lost 41 seats under President Donald Trump. In 2010, Democrats lost 63 seats in what President Barack Obama termed “a shellacking.”Democrats might also be starting the 2022 cycle from a place of subtraction. While redistricting might not cost Democrats as many seats as they once feared, they still probably begin the midterms by losing two to five seats, depending on how aggressively some states—particularly Texas and New York—choose to gerrymander.The Capitol Riot Pissed Off These People So Much They’re Running for OfficeAdditionally, some of the Democrats’ strongest House incumbents in vulnerable seats—Conor Lamb (PA), Tim Ryan (OH), Charlie Crist (FL), Cheri Bustos (IL), and Ann Kirkpatrick (AZ)—are either retiring or running for a higher office, potentially opening the door for a Republican to claim their seat.But Democrats think a booming economy, a popular president, and a competent government response to coronavirus could blunt all of those potential losses, perhaps even cause Democrats to gain seats. And Maloney sees Republicans making some major tactical mistakes.“Doubling down on Trump without Trump, which is an even more toxic and malignant form of conspiracy theories and white supremacy, is just a dumb strategy in swing districts,” Maloney said. “But I think they’re so confident in the precedent that they forgot to bring a plan and they forgot to bring any policies that might justify winning back the majority.”In contrast, Maloney and other Democratic strategists say Democrats have a winning message on the economy, which they believe will be humming come the midterm elections. (Maloney theorized that it’d be growing at 7 percent.) And Democratic strategists noted that Republicans may have made a misstep on the $1.9 trillion COVID relief package, allowing it to pass without a single GOP vote.“While we focus on delivering, they are going to focus on dividing,” Maloney said. “And that’s why you see them trying to exploit issues that support mass racial justice for short-term political gain, or issues as silly as children’s books or Mr. Potato Head, because they are a party without ideas in search of pockets of frustration to exploit.”Maloney added that the GOP’s game plan seemed to be to vote ‘no’ on everything Democrats put forward on the economy, on infrastructure, and on the coronavirus pandemic, sprinkle in a host of culture war items that seem to be motivating Republicans more than ever, “literally root for the president to fail,” and then somehow win.For the record, the National Republican Congressional Committee sees it going very differently. They think Democrats are putting forth an agenda that Americans will enthusiastically reject. And they suggested that Democrats weren’t taking the historical trends nearly seriously enough, noting that Republicans still lost seats with a relatively strong economy in 2018.“If the clowns at the DCCC don’t see how much trouble they are in, they are just as delusional now as they were last cycle,” NRCC communications director Michael McAdams said in a statement to The Daily Beast. “Sean Patrick Maloney’s tenure as DCCC Chairman has been an unmitigated disaster and House Democrats have embraced a toxic socialist agenda that wants to raise taxes, defund the police and open our borders.”Maloney’s limited tenure has been, to this point, mixed.Democrats just had their best off-year fundraising for the first quarter ever. The DCCC raised $15.6 million in March alone, and Democratic frontliners—the most vulnerable members—have already raised more than $20 million, ending the first quarter with more than $48 million cash on hand.And the 54-year-old Maloney said recruiting candidates had been going well, due in part to the frustration some Democrats felt watching the Capitol be sacked by insurrectionists.But there’s also been missed opportunities.Their decision not to play in a Texas special election seat last month appeared short-sighted after the top vote-getting Democrat missed second place by 355 votes—resulting in a Republican v. Republican runoff election later this year.A Democratic strategist who asked to remain anonymous to be more candid about that outcome noted to The Daily Beast that if Democrats knew it would only have taken a little bit of money or help on the ground to turn out the vote, they would of course made a small investment—if only to make sure Republicans had to spend in the runoff itself. And this strategist also said there could be a “chilling effect” for candidate recruitment, as the DCCC looks to entice the best possible candidates to upend their lives and run for Congress.The NRCC was also more than happy to point to the Texas special election as a failure for Maloney—as well as the legal challenges Democrats funded to the tune of $1.4 million trying to litigate a seat in Iowa that was decided by six votes.“Democrats have fallen on their face at every turn this cycle,” McAdams, the NRCC spokesman, said.Maloney, however, vigorously defended the DCCC’s decision not to spend in the Texas special election.“The point is not to come in second or third; the point is to win,” Maloney said. “So if I thought there was an argument to winning that seat, we would’ve invested in it. Simple as that.”For one, he said, the DCCC wasn’t prepared to pick a favorite among the Democratic candidates running. But for another, unlike the Republicans, Democrats decided not to spend on a seat that is already tilting in the GOP’s favor—and would likely only get redder as Texas goes through its partisan redistricting process.“That may disappoint people or cause certain second-guessing,” Maloney said. “But I think that one of the big takeaways from the last cycle was that the battlefield was too big and that we need to be more focused.”Democratic strategist Jesse Lee told The Daily Beast that focusing on the Texas special election—while a favorite activity among Beltway reporters and strategists—would really have little impact on the 2022 election. And if Democrats had spent there and gotten a Democrat into the runoff, “then everyone would’ve been lamenting that they chose one candidate over another.”Just as Maloney did, Lee mentioned that the midterms where the party in charge gained seats seemed to come in reaction to major crises—like 9/11 and the Great Depression.And Lee noted that there was a clear narrative developing, on the economy and on COVID, where Republicans were positioning themselves as “part of the problem” and “against the solution.”“It’s the combination of Trump and the Trump era, the insurrection, and the opposition to the rescue plan that has left them underwater by nearly 20 points,” Lee said of the GOP approval rating. “In elections that are more and more nationalized, especially in the House, a lot of voters will be making a choice between two parties as much as they’re making a choice between two candidates.”Other Democratic strategists noted that they’ve had success tying Republicans to the most extreme factions of the party, such as QAnon, insurrectionists, and Rep. Marjorie Taylor Greene (R-GA). And they didn’t see much risk in overplaying their hand by, say, trying to tie those elements of the party to more moderate and vulnerable members like Rep. Brian Fitzpatrick (R-PA).As one Democratic strategist noted, even the most moderate Republicans won’t speak out against whatever controversy Taylor Greene is kicking up day-to-day.And then, of course, there is the latest GOP controversy surrounding No. 3 House Republican Liz Cheney. Strategists said this would further cement the Republican brand and make it easier to show in those suburban, affluent, and educated districts that Democrats turned blue in 2018 that this isn’t your father’s GOP.“House Republicans are entrenched in their own infighting, choosing to shamelessly oust Liz Cheney for telling the truth about the results of the presidential election while ushering in political opportunist Elise Stefanik, who peddles dangerous conspiracies about the results of the election for her own political gain,” Maloney said.DCCC spokesperson Helen Kalla further went after Stefanik and Minority Leader Kevin McCarthy (R-CA) for showing what Republicans really stand for.“Elise Stefanik’s evolution from refusing to even say Trump’s name to becoming one of his staunchest defenders shows that pushing the Big Lie is a prerequisite for membership in today’s GOP,” Kalla said. “McCarthy and House Republicans are making their message clear—lie to the American people or get out of the way for someone who will.”Still, Republicans point to their strong reputation on the economy. And they believe that the potent culture issues, combined with the strong historical trends, will propel Republicans to the majority. Not a single GOP incumbent, after all, lost their House seat in 2020, despite Democrats winning the White House and believing they’d pick up an additional dozen districts.And yet Maloney has an answer for that, too. He said the smaller battlefield to defend, combined with the historical trend already being bucked in 2020 with Democratic losses, could lead to pickups for his party. But he acknowledges that the game plan does ride on a strong economy.“If the economy succeeds and people feel it, then just think about it,” Maloney said. “Their argument depends on either deceiving people about the president and the Democrats’ success, or trying to talk it down in a way, and I just think that’s a mistake.”Read more at The Daily Beast.Get our top stories in your inbox every day. 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DOGE sends Robinhood Crashing, but Musk Will Send Crypto (Literally) to the Moon — Does That Mean You Should Invest?

Bloomberg

(Bloomberg) – Wall Street traders like Trey Griggs are finding a new lease on life in the $2.4 trillion crypto Wild West.After two decades in energy trading, the 51-year-old was lured by a former Goldman Sachs Group Inc. colleague this February into a new world of market-making in digital currencies.Now he’s in fighting spirits – unleashing old-school finance tricks to exploit the industry’s rampant inefficiencies, volatility and downright weirdness.“All the fun that used to be had 30 years ago in the commodity markets and is no longer fun – that fun is now in crypto,” says the U.S. chief executive officer at GSR Markets in Houston.Griggs is among crypto newcomers deploying systematic strategies that are tried-and-tested in conventional asset classes – price arbitrage, futures trading, options writing – in a booming new corner of finance. As more mainstream investors get behind Bitcoin, boutique firms are joining the likes of Mike Novogratz in an ever-broadening crypto rally that keeps breaking records.For those who can stomach the price swings, the threat of exchange hacks and the byzantine market structure, complex fast-money trades are offering an alternative way to ride the digital mania.At GSR, the firm’s bread and butter is market-making, where traders pocket the spread between buy and sell orders.In stocks, that’s a nearly oligarchic business where the likes of Citadel Securities and Virtu Financial operate at lightning speed. In virtual currencies, where hundreds of exchanges offer free access at a slower pace, GSR can capitalize on the big volumes without splurging millions on high-frequency infrastructure.“Part of the tech we have is just to tell us did we actually trade or not, is this trade good or bad,” says GSR co-founder and former Goldman trader Richard Rosenblum. “We don’t want to be slower than our competitors, but it’s just not quite as much of the driver.”For every strategy in stocks, bonds or currencies rendered boring by low rates, regulation or market crowding, there’s a lucrative trade in a token lying across the hundreds of exchanges out there. Or so the thinking goes.Read More: Veterans of FX’s Wilder Days Are Loving Bitcoin’s VolatilityWhile crypto die-hards have made merry like this for years, the relentless rallies across the tokensphere this year are drawing more Wall Street converts seeking riches and new thrills.Take Mark Treinkman. After a career mostly at proprietary stock-trading shops like Chimera Securities, digital money is renewing his passion for quant trading.“I’ve been going through some of my old strategies and things that wouldn’t have worked in equities in decades have an edge in crypto still,” he says.A market-neutral strategy run by his $60 million firm BKCoin Capital gained 71% last year using investing styles that often include arbitraging different prices across exchanges and the gap between the spot and futures market.For a few minutes during trading on Wednesday, for example, the price of Ethereum Classic jumped well above $100 on the Coinbase exchange. The digital token was trading at less than $80 at other venues, offering an obvious opportunity for investors to make money simply by buying in one place and selling in another.It’s one of the best-known – albeit diminishing – discrepancies exploited by the likes of Alameda Research, a crypto trading firm filled with former traders from high-frequency shops. A famous example is the kimchi premium, the tendency for Bitcoin to trade higher in South Korea thanks to strong demand and the difficulty of moving money around to profit from the gap.With no one-stop prime broker to centralize trading books and offer clients leverage across venues, traders like Treinkman face plenty of challenges in their bid to arbitrage price gaps, but say the rewards are commensurate.And the opportunities pop up everywhere. For instance, when longer-dated futures in pretty much any asset class trade higher than the spot price – known as contango – the former almost always converges to the latter as the contracts mature.That’s popularized the crypto basis trade, where an investor goes long the spot rate and shorts the futures.When Bitcoin last peaked in mid-April, the December contracts were nearly 4% higher than August which were in turn about 2% higher than the spot reference rate, as speculators unleashed bets on rising prices. By contrast, the December oil contracts were trading beneath August’s on the same day, according to the data compiled by Bloomberg.“The crypto market is still dominated by retail investors who use excessive leverage and bid the premiums for futures,” said Nikita Fadeev, a fund manager at $60 million crypto unit at quant firm Fasanara Capital.Trades common in the industry also include short-term momentum and a form of statistical arbitrage, which bets on gaps between various tokens eventually closing like when Ethereum is surging but Bitcoin isn’t, Fadeev says.As assets grew, the fund recently appointed Laurent Marquis, the former co-head of derivatives at Citadel Securities, as chief risk officer, and Steve Mobbs, co-founder of quant fund Oxford Asset Management, as senior adviser.Over in Zug, Switzerland, St. Gotthard Fund Management has transformed from an old-school family office writing options on Swiss shares to a digital evangelist in its income strategy aiming to yield 8% a year. Just like in stocks, the investing style sells derivatives to take advantage of big demand to hedge price swings – which causes the volatility priced into options to be higher than what’s likely to come to pass.For option writers like St. Gotthard, that means the premiums are much juicier, though they also come with a higher risk of having to actually pay out, like an insurer during an earthquake.“The major difference at the end of the day is how much premium retail investors are willing to pay,” says chief investment officer Daniel Egger. “On the other hand of course we’ve written calls we wished we hadn’t in those moves up.”In fact, going long crypto over the past year has proved the easiest and most profitable way to tap into the boom. And for those choosing the systematic route, competition is rising.For example, in order to get an edge in its market-making strategy, BKCoin has recently installed servers at Asian crypto exchanges, a move known as co-location in the high-frequency world of stocks. It’s a sign the industry is growing up fast.“In any emerging market we’ve seen these inefficiencies decrease over time,” said George Zarya, founder of Bequant, a crypto prime brokerage that caters to systematic traders. “There are more professional players that come in.”(Updates first chart and market value in first paragraph. An earlier version corrected the seventh paragraph under the second chart to show Fasanara does not engage in momentum and stat-arb trades but says they are common in industry.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.