Why a Cryptocurrency Market Correction is Healthy

“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us.” – Thomas Carper, US-Senator

*Knowing Cryptocurrency
The reason behind an array of socio-economic perceptions about a cryptocurrency market correction is both due to its extreme volatility and a profusion of people investing in it. Although it has become mainstream, there are many who have just a vague idea of what it is.

Cryptocurrency is the first digital currency able to exercise complete decentralization and transparency. It is based on cryptography, where it borrows its name from.

Crypto is not secured via regulations or trust, rather by math. It forms the medium for peer to peer networking of file sharing.

“A purely peer to peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” – Satoshi Nakamoto (founder of Bitcoin)

*The Fear of Investing
The imagination and fear mentioned by Thomas Carper is the result of random price fluctuations of cryptocurrency. Ironically, they are not random at all. These prices are determined by numerous specific factors.

Those include government announcements, press statements, media propagations, news events, increasing or decreasing demand, advancements in technology and the crypto community as a whole. The community is comprised of both developers and users.

Since its development, there have been many predictions about its impending crash. But, if we take a look at the history of the price of Bitcoin, it seems to have broken all the predictions.

It always manages to bounce back from any downward correction of its prices.

Since July 2017, Bitcoin has shown a 500% increase in price largely due to the factors mentioned above.

*What Do We Mean By a Cryptocurrency Market Correction?
Like the idea of digital currency, the idea of a cryptocurrency market correction is largely unclear to people. What a market correction really means is the decline in the market capitalization or value of an entity.

In the case of cryptocurrency, which is completely decentralized, the factors involved in a market correction are also individual.

Although there are companies like Microsoft, DEL, Red Cross and others who are accepting Bitcoin, factors still manage to result in its market correction. This, again, results in reduction in the price of Bitcoin.

South Korea implementing stricter trading rules, China banning it altogether and India’s Finance Minister announcing sanctions against any transaction using cryptocurrency are all good examples.

These actions resulted in a decline of the value of cryptocurrencies, such as Bitcoin.

*Reasons Why a Cryptocurrency Market Correction is Healthy?
Coming back to our main argument now we will articulate whether market corrections are healthy or not.

Understand that unaccountable spikes in the value of all cryptocurrencies can have negative implications. One may take on the image of a scam for example.

When the total worth of Bitcoin was valued to be $1 billion, it was being called a ‘bubble’. In order to remain a viable source of transactions, a cryptocurrency market correction was necessary.

Other factors which highlight its importance are as follows:

-When there is a new opportunity in the market (in this case the creation of Bitcoin) there are only a few people who adopt it immediately. As it becomes more popular, the price naturally increases making it more difficult for newcomers to invest in it. That said, market corrections become necessary to create opportunities for these very same new investors.

-Not only does a cryptocurrency market correction open an opportunity for new investors, it also gives them a chance to increase their portfolio. In January 2018, Bitcoin was soaring by the $20,000 mark, but in February 2018 the market corrected that down to approximately $10,000. Thus, one can double their investment within the same parameters earlier referenced.

-Another reality that signals corrections are healthy is streamlining, i.e. making it free from turbulence. This turbulence, or extreme volatility, is the reason for the fear discussed initially.

As the demand within the global markets increases, the price of Bitcoin (while not regulated by any authority), will continue to correct itself based on a variety of factors.

The point of a cryptocurrency market correction certainly can be to maintain a reasonable price, rather than an overly inflated one.

Why a Cryptocurrency Market Correction is Healthy

Germany’s Tourism Board Accepts Bitcoin Payments

The German National Tourism Board has announced that it accepts cryptocurrencies such as bitcoin for its services. The organization promotes German travel destinations with offices in 32 countries around the world. GNTB also intends to implement blockchain technologies in its finances. “We want to be a global innovation driver in the tourism industry,” its chairperson recently stated.  

Accepting Bitcoin to Drive Innovation

Services offered by the German National Tourism Board (GNTB) can now be paid in cryptocurrency. The organization which promotes Germany as a travel destination accepts bitcoin payments from March this year, according to a press release. It also announced “medium-term” plans to test blockchain technologies in the processing of its international financial transactions.

Germany’s Tourism Board Accepts Bitcoin Payments

“Within our digitization strategy, we are constantly examining the latest technologies and considering their application in our organization,” said GNTB‘s Chair Petra Hedorfer. “By accepting cryptocurrencies as means of payment and with the possible implementation of the blockchain technology in our finances, we want to position ourselves as an innovation driver in the tourism industry,” she added.

The blockchain technology offers “interesting perspectives” in regards to the speed, transparency and security of financial transfers, the Board also notes. The announcement recognizes the “potential for tremendous improvements and savings” in international transactions.

Promoting the Bundesrepublik

For over six decades, the German National Tourism Board has been working to promote internationally travel opportunities in the the Federal Republic. It is constantly developing new marketing strategies and concepts based on specific themes, events and attractions. These are implemented under the “Destination Germany” brand that has been introduced on multiple markets around the globe.

GNTB says it is actively involved in efforts to optimize the marketing activities of its partners – German travel companies, commerce and trade associations. It also participates in sales activities in immerging and growing markets in order to increase the volume of tourist traffic and boost foreign currency receipts.

Germany’s Tourism Board Accepts Bitcoin Payments

The Board is attempting to position Germany as a diverse and attractive travel destination, but also strengthen the country’s profile as a business location. To achieve that it offers an array of services in cooperation with German businesses – from transport and accommodation, to shopping opportunities and tourist attractions.

The German National Tourism Board was founded by the Bundestag. It represents the country on behalf of the Federal Ministry for Economic Affairs and Energy. GNTB is headquartered in Frankfurt am Main and maintains offices in 32 countries around the world.

Leading in Adoption

Authorities in the major European economy have taken a relatively soft approach towards cryptocurrencies. Recently, Germany’s Federal Ministry of Finance announced that bitcoin should not be taxed when exchanged and used as means of payment. Its clarification notice effectively recognizes the most popular crypto as a currency. Bafin, Germany’s financial regulator, has advised investors in initial coin offerings to refer to regulations applicable to traditional financial instruments and comply with current requirements.

Decisions like these have created favorable conditions for bitcoin adoption in the country. Last year Germany’s largest food delivery portal, Lieferando.de, announced it had started accepting bitcoin payments, as news.Bitcoin.com reported. The company is owned by Takeaway.com BV which operates numerous online delivery services across Europe. This month German crypto media announced that Lieferando’s customers can now pay their orders in bitcoin cash, as well.

Mining Coins – What Does It Mean?

“[Bitcoin] is a remarkable cryptographic achievement… The ability to create something which is not duplicable in the digital world has enormous value…Lot’s of people will build businesses on top of that.” – Eric Schmidt, Executive Chairman of Google.

By now, almost everyone has heard of cryptocurrency like Bitcoin and Ethereum. Most people, however, may not know how the Blockchain protocol generates new coins nor how the network operates relative to mining coins.

Mining coins and running the platform is the job of miners, aka the node operators.

Cryptocurrency Transactions
Currencies like Bitcoin run on a Blockchain operated by independent mining operators from around the world. When a person with Bitcoins in their wallet wants to make a transaction, they send a query to the miners to authenticate the transfer.

Miners check the amount of coins on the IP address, as noted in the ledger. If enough coins are available, the system tries to resolve the query. The most efficient method is calculating the hash rate.

The same calculation simultaneously takes place over hundreds of other connected nodes.

Cryptocurrency protocols are designed so that it takes a specific amount of time for the query to be successfully resolved. For example, the time it takes for a Bitcoin query to be resolved is set at ten minutes.

The first mining computer that finds the correct solution adds it to the blockchain. The updated ledger is then sent to other miners on the network for authentication.

When the transaction is verified by a majority of nodes, it is updated to the ledger. The mining system that found the correct solution, or hash rate, earns a fraction of the coins from the transaction.

Mining Coins
Mining operations are responsible for two main functions, generating new coins and authenticating transactions for existing coins.

New coins are generated for most cryptocurrencies by solving a complex mathematical problem similar to authenticating transfers. The objective is to find the most efficient way to add a new block to the ledger. Additionally, the goal is to find the method that gives the least possible incremental value.

The first mining computer that finds the correct code is awarded with a small amount of newly generated coins. Those coins are then added to the total amount in circulation.

Difficulty in Mining Coins
Cryptocurrency developers add a degree of difficulty, and cost, into running a mining operation as more miners get into the business. The model is designed based on real world business situations.

Industries that are highly competitive have more barriers to entry and lower profit margins for each business. Those with few sellers tend to give a very high return on investment.

Mining requires advanced level computational resources such as high-end processors and graphics cards. Buying and operating these resources have a cost that the miner must bear.

Take the Bitcoin design for instance. When the value of Bitcoin rises, mining becomes a great way to generate an income based on the fractional reward system.

When investors see a greater profit in mining coins compared to their day job, they tend to purchase the equipment necessary to become miners. That will increase the operational capacity of the system.

But as more people join the business, the hash rate calculation becomes more difficult. This requires a more advanced level of machinery. Profits are balanced when the cost for each competing miner increases due to scalability issues.

Miners will be forced to stop mining coins when it becomes impossible for them to meet costs.

This self correcting system lies at the heart of all cryptocurrencies, which keeps the market from over saturating with mining operations.

Mining Coins – What Does It Mean?

Tennessee Now Recognizes Blockchain and Smart Contracts

Tennessee becomes the latest state to recognize blockchain technology and smart contracts, also known as “executable distributed code contracts.”

According to Senate Bill (SB) 1662, which was unanimously passed in the Tennessee House and Senate and signed into law by Republican governor Bill Haslam, “No contract relating to a transaction shall be denied legal effect, validity, or enforceability solely because that contract contains a smart contract term.”

Tennessee now joins Wyoming in recognizing blockchain-based electronic records for legal purposes.

This may open the door to further legislation for cryptocurrency and ICOs since blockchain is the foundation to which they are built.

Blockchain transactions just got a whole lot safer

Banking giant ING’s blockchain team has announced a major breakthrough that will help overcome one of the biggest obstacles to using blockchain in financial services: protecting data privacy. The new code, known as a “zero-knowledge range proof” (ZKRP) is 10 times more efficient than existing technologies designed to keep information on a ledger private.“Our solution is 10 times more efficient than other technologies” - Mariana Gomez de la Villa

“Our solution is 10 times more efficient than other technologies” – Mariana Gomez de la Villa

How does it work?

Currently, information on a public ledger is not private given that changes must be verified by each participant in the network. The ZKRP code adds a layer of cryptography to blockchain technology that resolves this challenge.

The ZKRP solution demonstrates the truth of a specific statement without revealing any additional information beyond what it’s trying to prove. For example, a mortgage applicant could prove that their salary sits within a certain range, without revealing the exact figure. Similarly, the ZKRP could prove that a payment amount is within a limit, without showing the exact amount.

What’s so clever about that?

“Until recently, one of the primary challenges for applying blockchain in the banking sector was ensuring that data privacy was protected and at the same time meeting regulatory reporting requirements,” explained Mariana Gomez de la Villa, global head of ING’s blockchain programme.

“While existing zero-knowledge technology has provided us with a way of overcoming that, the main limiting factor is the resource, and therefore cost, that each verification would generate.”

ING’s specific solution has been benchmarked against similar technologies in Ethereum, the world’s largest blockchain alliance, which the bank is part of. The operating costs of ZKRP are much lower than other technologies.

“ING’s ZKRP solution has been proven to be 10 times more efficient than others in the Ethereum test network, while upholding the same three principles: completeness, soundness and zero-knowledge,” said Mariana.

ING’s blockchain team have launched ZKRP as an open source solution, which means that other interested parties in the development community are able to download, access and even contribute to the solution.

 

This article originally appeared at: https://www.ing.com/Newsroom/All-news/Blockchain-transactions-just-got-a-whole-lot-safer.htm.

Bitcoin briefly jumps more than 11% after news Square is testing the digital currency

Square is testing support for Bitcoin 

The digital currency briefly surged more than 11 percent Wednesday to a high of $7,336.80 , according to Coin Desk. That’s within 10 percent of its record high of $7,879.06 hit last Wednesday. Bitcoin had fallen 30 percent below that record over the weekend amid controversy over the digital currency’s future.

In the established stock market, a decline of at least 10 percent from a recent high sends a stock into “correction” territory, and a drop of at least 20 percent marks “bear market” territory.

Wednesday’s gains in bitcoin came after news that Jack Dorsey’s company Square is testing support for bitcoin through its payments app Cash. Early on Wednesday, Credit Suisse analysts published a report on the Square news describing how the “bitcoin buying option could help stock.”

Square shares spiked more than 5 percent in the open before closing about 2 percent higher. The company’s test of bitcoin is still small and focused on letting customers buy and sell the digital currency within the app. The test does not allow individuals or businesses to send or accept bitcoin, Square said.

Bitcoin performance over the last six months

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Source: CoinDesk

Digital currency trading firm Genesis Global Trading found bitcoin tends to recover dramatically from large drops. The last four times bitcoin has fallen more than 20 percent this year, it has gained an average 28 percent in the two weeks following, and an average 61.5 percent in the four weeks following, the analysis showed.

Trading in Japanese yen accounted for about nearly 56 percent of bitcoin trading volume Wednesday, according to CryptoCompare. U.S. dollar-bitcoin trading volume accounted for about 25 percent.

Another digital currency, ethereum, traded about 1.5 percent lower near $331, according to CoinDesk.

“A lot of the recent volatility has been caused by the recent narrative and events surrounding bitcoin and bitcoin cash and the record setting exchange trading volume between the two amongst large investors, miners, and retail investors in Asia,” Alex Sunnarborg, founding partner, Tetras Capital, said in an email. “The price of BTC and BCH have moved inversely between each either, driving the price of bitcoin down as it flows to bitcoin cash and vice versa.”

The controversy over the best way to improve bitcoin’s transaction speeds and costs remains unresolved.

One upgrade proposal called SegWit2x was called off last Wednesday, causing bitcoin to surge temporarily to its record high before crashing.

An upgrade which took effect in August split bitcoin into bitcoin and bitcoin cash. The offshoot bitcoin cash traded slightly lower Wednesday near $1,222, about 50 percent below its record high of $2,477.65 hit Sunday, according to CoinMarketCap.

Another version of bitcoin that launched Sunday, bitcoin gold, has tumbled more than 20 percent in the last 24 hours to around $162, according to CoinMarketCap. Bitcoin gold is an attempt to make “mining,” or creating, the digital currency less dependent on specialized hardware.

This article originally appeared at: https://www.cnbc.com/2017/11/15/bitcoin-jumps-more-than-9-percent-after-news-square-is-testing-the-digital-currency.html.