What is Bitcoin? - CNN Tech

What is Bitcoin?

Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks! Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock and buy Xbox games. But much of the hype is about getting rich by trading it. The price of bitcoin skyrocketed into the thousands in 2017.

Why Bitcoins?

Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.

Acquiring Bitcoins

Buy on an Exchange

Many marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Coinbase is a leading exchange, along with Bitstamp and Bitfinex. But security can be a concern: bitcoins worth tens of millions of dollars were stolen from Bitfinex when it was hacked in 2016.

Transfers

People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.

Mining

People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes.

Owning Bitcoins

Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Unlike bank accounts, bitcoin wallets are not insured by the FDIC.

Wallet in cloud: Servers have been hacked. Companies have fled with clients’ Bitcoins.

Wallet on computer: You can accidentally delete them. Viruses could destroy them.

Anonymity

Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities.

Future in question

No one knows what will become of bitcoin. It is mostly unregulated, but some countries like Japan, China and Australia have begun weighing regulations. Governments are concerned about taxation and their lack of control over the currency.

Bitcoin vs history's biggest bubbles: They never end well - CNN Money

Bitcoin vs history's biggest bubbles: They never end well

by Daniel Shane @CNNMoneyInvest

December 8, 2017: 11:46 AM ET

Is Bitcoin just 'Tulip Mania', Take Two?

Is the bitcoin boom about to turn into one of history's biggest busts?

The digital currency's massive surge this year -- it's up more than 1,400% -- has all the hallmarks of a huge speculative bubble, according to people such as Warren Buffett.

And if it bursts, the results are likely to be spectacular.

"In terms of how it ends, bubble history suggests it will be with a bang, rather than a whimper," said Sharon Zoller, an economist at ANZ. "I can't think of any reason why this time would be different."

To better understand what may lie ahead, here's the lowdown on four famous financial bubbles in history:

Content by the UK’s Department for International Trade

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Tulip mania

In the early 17th century, speculation helped drive the value of tulip bulbs in the Netherlands to previously unheard of prices. Newly imported from Turkey, tulips were a big novelty at the time.

Hard data from those days is scarce, so it's difficult to gauge exactly how much prices soared. But people were putting up their homes as collateral, according to the Rijksmuseum -- the Museum of the Netherlands -- in Amsterdam.

Related: I bought $250 in bitcoin: Here's what I learned

Like many bubbles, prices were driven by greed or the fear of missing out. Speculators were buying bulbs in the hope that they could sell them on at an even higher price. Again, it didn't last. A flurry of sales caused a domino effect, and prices collapsed.

Stephen Innes, head of Asian trading at currency broker Oanda, believes bitcoin bubble could go the same way.

"Prices will become so out of reach of the common man that ultimately demand fades," he said.

Beware of bitcoin's bite: Richard Quest

South Sea bubble

In the 18th century, shares in the South Sea Company, a British trading firm, soared on expectations it would soon reap bumper profits from trade with South America.

But the big money never materialized.

South America was controlled by Spain, which was at war with the British Empire at the time. That made a British trading monopoly in the region unlikely, according to the Encylopedia Britannica.

Related: Nobel winner says bitcoin 'ought to be outlawed'

Nevertheless, British mom-and-pop investors piled into the South Sea Company's stock, which popped about 900% in the space of a year.

Soon afterward, the shares began to plunge as speculators became sellers. The South Sea bubble's collapse left a trail of bankruptcies in its wake.

Where's the skepticism as bitcoin keeps soaring?

Where's the skepticism as bitcoin keeps soaring?

Wall Street crash of 1929

In the five years prior to October 1929's huge crash, stocks listed on the Dow Jones Industrial Average skyrocketed 500%.

Investors had become very bullish on the U.S. economy during the "Roaring 20s," prompting them to keep bidding stock prices higher. Eventually cracks in the economy started to appear.

Related: Bitcoin boom may be a disaster for the environment

The crash didn't happen on just one day. The pain was spread out over several big plunges in the Dow, according to the Federal Reserve.

Making things much worse, many of the investors who had jumped on the bandwagon did so with borrowed money.

The crash led to the tremendous suffering of the Great Depression.

Wall Street didn't find its bottom until more than two years later, when the Dow languished 90% below its 1929 peak.

The dotcom boom

Investors were gripped by an internet frenzy in the late 1990s. They piled into web-focused companies, pushing the Nasdaq index up about 200% in the space of just over a year.

Those gains were fueled by a string of multibillion dollar stock floats during the era, many of which were unprofitable internet and software companies.

Are you trading Bitcoin? We want to hear from you.

The party didn't last. The bubble burst in early 2000, partly because higher interest rates made borrowing pricier. The Nasdaq plunged around 80% over the next couple of years.

But Shane Oliver, an economist at Australia's AMP Capital, said bitcoin's meteoric rise isn't quite like any previous bubbles he's seen before.

"Bitcoin leaves them for dead." he said.

CNNMoney (Hong Kong)

First published December 8, 2017: 9:26 AM ET

Trump advisor Gary Cohn: 'We're still not growing wages in this country' - CNBC News

8/12/2017

Trump advisor Gary Cohn: 'We're still not growing wages in this country'

The Trump administration is concerned about the lack of wage growth in the economy despite the steady tightening of the labor market, Gary Cohn says.

The White House economic advisor spoke after the Labor Department reported that average hourly earnings rose just 2.5 percent during the past year, below economists' estimates of 2.7 percent.

Jeff Cox | @JeffCoxCNBCcom

CNBC.comGary Cohn: Tax reform will help us drive real wage growth

17 Hours Ago | 03:42

The Trump administration is concerned about the lack of wage growth in the economy despite the steady tightening of the labor market, White House economic advisor Gary Cohn said Friday.

Speaking shortly after the Bureau of Labor Statistics reported that nonfarm payrolls grew by 228,000 in November, Cohn said there is frustration that the numbers haven't resulted in better gains for worker paychecks.

"We're still not growing wages in this country," Cohn told CNBC's "Squawk on the Street." "We do believe that tax reform will help drive real wage growth in the United States, which is something really important to the administration."

Congress is hashing out the final details of a tax plan that will sharply reduce the corporate rate, give companies a break on bringing back profits stashed overseas and reduce levies on many Americans.

President Donald Trump has pushed the plan as part of his effort to stimulate growth that he said will amount to 3 percent or more annually. Critics, though, charge that the benefits skew too sharply to the top earners.

In the meantime, policymakers are stumped as to why wage growth remains meager despite a jobs market nearing full employment. Friday's payrolls report showed that average hourly earnings rose just 2.5 percent during the past year, below economists' estimates of 2.7 percent.

"We know that American workers want this tax bill passed. They'll start seeing their paychecks change early next year when withholding tax cards are changed," Cohn said.

"We think we are in a prolonged period of wage growth starting the beginning of next year, which is something we haven't seen for the last eight or 10 years, and that's really important to us," he added.

Despite the slow wage growth, the Federal Reserve has hiked its benchmark interest rate twice in 2017 and is expected to add one more increase at its policy meeting next week. In addition, the Fed has indicated that it could move again three times in 2018.

But Cohn is in the camp that the central bank will move slowly.

"We're in a relatively benign period here with the Fed," he said. "We haven't seen wage growth, we haven't seen inflation in the system, and people are trying to figure out where is the Fed ultimately going to go with rate policy. I think people are thinking it's going to be more of the same. Rates may trend higher, but they're going to trend higher at a very slow pace."

Trump has nominated Fed Governor Jerome Powell to take over as chairman when Janet Yellen's term ends in February, and a key Senate panel pushed the appointment to the Senate floor earlier this week.

Big banks say bitcoin futures could be dangerous - CNN Money

Big banks say bitcoin futures could be dangerous

by Ivana Kottasová @ivanakottasova

December 7, 2017: 1:27 PM ET

Wall Street banks are warning about the dangers of bitcoin futures.

The Futures Industry Association, which represents big banks and brokers, has warned U.S. regulators that the risks of trading bitcoin futures contracts have not been properly studied.

In an open letter to the U.S. Commodity Futures Trading Commission, the FIA said that the speedy certification of bitcoin futures does "not allow for proper public transparency and input."

The Chicago Mercantile Exchange and the Chicago Board Options Exchange plan to start listing the contracts later this month. The Nasdaq will launch its own bitcoin futures in 2018.

Analysts say that announcements from the exchanges have helped propel bitcoin prices to new heights, because the moves were seen as signs that big mainstream investors are becoming interested.

Bitcoin (XBT) prices have gained over $4,000 in the past 48 hours to smash through $16,000.

Related: What's driving the bitcoin frenzy?

The FIA, which counts Goldman Sachs (GS) and Morgan Stanley (MSPRF) among its members, is concerned that exchanges regulated by the CFTC have been allowed to "self-certify" their new bitcoin contracts.

The decision will leave regulators with limited time to review futures offerings.

The FIA said that a "more thorough and considered process" would have allowed exchanges and clearinghouses more time to study trading limits and other ways to protect against price swings.

The group is worried that its members, which act as intermediaries between buyers and sellers, could be left holding the bag if something goes wrong.

"The recent volatility in these markets has underscored the importance of setting these levels and processes appropriately and conservatively," the group said in its letter.

"We remain apprehensive with the lack of transparency and regulation" of bitcoin and "whether exchanges have the proper oversight to ensure [bitcoin is] not susceptible to manipulation, fraud, and operational risk," it said.

Related: Bitcoin boom may be a disaster for the environment

The CFTC has itself warned investors about the dangers of bitcoin, noting that cryptocurrency exchanges are largely unregulated and outside the agency's purview.

"Bitcoin ... is a commodity unlike any the commission has dealt with in the past," CFTC chairman J. Christopher Giancarlo said in a statement on December 1.

"Investors should be aware of the potentially high level of volatility and risk in trading these contracts," the agency added.

CNNMoney (London)

First published December 7, 2017: 1:27 PM ET

U.K.'s Irish Fudge Will Come Back to Haunt May as Foster Hedges - Bloomberg

U.K.'s Irish Fudge Will Come Back to Haunt May as Foster Hedges

By Dara Doyle

December 8, 2017, 7:14 PM GMT+11

U.K. border plan enough to move Brexit talks to second phase

Questions remain about how workable solution might be

U.K., EU Strike Deal to Unlock Brexit Negotiations

Follow @Brexit for all the latest news, and sign up to our daily Brexit Bulletin newsletter.

U.K. Prime Minister Theresa May managed to kick the Irish border question far enough down the road to allow Brexit talks to move on. But Arlene Foster, who keeps her in power, hasn’t gone away.

In the deal agreed Friday, the U.K. guaranteed no hard border will re-emerge on the island of Ireland, with Northern Ireland playing by the same rules as those in the south of the border if all else fails. May also gave an assurance there’ll be no barriers between Northern Ireland and the rest of the U.K.

Arlene FosterPhotographer: Charles McQuillan/Getty Images

What’s not clear is how that might work, if U.K. rules begin to move away from those in the EU. How does the U.K. stop chlorinated chicken reared in Wales, for example, moving across the Irish Sea and into the EU through the invisible border? Irish Foreign Minister Simon Coveney made clear that’s not his problem -- it’s up to the U.K. to “design” a solution, he told broadcaster RTE.

Democratic Unionist Party leader Foster quickly warned that the game isn’t over. Without her 10 lawmakers in London, May does not have a working majority to pass legislation.

Caution

“We cautioned the prime minister about proceeding with this agreement in its

present form given the issues which still need to be resolved,” Foster said in an email statement. “Nothing is agreed until everything is agreed and how we vote on the final deal will depend on its contents.”

Foster said she welcomed the government’s assurances this week that “any alignment will be done on a U.K. wide basis.” This implies rules across the U.K. would match those in the EU. While that would solve the Irish question, it could spark a revolt among May’s own lawmakers, many of whom want to move away from EU rules.

For now, though, May has managed to fudge the issue enough to get to the next phase of talks, and she’ll hope a wide-ranging trade deal will largely neutralize the border question. If not, Foster is watching.

“Along with like-mind colleagues across the House of Commons, we will ensure that there is no backsliding on the promises made about the integrity of the Union,” she said.

US lawmaker Trent Franks quits over 'surrogacy' talks with aides - BBC News

8/12/2017

US lawmaker Trent Franks quits over 'surrogacy' talks with aides

Trent Franks is accused of offering a former aide $5m to act as a surrogate mother

Arizona Republican Trent Franks has resigned amid an ethics investigation into claims he repeatedly asked female staff to be surrogate mothers.

The announcement came after a congressional panel said it was opening an inquiry into sexual harassment allegations against Mr Franks.

The lawmaker acknowledged discussing surrogacy with two female aides when he and his wife were facing infertility.

He is the third member of Congress to resign in three days.

The Associated Press reports one of Mr Franks' former aides accuses him of offering her $5m (£3.7m) to act as a surrogate mother, repeatedly pressing her to carry his child.

She told the news agency that another female staff member had also been approached by Mr Franks about surrogacy.

One of the aides reportedly said Mr Franks retaliated against her after she turned down his alleged surrogacy requests by ignoring her and withholding assignments.

A spokesman for the eight-term congressman - who has a net worth of $33m - would not comment on whether he had offered aides money to act as surrogates.

Mr Franks said on Thursday his resignation would take effect next month.

But on Friday he said he had decided to quit immediately after his wife was admitted to a Washington hospital "due to an ongoing ailment".

In a statement on Thursday, the 60-year-old Republican acknowledged "my discussion of surrogacy with two previous female subordinates, making each feel uncomfortable.

"I deeply regret that my discussion of this option and process in the workplace caused distress."

Senator Franken to quit amid grope claims

US lawmaker to retire amid harassment claims

Mr Franks said he and his wife, Josephine, had used a surrogate to carry their two twins.

He stood down as the House of Representatives ethics committee opened an inquiry against him into a matter that "constitutes sexual harassment and/or retaliation for opposing sexual harassment".

Republican Speaker of the House Paul Ryan said he had advised the congressman to stand down.

Why so many sexual harassment cases in US, not UK?

US House requires anti-harassment training

An institution in turmoil

Analysis by Anthony Zurcher, BBC News, Washington

In the space of one week, three members of Congress have announced they are resigning because of sexual misconduct allegations. That, in all likelihood, is just the beginning.

If the past is any guide, the worst transgressions and abuses of power come in institutions - Hollywood, the Catholic Church, the athletic department of a major state university - where authority is unchecked and accountability is limited. The halls of Congress all too often fit that description.

Each congressional office is like a mini kingdom, with the member of Congress as monarch. Employees work at the "will and pleasure" of the elected politician. Staffers share stories of abuse - sometimes of the walk-my-dog, pick-up-my-dry-cleaning variety and sometimes much darker.

Those darker stories are beginning to come to light. Journalists are digging, and there are already reports of dozens of legislators under the microscope.

Both parties are being tested. If politicians in Washington aren't sweating, they should be.

The real test, however, will come when voters head to the polls in the months ahead. Will they hold lawmakers accountable? The answer will go a long way to determining whether the #MeToo movement is a blip or if it will fundamentally reshape the Washington power structure.

The ethics committee also announced on Thursday it was investigating Texas Republican Blake Farenthold amid claims of sexual misconduct against him by a former member of staff.

Lawmaker 'used tax funds to settle lawsuit'

It was revealed last week that Mr Farenthold used $84,000 of taxpayer money to settle a sexual harassment lawsuit with his former communications director.

Resignations of two Democratic lawmakers have shaken Washington this week.

Democratic congressman John Conyers announced on Tuesday that he will step down after multiple aides accused him of sexual misconduct.

Hours before Mr Franks' announcement, Minnesota Democratic Senator Al Franken said he too was resigning over claims of groping after several Democrats called on him to step down.