Original author: Stan Higgins
Coin News
“The most dangerous global sorority of beautiful pin-up girls that has ever existed” is now accepting bitcoin for its membership subscriptions.
SuicideGirls is a popular adult-themed online community that bills itself as a celebration of alternative lifestyles and female empowerment.
Some 2,624 SuicideGirls provide photos, video and blog posts to the website. Further, the larger SuicideGirls brand has expanded from photography and video to include comic books, magazines and books since its launch in 2001.
SuicideGirls first broke the news it would accept bitcoin on Reddit in a post detailing its excitement about adding the payment option. The post played off positive remarks issued by the group’s co-founder Missy Suicide in the company’s formal press announcement, a sentiment she echoed in an interview with CoinDesk.
Missy said:
“SuicideGirls was born on the Internet in 2001 and we have always been an enthusiastic adopter of new technologies and advancements that come from the web. [...] Bitcoin is a currency born on the Internet, and we really wanted to support the Internet’s native currency.”
More to see
Missy indicated that accepting bitcoin for its memberships is just the first step in what could be a larger move by the brand to accept digital currency. Missy said SuicideGirls is working to next accept bitcoin at its online store, and it hopes to take bitcoin for ticket sales at its live burlesque tour this fall.
Memberships cost the bitcoin equivalent of $48 for one year, $75 for two years and $200 for five years, and provide access to exclusive photos, videos, online groups and community events. The company accepts bitcoin payments through merchant processing provider BitPay.
Bitcoin interest
Missy said SuicideGirls has long been interested in developments in the bitcoin space, and that she personally learned about the technology through her personal relationship with noted bitcoin investor and Bitcoin Foundation board member Brock Pierce.
Missy said she worked with Pierce previously and was encouraged to learn more about the technology due to his own enthusiasm for digital currency.
However, she suggested that her company’s larger overhaul of its website slowed its ability to add bitcoin payments.
She explained:
“It took us a while to accept bitcoin on our site, mostly because we have spent the last two years rebuilding the site from the ground up responsively and that was just a huge project. It took up all our resources.”
Ideological partners
Though not an adult entertainment site in the traditional sense, the announcement is the latest that suggests adult-themed online communities and lifestyle groups are becoming some of the first major brands to accept bitcoin. For example, Hustler became one of the largest merchants to accept bitcoin this July.
Despite this business interest, Missy suggested that accepting bitcoin was a decision that was more ideological than practical, saying:
“When bitcoin is the standard currency for the world one day, we want our early adopter bragging rights, you know? 2014 isn’t as early as we would have liked [to accept bitcoin], but at least we’re in [the ecosystem] now.”
In particular, she noted that bitcoin lacks a strong feature for rebilling, though she hopes bitcoin customers will become repeat buyers.
“We figured we’d do one-off memberships and hopefully people would love being a part of our community so much they would go back into billing settings and buy another year when their first year expires,” she said.
Subscribers switch to bitcoin
The bitcoin community comprises mainly males, but Missy indicated these demographics did not influence her decision to start accepting digital currency as most SuicideGirls members are women.
Further, Missy revealed the company hasn’t seen a significant subscriber boost from accepting bitcoin, though she did not reveal exact figures.
Still, a number of customers, she said, are choosing to pay with bitcoin. For example, she mentioned that roughly 5% of the new members that enroll in the community daily are choosing to pay with bitcoin.
Missy said her company remains committed to bitcoin, even if it doesn’t see a significant business gain from the move, concluding:
“We’re not thinking short term about bitcoin. For us, it is about a long-term investment in a new kind of currency born on the internet that has a passionate community behind it.”
Images courtesy of SuicideGirls
BitPaymerchant processingSuicideGirls
Original author: Pete Rizzo
A recent legal referral in the EU may be inching the region a little closer to more unity on one small element of bitcoin taxation, but it won’t do much to help global confusion on the matter.
In June, Sweden asked Europe’s highest court, the European Court of Justice (ECJ), whether cryptocurrency exchanges are liable for value-added tax on the fees that they charge for their services. The result could have far-reaching implications for tax in the region.
In Europe, there is a directive on VAT that explains how it should be levied. EU directives are powerful documents, designed as high-level guides that member states can interpret when making their own laws.
VAT on profits from bitcoin exchanges
Cryptocurrencies are so new that few member states have worked out how to interpret the VAT rules for them. Belgium, Croatia, Cyprus, the Czech Republic, Greece, Hungary, Ireland and Italy haven’t decided whether to charge bitcoin exchanges VAT on the service that they provide. Latvia, Luxembourg, Malta, Portugal, Romania and Slovakia have no regulations on the matter either.
Some other states lie at the opposite end of the spectrum, with firm rulings on the matter. The UK was among the first, effectively making bitcoin trading exempt from VAT in a ruling published in March.
While exchanges and miners are off the hook, though, the UK says that VAT should be charged when goods and services are sold for bitcoin.
Several states have taken an opposing view. Estonia made its own decision about VAT on profits from bitcoin exchange services, levying a 20% tax on those trading bitcoins as a service. It is also charging a 10% tax on profits from selling bitcoins. Poland has imposed a 23% VAT on bitcoin mining profits, although its position on bitcoin exchanges isn’t clear.
Some states are imposing various taxes on cryptocurrency trades, but not necessarily VAT. Lithuania has said it will tax bitcoin trading as personal income at 5%. Slovenia treats mining profits as personal income. It won’t tax people selling bitcoins, but it will examine each case individually. Bulgaria wants a 10% income tax on the sale of bitcoins.
Most of these decisions address a question that Sweden decided it couldn’t answer alone. In June, it asked the ECJ a question that it couldn’t decide for itself, arbitrating a dispute between the Swedish tax authority (Skatteverket), and a private defendant, David Hedqvist.
The question – on the subject of Article 2 (1) of the VAT Directive, which describes what transactions should be subject to VAT – asked whether people who exchange cryptocurrency for fiat currency provide a VAT-relevant service; and if they do, whether that exchange service should be exempt from VAT.
“On most banking transactions, the charges that the bank makes are exempt from VAT, so you don’t pay them,” explains Siân Jones, co-lead of the exchanges regulation and accounting working group for the UK Digital Currency Association (UKDCA), an advocacy group for digital currencies. Sweden wants to know whether this applies to the markup charged for virtual currency exchange.
A decision that could change everything
The ECJ could take up to two years to deliver a decision, which can then be used by Sweden in its policy making, explained European tax lawyer Estoban van Goor.
The ruling could prompt other countries to change their regulations, he warned – or it could even prompt the EU to pass legislation broadly addressing VAT on cryptocurrency. It’s a potentially existential issue for European cryptocurrency exchanges, said van Goor.
An exchange may have to reconsider its business and pricing model, he said:
“If you have an exchange and you apply an exemption, and the tax authorities say we will assess you for VAT, then that could be a game changer for your business.”
VAT on the sale of goods and services for bitcoins
VAT on fees charged for exchanging bitcoins into fiat is relevant to exchanges, which make their money that way, and who are a crucial part of the emerging bitcoin economy. But VAT is also relevant to merchants, who make their money by selling goods and services for bitcoin.
Many countries have been asking themselves whether those merchants should charge VAT on the sale of goods and services in exchange for bitcoin.
Ireland’s finance minister has said that while it doesn’t regulate bitcoin as a currency, VAT might be chargeable on the equivalent value of goods and services exchanged for the cryptocurrency, and that such a tax would have to be invoiced in euros.
In Spain, private legal opinion suggests adding VAT on invoices sent in bitcoin, and says that bitcoin should be taxed as a service.
In other states, uncertainty reigns. Austria is floundering. In some countries, legal opinion suggests tax guidelines, but there appear to be no regulations enforcing it. Legal opinion in the Netherlands suggests VAT would be due on bitcoins received because of its lack of status as either money or financial product, and based on statements made by government officials.
Double taxes
There is a third VAT question that countries must answer: should people be charged VAT when they sell their own bitcoins? Opinion is divided on the matter.
Outside the EU, Norway has made its own decision about the commercial sale of bitcoins via a website. The country treats bitcoins as an asset, which renders it taxable. Because this means that bitcoin isn’t a currency in Norway, the commercial sale of bitcoins can’t be a considered a financial service, which would be VAT-exempt. Consequently, as a VAT-relevant electronic service, selling bitcoins commercially invokes a 25% VAT fee.
In Central and South America, few explicit rules have been passed with regards to cryptocurrency, although Brazil’s tax authority has argued that bitcoin is a financial asset rather than a currency. It will tax people selling bitcoins – but only if the value is over 35,000 Brazilian reals (around $16,000).
One of the worries about imposing VAT on the sale of bitcoin is that in some jurisdictions, it could result in a double tax for merchants dealing in cryptocurrency – once when they take bitcoins in exchange for goods and services, and again when they sell those bitcoins.
Germany, for example, delighted bitcoiners when it announced that bitcoins held for over a year wouldn’t be subject to capital gains tax. But it concerned bitcoin investors and businesses when it recommended a tax on the commercial sale of bitcoin. The country, which classes bitcoin as a ‘financial instrument’ rather than a functional currency, classifies its sale as a “miscellaneous service”, which would invoke VAT.
The danger is similar in some areas outside the EU. In Singapore, bitcoins are treated as products. Bitcoin investors will be fine there, because cryptocurrency is treated as capital gains for investment purposes. This means that if Singapore residents buy and hold bitcoin for an extended period, it’s tax-free, because there is no capital gains tax in Singapore.
The story is different for merchants. Bitcoins are considered a means of barter when used to buy goods and services in Singapore, and therefore taxable. They’re also subject to general sales taxes when sold.
This creates the potential for a double or even a triple tax, officials have said. Companies could be taxed when buying bitcoins, when selling them, and potentially when using them as a form of payment.
What is cryptocurrency, anyway?
The ruling from the ECJ could help answer a more fundamental question about bitcoin that could help countries resolve multiple issues: what is cryptocurrency? Is it a legal currency? A financial service? A commodity?
“The answer to this question will be useful,” said Jones. “If it were goods, it would be a question that they wouldn’t need to refer to the ECJ. If it was legal tender, it wouldn’t either. The problem is that virtual currencies sit in this nether world.”
Other taxes
While there might be an opportunity to harmonize some aspects of VAT on cryptocurrency in Europe, it will be far more difficult to achieve a single approach to other taxes, such as personal and corporate income tax and capital gains. These tax regimes are decided mostly at a national level.
Broadly speaking, income taxes are calculated on any income regardless of a country’s particular rules about bitcoin, argue experts.
“It is pretty clear that any transaction that otherwise gives rise to income taxes, is still taxable, regardless of the fact that it is settled in bitcoin,” said Omri Marian, an assistant professor of law at the University of Florida who wrote a paper on the use of cryptocurrencies as tax havens.
However, the details of some tax applications will differ depending on how the country treats cryptocurrency.
Jones said:
“There are some countries where how it’s classified has a bearing on the tax. So perhaps capital gains on real estate but not other assets. Or if it’s a certain type of asset it may only be subject to capital gains if it’s held for under a year.”
Other regions
In the US, the federal government doesn’t impose VAT on anything, although national sales taxes are imposed on certain goods and services.
However, at the federal level, the IRS made a March ruling categorizing bitcoin as property. For investors, this means that capital gains tax is due for investors selling bitcoin before a year is out. Exchanges may not pay VAT, but when they sell digital currency to a customer, the gross income equals the value for which the currency is sold, say lawyers.
But at a state level, things are less defined. States have generally been slow to issue official guidance on bitcoin and taxes, according to Marian.
He finds two reasons for the lack of state tax regulation of cryptocurrencies:
“First, states seem more concerned about bitcoin when it comes to consumer finance and investor protection issues.”
He argued that it isn’t yet a major source of tax revenues and doubted where state taxes need much clarification.
“If a transaction is subject to sales tax, for example, it is because the nature of the transaction, not because of the nature of bitcoin. Sales tax will apply to a sale in most states regardless if one is being paid with USD or bitcoin.”
In Canada, not much has changed from a tax perspective since the country’s tax authority released guidance on the status of cryptocurrency in November. The Canada Revenue Agency (CRA) still taxes bitcoin as bartered items from a tax perspective, although in a separate document, it warns that profits from commodity transactions could be taxed as income.
We also know of several non-EU countries that have not issued explicit rules for taxing bitcoin presently, but which are considering the issue. Israel is mulling it over; Australia is behind on tax guidance that it has already promised.
Ultimately, some trading blocks may eventually establish uniform rules for some taxes as they relate to cryptocurrency, but Marian warned not to expect everyone in the world to sing from the same song sheet, on all tax issues.
“Harmonization is a lot to expect for in a world where different countries subject similar transactions to different tax regimes,” he said.
And of course, there’s the other important issue: collection. Marian pointed out:
“Difficulty still exists in the context of administration and collection, given the pseudo-anonymity. The more mainstream bitcoin becomes, the more it becomes a worry for tax evasion, and I think this is where we’re going to see much of the focus.”
Regimes may tax bitcoin all they want, he added. But first, they have to understand what it is. And then, they have to understand how to follow the money, commodity, financial instrument – or whatever they decide to call it.
Image via Shutterstock
EuropeVAT
Original author: Danny Bradbury
Patrick Foot is a writer on financial markets at IG, a leading provider of online trading. In this article he examines what the current lack of volatility in the forex markets means for traders of digital currencies like bitcoin.
The last 12 months have been barren for forex investors hoping for some currency movements they can base trading strategies on.
Volatility has dwindled from healthy levels in mid-2013 down to 25-year lows in May and July this year.
Several reasons have been put forward for what may be the cause of this dry spell, but the overriding causes appear to be the continually low interest rates set by central banks, increased geopolitical risk and return to growth from major economies (keeping risk low in other assets).
Average forex volatility across USD, EUR, GBP, AUD and JPY. Source: IG forex chartsBitcoin’s nature sets it apart from such outside factors as these. A lack of a central regulator (or base in a national bank) keeps bitcoin separate from interest rate movements and economic recovery. The escalation of tension between any of Russia, America, Israel or the Middle East is unlikely to play out in bitcoin markets.
That has resulted in bitcoin enjoying a starkly different 12 months to more traditional currencies, experiencing a swing worth of over $1,000 before levelling out at somewhere around the $550-$650 mark for the past few months – a comparative drop in volatility, but still unstable when compared to other currencies and markets.
BTC/USD movement over the past 12 months.As such, the major movements tend to be associated with major developments in the currency itself. Bitcoin’s growth at the end of 2013 was largely down to a Senate committee ruling on its legitimacy, and dwindling in February around the disastrous fall of Mt Gox.
However, there are several ways in which the lull in forex volatility and boom in bitcoin can be related. Its position outside political and economic influence certainly makes bitcoin attractive to those driven away by low interest rates in the US, UK, EU and other major economies. In that respect, bitcoin could be seen as a high-volatility commodity: useful to traders in times of low market movement elsewhere.
Until some of the oft-noted fears surrounding bitcoin’s legitimacy and stability are answered, price fluctuations will be hard to predict to all but the most insightful of traders. The longer the current situation continues, however, the better for bitcoin.
Traders are being forced to diversify their portfolios and risk appetites are growing as economies recover without liquid forex markets to accompany them. At the moment, the bullish sentiment in several major indices is taking the majority of investor attention and bearish news on bitcoin continues to dissuade those looking for a forex alternative.
But the outlook for both of those assets could reverse entirely at any moment. An index correction has been predicted for some time; bitcoin could be one positive development away from another major move. Should that happen, the lull in forex volatility could start playing out in bitcoin in a major way.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.
Spread betting and CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.
forexvolatility
The last 12 months have been barren for forex investors hoping for some currency movements they can base trading strategies on.
Volatility has dwindled from healthy levels in mid-2013 down to 25-year lows in May and July this year.
Several reasons have been put forward for what may be the cause of this dry spell, but the overriding causes appear to be the continually low interest rates set by central banks, increased geopolitical risk and return to growth from major economies (keeping risk low in other assets).
Average forex volatility across USD, EUR, GBP, AUD and JPY. Source: IG forex chartsBitcoin’s nature sets it apart from such outside factors as these. A lack of a central regulator (or base in a national bank) keeps bitcoin separate from interest rate movements and economic recovery. The escalation of tension between any of Russia, America, Israel or the Middle East is unlikely to play out in bitcoin markets.
That has resulted in bitcoin enjoying a starkly different 12 months to more traditional currencies, experiencing a swing worth of over $1,000 before levelling out at somewhere around the $550-$650 mark for the past few months – a comparative drop in volatility, but still unstable when compared to other currencies and markets.
BTC/USD movement over the past 12 months.As such, the major movements tend to be associated with major developments in the currency itself. Bitcoin’s growth at the end of 2013 was largely down to a Senate committee ruling on its legitimacy, and dwindling in February around the disastrous fall of Mt Gox.
However, there are several ways in which the lull in forex volatility and boom in bitcoin can be related. Its position outside political and economic influence certainly makes bitcoin attractive to those driven away by low interest rates in the US, UK, EU and other major economies. In that respect, bitcoin could be seen as a high-volatility commodity: useful to traders in times of low market movement elsewhere.
Until some of the oft-noted fears surrounding bitcoin’s legitimacy and stability are answered, price fluctuations will be hard to predict to all but the most insightful of traders. The longer the current situation continues, however, the better for bitcoin.
Traders are being forced to diversify their portfolios and risk appetites are growing as economies recover without liquid forex markets to accompany them. At the moment, the bullish sentiment in several major indices is taking the majority of investor attention and bearish news on bitcoin continues to dissuade those looking for a forex alternative.
But the outlook for both of those assets could reverse entirely at any moment. An index correction has been predicted for some time; bitcoin could be one positive development away from another major move. Should that happen, the lull in forex volatility could start playing out in bitcoin in a major way.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.
Spread betting and CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.
forexvolatility
Original author: Patrick Foot
The price of bitcoin declined to its lowest level since May yesterday, falling nearly 10% and ending what had been a long period of relative optimism and stability for the global bitcoin market.
But while there were many theories as to what news events could have caused bitcoin’s value to fall into such a steep decline, some market observers believe that this most recent movement may have been caused not by external factors, but by the actions of bitcoin traders.
This theory, perhaps most notably posed by Raffael Danielli, posits that out-of-control margin trading caused a flash crash in at least one major bitcoin exchange market, a development that had a cascading effect across the larger bitcoin market.
In the post on his quantitative analysis blog Matlab Trading, Danielli asserts that margin traders, specifically those on Hong Kong-based bitcoin trading platform Bitfinex, had invested significant funds into long positions as bullish sentiment rose in July.
Speaking to CoinDesk, Danielli elaborated on his post, suggesting that initial positive sentiment about New York’s proposed bitcoin regulation had a profound impact on the digital currency trading community, but that it was how investors acted on this information that proved problematic.
Danielli explained:
“[Positive sentiment about US regulation] resulted in large buying activities and traders on Bitfinex started to borrow as much money as they [could] to buy more bitcoins and increase their position in anticipation of a market upswing. As it turned out, New York’s proposed bitcoin regulations are more on the harsh side and the European banking authority also decided to take a very cautious approach.”
He concluded: “In other words, many traders were caught on the wrong foot and today they paid the price.”
The rise of bitcoin margin trading
Margin trading allows investors to borrow money from brokers, funds that are then leveraged by borrowers to trade on the outlook of bitcoin. Borrowers can then place bets on how they believe the market will perform, going either ‘long’ or ‘short’ depending on whether they think the price of the asset will rise (long) or fall (short).
When margin traders close their position, they return the original principal to the investor, plus any agreed upon interest, and the borrower is assessed a profit or a loss.
While a mainstay of major traditional markets, margin trading is relatively new to the bitcoin ecosystem. China’s largest bitcoin exchange OKCoin introduced its margin trading service this June, while Bitfinex opened its offering in June of 2013. BTC-e, another major Europe-based exchange, also offers the service.
Though he is a critic of margin trading, Danielli was quick to point out that the practice is not something that’s unique to the bitcoin ecosystem.
“All major exchanges in the world such as NASDAQ, NYSE and BATS have to deal with similar events like the one we observed today.”
Proponents of margin trading assert that the trading option provides experienced investors with the chance to gain significant profits, provided they properly gauge the risks associated with their borrowing.
Bullish sentiment builds
Danielli suggested that news was a factor in yesterday’s price decline but only in how it influenced overall trading activities and investor sentiment. Still, his statements illustrate how these factors can prove to be a powerful combination.
He argued that traders rushed to place long bets after the release of New York’s BitLicense proposal, but that as the narrative surrounding the regulation soured, the positions placed during this period of optimism were left in limbo.
Further, a number of smaller news events compounded, he said, slowly weakening optimism about the market.
Danielli cited the news that certain recipients of the Ethereum project funds could sell roughly 2,600 BTC (roughly $1.2m at press time) raised in its initial bitcoin fundraising, and concern over increased merchant adoption as factors that influenced traders.
“Many traders were caught in large, leveraged, long positions entered in mid-July around $600 to $640 as can be seen from the change in open swap positions,” Danielli said, adding:
“It was just a question of time until those traders would hit the margin call if prices continued to drop.”
Crash in motion
This trend, Danielli argues, came to head at roughly 1:00am UTC on 14th August with one large sale order on Bitstamp that caused 500 BTC to be sold in one minute, pushing the price down to $525.
Prices on Bitstamp and Bitfinex began to decline, and as the price of bitcoin on these exchanges neared $520, a “breaking point” was hit, he said.
“After this point, Bitfinex started to liquidate positions of traders who could not cover their margin anymore and selling their positions in the open market,” he continued. “This increased downward momentum and subsequently more traders got hit with margin calls.”
This, Danielli asserts, caused the price to crash to $451 on Bitfinex before the markets could recover. However, Bitfinex offered a different take on the events.
Margin trading exchanges respond
Given this belief that margin trading likely contributed to the decline of bitcoin’s price, CoinDesk reached out to the major exchange platforms that offer the service, with only one exchange, Bitfinex, responding to requests for comment.
Bitfinex management told CoinDesk it remains confident in its service, saying that ultimately, the responsibility for trading activity lies with the bitcoin community, who must understand the risks involved with margin trading. The exchange framed itself as a service provider, and that far from being a contributing factor, its procedures actually prevented larger market losses.
Bitfinex said:
“In this particular instance, we had two extremely large, unforced, market sell orders come in one after another. While there were some forced liquidations, it was not the majority of the trading activity around that time.”
Bitfinex argued that, despite some claims in the community, it does have such safeguards in place to help stop such harmful actions on its market, and that its platform actually prevented a more extreme flash crash in this instance.
Bitfinex said:
“All systems performed nominally and according to design. We were very pleased to see that our hard efforts in improving our risk management technology and process yielded an orderly result.”
Short positions increase
Speaking to CoinDesk, other market observers suggest there may have been more malicious activities that contributed to the price crash, and that neither the exchanges offering the service or the involved traders may have been a factor in yesterday’s events.
Jonathan Levin, chief executive at Coinometrics, an analytics firm seeking to promote digital currency exchange transparency, is more skeptical that the trading was the result of news pressures.
Levin said:
“It was quite clear that what triggered the flash crash was a series of margin calls being closed out [...] but the question is, who was doing it? Was it market manipulation or was it literally just a big position being closed out?”
Levin has performed a preliminary analysis that shows plenty of profit was realised during the flash crash, and that there were clear warning signs that a big price dip was imminent. Levin pointed out that the volume of bitcoin swaps on Bitfinex grew sharply two days before the crash.
Swaps are a tool offered by the exchange to allow owners of assets, like bitcoin holdings, to loan them out for a return. The loaned assets can be used for leveraged trades as well as for short-selling. A short seller would borrow bitcoin using a swap and then sell that bitcoin for US dollars, Arthur Hayes, CEO of BitMEX, said.
The increased bitcoin swap activity suggests that traders were able to take short positions ahead of the flash crash, therefore profiting from the plunge in price.
Link remains unclear
But the link between the rise in short positions and the eventual trigger for the flash crash – the two big sale orders – is open to interpretation for now.
“Could it be that someone had insider information on these long positions? I don’t know,” Levin said.
A skillful trader with sufficient resources could also have spotted that market conditions were ripe for an adventurous short to make a killing on the market, according to Hayes, who added:
“Savvy traders try and sniff out where the margin call trigger levels are and push the price down to trigger margin calls and cover their short at lower prices.”
While Levin said that he prefers not to speculate whether market manipulation was behind the flash crash, he noted that the spike in bitcoin swaps on the exchange was a warning signal that investors should have heeded.
“The chart with the shorts coming in, I think that’s a warning signal. That should have warned the market,” he said.
Alternative theories
Still, Hayes believes that a confluence of factors created the conditions for the flash crash, not least of which was the summer holiday season.
“The new marginal buy and holder of bitcoin is probably on a beach or family vacation somewhere,” he said.
While traders were on vacation, order books remained thin, creating the conditions for big price swings if a relatively large sell order landed on the market, Hayes said.
Hayes also pointed to growing merchant acceptance of bitcoin as a reason for an increased supply of coins, as merchants immediately exchanged the digital currency that customers handed them to fiat. Miners, who needed to regularly exchange bitcoin for fiat to “pay their bills” were another reason for selling pressure on the digital currency, Hayes said.
Jean Marie-Mognetti, a director at Global Advisors, a bitcoin hedge fund, went even further afield to describe the factors responsible for the flash crash, saying:
“Rather than looking at bitcoin in isolation, it’s important to consider it in light of broader macroeconomic factors.”
Mognetti pointed to a number of concerns in Europe that have weakened the bitcoin price outlook, noting that there were concerns over Germany’s GDP growth, lingering worry over a eurozone recovery and a Russian ban on imports that could be ratcheting up geo-political tensions. Commodities like crude oil, natural gas and copper have also declined in price, he noted.
“In such an environment, conditions for a bitcoin rally don’t seem to be in place. Holders of bitcoin may feel inclined to reduce their risk profile,” he said.
CoinDesk contacted OKCoin and BTC-e for comment on this piece, but did not receive an immediate response.
Joon Ian Wong contributed reporting.
Image via Shutterstock
Bitfinexmargin tradingprices
Original author: Pete Rizzo
Original author: Pete Rizzo
An altcoin is looking to establish what it calls a “24/7 global game of Risk”, with the block chain serving as the basis for player action during the game.
Ironbankcoin is partnering with Blockchain Technology Group, a cryptocurrency technology firm that specializes in designing and managing digital currencies. Blocktech will manage the ironbankcoin network while the development team for the game handle the design and implementation of the game platform.
According to the alt’s official Bitcoin Talk post, ironbankcoin will function as an ownership token for the game – the more IBC you hold, the more land you own. Yet, because the alt will be traded and exchanged in active markets, the value of that “land” is very much at play. Finally, the coin will function as an in-game currency as well.
The development team noted on Bitcoin Talk:
“Have you ever wanted a coin that doesn’t need to be tied to BTC? An economy made from a “game”, but a game that can make you more of the currency. The land will have value in IBC and that is what the marketcap can be tied to. Easy to defend a small portion of land for small profits. Near impossible to rule a kingdom alone. Who can you trust to help you rule?”
The comments above imply that the game will require cooperation and intrigue between players. While the announcement did not contain specific details about the nature of the gaming platform, the development team told CoinDesk that it will focus on kingdom management, diplomacy and economic management.
Ironbankcoin is currently holding an initial coin offering (ICO), offering 50 percent of the coin’s 100 million coin supply during a seven-day pre-launch sale. According to the development team, coins will be distributed on a proportional basis depending on the amount of BTC received during the sale.
SYNC expands asset list, launches new wallet
SYNC is a curious entry in the lexicon of alternative cryptocurrencies, building its value proposition on a membership structure that offers several levels of potential return for investors.
Several weeks ago the SYNC community made waves in the markets when it announced SYNC Assets, a portfolio of digital assets that includes domain names and prominent cryptocurrencies.
For those who meet the requirements, proceeds from asset sales are distributed proportionally to eligible members.
Since the SYNC Assets launch, the team has built the list of domain names it controls and has continued to push value-added features such as airline miles and discounts exclusively for SYNC holders.
CoinDesk spoke with SYNC Foundation co-founder Mike Fiol, who said that the fundamental purpose of SYNC is to give individuals an entry point into crypto-investment with a vehicle that seeks greater stability compared to other available coins.
Fiol explained that beyond that, the goal of the project is to give investors a way to avoid some of the problems associated with altcoin markets, including projects that turn out to be fraudulent in nature.
He said:
“We’re trying to create something that has some tangible value to it. It was a response to all the scams going on, a response to the realization that anyone can work on a coin.”
One of the projects under development is the creation of a mobile app that will allow SYNC owners to tap a range of discounts and consumer benefits. According to Fiol, the app will enable SYNC investors to find businesses nearby that offer these benefits. Notably, inclusion in the membership program requires owning at least one SYNC, which at press time costs an average of 1.2 BTC across all exchanges.
Fiol summed it up:
“If you use it correctly, you can save outrageous amounts of money.”
Two percent of proceeds from the Foundation’s asset and coin sales are directed to a program called SYNC Kids. This initiative devotes funds to the Spenser Somers Foundation, a non-profit organization which sponsors a Ronald McDonald House children’s charity center in Minneapolis.
Looking ahead, the SYNC team recently released a new wallet and is looking to continue expanding on its existing services. Fiol hinted at upcoming releases that will expand the scope of usability for SYNC.
Educational initiative for altcoin trading takes shape
The altcoin world owes much of its existence to the diverse community of investors, traders and Twitter pundits fueling speculation and exchange in the marketplaces. While some bring years of experience in traditional financial and asset markets to the crypto realm, there are others who enter the environment with little idea of where to begin.
Ivyleaguecoin, a new altcoin initiative, aims to provide a vehicle for novice investors to gain insights into the nature of buying, selling and trading.
CoinDesk spoke with the ivyleaguecoin organizer, who said that the goal is to provide a platform for people to gain perspective on the various aspects of trading on a level that is comfortable for them. The planned courses will be structured in several tiers and include resource documents, live webinars and one-on-one instruction.
No pricing information is yet available, but an ICO is planned that could raise as much as 2 BTC to pay for platform development and instructor compensation. The organizer told CoinDesk that participation in the tiers will require varied pay scales, saying:
“Each tier will have different cost and include some coins. The intro level will be basic documents to start a user if they don’t feel the need for live training. The novice and advanced [levels] will have live training sessions to better help people understand what they see and where.”
The team behind ivyleaguecoin has yet to reveal an initial launch date, but with a planned two week-long ICO period, the program may not go live until next month at the earliest.
Strange alt of the week
Here on All Things Alt, we’ve covered our fair share of bizarrely branded coins. For better or for worse, some development teams choose potentially copyright-protected properties and attempt to build cryptocurrency network.
Lemurcoin continues this proud tradition by using popular characters from the DreamWorks Animation film series Madagascar, including the character “King Coolian” who is embossed on the coin’s official logo. The film collection focuses on a group of animals who find themselves thrown into wacky adventures around the globe, and the broader franchise itself has generated hundreds of millions of dollars in global revenue.
For this appraoch, lemurcoin has won this week’s Strange Alt of the Week award.
As an altcoin itself, lemurcoin is pitched as a low-supply investment opportunity tied to, according to its official Bitcoin Talk post, the number of lemurs alive in the world.
The post reads:
“[The] value of lemurs in the world fauna is very high; smart, uncharted and mysterious creatures of the world. King Coolian believes their coin deserves same high value!”
The development team has a number of proposed initiatives in mind, most notably a Madagascar-focused airdrop. The announcement post explores the question of whether or not the currency could act as a so-called country coin like auroracoin, saying:
“Is lemurcoin an official cryptocurrency of Madagascar? Huh, what kinda questions is that, sure it is! His Countryness King Coolian himself said so!”
The coin is expected to fully launch on 17th August. CoinDesk reached out to DreamWorks for comment but did not receive an immediate response.
Blocktech Technology GroupIronbankcoinSYNC
Original author: Stan Higgins
The information provided mirrors data available from platforms like Blockchain. Users can see a block’s size, its difficulty and the associated fees. The search engine took a different approach compared to the services offered by Google and Yahoo!, providing network data rather than information about prices.
Biteasy told CoinDesk that it’s possible the DuckDuckGo integration could be a model for how search engines create intuitive environments for accessing block chain information, saying:
“DuckDuckGo bitcoin users will not have to leave their favorite search tool in order to check their balances or pending transactions. Hopefully other search engines will follow suit.”
Biteasy added that it will be expanding on its services in the future, providing more in-depth block chain data that can be integrated via its open-source API.
Images via Shutterstock, Biteasy
BiteasyDuckDuckGogoogleYahoo
Original author: Stan Higgins