MicroStrategy Buys $1.026 Billion Of Bitcoin

MicroStrategy Buys $1.026 Billion Of Bitcoin
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After raising more than $1 billion dollars to buy bitcoin last Friday, MicroStrategy announced today that it has completed a purchase of approximately 19,452 BTC, purchased for an aggregate price of $52,765 per bitcoin. CEO Michael Saylor announced the monumental purchase via Twitter.

In total, MicroStrategy has purchased an aggregate $2.171 billion worth of bitcoin, holding about 90,531 bitcoin in total (or about 0.43 percent of all of the bitcoin that will ever exist). The company announcement noted that these bitcoin have been purchased for an average price of $23,985 per coin (at the time of this writing, 1 BTC is valued at more than $49,000 on various OTC exchanges).

The move has emphasized that Saylor is more than willing to put his money where his mouth is and remains confident that bitcoin is the best possible asset for maintaining monetary energy into the future. 

“The company now holds over 90,000 bitcoins, reaffirming our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, can serve as a dependable store of value,” Saylor is quoted as saying in the announcement. 

After buying billions of dollars’ worth of bitcoin, is MicroStrategy going to finally sit back and relax? Does it have enough? The answer is no, it’s going to buy more. MicroStrategy plans to continue accumulating bitcoin. 

“We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities in capital raising transactions with the objective of using the proceeds to purchase additional bitcoin,” Saylor said. 

Buying this much bitcoin this quickly recalls the “Bitcoin For Corporations” conference that Saylor hosted earlier this month. More than 8,000 individuals attended the conference, and shortly after it was held, Tesla bought $1.5 billion worth of bitcoin. Given how successful the conference was, one can only assume that we will be seeing more institutions buy loads of bitcoin in the future. Saylor and MicroStrategy seem to be aware of this and chose to act fast to accumulate more BTC.

There will only ever be 21 million bitcoin, and these companies are going to have to battle it out on the marketplace to accumulate more than their competitors. Once you get bit by the bitcoin bug, you can’t stop accumulating. One can never have enough.

The post MicroStrategy Buys $1.026 Billion Of Bitcoin appeared first on Bitcoin Magazine.


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As Bitcoin Surges, Investors Find Invictus Capital’s C10

As Bitcoin Surges, Investors Find Invictus Capital’s C10
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This is a promoted article provided by Invictus Capital.

As the bitcoin price finds its footing among all-time high levels, following a meteoric bull run that’s been ongoing for nearly a year, investors are increasingly looking for ways to get exposure to the asset. But many of these potential Bitcoiners are also interested in the broader cryptocurrency market, as well as mitigating the volatility that is so common in the space.

Many within this group have found Crypto10 Hedged (C10), a unique index fund provided by Invictus Capital that allows investors to maintain a portfolio of the top-10 performing cryptocurrencies through a single ERC-20 token (the C10 token), while mitigating the volatility that traditionally comes with investing so widely in the cryptocurrency market.

The fund’s assets under management have eclipsed $8.5 million in recent days, with significant gains from BTC’s rally. But it may surprise you to learn that C10 has outperformed even bitcoin’s stellar returns across 2021.

“The dominant crypto asset, bitcoin, has seen tremendous growth over the recent bull run, surpassing its previous all-time high of $20,000 by over 150 percent to more than $52,000,” said Andrew Knight, Invictus Capital’s vice president of analytics. “Altcoins such as ETH have yet to reach quite the same level of outperformance relative to their 2018 highs, however, they have been staging impressive resurgence off of the back of bitcoin’s rally, contributing to the C10 fund’s performance.”

C10 is structured in a unique way to capitalize on a bull run like this — in which bitcoin is surging and lifting most of the cryptocurrency market along with it. But it’s also structured to mitigate the volatility that almost certainly comes with these crypto rallies as well.

“The index fund comprises the top-10 cryptocurrencies by market capitalization, which rebalances weekly — a frequency optimized by our quant team to enhance returns by locking in profits from surging assets, and similarly reducing exposure to assets in free fall,” a release from Invictus Capital explained. “There is also a cap of 15 percent per asset, which ensures further risk mitigation by preventing single cryptocurrencies from dominating the portfolio.”

Furthermore, C10’s rebalancing process allocates cash every week in response to market movements. This allows the fund to hedge against downside volatility by allocating up to 100 percent exposure to yield-bearing cash when the market is trending down. It’s a unique aspect that helps protect investors from the volatility that traditionally comes with bitcoin and cryptocurrency investment.

Ultimately, this structure is designed for medium- to long-term investors, those who are embracing this class of financial asset as a future that will only grow brighter. In this way, it is a much-needed product in the space and one that can help investors who might be adverse to other, more risky avenues of bitcoin investment to get exposure to BTC.

“C10 is a tokenized index fund that serves as an excellent diversification tool for those interested in adding cryptocurrency to their portfolios,” concluded Daniel Schwartzkoppf, CEO of Invictus Capital.

The post As Bitcoin Surges, Investors Find Invictus Capital’s C10 appeared first on Bitcoin Magazine.


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Bitcoin, Lightning And Podcasting 2.0

Bitcoin, Lightning And Podcasting 2.0
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This week on the “Bitcoin Magazine Podcast,” host Christian Keroles sat down with long-time Bitcoin podcaster and advocate Anita Posch. Posch is the host of the fantastic “Anita Posch Show” where she highlights the efforts of Bitcoiners around the globe, especially bitcoiners in Africa and LATAM. 

In this episode, Keroles and Posch focused on new podcasting technology being built on top of the Bitcoin Lightning Network. Podcasting started as the ultimate way for individuals to broadcast information without corporate influence. It was a medium for the people. Since it’s humble beginnings, podcasting has turned into a cultural phenomenon, but it has also become corrupted. Current podcasting infrastructure no longer supports the censorship-resistant dream of its origin. Bitcoin looks to be an answer here for creators to cultivate community and monetize directly with P2P cash. 

Listen in to this episode to learn more about Posch and the crossroads between Bitcoin and the future of podcasting. 

The post Bitcoin, Lightning And Podcasting 2.0 appeared first on Bitcoin Magazine.


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Financial Vampirism And Bitcoin

Financial Vampirism And Bitcoin
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2020 was an unprecedented year in financial engineering. Unprecedented and yet… totally predictable if you pay attention to the right metrics.

Market trajectories which have been set in motion, and remain in motion until acted on by an outside force, are being brought to bear on the world stage. No matter how many pundits regurgitate the notion that “nobody could’ve possibly seen this coming,” the truth is that the underpinnings of societal structure have been beset by a very predictable and destructive curse

As markets become unstable following a period of monetary expansion and contraction, investors will demand either a premium on longer-term lending rates or will drive down yield (due to increased demand) on shorter-term lending rates. Historically, this yield curve inversion is a clear indicator of upcoming recessions because it signals uncertainty regarding the future. Couple this with historically-low unemployment rates (another signal that the market is oversaturated) and you’re left with a clear picture of the downturns to come. In fact, the only truly surprising thing about the market malaise of 2020 is how it leaves supposed experts scratching their heads in befuddlement.

The Rise Of The Vampire

The story certainly isn’t new (aggry beads are a sobering example of the economic and societal impacts of monetary debasement); in fact, American economist Murray Rothbard chronicled over a century’s worth of financial engineering and capital market manipulation in his book “A History of Money And Banking In The United States: The Colonial Era To World War II.” An endless boom and bust cycle exacerbated by fiat currencies and Keynesian economic theory have put us on a  trajectory of ever-accelerating debasement. 

The history is nuanced and complex, but the mechanics are quite simple. Sovereigns expand the money and credit supply to retain a disproportionate level of expenditure relative to tax receipts. A trick, colloquialized by the name of “coin clipping” in a time prior to the fiat monetary monopolies that plague the modern day, involved gathering tribute in the form of taxes, clipping or shaving a small value of the precious metal from the coins, and then recirculating them at face value. 

Market boom cycles (bubbles) occur in response to the expansion of money and credit in the system. The less affluent individuals, who can only afford to save in the form of cash, experience a reduction in their purchasing power as their slice of the economic pie becomes steadily smaller. Scarce assets are bid up at market, as a greater supply of currency competes for a limited supply of resources. Crack up-asset booms are followed by deflationary busts and credit contractions. 

Under monetary metal standards, suspension of redemption of specie was used to disrupt the liquidation of malinvestment. Legislation such as Executive Order 6102 in 1933 and the suspension of Bretton Woods in 1971 were indefinite forms of suspension of redemption of specie. This ultimately placed the world on a fiat standard, where expansion of the monetary base and allowable credit could continue unabated without the bothersome settlement to the base layer. 

Disruption of the liquidation process that naturally occurs in the market, however, does not free the vampire from the economic consequences of bleeding its prey dry. 

There is a great deal of misunderstanding in modern analysis of financial markets in the 21st century. Events seem haphazard and at odds with the natural order when not viewed through the lens of Austrian economics. But in reality, these events are perfect representations of the logical basis upon which all human action occurs. 

Man acts to satisfy his most immediate needs first, utilizing whatever resources are available to him to prioritize satisfaction of his most urgent wants in descending order. Rothbard called this the “marginal utility of value.” 

While human action is subjective and no one can predict how any one man will act under the various circumstances he finds himself in, a natural order of operations can be gleaned from societies and economic activities as a whole. 

Obviously, Maslow’s hierarchy of needs naturally drives man to satisfy his physiological and safety needs first. This can be observed across the sociological spectrum of societies and traced back throughout history. We can see societies begin to flourish when enough capital goods and information are accumulated to the degree where focus can shift from the satisfaction of the most pressing and basic wants (survival) to those of a higher order. 

Man learned through voluntary and profitable trade with his counterparts that in a free and flourishing society, his capital could be preserved and could grant him a degree of certainty in satisfying his basic needs into the future via savings.

The dominant medium through which man determined he would save his capital emerged in the form of a monetary medium, that is, the most liquid salable good in a society that served to preserve value across time and space. A single, most important asset which enjoys its value premium separate from its function as a capital or consumption good. In terms of historical significance, this medium, with unprecedented success, was gold. 

Fast forward to 2020 and the world looks much different. The bastardization of the natural economic order through policies influenced by the likes of Keynesian economics has distorted the ways in which man can plan for and save his capital for the satisfaction of his most basic needs in the future. 

The melting ice cube that is fiat currency functions not as a chosen dominant market leader in capital savings and transactions, but rather as a lynchpin in a vampiric legal monopoly which extracts the wealth from every productive aspect of profitable and voluntary cooperation among men. Whether consciously or not, acting man fears for his ability to preserve wealth into the future and provide for his grandchildren, or even satisfy his most basic needs in the immediate future. 

This drives him to seek out alternative media in which he can preserve his monetary energy into the future, giving birth to a wide range of inefficient and arcane financial instruments through which he can find refuge in the storm of monetary debasement. 

Real estate, equities, bonds, precious metals, fine art, luxury vehicles…you probably know the list. Tune in to any average joe financial planning YouTube channel and you’ll find a laundry list of strategies employed to preserve capital into the future. Capturing asset inflation has become an entrepreneurial activity in and of itself. Entire industries are built around advising, planning, trading and arbitraging the effects of monetary expansion on the market as a whole. The more unstable the system, and the more estranged its inhabitants, the more it takes the form of degenerative gambling, like a drowning swimmer desperate to get his head up for another breath of air.

Homes, built to fulfill a specific utility (the need for shelter and security) are bought and sold like collector’s items, with a high level of monetary premium. Equities are traded at a spot value decades beyond projected earnings and fair valuations according to cash flows. Tax incentives are built around protecting the liquidity in these instruments and allowing the vampire to siphon off a continuous stream of fresh sustenance for itself.

Of course, the more leveraged the system becomes, the more it defies the natural economic order of liquidation, the more it pushes off risk into the future, the more unstable it becomes. 

A growing chorus of populism on both sides of the political theater (and yes, I use the term “theater” literally here) demands state intervention in the markets to protect what is deemed most urgent. That is, assets must continue to inflate because assets are the store of value medium through which man preserves himself into the future. 

Gone are the days of trepidation and debate over public fiscal conservatism. Monetary policy is three sheets to the wind and legislators drool over the next allocation of pork to their aisle of special interests. As the risk increases by orders of magnitude, “troubled assets” are bought up in droves by the legal vampire which is drunk on the blood of its host. 

The store of value proposition of assets must be upheld by the legal monopoly or else it might face certain destruction at the hands of a disenfranchised constituency.

And here we find ourselves in a most curious and unusual place.

The Vampire’s Curse

Entrepreneurs (whether they know it or not) now find themselves in a crossroads of great societal importance. They no longer merely provide goods and services to the consumer at a profitable rate, but rather have taken on a role of a much greater import. 

They control the levers of financial engineering of money-like assets. They satisfy the market demand for instruments in which man can preserve his capital — his lifeblood — into the future. 

Only in a world where incentives have been so painfully and obviously distorted, because of the nature of the vampire’s grasp, do you see events like this:

And this:

As Rana Foroohar asks in her book “Makers And Takers”:

“How did finance, a sector that makes up 7 percent of the economy and creates only 4 percent of all jobs, come to generate a third of all corporate profits in America, at the height of the housing boom, up from some 10 percent it was taking 25 years ago?”

Because, you see, Apple no longer just provides fun and interesting electronic devices to its consumers and, likewise, the airlines no longer just provide transportation across land and sea. These businesses have mutated into mercurial public financial instruments which the whole of society depends upon to preserve its lifeblood into the future.

Corporate executives who can satisfy this most urgent market demand for a sound store of value are lauded as demigods. Gone are the days of the Henry Fords, whose entrepreneurial activities were grounded in building an empire of value for the consumer through sound business practices.

Soft money and artificially cheap credit (i.e., that which is redistributed by the state and its legal monopoly) promote financialization at the cannibalization of the entrepreneurial process. The vampire has taken complete dominion over the capital markets. By pulling his levers of interest manipulation, reserve ratios and asset purchases, he feeds himself at the expense of the productive capacities across society.

No other explanation can be used to justify a technology company like Apple borrowing billions of dollars to pump the price of its public financial instrument when it sits on more than $200 billion in cash. 

No other explanation can be used to justify a transportation industry which allocates nearly every dime of its free cash flow for over a decade to protect the value of its equity. 

Killing A Vampire

There is only one way to kill a vampire. Just as technology disrupts and revolutionizes countless industries across generations of men, human ingenuity for finding ways to solve complex problems seemingly knows no limit.

A new monetary medium that satisfies the most pressing demand for preserving lifeblood into the future is making its way onto the world stage. Over-engineered financial assets that have been used as stores of value and contain a great deal of monetary premium are like hyper-saturated solutions in desperate search for equilibrium. 

The emergence of a global, self-clearing digital monetary network which emulates and improves upon the monetary properties of history’s best money (gold) will function like a vacuum that sucks up this premium like a black hole. 

A deluge of ink has been spilled on the history of money, as well as the emergence and merits of this new technology known as Bitcoin, but the critical eye can discern that the paradigm shift is already in motion. While the mainstream parrots conventional wisdom and stands stunned in disbelief as the universe returns to a state of natural equilibrium (that is to say, a monetary premium in money, rather than in money-like assets), rest assured that the benefits to society will be immense.

A diffusion of the monetary premium away from hyper-saturated money alternatives like real estate, commodities and equities and into an accessible, digital hypo-saturated sound money will allow for a more productive satisfaction of the marginal utility of value of these goods and services. Instead of needing a money spigot of capital to artificially inflate assets and preserve wealth through space and time via complex and over-engineered financial instruments, entrepreneurs can return to solving less pressing issues. Homes can return to a more reasonable price in line with their utility value. Gold and other commodities can be made more cheaply available in industrial applications.

Entrepreneurial capital will free itself from its tether to malinvestment in the form of artificial inflation via financial instruments, and will be put to use in the profitable and productive satisfaction of man’s desire. 

This curse can be lifted. 

For the first time in history, the world will know monetary security without the drawbacks of a commodity-based money. We have a scalable, base layer bearer asset set upon a distributed and global peer-to-peer network that settles in real time.

Bitcoin is the stake through the heart of a most terrible beast.

Author’s note: A big thank you to Robert Breedlove, Parker Lewis, Ben Prentice, Ben Kaufman and Rollo Mcfloogle, who helped me sort through and proof read these thoughts. 

This is a guest post by Heavily Armed Clown. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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The Bitcoin Magazine Art Portal: Calling All Bitcoin Artists

The Bitcoin Magazine Art Portal: Calling All Bitcoin Artists
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It’s no secret that the world of fine art and collectibles has been massively disrupted by technologies stemming from the innovation of Bitcoin.

Non-fungible tokens, colloquially known as “NFTs,” are a relatively new technology that has taken the art world by storm, generating millions of dollars in sales across platforms like Nifty Gateway, Async, SuperRare, MakersPlace, KnownOrigin, Rarible; the list grows. Projects like NBA Top Shot and CryptoPunks are leveraging this technology to create digitally-scarce art and collectibles worth thousands of U.S. dollars apiece!

There have been large sums of value discovered in the realm of digital art and collectibles in the past few months alone. Advancement is rapid in this nascent space, and I imagine we haven’t seen the top yet, but where will it all “end up”?

The First NFTs Were Right Here On Bitcoin (And They’re Coming Back)

Maybe we should look at where it all started. That’s right, the one blockchain to rule them all: Bitcoin. NFTs started in 2015 on BTC with counterparty token (XCP) and rare pepes. While today we are seeing a thriving ETH-based NFT space, many Bitcoiners and Bitcoin artists are ready for a BTC NFT resurrection.

I personally see the value in NFTs for their immutability, uniqueness, scarceness and permanence. You don’t need to do anything to keep up the condition of a digital art piece the same way you would with a painting or print. But if the value of an NFT is directly tied to its permanent residence on a perpetually-secure blockchain, then there’s a clear case to be made for why BTC is the best chain for hashing digital art and tokenized collectibles. Whatever additional layers of protocol it takes to make the perfect platform and marketplace, it’s clearly the BTC chain that you want the data pegged to.

And that’s possible now! Today, you can make Bitcoin NFTs using various methods, including Counterparty via Freeport.io, which is a browser-based wallet that allows you to mint NFTs on BTC and even view the BTC NFTs in-browser. 

Other methods are being worked on today as well, with the goal of competing with the Ethereum NFT marketplace soon.

So, when will this shift occur? Will ETH always be better for this the same way BTC will always be better hard money? It is possible, but I won’t digress further into this topic today.

A Call To All Artists

Ultimately, I’m writing this as a call to action. To any artist, established, aspiring or otherwise: If you have an interest in Bitcoin, and want to create art about Bitcoin, Bitcoin Magazine wants to see it and help you share it!

If you submit your artwork to the Bitcoin Magazine contributors portal (art.bitcoinmagazine.com) your work may be selected and featured on bitcoinmagazine.com in an upcoming article.

This initiative by Bitcoin Magazine has one goal in mind: bringing Bitcoin art to the masses.

Do I Qualify To Submit?

If you are a “bitcoin artist” or an artist that makes art relating to Bitcoin, even in abstract ways, you qualify! The image of your art probably belongs on Bitcoin Magazine where it will be syndicated across the web and seen by the most Bitcoiners possible.

If you’re an artist that can’t get his/her/their NFT sales off the ground, and your artwork relates to bitcoin, you qualify! What better way to get your artwork and name out in front of people who’d be most likely to appreciate it.

If you are just a regular person who made a one-hit-wonder meme or artwork in ode to Bitcoin, you qualify too! 

But there will be a curation process and not any old sketch with a Bitcoin logo will make it through. Please don’t feel discouraged if a submission isn’t selected. Bitcoin is for everybody and so is making art!

With this new initiative, Bitcoin Magazine is attempting to decentralize the art contributions on the Bitcoin Magazine website, the same way written contributions come from across the Bitcoin community. This initiative will give artists extra opportunity to gain exposure to our audience, and give our audience exposure to the many great artists in this space, whether they be up and coming or well established.

So, make your way over to the brand new Bitcoin Magazine ✨Art Portal✨ where we will be fielding visual content submissions the same way we accept written contributions from the community.

The post The Bitcoin Magazine Art Portal: Calling All Bitcoin Artists appeared first on Bitcoin Magazine.


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Interview: Bitcoin In Nigeria With Ahyke Otutubuike

Interview: Bitcoin In Nigeria With Ahyke Otutubuike
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This episode of Bitcoin Magazine’s “Bitcoin In Asia” featured Ahyke Otutubuike, a technical writer and Bitcoin user based in Nigeria. 

Nigeria has been in the news this month as its central bank issued a directive, prohibiting regulated financial institutions from dealing with cryptocurrency exchanges and companies that touch crypto, essentially unbanking them. Ahyke had a piece in Bitcoin Magazine this past week explaining the situation and adding context for Bitcoin’s place in Nigeria’s economy overall, he added additional analysis in this episode. He discussed the momentum for Bitcoin in Nigeria and its main use cases, national economic factors behind the central bank’s move, what he sees as the main drivers of the action and what comes next.

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First-Ever North American Bitcoin ETF Breaks Records In Opening Week

First-Ever North American Bitcoin ETF Breaks Records In Opening Week
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The first bitcoin exchange-traded fund (ETF) to receive regulatory approval in North America has already demonstrated the market’s huge appetite for such a product.

The Purpose Bitcoin ETF (ticker: BTCC), brought to market by Purpose Investments earlier this week, traded $80 million worth of shares in its first hour and $200 million in its first day — a figure that’s ten times greater than that of the average ETF and broke records in Canada, according to Bloomberg senior ETF analyst Eric Balchunas.

In its second day on the market, BTCC traded $350 million in shares, which was three times more than any other ETF, per Balchunas.

While BTCC is the first bitcoin ETF to hit the North American market, it will not be the last. Ontario regulators approved a second bitcoin ETF from Evolve Funds Group this week. And bitcoin custodian NYDIG recently submitted a regulatory approval filing to offer a similar bitcoin ETF product in the United States. 

The extreme volumes and interest generated by the BTCC ETF have already demonstrated startling retail excitement for easy, safe bitcoin exposure from such products.

The post First-Ever North American Bitcoin ETF Breaks Records In Opening Week appeared first on Bitcoin Magazine.


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2021 Bitcoin Investment Research Report

2021 Bitcoin Investment Research Report
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Bitcoin, the decentralized digital currency, was established on January 3, 2009 by Satoshi Nakamoto, the pseudonymous developer(s) who pieced together its original source code. Satoshi mined the very first Bitcoin block and received 50 BTC for the work. After that, the decentralized cryptocurrency network was born, and it would begin to grow and spread throughout the world like a virus.

Bitcoin’s price has surmounted a wall of worry since this 2009 origin. It went from few people thinking it has value, to millions of people around the world buying and saving bitcoin, including some of the world’s top investors like Bill Miller, Paul Tudor Jones, Stanley Druckenmiller and Larry Fink. And one of the more fascinating things behind the rise of bitcoin is its organic nature. Bitcoin has no CEO, no centralized organization and no marketing department, yet it has still become a multi-hundred-billion-dollar asset. The objective of Mimesis Capital’s “2021 Bitcoin Investment Research Report” is to dive into why bitcoin was the best performing asset of the last decade, and provide an outlook for 2021.

In the Mimesis Capital bitcoin investment research report for 2021, we cover bitcoin’s repeated parabolic price history, why bitcoin has value, three key exponential network effects, the stock-to-flow scarcity pricing model, its potential long-term opportunity, our outlook for 2021, the idea of “escape velocity” and more. It aims to be the ultimate modern guide on bitcoin, designed to provide unique, data-driven insights that support the inevitable adoption of bitcoin as the world’s greatest form of money. Our research is specifically written for family offices, institutional investors and corporations looking to adopt bitcoin as their treasury reserve asset, but we are publicly publishing this research for all individuals.

Who are we? Mimesis Capital is a family office that focuses on wealth preservation through bitcoin, equity investment and investment-grade art.

As a firm, we believe that bitcoin has ignited a generational wealth transfer. Bitcoin is a system capable of storing monetized energy without dilution. It is a revolutionary discovery of a new digital good that has the unique properties of being scrace, durable, divisible, transactable, portable and fungible, all in a decentralized manner. We believe that Mimesis Capital has recognized the implications of the discovery of bitcoin before the world at large, and we are capitalizing on this pivotal transition.

Based on our research and unique perspective, we believe that bitcoin is the pristine primary treasury reserve asset. In addition, we think bitcoin can serve as our investment benchmark and unit of account. The rest of the world is trying to accumulate more dollars, while we are trying to accumulate more bitcoin. Dive into our publicly-available “2021 Bitcoin Investment Research Report” to understand our thought process, peer into how we came to the conclusion that bitcoin is the world’s best monetary good and access data-driven insights that support our analysis.

Access the full “Bitcoin Investment Research Report for 2021.”

The post 2021 Bitcoin Investment Research Report appeared first on Bitcoin Magazine.


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Bitcoin Hits $56,000, What’s Next?

Bitcoin Hits $56,000, What’s Next?
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In January 2021, Bloomberg Analyst Mike McGlone predicted that the price of bitcoin would hit $50,000 at some point this year. At the time, the value of the leading crypto asset was merely hovering above $30,000, and the $50,000 mark felt a very long way off. Less than a full month later and the cryptocurrency king has not only passed $50,000 — a major price milestone — but exceeded $56,000. And it appears as if nothing can stop it from going even further.

The price rise that has seen bitcoin nearly double in value since the beginning of 2021 started in late 2020, when the cryptocurrency industry as a whole witnessed a bull run that surpassed any cycle from the past, particularly that of 2017. 

So, with bitcoin hitting the $56,000 mark, the question on everyone’s mind is: What’s next? What does the future hold in terms of price, regulation and adoption of this “digital gold?”

A Brief Bitcoin Price History

One of the things that has contributed to the appeal of bitcoin is its status as the first-ever cryptocurrency. Created in 2009 by a pseudonymous person or group known as Satoshi Nakamoto, the idea behind its creation was to serve as an alternative to the failing traditional banking system. 

However, its rise to the top and acceptance by the public hasn’t been simple or straightforward. The cryptocurrency barely existed, without any significant value for years. It was only in 2011 that its value increased significantly, with its reaching a meager $10 that year. 

The economic crisis in Europe in 2013 allowed the asset to make inroads into other markets outside of the U.S. And the view that it could serve as a viable alternative to traditional fiat currencies helped in its early adoption. Simultaneously, several other cryptocurrencies were emerging based on the Bitcoin open-source code with little tweaks.

But bitcoin’s rise in value was a steady one (even if it is notoriously volatile in the shorter term), as bitcoin added zeros year after year. While it has had a few bull runs since it was created, the first massive bull run was in 2013 when it crossed the $1,000 mark. In 2017, it crossed the $10,000 mark and got very close to the $20,000 one by reaching highs above $19,000.

What followed those highs was a massive slump the following year. The value came tumbling down from $19,783 in December 2017 to $3,300 in December 2018. From there, its price became more stable and slowly began its rise back to the top. It took almost two years for the cryptocurrency to reach its previous all-time high again and it finally reached the $20,000 mark in December 2020.

Bitcoin carried its 2020 price form right into 2021 as it continued to reach new milestones, seemingly with each day. After finishing 2020 at around $28,000, it quickly rose to a peak around $40,000 in January 2021, before flagging a bit.

With February came the big Tesla announcement of a $1.5 billion investment in bitcoin, plus the entrance of other institutions like BNY Mellon, playing a part in helping the value of the asset continue to climb, inching close to $50,000 before finally passing that figure on February 16, 2021, exactly two months after hitting $20,000 for the first time.

What’s Next?

Now that Bitcoin has passed the big 50, there are several things that cryptocurrency enthusiasts and skeptics alike are looking forward to. The multi-million question, however, is: Will bitcoin’s value keep rising from here, or will we witness another major price slump like we did in 2017? The truth is, it’s hard to tell, but analysts and price forecasts can give us some idea of what to expect from the asset.

Price Forecast

Only a few investors and analysts were able to predict the massive surge in bitcoin price and hedge fund manager Mike Novogratz was one of them. Novogratz has predicted that bitcoin will peak at $65,000 in 2021. The number may have looked overly optimistic when he originally announced it, but given that it is still only February and bitcoin has already reached $50,000, it doesn’t seem far-fetched anymore.

Perhaps a prediction that still looks and feels farfetched is that of Tom Fitzpatrick, the Citibank analyst, who said that bitcoin will peak at $318,000 by the end of 2021.

Looking at previous surges in price and the current price trend, it would seemingly take a miracle for that to happen. But bitcoin has been known to pull off some surprising price stunts that are nothing short of magical. So, it wouldn’t hurt to hold on to that dream.

On the side of technical analysis, many cryptocurrency platforms also have made price forecasts about what to expect from BTC. DigitalCoinPrice, for instance, believes bitcoin will reach highs of more than $86,000 by the end of this year, at the time of this writing.

Given that the price of the cryptocurrency has more than doubled its price in the past two months, it doesn’t seem entirely impossible that the same thing could happen within the next ten months. The Investment bank JPMorgan Chase has predicted that bitcoin could reach $146,000.

But all of these predictions have one thing in common; they see the value of bitcoin rising. Considering that the cryptocurrency is in the price form of its life, it is probably only a full-fledged skeptic that would have a negative price outlook.

Increased Adoption

While it is hard to tell with certainty what will happen to the price of bitcoin, one thing is sure: It is getting the attention of institutional investors.

The primary issue that most institutional investors have with bitcoin is its volatility. But in the current inflationary economic climb, where not taking a risk seems like a more significant risk, investors seem ready to bet on bitcoin.

With companies like MicroStrategy, Tesla and Square already investing or planning to accept bitcoin payments, other corporate entities should join the bandwagon because they wouldn’t want to be left out. 

Mastercard has already announced plans to facilitate bitcoin transactions. Apple seems to be considering investing in bitcoin. As noted above, BNY Mellon plans to include digital assets in its offerings. Even JPMorgan is optimistic about bitcoin. So, you see, major institutions have been backed into a corner of either accepting that BTC is the present and the future, or being left behind.

However, adoption doesn’t mean that bitcoin will become the world reserve currency. Many believe it will only become a more accepted value store. Its current price and the likelihood of even higher importance in the future may actually make it more difficult for bitcoin to become a standard transactional currency. 

Thus, as time goes, we could witness more institutional and mainstream adoption of the cryptocurrency as a store of value than as a payment method for goods and services.

Regulatory Clarity 

As bitcoin continues to climb higher, more regulations don’t just look likely, they have become an inevitability. The increase in value means an increase in risks — the deal is gradually getting to a point where regulators’ warning about bitcoin’s perceived dangers are no longer enough. There’s a need for action.

This is evidenced in a recent statement made by a commissioner of the U.S. Securities and Exchange Commission, Hester Peirce, who said that there is now an urgent need for more regulatory clarity concerning the use of cryptocurrencies. She is not alone with this view, as this writer also shares the same thought.

As BTC becomes more mainstream, regulatory bodies have to become more proactive and take a more cursory look at how the industry could serve the interests of their people. They should avoid reactionary actions, like those of the Nigerian or Indian governments, which have both decided to effectively ban cryptocurrencies in their jurisdictions.

Instead, more regulatory clarity should be offered to the industry and, with time, everyone will become enamored with the cryptocurrency space.

Conclusion

Bitcoin passing $50,000 is a significant milestone, not just for the asset, but also for other cryptocurrencies, too. It is expected that the rise in value of bitcoin and its effects will generally have a ripple effect on the whole cryptocurrency industry. After all, bitcoin has always been the pacesetter.

Thus, this new price level will bring with it a whole new level of scrutiny, pessimism and some fight back from the traditional financial industry. But BTC is like a moving train, and presently, nothing can stop this train from moving further forward.

This is a guest post by Oluwapelumi Adejumo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post Bitcoin Hits $56,000, What’s Next? appeared first on Bitcoin Magazine.


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Why Investors Are So Excited About MicroStrategy’s Bitcoin Acquisition Plan

Why Investors Are So Excited About MicroStrategy’s Bitcoin Acquisition Plan
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MicroStrategy has announced another convertible bond raise, this time priced at $900 million, in order to buy even more bitcoin. How does this compare to its last bond offering? And why isn’t it going to stop anytime soon?

What’s A Convertible Note?

First, a convertible bond or note starts as a bond, then “converts” to equity. The company pays lower interest rates because of this potential conversion. In other words, the company will pay for it later with an equity dilution. A company may choose this route if it has bad credit or it’s expecting high growth.

MicroStrategy’s First Convertible Bond Offering

In December 2020, MicroStrategy announced its first convertible bond offering for the explicit purpose of buying bitcoin. Citi immediately downgraded MSTR to a “sell” recommendation. But, the market had a much more bullish take.

Investor appetite was so strong that MicroStrategy upsized its offering from $400 million to $550 million with the additional option for inverter’s to purchase another $100 million. All of this was filled for a total $650 million offering.

MicroStrategy also priced its bonds insanely low. Interest was 0.75 percent per year. So, payments were about $4 million per year for a company with an operating income of about $40 million. That’s 10x coverage. Meanwhile, 2x is generally considered strong.

CEO Michael Saylor went even further than this aggressive pricing by giving MicroStrategy the option to settle the bond in shares or pay out in cash. The bond was struck for $398 per share while the stock was at $289. This was equivalent to a 35 percent premium to investors.

MicroStrategy’s Latest Offering

This month, MicroStrategy announced a proposed latest offering of $600 million converts with a $90 million optional additional purchase. The announced pricing was even more aggressive than the previous offering. It upsized the offering to $900 million with a $150 million optional increase. This was offered at 0 percent interest to be settled in shares or cash, at a 50 percent premium. The offering closed today and was completely filled for the $1.05 billion raise. Clearly, investor appetite remained massive for such an upside and proposed pricing.

So, why do investors remain excited? MicroStrategy has no debt, apart from its previous $650 million convertible bond note. It can handle more, given its operating income and that its balance sheet has more than doubled from its bitcoin holding — from $1.1 billion to $3.4 billion. 

MicroStrategy owns more bitcoin than any other operating company, and it gives it a scarcity value above the value of the core business and BTC holdings. To many institutional investors, it is the company you want to invest in for an “almost free call option on bitcoin” 

Tesla’s addition of bitcoin to its balance sheet is helping normalize the practice of corporations adding bitcoin to their balance sheets as a reserve, but MicroStrategy is the only public company actively taking out debt to acquire more bitcoin. 

And, per MicroStrategy’s  “Bitcoin Acquisition Strategy” stated in its 10K, it has no plans to stop. For the foreseeable future, it will utilize excess cash flows and debt to acquire more and more bitcoin. 

MicroStrategy remains the only public company on the market continuing to take out debt to acquire more bitcoin. Its pricing of these bonds and rising stock price have shown its success in this strategy. They won’t be stopping anytime soon. 

This is a guest post by Ellie Frost. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post Why Investors Are So Excited About MicroStrategy’s Bitcoin Acquisition Plan appeared first on Bitcoin Magazine.


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Explaining Bitcoin Addresses

Explaining Bitcoin Addresses
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In this episode of “The Van Wirdum Sjorsnado,” hosts Aaron van Wirdum and Sjors Provoost discussed Bitcoin addresses. Every Bitcoin user has probably at one point used Bitcoin addresses, but what are they, exactly?

Van Wirdum and Provoost explained that Bitcoin addresses are not part of the Bitcoin protocol. Instead, they are conventions used by Bitcoin (wallet) software to communicate where coins must be spent to: either a public key (P2PK), a public key hash (P2PKH), a script hash (P2SH), a witness public key hash (P2WPKH) or a witness script hash (P2WSH). Addresses also include some meta data about the address type itself.

Bitcoin addresses communicate these payment options using their own “numeric systems,” the hosts explained. The first version of this was base58, which uses 58 different symbols to represent numbers. Newer address types, bech32 addresses, instead use base32 which uses 32 different symbols to represent numbers.

Van Wirdum and Provoost discussed some of the benefits of using Bitcoin addresses in general and bech32 addresses in specific. In addition, Provoost explained that the first version of bech32 addresses included a (relatively harmless) bug, and how a newer standard for bech32 addresses has fixed this bug.

The post Explaining Bitcoin Addresses appeared first on Bitcoin Magazine.


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Interview: Diego Gutiérrez Zaldívar And Building On Bitcoin

Interview: Diego Gutiérrez Zaldívar And Building On Bitcoin
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This week, on the “Bitcoin Magazine Podcast,” host Christian Keroles sat down with long-time Bitcoiner and co-founder of the RSK Bitcoin sidechain Diego Gutiérrez Zaldívar. RSK has been live on top of Bitcoin since 2018 and has been quietly building a fantastic ecosystem of wallets, decentralized order books, bitcoin-backed stablecoins and more. The projects being built on and enabled by RSK have been generating an incredible amount of hype in the Bitcoin community and they are all enabled by the RSK sidechain.

RSK is merge mined with bitcoin and leverages bitcoin as it’s own native currency. Bitcoin has to be pegged into the RSK chain and Zaldívar’s team is working on greatly improving the UX and wait time for a trustless peg between BTC and RBTC. Keroles and Zaldívar discussed how Bitcoiners can easily and trustlessly peg into the RSK chain and start taking advantage of all of the applications built on RSK. There are several user-friendly wallets, including Edge Wallet that allows for a non-technical user to get access to RBTC.

In this interview, it was made very clear that Zaldívar and his team are true Bitcoiners who are building with Bitcoin’s best interests in mind. Because the RSK team is located in Argentina and throughout LATAM, it has a very close perspective on the struggles and needs of the unbanked and underbanked. RSK is building the decentralized infrastructure needed to sustain a financial system completely on blockchains.

The post Interview: Diego Gutiérrez Zaldívar And Building On Bitcoin appeared first on Bitcoin Magazine.


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This Month In Bitcoin And Central Banks

This Month In Bitcoin And Central Banks
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In this episode of Bitcoin Magazine’s “Fed Watch” podcast, Christian Keroles and Ansel Lindner gave an update on central bank news in relation to bitcoin. This is the only podcast that tackles this intersection of macro and bitcoin from a realistic and skeptical point of view. The cracks in the legacy financial system are fairly evident at this point, but it is not going to be a quick and easy transition to what is next. Bitcoin’s niche is growing and muscling into the territory of the legacy system. But it will happen in phases, without a centralized plan. This podcast examines that point friction.

This episode started with a review of Federal Reserve Chairman Jerome Powell’s comments over the last week. The hosts dove into its dual mandate of stable prices and maximum employment, and the Fed’s focus is switching to employment. Powell also implied a slight change to its policy on inflation “running hot” over 2 percent in an attempt to target an average of 2 percent inflation. He said that stimulus results in temporary shocks of inflation, and it is those temporary shocks over 2 percent that is is willing to allow.

Next, the hosts moved onto the European Central Bank (ECB), which has been the center of a majority of central bank news over the last six months. Lindner read through some comments by Fabio Panetta, member of the ECB’s executive board and chair of the task force on a digital euro, from last week. He was very negative on corporate stablecoins while dismissing bitcoin completely. Then, out of the other side of his mouth, he proclaimed the progress they are making on the digital euro. 

However, Panetta lastly spoke about tradeoffs in the design of the digital euro, between functionality and privacy. This is interesting because accepting there are tradeoffs is something that comes after a learning process for Bitcoiners and still evades many people involved with altcoins. Bankers at the ECB seem to be progressing along the typical learning curve of others as they enter this space, and are ahead of most altcoin folks already. It is only a matter of time until they come around to the fact they cannot compete head-to-head with bitcoin.

The hosts finished up the central bank news by talking quickly about the People’s Bank of China (PBoC) and the Bank of Japan (BOJ). Here, the only news is a lack of news from China around Lunar New Year and the BOJ announcing a review of their policies starting in March as its economy looks to be heating up slightly.

In typical “Fed Watch” fashion, the hosts spent the last few minutes talking about bitcoin and some of the broad developments over the last month. All together, another great episode.

The post This Month In Bitcoin And Central Banks appeared first on Bitcoin Magazine.


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MicroStrategy Ups Note Offering For Buying More Bitcoin To $900 Million

MicroStrategy Ups Note Offering For Buying More Bitcoin To $900 Million
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Just one day after CEO Michael Saylor announced that his company MicroStrategy was proposing a private offering of $600 million of convertible senior notes to buy more bitcoin, he announced that the offering will actually be $900 million of notes, according to a release

The terms around this offering were also further clarified from what was proposed yesterday, as it was announced that they will not bear interest, and the principal amount of the notes won’t accrete. These notes will mature on February 15, 2027 unless they are repurchased earlier.

The release states that MicroStrategy “estimates that the net proceeds from the sale of the notes will be approximately $879.3 million (or approximately $1.0 billion if the initial purchasers exercise in full their option to purchase additional notes), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by MicroStrategy.” 

As announced in yesterday’s proposal, today’s release reaffirmed that MicroStrategy will offer the purchaser the option to purchase the notes “within a 13-day period beginning on, and including, the date on which the notes are first issued,” but today’s announcement clarified that this would only be the case for “up to an additional $150 million aggregate principal amount of the notes.” The offer is expected to close in two days, on February 19, 2021.

If there was any doubt about the intentions for the use of this money, following MicroStrategy’s ongoing bitcoin buying as well as its proposal from yesterday, this announcement stated that the company “intends to use the net proceeds from the sale of the notes to acquire additional bitcoin.”

There is only 21 million bitcoin out there for the entire world, ever. This is just one company, taking on massive debt to buy more bitcoin yet again, front-running all its competitors and other institutions in the process. If other big players want to keep pace with MicroStrategy, they’re going to have to not only accumulate massive amounts of bitcoin as well, but also likely take on debt to do their best to catch up. 

MicroStrategy has set a new standard for companies when it comes to preserving shareholder value. And that is the Bitcoin standard.

The post MicroStrategy Ups Note Offering For Buying More Bitcoin To $900 Million appeared first on Bitcoin Magazine.


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Interview: How Bitcoin Changed My Life With Yung Lerk

Interview: How Bitcoin Changed My Life With Yung Lerk
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For this episode of Bitcoin Magazine’s “Meet The Taco Plebs,” I was joined by fellow pleb Yung Lerk (@YungLerk_) for his first-ever podcast appearance.

This was one of my favorite episodes that I’ve recorded in this series and I’m sure you’ll love it just as much as I did. We kicked off this interview by discussing Lerk’s rabbit hole story and how he found Bitcoin. He described how he went through a four-touch process with Bitcoin after finding it for the first time in 2012, and seeing it pop back up over and over again as time went on. He remembered his friends buying things from Silk Road with bitcoin and talked a little about that.

Bitcoin changes you, you don’t change Bitcoin. And Lerk explained just how much he’s changed since coming into the Bitcoin space. Precoiner Lerk would spend lots of money on things that he didn’t necessarily need, and he explained how he earned a good amount of money but didn’t know what to do with it. Once he dove down the rabbit hole, he stopped the needless spending to accumulate as much bitcoin as possible, and he hasn’t looked back. He mentioned the importance of bitcoin’s finite supply of 21 million, and why that urges him to stack harder.

This led to a discussion about time preference and savings, and how Bitcoin completely changes your incentives in life. 

“If it doesn’t change your life, you’re doing it wrong” he said, and I completely agree. 

Many people who buy bitcoin don’t get into it and learn why it’s important. Bitcoin is powerful enough to change the life of anyone, so if it doesn’t change yours, you may be going about it wrong.

Below are some of Lerk’s most interesting thoughts shared during the interview. And be sure to check out the full episode for more.

How Did You Find Bitcoin And Fall Down The Rabbit Hole?

I got into Bitcoin in the fall of 2019, I heard about it growing up a couple of times, like in High School when people were using the Silk Road. Then, in college, my buddies were using it to gamble and buy drugs on the internet. I never thought much of it because I grew up thinking cash is king, but man was I wrong. 

After I finished college, I got a real-world job and started making some money that I didn’t exactly know what to do with besides leaving it in the bank. I started researching investment articles online and came across a thread talking about Bitcoin and finite supply. How there will never be more than 21 million ever created, I think that’s what really resonated with me. I’ve heard about Bitcoin too much to not try to learn about it. so once I read that thread, I went and bought my first bitcoin. Also seeing how easy it was to buy it and hold it, I slowly became addicted to stacking sats.

I’ve always loved Twitter as a social medium, and once I found Bitcoin Twitter, it was all over from then on. I submersed myself into the lifestyle by talking about it, reading books about it, listening to podcasts like “TFTC” and “Stephan Livera,” following Bitcoin plebs and OG’s who’ve been in the space for years. You can always learn something new in the Bitcoin space, which is one part that will always bring me back. One of the coolest things that I liked on my rabbit hole journey is that the personalities that you meet are a feature.

How Has Bitcoin Changed Your Life?

There are so many ways that you can look at how Bitcoin changed your life because it has so many different variants impacting an individual. Me, personally, I was never the best at saving money or knowing how to grow my money for the future, so Bitcoin gave me a savings technology that I don’t have to worry about. I grew up always being the computer guy out of the friend group, so I wasn’t into stonks and never cared to learn about them.

Bitcoin made me want to learn about what is money and how it worked throughout history. Once I started engulfing every moment I could about what Bitcoin is and how it worked, I’ve been addicted ever since.

What Do You Consider To Be The Most Amazing Thing About Bitcoin?

The most amazing thing about Bitcoin to me is all of the different variables that it brings to the table such as money, technology, economics, mining, art, game theory, freedom, etc. It can be quite overwhelming at times when you’re just diving down the rabbit hole but the best thing you can do is soak it all in. There’s always something you can learn in the space from another Bitcoiner and that’s what intrigues me the most. The Number Go Up technology will continue to bring in more and more people, those who hold through the FUD will be rewarded.

How Would You Advise Someone To Learn About Bitcoin? What Are Your Favorite Podcasts, Articles And Books?

Bitcoin’s future is so bright with many brilliant minds working on the project but what I’m looking forward to the most is the Lightning Network. The opportunities that we’ve already seen with companies like Strike and MintGox that have come up within the past year, these are just the beginning in my opinion. A majority of people have never heard of the Lightning Network but they have heard of Bitcoin. In the future, I think Lightning is going to have a big impact on adoption.

What Is Your Best Bitcoin Pitch?

I think price predictions are always tough to give because honey badger don’t care, but it will be interesting to see where we end up after this crazy year we just had. My price prediction for the end of the year is $150,000 and by 2030 it will have touched $1 million at some point. HODL PLEBS!

The post Interview: How Bitcoin Changed My Life With Yung Lerk appeared first on Bitcoin Magazine.


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Bitcoin Will Persist In Nigeria, But The Ban Changes Things

Bitcoin Will Persist In Nigeria, But The Ban Changes Things
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You have probably heard the news about the Central Bank of Nigeria (CBN) imposing a ban on financial services for cryptocurrency exchange operators, as well as the incongruent excuses for its action. You may have also heard of several connected controversies, like how it’s linked to the #endSARS protests, aid for which was partly funded in bitcoin. 

What you probably don’t know, though, is how this is related to the economic shock from the COVID-19 pandemic, the huge arbitrage gap in the naira (NGN) prices across the Nigerian currency market, the decline in Nigeria’s inflow remittances and the emotional tension of individuals whose funds are sadly trapped in all of this. 

Over the course of this piece, we will be looking at the economic state of Nigeria prior to the cryptocurrency exchange ban and how it has influenced rapid cryptocurrency adoption, the involvement of the Nigerian senate and what will most likely ensue next. 

Nigeria Crypto Exchanges In Light Of The Ban

According to Statista, Nigeria was ranked as the third-highest trader of bitcoin by volume on online exchanges in 2020, which obviously speaks of huge daily-volume transfers from local banks to exchanges and vice versa. Unfortunately, the ban — which came as a sudden reminder of what the CBN has said was a prohibition instituted in 2017 — has affected countless individuals and businesses who rely on cryptocurrency, as well as exchanges with established Nigerian bank accounts.  

Unlike the Indian cryptocurrency ban, which came with a week’s notice, the reminder of the Nigerian cryptocurrency restriction was circulated like a sudden knockout punch to exchange operators. Exchanges were hurt and their customers were, too. My close friends and acquaintances were all affected. 

Personally, I find that it reinforced the fact that the only true financial control you can really have is the type that you get from an uncompromised private key. You may have some control with a custodial wallet; but definitely not from a bank account.

Why Nigeria Has Embraced Cryptocurrency

Beyond the speculative benefits and freedoms of the cryptocurrency market, a major reason why cryptocurrencies have been adopted so readily in Nigeria is because they offer the most efficient remittance window for Nigerians looking to transfer funds in and out of the country. Even remitting funds within Africa comes at a very high cost from Nigeria, assuming you are using an official remittance service.

As a technical writer who works for international clients and customers, I tend to use cryptocurrencies for every payment that I make or receive; except in cases where it’s not convenient for the client or customer. I will be explaining why shortly. 

Another practical example of individuals benefiting from the use of cryptocurrency in Nigeria can be found in Chinese importers who have to send/receive funds to/from China into the African country. However, with outflow restrictions of $10,000 at a 20 percent remittance cost, these importers tend to resort to using cryptocurrency exchanges, which help them make payments to a seller’s Chinese bank account. 

For context, according to data from the CBN, in 2015, diaspora remittances generated $21.2 billion for the country, outpacing crude oil by $1.6 billion. Also, according to a World Bank report on inflow remittance by nation, the Nigerian inflow remittance had been on a steady rise for 12 years. 

It only started declining in 2018. In fact, according to Nairalytics, a Nigerian market analytics website, diaspora remittances declined by 97.3 percent between January 2020 and September 2020. Coincidentally, cryptocurrency volumes in the country were at their highest during this period.

A major reason for this decline in remittances can be found in the huge arbitrage between Nigeria’s official and unofficial internal exchange rates for currency exchanges. At the time of this writing, there is a huge price gap of about 20 percent to 30 percent between these rates. This gap is between the official and unofficial ends of the Nigerian currency market. 

In other words, if you had to do a currency exchange of NGN to USD through a bank, you are likely to get your USD exchanged to NGN at a 30 percent mark down. But if you used a black market exchange, you would get it at near the true forex rate. Unfortunately, gaining access to this end of the market is risky, difficult and also illegal.  

But fortunately, with cryptocurrency exchanges, access to better exchange rates is fast, sleek and requires almost no middleman, besides maybe the exchange providing escrow and you receiving the funds in your bank account. The exchange rates, from personal experience, fit the reality, especially with peer-to-peer exchanges.

Also, another motivation for this rise in cryptocurrency volume has been the rapid devaluation of the naira in the forex market. The NGN/USD pair has lost over 189 percent in just five years. 

Source: TradingView

Also, as in every other part of the world, investors and savers in Nigeria are slowly beginning to see the promise that the cryptocurrency market offers for long-term investing.

Why This Ban Is Unfounded

In defending its 2017 ban on the financial facilitation of cryptocurrency operations, CBN argued that cryptocurrencies are “largely speculative, anonymous and untraceable” and “increasingly being used for money laundering, terrorism financing and other criminal activities.”

But before cryptocurrencies came along, fraud was perpetrated using bank accounts. All of the catfishing scams I have heard of in Nigeria were conducted using traditional remittance services like Western Union and so on. All of the criminal activities involving foreign bank accounts that I have heard of in Nigeria were also conducted using traditional remittances.

Interestingly, every cryptocurrency exchange is mandated by the 2017 CBN directive to be KYC and AML compliant so they can operate bank accounts. This shrinks the possibilities of fraud through this medium to the barest of minimums. Despite this, the CBN is still proceeded with a ban. 

Turning To P2P Exchanges 

In the five days following the ban reminder, Binance, which is a major cryptocurrency exchange operating in Nigeria, added NGN as a fiat asset in its P2P market section. Also, several P2P exchanges which are still in operation in the country are now becoming prominent.  

As this demonstrates, the CBN restriction has only turned those interested in exchanging cryptocurrencies toward P2P trades which, by the way, were the status quo before now as well. With this, it is very likely that cryptocurrency volume in the country will pick up; however the activity may be largely untraceable. 

Nigerian Senate Summons CBN, SEC For A Brief

Some days after the restriction was recirculated, the Nigerian senate called on the governor of the central bank and the director general of the Nigerian Securities and Exchange Commission (SEC) to offer a brief on the ban and the ongoing status of cryptocurrencies in the country.

However, at the time of this writing, the date of that hearing is still undecided. What is clear, however, is that some senators are in favor of cryptocurrency regulation. Here are some thoughts of senators in favor of a regulation:

Also, the former deputy governor of the Nigerian central bank, Kingsley Moghalu, shared his thoughts in a recent interview on why a regulation for cryptocurrencies in the country is necessary.

Other groups, like the Blockchain Nigerian User Group (the biggest blockchain community in the country), exchange operators and several other individual entities are working toward securing an ease in the ban. We will likely see a hearing of blockchain stakeholders in the senate, but information on that is still unclear.

It is certain that, eventually, affected operators will be getting a grace period to withdraw their funds. Also, the Nigerian central bank will eventually come to terms with how uncontrollable cryptocurrency trades really are, once P2P trading normalizes. 

However, what may be most affected is the growth of the blockchain innovation that we were beginning to see in the country before this ban was recirculated.

This is a guest post by Ahyke Otutubuike. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post Bitcoin Will Persist In Nigeria, But The Ban Changes Things appeared first on Bitcoin Magazine.


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FastBitcoins Gifting Customers 50 Percent Of On-Chain Transaction Fees For Using Lightning

FastBitcoins Gifting Customers 50 Percent Of On-Chain Transaction Fees For Using Lightning
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FastBitcoins, which allows users to buy bitcoin directly via their bank accounts or at physical locations quickly through the Lightning Network, will be rewarding its users with 50 percent of the transaction fees that would usually be charged on-chain.

“With this new incentive, FastBitcoins aims to proactively drive customer adoption of the Lightning Network, the payments layer that sits on top of the main Bitcoin blockchain, and make Bitcoin usable for people in real life,” according to an announcement shared with Bitcoin Magazine. “The Lightning Network allows near-instant Bitcoin payments with tiny fees. By sharing the cost savings, FastBitcoins is encouraging users to trial the Lightning Network and discover how it can be as easy and convenient to use as fiat currency.”

On-chain Bitcoin transactions include fees to incentivize miners to validate the blocks in which that transaction data is contained. But the Lightning Network creates channels between individuals on a second layer, allowing them to send BTC payments back and forth and only settle on the base layer once they close these channels. As such, Lightning transactions can be verified much quicker than on-chain transactions, and transaction fees are only required upon channel closures.

While institutions and retail investors continue to divert their treasury assets to BTC as a store of value, the Lightning Network is a compelling solution for micropayments and rapid transactions. This promotion from FastBitcoins is meant to remind or inform users of that potential.

“People all over the world are learning that Bitcoin enables them to keep their wealth safe from inflation,” Danny Brewster, the managing director of FastBitcoins, said in the announcement. “But what is less well known is that it can actually be used in small amounts, too… We want to help people experience Bitcoin’s full potential, and what better way to do this than by incentivizing them to take the leap and see how the Lightning Network transforms bitcoin from a store of value into something even more powerful?”

The post FastBitcoins Gifting Customers 50 Percent Of On-Chain Transaction Fees For Using Lightning appeared first on Bitcoin Magazine.


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NYDIG Files For Bitcoin ETF Approval

NYDIG Files For Bitcoin ETF Approval
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Bitcoin-focused financial services firm New York Digital Investment Group (NYDIG) filed for approval to offer a bitcoin exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC) today.

An ETF is seen as one of the easiest ways of bringing bitcoin exposure to the masses, as it would be accessible through the stock market and legacy brokerage accounts. Currently, with no approved ETF on the market, retail investors using legacy brokerage accounts are constrained to bitcoin trusts like Grayscale’s GBTC. Investment in bitcoin-focused companies is also a route to indirect bitcoin exposure, but an ETF would offer direct exposure to BTC without the need to pay trust premiums or invest in third-party companies.

Per the filing, NYDIG hopes to list the ETF on the New York Stock Exchange. The bitcoin tied to the product would be custodied with the NYDIG Trust Company and its initial authorized participant — an organization with the right to create and redeem shares of an ETF — is investment giant Morgan Stanley. NYDIG Bitcoin Trust, as the product would be called, would pay NYDIG Asset Management a fee of 0.5 percent per year.

The filing also included information about the bitcoin market, offering a high-level overview of how the Bitcoin protocol and network operate and making the claim that the bitcoin on-chain are fungible. 

“Units of bitcoin are treated as fungible,” the filing reads. This is noteworthy, as the case of bitcoin fungibility has been questioned many times by critics of Bitcoin’s open ledger. 

The filing also dives into the Lightning Network, explaining the development around another one of Bitcoin’s oft-criticized shortcomings: scalability.

“Development of the Bitcoin source code has increasingly focused on modifications of the Bitcoin protocol to enhance speed and scalability,” per the filing. “[The Lightning Network] enables increased transaction throughput and reduces the computational burden on the Bitcoin network. The Lightning Network is currently a subject of ongoing research and development and does not yet have material adoption as of January 2021.”

The filing came shortly after Purpose Investment announced the approval of its own bitcoin ETF by Canadian regulators, making it the first firm cleared to offer such a product in North America. Many firms have attempted to receive approval for a bitcoin ETF from the SEC and many have been rejected.

NYDIG is a subsidiary of Stone Ridge Asset Management, which has more than $10 billion in assets under management and announced its own $115 million bitcoin investment late last year.

The post NYDIG Files For Bitcoin ETF Approval appeared first on Bitcoin Magazine.


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Sports Gambling Website 500.com Acquires Bitcoin Mining Pool BTC.com

Sports Gambling Website 500.com Acquires Bitcoin Mining Pool BTC.com
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Today, Shenzhen, China-based sports lottery site 500.com announced the acquisition of major Bitcoin mining pool BTC.com from Blockchain Alliance Technologies Holding Company via a share-swap agreement. Blockchain Alliance is operated by BitDeer, which itself is chaired by Jihan Wu, the co-founder of bitcoin mining giant Bitmain.

The terms of this purchase agreement include 500.com using 10 percent of its own outstanding shares to execute it, according to the announcement. The terms also outlined additional share issuances based on the performance of BTC.com businesses.

According to BTC.com mining pool data, it is currently the fourth-largest pool by block validation, contributing just over 10 percent of the total network hash rate over the last three days. As of the time of this writing, BTC.com maintains a hash rate of 15.36 exhahashes per second across that timeframe.

This news comes hot off the heels of 500.com’s announcement in early February that it is purchasing 15,900 bitcoin mining rigs. This is rapid advancement for the online gambling company, which only just announced its intention to enter the blockchain space in January. 

It also begs the question of what other non-Bitcoin focused companies will target mining pools for acquisition in the near future. As we see more companies adopt bitcoin as part of their corporate reserve strategies, mergers and acquisitions like this one might be the next steps in the advancement of bitcoin exposure by Wall Street and other institutions.

The post Sports Gambling Website 500.com Acquires Bitcoin Mining Pool BTC.com appeared first on Bitcoin Magazine.


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MicroStrategy To Offer Another $600 Million Of Convertible Notes To Buy More Bitcoin

MicroStrategy To Offer Another $600 Million Of Convertible Notes To Buy More Bitcoin
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Gigachad CEO Michael Saylor announced on Twitter this morning that his company, software intelligence firm MicroStrategy, has proposed a private offering of $600 million in convertible senior notes so it can “use the net proceeds from the sale of the notes to acquire additional bitcoins,” according to the press release Saylor shared.

These notes would officially be due on February 27, 2027, with interest being paid on February and August 15 of each year starting in August 2021. The amount of interest paid is to be determined at the time of the pricing of the offering. 

Whoever takes up this offer will be given a grant that allows them to purchase the notes “within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $90 million aggregate principal amount of the notes,” per the release.

Ever since MicoStrategy bought 0.1 percent of the total bitcoin supply last summer, it has been accumulating more and more. To say that it went “all in” on a Bitcoin standard would be an understatement, with this being just the latest speculative attack on the U.S. dollar that it aims to complete. In December 2020, the firm announced its intention to offer $650 million of convertible notes to buy bitcoin.

For those who don’t know what a speculative attack is, allow me to explain: Since the U.S. dollar and other fiat currencies have infinite supplies with constantly decreasing purchasing power, the power move here is to take on USD-based debt now to buy bitcoin, which has a finite supply with increasing purchasing power. Over time, the debt would be easy to pay off, not only with the money from the investment, but because the value of the fiat would naturally become much lower. Essentially, it’s the practice of taking on cheap debt to buy a harder asset whose value you expect to rise.

Bitcoin thought leader Anil shared a great example of a historic speculative attack committed by Hugo Stinnes using gold against the German papiermark before the collapse of the Weimar Republic in 1923.

The post MicroStrategy To Offer Another $600 Million Of Convertible Notes To Buy More Bitcoin appeared first on Bitcoin Magazine.


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