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Bitcoin-Backed Square Named Yahoo Finance Company of the Year

Bitcoin (BTC), Cryptocurrency–While no one will argue the fact that 2018 has been a horrible year for cryptocurrency valuation, with the majority of altcoins down 90 percent or more since the start of the year, Bitcoin-supported payment portal Square has been named a top finance company of 2018.

Yahoo Finance, in its end of the year roundup, named Square their 2018 Company of the Year. Square, which has been around since 2009 but only began offering BTC trading in November 2017, has been a supporter of cryptocurrency despite the down market. While fiat makes up the majority use of the payment platform, Co-Founder and CEO Jack Dorsey has managed to exert an influence over the company which has extended to digital assets.

According to the release by Yahoo Finance, the company’s stock has demonstrated just how powerful of a player Square has become in the fintech scene,

Square’s investors know it. The stock was up 72% through Dec. 14. Before the larger market pullback that began in October, shares were up 170% through the end of September.

The acquisitions Square has made over the last several years, leading the company’s offering and technology to outpace the growing competition of a digital payment processors, has led to Square being vaulted into the top echelon of a companies typically selected by Yahoo Finance for their end of the year reward,

Square, with $26 billion in market cap and 2,300 employees, might look like a surprising choice compared to our picks in the past few years, all much larger companies: Facebook in 2015, Nvidia in 2016, and Amazon last year. But Square is rapidly making itself a force to be reckoned with in financial services. In November, the company forecast 60% growth for 2018 and more than $3.2 billion in revenue.

With the help of Dorsey, who is also co-founder and CEO of Twitter, Square has managed to grow its Bitcoin division into a wing of the company that is seeing increased revenue. In November, Square quarterly reports announced that Q3 BTC revenue was $43 million, up $37 million from the previous quarter. While that figure represents a small drop in the bucket for the billion-dollar company, it also positions Square to be a market leader in the event of broader Bitcoin and cryptocurrency adoption.

Jack Dorsey, who has been outspoken in his support for Bitcoin, has been one of the most high profile tech industry figures to overlap into the world of cryptocurrency. In March, Dorsey made waves in the crypto space and beyond when he gave his opinion that Bitcoin could become the internet’s–and world’s–single currency over the next ten years,

“The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin,”

Considering the position that Dorsey holds with both Square and Twitter, it could provide an interesting proposition for Bitcoin and cryptocurrency over the coming year. With the bombshell rumor out of Facebook that the social media giant is developing a stablecoin for its WhatsApp messaging platform, Twitter could find itself in position to follow suit in order to keep up with the competition. Square, given its high profile development and app-focused usability, could provide a conduit for Twitter to make the leap into cryptocurrency.

At the very least, Dorsey’s presence with Square and his influence in Twitter is a positive focus for cryptocurrency investors looking to 2019 for further industry growth.

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Bitcoin (BTC) Leads Google Trends Most Commonly Asked in 2018

Bitcoin (BTC), Cryptocurrency–While market prices continue to look shaky for cryptocurrency and the broader altcoin market, Bitcoin managed to score a minor win on the day. According to the analytics trending tool published by Google, “What is Bitcoin?” was the most searched phrase for the question-asking category for 2018. Both United States and United Kingdom Google users searched for information about the number one cryptocurrency by market capitalization more than any other topic, giving an indication that–while some would proclaim the technology a bubble in the process of bursting–there still remains interest in the field of cryptocurrency.

Rounding out the top five included “What is racketeering,” “What is DACA,” “What is a government shutdown” and “What is Good Friday.” Bitcoin’s top position for Google’s rankings comes at a time when the currency is experiencing its relative lowest point for the year. Last week EWN reported on the state of the crypto markets in 2018, with BTC experiencing its worst monthly loss in November since August 2011. The price fall for Bitcoin comes at the tail end of an already bearish year for cryptocurrency, seeing the entire market capitalization tumble from over $800 billion to its present value of $110 billion.

Bitcoin, in particular, has ceded its share of losses, dropping from close to $20,000 at the end of December 2017 to today’s trading price of $3500. While some analysts have pointed to indicators that BTC and the crypto markets may be entering oversold territory, with a potential bounce coming for investors, others have pointed to a much dire future for crypto into next year.

News of search interest for the cryptocurrency is a welcomed sight for investors amidst the price fall, with many claiming a fundamental lack of understanding by the general population for being a catalyst to Bitcoin’s recent price drop. As opposed to learning about the technology and the potential for cryptocurrency, investors through money at BTC, altcoins and ICOs with abandon throughout 2017’s bull run, leading to the bloated market prices to start the year that would inevitably lead to the crash.

With the conversation shifting from the daily price movement of Bitcoin and the money to be made from investing in the digital asset, industry enthusiasts are hoping to garner more focus on the development and adoption for the technology. Last year saw “blockchain” and “cryptocurrency” become to buzz words, similar to the social media and app-development frenzy in the early part of this decade, which fueled unrealistic expectations for the industry. Bitcoin, as a technology, was unprepared to handle the influx of consumers, which led to the service becoming nearly unusable with skyrocketing transaction fees and unacceptable confirmation times. Detractors of the digital asset quickly latched onto the flaws of the currency under high network stress, leading to a negative shift in sentiment for the viability of cryptocurrency and contributing to the growing investment uncertainty.

With the market turned at the start of the year, it did so with equal ferocity to the bull run which ended 2017. Now, entering the final month of 2018, the majority of currencies are sitting on over 90 percent losses since their last all time high, with most financial analysts calling for further crypto blood and claiming that the bubble has finally popped.

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Bloomberg Opinion Bitcoin Price Prediction: More FUD for 2019

Bitcoin (BTC), Cryptocurrency–While the crypto markets see a slight reversal in pricing to round out the final week of December, with Bitcoin creeping closer to $3700 after hitting a relative low earlier in the week, predictions on the outlook of the industry for 2019 continue to sour investors.

Last week, as reported by EWN, billionaire crypto investor Mike Novogratz lamented the state of the cryptocurrency markets throughout 2018, claiming in a conference call that,

“It’s been a horrible bear market in tokens. There’s plenty of reason to be depressed.”

However, Novogratz qualified his statement with some positive spin, reminding investors that coin prices may be down but adoption and general acceptance for crypto and blockchain has been on the rise throughout the year. Despite his crypto investment firm Galaxy Digital Holdings posting over $130 million in losses through 2018’s bear cycle, Novogratz remains confident in cryptocurrency extending into 2019 and beyond,

“I fundamentally think you’re going to see big adaption in 2019, 2020. Lots of the items in the digital world, the e-gaming space, are low value items so I think people will be more comfortable participating in blockchain. We’re making big investments in that area.”

While Novogratz, a long time Bitcoin bull and supporter for cryptocurrency, remains hopeful for a market recovery into next year, traditional financial outlets have fond more reason to be cynical. In a year end, opinion-based review for 2019 predictions, Bloomberg opinion column has struck a chord in crypto investors by publishing more of the FUD that has become part and parcel among mainstream publications.

Rounding out the top of the list for “egregious predictions of 2018,” the opinion piece by Barry Ritholtz lambasts Bitcoin and the litany of assumptions that were made at the start of the year in the midst of a bull run,

“The spectrum of predictions ran from the sublime to the criminally negligent to the utterly insane. It got so bad that a website was set up to track all of the Bitcoin prophesies.”

The article continues on to call out Fundstrat’s Tom Lee and the aforementioned Mike Novogratz for their predictions throughout the year,

“Fundstrat’s Tom Lee’s 2018 forecast for $25,000 Bitcoin was reduced last month to $15,000 by year-end. (The cryptocurrency recently traded at about $3,650.) As foolish as that sounds, it was modest compared to the rest of the asylum. Michael Novogratz forecast that ‘$40,000 was possible by the end of 2018.’”

While Bitcoin continues to trade close to a relative low for the year, with the digital asset slipping from near $20,000 in December 2017 to $3600 as of writing, the schadenfreude for BTC and cryptocurrency in general is mounting. From a combination of FOMO and “I told you so,” traditional finance analysts are lining up to cast stones at the number one cryptocurrency by market cap, despite failing to predict a similarly bullish run for the coin just a year ago.

Investors, still reeling from the losses of 2018’s ongoing bear cycle, have little to be excited for as we enter the final month of the year. However, they have managed to weather the storm of Bitcoin hate and claims of BTC “being dead,” which has led to the creation of websites tracking the obituaries for the coin. Time will tell if the current crop of predictions for the demise of Bitcoin will be added to the heap.

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Goldman Sachs CFO Calls Trading Desk Rumors “Fake News”

Bitcoin (BTC), Cryptocurrency–Despite reports surrounding a potential cryptocurrency trading desk by Wall Street goliath Goldman Sachs–and its subsequent closure–the company has since come out to debunk any such reports.

First reported by CNBC on September 6, Goldman Sachs Chief Financial Officer (CFO) Martin Chavez has explained that reports related to the company abandoning its intended cryptocurrency trading desk have been “fake news,” and described the entire scenario as a premature understanding. Speaking at the TechCrunch Disrupt Conference in San Francisco, the CFO of Goldman Sachs put the situation rather bluntly,

“I never thought I would hear myself use this term but I really have to describe that news as fake news.”

While Bloomberg had originally reported at the end of last year that Goldman Sachs was working on the implementation of a cryptocurrency trading desk to be launched in 2018, a story out of Business Insider earlier this week claimed that the project had been shuttered. The Business Insider report quoted unnamed sources as the basis of the information, giving evidence that the Wall Street firm had decided to do away with the previously hyped up trading desk. In addition, the story cited the unclear regulatory environment of cryptocurrency–a feature that many have been alluding to as a barrier to institutional investors–was the primary reason for Goldman shelving the project, at least in the interim.

Chavez has since come forth to say that the excitement over a Goldman Sachs crypto trading desk got ahead of the facts, with the industry not yet being at the point of maturation necessary for such a venture,
“When we talked about exploring digital assets […] it was going to be exploration that would be evolving over time. Maybe someone who was thinking about our activities here got very excited that we would be making markets as principal and physical Bitcoin, and as they got into it they realized part of the evolution but its not here yet.”

Chavez also went on to say that the bank has no intention to proceed with physical Bitcoin trading at this point in time, claiming that a more reliable custody solution was needed before they would consider the option. However, the company does still provide liquidity for BTC future contracts through CBOE and CME, a feature that some have seen as a prelude for the industry finally obtaining approval by the U.S. Securities & Exchange Commission for Bitcoin Exchange-Traded Funds. Expanding upon the idea of Goldman Sachs venturing into Bitcoin directly, Chavez called the idea “tremendously interesting,” but also went on to state that it would be challenging to implement in the current market form,

“Physical bitcoin is something tremendously interesting, and tremendously challenging. From the perspective of custody, we don’t yet see an institutional-grade custodial solution for Bitcoin, we’re interested in having that exist and it’s a long road.”

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Satis Group Price Analysis: Bitcoin and Monero Biggest Gainers Over 10 Years

Bitcoin (BTC), Monero (XMR)–According to a report by the initial coin offering (ICO) advisory and research firm Satis Group, both Monero and Bitcoin look to be the biggest winners in terms of price gain over the next decade. Satis, which publishes outlooks for both ICOs and current cryptocurrencies, as well as advising on  the forces that will shape the industry, has released a new forecast for the next ten years that puts XMR as the greatest price gainer while predicting XRP to be in for a historic crash.

According to the report, Monero is predicted to have a price appreciation of 38391 percent over the next ten years, bringing the price to a whopping $39,584 (up from its current value of $108 as of writing). The report also predicts Monero having a strong performance over the next year, predicting a four-digit percentage increase in price to bring the valuation of XMR to $1476.

In addition to being bullish on Monero, the new report also finds more profit to be made through Bitcoin, claiming that the number one currency by market capitalization will eclipse it’s previous all time high of $20,000 at some point in the next year to bring the total value of BTC to $32,914. The five and ten year outlook for Bitcoin is equally positive, with the coin poised to hit $96,378 and $143,900, respectively, over the coming decade. Ethereum and Litecoin were also listed in the report with positive gains, however Satis Group predicts neither coin to perform anywhere near as well as Monero and Bitcoin. Litecoin has an expected 10-year price outlook of $225, failing to eclipse December 2017’s all time high, while Ethereum’s outlook is pegged at $588–again failing to retest previous highs.

Interestingly, Satis Group finds XRP to have an overwhelmingly negative outlook, predicting the coin to reach a historic low in investment price. The former product of blockchain startup Ripple and current third overall cryptocurrency by market cap is predicted to be worth a penny in five-year’s time, and less than that over the full decade forecast. XRP, which once traded for as high as $3.84 per coin during the January’s bull run, is expected to continue a slow decline worth up to 90 percent of the current value, a price point that would result in a 99.7 percent decline since the last all time high.

The reasoning behind such a meteoric rise for Monero stems from the belief by Satis Group that anonymity-providing currencies will form the dominant share of the market rather than the current projection towards Dapps. Satis Group finds penetration into offshore deposit markets as the natural extension for the growth of cryptocurrency, making the value of a currency like XMR–which rebuffs censorship and can hide user transaction information–more attractive if the industry shifts towards providing greater privacy services.

Bitcoin also received a positive review from Satis Group, with the company highlighting that the high marketability and brand appeal of the coin would continue to climb with the growing penetration of cryptocurrency into society. Taken from the report,

“Despite a lack of appeal during retail frenzies, we continue to believe that BTC and its network effect will dominate end-market share within Currencies and the overall cryptoasset market, driven by: 1) increasing liquidity and purchasing avenues, 2) increasing brand recognition, 3) its position as the default base-pair within the crypto markets, 4) declining relative volatility, 5) relative lack of attack vectors, 6) network capacity alleviation through the maturity of layer-2 solutions, and 7) an increasingly high attack and overthrow cost.”

Girl in a jacket


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Bitcoin (BTC) Price Dips Below $6800 Following ETF Delay

Bitcoin (BTC)–Bitcoin suffered another valuation blow today as the bears forced the price back below $6800. While the coin was experiencing a mild price rally after falling from $8200 to under $7000, news of the U.S. Securities and Exchange Commission (SEC) delaying their decision on a Bitcoin ETF until September 30th.

Most investors and cryptocurrency enthusiasts were hopeful that the SEC would deliver a favorable ruling on the creation of a Bitcoin Exchange Traded Fund, despite last month’s denail of a Winklevoss ETF. However, today news broke that the government body had decided to further put off a ruling on investment firm VanEck’s bid for creating an ETF, sending the market back into a turmoil. Despite the failure of the Winklevoss ETF proposal last month, New York based investment management firm was the frontrunner in the creation of a SEC-approved fund. Now, that ruling seems to be caught in limbo as the regulatory agency continues to punt away the issue to a later date.

Speaking in an earlier interview with CoinDesk, VanEck director of digital asset strategy Gabor Gurbacs was candid about his firm’s chance to create the first cryptocurrency ETF,

“Unfortunately, I don’t know the answer. I do know that we have addressed market structure issues and this is a chance for regulators to bring bitcoin under existing frameworks and protect investors.”

In addition, Gurbacs affirmed his company’s intention to create a product that serves the needs of institutional investors, as opposed to the retail market that dominates the investing side of cryptocurrency,

“Today, the bitcoin markets are still 90-95 percent retail and institutions are looking for a way to get into these markets so the physical ETF we have tailored to institutions.”

While some have questioned the emphasis and need for government regulated funds, VanEck is confident that such a move will bring improvement to the industry of cryptocurrency. Wall Street and institutional investors have thus far shied away from diving into the cryptomarkets, due to the volatility and lack of exchange security, in addition to murky legislation surrounding the investment vehicle. ETFs provide more certainty to these firms, in addition to revealing a pathway for more security and best practices in relation to handling the emerging crypto asset class.

Given the severe price movement following the SEC delay, Bitcoin investors across the globe are hanging on news of ETF approval. In July, Bitmex co-founder Arthur Hayes boldly predicted that the price of BTC would reach $50,000 by year’s end in the event of an approved ETF. The anticipation has caused erratic pricing in the market, with underlying technology and adoption having little to do with value swings at present.


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VanEck: Bitcoin ETF Answers $1 Billion Question

Bitcoin (BTC)–The entire landscape of cryptocurrency hangs on an upcoming decision by the United States Securities and Exchange Commission (SEC) in relation to approving Bitcoin Exchange Traded Funds (ETFs). While just a month ago the industry was optimistic about the creation of BTC ETFs, the last several weeks have brought about a change in narrative.

It started with the announcement of the Winklesvoss twins’ bid for creating a crypto ETF being denied by the commission, stating the possibility of manipulation as their primary concern. While the market was rallying to double digit gains for nearly the first time this year, the price subsequently took a hit to below $8,000 for BTC. However, the price drop was short lived, as the bulls once again pushed forward on the belief in coming government regulation and institutional money. Bitmex co-founder Arthur Hayes made the high-profile prediction in July that the price of BTC would have no problem reaching $50,000 by year’s end riding on the back of an approved ETF. Unfortunately, the bullish turn in the market did not last for more than a week, with prices falling to below $7,000 and negating the positive momentum created from the ETF hype.

VanEck, a New York-based investment management firm, recently spoke with CoinDesk in an interview about the possibility of crypto ETFs and the impact they will have upon the market and industry. Gabor Gurbacs, director of digital asset strategy, put it this way when posed with the question about whether a Bitcoin ETF will be approved in the upcoming decision,

“I wish I knew the answer to your $1 billion question. Seriously.”

VanEck has been in the headlines as one of a handful of investment firms vying for creation of the first BTC ETF, with the company currently being a favorite in the race for approval. CoinDesk probed further in the interview, asking Gurbacs point-blank how he felt about his company’s chance to be green-lighted for operating the fund,

“Unfortunately, I don’t know the answer. I do know that we have addressed market structure issues and this is a chance for regulators to bring bitcoin under existing frameworks and protect investors.”

CoinDesk goes on to outline the steps VanEck has taken in securing its proposal to the SEC, a move that started three years ago via a the financial company SolidX which first sought to bring an ETF to the market. Gurbacs also makes a strong case for his company’s position over the recently denied Winklevoss ETF, stating that his company is planning to deliver an insured product, with all of the Bitcoin in the fund covered in a situation of “theft and hacks and losses of all sort.”

Gurbacs words go a long way in describing why the market has become consumed with the prospect of a BTC exchange traded fund, namely the security and protection it offers to Wall Street and other institutional investors. In addition, a positive ruling by the SEC would come with government regulations–which may be lamented by the crypto industry’s decentralized ethos–but provide a clearer picture for big-money firms looking to operate in the space. The current state of cryptocurrency is one plagued with hacks and other forms of scandal, with the legality of it all murky by most institutional standards.

Indeed, Gurbacs reiterates the company’s stance towards creating a product that is focused on institutional investors,

“Today, the bitcoin markets are still 90-95 percent retail and institutions are looking for a way to get into these markets so the physical ETF we have tailored to institutions.”

While Wall Street will bring an influx of funds to the crypto markets, hopefully to elevate the price of Bitcoin, some industry figures have become frustrated with the emphasis on SEC approval that is overriding the focus on the underlying technology.


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UBS: ‘Lack of Stability’ Preventing Bitcoin Going Mainstream

Bitcoin (BTC)–One of the world’s largest investment banks has commented upon the rise of cryptocurrency, and found fault with the scalability and price volatility associated with Bitcoin.

The Union Bank of Switzerland, an investment bank and financial services company, has joined the list of Bitcoin detractors who point out the obvious flaw with the currency: price volatility will continue to repulse the average person from using it as a form of money. As reported by CNBC, UBS strategist Joni Teves wrote in a letter to clients that Bitcoin should not be considered a “legitimate asset class.” The strategist warned that increased regulatory support is still warranted, and that technical hurdles related to scalability continue to prevent the coin from going mainstream. In addition, he also found fault with the price volatility–a refrain that has become common in and outside of the industry–that makes Bitcoin difficult to use as a regular currency,

“Bitcoin is still too unstable and limited to become a viable means of payment or a mainstream asset class. Owing to its lack of price stability, bitcoin falls short of criteria that need to be satisfied to be considered money.”

As Bitcoin’s price continues to tumble towards $7000 and prolong 2018’s bearish cycle, the cryptocurrency critics highlighting price volatility seem to be announcing themselves in droves. Despite the belief by many within the industry that a Bitcoin based ETF is going to overcome the hurdle of SEC approval, UBS remains skeptical of BTC’s ability to function as money,

“Fixed supply and unusual demand dynamics make the system susceptible to high price volatility, in turn making it difficult for bitcoin to step into the role of money or to be a viable new asset class.”

However, the investment bank is not entirely writing off the future of cryptocurrency–instead they find scalability and erratic valuation to be a barrier to going mainstream. Regulatory support, such as the aforementioned SEC approved ETF, would be the first major step to overcoming the hurdle of acceptance. At present, institutional and Wall Street money has yet to fully back crypto, in part because of the murky regulatory and legal landscape of the investment. Scalability is also highlighted in the paper as an area for the largest cryptocurrency by market capitalization to improve upon. In January, as the crypto markets were reaching their pinnacle for the year, the utility of BTC transactions ground to a halt in the form of high fees and slow confirmations. According to BitInfo, average BTC transaction fees hovered around $55 at the beginning of the year, creating an expensive, congested network just when the cryptocurrency was getting its widest global exposure.

Despite the harsh words on price volatility, the UBS report contends that Bitcoin could find a future as a payment platform or investment vehicle, stating BTC could one day become,

“a viable payment mechanism and/or a legitimate asset class in which even the most conservative and traditional investors can participate.”

The UBS report reiterates a commitment to continued research and investigation into cryptocurrency, particularly for the benefit of the underlying blockchain technology.


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Payment Platform Square Sees $37 Million in Revenue From Bitcoin Integration

Bitcoin (BTC)–Despite the growing perception that cryptocurrency offers little value to digital payment platforms, Square has published figures that show a gain in revenue valued in tens of millions of dollars for the second quarter of the year.

Square, Inc., the brainchild of Twitter founder Jack Dorsey, has been a positive driving force for cryptocurrency via the integration of Bitcoin dating back to last year. In November 2017, the payment application worth $16 billion began implementing BTC for buys, sells and storage, giving the king of cryptocurrency a high-profile, mainstream outlet with an easy to use smartphone app. Dorsey, CEO and founder of Square since 2009, has been a huge proponent of Bitcoin and one of the most bullish figures to emerge from the social media culture of Silicon Valley, going on record in March that Bitcoin could be the world’s “single” currency in a decade.

Published in a quarterly report to the U.S. Securities and Exchange Commission (SEC), Square revealed generating over $70 million in revenue via Bitcoin alone through the first half of 2018. In addition, despite the falling price of cryptocurrency throughout 2018, the company reported a growth in revenue between the first and second quarter of the year, posting $34 million and $37 million, respectively. Total revenue for the second quarter was $814 million, with BTC making up 4.5 percent of that value. The numbers reflect a similar quarterly report out of Ripple, whereby the total valuation of XRP sales had dropped substantially (as the coin fell from nearly $4 USD at the beginning of the year to below $0.50), while customer volume increased. Revenue coming out of sources like Square gives the impression that although the crypto markets are struggling to turn around from a prolonged bear cycle, adoption in the industry and customer growth is moving at a reasonable pace.

In June, Square completed a milestone in operating within the crypto space, acquiring a BitLicense to allow buy and sells for customers living in New York. While the company has yet to see substantial profit from the addition of cryptocurrency (most of the reported revenue has been offset by operating and implementation costs), the stepping stone of increase is promising to that end.

Despite Dorsey’s bullish remarks on Bitcoin, his dual presence with Square and Twitter has created one of the more perplexing contradictions surrounding cryptocurrency. Twitter, alongside Google and Facebook, implemented a ban against cryptocurrency advertisements earlier in the year, contributing to the substantial fall off in price. While Dorsey may not have had a hand in bringing about such a one-sided ruling against crypto, it’s telling to hear his opinions on Bitcoin combined with the actions Square has taken to become a legitimate player in the market.

Most community members of cryptocurrency would prefer to see adoption beyond payment processors and platforms of exchange–as the currency is capable of accomplishing transactions without an intermediary. However, the recognizable nature of Square in conjunction with its high profile CEO Jack Dorsey, is a tailwind for the king of cryptocurrency. Square is in prime position, like most mobile-based crypto portals, to pivot into a more user friendly option for those intimidated by the private/public key approach to BTC transactions. At the very least, with adoption next spreading into the mainstream and less tech-savvy crowd, the need for custodial outlets will be beneficial to the industry.


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Paul Krugman: Bitcoin Will “Set the Monetary System Back 300 Years”

Bitcoin (BTC)–Bitcoin is again in the headlines being criticized by a Nobel Prize winning economist. Paul Krugman, one of the most accoladed and celebrated economists of our time, has again written in his contribution to The New York Times that Bitcoin fails to constitute money, but could also be responsible for erasing much of the monetary innovation created over the last three centuries.

While most proponents within the industry of cryptocurrency would argue that the technology of blockchain, driving a decentralized currency, constitutes significant innovation to the stagnated landscape of banking and finance, Krugman has found fault with that assumption. Krugman forms his argument around the  movement of the finance industry towards friction-less payments systems, a concept he finds Bitcoin to be eroding. As opposed to debit and credit cards, which charge a premium to bank merchants but provide consumers with a seamless payment system, Bitcoin and most cryptocurrencies complicate this formula with the introduction of miners and bloated transaction costs. Krugman goes so far as to claim that enthusiasm for cryptocurrency is directly at odds with a desire to continue the innovation of money,

Set against this history, the enthusiasm for cryptocurrencies seems very odd, because it goes exactly in the opposite of the long-run trend. Instead of near-frictionless transactions, we have high costs of doing business, because transferring a Bitcoin or other cryptocurrency unit requires providing a complete history of past transactions. Instead of money created by the click of a mouse, we have money that must be mined — created through resource-intensive computations.

More damningly, Krugman goes on to say that cryptocurrency and Bitcoin are not only putting inverse pressure on the modern progress of finance, but are in danger of eroding 300 years of improvement within the space by regressing back to frictioned systems,

In other words, cryptocurrency enthusiasts are effectively celebrating the use of cutting-edge technology to set the monetary system back 300 years. Why would you want to do that? What problem does it solve? I have yet to see a clear answer to that question.

Krugman cites the necessity to maintain reputation as being a driving force for trust in banks and monetary government authorities. As he admits, governments throuhgout history have abuse their power over a population’s monetary supply, but always to disastrous effect. Banks likewise are responsible in their fiscal policy and decision making in an effort to maintain their reputation, thereby providing the incentive for beneficial behavior. Bitcoin, on the other hand, is issued from an anonymous source, with mining and proof of work being the inefficient solution to give the currency an underlying system of trust,

“you need the digital equivalent of biting a gold coin to be sure it’s the real deal, and the costs of producing something that satisfies that test have to be high enough to discourage fraud.

Krugman again reiterates the frequent argument against Bitcoin and cryptocurrency, one often proposed by Peter Schiff, that the currency has no inherent value or connection to a physical world that tethers the price,

“Cryptocurrencies, by contrast, have no backstop, no tether to reality. Their value depends entirely on self-fulfilling expectations – which means that total collapse is a real possibility. If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless.”

Krugman has a history of derision towards Bitcoin and cryptocurrency, at one point calling the method of digital money “evil” in a post dating back to 2013.