shitco.in

Today, The New York Times took their turn at attempting to identify who Satoshi might be. Contrary to the Newsweek fiasco, this piece was well researched and written, including many important pieces of Bitcoin’s past (with links/citations for a change!).

The article suggests that Nick Szabo may have some connection to Bitcoin’s creation, but they are unable to make any concrete conclusions. Our stance is that it doesn’t really matter who Satoshi is. For all we care, it could just be a new program The Machines inserted into The Matrix, and there is no Satoshi. While the exposure from these “found Satoshi” stories is welcomed, we feel that education trumps fairy tale chasing.

The NYT had to fuck something up with their article, and we found that when we watched the video embedded into the article (after reading it). If you found Satoshi, the first thing he would probably tell you is that MINING IS NOT SOLVING MATH PROBLEMS! Also, isn’t the whole part about the miners/network verifying transactions to prevent a double spend pretty important? What about that Blockchain thingie that the MSM has in their sights? The guy in the video seems really enthusiastic about everything he is discussing, but really doesn’t seem to understand what he is saying.

Anyway, enough with the hate… he does bring up an important point that we can use to loop this thing full circle – “What is money?”. And with that, we bring you a blog post from Mr. Szabo himself, entitled – Shelling Out — The Origins Of Money. Hope you enjoy the weekend reading 🙂

Enjoy the attached video. Great, concise presentation:

 

ARISE CHIKUN!!!

Been a while since you read that text? These days, the only trollbox we visit is on BitMEX, but we still remember the good old days of BTC-e.

For those of you who don’t know who Fontas is:

Fontas was part of the special research team in the 1990’s that led to left-handed televisions becoming so popular with the local fishermen in Nebraska. In fact, pretty much no one in Nebraska or surrounding islands uses right-handed TVs these days.

BTCVIX outlined the return best in his Reddit post:

Notorious pump&dumper Fontas is back– chatting in TradingView chat under the name @lexentius a name he used in email correspondence — the account was dormant for the last 14 months prior to today https://www.tradingview.com/u/lexentius/[1] he provided his signed btc address with confirmation that links to the fontas btc address: http://i.imgur.com/DssIlhh.png[2] & https://i.imgur.com/RNHcQ7c.png

[3]

Edit: from anon btc-e source:

I just had a conversation with https://www.tradingview.com/u/lexentius/[4] on TradingView and he was able to tell me the contents of a PM sent on btc-e to the “fontas” account. He can’t talk in BTC-e trollbox because he was permabanned.

He sent me this http://i.imgur.com/HcASmfE.png

[5] This was our secret exchange http://imgur.com/a/HodzI

[6]

This is the content of his signed message

1Fonta2vraivWddxbsv3PnoMs6qMCFS5k2

Message:lexentius

Signature: HMGBr4DToCWGdEyTv+9QbDHBwQs6+ErPhU6mtdzWBGvHLFb7mbLriRBmADmABAyiYEfgPbcfOvFQ8uSDIpHeufY=

The address dates back to when fontas was active https://blockchain.info/address/1Fonta2vraivWddxbsv3PnoMs6qMCFS5k2[7]

END MESSAGE

Let the conspiracy theories and speculations begin

After a long day of chatting/listening to him, it seems like he is at least somewhat confident that a BTC bull market might return.

So bulls, now you have the BTC old timers and Wall Street here at the same time. Why don’t you guys stop being such dickheads and going WAY over levered margin long so that the BTC price can actually go up?

For those of you who are new to the Bitcoin scene, you may have missed a few of the gems from it’s rich past. Even if you have been around since the Genesis Block, it’s always refreshing to look back at some of the well written pieces chronicling the rise of cryptocurrency.

We recently came across this gem from The New Yorker, and some great commentary from Gwern.

Check out the text on Gwern’s site, here.

For a PDF of the article posted on Cryptome, click here.

Happy trading everyone, congrats to the bears who made some money today.

Ok, so maybe the title is a bit of an overstatement, but seriously… BTC traders have been diversifying out of crypto! People called for BTC price stability (we certainly aren’t fans), and it has arrived. Is 2015 going to turn into the “year of the day-long, $2 range Bitcoin”?

(BFX 15m chart for May 12 shown)

Seriously though, we probably have seen more days that look like this in 2015 than the previous two years combined. Overall trading volume has seen a pretty steady increase though, so the recent stability definitely can’t be attributed to a lack of interest or decrease in trading activity. Yes, automated trading probably accounts for a large percentage of the increase, but there is still a steady flow of trades which are entered manually by traders.

(BFX 1w chart shown)

A Bitcoin trader’s day can only consist of so much Reddit, TV, Zerohedge and Whaleclub. We actually have to make money at some point. How do you make money in a market that ranges ~$2 in a day? You don’t unless you are a robot, or have hands like Jackie Chan.

Fortunately, the Bitcoin ecosystem has evolved to such an extent that you can trade other markets without having to give up your precious buttcorns.

News recently surfaced that Huobi (in collaboration with Caimao) will now allow customers to “mortgage” their Bitcoins in order to trade with Yuan on the Shanghai stock exchange. While this isn’t something we would recommend doing (but we REALLY wish Bitcoin would bubble like the Shanghai Composite), there are much safer ways to invest your Bitcoin and play other markets.

Our recommendation is a service called 1Broker.

Feel free to sign up here using our referral link.

1Broker offers access to a wide variety of markets, using Bitcoin in and out as your collateral.

Before using any service/website, we obviously recommend each user do their own individual research. A thorough read of the Bitcointalk thread for 1Broker provides plenty of insight into the sites 3 year history, which surprisingly (for Bitcoin) is pretty flawless.

Some major points:

– They haven’t ever been hacked

– Contracts are backed by actual CFDs for larger positions

– Website admins will refund your BTC if you suffer a loss due to site downtime

Our only complaint is that the spreads for some of the markets are a bit big, but they have been improving over time, and we expect them to continue to do so. If you aren’t trying to day trade tiny ranging markets (like Bitcoin today), you shouldn’t have a problem with the spreads currently provided.

Keep up the great work exxe, we hope to see your project continue to grow!

Bulls have been suffocating the last 16+ months, as Bitcoin Bears have held a firm tracheal grip. The bulls experienced a series of false starts throughout 2014, with none of the news based pumps materializing, and all going the way of “the Microsoft, PayPal and Lunar pumps”. While this phenomenon can be attributed to a number of variables (that’s for another blog post), the bottom line that became apparent is that something significant was going to have to change in order to induce hyperbitcoinization. Moving into 2015, we saw what looked like a capitulation moment in January, but with a nominal amount of follow through price wise so far.

Taking a quick look at the USD swaps on BFX, we see that even during this capitulation, there were close to $15 million in USD longs that were not margin called. These traders are probably not BFX Dreamers, and are using margin safely, so we would expect them to be strong hands that are going to hold their long until they are more comfortable selling at a higher price. Yes, USD swaps have increased since January, but an important metric to look at is the approximately $11 million USD increase in swaps, not just the sum of swaps. It’s important to note, most of these swaps were opened starting in the beginning of March, which would infer they were used to purchase coin at prices higher than where we are now. These longs have been juicy bull meat for the bears recently, and we have been expecting a massive bear raid for a few weeks now.

Our long term outlook has always been extremely bullish, and now we are officially changing our short-medium term view to cloudy, with a chance of bullishness. This past weekend brought a few dollars of price movement, but perhaps the most significant indicator of our direction moving forward is what didn’t happen over the weekend.

Last week, a significant number of shorts closed, presumably because of the bullish news in the Bitcoin ecosystem (GBTC, Goldman, Nasdaq). We see a slightly less than 1/3 decrease in BTC swaps over the last 7 days.

In the past, we have seen opportunistic bears use these time periods to drive down the price and accumulate more cheap coins. While it looks like some small dump attempts may have been made over the weekend, we do not see any significant increase in BTC swaps during this time period. That leads us to believe those coins were a) spot coins being sold or b) margin longs closing/trading.

To be clear, we are not on the “bubble” train, as there has already been talk of bubbles in the interwebs. We believe that the path to 10k and higher will be a bumpy one, amplified by the derivatives and other instruments which have come to market since 2013. The bears will return and have their day to bask in glory again, but we are thinking that in the nearer term a small bull run may be in order.

And perhaps the most under appreciated Tweet of the weekend:

@jerrybrito THE blockchain. It's a colored coin implementation. That got lost on cutting room floor.

— Michael Casey (@mikejcasey) May 10, 2015

Shocking, right? We had a news based pump that is flagging and hasn’t dumped yet? Someone pinch me, please! Ok, fine… I fully expect to wake up to a “full retrace” back down to 230 because some “bearwhale” feels like having a bull steak dinner (probably not grass fed though), or maybe the BFX longs will slowly capitulate.

BFX chart as of 9PM EST, 15m shown.  Where are the hopeium traders today losing their shit while high on margin?

At the time of the time of the 5k volume bar on the 15m BFX chart shown above, we also see around a 2k BTC decrease in swaps, presumably a short closing.

The BFX Dreamers (as we call them, the idiotic traders that have been going margin long nonstop since… maybe December 2013?) would be expected to FOMO and Low Pro long at this point, but strangely, we see a sizable decrease in USD swaps during the corresponding time period. Could they be smartening up? Unlikely (because they are so fucking persistent), but maybe there is some new money coming into the ecosystem that is finally lightening their bags. It wouldn’t be surprising with all of the mainstream news surrounding Bitcoin.

Looking at a longer term chart of BFX USD swaps, they seem to be leveling out right now, possibly headed into decline.

So, what is this in the headline of the article about itBit. They are a NYC based (with a Singapore headquarters as well) startup, which just received it’s charter. They are the first Bitcoin exchange to do so. The best way for traders to view this news in our opinion is as as an iceberg bid order. Things could get real from here, or we could plunge back into bear winter (even in the Northern Hemisphere) and require another Fireside Chat from Barry.

For those of you that are behind, here is the itBit news from NYDFS, check it out here.

From the release:

In light of the demonstrated need for stronger oversight of virtual currency exchanges after the Mt. Gox collapse, NYDFS issued a March 2014 public order initiating a process for accepting licensing applications for virtual currency exchanges under the New York Banking Law. As previously noted in the NYDFS announcement of that order, those exchanges will ultimately be expected to meet the full requirements of the BitLicense regulatory framework as a condition of licensure. NYDFS expects to issue its final BitLicense regulations later this month.

ItBit applied to NYDFS for a charter under that process for virtual currency exchanges in February 2015. NYDFS conducted a rigorous review of that application, including, but not limited to, the company’s anti-money laundering, capitalization, consumer protection, and cyber security standards. As a chartered limited purpose trust company with fiduciary powers under the Banking Law, itBit can begin operating immediately and is subject to ongoing supervision by the NYDFS. ItBit will also be required to meet the obligations for operating a trust company under New York law, as well as those under the final BitLicense regulations.

The news from itBit can be found here.

New York – May 7, 2015 – Global bitcoin exchange itBit today announced it is available to all U.S. retail and institutional bitcoin traders and will begin accepting U.S. customers immediately. Through a trust company charter, granted by the New York State Department of Financial Services (NYDFS), itBit has established the itBit Trust Company, organized under New York State banking law. This makes itBit the only U.S.-chartered and supervised bitcoin exchange able to offer unique protection and security for customers in full compliance with New York and federal law.

With oversight from the NYDFS, the itBit Trust Company provides unparalleled security and protection for all client deposits and assets. All client deposits and assets, including both bitcoin and fiat currency, are held for customers in secure custodial accounts in order to ensure the safe return of customer balances. In order to provide further heightened protection, itBit has partnered with an FDIC-insured and regulated U.S. banking institution to provide assurances to all U.S. clients that their fiat balances are held in the U.S. and with the benefit of FDIC-insurance (up to $250,000 per account).

Excellent news all around, we congratulate itBit and the NYDFS for working together and reaching a reasonable agreement! itBit also announced the closure of a $25m series A funding round.

Why is a charter so important? Simply (from Investopedia):

DEFINITION of ‘Chartered Bank’

A financial institution whose primary roles are to accept and safeguard monetary deposits from individuals and organizations, and to lend money out. The details vary from country to country, but usually a chartered bank in operation has obtained government permission on some level to do business in the banking sector.

INVESTOPEDIA EXPLAINS ‘Chartered Bank’

Chartered banks provide the core financial intermediary services necessary in today’s economy; individuals can easily deposit their funds into various types of accounts within a chartered bank, earning interest on their temporary savings. Chartered banks maintain a float of currency so they can process customers’ daily transactions, but they lend out the majority of their deposits to individuals and commercial borrowers in an effort to stimulate economic growth.

More from the Federal Reserve.

The proposed bank must first receive approval for a federal or state charter. The Office of the Comptroller of the Currency (OCC) has exclusive authority to issue a federal or “national bank” charter, while any state (and the District of Columbia, Guam, Puerto Rico, and the Virgin Islands) may issue a state charter. Before granting a charter, the OCC or state must be able to determine that the applicant bank has a reasonable chance for success and will operate in a safe and sound manner. Next, the proposed bank must obtain approval for deposit insurance from the Federal Deposit Insurance Corporation (FDIC). Additional approvals are required from the Federal Reserve if, at formation, a company would control the new bank and/or a state-chartered bank would become a member of the Federal Reserve.

All insured banks must comply with the capital adequacy guidelines of their primary federal regulator (Federal Reserve, FDIC, or OCC). The guidelines require a bank to demonstrate that it will have enough capital to support its risk profile, operations, and future growth even in the event of unexpected losses. Newly established banks are generally subject to additional criteria that remain in place until the bank’s operations become well-established and profitable.

More information on The OCC here.

Video of itBit CEO on CNBC here.

In all, this charter is a much bigger deal than most realized at first. Is it enough to hold off a massive, over-leveraged bull dump? Only time will tell.

Interesting segment on Boom Bust today regarding bank charters, starts at 13:41 (click for video).

Thanks to Arthur at BitMEX for the shout out in today’s blog post. If you aren’t a BitMEX customer, we recommend registering and checking them out.

 

Just after 5pm EST today (May 6th, 2015), Dump Team 6 commenced a high volume, multi-exchange sell-off.  As usual, panic quickly struck both the Chinese and Western exchanges, as traders who were high on margin started to sober up and realize it might not be such a great idea to trade while using hopeium.

The right shoulder of most Bitcoin trader’s favorite TA pattern (ok, besides a triangle) started to form (as it always does), but instead of continuing to crash, something strange happened.  (2h chart shown above, note the H&S + volume)

Zoomed in on the sell off, we can see that the bears were held off by some sort of strange trading activity, or exchange malfunction. While we are used to lag, BitcoinWisdom/TV charts breaking, API feeds going down and a plethora of other issues while trading the buttcorn, few issues leave a trail like that shown below.

Immediately, BFX customers took to Reddit in order to voice their concern.  This thread popped up in /r/bitcoinmarkets, which quickly filled up with replies, screenshots and accusations of manipulating a number 2 in one of the screenshots.  Crazy, yes… people on Reddit will even try to debunk legitimate screenshots.

What may be the most telling, is a screenshot which shows the USD price on BFX drawn out to 8 decimal places. This would suggest that USD and BTC data streams were inadvertently crossed for a short period of time, which also lines up with the malfunctions that traders saw in their accounts.

And another screenshot, originally posted on Reddit.

While this issue seems to be ironed out already, we hope that BFX will come forward with an explanation of the event. Based on a previous issue with the exchange, we would expect trades to be rolled back or for customers to be fully reimbursed.

We can only speculate, but maybe this has something to do with the Alpha Point integration finally nearing completion. Users have been experiencing/reporting some issues with the BFX order book the last few days, specifically it being stuck in a “loop”. Whatever is going on behind the scenes, let’s hope everything is OK at BFX headquarters.

Edit: Zane has confirmed that this was an AlphaPoint integration issue on Reddit. They are still looking into the details.

We encountered an issue last night with margin trading accounts. We have fixed this issue and will release an explanation soon.

— Bitfinex.com (@bitfinex) May 7, 2015

For users affected by last night's bug, please contact us and we will be sure to get everything fixed. Thank you for working with us on this

— Bitfinex.com (@bitfinex) May 7, 2015

Edit 2: A happy BFX customer has come forward on Reddit, they have made his account whole.

Today, FinCEN released information that they have fined Ripple Labs and XRP II (a subsidiary) $700,000 USD for violating the Bank Secrecy Act.

Once again, Bitcoin users not affected.

For all intents and purposes, Ripple Labs Inc. IS Ripple. As we all know, Bitcoin is a protocol governed by the rules of math, programming and logic. Fortunately, FinCEN agrees (outlined below).  Here at shitco.in, we don’t expect to see any lawsuits against the Bitcoin protocol any time soon.

Some takeaways from today’s documents:

– FinCEN press release can be found here.

So what we have here is Ripple Labs “failing to implement and maintain an adequate anti-money laundering program designed to protect its products from use by money launderers or terrorist financiers”. Wait a second… Didn’t a case just come to light where Bitcoin exchanges (BitStamp and Coinbase) came forward regarding suspicious activity from a government agent?

So, individual Bitcoin exchanges are able to implement KYC/AML for an unregulated protocol, but Ripple can’t keep track of their pre-mined shit?

Oah yeah, even better… the government has a concept of what pre-mined is now.

From this document.

So, in summary…

Jed McCaleb founds and then leaves Mt. Gox (which so gloriously implodes) to start Ripple, which the US government recognizes as pre-mined (garbage). Now, FinCEN is fining Ripple for failing to comply with the simplest of virtual currency regulations which were outlined 2 years ago, in 2013!

In it’s first day of trading in the regulated marketplace, Bitcoin traded at a record high (in USD) of $1,337.00 per BTC.  GBTC is an investment vehicle which represents approximately 1/10, or .1 BTC per share.  More information on the security can be found here.

Edit: More information is available here, on Reddit.

Edit 2: Some discussion in the Investing sub-Reddit.

Edit 3: From BitcoinTalk, a Bloomberg Terminal screenshot.