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Cryptocurrency, News

Could Bitcoin Price Plummet when Mt. Gox Refunds its 140,000 BTC?

MtGox

The main cryptocurrency in the market could suffer a price drop if the more than 140,000 bitcoins (BTC) reinstated by the Mt. Gox hack are sold. As of this writing, it is trading at $21,600, having hit its lowest in over a year three weeks ago.

This was reported by the analyst Healthy Pockets, given that the lawyer behind the hacking of the Mt. Gox exchange announced that the refund of 141,686 BTC to those affected is being prepared . These are the compensations that the users of said platform will receive for the theft of 850,000 BTC that it suffered 8 years ago, in 2014.

The resolution of the case determined that those affected can receive compensation in BTC, bitcoin cash (BCH) or dollars valued at the time of the hack. Of these options, Pockets indicates that the majority probably choose bitcoin because it is the most profitable.

Such a decision leads him to believe that, upon receiving the funds, those compensated from the Mt. Gox hack could sell their repaid bitcoins . Considering that, he warns that this action could have “serious consequences” for the price of the cryptocurrency. Precisely the value of BTC tends to fall when there is more supply than demand.

For comparison, remember that the recent sale reported on CriptoNoticias of just over $10,000 BTC by miners likely propelled the cryptocurrency’s decline to its lowest in over a year.

Although it should be noted that the fall of bitcoin to USD 17,600, the minimum in more than a year that it touched three weeks ago, was not only due to the sale made by the miners. It was triggered by widespread supply action by investors in the market. In fact, this was also seen in stocks after the disappointing macroeconomic environment .

The action of those compensated for the hack of Mt. Gox could impact the price of bitcoin

In this scenario, a sale of more than 140,000 BTC may not affect the price of the cryptocurrency if there is strength in demand at the same time. But if this is not the case, bitcoin could continue to decline .

Also, consider that those compensated for the Mt. Gox hack could decide to hold their refunded bitcoins instead of selling . This action would not generate a negative effect on the price of the cryptocurrency. Therefore, it is necessary to see how they act when receiving the refund and what impact it causes in the crypto market.

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Cryptocurrency, Horror Story, News

Why did Terra (LUNA) collapsed? What is the Death Spiral?

terra chart

The cryptocurrency that went from $54 to only a few cents in less than a day.

For the past few years, Terra has been building its name as a leader in the stablecoin space. Terra is a layer 1 blockchain built on top of Cosmos that specializes in stablecoin transactions. In late 2020, Terra introduced its own algorithmic stablecoin, TerraUSD (UST). This stablecoin was always supposed to be worth $1.00. However, this stablecoin quickly lost the stability it was meant to have and fell sharply. Many are wondering if the Terra UST failure is the beginning of the end for the project or if there is still room for a recovery.

Why is Terra (LUNA) down?

Terra is a blockchain protocol that hopes to increase the general use of stablecoins in the open economy. Stablecoins are known for their pegged prices, a stark contrast to the extreme volatility seen in most cryptocurrencies.

LUNA is the token that feeds the Terra protocol. Its primary use is to provide liquidity for trades and keep the price of UST stable. Users can stake their tokens to provide merchants with liquidity and earn rewards. This liquidity is also used by the Terra protocol to keep the price of UST at a constant $1.00. However, this system failed and allowed the price of UST to drop to $0.30.

To keep the price of UST stable, Terra will burn or mint LUNA tokens. Since LUNA is used to support UST, influencing supply can be used to keep the price of UST constant, at least in theory. When the price of UST drops below $1.00, LUNA is created and UST is burned. This increases the amount of LUNA per UST and raises the price of USTs. Conversely, when UST rises above $1.00, LUNA is burned and UST is created. This decreases the amount of LUNA per UST and reduces the price of UST.

While this idea should work in theory, the creators of the project were not prepared for the possibility of a massive sale.

The Death Spiral

During the first two weeks of May 2022, some large UST withdrawals were made. This sale of UST increased supply and lowered the price of UST. When the price dipped slightly below $1.00, many panicked and also sold. This caused the price to drop even further. In an attempt to combat this, Terra began burning UST and minting LUNA tokens. However, his system had a maximum amount of UST that could be burned. Once that cap was reached, the stablecoin began to free fall.

In the case of LUNA, when UST fell, many also left their positions in LUNA. This is because UST is an integral part of Terra’s protocol, so its failure could mean bad things for LUNA. Then the price of LUNA started to drop due to the liquidation of UST. However, LUNA’s supply was also increasing rapidly in an attempt to keep the UST price stable. This further decreased the value of LUNA.

In the last week, LUNA has dropped from almost $90 to around $1.00. Investors who owned LUNA lost almost all of their position.

Terra (LUNA) Price Movements

During the second half of 2021, and until the fall of UST, LUNA had been rising steadily. In fact, it appreciated over 1000% from its lows in May 2021 to highs of nearly $120 in April 2022. This surge was due to the steady increase in demand for stablecoins and UST. LUNA rose continuously until May 2022 when the price of UST crashed.

After UST started to drop, LUNA dropped more than 95% in just one day. The fragility of the project was shown, with many abandoning their positions as more holes began to appear. Additionally, the market capitalization fell from nearly $30 billion to just over $1 billion.

Cryptocurrency market cycle

One way the cryptocurrency market can be measured is by comparing Bitcoin to other tokens. If altcoins, or any non-Bitcoin token, outperform Bitcoin, then it is considered “altcoin season.” It is currently not altcoin season, which means Bitcoin is outperforming at least 75% of the top 50 cryptocurrencies. In fact, Bitcoin is outperforming almost all other major tokens.

While Bitcoin is outperforming other tokens, this is a relative term. The crypto markets have been suffering for some time, with major tokens down more than 50% in recent months. While this price drop may not be the direct cause of LUNA’s decline, it could certainly be a major factor.

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Cryptocurrency, FAQs, News

Ethereum 2.0 is cancelled!?!

What you need to know?

The Ethereum network has for many years been the cradle of thriving innovation. We have thus seen the emergence of various phenomena such as ICOs , DeFi , NFTs and more recently the Metaverse .

However, the performance of the network cannot keep up with the growing demand. Thus, for several months Ethereum has been the victim of significant congestion . One of the main consequences of this congestion has been the drastic increase in charges on the network.

Fortunately, the developers have imagined several developments aimed at improving the performance of the network and allowing it to process a larger volume of transactions, without negatively impacting the user experience.

These evolutions have long been grouped under the name of Ethereum 2.0 . Thus, Ethereum 2.0 designates various updates:

  • The change in consensus , with the passage from proof of work to proof of stake;
  • The deployment of sharding , a solution to split the network into multiple subnets, in order to increase throughput.

“Ethereum 2.0”… it’s over

In a post published on January 24 on the official blog of the Ethereum Foundation , it announces the end of Ethereum 2.0 . Don’t worry, we’re only talking about the terminology and not the various changes included in this update.

Indeed, in the old versions of the roadmap, Ethereum as we know it had to give way to a new version of the network, hence the name Ethereum 2.0.

“As part of this roadmap, the existing proof of work chain (Eth1) would eventually be deprecated via the difficulty bomb. Users and applications would migrate to a new proof-of-stake Ethereum chain, known as Eth2.”

However, changes to the roadmap have disrupted the course of this transition.

Thus, with the appearance of The Merge , which aims to connect a part of each of these two versions of Ethereum, it no longer makes sense to differentiate them.

Indeed, The Merge aims to connect the “application” part of Ethereum as we know it, namely the entire application ecosystem, to the consensus part of Ethereum 2.0 in proof of stake. As a reminder, this consensus layer was deployed in December 2020, via the launch of the beacon chain.

Execution and consensus layer

This is why the developers decided to drop the name of Ethereum 2.0. Instead, they offer the following designations:

  • Ethereum 1.0 becomes: execution layer ;
  • Ethereum 2.0 becomes: consensus layer ;

Therefore, Ethereum will now be the addition of these two entities.

Execution layer + consensus layer = Ethereum.

In practice, this does not change much. However, this helps to bring more clarity and not to lose newcomers, who are new to Ethereum, Ethereum 2.0 and may find it difficult to understand the link between the two.

“A major problem with the Eth2 appellation is that it creates the wrong thinking pattern for new Ethereum users. They intuitively think that Eth1 comes first and Eth2 comes after. Or that Eth1 ceases to exist once Eth2 exists. Neither is true. By removing the Eth2 terminology, we save all future users from navigating this confusing mental model.”

This decision was made due to the imminent arrival of the said fusion of the execution layer and the consensus layer via The Merge. Thus, the connection of the two entities has been announced for around June 22, 2022.

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Cryptocurrency, News

Greenidge became the first carbon-neutral Bitcoin mining operation in the United States

Greenidge is investing in its renewable energy investment program

In 2014, the Lockwood Hills landfill in Dresden, New York, was acquired by Lockwood Hills LLC, a subsidiary of Greenidge. Greenidge claims the site has been “safely maintained” for the past seven years, during which time it has phased out the use of coal-fired electricity at the neighboring power plant. According to Thursday’s announcement, the company plans to safely shut down and shut down the landfill, and Greenidge hopes to “install a solar project on the 143-acre site, which will generate up to 5 MW of power.”

The bitcoin mining company said the move is in line with the company’s efforts to improve New York’s environment. While working on projects like the Lockwood Hills landfill, Greenidge details that he is purchasing voluntary carbon emissions from US greenhouse gas reduction projects. Jeff Kirt, CEO of Greenidge, believes that bitcoin mining models could help operations preserve environmental safety.

On May 14, the Greenidge Generation company announced that, as of June 1, it will compensate 100% of its CO2 emissions resulting from Bitcoin mining. The company also intends to invest a portion of its mining profits in renewable energy projects in the United States.

To offset greenhouse gas emissions from a 7,000-piece ASIC facility , they will purchase voluntary carbon offset credits from a portfolio of polluting gas reduction projects.

These carbon offsets are bonds that represent a reduction in the carbon dioxide emissions that are produced, thus balancing the emissions made elsewhere.

The energy generating and mining company of bitcoin would have to acquire credits for the 14 MW it consumes (of the 106 it generates) to mine an average of 5.5 bitcoins per day .

The credits will be certified by recognized registries

These credits will be certified by one of the three most recognized registries in the field, as reported in the statement : the American Carbon Registry (ACR), the Climate Action Reserve (CAR) and the verified carbon standard (Verra).

“Bitcoin mining at Greenidge is already a model for the industry as we develop this emerging financial platform for people around the world in a way that fully protects our environment and promotes economic growth in New York State,” Kirt said. The move will make renewable energy a reality by leveraging bitcoin from mining profits to create a new solar farm on a landfill, Kirt added.

Bitcoin Mining, President of Greenidge, creates jobs, supports the local community and helps the environment

Greenidge is just one of many crypto mining projects seeking to rejuvenate the environment by transforming business models and eliminating waste. For example, Stronghold Digital Mining converts residual coal into alternative energy to mine bitcoins and other cryptocurrencies. In late May, EZ Blockchain partnered with a Texas oil service provider to generate revenue from natural gas wasted with bitcoin.

Prior to the Greenidge acquisition in 2014, the Lockwood landfill was allowed to store Coal Combustion Waste (CCR) and other waste. Greenidge says he will ensure that “the site will no longer accept any waste” by adding a water filtration system and a permanent membrane to stop erosion.

“For those of us who grew up here and still live here in the Finger Lakes, the Lockwood Hills landfill was in constant presence, overlooking Seneca Lake and the town of Dresden, and we were always hoping for something that would eventually not be necessary.” – According to a statement by President Greenidge Dale Irwin.

Irwin added that he is pleased that bitcoin mining facilities are not only able to create jobs and support local businesses, but also that crypto mining operations can “facilitate the development of renewable energy in this former landfill.”

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News

Damn China, Back at it Again with the Ban!

After several weeks of speculation on the Chinese government’s next move on Bitcoin and cryptocurrencies exchanges, the Chinese authorities have now ordered the closure of all the exchanges operating in the country. Previously, it had been reported that according to China’s National Internet Finance Association (NIFA), the exchanges operating in China have no legal authority to operate cryptocurrencies in the country. None of the cryptocurrency exchanges operating in China have the requisite licenses required for order book exchange.

The exchanges have been ordered to voluntarily wind down their operations and were supposed to stop any new user registrations by September 15th 2017. They were to publish the closing notices outlining the schedule of when they will stop trading of all virtual currencies. Additionally, the regulators have instructed the exchanges to develop and publicize plans on how they intend to allow customer withdrawals in a risk-free manner and how they will ensure that the funds are handled in a manner that protects the interest of investors.

All the major exchanges including BTCC, ViaTBC, Huobi, OkCoin, and Yotbc have already complied with the notice and announced their closure plans.  BTCC and ViaTBC will be closing operations on September 30th while Yotbc shall close on September 18th . OkCoin and Huobi will be closing at the end of October.

And the reaction to the news of the closure of the cryptocurrency exchanges was instant and sent shockwaves globally. It saw the Bitcoin struggle around the $3000 region from a high of over $5000 earlier in the month but has since recovered to trade at around $3600 by the time of writing. The Yuan-dominated Bitcoin crashed as much as 35% plummeting from 25,000 Yuan to a low of 16,000 Yuan on September 14th upon confirmation that BTCC was shutting down operations.

The authorities’ latest decision to close down the cryptocurrency exchanges began earlier in the month. They ultimately want to stop all initial coin offerings (ICOs) in a bid to stem fraudulent fundraising, pyramid schemes and speculative investment. Additionally, this closure follows the authorities’ earlier crackdown on the exchanges in February this year which saw them temporarily stop operations as they sought to upgrade their customers’ verification systems to comply with the Anti-money laundering policies of the People’s Bank of China.

But will the latest closure of the cryptocurrency exchanges in China have any long-term implications on the growth and development of this nascent technology? Most analysts believe not. First and foremost, the analysts have observed that the closure is likely to be temporary and all that is needed for exchanges to resume operations is a license. Although no authorities have confirmed or denied this, it is believed that the Chinese regulators are working on a stricter regulatory and licensing regime meant to strengthen the cryptocurrency exchange supervision. These new regulations and licensure requirements are expected to be enforced after the National People’s Congress slated for mid-October. It is during this Congress that the ruling party elects its leaders and, historically, the period leading to the Congress witnesses increased power tripping by the Chinese government.

It is believed that the real reason for the crackdown on the cryptocurrency exchanges is an attempt to put a stop on capitalism. But will these endeavors succeed? With the tightening of regulation in the mainland China, there is a high possibility that the exchange business will shift to Hong Kong. Already, the cryptocurrency and blockchain token exchanges in Hong Kong have reported an increased number of inquiries from the mainland by people who would like to list their tokens in the City’s exchanges. Japan and South Korea are the two neighbors who have the potential to hugely benefit from the crackdown in China since they have more efficient regulations, industry standards and policies.

The increased surge in the number of Chinese clients registering in Hong Kong’s exchanges and the increase in trading volumes in Japanese exchanges is a clear evidence of the historical fact in economics which teaches that capitalists always finds a way. Financial markets exist to channel capital to where it is needed and any regulations which restrict the free flow of capital will eventually die. Additionally, any Chinese citizen traveling outside the country can easily purchase Bitcoin from the thousands of public exchanges operating elsewhere in the globe. No single country can halt the development of the cryptocurrency movement.

Moreover, the closure of the exchanges does not reflect a change in fundamentals of the cryptocurrency technology and applications but rather it is just a market structure drop.  The foundation upon which blockchain technology and the cryptocurrencies are built is as solid as it has always been and therefore there is no tangible proof that the closure of such exchanges will impact on the growth of the industry. The value of the blockchain assets such as Bitcoin is not derived from the exchanges but rather it is intrinsic in the technology and the numerous applications to which it is put into use.

In any case, the closure of the exchanges has not classified Bitcoin and other cryptocurrencies as illegal and so their usage in the purchase of goods and services shall continue. According to Bloomberg, the ban on exchange-based cryptocurrency trades will not apply to over-the-counter (OTC) trades.  Consequently, it is expected that we are going to witness a surge in broker-based OTC and peer-to-peer trading. This means that although the aggregate cryptocurrency business in the country may be curtailed, it is may not be eliminated completely. Moreover, there will be increased trading conducted solely between cryptocurrencies.

Finally, does the closure of the cryptocurrency affect the Bitcoin and other cryptocurrencies mining business? China is famed for the heavy investments in cryptocurrency mining and some reports estimate that the country’s share of total worldwide hashrate is in the range of 70-72%. According to the announcements put out by BTCC and ViaBTC when announcing the impending closure of their exchange operations, both companies have indicated that their mining pools and cloud mining services remain unaffected by the ban. However, without access to domestic cryptocurrency exchanges, if the ban is extended for prolonged periods or becomes permanent, many of the mining operations may close down and relocated to other countries. In the long-term, such a move would erode China’s leadership in the mining industry but would not affect the business of mining globally.

As seen above, the actions by the Chinese regulatory authorities may not have long-term implications in the blockchain technology and cryptocurrencies. There will be short-term price movements but the fundamentals are still strong and the currencies will rebound.

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News, FAQs

What is Cryptocurrency Tax Fairness Act? Is it Good? Is it Bad?

Two lawmakers, Jared Polis and David Schweikert, who jointly chair the Congressional Blockchain Caucus, have introduced a new legislation known as Cryptocurrency Tax Fairness Act of 2017. The legislation seeks to create a taxation structure that addresses the burdensome reporting requirements which were introduced by IRS in their March 2014 guidelines.

What are the provisions of the IRS guidelines on cryptocurrencies taxation and what are their implications?

In the March 2014 guidelines, IRS classified cryptocurrencies such as Bitcoin as properties. This had major positive and negative ramifications on the development, application, and usage of the blockchain technology in the payments systems. On one hand, this was a good move since any gains from sale and exchange of cryptocurrencies are taxed as capital gains rather than ordinary income. Capital gains attract lower tax rates than ordinary incomes, resulting in major tax savings for cryptocurrency holders.

On the other hand, the categorization of cyptocurrencies as property introduced two major challenges. One of the problems is the issues of record keeping for tax purposes. In order to report any gains or losses, the cryptocurrency users would have to track price movements between transactions. The guidelines provide that cryptocurrency holders must report the fair market value of their holdings on the date of receiving the currency.

The other problem, and probably the most critical one, is that unlike fiat currencies issued by governments, the de minimis exception is not applicable in properties. The de minimis exception provides tax exception for very small transactions. For example for foreign currency transactions, you do not have to report any gains less than $200 made in a single personal foreign currency transaction.  Without the de minimis exception, any gains, no matter how small, made between the time you acquired the currency and the time you used it, must be tracked and reported to the IRS at the end of the year. This means that using cryptocurrencies to make even the smallest transactions such as an MP3 download is a taxable event and requires meticulous tracking of price fluctuations and reporting to IRS.

In addition to the complexities of tracking and reporting such cryptocurrency transactions, it is generally viewed that by taxing these transactions, the IRS is having a second bite at the cherry. This is because the transactions have already been taxed, and regardless of the currency used to settle the payment, no further taxation should be imposed. For example, a customer paying latte at a café using Bitcoin should not pay any extra taxes as compared to a customer paying in dollars.

The provisions of the IRS guidelines created major reporting responsibilities both for casual users and institutional traders of cryptocurrencies. Cryptocurrencies are extremely volatile and tracking this volatility substantially increases the compliance costs. Additionally, the cryptocurrency economy is in itself a complicated concept for most people and adding an equally complex reporting requirement does not help matters at all. Due to this high compliance costs, and partly due to ignorance, most people are in violation.

Naturally, the IRS guidelines create a lot of friction and discourage the application of cryptocurrency in the payments ecosystem. Moreover, this has stifled the growth of this nascent innovative technology since with this complex reporting requirements comes depressed usage and the ROI for developers and investors in the payments systems is therefore extremely low. For investors to put their money in the development of everyday-use payments solutions, they must be assured of critical masses for widespread application of the technology.

What are the provisions of the Cryptocurrency Tax Fairness Act of 2017 and what is their impact?

The Congressional Blockchain Caucus is a collaboration platform for the government and the industry to study and understand the implications, potential, and development of the blockchain technology. The blockchain is a decentralized distributed public ledger and is the technology behind cryptocurrencies such as Bitcoin.  Its application goes beyond cryptocurrencies and it has been a major source of disruptions in the global economy. Its main advantages are transparency, security, speed, and reduced transaction cost.

The Cryptocurrency Tax Fairness Act aims to create a structure for the taxation of purchases made with cryptocurrency. The bill introduces two major proposals designed to simplify cryptocurrency taxation in the US, and if passed, would be a major step in encouraging the development of this technology and its application in the payment systems. These two proposals are; the creation of a de minimis exemption for transactions executed using cryptocurrency and a development of a clear guideline for informational reporting.

The de minimis exception proposed in the bill is similar to the one enjoyed for foreign currency transactions. Under the bill any cryptocurrency transaction below $600 would be completely tax exempt. This implies that you would not need to keep tracking gains or losses on every small transaction you made. Additionally, even if there was to be any noticeable gain, you would not owe any taxes on such gains.

This would be a major achievement and a significant departure from the current taxation regime where you have to track and report every little purchase you make using cryptocurrency. Through this, the tax compliance costs would be substantially reduced and fewer people would be in violation.

The second proposal of the bill is to provide for the development of guidelines for informational reporting on digital currency for which capital gains is applicable. These would be the transactions above the $600 threshold such as the one for getting in and out of investment position and for which capital tax would be due. Currently, the cryptocurrency holder is responsible for tracking and reporting all the gains and losses from such transactions. This is in contrast to the transaction for stock holding whereby the stock broker is the one who provides you and the IRS with the statement of your gains and losses.

By developing informational reporting guidelines, the bill seeks to further simplify the reporting requirements of the cryptocurrency users by providing a mechanism through which cryptocurrency supplies such as Coinbase would be able to report on these transactions. This would help to avoid court cases similar to the current one between IRS and Coinbase, in which Coinbase is contesting what it has described as a broad and unnecessarily punitive request by IRS to supply all records for all customers for the period between 2013 and 2015.

These twin proposals of the Cryptocurrency Tax Fairness Act are a priceless contribution towards encouraging the use of cryptocurrency in the payment ecosystem. They will encourage investment thus creating the much-needed good jobs in the economy. Additionally, the consumers will benefit from the convenience, cost effectiveness and security of the blockchain technology.

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Theories

How will the North Korea-Trump war affect the Crypto World?

In the second half of calendar year 2017, there are several factors converging that will have significant ripple effects throughout the world in general, but North Korea and the United States in particular. These events will serve as catalysts towards fundamental quality of life changes for everyone as we come to grips with this coming change and the evolving revolution that is cryptocurrency.

trumpThe North Korea situation for President Trump is complicated not only by what outwardly appears to be opposition from both Russia and China, but Trump’s options are limited by an establishment political class coupled with corporate mainstream media opposition at home that seemingly doesn’t respect, nor accept the fact that he was the people’s legitimate choice to be the Commander-in-Chief. Enter Kim Jong-Un, nuclear weapons, and our country’s predisposition to be the world’s policeman.

We are all witnessing a ‘perfect storm’ brewing with the challenges of not only the North Korea nuclear dilemma, there is also the fact that paper and electronic fiat currencies, held in banks, and our debt based systems are in a race to their intrinsic value of zero. There are also the massive national debt, the various public pension crises, derivatives, and bubbles in several sectors of consumer debt to contend with; auto, student loan, credit card, and mortgage. The Federal budget and tax policy issues, along with the severe impact of natural disasters such as the aftermath of Hurricane Harvey and the very real potential for added severe devastation by Hurricane Irma only add to the headache facing President Trump. Those are only some of the factors and variables. Did I say perfect storm?

As a result, Bitcoin, and all of the other myriad blockchain technology based cryptocurrencies, currently stand at a historical point. They’re at the cusp of a massive transfer of wealth and an opportunity to revolutionize how ALL transactions are done, away from governments and the banking system, as the often conjured fiat currencies teeter at the bitter edge of manipulated collapse. A nuclear exchange, in any form, can have significant implications for cryptocurrencies, for the better.

north korea nuclear

Bitcoin, even with its recent pullback from over $5,000 down to $4,300 per unit, commands a market cap greater than a significant portion of companies in the S&P 500. Even with the rocket-like rise, it’s is not in a bubble as many may think. To be in a speculative bubble, the asset must have two characteristics, have a value or price that highly exceeds its intrinsic value, and be widely held. Relatively speaking, it isn’t widely held and opinions vary widely on its intrinsic value. What is of concern though are the implications of present day nuclear brinkmanship by the immature leader of North Korea.

Unlike Gold and Silver which can be physically possessed and have been universally considered as money for over 5 millennia, cryptocurrencies have no substance and reside in the digital ledgers that compose the blockchain system on the internet. An electromagnetic pulse (EMP) can render the technology inert if a regional nuclear exchange, starting with, god forbid, Kim Jong-Un ordering the nuking of Seoul, Tokyo or even Taipei or Hong Kong for instance, creating a domino escalating effect into a wider world war.

I say ‘inert’ purposefully because the beauty of blockchain cryptocurrencies, unlike their fiat/paper counterparts, is that there is no central authority. There’s no controlling central bank or overarching, taxing, regulating government. It’s a decentralized, anonymous global network that manages and records all transactions across the entire network, so if only a few servers and the internet survives (both are necessary), technically the cryptocurrency survives. In such a scenario, value may remain, but as the internet and e-commerce are imbedded indelibly into our society, will there be a practical ability to trade with the world wide web impacted by war induced EMP? Past internet shutdowns have cumulatively cost $billions. Add deliberately targeted EMP to the mix and the impact will be costly to both traditional e-commerce and cryptocurrency transactions. Overall impact? To be determined.

Another concern given the very real North Korean nuclear problem is what happens to the cryptocurrency in the blockchain whose owners are deceased and their anonymous encrypted authentication is lost without clear, legal instructions left behind to pass on digital currency? Are these units out of the loop forever? Can they be recovered? Also, to be determined.

As cryptocurrencies go more and more mainstream, not only will governments and central bankers object, they will become a force to be reckoned right along with Kim Jong-Un’s hydrogen bombs. Bankers know that, for now, cryptocurrencies, in large part, must be redeemed for a fiat currency as the cryptocurrency trading infrastructure is still developing. In wartime, this becomes an even more critical issue as the internet is a critical means of communication, and cutting off communications is a war planner priority. This attacks the very digital core of cryptocurrencies and the practical ability to exchange them for cash or precious metals to acquire basic necessities.

financial crisisThe ongoing currency war against the US dollar hegemony also factors into cryptocurrency’s tactical and strategic value. As countries turn away from the US dollar as the primary medium of international exchange and trade, currency war policies such as economic sanctions are effectively neutered. China has upped the stakes by announcing that by the end of 2017, the Shanghai and Hong Kong exchanges will offer crude oil futures contracts denominated in yuan which will be fully convertible to gold. This will allow oil exporters to bypass the dollar entirely. This is a game changer which bodes well for cryptocurrencies as the fiat currency war continues.

The monetary flow by the smart money is away from zero and negative interest fiat currency-based financial instruments to fast rising cryptocurrencies which early adopters and true believers know to be the future of money. Bitcoin transactions and businesses accepting it as payment are steadily increasing, and while the blockchain is highly resistant to single vector attacks by hackers, the jury is out and the laws of unpredictable, unanticipated, and unintended consequences will preside if Kim Jong-Un and the North Koreans force President Trump’s hand with a nuclear launch.

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