Monday, January 15, 2018

The DDoS attack on Bitconnect is over (or at least the attackers are going after the wrong servers now that the Bitconnect website has reportedly been migrated to new servers under different IP addresses).

I logged in to my account and found that everything was in order. The only thing I missed out on over the past two days was the ability to convert my accrued interest into Bitconnect coins, loan it to the trading robot, or convert it to Bitcoin and withdraw it to my cold wallet. Everything continued on as normal with the platform save for the ability of users to log in. Other than that, no harm done.

Sunday, January 14, 2018

Bitconnect has been under sustained DDoS attack for two days now, making the service inaccessible to users. It did come up briefly again last night, and behind the scenes all was proceeding as normal. Unfortunately the attack overwhelmed their servers again a short time later and it's back to being "offline."

If you're not familiar with DDoS attacks, here is a great explanation of what they are, how they work, and why people launch them.

While I'm stuck waiting along with everyone else to get back into my Bitconnect account, I've been exploring Hashflare, a "cloud mining" platform that provides access to powerful Bitcoin and alt coin mining operations through affordable one-year contracts. This is the "production" side of Bitcoin, as opposed to the trading side that Bitconnect represents.

As of now, given Bitcoin's price in USD and current "difficulty," a $2.20 USD one-year 10 gigahash/second contract through Hashflare would return roughly $6.02 over the term, a return of just about 274%. All that for not having to purchase, power, and operate mining equipment of my own. Not bad, huh?

One other thing attracting me to this platform is that I can purchase these contracts with a credit card. As I wrote about yesterday, I do not think anyone should use a credit card for this kind of thing and then carry the balance. What you should do is spend cash you actually have on-hand through a card and pay the balance immediately (or at least before the end of the following billing cycle, so as to avoid interest charges). Even better is to do this with a cash back rewards card, which can be used to offset some of the total cost and thus enhance your return (example: I use a card that offers 1.5% cash back, which if I apply the cash back to the balance reduces the cost of one of these contracts to $2.167 USD, boosting the annual return by nearly 4%).

A few days ago I expressed my view that one should not take on debt to make an investment in something like Bitcoin. That's still my view.

This article that appeared in Fortune recently is along those lines. It's about people using credit cards to purchase Bitcoin, which is a method that tends to come with higher commissions (the article cites a 4% fee if the purchase is made through Coinbase), and the high cost of interest on such balances over time if one does not pay the debt off within the following billing cycle.

Add these two things together and toss in a decline in the value of Bitcoin (which has been the case as of late), and it's a recipe for big losses.

So then the article mentions that some have "concerns" about Bitcoin becoming a systemic economic risk, owing to such behavior.

I just have to laugh at that, because this same behavior, when it involves purchasing ordinary goods and services on credit, things which either rapidly decline in value or represent no sort of retained value, that just doesn't seem to attract these same "concerns." lol.

All that said, if you are using or planning to use a credit card to purchase cryptos, at least do this: use a cash back rewards card that carries no annual fee, and apply the cash back to the balance, which you should then completely pay off before the end of the next billing cycle following the date of your purchase. This will in effect reduce the commission you pay to purchase your crypto, and a credit card balance paid in full by the end of the following billing cycle incurs no interest charges.

Saturday, January 13, 2018

This is a pretty good read on Ripple (XRP), and I find it refreshing to see this point put out there in a blunt and direct fashion: Ripple is not the next Bitcoin (BTC).

As the article describes, its purpose and therefore its inner workings are wholly different than that of BTC. XRP is made specifically to work in a way that traditional financial institutions can use it, given all of the regulations they must operate under.

MIT Technology Review: No, Ripple Isn't the Next Bitcoin

However, the article leaves out two points about XRP and the existing order it is designed to disrupt that are crucial to understanding its future value prospects:

1) All of the XRP that will ever exist was created on day one, unlike most crypto currencies, however, every time a transaction occurs in XRP a tiny bit of it is "burned," destroyed permanently, thus increasing the scarcity of XRP over time; this is "mining" in reverse;

2) Existing money transfer networks require large pools of capital that be kept idle on the sending and receiving ends just in case a transfer order comes through the institutions involved (termed, "nostro" and "vostro" accounts), which XRP eliminates the necessity of; these pools represent trillions of dollars globally, which would be freed up for other uses and at least in part used to purchase XRP.

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