FX CRYPTOCURRENCIES
holders to hedge their investments against catastrophic loss thereby reducing the volatility. The consequence of smoothing out this volatility might hurt its appeal to the masses, specifically the millennials, but on the other hand the CME brings credibility to the asset class allowing institutional ownership. With trading starting in the second week of December, it is interesting to see how the futures market is able to cope with a 24/7 365 day a year market that has 124 active ex ch a n g es, according to coin .market . There are 60 major
stock exchanges in
the world today that took over 100 years to build.
2. Miner Control
Te mining companies not only mine for bitcoin but also manufacture the mining rigs. If investors think about the implications, there comes a realization that these miners can control the supply through pricing and delivery. This is exactly what is playing out in the market right now. Bitmain’s founder of the ASIC mining unit also runs AntPool, which is one of the top three mining
36 FX TRADER MAGAZINE January - March 2018
suppliers have good reputations. The reason for these delays can be found when you unearth the structural incentive for bitcoin miners to delay. Mining is very competitive and as the difficulty rates keep climbing, a miner’s size of reward is correlated to the amount of hashing power it can bring to bear. Typically, the pool with the highest hash rate gets the block.
Last year one of the top manufacturers of mining equipment, BitMain, had a tremendous amount of negative press regarding the “Antbleed”
pools in the world. The suppliers seem to find every reason under the sun not to ship. Finally, when they are ready to ship there seems to be a final round of negotiation on what model they can ship.
There is a backlog of orders for mining equipment and very few
backdoor. The backdoor could have allowed BitMain access to the mining units and shut them down. Bitcoin Magazine contended that this could have shut down 50% of the worldwide hash power on the bitcoin network. According to Steve Rubakh, CEO of Integrated Ventures Inc. (INTV), “BitMain hasn’t
had
anything for sale for cash for 90 days; it’s only taking bitcoin and this is forcing the miners to build up coins instead of selling them. What’s worse is if you are lucky enough to catch wind of a sale the traffic on the site times you out. These sales are
2–3 hours long and generate $8–10 million.” These miners have almost cartel type pricing, which means they have to find a balance between letting new miners get into the market and the games they play with the new units. It’s a slippery slope because if the price goes up too fast then more entrants will come into the market diluting their power and control of the market. Tere is no denying their stranglehold on market.
3. Breadth of Exchanges Bitcoin is trading on 124 exchanges
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