Bitcoin Weekly two thousand sixteen June 1: China influences rise in market value, BTC – not money – case, Australia auctioning $ in bitcoins, the DAO comes online
Bitcoin Weekly two thousand sixteen June 1: China influences rise in market value, BTC ‘not money’ case, Australia auctioning $11.5M in bitcoins, the DAO comes online
UPDATED 20:26 EST . One JUNE two thousand sixteen
It looks like the Bitcoin market value got a unexpected shot in the arm as Chinese investments have shoved the price up by almost $100 (see below). During a money laundering court case in Florida, an economics professor argued that bitcoins are “not money” by comparing the cryptocurrency to collectible baseball cards and comic books. In what makes the 2nd largest auction of seized bitcoins, Australian officials will be selling off bitcoins as proceeds to a crime in Sydney to the tune of 24,518 on June 20.
Not fairly Bitcoin, but the Ethereum blockchain DAO (or Distributed Autonomous Organization or “The DAO”) has finished its crowdfunding round to become the largest crowdfunded project in history exceeding $167 million USD in funds. The DAO is also an experiment in company-as-code as the entire organization runs using wise contracts and computer code in order to codify its own corporate governance. Read below about the rise of this interesting fresh class of business, the way it works and the current fears critics have about the future of the project.
This past week Bitcoin market prices got interesting: the market value leaped almost $100 over the three-day weekend. BTC market value presently holds an average price of $536.50 USD (according to BitcoinAverage.com) compared to the $451 reported in last week’s Bitcoin Weekly. The market rise began just after May 25, two thousand sixteen and found its peak around May thirty around $550, with a trough and then an uptick.
Speculation contends that Chinese markets are behind this unexpected rise in Bitcoin market value with investors coming back to the market once again.
All this and more in this Bitcoin Weekly.
Wall Street Journal reports Chinese influence on Bitcoin market leading to twenty percent rise
Over the past week, Bitcoin market value has seen an almost thirty percent boost and the Wall Street Journal is reporting (warning: paywall site) that the reason may be enhanced trading and investment from China.
The WSJ reports that two well known Chinese exchanges, Huobi and OKCoin, collectively represent ninety two percent of global trading in bitcoin across the time of the price increase.
Other factors may be involved in this value increase as the block prize for Bitcoin miners will be halved soon. In approximately five weeks, the prize for miners “discovering” a fresh block will reduce from twenty five BTC to 12.Five BTC. As the total number of bitcoins available to be mined is predetermined, this event happens periodically until the prize will reduce to zero.
As this event will switch the total number of bitcoins flowing in, and also affect the profitability of mining, it may certainly have a market effect.
For more information on “The Halvening,” Joseph Youthfull at Bitcoin Magazine does an excellent job at describing the protocol phenomena and its potential effects.
Bitcoin described as “not money” in Florida money laundering case by economics professor
The debate over if bitcoins should be considered money or not money has permanently caught the attention of the Bitcoin community. The nature of bitcoins as a medium of exchange and store of value (properties of money) speak to the core of its use as a currency; but this also leads to questions as to how its trade will be regulated by governments.
During a latest money laundering case in Florida, the defense for Michell Espinoza, accused of selling laundered $1,500 worth of bitcoins to federal agents, called upon Barry University associate economics professor Charles Evans who claimed that bitcoins are not technically money under local law.
“Basically, it’s poker chips that people are willing to buy from you,” Evans testified.
The irony of this statement is reflected in the fact that Evans received $Three,000 in bitcoins as his fee as defense witness.
In addition, Evans argued that no central bank or authority backs Bitcoin within the United States and that the Internal Revenue Service (IRS) considers Bitcoin trading bartering in a commodity. He then went on to compare assigning worth to bitcoins as similar to how collectors determine the value of baseball cards or comic books for purposes of trade.
According to the argument, if bitcoins are not legally money therefore trading in them cannot be money laundering and the defense wants the charges thus dismissed.
A ruling is expected on the defense mobility to dismiss in approximately two weeks.
Australia to auction off $11.5M in confiscated bitcoins
Approximately $11.5M in confiscated bitcoins will be auctioned off in Sydney, Australia later this month in the very first such auction outside of the United States and the 2nd largest ever. The very first largest auction of confiscated bitcoins happened in two thousand fourteen when the U.S. Marshals auctioned off over 144,000 bitcoins seized the Silk Road dark web marketplace across a series of auctions.
According to CNBC, the sale will take place June 20-21 and involve 24,518 bitcoins. The bitcoins are the proceeds of a crime committed by an unidentified Australian man convicted of commercial drug trafficking in 2014. Australian department of justice officials declined to comment on the case except to confirm the seizure of coins in 2013.
According to Phys.org, officials said registered bidders will be told the name of the person from whom the bitcoins were confiscated.
Bidders may register with Ernst & Youthfull, the financial hard running the auction, until June seven for the 48-hour sealed auction on June 20.
The lateness of this auction from the apparent confiscation is interesting, but not unknown in criminal trials.
The Ethereum DAO crowdfunding has ended and it is now up and running
The very first Distributed Autonomous Organization (DAO), a fully self-operating and self-governed organization that runs entirely on code and not the governance of people, is now running on the Ethereum blockchain after its initial crowdfunding round.
The crowdfunding round, which ran from late April to May 28, raised more than $167.93 million USD in funds by selling 1172.78 million DAO tokens (a cryptocurrency necessary for participating in the DAO itself) for Ether (ETH), the Ethereum blockchain cryptocurrency. This event makes the DAO crowdfound the largest cryptocurrency crowdfunding experiment ever. It even exceeds the current crowdfund investment in Starlet Citizen, which is one of the largest crowdfunded movie games in existence at $114.7 million and counting.
The Ethereum DAO is experimental and will be one of the very first test cases in what it means to have a fully decentralized autonomous organization that can operate based on its own code, which generates the rules for interaction and governance via UI, computer protocol, programmable API and wise contracts.
The functionality of the DAO itself is fairly elaborate and requires a bit of research to understand read this DAO one hundred one for details.
“DAOs hold potential to create a fresh asset class in a fresh asset class,” said Charles Hayter, CEO of CryptoCompare (Crypto Coin Comparison LTD), “but it’s early days so caution on known unknowns and unknown unknowns has to be advised. Attack vectors to the code, or idealistic rather than practical implements for governance in its coded ‘Articles of Association’ and ‘Shareholders Agreements’ are not attempted and tested.”
A comparison of ETH to BTC over the time span leading to the DAO creation. Chart courtesy of CryptoCompare (ETH overview).
During the DAO token sales, which were exchanged for ETH, the exchange rates for ETH spotted a notable increase in both value and volume. Compared to the large crowdfunding for the DAO, this represents an enhanced interest in ETH during that period.
Hayter’s concerns about the unknown qualities of the DAO’s own coded governance nature have also been spreading through the media during the past week. Mere days after the initial launch of the DAO platform critics began to voice apprehensions.
In fact, May thirty articles appeared on Inverse, Quartz and CryptoCoinsNews voicing those concerns. The thickest on the block, research from cryptocurrency entrepreneur Dino Mark, Ethereum researcher Vlad Zamfir and Cornell University professor Emin Gün Sirer published on May 27, called for an instant moratorium on the experiment.
“In this paper, we analyze the rules of The DAO and identify problems with its mechanism design that incentivize investors to behave strategically;” the researchers wrote, “that is, at odds with truthfully voting to expose their preferences. We then outline potential attacks against The DAO made possible by these behaviors.”
The paper then goes on to list nine causes that they expect would lead participants in the DAO to collude and commit to “strategic rather than fair behaviors.” This, the researchers fear, could lead to casual participants in the DAO, who do not vote but instead just want to invest and come along for the rail, to get colloquially taken for that rail.
The DAO is only days old and the functions that it can support and what it will do are still being formulated.
People interested in becoming involved in the DAO now that the initial funding round is finish can still participate. People interested in having the DAO do something (i.e. produce a product, a service, whatever) can submit proposals and have their ideas evaluated for inclusion. Simon Dingle, a fintech podcaster, wrote a very good article on Medium describing this process and the DAO for beginners.
Critics and investors still need to duke it out and the DAO has not yet evaluated or launched any projects using its proposal system. It will depend on the holders of the DAO tokens whether this experiment rises to expectations or smashes on the rocks.
Either will progress expectations for future experiments and shove the horizon for using blockchains and wise contracts for future autonomous organizations.