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Bitcoin and cryptocurrency mining has become a growing industry, and mining operations continue to compete by making faster chips and purchasing large quantities of land to host data facilities all over the world. Data recorded from around the globe shows the mining economy is booming and the venture has become very profitable for many mining operations and chip manufacturers. For instance, this week it was revealed by regional reports that the Chinese firm, Bitmain Technologies, raked in 14.3 billion yuan ($ 2.3billion USD) in revenue last year from sales.
Mining Proves to Be One of Cryptocurrency’s Most Profitable Sectors
Mining cryptocurrencies like bitcoin has become very profitable for those who know how to obtain cheap electricity and operate a sound business. The ecosystem has spread as Graphics processing unit (GPU), and Application-specific integrated circuit (ASIC) chip manufacturers are making lots of money from the mining industry.
Public shares from companies like AMD, the Taiwan Semiconductor Manufacturing Co (TSMC), and many others have spiked considerably this past year. It turns out, that still to this day, churning out complicated math problems to find blocks is one of the hottest sectors in the cryptocurrency space, and this phenomenon will likely continue. One example is the 16-nanometer mining chip that has been an industry standard for quite some time, but now 12nm, 10nm, and 7nm chips are coming in the near future.
China’s Two Dominant Mining Manufacturing Businesses
One firm, Bitmain Technologies, has been a top mining chip manufacturer for a very long time delivering mass-produced ASIC rigs featuring 28nm, 16nm semiconductors. A recent disclosure from China’s Digitimes details that Bitmain had reportedly ordered 100,000 12nm chips from TSMC and the order was marked “urgent.” Alongside the order, according to the publications 8BTC and Applancer, the Chinese mining firm Bitmain Technologies revenue in 2017 was 14.3 billion yuan ($ 2.3billion USD). The report says that “Bitmain has become China’s second largest IC design company, ranked only second to Hisilicon.” With many companies entering the industry, Bitmain is relentlessly holding its top position in the cryptocurrency mining economy.
Another company that’s done very well last year is China’s Canaan Creative a firm that also creates digital currency miners. The Avalon bitcoin mining chip manufacturer attracted investors in May of last year raising 300m yuan ($ 43Mn USD). A week later Canaan acquired the first document timestamping service for the bitcoin core blockchain called Proof of Existence. According to the reports, Canaan has been developing 7nm semiconductor chip designs and has plans to enter the Artificial Intelligence (AI) market. Coincidently Bitmain is also attempting to enter the AI market with its custom-designed semiconductor hardware.
Bitfury Is Still Dabbling In the Mining Industry
The blockchain firm Bitfury created in 2011 has said it has been making a lot of money this year as the company claims to be generating $ 100Mn USD annually. Although, it’s also been reported that the company doesn’t like to be referred to as a ‘mining company’ anymore, but still seems to dabble in the industry.
Nevertheless, the company still has a mining pool, but it doesn’t command the hashrate it used to years ago, capturing only 1.7 percent of the network’s processing power. Further, the company’s website sells a mobile bitcoin mining unit called the ‘Blockbox,’ and it still sells custom 16nm semiconductor chips. The company hasn’t shown any signs of designing a new semiconductor smaller than the 16nm. Bitfury has also pivoted its business in many different directions with ideas like lightbulbs that mine bitcoin, and blockchain surveillance services. At the same time, the firm has recently claimed to be building the biggest mining operation in North America.
New Fish or Sharks Will Swim Among the Whales
All of these current mining conglomerates have some competition coming soon as there are a few companies aiming to join the mining industry with superior technology. For instance, the Japanese firm, GMO Internet Inc, just recently announced the successful completion of 12nm Fin FET Compact (FFC) semiconductor chips. After completing this task, GMO says the feat has brought them closer “towards realizing a […] 7 NM process technology for mining chips.”
Another Japanese firm that is making waves in the mining industry is the e-commerce and internet conglomerate DMM Group. The firm has started its own mining operations and a “crypto mining lab” that plans to research and develop “the highest per unit hash power” in custom DMM machines.
According to reports last week, the well known Korean electronics manufacturer Samsung is entering the bitcoin hardware and semiconductor market. Allegedly Samsung’s foundry is manufacturing 10-nanometer chips for both GPU and ASIC devices.
It’s safe to say the mining industry will continue to be a very lucrative business, but there have been many failed operations along the way like Butterfly Labs, Black Arrow Software, Hashfast, Vmc, and Cointerra. Some of the older companies like Canaan and Bitmain still have to keep their guard up as new entrants come into the market with faster processors. However, the revenues and funding these existing companies received this year continues to give them a competitive edge until the newcomers prove their devices and semiconductors are what they claim.
What do you think about the competitive mining industry and how lucrative these businesses are? Do you think the new companies claiming to have faster chips will change the mining industry? Let us know what you think in the comments below.
Images via Pixabay, DMM, GMO, Atlas data, PwC, McLean Reports, Bitfury, Canaan Creative, and Bitmain Technologies.
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The Russian Ministry of Finance is drafting a bill to allow the creation of offshore companies to trade cryptocurrencies. This follows the bill which the ministry recently published on the legal framework for cryptocurrencies.
Crypto Trading Offshore
“The Ministry of Finance proposed to create offshore companies in Russia for trading with cryptocurrency,” Ria Novosti reported. Deputy Finance Minister Alexei Moiseev told journalists that his ministry is “considering the possibility of implementing organized trades of cryptocurrencies on the Russky and Oktyabrsky islands,” according to Tass.
Oktyabrsky is a river island in the European Kaliningrad Oblast. Russky Island is part of the city of Vladivostok, off the Pacific coast near Japan. In November of last year, a Hong Kong company announced that it planned to set up a crypto mining farm on Russky Island.
Referring to a recently published bill entitled “On Digital Financial Assets,” Moiseev said the two islands are being considered in the bill. He elaborated that the opportunity to trade cryptocurrencies on Russky Island was “discussed with the Ministry of the Far East,” Ria Novosti described.
Moiseev believes that “the exchange of cryptocurrency for rubles and other assets can be resolved in separate territories,” Tass noted and quoted him explaining:
Maybe it will not be on the common territory, but within the framework of special territories like Vladivostok Free Port, [where] there is already an offshore element, and now a bill is being prepared for the Russky and Oktyabrsky Islands, where there will be an even more special regime.
The Ministry of Finance and the Bank of Russia still have not reached an agreement on the possibility of exchanging cryptocurrency for rubles and other assets.
Russian Presidential Adviser on Internet Development, Herman Klimenko, has “criticized the idea of the Ministry of Finance to create offshore companies in Russia to trade cryptocurrencies,” Tass also reported. According to him, from a technical point of view, there is no difference where the trading of cryptocurrencies is carried out.
Klimenko elaborated, “This is about the same as legalizing mining in a certain territory. You cannot prove that it is conducted on certain sites or on certain equipment.” In addition, he “believes that the organization of offshore companies has no economic basis and will not lead to the creation of new jobs.” He was further quoted by the publication:
When we do offshore fishing in Vladivostok, it’s understandable, there are fish there. If on the Russian island there were the best quality of Internet access and the fastest connection to the whole world, we would say that, for trading in cryptocurrency, this is the most important factor. Then it would be understandable, and so [as it is] there is no point.
What do you think of the Russian finance ministry’s plan to allow cryptocurrency trading offshore? Let us know in the comments section below.
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Another major international leveraged trading brokerage has launched a contract-for-difference (CFD) for Bitcoin Cash paired against the US dollar. This means that Roboforex clients gain today the ability to trade the instrument on the most popular platform in the retail forex market, MT4.
Bitcoin Cash CFD
Roboforex, an IFSC (International Financial Services Commission of Belize) licensed financial broker, has expanded the list of cryptocurrencies available for CFD trading to its clients the via popular MT4 and MT5 FX platforms. The company’s traders now have the opportunity to speculate on the prices of bitcoin cash as well as dash, litecoin, and Ripple’s XRP. The leverage applicable for all the instruments is fixed at 1:10.
Only back in September 2017 the brokerage first provided its clients with an opportunity to trade leveraged instruments on assets from the cryptocurrency market, starting with bitcoin (BTC) and ethereum (ETH), which were made available in both Meta Trader platforms, MT4 and MT5, as well as its own R Trader.
Irresistible Popularity and Volatility
Explaining the rationale for adding the new instruments at this time, the company says it will allow traders to diversify their trading portfolios. It says that altcoins attracted a lot of attention from their traders’ clients throughout 2017 during the massive rally. CFD traders are especially attracted to volatility, as this form of leveraged trading allows them to go long or short. This combined with the “intensive development of the digital currency market” are the reasons Roboforex decided to introduce new crypto-based instruments.
Denis Golomedov, CMO at Roboforex, commented about the move: “We always keep up with the time and provide quality access to a wide range of trading instruments. The current situation is that a large part of our clients are trading cryptocurrencies and we see high potential in them. This market is very attractive due to its volatility. It is growing and scaling very quickly, and more and more people are taking interest in it. To satisfy this demand, corresponding infrastructure and services are required, and Roboforex is systematically, step by step, implementing them for its clients.”
Is now the best time to trade cryptocurrency on leverage with CFDs? Tell us what you think in the comments section below.
Images courtesy of Shutterstock.
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Apple co-founder, Steve Wozniak, recently stated that he has liquidated most of his bitcoin holdings whilst speaking at a business forum in Sweden. Mr. Wozniak has previously stated that he had purchased bitcoin for approximately $ 700 USD, suggesting that he likely realized gains of more than 1000%.
Wozniak Sells Bitcoin Stash
Speaking at the Nordic Business Forum in Sweden on January 24th, Steve Wozniak told an audience that he has liquidated nearly all of his bitcoin holdings. Mr. Wozniak stated that he does not want to obsess over the price of bitcoin, and chose to cash out after the price “shot up.”
“I had bitcoin to experiment with and when it shot up high, I said, ‘I don’t want to become one of those people that watches it, watches it and cares about the number.’ I don’t want that kind of care in my life. Part of my happiness is not to have worries, so I sold it all — just got rid of it — except just enough to still experiment with,” Mr. Wozniak said.
The Apple co-founder also stated his primary interest in Bitcoin moving forward will be using the cryptocurrency as a means of payment.
“Life is About Happiness”
In 2017, Mr. Wozniak recounted his entrance into the bitcoin markets, stating “I remember getting interested in bitcoin some time ago. It was $ 70 for a bitcoin, man and I went online and you had to have a special bank account at a special bank and I couldn’t buy any bitcoin so I gave up. Eventually, I got some of them at the $ 700 stage.”
After having likely closed his position at a more than 1000% profit, Mr. Wozniak is at peace with his decision to liquidate the majority of his bitcoin stash. “If I died and had all this wealth and yachts and all this stuff, would I be as happy as when I laugh? And I thought about pranks I played and jokes I had told and music I would hear that would make me smile, and I came up with my formula that life is about happiness.”
Do you think Wozniak sold at the right time? Share your thoughts in the comments section below!
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We know you heard this one before, but China wants to ban bitcoin…again. Only this time the government plans to use one of its most far reaching tools, the Great Firewall of China, to completely prevent anyone in the country from reaching foreign exchange sites. Unless they have the technical capability to bypass it, of course.
Closing the Gaps in the Great Firewall of China
Chinese authorities have decided to block internet access to overseas cryptocurrency exchanges, effectively cutting them off from the market in China like Google or Facebook. This comes after regulators determined that all their previous attempts to stop local investors from taking part in bitcoin trading and Initial Coin Offerings (ICOs) have failed in their mission so far.
Financial News, a People’s Bank of China mouthpiece, wrote that: “To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs. ICOs and virtual currency trading did not completely withdraw from China following the official ban… after the closure of the domestic virtual currency exchanges, many people turned to overseas platforms to continue participating in virtual currency transactions. Overseas transactions and regulatory evasion have resumed… risks are still there, fueled by illegal issuance, and even fraud and pyramid selling”.
Will It Work This Time?
After China clamped down on operations of local exchanges, once the world’s most active bitcoin trading venues, the industry quickly moved offshore to Hong Kong, Singapore, Tokyo and beyond. The websites offered Chinese language support and users had various ways to fund their accounts. Now the plan is to prevent all access to the sites completely, so none of these bypasses will get a chance to work.
The Great Firewall works by both targeting individual domains and general forbidden keywords. Sophisticated and tech-savvy Chinese traders might be able to bypass the block with a VPN service, but internet censors have been cracking down hard on those as well recently and they have gotten better at this cat and mouse game as well with the help of major technology companies. For those who will not be able to access international websites they might have to trade off-exchange only and wait for a truly unblockable decentralized solution.
Will the government of China be able to stop its citizens from buying bitcoin this time around or should bitcoin just ban China and get it over with? Tell us what you think in the comments section below.
Images courtesy of Shutterstock.
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Doomsdayers out in force; Paul Krugman being Paul Krugman; Tether upto its usual tricks and the usual gamut of scams, schemes, and shakedowns. It’s been emotional. It’s been nerve-wracking. But it’s also been a total riot. Welcome to This Week in Bitcoin.
Also read: Trading Tip `The Wall´ – I Was Wrong
We’re All Gonna Make It
It’s too soon to say we’re out of the woods, but the blood-letting has at least been stemmed long enough for us to be able to glance at our portfolios once more. The past week in bitcoin has frequently felt like a titanic battle of good vs evil, or rather gloom vs cheer. Every glimmer of good news that’s emerged through the clouds has been drowned out by a sudden deluge of grim tidings. So far, evil seems to have had the upper hand, but like any good fairy tale, the forces of good will ultimately prevail. First though, there’s a white knuckle, heart-racing journey to endure laced with sporadic bursts of pain.
This week’s biggest stories haven’t always made for cheerful reading, but they’ve certainly been captivating, and have predictably been interpreted through the lens of the current mood. Facebook banning crypto ads, most would say, is surely for the best, as if there’s one thing the world doesn’t need more of it’s scammy ICOs preying on the gullible. Some media outlets portrayed this as further evidence of a crypto crackdown, and even suggested it was the reason for the market downturn. They were wrong, although quite what caused this week’s slump is a matter of some debate, which we’ll get to shortly.
Keep Calm and Hodl Hard
Even the most pessimistic of publications didn’t manage to portray Samsung’s entry into the ASIC mining business or Square launching its bitcoin buying service as anything but good news. South Korea bringing an end to anonymous cryptocurrency trading can also only be a good thing if the increased transparency helps settle regulators. These bullish stories were mostly drowned out however by the bearish news that Tether had severed ties with its auditor and been subpoenaed by U.S. regulators.
Depending on your outlook, several of this week’s ICOs were either a raging success or a total disappointment. If you successfully bought into The Bee Token or Dadi, for instance, you’re probably quite content. If you’re one of the hundreds of investors who got scammed by phishing emails purporting to be from these companies, however, this week has been a total disaster. It’s hard to keep track of the amount of ether that’s been stolen in this manner in the last seven days, but somewhere in the region of $ 3-4 million sounds about right once vegetables on the blockchain’s exit scam is factored in. It’ll keep happening until investors get smarter or ICOs find a way to eliminate these attack vectors. Stopping all email communication altogether would probably be a start.
File Under WTF
And now onto this week’s WTF stories. The whitepaper for Venezuela’s shitcoin – sorry, ERC20 token – arrived, and it didn’t disappoint. We wrote:
There’s something inescapably strange about reading a national government’s whitepaper which references Coinmarketcap and where talk of pre-sales and token emissions is bandied about.
Oh, and with each Petro token priced at the going rate for a barrel of oil, they’ll raise $ 5 billion if the Petro hits its hard cap. Beat that Telegram. Other oddities we reported on this week include Japan’s most popular chat app announcing plans to launch a cryptocurrency exchange and leaked docs which suggest the NSA are trying to crack the ring signature technology used in anonymous cryptos such as Monero. That one got the comments section warmed up.
Speaking of Monero, if there’s one thing a bear market’s good for it’s flushing out scamcoins. This week, ERC20 token Monero Gold (not affiliated with the real Monero) got rekt and so did Bitconnect imitator Davorcoin. There’s something strangely satisfying about watching a shitcoin plummet all the way to its rightful value of zero.
It’s Time We Talked About the Bitcoin Price
There’s a lot of ways this week’s market drama can be interpreted and a lot of reasons that can be attributed. In the lack of any sensible explanation, we might as well blame the moon again. It seems a more likely explanation than the unfounded rumors of India banning cryptocurrency. Strangely, there’s actually data to support the theory that market cycles are correlated with the movements of the moon. Look, there’s even a pretty chart and a PHD study on the phenomenon, so it must be true.
We’re not saying it was the super blue blood moon that appeared this week, but it was totally the moon. For all the pain the past semana has brought, let’s look on the bright side: bitcoin’s still up 729% since last February. Keep calm, hodl hard and everything will turn out just fine.
What was your favorite story from this week in bitcoin? Let us know in the comments section below.
Images courtesy of Shutterstock, Coinmarketcap, and Stroax.
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There seems to be a sudden surge of ICOs in the gambling space, and Zero Edge has caught our attention. It aims to create a cryptocurrency for the online gambling space and they have an ICO coming up. Zero Edge is a decentralized online casino and an open protocol which aims to offer players 0% house edge casino games, fee-less sports betting and an open source platform for building online games.
Zero Edge will be creating their own token named Zerocoin which is the fundamental part of their business model. Adrian Casey, CEO of ZeroEdge, says, “The Zero Edge Casino model is based on Metcalfe’s law and factual Bitcoin price growth. Casino players, i.e. Zerocoin holders will not only be able to play 0% house edge games, which offer a truly equal odds of winning against the house but will also see their Zerocoin value increase as a result of increased demand and adoption of the token.”
The blockchain use case for Zero Edge is mainly in providing decentralised trust. All games will be publicly verifiable on the Ethereum blockchain without negative effects on user experience during the game session. Furthermore, Zero Edge Casino will have a sophisticated and audited random number generator (RGN) mechanism to ensure complete randomness of its games.
Adrian Casey, the CEO of Zero Edge believes that The main problem with online gambling industry today is that its purely profit-driven enterprise with marginal consideration for consequences of its practices.
He says, “The simple solution to the problem is creating a platform where playing games is “free”. Players are not required to pay any fixed amount of money to be able to play at the casino. This can only be achieved by creating a closed loop economy with its own token where players purchase the token with fiat or crypto. Since the supply of ZERO is limited, its value is directly proportional to demand.”
They claim that their main difference that makes Zero Edge stand out from its competitors is that its business model is based on its token’s value growth rather than the cash flow generated from casino’s games.
The Team and product
The team at Zero Edge is lead by a CEO who has spent 6 years with two of the biggest names in the betting industry, namely William Hill and Centrebet. Adrian is supplemented with a good tech and marketing team, many of whom have had past experiences in the betting industry.
The advisory team is dominated by legal experts, professionals in the betting industry and other entrepreneurs in the blockchain and cryptocurrency space. A good thing to note here is that there isn’t anyone mainstream big name on the team and advisors, but preliminary LinkedIn verification shows a very focused emphasis on the betting industry.
As far as the product goes, you can check out some of the games in the casino section on their website, with some other verticals such as sports betting, are still under construction.
An interesting fact I came across recently was that gambling has been part of human life even before written history. The earliest six-sided dice date to about 3000 BC in Mesopotamia. This has translated to a huge betting industry in today’s day and age, where the global online gambling market was 37.91 billion USD in 2015 and is estimated to reach 59.79 billion USD by 2020, at a CAGR of 9.5%
Zero Edge ticks all the boxes when it comes to the market size, the problem it is solving, the team and product. The fact that they have a working product is particularly reassuring. There’s also a good incentive for early investors. The company will organize its early token sale (pre-ICO) in February when the public will be offered to purchase a limited supply of Zerocoins for a discounted price.
This is a paid press release. Readers should do their own due diligence before taking any actions related to the promoted company or any of its affiliates or services. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in the press release.
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This past January the Bitcoin Cash (BCH) developers and community began implementing a new address format called ‘Cashaddr.’ The new protocol serialization makes BCH addresses distinct from other cryptocurrency formats in order to reduce user error, and the change also bolsters some future network functionalities as well. Over the past two weeks, many BCH supporting businesses and service providers have upgraded to the new format.
Lots of BCH Infrastructure Providers Implement the New Cashaddr Address Format
Just recently the bitcoin cash development team and the community changed the cryptocurrency’s address format to a new version. The integration makes it much harder for users to send BCH to a bitcoin core (BTC) address or vice versa. Basically addresses look different and some contain the prefix “bitcoincash:” when displayed.
Every Cashaddr address is also tethered to a “legacy address”, and the change doesn’t affect the users private and public keys. So far lots of bitcoin cash supporting exchanges and wallet providers have upgraded to the new format over the past two weeks.
Services That Support Cashaddr
Currently, the service providers and wallets who have integrated the Cashaddr format include Blockchain Wallet, Coinbase, Electron Cash, Bitcoin.com, Explorer.bitcoin.com, Bitpay, Copay, Coinomi, Hitbtc, Chaintip, Stash Wallet, BTC.com Wallet, Bitcoin ABC, Bitcoin Unlimited, Blockchair, and Blockdozer. Other wallets like the iOS client Unit have detailed that their development teams plan to implement the address change in the near future. Some companies like Shapeshift are expected to integrate Cashaddr, but the firm has made no statements of this intention. Shapeshift’s hardware wallet business Keepkey has stated Cashaddr functionality will be provided in the future.
Cashaddr and Legacy Format Compatibility
Alongside this, there are also wallets that allow you to toggle between both Cashaddr and legacy addresses within the wallet interface. If a user does find some compatibility issues with a wallet that does not support the Cashaddr format, there is a tool that can convert a BCH Cashaddr address to the Legacy format and vice versa. The website Bitcoincash.org has this tool available for users who run into wallet compatibility issues. Another converter tool is also available in the Electron Cash 3.1 client.
“Any legacy bitcoin address format will convert to one and only one Cashaddr format, and the same is true in reverse. So there will always be two versions (legacy and Cashaddr) of any given address, and they are interchangeable because they correspond to the same set of private and public keys,” explains the Bitcoin ABC development team regarding the Cashaddr addresses relationship with the legacy format.
The address format is just an encoding — To use an analogy, think of the encoding as just a wrapper, or “clothing — Consider the fact that you can always talk to your friends, regardless of what clothes either of you happen to be wearing. In this analogy, what’s underneath the clothes is the raw public key hash (pubkeyHash). You can convert from the old format to the new format, or from the old format to the format and there are several converter tools available.
Some Providers Show No Intention to Upgrade
At the moment there are a few wallets who have no immediate intentions to support the Cashaddr format. On January 17 the wallet provider Jaxx said they have “no plans to integrate Cashaddr at the moment.” The hardware wallet provider Ledger stated a while back the company does not plan to support the change. “It’d be significantly easier for everybody to just update the P2PKH and P2SH versions while keeping the same address format, or reuse Bech32, so wallet developers don’t have to support two different but almost similar schemes,” explains Ledger’s chief technical officer (CTO). According to the CTO of the hardware wallet company Satoshi Labs his development team doesn’t plan to upgrade the Trezor software to the new format anytime soon.
There’s plenty of work around for people who have issues with compatibility between wallet interfaces. However, a great majority of the bitcoin cash ecosystem has upgraded, and other BCH supporting companies plan to do so in the near future.
Is there a wallet that you know that is Cashaddr compatible that’s not mentioned above? Let us know so we can update our list. What do you think about the new format? Let us know your thoughts on this change in the comments below.
Images via Pixabay, Bitcoin.com, Blockchain.info, Electron Cash, BTC.com, Bitcoincash.org, Copay, and Bitpay.
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Chicago Mercantile Exchange (CME) Chairman and CEO Terry Duffy explained in a recent interview how the decision to list bitcoin futures in the last quarter of 2017 wasn’t made as a result of light or transient causes. Instead, it was a deliberate effort to bring a proven technology to well-financed clients who will help it mature.
CME’s Chairman and CEO on Bitcoin Futures
Scarlet Fu put it bluntly. Did the long practice of self-certification within the commodities exchange industry force out or exclude important players such as Goldman Sachs, for example, who were then saddled with bitcoin futures they clearly didn’t want, poisoning the well? Mr. Duffy, CME Chairman, answered immediately, “No.”
“I don’t think it does,” he continued, “because we spent a lot of time working with all our clients, talking to them about all our products, educating them about what we’re thinking. At the same time, there is a competitive issue out there that you want to be cautious of. The self-certification process is a big part of why [bitcoin] was put into place [so quickly].”
Questions of industry self-certification have popped up in frequency tandem to bitcoin’s giant price drop in recent weeks. It even became the central focus of the regulator’s first meeting of the year, as both CME and its crosstown rival, Chicago Board Options Exchange (Cboe), were asked to defend the tradition in direct contrast with standard stocks and their grueling gatekeeper, the Securities and Exchange Commission (SEC).
Mr. Duffy expanded his answer to Ms. Fu of Bloomberg, stating “[Our bitcoin futures product] didn’t have to go through a six month review (everybody could look at your intellectual property and do a copycat, lookalike product). We don’t have the same model as the Securities model. Ours is completely different. I think that the self-certification process works. We worked closely with our regulator. We worked more closely with them on this product because of the unique nature of this product.”
Bitcoin is a Proven Commodity
Cboe was the first to list bitcoin futures, but CME’s week-later entrance into the ecosystem was largely seen as validation for the decentralized currency’s legitimacy and resiliency. CME is about as mainstream as finance can get. It owns several exchanges, and among its holdings is the Dow Jones index.
Remaining on the self-certification issue, Mr. Duffy defends the decision to list bitcoin. “At the same time, and I said this on my earnings call this morning, this product has been around for nine years. It’s not like it just showed up yesterday. Volatility [in traditional markets] has been low the last couple of years. What has not been low in volatility? It’s been bitcoin. People are clamoring for some kind of [volatility]. All the sudden this product becomes very much front page news. We’ve all been talking about bitcoin, and there’s been a lot of conversation about,” he explained. That conversation often turned to volatility and risk, and CME is not in the business of introducing more risk but, instead, managing it.
“We list [bitcoin futures], and we list it with a whole new group of standards. I said today on my shareholder earnings call I would not reduce any of those standards in order to make money on this product. I think it’s important we take a very slow approach to this, and make sure the product is rolled out properly.”
Ms. Fu asks indignantly, “So that high initial margin of 43% … under no circumstances would you lower that?” By way of perspective, commodity margins are usually single digits. Mr. Duffy’s answer is somewhat surprising, as it seems he really believes in bitcoin futures for the long term.
Protecting Ma and Pa
“That’s not what I said,” the Chairman and CEO corrected. “I would not do that in lieu of trying to get volume on it. I think the product needs times to mature. I think we’ve got to get more people involved in it, more commercials involved in this product. One of the reasons we have a five bitcoin per contract, versus our competitors having a one bitcoin contract, is I wanted to make sure I did not attract what is referred to in the business as the ‘moms and the pops’ trading it. I wanted to make sure people had a really good idea about what they’re getting into. I don’t want to attract a craze of people attracting to a marketplace when they’re not quite sure what they’re doing,” he cautioned. CME’s Chairman defended the high margin rates while the sot price tanked, stating
“Now, you look at the price of bitcoin. When we listed it, it was at $ 19,500 day one CME listed it. Today, it’s around $ 9,000 a bitcoin. We have a 43% margin, as you referenced a moment ago; we have had an over 50% decrease in that product. We are still holding 43% initial margin on that product today. It goes to show you the risk management processes we have in place for all of our asset classes but especially something like this when people were concerned about a quick break or a quick rally.”
Ms. Fu also asked about the prospect of listing other cryptos. Mr. Duffy pained a little at the question, “I’ll be honest with you Scarlet, we have not made a decision if we’re going to pursue other cryptocurrencies or not. I was very clear with the management of my company, and my board and my shareholders: this is new, this is controversial, but at the same time, if you look at the evolution of finance, everything was new, everything was controversial. We’re taking a very measured approach towards cryptocurrencies, and I will tell you right now we have no plans in the immediate future to bring out new cryptos right now,” he remarked candidly.
What do you think of Mr. Duffy’s comments? Let us know in the comments section below.
Images courtesy of Pixabay, CME.
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The future for manufacturers of bitcoin mining hardware in China appears bright despite reports that the Chinese central government will seek to rein in the power consumption of mining companies operating within its borders. Hong Kong-based media outlet, South China Morning Post, has reported that there is considerable international demand for Chinese mining hardware internationally – with Russian buyers representing a significant share of the industry’s demand.
Russian Buyers Provide Demand for Chinese Mining Equipment
South China Morning Post spent time with Alex, a 38-year-old Russian businessman visiting China to establish connections with bitcoin mining hardware retailers. The report states that Alex spent three days exploring central Shenzhen, where he compared the products offered by 30 different retailers. Alex claims to have had two or three trips to China over the last 15 years to purchase toys that he resells in Russia, however, this is the first trip that he has undertaken in order to purchase mining hardware.
Alex states that when he first entered the bitcoin mining industry he purchased 200 units in Moscow, for which he paid a 20% premium when compared to the Chinese market. He states that there is far more to consider than just the prices of the hardware he inspects, emphasizing that “It’s about how to choose a true retailer [that I trust].”
For Alex, Shenzhen, in particular, offers too many potential retailers to easily choose from.
Mining Hardware Vendors Plentiful in Shenzen
South China Morning Post recounted exploring the SEG Plaza in Huaqiangbei, Shenzen – a major manufacturing hub that has comprised a Special Economic Zone since the 1980’s.
The report states that the plaza houses “vendors of mining machines scattered between the fourth and sixth floors in spaces originally occupied by sellers of computer components,” noting that “One mining shop had a Russian translation at the bottom of its ad.”
Whilst South China Morning Post article states that “Russians dominate the list of foreign customers,” it is also reported that “Indians and other Europeans” comprise a significant share of the market demand for Chinese mining hardware.
Do you think that China will maintain its dominance over the mining hardware manufacturing market? Share your thoughts in the comments section below!
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The post International Market Maintains Demand for Chinese Cryptocurrency Mining Hardware appeared first on Bitcoin News.