Chinese Bitcoin Exchanges: Litecoin Price Volatility Driving Bitcoin Gains, Not Chinese Stock Market

Bitcoin Magazine
Chinese Bitcoin Exchanges: Litecoin Price Volatility Driving Bitcoin Gains, Not Chinese Stock Market

Over the past several days, investors have witnessed sudden gains in volume and extreme price volatility for litecoin. In the last week litecoin has gained over 79 percent against bitcoin, 88 percent against the U.S. dollar and 90 percent against the euro and the yuan.

Much of the rapid increase in volume around litecoin trading was coming from Chinese markets, which is cause for concern at Huobi, a major digital currency exchange based in Beijing.

According to Arthur Hayes, the Cofounder and CTO of BitMEX, a litecoin ponzi scheme may have caused both bitcoin price and volume increases on Chinese digital currencies exchanges in the last few days.

Huobi CEO Leon Li told Bitcoin Magazine that the exchange had taken steps in the wake of the so-called “pump and dump” litecoin scheme.

“We did experience a tough Friday in Beijing because of LTC price volatility. Those promoters are potentially very dangerous, so we post risk warning on Huobi and will start risk revealing mechanism to all our users. An English notice was posted on BitVC.”

Li acknowledged there were also other factors at play, saying “The recent price volatility of litecoin is indeed one of the causes of the price increase of bitcoin. Since the LTC, BTC price is bouncing back from the lowest 1:200 to the recent 1:30 aprox. Many users chose to sell litecoin and buy bitcoin, which is also one of the sources where bitcoin purchasing power comes from.”

Given this week’s turmoil in the stock market in China, it would be tempting to assume that the current increase in bitcoin price and trading volume on Chinese exchanges is a direct result of this alone.

Chinese exchanges confirm that bitcoin trading volume is growing

Jack Liu, Head of International at OKCoin told Bitcoin Magazine, “As the largest exchange in China, we’ve seen a near 50% increase in volume in the past month.”

All three exchanges said the stock market closure had little to do with the increase in volume as this trend started three weeks to a month ago.

Greg Wolfson, Director of Business Development for BTCChina, told Bitcoin Magazine “We’ve seen a sustained increase in trading volume over the last three weeks, roughly coinciding with the Greek referendum. In part, this is driven by speculators and investors seeking safe haven, because global macro events are an important force in the market right now…

“In fact, there is no monetary crisis in China. There is a sharp correction in the stock market, but bitcoin did not play any role in that. The current value of all the bitcoins in circulation globally is insignificant compared to the capitalization of Chinese stock markets. The correction in the stock markets is perceived as resulting from excessive margin lending and the entry of many novice investors. It’s a classic stock market bubble. There is no perception that bitcoin played any role and no evidence to support that.”

Huobi CEO Li put the current situation in perspective saying it still doesn’t compare with the bitcoin price spike of late 2013 and early 2014.

“The price of bitcoin has experienced a rise to some extent. And the exchange volume has also become more active. But this cannot be recognized as significant increases or changes. The volume of bitcoin users has increased about twice than in period of downturn, however there’s still a gap if we compare it to the peak time at the end of 2013 and the beginning of 2014.”

There is some speculation that the upcoming “halving” of litecoin, due in late August, may be driving sales to some extent but not enough to explain the sudden increases in the last week.

With continuing uncertainty in Greece, anxiety over the recent spam attack on bitcoin, and an unfolding litecoin ponzi scheme, the price of bitcoin may be at the center of an almost “perfect storm”.


Photo GoShow / CC BY-SA 3.0 

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F2POOL Generates Largest Bitcoin Transaction Ever Recorded

F2POOL, one of the largest Chinese bitcoin mining pools has generated the largest bitcoin transaction ever recorded in an attempt to alleviate the massive spam attack launched on the bitcoin network this week, which Bitcoin Magazine previously covered.

An anonymous figure or an organization has sent thousands of micro bitcoin transactions across the network now referred to as “dust,” to temporarily clog up the bitcoin network.

While the attack appears to have ended, miners are still catching up on the backlog of transactions. At the time of writing, the number of unconfirmed transactions had dropped to 33,000. In order to process these transactions at a faster rate, F2POOL took the unusual step of creating a custom transaction that occupied an entire block

The transaction generated by F2POOL was 999 kilobytes in size, taking up the maximum storage of a block or a packet of transaction data.

Nicholas Weaver, current UC Berkeley computer security researcher told Motherboard, “Overall, quite impressive. But I can still think of things that could further increase the effectiveness of the attacks.” He explained that the individual or the group that have initiated the attack can add rewards to their junk transactions to encourage miners to process their transactions first, “leaving real transactions out.”

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Jonathan Vaux at Wired Money: Visa Deeply Interested in Integrating Blockchain Technology

American credit-card company Visa has once again showed its interests for bitcoin at WIRED Money held in London.

Jonathan Vaux, executive director of new digital payments and strategy at Visa Europe, who attended the session on behalf of Visa announced: “The one thing I often get asked about is bitcoin. I do see … a separation between the currency and the technology that sits under it. From the point of view of currency, I think that’s interesting. As Visa, that’s what we do – we manage currencies.”

Vaux said Visa is deeply interested in the blockchain technology which stands as a backbone of bitcoin as a currency, and suggested that Visa could implement the technology to ease the settlement and transfer of payments.

“Ultimately, what we’re looking for is the technology and the component parts that we can bring into our platform and into our marketplace, that delivers a richer proposition,” Vaux said.

Like many other financial institutions and establishments, Visa is interested in identification, device fraud and digital receipting – which may be referred to as smart contracts on the blockchain and cloud-based technology to organize and settle online payments. Vaux explained that Visa will actively look into these areas for its customers and to enhance their operations.

Vaux added that Visa is interested in facilitating bitcoin as a currency.

“Like any other currency, although this might not be the best week to discuss it, at Visa we are very keen to facilitate that translation of currencies on a global basis,” he said.


Image via WIRED Money

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Popular Japanese Q&A Site OKWave to Integrate Bitcoin Tipping Across Platform

OKWave, the largest Q&A site in Japan with more than 40 million monthly visitors, has announced that the company will integrate bitcoin to allow its users to either tip each other or incentivize its users using bitcoin.

OKWave’s blogpost read, “Until now, you could only leave thanks in the comments under your favourite answers, now you can send your gratitude with bitcoin.”

The company uploaded a screenshot of the tipping program that has implemented a voting system like Reddit, in which users can up-vote and down-vote content and get paid in bitcoin for highly rated content.

The tipping system itself is very similar to the recently launched Taringa! Creadores, a tipping initiative developed by Argentina’s largest social media platform Taringa!, which started to enable its users to receive incentive via bitcoin. Since June, Taringa! Has seen a more than 40 percent spike in content creation, which may have influenced the Japanese Q&A site to introduce bitcoin to its users.

The bitcoin integration of OKWave’s new tipping system marks the second major bitcoin deal since Rakuten, the largest Japanese e-commerce store, began to accept bitcoin earlier this year. Although the company has not announced its partner payment processing platform, it is highly likely that the company will be advised by Bitcoin angel investor Roger Ver, who was one of the first to mention the news on the July 7.

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As Grexit Looms, Greek Island Begins Testing Blockchain-Based Parallel Currency

Perhaps a blockchain-based parallel currency could provide a solution to the Greek crisis and be an alternative for Greece, Forbes reports. Lee Gibson-Grant, founder of U.K.-based digital currency consultancy Coinstructors, recently met with the Mayor of Agistri, an island in Saronic Gulf with a population of around a thousand people. The Mayor has agreed to start testing blockchain technology solutions in the island.

The single ATM on Agistri ran out money last week.

The project is related to the Drachmae project covered by Bitcon Magazine in May. Proposed by CNBC contributor Brian Kelly, the author of “The Bitcoin Big Bang: How Alternative Currencies Are About to Change the World,” Drachmae is intended as a quick and simple bitcoin-like solution for Greece’s troubled economy.

Kelly provides more detail in a CNBC post titled “Greek island agrees to test digital currency.” He is persuaded that the technology behind bitcoin can be used to create a store of value that is independent of the traditional banking system.

“The digital currency I created last year, Nautiluscoin, was designed to tackle this specific task,” says Kelly.“ We can now offer Greece a digital currency that is backed by gold and is integrated into a mobile-banking platform.

The Mayor of Agistri has agreed to allow the island to be a pilot program for a new monetary ecosystem, which will use Nautiluscoin. Over the coming weeks, the infrastructure for this project will be rolled out and the citizens of Agistri will receive Nautiluscoin to begin transacting.

Nautiluscoin will be backed by gold, which, according to Kelly, is still the most trusted independent form of money. Coinstructors, a partner in the project, developed and Dracmae Connect to create a transaction system. The system will charge a fee for each Nautiluscoin transaction, and the fees will be used to purchase gold for a “Nautiluscoin Stability Fund.”

That may sound a bit circular and chaotic, but probably the project developers haven’t had the time to fully detail the mechanism of the proposed monetary system. At the time of writing, the website still has a “Lorem ipsum…” placeholder for yet-to-be-written text.

“Using gold to back Nautiluscoin should give both tourists and merchants assurance that a digital currency is more than just lines of computer code,” says Kelly. “A digital currency like Nautiluscoin can be quickly deployed to kick-start the tourism industry. We have already begun to implement this plan and estimate that it will take 60 to 90 days to fully execute.”

Local businesses can create a loyalty program via Drachmae Connect, which enables tourists to book hotels and other services at a discount. While Agistri is a test case, the initiative could be applied throughout Greece, and Gibson-Grant is persuaded that a parallel digital currency would be an ideal solution for the nation. “A digital currency over the blockchain would be ideal right now for Greece and tourists,” he said.

Kelly notes that the project is inspired by the highly successful WIR Bank that manages and issues the private currency WIR franc in Switzerland. The WIR Bank was established by two Swiss businessmen in 1934 in response to a failing economy and currency shortages.

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