Think carefully before buying Bitcoin – and don’t buy the ‘safe haven’ claims


Lee Smales, University of Western Australia

The sharp rise and subsequent fall in Bitcoin’s value places it among the greatest market bubbles in history. It has outpaced the 17th-century tulip mania, the South Sea bubble of 1720, and the more recent Japanese asset price and dot-com bubbles.


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The rapid price rise garnered attention from an increasing number of academics and investment advisers. Some have suggested that Bitcoin improves portfolio performance and can even be used as a potential “safe haven” asset in place of gold.

Our work finds that much of this research is flawed and overlooks some important attributes that any investor should consider before allocating funds to such a speculative investment.

This is particularly relevant if investing in Bitcoin is rationalised as a prospective safe haven in times of market turmoil.

Hard to value

The first attribute investors consider is how to value Bitcoin. Typically, assets are valued based on the cash flows they produce. Bitcoin lacks this property.

This leads to ongoing debate as to the true value of Bitcoin and other cryptocurrencies. Some, such as the Winklevoss twins and other Bitcoin entrepreneurs, believe the price will soar far higher. Others, including Nobel prize winner Eugene Fama and esteemed investor Warren Buffett, believe the real value is closer to zero. Another Nobel winner, Robert Shiller, suggests the correct answer is “ambiguous”.

There is even wide variation in price across the various Bitcoin exchanges. This is common in fragmented markets and makes it difficult for an investor to find the best market price at any point in time – a process called price discovery.

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High price volatility

Bitcoin prices also have a high level of variation (volatility) when compared to other possible investments including bonds, stocks and gold. Even tech stocks such as Twitter, which are considered relatively volatile, are found to have less price variation. This adds to the difficulty investors face when trying to value Bitcoin and any portfolios that contain it.

This is of particular concern given the large daily losses that Bitcoin has experienced in its relatively short life. The largest one-day decline experienced by the popular S&P500 index since 2011 is 4.2%. Bitcoin has had nearly 200 days that were worse (and over 60 days worse than the biggest decline in the gold price of 10.2%).

Put another way, Bitcoin has had 200 days worse than the worst day on the stock market. This hardly seems like an enticing investment for most.

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Low liquidity

Investors should also consider the ease with which they are able to buy and sell any assets in which they invest. One method used to measure this liquidity attribute is the bid-ask spread – the difference in the price at which one is able to buy and sell the asset.

More liquid assets have a narrow bid-ask spread. Bitcoin’s bid-ask spread varies from one exchange to another, but in general it is much larger than for other assets.

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While bid-ask spreads provide one measure of implicit trading costs, investors also consider the explicit transaction fees they are charged when trading. Transaction fees for trading traditional investments are typically well known and have trended down over time.

While Bitcoin fees have recently declined, they have proven to be highly variable, ranging from over $30 to under $1. The time taken to process a transaction can also be greater than 78 minutes. This is much longer than for stocks or bonds and creates another layer of uncertainty for investors.

Only for the most risk-loving

Bitcoin is harder to value, more volatile, less liquid, and costlier to transact than other assets in normal market conditions. Potential investors should be wary and carefully consider whether such highly speculative assets are appropriate additions to any portfolio.

The ConversationGiven safe havens are typically in demand during financial crisis, when markets are more volatile and less liquid, it is highly unlikely that Bitcoin is even worth considering as a safe-haven asset.

Lee Smales, Associate Professor, Finance, University of Western Australia

This article was originally published on The Conversation. Read the original article.

Somali militants chase Christians who’ve fled, beat them


After months of evading his pursuers, they finally caught up with him.

Voice of the Martyrs Canada confirms that on August 21, Islamic militants in Addis Ababa, Ethiopia found Mohamed Ali Garas, a prominent Somali church leader and convert from Islam, and beat him severely, reports MNN.

Five years ago, Garas fled his Somali homeland. VOMC’s Greg Musselman says Garas he sought refuge in Ethiopia because "he was involved in church work there as a pastor. Attempts were made on his life. He’s been threatened, he’s been arrested."

On the night he was attacked, he was walking home when he heard two men calling his name. He turned to see what they wanted, and they attacked, fleeing only when a neighbor arrived on the scene. Although the beating was severe, Garas survived.

The attack itself is unsettling, explains Musselman because "they [extremists] are not just leaving it back home; they’re taking it wherever they find these people that have converted to Christ from an Islamic background."

This incident shows that the persecution is not contained within Somalia’s borders. For al Shabaab, they’re ramping up to an all-out war meant to eradicate Christianity.

Shortly before a deadly suicide bombing attack on August 24, an al Shabaab spokesman was quoted as saying: "The operation is meant to eliminate the invading Christians and their apostate government in Somalia. The fighting will continue and, God willing, the mujahideen will prevail."

Somali Christians living in Ethiopia have come under increased attacks from Somali Muslims in recent months. That’s a trend that is likely to continue. Musselman says, "When you understand a little bit of the group like al Shabaab…you’re not surprised that they will go to any length. They’re thinking is that ‘the only kind of a Somali Christian is a dead one.’"

International Christian Concern notes that a Somali pastor in the Ethiopian capital has described this latest attack as "an apparent attempt to scare the Somali Christian community in Addis Ababa who considers Ethiopia a safe haven from religious persecution."

Musselman notes that prayer is a powerful recourse. "Lord, our brothers and sisters in Somalia are such a small group. They’re trying to be faithful. There are other Somalis that have left the country; they’re trying to be faithful, and they continue to suffer attacks, and it’s difficult for them. But we ask You, Lord, to move on the hearts even of the enemies that are persecuting these believers, that they would have the freedom to share the Gospel of Jesus Christ."

Report from the Christian Telegraph

Republic of Somalia’s jihad-related chaos and violence


In a report that comes as no surprise to many counterinsurgents, officials from the United Nations released a sharp rebuke of war-torn Somalia’s government. In its report, the UN officials called the Somali security and federal transitional government "ineffective, disorganized and corrupt" despite international assistance, reports Law Enforcement Examiner.

"Despite infusions of foreign training and assistance, government security forces remain ineffective, disorganized and corrupt — a composite of independent militias loyal to senior government officials and military officers who profit from the business of war and resist their integration under a single command," the report reads.

"Efforts to restore peace and security to Somalia are critically undermined by a corrosive war economy that corrupts and enfeebles State institutions… Commanders and troops alike sell their arms and ammunition – sometimes even to their enemies. Revenues from Mogadishu port and airport are siphoned off. Some government ministers and members of parliament abuse their official privileges to engage in large-scale visa fraud, smuggling illegal migrants to Europe and other destinations, in exchange for hefty payments," states the UN report.

According to officials, the extensive report should be released in New York City this week so members of the UN Security Council may peruse the contents.

"During the course of the mandate, government forces mounted only one notable offensive and immediately fell back from all the positions they managed to seize," the report read. "The government owes its survival to the small African Union peace support operation, AMISOM, rather than to its own troops."

During the 1990s, a group of Saudi-educated, Wahhabi militants arrived in Somalia with the aim of creating an Islamic state in this dismal African country. Also, the renowned Al-Qaeda established an operations base and training camp. They would routinely attack and ambush UN peacekeepers. In addition, they used Somalia to export their brand of terrorism into neighboring Kenya.

Leading members of Al-Qaeda continue to operate, mostly in secrecy, in Somalia and have built up cooperation with some of the warlords who control food, water and medicine. And the people of Somalia starve, mourn and die.

Since 2003, Somalia has witnessed the growth of a brutal network of Jihad with strong ties to Al-Qaeda. In fact, when the US forces faced a bloody battle in 1995 during what became known as the Black Hawk Down incident, it was Al-Qaeda joining with a local warlord who killed and wounded US special operations soldiers.

Somalia has been without a functioning national government for 14 years, when they received their independence from Italy. The transitional parliament created in 2004, has failed to end the devastating anarchy. The impoverish people who live in the ruined capital of Mogadishu have witnessed Al-Qaeda operatives, jihadi extremists, Ethiopian security services and Western-backed counter-terrorism agents engaged in a bloody war that few support and even fewer understand.

In an incident that gained American press attention, Somali-based terrorists armed with rocket-propelled grenades launched an unsuccessful attack on Seaborn Spirit as it rounded the Horn of Africa with American, British and Australian tourists on board. For unexplained reasons, the attack is being treated as an isolated incident and the terrorism link is being all but ignored by journalists. The term "pirates" is routinely used with only a few reporters calling the attackers "terrorists."

The ship came under attack during the early morning hours when the heavily armed terrorists in two speedboats began firing upon the ship with grenade launchers and machine guns. They assailents were repelled by the ships crew who implemented their security measures which included setting off electronic simulators which created the illusion the ship was firing back at the terrorists.

According to passenger accounts of the attack, there were at least three rocket-propelled grenades or RPGs that hit the ship, one hit a passenger stateroom without inflicting injuries.

When a Somali Federal Government was established in 2004, it remained a government in exile since the capital of Mogadishu remains under the control of a coalition radical Islamists who’ve instituted Sharia law and a justice system known as the Islamic Courts Union.

In the winter of 2006, Al-Shabaab initiated a large-scale insurgency using the same tactics as al-Qaeda, Hamas and Hezbollah, complete with assassinations of government and military officials and suicide bombings targeting aid workers and transitional government officials.

In their report, UN officials blame the government for its failure to control Somalia and point to a lack of professional commanders, and a military that resembles an amateur militia rather than a professional Army.

The UN report points out that The Somali National Security Force was meant to have 8,000 soldiers fully trained and deployed. However, as of the beginning of the New Year, there are fewer than than 3,000 fully trained and equiped soldiers.

"One of the reasons the Islamic Courts Union and Al-Shabaab have both been somewhat popular is because people were sick of clan-based politics," according to the UN report.

Western governments fear that Somalia’s instability may provide a safe haven for international terrorist groups. Al-Shabaab members have cited links with Al Qa’ida although the affiliation is believed to be minimal. The group has several thousand fighters divided into regional units which are thought to operate somewhat independently of one another.

The US has launched selected air attacks against Al-Shabaab leaders thought to have ties to Al Qa’ida, but analysts say this has only increased their support among Somalis.

The Western-backed Ethiopian military invaded Somalia in 2007, but many analysts believe this too augmented Al-Shabaab’s military campaign against the transitional government. The Ethiopians withdrew in January of last year after over 16 months of Al-Shabaab attacks on its forces.

The transitional government is preparing a major military offensive to retake the capital Mogadishu from Al-Shabaab and various other militant groups in the coming weeks.

Report from the Christian Telegraph 

Taliban Ready to Negotiate in Afghanistan


According to reports coming out of Afghanistan, the Taliban may be ready to negotiate so that it can be reintegrated into Afghan society – including the government of the country. Even Western military commanders in Afghanistan suggest that this may be the way forward after years of war.

I have to say that I have some serious concerns about this policy should it become the one that is taken by both Western military forces (and obviously the governments behind these forces) and the Afghan government.

Firstly, what ever happened to not negotiating with terrorists? Does not this sort of policy suggest if terrorists hold out long enough there will be opportunity for negotiations and rewards for these negotiations? I don’t believe that this is a good message to send at all.

Secondly, was not one of the aims of the invasion of Afghanistan to drive the Taliban from power and thereby ensure that there was no safe haven for Al Qaeda in that country? Would not this policy provide a possibility for Al Qaeda to regain a lost safe haven in Afghanistan – perhaps not immediately, but in the long run – especially if the Taliban again control the country?

Thirdly, what happens with the Taliban problem in Pakistan should the Taliban gain some form of legitimacy in Afghanistan? Wouldn’t the Pakistan problem become even more difficult, especially given the close ties of the Taliban with Al Qaeda?

Just a few thoughts on the issue. There are plenty more.

COLOMBIA: LEFTIST GUERRILLAS THREATEN, KILL CHRISTIANS


Pastors are issued warnings in north; evangelists murdered in southwest.

LOS ANGELES, March 18 (Compass Direct News) – Having been sentenced to die by leftist rebels for holding Christian worship services in 2006, a pastor in Colombia’s northern department of Arauca took seriously the death threats that guerrillas issued on Friday (March 13), according to Christian support organization Open Doors.

The rebels from the National Liberation Army (ELN) phoned a pastor of Ebenezer Church in Saravena at 5:30 a.m., telling him to meet them at a site on the Arauca River at 7 a.m. When the pastor, who requested anonymity, arrived at the landing, the guerrillas took him by canoe to the other side of the river – into Venezuela – then drove him to a guerrilla camp some 40 minutes away.

For the next three hours, the rebels warned him that area pastors have three options: cooperate with the revolutionary cause of the guerrillas, leave or die.

They warned him that pastors must not preach to ELN guerrillas – the Christian message of peace contradicts their military objectives – and could not support Christian political candidates without their permission.

“We do not want pastors and those attending their churches to participate in politics,” they told the pastor. “We do not want evangelicals in politics, because you do not support our ideals. We have nothing in common with evangelicals.”

The guerrillas said the ELN does not object to pastors preaching within church walls, but that the congregation must not talk of politics, war or peace. Before letting him go, they told him that the ELN will show no compassion on church members if they continue to disobey those directives.

Such threats were not new to the pastor. In 2006, Open Doors sources said, he and his family had to leave behind the church he pastored in Fortul village and much of their belongings after guerrillas threatened to kill him for preaching and leading Christian services in both a home and a worship building.

ELN forces took control of the area in 2007 and quickly declared Christian worship illegal; by January 2008, the guerrillas had closed seven churches and prohibited preaching of Christ in rural areas.

According to the U.S. Department of State’s International Religious Freedom Report 2008, the Human Rights Unit of Colombia’s Prosecutor General’s Office is investigating killings in past years of 14 clergy members believed to have been targeted because they were outspoken critics of terrorist organizations. The Presidential Program for Human Rights reported that nearly all killings of priests by terrorist groups could be attributed to leftist guerrillas, particularly the FARC.

“Catholic and Protestant church leaders noted that killings of religious leaders in rural communities were generally underreported because of the communities’ isolation and fear of retribution,” the state department report notes. “Religious leaders generally chose not to seek government protection because of their pacifist beliefs and fear of retribution from terrorist groups.”

A human rights organization affiliated with the Mennonite church, Justicia, Paz y Acción No-violenta (Justapaz), asserted that guerrillas, former paramilitaries, and new criminal groups equally committed violence against evangelical church leaders, according to the state department report.

Leftist rebels opposed to Christian peace teachings continue to issue threats of violence against pastors and Christian leaders in various parts of Arauca department. On Feb. 28, ELN guerrillas took the pastor of another church to a guerrilla camp in Venezuela. Upset that pastors were taking advantage of the presence of the Colombian army to defy the guerrillas – publicly preaching Christ and using their pulpits for preaching peace – the rebels accused Christians of not helping with social projects.

“Preach inside churches, but do not let them die – worry how to save those that are with you,” one guerrilla told the pastor, who requested anonymity. “We will have to take drastic measures with pastors so they obey again.”

The pastor first had contact with rebels 12 years ago, when Marxist members of the Revolutionary Armed Forces of Colombia (FARC) held him for several days.

In Puerto Jordán, a municipality of Arauquita, last Dec. 9 presumed leftist rebels gave 40-year-old pastor Rodolfo Almeida eight days to leave. Open Doors reported that a young man came to his house at 8:30 at night and asked for his wife. Surprised that stranger would ask for her at that hour, Almeida asked why he wanted to see her. The young man then told him that he had eight days to leave town or his life would be threatened.

The stranger refused to tell Almeida what organization he was with. He only reminded him that he had been warned. The pastor had received similar threats from ELN rebels in 2007, and by the end of 2008 he and his wife decided to leave with their three children. Almeida had served for more than two years as co-pastor of Ebenezer Church in Arauquita.

Two unnamed Christian mayors in Arauca have also come under threat from the guerrillas, and on Feb. 15 a councilman was killed. Since they took office in January 2008, the mayors of Arauquita and Saravena have been attacked by ELN rebels several times, according to Open Doors. They have drawn the ire of the guerrillas because they cannot be bought as their predecessors were, and they refuse to engage in the rebels’ illegal activities.

“In our lives we have lost the privileges of an ordinary person,” the mayor of Arauquita told Open Doors. “Now we are military targets. God brought me here, but sometimes I have wished not to continue, because being a Christian in a context like this where we live has a very high price.”

Last year, he added, guerrillas killed seven Christians in Arauca department. “Some of them were public officials, others were leaders or simply people recognized by their testimony as believers in Christ,” he said.

Open Doors reported that Councilman Francisco Delgadillo, a Christian who had received threats from the ELN guerrillas, was killed as he returned to his home on Feb. 15.

 

FARC Territory

Across the river, Venezuela serves as a safe haven for the ELN, which the U.S. Department of State has designated as a terrorist group. With the approval of Venezuelan President Hugo Chávez, the guerrilla forces use the country as a base from which to move into Colombia’s oil-rich Arauca department.

Although the ELN has been at odds with the Marxist FARC, in Arauca the two rebel groups co-exist without conflict; from their bases in Venezuela, according to Open Doors, the two groups amicably share paths and roads.

FARC guerrillas control the southwestern department of Huila, where last November four Christians were killed. Open Doors reported that all four belonged to the Alianza Cristiana church of Santana Ramos. Farley Cortés was killed on Nov. 5 in Plumeros village, Hermes Coronado Granado was killed on Nov. 8 in Santana Ramos, and 10 days later a married couple, Dora Lilia Saavedra and Ferney Ledezma, were also killed there.

Guerrillas seized Saavedra, 40, and the 35-year-old Ledezma from the school where Saavedra taught on Nov. 18, bound them on the floor of an old house and shot them several times. The FARC guerrillas had taken their three children, ages 3, 5 and 12, along with them and made them wait at a nearby house within hearing of the shots. The couple, married for five years, were known for proclaiming Christ in the village that borders the farm they owned.

Their pastor, Hernan Camacho, has moved with his family out of the area after receiving death threats.

The FARC accuses the families of Camacho, his brothers and Saavedra of refusing to follow its ideology, Pastor Camacho told Open Doors. “[The guerrillas] say that we, the evangelical ones, are their worst enemy because we teach the people not to take up weapons,” he said. “They accuse us of lulling the minds not to claim our rights against the government … the guerrillas say that it is our fault that the people prefer to continue with the church and not to join them.”

Motives for the killings are still under investigation, but Open Doors reported that Huila is in a zone historically known for systematic persecution of the church by guerrillas. In July 2007, pastor Jael Cruz García, 27, and another pastor, 63-year-old Humberto Méndez Montoya, were murdered in the village of La Legiosa in northern Huila. In 2002, two other pastors, Abelardo Londoño and Yesid Ruíz, were shot and killed in the same area.

Having lost three key leaders last year and been pushed out of most major urban centers by government forces, the FARC has embarked on a terror campaign to make its presence known in cities, according to The Christian Science Monitor. In the Huila capital of Neiva, on March 6 a bomb explosion damaged a hardware store and nearby businesses, according to the newspaper, and on Jan. 16 suspected FARC rebels were responsible for a car explosion at a shopping mall.

Report from Compass Direct News

IRAQ: COURT RELEASES CHRISTIAN GIRL SENTENCED FOR MURDER


Prison term reduced for abused niece who defended herself; family fears retaliation.

ISTANBUL, November 17 (Compass Direct News) – In prison at the age of 14 for having fatally stabbed her uncle in northern Iraq, Asya Ahmad Muhammad’s early release on Nov. 10 thanks to a juvenile court decision was overshadowed by fear of retaliation from her extended Muslim family.

Also known as Maria, the now 16-year-old Muhammad was sentenced to five years in prison for killing her paternal uncle in self-defense on July 9, 2006 when he attacked her, her mother and little brother at their family kitchen utensil store in the outskirts of Dohuk. The uncle had cut her mother with a knife and was fiercely beating them for converting to Christianity and for “shaming” the family by working in public when Muhammad stabbed him.

Clearing her of an original conviction for premeditated murder, the Erbil high court last year had reduced Muhammad’s sentence from five to three-and-a-half years, upholding an earlier decision that she was guilty of killing her uncle though she acted in defense of herself and others.

Muhammad’s lawyer, Akram Al-Najar, told Compass that following his appeal to the Dohuk juvenile court, the court earlier this month agreed to reduce her sentence to two years and four months on the basis of her good conduct and having served nearly three-quarters of her three-and-a-half year sentence.

“She deserved to be released since her behavior and attitude was excellent,” said Al-Najar. “That is why the court accepted my request and decided to reduce her punishment to two years and four months.”

Local Christians have commented that Muhammad’s sentence was light, considering that it was culturally acceptable for an uncle to beat his niece. Her jail time also meant that she didn’t have to fear reprisal attacks from her relatives.

But Muhammad’s release from prison now means a possible retaliation from extended family members for her uncle’s death, said Al-Najar.

“I am not sure she is safe right now, especially after her release, since there are still people intent on gaining revenge,” said the lawyer.

 

Father Threatened

Muhammad’s father, Ahmad Muhammad Abdurahman, who converted in 1998 while working in Beirut, said that in the last week family members have called him twice telling him his days of joy are numbered.

“My sisters called me, and my brother’s wife called me also [and said], ‘You are a shame. Don’t be happy in your family; we will never let you be happy in your family,’” Abdurahman told Compass.

He explained that his change in faith was grounds for an “honor” crime in his Kurdish family, and even more so now that blood had been shed. His father, a Muslim cleric, was enraged by Abdurahman’s conversion. Abdurahman’s deceased brother, Sayeed, on five occasions had tried to kill him and had also burned down his house. Abdurahman has seven brothers.

Abdurahman said that since the release of his only daughter, he has left his old home but remains in the town of Dohuk, unsure of what the next step is for his family. He said his only hope now is to come up with the “blood money” necessary to buy peace with his family for his brother’s death. The court has set this amount at 10 million Iraqi dinars (US$8,670).

Unable to keep a stable job, Abdurahman is not sure he will be able to come up with the amount, nor whether it will suffice to keep his family safe within the borders of Iraq.

“I just pray that God gives me provision to take my daughter and family to a different country,” he said. “We have now moved to a different house, but I am afraid they will come and contact me again. I want to keep my daughter and wife safe, but I don’t know how I will manage to do so.”

In a phone interview with Christian support organization Open Doors, Muhammad said her time in prison had been difficult and she was thankful to be back with her family.

“I am very glad because God gave me a miracle, and I am very happy to meet my mother and my father,” she told a representative of the organization. “My hope [is] in Jesus; I always prayed for God to comfort my mother [until] I see my mother, I see my family again.”

 

Relative ‘Safe Haven’

Despite the recent waves of violence in Mosul, south of Dohuk in northern Iraq, Abdurahman said that the Kurdish part of the country is still considered a safe haven for Christians, where many Christian families from Mosul have also fled in recent weeks

“Many Christians come here from Mosul and Baghdad, and the Kurdish government does a good job to protect Christians,” he said. “That’s what I see.”

He noted, however, that according to Iraqi law it is still not possible for Iraqis to change their religion on their national identification cards.

“It is my dream that one day I will be free to change my ID card,” he said. “My card now writes ‘Muslim.’ But my faith is Christian.”

Abdurahman asked for prayer as he looks for a job or a way to get out of Iraq.

“I don’t know what will come from God,” he said. “I’m not worried about that, but my family needs help, they need food and things … I’m just thanking God that he brought my sheep, my daughter, into the family again.”

Report from Compass Direct News