Say what you want, but cryptos move higher on stronger dollar

Bitcoin stealthily moved over the $9,000 mark overnight, despite the continuing noise coming out by financial watchdogs.

While I still believe bitcoin is the blue chip of the cryptocurrencies, over the last month’s rise it has lagged other acceptable digital currencies in appreciation. Ripple soared 85% and ethereum is up almost 65% over the last two weeks, while litecoin and bitcoin trail with roughly 36% appreciation over the same time frame. Continue reading

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Dimon trashes bitcoin, but is OK with CDSs

JPMorgan’s chief Jamie Dimon in a seemingly unprovoked response took on bitcoin again Tuesday at banking conference in Manhattan.

Tuesday, America’s shadow president as some have called him, belittled his daughter in order to trash bitcoin. Dimon said that his daughter purchased some bitcoin, concluding “it went up and she thinks she is a genius.”

But he went on to say he would fire any trader who bought bitcoin just for being stupid.

It’s a shame Dimon did not have the same outlook when it came to his traders  buying credit default swaps in London in 2012 when the bank lost more than $7 billion on the London Whale trade.

Look, I’ve met Jamie Dimon, and interviewed him. He has strong opinions on government and regulations. He makes no bones about how great America is and he does not suffer fools lightly.

And to be honest, he could be dead on with bitcoin. It’s not a great stretch to think governments would crackdown on untaxable money moving around the globe, but let’s not forget that Dimon has written checks totaling more than $21 billion in penalties and fines to Uncle Sam because his traders were stupid with packaging mortgages or manipulating commodities during and shortly after the Great Recession.

While bitcoin has fallen below $4,000 since his statements, bitcoin is up a mere 1,100% since the JPM chief trashed it in 2015 at the same conference. Dimon admitted he does not know how high the crypto could go before the crash saying, “it could hit $100,000 before it drops.”

There’s no way to know who will be right on any investment, and yes there will always be pain when markets crash. But for Dimon to say bitcoin is a joke and compare it to the tulip craze is so far off base, since his firm is using blockchain technology right now and  developing it for broader applications.

For a man who hates government over regulating banking, his words on a crackdown in the crypto space ring hollow to me.

IMF eyeing blockchain for roll out of SDR to replace US dollar: Rickards

I was talking to a currency trader, Thursday on the train going home. He knows I’m a business editor at a large paper in New York City.

He was telling me how Fx traders were not taking any positions after the end of this year. How the markets were constricting and said it was a huge problem and perhaps a bigger story.

I asked why? Was there a global currency coming or perhaps a reset?

All he could tell me as we got off the train was that I should look into it.

I researched over the weekend, and could not come up with anything. Now admittedly, I don’t usually look that deep into the currency trading world. It’s a closed community that’s not very transparent or accessible.

However this morning I did see that James Rickards, author of “Currency War,” among other titles and cited here before, put out an open letter to President Trump warning him of problems in the US dollar.

The nutshell of the letter is that beginning Jan. 2018 the International Monetary Fund — using blockchain technology, which is the same technology that bitcoin and other cryptocurrencies use, will be issuing Special Drawing Rights (SDR) as a new world currency to replace the dollar.

Now I find his letter highly doubtful given the quick timing of implementation, however I have this currency trader from Deutsche Bank telling me there are problems in the Fx markets, prior to the paper being published.

So I have two sources essentially saying the same thing.

Rickards does cite white papers and statements from IMF chief Christine Lagarde talking about SDRs and certainly Rickards has a long history of talking up the SDR as a world currency, replacing the dollar.

So what does this mean in the big picture? Rickards writes:

Just look what happened the last time we had a big change in our global financial system. In 1971, Nixon announced the U.S. would no longer officially trade dollars for gold. That created a lot of uncertainties, turning that decade into a nightmare for stock investors.

 

Take a look… the Dow Jones, an index of “stable” blue chip stocks (the kind most retirees like to hold), was cut in half. Stock investors bailed out of the market and, for the most part, didn’t come back for a decade.

 

I expect something similar once Distributed Ledgers go live.

The transition from a U.S. dollar system to a new system dominated by SDRs will be messy. Stocks will collapse… and will stay down.

 

There will be no recovery this time, because the U.S. government won’t be able to come to the rescue like they did in 2008.

 

You [President Trump] won’t even have funding for normal operations, let alone enough funds to save stock investors.

 

There has been a plenty of selling of the dollar recently, but that’s against other currencies like the euro and pound, If the IMF’s plan is true those currencies would also be devalued, so that is not a good indication of the plan.

Unless you figure in a currency trading scenario where the 800-lbs gorilla is the dollar and it is weakened, then all other currencies in the world will gain.

If crude can be traded in any currency, then there is big trouble in not only the currency market — a small backwater trading operation — but Treasury trading will implode.

That’s where Rickard’s nightmare scenario comes to fruition.


9-11-01: Never Forget

The ABCs of bitcoin for those wishing to jump in

As bitcoin reaches for $2,500 again, I thought this would be a good time to let my readers know exactly how digital currencies work and how to get more information if you wish to partake in this alternative investment.

It’s called a decentralized digital currency because it is stored electronically, there are no “coins” to put in your pocket and no one controls its value except the marketplace. The images of gold coins used by media to represent bitcoin are not real and do not exist.

Bitcoins are “mined” or searched for by using computing processing power in a distributed network to locate and solve mathematical problems to acquire the code for the “coin”. It’s not something you or I will be doing so let’s move on.

However this distributed network also provides the backbone to use bitcoin to purchase items or identify the bitcoin you hold.

Bitcoin and other alt coins are called cryptocurrencies not because they are so secretive or used by spies, but because the are based on blockchain technology, which uses robust encryption to secure the identity of that coin.

The blockchain or code behind bitcoin is the innovative technology that allows digital currencies to exist.

But enough about the back-end of bitcoin, to start out acquiring a digital currency you need to have a digital wallet.The wallet can be thought of more like a bank account, which can reside on your computer, phone or other smart device. It is always advisable to have your wallet backed up in another location so that a crashed hard drive does not wipe out your bitcoins.

There are many wallets out there to choose from depending on your security needs and whether you wish to be an active trader or a more passive buy and hold investor.

I say investor, because the majority of people holding digital currencies are doing just that. One year ago bitcoin was trading at $525, it is now nearing $2,500 so at this point it does not make sense to purchase items using bitcoin.

Now like any other investment, there’s no guarantee that bitcoins will continue this rapid rise, but there are some aspect of bitcoins that point in that direction.

The bitcoin protocol, which governors how bitcoin works will only create  21 million bitcoins.As of earlier this year 16.8 million or 80 percent of all the bitcoins to be created have been mined. So unlike the paper currencies in the world today, no governing body can print more bitcoin to dilute its value.

A second bullish marker for bitcoins is that a vast majority of the planet does not know of or is involved in digital currencies, so as this news moves into the mainstream more investors may wish to jump in.

There are some very outlandish predictions for bitcoins value in the next three years as the scarcity and growing numbers of investors become aware, but like I said no investment chart goes straight up.

As the value rises a very important aspect to bitcoins is it can be divided into smaller parts. The smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the founder of bitcoin, the software developer called Satoshi Nakamoto.

Remember this is just a primer and there are many resources out there to study up on this new form currency. I wanted to give the readers some guideposts to study and to get familiar with the protocol and tools needed to tap into this new technology.