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What is an Initial Coin Offering (ICO)?

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An Initial Coin Offering is an umbrella term, referring to a capital generation event which utilizes digital tokens as a means of compensation for investors.  While not exclusive to utility tokens, the term ICO is most often used when referring to the distribution of such assets.

Antoine Tardif is the founding partner of Securities.io, the CEO of BlockVentures.com, and has invested in over 50 blockchain & AI projects. He is the founder of Unite.AI a news website for AI and Robotics. He is also a member of the Forbes Technology Council.

Forex

US Dollar Forex Market Dips on Hopes of New Stimulus Deal

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US Dollar Forex Market Dips on Hopes of New Stimulus Deal
  • Dollar Loses Strength on Fresh Deal Hopes
  • Market Eyes Fed Speakers and Presidential Debate
  • Big Stock Rally Sees Confidence Return

The Dollar lost some strength in the forex market today as hopes lifted that a new fiscal package could be agreed in Washington. This comes as it was announced Monday that the democrats are to unveil a $2.2 trillion dollar aid bill. Also on the mind of traders today is the upcoming presidential debate, the first of the season which is slated to take place later on Tuesday. Meanwhile, stock market futures look quiet at the market takes a breather following a strong rally to start the week.

Coronavirus Aid Bill Brings Renewed Optimism

Republicans and democrats to date have failed to reach agreement on any additional stimulus for the US economy. House speaker Nancy Pelosi announced on Monday though, that the democrats will put forward a new, compromised proposal for agreement. This package is worth a total of $2.2 trillion. Prior talks had broken down in August with both sides unable to agree a deal, though there seems to be renewed hope this time around.

This has brought a sense of confidence to many forex trading the markets, and has led to a push away from the relative safety of the US Dollar again. The US Dollar Index has retracted slightly on the news, though it is still a long way above previous lows from August. The proposed new stimulus package is also set to include another $1,200 payment to each American taxpayer.

Fed Speeches and Presidential Debate Awaited

It will be a busy day for many from the Federal Reserve. There are many scheduled to address congress today and provide an update on the fiscal situation as they see it. This list does not include Federal Reserve Chairman Jerome Powell, though forex brokers and analysts alike, expect the message which is delivered to be similar to last time out. That was that to broadly encourage the government to provide additional stimulus.

The other big speakers of the day will be in debate format as President Trump and Joe Biden take the stage in the first of three televised US Presidential debates scheduled prior to the election. Many will be hoping that a clear winner here can provide more certainty to the economy moving forward. Something that is missing in the current moment.

Markets Look to Pick Up From Strong Recovery

There was a much needed positive day on Wall Street yesterday. Major markets started the week up more than 1.5% each. The Dow S&P 500, and NASDAQ all passing these levels. Traders will be hoping to carry on with that positive momentum when the opening bell comes later this morning.

It remains to be seen if the market will show any reaction to the proposed new stimulus bill, though this evening’s debate is poised to have a bigger impact than usual. Either way, it promises to be an eventful couple of days for trading on the equities front.

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Stocks

How to Invest in Stocks – Picking Stocks and Managing your Portfolio

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How to Invest in Stocks - Picking Stocks and Managing your Portfolio

In the two previous articles, we explained what you need to do to get started buying stocks, and introduced a few different ways to make money in the stock market. We are now ready to expand on the topic in more detail, with some tips on selecting stocks and building a portfolio.

Selecting stocks

With thousands of stocks to choose from, it helps to develop a process to find and select stocks. You only need 15 to 20 stocks in your portfolio, so it’s important to be very selective.

What does a share actually represent?

Before you start, it’s good to know exactly what you are buying when you buy a share of a company. Shares, stock, and equity all refer to the same thing: a share in the equity (ownership) of a company. There are various types of shares, but in most cases, you will be buying ordinary shares, also called common shares or common stock.

Each ordinary share gives its holder the following rights:

  • The right to one vote on important company issues.
  • The right to an equal portion of ownership. In the event that the company is liquidated the assets will be equally divided amongst shareholders, but only after creditors, bondholders, and preferences shareholders have been paid.
  • The right to receive dividends – if they are paid. Any profits that are not reinvested in the business are paid out as dividends.
  • The right to transfer ownership. In other words, you can sell your shares.
  • The right to information. Listed companies are obliged to provide certain information to shareholders.
  • The right to sue for wrongful acts. Shareholders can sue a company if their rights are not respected.

Share valuations

Owning a share of a company may confer the rights listed above, but ultimately you are probably investing to make a capital gain. That means you hope to sell the share at a higher price than you paid for it. This is where valuations come in.

Price and value are not quite the same things. A share price represents the price at which supply and demand are in equilibrium. However, the buyers probably believe the value to be higher than that price, while sellers believe the value to be lower than that price.

In most instances, for the share price to rise, the market’s perceived valuation of the company must rise. There is no specific correct or incorrect way to value a company, but the following three methods can be considered:

  • Intrinsic value, net asset value and book value, which are all similar but not identical metrics, only consider the value of a company’s assets. This method ignores the value of future profits.
  • The discounted cash flow model (DCF) ignores the value of the assets and instead considers expected future cash flows. This method would be more accurate if future cash flows were known with certainty – but this generally isn’t the case.
  • The dividend discount model considers the value of expected future dividends, which makes it easy to compare a share to risk-free bonds. Again, this method is based on assumptions that may be wrong.

What causes valuations to rise?

The market tends to value growing and profitable companies by considering future revenues, profits, and cash flows. On the other hand, companies that are struggling are often valued based on the value of their assets.

Typically, to sell a share for more than you paid for it, the perceived value needs to rise over a period of time. So, what causes the value to rise? For a company’s value to rise, its profits (or earnings) must rise. There are three ways to increase profits:

  • Increased revenue (sales) can occur if a company grows its market share, or if its market share remains stable while the size of the market grows.
  • An Increasing gross margin can result from higher sales prices or lower cost of sales. Sometimes a company benefits from economies of scale and the cost of each sale comes down as revenue increases.
  • An increasing profit margin can result from reducing expenses or overheads, or even from maintaining overheads while the gross margin rises.

The share price will usually rise when the market begins to believe any of the above will happen or accelerate in the future. If the market believes these numbers will fall, the share price will fall.

The share price may also increase for other reasons. If it raises its dividend or if it appears the company may be the target of a takeover the price may rise. Changes in management or new product release can also result in the price rising if investors think these events may result in higher earnings.

Key ratios

When selecting stocks to invest in, you will often need to compare one company with another. Valuation ratios have limited value when used to value a single share but are invaluable when it comes to comparing the market value of several companies. They can also be used to compare a stock’s current value to its historical value.

PE ratio

The price-earnings ratio, or PE ratio, is calculated by dividing the current share price by the company’s annual EPS (earnings per share). If the share price is $20 and the company’s EPS for the last year totaled $1, the PE ratio is 20/1, or 20. A PE ratio also normalizes the value, regardless of the stock price so you can compare a share trading at $2 with a share trading at $50.

As of September 2020, the market-cap-weighted PE ratio of stocks in the S&P 500 index is 28. The historical average is around 16, so stock values are historically quite high. Mature companies with relatively low growth usually trade with PE ratios between 10 and 15. Rapidly growing companies trade on much higher PE ratios – occasionally as high as 1000.

When actual earnings are used to calculate the PE ratio, it is known as a historical or trailing PE. If estimates of future earnings are used, it is referred to as a forward PE.

Price to Sales ratio

Often rapidly growing companies reinvest all their profits, or even run at a loss. In this case, the PE ratio cannot be calculated. The next best thing is the price to sales ratio, calculated by dividing the share price by revenue per share.

 EV/EBITDA

This is a slightly more accurate way to compare company valuations but is a lot more complicated to calculate. EV stands for enterprise value and is calculated by adding debt and cash to the market capitalization of the company.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This metric gives a truer reflection of the operating performance of a company than the basic EPS number.

The EV/EBITDA ratio can be used to compare companies with very different capital structures and operating models.

Other metrics to consider

Countless other ratios and metrics are used to analyze a company – but the following are the more essential numbers to consider.

Market capitalization

Market capitalization is calculated by multiplying the stock price but the number of outstanding shares. This is the value investors are placing on the company. Larger companies are typically more established, and their share prices are less volatile, while smaller companies carry more risk, but can grow faster.

As a general rule of thumb, a company valued at less than $1 billion may carry considerable risk, while companies worth more than $10 billion are mostly lower-risk investments.

Revenue growth rate

This is the rate at which revenue is growing each year. Ideally, the growth rate should be growing consistently each year, if not accelerating.

EPS growth rate

The EPS growth rate reflects the annual percentage growth in EPS. Unless a company is entirely focused on revenue growth, EPS should also be growing consistently.

Gross margin

The gross margin is the gross profit as a percentage of total revenue. Gross profit is calculated by subtracting the cost of goods or services sold from revenue. This is the company’s profit excluding expenses and one-off items.

Operating margin

The operating margin is calculated by subtracting normal expenses from the gross profit and then dividing the result by total revenue. This margin reflects the profitability of the company’s core business.

 Profit margin

The profit margin is similar to the operating margin but accounts for expenses that are not related to the company’s core business.

ROE

A company’s return on equity is calculated by dividing net income by shareholder equity. It indicates how effectively the company is using its assets and capital to generate profits. A common rule of thumb is that the ROE of a company should be above 15%.

Debt to equity

A company’s debt to equity ratio shows you how much debt the company has relative to its equity. Debt to equity ratios vary from industry to industry and should be compared to similar companies. As a general rule of thumb, the debt to equity ratio should be less than 2.

Dividend yield and dividend cover ratio

The dividend yield is calculated by dividing the total paid out in dividends over the last year by the current share price. This allows you to compare a stock to other income-generating assets. Not all companies pay dividends, in fact, most rapidly growing companies often prefer to reinvest all profits in the business. So, the dividend yield is only relevant to certain companies.

The dividend cover ratio is the ratio of EPS to annual dividends. This will give you an idea of whether the company can continue paying a dividend if its earnings take a knock. A ratio of three or higher is preferred.

Expectations vs reality

Stock prices typically reflect the market’s expectations about the future. Substantial price changes occur when expectations change – either at the company level, the sector level, or at the level of the entire market or economy. If there is no reason for expectations about the company to change, a stock’s price will usually track its sector or the market as a whole.

News should always be considered in the context of expectations. Good news can be bearish if the market is expecting great news, and bad news can be bullish if the market expects terrible news.

Buy low, sell high – or, buy high, sell higher?

One might assume that the way to make money in stocks is to buy low and sell high. Indeed, some of the best long-term investments can be made when stock prices decline. But that’s not the only way to approach investing. Sometimes you can buy low and sell high, but sometimes you will need to buy high and sell even higher.

Buy low, sell high

There are three types of situations where buying low and selling high makes sense. The first is when the entire market experiences a correction (a fall of around 10%) or a crash (a fall of 20% or more). This is the best time to buy stocks as you will find high-quality stocks trading at low valuations. This is when you should buy blue-chip stocks to hold for a long time.

The second is when the price of one stock declines because of stock-specific news. Often the price will fall too far, offering a great opportunity. The key is to carefully consider how likely it is that the stock price will indeed recover – was the news that led to the fall a temporary setback, or does it change the long-term picture for the company? If the setback was temporary, you may have an opportunity to make a great long-term investment

Finally, some industries are cyclical, and the stocks of companies in these industries sometimes trade in a clearly defined trading range. Examples include mining, energy, and construction. The time to buy cyclical stocks is after they turn the corner at the lower edge of the trading range. The time to sell them is if or when they lose momentum at the upper end of the range.

Buy high, sell higher

Some market-leading stocks remain in strong bullish trends for years at a time. Those investors waiting for a correction often never get one, and miss out on some of the best returns they could have earned. These are typically growth stocks with strong price momentum, and they often trade on very high PE ratios. For these types of stocks, there is often no alternative but to buy high and sell even higher.

Investing in momentum stocks does come with more downside risk than buying stocks that have already fallen, so you will need to manage risk carefully. You can manage your risk by doing the following:

  • Only buy the very best momentum or growth stocks. Stick to companies with a unique competitive advantage in a growing market.
  • Start out with a small position. If an investment is successful it will grow into a meaningful position in your portfolio on its own.
  • Decide how much you are prepared to lose before you invest – once the position is showing a profit you can risk a little more, but don’t allow yourself to lose more than the initial amount you were prepared to lose.

How to find stocks to buy

With thousands of stocks to sift through, it helps to use tools that make the job easier. You can find lots of stock screeners online that you can use for free. One of the most popular is Finviz, a stock screener you can use to filter over 7,500 stocks according to 70 different criteria. Some brokers also have stock screeners on their websites.

When should you sell?

In many ways, selling a stock at the right time is more important than the initial decision to buy the stock. Sometimes the right thing to do is hold the stock for a very long time and ride out any volatility. For other stocks, it may be best to sell after a strong run and when momentum slows. And, there will also be times when the best thing you can do is sell for a small loss before it becomes a large loss.

Your criteria for selling a stock should always be related to your reason for owning it in the first place. If you invest in a company because you believe the business has the potential to continue growing for a long time, then you should hold the stock until you believe the company can’t grow anymore. The price will go up and down along the way, but the price action should not influence your decision to sell.

If you buy a stock that you know is quite expensive and already pricing in a lot of future growth, you may need to watch the price action more carefully. Momentum stocks can easily fall 50% or more – in which case you will need the price to rise 100% just to get back to breakeven. There is no point holding onto a stock like this once the uptrend breaks. In this case, you may need to take a small loss or give up some of your profit, but you can always re-enter when the price stabilizes and begins rising again.

Managing your portfolio

The reality of investing is that some investments work out well while others don’t. This is just one of the reasons to spread your investments across a portfolio of stocks. Over time you can stick with the winners and let go of the losers and those that you believe have run too far. You can also manage the risk profile of your portfolio by buying different types of stocks.

Diversification and asset allocation – the key to risk management

Diversification is the best way to manage risk in a portfolio. As you add more stocks, you reduce the impact that one bad pick can have on your portfolio. However, research suggests that the benefits of diversification become marginal when the number of stocks exceeds 20. There is no harm in owning more stocks, but as far as diversification goes it is unnecessary. There is also something to be said for keeping things focused with 15 to 20 stocks.

Reducing volatility

If your entire portfolio is made up of volatile stocks you will have to watch its value rise and fall substantially. This may cause you to act impulsively and sell stocks at exactly the wrong time. You can reduce the volatility of the portfolio by including the following types of stocks and ETFs:

  • Defensive stocks are the stocks of companies that are not very sensitive to economic cycles. These are companies that have relatively predictable income streams and manage to sell their goods and services regardless of the state of the economy. Examples are companies that sell household products (Procter and Gamble, Johnson and Johnson, etc), pharmaceutical companies, and utilities (power, water, etc).
  • Bonds have lower average returns than stocks, but they are also less volatile. Allocating 10 to 20% of a portfolio to a bond ETF can have a substantial effect on volatility.
  • Gold is one asset that very often rises when stock prices fall. A small allocation (2 to 5%) to a gold ETF can also reduce volatility.
  • Cash is obviously the least volatile asset, though the returns are also very low. Nevertheless, holding some cash is a good way to reduce volatility.

Over time, your returns will probably come from the other stocks in your portfolio – the blue-chips, the growth stocks, and the small caps, but holding some defensive stocks and ETFs will help you ride out any volatility without losing your nerve.

Conclusion

This article is all about investing in individual stocks. As mentioned in previous articles, you can also invest in stocks by buying ETFs. You can also do both, with a core ETF holding and a handful of the stock you really want to own. If you are just beginning your investment journey, a sensible approach is to start with ETFs and gradually add individual stocks as you learn more about the market.

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Cryptocurrency

Investing In Bitcoin (BTC) – Everything You Need to Know

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Bitcoin is an “electric peer-to-peer cash system” according to its anonymous creator, Satoshi Nakamoto. The goal behind Bitcoin’s creation was to create “a system for electronic transactions without relying on trust“. Bitcoin succeeded in this task through a combination of ingenuity, determination, and technological prowess.

It’s hard to imagine a world without Bitcoin. Today, the world’s first and most successful cryptocurrency is a household name. There have been countless TV shows, songs, tributes, artwork, and books dedicated to this revolutionary invention.

Despite all of this attention, most people in the world remain clueless as to how this protocol works, what gives it value, and why so many people are obsessed with it. At its core, Bitcoin is simplistic, you could even say elegant. This revolutionary program was built upon decades of previous developments in the virtual currency sector to create a decentralized currency that is censorship-resistant.

What Problems Does Bitcoin (BTC) Solve?

Bitcoin didn’t enter the market as just some random chance. It was directly built to combat some of the most pressing issues facing humanity at this time. There’s a fundamental core message at the center of Bitcoin. It provides the world with the ability to separate the state from monetary policies. A cryptic message located within the coding of Bitcoin’s Genesis block makes the goal of the project clear. Embedded in the coinbase of this block was the cryptic message:

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

The message itself refers to a headline in The Times published on the same date listed. The creator of Bitcoin believed that bad monetary policy would lead the world into disaster. Perhaps this is why Bitcoin utilizes only sound financial principles to ensure its value and use.

Inflation

Bad monetary policy usually leads to runaway inflation. When countries experience inflation their currencies plummet in value. Inflation can destroy the local economy and cause citizens to be left in a state of crushing debt. Entire life savings are erased in days when inflation gets out of control. Inflation comes about when the amount of currency in the market exceeds the demand.

Fiat-currency has no maximum supply. Governments and the Federal Reserve can meet up and create new funding as they deem fit. The problem with this approach is that governments are notorious for letting the printers run wild to cover expenses such as infrastructure and wars.

Bitcoin Whitepaper

Bitcoin Whitepaper

Bitcoin doesn’t experience runaway inflation because it has a limited supply of only 21 million coins. This capped supply is introduced to the market in regularly timed intervals. In this way, Bitcoin provides the world with a global reserve currency that is far more predictive than the other systems in place.

Censorship

Censorship is another important issue that Bitcoin tackles head-on. Decentralized networks are historically hard to censor. For example, think of your favorite video streaming platform. That’s another form of a decentralized network. It simply allows you to meet other people online and trade data, regardless of what it is.

Bitcoin is similar in many ways. It allows anyone to meet up and exchange value. All Bitcoin transactions occur in a direct peer-to-peer process. Since there are no middlemen, regulators, or other parties involved, there is no-one to censor your right to spend your crypto as you choose.

Transparency

Bitcoin functions on a core protocol of transparency. Public blockchains allow everyone in the network to see every transaction in real-time. Not a single Bitcoin moves across the network without people having the ability to track it. This transparency allows Bitcoin to decouple from the other markets in the world. Bitcoin is the first truly decentralized market determined by supply and demand.

Privacy

While providing more transparency, Bitcoin is also able to provide more privacy. Bitcoin does away with account names and instead, you rely on two keys. The first key is your public key. This is the key that you give people to send you Bitcoin. The second key is your private key. This is how you can send Bitcoin. Never give this key to anyone. If you do, they can take all of your Bitcoin and you can do nothing about it.

How Does Bitcoin (BTC) Work

Bitcoin succeeded where previous virtual currencies failed because of the introduction of blockchain technology. A blockchain is a decentralized network of computers. This chain of computers leverages the entire computational power of the network to remain secure.

Bitcoin Trading - Analysis via CoinMarketCap

Bitcoin Trading – Analysis via CoinMarketCapBitcoin Trading – Analysis via CoinMarketCap

Bitcoin transactions get grouped into blocks. These are the blocks that create the chain of transactions, i.e. Blockchain. Blockchain currencies introduced a timestamp into their equation to make them unalterable. This timestamp is how Satoshi Nakamoto was able to defeat the age-old problem encountered by virtual currencies, double-spending.

Double Spend Quagmire

Previous attempts at virtual currencies came very close but ultimately failed because of the double-spend problem. The double-spend problem was how to stop hackers from spending a cryptocurrency twice during a transaction. In the material world, this isn’t a problem. Someone hands you the cash and they don’t have it and you do.

In the digital world, hackers can send you a virtual currency and while that transaction is processing, resend a similar transaction before the system recognizes the duplication. Nakamoto cleverly added a timestamp to each block of transactions. This timestamp is then used in the cryptographic code in the following block.

Mining Bitcoin (BTC)

Transactions on the Bitcoin blockchain receive approval from nodes, also known as “miners.” Once the block of transactions receives approval, it gets added to the chain of transactions to form the blockchain. Importantly, miners receive rewards for securing the network.

Originally, this reward was set at 50 Bitcoin. These rewards are set to half every 210,000 blocks. On average, this process takes around 4 years. In 2012 the first halfing occurred. It brought Bitcoin mining rewards down to 25 BTC. Then, in 2016 another one occurred. This left miners receiving 12.5BTC. The most recent halving was on 11 May 2020 and it took rewards down to 6.25BTC. Analysts predict at this rate, the final mining reward will occur sometime in 2140.

Why So Much Power

You often hear people complain that Bitcoin’s network is power-hungry. The reason that Bitcoin requires so much power has to do with its mining setup. In the Proof-of-Work (PoW) algorithm, only one miner can add the transaction to the blockchain. To determine what node gets this honor, every node competes to solve an advanced mathematical formula. This formula is known as the SHA-256 equation

SHA-256

SHA-256 is an extremely complex equation that requires computers to flex all their processing power. The equation is so difficult that it makes more sense for the computer to generate random guesses rather than attempt the equation directly. Notably, the answer to the equation must start with four zeros to be valid. It takes around 10 minutes for this process to complete.

Bitcoin Consensus Mechanism - SHA-256 - Blockchain Technology

Bitcoin Consensus Mechanism – SHA-256 – Blockchain Technology

Difficulty Adjustment

The more congestion on the Bitcoin network, the more difficult the equation becomes. This difficulty adjustment mechanism helps Bitcoin maintain its predictive monetary supply. Due to the introduction of high-end miners such as ASIC (Application Specific Integrated Circuits), Bitcoin mining difficulty has reached new heights. These chips are thousands of times faster than PCs at solving the SHA-256 equation. Keenly, the protocol will require more zeros at the beginning of the answer. This maneuver increases the difficulty of the equation.

Benefits of Bitcoin (BTC)

Bitcoin introduces some amazing benefits to the market. For one, Bitcoin is a safe ecosystem. Your transactions complete in a peer-to-peer fashion. The fewer intermediaries involved, the more cost-efficient and faster the transactions become. This is why Bitcoin is so much cheaper to send internationally than fiat currency.

You can send millions in Bitcoin in minutes and for a fraction of the cost of sending the same amount of value in fiat currency. Bitcoin streamlines international payments in a previously unimaginable way. Bitcoin remittance payment centers are a perfect example of how this cryptocurrency has helped benefit the world.

Bitcoin is not tied to any government and therefore is not beholden to any sanctions or other restrictions imposed on fiat currencies. People can spend their Bitcoin without politics in mind.  The decentralized nature of Bitcoin’s blockchain network makes it impossible for governments to shut down.

History of Bitcoin (BTC)

The official history of Bitcoin begins on August 18, 2008. That’s when Satoshi Nakamoto, Bitcoin’s anonymous creator registered the domain Bitcoin.org. Two months later, he published a link to his now-famous Bitcoin whitepaper. The paper was titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in a Cypherpunk mailing list. The Cypherpunk community believes that privacy is crucial in today’s digital environment.

Bitcoin’s Genesis block was mined on January 3, 2009. This was the start of Bitcoin’s blockchain. As such, it’s also referred to as Block 0. Nakamoto also collected a reward of 50 Bitcoins for mining this first block. The same month the first open-source Bitcoin client entered the market via a post on SourceForge.

Early Transactions

In Bitcoin’s early days, the excitement was limited to just the virtual currency development sector. Notably, the well-known computer programmer, Hal Finney was the first person to receive a Bitcoin transaction. Hal had been in close contact with Nakamoto throughout the early days of Bitcoin. He received 10 Bitcoins from Nakamoto on January 12, 2009.

There are some other first supporters to the project that are still active today in the sector.  Wei Dai, the creator of Bitcoin predecessor b-money was a big part of these early days of testing. Also, Nick Szabo, the creator of another Bitcoin predecessor, Bitgold, was one of the first persons to take part in these decentralized transactions.

Nakamoto Mining and Disappearance

Nakamoto was very active in Bitcoin’s early days. He communicated often with the aforementioned developers and others in the space. He discussed his concept in various posts that are still up today.

During these days, he was actively made modifications and posted technical information on the Bitcoin forum as well. He also mined around 1 million Bitcoins according to expert studies. Then, without warning, he suddenly vanished. In his last post, he discusses some final changes he made to the “safe mode” feature and leaves a link to the builds.

Satoshi Nakamoto Last Forum Post via Bitcoin Forum

Satoshi Nakamoto Last Forum Post via Bitcoin Forum

He never states anything about leaving. However, in a post previous to the final one, he states that “It would have been nice to get this attention in any other context.  WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us.”  Ever since Nakamoto disappeared, developer Gavin Andresen has taken up the role of the lead developer at the Bitcoin Foundation.

Pizza Day

On May 22, 2010, a Bitcoin enthusiast by the name of Laszlo Hanyecz purchased two large Papa John’s Pizzas for 10,000 BTC. The transaction took place on the Bitcoin forums. In the posts, Hanyecz offers 10,000 BTC to whoever will pick up pizzas, pay for them, and deliver them to his house. Hilariously, he states he needs two pizza’s so he can “nibble” on some the next day.

A British man took up the offer and within the next hour, Hanyecz was munching on some delicious pizza and the delivery man was off with his 10,000 BTC. At the time, 10,000 BTC was only worth around $41. Today, these BTC are worth over $100,000,000.00.

Vulnerabilities Appear

In early August 2010, an attack vector became evident to the Bitcoin core developers. The coding error caused block verification issues to occur. Hackers could exploit these issues because they allowed users to bypass Bitcoin’s economic restrictions. In turn, a hacker could create an infinite number of Bitcoins.

Only a few days later, these risks became reality as 184 billion Bitcoins were generated in a single transaction. These newly minted coins were sent to two addresses on the network. Luckily, developers were already aware of the vulnerabilities. They choose to reverse the transactions and fork Bitcoin’s blockchain over to the updated secure version.

At the time, Bitcoin use was still exclusive to developers, so it wasn’t the issue it would be today. Critically, this was the only time that a Bitcoin transaction was reversed. No other security flaws have come to light since.

Crypto Market Emerges

The following year saw the introduction of other cryptocurrencies. This was the birth of the crypto market officially. Also, select firms began to accept Bitcoin as payment for services. The very first organization to do so was the Electronic Frontier Foundation. WikiLeaks was also among the first firms to accept Bitcoin donations.

In 2012, Bitcoin received its first cameo on a national television series. The cryptocurrency appeared on a CBS legal drama called The Good Wife.  This year also saw the Bitcoin Foundation launch. The founders of this group were Gavin Andresen, Jon Matonis, Patrick Murck, Charlie Shrem, and Peter Vessenes.

Their goal was to drive Bitcoin adoption to new heights. To accomplish this task, developers sought to push for more standardization, protection, and promotion of open-source protocols in the market. Today the Bitcoin Foundation still plays a vital role in Bitcoin’s expansion.

BitPay

In October of 2012, the popular Bitcoin Payment processor, BitPay celebrated a major milestone. The firm reached 1,000 merchants accepting Bitcoin. The same year, one of the largest hosting platforms in the world, WordPress started accepting Bitcoin payments. These developments would lead to an amazing next year for Bitcoin.

French President Emmanual Macron Showing Off A Ledger Bitcoin Hardware Wallet

French President Emmanual Macron Showing Off A Ledger Bitcoin Hardware Wallet

In 2013, Bitcoin made major strides. This was the year that the payment processor, Coinbase reported the successful sale of $1million BTC at an average of $22 per coin. It was also the year for Bitcoin’s first major market crash. In March, there was a massive sell-off as the Bitcoin community split for around six-hours.

Two Bitcoins

The technical mishap left the world with two separate Bitcoin blockchains for hours. The developers made the call to halt all transactions to figure out the problem. This caused investors to lose faith in the fledgling project. A selloff occurred with Bitcoin shedding value in minutes. Developers were able to stabilize the situation when they had all miners upgrade to version 0.7 as the new standard.

Bitcoin (BTC) Regulatory Concerns

This was also the year that regulators began to take notice of Bitcoin’s activities. Specifically, the Financial Crimes Enforcement Network (FinCEN) made a public statement in which it stated that miners selling their BTC rewards for fiat needed to register as Money Service Businesses or face consequences. This announcement caused a slight ripple through the market but it was just a drop in the bucket of what was to come.

In April, Bitcoin experienced a major crash unlike any it had before. The crash was brought on by increased processing delays experienced by the world’s largest exchange at the time, Mt.Gox, and the world’s premier Bitcoin payment processor, BitInstant. The crash saw Bitcoin prices free fall from $266 to $76.

Confiscations

This year was also the first time a government agency claimed to have seized Bitcoin. Specifically, the US Drug Enforcement Administration listed the seizure of 11.02 Bitcoins in a United States Department of Justice notice. At around the same time, authorities seized multiple accounts related to the Mt.Gox exchange.

Regulatory Concerns

Bitcoin went through some regulatory issues during this time as well. The Foreign Exchange Administration and Policy Department in Thailand made Bitcoin illegal in the country. Also, US Federal Judge Amos Mazzant of the Eastern District of Texas of the Fifth Circuit made a controversial ruling that Bitcoin is “a currency or a form of money.” Lastly, Germany’s Finance Ministry acknowledged the cryptocurrency as a financial instrument.

Silk Road

In October 2013, the FBI seized roughly 26,000 BTC from the website Silk Road. This was the largest Bitcoin seizure up until that time. The man behind the operation, Ross William Ulbricht, was found guilty of drug trafficking and sentenced to life in prison for his role in the creation of this decentralized marketplace. Many believe this sentence was too harsh and that he was charged as the dealers and not as the market place developer.

Ross William Ulbricht

Ross William Ulbricht

Bitcoin ATMs

Bitcoin ATMs began to pop up around the globe at this time also. Robocoin and Bitcoiniacs launched the world’s first Bitcoin ATM in October 2013. This historical ATM resides in Vancouver, Canada. The same month, the Chinese internet giant Baidu allowed clients of website security services to pay their invoices using Bitcoins. Also, BTC China overtook the Japan-based Mt. Gox as the largest Bitcoin trading exchange by trade volume in the world.

In December, executives from the popular online retailer Overstock.com announced plans to accept Bitcoin in the coming weeks. Shortly after, the market experienced another major loss. This one was brought on partly because the People’s Bank of China prohibited Chinese financial institutions from using Bitcoin. At the time, China controlled the majority of Bitcoin’s trading volume.

Bitcoin Comes to Vegas

In 2014, Bitcoin continued along its path to institutional adoption. This year saw both The D Las Vegas Casino Hotel and Golden Gate Hotel & Casino properties in downtown Las Vegas announced they would start accepting the cryptocurrency. This news helped bolster Bitcoin’s price. However, the boost was short-lived.

In February 2014, Bitcoin experienced the notorious Mt.Gox Hack occurred. The platform saw the loss of 744,000 Bitcoin during the attack. Less than a month later, the world’s largest Bitcoin exchange filed for bankruptcy. The market shed value following this revelation.

Major Achievement

In September, the market started to rebound. This was the month that the TeraExchange received approval from the CFTC to start offering various Bitcoin-based services. Specifically, the firm began to offer an over-the-counter swap product based on the price of a Bitcoin. This occurrence was a monumental achievement for the entire market because it was the first time a U.S. regulatory agency approved a Bitcoin financial product.

Bitcoin (BTC) Goes Mainstream

The year ended strong for Bitcoin as well. The computer giant, Microsoft began to accept Bitcoin from users in December. You can buy Xbox games and Windows software using Bitcoin. Also, the first Bitcoin documentary, The Rise and Rise of Bitcoin, was released.

By 2015 the Bitcoin market was starting to gain momentum. In January of that year, Coinbase raised $75 million in seed funding. That year also saw the popular exchange Bitstamp stop trading for a week due to a hack. According to company documents, the firm had 19,000 Bitcoins stolen during the incident. Impressively, the platform reopened and no users lost funds only days later.

New Heights

The following year saw Bitcoin’s network expand to new heights. The network reached a record network rate of over 1 exahash/sec. In March 2016, the Cabinet of Japan recognized virtual currencies as forms of payment. This helped to push market value and development in the region. Sadly, in August 2016, another major Bitcoin exchange, Bitfinex, was hacked and around 120,000 BTC were lost.

Bitcoin is Recognized in Japan

2017 saw Japan pass more Bitcoin-friendly legislation. In this go-around, Bitcoin was officially recognized as a legal payment method. This stance helped to push trading volumes to new heights. The market exploded. For example, between January and May 2017, the exchange Poloniex reported an increase of more than 600% active traders on its platform.

Scalability Concerns

These record highs led to more investors entering the market. All of these users created an enormous amount of congestion on the network. Soon, Bitcoin transactions were costing more and taking much longer to complete. The problem reached a boiling point when the Bitcoin community split over how to handle the problems. In the end, a new cryptocurrency named Bitcoin Cash emerged.

Bitcoin Congestion via WooBull

Bitcoin Congestion via WooBull

In 2018, South Korea took major action against Bitcoin when it banned anonymous transactions. This year also saw the off-chain payment solution, the Lightning Network take flight. The Lightning Network relies on private payment channels to prevent Bitcoin market congestion.

Bitcoin Banking

Bitcoin banking solutions began to enter the market as well this year. This time is when the emergence of Bitcoin debit cards and bank accounts began to gain popularity. Also, Bitcoin ATMs started to spring up in more locations as their prices dropped significantly and more manufacturers entered the sector.

By 2019, Bitcoin was already a household name. There were thousands of cryptocurrencies and the market was expanding. Additionally, this is the time that other major crypto projects began to spoke regulators. Specifically, Facebook’s Libra coin had regulators on edge.

This year, Bitcoin began to mature. You can do nearly anything with Bitcoin nowadays. You can pay taxes, travel, or even by food or gift cards. Additionally, the expansion of the DeFi sector has provided Bitcoin users with even more options in terms of Bitcoin storage and passive income streams.

Who Invented Bitcoin (BTC)?

While the name behind the Bitcoin whitepaper states Satoshi Nakamoto, there has been no one to step forward and prove they are indeed Bitcoin’s creator. Numerous individuals have stated they were Nakamoto, but no one has yet been able to move any of those original 1 million BTC mined by the developer in its early days. This lack of substantial evidence has led conspiracy theories to run a rift.

In one particular instance, a computer programmer and early Bitcoiner by the name of Craig Wright came forward claiming that he was Nakamoto. He even attempted to file a Copywrite on the Bitcoin name. However, when it came time to prove he was Nakamoto, he was unable to provide any evidence that linked him to those unmoved million BTCs.

There have also been instances where someone was mistaken for Nakamoto. Newsweek took a man’s life through the ringers after it incorrectly published that he was the creator of Bitcoin. This man, Dorian Nakamoto denied having anything to do with the project. Today, his face stands as a symbolic image representing Satoshi Nakamoto.

How to Buy Bitcoin (BTC)

You can get Bitcoin at any exchange. Binance offers direct Bitcoin fiat currency pairs. You just need to register for an account. Once your account is valid, you can load it with fiat currency. Luckily, Binance just added instant account loading this month. It used to take three days to load.

Once your fiat currency is on the exchange, you can simply select the BTC/USD trading pair and you are good to go. The entire process only takes a minute and is very straight forward. Notably, Binance is the world’s largest exchange.

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How to Store Bitcoin (BTC)

Storing your Bitcoin is easy. There are more options available to Bitcoin investors than ever thanks to the popularity of this coin. The easiest way to store BTC is on a mobile app. Mobile apps are easy to navigate and can be downloaded in seconds. Best of all, most are free to use.

Mobile BTC wallets such as JAXX have come a long way since the early days of the market. Today’s wallets are easy to use and can store a multitude of different cryptocurrencies. These platforms make it easy for you to diversify your investments and keep track of your portfolio.

Desktop

If you want a more secure option than a mobile wallet, you can always go with the Bitcoin desktop client. The desktop wallet is more secure because your computer is usually more secure than your Smartphone. Additionally, since the desktop wallet was developed by the core developers of the project, you know it’s a safer option to consider.

For those of you that intend to HODL large amounts of Bitcoin, or for anyone who believes security is the primary investment concern, a hardware wallet is the best move. Hardware wallets keep Bitcoin stored safely offline. This strategy keeps your crypt away from hackers and other malicious codes.

Hardware Wallet

Companies such as Ledger offer hardware wallets at affordable rates. These devices are small enough to store anywhere or bring with you. Many provide you with some advanced features such as the ability to connect your wallet directly to exchanges.

We recommend either the Ledger Nano X or the Trezor Model T.

The Future of Bitcoin

Bitcoin’s future looks bright. The world now recognizes the power of blockchain technology. Bitcoin continues to expand both its user base and functionalities. Analysts agree that it’s only a matter of time before Bitcoin becomes the world’s premier reserve currency.

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Trading Risk Disclaimer: There is a very high degree of risk involved in trading securities. Trading in any type of financial product including forex, CFDs, stocks, and cryptocurrencies involves a high level of risk.

This risk is  higher with Cryptocurrencies due to markets being decentralized and non-regulated. You should be aware that you may lose a significant portion of your portfolio.

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