While interest in bitcoin has faded into a near distant memory, in most of our of staring eyes, since the popping of its last impressive bubble, the collapse of Gox, and the ensuing hooblah… beneath the calm, still water of disinterest, something is stirring. Unbeknownst to myself, while I was been tuned out of the cryptoworld, watching Ancient Aliens and ESPN, the gears have been turning in the crypto underground.
The elves have been at work, developing an elaborate infrastructure, and the hazardous monstrosity that bitcoin once was, is now morphing into an entirely new creature. One that just a few years ago would have been considered highly improbable. And dare i say that this new Bitcoin is getting… Sophisticated?
The big players have come to play, and have taken to the task of tackling the main setbacks that were hindering the growth from bitcoin expanding further. The main hindrance has been a lack of structural integrity in the networks infrastructure, but it appears that Bitcoin is overcoming this. With many obstacles to come, many obstacles are dissolving fast. Right now, it could be argued that the first legitimate platform built to effectively and excellently decipher this enigmatic algorithm for the common folk is coming of age. But most don’t seem to notice because they’re still staring into the chasms of possibilities of ancient aliens – I’m assuming everyone is hooked on that show and that is why they aren’t tuning into reality.
In the quiet, behind the scenes, like the shoemaker elves, they work unbeknownst to the public eye, preparing to offer effective solutions to bitcoin’s earlier years of endless and near hopeless problems. Of these problems, insecure exchanges and failing experimental platforms led to the most losses both in money and morale. Mt. Gox, the largest exchange holding the majority of bitcoins, suddenly evaporated into thin air before everyone’s eyes, leaving many robbed of their crypto. Unregulated, the bitcoin network has shown to be dangerous, with pitfalls and booby traps to watch out for while feeling your way, blind, through the perilous crypto landscape of hackers, corruption, and slews of nearly unknowable variables.
Reminiscent of the wild wild west, the bandits robbing trains are now hackers and corrupt business operators. Unfaltering reputation remains a key source of trust, but many-a-time reputation is built only for the extended trust benefit, before taking off with that much more loot, as victims fully open themselves to the disciplined con artist. We still have a long way to go on all this.
But worth looking at is Bitcoin’s massive gains in infrastructural developments. The Bitcoin creature is yet a fetus but its features are becoming clear. An active immune system is maturing, and distinct signs of evolution are clear.
Allow me to introduce the key points.
After getting my tax return this year, I weighed my options. Either spend it on junk I don’t need or invest in something. Reminiscing on those days and nights now years ago, glued to the trollbox on btc-e, riding the waves and market bubbles, trading between litecoin quarkcoin and the all stars of those days, scouring the news and forums for a sense of atmosphere for the markets to make sound decisions in what to buy and when to sell, I decided to examine re entering the volatility of bitcoin investing.
Getting back into the trading game felt like second nature, scouring the internet for a sense of market atmosphere, skimming through article after article, digesting any topic holding market relevance. Scouting out the terrain to get a feel, to even see if it was a good time to come back in. To my surprise, the whole setup has changed. I found an entirely different creature than the one I left after the gox collapse. For anyone who has been out of the loop, let me catch you up to speed to Bitcoin circa June, 2015. As a cautious investor, the following variables led me to an easy decision to stash my extra cash back into crypto. Here’s a size up by topic.
At first glance, “Bitcoin regulation” starts to make a negative mark in my mind, but upon considering what the regulation that Bitlicense actually does, it gets a huge Positive mark, and here’s why. Before Bitlicense, customer protection wasn’t in the cards. Exchanges could be started by any fat guy in their mom’s basement, and the danger was that the fat guy could disappear without a trace with everyone’s monies, and there was nothing anyone could do about it. These events essentially robbed alot people in the crypto community, and led to an atmosphere of insecurity, scaring away new adopters.
Sure, the idea of decentralized anonymous reputation building trust over time is supposed to be the future, yeah yeah, but it obviously doesn’t work. How many times has reputation been built just for the added trust and ended in an even greater hit? Pirates yes they rob I. So what’s good about Bitlicense is customer protection. They are essentially making sure exchanges have to be able to back their business with available money and thus protect the common customer. So, if the licensing works, disappointing stories like the Mt. Gox evaporation will not happen again, at least theoretically.
This is definitely good for bitcoins security as a market network. Another tip off for me, feeling for clues to atmospheric market indication: Mr. Lawsky, the superintendent of New York financial services(A.K.A. the Sheriff of Wall Street) who authored the Bitlicense legislation, resigned immediately after releasing the new Bitlicense rules. To do what? Oh, just leave wall street to start a law firm specializing in advising on BITCOIN. This to me was a highly auspicious career move for Mr. Lawsky, as if he knew that crypto was heading for the moon, getting himself into place. Just a hunch.
2. Xapo (currently in beta)
Second on the list, is a highly impressive development in Bitcoin infrastructure. If you haven’t checked out Xapo, check it out. The way they are securing their bitcoin in offline cold storage vaults being guarded around the clock requiring a sync on separate continents, seems like the backdrop for the next mission impossible movie. While their security is impressive, what is even more impressive is their bitcoin debit card(in beta testing). Imagine having a debit card backed by crypto, one where you can exchange it to cash at an ATM. To use anywhere debit cards are accepted. Well, check it OUT. They’re doing it.
On top of this, check out the Xapo project’s Powerhouse advisory board, a financial dream team.
Dee Hock, founder of visa, yes VISA, the payment system that revolutionized the whole world. Now he is helping make xapo possible. And he’s all about bitcoin. He loves bitcoin. Huge positive mark, probably the single most huge positive mark i have to report on. They couldn’t have a more important or influential or experienced person helping them with their payment systems.
Next, is John Reed, another powerhouse, responsible for Citibank. Also all about bitcoin. Big positive mark. And there’s Lawrence Summers, former secretary of treasury under President Clinton. Whoa. Xapo is covering their bases. Another Positive for xapo.
So why doesn’t everyone know about xapo? Well, it’s not quite out yet, it’s in beta testing. They’re getting the kinks out. But imagine seeing a xapo commercial at the super bowl in January. Ha. “Get yer xapo.”
So xapo is nothing less than mind boggling if you’ve been wondering if such a platform would ever develop to allow this obscure code to go mainstream. Huge news for anyone considering crypto. Its still early and nobody seems to be noticing xapo much. For anyone who thinks bitcoin is dead or dying, well. Bro, Visa is in. You can’t argue with that. To actually have bitcoin backing your bank card? This looks to be the real future, as unbelievable as it seems, even to me. Realistically though, this would have to happen for widespread acceptance to even be possible. Common joes are never going to understand the sha-256 algorithm, or mining difficulties, or even a blockchain. I’m sorry. You lost 96% of consumer culture at “algorithm.” But can they understand a card paying for their cheetoh’s? Heck yeah. Cha ching.
3. Network growth
If you look at the numbers, there are more transactions than ever, and therefore more users, with more users, scarcity will be primed that much more once crypto begins to rise, and catches on, it will shoot higher than ever, because more hands are reaching in. And with the new security scooting into place, the large exchanges aren’t just going to flop like gox did, and demoralize the whole cause, and this will possibly lead to a more stable growth rate.
The network growth in combination with the other variables, is another Positive mark.
4. Russia and China
So rumors are flying that russia is going to lift its ban on bitcoin transactions. If this goes down, that’s another huge positive mark. More hands grabbing for crypto, more scarce crypto is. Simple. Is their reconsideration influenced by the bitlicense legislation? Seems like it must have some influence. And is china going to follow suit?
If china reconsiders their bitcoin transaction ban, this will be an enormous positive mark. So far no news on China reconsidering. But watch out for it. (China might have it in their heads that their currency will replace the petrodollar as the global reserve currency, so they might want to hold back on accepting bitcoin(and they seem to make group decisions over there) to keep their currency strong… but if Visa gets in the game and bitcoin goes global, bad news for china, BTC may be replacing the petrodollar if(when) it collapses from all the quantitative easing and corrupt math the banking system subjects us to)
5. Byrne’s blockchain stock exchange
The overstock.com guy is bummed about bad practices in the stock market, he lost a bunch of money from naked short sales, so he wants to recreate the whole securities trading system to be less corruptible, essentially he aspires to replace the stock market with the blockchain, enabling sales to close instantly rather than the NYSE’s 3 days it takes to close a sale.
What does this mean? For now it seems like this isnt going to have a direct influence until the actual platform is done with testing and introduced for common folk to utilize. They’re talking 5 years. But once it’s up, if it goes up, sure, I’d like to invest in stuff like graphene capacitors and m-drive technology, which I can’t do without a broker. So that would be cool to open up a securities exchange for us regular folk. The smart contracts by the developers of counterparty are worth mentioning as a valuable future application, from what I gather these smart contracts will run the securities exchange. But for now this has only a slightly positive mark for short term bitcoin market atmosphere, since it’s only in early development. But if there is follow-through, the long term positive mark will be big.
6. The block size problem.
Apparently 1 MB blocks aren’t big enough for huge amounts of transactions. They are talking we need 20 MB. (If xapo takes the majority of bitcoin i don’t know that there will be much transactions if people just use their xapo cards anyway. Cuz that’ll all be internal xapo and thus less network transactions with more users) And this talk of tampering with the parameters gets hairy. It reminds me of the early days of terracoin basically exploding from the developers tampering with the gears so much. The difficulty got so low the asics moved to mine it because it had the highest profitability, and that hashpower shot the difficulty so high the coin froze for like 4 days straight cuz nobody could get through a block after the Asics left. Yeah i lost a chunk of money on that one. Learning experience. The lesson: don’t mess with stuff you don’t know what youre messing with. But those more qualified may find a way to increase block size seamlessly. I am just a common Joe, not a coding algorithm master, so this stuff is over my head. But I am very wary of the thought of such things because I’ve been burnt before.
This whole block size debate leaves a bit of a negative mark. Nobody’s fault, it’s just confusing for market fluidity.
Other negative marks are the ever present risk of 51% attacks. The only practically possible way to achieve 51% is by mining pools gaggling up to reach 51%. GHash came sort of close once i remember. Have they cleared this up? Negative mark.
And I still have not gotten a clear answer to what happens if some sort of illegal document is planted into the blockchain, thus undeletable, and every miner would be thus downloading this document, essentially making the entire network illegal. Is this a real threat? I don’t know, but i would like to be soothed by the soft whisperings of a technerd and get convinced this is not a vulnerability, and then I’ll feel pretty secure as an average investor. If it’s a threat that my investment could plummet to fail because of trolls corrupting the blockchain, well, that’s a negative mark. I’ve searched a lot on this one and can’t find resolution.
Also of note, Marc Andreessen, the creator of netscape navigator (the first widespread web browser) has been investing around 50 million in BTC start ups, most namely, coinbase. Before the web browser, only technerds could fathom an internet, but the platform of a browser brought this obscure code to revolutionize every facet of the modern world. And yes Mr. Andreessen helped with that big time, and he sees bitcoin as more or less the same situation. Obscure code regular folk don’t understand.
He has invested 25 million in coinbase, which similarly acts as a stable platform exchange for this obscure code, making it fairly simple to buy bitcoin. His enthusiasm for bitcoin’s future and the continued success of coinbase as the number one exchange is also a big positive mark. He likens bitcoin today to the internet in the early 1990’s.
So after considering these factors, there really was no question for me, at least for the next few years, personally, to invest my extra cash back into crypto. The price had stabilized at 230 when I made the decision, and as I write this its breaking 250. And after reading for days, I decided maybe it would be fun to write up a synopsis on what seems to be the biggest news.
Well, I hope my little report on bitcoin’s new infrastructure developments was informative. Thanks for tuning in.
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