Bitcoin today is not as dependent on China as before
China was the most important market for bitcoin in the previous years. China was even responsible for 90% of the trading volume. Over the last year this changed a lot. Only about 15% of the trading volume comes from China now.
Especially in Japan and South Korea trade volume of bitcoin rose enormously. This means a ban in China will limit the trade in bitcoin only for a small part, beside that the Chinese traders will probably find another way to buy bitcoins.
Outside of China bitcoin is doing extremely well
Before China announced the bad news, bitcoin was doing very well. Professional investors and even nation states started to invest in bitcoin. This is still the case and could easily multiply the market capitalization of bitcoin, so will the price!
Also the Segwit update has just gone through, this will make transactions on the Bitcoin network faster and cheaper. Also the network can be expanded with 2nd layers to create the possibility of smart contracts and micro transactions on the Bitcoin network. It looks like nobody sees the positive aspects in times of panic. Investors often say:
Buy when there is blood in the streets……
Keep your own private keys!
When you buy bitcoins, it is important to keep your own private keys. When you store your bitcoins on an exchange there is a risk you will loose them because of a failure of the exchange, a hack or changing regulations in the country where the exchange is located. The easiest and most secure way to do this is by using a hardware wallet.
Segwit will transform Bitcoin to the internet of money
Next week Segwit, an important update will be implemented. This means that the Bitcoin network can handle two times more transactions using the same amount of data. More important is the fact that Segwit will enable so called 2nd layers.
This creates the possibility to implement all features done by altcoins to be implemented in Bitcoin using side chains. Rootstock (RSK) and Lightning Network (LN) are almost ready to be launched and will bring smart contracts, micro payments and privacy to the Bitcoin network.
In the months and years to come all available blockchain applications will be enabled on the Bitcoin network. This will transform Bitcoin from a payment system to the internet of money. Furthermore it will scale the network exponentially.
Investors are turning to Bitcoin
After years the bad reputation of Bitcoin is finally slowly fading away. Mainstream media like CNBC and Bloomberg are mentioning it in a positive way and famous investors are starting to add bitcoin to their portfolio. GBTC, the only Bitcoin security available on Wallstreet is valued at 7500 USD per bitcoin at the time of writing. This means the demand under investors is huge, they are willing to pay about 90% premium!
Different countries are legalizing Bitcoin and Russia starts mining
In Japan they announced bitcoin to become a legal currency and it is expected that 200.000 stores will start to accept it this year. Also Australia, South Korea, India and Russia are in the proces of legalization. Russia is even planning to start mining on big scale. This could signal that Russia is planning to hold bitcoin in their treasury!
Scaling issue is partly solved after years
The rise of Bitcoin is delayed for years by the ongoing scaling debate about how to upgrade the capacity of the network. One side of the debate saw Segwit as the solution, but the others wanted a block size increase. Next week Segwit will finally been implemented and the recent hard fork created another coin for the other part of the community. Now both sides can go on working on their own vision.
Bitcoin network is more secure than ever
The security of the Bitcoin network will follow the price. The recent rise in price will increase the security level of the Bitcoin network (miners ensure the security of the network and after a price increase more people will start mining). One of the most important factors for Bitcoin to get value is the fact that it is the most secured network on earth.
At the moment the security risks are among the users. Online wallets and exchanges get hacked regularly. Happily a hardware wallet can almost fully eliminate the risk.
The bitcoin price has risen enormously, but the fundamentals are supporting it. In our view there is no bubble yet, but a serious correction in the short term can be considered as normal (happened a few time already this year).
When investors and nation states turn to bitcoin, not billions but trillions can flow into the tiny market capitalization of bitcoin (70,7 billion) and will multiple the price many times. In long term a bitcoin price of tens or hundreds of thousand USD is realistic in our view.
Storage of bitcoins and other cryptocurrencies on exchanges is now riskier than ever!
A lot is going on in the Bitcoin environment at the moment. Hackers are more active than ever because of recent gains and different forks will possible be activated in the months to come. Both are very risky for the ones that store their bitcoins on exchanges. In case a fork happens, there is the risk that your exchange doesn’t support one of the chains. Furthermore transactions done after the fork can disappear when the blockchain disappears. The general advise is:
For a few years the Bitcoin community is divided by a different vision how the network should be scaled. Simply said one part of the community thinks the blocks that are created every ten minutes should contain more (than one MB) data, while others think the network can be improved by Segwit.
Segwit is an update that will double the capacity of one block and create the possibility to build 2nd layers on the Bitcoin network like Lightning Network and Rootstock (RSK). These 2nd layers will scale up the network too, because the majority of the transactions will happen off chain.
To implement a certain solution the network need to be ‘forked’. A fork is a copy of the current software with some changes. When the full network agrees with this change, everyone will implement it and the network will be updated. However, when a part doesn’t run the update, the network will split and 2 different cryptocurrencies will exist. There are a few different forks that could be triggered in the months to come:
Segwit X2 is a compromis between the two rivals, whereby Segwit will be implemented in August followed by a doubling of the block size after 3 months. At het moment 100% of the miners is signaling that they will implement Segwit, so this is almost sure, but it’s only 100% sure when the network is really updated (they could play a dirty game).
The Segwit X2 deal describes that 3 months after the update of Segwit the size of the blocks will double via a hard fork, but miners can drop this by using other software before this event takes place. There is a chance that this fork will never happen when the community don’t see the need for it anymore.
UASF = User Activated Soft Fork
The fork era started with the UASF. Because miners didn’t want to upgrade to Segwit but the users did, the UASF came in existence. The UASF will cause all the UASF nodes to reject non Segwit blocks on and after the 1st of August 2017. This will cause a chain split that creates a bitcoin with Segwit and a bitcoin without.
The idea is that the Segwit chain will become more valuable because the economic majority wants Segwit. This creates a situation where miners shift to the Segwit chain to be able to earn bigger returns. Probably the Segwit 2X was successful because fear of the UASF under the miners. It looks like Segwit will be signaled by all miners before the 1st of August, so the UASF will not be activated.
Bitcoin ABC was an answer to the UASF in the first instance, but last saturday they announced that they are planning to fork anyway (also when the UASF never happens). Bitcoin ABC is a fork of Bitcoin planned on the 1st of August to create BCC or Bitcoin Cash, a clone of Bitcoin without Segwit and with 8 MB blocks.
This fork is quite sure to happen, but will probably not get so much support. Also BCC will not compete with Bitcoin as a 2nd Bitcoin, but it will be an altcoin. Because of this the damage will be limited.
Most likely scenario
Already 100% of the miners is signaling for Segwit, so it is almost sure that the update will take place via Segwit X2. This means the UASF will not get activated. The only likely fork in short term is the ABC fork. This will take place on the 1st of August and will create BTC and BCC. Keep in mind that the persons that will create BCC brought many surprises in the past, so maybe finally nothing will happen.
The support for BCC will probably be mostly in China, because the miners that support it are located here and the most important Chinese exchanges will support BCC. Most of the exchanges in the rest of the world will not support BCC or register it as an altcoin. When this fork happens it will probably become an altcoin.
3 months later the 2X hard fork is planned. But wether it will really happen is depending on Bitcoin ABC and the state of the Bitcoin network at that moment. Maybe Segwit will have a positive effect that make people decide that a hard fork is not needed anymore.
How to react?
As said in the beginning of this post it’s important to keep your keys yourself. This can be done by storing your bitcoins on a respected desktop wallet, hardware wallet or paper wallet. Storing your bitcoins on exchanges is very dangerous.
Firstly they get hacked regularly and secondly you never know if they support both coins after a split. When they don’t you will loose the unsupported coin. This happened in the real world when Ethereum experienced the split recently. Further it is important to not make any transactions during the split until the situation is under control.
Only use trusted wallets!
In case of a split you private key will give access to your coins on both of the blockchains. In case of an ABC fork, you will have the same amount of coins that you had before the fork on the BTC blockchain and on the BCC blockchain as well. After the fork, existing wallets will proceed to implement support for BCC and new wallets purely for BCC will be created.
BE CAREFUL! YOUR PRIVATE KEY ON THE BCC BLOCKCHAIN WILL GIVE ACCESS TO YOUR BTC TOO. WHEN YOU USE A WALLET CREATED BY SCAMMERS OR HACKERS TO STEAL YOUR PRIVATE KEY, YOU WILL NOT ONLY LOOSE YOUR BCC BUT ALSO YOUR BTC! USE ONLY TRUSTED WALLETS!
The best way to store your bitcoins securely is with a hardware wallet. A hardware wallet protect your bitcoins against hackers and by a split as well. Ledger and Trezor announced to create a BCC wallet when a split happens. They also advice to not make transactions till the network is settled again!
When you want to store your Litecoin securely, you can do that now with Trezor! Trezor supports beside Bitcoin some other altcoins like Ethereum, Dash and Zcash too. From now you can store Litecoins too on your Trezor hardware wallet. When you buy a new one, the Litecoin wallet is available by default. When you own a Trezor already, you can store Litecoin too, but you first have to download the latest updates.
Litecoin is the lightweight and fast little brother of Bitcoin. Bitcoin is often referred as digital gold and Litecoin as digital silver. Litecoin has proven to be able to exist next to Bitcoin. It is easier to make updates on Litecoin, this makes it a perfect testnet for the bigger and more robust Bitcoin.
Also Litecoin is able to (temporarily) take over certain use cases in the market of Bitcoin, when Bitcoin is not able to deliver them properly. A great example is the shift of mini and micro transactions to the Litecoin network, when the scaling problems in Bitcoin increased and the transactions got more expensive and took longer to be confirmed.
Why to store Litecoin on a hardware wallet?
The above mentioned reasons make Litecoin a possible good investment for the long run. A hardware wallet is one of the most secure ways to store cryptocurrencies and will still give you the possibility to make easy and secure transactions. Beside the Trezor, also the Ledger is compatible with Litecoin wallets.
Ledger Blue is soon available again! Pre-order now!
Ledger Blue is the most advanced hardware wallet and was sold out because of it’s enormous popularity. Ledger started a new production round to meet the huge demand for this hardware wallet. The Ledger Blue will be available from the 31st of July. Now, you can already make a pre-order to be sure that you are able to receive one before they are sold out again.
Ledger Blue is so popular, because high level of security and good usability are combined in this device. An owner of bitcoins or altcoins can be sure about security while the possible applications are enormous. Because the software is open source, the security level and possibilities will be expanded regularly through updates.
Pre-order the Ledger Blue now
It is unknown how many Ledger Blue hardware wallets are produced this time, so it is hard to tell how long it will take before they are sold out this time. When you really want to get one, it is advisable to pre-order one now. At the 31st of July the pre-ordered Ledgers will be send.
The long expected Bitcoin ETF is rejected by the SEC
The SEC has decided that the Bitcoin ETF of the Winklevoss twins is not allowed to be brought to the market. According to the SEC, the risk of fraud is to high. The existence of an Bitcoin ETF on Wall Street should make it way easier for investors to invest in bitcoin. This should give them a easy way to open a position on their regular broker account.
Furthermore an official Bitcoin ETF would be very positive for the reputation of bitcoin, it will be seen as a sign of acceptation of bitcoin in the financial world. The expectation was that when the ETF could proceed, the price would have skyrocketed. So after the rejection the bitcoin price made a huge drop. Good moment to buy?
The rejection of the Bitcoin ETF can also be positive
The short time effect of the rejection on the Bitcoin price is negative. However for the long term it can be good for Bitcoin. The existence of multiple Bitcoin ETF’s on Wallstreet could cause dilution because of fractional reserve practicing, done by financial institutions. While the Bitcoin protocol itself contains a strict regulation of supply.
This will happen when financial products based on Bitcoin are created, and are not for 100% backed by real bitcoins. The bitcoin price is naturally based on demand and supply. When financial institutions start creating products based on bitcoin, the chance for price manipulation will increase dramatically. This can lead to an false low price, caused by uncovered bitcoin assets that are flooding the markets.
Another result of the rejection of the ETF is that investors have to choose for the classic way to store bitcoins. This will motivate the Bitcoin community to design applications and improve the network to make storage and usage of bitcoin easier and more secure.
It is possible to invest easy and secure in bitcoin without ETF
The rejection of the ETF isn’t saying anything about the potential of bitcoin at all. Bitcoin is still the only really secure network that is based on blockchain. In the .com crash and the crisis of 2008, we have learned that all financial institutions in the USA are covering each other. The banks see Bitcoin as a huge threat, so they want to keep it as small as possible. The question is if the SEC really made an objective decision.
When you want to invest in bitcoin, you can do this easily and secure by ordering an hardware wallet (from only 15 Euro). After you can buy bitcoin on an online exchange or marketplace. A bitcoin is devisable in 100 million units, so you can also buy a small amount. When you buy now on the low, you are investing before all the big institutions are coming in. The potential is enormous!
Many people don’t know how they can get started with bitcoin, so most of them don’t start at all. This is too bad, since bitcoin has a huge potential and a small investment can stabilize a portfolio by its negative correlation with regular financial products. Furthermore bitcoin can cut transaction costs and make payments faster and easier. We will tell you how you can easily buy and store bitcoins without any technical knowledge.
Easy and secure
When you research how to buy and store bitcoins, there is a lot of information available, but most of it is complicated and requires technical knowledge about bitcoin. Some people just want to buy bitcoin without learning or understanding the technical background.
A hardware wallet can be connected to your computer with a USB cable and contains a bitcoin wallet. This wallet can’t be hacked, because the information to sign transactions will be held in a secure environment permanently. When you keep this wallet in a safe, it is as secure as keeping cash in a safe and you can still make instant transactions.
Since the bitcoin price is rising, it is increasingly important to secure your bitcoins properly
The bitcoin price is rising for a while and the outlook is still good. When the value of Bitcoin is increasing, it will attract more hackers and thieves to steel your bitcoins. You don’t want your bitcoins to be stolen while the price is exploding!
Satoshi nakamoto designed the Bitcoin netwerk perfectly. It is programmed in a way that the security will increase when the price is rising and visa versa. When the bitcoin price is rising, the profit for miners will increase. This greater profit will lead to more miners and this will cause a higher level of security.
Because of this self-regulating security system it is for hackers almost impossible to crack the Bitcoin network itself. Hackers will start hunting for bitcoins of individuals and online platforms. A recent case is the Bitfinex hack, but bitcoins of individuals get stolen regularly too. Especially after the recent rise in price it is important to secure your bitcoins properly.
How to secure your own bitcoins?
Online theft is the biggest risk for your bitcoins. When hackers crack your bitcoin wallet, they can send your bitcoins to another address and you will lose them forever. To avoid this you should not store a big amount in an online wallet or platform. Its best to store most of it in cold storage.
Cold storage means that you keep the ‘private key’ of your bitcoin wallet offline, so that hackers can’t reach it. The most common ways of cold storage are paper wallets and hardware wallets. The advantage of a hardware wallet is that you are still able to make secure transactions.
Decide the risk factor for yourself
There are some downsides of cold storage. In case of a paper wallet the bitcoins are not immediately available to spend. To make an interest you will have to take the risk of storing them on an online platform. Currently the interest on bitcoin lending is 12%. When you keep 2/3 in cold storage, you will be able to make an interest of 4%, this is still much more than what the bank has to offer!
Tradingplatform Bitfinex hacked, big amount of bitcoins stolen, is it possible to invest in Bitcoin in a secure way?
Today, storing your bitcoinssecurely became more important. When I checked the bitcoin price after I woke up this morning, I was shocked for a moment. While investigating the reasons why the price made a huge drop, I found the first articles about almost 120.000 stolen bitcoins from trading platform Bitfinex in the news.
Some investors lost their bitcoins in this hack, but all investors lost by the price drop
The previous crash of the bitcoin price was also caused by a big theft at Mt. Gox, but this time I expect the drop will not be so deep. The first argument for this is the fact that the platform and the amount of stolen bitcoins as well is much smaller compared to the total market. Furthermore, the last crash was on the top of a big bubble, so there was a lot of air in the market.
The Bitcoin network is never hacked and probably this will never happen. This means all you have to do is protecting your private keys against hackers and thieves.
You can decide about your risk / reward ratio yourself when you invest in Bitcoin
I’ve got some bitcoins stored at Bitfinex too, because I can lend them to traders here and get some good interest. I don’t know yet if they are stolen, and in that case I don’t know if I will ever get them back. The platform is not accessible at the moment, so future will learn.
Most of my bitcoins are stored on a hardware wallet (Trezor), so these are safe, but the only source of gain here is the price advance. That’s the reason a part of my bitcoins are invested at Bitfinex, but at lending platforms like BTCjam as well. The last time I got great interest here additional to the price advance.
Result: You decide about security yourself
So is it possible to invest in Bitcoin in a secure way? You can choose between secure, unhackable options like a hardware wallet and less secure options giving you a great extra return if everything goes well. You can also spread between these options, it’s all your choice!
If I had rejected the options to earn interest and stored all my bitcoins on a hardware wallet, I shouldn’t loose anything today, exempt the loss in price, but this is only temporary.
Don’t let yourself scare away from Bitcoin because of this hack, investing in Bitcoin in a secure way is really possible and the drop in price is probably only temporary!