With bitcoin (BTC) back above $8,000 and set to accelerate higher, the last thing crypto needs is a fallout between the bitcoin developer and business community and the diehard Bitcoin Cash (BCH) believers.
Bitcoin fork BCH, whose supporters insist that it is truer to bitcoin’s original mission of digital cash, fears bitcoin people want to shut it out of merchant payments. All this as BCH continues to track bitcoin as does the rest of the market, maintaining the outperformance margin opened up at the beginning of April.
That performance difference, however, is unlikely to be because the market assesses BCH to be a better product than bitcoin.
Bitcoin is still king by a very wide margin
Far from it, judging by the network fundamentals of BCH vis a vis bitcoin.
Although Roger Ver, a vociferous supporter of BCH, is able to point to its low fees on the network compared to BTC, that’s not for a good reason.
Perhaps most dangerously for BCH, it is not very decentralised, with the secretive BTC top mining pool based in China recently accounting for more than 50% of the hashrate, although that has decreased now. At the end of April their was the case of an entity using the name “Satoshi Nakamoto” that had 40% of the hashrate.
BCH has made itself a six-monthly target for attackers
Then there’s the six-monthly schedule of upgrades which seem to have turned into an opportunity for attackers to make mischief. That’s what happened on 15 May, when a bug was exploited that led to empty blocks, 10 in all.
It didn’t end there.
On the same day it has been speculated that there was an aborted attempt by short sellers to crash the price, with 179,202 BCH or BAB (the ticker on Bitfinex for Bitcoin ABC aka Bitcoin Cash) borrowed on Bitfinex to take a leveraged short position. The build up in BCH borrowing was spotted by redditor frozen124.
It didn’t work out for the shorters as the price rose, but the timing was suspicious according to folks at coinspice.io who have been doing some digging around. The borrowing by the shorters took place 12 hours before the empty blocks attack.
Additionally, 110,000 that had been borrowed ended up not being used to take a position in the market, leading observers to surmise that whoever was behind the borrowing, was linked to the block attack and for some reason had decided against executing.
It was a costly miscalculation on their part because all that borrowing of BCH drove the interest rate demanded by the lenders to 30%, so the unallocated borrowing cost 79 BCH or $31,500 at the price at the time.
Someone’s got it in for BCH.
Roger Ver sure thinks so, or at least the Bitcoin.com twitter account does:
Someone opened millions of dollars worth of shorts against BCH just before the scheduled network upgrade. This was followed by a failed attack on the network. Could these two things be related? 🧐https://t.co/orbc9Slq5R
— Bitcoin (@Bitcoin) May 15, 2019
For those new to crypto, bitcoin.com is controlled by Roger Ver and stands accused by bitcoin people of deliberately confusing the difference between the one and only original and the BCH fork.
But let’s not take sides.
Payments Protocol – BCH and BitPay versus Bitcoin core?
Nevertheless, the network attack and the apparent co-ordinated but half-cocked shorting effort may partly explain the timing of an incendiary broadside against the Bitcoin “maximalist” community in an op-ed published on bitcoin.com by Tomislav Dugandzic,described as an “independent bitcoin cash (BCH) user and currency speculator“.
Titled “Core vs Gavin – Bitcoin Payments Are Being Bulldozed for Political Reasons, Dugandzic is convinced that Bitcoin core are out to sabotage the way payments are processed for nefarious political reasons – a serious charge indeed.
At the centre of the brewing dispute is the Payments Protocol, which was some tidying done by Gavin Andresen and Mike Hearn in 2013 in the form of bitcoin improvement proposal 70 (BIP70).
The changes allowed a payer to be messaged by the receiver (merchant) and introduced code to specifically guard against “man in the middle” attacks where a bad actor gets between payer and receiver and inserts the fraudster’s address.
For merchants, the payment protocol removed the inefficiencies with, to take one example, paying refunds.
In a nutshell then, BIP70 makes handling payments more efficient for merchants and provides a better user experience for payers.
It turns out that not all wallets are supporting BIP70 but most major popular ones do including those for Bitcoin Cash.
BitPay, the largest bitcoin payment processor and a handler of both bitcoin and BCH payments, imlements payments protocol and it says it has reduced errors in payments by 98.6%.
So that’s all good. What’s the problem?
BitPay is what Dugandzic describes as a BCH-friendly payments processor and it is this that he claims lies behind a “political” move by bitcoin core ( which controls the official bitcoin website, bitcoin.org) to stymie the prospects for BCH adoption.
Bitcoin developers have deprecated BIP70, which is coders speak that it is being to be phased out.
Something of a war has broken out between those who want to keep BIP70 and others who want to revert to the earlier BIP21 for handling URIs (Uniform Resource Identifiers) and encoding of payment request information.
Samurai wallet is focused on by Dugandzic as an example of the anti BIP70 crowd as it came up in a video featuring Andreas Antonopoulos, who could be described as bitcoin royalty as the author of the seminal The Internet of Money.
Antonopoulos is what Dugandzic sees as a typical (as in political) “Bitcoin Core advocate”.
Here’s a quote from the op-ed, which provides a flavour of how these disputes quickly turn nasty:
The Samurai wallet team tweeted that they approve of Bitcoin Core advocates “viciously attacking” Bitcoin Cash advocates and that Bitcoin Cash advocates are “lunatics” and “frauds.” That’s a pretty strong choice of words to describe a group of people that have a difference of opinion regarding how Bitcoin should scale.
Bitcoin will not bend the knee for you, your business, or anyone else. Bitcoin will not compromise. That's a feature not a bug.
You lunatics forked yourself off, now you can deal with the consequences and the "vicious attacks". https://t.co/5DGoppwcIZ
— Samourai Wallet (@SamouraiWallet) February 8, 2018
Thin line between welcome competition and senseless tribalism
For mere mortals these disputes can all seem arcane but unfortunately they are important tests of the maturity of the space regarding cooperation on standards and resolving disagreements over competing technology solutions in the absence of an industry policeman.
The way these issues are fought out does nothing to help crypto adoption, be it bitcoin, one of its forks or one of the myriad other competing crypto projects.
Those critical of BIP70 seem to be suggesting that it cedes too much power to the likes of BitPay, which some presumably think is too closely aligned with the BCH camp.
Confusion in the marketplace and at the level of users actually trying to buy stuff with bitcoin and Bitcoin Cash, is no good for anyyone.
The BCH price may well continue to outperform bitcoin and even catch up on the former’s market cap, as it briefly seemed to be closing in on flippening BTC in November 2017.
But as BCH continues to motor, up 17% today at $425 it will be doing so probably more because of brand association with bitcoin rather than because of its technological superiority or, for that matter, the vitriol its supporters (and to be fair its detractors too) trade in.
Bitcoin has some weak points, like scaling. But governance and general inter-coin relations and its breakdown – which is how Bitcoin Cash came into being in the first place and then Bitcoin SV – is a headache for the crypto ecosystem, not just bitcoin or BCH, and it shows no signs of going away.
Alex Krüger Warns Bitcoin Approaching Major Line of Resistance – Plus Ethereum, Ripple and XRP, Litecoin, Stellar, Tron, Cardano
From analysis on the potential path ahead for Bitcoin to the rollout of a new developer site for the XRP ledger, here’s a look at some of the stories breaking in the world of crypto.
Economist and crypto analyst Alex Krüger is mapping out the lines of resistance and support for Bitcoin. According to Kruger, the $10,000 mark is a crucial psychological line on the horizon.
“I use Bitmex for levels (and charting), as that’s where most of the bitcoin-USD liquidity is. The first level is a fib, not as meaningful IMO as prior highs and key psychological levels (e.g. 10K).”
Before $10,000, Krüger says he’s eyeing $9,600 as the most immediate technical hurdle for the bulls and $9,000 as the first line of support.
Looming ‘Supply Shock’ Behind Bitcoin’s 138% Rally, Says VC Executive – Plus Ethereum, Ripple XRP, Litecoin, Tron, Augur, VeChain
From new analysis on Bitcoin’s big rally to a new potential launch date for Ethereum 2.0’s genesis block, here’s a look at some of the stories breaking in the world of crypto.
Anticipation of a supply shock in 2020 is likely driving Bitcoin’s 138% rally in 2019, according to Alyse Killeen, a partner at the investment group StillMark.
Killeen, a fellow at the Singapore University of Social Sciences, told Bloomberg Technology that she believes Bitcoin’s upcoming halvening is the number one reason for the surge.
“What I think might be happening is an anticipation of a coming supply shock in 2020. So what we’re looking ahead to is a halvening event. The way that new Bitcoin is introduced to the market is through a process called mining and the mining reward decreases by half every few years. And so in 2020 we’ll have much less of a daily supply of Bitcoin that we do now…
“While we’re looking ahead to the halvening and the supply shock, we’re also seeing a greater demand for Bitcoin and new on-ramps for familiar and conventional sources, so there’s an anticipation that there will be a broader group of consumers that have access and appetite for Bitcoin.”
Killeen says there have recently been “exciting progressions” in terms of scaling the currency up to a level where it can be used for more purchases.
“In 2019 we’re actually seeing higher layer infrastructure development rapidly progressing and so by that, what I mean is, the development of Lightning Network and the quick adoption from an early-user set of Lightning Network, as well as entrepreneurs building on top of Lighting Network, and so that will provide scale and has already. We’re looking at the introduction of sidechain technology including Blockstream’s Liquid network which gives us a new breadth and depth of use cases of the blockchain.”
The StillMark partner also believes Bitcoin stands alone among cryptocurrencies in terms of “stability, security and dependability,” and that it will serve as the main store of value in the crypto ecosystem going forward.
Justin Drake, a researcher at the Ethereum Foundation, says ETH 2.0 genesis block could launch at the beginning of next year.
“Looking at a target Genesis date toward the end of 2019 could be realistic. One thing that could work well is the third of January 2020, so… that comes after the December holidays, which are generally quieter, and it would be the 11th anniversary of the Bitcoin genesis.”
Ripple and XRP
In a new interview, Ripple’s general counsel Stuart Alderoty talks about Ripple’s efforts to work with regulators.
Alderoty told Law.com that Ripple is constantly engaging with representatives around the world to teach them about blockchain and cryptocurrency.
“We have government affairs, full-time representatives in the U.S., in Europe, in Asia Pacific. We regularly meet with regulators to educate them, to get them more comfortable with what we’re doing and trying to do, which is to solve for the very real-world problem of being able to move money cross-border without a lot of friction and expense.
We’ve also sat on the Federal Reserve Faster Payments Task Force. We’ve hosted a summit for central banks to learn more about blockchain. We regularly speak on panels. We’re often invited by regulatory organizations to come speak or serve on panels. I would say we’ve engaged with more than 50 regulators and policymakers worldwide on this issue.”
Litecoin’s halving is now 50 days away, according to a countdown clock from CoinGecko.
The Litecoin block reward for miners will decrease from 25 to 12.5 coins, a difference in value from about $3,542 to $1,726, according to current market prices.
Tron founder Justin Sun is moving the location of his much-publicized $4.6 million lunch with famed investor Warren Buffett to the “heartland of tech.”
Sun says the meeting will happen in San Francisco for the first time in its history.
“We decided to move this year’s lunch to a restaurant in the Bay Area to further shine the spotlight on GLIDE’s amazing charitable efforts. I’ve also said we want to bridge the gap between the world of blockchain and institutional investors. Nowhere is that goal more apt than in the heartland of tech.”
Augur is working to explain how and why prediction markets work.
The company has released a thought experiment explaining the mechanics. It also plans to publish a future post on how decentralized prediction markets operate.
OceanEx has released an alpha version of its crypto exchange and asset management platform on iOS, built on the VeChainThor blockchain.
Features include trading pair recommendation for new users and fast tracks for deposits and withdrawals.
Anthony Pompliano vs Peter Schiff: Facebook’s GlobalCoin takes centre stage as Twitter blows up with debates
The entry of mainstream companies into the world of cryptocurrencies has been seen as a marker for the mass adoption of digital assets. With the advent of Facebook’s GlobalCoin that has become a reality as the social media giant partnered with several tech giants like Vodafone and Spotify to ensure its integration into the financial system.
The announcement of the cryptocurrency further split the proponents of the industry into two factions: one that supported the coin and one that was vehemently against the idea of Mark Zuckerberg launching a digital asset. This rift was out in the public when Peter Schiff, CEO of Euro Pacific Capital and Anthony Pompliano, the CEO of Morgan Creek Digital Capital locked horns on the GlobalCoin topic. Schiff had tweeted:
“Facebook’s new cryptocurrency “Libra” is bad news for Bitcoin. Facebook will target the very market Bitcoin is counting on for growth, the unbanked in nations with high inflation. Libra will be stable, and much easier and cheaper to use as a medium of exchange than Bitcoin.”
Schiff’s comments reflect the same sentiment shared by many in the space who speculated that Bitcoin’s speculative nature will result in its downfall. Pompliano, however, had a different opinion, stating:
“False. In fact, the exact opposite is true. Like restaurants on an intersection, the more available, the better for each of them. If you’re so confident, let’s bet 10 BTC on whether Bitcoin hits $100,000 in the next 5 years? Should be easy decision to put your money where your mouth is if you truly believe what you’re saying :)”
Schiff responded by saying that the bet was skewed against his favor because he believed Bitcoin also has the option to fall to a $100, reducing the bet prize to just $500.”
Andreas Antonopoulos, the author of Mastering Bitcoin, had taken the debate to banks, claiming that financial institutions should be very afraid of GlobalCoin. He, however, was confident that the cryptocurrency would not threaten the slots held by Bitcoin, tweeting:
“Anything that’s created by any centralized organization that is subject to specific laws, cannot achieve any of these five pillars. And the reason they cannot achieve is that the law prevents them from doing so.”