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TGB Bitcoin Mid Year Review and Outlook 7

TGB Bitcoin Mid Year Review and Outlook 7

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Published by zerohedge
TGB Bitcoin Mid Year Review and Outlook 7
TGB Bitcoin Mid Year Review and Outlook 7

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Published by: zerohedge on Jul 25, 2013
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11/24/2013

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2013 BitcoinMid-Year Reviewand Outlook 
Greg Schvey
 Managing Editor
Jeff Schvey
 Technical Director
Phillip Archer
 Research Analyst
Jonathan Stacke
 Research Analyst
In This Report 
Macro Trends 1Trading Update 4Bitcoin Exchanges 9Entrepreneurs and Venture Capital 11Protocol Developments 14Mining Update 16Regulatory Environment 21Global Adoption 24Notable Events 27
www.TheGenesisBlock.com contact@thegenesisblock.com
 
Mid-Year Review and Outlook
July 15, 2013
1
The Genesis Block
Digital currency research and dataThe monetary freedomoffered by bitcoin isbecoming increasinglyvaluable.Global instability inrecent years has led to areduction in trust of many financialinstitutions.
Macro Trends
To understand bitcoin’s role in the first half of 2013, one must understand
the macro trends driving its recent adoption. All of the below topics haveexisted for years, but have recently re-emerged to the forefront of globalattention.
Capital Controls
Fr
eely transacting with one’s money is an ability many take for granted
until it is stripped from them. As governments and banks around the worldface economic desperation, global citizens are increasingly subject torestrictions on transfers and withdrawals from traditional bankinginstitutions.The fear of such actions has driven many to adopt bitcoin over the past sixmonths for its unique ability to be sent anywhere in the world for little orno cost, without an intermediary party able to restrict those capital flows.Highlighting this phenomenon are a number of specific instances this year.
Cyprus
As condition for receiving a much needed €10B bailout from the EU and
IMF, a number of Cypriot banks were required to shave large sums fromcustomer deposits and convert them into financial instruments to supportthe banks. To enforce this, the banks heavily restricted customerwithdrawals and transfers. Depositors in other EU nations and around theglobe saw this model as a potential template for future events, creatingone of the most important mac
ro events in bitcoin’s history.
 
F
IGURE
1
 
 –
 
2013
 
USD/BTC
EXCHANGE RATE
 
$10$60$110$160$210$260Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13
Cyprus bail-inannounced
 
Mid-Year Review and Outlook
July 15, 2013
2
The Genesis Block
Digital currency research and dataUncontrollable inflationis driving global citizensto seek alternatives.Bitcoin is immune topolitical manipulation of currency.Debasement of fiat bycentral banks has led tofear of inflation.
 Argentina
With the Peso seeing inflation rates as high as 20% and the Argentinegovernment restricting cross-border capital flows, bitcoin has become anincreasingly popular alternative. A recent meetup in Buenos Aires sawnearly 200 attendees interested in learning more about virtual currencies.Bitcoin now trades at a reported premium of 30% in Argentina, relative toglobal exchange rates.
Currency Wars
Allegations between governments of currency manipulation for tradeadvantages are nothing new to global economic and political discourse.America has levied such accusations against China for years, while
Germany has been similarly targeted as the EU’s industrial powerhouse
benefiting from the currency of a monetary union that is likely far weakerthan an independent Deutsche Mark.For the first time, the possibility of a currency not issued by a centralauthority or subject to manipulation for trade advantages has come to thelimelight. Many nations, most notably China, have repeatedly called for the
USD’s reign to c
ome to an end and bitcoin, if it reaches the scale manybelieve is possible, may be a means to that end. For a more in depthdiscussion on this topic, we recommend the following articles publishedearlier this year:
 
Monetary Easing
The continued mass monetization of government debt across the globehas led many to fear widespread inflation in coming years. As central banks
buy their own government’s debt, interest rates have been pushed to near
or below inflation with the intention of pushing wealth into risk assets tobolster the economy. While equity markets have risen to new highs, savershave been punished as the currency in their accounts is debased, withincreasing concerns of even greater inflation as financial markets continueto decouple from underlying fundamentals.

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