It was another hard fork day on May 15! Bitcoin Cash is creating a new blockchain with 32MB block size limits and added smart-contract functionality. This is the third hard fork that the Bitcoin Cash community has undergone in under a year, and declares their undeterred commitment to change whatever necessary to grow their blockchain’s transaction abilities. Bitcoin Cash strives to provide an inexpensive and fast medium of exchange for everyday payments.
A ‘hard’ fork refers to software changes that require the creation of a new blockchain from a previous one, whereas ‘soft’ forks can impute software updates without the creation of a new blockchain. A hard fork, therefore, is only implemented when there need to be changes made at the most fundamental level of the blockchain architecture; the consensus protocol layer.
A Bit of Background on Bitcoin Cash
Bitcoin Cash was born out of a hard fork with Bitcoin’s blockchain last summer. After much debate amongst various parties of the Bitcoin ecosystem over how to scale the Bitcoin network, a group of developers organized under the name ABC Bitcoin, wrote the code for a hard fork to create a new blockchain with 8MB block limits. On August 1, this new code was implemented to copy the entire Bitcoin block history onto a new network to begin mining its own transactions separately, as a distinct currency and under different mining parameters. Bitcoin Cash promises to be a peer to peer cash system. This system should be popular in areas where the traditional financial system has been unable to reach the unbanked.
In the case of last summer’s hard fork, not only was a new blockchain created, but also a new coin was introduced to the market to represent value exchanged on this new transaction ledger. However, not all hard forks create new coins. For example, Bitcoin Cash hard forked again last November to fix their algorithm adjusting mining difficulty because the network was producing wildly fluctuating hash rates.
To patch the system, various developer teams running different clients on the Bitcoin Cash blockchain agreed to implement a hard fork where they all copied the old ledger onto a new chain, with the software updated, and abandoned the old chain. Although technically November was also a ‘hard’ fork, it was obviously very different than the previous split in community generating not only a new blockchain, but also a new network, and a new coin.
However, it shouldn’t be understated that blockchain developers, including Bitcoin Cash, treat hard forking with caution, it’s a delicate process with potentially serious financial consequences. Though while many in the community treat hard forking with outright fear, this is a key part of how Bitcoin Cash operates, so the Bitcoin Cash community is not afraid of hard forks.
What’s New with the Latest Hard Fork?
This time around is more similar to the November hard fork but slightly different. Today’s fork neither creates a new coin, nor does it correct an existing problem, but rather strictly innovates in two ways. The first major change is the tripling of the block size limit from 8MB to 32MB that is a forward-looking adjustment to accommodate greater transaction throughput per block. I feel better that this block size growth is occurring now, while the usage of Bitcoin Cash still has a way to grow, rather than later when the network is at full throttle.
This the larger block size gives Bitcoin Cash some room to scale, something that other blockchains have been looking to tackle in other ways, e.g., Lightning Network and Proof of Stake. This makes Bitcoin Cash somewhat unique because it attempts to solve the scaling problem at the consensus protocol layer while maintaining the Proof of Work model.
However, larger blocks will not in effect grow the network regarding usage. It does, however, provide the ability for unprecedented growth. Growth in usage depends not on the block size but more on the community and businesses supporting Bitcoin Cash. Products, services and merchant adoption are key. After the block-size increase, the next advancement that Bitcoin Cash is putting forward is to add new and re-enable old, previously inactivated, machine-scripting operation codes, or more simply ‘op-codes,’ that give developers tools to create smart contracts.
These machine codes, called “Satoshi Op-codes” by the Bitcoin Cash community, allow developers to create different types of metadata implementations. By having the ability to call these functions, developers can create “colored coins” or representative tokens. These are tokens that can be tagged in a specific way to correspond to bonds, stocks, precious metals, commodities, and any physical or virtual object.
It is hard to say what might come out from this new functionality, but if we base our assumptions on what Ethereum has been able to accomplish from its second layer implementations, then I believe it will give Bitcoin Cash a lot of space for creative and productive ideas to blossom. To that end, we shall have to see what the developers of the Bitcoin Cash community do with these new functionalities and if the market decides to settle in this newfound block size that has yet be driven to scale.
New Diar Study: “Ethereum Touched Record Highs for It’s On-Chain Transaction Volume During December 2018”
According to a report released by analytics firm Diar yesterday, the total number of Ethereum on-chain transactions hit an all-time high last month (December 2018). To be a bit more specific, we can see that the number of tx’s scaled up to a mammoth 115 million by the end of December 2018.
On the above-stated matter, the folks over at Dair were quoted as saying:
“In terms of transaction count on-chain, the ‘supercomputer’ has found stability since October bobbing between 16–17 million monthly transactions.”
More On The Matter
At press time, it is worth mentioning that the number of on-chain ETH transactionsassociated with the United States dollar is currently at a 22-month low. For those who may not be aware, the U.S. dollar’s on-chain value last year lay around the $815 million marks (a figure that was pegged to be $1.1 billion in 2017).
In its report, a researcher for Diar further noted:
“A 97 percent drop in on chain transaction value from the peak in January versus December 2018 was, by and large, the cause of an 80 percent drop in Ethereum’s price.”
Chart Showcasing the Monthly ETH On-Chain Transaction Volume (Source: Diar)
Other Information Worth Considering
- Processing charges associated with the ETH network are unlikely to interfere with the ecosystem’s growth because the network currently offers users with some of the lowest fees for on-chain transactions.
- The recent ETH Constantinople hard fork was delayed due to the discovery of a security vulnerability (that could have potentially allowed for the occurrence of a ‘reentrancy attack’).For those of our readers who may not be aware of what a reentrancy attack is, it is essentially a vulnerability that allows potential hackers to steal altcoins from a particular smart contract by repeatedly requesting funds from the network (all while feeding the system wrong information about the miscreant’s real ETH balance).
- Final Take
In rounding off this article, it is worth remembering that once the Constantinople upgrade goes live, it will be able to introduce cheaper gas costs (transaction fees) for some of the central operations (primarily storage) that can be carried out within the Ethereum network.
China’s Tsinghua University Partners with Ripple to Create Blockchain Research Scholarship Program
From the moment that Ripple first launched its platform, it has been looking for ways to spread cryptocurrency and their own products throughout the industry.
They have even managed to cross a major milestone as they established over 200 partnerships involving 40 separate countries. One of their most recent partnerships involves Tsinghua University, in an effort to launch a new scholarship program that will educate students in China.
While China has held a strict anti-crypto stance, the same has not been true of blockchain technology.
The program, which will be called the Blockchain Technology Research Scholarship program, is the combined venture of Ripple and the Tsinghua University Institute of Financial Technology (THUIFR). This university is one of the top schools in all of China, though THUIFTR was not started until 2017. It has been a collaborative effort between Institute for Interdisciplinary Information Sciences, PBC School of Finance, School of Software and Law School at Tsinghua University.
As students participate in the program, they will learn about the ins and outs of blockchain technology. On Twitter, THUIFR claims to have already hosted a seminar, titled “Innovation and Development of Digital Currency and its Regulatory Path.”
The partnership with Ripple will allow the program to launch in China, focusing clearly on the international regulations that govern the blockchain. Ivy Gao, the Director of International Cooperation and Development for THUIFR, said,
“Most importantly, I believe, this program will greatly help with their future research or career in the field of blockchain technology.”
The SVP of Global Operation at Ripple, Eric van Miltenburg, said,
Ripple has created an impressive reputation for itself as a major player in the fintech world. There are multiple banks using its xRapid product as their own blockchain solution, with more being added as the word spreads. However, it is perhaps the unique philosophy of Ripple’s platform and products that appeals to China, considering the substantial difference from that of Bitcoin’s ideology.
Their token has become the second-most valuable crypto asset, which could be due to the pattern of collaboration between financial institutions, governments, and universities.
According to the most recent data provided by CoinMarketCap, Ripple is presently being traded at $0.3175, ranking second by market capitalization.
Was November the Last Big Bitcoin Sell-Off? Trader Expects Slow Grind in 2019
By CCN.com: According to a trader and crypto technical analyst, November 2018 may have been the last sell-off of Bitcoin and a long consolidation period is expected throughout 2019.
Since experiencing a steep 13 percent drop on January 10 from $4,036 to $3,502, the Bitcoin price has been relatively stable in a tight range in mid-$3,000.
What Does Low Volatility Mean For Bitcoin?
While it seems as if the price of Bitcoin has been volatile throughout the past two weeks, the volatility of the dominant cryptocurrency occurred in a tight range between $3,500 to $4,000.
No major movements below or above key support and resistance levels were recorded, preventing any meaningful short-term price movement.
One trader said that if the trend of relatively low volatility in a tight low price range continues, the sideways action of Bitcoin will extend throughout the year, resulting in a long consolidation period.
“The longer this sideways action takes place the more I think the bottom is in. November was one of the worst monthly candles in history. It’s very possible that was the last of the major selling and now we’ll have a consolidation period that lasts most of 2019,” the trader said.
On Sunday, Bitcoin recorded a six percent drop against the U.S. dollar in a 24-hour period from $3,700 to $3,470. The asset has since recovered above the $3,500 mark and based on the performance of the asset in the last 48 hours, Bitcoin is expected to demonstrate stability throughout the week.
Hsaka, a cryptocurrency analyst, said:
Inside Bar; Low that was taken out (3480) holding as support; Continue leaning neutral here, can’t short HTF support, will wait for a break (even moreso when confluent with that CME gap).
A slow grind upwards in the first two quarters of 2019 could allow Bitcoin to establish a proper bottom and a mid-term trend reversal. If the price of asset recovers quickly in a short time period, as seen in the major sell-off of cryptocurrencies in November 2018, it can leave the asset class vulnerable to a large short-term correction.
With events that are considered as catalysts to fuel the momentum of Bitcoin in the first two quarters of this year including Bakkt and Bitcoin exchange-traded fund (ETF) far from being materialized due to the shutdown of the U.S. government, it has become more likely for the cryptocurrency market to demonstrate a low level of volatility in the upcoming months.
How About Alternative Crypto Assets?
Historically, alternative crypto assets, especially low market cap cryptocurrencies, have tended to perform strongly against Bitcoin when the asset is in a sideways market.
However, as seen in the performance of tokens and other major crypto assets in the past 48 hours, the stability in Bitcoin is unlikely to trigger short-term rallies for assets with lower volumes and valuations due to the current conditions of the market.
Some analysts believe November to have been the last sell-off for Bitcoin and expect a several-month-long consolidation period to occur.