Tag Archives: Cryptocurrency

Will the Bitcoin Bubble Pop in 2018? What You Need to Know

As the end of 2017 approaches and we all look forward to a new year, many are looking back at 2017 wishing they had started the year with an investment in Bitcoin. On January 3rd of 2017, Bitcoin passed the $1000 USD per BTC value. For many, that was simply too much to gamble, and many would-be investors were too afraid that the Bitcoin bubble would pop and market value would retract. How wrong they all were.

As of November 30th, 2017, less than 11 months since breaking that price point, Bitcoin broke another milestone by hitting a market valuation of nearly $11,000 USD per BTC on all major exchanges. Those same investors are kicking themselves, realizing that they very likely missed an opportunity of a lifetime, while those who did invest are enjoying a highly profitable year. Bitcoinplay  facts on market value tell us that not only is this rapid growth nothing new, but it has been consistent since 2010.

In 2010, a $100 USD investment would today be worth well over $10 million and that number is rapidly growing. With so many now aware of the Bitcoin mega-wave, many are asking, is it the right time to enter the Bitcoin market and will 2018 be the year the Bitcoin bubble pops? Here is what you need to know in regards to Bitcoin’s potential in 2018.

The Two Sides of the Fence

There are really only two sides to the Bitcoin fence. The first is the growing group of investors that have managed to go against the obvious mainstream predictions and who are now are making a killing in the cryptocurrency world. The other is a group that is still convinced Bitcoin is a bubble that will eventually pop at some point. Early adopters and neo-rich Bitcoin millionaires who have already made small fortunes on the famed currency lead the first group. The second is led by old-school investors that remain attached to dated theories, failing to see the intrinsic value of Bitcoin. Both sides of the argument have valid reasoning based on their paradigms. However, only one is cashing in, and that would be the adopters.

2018 Predictions

Though the second group’s overall predictions for Bitcoin may eventually prove to be accurate, Bitcoin in 2018 is likely still a good investment. A bubble is based on demand and until that demand has hit its maximum, the bubble will continue to grow. Bitcoin is still highly under-adopted and increasingly more people are joining the Bitcoin bandwagon on a daily basis. It is highly unlikely that, in 2018, the maximum for Bitcoin will be reached. As such, it is more likely that Bitcoin will continue to grow through 2018.

2018 Growth Rate

Based on 2017 growth rate and current adoption levels, it is not likely that Bitcoin will continue to grow at its current pace. That being said, however, its market adoption does remain unchanged and legislation or other external factors remain consistent. Most of the Bitcoin investors that are on the pro-side of the Bitcoin phenomenon predict approximately half the growth in 2018 as 2017. If that prediction was to hold accurate, a $50,000 BTC market value for Bitcoin should be reached towards the end of 2018.

Bitcoin is highly volatile and these predictions are just predictions. The two main things to remember if you are planning to invest is, firstly, whether you think Bitcoin has reached its market adoption saturation point or not. If you think Bitcoin will continue to attract more users in 2018, then investing in Bitcoin is probably the right move. If you think the bubble will burst and Bitcoin has reached adoption saturation, then Bitcoin wouldn’t be a good investment.

Whatever your prediction for Bitcoin in 2018, educate yourself and only invest what your willing to lose in the worst-case scenario. Secondly, remember the old adage: no risk, no reward. Is Bitcoin worth the risk to you? Even if you think the bubble will eventually pop, the real question is, do you think you could get in and out in time to make a decent profit? For many, that answer is yes.

Decentralized Exchanges

Created in 2008 by the pseudonymous computer programmer Satoshi Nakamoto, bitcoin is digital money that’s tracked via a public ledger and controlled by no central bank, corporation, or individual.

Image courtesy of Wiki Commons

It’s a peer-to-peer currency based on the blockchain running on the internet that allows its users to transfer value with no central authority or third party involved. Since a network of distributed and mostly anonymous miners are all in charge of processing the transactions, we avoid problems like censorship and fraud.

The automated issuance mechanism of bitcoin through mining also seeks to remove the control of money printing from privately owned banks that lend money to the public at an interest, creating the debt based economy. The primary goal of Bitcoin, to return the control of money to its owners, is in a way lost with third party services.

With cryptocurrencies comes the need for exchanges, and centralized exchanges are easy to use, easy to access, and they provide advanced trading functionalities like margin trading and others.

However, they also represent a security risk for your funds. While some exchanges are better guarded than others, hacks are not an uncommon. There are a number or risks related to centralized exchanges like incompetence, bankruptcy, etc.

We need to exchange our currencies. There are certain items and services that we cannot buy with Bitcoin and in order to acquire Bitcoin or cryptocurrencies, most people have to exchange it for a national currency. Furthermore, some cryptocurrencies like Ether or Bitshares have special features or tools that are not present in Bitcoin. So how can we exchange our coins without entrusting them to a third party service? The answer lies with decentralized exchanges.

Image courtesy Wiki Commons

Decentralized Exchanges

A decentralized exchange is an exchange market that does not rely on a third party service to hold the customer’s funds. Instead, trades occur directly between users (peer to peer) through an automated process. This system can be achieved by creating proxy tokens (crypto assets that represent a certain fiat or crypto currency) or assets (that can represent shares in a company for example) or through a decentralized multi-signature escrow system, among other solutions.

This is an alternative to the current centralized model in which users deposit their funds and the exchange issues an IOU that can be freely traded on the platform. When a user asks to withdraw his funds, these are converted back into the cryptocurrency they represent and sent to their owner.

Advantages

The most important benefit to using a decentralized exchange over a centralized one is their “trustless” nature. You are not required to trust the security or honesty of the exchange since the funds are held by you in your personal wallet and not by a third party.

Another advantage to the decentralized model is the privacy it provides. Users are not required to disclose their personal details to anyone, except if the exchange method involves bank transfers, in which case your identity is revealed only to the person that is selling or buying from you.

In addition, the hosting of decentralized exchanges is distributed through nodes meaning that there is no risk of server downtime. To summarize,

  • No parenting by governments, banks and other institutions
  • Secure, no 3rd party involved
  • Set the unbanked free
  • Open, Transparent
  • Global, fast, efficient, 24/7
  • No identity theft
  • A platform for innovation

Disadvantages

Some decentralized exchanges require users to be online in order for an order to be listed and for the trade to take place, requiring users to perform certain actions like signaling that a payment was received.

Trading features like margin trading, lending and stop loss are currently not available in the decentralized model as they only allow the basic exchange of currency for a predetermined value.

Overview of decentralized exchanges

While there is still a way to go in order to build fully functional and convenient decentralized exchanges, there are several projects that have brought us the basic functions and an alternative way to trade currencies while keeping your funds safe from hacks, inside thefts and faulty business models.

Bitsquare is a decentralized open-source exchange that allows users to buy and sell Bitcoin for cryptocurrencies and national currencies without the need to entrust funds to third-party or middleman, meaning that the transactions occur directly between the buyer and seller. Bitsquare relies on a decentralized multi-signature escrow system to ensure that all trades are carried out honestly.

CounterParty is a meta-coin smart contract layer that embeds data into regular Bitcoin transactions. It allows anyone to issue assets or tokens inside of the Bitcoin blockchain. When trading assets for other assets, the Counterparty protocol acts as a decentralized escrow service that holds the funds until the orders are matched. When trading an asset for Bitcoin, the asset is held in escrow and the other user must make a manual bitcoin payment using the Counterparty wallet.

Waveplatform Waves Asset Exchange is allowing users to trade assets (including asset-to-asset exchange), fiat tokens, and cryptocurrencies.

Bitshares is a crypto platform with its own native currency, Bitshares. Using the Bitshares platform, users can trade BTS, Market Pegged Assets (a crypto asset pegged to another currency or commodity that always has 100% or more of its value backed by the BitShares core currency, to which they can be converted at any time) and User Issued Assets (assets that can be issued by anyone to represent shares, commodities, currencies and so on). Openledger is the Web-based version of Bitshares, running on the same underlying blockchain.

Nxt is a crypto platform (one of the first crypto 2.0 projects) that allows users to issue and trade assets. These assets, however, can only be exchanged for the coin NXT and not for other cryptocurrencies.

Komodo EasyDEX exchange will allow users to trade cryptocurrencies directly without resorting to proxy tokens, while the PAX (Pegged Asset Exchange), both being developed by the SuperNET and Komodo teams, allows users to exchange national currency assets with the privacy that zero-knowledge proofs provide.

Stashcrypto is built on the Open-Transactions financial cryptography platform, an extremely fast and low cost off-blockchain system based on signed receipts. When combined with Bitcoin, OT solves hard problems in crypto finance. Receipts in OT cannot be forged, and a user’s balance cannot be changed without his signature. OT is also able to prove all balances, as well as which instruments are still valid, without storing any history except for the last signed receipt.

Cryptor Trust is working on the Blockchain Asset Exchange (BAE), an open decentralized distributed platform for trading securities. Cryptor Trust plan to list their own investment entities on the BAE exchange.

Conclusion

Decentralized exchanges provide global, frictionless value-transfers. Without decentralized exchanges, there will be intermediaries having control over the transfer of value.

Geir Solem

Bitcoin Is The World’s Best Performing Currency

Bitcoin is officially the world’s best performing currency of 2015.

During the last trimester, the most popular and widely used cryptocurrency overtook the dollar by a whopping 35%, leaving aside the strength experienced by the dollar (8.3% throughout the year).

The infographic below uses the U.S. Dollar Index as a benchmark to make the comparison against other 17 major currencies, precious metals (gold/silver) and the digital currency, Bitcoin.

bitcoin-best-currency-of-2015

 

Maximiliano Garcia
Cryptor Trust