Bitcoin News Weekly Recap: Last Week: Latest Cryptocurrency Weekly Digest June 1-9

  • Chainalysis data suggests that almost no one is using Bitcoin for payments. But does it really mean anything?
  • Bitfinex gets caught astroturfing on various social media platforms to manipulate its reputation
  • White paper for Facebook’s GlobalCoin is expected to be published this month
  • Anti-cryptocurrency draft bill in India proposes 10-year jail term for cryptocurrency HODLers
  • Litecoin surges to 12-month high ahead of mining reward halving

Bitcoin for payments, anyone?

Data provided by blockchain investigation software developers, Chainalysis Inc., shows that merely 1.3% of on-chain transactions in the first quarter of 2019 accounted for merchant payments. Merchant payments constituted 0.9% of on-chain transactions in 2018.

These numbers shouldn’t come as a surprise given the volatility of Bitcoin and the ubiquity of the HODL memes in recent years across social media. Not too many people view Bitcoin as a medium of exchange just yet, but as more of an exotic tradable asset with a promise for immediate profits.

However, in saying that, merchant payments have trended up by more than 40% from last year and as a rule, there is a notion that people are likely to pay with Bitcoin and merchants are more inclined to accept it for payments when the price is trending up. Telecom services provider, AT&T, announced that it would be accepting Bitcoin payments in the wake of the recent price surge.

It’s important to note that the data from Chainalysis only takes into account transactions which go through Bitcoin payment processors such as BitPay, CoinGate and CoinPayments.

Most of these merchants use payment processing services to accept Bitcoin without actually taking Bitcoin as payment. Typically, the payment processor accepts Bitcoin from consumers and deposits fiat currency in the merchant’s bank account.

On Saturday, Lithuanian payment processor, CoinGate, disputed the accuracy of Chainalysis’ report, stating that the numbers presented in the report don’t add up. Earlier in the year, BitPay announced that it had processed over a billion dollars’ worth of transactions in 2018 for the second year in a row.

Even if Chainalysis’ numbers are a little off-the-mark, Bitcoin is a peer-to-peer currency for the Internet and its impact cannot, nay, should not be measured by merchant payments made through third party processors.

More significant is the fact that peer-to-peer transactions are up 56% from 2018, from 2.5% to 3.9%. Meanwhile, transactions involving centralized exchanges have declined from 92% in 2018 to 89% in the first quarter of 2019.

Bitfinex caught doing Bitfinex things

There’s a laundry list of controversies surrounding Bitfinex’s manipulative tendencies that at this point, that cloud of controversy engulfing Bitfinex might as well be a taping of Teflon.

Evidence showing Bitfinex using a service called PIDC Networks since at least June 2018 to manipulate their sordid reputation on social media platforms emerged this week on Reddit.

This confirms allegations made by dogged Bitfinex critic, Bitfinex’ed, back in 2018, that the exchange was using Twitter bot attacks and dedicated accounts on Reddit to vote down on all negative posts regarding Bitfinex and all of its platforms.

Bitfinex is probably not alone in astroturfing social media reputation, the very existence of astroturfing services attests to as much, but Bitfinex repeatedly getting away with all manner of manipulation is seriously affecting the reputation of cryptocurrencies as a whole.

Ripple killer or Facebook credits 2.0?

GlobalCoin, Facebook’s upcoming stablecoin, is its second foray into virtual currencies. Facebook launched a virtual currency in 2011, called Facebook credits, which went down like a lead balloon and became defunct within two years.

Reports this week have suggested that Facebook is all set to publish the white paper for GlobalCoin on June 18. Facebook’s head of financial services, Laura McCracken, revealed at a trade conference in Amsterdam that the stablecoin will be pegged to an index comprising multiple currencies, rather than any particular fiat currency.

While it’s not going to be truly decentralized, Facebook is planning to adopt an approach similar to Ripple, by allowing financial institutions and tech companies to operate as validating nodes on the network, a ‘privilege’ which can be availed for 10 million dollars.

Facebook is also planning to set up physical ATMs where users can purchase the digital coin using fiat currencies and is looking to aggressively target developing economies where government-backed currencies are more susceptible to inflation.

In short, GlobalCoin is Ripple’s XRP minus the volatility, with validating nodes on the network being centralized institutions hand-picked by Facebook and users of the network will be obliged to delegate trust to these familiar third parties.

The provenance of GlobalCoin can be traced back to a statement from Mark Zuckerberg which was made at the peak of the cryptocurrency bubble in January 2018,

“With the rise of a small number of big tech companies — and governments using technology to watch their citizens — many people now believe technology only centralizes power rather than decentralizes it.

There are important counter-trends to this — like encryption and cryptocurrency — that take power from centralized systems and put it back into people’s hands.”

This is classic hipster irony. Unlike Bitcoin, GlobalCoin simply wants to redistribute more power, specifically control of money, from tin-pot governments and banana republics into the hands of the few big tech companies, like Facebook, who already have a stranglehold on all digital data.

Could Indian government go full retard with cryptocurrency laws?

Speaking of tin-pot governments, a most preposterous legislative proposal has been put forth for consideration in India.

As part of the draft for ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019’, a 10-year jail term has been proposed for those who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies.”

Wait, what? Does it actually say hold? You better believe it! The draft further proposes making holding of cryptocurrencies a non-bailable offence. This comes after India’s central bank, the Reserve Bank of India (RBI), issued a notification to proscribe banks in the country from offering financial services to cryptocurrency exchanges.

The country’s Economic Affairs Secretary, Subhash Chandra Garg, cited ‘money laundering risk’ as the reason behind criminalizing all cryptocurrency related activities, and added that a digital Rupee could be launched after consultation with the RBI.

India has a bicameral legislature and the bill must pass in both houses via a two-third majority vote. On the face of it, it’s highly unlikely that such a draconian bill would ever be allowed to be codified as law but there’s a reason the bill has been proposed in the first place.

Like Facebook, governments around the world are waking up to the inevitability of digital money and the very real prospect of having to cede control over money. Amidst all the flapping and hand-wringing, governments fail to recognize that borderless, permissionless cryptocurrencies, Bitcoin in particular, cannot be tamed by local laws.

Anatoly Aksakov, member of Russia’s State Duma, the lower house of Russian federal assembly, has claimed that Russia is also considering similar measures against mining and trading but not holding of cryptocurrencies.

Trading Insights

Following five successive weekly closes in green, last week saw Bitcoin close in red on the weekly chart for the first time since April.

The last trading week of May closing in a doji offered an early indication of bull exhaustion and the first week of June saw Bitcoin’s price tumble from a fleeting dalliance with 9k, registering a 13 month high of 9096, all the way down to 7433 on June 4.

For most of this trading week, Bitcoin has found support at the 23.6% Fibonacci retracement level. If this level fails to stem the corrective wave, the next support levels below can be found at 7219 and 6825.

The daily chart for Bitcoin is looking potentially bullish again, depending on Monday’s closing price. At the time of writing, Monday’s trading has seen a 4.3% surge. If the price closes above 7966 for Monday, a bullish engulfing pattern would come into play.

Among altcoins, Litecoin went against the grain to post 15% weekly gains and this trend is likely to continue as Litecoin’s mining reward halving draws near. The halving will reduce mining reward from 25 LTC to 12.5 LTC and is roughly 32k blocks or 56 days away.

A bullish MACD cross and breakout from a bullish flag pattern on the daily chart portray a positive outlook for Litecoin leading up to the halving in the first week of August.

The biggest losers among leading altcoins this past week were TRON, EOS and Bitcoin SV, erasing between 10 to 15% of their market caps.

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Lamps Toujours
Lamps is a British economist and Bitcoin evangelist with an elusive ken for all things blockchain. A writer by avocation, Lamps' suasive opinions and analyses evince a quenchless passion to promote the integration of blockchain as the new economic and commercial infrastructure on a global scale.

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