The Bitcoin bubble is second only to the Tulip bubble. The current digital currency bubble is the second biggest bubble in recorded history.
Bitcoin is turning into the mother of all Ponzi Schemes. Below are the criteria that make Bitcoin a Ponzi Scheme:
– It has no intrinsic value. A few merchants might exchange low priced goods for Bitcoins because when the value crashes, they might only be out a pizza, or a gift card. Few if any are exchanging Bitcoins for big ticket items like computers, cars, or houses. The reason is that when Bitcoin crashes, people can handle being out a pizza or a gift card. But no one wants to accept a 30 year house loan paid with Bitcoins to maturity. If Bitcoin crashes and goes worthless, who wants to be out an entire house? Bitcoin’s main value is that someone, somewhere, chased it higher and is therefore a greater fool than someone else who bought lower. The catalyst for Bitcoin is the greater fool whose rational thinking was overcome by greed. Continue reading “Bitcoin Ponzi Scheme Bubble Fueled By Standpoint Research Price Target Hike”
Bitcoin has split into two digital currencies, the old bitcoin and the new bitcoin cash. Digital currency miners and developers could not reach an agreement and so now there are two bitcoin currencies.
The new bitcoin currency called Bitcoin Cash has all the characteristics of bitcoin but with the added advantage of a larger block size.
Anybody who holds the original bitcoin will have the same amount of Bitcoin Cash as long as they take the steps needed to convert.
A transaction of bitcoin happens when a block is added to the blockchain database. The problem is that blocks are limited to 1MB every 10 minutes or about seven transactions per second. That means that bitcoin transactions can take hours or even days to occur. In comparison, Visa allows for about 2,000 transactions per second.
Segwit2x versus Bitcoin Cash
Segwit2x will move some of bitcoin’s transaction data outside of the block and on to a parallel track to allow more transactions to take place now. Then in November Segwit2x will push for doubling the block size to about 2MB around November 2017.
Bitcoin Cash instead increases the block size to 8MB or about 56 transactions per second. Those pushing for Bitcoin Cash are sceptical that Segwit2x plan of doubling the block size in November will actually happen or even be enough.
Segwit2x has been adopted by enough of the bitcoin community to proceed, but more in leaning towards Bitcoin Cash saying that Segwit2x proposals do not go far enough to fix the transaction time issue.
Coinbase turned me off of buying bitcoin when they used a Latvia bank for clearing transactions which was blocked by my US bank. It comes as no surprise to learn that Coinbase said it will not support the new Bitcoin Cash and it said in an email alert that it has temporarily disabled bitcoin withdrawals and deposits.
Stay out of bitcoin right now. Let all the drama play itself out before you consider taking a long entry in bitcoin.
Do you have any thoughts on bitcoin splitting into two digital currencies? Leave your comments below.
In this week’s stock market news update Lance talks about the Comey testimony, the huge 40% win in bitcoin in less than a week, and the Federal Reserve’s likely hike of interest rates next week.
Stock Market News Update – All Eyes On Fed Meeting Next Week
The Twiggs Money Flow looks weak on all the major indices but it’s not something to be too concerned about yet. We could see the money flow drop and volatility fall heading into next Wednesday’s Federal Reserve meeting where it is expected that rates will be hiked by a quarter point.
Looking at the Dow Jones Transportation weekly chart we see that its headed for a test of resistance at 9500. Transports still look very bullish which is a good sign for the US economy and stock market.
Bitcoin value is rising fast after Britain’s largest online trading platform, Hargreaves Lansdown, allows its customers to invest in bitcoin, according to the Telegraph (link above).
There are so many amazing things going on that are raising bitcoin value.
Bitcoin Value Up On Swedish ETN
Hargreaves Landsown is providing this service via a Swedish based bitcoin ETN offered by XBT Provider. In other words, Sweden is moving fast to become a leader in the digital currency while back in the U.S., the SEC is busy blocking any type of BTC ETF or ETN on the grounds of transparency.
Hargreaves Lansdown customers can now buy BTC in their personal pension (Sipp) or a normal brokerage account. When did you ever think that you would see BTC being offered in a pension fund? Nice!
Disclosure: I’m long GBTC.
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