My Bitcoin is falling, but is the sky falling?

Broad cryptocurrency market trends and should investors be concerned.

Some of you might already know, but in the interest of full disclosure I’ve been a cryptocurrency investor and Bitcoin/Ethereum holder since sometime in early 2017. Throughout that time I’ve seen Bitcoin achieve great things consistently outperforming people’s expectations and crushing the naysayers doomaday predictions. I have followed Bitcoin the way to it’s all time high of just a hair over USD $20,000 a coin and have watched the total crypto market cap exceed USD $835 billion.

Total Market Capitalization since the start of 2017

When I was first buying into Bitcoin at around USD $2,000 a coin people said I was crazy and that there was no way that the price could go any higher! From the moment I learned about Bitcoin and the blockchain though I was a believer, both in the project and the concept that the decentralization of the global money markets was one day going to become a reality and change the world for the better.

Bitcoin price in USD since the start of 2017

Since the day that I bought my first Bitcoin I have bought and sold various crypto assets more times that I can remember and it’s always been the same case. People have always been telling me it’s a bubble, that at some point it was going to collapse and all of my hard earned money was going to be gone. Sure there are always going to be scams, but most half intelegent investers can spot them a mile away!

Don’t get me wrong I’m not magical or immuned to the fluctuations that occur in currency markets be they fiat or cryptocurrency. With Bitcoin currently sitting at around USD $8,750 my portfolio is in the red just like everyone else’s . Well at least that is if you look at it from a short-term point of view.

This is what I keep telling the brand new investors. The poor people that got caught up in the hype train, the marketing and the media frenzy that was occurring only 2 months ago. For the investors that bought in only a couple of weeks back at the all time highs this is an awfully bitter pill to swallow. As it stands now, the market, at least for some currencies is down over 50%. I have some very close friends who bought into crypto at the peak and the anxiety that comes from constantly looking at their exchange apps is terrible. I keep telling them they just need to relax and that the market will return. It’s just a matter of time… and it could be a damn long time but  panicking and pulling their money out now could possibly be one of the worst decisions you could make.

I like a lot of cryptocurrency investors and commentators out there, I think of the current crypto market correction as being a healthy one. It’s basically just growing pains, like the market is shaking off some of the bad money that been poured into it. Everyone needs to realize that compared to the big fiat stalwarts like the USD, EUR and CHF,  Bitcoin is still a very new currency. Nothing becomes a global standard without going through some of these trials and tribulations.

Another potential factor that has potentially impacted the crypto market and that has certianly gained a lot if media interest is the involvement of South Korean trade (and the regulation thereof) in cryptocurrency. Not many people realize but from an adoption point of view the people of South Korea have flocked to cryptocurrency shown an appetite for trading well beyond that of investors in most other countries.

Essentially, well at least might take on things, is that the South Korean government has seen the incredibly rapid uptake of crypto assets by it’s people and was terrified that a collapse of the “crypto bubble” could cause huge panic on South Korean money markets and could potentially collapse their economy. What the government didn’t consider was that by rapidly changing the regulation around cryptocurrency investment they could potentially create a panic for investors and collapse the cryptocurrency markets. In the end, what the South Korean government caused was not a total collapse of the market but a still significant 1.6% drop in the Bitcoin price and a almost 1% drop in the price of Ethereum.

More information on South Korea’s measures to curb the speculation in cryptocurrency trading you can have it read of the white papers here.

FSC announces financial measures to curb speculation in cryptocurrency trading

Another significant impacting factor on the current cryptocurrency market cap is a raft of crime and theft of large quantities of cryptocurrency. There’s a lot of concern from investors around the safety and security of many of the large online exchanges. This was highlighted once again when the Japanese authorities ordered the tokyo-based exchange Coincheck to completely reassess it’s security systems and come up with proven measures in order to safeguard their investors  after almost $530 million worth of NEK coin was stolen from them.

Last but not least I’d like to give people a little bit of perspective on exactly why a good portion if not the majority of investors were involved in the crypto markets to start off. It is no surprise to a lot of the long termers (and I’m not even putting myself in that boat) that most Bitcoin, Litecoin, Ethereum and other crypto asset traders saw the insane gains of the last 2 months and ran to exchanges to jump in and make a quick buck. This is never a smart way to invest! I know it sounds harsh, but to a small extent I’m kind of happy that these people have been burnt. It’s a lesson to them as to the seriousness of investing. If bitcoin, or any other cryptocurrency is to become a true global transactional power this speculation and rapid in and out trading has to stop.

For now and for me, I’m excited for the future of crypto.  I’m hanging in there and hodling my coins. I’m still ahead on the the coins that I first bought when I started trading and I’ll be looking to buy more. If bitcoin gets as low as some people are saying it will (in the USD $6,000 range) it should present an amazing buying opportunity. So for now I sit tight and wait 🙂

Thanks for reading!

Ethereum 2.0 and it’s plans for world domination!

During his presentation in Taipei during the BeyondBlock Conference last Monday (November 25), Vitalik Buterin inventor and founder of the Ethereum blockchain braved the rain and humidity in order to detail his vision for Ethereum 2.0.

Throughout his one hour presentation he covered many potential modifications in Ethereum’s design that he would like to see brought to fruition over the next couple of years to boost Ethereum. Vitalik identified the main growth areas for the still quite young currency as being in regards to personal privacy, security, naturally and scalability. Of the multitude of topics discussed though it was the scalability that appeared to get him the most excited.

Buterin does not appear concerned regarding rivals. “The Ethereum killer is Ethereum, the Ethereum of China is Ethereum, the Ethereum of Taiwan is Ethereum… 2.0,” he said.

The very rate at which Ethereum continues expanding appears to validate Buterin’s positive outlook. At the peak of it’s seemingly relentless climb the price of an Ether recently crossed the key psychological barrier of USD $500 a coin. This mighty feat combined with the fact that the Ethereum block chain has proven to be a fast and trouble free instrument from a transactional point of view is why Etherium is currently flying so high.

Currently the Ethereum blockchain is handling more transactions than the other major blockchains combined. An incredible feat and something no other crypto currency can come even close to achieving.

Keeping Ethereum responsive from a transactional point of is one of view is going to be one of Vitalik’s key criteria moving forward. During his presentation on of his slides read, “We want to scale to thousands of transactions per second, on chain, without any supernodes,” but maintaining this capability without supernodes is just one of the facets in Vitalik’s master plan. Moving the currency forward and maintaining its current value in the crypto space requires the careful balancing and coexistence of decentralization, scalability and security, not an easy task nut something Vitalik and his team think they can achieve.

Separating a blockchain network into a number of smaller sized part networks (called shards) is a potentially efficient way to process multiple parallel and is one of the potential ways that Vitalik may attain the high throughputs required to take on the likes of networks such as Visa and MasterCard.

“You can think of (sharding) as, in a fairly simple version, creating a blockchain where you have, let’s say, a hundred different universes, and each of these universes is a different account space,” said Buterin. “So you can have an account in some universe or you can have a contract in some universe and you can send a transaction in some universe, and if you send a transaction in some universe it only affects stuff in some universe.

“But these kind of 100 universes are not just separate blockchains; they are systems that are also interconnected with each other,” continued Buterin. “Particularly, they share consensus. So in order to break even one of them, you have to break the whole thing.”

Buterin then went about defining reasonably simple as well as a lot more innovative methods to apply sharding in the Ethereum blockchain, describing a sharding roadmap that visualizes, at the very least, the production of brand-new “universes” that do not influence the main blockchain while allowing the trailing of some new ideas such as increasing scalability, beginning with “quadratic scalability as nodes validate certain shards and act as light clients for other shards.”

Keeping the presentation moving at a cracking pace, Buterin then moved on to discuss the concept and importance of privacy. In the near term, the implementation of zero-knowledge proof personal privacy technology the same as that used in the Zcash blockchain is something of particular interest o to the Ethereum team. These brand-new personal privacy tools will enable the user to only reveal deals to certain parties while concealing them from everyone else. In his own words the cryptocurrency privacy issue now 75% solved.

Another significant planned upgrade to Ethereum will certainly be the intro of Proof of Stake or PoS in the Casper release which could be with us as soon as next summer season. With the eventual launch of Casper, Ethereum will be moving from a straight up Proof of Work (PoW) model to a new and improved hybrid PoW/PoS model. “In this scheme, all of the proof-of-work mechanics will continue to exist, but additional proof-of-stake mechanics will be added,” noted Buterin.

With the recent revelation that the calculations on the Bitcoin blockchain are currently consuming as much power as 159 countries and the admission by  it was identified that a reduction in the energy consumption of the Ethereum blockchain was going to be one of the key requirements to maintain it’s long term viability as well. The integration of the hybrid PoW/PoS model will be a key part of these energy reduction efforts and should give Ethereum a long term advantage over many of the other often mentioned currencies.

Smart contracts that utilise the Turing-complete programming language are definitely one of the major draw cards for Ethereum. While smart contracts are finding utility in a range of varied applications and are creating new possibilities for the way we trade with each other, the safety and security of Ethereum smart contracts is coming up in the press all to often. Buterin was able to confirm the rumours that Ethereum will ultimately be adopting a brand new Python-like programming language for it’s smart contracts known as “Viper”. Viper is being applied to make it possible for the growth of more secure Ethereum applications.

While last Mondays talk by Buterin didn’t go over anything truly new it did go a long way to confirming previous leaked rumours as well as plans mentioned in previous talks and documents. The enthusiastic way in which he talked about the Ethereum road map brought the crowd to their feet and went a long way towards showing why this currency has the huge cult like following that it does.