Cryptocurrency Costs Unlikely to Crowd Out Fiat Currencies in Korea.

Cryptocurrency Costs Unlikely to Crowd Out Fiat Currencies in Korea

Cryptocurrency Costs Unlikely to Crowd Out Fiat Currencies in Korea
 

South Korea’s central bank has published a new working paper analyzing a dual-currency regime by pitting cryptocurrencies against traditional fiat currencies.

Penned by economists and academics from the Bank of Korea and Seoul’s Hongik University, the working paper, titled ‘Crowding out in a Dual Currency Regime? Digital versus Fiat Currency’, was published earlier this week.

“We examine the impact of a privately issued digital currency and fiat currency using the simplest framework, with which we may derive the most straightforward implications,” reads the introduction of the paper. “More specifically, we attempt to answer the question of whether digital currency will crowd out fiat currency.”

The authors claim their research employs the ‘simplest model of monetary economics’ to drive these straightforward implications with the minimum number of assumptions. The research considers dual currency regime, one which sees the coexistence of privately-issued digital currencies and fiat currencies issued by the government. Bitcoin is underlined is a notable example of a private digital currency.

Making note of a number of efforts with central banks exploring the possibility of issuing their own digital currencies, the researchers point to the example of the Bank of England which has publicly revealed its effort to do so. Such an attempt “could drastically change our monetary system” the authors write.

According to the researchers, the costs associated with both fiat and digital currencies will see both of them function together with each other’s drawbacks. High costs in using one could inturn spur demand for the other, and vice-versa, allowing both fiat and digital currencies to co-exist. They state:

“High costs of using fiat currency increase the demand for digital currency. Similarly, high costs of using digital currency relative to fiat currency raise the demand for fiat currency. In a world of imperfect currencies with uncertain costs associated with the use of a currency, it is unlikely that the relative costs of using digital currency will be low enough to drive out and accordingly crowd out fiat currency entirely. Our results rather suggest that the threshold of equating the demand for fiat currency with that for digital currency will allow the co-existence of both currencies.”

Fiat currencies have been historically known to decrease continuously, the authors confirm, due to inflation and the factor of new money pumped in to the supply by the central bank, also known as quantitative easing.

Bitcoin, in stark contrast, has a fixed supply which would imply a “deflationary bias”, the authors note.

“This could lead to a situation in which Bitcoin drives out fiat currency as a store of value,” the authors speculate, before quickly adding:

However, security or trust issues – the decentralization of digital currency and the absence of insurance provided by governmental authorities – may prevent digital currency from being used as a store of value. Instead, digital currency may be used as a medium of exchange dominantly.

The authors also point to future research possibilities, such as covering the topic of digital money appreciating due to ever-increasing demand and the possibility of a triple currency regime, one which would see private digital currencies like bitcoin, central bank digital currencies and fiat currencies operate together.

David Ogden
Entrepreneur

David – http://markethive.com/david-ogden

Best Cryptocurrency Exchanges

best cryptocurrency exchanges

Best Cryptocurrency Exchanges

What is a cryptocurrency exchange?

Cryptocurrency exchanges are websites where you can buy, sell or exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euro. For those that want to trade professionally and have access to fancy trading tools, you will likely need to use an exchange that requires you to verify your ID and open an account. If you just want to make the occasional, straightforward trade, there are also platforms that you can use that do not require an account.

Types of exchanges

Trading Platforms – These are websites that connect buyers and sellers and take a fee from each transaction.

Direct Trading – These platforms offer direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have a fixed market price, instead, each seller sets their own exchange rate.

Brokers – These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers.

The Best Cryptocurrency Exchanges

Today there are a host of platforms to choose from, but not all exchanges are created equal. This list is based on user reviews as well as a host of other criteria such as user-friendliness, accessibility, fees, and security. Here are ten of the best crypto exchanges in no specific order.
 

Coinbase

Backed by trusted investors and used by millions of customers globally, Coinbase is one of the most popular and well-known brokers and trading platforms in the world. The Coinbase platform makes it easy to securely buy, use, store and trade digital currency. Users can purchase bitcoins or Ether from Coinbase through a digital wallet available on Android & iPhone or through trading with other users on the company’s Global Digital Asset Exchange (GDAX) subsidiary. GDAX currently operates in the US, Europe, UK, Canada, Australia and Singapore. GDAX does not currently charge any transfer fees for moving funds between your Coinbase account and GDAX account. For now, the selection of tradable currencies will, however, depend on the country you live in. Check out the

Pros: Good reputation, security, reasonable fees, beginner friendly, stored currency is covered by Coinbase insurance.

Cons: Customer support, limited payment methods, limited countries supported, non-uniform rollout of services worldwide, GDAX suitable for technical traders only.

Kraken

Founded in 2011, Kraken is the largest Bitcoin exchange in euro volume and liquidity and is a partner in the first cryptocurrency bank. Kraken lets you buy and sell bitcoins and trade between bitcoins and euros, US Dollars, Canadian Dollars, British Pounds and Japanese Yen. It’s also possible to trade digital currencies other than Bitcoin like Ethereum, Monero, Ethereum Classic, Augur REP tokens, ICONOMI, Zcash, Litecoin, Dogecoin, Ripple and Stellar/Lumens. For more experienced users, Kraken offers margin trading and a host of other trading features. Kraken is a great choice for more experienced traders.

Pros: Good reputation, decent exchange rates, low transaction fees, minimal deposit fees, feature rich, great user support, secure, supported worldwide.

Cons: Limited payment methods, not suitable for beginners, unintuitive user interface.

 

Cex.io

Cex.io provides a wide range of services for using bitcoin and other cryptocurrencies. The platform lets users easily trade fiat money with cryptocurrencies and conversely cryptocurrencies for fiat money. For those looking to trade bitcoins professionally, the platform offers personalized and user-friendly trading dashboards and margin trading. Alternatively, CEX also offers a brokerage service which provides novice traders an extremely simple way to buy bitcoin at prices that are more or less in line with the market rate. The Cex.io website is secure and intuitive and cryptocurrencies can be stored in safe cold storage.

Pros: Good reputation, good mobile product, supports credit cards, beginner friendly, decent exchange rate, supported worldwide.

Cons: Average customer support, drawn out verification process, depositing is expensive.
 

ShapeShift

ShapeShift is the leading exchange that supports a variety of cryptocurrencies including Bitcoin, Ethereum, Monero, Zcash, Dash, Dogecoin and many others. Shapeshift is great for those who want to make instant straightforward trades without signing up to an account or relying on a platform to hold their funds. ShapeShift does not allow users to purchase crypto’s with debit cards, credit cards or any other payment system. The platform has a no fiat policy and only allows for the exchange between bitcoin and the other supported cryptocurrencies.

Pros: Good reputation, beginner friendly, Dozens of Crypto’s available for exchange, fast, reasonable prices.

Cons: Average mobile app, no fiat currencies, limited payment options and tools.

 

Poloniex

Founded in 2014, Poloniex is one of the world’s leading cryptocurrency exchanges. The exchange offers a secure trading environment with more than 100 different Bitcoin cryptocurrency pairings and advanced tools and data analysis for advanced traders. As one of the most popular trading platforms with the highest trading volumes, users will always be able to close a trade position. Poloniex employs a volume-tiered, maker-taker fee schedule for all trades so fees are different depending on if you are the maker or the taker. For makers, fees range from 0 to 0.15%, depending on the amount traded.

For takers, fees range from 0.10 to 0.25%. There are no fees for withdrawals beyond the transaction fee required by the network. One of the unique tools on the Poloniex platform is the chat box which is constantly filled with user help and just about everything. Any user can write almost anything but inappropriate comments are eventually deleted by moderators. It can sometimes be hard to distinguish the good advice from the bad, but the Chatbox is a great tool that will keep you engaged.

Pros: fast account creation, feature rich, BTC lending, high volume trading, user-friendly, low trading fees, open API.

Cons: Slow customer service, no fiat support.
 

Bitstamp

Bitstamp is a European Union based bitcoin marketplace founded in 2011. The platform is one of the first generation bitcoin exchanges that has built up a loyal customer base. Bitstamp is well known and trusted throughout the bitcoin community as a safe platform. It offers advanced security features such as two-step authentication, multisig technology for its wallet and fully insured cold storage. Bitstamp has 24/7 support and a multilingual user interface and getting started is relatively easy. After opening a free account and making a deposit, users can start trading immediately.

Pros: Good reputation, high-level security, worldwide availability, low transaction fees, good for large transactions.

Cons: Not beginner friendly, limited payment methods, high deposit fees, user interface.

 

CoinMama

CoinMama is a veteran broker platform that anyone can visit to buy bitcoin or Ether using your credit card or cash via MoneyGram and the Western Union. CoinMama is great for those who want to make instant straightforward purchases of digital currency using their local currency. Although the CoinMama service is available worldwide, users should be aware that some countries may not be able to use all the functions of the site. CoinMama is available in English, German, French, Italian and Russian. Check out the CoinMama FAQ

Pros: Good reputation, beginner friendly, great user interface, good range of payment options, available worldwide, fast transaction time.

Cons: High exchange rates, a premium fee for credit card, no bitcoin sell function, average user support.

 

Bitsquare

Bitsquare is a user-friendly peer to peer exchange that allows you to buy and sell bitcoins in exchange for fiat currencies or cryptocurrencies. Bitsquare markets itself as a truly decentralized and peer to peer exchange that is instantly accessible and requires no need for registration or reliance on a central authority. Bitsquare never holds user funds and no one except trading partners exchange personal data. The platform offers great security with multisig addresses, security deposits and purpose built arbitrator system in case of trade disputes. If you want to remain anonymous and don’t trust anyone, Bitsquare is the perfect platform for you. Check out the Bitsquare FAQ

Pros: Good reputation, secure & private, a vast amount of cryptocurrencies available, no sign-up, decent fees, open source, available worldwide, good for advanced traders.

Cons: Limited payment options, average customer support, not beginner friendly.

LocalBitcoin

LocalBitcoin is a P2P Bitcoin exchange with buyers and sellers in thousands of cities around the world. With LocalBitcoins, you can meet up with people in your local area and buy or sell bitcoins in cash, send money through PayPal, Skrill or Dwolla or arrange to deposit cash at a bank branch. LocalBitcoins only take a commission of 1% from the sellers who set their own exchange rates. To ensure trading is secure, LocalBitcoins takes a number of precautions. To start, the platform rates each trader with a reputation rank and publicly displays past activities. Also, once a trade is requested, the money is held on LocalBitcoins’ escrow service. After the seller confirms the trade is completed the funds are released. If something does happen to go wrong, LocalBitcoins has a support and conflict resolution team to resolve conflicts between buyers and sellers. Check out

Pros: No ID required, beginner friendly, usually free, instant transfers, available worldwide.

Cons: Hard to buy large amounts of bitcoin, high exchanges rates.

Gemini

Co-founded by Tyler and Cameron Winklevoss, Gemini is a fully regulated licensed US Bitcoin and Ether exchange. That means Gemini’s capital requirements and regulatory standards are similar to a bank. Also, all US dollar deposits are held at a FDIC-insured bank and the majority of digital currency is held in cold storage. Gemini trades in three currencies, US dollars, bitcoin, and ether, so the platform does not serve traders of the plethora of other cryptocurrencies. The exchange operates via a maker-taker fee schedule with discounts available for high volume traders. All deposits and withdrawals are free of charge. The platform is only fully available to customers in 42 US states, Canada, Hong Kong, Japan, Singapore, South Korea and the UK.

Pros: Security & Compliance, slick/minimalistic and user-friendly design, great analytics, high liquidity.

Cons: Limited currencies, small community, average customer support, limited worldwide availability, no margin trading.
 

Blockchain

Blockchain is the world's leading software platform for digital assets. Offering the largest production blockchain platform in the world, using new technology to build a radically better financial system, based in Europe. The software has powered over 100M transactions and empowered users in 140 countries across the globe to transact quickly and without costly intermediaries. They also offer tools for developers and real time transaction data for users to analyze the burgeoning digital economy.

Pros: Security & Compliance, slick/minimalistic and user-friendly design, great analytics, high liquidity.

David Ogden
Entrepreneur

David – http://markethive.com/david-ogden

Cryptocurrency Inflation V Deflation

cryptocurrency inflation v deflation

Cryptocurrency Inflation v Deflation
 

In the world of cryptocurrency, there are two main types of ecosystems. Either a cryptocurrency is inflationary – with new coins generated by mining or staking – or it is deflationary. A lot of people claim bitcoin’s deflationary status is a problem, and how minor inflation could alleviate these concerns. However, there are different aspects of either concept that need to be taken into account first.
 

1. DEFLATION
 

Most cryptocurrency enthusiasts are well aware of how bitcoin has a fixed supply cap of 21 million coins. It is expected the last bitcoin will be mined around the year 2140, even though a large portion of the available supply is in circulation already. Some financial experts claim bitcoin’s capped coin supply is a problem, as it makes the popular cryptocurrency deflationary. Since no additional coins will be brought into circulation from that point forward, there will be no more inflation for bitcoin.
 

Deflation in the traditional financial ecosystem is a bad thing. Then again, cryptocurrencies such as bitcoin cannot be compared to any other currency in the world, thus making it a rather moot point. It is also a clear indication of how most economists are stuck in their old ways of thinking. Deflation is often associated with economies that not performing all that well. In most cases, deflation leads to falling prices. If that were to happen to bitcoin, things could go from bad to worse rather quickly.

 

One thing to keep in mind is how during times of financial hardship, consumers are not investing but flocking to liquid currency. For bitcoin, that could be a good thing, as it may even lead to future prosperity. From a long-term perspective, deflationary currencies are by far the better option. In bitcoin’s case, deflation will – probably – cause a rise in value. There is no real reason to think deflation is bad for bitcoin by any means.

 

2. INFLATION
 

Every major traditional currency known to man is inflationary. There is no hard limit as to how many US Dollars, Euros, or Pounds Sterling there can be at any given time. Central banks can use a technique called “helicopter money” to introduce more bills and coins to an ecosystem if they see the need to do so. With more money to go around, they hope to improve the financial situation for their specific region.

 

Inflation also has a nasty side effect that most people tend to overlook. As the supply of an available currency continues to grow, it makes the previously existing supply worth a bit less. In the world of cryptocurrency, there are two types of inflation: proof-of-work and proof-of-stake. The first option makes bitcoin an inflationary currency until all 21 million BTC have been generated. Proof-of-stake allows for a virtually unlimited coin supply even when there are no longer mining rewards to be distributed.

 

Although a lot of people see no harm in inflationary cryptocurrencies, it provides a bit of a problem when it comes to estimating a coin’s value. Since there are more coins every day, inflationary cryptocurrencies cannot be labeled as a store of value per se. Interestingly enough, some of the major cryptocurrencies have decided to take the inflationary approach, including Ethereum – switching to proof-of-stake soon – and Dash. Other currencies, such as Litecoin, have taken the same model as bitcoin, effectively limiting their supply. From a store of value point-of-view, deflationary cryptocurrencies are the better option, by the look of things.

David Ogden
Entrepreneur

 

Contributor JP Buntinx

David – http://markethive.com/david-ogden

Bitcoin Has Power to Break People Out of Poverty, Current System Broken

Bitcoin Has Power to Break People Out of Poverty Current System Broken

Bitcoin Has Power to Break People Out of Poverty, Current System Broken

Can Bitcoin help people break out of poverty? What if we could build a financial system with Bitcoin that would lead to a more equitable and fairer society?

Bitcoin has been around for nearly a decade now and it has survived many doomsday predictions regarding its demise. It has grown to become an accepted medium of transferring money, it has also been recognized as a currency in some countries like Japan.
 

Why is the existing system broken?

The present financial system is supported by large-scale financial institutions that provide financial services. This means banks, insurance companies, credit card companies, housing finance companies, money transfer companies etc.

The problem is that while these businesses have existed for a long time, accessibility has always been an issue. According to the world bank, two bln people still do not have access to a bank account. Yet this present financial institution based payment system is stuck in an archaic era.

People are expected to use cash by withdrawing it from a bank account, they are supposed to deposit money physically at a bank teller or a machine and there are costs attached to just using and maintaining the system.
 

Digital is the answer

Digitalization and using modern technology like smartphones has many benefits. The World Bank Working Paper titled – The Global Findex Database 2014, Measuring Financial Inclusion around the World says:

“Moving from cash-based to digital payments has many potential benefits, for both senders and receivers. It can improve the efficiency of making payments by increasing the speed of payments and by lowering the cost of disbursing and receiving them.”

The report points out further that digital payments increase transparency of payments reduce leakages and provide a first entry point to a formal financial system.

 

The currency is the financial system

Bitcoin and other cryptocurrencies that have emerged have several advantages. Firstly they are digital. There is no cash to handle. You do not need vaults, armored cars or any of the other infrastructure that makes handling cash expensive.

Secondly, some cryptocurrencies have features like smart contracts built in, which can be used by people to conduct transactions securely with each other without the need for intermediaries institutional or otherwise.

As MIT Technology Review recently quoted Joi Ito, Director of MIT Media Lab as saying about Bitcoin:

“Whether you’re an individual trying to get access or you’re a pensioner with lots of money tied up in the market, you’re going through these intermediaries that don’t represent you very well. [Bitcoin] creates a much more level playing field, and hopefully, it will reduce the complexity of the financial system.”
 

The poor need to be unshackled

Regulatory hurdles need to be surmounted before digital currency can truly go mainstream, however, there is hope for the future as countries are getting around to the idea of Bitcoins becoming a part of the system.

There are advantages as well. Digital currencies are transparent and some currencies like Bitcoin offer a transaction ledger that is public. These currencies can help the poor gain freedom from cash which is money that offers anonymity to drug dealers, corrupt officials and others preying on them. Digital currencies also takes out the need for people living in remote areas to go to centers of population for making transactions.

Conversely, it also frees up financial institutions from having to put up infrastructure and staff in remote locations. Whichever way you look at it, the poor gain significant freedom from the advent and use of digital currencies.

David Ogden
Entrepreneur

 

By Shivdeep Dhaliwal

David – http://markethive.com/david-ogden

Bitcoin Price Tripled in Last Year

bitcoin price trippled in last year

A collection of Bitcoins stand in this arranged photograph in Danbury, U.K., on Thursday, Dec. 10, 2015. Bitcoin, the digital currency, climbed on Wednesday to hit its highest levels since early November, amid fresh speculation that the identity of Satoshi Nakamoto — the virtual currency’s creator — may have finally been revealed. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

Bitcoin Price Tripled in Last One Year

A collection of Bitcoins stand in this arranged photograph in Danbury, U.K., on Thursday, Dec. 10, 2015. Bitcoin, the digital currency, climbed on Wednesday to hit its highest levels since early November, amid fresh speculation that the identity of Satoshi Nakamoto — the virtual currency’s creator — may have finally been revealed. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

In April of 2016, Bitcoin price averaged at around $420 on most major Bitcoin exchange markets. Since then, over a period of 12 months, Bitcoin price tripled, increasing from $420 to $1257.

As previously reported, Bitcoin price is nearing its all-time high price set at $1,277, primarily due to the explosive growth of the Japanese Bitcoin industry.

Analysts expect Bitcoin price to increase consistently in the mid-term if key markets such as Japan and the US sustain their growth and if relatively small markets like India experience a massive change in regulatory frameworks for Bitcoin trading and usage.

Two key factors: India and Japan

For years, India was considered to be one of the more important markets for Bitcoin to penetrate because of the country’s poor banking system, declining financial platform and weak infrastructure. Today, local analysts and researchers note that 40 percent of Indian population remains unbanked.

The vast majority of households and individuals in India do not rely on banks or established financial institutions to manage their money for a few reasons.

Recently, the demonetization of 500 and 1,000 bank notes initiated by the Indian government led to a nationwide financial crisis, as banks and ATMs ran out of cash to dispense. Both the banked and unbanked populations of India have been struggling to obtain cash to fund day-to-day operations and basic necessities ever since.

Moreover, research and professional services firms such as PwC revealed that by October of 2015, 233 mln Indians had no access to bank accounts. According to Times of India, a prominent local publication, a UN report further revealed that 43 percent of adults in India made no deposits or withdrawals in banks.

“I have nearly Rs 20,000 saved up from the last so many years. I never knew how to do bank work, so I never had an account. I’ve had no need for one, and now I am stuck with all the cash but can’t use it to buy my supplies. I have some money saved but all in cash at home, as I did not know how to deposit in the bank,” said a full-time professional who resides in India.

Over the past few years, major Bitcoin exchanges and service providers in India were not able to demonstrate an exponential rate of growth in terms of user base and daily trading volume. It was only by early 2016 that exchanges such as Zebpay and Unocoin began to see a spike in their user base and trading volumes.

One key factor that would allow the Indian Bitcoin industry to grow at a rapid rate similar to China, South Korea and Japan is the legalization of Bitcoin as legal tender and currency. The central banks of the Philippines and Japan most recently legalized Bitcoin as legal tender, to help their local industries to grow and allow the general consumer base to utilize bitcoin.

For Bitcoin to achieve mainstream adoption in India, a legalization of the digital currency by local authorities is necessary. If Bitcoin becomes legalized by the end of May as many predicts, and millions of new users from India emerge as a result, Bitcoin price will likely surge in the mid-term. Therefore, for the mid-term, the performance of the Japanese, US and Indian markets should be considered as reasons to hold onto Bitcoin as an investment.

David Ogden
Entrepreneur

 

Source : Cointelegraph

David – http://markethive.com/david-ogden

What’s keeping Cryptocurrencies from mass adoption? – Part 2

 

What’s keeping Cryptocurrencies from mass adoption? – Part 2

Official Local Exchanges

Having to look other users in the eye can make a world of difference. Face-to-face exchanges at trusted locations means that the sale of a coin can be more easily limited, and this can act as a throttle to gauge demand. People on the “front lines,” seeing the real demand for the coin in person, can then vote to increase the price. Having stable locations to exchange the currency also creates consistency. It removes the guessing game of wondering where you can buy and sell your coin.

The advantages are not just purely economic, either. Cryptocurrencies don’t exactly have the best reputation thanks to their penchant for attracting unscrupulous people. Unethical or illegal businesses will tend to be voted out of cooperative networks with face-to-face exchanges, however, which can go a long way towards legitimizing the currency. It would still be possible to run such enterprises of course, but they would never be part of the co-op.

Local Exchange Dominance

This kind of approach can only work if there are dramatically more local exchanges than online exchanges. It would mean that the local exchanges would dictate the pricing of the currency.

Marketing Early Can Be Disastrous

Marketing is a powerful force, and as such it needs to be handled with care. On the one hand, founders naturally want to attract investment early on. This will raise the price of the coin and help pay for infrastructure, as well as boost the growth of the coin. On the other hand, historically the earliest investors in cryptocurrency have been extremely low quality—they are the speculators who doom the currency in the long run and scare away mainstream users.

With speculation, capital infusion is needed to keep the currency stable, which can be a significant task. Take Bitcoin for instance: With a market cap of roughly $20 billion, it would need a huge amount of capital to have a stable floor.

low and Steady Wins the Race

Cryptocurrencies are still in their infancy, and it’s hard to tell where the path for most of the major currencies is headed. What is the “finish line” that they are aiming for? What will the end game be?

Most cryptocurrencies have little direction besides the whims of the market, so there’s no telling where they will end up. However, there are a handful of interesting coins that have invested in strategies that nudge them in a specific direction.

The Central App Coin Method

This is a strategy that is centered around creating value with unique products and services that are associated with the currency. In this way, you could say that the currency is backed by something that people actually want.

For example, the MaidSafe network incentivizes users to provide something of value to the network (storage space), and offers the use of apps and services in return for coins. This naturally leads to better cooperation. People want to create value and channel their efforts towards the growth of the currency that they have in common.

The Setup and Switch Metho

Similar to the central app strategy, this method establishes a user base first, and then introduces the currency. Bitshares and its array of associated startups is a good example of this. Several networks with varying currencies—Steemit and their STEEM currency, Peerplays and their tokens, for instance—slowly built their user base and value exchange system, and now they plan to adopt a central currency with Bitshares. This allows them to create a stable base first before pooling their resources.

The Grassroots Movement

Finally, the best way for a currency to create that all-important foundation of true users is through bootstrapping. Just like a business startup, a currency like this would need a user base that believed in a common mission. It would need everyone in the system to be able to see the inherent value of the coin, and to understand that it could be worth much more than the value it is traded for in its early stages.

An example of one of these grassroots efforts is FairCoin. It’s a currency established and led by FairCoop, whose strategy is to build an ecosystem where businesses cooperate to give users maximum value. It is a currency built from the ground up to incentivize the long-term interests of users instead of their short-term greed—not just because it’s the right thing to do, but because it makes sense.

FairCoin focused from the beginning on building infrastructure for everyday users. Because of the strong relationships among members of the co-op, they can have thousands of ATM’s, debit cards, and exchanges that make mass adoption much easier.

An approach like this allows the currency to slowly build itself in the background without the need for a spotlight and the barrage of speculators that come with it. This offers the huge advantage of stability from the very beginning, though it does pose the problem that FairCoin has to bootstrap with less capital than most coins. Unlike other cryptocurrencies, they can’t rely on CoinMarketCap to sing their praises by displaying artificially rising prices (the effects of speculation).

In other words, FairCoin traded the excitement of volatility and greed for a quiet, long-term stability. The only problem is that people might not notice! Drama catches the human eye, after all.

Hard Forks

Let’s take a look at the hard fork that looms in the horizon for Bitcoin. As if things weren’t complicated enough, now there could be two competing chains for the currency. There are already many technical barriers to Bitcoin’s adoption among mainstream users, and this is yet another one. This makes the price even more uncertain, and uncertainty is like poison for a currency.

On the other hand, if you have a large community and a co-op on top of an immutable blockchain, then a hard fork is extremely unlikely—and unnecessary. Cryptocurrencies like MaidSafe, Bitshares, and FairCoin all represent solid communities that are incentivized to cooperate instead of speculate. This means that the coin can be worth more than its market price; it has a high inherent value within the system itself.

This makes it so that users have very little reason to defect from the existing community. A hard fork would mean giving up many benefits of the co-op, so people stay loyal to the original vision of the currency. When something deeper than just greed ties a community, hard forks don’t occur as often.

Conclusion

Stable prices don’t just happen by accident. They are not a miracle of the market—they require a carefully constructed foundation. A stable currency needs a stable ecosystem first.

While it’s tempting to market the currency too soon because capital injection can do a lot to raise prices in those critical early periods, it’s better to wait. Advertising is like opening up Pandora’s box and inviting the world to look inside. Some of those users will be interested in the actual currency, but others will be undesirable speculators that just leech off the system. For a currency to be stable, it needs to be used by “the 99%,” not just a handful of investors.

A currency needs to grow with the people, not past them. Look at the state of Bitcoin and its inflated prices. The everyday person can no longer either mine the coin or expect to use the coin in everyday transactions without high fees or risk. It has been given up to the speculators.

With a truly stable currency, on the other hand, you can have currency conversion, remittance, ATM withdrawals, and other financial services with lower fees than fiat systems. In other words, it can be used as intended—as money. This is what will ultimately attract a mainstream audience and will actually incentivize them to make the switch to cryptocurrency.

David Ogden
Entrepreneur

David – http://markethive.com/david-ogden

What’s keeping cryptocurrencies from mass adoption?

What is keeping cryptocurrency from mass adoption

What’s keeping cryptocurrencies from mass adoption?

 

Speculators flocked to Bitcoin and many of the alt-coins in hopes of getting in early and making a big exit, but everyday users haven’t warmed to cryptocurrencies.

There are many reasons why, but one of the largest barriers to mainstream adoption is the price volatility of cryptocurrencies.

So the question is, why do the prices change so much in the first place? It comes down to supply and demand: Most cryptocurrencies have only a fixed total supply, and yet demand for the coins is uncertain and constantly fluctuating thanks to speculation.

Of course, it’s easy enough to talk about the problem — coming up with a solution is quite another matter.

Why is Stability So Important?

The need for stability is not unique to cryptocurrency. Any currency needs to be stable in order to be used as a trusted medium of exchange. The more that prices rise and fall, the more ordinary people will shy away from using the coins for everyday transactions.

Whether they hoard the coins in the hope that prices will rise sharply soon, or they avoid using them altogether for fear that they will lose all of their value, people are not yet accustomed to seeing cryptocurrency as real money.

Worse, the unpredictability of prices wreaks havoc on regular money services, like remittance, currency conversion, and the use of ATMs. In order to use cryptocurrencies, businesses have to hedge their risks by charging exorbitant fees.

Bitcoin ATMs can charge up to 15% just to convert to fiat currency. This totally defeats the original purpose of cryptocurrencies, which was to offer a cheaper and more flexible alternative to other payment methods. With no advantage over government-printed money, why would the average person use them?

Patience is a Virtue

Price volatility has plagued Bitcoin from nearly the beginning. With what we have learned over the better part of a decade, why have cryptocurrencies still not solved this problem of fluctuating prices?

Human nature gets in the way, as it tends to do. It is difficult to stabilize prices in a world where people would rather play the market and get instant gratification by re-selling their coins for as high a price as possible. Without careful planning from the very onset of a cryptocurrency’s existence, it’s hard to recover from the effects of speculation.

Phase 1: Building a Stable Ecosystem

When building a cryptocurrency from scratch, you first need a solid foundation. From this foundation, the currency can grow and self-correct as it develops.

Gauging Demand

The first piece of the puzzle is being able to reliably predict demand. Uncertainty around demand is the main cause of price fluctuation, as every user’s intentions are a mystery to every other user. Having a way to gauge real demand for a coin would go a long way in fixing this problem.

The issue with predicting demand, though, is the existence of speculators creating artificial demand. This is the core of the problem: With so much speculation, the price for the cryptocurrency will not reflect its actual usage and demand. It simply becomes a bubble that is constantly on the verge of bursting, and no one wants to risk their hard-earned money on that.

Traditionally, the solution to the problem of stability was to have a central bank. The government could then alter the money supply at will, for example by causing inflation. Cryptocurrencies are by definition decentralized — that is part of their advantage — and without a central bank they need an entirely new approach when it comes to squashing volatility. They need to do this without compromising the freedom of the users and without resorting to inflation.

Cooperation Over Competition: A Decentralized Community

“United we stand, divided we fall.”

What if there was a currency that encouraged people to cooperate? What if people were incentivized by a spirit of growth, rather than of greed? Under the ideal model, a network of cooperative businesses and services would coordinate with each other as a single unit. The coin would be shaped democratically by this co-op (shaped not controlled). Every user would have incentives to help the network grow as a whole, and the use of a blockchain would help make the process fair.

Instead of rampant online speculation, users would visit local exchanges to buy and sell the currency. The community as a whole would vote on when to increase the coin’s price, which would keep things democratic and guard against sharp spikes.

David Ogden
Entrepreneur

 

Neil Haran
CONTRIBUTOR

David – http://markethive.com/david-ogden

Cryptocurrencies Surge in Value – Threefold Increase since last year

Cryptocurrencies Surge in Value - Threefold Increase since last year

Cryptocurrencies Surge in Value – Threefold Increase since last year

The combined market value of bitcoin and other crypto-currencies is now $27bn, representing a threefold increase since the start of 2016, with bitcoin miners having earned more than $2bn since trading in the electronic currency began in 2009.

These are some of the findings of a new report the Global cryptocurrency benchmarking study by Dr Garrick Hileman and Michel Rauchs of the University of Cambridge.

The authors note that ten years after the publication of a white paper by Satoshi Nakamoto which led to the creation of bitcoin, the crypto-currency markets now have approximately the same valuation as AirBnB, with the value of individual coins, the total number of users and the number of crypto-currencies in use all rising fast.

The prices of bitcoin and "altcoins" such as dash, monero and ether have all rocketed in price in the last 18 months, more than doubling in the case of bitcoin and with monero worth 16 times more than at the start of 2016.

At the same time, the number of daily bitcoin transactions has risen from 201,595 in Q1 2016 to 286,419 a year later, with the ether being traded more than twice as much reaching 47,792 daily transactions in January-February 2017.

With the future direction of bitcoin uncertain due to arguments about the best way to increase its scalability without centralising power in the hands of a few giant "miners" (generally companies operating a large number of powerful servers that verify transactions on the bitcoin blockchain), alternative currencies such as the ether have risen in importance as a hedge for investors.

The alternative approaches threaten to split bitcoin in two, forking the blockchain. This could create difficulties as there would be two different versions of bitcoin in circulation, and other coins and services built on the bitcoin blockchain and currency exchanges would have to decide which way to go. However, despite the feuding, the price of bitcoin against the US dollar is close to an all-time high.

The transaction fees that miners can earn have risen sharply as the number of transactions, and hence the size of the blockchain, has grown, with users opting to pay more for a quicker transaction time. This has left the big miners with a lot of power and a vested interest in the way bitcoin evolves.

The report estimates the current number of unique actve users of crypto-currency wallets be between 2.9 million and 5.8 million, with between 5.8 million and 11.5 million wallets in active use. The industry is thought to employ around 2,000 people worldwide.

David Ogden
Entrepreneur

 

John Leonard

Author

David – http://markethive.com/david-ogden

Bitcoin Rises Footsie Falls as UK Heads to Snap Election

Bitcoin Rises Footsie Falls-as UK Heads to Snap Election

Bitcoin Rises, Footsie Falls, as UK Heads to Snap Election

 

Theresa May, the British unelected current Prime Minister, has surprised and at the same time excited everyone by all the sudden calling a snap election in what may be an historical two months of campaigning.

“It was with reluctance that I decided the country needs this election, but it is with strong conviction that I say it is necessary to secure the strong and stable leadership the country needs to see us through Brexit and beyond,” May said according to Reuters.

No one was expecting the British election as May has univocally stated there will not be one, but the surprise u-turn sent FTSE down some 2.46%, Pound is up to months high and so is Bitcoin, rising slightly around 1.50%.

The outcome of the election is currently seen as somewhat certain because the Labour leader of the opposition, Jeremy Corbyn, is generally seen as unelectable. Moreover, Theresa May is 20 points ahead of Labour, but will there be a twist?

All eyes are now on Tim Farron, the leader of the Liberal Democrats. The party rose to power in a coalition in 2010 with the conservatives. Voters, however, severely punished them in 2015 because they rose student fees when they said they would not.

However, now the times are very different. Britain has as good as no official opposition. The only real choice is the Liberal Democrats, a coalition of social liberals and classic liberals. They usually strongly appeal to students, while also attracting libertarian-leaning voters.

In this election, their main selling point would probably be their pro-EU stance. Jeremy Corbyn has been accused of lackluster campaigning for remaining in the EU prior to the referendum. Some speculate he is secretly in favor of Brexit.

The only voice, therefore, for some 48% of voters who wished to remain, may be Tim Farron. It is far too early to say what exactly he will promise, but if the party accepts the referendum’s results and campaigns on a soft-brexit, it may actually have a real chance of providing a third political earthquake in just months.

The election may then be given some meaning, instead of being just a coronation, as the public debates whether they wish to hard or soft Brexit in potentially the biggest decision this nation has faced in almost a century.

We should, however, expect Tim Farron to botch it all and say we should have a second referendum, something which would probably take them off the election map and relegate them to a joke party.

Britain has voted to leave. The will of the people must be upheld. The question now is how, not if. The nation demands an opposition. Who wants the position is now the question everyone is asking.

David Ogden
Entreprenuer

David – http://markethive.com/david-ogden

Should You Accept Cryptocurrency In Your Small Business?

should you accept cryptocurrency in you small business

Should You Accept Cryptocurrency In Your Small Business?

 

Despite the controversy and challenges that occur — small-business owners are embracing cryptocurrencies, like bitcoin. The main reason, according to the more savvy entrepreneurial-types, is that by using the latest technology they can stand out from other businesses.

Does that mean that accepting cryptocurrencies is the right fit for your business? It actually depends on your business’s particular situation and needs, but for the most part, cryptocurrencies can offer the following advantage for business owners.

In years past U.S. merchants have had to pay over $78 billion in credit and debit card processing fees. Since cryptocurrencies are decentralized, meaning that they don’t require a bank to verify each transaction, you can eliminate those transaction fee which normally cost 2 percent up to 5 percent for each transaction.

In other words, it costs almost nothing for your customers to transfer funds to you. As for you — as a business owner — don’t have to share your hard-earned revenue with that third party financial institutions.

More privacy and security for your customers.

According to a research by Statista, 17 percent of shopping cart abandonment is over payment security concerns, with another 18 percent is due to excessive payment security checks.

With cryptocurrency transactions, customers don’t have to share personal data when making purchases because they rely on a send-only protocol, meaning that counterfeiting and identity theft are decreased because there aren’t any number for hacker to steal.

Transactions are processed quickly.

Waiting for a funds to become available in your bank account isn’t just frustrating, it can negatively impact your cash flow. That’s not the case with cryptocurrency transactions. In most cases, these transactions occur in real-time because there aren’t multiple banks holding-up the payment process.

Even if it’s not that quick — funds are typically available in just a couple of minutes.

It’s an international currency.

If your business exports goods and services, or purchases supplies or materials from other countries, then cryptocurrencies like bitcoin can help you get around those expensive foreign transaction fees, exchange rates, or currencies.

Since eCash, like bitcoin, is a global currency and it’s not tied to any single government or company. In other words, it ignores border restrictions. So as long as both parties accept bitcoin, you’re good to go.

No fraud, no chargebacks.

 

Cryptocurrencies are similar to cash, in that you either have it or you don’t and all transactions are final. This is because transactions are added to the blockchain via a complex system called mining.

This system verifies funds and makes it pretty much impossible to spend more than you own. Also, since both parties must approve the transaction, there aren’t any disputes to worry about it. This means that chargebacks don’t occur and are a thing of the past.

Acquire new customers.

There are serious die-hard fans of cryptocurrencies. Having your customers already familiar with cryptocurrencies is a plus and can be a major assist for your business since they actively seek out businesses that accept digital currencies.

Of course, that’s a niche market. However, as a general rule of thumb, when you offer more payment options the more customers you’ll be able to attract. In fact, it’s been found that up to 28 percent of shopping cart abandonment is caused by the lack of a payment option a shopper prefers to use.

We’re moving away from paper.

Both cryptocurrencies and digital wallets are continuing to grow. In fact, both the blockchain and bitcoin had banner years in 2016. Bitcoin was the top currency in 2016 and is being valued at around $1,000.

It’s expected this trend will continue in 2017 and and began a high growth beyond 2017 as people become more familiar with this digital currency.

Instead of resisting this change, it would make more sense for your business to become an early adopter and embrace cryptocurrencies so that you can set yourself apart from your competitors.

The bottom line.

While accepting cryptocurrencies can set you apart as an innovator and an early adopter of fintech. Cryptocurrencies are faster and cheaper than processing traditional payments, and are relatively secure.

As yet, cryptocurrency is not equally regulated. Some countries are working to restricted cryptocurrency use.

If is not considered as stable, yet. Cryptocurrency isn’t as regulated as the price of eCash and it can fluctuate suddenly.

Limited scaling. The system is designed to only process so many transactions at this time. However, the fintech revolution is solving many of the issues surrounding the scaling.

Lack of applications. There aren’t as many applications to process virtual currencies as compared to apps that can process credit or debit cards. However, several companies are in the race to come up with the MVP app for cryptocurrencies.

Security. While identity theft and counterfeit can be greatly reduced with this type of system, there’s no system in place to prevent human error, technical glitches, or fiduciary fraud. (Of course, there never has been anything to stop those very same issues in traditional banking, either. Cryptocurrency still remains the most secure banking method as a result of the blockchain process.)

Makes planning more challenging. Since cryptocurrencies are decentralized, and 100 percent digital, it can make preparing financial statements, determining taxes, and figuring out your prices difficult.

If you do decide to start accepting cryptocurrencies after weighing the pros and cons, you can easily get started by using digital wallets like Due and Coinbase.

There’s also POS systems like XBTerminal that allows customers to pay from any mobile bitcoin wallet by using NFC or QR code.

David Ogden
Entrepreneur

This article was originally published on Due.com.

David – http://markethive.com/david-ogden