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Why You Should Continue To Stay Away From Bitcoin

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After its spectacular run up in 2013 and subsequent crash, Bitcoin has somewhat stabilized at around $250 (although the trend is still down). So much so that mainstream media is once again picking up the coverage Silicon Valley banks on Bitcoin as a way to overtake Wall Street

Yet, my opinion about it hasn’t changed. At the end of the day Bitcoin still has a real possibility of going to ZERO. Let’s take another look.

Is Bitcoin a legitimate currency, a speculative investment or the future?  This is a complex matter to discuss as there could be an infinite number of arguments made for or against it. However, here are some basic points to understand….

  1. Understand that Bitcoin is still a pure speculation at this stage. There is nothing to back it up and there is nothing to assign any sort of fundamental value to it.   As such, speculate away, but know that while it can appreciate significantly it can also go to zero in no time.
  2. The US Government can crush it at will and at any time. Yes, I know that it cannot be controlled by the government, it is independent and out there on the net. However, don’t be a fool.  The US Government, if it really wants to, can destroy Bitcoin in a matter of hours.
  3. There is very little volume and the total value as a currency is very low. While that can be an advantage when the currency is going up, good luck trying to get out of it while it is heading down.  Plus, the fact that people in China see it as an investment vehicle now is a huge negative red flag.

Basically, there is no fundamental value to invest in Bitcoin at this stage. While it can appreciate significantly, know that all gains would be out of pure speculation. I repeat, there are no fundamentals to back it up.  On the flip side, it can go to zero either because of speculation or if the US Government decides (for whatever reason) to pull a plug on it. In other words, continue to stay away.  

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Why You Should Continue To Stay Away From Bitcoin Google

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Why Bitcoin Remains A Speculative Mess Not Worth Your Money

bitcoin - chart

I have been warning people to stay the hell away from Bitcoin since its spectacular run up into December of 2013. Since then, the “currency” is down over 80%. Yet, despite its big decline, my overall opinion hasn’t changed. At the end of the day Bitcoin still has a real possibility of going to ZERO. Let’s take another look.

Is Bitcoin a legitimate currency, a speculative investment or the future?  This is a complex matter to discuss as there could be an infinite number of arguments made for or against it. However, here are some basic points to understand…. 

1. Understand that Bitcoin is still a pure speculation at this stage. There is nothing to back it up and there is nothing to assign any sort of fundamental value to it.   As such, speculate away, but know that while it can appreciate significantly it can also go to zero in no time.
2. The US Government can crush it at will and at any time. Yes, I know that it cannot be controlled by the government, it is independent and out there on the net. However, don’t be a fool.  The US Government, if it really wants to, can destroy Bitcoin in a matter of hours.
3. There is very little volume and the total value as a currency is very low. While that can be an advantage when the currency is going up, good luck trying to get out of it while it is heading down.  Plus, the fact that people in China see it as an investment vehicle now is a huge negative red flag.

Basically, there is no fundamental value to invest in Bitcoin at this stage. While it can appreciate significantly, know that all gains would be out of pure speculation. I repeat, there are no fundamentals to back it up.  On the flip side, it can go to zero either because of speculation or if the US Government decides (for whatever reason) to pull a plug on it. In other words, continue to stay away.  

Z30

Why Bitcoin Remains A Speculative Mess Not Worth Your Money Google

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The End Of Bitcoin?

Bitcoin just can’t catch a break lately. With recent price collapse, Mt. Gox failure and bankruptcy, Chinese controls and the recent IRS ruling, Bitcoin has more twists and turns than a Mexican Telenovela. That has been my biggest problem with the Bitcoin since the start. No one on this earth can accurately predict where Bitcoin will be 2 years from now. It might be at $1 or at $1 Million. As such, Bitcoin is nothing more than a highly speculative asset. 

Further, I believe that recent IRS ruling classifying Bitcoin as an asset as opposed to a currency is the biggest death blow that no one is talking about. Just imagine buying a chocolate bar with Bitcoin and trying to figure out your capital gain/loss in the transaction. I fathom most people will give up after the first try. Whatever the future is, when it comes to Bitcoin, it is impossible to predict. That is precisely why I continue to maintain that most people should stay away from the currency. If you do want to make money from Bitcoin, this would a much better way. Click Here.    

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Talking Numbers Writes: This could be the end of the Bitcoin era

Bitcoin may be thought of as an alternative currency – but just don’t say that to the IRS.

The US Internal Revenue Service says that Bitcoin is property, not currency. That means profits in Bitcoin get taxed at the lower capital gains rate rather than income rate. But, it also means that losses in Bitcoin are also at the capital gains tax rate. That helped Bitcoin’s value to drop 20% in just the past week.

CNBC contributor Gina Sanchez, founder of Chantico Global, this is yet another bad headline in a long stream of bad news.

“It’s a terrible thing,” says Sanchez of Bitcoin’s IRS categorization. “This is already a really negative story, in my opinion. What this says is every time you make a transaction, you basically have to keep track of your capital gains – every transaction.”

In general, Sanchez sees no reason for investors to trade their dollars for Bitcoin. “Bitcoin as a currency doesn’t make any sense,” she says. “You basically have a whole bunch of cyber geeks trying to tout themselves as a monetary authority. That’s just not going to fly.”

Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, was once fairly bullish on the future of Bitcoin. But, after a few scandals – from the MtGox collaps to the arrest of BitInstant founder Charlie Shrem – and a huge drop in value, Ross is now very bearish. 

“It hasn’t completely collapsed – yet,” says Ross. “This has transitioned from a trade into a scandal, which is like a duck transitioning to a l’orange; it’s not a good thing.”

Ross sees Bitcoin trading in a descending triangle with a base at the $500 level. Given that its peak was around $1,100, the triangle would project a downside of equal magnitude in the opposite direction. In this case, that would be negative $100.

“Now, that doesn’t really make sense,” says Ross. “But, given the recent history – given the MtGox scandal – I could see this thing at negative. It could actually cost you money to own this thing at the end of the day. It could just disappear that quickly.” 

“I don’t know what good could really come of it at this point.”

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Bitcoin Crazy

The news cycle for Bitcoin continues to accelerate. Here is all you need to know for this week. 

Still want to invest in Bitcoin? Good luck and enjoy the ride. You have more cojones than I do. 

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Bitcoin Crazy  Google

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How To Make Money From Bitcoin

There is no question that some sort of a digital currency will be adopted over the next 10-20 years. With recent publicity, Wall Street derivative market setup and market adaptation, BitCoin has a good chance of becoming that de facto digital currency.  Yet, with wild market fluctuations and no intrinsic value to speak of, how do you make money from BitCoin? 

Famed entrepreneur and tech investor Marc Andreessen might have an answer. According to him….

“Andreessen is betting on the idea that there will be a big infrastructure built around currencies like this,” explains Blodget in the video above. “He’s investing in the service providers around them.” Andreessen is betting that bitcoin “is the Internet in 1993, 1994,” adds Blodget.

I think that’s a very good way to approach Bitcoin. While the currency itself might be highly volatile it will be the service providers that will make most of the money and build multi-billion companies around it. Yet, it’s not without problems. There will only be 1 or 2 winners in the space. To the likes of PayPal. With too many unknowns and uncertainties, it’s anyone’s guess what will work and what will fail.

Plus, most of these companies are in early start up phases, making an investment in them fairly difficult. With that said, it would be a good idea to watch this space and see what pops up.  

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How To Make Money From Bitcoin Google

 

Why Marc Andreessen is betting big on bitcoin

Bitcoin is trading about 55% below its record high and Its biggest exchange is now bankrupt following a multimillion-dollar loss. Does the popular virtual currency have a future?

Marc Andreessen, the founder of Netscape, thinks so. The co-founder and partner of venture capital firm Andreessen Horowitz has invested about $50 million in bitcoin-related companies and plans to invest hundreds of millions of dollars more according to The Wall Street Journal.

Andreessen has invested $25 million in Coinbase, which creates digital wallets, and smaller sums in Ripple, a payment system as well as other bitcoin-related companies, according to The Journal.

“There appears to be some need for a digital currency that crosses borders that anybody in any country at anytime can exchange…with low transaction costs [and] can then be picked up anywhere else in the world,” says The Daily Ticker’s Henry Blodget, about the potential demand for virtual currencies.

But will that change?

Andreessen is betting on it.  He expects more Internet users will use virtual currencies in the future, to transfer digital contracts, signatures and money because the costs will be less than doing the same transactions through banks and credit card companies.

“Andreessen is betting on the idea that there will be a big infrastructure built around currencies like this,” explains Blodget in the video above. “He’s investing in the service providers around them.” Andreessen is betting that bitcoin “is the Internet in 1993, 1994,” adds Blodget.

Blodget says if bitcoin does gets adopted by more people “it probably will become more valuable.” But in the meantime, says Blodget, its price “could go to a penny or a million. It has no intrinsic value whatsoever.”

Even Andreessen acknowledges the price risk. He told the Journal that bitcoin is “weird and scary and nerdy, and full of scams and frauds, just like the Internet was.”

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Attention: BitCoin Derivatives Are Coming. Good Idea?

According to the WSJ a start-up derivatives exchange is working on what it claims will be the first BitCoin swap, allowing financial institutions to bet on the value of the embattled virtual currency. A good idea or a bad one? That is irrelevant here. Here is what this means. 

First, Wall Street is embracing BitCoin as it’s first virtual currency. It is here to stay and Wall Street will continue to build a market infrastructure around the currency. Second, BitCoin remains a highly speculative vehicles without any sort of “Value” backdrop. It is worth as much or as little as speculators are willing to pay for it. Since it’s value cannot be properly ascertained I continue to advice you to stay away. BitCoin might go to $1 just as easily as it might go to $1 Milliion. Stay out. 

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WSJ: New Derivative Guards Against Bitcoin’s Price Swings

If you thought trading bitcoin was a shot in the dark, how about bitcoin derivatives?

A start-up derivatives exchange is working on what it claims will be the first bitcoin swap, allowing financial institutions to bet on the value of the embattled virtual currency.

Tera Group Inc, operator of the exchange, said it has drafted documentation for a 25-day swap transaction between a pair of U.S. financial firms. The swap works by allowing the holder, say a vendor who accepts bitcoin as a method of payment, to protect against a potential drop in the virtual currency’s value against the U.S. dollar.

Under the swap–known as a “non-deliverable” forward because the contract is settled in cash without the need to deliver bitcoin–the parties agreed to pay each other in the future a certain amount based on the values of the two currencies. The parties to the swap agreed to use an average price taken from multiple bitcoin exchanges to determine how they’ll settle up.

Tera declined to name the parties to the planned swap transaction, but said it should be complete within the next several weeks and would be transacted off Tera’s platform as an unregulated financial contract.

The contract comes as bitcoin proponents have pushed for the currency to bet used by mainstream investors in more regulated markets and to be used in day-to-day commerce. But bitcoin has recently suffered from wild price fluctuations and regulatory scrutiny that have threatened to dent its popularity among investors and other users.

Tera is separately applying to the Commodity Futures Exchange Commission to list bitcoin derivatives on its regulated exchange. The CFTC already has a laundry list of to-dos as it brings swaps under its purview in the wake of the financial crisis, and grapples with a range of budgeting constraints.

A CFTC spokesman didn’t immediately respond to a request for comment.

Routine swaps were pushed onto open platforms resembling exchanges under the 2010 Dodd Frank financial overhaul law. Non-uniform transactions that could not be routed to clearinghouses were allowed to be transacted off of those platforms.

The terms of the bitcoin swap will still have to be reported to regulators along with other swaps.

Whatever happens to the value of the currency, the party seeking the hedge has locked in the value of bitcoin for the life of the swap. The other party either gets a windfall if the value of bitcoin rises, or takes a hit if it falls below the composite price.

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Who’s Got All The Stolen Bitcoins?

Last week, one of the most prominent Bitcoin exchanges,  Mt. Gox bitcoin exchange, shut its doors and filled for bankruptcy due to a Bitcoin theft. Exchange CEO Mr. Mark Karpeles had claimed that the exchange was hacked and all Bitcoins were stolen. Today, a group of hackers have accused Mark Karpeles of perpetrating the crime and stealing Bitcoins for himself. So, who is at fault. Is it Mr. Karpeles or hackers? 

Who cares!!!

The point here is NOT to invest in Bitcoins. It might be the best investments since the Tulip Mania of 1637 and it might very well go from today’s price of $600 to $1 Million, but that’s not the point here. It is too speculative, it is unregulated and it is prone to crime. Therefore, just as it might to go to $1 Milliion, it might simply go “POOF” into thin air. Just as it did above. Making it an unsound investment to say the least. As such, speculate at your own risk. 

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Who’s Got All The Stolen Bitcoins? Google

Report: Mt. Gox CEO Holding ‘Stolen’ Bitcoins

Hackers this weekend targeted the Reddit account and personal blog of Mark Karpeles, CEO of the bankrupt Mt. Gox bitcoin exchange, posting information online that they claim proves Karpeles is actually hoarding bitcoins he claims were stolen.

The hackers charge that some of the nearly half a billion dollars worth of the digital currency lost in recent cyberattacks is actually still in the French CEO’s possession.

“It’s time that MTGOX got the bitcoin communities wrath instead of Bitcoin Community getting Goxed,” the unnamed group wrote, according to Forbes, a reference to the downtime and other glitches that have plagued Mt. Gox.

The hackers initially posted to Karpeles’s website a 716MB file of stolen data from Mt. Gox’s servers; it included a spreadsheet of more than a million trades, the company’s balance in 18 currencies (including bitcoin), administrative access to Gox parent company Tibanne Limited, and a screenshot of the hackers’ access, as well as a list of Karpeles’s home addresses and personal resume.

An abridged version, which features Mt. Gox’s balances, was later posted online, with a link to the entire set of data.

 

“This release would have been sooner, but in the spirit of responsible disclosure and making sure all of ducks were in a row, it took a few days longer than would have liked to verify the data,” the hackers wrote on Pastebin, advising readers to “repost and share this info before it’s gone.”

Karpeles’s website is currently offline, and the original Reddit post has since been deleted.

Mt. Gox filed for bankruptcy in Japan late last month, saying it lost 750,000 bitcoins, or about $480 million—7 percent of the estimated global total of bitcoins. An attack on the company’s computer systems also cost Gox about 100,000 of its own units.

The filing came days after the exchange mysteriously went offline, halting trades of the cryptocurrency.

Last month, meanwhile, bitcoins valued at approximately $2.7 million went missing from Silk Road 2, allegedly due to a hack. Silk Road 2 is the reincarnation of the original Silk Road, an online black market for all things criminal that was shut down by the feds last year. The new site emerged in November and is only accessible to those who have an invite and sign in using the Tor anonymizing service.

Bitcoin has been a popular topic of late. Last week, Newsweek said it haduncovered the creator of bitcoin, a 64-year-old California man named Satoshi Nakamoto. But has denied any involvement.

For more, see How Thieves Steal Your Bitcoins, as well as the Bitcoin and Other Cryptocurrencies slideshow above.

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Bitcoin Wild Swings Continue. Down 25% In Two Days.

Check out the chart below. Is that something you want to invest in? 

If your answer is YES, you have got more balls than brains. Taking merits of this digital currency aside, at the end of the day no one really knows how much bitcoins are worth. They could be worth $1 Million or they could be worth $1. It is purely arbitrary. You can’t value it and as such it is not an investment. It is a pure speculation. Anyone who claims otherwise is full of shit.

Is there utility in Bitcoin. Certainly. However, the utility part can be equated to early American colonial times, where every little town had its own currency. Same thing will happen with onslaught of digital currencies over the next decade. Who will win?  One thing is for sure. I am not smart enough to figure it out, but good luck speculating in Bitcoins.    

bitcoing chart

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Bitcoin Wild Swings Continue. Down 25% In Two Days.  Google

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The Secret Behind Bitcoin Madness. Should You Invest?

BusinessWeek Writes: Bitcoin Buyers Beware: Being Greedy Ain’t Easy

 spending-bitcoins-investwithalex

Fitting, then, that the price of a Bitcoin just crossed—at least for a little while—the $1,000 mark.

Money men who proudly call themselves greedy say that Bitcoin remains undervalued at that price. The preferred currency of online drug dealers, it’s just beginning to become a bit more mainstream. Folks such as Richard Branson are talking about accepting Bitcoin for flights on Virgin America (or, soon, spaceflights on Virgin Galactic). Stores in Silicon Valley will let you buy a sandwich and sushi with the virtual currency. Each new level of visibility is likely to push the value of Bitcoin higher.

Advocates of Bitcoin use liken the currency’s position to the Internet in its early days. We’re in the dial-up phase, they say—you should buy in before the boom of all booms arrives.

Read The Rest Of The Article Here

“You should buy in before the boom of all booms arrives”, WOW is all I have to say. If that is not a clear sign of speculative mania, I don’t know what is.

I have written about Bitcoin before. You can see it here  “Bitcoin: Crazy or Smart”

Even though the currency has appreciated significantly since that write up, I continue to maintain my position. Primarily, that the Bitcoin is nothing more than a speculative investment that warrants no capital outlay.  My biggest problem with Bitcoin is not having the ability to measure and/or analyze its value at this stage. It can be worth zero or it could be worth $1 Million.  In fact, some speculators believe that it should be worth $1 Million. Indeed.

Given its volatility, unpredictability, tiny float and no real value, Bitcoin remains a highly speculative investment. Certainly, it can go to $1 Million just as easily as it could go to Zero. Overnight. As such, only speculators who do not care about losing their money should apply.  I maintain my position that traditional investors must stay away. This is nothing more than a drunken Tulip Mania. 

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The Secret Behind Bitcoin Madness. Should You Invest? 

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BitCoin. Crazy or Smart?

Bloomberg Writes: Bitcoin Spawns China Virtual IPOs as U.S. Scrutiny Grows

bitcoin_euro

Bitcoin craze is reaching new heighs in China.

Sun Minjie is a 28-year-old Internet worker who lives in Beijing. Eager to profit from growing demand for the digital currency, Sun has invested more than $3,000 in a company called 796 Xchange Ltd., an online exchange for trading stocks and other financial instruments related to Bitcoin, where initial public offerings are also being held.

He’s part of a small but growing group of investors in China who have put the country into contention with the U.S. as the biggest downloader of the virtual money that’s being used to buy a growing range of goods and services online. While intensified scrutiny by U.S. regulators casts doubt on the currency’s future there, China’s Bitcoin industry is expanding.

“What’s worrisome is that a lot of people could be just treating it as a speculative investment,” said Peter Pak, head of trading of BOCI Securities Ltd. in Hong Kong. “In China, the stock market, property and bond market are all not so good, so people get really excited when they hear of a new investment that generates high returns.”

Sun’s outlay of about 28 Bitcoins — or $3,108 — for more than 400 shares in 796 Xchange has returned about 46 percent since the stock’s Aug. 1 debut on the company’s own website. The benchmark Shanghai Composite Index (SHCOMP) has only gained about 2 percent during the same period.

Expensive to Crack’

Bitcoin is similar to other currencies — say, the Mexican peso — except it’s not controlled by any government and the total number is capped at about 21 million coins. Computer users can “mine” them by solving mathematical puzzles — uncovering the hidden series of letters and numbers that matches up with security keys specified by the computer programmers who invented Bitcoin in 2009. As more are mined, the puzzles get harder, and therefore more expensive to crack.

Sun turned to shares of Bitcoin companies after initially trying to mine the currency crunching algorithms on souped-up PCs at his office and home. He gave up after a month, concluding that his computers weren’t up to the task.

“Simple desktops can no longer dig them up,” he said.

Read the rest of the article here.

So, is Bitcoin a legitimate currency, a speculative investment or the future. This is a complex matter to discuss as there could be an infinite number of arguments made for or against it. However, here are some basic points to understand…. 

1. Understand that Bitcoin is a pure speculation at this stage. There is nothing to back it up and there is nothing to assign any sort of fundamental value to it.   As such, speculate away, but know that while it can appreciate significantly it can also go to zero in no time.

2. The US Government can crush it at will and at any time. Yes, I know it cannot be controlled by the government, it is independent and out there on the net. However, don’t be a fool.  As NSA just showed, the US Government basically controls the Internet and as such if it really wants to, it can destroy Bitcoin in hours through various means.

3. There is very little volume and the total value as a currency is very low. While it can be an advantage when the currency is going up, good luck trying to get out of it while it is heading down.  Plus, the fact that people in China see it as an investment vehicle now is a huge negative red flag.

Basically, there is no fundamental value to invest in Bitcoin at this stage. While it can appreciate significantly, know that all gains would be out of pure speculation.  There are no fundamentals to back it up.  On the flip side it can go to zero either because of the speculation or if the US Government decides (for whatever reason) to pull the plug on it.  I say it is too much risk if you value your money.