Venezuelan “banks”, the African MMM and Chinese shadow businesses … How is the crypto currency market organized, and why did the bitcoins rate collapse last week?
In April, Japan officially recognized bitcoin as a means of payment. Local investors began to invest in it. This led to a record growth in the market of crypto-currencies. By the end of May, the bitcoin rate doubled from $ 1,300 to $ 2,700. “Ether”, another popular currency, developed by a young Russian from Russia, also doubled, similar growth was shown by other crypto-currencies. A real gold rush began: people around the world began to sweep from the counters of the stores of the video card (they are well suited for parallel computations required for mining) and create special farms.
Mining is the receipt of a crypto-currency for the maintenance of its infrastructure, that is, for the performance of related calculations. In order to assemble your farm, you need to buy several video cards – the more, the better, – link them to a single computer system and connect it to the work of the block (distributed registry) on which the crypto currency works. As a reward for providing its facilities for calculations, the miner receives a certain amount of crypto currency. For example, a farm of four good graphics cards can bring 0.01 bitcoins per day.
Gold rush quickly reached Russia. The prices for video cards soared several times. Already on May 19 Vedomosti recorded a shortage of video cards on the market – all of them were bought by miners. A similar situation has developed in other countries.
How beneficial is the bitcoin? Farm, collected a month ago for three million rubles, brings the owner $ 150 a day. The approximate payback period of such a farm is a year. But this is if the course does not fall. A crypto currency is a very volatile asset. They are decentralized – there is no single “central bank” that produces bitcoin or ether and controls the stability of the exchange rate. This “bank” is distributed among hundreds of thousands of miners around the world. The rate of crypto currency depends solely on demand and supply in the market. There is good news about the crypt – the market is growing. Bad – the market is falling.
Japan is one of the largest economies in the world. The official status and popularity of bitcoin in Japan became a signal that led to a record market growth in May. But under the laws of the exchange behind the rapid growth always follows a correction. In June, the bitcoin rate fell by 15% in one day. The reason – rumors about a possible division of the crypto currency into two, as it already happened earlier with the ether.
In May, the American pension fund BitcoinIRA, accepting deposits in bitcoins, recorded a three-fold increase in investments in the crypto currency. According to the director of the fund, bitcoin is a good tool to diversify your financial portfolio, but you should not make a long-term bet on it. Investments in bitcoin bring 30% per month, and shares of companies from the list of S & P 500 – only 1%. But at the same time fluctuations in the bitcoin rate reach 90%, against only 4% in the S & P 500.
Bitcoin is invested by two types of people: speculators who expect to make money on the hype around the crypto currency, and people who do not trust central banks – buying bitcoins, they are insured against inflation. This is how bitcoin became popular in Argentina and Venezuela, where inflation for 2016 was 720%.
Image result for mavrodi afrika
In addition, bitcoin has gained unprecedented popularity in Nigeria and China. In both countries, there are restrictions on the purchase of foreign currencies and the withdrawal of the national currency abroad. And still bitterly popularized Sergei Mavrodi – his recent projects in Africa and Asia worked through the crypto currency, than cool raised her rate.
One of the most popular uses of crypto currency is trading in the so-called “darknet”. Anonymous sites, accessible through the Tor browser, allow buying and selling for crypto-currencies illegal goods and services – drugs, weapons, forged documents. Most Russian and Ukrainian drug traffickers in darknet accept payments in bitcoins. True, this currency is not suitable for small purchases – for example, with a purchase of $ 6 commission will be at least $ 1.
Bitcoin transactions can take several hours, or even a day, and the commission amount is sometimes comparable to the amount of the purchase. All this together with the instability of the course makes bitcoin uncomfortable for everyday purchases. Only 3 of the 500 most popular US retail sites accept payment in bitcoins. It is interesting that last year there were more such 5.
In 2015, the servers of one Italian bank were hacked – but not for the purpose of withdrawing money, but for using computing power for the mining of bitcoins. Similar cases took place a few years ago, but now everything has changed. The amount of computing power involved in the bitcoin infrastructure has increased 770 times since 2014. Mine on a work computer or even on a botnet from a group of hacked machines is simply unprofitable.
The future of bitcoin is not defined – the division of the currency into two independent systems is planned for August 1, only then it becomes clear which part of the bitcoin community it will support. Rumors about a possible crisis have already led to a considerable drop in the rate of bitcoin. Some of the miners revised their business plans and began selling farms purchased at the peak of the course. The farm, collected for three million, is sold at a discount – for 2.2 million rubles. Gamers breathed a sigh of relief – finally it became possible to buy a video card at a normal price.
But in general, the bitcoin community is optimistic. Despite the problems of bitcoin, the idea of a global decentralized currency looks very attractive. Now, the exchange has attracted thousands of speculators, and this harms the image of technology. Some market participants are sure – sooner or later the bubble will crash. Others predict that by 2020, one bitcoin will cost more than $ 30,000.
Not freeloaders, but bitcoins
By the beginning of this year, millions of people have participated in the financial pyramid of Mavrodi Mondial Moneybox (MMM) operating on the African continent (and also in South Asia and some Latin American countries). After the last initiatives of Sergei Mavrodi in the CIS failed, he went to where there is no legislation restricting the activities of financial pyramids, and citizens are not very financial literate.
The wave of popularity of the new MMM swept across Egypt, South Africa and Zimbabwe, but a particularly successful and in demand new brainchild of Sergei Mavrodi was in equatorial Africa. In Nigeria, the MMM website has become one of the most popular resources of the network, and the participation of citizens in it has caused concern among the government. On Youtube you can find numerous clips of African video bloggers – both praising the advantages of MMM, and exposing fraud.
Investors Mavrodi offers a rate of 30% per month and already habitually says a lot about what he intends with the help of his pyramid to change the world for the better and take care of the destitute. In general, MMM gives Africans the dream of a better life and at the same time the feeling that they are busy with something useful – a story familiar to Russia.
In December 2016, the African MMM faced the first problems: payments were stopped for a month because of “a high load on the system.” At this point, Mavrodi transferred the calculations from the Nigerian Naira to the bitcoins, and also traditionally accused the pyramids of unscrupulous journalists that fan the sensation in the problems.
Now the “business model” of Mavrodi is built also on the difference in rates between local African currencies, some of which suffer from hyperinflation, and bitcoins, whose rate has been growing in recent months. “The mutual aid fund” of MMM in Africa is designed in such a way that contributions to it are made in the crypto currency, but it is already necessary to deduce the interest in local money.
Andrey Brodetsky, Kyril Martynov, “Novaya gazeta”