You might as well just mark it $10,000.
Bitcoin is trading near $9,950 on Tuesday morning on a Bloomberg story that seemingly confirms earlier reports about Shinhan in South Korea.
The bank (South Korea’s largest) is reportedly “in the process” of choosing a company to test platforms for Bitcoin wallets and vaults and assuming regulatory approval, this is going to be launched by mid-2018.
“Shinhan posted a bid invitation on its website earlier this month. It plans to develop a test server for the vault service to store the cryptocurrency safely, a mobile application to use the service, and statistical and analytical tools,” Bloomberg writes, fleshing out the digital details.
So that was the good news out of South Korea for Bitcoin. The bad news is that Prime Minister Lee Nak-yon says cryptocurrencies are corrupting the nation’s youth. And yes, I am serious. Apparently, he’s concerned that young people hell-bent on making fast money are diving head first into what he’s somewhat derisively called “a raging market.”
“If we let things continue, I feel some serious pathological phenomenons could occur [and] volumes on our cryptocurrency exchanges are more than that of the Kosdaq,” an online statement reads.
The PM is also reportedly concerned that these “serious pathological phenomenons” could lead the country’s youth down the road to committing drug crimes and getting caught up in pyramid schemes. To wit:
There are cases in which young Koreans including students are jumping in to make quick money and virtual currencies are used in illegal activities like drug dealing or multi-level marketing for frauds.
Why pyramid schemes, you ask? Well, recall what Marko Kolanovic said about cryptocurrencies in September:
Another worrying aspect of cryptocurrencies are some parallels to fraudulent pyramid schemes. Initiator of a pyramid scheme often ensures ownership of a disproportionally large share of future profits. For instance, in the case of bitcoin, it is believed that an unknown person (or persons) known as ‘Satoshi Nakamoto’, before disappearing, mined the first 1-2M coins or ~10% of the coins that will ever exist ($4-8bn USD current value). While initial mining requires a negligible effort, the benefits for subsequent participants start diminishing. Mining becomes progressively more difficult, and eventually unprofitable, marking the likely end of a scheme. A way around this in Pyramid schemes is to bypass the original chain and start a new one of your own. The cryptocurrency analogy would be to start a new coin if it is more profitable than mining the existing one. This can work as long as there are enough willing and uninformed buyers.
At the same time, Financial Services Commission Vice Chairman Kim Yongbeom said South Korea is set to draw up measures to keep cryptocurrency transactions from being used as a new conduit for money laundering.
Meanwhile, Mike Novogratz – who went down in flames at Fortress and is now plotting a comeback in part via a $500 million digital asset fund – has a new price “target” for Bitcoin… $40,000:
Ok, Mike. I hope, for the sake of your reputation, you’re right.
He does note that retail investors shouldn’t put any more than 1-3% of their money in cryptocurrencies, and while it’s the thought that counts, Google Trends seems to suggest that not only are folks not taking that advice, they are in fact trying to borrow to buy Bitcoin…
Borrowing to buy into the greatest bubble we have seen in years…what could possibly go wrong!
Some say the biggest bubble ever… The excerpt from Kolanovic reminded me that the blockchain technology, or at least that part about how compensation is “earned” or “mined” and how that gets harder and harder as the phenomenon grows, is really kind of a digital/virtual version of the old chain letter. It’s been a while since we’ve seen one of those but I recall one episode in the 80’s that started in Dallas I think, that reached epic proportions before it collapsed.