Bitcoin’s Big Halving Countdown And ‘Long Tail Risk’

On July 9, 2016, just eight days away, the bitcoin market is going to change.

As for the impact of that change, it’s all speculation for now, but just the chatter around bitcoin’s halving event has sent its prices fluctuating a bit more than normal. Of course, there’s Brexit, too, that pushed bitcoin’s prices even higher.

Bitcoin halving is an adjustment to bitcoin’s design in order to control how many new bitcoin can be created. When bitcoin was first released, a cap was placed on how many bitcoin could ever be produced.

When the halving occurs, the bitcoin block mining reward will decrease from 25 to 12.5 bitcoins. The last halving event was on Nov. 28, 2012, when the mining reward was cut from 50 to 25. That means that whenever a bitcoin miner completes a bitcoin block they earn a bitcoin. So when the halving occurs, the miners will only get 12.5 bitcoins instead of 25 bitcoins.

While it’s unknown what might happen after this halving goes into effect, many speculate that, if supply is cut, prices will jump. Basic supply and demand at best, and perhaps the oddest scenario. And just to get everyone on the same page, for this week’s bitcoin tracker we gathered up a few key numbers that might come in handy when this bitcoin halving event occurs next week.

15,717,057 | Number of bitcoins in circulation (As of June 30)

5,282,925 | Bitcoins left to mine until the next halving

21,000,000 | Total number of bitcoins that can be produced (under its current structure)

$10.5B | Bitcoin’s estimated market cap

3,600 | Number of bitcoins generated daily

$668.72 | Bitcoin’s price on June 30

$536.82 | Bitcoin’s lowest price in June 2016

74.84 Percent | Percentage of bitcoins mined

So what will the full impact of the halving event have on bitcoin? We’ll find out July 9.

Beyond bitcoin’s next big event, here’s what else happened this week in bitcoin.

Winklevoss Twins Choose BATS over NASDAQ 

The Winklevoss Bitcoin Trust (its actual name) has decided it won’t list on the NASDAQ, and instead will list its bitcoin exchange on BATS Global Markets, according to SEC filings.

While this may seem odd, especially because the Winklevosses have talked about listing on NASDAQ for some time, reportedly the BATS team convinced them to join their side because they are a larger player in the ETF market. But before they can bring that exchange to a trading market it still needs one little thing: SEC approval.

But if the Winklevosses receive that approval and their Gemini bitcoin exchange gets SEC approval, it would be the first regulated bitcoin-related investment vehicle of its type. If it gets approval to trade it would do so under the symbol COIN. It would also mark a first of its kind for BATS as being its first bitcoin-related asset.

We are excited to add the Winklevoss Bitcoin Trust,” Laura Morrison, head of exchange-traded products at BATS, told WSJ.

Bitcoin Exchange Scores VC Support

A startup in Singapore offering bitcoin exchange and cryptocurrency services just secured another major round of funding.

The company, Quoine, announced that is has raised $16 million for its Series B round. This follows its $2 million Series A round in December 2014. This new round’s investors included Jafco, a Japanese investment company, along with a unnamed VC firm. But the company noted that the round is not closed so there could be up to $4 million more raised in this round.

According to reports, Quoine is the largest bitcoin exchange that operates in a major bitcoin market, Japan, as it has $50 million bitcoins transacted over its exchange per day. Its co-founder Kariya Kayamori said in an interview that there is $50 trillion of foreign-exchange trading in Japan a year, and eventually he believes cryptocurrencies will account for 10 percent of those transactions.

The latest conversation among Japan’s Liberal Democratic party surrounds plans for bitcoin and other digital currencies to be treated equally to any other currency. What that would do, of course, is put bitcoin in a regulatory framework that enables lawmakers to tax, regulate and monitor bitcoin transactions in a way that may give more legitimacy to the concept of the cryptocurrency.

Citi Says Bitcoin Isn’t A Threat To Banking

New research from analysts at Citi Research have concluded one thing this week that many people could have already guessed: bitcoin doesn’t pose a threat to banking.

While there is a lot of chatter about how blockchain could innovate the banking ecosystem, when it comes to where bitcoin fits into the mix, that’s an entirely different discussion. And for now, what the researchers have concluded is that bitcoin isn’t quite ripe for the mainstream market. In fact, it hasn’t really gotten past the “proof-of-concept” stage, the group concludes.

“Having written three reports on the topic of blockchain,” the group wrote in its report, “one common theme we have observed is the limited use-cases for the peer-to-peer transfer of value due to a number of issues including scalability, network adoption and lack of a legal/regulatory framework for dispute resolution.”

The concept of digital currency issued by banks could eventually arise as an issue in the payments industry, the report concludes, but for now, bitcoin doesn’t seam to have enough oomph to get it over that hump that would actually have these researchers concerned.

“We do view a central-bank issued digital currency as a significant threat to the banks’ central role in payments,” they write. “But this seems to be a very long tail risk.”

Which about sums up bitcoin itself.


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