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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (19984)	9/19/2017 3:53:32 PM
From: Don Green	Respond to of 33421

Why Bitcoin Is Rebounding After Getting Trashed Last Week BILL PETERS investors.com Bitcoin surged 13% on Monday, as traders decided that last week's melodrama over China's attempts to crack down on the digital currency weren't such a big deal after all. The value of the cryptocurrency shot up past $4,000 on Monday, after dipping below $3,000 on Friday. Bitcoin Investment Trust( GBTC), an ETF tied to the movements of bitcoin, jumped 12.7% to 710.30 in the stock market today. The currency's value has plummeted in recent days on reports that China planned to halt bitcoin trading on domestic exchanges and had banned initial coin offerings, a form of digital-cash-based fundraising. What's more, JPMorgan Chase ( JPM) CEO Jamie Dimon last week called the currency "a fraud," while Mohamed El-Erian, chief economic advisor at Allianz, said that bitcoin was overvalued and that governments were unlikely to "allow the amount of adoption that is currently priced in." But on Monday, the sense among traders, apparently, was that China's influence on the digital currency market might have been overstated. Aurelien Menant, CEO of Gatecoin, a token exchange, told CNBC that traders were "realizing that it doesn't really matter what happens in China anymore, the exchanges based there no longer dominate trading activity". He added that big investors in Europe, Japan and Korea were helping to drive what he said was the next bull cycle. IBD'S TAKE: As cryptocurrencies grow, they've become tougher to ignore by the financial industry's old guard. Here's what some Wall Street giants are doing in the digital currency space. Meanwhile, the Bank for International Settlements, in a quarterly review publication dated Sunday, suggested that central banks can no longer simply theorize about the possibilities of digital currency. "Whether or not a central bank should provide a digital alternative to cash is most pressing in countries, such as Sweden, where cash usage is rapidly declining," it said. "But all central banks may eventually have to decide whether issuing retail or wholesale (central bank cryptocurrencies) makes sense in their own context."

To: Don Green who wrote (19984)	9/19/2017 4:03:39 PM
From: Don Green	Respond to of 33421

Central Banks Can’t Ignore the Cryptocurrency Boom August 30, 2017, 12:00 AM EDT August 30, 2017, 10:44 PM EDT Digital coins challenge the guardians of official money Central banks are being urged to heighten their oversight A Look Inside One of the World's Biggest Bitcoin Mines blob:https://www.bloomberg.com/f85f7a2f-1c25-4b8b-ae5b-2200c8e5bcd1 The boom in cryptocurrencies and their underlying technology is becoming too big for central banks, long the guardian of official money, to ignore. Until recently, officials at major central banks were happy to watch as pioneers in the field progressed by trial and error, safe in the knowledge that it was dwarfed by roughly $5 trillion circulating daily in conventional currency markets. But now as officials turn an eye toward the increasingly pervasive technology, the risk is that they’re reacting too late to both the pitfalls and the opportunities presented by digital coinage. "Central banks cannot afford to treat cyber currencies as toys to play with in a sand box," said Andrew Sheng, chief adviser to the China Banking Regulatory Commission and Distinguished Fellow of the Asia Global Institute, University of Hong Kong. "It is time to realize that they are the real barbarians at the gate." Bitcoin -- the largest and best-known digital currency -- and its peers pose a threat to the established money system by effectively circumventing it. Money as we know it depends on the authority of the state for credibility, with central banks typically managing its price and/or quantity. Cryptocurrencies skirt all that and instead rely on their supposedly unhackable technology to guarantee value. https://www.bloomberg.com/news/articles/2017-08-30/cryptocurrencies-are-new-barbarians-at-the-gate-of-central-banks

To: Don Green who wrote (19984)	9/19/2017 4:08:35 PM
From: Don Green	1 Recommendation Recommended By John Pitera Respond to of 33421

Satoshi vs. Uncle Sam: What Happens When Governments Issue Cryptocurrencies? What would happen if Bitcoin’s and Ethereum’s biggest competitor in the cryptocurrency space was the U.S. Federal Reserve? A new report issued by the Bank for International Settlements (BIS) considers whether central banks should issue their own cryptocurrencies. It looks at both retail and wholesale options, as well as payment systems that are blockchain-based versus those more centralized. In this post, we’ll focus on the option most like Bitcoin and other private cryptocurrencies: a central bank-issued retail cryptocurrency that uses distributed ledger or blockchain technology. The comparison illuminates a question that will be crucial in determining the future of cryptocurrencies: do people want a currency free from government control or not? The BIS report proposed a hypothetical cryptocurrency called Fedcoin, which would have one-for-one compatibility with outstanding cash and government reserves. The report proposes that “Fedcoins would only be created (destroyed) if an equivalent amount of cash or reserves were destroyed (created) at the same time. Like cash, Fedcoin would be decentralised in transaction and centralised in supply.” Such a system would offer individuals the convenience of digital payments along with, at least in theory, the anonymity of cash (while economists such as Ken Rogoff believe anonymity is a bad thing, the BIS report provides several “legitimate” reasons why it is desirable). The report raises several logistical questions. Perhaps most importantly, what does Fedcoin’s blockchain look like? Bitcoin employs a system where miners (anyone willing to provide sufficient computing power) independently verify and store transactions, and are compensated with new bitcoins. Would the Fed cede such operations to “ordinary” individuals or would it somehow operate the system in-house? If the former, how would it compensate these individuals if the supply of Fedcoins is tied to cash and reserves outstanding? If the latter, would anonymity be sacrificed? Logistical questions aside, let’s imagine a world where consumers and businesses choose between Bitcoin and Fedcoin. Bitcoin supply is determined by a limited algorithm, and is immune to inflating by a government. Fedcoin would have the backing of a government, and presumably guaranteed exchangeability with outstanding cash and reserves. The decision would come down to individuals’ political philosophy and economic worldview. Longstanding debates between the gold standard and fiat money underscore that different people would come to different conclusions. The outcome might also be determined by future events. A financial crisis leading to the collapse of fiat currencies would drive people to private options, while successful attacks by hackers on Bitcoin could do the opposite. Despite China’s recent moves, I think it far more likely that rather than “banning” cryptocurrencies, most governments will coopt them and offer their own versions. But while the gold-versus-fiat debate is about assembling the political forces necessary to change government policy, the private-versus-public cryptocurrency debate would allow individuals to vote with their actions. Those favoring the private option could use it whenever possible, while those favoring the public option could do the same. Network effects might ultimately force there to be a winner, but the process might well be more democratic than debates we currently have. aier.org