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ECB to launch its own digital currency, might eat into Bitcoin’s market share

Disruptive technologies have the potentiality to transform existing technologies in inconceivable ways. Bitcoin and Blockchain Technology represent the kind of technologies that can change the phase of how we know things forever. Blockchain has already picked up applications in numerous fields like financial services, medical services, administration and many other fields that require replacement of conventional databases.

European Central Bank has found another application for cryptocurrencies but this time more aligned to the terms of Fiat currencies. ECB is planning to launch their own Digital Base Money (DBM) is a digital equivalent of banknotes, representing a claim at the central bank. Let’s dive deep into how this currency would work and what this would mean to Bitcoin:

The models for this digital currency system:

Member of the Executive Board of the European Central Bank, Yves Mersch revealed that the they might go ahead with two models for the digital currency: account-based and value-based, both supported by blockchain. For an account-based system, central bank would be directly involved in money transfers between accounts. This wouldn’t require an electronic wallet and the bank could see the whole transaction history.


The value-based DBM design is closer to Bitcoin and is modeled after cash. In this case, the non-banks would have their electronic wallets and the central bank wouldn’t be involved directly. Funds are debited and credited from the electronic wallets creating a traceable transaction history.

What would this move mean to cash:

The reason or motive behind this move was explained as an increasing indirect public demand for a central bank’s digital currency. Mersch stated that as such commercial banks offer various electronic payment methods like credit cards, debit cards, net banking etc. In such cases People may prefer to hold claims on the central bank to avoid the risk that the commercial bank defaults. With the introduction of Blockchain, bringing in this transparency would be far more simpler than anticipated.

As far as cash is concerned, Mersch said that it would co-exist along with the DBM as switching completely to electronic transfers would be difficult.

How would Bitcoin be impacted:

Introduction of ECB’s DBM might have a negative impact on Bitcoin and other cryptocurrencies. Eurozone has been under constant turmoil from last couple of years owing to Greek crisis and lingering after effects of 2008 crisis. Recently Italy added to the pressure by voting bank bail outs. In cases of this Geo-economic crisis, Bitcoin profited with significant fund flows from European commodities. With the introduction of DBM, there is a strong possibility that ECB is shielding their currency from any market impacts. This fund flow would in turn be directed into DBM and Bitcoin might lose out on its share.


However there is another possibility that if Eurozone is losing credibility for investing,people might not even choose DBM for investing and would look for alternatives. How this would exactly pan out, only time will tell.


Only 7 People Filed Bitcoin Related Complaints with CFPB in 2016

Bitcoin is a cryptocurrency or digital form of money that provides person-to-person transactions. The main selling point of Bitcoin is its decentralized nature with stops governments, banks, or financial institutions from interfering with its inherent value. Nonetheless, Bitcoin has a love-hate relationship evoking mixed feelings in the traditional financial landscape. Some countries have placed restrictions on how you can use the cryptocurrency and some countries have outright bans on Bitcoin.

In contrast, the U.S. government considers Bitcoin a commodity and it even believes that Blockchain technology on which Bitcoin is built could help financial regulations. Bitcoin has a welcoming atmosphere in the U.S. and more than 100,000 businesses now accept Bitcoin here. In fact, some top-flight firms such as Microsoft and Dell accept Bitcoin payments. Interestingly, critics are always on the lookout for bad press with which they can discredit Bitcoin; yet, Bitcoin was able to record a scandal-free 2016.

Only 7 people had reasons to file complaints on Bitcoin in 2016

The US Consumer Financial Protection Bureau (CFPB) is a government entity saddled with the responsibility of scrutinizing financial products and services stateside. The board was founded after the 2008 economic crisis and it started accepting complains on cryptocurrencies in 2014. Now, data showed that Americans filed only 7 complaints with the CFPB on Bitcoin related issues last year.

A research team from LendEDU scoured the CFPB’s public complaints database in order to group the commonest consumer complaints against financial products and services in 2016. The research showed that Americans filed about 190,000 complaints on financial products and services in 2016.  Out of the 190,000 complaints on financial products and services, only 7 complaints had anything to do with Bitcoin in 2016. In fact, six of those Bitcoin related complaints have already been closed and only one complaint filed against Coinbase on Nov 29 was still active.

In contrast to the extremely low number of Bitcoin-related complaints, other financial products and services had a large number of complaints. For instance, the report shows that the CFPB recorded 43,841 complaints on credit reporting. The board also has 40,965 complaints on mortgages and it had 39,759 complaints on debt collection.

Here’s why the CFPB had a low number of Bitcoin related complaints

The first possible reason for the low number of Bitcoin-related complaints with the CFPB is that a small number of people are using Bitcoin for transactions. Bitcoin is still in its embryonic stage relative to fiat currencies or alternative currencies such as gold; hence, the reason for the low number of complaints might be due to its low volume of transactions.

The second possible reason for the low number of Bitcoin-related complaints is that many Bitcoin users might not know that they could file complaints with the CFPB. To start with, the CFPB is only 5 years old and it only started taking Bitcoin-related complaints in 2014. Hence, it is quite a possible that a larger number of Bitcoin-related complaints are going to other government agencies and not CFPB.

The third possible reason for the low number of Bitcoin-related complaints is that Bitcoin users don’t have reasons to file complaints when they use the cryptocurrency. Bitcoin offers a person-to-person medium for transactions; hence, the absence of a third party significantly reduces the possibilities of a mistake when transactions are being processed.

Bitcoin is Becoming Digital Gold in Germany

Bitcoin investors are becoming apprehensive about the supposed ‘crackdown’ on Bitcoin in China. The apprehensions are justified if you consider the fact that China currently accounts for about 80 of volume transactions globally. However, while the whole world remains fixated on increasing regulation for Bitcoin use in China, other countries are rising up to the occasion to provide an enabling environment for Bitcoin to thrive.


Today, my attention is on Germany as Bitcoin starts to build up momentum for mainstream adoption in the country. A popular TV channel in Germany, Das Erste, has aired a full feature broadcast television show on the growing adoption of Bitcoin in the country.  The video commentary runs in German but it features a mix of German and English speakers, you can also translate the summary and comments in-browser with Chrome

Meet Germany’s digital gold

Das Erste says Bitcoin can be regarded as digital gold in Germany and the name is apt.  To start with, the digital currency has doubled its value relative to the Euro in the last one year – in contrast, gold has not been able to record such massive gains in the same period.

The video starts by showing the level of Bitcoin adoption in Germany with people using the cryptocurrency to pay for everyday items. You can see some people using Bitcoin to buy coffee, making withdrawals from the ATM, and sending money to others through the cryptocurrency.

The video goes on to include a feature report on Martijn Wismijer, one of the pioneer Bitcoin adopters known for having a Bitcoin wallet chip implant in his hand. In Martin’s words,” I’ve had a chip implant since 2014. You can hardly see it, but here is the antenna, next to the chip. If I want to buy, I just keep my hand at the checkout or the machine over there.”

Bitcoin Wallet chip implants are the futuristic forebears of how well Bitcooin can ingrain itself into the global economy. In fact, Martin goes on to show how the use of Bitcoin use transcends digital transactions by using his Bitcoin wallet chip implat to order a Red Bull from a vending machine.

The adoption of Bitcoin is taking off in Europe

Germans are starting to recognize the possibilities that Bitcoin might offer as an alternative global currency. The fact that you don’t need the services of a bank to conduct Bitcoin transactions with people locally or in other parts of the world is one of the factors driving the adoption of Bitcoin in the country. The low transaction costs and the relative privacy are also driving up interest in the use of Bitcoin.

The adoption of Bitcoin is also taking off in Iceland as the video features Marco Streng, CEO of the firm Genesis Mining in Iceland.  Streng provided some insights on Bitcoin mining in Iceland and he notes that his company’s mining activities is “over 10,000 graphics cards, which is more than the largest supercomputer in the world.”

Bitcoin is Too Big for China to Kill

Bitcoin investors have had it rough in the last couple of weeks after the cryptocurrency crashed from its near all-time highs. The main reason behind the decline in the price of Bitcoin was rising apprehension that China might move to halt the demand for Bitcoin it its economy. China is one of the markets where Bitcoin enjoys a broad-based early adoption, but the government’s recent effort to tackle money laundering and capital outflows makes the outlook for Bitcoin gloomy in the country.

Interestingly, many investors didn’t wait to examine the fundamental reasons supporting the rally in Bitcoin and they rushed for the exits at the first sign of trouble from China. However, China might be one of Bitcoin’s biggest markets but it is not Bitcoin’s only market. This article explores some of the reasons Bitcoin’s global broad-based demand won’t be eroded just because China wants to regulate the cryptocurrency.

Bitcoin’s adoption and growth is not dependent on China

China is a big market for Bitcoin and it has dominance in the volume of Bitcoin mining activities within its borders. However, many investors are erroneously mistaking the volume of Bitcoin trade in China for its leadership in Bitcoin’s global total addressable market share. However, the fact remains that at the core of Bitcoin’s decentralized philosophy is an intentional move to ensure that no single country is able to control the value of Bitcoin.

Hence, China might have a large number of Bitcoin users but it can’t dictate the terms of use for “Bitcoineers” globally. Matej Michalko, CEO of Decent observes that “Bitcoin is a global currency, not dependent on the single economy, no matter how powerful it is. China’s willingness to put effort on Bitcoin trading should encourage other countries to adapt their legislature in favor of a more flexible approach to cryptocurrencies.”

India and Venezuela are some of the populous economies with a growing demand for the use of Bitcoin. Hence, even if China decides to close down all the Bitcoin exchanges in the country, the move could have short-term effects in reducing the value of Bitcoin but the move won’t be enough to shut down the value proposition that Bitcoin already has globally.

China’s current efforts might push for a wider adoption of Bitcoin

In the first few days of 2017, Bitcoin was trading around $1,134 before China made some moves that triggered a decline last week – Bitcoin now trades around $829. Critics of Bitcoin might want to gloat over the marked decline in the value of the cryptocurrency. However, the fact remains that the decline might turn out to be a blessing in disguise in fuelling the increase adoption of Bitcoin in the global markets.

To start with, investors often love to “buy low” and “sell high”; hence, the $1,034 trading price of Bitcoin at the start of the year priced out many potential investors from the market. However, Bitcoin seems to have found support around the $800 mark in the last couple of days; hence, it shouldn’t fall lower unless there’s another cataclysmal event in the news. In essence, many more investors would be willing to buy Bitcoin now that its price is manageable around $800 in anticipation of booking gains in the next rally in the cryptocurrency.


4 Reasons Coinbase can’t seem to Divest its Many Controversies

Coinbase is one of the most popular Bitcoin exchanges in the world and it is probably the most reputable exchange. Coinbase was the first exchange to obtain U.S. regulatory approval, it has operations in 32 countries where it serves more about 5.3 million customers. Coinbase also lay claim to being the most user-friendly  platform for people cryptocurrency users, especially people new to Bitcoin. In fact, you can pay on Coinbase using EFT, ACH, SWIFT, credit cards, and PayPal among others.

One would think that Coinbase would have a smooth sailing to home because of the quality of its service. However, the firm always seems to find itself entangled in one controversy or the other as users find reasons to complain about some aspects of its service. This piece examines some of the major controversies in which Coinbase has been enmeshed in the recent past.

Sudden account closure and suspension

The first reason Coinbase doesn’t seem to have a good reputation in line with the quality of its service is the firm’s notoriety for freezing or closing user’s accounts. Coinbase tries to be compliant with necessary Anti-Money laundering (AML) and Know Your Customer (KYC) laws.

Hence, you can expect Coinbase to ask you to provide some personal information before you can use the full suite of its service. Ironically, many people use Bitcoin because of the privacy it offers on financial transactions; hence, they do not find it easy to corporate with the firm’s KYC efforts.

Accusations of Big Brother tendencies

Coinbase also tends to find itself in the blackbook of users who accuse it of having big brother tendencies in how it conducts its business. Many users accuse Coinbase of seeing your Bitcoin as its money; hence, it tends to track your spending to be sure that you don’t use its exchange for activities that it doesn’t endorse. For instance, you can’t use the exchange to pay for adult services, gambling is not permitted, and you can’t even resell your Coinbase Bitcoin on other exchanges.

A large volume of complains amplified by social media

Coinbase claims to have a user base of about 5.3 million users; hence, it is not surprising that the firm tend to have a huge volume of user complaints. However, many users have the misguided notion that coinbase support staff will be more inclined to expedite action on their complaints when made publicly via social media because any responsible firm will try to avoid bad press in the social media space.

The problem however is that every user with any semblance of complaint comes to air their grievances of social media. Hence, it is hard to filter out coinbase’s commendation from the condemnation amidst the din of social media.

Conflicts with the open source philosophy of Bitcoin

Nobody can lay claim to being the owner of Bitcoin or its underlying Blockchain technology. Blockchain technology and Bitcoin are firmly rooted in a philosophy that supports an open source nature. However, Coinbase management crossed the line when they tried to push 9 patent filings to lay claim to some important crytocurrency innovations. Their so-called innovations inclide “tips button”, “hot wallet” and “Bitcoin exchange” – these are applications that embody the very essence of Bitcoin and Coinbase was clearly overreaching in laying claim to the patents.