Thanks to those of you who have contributed to the Bit. I was ~$2,700 in the hole last week, and I’m now down to only $2,337. When I get down to zero, I’ll delete this banner. In the meantime, here are some wallets you might fund in order to help me cover the Bit’s daily costs:
Blockchain: 1MkF9FgxP4wQ4pqRe4uDuzAPNRCAQUA646
Circle: 18Za7SmHRxbmkEj5QLeSqnYWGm8zjsWf7y
Coinbase: 12oGSjXu5YZSRE6pfmcPxQxvswMRUVn9ZQ
Xapo: 3QyLGqnYnpg9wybJh8ZSY2wVvrti7twKj9 (multi-sig!)
Or @ChangeTip me on twitter @twobitidiot
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Last week I wrote a little bit about the price of bitcoin. Over the course of two posts, I shared my mental model for justifying bitcoin’s non-zero value. I received a lot of feedback—mostly positive around my thinking regarding bitcoin’s theoretical floor price given a certain level of “transaction demand”; somewhat negative around my comparison of bitcoin’s transactional demand / reservation demand multiple to stock multiples. [Yes, the P/E ratio comparison is imperfect for a number of reasons, but it’s a reasonable analogy, and I haven’t seen any other model that makes more sense.]
The punch line of those first two posts was that if we agree blockchain technology has value and will disrupt financial services, then some blockchain native tokens must have value. How widespread the technology has the potential to become and how fast it might grow will ultimately dictate how willing speculators are to hold these native tokens.
But this begs the question: what happens if bitcoin goes to zero? After all, don’t we say all the time that bitcoin will either be one of the best performing investments of all time or its value will become virtually worthless?
This binary outcome seems scary at first glance, but it’s not the whole story…bitcoin probably doesn’t go to zero without a viable replacement emerging well in advance. I doubt bitcoin will die and participants in this growing ecosystem (with $500mm in VC funding) will be left operating businesses running on an irreparably broken technology. Instead, it seems much more likely that bitcoin simply fades away as another alternative currency slowly overtakes it.
Consider the two most likely scenarios that would threaten bitcoin’s viability as the winner-take-all blockchain token: a hard fork of the protocol over rifts concerning mining centralization, block size limits, hashing algorithms, seignorage plans, etc., OR drastic overregulation that sees blockchain technologies which promote anonymity essentially banned in favor of friendlier Big Brother-friendly alternatives. In either scenario, the broader bitcoin community would know well in advance which “next best” option was available in the event the bitcoin blockchain became unsecured. The major investors, ventures, and users who relied on bitcoin’s rails for their respective services would simply migrate over to a new blockchain and its corresponding token.
XRP or ETH would go from less than 10% of bitcoin’s market cap to maybe 50% leading up to any feared shift, before sprinting past BTC as bitcoiners fire-sold their rapidly depreciating holdings. Today, we typically see bitcoin and its alternatives rise and fall in tandem because they are complements. But in any catastrophic edge case, one or two of these complements would probably emerge as a substitute, and you’d see at least some assets reinvested in the new dominant blockchain token. That is even if bitcoin plummeted to near zero, other alternatives would survive, and one or two would probably even rise to absorb the blockchain demand.
Call it “Idiot’s Law”: it can’t possibly all go to zero at the same time, can it?
For Entrepreneurs
The MIT E-Lab is a well established (20+ year) program that helps startups by matching them with MIT & Harvard business school students for a semester. The E-Lab is now looking for cryptocurrency related startups at various stages, so apply if you think this could help your efforts. (You don’t need to be local, but a c-level exec has to be in Cambridge frequently.) To apply, or for more info on E-Lab visit http://elab.mit.edu/.
Events
MIT Bitcoin Expo - March 7-8th
Get your tickets today — MIT is hosting its second annual Bitcoin Expo on March 7th and 8th!
This premiere student-run event, hosted by the MIT Bitcoin Club and Wellesley Bitcoin Club, features two days of panels and presentations from leading professionals and academics in the cryptocurrency space. You’ll hear from engineers who maintain and develop the core Bitcoin protocol, academics on the cutting edge of cryptocurrency research, and founders and executives of some of the hottest million-dollar startups in bitcoin.
Join hundreds of students and professionals as we learn about the most recent and upcoming legal and technical developments in Bitcoin. Delve into the heart of recent developments with experts like Gavin Andresen, Jeremy Allaire, Adam Ludwin, Charlie Lee, Constance Choi, Peter Todd, Jerry Brito, Joi Ito, Andreas Antonopoulous and many, many more.
Day One will provide insight into the Bitcoin mainstreaming process as well as the legal and security challenges for Bitcoin companies to overcome. Day Two will detail the inner workings of bitcoin and the new technologies that are emerging as the industry develops. Join us as we strive to understand the present and build the future.
The event is free for students and only $125 for 2 days for professionals.
For more information visit mitbitcoinexpo.org
Inside Bitcoins Conference and Expo - Berlin (Mar. 5-6), and New York (Apr. 27-29) Inside Bitcoins is the largest bitcoin and blockchain technology focused event series worldwide. At each event you’ll hear about the latest challenges, trends, and opportunities in the industry from experts including Chris Odom, Co-Founder and CTO, Monetas; Marshall Swatt, Chief Technology Officer and Co-Founder, Coinsetter; Dan Morehead, Founder & CEO, Pantera Capital Management; Gil Luria, Managing Director, Wedbush Securities; and more. Plus, TBI Daily readers get 10% off the Berlin and New York events with code TBIDAILY. See you there!
Jobs, Jobs, Jobs
Bitnet, San Francisco, Belfast, London (VC-backed)
-Leading digital commerce platform & former Visa team.
-Open positions: Engineering (Customer Success, Lead UI, Product, DevOps), Sales Director (EMEA), Sales Engineer (San Francisco)
-Check out Bitnet (https://bitnet.io/careers.html) and email jobs@bitnet.io
Coinbase, San Francisco (VC-backed)
-Largest “universal services” bitcoin company.
-Open positions: Security Engineer, Software Engineer (2-3 years mobile product development), Regulatory Compliance Investigator, (1 year conducting SAR investigations)
-Check out Coinbase (https://www.coinbase.com/careers/)
BitGo, Palo Alto (VC-backed)
-The leading Bitcoin multi-sig security company
-Open positions: Back-end / Front-End / iOS / Security Engineers, UX Designer
-Check out BitGo (www.bitgoinc.com/jobs) and email jobs@bitgo.com
Bolt, San Francisco (VC-backed)
-Stealth startup focused on consumer applications of Bitcoin.
-Open positions: Security Engineer, Ruby Engineer, UI/UX Designer, Executive Assistant.
-Check out Bolt (bolt.com) and email jobs@bolt.com.
Elliptic, London (VC-backed)
-Full-service bitcoin custodian.
-Open positions: Data Scientists and Front-end developers.
-Learn more and apply at elliptic.workable.com
Today’s Tid Bits
Olivier Janssens and Jim Harper Voted to Bitcoin Foundation Board
http://www.coindesk.com/olivier-janssens-and-jim-harper-voted-to-bitcoin-foundation-board/
Following a controversial, blockchain voting process Olivier Janssens and Jim Harper have been elected to the board of the Bitcoin Foundation. From the eligible voters, Janssens received 277 votes and Harper received 264. Janssens hopes to decentralize the core development of Bitcoin, so its developers can be paid directly by the community. While Harper said he focus is on “building the foundation’s stability and solidity.”
European Central Bank: Digital Currencies ‘Inherently Unstable’
http://www.coindesk.com/european-central-bank-digital-currencies-inherently-unstable/
The European Central Bank (ECB) described digital currency as “inherently unstable,” but potentially transformative in the realm of payments, in a recently published report. The report builds off the ECB’s study published in 2012, which offered a general overview of digital currency. The ECB noted digital currency’s potential in the remittance ecosystem, but warned against the growth of altcoins or as they refer to them, “scamcoins.”
DigitalBTC Launches Mining Contracts Platform DigitalX Mintsy
http://www.coindesk.com/digitalbtc-launches-mining-contracts-platform-digitalx-mintsy/
DigitalBTC, an Australian bitcoin company, has launched digitalX Mintsy, a new service that allows users to lease their computer processing power for cryptocurrency mining and trade contracts on its online marketplace. DigitalBTC is the first bitcoin firm to be listen on the Australian Securities Exchange, and it’s DigitalX Mintsy product has already received “over 30,000 pre-enrollments,” according to the company.
Coinplug Enables Bitcoin Buying at Over 7,000 Regular ATMs
http://www.coindesk.com/coinplug-enables-bitcoin-buying-at-over-7000-regular-atms/
Coinplug, a South Korean bitcoin service company, has enabled bitcoin purchases with credit cards through over 7,000 regular cashpoint ATMs across the country. The deal was made possible due to Coinplug’s partnership with Nautilus Hyosung, the Korean ATM manufacturer with 7,000 to 9,000 active machines in South Korea.
BIT Poised to Become Publicly Traded Bitcoin Found
http://www.wsj.com/articles/bitcoin-investment-trust-gets-finras-ok-to-become-public-bitcoin-fund-1425242094
Following approval and assignment of a ticker symbol by the Financial Industry Regulatory Authority, Barry Silbert’s Bitcoin Investment Trust (BIT) is poised to become the first publicly traded bitcoin fund, on an electronic platform operated by OTC Markets Group. The BIT has been racing against the Winklevoss Twins’s, Winklevoss Bitcoin Trust, which is going through a lengthy Securities and Exchange Commission process to register a formal exchange-trade funded. The BIT took an alternative, faster route to the public markets. The BIT was originally launched in 2013 as a private fund for accredited investors with annual incomes greater than $200,000 or assets of more than $1 million. Each share of BIT is worth approximately one-tenth of a bitcoin.
J.P. Morgan Goes Hunting for Disruptors and Bitcoin Experts
http://blogs.wsj.com/moneybeat/2015/02/27/j-p-morgan-goes-hunting-for-disruptors-and-bitcoin-experts/
A recent job posting on J.P. Morgan Chase’s website highlighted the challenge facing Wall Street firms looking for cutting-edge technologists. The job description included, “…you have an opinion on bitcoin and other cryptocurrencies, and you are probably ambivalent about the prospect of working for a large financial institution.” The major bank needs smart techies, who aren’t necessarily, eager to work for them.
The Blockchain is Becoming the Sparkle in Bitcoin
http://www.nytimes.com/2015/03/02/business/dealbook/data-security-is-becoming-the-sparkle-in-bitcoin.html?emc=edit_dlbkam_20150302&nl=business&nlid=69785252
Entrepreneurs worldwide are now working to harness Bitcoin’s blockchain, a decentralized database that is driven by cryptography, for applications beyond bitcoin transactions. The block chain could ultimately upend anything that requires a trusted middleman for verification, like stocks, contracts, property titles, patents and marriage licenses. According to Adam Ludwin, a co-founder of Chain.com, banks and multinational telecommunications companies are quietly expressing interest in ways to take advantage of the block chain. Companies working on block-chain applications are also beginning to secure chunks of financing, such as Blockstream ($21m) and Ripple Labs ($9m). Investors are now starting to bet on the technology, not just the currency.
Bitcoin Swaps Exchange Gets Public Listing Via Reverse Merger
http://blogs.wsj.com/moneybeat/2015/02/27/bitcoin-swaps-exchange-gets-public-listing-via-reverse-merger/
Tera Group Inc., a bitcoin derivative trading platform, announced a reverse merger with MGT Capital Investments, a New York Stock Exchange-listed company that runs online gaming sites, which could make the Tera Exchange, a publically listed company. Tera will take a controlling stake in MGT, which will issue common stock shares worth $0.70 of its pro form equity to Tera’s owners. Tera is the first regulated platform for bitcoin derivatives, approved by the Commodities Futures Trading Commission in September.
Stellar Takes a Step Into the Microfinance World
http://blogs.wsj.com/moneybeat/2015/02/28/bitbeat-stellar-takes-a-step-into-the-microfinance-world/
Stellar, the cryptocurrency-based payments systems, announced a partnership with Oradian, a banking-software company, to use the Stellar platform in its core banking software for microfinance institutions (MFI). The combined Oradian/Stellar product would allow microfinance companies to quickly send money to each other, according to Jed McCaleb, the founder of Stellar. The partnership is beginning with a pilot program in Nigeria.
Augur Bets on Bright Future for Blockchain Prediction Markets
http://www.coindesk.com/augur-future-blockchain-prediction-market/
Augur, a decentralized, blockchain-based prediction market founded by Jack Peterson is set to launch a token crowdsale this spring. The Augur team, featuring Jeremy Gardner and Joey Krug, are out to prove that a platform that allows participants to bet on the outcome of real-world events can be a vehicle for social good, rather than another digital gambling outlet. Augur intends to use two types of tokens to facilitate its market, first it will use a sidechains technology to transfer and hold bitcoin during wagers, and second an Augur token, Reputation, which is the token of focus during its upcoming crowdsale. Gardner believes that Augur could be a “world-changing forecasting tool.”
BitFury Launches New 28nm Bitcoin Mining ASIC
http://www.coindesk.com/bitfury-launches-new-28nm-bitcoin-mining-asic/
BitFury, a bitcoin mining giant, has announced it has completed the manufacturing of its anticipated 28nm ASIC chip. Valery Vavilov, BitFury’s CEO, believes that the chip is the company’s “most energy-efficient and high-performance technology to date” that will keep up with chip efficiency in line with the rising difficulty of the bitcoin mining network.
Bitcoin Takes the Stage at SXSW 2015 Interactive
https://bitcoinmagazine.com/19421/bitcoin-takes-stage-sxsw-2015-interactive/
SXSW 2015 Interactive Festival that is known to “preview the technology of tomorrow” will feature speakers form the top companies in the Bitcoin industry who will present a full-day, mini-conference of Bitcoin-related content. The event will feature five sessions titled, “What is Bitcoin?,” “Bitcoin 2.0,” “A Future with Bitcoin,” “Impact of Developing World,” and “Real World Applicaitons.” The event is taking place on Monday, March 16th at Startup Village in the Austin Grand Ballroom of the Hilton Downtown in Austin, Texas. BitPay, Gyft, LibraTax, ChangeTip, and Chain are sponsoring Bitcoin at SXSW 2015.
Bitstamp to Introduce New Fee Structure
http://www.coindesk.com/bitstamp-to-introduce-new-fee-structure/
Bitstamp, the Slovenia-based bitcoin exchange, is set to simplify its fee schedule next month by grouping market participants according to the amount of dollars traded over a 30-day period. Which will significantly lower the transactions fees charged by the exchange for the “vast majority” of it’s clients. Currently, the structure is that a buyer or seller trading less than $500 would be subject to a 0.50% fee; however, the updated structure will feature a 0.25% charge for anyone spending less than $20,000,
Igot Expands Exchange and Remittance Services to Kenya
http://www.coindesk.com/igot-expands-exchange-and-remittance-services-to-kenya/
Igot, a Australian based bitcoin exchange, has expanded to Kenya following the acquisition of TagPesa, a local cryptocurrency exchange and remittance gateway. Igot will also be integrating with M-Pesa’s mobile payments service as a part of the expansion. Currently, the company provides remittance services to over 40 countries worldwide, and this expansion will allow Igot’s international customers to send funds directly into a friend of relative’s Kenyan bank account.
DigitalBTC Reports Net Loss on Falling Bitcoin Price
http://www.coindesk.com/digitalbtc-reports-net-loss-on-falling-bitcoin-price/
Digital CC Ltd an Australian bitcoin company has published a $2.3m net loss after tax as the results for its half-year period up to December 31st, 2014. The firm was the first bitcoin company to be listed on the Australian Securities Exchange (ASX), trading as digitalBTC. The firm’s total revenue was $14.5m, of this, $4.6m was from bitcoin mining and $9.9m came from its liquidity desk.
Have a tip or feedback? Email me! (2bitidiot@gmail.com)