Wealth Creation and bitcoins

Under scrutiny

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When does bitcoin mining become non profitable?

Cryptocurrencies like Bitcoin can be analysed because every transaction is traceable. This means that they are an attractive system for physicists to study. In a paper published in EPJ B, Leonardo Ermann from the National Commission for Atomic Energy in Buenos Aires, Argentina, and colleagues from the University of Toulouse, France, have examined the structure of the Bitcoin-owner community by looking at the transactions of this cryptocurrency between 2009 and 2013. The team's findings reveal that Bitcoin owners are close to an oligarchy with hidden communities whose members are highly interconnected. Go figure

A study led by Feng Mai, professor at the Stevens School of Business, shows that periods of increasingly positive social media commentary do, in fact, significantly influence the rising price of Bitcoin, but the surprise? It's the silent majority, not the vocal minority, who moves these prices.

The silent majority -- infrequent users who took the time to comment on the cryptocurrency's prospects -- moved prices more, as much as ten times more, when they posted positive comments. "They are the ones investors watch," says Mai, whose work appears in the Journal of Management Information Systems. Mai, working with the University of Cincinnati, Dickinson College and Ivey Business School, collected and analyzed two years' worth of forum posts on the world's most popular public Bitcoin forum, Bitcointalk.

They collected two months' worth of Twitter data, including more than 3.4 million tweets about Bitcoin. Classified them into positive, negative and other sentiment categories using natural-language processing techniques. They also compared changes in Bitcoin's price with the chatter around the cryptocurrency. But just as chatter can affect the price, Bitcoin's value can affect the sentiment around it, so the team also factored in daily rises and falls in indicators such as the S&P 500 stock index, gold prices and volatility indexes to better understand the two-way relationship. "This was the first robust statistical finding to verify that social media and Bitcoin prices are actually linked," Mai says. "It may be intuitive, but positive sentiment moves Bitcoin prices."

They found that rather than the vocal users driving changes in Bitcoin price, the price instead changed in proportion to the comments made by users who were infrequent posters. "Vocal users of social media may sometimes have a certain agenda, in this case hyping or boosting the price of Bitcoin because they themselves have invested in it," says Mai. "So, if most of the social messages around Bitcoin are generated by people who are biased, the sentiments on social media may not accurately reflect the currency's actual value."

Interested in the Advantages bitcoin has?

We should not forget that wages, electrity, taxes and other factors have a great influence, in % depending on the country up to 50% of the cost is derived from accompanying costs.

Below is the list of the different price levels for major cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Zcash (ZEC)

The richest will pass?

Figures have pointed to a 27% of the very rich not yet investing for one reason or another as potential crypto investors. Add to that 29% of millionaires already invested and the market could swell given the extra injection of interest. It appears though, that only a third of the millionaires surveyed had received any information from their wealth managers about cryptocurrency investment.

This also indicates that it is probable that there is some catch up required in the financial industry for wealth managers to become more knowledgeable about cryptocurrency, blockchain and what these can offer, before they can pass on this knowledge to their client investors as an alternative investment opportunity. There are indications though that some wealth managers are still skeptical of promoting cryptocurrency products as investment opportunities to their HNWI clients. The next page is about Mining Bitoins Know how matters, know how bitcoin is mined.

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