The Modern Gold Rush: These Three Stocks Could Benefit

Aibek Burabayev - INO.com Contributor - Metals


History repeats again and again as human beings don’t change; they only change on the surface. There is a good lesson learned from the Gold Rush in the 19th century – there were some lucky diggers, who made a fortune, at the same time many merchants who were selling equipment and jeans became rich. But many adventurers left broke.

These days we have the Crypto-Mining Gold Rush led by Bitcoin with a market share of more than 60% and market capitalization over $124 billion. This coin is worth as much as the Hungarian GDP and exceeded the market cap of NVIDIA Corporation (NASDAQ:NVDA) – one of those “merchants” selling “shovels” to modern “diggers” aka miners.

Today, as long ago, the competition gives an advantage to cooperated mining pools with the most advanced equipment, lowest electricity, and labor costs. That’s why there is no surprise that the top mining pools are located in China (70% of the Bitcoin hashrate).

There are two main types of suppliers to the crypto mining industry: electricity suppliers (up to 70% of all mining costs) and equipment suppliers. The massive demand for mining equipment attracts nimble middlemen, for instance, they resell the ASICs (application-specific integrated circuits, microchips) for 2x-3x of the original price tag, making relatively risk-free money on modern “diggers” that risk a lot. Continue reading "The Modern Gold Rush: These Three Stocks Could Benefit"

Modern Paradox: As Large As Goldman Sachs But Has No Intrinsic Value

Aibek Burabayev - INO.com Contributor - Metals


The Riddle

This riddle could be paraphrased as “It is almost worth the gold reserves of France (World #5), it is what all want now at the price of 2016, you would be eager to have it as a gift last Christmas, it stands at 14 GDPs of Kyrgyz Republic (my motherland)”. Yes, you got it right, it’s a Bitcoin - notorious, attractive and, of course, risky.

Last week the market cap of this coin hit an all-time high at the 99+ billion dollars increasing ten times from what it was just a year ago.

Chart 1. 1-year dynamics of Market Cap of Bitcoin in USD

Dynamics of Market Cap of Bitcoin in USD
Chart courtesy of blockchain.info
Continue reading "Modern Paradox: As Large As Goldman Sachs But Has No Intrinsic Value"

Bitcoin Bonanza Rolls On

Matt Thalman - INO.com Contributor - ETFs


As the Bitcoin phenomenon rolls on, we continue to see new prospectuses for possible Bitcoin funds despite the Securities Exchange Commission denying the creation of one Bitcoin Exchange Traded Fund due to the lack of market surveillance and regulation. Oddly enough, the currency was started to give its user autonomy from governments and other regulatory agencies.

So the main reason why the currency grew in popularity is the reason why investors are finding it difficult to invest in the asset. Thus far two different proposed Exchange Traded Funds have been denied in the US, but it would appear the once denied Winklevoss Bitcoin ETF might have a chance of being approved the second time around. What is interesting is that the Winklevoss Twins were not the ones who filed the petition for reconsideration of their ETF, it was the Bats exchange, which the proposed ETF would trade on if approved. Continue reading "Bitcoin Bonanza Rolls On"

Bitcoin Is NOT The New Gold

Lior Alkalay - INO.com Contributor


Last week, the price of one Bitcoin surged above $1,227, the price of an ounce of Gold. And the headlines soon followed, screaming, “Bitcoin worth more than Gold.” The implication, of course, that Bitcoin is the new Gold in the world. In reality, however, Bitcoin is hardly the “new” Gold, real or digital.

In arguing for Bitcoin’s allure, enthusiasts tend to fall back on one singular point; like real Gold, there is but a finite number of Bitcoin that could be mined (21 million to be exact). But that is hardly the case. Bitcoin’s allure is not a factor of its rarity, but rather its ecosystem. That ecosystem enables financial transactions between two parties, both anonymously, and at very low costs. The fact is that that ecosystem could be easily replicated with an alternative to Bitcoin. So, while the number of Bitcoins we can mine is limited, the amount of alternative ecosystems that could emerge for Bitcoin wannabes is not. In fact, even today, there are already 12 different alternatives to Bitcoin, including Litecoin, Peercoin and Primecoin.

However, there is one area in which Gold and Bitcoin have something in common and, unfortunately, for Bitcoin bulls, it is in their vulnerability rather than strength. Both Bitcoin and Gold do not pay interest like a currency, nor a dividend like a stock. And when interest rates rise the allure of Bitcoin and Gold quickly fades. Because, simply put, there are better alternatives. Continue reading "Bitcoin Is NOT The New Gold"

This Coin Smashed All...Again...And Again To Pieces!

Aibek Burabayev - INO.com Contributor - Metals


A year ago I wrote about the comparative dynamics of three outstanding kinds of money of different generations – the older generation was represented by gold, the 20th-century generation was represented by the Dollar (Index) and for the modern generation I used the cryptocurrency Bitcoin (BTC). I think some of you have just discovered the serious value of Bitcoin as it just crushed the rivals doubling its value. The dollar index (DXY) gained only 8% as gold showed negative dynamics in 2015. Below I put the result of the poll you voted on a year ago for the 2016 year performance.

Chart 1. Voting results January 2016: You Bet On Safety

INO.com Bitcoin Poll Results

I noticed that there are a plenty of gold bugs among regular readers as gold gathered the most votes. The second position went to bitcoin and it shows that there are many modern enthusiasts among our readers. It looks like the least amount of optimism was felt about the US dollar’s future although it didn’t rank the last in 2015. Let’s see, in the chart below who the winner was. Continue reading "This Coin Smashed All...Again...And Again To Pieces!"