Bitcoin: Buy, Sell, Or Hold?, Seeking Alpha

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Jun. 1, two thousand seventeen Ten:33 AM

  • Bitcoin is at a crossroads. What do you do?
  • What is segwit? What is BIP 148?
  • What is the current risk with Bitcoin?

Many of you have very likely been following Bitcoin. I thought I would write about it since it is kind of at a crossroads, and I have been doing a lot of research on the subject lately. I have included charts of Bitcoin in the newsletter in the past because I feel there is a link inbetween Bitcoin and gold. The link is that they are both hedges for fiat currency. I have always considered gold as an alternative to the dollar. I feel the same way about Bitcoin.

Bitcoin is not a tulip mania. This is a fresh software application with a powerful use case – an alternate currency. It could be just as significant as Facebook, which is ubiquitous via the world.

For those of you who do not know what Bitcoin is, here is a basic explanation. Someone named Satoshi Nakamoto, which is an alias for an unknown person or group, released Bitcoin in 2009. It is an open-source software application based on something called a blockchain.

The blockchain is a digital ledger that contains who possesses bitcoins and all of the transactions. The strength of the blockchain is that it has two hundred fifty six encryption and has never been hacked. It is considered secure.

The beauty of Bitcoin is how the bitcoins are created. It is done by something called proof of work, which is essentially a difficult math problem. This is called mining, and anyone can do it. However, presently only three thousand five hundred bitcoins are created daily. That means all of the miners are rivaling against each other to solve these math problems. It requires a significant amount of computer processing power to generate a single bitcoin, and this requires a lot of electric current. For this reason, most miners own a building utter of computers.

The three thousand five hundred bitcoins that are created daily boundaries how many bitcoins are in circulation. Presently there are about sixteen million bitcoins, and the maximum is twenty one million bitcoins. About every four years, the number of bitcoins created daily drops in half. This means that in 2020, the number created daily will drop to around 1750. It will take about one hundred years to reach twenty one million.

Below is the Bitcoin chart. You will see that the price doubled from March through May. The reason why is because request can lightly outstrip supply. With only three thousand five hundred fresh coins created daily, the price will rise if people have to buy them from existing owners of Bitcoin.

So, miners create the bitcoins, but how do you buy them and get them on the blockchain? Transactions are finished using a Bitcoin network of user knots. When you attempt to buy or sell bitcoin it is validated and confirmed using a random number of user knots. A user knot is a computer on the Internet with Bitcoin software installed. There are presently about 7,500 user knots around the world.

Whereas miners are paid for both generating bitcoins and for transactions, user knots are not. The only benefit of running a user knot is to be involved in shaping the direction of Bitcoin development. By running a user knot you get to help determine which version of Bitcoin software is used.

Bitcoin is fully decentralized. There is no Bitcoin organization or location of Bitcoin computers. Anyone can join as a miner or user knot. This creates a bit of mess when the software needs to be improved or enhanced. Satoshi created a system of consensus for enhancements, but he also permitted the potential for splitting the blockchain into two software versions. The Bitcoin community calls this splitting, soft forks and hard forks.

A hard fork is when the blockchain is inherited by two different versions of Bitcoin software, without the possibility of a later date merging. This can be a nuclear option, where you literally create a fresh alt-coin. These two Bitcoins will challenge against each other from that day forward. Normally, a hard fork is done on purpose, and one of the software versions is killed off.

A soft fork is done with the expectation that a consensus will be obtained by the Bitcoin community (user knots and miners). Thus, you do not get two rivaling software versions. These forks are done with the intention of merging the forks together. These types of soft forks are considered to be rearwards compatible since they are supposed to merge.

I was under the impression that soft forks do not split the blockchain, but that’s not true. A soft fork can indeed create a split, and once the blockchain is split, you can get a big mess. The split creates two versions of the Bitcoin software, with each version inheriting the blockchain.

When a soft fork is done and there is no consensus, user knots and miners are supposed to revert to the original code. However, two bad things can happen when no consensus is reached. Very first, during the split, your wallet needs to support both software versions in the event you make a transaction. 2nd, user knots and miners need to revert back to the original code. If they do not revert, then they essentially turn a soft fork in to a hard fork and create a fresh alt-coin.

If you’ve read this far, the explanation of how Bitcoin works is over, and now we get to the interesting and significant stuff. Never before has the Bitcoin community been in such a state of conflict. This conflict is about how to fix it’s two most pressing problems: high transaction fees and low transaction speed.

Both the user knots and Bitcoin developers want to deploy something called segwit to resolve these scaling issues. The problem is that the miners, who make all the money, have refused. The miners want to do an agreed upon hard fork to expand the blocksize, so they can make more money. The miners want a compromise: you get segwit and we get a larger blocksize.

The problem is that the user knots and developers don’t trust the miners and do not want to risk a hard fork. The user knots are attempting to pre-empt the miners and implement something called BIP one hundred forty eight to deploy segwit. However, it is a soft fork without the miners consensus and creates the potential for a blockchain split.

Thus, we have a fat conflict on how to resolve the scaling issues. The potential for a blockchain split is fairly real. The miners attempted to get consensus on a fresh version of Bitcoin called Bitcoin unlimited. However, the user knots and developers told them no because it did not contain segwit. Now the user knots and developers are attempting to thrust BIP one hundred forty eight with segwit. The miners are telling no, unless they also get a blocksize increase using a hard fork.

On August one st , the user knots are menacing to release BIP 148. They are attempting to force the miners to hop on board and accept this enhancement. However, if the miners do not, then we will have two versions of Bitcoin. In theory, this is a harmless soft fork. However, it could turn into a hard fork, or we could revert back to the current version and BIP one hundred forty eight dies.

One way or another, Bitcoin needs to address its scaling issues. Presently it costs about $Two for a transaction and it take twenty minutes or longer for a transaction to be confirmed. Plus, the transaction fees and confirmation times are enlargening. This will kill Bitcoin because challenging alt-coins will solve these issues and become more popular.

What is ironic, is that segwit has the potential to reduce transaction fees substantially. This opens the door for Bitcoin to become the world’s number one digital transaction currency. It could be ample. You would think the Bitcoin community could come to an agreement. I think the reason Bitcoin is leaping in price is that people believe Bitcoin will fix its scaling issues and see its potential.

The uncertainty surrounding Bitcoin is if segwit will get deployed, or how the scaling issue will be addressed. This creates the potential for the blockchain to be inherited by two rivaling Bitcoin versions. That kind of uncertainty is going to exist over the next few months, especially in June and July.

Because of uncertainty, I think the upside for Bitcoin is somewhat limited in the near term until we know the outcome of segwit. I also think the downside potential in the near term is significant. My guess is that we could lightly see Bitcoin drop to $1500 or lower as this uncertainty resumes. And if we get a messy blockchain fork, it could go much lower. This Bitcoin community squabble is fairly real and tenacious.

Besides these scaling issues and potential forks, governments are still a threat to Bitcoin. However, banks are going to bring out crypto-currencies using blockchains very soon. It won’t exactly be fair if they single-out Bitcoin as illegal and let banks have their own crypto-currency. People will scream. Plus, Japan has legalized Bitcoin as a payment method, with 300,000 businesses expected to adopt it in 2017. I don’t think Bitcoin is going away in Japan. If Japan has Bitcoin, so will many other countries.

Note: Crypto-currency and alt-coins are the terms used to describe these fresh Internet digital currencies. Crypto is brief for cryptography, which is the art of solving codes. This is how the miners work.

I could see the USA and Europe teaming up to outlaw Bitcoin, but that would leave China and the rest of the world still using it. To kill Bitcoin, you would need dozens of countries all working together to form laws making it illegal. I suppose the G-7 or the G-20 could attempt to outlaw it, but that seems like a long shot. Each country would need to pass their own laws. Is Bitcoin so disruptive that they would all do such a thing?

As long as Bitcoin is permitted anywhere in the world, it will exist. Killing it and forcing it to zero will be amazingly difficult. So far, only China and Japan have adopted Bitcoin in a big way. China is where most of the mining and bitcoin buying is occurring. The next countries likely to adopt Bitcoin will be India, Europe, the USA, Russia, Australia, and Indonesia. This will happen over the next duo of years. If they are going to kill Bitcoin, they better hurry.

The reason I became bullish on Bitcoin was when China regulated their exchanges and coerced them to charge transaction fees for trades. Instead of outlawing Bitcoin, China actually strengthened it in 2016. More regulations are coming, but it will only legitimize Bitcoin. There are many crypto-currencies around the world. Are they going to outlaw all of them and then let the banks or other financial institutions issue a crypto-currency? That doesn’t seem logical to me. Once we see a bank issue a crypto-currency, that will be the sign that they are here to stay.

Do not underestimate the degree of disruption that is still possible with a blockchain split. Buying Bitcoin is clearly not a wedge dunk investment. As I previously mentioned, it will not be effortless to resolve the scaling issues. And these scaling issues proceed to escalate and must be addressed soon.

As a Bitcoin possessor, I am very worried about how the scaling problem will be addressed. This could go either way. We could get a clean solution, or we could get a messy one. Moreover, the outcome of messy one is unknown. It is not inconceivable that we could have two or even three versions of Bitcoin, with each version having a different valuation! And, which version will your wallet support? Did I say it could get messy?

So, is Bitcoin a buy, sell, or hold? If segwit gets deployed sleekly without a split into two rivaling bitcoins, then it is buy. With a slick deployment of segwit, Bitcoin has the potential to go to the moon. My target is $100,000 with segwit and only one version of Bitcoin. If Bitcoin resumes growing at a 12% to 13% monthly rate (it’s current monthly growth rate since July two thousand ten at five cents), it will be around $250,000 by 2020. That target seems a bit high, but $100,000 seems reachable.

If the scaling issues are not resolved slickly and quickly, then the outcome for Bitcoin could be disastrous. However, because of the massive upside potential, the play here is most likely to hold your Bitcoin until segwit is resolved. It could get messy, but as De Niro said in Fever, “It’s worth the open up”. If you are a conservative investor and like to take your profits, then now is very likely a good time. Actually, the right time was at $2700, but that ship has sailed. If you do bail, you an always get back in after segwit is resolved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next seventy two hours.

I wrote this article myself, and it voices my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Bitcoin: Buy, Sell, Or Hold, Seeking Alpha

Bitcoin: Buy, Sell, Or Hold?

Bitcoin is at a crossroads. What do you do?

What is segwit? What is BIP 148?

What is the current risk with Bitcoin?

Many of you have most likely been following Bitcoin. I thought I would write about it since it is kind of at a crossroads, and I have been doing a lot of research on the subject lately. I have included charts of Bitcoin in the newsletter in the past because I feel there is a link inbetween Bitcoin and gold. The link is that they are both hedges for fiat currency. I have always considered gold as an alternative to the dollar. I feel the same way about Bitcoin.

Bitcoin is not a tulip mania. This is a fresh software application with a powerful use case – an alternate currency. It could be just as significant as Facebook, which is ubiquitous via the world.

For those of you who do not know what Bitcoin is, here is a basic explanation. Someone named Satoshi Nakamoto, which is an alias for an unknown person or group, released Bitcoin in 2009. It is an open-source software application based on something called a blockchain.

The blockchain is a digital ledger that contains who wields bitcoins and all of the transactions. The strength of the blockchain is that it has two hundred fifty six encryption and has never been hacked. It is considered secure.

The beauty of Bitcoin is how the bitcoins are created. It is done by something called proof of work, which is essentially a difficult math problem. This is called mining, and anyone can do it. However, presently only three thousand five hundred bitcoins are created daily. That means all of the miners are contesting against each other to solve these math problems. It requires a significant amount of computer processing power to generate a single bitcoin, and this requires a lot of electro-therapy. For this reason, most miners own a building utter of computers.

The three thousand five hundred bitcoins that are created daily boundaries how many bitcoins are in circulation. Presently there are about sixteen million bitcoins, and the maximum is twenty one million bitcoins. About every four years, the number of bitcoins created daily drops in half. This means that in 2020, the number created daily will drop to around 1750. It will take about one hundred years to reach twenty one million.

Below is the Bitcoin chart. You will see that the price doubled from March through May. The reason why is because request can lightly outstrip supply. With only three thousand five hundred fresh coins created daily, the price will rise if people have to buy them from existing owners of Bitcoin.

So, miners create the bitcoins, but how do you buy them and get them on the blockchain? Transactions are ended using a Bitcoin network of user knots. When you attempt to buy or sell bitcoin it is validated and confirmed using a random number of user knots. A user knot is a computer on the Internet with Bitcoin software installed. There are presently about 7,500 user knots around the world.

Whereas miners are paid for both generating bitcoins and for transactions, user knots are not. The only benefit of running a user knot is to be involved in shaping the direction of Bitcoin development. By running a user knot you get to help determine which version of Bitcoin software is used.

Bitcoin is downright decentralized. There is no Bitcoin organization or location of Bitcoin computers. Anyone can join as a miner or user knot. This creates a bit of mess when the software needs to be improved or enhanced. Satoshi created a system of consensus for enhancements, but he also permitted the potential for splitting the blockchain into two software versions. The Bitcoin community calls this splitting, soft forks and hard forks.

A hard fork is when the blockchain is inherited by two different versions of Bitcoin software, without the possibility of a later date merging. This can be a nuclear option, where you literally create a fresh alt-coin. These two Bitcoins will contest against each other from that day forward. Normally, a hard fork is done on purpose, and one of the software versions is killed off.

A soft fork is done with the expectation that a consensus will be obtained by the Bitcoin community (user knots and miners). Thus, you do not get two rivaling software versions. These forks are done with the intention of merging the forks together. These types of soft forks are considered to be rearwards compatible since they are supposed to merge.

I was under the impression that soft forks do not split the blockchain, but that’s not true. A soft fork can indeed create a split, and once the blockchain is split, you can get a big mess. The split creates two versions of the Bitcoin software, with each version inheriting the blockchain.

When a soft fork is done and there is no consensus, user knots and miners are supposed to revert to the original code. However, two bad things can happen when no consensus is reached. Very first, during the split, your wallet needs to support both software versions in the event you make a transaction. 2nd, user knots and miners need to revert back to the original code. If they do not revert, then they essentially turn a soft fork in to a hard fork and create a fresh alt-coin.

If you’ve read this far, the explanation of how Bitcoin works is over, and now we get to the interesting and significant stuff. Never before has the Bitcoin community been in such a state of conflict. This conflict is about how to fix it’s two most pressing problems: high transaction fees and low transaction speed.

Both the user knots and Bitcoin developers want to deploy something called segwit to resolve these scaling issues. The problem is that the miners, who make all the money, have refused. The miners want to do an agreed upon hard fork to expand the blocksize, so they can make more money. The miners want a compromise: you get segwit and we get a larger blocksize.

The problem is that the user knots and developers don’t trust the miners and do not want to risk a hard fork. The user knots are attempting to pre-empt the miners and implement something called BIP one hundred forty eight to deploy segwit. However, it is a soft fork without the miners consensus and creates the potential for a blockchain split.

Thus, we have a giant conflict on how to resolve the scaling issues. The potential for a blockchain split is fairly real. The miners attempted to get consensus on a fresh version of Bitcoin called Bitcoin unlimited. However, the user knots and developers told them no because it did not contain segwit. Now the user knots and developers are attempting to shove BIP one hundred forty eight with segwit. The miners are telling no, unless they also get a blocksize increase using a hard fork.

On August one st , the user knots are menacing to release BIP 148. They are attempting to force the miners to leap on board and accept this enhancement. However, if the miners do not, then we will have two versions of Bitcoin. In theory, this is a harmless soft fork. However, it could turn into a hard fork, or we could revert back to the current version and BIP one hundred forty eight dies.

One way or another, Bitcoin needs to address its scaling issues. Presently it costs about $Two for a transaction and it take twenty minutes or longer for a transaction to be confirmed. Plus, the transaction fees and confirmation times are enhancing. This will kill Bitcoin because contesting alt-coins will solve these issues and become more popular.

What is ironic, is that segwit has the potential to reduce transaction fees substantially. This opens the door for Bitcoin to become the world’s number one digital transaction currency. It could be yam-sized. You would think the Bitcoin community could come to an agreement. I think the reason Bitcoin is hopping in price is that people believe Bitcoin will fix its scaling issues and see its potential.

The uncertainty surrounding Bitcoin is if segwit will get deployed, or how the scaling issue will be addressed. This creates the potential for the blockchain to be inherited by two contesting Bitcoin versions. That kind of uncertainty is going to exist over the next few months, especially in June and July.

Because of uncertainty, I think the upside for Bitcoin is somewhat limited in the near term until we know the outcome of segwit. I also think the downside potential in the near term is significant. My guess is that we could lightly see Bitcoin drop to $1500 or lower as this uncertainty resumes. And if we get a messy blockchain fork, it could go much lower. This Bitcoin community squabble is fairly real and tenacious.

Besides these scaling issues and potential forks, governments are still a threat to Bitcoin. However, banks are going to bring out crypto-currencies using blockchains very soon. It won’t exactly be fair if they single-out Bitcoin as illegal and let banks have their own crypto-currency. People will scream. Plus, Japan has legalized Bitcoin as a payment method, with 300,000 businesses expected to adopt it in 2017. I don’t think Bitcoin is going away in Japan. If Japan has Bitcoin, so will many other countries.

Note: Crypto-currency and alt-coins are the terms used to describe these fresh Internet digital currencies. Crypto is brief for cryptography, which is the art of solving codes. This is how the miners work.

I could see the USA and Europe teaming up to outlaw Bitcoin, but that would leave China and the rest of the world still using it. To kill Bitcoin, you would need dozens of countries all working together to form laws making it illegal. I suppose the G-7 or the G-20 could attempt to outlaw it, but that seems like a long shot. Each country would need to pass their own laws. Is Bitcoin so disruptive that they would all do such a thing?

As long as Bitcoin is permitted anywhere in the world, it will exist. Killing it and forcing it to zero will be amazingly difficult. So far, only China and Japan have adopted Bitcoin in a big way. China is where most of the mining and bitcoin buying is occurring. The next countries likely to adopt Bitcoin will be India, Europe, the USA, Russia, Australia, and Indonesia. This will happen over the next duo of years. If they are going to kill Bitcoin, they better hurry.

The reason I became bullish on Bitcoin was when China regulated their exchanges and coerced them to charge transaction fees for trades. Instead of outlawing Bitcoin, China actually strengthened it in 2016. More regulations are coming, but it will only legitimize Bitcoin. There are many crypto-currencies around the world. Are they going to outlaw all of them and then let the banks or other financial institutions issue a crypto-currency? That doesn’t seem logical to me. Once we see a bank issue a crypto-currency, that will be the sign that they are here to stay.

Do not underestimate the degree of disruption that is still possible with a blockchain split. Buying Bitcoin is clearly not a tuck dunk investment. As I previously mentioned, it will not be effortless to resolve the scaling issues. And these scaling issues proceed to escalate and must be addressed soon.

As a Bitcoin holder, I am very worried about how the scaling problem will be addressed. This could go either way. We could get a clean solution, or we could get a messy one. Moreover, the outcome of messy one is unknown. It is not inconceivable that we could have two or even three versions of Bitcoin, with each version having a different valuation! And, which version will your wallet support? Did I say it could get messy?

So, is Bitcoin a buy, sell, or hold? If segwit gets deployed slickly without a split into two rivaling bitcoins, then it is buy. With a sleek deployment of segwit, Bitcoin has the potential to go to the moon. My target is $100,000 with segwit and only one version of Bitcoin. If Bitcoin proceeds growing at a 12% to 13% monthly rate (it’s current monthly growth rate since July two thousand ten at five cents), it will be around $250,000 by 2020. That target seems a bit high, but $100,000 seems reachable.

If the scaling issues are not resolved slickly and quickly, then the outcome for Bitcoin could be disastrous. However, because of the fat upside potential, the play here is most likely to hold your Bitcoin until segwit is resolved. It could get messy, but as De Niro said in Warmth, “It’s worth the open up”. If you are a conservative investor and like to take your profits, then now is very likely a good time. Actually, the right time was at $2700, but that ship has sailed. If you do bail, you an always get back in after segwit is resolved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next seventy two hours.

I wrote this article myself, and it voices my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Bitcoin: Buy, Sell, Or Hold, Seeking Alpha

Bitcoin: Buy, Sell, Or Hold?

Bitcoin is at a crossroads. What do you do?

What is segwit? What is BIP 148?

What is the current risk with Bitcoin?

Many of you have most likely been following Bitcoin. I thought I would write about it since it is kind of at a crossroads, and I have been doing a lot of research on the subject lately. I have included charts of Bitcoin in the newsletter in the past because I feel there is a link inbetween Bitcoin and gold. The link is that they are both hedges for fiat currency. I have always considered gold as an alternative to the dollar. I feel the same way about Bitcoin.

Bitcoin is not a tulip mania. This is a fresh software application with a powerful use case – an alternate currency. It could be just as significant as Facebook, which is ubiquitous via the world.

For those of you who do not know what Bitcoin is, here is a basic explanation. Someone named Satoshi Nakamoto, which is an alias for an unknown person or group, released Bitcoin in 2009. It is an open-source software application based on something called a blockchain.

The blockchain is a digital ledger that contains who wields bitcoins and all of the transactions. The strength of the blockchain is that it has two hundred fifty six encryption and has never been hacked. It is considered secure.

The beauty of Bitcoin is how the bitcoins are created. It is done by something called proof of work, which is essentially a difficult math problem. This is called mining, and anyone can do it. However, presently only three thousand five hundred bitcoins are created daily. That means all of the miners are rivaling against each other to solve these math problems. It requires a significant amount of computer processing power to generate a single bitcoin, and this requires a lot of electro-therapy. For this reason, most miners own a building utter of computers.

The three thousand five hundred bitcoins that are created daily boundaries how many bitcoins are in circulation. Presently there are about sixteen million bitcoins, and the maximum is twenty one million bitcoins. About every four years, the number of bitcoins created daily drops in half. This means that in 2020, the number created daily will drop to around 1750. It will take about one hundred years to reach twenty one million.

Below is the Bitcoin chart. You will see that the price doubled from March through May. The reason why is because request can lightly outstrip supply. With only three thousand five hundred fresh coins created daily, the price will rise if people have to buy them from existing owners of Bitcoin.

So, miners create the bitcoins, but how do you buy them and get them on the blockchain? Transactions are ended using a Bitcoin network of user knots. When you attempt to buy or sell bitcoin it is validated and confirmed using a random number of user knots. A user knot is a computer on the Internet with Bitcoin software installed. There are presently about 7,500 user knots around the world.

Whereas miners are paid for both generating bitcoins and for transactions, user knots are not. The only benefit of running a user knot is to be involved in shaping the direction of Bitcoin development. By running a user knot you get to help determine which version of Bitcoin software is used.

Bitcoin is downright decentralized. There is no Bitcoin organization or location of Bitcoin computers. Anyone can join as a miner or user knot. This creates a bit of mess when the software needs to be improved or enhanced. Satoshi created a system of consensus for enhancements, but he also permitted the potential for splitting the blockchain into two software versions. The Bitcoin community calls this splitting, soft forks and hard forks.

A hard fork is when the blockchain is inherited by two different versions of Bitcoin software, without the possibility of a later date merging. This can be a nuclear option, where you literally create a fresh alt-coin. These two Bitcoins will challenge against each other from that day forward. Normally, a hard fork is done on purpose, and one of the software versions is killed off.

A soft fork is done with the expectation that a consensus will be obtained by the Bitcoin community (user knots and miners). Thus, you do not get two contesting software versions. These forks are done with the intention of merging the forks together. These types of soft forks are considered to be rearwards compatible since they are supposed to merge.

I was under the impression that soft forks do not split the blockchain, but that’s not true. A soft fork can indeed create a split, and once the blockchain is split, you can get a big mess. The split creates two versions of the Bitcoin software, with each version inheriting the blockchain.

When a soft fork is done and there is no consensus, user knots and miners are supposed to revert to the original code. However, two bad things can happen when no consensus is reached. Very first, during the split, your wallet needs to support both software versions in the event you make a transaction. 2nd, user knots and miners need to revert back to the original code. If they do not revert, then they essentially turn a soft fork in to a hard fork and create a fresh alt-coin.

If you’ve read this far, the explanation of how Bitcoin works is over, and now we get to the interesting and significant stuff. Never before has the Bitcoin community been in such a state of conflict. This conflict is about how to fix it’s two most pressing problems: high transaction fees and low transaction speed.

Both the user knots and Bitcoin developers want to deploy something called segwit to resolve these scaling issues. The problem is that the miners, who make all the money, have refused. The miners want to do an agreed upon hard fork to expand the blocksize, so they can make more money. The miners want a compromise: you get segwit and we get a larger blocksize.

The problem is that the user knots and developers don’t trust the miners and do not want to risk a hard fork. The user knots are attempting to pre-empt the miners and implement something called BIP one hundred forty eight to deploy segwit. However, it is a soft fork without the miners consensus and creates the potential for a blockchain split.

Thus, we have a meaty conflict on how to resolve the scaling issues. The potential for a blockchain split is fairly real. The miners attempted to get consensus on a fresh version of Bitcoin called Bitcoin unlimited. However, the user knots and developers told them no because it did not contain segwit. Now the user knots and developers are attempting to shove BIP one hundred forty eight with segwit. The miners are telling no, unless they also get a blocksize increase using a hard fork.

On August one st , the user knots are menacing to release BIP 148. They are attempting to force the miners to leap on board and accept this enhancement. However, if the miners do not, then we will have two versions of Bitcoin. In theory, this is a harmless soft fork. However, it could turn into a hard fork, or we could revert back to the current version and BIP one hundred forty eight dies.

One way or another, Bitcoin needs to address its scaling issues. Presently it costs about $Two for a transaction and it take twenty minutes or longer for a transaction to be confirmed. Plus, the transaction fees and confirmation times are enlargening. This will kill Bitcoin because challenging alt-coins will solve these issues and become more popular.

What is ironic, is that segwit has the potential to reduce transaction fees substantially. This opens the door for Bitcoin to become the world’s number one digital transaction currency. It could be meaty. You would think the Bitcoin community could come to an agreement. I think the reason Bitcoin is hopping in price is that people believe Bitcoin will fix its scaling issues and see its potential.

The uncertainty surrounding Bitcoin is if segwit will get deployed, or how the scaling issue will be addressed. This creates the potential for the blockchain to be inherited by two contesting Bitcoin versions. That kind of uncertainty is going to exist over the next few months, especially in June and July.

Because of uncertainty, I think the upside for Bitcoin is somewhat limited in the near term until we know the outcome of segwit. I also think the downside potential in the near term is significant. My guess is that we could lightly see Bitcoin drop to $1500 or lower as this uncertainty proceeds. And if we get a messy blockchain fork, it could go much lower. This Bitcoin community squabble is fairly real and tenacious.

Besides these scaling issues and potential forks, governments are still a threat to Bitcoin. However, banks are going to bring out crypto-currencies using blockchains very soon. It won’t exactly be fair if they single-out Bitcoin as illegal and let banks have their own crypto-currency. People will scream. Plus, Japan has legalized Bitcoin as a payment method, with 300,000 businesses expected to adopt it in 2017. I don’t think Bitcoin is going away in Japan. If Japan has Bitcoin, so will many other countries.

Note: Crypto-currency and alt-coins are the terms used to describe these fresh Internet digital currencies. Crypto is brief for cryptography, which is the art of solving codes. This is how the miners work.

I could see the USA and Europe teaming up to outlaw Bitcoin, but that would leave China and the rest of the world still using it. To kill Bitcoin, you would need dozens of countries all working together to form laws making it illegal. I suppose the G-7 or the G-20 could attempt to outlaw it, but that seems like a long shot. Each country would need to pass their own laws. Is Bitcoin so disruptive that they would all do such a thing?

As long as Bitcoin is permitted anywhere in the world, it will exist. Killing it and forcing it to zero will be exceptionally difficult. So far, only China and Japan have adopted Bitcoin in a big way. China is where most of the mining and bitcoin buying is occurring. The next countries likely to adopt Bitcoin will be India, Europe, the USA, Russia, Australia, and Indonesia. This will happen over the next duo of years. If they are going to kill Bitcoin, they better hurry.

The reason I became bullish on Bitcoin was when China regulated their exchanges and coerced them to charge transaction fees for trades. Instead of outlawing Bitcoin, China actually strengthened it in 2016. More regulations are coming, but it will only legitimize Bitcoin. There are many crypto-currencies around the world. Are they going to outlaw all of them and then let the banks or other financial institutions issue a crypto-currency? That doesn’t seem logical to me. Once we see a bank issue a crypto-currency, that will be the sign that they are here to stay.

Do not underestimate the degree of disruption that is still possible with a blockchain split. Buying Bitcoin is clearly not a catapult dunk investment. As I previously mentioned, it will not be effortless to resolve the scaling issues. And these scaling issues proceed to escalate and must be addressed soon.

As a Bitcoin proprietor, I am very worried about how the scaling problem will be addressed. This could go either way. We could get a clean solution, or we could get a messy one. Moreover, the outcome of messy one is unknown. It is not inconceivable that we could have two or even three versions of Bitcoin, with each version having a different valuation! And, which version will your wallet support? Did I say it could get messy?

So, is Bitcoin a buy, sell, or hold? If segwit gets deployed slickly without a split into two contesting bitcoins, then it is buy. With a sleek deployment of segwit, Bitcoin has the potential to go to the moon. My target is $100,000 with segwit and only one version of Bitcoin. If Bitcoin proceeds growing at a 12% to 13% monthly rate (it’s current monthly growth rate since July two thousand ten at five cents), it will be around $250,000 by 2020. That target seems a bit high, but $100,000 seems reachable.

If the scaling issues are not resolved slickly and quickly, then the outcome for Bitcoin could be disastrous. However, because of the enormous upside potential, the play here is most likely to hold your Bitcoin until segwit is resolved. It could get messy, but as De Niro said in Fever, “It’s worth the spread”. If you are a conservative investor and like to take your profits, then now is very likely a good time. Actually, the right time was at $2700, but that ship has sailed. If you do bail, you an always get back in after segwit is resolved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next seventy two hours.

I wrote this article myself, and it voices my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Bitcoin: Buy, Sell, Or Hold?, Seeking Alpha

Без кейворда

Jun. 1, two thousand seventeen Ten:33 AM

  • Bitcoin is at a crossroads. What do you do?
  • What is segwit? What is BIP 148?
  • What is the current risk with Bitcoin?

Many of you have most likely been following Bitcoin. I thought I would write about it since it is kind of at a crossroads, and I have been doing a lot of research on the subject lately. I have included charts of Bitcoin in the newsletter in the past because I feel there is a link inbetween Bitcoin and gold. The link is that they are both hedges for fiat currency. I have always considered gold as an alternative to the dollar. I feel the same way about Bitcoin.

Bitcoin is not a tulip mania. This is a fresh software application with a powerful use case – an alternate currency. It could be just as significant as Facebook, which is ubiquitous via the world.

For those of you who do not know what Bitcoin is, here is a basic explanation. Someone named Satoshi Nakamoto, which is an alias for an unknown person or group, released Bitcoin in 2009. It is an open-source software application based on something called a blockchain.

The blockchain is a digital ledger that contains who wields bitcoins and all of the transactions. The strength of the blockchain is that it has two hundred fifty six encryption and has never been hacked. It is considered secure.

The beauty of Bitcoin is how the bitcoins are created. It is done by something called proof of work, which is essentially a difficult math problem. This is called mining, and anyone can do it. However, presently only three thousand five hundred bitcoins are created daily. That means all of the miners are challenging against each other to solve these math problems. It requires a significant amount of computer processing power to generate a single bitcoin, and this requires a lot of electro-stimulation. For this reason, most miners own a building utter of computers.

The three thousand five hundred bitcoins that are created daily thresholds how many bitcoins are in circulation. Presently there are about sixteen million bitcoins, and the maximum is twenty one million bitcoins. About every four years, the number of bitcoins created daily drops in half. This means that in 2020, the number created daily will drop to around 1750. It will take about one hundred years to reach twenty one million.

Below is the Bitcoin chart. You will see that the price doubled from March through May. The reason why is because request can lightly outstrip supply. With only three thousand five hundred fresh coins created daily, the price will rise if people have to buy them from existing owners of Bitcoin.

So, miners create the bitcoins, but how do you buy them and get them on the blockchain? Transactions are finished using a Bitcoin network of user knots. When you attempt to buy or sell bitcoin it is validated and confirmed using a random number of user knots. A user knot is a computer on the Internet with Bitcoin software installed. There are presently about 7,500 user knots around the world.

Whereas miners are paid for both generating bitcoins and for transactions, user knots are not. The only benefit of running a user knot is to be involved in shaping the direction of Bitcoin development. By running a user knot you get to help determine which version of Bitcoin software is used.

Bitcoin is fully decentralized. There is no Bitcoin organization or location of Bitcoin computers. Anyone can join as a miner or user knot. This creates a bit of mess when the software needs to be improved or enhanced. Satoshi created a system of consensus for enhancements, but he also permitted the potential for splitting the blockchain into two software versions. The Bitcoin community calls this splitting, soft forks and hard forks.

A hard fork is when the blockchain is inherited by two different versions of Bitcoin software, without the possibility of a later date merging. This can be a nuclear option, where you literally create a fresh alt-coin. These two Bitcoins will challenge against each other from that day forward. Normally, a hard fork is done on purpose, and one of the software versions is killed off.

A soft fork is done with the expectation that a consensus will be obtained by the Bitcoin community (user knots and miners). Thus, you do not get two contesting software versions. These forks are done with the intention of merging the forks together. These types of soft forks are considered to be rearwards compatible since they are supposed to merge.

I was under the impression that soft forks do not split the blockchain, but that’s not true. A soft fork can indeed create a split, and once the blockchain is split, you can get a big mess. The split creates two versions of the Bitcoin software, with each version inheriting the blockchain.

When a soft fork is done and there is no consensus, user knots and miners are supposed to revert to the original code. However, two bad things can happen when no consensus is reached. Very first, during the split, your wallet needs to support both software versions in the event you make a transaction. 2nd, user knots and miners need to revert back to the original code. If they do not revert, then they essentially turn a soft fork in to a hard fork and create a fresh alt-coin.

If you’ve read this far, the explanation of how Bitcoin works is over, and now we get to the interesting and significant stuff. Never before has the Bitcoin community been in such a state of conflict. This conflict is about how to fix it’s two most pressing problems: high transaction fees and low transaction speed.

Both the user knots and Bitcoin developers want to deploy something called segwit to resolve these scaling issues. The problem is that the miners, who make all the money, have refused. The miners want to do an agreed upon hard fork to expand the blocksize, so they can make more money. The miners want a compromise: you get segwit and we get a larger blocksize.

The problem is that the user knots and developers don’t trust the miners and do not want to risk a hard fork. The user knots are attempting to pre-empt the miners and implement something called BIP one hundred forty eight to deploy segwit. However, it is a soft fork without the miners consensus and creates the potential for a blockchain split.

Thus, we have a giant conflict on how to resolve the scaling issues. The potential for a blockchain split is fairly real. The miners attempted to get consensus on a fresh version of Bitcoin called Bitcoin unlimited. However, the user knots and developers told them no because it did not contain segwit. Now the user knots and developers are attempting to shove BIP one hundred forty eight with segwit. The miners are telling no, unless they also get a blocksize increase using a hard fork.

On August one st , the user knots are menacing to release BIP 148. They are attempting to force the miners to hop on board and accept this enhancement. However, if the miners do not, then we will have two versions of Bitcoin. In theory, this is a harmless soft fork. However, it could turn into a hard fork, or we could revert back to the current version and BIP one hundred forty eight dies.

One way or another, Bitcoin needs to address its scaling issues. Presently it costs about $Two for a transaction and it take twenty minutes or longer for a transaction to be confirmed. Plus, the transaction fees and confirmation times are enlargening. This will kill Bitcoin because rivaling alt-coins will solve these issues and become more popular.

What is ironic, is that segwit has the potential to reduce transaction fees substantially. This opens the door for Bitcoin to become the world’s number one digital transaction currency. It could be ample. You would think the Bitcoin community could come to an agreement. I think the reason Bitcoin is hopping in price is that people believe Bitcoin will fix its scaling issues and see its potential.

The uncertainty surrounding Bitcoin is if segwit will get deployed, or how the scaling issue will be addressed. This creates the potential for the blockchain to be inherited by two rivaling Bitcoin versions. That kind of uncertainty is going to exist over the next few months, especially in June and July.

Because of uncertainty, I think the upside for Bitcoin is somewhat limited in the near term until we know the outcome of segwit. I also think the downside potential in the near term is significant. My guess is that we could lightly see Bitcoin drop to $1500 or lower as this uncertainty proceeds. And if we get a messy blockchain fork, it could go much lower. This Bitcoin community squabble is fairly real and tenacious.

Besides these scaling issues and potential forks, governments are still a threat to Bitcoin. However, banks are going to bring out crypto-currencies using blockchains very soon. It won’t exactly be fair if they single-out Bitcoin as illegal and let banks have their own crypto-currency. People will scream. Plus, Japan has legalized Bitcoin as a payment method, with 300,000 businesses expected to adopt it in 2017. I don’t think Bitcoin is going away in Japan. If Japan has Bitcoin, so will many other countries.

Note: Crypto-currency and alt-coins are the terms used to describe these fresh Internet digital currencies. Crypto is brief for cryptography, which is the art of solving codes. This is how the miners work.

I could see the USA and Europe teaming up to outlaw Bitcoin, but that would leave China and the rest of the world still using it. To kill Bitcoin, you would need dozens of countries all working together to form laws making it illegal. I suppose the G-7 or the G-20 could attempt to outlaw it, but that seems like a long shot. Each country would need to pass their own laws. Is Bitcoin so disruptive that they would all do such a thing?

As long as Bitcoin is permitted anywhere in the world, it will exist. Killing it and forcing it to zero will be exceptionally difficult. So far, only China and Japan have adopted Bitcoin in a big way. China is where most of the mining and bitcoin buying is occurring. The next countries likely to adopt Bitcoin will be India, Europe, the USA, Russia, Australia, and Indonesia. This will happen over the next duo of years. If they are going to kill Bitcoin, they better hurry.

The reason I became bullish on Bitcoin was when China regulated their exchanges and compelled them to charge transaction fees for trades. Instead of outlawing Bitcoin, China actually strengthened it in 2016. More regulations are coming, but it will only legitimize Bitcoin. There are many crypto-currencies around the world. Are they going to outlaw all of them and then let the banks or other financial institutions issue a crypto-currency? That doesn’t seem logical to me. Once we see a bank issue a crypto-currency, that will be the sign that they are here to stay.

Do not underestimate the degree of disruption that is still possible with a blockchain split. Buying Bitcoin is clearly not a wedge dunk investment. As I previously mentioned, it will not be effortless to resolve the scaling issues. And these scaling issues proceed to escalate and must be addressed soon.

As a Bitcoin possessor, I am very worried about how the scaling problem will be addressed. This could go either way. We could get a clean solution, or we could get a messy one. Moreover, the outcome of messy one is unknown. It is not inconceivable that we could have two or even three versions of Bitcoin, with each version having a different valuation! And, which version will your wallet support? Did I say it could get messy?

So, is Bitcoin a buy, sell, or hold? If segwit gets deployed sleekly without a split into two rivaling bitcoins, then it is buy. With a sleek deployment of segwit, Bitcoin has the potential to go to the moon. My target is $100,000 with segwit and only one version of Bitcoin. If Bitcoin proceeds growing at a 12% to 13% monthly rate (it’s current monthly growth rate since July two thousand ten at five cents), it will be around $250,000 by 2020. That target seems a bit high, but $100,000 seems reachable.

If the scaling issues are not resolved slickly and quickly, then the outcome for Bitcoin could be disastrous. However, because of the fat upside potential, the play here is very likely to hold your Bitcoin until segwit is resolved. It could get messy, but as De Niro said in Warmth, “It’s worth the spread”. If you are a conservative investor and like to take your profits, then now is most likely a good time. Actually, the right time was at $2700, but that ship has sailed. If you do bail, you an always get back in after segwit is resolved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next seventy two hours.

I wrote this article myself, and it voices my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Bitcoin: Buy, Sell, Or Hold?, Seeking Alpha

Без кейворда

Jun. 1, two thousand seventeen Ten:33 AM

  • Bitcoin is at a crossroads. What do you do?
  • What is segwit? What is BIP 148?
  • What is the current risk with Bitcoin?

Many of you have very likely been following Bitcoin. I thought I would write about it since it is kind of at a crossroads, and I have been doing a lot of research on the subject lately. I have included charts of Bitcoin in the newsletter in the past because I feel there is a link inbetween Bitcoin and gold. The link is that they are both hedges for fiat currency. I have always considered gold as an alternative to the dollar. I feel the same way about Bitcoin.

Bitcoin is not a tulip mania. This is a fresh software application with a powerful use case – an alternate currency. It could be just as significant as Facebook, which is ubiquitous via the world.

For those of you who do not know what Bitcoin is, here is a basic explanation. Someone named Satoshi Nakamoto, which is an alias for an unknown person or group, released Bitcoin in 2009. It is an open-source software application based on something called a blockchain.

The blockchain is a digital ledger that contains who possesses bitcoins and all of the transactions. The strength of the blockchain is that it has two hundred fifty six encryption and has never been hacked. It is considered secure.

The beauty of Bitcoin is how the bitcoins are created. It is done by something called proof of work, which is essentially a difficult math problem. This is called mining, and anyone can do it. However, presently only three thousand five hundred bitcoins are created daily. That means all of the miners are challenging against each other to solve these math problems. It requires a significant amount of computer processing power to generate a single bitcoin, and this requires a lot of electrical play. For this reason, most miners own a building utter of computers.

The three thousand five hundred bitcoins that are created daily thresholds how many bitcoins are in circulation. Presently there are about sixteen million bitcoins, and the maximum is twenty one million bitcoins. About every four years, the number of bitcoins created daily drops in half. This means that in 2020, the number created daily will drop to around 1750. It will take about one hundred years to reach twenty one million.

Below is the Bitcoin chart. You will see that the price doubled from March through May. The reason why is because request can lightly outstrip supply. With only three thousand five hundred fresh coins created daily, the price will rise if people have to buy them from existing owners of Bitcoin.

So, miners create the bitcoins, but how do you buy them and get them on the blockchain? Transactions are ended using a Bitcoin network of user knots. When you attempt to buy or sell bitcoin it is validated and confirmed using a random number of user knots. A user knot is a computer on the Internet with Bitcoin software installed. There are presently about 7,500 user knots around the world.

Whereas miners are paid for both generating bitcoins and for transactions, user knots are not. The only benefit of running a user knot is to be involved in shaping the direction of Bitcoin development. By running a user knot you get to help determine which version of Bitcoin software is used.

Bitcoin is entirely decentralized. There is no Bitcoin organization or location of Bitcoin computers. Anyone can join as a miner or user knot. This creates a bit of mess when the software needs to be improved or enhanced. Satoshi created a system of consensus for enhancements, but he also permitted the potential for splitting the blockchain into two software versions. The Bitcoin community calls this splitting, soft forks and hard forks.

A hard fork is when the blockchain is inherited by two different versions of Bitcoin software, without the possibility of a later date merging. This can be a nuclear option, where you literally create a fresh alt-coin. These two Bitcoins will rival against each other from that day forward. Normally, a hard fork is done on purpose, and one of the software versions is killed off.

A soft fork is done with the expectation that a consensus will be obtained by the Bitcoin community (user knots and miners). Thus, you do not get two challenging software versions. These forks are done with the intention of merging the forks together. These types of soft forks are considered to be rearwards compatible since they are supposed to merge.

I was under the impression that soft forks do not split the blockchain, but that’s not true. A soft fork can indeed create a split, and once the blockchain is split, you can get a big mess. The split creates two versions of the Bitcoin software, with each version inheriting the blockchain.

When a soft fork is done and there is no consensus, user knots and miners are supposed to revert to the original code. However, two bad things can happen when no consensus is reached. Very first, during the split, your wallet needs to support both software versions in the event you make a transaction. 2nd, user knots and miners need to revert back to the original code. If they do not revert, then they essentially turn a soft fork in to a hard fork and create a fresh alt-coin.

If you’ve read this far, the explanation of how Bitcoin works is over, and now we get to the interesting and significant stuff. Never before has the Bitcoin community been in such a state of conflict. This conflict is about how to fix it’s two most pressing problems: high transaction fees and low transaction speed.

Both the user knots and Bitcoin developers want to deploy something called segwit to resolve these scaling issues. The problem is that the miners, who make all the money, have refused. The miners want to do an agreed upon hard fork to expand the blocksize, so they can make more money. The miners want a compromise: you get segwit and we get a larger blocksize.

The problem is that the user knots and developers don’t trust the miners and do not want to risk a hard fork. The user knots are attempting to pre-empt the miners and implement something called BIP one hundred forty eight to deploy segwit. However, it is a soft fork without the miners consensus and creates the potential for a blockchain split.

Thus, we have a meaty conflict on how to resolve the scaling issues. The potential for a blockchain split is fairly real. The miners attempted to get consensus on a fresh version of Bitcoin called Bitcoin unlimited. However, the user knots and developers told them no because it did not contain segwit. Now the user knots and developers are attempting to shove BIP one hundred forty eight with segwit. The miners are telling no, unless they also get a blocksize increase using a hard fork.

On August one st , the user knots are menacing to release BIP 148. They are attempting to force the miners to hop on board and accept this enhancement. However, if the miners do not, then we will have two versions of Bitcoin. In theory, this is a harmless soft fork. However, it could turn into a hard fork, or we could revert back to the current version and BIP one hundred forty eight dies.

One way or another, Bitcoin needs to address its scaling issues. Presently it costs about $Two for a transaction and it take twenty minutes or longer for a transaction to be confirmed. Plus, the transaction fees and confirmation times are enhancing. This will kill Bitcoin because rivaling alt-coins will solve these issues and become more popular.

What is ironic, is that segwit has the potential to reduce transaction fees substantially. This opens the door for Bitcoin to become the world’s number one digital transaction currency. It could be gigantic. You would think the Bitcoin community could come to an agreement. I think the reason Bitcoin is hopping in price is that people believe Bitcoin will fix its scaling issues and see its potential.

The uncertainty surrounding Bitcoin is if segwit will get deployed, or how the scaling issue will be addressed. This creates the potential for the blockchain to be inherited by two challenging Bitcoin versions. That kind of uncertainty is going to exist over the next few months, especially in June and July.

Because of uncertainty, I think the upside for Bitcoin is somewhat limited in the near term until we know the outcome of segwit. I also think the downside potential in the near term is significant. My guess is that we could lightly see Bitcoin drop to $1500 or lower as this uncertainty resumes. And if we get a messy blockchain fork, it could go much lower. This Bitcoin community squabble is fairly real and tenacious.

Besides these scaling issues and potential forks, governments are still a threat to Bitcoin. However, banks are going to bring out crypto-currencies using blockchains very soon. It won’t exactly be fair if they single-out Bitcoin as illegal and let banks have their own crypto-currency. People will scream. Plus, Japan has legalized Bitcoin as a payment method, with 300,000 businesses expected to adopt it in 2017. I don’t think Bitcoin is going away in Japan. If Japan has Bitcoin, so will many other countries.

Note: Crypto-currency and alt-coins are the terms used to describe these fresh Internet digital currencies. Crypto is brief for cryptography, which is the art of solving codes. This is how the miners work.

I could see the USA and Europe teaming up to outlaw Bitcoin, but that would leave China and the rest of the world still using it. To kill Bitcoin, you would need dozens of countries all working together to form laws making it illegal. I suppose the G-7 or the G-20 could attempt to outlaw it, but that seems like a long shot. Each country would need to pass their own laws. Is Bitcoin so disruptive that they would all do such a thing?

As long as Bitcoin is permitted anywhere in the world, it will exist. Killing it and forcing it to zero will be amazingly difficult. So far, only China and Japan have adopted Bitcoin in a big way. China is where most of the mining and bitcoin buying is occurring. The next countries likely to adopt Bitcoin will be India, Europe, the USA, Russia, Australia, and Indonesia. This will happen over the next duo of years. If they are going to kill Bitcoin, they better hurry.

The reason I became bullish on Bitcoin was when China regulated their exchanges and coerced them to charge transaction fees for trades. Instead of outlawing Bitcoin, China actually strengthened it in 2016. More regulations are coming, but it will only legitimize Bitcoin. There are many crypto-currencies around the world. Are they going to outlaw all of them and then let the banks or other financial institutions issue a crypto-currency? That doesn’t seem logical to me. Once we see a bank issue a crypto-currency, that will be the sign that they are here to stay.

Do not underestimate the degree of disruption that is still possible with a blockchain split. Buying Bitcoin is clearly not a tuck dunk investment. As I previously mentioned, it will not be effortless to resolve the scaling issues. And these scaling issues proceed to escalate and must be addressed soon.

As a Bitcoin possessor, I am very worried about how the scaling problem will be addressed. This could go either way. We could get a clean solution, or we could get a messy one. Moreover, the outcome of messy one is unknown. It is not inconceivable that we could have two or even three versions of Bitcoin, with each version having a different valuation! And, which version will your wallet support? Did I say it could get messy?

So, is Bitcoin a buy, sell, or hold? If segwit gets deployed sleekly without a split into two contesting bitcoins, then it is buy. With a sleek deployment of segwit, Bitcoin has the potential to go to the moon. My target is $100,000 with segwit and only one version of Bitcoin. If Bitcoin proceeds growing at a 12% to 13% monthly rate (it’s current monthly growth rate since July two thousand ten at five cents), it will be around $250,000 by 2020. That target seems a bit high, but $100,000 seems reachable.

If the scaling issues are not resolved slickly and quickly, then the outcome for Bitcoin could be disastrous. However, because of the ample upside potential, the play here is most likely to hold your Bitcoin until segwit is resolved. It could get messy, but as De Niro said in Fever, “It’s worth the spread”. If you are a conservative investor and like to take your profits, then now is most likely a good time. Actually, the right time was at $2700, but that ship has sailed. If you do bail, you an always get back in after segwit is resolved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next seventy two hours.

I wrote this article myself, and it voices my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Bitcoin: Buy, Sell, Or Hold?, Seeking Alpha

Без кейворда

Jun. 1, two thousand seventeen Ten:33 AM

  • Bitcoin is at a crossroads. What do you do?
  • What is segwit? What is BIP 148?
  • What is the current risk with Bitcoin?

Many of you have most likely been following Bitcoin. I thought I would write about it since it is kind of at a crossroads, and I have been doing a lot of research on the subject lately. I have included charts of Bitcoin in the newsletter in the past because I feel there is a link inbetween Bitcoin and gold. The link is that they are both hedges for fiat currency. I have always considered gold as an alternative to the dollar. I feel the same way about Bitcoin.

Bitcoin is not a tulip mania. This is a fresh software application with a powerful use case – an alternate currency. It could be just as significant as Facebook, which is ubiquitous across the world.

For those of you who do not know what Bitcoin is, here is a basic explanation. Someone named Satoshi Nakamoto, which is an alias for an unknown person or group, released Bitcoin in 2009. It is an open-source software application based on something called a blockchain.

The blockchain is a digital ledger that contains who possesses bitcoins and all of the transactions. The strength of the blockchain is that it has two hundred fifty six encryption and has never been hacked. It is considered secure.

The beauty of Bitcoin is how the bitcoins are created. It is done by something called proof of work, which is essentially a difficult math problem. This is called mining, and anyone can do it. However, presently only three thousand five hundred bitcoins are created daily. That means all of the miners are rivaling against each other to solve these math problems. It requires a significant amount of computer processing power to generate a single bitcoin, and this requires a lot of tens unit. For this reason, most miners own a building utter of computers.

The three thousand five hundred bitcoins that are created daily boundaries how many bitcoins are in circulation. Presently there are about sixteen million bitcoins, and the maximum is twenty one million bitcoins. About every four years, the number of bitcoins created daily drops in half. This means that in 2020, the number created daily will drop to around 1750. It will take about one hundred years to reach twenty one million.

Below is the Bitcoin chart. You will see that the price doubled from March through May. The reason why is because request can lightly outstrip supply. With only three thousand five hundred fresh coins created daily, the price will rise if people have to buy them from existing owners of Bitcoin.

So, miners create the bitcoins, but how do you buy them and get them on the blockchain? Transactions are finished using a Bitcoin network of user knots. When you attempt to buy or sell bitcoin it is validated and confirmed using a random number of user knots. A user knot is a computer on the Internet with Bitcoin software installed. There are presently about 7,500 user knots around the world.

Whereas miners are paid for both generating bitcoins and for transactions, user knots are not. The only benefit of running a user knot is to be involved in shaping the direction of Bitcoin development. By running a user knot you get to help determine which version of Bitcoin software is used.

Bitcoin is totally decentralized. There is no Bitcoin organization or location of Bitcoin computers. Anyone can join as a miner or user knot. This creates a bit of mess when the software needs to be improved or enhanced. Satoshi created a system of consensus for enhancements, but he also permitted the potential for splitting the blockchain into two software versions. The Bitcoin community calls this splitting, soft forks and hard forks.

A hard fork is when the blockchain is inherited by two different versions of Bitcoin software, without the possibility of a later date merging. This can be a nuclear option, where you literally create a fresh alt-coin. These two Bitcoins will challenge against each other from that day forward. Normally, a hard fork is done on purpose, and one of the software versions is killed off.

A soft fork is done with the expectation that a consensus will be obtained by the Bitcoin community (user knots and miners). Thus, you do not get two challenging software versions. These forks are done with the intention of merging the forks together. These types of soft forks are considered to be rearwards compatible since they are supposed to merge.

I was under the impression that soft forks do not split the blockchain, but that’s not true. A soft fork can indeed create a split, and once the blockchain is split, you can get a big mess. The split creates two versions of the Bitcoin software, with each version inheriting the blockchain.

When a soft fork is done and there is no consensus, user knots and miners are supposed to revert to the original code. However, two bad things can happen when no consensus is reached. Very first, during the split, your wallet needs to support both software versions in the event you make a transaction. 2nd, user knots and miners need to revert back to the original code. If they do not revert, then they essentially turn a soft fork in to a hard fork and create a fresh alt-coin.

If you’ve read this far, the explanation of how Bitcoin works is over, and now we get to the interesting and significant stuff. Never before has the Bitcoin community been in such a state of conflict. This conflict is about how to fix it’s two most pressing problems: high transaction fees and low transaction speed.

Both the user knots and Bitcoin developers want to deploy something called segwit to resolve these scaling issues. The problem is that the miners, who make all the money, have refused. The miners want to do an agreed upon hard fork to expand the blocksize, so they can make more money. The miners want a compromise: you get segwit and we get a larger blocksize.

The problem is that the user knots and developers don’t trust the miners and do not want to risk a hard fork. The user knots are attempting to pre-empt the miners and implement something called BIP one hundred forty eight to deploy segwit. However, it is a soft fork without the miners consensus and creates the potential for a blockchain split.

Thus, we have a yam-sized conflict on how to resolve the scaling issues. The potential for a blockchain split is fairly real. The miners attempted to get consensus on a fresh version of Bitcoin called Bitcoin unlimited. However, the user knots and developers told them no because it did not contain segwit. Now the user knots and developers are attempting to shove BIP one hundred forty eight with segwit. The miners are telling no, unless they also get a blocksize increase using a hard fork.

On August one st , the user knots are menacing to release BIP 148. They are attempting to force the miners to leap on board and accept this enhancement. However, if the miners do not, then we will have two versions of Bitcoin. In theory, this is a harmless soft fork. However, it could turn into a hard fork, or we could revert back to the current version and BIP one hundred forty eight dies.

One way or another, Bitcoin needs to address its scaling issues. Presently it costs about $Two for a transaction and it take twenty minutes or longer for a transaction to be confirmed. Plus, the transaction fees and confirmation times are enhancing. This will kill Bitcoin because challenging alt-coins will solve these issues and become more popular.

What is ironic, is that segwit has the potential to reduce transaction fees substantially. This opens the door for Bitcoin to become the world’s number one digital transaction currency. It could be ample. You would think the Bitcoin community could come to an agreement. I think the reason Bitcoin is hopping in price is that people believe Bitcoin will fix its scaling issues and see its potential.

The uncertainty surrounding Bitcoin is if segwit will get deployed, or how the scaling issue will be addressed. This creates the potential for the blockchain to be inherited by two contesting Bitcoin versions. That kind of uncertainty is going to exist over the next few months, especially in June and July.

Because of uncertainty, I think the upside for Bitcoin is somewhat limited in the near term until we know the outcome of segwit. I also think the downside potential in the near term is significant. My guess is that we could lightly see Bitcoin drop to $1500 or lower as this uncertainty resumes. And if we get a messy blockchain fork, it could go much lower. This Bitcoin community squabble is fairly real and tenacious.

Besides these scaling issues and potential forks, governments are still a threat to Bitcoin. However, banks are going to bring out crypto-currencies using blockchains very soon. It won’t exactly be fair if they single-out Bitcoin as illegal and let banks have their own crypto-currency. People will scream. Plus, Japan has legalized Bitcoin as a payment method, with 300,000 businesses expected to adopt it in 2017. I don’t think Bitcoin is going away in Japan. If Japan has Bitcoin, so will many other countries.

Note: Crypto-currency and alt-coins are the terms used to describe these fresh Internet digital currencies. Crypto is brief for cryptography, which is the art of solving codes. This is how the miners work.

I could see the USA and Europe teaming up to outlaw Bitcoin, but that would leave China and the rest of the world still using it. To kill Bitcoin, you would need dozens of countries all working together to form laws making it illegal. I suppose the G-7 or the G-20 could attempt to outlaw it, but that seems like a long shot. Each country would need to pass their own laws. Is Bitcoin so disruptive that they would all do such a thing?

As long as Bitcoin is permitted anywhere in the world, it will exist. Killing it and forcing it to zero will be exceptionally difficult. So far, only China and Japan have adopted Bitcoin in a big way. China is where most of the mining and bitcoin buying is occurring. The next countries likely to adopt Bitcoin will be India, Europe, the USA, Russia, Australia, and Indonesia. This will happen over the next duo of years. If they are going to kill Bitcoin, they better hurry.

The reason I became bullish on Bitcoin was when China regulated their exchanges and compelled them to charge transaction fees for trades. Instead of outlawing Bitcoin, China actually strengthened it in 2016. More regulations are coming, but it will only legitimize Bitcoin. There are many crypto-currencies around the world. Are they going to outlaw all of them and then let the banks or other financial institutions issue a crypto-currency? That doesn’t seem logical to me. Once we see a bank issue a crypto-currency, that will be the sign that they are here to stay.

Do not underestimate the degree of disruption that is still possible with a blockchain split. Buying Bitcoin is clearly not a ram dunk investment. As I previously mentioned, it will not be effortless to resolve the scaling issues. And these scaling issues proceed to escalate and must be addressed soon.

As a Bitcoin holder, I am very worried about how the scaling problem will be addressed. This could go either way. We could get a clean solution, or we could get a messy one. Moreover, the outcome of messy one is unknown. It is not inconceivable that we could have two or even three versions of Bitcoin, with each version having a different valuation! And, which version will your wallet support? Did I say it could get messy?

So, is Bitcoin a buy, sell, or hold? If segwit gets deployed sleekly without a split into two rivaling bitcoins, then it is buy. With a sleek deployment of segwit, Bitcoin has the potential to go to the moon. My target is $100,000 with segwit and only one version of Bitcoin. If Bitcoin proceeds growing at a 12% to 13% monthly rate (it’s current monthly growth rate since July two thousand ten at five cents), it will be around $250,000 by 2020. That target seems a bit high, but $100,000 seems reachable.

If the scaling issues are not resolved slickly and quickly, then the outcome for Bitcoin could be disastrous. However, because of the phat upside potential, the play here is very likely to hold your Bitcoin until segwit is resolved. It could get messy, but as De Niro said in Warmth, “It’s worth the spread”. If you are a conservative investor and like to take your profits, then now is very likely a good time. Actually, the right time was at $2700, but that ship has sailed. If you do bail, you an always get back in after segwit is resolved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next seventy two hours.

I wrote this article myself, and it voices my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Bitcoin: Buy, Sell, Or Hold?, Seeking Alpha

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Jun. 1, two thousand seventeen Ten:33 AM

  • Bitcoin is at a crossroads. What do you do?
  • What is segwit? What is BIP 148?
  • What is the current risk with Bitcoin?

Many of you have most likely been following Bitcoin. I thought I would write about it since it is kind of at a crossroads, and I have been doing a lot of research on the subject lately. I have included charts of Bitcoin in the newsletter in the past because I feel there is a link inbetween Bitcoin and gold. The link is that they are both hedges for fiat currency. I have always considered gold as an alternative to the dollar. I feel the same way about Bitcoin.

Bitcoin is not a tulip mania. This is a fresh software application with a powerful use case – an alternate currency. It could be just as significant as Facebook, which is ubiquitous across the world.

For those of you who do not know what Bitcoin is, here is a basic explanation. Someone named Satoshi Nakamoto, which is an alias for an unknown person or group, released Bitcoin in 2009. It is an open-source software application based on something called a blockchain.

The blockchain is a digital ledger that contains who possesses bitcoins and all of the transactions. The strength of the blockchain is that it has two hundred fifty six encryption and has never been hacked. It is considered secure.

The beauty of Bitcoin is how the bitcoins are created. It is done by something called proof of work, which is essentially a difficult math problem. This is called mining, and anyone can do it. However, presently only three thousand five hundred bitcoins are created daily. That means all of the miners are challenging against each other to solve these math problems. It requires a significant amount of computer processing power to generate a single bitcoin, and this requires a lot of electro-therapy. For this reason, most miners own a building utter of computers.

The three thousand five hundred bitcoins that are created daily thresholds how many bitcoins are in circulation. Presently there are about sixteen million bitcoins, and the maximum is twenty one million bitcoins. About every four years, the number of bitcoins created daily drops in half. This means that in 2020, the number created daily will drop to around 1750. It will take about one hundred years to reach twenty one million.

Below is the Bitcoin chart. You will see that the price doubled from March through May. The reason why is because request can lightly outstrip supply. With only three thousand five hundred fresh coins created daily, the price will rise if people have to buy them from existing owners of Bitcoin.

So, miners create the bitcoins, but how do you buy them and get them on the blockchain? Transactions are finished using a Bitcoin network of user knots. When you attempt to buy or sell bitcoin it is validated and confirmed using a random number of user knots. A user knot is a computer on the Internet with Bitcoin software installed. There are presently about 7,500 user knots around the world.

Whereas miners are paid for both generating bitcoins and for transactions, user knots are not. The only benefit of running a user knot is to be involved in shaping the direction of Bitcoin development. By running a user knot you get to help determine which version of Bitcoin software is used.

Bitcoin is fully decentralized. There is no Bitcoin organization or location of Bitcoin computers. Anyone can join as a miner or user knot. This creates a bit of mess when the software needs to be improved or enhanced. Satoshi created a system of consensus for enhancements, but he also permitted the potential for splitting the blockchain into two software versions. The Bitcoin community calls this splitting, soft forks and hard forks.

A hard fork is when the blockchain is inherited by two different versions of Bitcoin software, without the possibility of a later date merging. This can be a nuclear option, where you literally create a fresh alt-coin. These two Bitcoins will rival against each other from that day forward. Normally, a hard fork is done on purpose, and one of the software versions is killed off.

A soft fork is done with the expectation that a consensus will be obtained by the Bitcoin community (user knots and miners). Thus, you do not get two contesting software versions. These forks are done with the intention of merging the forks together. These types of soft forks are considered to be rearwards compatible since they are supposed to merge.

I was under the impression that soft forks do not split the blockchain, but that’s not true. A soft fork can indeed create a split, and once the blockchain is split, you can get a big mess. The split creates two versions of the Bitcoin software, with each version inheriting the blockchain.

When a soft fork is done and there is no consensus, user knots and miners are supposed to revert to the original code. However, two bad things can happen when no consensus is reached. Very first, during the split, your wallet needs to support both software versions in the event you make a transaction. 2nd, user knots and miners need to revert back to the original code. If they do not revert, then they essentially turn a soft fork in to a hard fork and create a fresh alt-coin.

If you’ve read this far, the explanation of how Bitcoin works is over, and now we get to the interesting and significant stuff. Never before has the Bitcoin community been in such a state of conflict. This conflict is about how to fix it’s two most pressing problems: high transaction fees and low transaction speed.

Both the user knots and Bitcoin developers want to deploy something called segwit to resolve these scaling issues. The problem is that the miners, who make all the money, have refused. The miners want to do an agreed upon hard fork to expand the blocksize, so they can make more money. The miners want a compromise: you get segwit and we get a larger blocksize.

The problem is that the user knots and developers don’t trust the miners and do not want to risk a hard fork. The user knots are attempting to pre-empt the miners and implement something called BIP one hundred forty eight to deploy segwit. However, it is a soft fork without the miners consensus and creates the potential for a blockchain split.

Thus, we have a massive conflict on how to resolve the scaling issues. The potential for a blockchain split is fairly real. The miners attempted to get consensus on a fresh version of Bitcoin called Bitcoin unlimited. However, the user knots and developers told them no because it did not contain segwit. Now the user knots and developers are attempting to shove BIP one hundred forty eight with segwit. The miners are telling no, unless they also get a blocksize increase using a hard fork.

On August one st , the user knots are menacing to release BIP 148. They are attempting to force the miners to leap on board and accept this enhancement. However, if the miners do not, then we will have two versions of Bitcoin. In theory, this is a harmless soft fork. However, it could turn into a hard fork, or we could revert back to the current version and BIP one hundred forty eight dies.

One way or another, Bitcoin needs to address its scaling issues. Presently it costs about $Two for a transaction and it take twenty minutes or longer for a transaction to be confirmed. Plus, the transaction fees and confirmation times are enlargening. This will kill Bitcoin because contesting alt-coins will solve these issues and become more popular.

What is ironic, is that segwit has the potential to reduce transaction fees substantially. This opens the door for Bitcoin to become the world’s number one digital transaction currency. It could be enormous. You would think the Bitcoin community could come to an agreement. I think the reason Bitcoin is hopping in price is that people believe Bitcoin will fix its scaling issues and see its potential.

The uncertainty surrounding Bitcoin is if segwit will get deployed, or how the scaling issue will be addressed. This creates the potential for the blockchain to be inherited by two challenging Bitcoin versions. That kind of uncertainty is going to exist over the next few months, especially in June and July.

Because of uncertainty, I think the upside for Bitcoin is somewhat limited in the near term until we know the outcome of segwit. I also think the downside potential in the near term is significant. My guess is that we could lightly see Bitcoin drop to $1500 or lower as this uncertainty proceeds. And if we get a messy blockchain fork, it could go much lower. This Bitcoin community squabble is fairly real and tenacious.

Besides these scaling issues and potential forks, governments are still a threat to Bitcoin. However, banks are going to bring out crypto-currencies using blockchains very soon. It won’t exactly be fair if they single-out Bitcoin as illegal and let banks have their own crypto-currency. People will scream. Plus, Japan has legalized Bitcoin as a payment method, with 300,000 businesses expected to adopt it in 2017. I don’t think Bitcoin is going away in Japan. If Japan has Bitcoin, so will many other countries.

Note: Crypto-currency and alt-coins are the terms used to describe these fresh Internet digital currencies. Crypto is brief for cryptography, which is the art of solving codes. This is how the miners work.

I could see the USA and Europe teaming up to outlaw Bitcoin, but that would leave China and the rest of the world still using it. To kill Bitcoin, you would need dozens of countries all working together to form laws making it illegal. I suppose the G-7 or the G-20 could attempt to outlaw it, but that seems like a long shot. Each country would need to pass their own laws. Is Bitcoin so disruptive that they would all do such a thing?

As long as Bitcoin is permitted anywhere in the world, it will exist. Killing it and forcing it to zero will be exceptionally difficult. So far, only China and Japan have adopted Bitcoin in a big way. China is where most of the mining and bitcoin buying is occurring. The next countries likely to adopt Bitcoin will be India, Europe, the USA, Russia, Australia, and Indonesia. This will happen over the next duo of years. If they are going to kill Bitcoin, they better hurry.

The reason I became bullish on Bitcoin was when China regulated their exchanges and compelled them to charge transaction fees for trades. Instead of outlawing Bitcoin, China actually strengthened it in 2016. More regulations are coming, but it will only legitimize Bitcoin. There are many crypto-currencies around the world. Are they going to outlaw all of them and then let the banks or other financial institutions issue a crypto-currency? That doesn’t seem logical to me. Once we see a bank issue a crypto-currency, that will be the sign that they are here to stay.

Do not underestimate the degree of disruption that is still possible with a blockchain split. Buying Bitcoin is clearly not a tuck dunk investment. As I previously mentioned, it will not be effortless to resolve the scaling issues. And these scaling issues proceed to escalate and must be addressed soon.

As a Bitcoin possessor, I am very worried about how the scaling problem will be addressed. This could go either way. We could get a clean solution, or we could get a messy one. Moreover, the outcome of messy one is unknown. It is not inconceivable that we could have two or even three versions of Bitcoin, with each version having a different valuation! And, which version will your wallet support? Did I say it could get messy?

So, is Bitcoin a buy, sell, or hold? If segwit gets deployed slickly without a split into two challenging bitcoins, then it is buy. With a sleek deployment of segwit, Bitcoin has the potential to go to the moon. My target is $100,000 with segwit and only one version of Bitcoin. If Bitcoin resumes growing at a 12% to 13% monthly rate (it’s current monthly growth rate since July two thousand ten at five cents), it will be around $250,000 by 2020. That target seems a bit high, but $100,000 seems reachable.

If the scaling issues are not resolved slickly and quickly, then the outcome for Bitcoin could be disastrous. However, because of the thick upside potential, the play here is most likely to hold your Bitcoin until segwit is resolved. It could get messy, but as De Niro said in Fever, “It’s worth the spread”. If you are a conservative investor and like to take your profits, then now is very likely a good time. Actually, the right time was at $2700, but that ship has sailed. If you do bail, you an always get back in after segwit is resolved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next seventy two hours.

I wrote this article myself, and it voices my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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