Original author: Joon Ian Wong
Coin News
The second day of Coin Congress in San Francisco focused less on recent US regulatory developments, instead placing a heightened emphasis on the promise of bitcoin’s underlying technology.
Held at the Union Square Hilton this week, the event featured a variety of speakers and panels. Experts offered unique perspectives on the bitcoin and cryptocurrency economy, and with their remarks succeeded at framing the industry as a fast-developing space worthy of its early accolades.
Despite the promise and excitement surrounding the industry, however, event commentators were keen to point out the obstacles that bitcoin needs to overcome in order to bring its full capabilities to market.
The mainstream portrayal of bitcoin in the media appears to be one issue, according to Michael Terpin, who founded the PR service Marketwired in the early 1990s. He says negative headlines sell, and that bitcoin is paying a heavy price because of this.
Terpin said:
“The media is like a sponge, waiting for the loudest click-bait to happen.”
Perception and adoption
Discussion on the perception of bitcoin continued through the day, with one specific panel addressing the issue directly. There, George Gilder, an author, investor and moderator of the perception panel, called cryptocurrency, “a new category of information on the Internet that fulfills the real promise of the Internet”.
Due to this type of praise, speakers were emboldened about the currency and its prospects.
Tim Parsa, CEO of BitReserve, said:
“Anything you fight, you make stronger.”
Bradley Rotter, co-chair of hardware startup Rivetz, echoed this positive sentiment, saying that digital currencies were inevitable with the advent of the web.
“Does the internet deserve its own currency? Of course it does,” Rotter noted.
Lee Fox, founder of Peerspring, said that demographic shifts will foster distributed systems adoption no matter what. She said she sees this in a younger generations that is, “already circumventing what was once centralized”.
Venture capitalists still positive
The Coin Congress venture capital panel offered similarly positive opinions on the long-term opportunities that bitcoin presents, as commentators were optimistic bitcoin could overcome its perception issues.
The VCs were perhaps unsurprisingly bullish on investing in bitcoin businesses.
Bart Stephens, managing partner of Stephens Investment Management, said there is “massive opportunity to connect the financial world to bitcoin”.
![VC Panel. [L-R] Matthew Roszak, Jonathan Teo, James Robinson, Steve Waterhouse, Bart Stephens](http://media.coindesk.com/2014/07/coincongressday2vcpanel.png)
VC Panel. [L-R] Matthew Roszak, Jonathan Teo, James Robinson, Steve Waterhouse, Bart StephensElsewhere, Pantera Capital’s Steve Waterhouse compared bitcoin technology to a popular underlying digital technology, the IP address.
Waterhouse said:
“[The] IP address is not a consumer technology. The question is whether [bitcoin] is a consumer technology or an infrastructure technology. It’s likely an infrastructure technology.”
RRE Ventures’ James Robinson, offered a different assessment, saying that he believes consumers will continue to choose banks over BTC.
Robinson added:
“You may not like [banks], but you know that your money will be there tomorrow.”
Jonathan Teo, managing director of Binary Capital, said that the amount of VC flowing into bitcoin companies is only going to increase, a promising statement for entrepreneurs, as many were in attendance at the conference for industry networking and knowledge sharing.
“There will be a lot more venture dollars flowing into the digital currency space,” Teo said.
Mergers and acquisitions
Despite optimism from VCs, even this segment of the industry faces pressing issues.
For example, there have not been any significant financial exits in the bitcoin space to date. William Quigley, managing director of Clearstone Venture Partners, presented on the possibilities of merger and acquisition (M&A) activity in bitcoin, basing his assessments on historical observations from the early Internet days.
“[That] bubble really was about 18 months,” he said.
Quigley told the Coin Congress audience that he expects a similar situation to unfold in the digital currency space, adding:
“With respect to bitcoin, I see lots of acquisitions happening quickly.”
Quigley estimated that there are about 700- 800 bitcoin startups in total right now, and with only 100 venture-backed companies that go public every year, mergers and acquisitions (M&A) might be the way many bitcoin-related ventures will likely see a financial exit.
“A lot companies are going to be acquired,” he said.
However, bitcoin-related companies with the potential to be purchased for $1bn or more will need to be what Quigley called an “operating business” – not just an idea or play on bitcoin, but something with substantial customer numbers.
And in order to get to that level, VC money will be needed to deal with regulatory matters.
Quigley said:
“Compliance cannot be ignored, especially in the United States. This is why bitcoin startups will have to raise capital.”
Technology advancing
Technology was yet another major theme, with speakers touching on the latest developments in the space.
Bitcoin entrepreneur and former Tradehill co-founder Ryan Singer encouraged developers to use technologies such as multisig in order to avoid actually hosting cryptocurrency for users.
Ryan Singer during his “Stop Holding Other People’s Coins” presentation.“I think it’s getting more uncomfortable,” to hold other people’s coins, he said. Because of new regulation possibly on the horizon, hosting features like wallets might end up being prohibitively expensive for a startup.
“If you hold other people’s money, you are going to have to bond and insure it,” Singer said.
Multisig technology like the sort BitGo offers requires several keys in to manage bitcoin funds, reducing possible risks associated with controlling funds the way that many hosted wallets currently do.
Singer noted:
“It is possible to do full transactions without being in the business of holding bitcoin.”
Another idea along these lines was presented called Rivetz, a hardware technology for financial independence outside of the existing banking system.
“I want to build [bitcoin functionality] into the device I have at the time,” said Rivetz CEO Stephen Sprague during his talk titled ‘Building a Hardware Wallet into the Device You Have’.
The startup is building a digital currency storage system that harnesses existing technological capabilities inside consumer electronics devices such as a PCs, phones and tablets.
Images via CoinDesk
Coin CongressVCs
Original author: Daniel Cawrey
Original author: Stan Higgins
Original author: Stan Higgins
Bitcoin price declines
At press time, the price of bitcoin on the CoinDesk USD Bitcoin Price Index had lost its long-time stability, dropping roughly 4% since the day’s open to sit at $595.73. This figure was up from the day’s low of $591.46, but down measurably from its high of $618.42, figures that baffled traders and reddit readers alike.
The day’s low was observed at 13:35 UTC and was followed by a sharp recovery, but it wasn’t enough to undo the mysterious and sudden decline.
Prices on the CoinDesk CNY Bitcoin Price Index followed a similar trajectory, falling from an open of ¥3,832.17 to ¥3,692.45 at press time, but for once, even China wasn’t to blame for falling bitcoin prices.
With no clear news to blame for either the stability or the decline, many are wondering where to turn for answers.
The trough of disillusionment
Maybe bitcoin’s price needs more than good news.
After all, people need time to figure out world-changing, disruptive technologies like bitcoin. Positive newsflow in the interim isn’t going to help the world adapt to our bitcoin future, no matter how many computers Dell sells.
That’s what Joe Lee, a trader and founder of bitcoin derivatives exchange BTC.sx, thinks is going on.
“The price is stagnant because we’re going through a trough of technology adoption for crypto currencies, where the world is working how to take it,” he said, citing technology research firm Gartner’s theory of a technology adoption ‘hype cycle’.
Gartner’s hype cycle, which comes complete with interactive chart, is a fancier way of saying that all that positive news is going to take time to sink into people’s minds. In Gartner-speak, we went over the Peak of Inflated Expectations in January, when the price was soaring, and now we’re headed into the Trough of Disillusionment.
Gartner’s Hype CycleAnd then there is this succinct explanation, from Jean Marie Mognetti, a partner at Global Advisor, which is launching a hedge fund regulated by Jersey authorities that will open for subscriptions on 1st August.
Mognetti says his firm’s bitcoin fund is aiming for $200m under management in a year’s time, which would put it $50m above current hedge fund heavyweight Pantera Capital.
“There is nothing in particular going on in the market at the moment. We have good visibility of [the market's] major components right now,” he said.
It’s not about reddit anymore
As Mognetti sees it, it’s not that bitcoin has become a moribund asset, it’s that earlier periods saw too much volatility.
“It really depends on what window you look at. If you’re looking at two months, it’s OK, it’s consolidating. If you look at six months, it definitely rose a lot from a very low price. Even in May there was nice upside, from $400 to $560. That’s a 50% gain. I know a lot of asset managers who would die to get 50%,” he said.
As for the news cycle, Mognetti thinks it’s going to take a lot more than a viral reddit post to get bitcoin prices moving these days. Bitcoiners were overreacting to newsflow in the past, seizing on every new announcement or reddit post to bid up or sell down prices frenetically, he said. But, it looks like bitcoiners are starting to grow up and settle down, he says, drawing a parallel with another market, the decidedly analogue trade in crude oil.
“In the past a single tension in the Middle East would trigger a massive spike in [oil prices]. These days the market discounts [news] very early and doesn’t overreact anymore. It’s just a proof of the market maturing. Now only real news moves the market, it’s not about Twitter and reddit anymore,” he said.
Ron Glantz, research director at Pantera Capital, probably the largest active bitcoin fund at the moment, with $150m under management, largely agrees. There’s been “no news”, he says, and that includes Dell’s announcement, biggest merchant or no.
Short-term catalysts
What could get the price moving again? Basically, whales.
Exchanges are facing a liquidity issue – it’s drying up across the big exchanges, says Lamb, of Coinfloor. Exchange operators are faced with the challenge of keeping volumes up as speculative traders drift away from the relatively stable bitcoin price. Pantera’s Glantz concurs, observing that a big trade in these market conditions would shift the bitcoin price.
“There isn’t much liquidity in the market. Someone trying to buy, say, $2m quickly will move the market,” he said.
Whales aside, there’s the slightly more prosaic technical analysis to consider. George Sammantic, a co-founder of BTC.SX, thinks that prices could break out of their narrow trading band imminently, and more likely upward. Sammantic cites high support levels and tight Bollinger Bands as indicators that prices could break out soon.
“Generally, minus some kind of news event, we should see the price start to move in either direction and only afterwards will we find out why. For now I see bullish patterns forming,” he said.
Coinometrics volatility index for year to date.What could those surprise news events be? Glantz of Pantera submits that it could be new capital controls, perhaps imposed on an economy facing spiralling inflation.
“A lot of people in Argentina own bitcoins,” he notes wryly.
The Coinfloor and BTC.SX bosses hope that organic bitcoin growth and adoption will bring prices to a natural tipping point. But, Magnotti of GABI offers the most audacious theory of all:
“I don’t want to blow my own trumpet on this one, but I think GABI ending its subscription period and going live on the market will be a serious catalyst.”
Magnotti says he’s been flooded with requests to subscribe to his fund, even from traditionally conservative institutional investors – although he wouldn’t be drawn on giving specifics, citing client confidentiality.
For market watchers who want to test Magnotti’s theory, he’s planning to start trading at the start of September, so mark your calendars.
Image via Shutterstock
BTC.sxCoinfloorGABIPantera Capitalprices
Original author: Joon Ian Wong
Original author: Stan Higgins
The North American Bitcoin Conference brought the full range of the international bitcoin community to Chicago’s McCormick Place convention center this weekend for two days of discussion on all things digital currency.
Though it was perhaps the major announcements by Blockchain, the Chamber of Digital Commerce and OKCoin, as well as discussion of New York’s new bitcoin regulation, that reverberated most widely online, the conference itself was focused on engendering community spirit.
The array of panels and booths showcased the wide variety of businesses not only serving the space, but sharing ideas in an open and friendly setting. Further, the addition of companies such as Germany’s BitXatm and China’s Huobi and OKCoin ensured that new voices were able to add to the ongoing dialogue in the US.
View the gallery below:
Whether it was PayPal and Blockchain coming to the stage for a discussion on bitcoin’s future or bitcoin wallet provider Pheeva and block chain API maker Chain holding an impromptu photo session, the event succeeded at showcasing the strong sense of unity and community spirit that still pervades the budding industry, perhaps owing to bitcoin’s open-source roots.
As organiser Moe Levin quipped at the show, “It’s hard to get people that are so interested in the future of technology in the same room to speak.”
However, as Levin proved with his event, once together, there’s no limit to the kinds of conversations that can be generated. He added:
“We did an hour-and-a-half on bitcoin 2.0 and it was amazing. That was just throwing things together, matching people who were already here at the conference. This environment is so busy and fast-paced, so we need to be able to move things around.”
Organisers are now working on a follow-up conference to be held this January, with a website for the event reportedly coming online soon.
Read our full recap of both day one and day two of the event for more coverage.
Images via The North American Bitcoin Conference
galleriesNorth American Bitcoin Conference
Original author: Pete Rizzo
Original author: Pete Rizzo