Ray Dalio Joins the Crusade against Bitcoin

Bitcoin’s latest critic from the world of high-finance is the founder of Bridgewater Associates, Ray Dalio. In an interview with CNBC on Tuesday, the brains behind the planet’s biggest hedge fund called the leading cryptocurrency, a “bubble”. His reasoning simply being that if people are buying something with the hope of selling it on for a higher price, it must be a bubble.

It’s a shame. It could be a currency. It could work conceptually, but the amount of speculation that is going on and the lack of transactions [hurts it].

The investor maintains that cryptocurrencies can’t perform the essential roles necessary to validate itself as a currency. In a puzzling logic, he states that ease of transactions as a medium of exchange, and being a “storehold of wealth” are vital to satisfy the definition of currency. Someone had better remind Mr. Dalio of the buying power of a dollar in 1960 versus that in 2017.

Dalio’s comments are difficult to interpret in anyway but bearishly. However, they were far less damning than those made by Jamie Dimon last week. As we’re sure you’re all well aware (thanks to the huge media attention the story got), the JP Morgan CEO branded Bitcoin a “fraud” that would “blow up”.

Whilst some perceived Dimon as having some benevolent power over cryptocurrency market after the price of Bitcoin tumbled from near its all-time high of $5,000 to just under $3,000, his words coincided with genuine fear and uncertainty surrounding Chinese regulation. The lack of movement following Ray Dalio’s own shot at crypto this week show that he either doesn’t command the same level of sorcery as the JP Morgan exec, or the market simply doesn’t care what two financial dinosaurs think of it.

The fact is that whilst these hyper-wealthy individuals are undoubtedly highly intelligent (you don’t rise to the top quite like they have without some “smarts”), they’ve almost certainly gleaned their opinion of Bitcoin and other cryptocurrencies from sensationalist headlines from mainstream sources. They’re busy people. They simply don’t have the time to research something as new, and admittedly alien, as Bitcoin and other such digital assets.  Alex Gurevich, a former executive at JP Morgan, sums it up excellently with his response to Dimon, and we’re sure the sentiment would extend to Dalio too:

Jamie, you’re a great boss and the GOAT bank CEO. You’re not a trader or tech entrepreneur. Please, STFU about trading $BTC

Ref: CNBC | Image: [email protected] (License CC0)

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You’d have to have been living under a rock recently to have not noticed that the whole crypto world is abuzz about China, and their pending regulation. There’s been a whole lot of fear and uncertainty spread with claims ranging from the highly optimistic — any ban will be temporary, and affect initial coin offerings and exchanges only — to the fatalistic — the Chinese state is moving towards a total suppression of all things crypto.

The only thing anyone outside of the Chinese government knows for sure is that for now, ICOs are illegal and Chinese exchanges are shutting down domestic trading involving CNY. Beyond that is anyone’s guess for the time being. The government notice to exchanges reads:

All trading exchanges must by midnight of Sept. 15 publish a notice to make clear when they will stop all cryptocurrency trading and announce a stop to new user registrations.

Following the announcements, there was, of course, immediate uncertainty. This was, however, short-lived. The value of Bitcoin dropped from close to $5,000 to just under $3,000 rapidly before gains saw it approach $4,000 again shortly after. If we compare this to the 2013/14 “bubble” bursting, evidence of a more mature market, and one that is far less reliant on Chinese trading emerges.

Despite the minor wobble, and even when faced with the prospect of an outright ban in China, leading voices within the community remain bullish long-term for crypto. Josh Olszwicz, a successful Bitcoin trader, told one publication that the news out of China has barely registered in the market because it doesn’t affect the coin’s technology in any way:

If it doesn’t affect the protocol, then it’s not a real problem. The Bitcoin cash shakeup was more worrisome from my perceptive, but even then the core Bitcoin protocol remained unaffected. Countries can try and ban Bitcoin all they want, but people will still use it if they need and want to — the protocol doesn’t need government acceptance

Meanwhile, other commentators argue that the ban could be a temporary measure to protect consumers from the minefield which initial coin offerings were becoming. The innovative fundraising method has raised over $2 billion this year alone, and for many, its explosive growth could only end one way.

Sebastian Quinn-Watson, of Blockchain Global, thinks that regulators could be working towards a government-approved program that would allow for companies to run ICOs in a much safer fashion. He doesn’t see the bans as long-term and mentions how important innovation is in China’s growth plan going forward.

By stepping in so dramatically and not allowing what would have been an almost inevitable crash in the crypto market, the regulators acted to ensure that investors did not irrevocably lose trust.

Not everyone is so optimistic, however. Jim Stent, the author of a book on Chinese banking practice, says that the crackdown is permanent and aims at reducing risk in the country’s financial sector.

With Chinese trading volume already waning before the news landed, and sentiment strong over Bitcoin’s inbuilt regulation-resistance, it appears that any moves towards an outright ban in China during the coming weeks will have a minimal impact on the market anyway. Many who think this represents a nail in Bitcoin’s coffin have already made their moves back to fiat, and those that remain positive over cryptos future are clearly not phased by the posturing from Beijing.

Ref: Business Insider

Jeremy Allaire, CEO of payments startup Circle, recently appeared on CNBC with high praise of Bitcoin, and cryptocurrency in general. When considering recent price moves, he reminded people to look at them in relation to the swings of 2013/14. The relative stability experienced in the wake of this recent bout of bad news from China for him is evidence of a market which is “less dramatic.” In a particularly bullish sentiment for the whole space, he referred to the “[cryptocurrency’s] underlying infrastructure [being] incredibly powerful.”

Allaire highlighted various factors to support the notion that today’s market is a “radically different place” from the days of the 2013 crash. He cited the existence of many more regulated exchanges, and an increasingly institutional market, as well as “robust retail participation”. Echoing many thought leaders in the space, he seemed almost flippant about the recent news out of China:

There was some news. That uncertainty led to some declines but there’s been a rally out of that now that I think people understand where China stands” “now the market is moving forward.

He also went on to remind analysts who criticise cryptocurrency’s lack of usage as a means of exchange, that coins and tokens should really be considered as commodities. Allaire claims that in Circle’s early days, they knew that customers wouldn’t want a completely new currency but rather to benefit from some of the advantages of a cryptocurrency infrastructure. The chief of these is the ability to “beam value around the internet” similar to how content and photos are now shared.

I don’t think anyone looks at these assets as currencies… there are attributes that behave like currencies. They really are digital commodities. They behave more like commodities.

Circle is an innovative payments startup which believes that sending money should be as easy as using social media. They use the blockchain to allow instant transfers of funds, and Allaire states they traded $2 billion in crypto assets in August alone.

The Swiss Financial Market Supervisory Authority (FINMA) has recently taken action against the perpetrators of a crypto-scam. The firms in question were distributing a fake cryptocurrency and acting without proper licensing. A dozen other possible fraud cases are under scrutiny from the watchdog too.

In a statement earlier today, FINMA announced that they have taken action against the QUID PRO QUO Association. The companies involved had been providing “E-Coins” for over a year and it’s estimated that they had amassed more than $4.2 million from many users. Of these funds, FINMA has said they were able to recover around half. They commented on the legality of the firms:

This activity is similar to the deposit-taking business of a bank and is illegal unless the company in question holds the relevant financial market license.

In addition, it was found that the operation had failed to back the E-Coins with tangible assets, something which the company’s forming the QUID PRO QUO Associated had promised to do. This led FINMA to seize some CHF2 million and launch bankruptcy proceedings against the firms.

These three legal entities accepted funds amounting to at least four million Swiss Francs from several hundred users.

Alarm bells should have been ringing earlier for those who were duped by QUID PRO QUO. After their investigation, FINMA reported that E-Coin was not like “real cryptocurrencies”. Apparently, it was completely centralized on local servers, rather than being stored on a distributed blockchain ledger. Unfortunately, hyped markets don’t always produce the most rational investor behavior, and as such many were duped by the scam.

For FINMA, the crackdown against QUID PRO QUO is the first of a total of twelve similar investigations in Switzerland. The country, and in particular the small municipality of Zug, has become something of a hotbed for crypto companies, particularly after the recent crackdown on secretive practices taking place in the nation’s hugely successful banking sector. Drawn by favorable tax rates, many legitimate startups now call Switzerland home. However, with the explosive growth of the industry in recent years, many scams and infringements of law (purposeful and accidental) have gone unnoticed. Roger Darin, the Community Manager at Bitcoin Association Switzerland spoke to a local publication:

I am very glad these ponzi schemes and outright scams have shown up on Finma’s radar. There is a lot happening in Switzerland’s crypto asset space, and just as the Street Parade attracts pickpockets every year, scammers use the excitement to trick unsuspecting newcomers.

Around the world, regulators and traditional banks are beginning to voice concerns about the use of cryptocurrencies. With the SEC in the US regulating ICOs as securities, China outright banning them altogether, and now Switzerland policing scams in their own crypto industry, it appears that the wild west days of cryptocurrency may finally be drawing to a close. Whilst many Bitcoin puritans loath the idea of government regulation, many others admit that it is something vital for the wider adoption necessary to drive the space’s market cap skyward in the future. A more stable, policed climate is crucial before more traditional investors are willing to enter the market.

Ref: Reuters

The latest in the slew of crypto critics is Jackson Palmer, the creator of Dogecoin. Palmer claims that thanks to the proliferation of scam ICOs, a similar fate might be lurking in wait for the rest of crypto as that which caused him to leave his pet-project in 2015.

For those who don’t know what Dogecoin is, it was released in 2013 as a way for Palmer to satirise the hype surround Bitcoin and blockchain technology. He branded his project using the image of the dog from the Doge meme, you know, “such humor. Much funnies” – that kind of thing. The amusing crypto’s inventor had intended his creation to highlight how insane he found the investment of large sums of money into unknown assets like cryptos.

The joke was lost on many, however, and investors bought Dogecoin anyway. In terms of market cap, the eventual all-time-high for the joke-coin was $400 million. Eventually, the currency attracted scammers and hackers who would take advantage of the hyped and inexperienced market that had sprung up. Operations included the hacking of wallets, and making fraudulent claims about fake products. Finally, Palmer stopped working on Dogecoin.Recently, he warned that a similar fate might soon befall the rest of crypto. He mentioned the current goldrush-like nature of the ICO craze:

What’s happening to crypto now is what happened to Dogecoin… I’m worried that this time, it’s on a much grander scale.

Yet again, the market takes a hit, and the “crashes”, “bubbles”, and “tulips” are trotted out.

At its current immature phase, the cryptocurrency market is prone to wild swings in its valuation caused by various external factors. The chief of these is regulatory measures, like those pending in China right now. Secondary, is the introduction or discovery of some Blockchain breaking technology, or destructive code placed into one of the various updates of a protocol. If something simultaneously causes the entire market to sell one commodity en masse, its price will, of course, fall rapidly. It’s as simple as that. How low it goes will depend on the gravity of the news and how much it affects investor confidence.

It’s no secret that the market is currently largely built on speculation but daily, more real-world uses are emerging for various cryptocurrencies. Bitcoin is being used to buy up real estate in Texas, Steem powers a young and growing social network, and Ether whilst predominately used for ICOs (themselves at risk of causing a mass crypto selloff) at present, is used by various applications progressing towards completion. As more potential uses for the decentralised emerge, the value will shift from speculative to actual for some platforms. Many, of course, will perish.

People love to use the “tulip” example from seventeenth-century Holland when talking about any potential market bubble. Interestingly enough, they also like to group this idea with that of the “tech boom” of the late ‘90s. To me, these “bubbles”, although caused by wild speculation like that which we see in crypto today, are totally different. Firstly, tulips had been around for a long time and do not offer any revolutionary properties – the internet, and blockchain tech are potentially highly disruptive technologies. Secondly, with such ground-breaking innovation, the eventual use and therefore value of cryptos cannot be accurately gauged. Are cryptos even currently overbought? If you look at graphs of investment in tech companies which show the “bubble” and compare them with those of crypto market caps, the answer could easily be “no”. The tech industry wasn’t overbought in the early noughties, but just as there is in crypto today, there was plenty of dumb money in a lot of stupid shit back then.

The statements, views and opinions expressed in this article are solely those of the author and do not necessarily represent those of NewsBTC

After the bombshell that was Chinese regulation hit last week, those who follow the crypto space closely will likely be sick of reading foreboding forecasts, and wild speculation on how the market will be impacted. Fortunately, the world of cryptocurrency is larger than just China – the clue’s in the name, really. As the climate of fear and uncertainty finally calms, better news is able to break through the diminishing noise from the East.

Speaking to CNBC, Daniel Döderlein, the CEO of Norway’s Auka, a fintech startup providing cloud-based mobile payments products for 17 banks, hinted at a mergers and acquisitions “shopping spree” early in 2018. He noted that the heavy-weights in the tech world have a long-standing relationship with banks but, drawn by innovation in payment processing, would inevitably show more interest in the sea of fintech companies springing up daily.

Döderlein stated that a new European directive enabling third parties to monopolize on banking software would help the drive towards new products — also known as “open banking” in fintech circles. This would result in tech behemoths like Capgemini and IBM buying up smaller startups and with them the innovations that they bring to finance. He argued that whereas the small fintech firms can provide new capabilities, they struggle when it comes to customer relationships — something which larger companies have already solved in many cases.

What we see predominantly throughout that whole sector is that their capability in terms of the technology you need to serve this next leg of the journey, once all the floodgates are being opened up in January 2018, is not necessarily present. So they will probably go on a shopping spree and do a lot of M&A.

He went on to say that the biggest companies would start to acquire smaller firms because they need suitable payments technology to take advantage of the EU’s Revised Payment Services Directive which will take effect in January. He highlighted the mutually beneficial relationship that will occur between young firms like Starling and Monzo, who have the technology behind them but lack the relationship with the public to take their product to the consumer, and the planet’s largest, who suffer the opposite fortune.

Many of these larger players in the market that have no experience of doing payments but see that this software has a very strategic disposition, including the option of reducing their payment processing cost.

Whilst the effect of any “shopping spree” for fintech startups won’t be felt on the market for some time, it’s certainly encouraging for general sentiment that the planet’s largest companies are still deeply fascinated by the revolutionary technology backing cryptocurrency.


Security vendor ESET reports of a new technique cybercriminals are utilising to generate funds. By purchasing traffic from an advertising network, they’re able to distribute malvertising (malicious ads) that utilise many victims’ computers to mine crptocurrency.

By combining JavaScript and cryptocurrency mining, those perpetrating such attacks are able to operate without actually hacking any machines at all. The adverts selected for the scam are predominately video streaming and in-browser gaming websites. It’s supposed that those using such pages are more likely to remain on the same site for a longer period of time, and thus mining more cryptocurrencies for the criminal ring. It’s also likely these types of pages are chosen because users of the types of sites will expect some increase in CPU activity when streaming a video or playing a game. They will, therefore, be less able to discern their machine performing poorly as a result of the resource drain cryptocurrency mining has on computers. Finally, the chosen sites are also immensely popular. The one which ESET found with the most malicious ad impressions was ranked 907 in Russian, and 233 in Ukraine. Other sites chosen are similarly popular in Eastern Europe.

Since home computer users don’t run the kind of chips required to mine Bitcoin profitably, the cybercriminals responsible are using easier to mine cryptos. Most notable are ZCash, Litecoin, and Monero. These coins require much less computing power than typically associated with large-scale BTC mining operations.

ESET notes that malvertising is usually prohibited by the majority of networks because of how CPU-intensive it is, and the effects it has on the general user experience. At present, it remains unclear whether those networks distributing the ads and games have been compromised, or are themselves usurping their victims’ computing power for their own gain.

ESET also reported a geographical pattern emerging amongst cases involving malvertising, with most examples coming from Eastern Europe — and particularly Russia.

The security company named the particular scripts used as JS/CoinMiner.A. They offer protection to their suite users through the use of potentially unsafe app detection methods. Meanwhile, they recommend those that do not use ESET products use a correctly-configured script or ad blocker. This should stop Javascript miners from running.

Ref: WeLiveSecurity 

Chinese news reports that two of the country’s largest exchanges have been given an extra month to operate domestically. It appears OKCoin and Huobi will be allowed to continue offering services until October 31, 2017. This corresponded with an instant upswing in crypto markets with Bitcoin alone gaining $400 in just minutes. However, there is yet to be an official announcement from Beijing confirming the extended deadline.

Local news outlet Caixin reports that since OKCoin and Huobi have not performed any ICO operations, they will be allowed to continue offering services.

Meanwhile, OKCoin has issued a statement with regards to the impending regulations facing the industry. The post on their website today confirms the October deadline. In it, they announced the company’s short-term plans and affirmed their commitment to explore and fulfill all regulatory recommendations.

OKCoin’s International Customers to Remain Unaffected

Effective immediately is the suspension of new registrations, and additional deposits in RMB. The post also asserts that all funds deposited on OKCoin is completely safe, thanks to their 100% reserve system. They do however warn that withdrawals might take an abnormally long time, due to congestion. They have thus increased the processing time from 24 hours to 72 hours to account for the extra volume of transactions taking place. In addition, they ask customers to try and use their email support service where possible as queues for telephone support are understandably long. Finally, they reassure customers using services outside of China that they will remain unaffected.

In terms of users still holding coins, OKCoin has said that services will continue as normal. They will provide permanent free storage for users wishing to leave their money and private keys with them. In accordance with anti-money laundering requirements, all coins do need to complete a video verification. The site has imposed a limit of nine days on how long they will accept new video certifications. In order to ensure a smooth experience, it will be offering guidance to the customers on the platform.

Interestingly, the markets have responded quickly to the new developments. The good news, however small, caused a surge in buying of all cryptocurrencies with CoinMarketCap reporting double-figure hourly gains across the many assets and tokens amongst the top 100.

Ref: Ciaxin | OKCoin

The planet’s oldest Bitcoin exchange, Shanghai’s BTCC, will cease trading on its domestic exchange by September 30. The news comes following the tightening of regulations within China’s crypto-space earlier this month.

BTCC announced their decision to close the domestic side of their platform via Twitter earlier today. They cite the recent ICO ban facing Chinese investors and startups alike as the cause for their action. Local media also claims the company has received a verbal notice from Shanghai’s financial regulator.

Whilst the regulatory notice focused on the current pending ICO regulation, it made no mention of a ban on other digital currencies. However, BTCC will still shut down trading of cryptocurrencies such as Bitcoin and Ether. The decision to cease all operations in China may have something to do with the exchange’s own tradable token, ICOCoin, started the company’s co-founder. They also announced today via their website that they would no longer be accepting new users effective immediately. Users of other services that BTCC provide should not encounter any disruption. These include those mining using their mining pool, and those trading on the international exchange.

Charles Hayter, a data analyst at CryptoCompare made the following comment:

The Chinese ban is causing a panic in the market as mixed messages and lack of clarity has turned sentiment negative.

Founded in 2011, BTCC assumed the title of world’s oldest exchange following the closure of Mt. Gox in 2014. It was also briefly the largest global cryptocurrency platform, before eventually losing market share to other exchanges. It does, however, remain a large player in the threatened Chinese crypto industry.

At present China’s other large exchanges have not followed BTCC’s example. Huobi and OKcoin, for example, are still operating as normal.

The news comes following the start of what appeared to be a standard market correction across all cryptocurrencies, exacerbating the downswing. The global market cap of all digital assets combined is down 30% from this month’s all-time-highs. Bitcoin alone shaved as much as 15% off its peak of nearly $5,000, down to the mid-3,000s.

Whilst Chinese trading used to make up a huge proportion of Bitcoin’s global market cap, it is now much less significant. The high levels of early adoption from Chinese investors and traders was largely fuelled by the fee-less trading which domestic exchanges offered their customers. According to CryptoCompare, trade for last month in Chinese yuan, US dollar, and Japanese yen accounted for 12%, 36%, and 40% of all global cryptocurrency trading, respectively.

Ref: Reuters


The Reserve Bank of India have made public their exploration of a “fiat cryptocurrency”. Speaking at a fintech event by KPMG, RBI executive director Sudrashan Sen said:

Right now, we have a group of people who are looking at fiat cryptocurrencies. Something that is an alternative to the Indian rupee, so to speak. We are looking at that closer.

Intended to be used in the place of rupees, the central bank could eventually issue digital tokens instead of notes. Just like every other state-issued currency, it would be backed by absolutely nothing.

Sen then went on to call Bitcoin, the world’s first ever totally public blockchain, a “private cryptocurrency”, stating:

Fiat will be instead [when] the Reserve Bank starts issuing digital cryptocurrency, which you can carry in the cyber space with you, when you don’t hae to keep physical currency in your pocket, that’s the way.

The advantages of a blockchain-based currency issued and centralised on government systems are numerous from the perspective of a financial institution like RBI. A centralised, immutable ledger of all transactions the country-over would be a fantastic tool to fight money laundering, tax-aversion, and other forms of crime. But true cryptocurrencies represent far too much risk for central banks.

Sen commented, “as regards non-fiat cryptocurrencies, I think we are not comfortable” — a sentiment which echoes that in the banking sectors, and the legislatures in India and elsewhere across the planet.

Plans now seem to be forming in India on how to treat “non fiat” cryptos. Last month, the Finance Ministry of India said would be beginning to tackle the issue of regulation. An initial committee hearing suggested a lack of optimism for full legalisation.

This follows the Reserve Bank of India’s statement from February of this year. Warning companies for choosing to operate in cryptocurrency, a spokesperson said:

Any such user, holder, investor, trader, etc. dealing with virtual currencies will be doing so at their own risk.

They also cited a host of financial, legal, operational, security, and customer protected issues that companies using Bitcoin and other crypto were exposing themselves to.

Time will tell how harshly the Indian executive will come down on cryptocurrency. With their own bastardised version of Satoshi’s dream in the works, it’s doubtful there’ll be much room for competition, however.

Ref: MoneyControl | Indian Express | Image: Wikimedia  (CC3.0)