Bitcoin in the News : 2017-08 More++

I ended my previous post, Bitcoin [Cash] in the News : 2017-08 Price, with a promise:-

Now that I understand that Bitcoin Cash is a new cryptocoin, I can return to the August price analysis for good old bitcoin. I'll do that in my next post.

That '2017-08 Price' post included a chart of the month's bitcoin price movement. It can also be explained verbally:-

Bitcoin started the month around $2800, climbed steadily in price, and ended the month around $4800. That made for a 70% upward movement in price during a single month.

Like many people, I've been interested in investing since I first started working full time and there is a good adjective for that sort of price climb: 'Extraordinary!' What do the price analysts at Cointelegraph.com say about this? Here's an example from the first week of the month:-

• 2017-08-06: Bitcoin Weekly Price Analysis: July 29 - August 6 • 'On Aug. 1 Bitcoin was traded in the long-term $3,000 channel. Technically, the movement needed a pullback, as it had larger scale resistance. The fork resulted in the instant correction for Bitcoin price. The buyers’ prevailed, which is proved by the purchase volumes. There was also an attempt to form a reversal down at the peak of the correction. But you need to remember, that a reversal shatters the previous trend. Price movement is the result of the market demand and supply. So for a reversal, the demand volumes at the correction peak need to be at least equal to the ones, formed previously at this level.'

Some keywords: channel, pullback, resistance, correction, reversal. This is technical analysis, which means looking at psychological factors rather than fundamental values. It's also poorly written: "buyers’ prevailed", why the apostrophe?; "equal to the ones, formed previously", why the comma? The first sentence in the article was:-

Exchanges are announcing to allow the Bitcoin Cash deposits and withdrawal, which caused Bitcoin Cash price fall.

Although I think I understand what the writer wanted to say, it wasn't said very well. And why should announcing the possibility of deposits and withdrawals cause a price to fall? I'm not picking on this particular writer; other articles published during the month were comparable: poorly written psychological analysis. On top of this, the Cointelegraph price analysis was loaded with predictions:-

• 2017-08-06: Road to $10,000: How Bitcoin Price Broke $3,000 and What’s Ahead
• 2017-08-14: Is Bitcoin on Its Way to $5000, and Should You Invest or Stay Away from Bitcoin?
• 2017-08-18: Not Bubble - Bitcoin Growing Up, Heading to $10,000: Dave Chapman
• 2017-08-22: Each Bitcoin Could Be Worth $619,047 in 10 Years: Forbes Contributor

Pick a price, any price? No one can convince me that we're looking at serious analysis here.

After 'Bitcoin Cash' and the bitcoin price rise, what other bitcoin stories were in the news in August? Here are an even handful, all of them from the last days of the month:-

• 2017-08-23: Bitcoin Transactions Aren’t as Anonymous as Everyone Hoped (technologyreview.com; MIT) • 'Web merchants routinely leak data about purchases. And that can make it straightforward to link individuals with their Bitcoin purchases, say cybersecurity researchers.'
• 2017-08-24: Bitcoin miners are making a killing in transaction fees (businessinsider.com) • 'Every time a miner unlocks a bitcoin block, vis-a-vis mining, all the transactions on that block are processed. The miner, in return for his hard work, is rewarded with 12.5 bitcoins for unlocking the block. They also get to keep the transaction fees bitcoin holders pay when they transact with the cryptocurrency'
• 2017-08-26: Chinese Producer Embeds Bitcoin Mining Chips In Household Appliances (cointelegraph.com) • 'Chinese electrical appliances manufacturer, the Midea Group, has filed a patent for a technique for mining Bitcoin using household products.'
• 2017-08-29: Dark web finds bitcoin increasingly more of a problem than a help, tries other digital currencies (cnbc.com) • 'Blockchain Intelligence Group, estimates that illegal transactions in bitcoin have fallen from about half of total volume to about 20 percent last year.'
• 2017-08-30: In Santa Barbara, An Annual Event Brings Together Those Closest To Bitcoin's Roots (forbes.com) • 'Crypto 2017, a conference sponsored by the International Association for Cryptographic Research'

That second-to-last story -- 'illegal transactions in bitcoin have fallen' -- might be because volumes of legal transactions have increased. It might also be because growing interest in bitcoin means growing scrutiny. In last month's post, Bitcoin in the News : 2017-07 More++, I noted, 'No Bitcoin in the News would be complete without mainstream press reports on the dark side of bitcoin'. This month, I didn't detect any such reports. What will September bring?

Bitcoin [Cash] in the News : 2017-08 Price

If last month's price post, Bitcoin in the News : 2017-07 Price, had only a little real news behind it, this month's post makes up for it. The following chart might be captioned, 'Straight Up!'.

Bitcoin Price Index

Keeping to a single source, Bitcoin Price Analysis (BPA; cointelegraph.com), here is the first significant price news for August:-

• 2017-08-02: Bitcoin Cash Price and Market Overview • 'Since the start of trading, more than 24 hours now, the price of a new Bitcoin-fork - BCC/BCH increased by 9,378 percent.'

Whoa! What is going on here? I go away for a month and nothing makes sense anymore. What was the first mention of 'Bitcoin Cash' on Cointelegraph.com?

• 2017-07-25: Bitmain: Bitcoin Cash Hard Fork Merely Contingency Plan for UASF • 'In its initial announcement earlier this month, Bitmain, arguably the largest mining equipment manufacturer and mining pool operator in the industry, threatened the community with a contentious hard fork in response to the user-activated soft fork (UASF). As users, node runners and businesses proposed the activation of BIP 148, a user-activated soft fork that ignores the presence of miners and activates Segregated Witness, Bitmain, the operator of Antpool, emphasized that it will lead a Bitcoin hard fork on Aug. 1 and create Bitcoin Cash, a separate Bitcoin Blockchain.'

Here are some more early Cointelegraph articles on 'Bitcoin Cash'.

• 2017-07-25: Bitcoin Cash? Why not? Roger Ver Signals Support As New Fork Trades At $400
• 2017-07-25: Bitcoin Price Slides 7% As Bitcoin Cash Emerges - Fork Fears?
• 2017-07-26: Fear Not The Fork But The Fear Itself: Bitcoin Wisdom
• 2017-07-26: Bitcoin Investors Should Not Fear August 1 Chain Split • 'Last week, some of the largest and leading Bitcoin exchanges and businesses including Coinbase and BitMEX clarified that they are not in favor of Bitcoin Cash and thus, cannot support the hard fork led by ViaBTC. Coinbase emphasized that it is not willing to support Bitcoin Cash due to its contentious nature, while BitMEX noted that Bitcoin Cash will likely lead to serious security issues.'

Since I'm a Coinbase user, the Bitcoin Cash fork doesn't affect me (at least for now). For the record, here are two more BPA articles from the first week of August.

• 2017-08-03: Bitcoin Cash Price Poised to Plummet Once Network Stabilizes
• 2017-08-06: Bitcoin Cash Weekly Price Analysis

Now that I understand that Bitcoin Cash is a new cryptocoin, I can return to the August price analysis for good old bitcoin. I'll do that in my next post.

Bitcoin in the News : 2017-07 More++

Bitcoin price movement was the main story in my previous post, Bitcoin in the News : 2017-07 Price, and speculation about the cause of the movement was the secondary story. Several sources mentioned 'civil war', as in

• 2017-07-20: Bitcoin swings as civil war looms (bbc.com) • 'The value of the virtual currency Bitcoin has always been volatile. Even so, there has been particular turbulence in recent days as fears of a "civil war" among its adherents first grew and then subsided, although they have not gone away altogether.'

I could give many examples of related stories, but one article was more comprehensive than the others (NB: needs Flash).

• 2017-07-18: Behind on Bitcoin Drama? A (Short) History of Scaling (coindesk.com) • The article is undated, with one story from 2014, one from 2015, and the other 15 from 2017, half of those from July. I used the date of the last event mentioned.

Since no 'Bitcoin in the News' would be complete without mainstream press reports on the dark side of bitcoin, here are three:-

• 2017-07-01: UK dealer charged in US over multimillion-dollar fake Bitcoin site scam (theguardian.com) • 'Renwick Haddow created ‘trendy’ companies and duped investors into thinking they were big successes, authorities in New York allege.'
• 2017-07-24: Pennsylvania police, hunting for stolen laptops, say they stumbled on $40 million bitcoin scam (washingtonpost.com) • 'Law enforcement in Pennsylvania’s Bucks County likely didn’t think they were dealing with a dark Web criminal pro when Theodore [Ted] Price’s name first popped on their radar.'
• 2017-07-27: 'Criminal mastermind' of $4bn bitcoin laundering scheme arrested (theguardian.com) • 'Russian operator of long-standing bitcoin exchange BTC-e indicted for laundering money including high-profile hack of funds from Mt Gox exchange'; [Alexander Vinnik]

I could again give other stories, many of geographical interest, but I'll stop to document a personal experience. At the end of last year, I wrote a post about Buying Ethereum (December 2016). While writing this current post, I checked on the status of that trade and was surprised to see that the value of the Coinbase account had increased twenty times. I exchanged some of the ethereum for cash and used part of that to buy a small amount of litecoin, a cryptocurrency introduced by Coinbase since I last looked at the account.

Why mention this? First, because bitcoin++ is more than an arbitrary collection of news stories. Second, because cryptocurrencies are part virtual, part real. Third, because it introduces the last story.

• 2017-07-29: Howard Marks says bitcoin isn’t real -- and we can all blame millennials for its rise (marketwatch.com) • 'Howard Marks has some harsh words for the bitcoin community and the rise of digital currencies, which have become all the rage lately. “Digital currencies are nothing but an unfounded fad,” said the co-chairman of Oaktree Capital Management, who was among the first to sound the alarm on the 2008 financial crisis.'

Will Howard Marks be massively right a second time? Time will tell, but it brings to mind the old saying, 'You don't make any money until you sell.'

Bitcoin in the News : 2017-07 Price

Although the chart below isn't strictly limited to first-day-of-the-month and last-day-of-the-month markers, it does show the bitcoin price action over the month of July. The chart's start price corresponds to the end of the chart in Bitcoin in the News : 2017-06 Price, while the end price shows the upward trend continuing into August.

Bitcoin Price Index

Once again I turn to Bitcoin price analysis (cointelegraph.com) for some background on the price movement. The first half of the month had only a few (increasingly tedious) stories predicting an eventual target price -- $55.000, $4.000, $500.000 -- which might as well be produced by a random number generator. The second half of the month had a few stories with more depth.

• 2017-07-21: SegWit2x Deployment: ‘Excited Traders’ Drive Bitcoin Price Up • 'Bitcoin has bounced back from its huge loss after bridging an ideological gap that poses a threat to the number one cryptocurrency. [...] Many core members are still not open to the use of SegWit2x because they say it hasn’t been tested for bugs yet. Also, not all miners support SegWit2x, which they say is a flawed compromise that doesn’t solve the root scaling problem.'
• 2017-07-28: Bitcoin Price Reacts to SegWit News • 'Yesterday, July 27, the signaling stage about the Segregated Witness protocol, SegWit, BIP 141, was activated'

The term 'SegWit' was first seen on this blog in Bitcoin in the News : 2016-10 More++. That post points to a previous post from April 2016 where the term 'segregated witness' was introduced and which itself points to an important video explaining the subject. As for 'SegWit2x', the simplest explanation I could find is How is Segwit2x different from Segwit? (bitcoin.stackexchange.com):-

SegWit2x is a combination of both SegWit and a 2MB hardfork (to activate three months after SegWit). SegWit2x uses a different 'bit' for signaling (bit 4 instead of bit 1) than SegWit.

That appears to be where we are today -- more price news next month.

Bitcoin in the News : 2017-06 More++

When you think of bitcoin, what other words come to mind? There are a few associated words in this blog's title -- cryptocurrency, blockchain, mining -- but another word that occurs more and more frequently is 'bubble'. Looking at the price movement for the past few months (see Bitcoin in the News : 2017-06 Price for last month) makes it easy to understand why.

My Google news alerts for bitcoin for the 30 days of June included seven days with the mention of 'bubble'. This compares to five days in May, zero days in April, three days in March, and scattered single references since I started tracking the keyword 'bitcoin' two years ago.

• 2017-06-06: Bitcoin is a 'bubble,' Mark Cuban says (businessinsider.com) • 'When everyone is bragging about how easy they are making money, it's a bubble.'
• 2017-06-09: Is bitcoin in a bubble? This metric suggests there’s more room to grow (marketwatch.com) • 'Bitcoin’s "P/E ratio" looks at the digital currency’s network value -- the number of outstanding bitcoins multiplied by price; this figure is currently $44.69 billion -- against its daily transaction volume.'
• 2017-06-10: Four Reasons Bitcoin is Not A Bubble: Analyst (cointelegraph.com) • 'Decentralization, Supply, Security, Fraud-proof'

Astute analysis or wishful thinking? Probably a bit of both. The next article makes no sense at all. (e.g. 'The main factor that makes a digital bubble impossible is market bipolarity.')

• 2017-06-17: There Will Be No Bubble for Bitcoin and Ethereum, Here’s Why. (cointelegraph.com) • 'Such a thing is impossible due to the market-influencing capabilities of Bitcoin and Ethereum.'
• 2017-06-22: The Bitcoin Bubble Will Turn Into Mania Before It Bursts (forbes.com)
• 2017-06-28: Ignore the Naysayers, there’s no Bubble in Bitcoin (newsbtc.com)

On the path from curiosity to bubble to mania, when does the phenomenon become a 'gold rush'?

• 2017-06-23: It's a gold-rush mentality in bitcoins, and many are at risk of losing big (indiatimes.com)
• 2017-06-27: Bitcoin Development Similar to 1800s Gold Rush: Expert (cointelegraph.com)

Here are two more signs of a bubble, impossible or not. Both stories are from mainstream financial news.

• 2017-06-02: Bitcoin start-up Coinbase aims for $1 billion valuation (cnbc.com)
• 2017-06-23: Bitcoin speculators are the new day traders (cnbc.com)

There's nothing about bubbles in the last two stories, but both are worth noting.

• 2017-06-19: Move Over, Bitcoin. Ether Is the Digital Currency of the Moment (nytimes.com) • Nathaniel Popper; chart comparing market caps
• 2017-06-23: itcoin: Why The 'Flippening' Failed - Winklevoss Bitcoin Trust ETF (Pending : COIN) (seekingalpha.com) • 'Many feel that as soon as Bitcoin is dethroned ... dubbed "The Flippening"'

The word 'flippening' was new to me.

Bitcoin in the News : 2017-06 Price

It's the first Saturday of a new month which means it's time to look at bitcoin price action for the preceding month. For the first month since March, the price at the end of the month was not substantially higher than at the beginning of the month. (For easy reference, my previous report on this blog was Bitcoin in the News : 2017-05 Price.) Here's the chart for 2017-06.

Bitcoin Price Index

Once again, I turn to Bitcoin price analysis (cointelegraph.com) for an explanation of the price movement. The first story echoes the last story in the '2017-05 Price' post.

• 2017-06-02: Bitcoin Price Recovers to $2,400 as Chinese Exchanges Resume Withdrawals

Then it was up, up, and away...

• 2017-06-05: Bitcoin Price Resilient to Economic Uncertainty, Hits $2,600 as Markets Plunge
• 2017-06-06: Bitcoin Price Hits New All-Time High at $2,933, Closing on $3,000

...in my beautiful balloon? So it would seem to some pundits.

• 2017-06-08: Bitcoin Price Can Reach $1 Mln: CNBC's Jim Cramer
• 2017-06-09: Bitcoin Price Will Hit $250,000 by 2020 If Seven-Year Trend Continues

Let's do the math. We'll eventually have 21 million bitcoins, which is 21 x 10^6. If each bitcoin is worth 1 x 10^6 USD, then the total value will be 21 x 10^12 USD, which is $21 trillion. Wikipedia, in Economy of the United States, informs,

The United States' GDP was estimated to be $18.46 trillion in 2016.

U.S. GDP is more than 20% of world GDP, so even then the math doesn't support Cramer's prediction. In any case, 3.000 is a long way from 1.000.000.

• 2017-06-12: Bitcoin Price Made History Again by Topping $3,000

Note that all of the preceding commentary took place in the first half of the month. Then we had a sharp fall of 20% -- in a stable market that would be called a correction -- then a rebound that 'retraced' (another word commonly used in market analysis) 50 % of the loss. So what's next? Up or down, it's anyone's guess.

• 2017-06-24: Bitcoin Price Stabilizes at $2,700, Another Surge Imminent?
• 2017-06-24: Cryptocurrency Bubble Will Burst: Aberdeen Asset Management

The last week of the month saw a slide to the level we saw at the beginning of the month, but there were no further reports. Am I seeing a pattern here? The good news is reported; the bad news isn't. Or is this just my imagination playing tricks on me?

Bitcoin in the News : 2017-05 More++

I summarized my previous post, Bitcoin in the News : 2017-05 Price, in a single sentence:-

Last month's post about April was crazy, but this month's post is even crazier.

I could also have summarized the month with a couple of keyword nouns: high, $2000; or keyword verbs: soar, spike, surge. After that, the most prevalent keyword was something completely different: ransom, as in:-

• 2017-05-15: Hardly Anyone Paying the Hackers? Because Using Bitcoin Is Hard (bloomberg.com)

After the ransomware began infecting users on Friday, they were given 72 hours to pay $300 in bitcoin -- chosen by the hackers because the crypto currency is harder to track than conventional payments -- or pay twice as much. If they refused to pay after seven days, their computer would be permanently locked -- a serious problem for those who haven’t backed up their data.

As of early Monday, only about $50,000 had been paid in ransoms, according to Elliptic Enterprises Ltd., a London-based company that tracks illicit use of bitcoin. The company calculated the total based on payments tracked to bitcoin addresses specified in the ransom demands, adding that it expects the total to rise.

More details emerged in the following days.

• 2017-05-16: Massive cryptocurrency botnet used leaked NSA exploits weeks before Wanna Decryptor (arstechnica.co.uk; also 'WannaCry') • 'On Friday, ransomware called Wanna Decryptor or WannaCry used leaked hacking tools stolen from the National Security Agency to attack an estimated 200,000 computers in 150 countries. On Monday, researchers said the same weapons-grade attack kit was used in a much earlier and possibly larger-scale hack that made infected computers part of a botnet that mined cryptocurrency.'
• 2017-05-16: From Kill Switch To Bitcoin, 'WannaCry' Showing Signs Of Amateur Flaws

The WannaCry infection was preceded by another wannabe-rich-quick criminal scheme:-

• 2017-05-07: Bitcoin Ransomware Education – AutoDecrypt (themerkle.com) • 'The number of different types of bitcoin ransomware continues to grow at an alarming rate. Earlier this week, security experts have come across a new strain that goes by the name of AutoDecrypt. Contrary to what people may believe by looking at the name, this malware will not automatically decrypt itself unless a payment is made.'

Unfortunately, this wasn't the last time we'll be confronted by this problem, partly because of another recurring keyword that appeared in different contexts: mainstream.

• 2017-05-22: Bitcoin Is Going Mainstream, but Its Current Run-Up Has a Speculative Feel (thestreet.com) • 'Bitcoin has largely failed as a mode of payment for consumer transactions, with many of the retailers that embraced it a few years ago having backtracked and the rest (from all signs) mostly seeing limited bitcoin transaction volumes. What the predictions of bitcoin's death didn't foresee, however, was the degree to which it would be embraced as an alternative to precious metals as a safe haven for those worried about things like inflation, political instability and (in certain countries) the security of assets held in traditional currencies.'
• 2017-05-24: Bitcoin is up over 400% in the past year—what’s stopping it from going mainstream? (marketwatch.com) • Abigail Johnson [CEO of Fidelity Investments] says bitcoin is grappling with technological and regulatory issues, as well as what to use it for in the first place.
• 2017-05-27: From Bitcoin to Big Business, Blockchain Technology Goes Mainstream (voanews.com) • 'The technology behind bitcoin and other cryptocurrencies is being looked at by more conventional companies and businesses'

Soar, spike, surge; ransom; mainstream. These keywords are all linked by more than bitcoin.