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After a dark red weekend in the crypto market, both bitcoin and major altcoins rebounded strongly on Sunday and Monday morning. Over the past 24 hours (UTC 07:10 AM), bitcoin has shot up more than 8% from its weekend lows below the USD 3,500 level. From a technical analysis-perspective, bitcoin and other major coins now appear to have found some support around levels established all the way back in September 2017. The question, however, is whether this level will hold, or if the market needs to search even lower to find a bottom.
Top 10 coins (UTC 07:10 AM):
Following the massive decline in the size of the cryptocurrency market, the market capitalization of the entire crypto market has now shrunk to around USD 130 billion, from a peak of 822 billion in January this year.
Therefore, more than 50 of the largest publicly traded companies in the world now have market cap’s that are larger than the entire crypto market. This includes all of the famous tech companies – the so-called FAANG (Facebook, Amazon, Apple, Netflix, and Google) group of stocks – but also many smaller companies like McDonald’s, Walt Disney, and MasterCard.
Among the biggest losers during the recent wave of crypto selling has been Bitcoin Cash (BCH), which was hit hard by the internal fighting between the Bitcoin ABC and Bitcoin SV camps. The dust in that battle now seems to have settled with Bitcoin ABC emerging as the winner, but it has nonetheless caused heavy losses in the BCH price, as it fell from over USD 380 a week ago to just USD 167 as of press time. Bitcoin Cash also briefly lost its number 4 spot to EOS, although this has been reversed Monday morning.
Although the market seems to have found at least some support for now, volatility may be coming back to bitcoin soon. On Friday (Nov 30), bitcoin futures on the CME Group exchange are set to expire – a monthly occasion which some suggest have caused bitcoin sell-offs in the past.
However, the link between bitcoin futures expiries and sell-offs – or rallies – in the “physical” bitcoin market is highly uncertain, and the last year has shown that other futures expiry dates have been rather uneventful in the bitcoin market. The price of Bitcoin has dropped sharply in the past year, so anyone who invested heavily at the peak will have lost a lot of money. And now there’s more bad news for crypto-currency investors to worry about: they may not legally own the digital assets they have purchased.
My colleagues and I have recently completed research showing that courts in England and Wales are unlikely to identify digital tokens as property, since the law does not recognise possession of intangible items. This means that crypto-currency holdings may not qualify as property at all. As a result, although digital tokens are technically secured through blockchain technology, the level of legal protection is unclear. And the same likely applies in other common law jurisdictions such as the United States, Hong Kong, Singapore, and most of India.
Property law deals with the rights you have over the things you own. Common law systems distinguish between land, called “real property”, and all other property, called “personal property”. Personal property includes rights over two categories of things. First, there are “things in possession”. These are tangible items which you can physically possess and transfer to another.
The £20 note in your pocket is a thing in possession. Second, there are “things in action”, a mixed category of rights that can only be claimed or enforced by legal action. This includes debts, rights under contract, and intellectual property. The GBP 20 you have deposited at a bank is a thing in action, because the bank owes you a debt of GBP 20. That debt is intangible, but, if necessary, could be enforced through legal action.
So what about digital tokens such as crypto-currencies? Tokens don’t physically exist. They are entries on a virtual ledger. And case law in England and Wales has established that a thing which exists only in electronic form cannot be the subject of possession. So digital tokens aren’t things in possession. But they don’t really resemble things in action either. A Bitcoin doesn’t give you a right to anything or against anyone. What you have is a cryptographic private key (a sort of secret number password) that gives you exclusive control over that Bitcoin. This allows you to submit transactions to the ledger and send your Bitcoin to anyone you like.
Other types of tokens do give you a right against the token issuer. For instance, utility tokens give you a right to a product or service from a company. Such tokens effectively represent a debt or right under contract and will probably be considered things in action. However, not all tokens give purchasers a right against the issuer. The terms of one recent token sale by start-up firm Block.one – which raised USD 4 billion – specified that the tokens have no rights, uses, or attributes.
In future, the law could extend property rights to digital tokens, for instance by recognising a new category of virtual-thing-in-possession – but this would probably require new legislation. For now, the property status of digital tokens remains an “area of doubt”, as one of the UK’s Supreme Court justices recently put it. So caveat emptor: bitcoin buyer, beware. Dave Michels, Research associate, Queen Mary University of London.Disclosure statement: Dave Michels receives funding for his research on the Cloud Legal Project through a generous charitable donation from the Microsoft Corporation.
In this post, I sketch out a description of a possible existential risk for Bitcoin, that has arisen from the exponential increase in price seen in 2017 and the abrupt fall that followed.Matt Mullenweg, 2017
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In recent days, the price of Bitcoin has been falling abruptly, to a level where a lot of the mining hardware that was produced and put online in 2018 is no longer profitable to operate. The Bitcoin hashrate has nearly halved over this period (from a high point of 62 million TH/s to a low of 34 million TH/s a couple of days ago), meaning that almost half of the total mining hardware that was operating in October has been brought offline. Because mining hardware is single-purpose (it can only be used to mine Bitcoin, you can’t even crack hashed passwords with it), that hardware is now almost completely worthless. In particular, anything less energy-efficient than a S9 won’t find any buyers other than electronics recycling shops. Rumors are that you can now buy mining hardware by the pound in China, where most of the miners were operating.
Some commentators have questioned whether Wright – a colourful character who once claimed to have invented Bitcoin – ever had the tokens to begin with. But the case shows how the outcome of disputes can depend on the property status of digital tokens. Similar issues could arise in cases of theft, bankruptcy, and divorce.