Bitcoin’s Fall Forecast

Bitcoin activity has been relatively calm again this week, but that doesn’t means that there is a shortage of updates and opinion on its latest moves. A cryptocurrency engineer is creating a social media platform to allow content writers to be paid in bitcoin — a “Bitcoinbook” for Reddit users, if you will. Also, two bitcoin experts responded to central bank calls for assistance in lifting the global economy and suggested that cryptocurrencies are less risky than central bank fiscal policies. Let’s get the details.

The Bitcoin Social Network?

Facebook, watch out. There’s a new social network for bitcoin users — all 10 of them. Well, actually, 10 million, according to CoinDesk, but they have a long way to go to catch up with Facebook’s 1.7 billion Facebook users.

A former cryptocurrency engineer with Reddit, Ryan X. Charles, is creating a network that is open to bitcoin and non-bitcoin users alike, according to Bitcoin Magazine. Charles is arguing that a mainstream app dedicated to bitcoin has more value than one that is bitcoin-exclusive, and few are in dispute with his assumption. The platform, called Yours, is primarily designed as a place for content creators to receive payment, coincidentally, but Charles denies that there is any link between his past employer, Reddit, and his new project.

Charles’ idea is that, by using a platform that is geared to a non-bitcoin-using audience — in this case, content creators — it will be clearer to them how bitcoin is actually solving a problem. Charles is aware that a frictionless process is necessary for the onboarding of users, and he is not averse to even paying new users, which was a tactic of PayPal. The Coinbase Buy Widget as another option for users who want to buy bitcoin, which is only required if a user wants to pay for content.

Now, if they could only take their payment and actually buy stuff. For that, they’d actually have to convert it to dollars. Which makes PayPal’s tactic back in the day a whole lot more sensible.

App Launch, App Closure, App Acquisition

The Keza app which allows bitcoin users to invest in mainstream U.S. stocks, has been acquired by Satoshi Citadel Industries (SCI), and the app has been relaunched.

Stay with us on this one. Shortly after launching in April, the Keza app shut down, and this was on the heels of $357,000 in funding from Digital Currency Group and Jason Calacanis of HOF Capital. Keza had also promised a remittance app as a tool for cross-border payments and remittances.

According to CryptoCoinsNews, SCI had noted in a blog that, in 2016, it foresaw a need for an app that would allow people to invest in the stock market and a way for people to do so securely using bitcoin. Yes, all of those criminals making a killing on the dark web, need a way to buy stocks, so what the heck. Many of the existing bitcoin-related investment websites were not legitimate, and investors were losing money.

Early in 2016, Keza launched, and SCI lauded its simplicity and potential. But then, two or three months later, Keza shut the app down. The reason is unclear, but there was a suggestion that either the company failed to comply with the U.S. Securities and Exchange Commission or test feedback reported a lack of interest.

Fast forward to now, and SCI has convinced Keza that it would be a great partner in the company’s vision to build a bitcoin ecosystem and has acquired Keza. SCI has relaunched a fully functional Keza app that will allow anyone to invest U.S. stocks using bitcoin. SCI plans to build more investment tools on the app. That business deal was almost as convoluted as the bitcoin laundering system. So much for simplicity. We’ll see about the potential.

Bitcoin’s Fall Forecast

Let’s recap the summer for bitcoin prices and see what might befall the currency in the fall. As investors were flummoxed by Brexit, they fled to bitcoin, and the price soared. But the joy was shortlived once the Bitfinex hack hampered the trajectory of confidence among bitcoin investors. Currently, the price hovers between $550 and $600.

So, what’s the jabbering going into the fall and the winter? According to CoinDesk, bitcoin exchange-traded funds (ETFs) are creating some excitement. The emergence of an ETF that tracks a group of stocks would be a milestone and a catalyst for growth. SolidX filed a registration statement with the SEC to launch the SolidX Bitcoin Trust, which is the second such filing — Winklevoss Bitcoin Trust being the first.

According to Daniel Masters, director of Global Advisors Bitcoin Investment Fund: “From the early 2000s onward, there was a proliferation of ETFs covering all manner of commodity interests. In each and every case — for gold, silver, oil, natural gas, platinum, copper and even indices — the advent of the ETFs led to higher prices, more trading volume of futures and cash exchanges and higher levels of commodity futures open interest.”

So, if either ETF is approved, the price could go up.

Another factor that is being bandied about is scaling, to which blockchain is not amenable. Currently, blocks of transactions on the bitcoin blockchain have a storage size of just 1MB, which limits the number of transactions the network can process, and there is no immediate resolution. One solution is
Segregated Witness (SegWit), which has potential, but analysts are unconvinced that it will budge prices.

According to one cryptocurrency investment fund manager, Jacob Eliosoff: “Investors have likely already priced in the coming change, as it was announced in December and originally expected to be deployed in April.”

Now, this seems far-fetched. One investor and entrepreneur, Vinny Lingham, has suggested that halving the bitcoin network rewards to miners is a potential influence on bitcoin prices. But it’s not a great theory because rewards were halved earlier in the summer with little effect.

Lingham’s explanation is a delay in the knock-on effect from a lack of supply. That requires explanation. Lingham suggests that there will be a surge in the price in the next two to four weeks because miners, who have not turned a profit because of the lowered rewards, will be forced to buy bitcoin, creating demand with short supply and pushing up the price.

According to Lingham: “It’s the same as selling crops in the futures market and then being hit by a storm that wipes out half of your fields. The only way, technically, that this doesn’t happen is if the price doubles on halving day (it won’t).” Bitcoinonomics 101.
Bitcoinonomics 102: people have been saying that the price of a bitcoin would reach $1M dollars by 2020 and enthusiasts have said that it would hit $2,000 each year since 2014.

Bitcoin Safer Than Central Bank Fiscal Policy

At the three-day Economic Policy Symposium in Jackson Hole, the world’s central banks made a plea to governments to step up efforts to stimulate the global economy. The U.S. Federal Reserve, the Bank of Japan and the European Central Bank discussed ways to meet current economic challenges.

According to The CoinTelegraph, the banks feel that monetary policy is not enough to improve the global economy, and Jose Rodriguez, VP of payments for the Mexican cryptocurrency exchange Bitso, agrees. Rodriguez said that there is unnecessary risk for people in the way that central banks manage economies.

“Currently, the way the government handles the economy using a very limited number of people is risky when trying to move the value of their notes and coins, like interest rates, money emission, debt, etc.,” said Rodriguez.

Bitnation’s Susanne Tarkowski Tempelhof also weighed in on the discussion, citing central bank controls as a mechanism that stifles economies as opposed to free market systems.

“Central bankers are part of the problem through attempting to control currencies, adding inflation and stifling markets. The only way consumer confidence can be restored is through a boosted economy, and that won’t come through any government intervention. To the contrary, economies may reboot despite government interference, through peer-to-peer free market technologies, such as cryptocurrencies and encrypted communications,” said Tempelhof.

Both experts opine that cryptocurrencies can provide a transparent and democratic solution.

“Economic management from central banks lacks transparency and democratic decision-making. Bitcoin and cryptocurrencies have created transparent, powerful and democratic financial and economic solutions, which will continue to evolve and create true financial inclusion worldwide. They will achieve the final goal of making the economy grow, stimulate economic activity and create trade and options for people to choose which system and currency to use according to their convenience — a goal for all countries and central banks,” Rodriguez stated.

Um, hello … has anyone been watching what happens when central banks can’t use their own money to control their monetary supply? Exhibit A — Greece and its financial crisis. If there is one thing that all economists can agree on, it is that bitcoin as a global currency is DOA. It’s time to stop wasting brain cells on thinking that bitcoin, the currency of criminals, has any prayer of becoming anything other than, well, the currency of crime.

Meanwhile, new data provided to Reuters shows that, in the last decade, one-third of bitcoin trading platforms have been hacked, and almost 50 percent have shut down in the last six or so years. Moreover, there is no depositor’s insurance to absorb losses. Yea, sure sounds like cryptocurrencies are safe and secure.