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NEW YORK, March 24 (Reuters Breakingviews) - Almost one year ago, billionaire Peter Thiel threw $100 bills into the crowd from the stage at a cryptocurrency conference in Miami, likening fiat currency to toilet paper and touting bitcoin as the best alternative. Thiel has said that central banks are "bankrupt" and that the fiat money regime is coming to an end. Since his Miami proclamations, bitcoins price has fallen by nearly 40%, though in the last few weeks after Silicon Valley Banks failure it has had a resurgence. That suggests people think that Thiel is onto something. Those following his advice are sorely misled.

Thiels venture capital fund quietly dumped almost all its own holdings shortly before that Miami speech, according to the Financial Times. But others are buying. Former Andreessen Horowitz investor Balaji Srinivasan made a bet with a pseudonymous Twitter user last week that bitcoin would reach $1 million in the next three months while hyperinflation takes hold. At first glance, his prediction seems wildly optimistic but directionally reasonable bitcoin has surged by over 35% since SVBs collapse on March 10. The tech-heavy Nasdaq Composite Index (.IXIC) and gold both rose less than 10%.

The philosophy behind that surge is that cryptocurrency will replace government-backed dollars. The trouble is bitcoin has benefitted precisely because of actions taken by central banks. The Federal Reserve, by the faith and good standing of the U.S. government, has stepped up to stabilize the system with new programs. Fed Chair Jerome Powell has also tempered his comments about plans to raise rates. Whats more, bitcoin may never have surpassed $60,000 to reach its highest-ever price level in 2021 had the Fed not kept interest rates consistently low. Its the prospect of lower rates not the lack of government stability that is opening the door to riskier bets like those on bitcoin.

The second snag is that contrary to Srinivasan and Thiels claims, bitcoin is too volatile to protect investors against inflation by preserving its purchasing power over long periods of time. U.S. inflation continues to spike even as the Fed raises rates. Gold is a tangible asset, unlike bitcoin, and thats precisely what makes it an inflation hedge. In theory, as the price for goods goes up, gold follows. If investors hope to inoculate their portfolios against a weakening dollar, they should heed Thiels actions, not his words.

Follow @AnitaRamaswamy on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

Bitcoins price has appreciated by over 35% since Silicon Valley Bank collapsed on March 10, while the Nasdaq Composite Index has traded up less than 5% over the same period, according to data from Refinitiv. Bitcoins price is up nearly 70% in 2023.

Editing by Lauren Silva Laughlin and Sharon Lam

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Continued here:

Breakingviews - Bitcoin is a solution looking for a problem - Reuters

Bloomberg Intelligence senior macro strategist Mike McGlone says the stage is being set for a strong Bitcoin (BTC) performance next year.

In a new interview with Scott Melker, McGlone says that Bitcoins halving event, plus a series of other fundamental developments, are set to boost the flagship cryptocurrency in 2024.

Bitcoin undergoes a halving every four years when the newly issued supply of BTC is reduced by half, and the event has historically coincided with Bitcoin bull markets.

Says McGlone,

The key thing is what stops that trajectory? In the big picture trying to play for these $10,000 moves, I guess well thats a big amount of Bitcoin now, can make you lose your hair. The bottom line is astute investors, institutions on the planet all realize every day that goes by is they need part of this asset. I think by the time we get to 24, that halving, were gonna be talking about a pretty severe recession, all politics leaning Republican, at least presidential, and its just going to be a great setup next year. Im really looking forward to it.

In the near term, McGlone says hes not totally bullish on Bitcoin yet, and is waiting to see the performance of the S&P 500 (SPX). He says the SPX is a reliable measure of the volatility of other risk assets like Bitcoin.

The current trajectory is Bitcoin is showing its becoming more of a global digital reserve asset and potentially a store value as the stock market volatility is high. The key thing is lets say S&P is making a new low and heads toward $3,000. Lets see how Bitcoin reacts. Itd be wonderful if it doesnt go below $20,000. But we got to see. I dont know. Long term, as we get through this period, therell be more significant signals that Bitcoin is going to go up to $100,000

Im too bearish [on the] stock market. The number one measure of beta of risk assets on the planet is the S&P 500. Im still too bearish that, to be bullish Bitcoin. I just got to see how that pans out.

Bitcoin is trading for $27,191 at time of writing.

I

Featured Image: Shutterstock/Sergey Nivens

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Bloomberg Analyst Says Great Set Up Forming for Bitcoin (BTC) Before 2024 Halving - The Daily Hodl

SINGAPORE - A face-to-face transaction to sell $320,000 worth of bitcoin went awry when a quarrel broke out over who was entitled to the cash after the buyer denied having received the cryptocurrency, despite the bitcoin network confirming the transfer.

Mr Christofle Rio, who had transferred 12.14 bitcoin to a digital wallet, eventually left the Tanjong Pagar apartment without the cash and bereft of the cryptocurrency.

He then sued Mr Malcolm Tan Chun Chuen, the man who transacted with him, for breach of contract for failing to pay the agreed price.

But Mr Tan argued that his company, Qrypt Technologies, was merely a middleman that facilitated the sale of bitcoin from Mr Rios company, GCXpress Commerce (GCX), to the actual buyers.

He contended that he cannot be liable, nor does Mr Rio have the legal standing to sue, simply because the agreement was not between them as individuals, but between their respective companies.

Mr Rios lawsuit was dismissed last Wednesday, after the High Court found that both men were not the proper parties to the contract as they were acting on behalf of their respective companies, and not in their personal capacities.

Mr Rio set up GCX in 2019 as a cryptocurrencies trading business, while Mr Tan, a disbarred lawyer, was the managing director of Qrypt, a digital assets and blockchain company.

According to Mr Tan, he was contacted on Dec 1, 2020 via messaging app Telegram by someone identified as Kenneth, who asked to buy more than $300,000 worth of bitcoin.

Mr Tan then contacted Mr Rio, who said he had $320,000 worth of bitcoin to sell. They arranged to conduct the transaction at Mr Tans office at 18 Spottiswoode Park Road that afternoon.

Mr Tan then informed Kenneth about the meeting. Kenneth said he would be present at the office with his staff, and emphasised that all communications should be done via Telegram.

At 4.10pm, three men, who identified themselves as Kenneth, Eric Foo and Chua Hong You, arrived at Mr Tans office. Mr Foo took cash out of a bag and placed it on a table in the room.

Mr Tan asked Kenneth for his identity card to allow Qrypts compliance manager to complete the checks to comply with Monetary Authority of Singapore regulations.

Kenneth declined and asked Mr Chua to provide his identity card instead. Mr Chua was cleared to proceed with the transaction.

Some confusion was caused when a second buyer showed up, also carrying $320,000 in cash. The buyers had apparently arranged for him to wait downstairs. He was told to leave the premises.

At about 4.30pm, Mr Rio, accompanied by a Mr Phoon Chee Kong, arrived with counting machines. After the cash was counted, Mr Rio transferred 12.14 bitcoin to the wallet specified by Mr Tan.

Mr Tan then sent 11.982443 bitcoin after deducting a 1 per cent administrative fee to the wallet address stated in the Telegram chat.

However, the verification process took over an hour.

Mr Rio and Mr Phoon were stopped by the three buyers from leaving with the cash until the transfer has been verified.

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Bitcoin seller loses lawsuit over deal involving $320k in cash - The Straits Times

In the early days of cryptocurrency, it was considered a revolutionary innovation that would change the financial landscape forever.

Bitcoin, the first and most well-known cryptocurrency, was created as a decentralized currency that would be immune to fraud and hacking. However, over the years, the security of cryptocurrencies has been called into question, with several high-profile hacks and scandals leaving investors in turmoil.

The most infamous of these is the MtGox hack.

MtGox, which stands for Magic the Gathering Online eXchange, was originally created as a platform for trading Magic the Gathering cards online. However, it soon expanded to include trading in Bitcoin.

In 2014, MtGox suddenly collapsed, and its users were left reeling. It was soon revealed that the exchange had been hacked, with approximately 850,000 Bitcoins (worth around $450 million at the time) stolen from its wallets.

Well, the question arises here, how did this hack occur, what were the loopholes in the system, and what happened to bitcoin?

So, lets dive deep into one of the most tragic events in the history of digital currencies, which is The MtGox Exchange Hack.

Lets begin to unfold the story!!

In 2010, Jed McCaleb, a programmer, and early Bitcoin enthusiast created MtGox, short for Magic: The Gathering Online Exchange. The exchange was initially designed to facilitate the trading of cards for the popular fantasy game, but McCaleb soon realized that Bitcoin had greater potential.

In March 2011, he sold the exchange to Mark Karpeles, a French software engineer, who shifted the focus to include trading in Bitcoin. Under Karpeles leadership, MtGox quickly became the dominant player in the Bitcoin market, handling over 80% of all Bitcoin transactions at its peak.

The exchange was based in Tokyo, Japan, and its success was attributed to its low trading fees and user-friendly interface. MtGox also played a key role in the early growth of Bitcoin, helping to popularize the currency and attracting new investors.

By 2013, MtGox was processing over $100 million worth of Bitcoin transactions each month, and its user base had grown to over one million.

But in just a few short months, the exchange started to face a destructive hack that would change the course of its history and the entire cryptocurrency industry, leading to the theft of 850,000 bitcoins and the bankruptcy of the company.

It was the year 2011, The hack of MtGox began, with the first signs of suspicious activity being reported by customers.

However, it wasnt until February 2014, when MtGox suddenly suspended all trading, claiming that it had discovered a bug that allowed hackers to manipulate the price of Bitcoin on its platform.

As of 13 June 2011, the true extent of the hack was revealed & until then the hackers were able to steal 850,000 bitcoins, worth over $450 million at the time, from the exchange.

The impact of the hack was significant, later MtGox filed for bankruptcy and was forced to shut down, leaving its users without access to their funds. At the time of the hack, MtGox had only 200,000 bitcoins in its possession, and the rest were lost due to the hack.

This led to a shortage of bitcoins on the exchange and a subsequent drop in the price of BTC from $850 to $450 was seen in just a few days and provoking many investors to lose confidence in the industry.

In response to this incident, many users protested on the street and raised doubts about the security of the MTGox exchange.

MtGOX, Where is our Money?

MtGox, Are you Solvent?

MtGox, Dont Blame Bitcoin for Your Bad Code?

Till today, the full details of the hack are still unclear, but its believed that the hackers were able to gain access to MtGoxs hot wallet (a wallet that is connected to the internet) and steal the bitcoins.

Some experts have also suggested that the hack may have been an inside job, as the hacker was able to navigate the system with ease and avoid detection.

After the hack, authorities launched an investigation into the incident, but the exact details of the hack and the identity of the hackers remain unknown.

Later, a trustee was appointed to handle the bankruptcy process, with the companys CEO Mark Karpeles facing criminal charges in Japan.

Multiple efforts were made to recover the stolen funds, with a portion of the funds being returned to the users. However, a significant amount of the stolen Bitcoins remains missing to this day.

Several self-regulatory bodies were also formed as a result of the incident, such as the Japan Virtual Currency Exchange Association (JVCEA), formed in April 2018 to provide a safe and secure environment for the crypto industry.

On April 16, 2014, Mt. Gox filed for bankruptcy in the Tokyo District Court and was subsequently ordered to liquidate in April 2014. Additionally, the court-appointed Attorney-at-law, Nobuaki Kobayashi, is currently serving as the bankruptcy trustee, supervisor, and investigator.

Later on 24th Nov 2017, some of the creditors of MTGOX filed a petition for the commencement of civil rehabilitation proceedings against MTGOX with the Tokyo District Court.

It was to explain the reason why they have filed an involuntary petition for the commencement of civil rehabilitation proceedings regarding Mt. Gox, which is in the process of bankruptcy proceedings.

On June 22, 2018, the Tokyo District Court issued an order for the commencement of civil rehabilitation proceedings for MTGOX. As a result, the previously ongoing bankruptcy proceedings have stayed. In addition, too, an administration order was issued by the Tokyo District Court which has appointed Civil Rehabilitation Trustee for ongoing rehabilitation proceedings.

In 2019, the Tokyo District Court ordered that the remaining assets of the bankrupt exchange be used to repay its creditors. Eventually, due to the high number of rehabilitation claims, the Rehabilitation Trustee requested an extension of the submission deadline, to allow for repayment methods and appropriate measures to be taken.

Later on October 20, 2021, the Notice of Confirmation Order of Rehabilitation Plan was released & an announcement was made to rehabilitation creditors about the procedures and amount of such repayments.

Afterward, the Rehabilitation Trustee request all the rehabilitation creditors to register their bank account information and other information on MtGoxs Online filing system.

However, on October 6, 2022, the Rehabilitation Trustee launched a function for creditors to select a repayment method and register payee information on the MTGOX Online Rehabilitation Claim Filing System

As the deadline stated in the notice was on January 10, 2023 (Japan time); any creditor who wishes to receive Repayment must complete Selection and Registration on the System by such deadline.

However, later this deadline was changed to March 10, 2023 (Japan time); considering various circumstances such as the progress by rehabilitation creditors in respect of the Selection and Registration.

The process of distributing these assets to creditors, known as the civil rehabilitation process, is still ongoing, and it is uncertain when the distribution of funds will be completed.

Yet, a few of the major dates announced for the rehabilitation plan were from July 31, 2023 (Japan time) to September 30, 2023.

However, the process of repaying the creditors is complex and time-consuming, as the trustee needs to verify the claims of each creditor and ensure that the funds are distributed fairly.

Creditors can check the status of their claims on the MtGox website, and they will be notified when the distribution process is complete.

Apart from ALL!!!

This was all in the MtGox Exchange Hack, which shook the cryptocurrency world and remains one of the biggest hacks in history. The lessons learned from the hack are numerous and have played an important role in shaping the security and regulation of cryptocurrency exchanges.

Since then, the cryptocurrency industry has grown and matured, with the development of robust security measures and the implementation of stricter regulations and oversight.

After this historical event, many crypto companies now have insurance policies to protect customers assets. The hack served as a reminder of the need for better security measures in the crypto industry and the importance of being cautious when choosing an exchange to trade on.

Although a quick wake-up call for the industry and highlighted the importance of security in the cryptocurrency space, every exchange must implement robust security measures to protect their users funds.

The MtGox hack was a watershed moment for the cryptocurrency industry. It exposed the vulnerabilities of centralized exchanges and highlighted the need for better security measures. It also shattered the trust of Bitcoin investors, who had believed that their digital assets were secure.

The fallout from the MtGox hack is still being felt today. The exchange declared bankruptcy in 2014, and its users have been fighting for compensation ever since. The incident has also had a profound impact on the cryptocurrency industry as a whole, leading to greater scrutiny and regulation of exchanges and highlighting the need for better security protocols.

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The MtGox Hack: How the Worlds Largest Bitcoin Exchange was Hacked - Coinpedia Fintech News

The CEO of investment management firm Vaneck has predicted a bull cycle for gold and bitcoin. We are at the very beginnings of what could be a several-year cycle in gold, and I also put bitcoin in that category as well, the executive said, adding that the Federal Reserve is close to the end of their tightening.

Jan van Eck, CEO of investment management firm Vaneck, shared his prediction regarding gold and bitcoin in an interview with CNBC last week. His firm has $69 billion in assets under management.

When asked whether gold, at its present levels, should be viewed as an investment or a temporary trade that may yield additional profits, he replied:

We are at the very beginnings of what could be a several-year cycle in gold, and I also put bitcoin in that category as well.

Finally, as a gold investor, youve been rewarded over the last couple of weeks. Weakness in the banking system and gold rallied. Thats why you own gold, the executive continued.

The Vaneck CEO further explained that it could be a two-year cycle because he believes that the Fed is close to the end of their tightening. The executive added: The market is worried now about the consequences and it could take a year or more for those consequences to roll through the commercial real estate market, the banking and lending dynamics, [and] maybe we have a shallow recession. He elaborated:

At some point, the Fed is going to start easing, and thats when gold is really going to party.

Discussing gold and bitcoin, the Vaneck executive opined:

I think all the speculation is out of both of those markets.

Van Eck pointed out that bitcoin has surged nearly 70% this year, outperforming all other assets, and has rewarded the people that own bitcoin for that thesis of wanting a hedge in their portfolio.

Last month, Pantera Capital said that were already in the next bull market cycle for bitcoin. Last week, the Federal Reserve raised interest rates by 25 basis points. Some people expect the Fed to cut rates soon, including billionaire Jeffrey Gundlach. However, Fed Chair Jerome Powell stated that rate cuts are not in the Feds base case. Economist Peter Schiff said the Fed has already returned to quantitative easing whether they admit it or not.

Do you agree with Jan van Eck? Let us know in the comments section below.

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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