Bitcoin Had A Pretty Mental Weekend – R64 900

All it took was a solid decision and, by the end of the weekend, famed cryptocurrency bitcoin hit a series of all-new record highs.

First, it reached an all-time high of just over $4 225 (R56 300) on Sunday, and in South Africa, the price “shot up from a high of R51 681 early Friday morning to a new record high of R62 843 on Sunday,” reports Moneyweb:

Data from South African exchange Luno shows that 2 241.826 bitcoin were traded via its platform between Friday and Sunday, which at a mid-point of R57 262 is equivalent to more than R128 million.

Casual:

But it didn’t stop there.

To give you some perspective, bitcoin finished 2016 at only R15 149 on December 29; on Monday afternoon, it hit a new higher record of R64 900.

But how? You might have recently skimmed over various concerns regarding bitcoin’s future, and are wondering where this breaking of records came from.

Well, Farzam Ehsani, blockchain lead at RMB, explained it was the eventual clarity on the cryptocurrency’s future that helped the cause:

Bitcoin is said to have “split” on August 1 as Bitcoin Cash, a new cryptocurrency completely independent of bitcoin, was launched following a dispute among developers on how to scale bitcoin.

At the same time, Bitcoin Core adopted SegWit, an update aimed at solving transaction malleability and increasing the speed and throughput of transactions on the blockchain.

“There was a lot of disunity in the bitcoin community leading up to the fork. Given the decentralised nature of blockchains and the difficulty in making protocol upgrades, many people divested from bitcoin not knowing how the fork would pan out. But the fork went relatively smoothly and there is now more clarity on how bitcoin and Bitcoin Cash (the forked blockchain) plan to scale. This clarity has drawn people back into the cryptocurrency, and as there’s a limited supply of bitcoin, the price is going up,” he said

Damn, markets really are so fickle.

Here’s how bitcoin is doing in South Africa at the moment:

Bitcoin is fast gaining traction in South Africa. Data from CryptoCompare puts the market cap of South African bitcoin holdings at just over R1 billion compared with a total global market cap of $70 billion. It shows that 556.55 bitcoin were traded at a rand value of R34.2 million over the last 24 hours, which accounts for just 0.13% of total global trade. But Gamaroff said volumes traded on just one local exchange, Luno, are comparable with those traded exchanges in major bitcoin markets such as China and the US.

Although Luno would not disclose the number of active users on its domestic platform, it did confirm a marked increase in interest. “We see an increase in interest – mobile app downloads, new customer signups and trading – correlated to some external events. The first is volatility — when the price goes up or down, more people are buying and selling. That said, when the price moves up, people tend to revisit the idea of buying a small amount of bitcoin, something they may have considered sometime in the past. We also see more press coverage during these times,” said Werner van Rooyen, head of marketing and growth at Luno.

Lorien Gamaroff, chief executive of Bankymoon, explained that globally, bitcoin is going through its “next step” moment “similar to when the Internet became mainstream”:

“It’s not just this funny thing that geeks are playing with. People outside the system are looking at it seriously and trying to figure out how it works and there’s all this new money coming into the system.

“[B]itcoin’s rise is likely to continue as traders’ worst fears such as hacked exchanges and forks have had little to no effect on its price.

“If you’re in bitcoin, you should be bullish. Things that have stopped the rally in the past are not having that effect anymore. Sentiment is positive and there’s nothing fundamentally right now that looks threatening… It’s not impossible to see the price doubling by the end of the year.”

Imagine where you would be sitting if you had invested in bitcoin when Seth told you to back in 2013.

Be bullish, kind sir! One Satoshi at a time.

[source:moneyweb]

How much you could have made if you invested in Bitcoin

The price of Bitcoin has broken through the $4,000 mark, reaching $4,200 on 13 August.

Local exchange Luno had the rand price of Bitcoin listed as R61,200 at the time of writing, which is a substantial increase since the start of 2017.

Even with the price of Bitcoin showing strong growth in recent years, however, many South Africans are hesitant to invest in the cryptocurrency.

There are many reasons for this, chief among which is the lack of regulation and non-involvement of governments and central banks.

Investment firm Citadel said the difficulty in evaluating Bitcoin as a traditional currency lies in its lack of central authority, domiciled area, or any linked economic fundamentals.

It said it will not, and cannot, invest in Bitcoin, and likened its rise in price to that of BlackBerry.

International investors are no different, with Bloomberg stating that even as investors are lured by the price gains of Bitcoin, the biggest institutions are reluctant to get involved – raising concerns about liquidity.

Huge growth

Whether you think Bitcoin is the best thing since touchscreen smartphones or would not touch it with a bargepole, there’s no denying its massive growth in value.

The table below shows how much you would have grown a R50,000 investment if you had put it in Bitcoin in recent years. Pricing is taken from CoinDesk.

Bitcoin Growth Year Bitcoin Price on 1 Jan R50,000 Investment on 13 August 2017 2013 $13.30 R15,789,500 2014 $770.44 R272,500 2015 $313.92 R669,000 2016 $434.46 R483,500 2017 $997.69 R210,500 The price of Bitcoin was taken as $4,200 on 13/8/17.

Now read: How I built a mining rig despite graphics card shortages in South Africa Forum discussion

How Did BTC-E (Allegedly) Process 95% of Bitcoin Ransom Payments

BTC-E, the oldest bitcoin exchange in the bitcoin industry, was officially taken down and seized by six U.S. law enforcement agencies last week for its involvement in the theft of $2.21 billion from now-defunct bitcoin exchange Mt. Gox and Bitcoinica.

Alexander Vinnick, the founder of BTC-E, was arrested in Greece and charged for laundering over $4 billion in bitcoin through his bitcoin exchange. In addition to laundering funds stolen from Mt. Gox and Bitcoinica, which amount to over $2.4 billion, Google and blockchain analyst firm Chainanalysis revealed at the Black Hat USA 2017 security conference that 95 percent of ransomware have been cashed out via BTC-E.

By law, in almost all regions excluding those that are yet to regulate their bitcoin markets such as India, bitcoin exchanges and trading platforms are required to comply to strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies. To be fully compliant with the law, exchanges need to maintain a database of its clients, their personal information and explicit details into transactions processed by the exchange for its clients.

Over the past few years, law enforcement agencies including the FBI and Europol found success in tracing bitcoin payments received by criminals on the dark web. Although it is not possible for law enforcement agencies and investigators to directly link a wallet to an identity, bitcoin transactions can be traced down to an identity if criminals decide to cash out via regulated bitcoin exchanges.

For instance, when a group of hackers stole around $950,000 within a two-month period by exploiting a bug discovered in the UPI application of the Bank of Maharashtra (BoM) and purchased over $155,000 in bitcoin through local bitcoin exchanges including Zebpay, bitcoin exchanges collaborated with law enforcement agencies and utilized their KYC systems to trace the identities of the hackers.

Hence, primarily due to the transparent nature of bitcoin and strict regulations of overseas bitcoin markets, bitcoin usage amongst dark web criminals and hackers has significantly decreased.

However, if criminals can launder bitcoin transactions through exchanges and essentially mix the inputs and outputs of transactions, they can anonymously cash out bitcoin. According to the Greek police and U.S. investigators, Vinnick and BTC-E laundered bitcoin transactions for the vast majority of ransomware distributors and according to Google and Coinalytics, 95 percent of ransomware distributors laundered their bitcoin transactions through BTC-E.

BTC-E was able to process 95 percent of bitcoin ransom payments because it had the authority over its KYC and AML systems. Because BTC-E had absolute control over its platform and it operated as a platform for ransomware distributors and hackers, it allowed users to avoid investigations from law enforcement agencies while cashing out their funds.

For large amounts of bitcoin, BTC-E owner Vinnick also utilized Tradehill, another one of his exchanges, to launder funds. According to the US authorities and the US Financial Crimes Enforcement NetworK (FINCEN), Vinnick received stolen funds from Mt. Gox and laundered them through BTC-E and Tradehill, a San Francisco-based exchange.

Despite promising the community a 10-day recovery period, within a few days after the arrest of Vinnick, BTC-E was seized by US authorities and the company was fined a total of $110 million.

Investigators at FINCEN stated that Vinnick and other executives at BTC-E utilized the trading platform to assist criminals that have profited from ransomware, fraud, identity theft, tax refund fraud schemes, public corruption and drug trafficking.

“BTC-e quickly became the virtual currency exchange of choice for criminals looking to conduct illicit transactions or launder illicit proceeds, all of which BTC-e failed to report both to FinCEN and law enforcement,” read the FINCEN report.