December 9, 2017
In last week’s viral post, we introduced Harry to you, a close friend of ours who bought a fraction of a Bitcoin to test the waters. It didn’t take long for him to get hooked. He knew a bit about diversification so he decided to buy some Ether as well at $460.
“Guys, this is the best thing that has ever happened to me.”
He didn’t listen to us when we bought it at $12 but that’s another point. Two days later, he was absolutely frustrated:
“I hate Ether so much. It’s not moving at all. I’m gonna sell it and move it to BTC.”
We don’t blame Harry. We have serious doubts about ETH too now. If a kitten-selling app can clog up the Ethereum blockchain, how can we be confident that it can support the likes of Microsoft and IBM?
ETH had reached an all-time high, touching $500 on November 29, close to a 9% increase in less than a week, but that wasn’t good enough for Harry. He sold at a loss at $415, and got burnt on the transaction fees but that would not dissuade him from buying the king of crypto at $15,000.
Harry didn’t know anything about why BTC was skyrocketing up the charts. He didn’t know what futures were, but he knew one thing for sure – he didn’t want to miss the boat.
U.S. exchanges are getting ready to offer bitcoin futures from this Sunday. CBoe Global Markets will be the first of three exchanges to offer futures, jumping a week ahead of its rival, CME. Nasdaq plans to launch its futures in the second quarter of 2018.
Notably, CBoe will be waiving all of its transaction fees for Bitcoin futures in December and contracts will not be subject to price limits.
Be careful when an exchange gives out freebies. CBoe is not a charity and what it’s clearly doing is trying to dominate the market as much as it can before its competitors can have a slice of the crypto pie. Be prepared to get burnt when you sell your futures. They know they’re going to get a killing either way. (We definitely don’t recommend short selling where losses are unlimited and gains limited in an unpredictable market.)
In future posts, we’ll talk more about whether established exchanges are truly fulfilling their fiduciary roles as robust financial institutions. Nobody seems to be asking the question about whether Bitcoin leverages the best blockchain technology out there as the table below outlines:
|Confirmation Times||51 minutes||3.5 minutes||5 seconds|
|No. of Transactions per second||3||20||1,000|
|Price per transaction||$8||$0.094||$0.0000002|
|Current Scalability Issues||Yes||Yes||No|
With financial institutions such as J.P. Morgan requiring technology to support over 1,340 transactions per second during the Black Friday sales, it begs the question whether Bitcoin is truly the frontrunner to be legitimised as the flagbearer for breakthrough blockchain technologies or simply a money-making machine fuelled by greed.
Just remember that the U.S. Securities and Exchange Commission rejected listing a Bitcoin ETF backed by the Winklevoss twins just nine months ago, citing its concerns about the lack of regulation and its premature stage of development. CBoe again have been the ones pushing for the ETF to be reviewed again, filing a ‘petition for review’ of the disapproval. No surprises there. Yet nothing fundamentally has changed for Bitcoin, or its markets. There have been no changes to regulation, and Bitcoin’s technology has not improved, apart from forking in multiple directions into Bitcoin Cash, Bitcoin Gold and Bitcoin Diamond.
Not to mention, at least three further Bitcoin forks have been scheduled for December, with more to follow in Q1 2018:
|Bitcoin Cash||August 1, 2017|
|Bitcoin Gold||October 24, 2017|
|Bitcoin Diamond||November 24, 2017|
|Super Bitcoin||December 15, 2017|
|Bitcoin Platinum||December 23, 2017|
|Bitcoin Uranium||December 31, 2017|
|Bitcoin Cash Plus||January 2, 2018|
The names are akin to the latest iPhone models or even Pokémon games, all a version of Bitcoin claiming to solve the issues of scalability and centralisation yet are likely to end up being money-making empty promises just like the host of ICOs we’ve seen in the past few months. Just look at Bitcoin Gold; its founders gave themselves a generous $30 million endowment under the radar.
But then again, who cares? It’s free money! No wonder everybody is too scared to sell Bitcoin, a ‘too good to be true’ asset, and face the emotional trauma of missing out. Bitcoin is experiencing an endless honeymoon and the elephant in the room suggests the inevitable, that Bitcoin will one day be legitimised. Right?