Author: Dale Warburton

Dale is a former attorney turned passionate Bitcoiner with an interest in investments, macro, geopolitics, innovation, tech, nature, wildlife, MMA and Bitcoin (of course).

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Bitcoin Crypto News

Man Who Lost 7,500 Bitcoin Has a New Plan to Recover His Fortune

In 2013, 35-year-old British IT engineer James Howells accidentally threw away a hard drive of an old computer containing 7,500 bitcoins.

Eight years later, he still hasn’t given up on his quest to recover his coins, which ended up along with the hard drive in a landfill in his home town of Newport, South Wales.

Howells’ Plan to Find his Fortune

James Howells. Souce: Aronboss

In his mission to find the discarded hard drive with its estimated 7,500 bitcoins (valued presently at A$323.2 million), Howells has devised a 12-month plan to search the city landfill using x-ray scanning devices and AI technology:

We have a system with multiple conveyor-belts, x-ray scanning devices and an AI scanning device that would be trained to recognise items that are a similar size and density to the hard drive.

James Howells

Howells estimates he would need to sift through 300,000–400,000 tonnes of waste up to 15 metres deep across 200 square metres. He notes it would be a difficult search given the delicacy of the hard drive and therefore he has enlisted assistance from “some of the best data recovery experts in the world to make sure we can get [the bitcoins] off the hard drive”.

Finding a needle in a haystack. Source: Waste Today

While the search would be expensive, Howells says his plan is supported by a hedge fund that is prepared to cover the cost in exchange for a share of the bitcoins.

Despite Howells’ plan, it has not been received favourably by the Newport City Council, even after he offered it £55 million (approximately US$76 million). Council explained that:

The cost of digging up the landfill, storing and treating the waste could run into millions of pounds – without any guarantee of either finding [the hard drive] or it still being in working order … excavation is not possible under our licensing permit and excavation itself would have a huge environmental impact on the surrounding area.

Newport City Council spokesperson

Risks of Self-Custody

Situations such as this provide a timely reminder of some of the risks inherent in holding your own private keys. Self-custody of digital assets such as Bitcoin is a doubled-edged sword.

On the plus side, no one can confiscate them without your permission. You can effectively “be your own bank” and spend it without ever needing the assistance or cooperation of any third party. The downside is that if you lose your private keys, there is no customer helpdesk to call. Once your keys are gone, you’ve lost access to your crypto and recovering them can be next to impossible.

There are only ever going to be 21 million bitcoins and up to 20 percent of supply has been lost forever. In many cases, those who have lost their private keys are early adopters who acquired their coins before much of the user-friendly interfaces and products existed (Ripple’s CTO is one such example).

These risks intrinsic to self-custody remain one of the most compelling reasons some investors prefer investing in crypto funds or exchange traded projects (ETPs). That way, the risk is transferred to a trusted third party.

On the face of it, it would appear Howells may have reached the end of the road. However, given the prize at stake, it wouldn’t be entirely surprising to see the matter proceed to court. And you probably wouldn’t blame him.

Categories
Crypto News Stablecoins

USDC Stablecoin Provider Goes Public in $4.5 Billion Deal

Circle, the company behind USDC, has announced that it will soon become a publicly traded company on the New York Stock Exchange (NYSE) in a historic day for crypto and stablecoins.

Details of the Deal

Circle co-founder, chairman and CEO Jeremy Allaire made the announcement on the company’s website and outlined the mechanics and underlying rationale of the transaction.

Allaire noted that the move would be accomplished through a combination with Concord Acquisition Corp, a publicly traded special purpose acquisition company (SPAC). The transaction puts Circle’s enterprise value at US$4.5 billion, and once closed Circle expects to trade on the NYSE under the symbol “CRCL”.

A central component of our mission has been helping to establish and grow USD Coin (USDC), the fastest-growing dollar digital currency in the world. USDC has grown over 3400 percent since early 2021.

Circle co-founder, chairman and CEO Jeremy Allaire

Circle now looks set to become only the second US crypto company to go public after Coinbase’s direct listing earlier this year. 

Growth in Stablecoins

In May, Crypto News Australia reported that the stablecoin market had grown to over US$100 billion. USDC, with a circulating supply of 26 billion, is the second-largest stablecoin behind Tether (USDT), although it is growing much faster.

According to Circle, USDC has now settled $785 billion in on-chain transactions to date and is widely used by various crypto exchanges, fintech clients, and DeFi users worldwide.

Despite their growth, some regulators view stablecoins as a threat to their central bank digital currency (CBDC) projects. Many remain confused about the difference between the two and whether they are able to co-exist or not. For now, those questions remain largely unanswered.

Categories
Australia Bitcoin Crypto News Gold

Aussie Finance Podcaster BIP Claims Bitcoin “Will Never Become a Store of Wealth”

In their most recent episode, BIP podcast hosts Paul Colgan and James Whelan of the VFS Group discussed crypto with Australian blockchain entrepreneur Sergei Sergienko. Much like Peter Schiff, it’s clear they aren’t keen on crypto.

Hosts Not Keen on Bitcoin

The hosts are self-described crypto sceptics and kicked off the episode by referring to crypto fanatics as “religious” and at times “unhinged” or “detached from reality”.

The episode covered the range of common arguments typically made against crypto:

  • It’s used for illicit activities: Unlike fiat, crypto is traceable on the blockchain. In 2020, chain analysis showed that 0.34 percent was used for illicit activity. The UN estimates between 2.5 – 5 percent of global GDP (between US$1.6 – $US4 trillion) is for illicit activity. In absolute and in relative terms, fiat accounts for far more illicit activities.
  • Governments can and do seize crypto assets: No one has the ability to confiscate your crypto provided you are in sole control of your private keys. As crypto investors will tell you – not your keys, not your coins. Leaving them in a public wallet such as an exchange or with a custodian is an example of you not controlling your keys.
  • Use of bitcoin for payment is extremely limited: To an extent it’s true, but not in El Salvador where it is legal tender. For now, as Bitcoin grows in value and in most countries is treated as an asset for tax purposes, it makes little sense to use it for day-to-day transactions. In Australia, the ATO treats Bitcoin as an asset, meaning you are obliged to pay capital gains tax on all individual bitcoin transactions if your exit price is higher than your base cost.

BIP Podcast Host: Bitcoin is Not a Store of Value

In simple terms, a store of value is defined as an asset that preserves its purchasing power over time. Traditionally, gold has fulfilled that role, but increasingly, millennials are switching gold for crypto, even in regions with strong patterns of gold ownership. It’s not surprising, given that over the past 10 years Bitcoin has comfortably outperformed gold.

Notwithstanding the data, Whelan of the BIP podcast saw the “calamity value of gold”, but not in Bitcoin. For that reason, he argues, Bitcoin will never be a store of value:

If everything stopped working and we had to actually go back to the barter system, it’s very handy to have gold in your safe, which is divisible and tradable. Whereas if nothing’s working … your Bitcoin wallet is effectively as useless as a doorstop.

Paul Whelan, BIP podcast

In order to shut down the Bitcoin network, you would need to shut down the internet and all connectivity. It’s difficult to imagine such circumstances, but in such event you may want to have a little gold on hand for the “zombie apocalypse”.

In all other cases, however, Bitcoin’s scarcity, supply inelasticity and exponential returns appear to provide a compelling case for Bitcoin over gold.

Categories
Bitcoin Bitcoin Mining Crypto News

Bitcoin Volcano Mining Could Earn El Salvador 20,000 Bitcoin a Year

El Salvador’s adoption of Bitcoin as legal tender has undoubtedly been one of crypto’s top stories in 2021. Following the historic move, President Nayib Bukele has shifted his focus on unleashing the nation’s abundant geothermal energy to mine Bitcoin, which, based on its current price, could return over A$1 billion per year.

100% Green Energy Bitcoin Mining

Source: Pinterest

In early June, Bukele announced his intention to mine 100 percent eco-friendly Bitcoin, signalling that plans were afoot:

While the latest details remain unclear, the President recently took the opportunity to discuss the matter with Peter McCormack of the What Bitcoin Did podcast:

Volcanoes – An Economic Windfall?

So-called volcano mining (correctly referred to as mining using geothermal energy) has captured the imagination of the crypto community. Since the announcement, various analysts have estimated the potential financial impact of mining Bitcoin using the country’s geothermal energy resources.

Conservative estimates suggest that El Salvador could generate approximately 20,000 BTC per year, with some suggesting it may indeed prove to be one of the most profitable projects on record:

If El Salvador is successful in its effort and if the price of BTC reaches US$100,000, El Salvador may be able to increase its GDP by almost 10 percent. As always, the devil is in the detail and for the time being at least, we will need to wait and see how things play out.

Categories
Crypto News History

Flashback: Dec 2000 Newspaper Said ‘the Internet May Be Just a Passing Fad’

Technology has a tendency to completely revolutionise the way the world works. At any given time, “experts” speculate about whether a particular technological innovation is likely to succeed. Most often they get it wrong, sometimes spectacularly. Will today’s forecasts about crypto suffer a similar fate?

Forecasts are Difficult

If innovation followed a predictable and linear path, forecasts would be easy. The reality is that innovation tends to be exponential and unexpected. Notwithstanding, it can be fun looking back at some of the more egregious examples in recent history.

Forecasts about the internet proved to be inaccurate at best, but this newspaper headline from December 2000 probably tops the list.

Source: Reddit

To this day, few will let Nobel laureate and former White House economic adviser Paul Krugman forget his comments made about the internet in 1998.

Source: Reddit

Misguided technology forecasts are not limited to the internet; they are pervasive throughout history relating to all sorts of innovations:

1966: “Remote shopping, while entirely feasible, will flop” – Time magazine

1981: “Cellular phones will absolutely not replace local wire systems” – Marty Cooper, inventor

1995: “I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse” – Robert Metcalfe, founder of 3Com

2005: “There’s just not that many videos I want to watch” – Steve Chen, CTO and co-founder of YouTube, expressing concerns about his company’s long-term viability

2007: “There’s no chance that the iPhone is going to get any significant market share” – Steve Ballmer, former Microsoft CEO

How Will Today’s Forecasts About Crypto Look in the Future?

Crypto has always had sceptics questioning its utility, energy use and volatility. Many critics claim it is a scam, or that it is otherwise in a bubble. Of course, there are also constant cries to ban crypto. Unsurprisingly, the banning argument has often been used by the failing incumbents:

Source: Bitcoin Archive

Yet somehow these attacks don’t appear to derail the industry, perhaps highlighting what risk analyst Nassim Taleb would describe as its “antifragility”.

Binance tweet

It is well documented by now that Bitcoin has been declared dead by the mainstream media at least 420 times. It’s also worth noting that within the past couple of years, countless major financial institutions managing billions of dollars have completed a full 180 when it comes to their views on industry.

Given there are literally thousands of coins and tokens within the crypto ecosystem, not to mention the innovation around DeFi, NFTs, Stablecoins and CBDCs, one would expect the majority of projects within these areas to fail.

The exciting part right now is speculating what will succeed. Only time will tell. Hopefully, our views won’t appear too foolish in hindsight.

Categories
Bitcoin Crypto News Market Analysis Markets

Whales Bought 60,000 BTC Over the Weekend Worth $2.7 Billion

After recent record losses, Bitcoin (BTC) HODLers enjoyed gains over the weekend for the first time in weeks as the digital asset surged over 5 percent overnight. This was largely attributed to the influx of Bitcoin whales holding 100 to 10,000 Bitcoin accumulating over 60,000 coins in a single day, worth US$2.7 billion.

Bullish Signs as Bitcoin Whales Steadily Accumulate

On-chain analyst and trader Willy Woo had a humorous take on the aggressive whale accumulation, tweeting:

According to on-chain analysts Santiment, these addresses now hold 9.12 million coins combined, up over 100,000 from only six weeks ago.

The total number of coins held by whale entities – addresses controlled by a single network participant holding 1,000 to 10,000 Bitcoin – rose by over 80,000 to 4.216 million Bitcoin on 2 July, hitting the highest level since May. For context, this remains some way below the record high of 4.542 million reached in February.

Source: Glassnode

The number of whale entities has now jumped to a three-week high of 1,922, which read together with signs that Bitcoin may have bottomed out, offers bullish support.

Whale Accumulation Coincided with Largest Downward Bitcoin Mining Difficulty Adjustment in History

Source: Glassnode

Interestingly, this recent whale accumulation coincided perfectly with the largest negative difficulty adjustment (-28 percent) in the history of the Bitcoin network.

In short, the difficulty adjustment refers to the difficulty of mining Bitcoin and is linked to the hashpower. As hashpower is removed, the difficulty decreases and where hashpower increases, difficulty is increased. The record 28 percent reduction in the difficulty adjustment was a direct consequence of China banning Bitcoin mining.

Most, however, view the mining ban in a positive light. As hashrate migrates out of China, the network becomes more decentralised and given the network’s response to the recent negative difficulty adjustment, it appears as resilient as ever.

At the moment, whales appear bullish. Historically, this tends to provide evidence of a broader shift in sentiment. It remains to be seen whether this trend will continue in the coming months.

Categories
Bitcoin Crypto News Market Analysis Markets

Amid Unprecedented FUD, Strong Signals Emerge that Bitcoin May Have Bottomed

Despite Bitcoin’s breakout performance in 2020, much of the gains have been erased over the past three months as Bitcoin slid 43 percent amid a barrage of relentless FUD relating to China and environmental concerns.

While the grounds for such concerns can be challenged, there is mounting evidence that Bitcoin may be turning the corner.

A Difficult Bull Market for HODLers

Based on Bitcoin’s halving cycle and subsequent price movements, we ought to be somewhere near the middle of a bull market. Given that Q2 2021’s performance was the worst in eight years, even the most bullish of HODLers have had their conviction tested in the face of persistent, and seemingly coordinated, FUD.

Four Reasons for HODLers to be Optimistic

Throughout this latest round of FUD, Bitcoin has been enormously volatile, with ongoing support seemingly around the US$30,000 mark. However, a number of indicators suggest this may indeed be the bottom and that there is cause for optimism in the near term.

#1 Puell Multiple Signals Only 5th Buying Opportunity in Bitcoin’s History

This metric explores market cycles from a mining revenue perspective by looking at the supply side of Bitcoin’s economy – Bitcoin miners and their revenue. Miners are considered sellers by necessity since their operating costs tend to be fixed in fiat terms. When the value of Bitcoin mined and entering the ecosystem is too large or too small by historical standards, it can provide an opportunity for investors.

Notice below how the indicator has slipped into the green, last seen in March 2020. For long-term HODLers, now seems to be the time to accumulate.

The Puell Multiple, Source: lookintobitcoin.com

#2 Long-Term HODLers Continue to Accumulate

As Crypto News Australia reported earlier this year, long-term HODLers tend to be sellers when a market top is near and buyers when there are material price dips. Over long periods, this has proven to be a solid investment strategy.

As short-term HODLers capitulated in droves during May and June, long-term HODLers continued to accumulate, as highlighted in the chart below.

Source: Glassnode

#3 Funding Rates Shifting Away from Negative Territory

Funding rates are payments between traders to make the perpetual futures contract price close to the index price, representing the sentiment of traders on the positions they take in the perpetual swaps market. In the simplest of terms, positive funding rates are indicative of bullish sentiment whereas negative funding rates imply many traders are bearish.

Based on the chart below, funding is gradually moving into positive territory, a historically optimistic indicator for short- to medium-term price movements.

Source: CryptoQuant

#4 Bitcoin NVT Ratio Shows Bitcoin is Undervalued

The Bitcoin NVT ratio is equivalent to a traditional price-to-earnings ratio used to assess whether a stock is under- or overvalued.

Based on the chart below by respected Bitcoin analyst Willy Woo, the current price of Bitcoin is operating along the lower bounds of undervalued (marked by the green dotted line). The upper bounds (i.e a strong sell indicator) is the red dotted line, indicating Bitcoin would be overvalued at around US$121,000.


Source: woobull.com

When in Doubt, Zoom Out

If you entered the Bitcoin market for the first time in the past six months, this most recent correction would undoubtedly have been difficult to stomach. That said, it is worth remembering that anyone who has invested in Bitcoin for a period of greater than 3.25 years has made money.

The strategy employed by successful accumulators has been remarkably simple – don’t use leverage, dollar-cost average, and have a long-term horizon of four or more years.

Bitcoin’s logarithmic price chart clearly demonstrates that long-term holders tend to be rewarded. Short-term price volatility, however, is the price they have to pay to enjoy exceptional long-term returns.

Source: Dan Morehead, Pantera Capital
Categories
Australia Bitcoin Crypto News Cryptocurrency Law

Australian “Bitcoin Inventor” Wins Lawsuit Over Bitcoin Whitepaper Copyright Claim

Australian businessman Dr Craig Wright is a much derided figure within the Bitcoin community who infamously claims he is the creator of Bitcoin. Following his lawsuit filed earlier this year, the London High Court has granted default judgment for copyright infringement against “Cøbra”, the pseudonymous operator and publisher of the bitcoin.org website.

Did “Cøbra” lose the case on the merits? Not quite; he didn’t even bother defending it.

Wright Sues for Copyright Infringement

Earlier this year, Wright obtained permission to sue “Cøbra” for copyright infringement for unlawfully publishing the Bitcoin Whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System”.

Dr Craig Wright. Source: Coindesk

In his claim, the self-described student, researcher, lawyer, banker, economist, pastor, coder, investor and mathematician argued that he owned the copyright to the seminal document under the moniker “Satoshi Nakamoto”. Although he currently claims that Bitcoin is a ponzi, his legal team was quick to point out that:

Dr Wright does not wish to restrict access to his White Paper [which is freely accessible on his blog, https://craigwright.net/bitcoin-white-paper.pdf] but does not agree that it should be used by supporters and developers of alternative assets, such as Bitcoin Core, to promote or otherwise misrepresent those assets as being Bitcoin, given that they do not support or align with the vision for Bitcoin as he set out in his White Paper.

Ontier LLP, Source: https://www.ontier.net/ia/wright-v-cobra-ontier-press-release.pdf

Wright Claims a “Win” in His Lawsuit

In legal proceedings, there are two types of quick wins – summary judgment and default judgment. Summary judgment is awarded when the defendant has filed a defence but the court finds there is no prospect of success. Default judgment, however, is when the defendant doesn’t file a defence in the first place.

In the case against “Cøbra”, default judgment was awarded together with legal costs in the amount of £35,000 (US$48,400). In other words, the defendant didn’t even try to mount a defence, as it was considered “a waste of time”.

Aside from legal costs, the order also required that “Cøbra” remove the Whitepaper and put a notice on the website informing visitors of the default judgment for a period of six months.

In an underhand jibe directed at Wright, “Cøbra” issued the following statement on Twitter:

In a post, “Cøbra” noted that the Bitcoin Whitepaper located at https://bitcoin.org/bitcoin.pdf wouldn’t be accessible to UK-based visitors, but that ultimately, he hoped that the truth would prevail.

What Are the Odds That Wright Created Bitcoin?

Most Bitcoiners will tell you “no chance”, but if you were feeling charitable, you could argue the odds are marginally higher than zero.

Despite his credentials, Wright is largely discredited in crypto circles. Entire websites have been created to disprove his claim that he created Bitcoin, and even the otherwise reserved Ethereum founder, Vitalik Buterin, has called Wright a “fraud“. Most recently, he commented:

I view Craig Wright as being kind of like a Donald Trump figure and that, like, he’s not very intellectual. I think he gets a big audience because he says things that like to play to the resentments that people have.

Vitalik Buterin on the Lex Friedman Podcast

It’s not often that proponents of Bitcoin and Ethereum agree. The fact that they agree on the topic of Dr Wright is in itself revealing.

Wright’s litigious nature suggests the saga is not likely over. At the time of writing, he was still embroiled in court proceedings demanding access to 111,000 bitcoins held in two addresses which he claims were “stolen”.

Categories
Banking Bitcoin Crypto News

Billionaire Salinas is “Working with his Bank in Mexico” to Accept Bitcoin

With an estimated fortune of US$15.2 billion, Ricardo Salinas recently dipped his toe into the world of Bitcoin in a big way – to the tune of 10% of his net worth. This has since been followed by an unexpected announcement via Twitter where he revealed he is working with his bank to be the first in Mexico to accept Bitcoin.

Salinas’ View of Bitcoin: ‘No Stinky Fiat in My Portfolio’

In a short video doing the rounds on Twitter, Salinas talked about Bitcoin and his view that all fiat currencies are “a fraud”. When asked how he would invest over the next 30 years, he named Bitcoin and, with a smile, indicated he would not have any “stinky fiat” in his portfolio.

Salinas further argued that Bitcoin’s liquidity and global value alone justified inclusion in every investor’s portfolio. To him, the most important aspect of Bitcoin was the 21 million hardcap that stood in direct contrast to the limitless abundance of fiat currency.

#Bitcoin @RicardoBSalinas on Twitter

Bitcoin Billionaires Banter on Twitter

Shortly after the Salinas video was published, Michael Saylor shared it and had this to say:

Soon after, the 65-year-old Mexican mogul responded:

Financial Institutions are Increasingly Changing Their Tune

Salinas’ sentiments reflect a growing recognition within financial institutions such as banks that the digital asset space is here to stay. This remarkable turnaround started with the establishment of trading desks, which has since progressed into retail banking.

To illustrate this dramatic shift, NYDIG recently reported that by the end of 2021, up to 300 million US citizens would be able to buy Bitcoin natively through their online banking.

It’s difficult to see this trend slowing down in the long run, particularly in light of El Salvador’s recent adoption of Bitcoin as legal tender, with a host of Latin American countries looking to follow suit.

Notwithstanding these positive developments, at this stage it remains unclear whether Salinas will succeed in his quest to get his bank to accept Bitcoin.

Categories
Crime Crypto News Hackers Investing Scams

Founders of South African Crypto Investment Company Vanish with $3.6 Billion Worth of Bitcoin

Ameer and Raees Cajee, the brothers behind Cape Town-based crypto investment platform Africrypt, have disappeared under suspicious circumstances, together with 69,000 Bitcoins belonging to their clients.

Africrypt Investor Presentation 2020: Moneyweb

The Promise of Exceptional Returns and Where Things Started Going Wrong

The company was founded in 2013 and over the years had managed to secure a lot of support from investors, including some prominent local celebrities. Ostensibly, it was a well-run business that continued to grow on the back of “sophisticated algorithmic trading” that promised returns of 10% per day.

Things took a strange turn in April when investors were sent an email alleging a hack. The email noted that the platform would be shut down and investors’ accounts, wallets and nodes frozen. Most surprisingly, investors were requested not to contact law enforcement authorities as this would “slow the recovery process”.

Investors Appoint Investigators as Suspicion Grows

Shortly thereafter investors hired specialist legal practice Hanekom Attorneys who established that the company had moved 69,000 Bitcoins from their clients’ wallets through a crypto tumbler, making them virtually untraceable. Investigators also found that Africrypt employees had lost access to the back-end platforms seven days before the alleged hack.

We were immediately suspicious as the announcement implored investors not to take legal action.

Derek Hanekom, Hanekom Attorneys

Hanekom indicated it was unlikely that all funds came from South Africans, saying it looked more like an international money laundering operation. The South African Police has been assigned to the case and has contacted exchanges to ensure the funds aren’t liquidated. It is alleged that the Cajee brothers have since decamped to the UK, but that remains unclear.

Investors Cautioned: Do Your Own Research

The crypto space remains a very new market that is highly volatile and experimental, and investors are advised to always DYOR (do your own research).

Some recent scams we have seen:

Despite the discernible scams occurring, crypto remains an exciting prospect for the African continent with projects like Cardano developing blockchain solutions for decentralised identity and financial systems.