As we all know, Bitcoin Cash terrified the markets by splitting in two this month. Miners went to war, threatening to launch attacks on each other and hold the network hostage.
It showed a possible weakness in “mining” cryptocurrencies in that miners can exert a huge influence over the network.
It’s no coincidence that Proof-of-Work mining cryptocurrencies like ethereum, bitcoin, and bitcoin cash fell harder than others.
XRP, which uses a consensus protocol instead, held its value better during the crash, as did others with a consensus network like Stellar (XLM).
As market prices fall, traders look to put their money in projects with real-world use. Ripple has been on a headline-grabbing spree this year, shouting about their high-profile partnerships with banks like Santander and American Express.
While Ripple is shouting from the rooftops about XRP, developers at Ethereum have got their head down. Ethereum enjoyed all the attention in 2017, but the team is now quietly working on the next upgrade, dubbed Ethereum 1x, due next year.
It doesn’t necessarily mean activity or innovation has died down on Ethereum, it just means there are fewer headline-grabbing announcements.
4. The Demise of ICOs
If you wanted to invest in an ICO (initial coin offering) last year, you typically needed to fund it with ether. Now that some ICOs have lost as much as 98% of their value, that excitement has vanished.
Not only is there a lack of ICO hunger, some ICOs are reportedly liquidating their ETH to meet costs. As the premier platform for ICOs, Ethereum is taking a bigger hit than many other major cryptocurrencies.
What do you think?
Is the XRP flippening permanent? Will Ethereum’s big upgrade trigger a resurgence? Leave your comments below!
A version of this article first appeared in our exclusive newsletter. If you’d like Block Explorer’s cutting-edge analysis before it hits our website, sign up now.
The world’s first fully-regulated crypto ETP (exchange-traded product) will launch in Switzerland this week, allowing people to trade a basket of cryptocurrencies including bitcoin, ethereum, XRP, bitcoin cash, and litecoin.
It’s important to point out that, contrary to some misleading news reports, this is not the much-hyped bitcoin ETF (exchange-traded fund).
The cryptoverse is eagerly awaiting the approval of a bitcoin ETF, with many calling it the future catalyst for a bitcoin price surge. But how is this Swiss crypto ETP different? And what exactly do you need to know?
What is a Crypto ETP?
An ETP is an acronym for “exchange-traded product.”
In simple terms, an ETP tracks the price of an underlying asset (or a basket of assets), like gold, stocks, and now cryptocurrencies.
The beauty of ETPs is that they are simple and cheap. With this new ETP, investors don’t need to buy cryptocurrencies directly or figure out how to store them. They simply buy the ETP from their broker and instantly get exposure to a basket of five cryptocurrencies.
The ETP is traded on the Swiss stock exchange and can be bought through a traditional stockbroker.
In essence, they’re more accessible to institutional investors which may lead to more money flowing into the crypto market.
Sounds a Lot like an ETF…
It is. The difference is that “ETP” is an umbrella term for different types of exchange-traded products. Those products include ETFs.
ETFs are the most popular type of ETP, but there are others, including exchange-traded notes (ETN) and exchange-traded vehicles (ETFV).
The Amun Crypto ETP will begin trading this week on the Six exchange. It will track a basket of five cryptocurrencies, weighted heavily to bitcoin and XRP. The exact makeup of the ETP is listed below:
Bitcoin Cash: 5.2%
It’s interesting to note that XRP receives a significantly higher weighting compared to ethereum. Although XRP overtook ethereum as the second-largest cryptocurrency last week, the heavier weighting may be an indication of Amun’s expectations for the future.
Note: the weighting will be rebalanced automatically on a monthly basis.
Amun notes that it aims to provide a diverse holding of crypto assets. However, it removes any assets that are tied to a fiat currency, like tether, and any currencies with anonymity features (such as zcash and monero).
The Amun Crypto ETP also avoid any coins without sufficient liquidity and those that don’t trade on reputable exchanges.
“The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments.”
The ETP carries a management fee of 2.5% annually.
Jane Street and Flow Traders will back the fund and have agreed to pour money into the ETP to give it liquidity. They are known as “market makers.”
In true cryptocurrency style, the ETP will trade under the ticker $hodl. It’s a nod to the popular crypto meme “hodl,” a misspelling of “hold” which was adopted by crypto enthusiasts as a term for holding bitcoin even through the biggest price drops.
It launches on the Swiss SIX exchange, the fourth-largest stock exchange in the world. Based in Zurich, it has a market capitalization of $1.6 trillion.
At the time, SIX CEO said: “For us, it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry.”
Set to launch in 2019, the exchange will facilitate trading, settlement and storage custody services.
How Is This Different to the Anticipated Bitcoin Etf?
First, there’s the makeup of the ETF itself. The Amun Crypto ETP tracks a basket of cryptocurrencies, rather than purely bitcoin.
Secondly, there’s the scale and impact of the ETP. While the Swiss ETP is an important first step, launching an ETF in the US is a much bigger beast.
The size of the exchange is the first point of difference. The Swiss exchange has a market capitalization of $1.6 trillion, compared to the New York Stock Exchange’s $21.3 trillion and the Nasdaq’s $7.8 trillion.
Simply put, launching a bitcoin ETF on one of the major US exchanges would have a much larger impact.
Then there’s the regulatory process. Switzerland, as explained, is much more open to the crypto industry in general. Approval in Switzerland is less of a groundbreaking move. Whereas the approval of a bitcoin ETF in the US would break down the door for countless other cryptocurrency products and investment vehicles.
The Securities and Exchange Commission (SEC) faces a deadline of December 29th to rule on the next bitcoin ETF proposal put forth by VanEck. However, there’s a good chance the SEC will push the decision back into 2019.
Commentators expect a bitcoin ETF approval to kickstart a new bitcoin price surge. It would, theoretically, allow institutional investors to flood into the market.
Currently, many Wall Street traders are forbidden to buy or hold cryptocurrencies as part of their client portfolios. Others are worried about the risk involved with buying and storing so much crypto directly.
A bitcoin ETF would give them an easier way to gain exposure to the crypto market, without the risk and complexity of buying it directly.
The Swiss crypto ETP is an impressive and important milestone in crypto adoption. It provides a simple route for institutional investors to wade into the crypto market. However, this is not the catalyst many are waiting for, and it does not make a bitcoin ETF approval in the US any more likely.
As always, Block Explorer will bring you more information as and when the true bitcoin ETF is approved in the US.
This article is regularly updated to include the latest Bitcoin Cash fork developments.
What is the Looming Bitcoin Cash Hard Fork?
As part of the Bitcoin Cash system, the community schedules a bi-annual upgrade to keep the network up to date.
The next upgrade is due on November 15th, around 4.40pm GMT. However, there is disagreement over the upgrade itself. The split in the community is likely to create a “hard-fork,” where the blockchain splits with two different rules or “protocols.”
Both aim to release a different version of the upgrade on November 15th.
The difference in opinion means this is a “contentious hard-fork.” When the upgrades are made, there will be two versions of the Bitcoin Cash blockchain, and it remains to be seen which will be the “dominant” chain.
The Argument: Bitcoin Cash ABC
One of the most prominent features of the Bitcoin Cash ABC proposal is to move beyond monetary transfers. An improvement to the scripting language may lead to the introduction of smart contracts on the Bitcoin Cash blockchain.
The upgrade will also introduce “canonical transaction ordering,” which alters the way transactions are listed in a block. Bitcoin Cash ABC claims this will act as the foundation for enormous scaling potential in the future.
The major feature of the nChain upgrade is the quadrupling of blocksize. nChain proposes a new blocksize of 128MB, which is their solution to scaling issues.
nChain will release a “full node implementation” reflecting these changes on November 15th. nChain calls this upgrade Bitcoin SV, or “Satoshi’s Vision,” as they claim it is a true reflection of Bitcoin founder Satoshi Nakamoto’s ideals.
The Two Upgrades Are Incompatible
The two differing proposals cannot function together. So, when the two parties activate their upgrade, two different chains will be created, hence the hard fork.
Their software is used by two-thirds of Bitcoin Cash mining nodes, who simply need to upgrade the software to implement the upgrade.
As for the big name support, Roger Ver and his website bitcoin.com are vocal supporters of Bitcoin Cash ABC. Bitmain, the world’s largest cryptocurrency mining company, has also publicly stated support for Bitcoin Cash ABC.
Pre-fork trading on Poloniex showed that ABC was initially valued four-times higher than rival SV, suggesting that traders backed the ABC project. However, the two coins are now trading at near parity ahead of the fork.
Who’s in Favor of Bitcoin Cash SV
The loudest voice for Bitcoin Cash SV is Craig Wright, who has publicly declared himself as Satoshi Nakamoto in the past.
His software company nChain proposed the alternate vision, called Bitcoin SV (or “Satoshi Vision”)
The argument reached boiling-point when Roger Ver published an email reportedly from Craig Wright which read“You are my enemy… You will now discover me when pissed off.”
Bitcoin Cash also has support from the vast majority of Bitcoin Cash mining pools. Current estimates suggest that SV will command up to 72% of mining power, which could give it the edge when the fork initially happens.
Coinbase, Binance, and Ledger Support?
Two of the world’s leading crypto exchanges, Coinbase and Binance, have both expressed support for the hard fork. Although, it remains to be seen which fork they will ultimately follow.
“Unlike previous BCH hard forks, there is a competing proposal that is not compatible with this published roadmap. Coinbase will monitor the hard fork process and work to minimize customer disruption until the network meets Coinbase security standards.”
Binance didn’t comment on the contentious nature of the fork, but did express support:
“Binance would like to confirm support for the upcoming Bitcoin Cash hard fork.”
“Ledger will pause Bitcoin Cash service to avoid unwanted transactions until it is clear which of these chains will be the dominant one.”
In all cases, transactions will be paused at least an hour before the fork is due to take place (roughly 4.40pm GMT).
What Happened to the BCH Price?
Generally speaking, a hard fork often triggers a price run in anticipation of free tokens. When a hard fork occurs, holders of the coin are often granted the new forked token on a 1:1 basis.
This was the case when Bitcoin forked to create Bitcoin Cash. Everyone holding bitcoin also received the same number of bitcoin cash tokens.
Traders initially flocked to BCH in anticipation of a new, valuable forked coin.
However, that excitement has run out, with Bitcoin Cash falling almost 20% this week. After the initial gold rush, traders are contemplating the fact that vicious infighting could have a negative effect on the future of Bitcoin Cash.
Unless nChain and ABC come to a compromise or agreed solution, Bitcoin Cash will fork on November 15th, resulting in two separate blockchains. The dominant chain will likely be supported by major exchanges and third parties, but it remains to be seen which chain that will be.
Block Explorer will keep you updated on the developments as we move closer to the November 15th upgrade.
After a vicious war of words between the two competing sides, Bitcoin Cash will execute a hard fork today and split into two separate blockchains. By the end of the day, we may have two new cryptocurrencies on the market:
Bitcoin Cash ABC and Bitcoin Cash SV.
However, the developers behind Bitcoin Cash SV do not expect the two new blockchains to live in harmony.
Bitcoin Cash SV: “The Intention is for Only One Chain to Survive”
Looking back to a press release issued earlier this month, the Bitcoin Cash SV camp explained clearly:
“With Bitcoin SV, we are not seeking to create a new Bitcoin variant and we are not intending to create a new Bitcoin SV token.”
The statement was issued by nChain, the software and development company behind the proposed SV upgrade. It continues:
“There will likely be a period of time before this temporary chain split is resolved, while miners are voting with their hash power.”
In other words, they believe only one chain should be allowed to exist after the fork: the longest one. That will simply be determined by how much hash power (or mining computer power) is directed to each chain.
“No Transaction Replay Protection” – a Technical Trip Wire
Transaction replay protection is a mechanism built into blockchains that makes transactions on one blockchain invalid on the other one.
Bitcoin Cash SV has not implemented this protection.
Without transaction replay protection, it means users can unwittingly lose money by accidentally transacting on the wrong chain. It also opens up holes for hackers to exploit.
It’s a sign of war from Bitcoin Cash SV. They expect the “losing” chain to peter out, with no protection needed.
If you’re a Bitcoin Cash holder, however, you need to be careful. The best advice is to keep your Bitcoin Cash safely in a wallet until the dust settles.
A Fight for Hash Power
If only one chain is to exist, it will come down to a fight over hash power. In other words, the decision lies with Bitcoin Cash miners: which upgrade will they devote their mining power to?
This also gives SV the potential power to initiate a 51% attack against the ABC blockchain. Craig Wright, the man behind SV has not ruled out this possibility. Miners could also mine “empty blocks” that don’t contain any transactions. It would effectively bring the blockchain to a halt.
Hash power simply refers to the amount of computer power dedicated to cryptocurrency mining at any one time. If the majority of hash power is directed at one side of the fork, we can infer it has more support from miners.
In other words, it looks like miners might back SV.
These Figures are Estimates
It’s important to remember that figures on both sides of the debate are estimates.
Poloniex trading figures are based on a hypothetical market with relatively thin trading volume.
And the CoinDance hash estimates are based on how mining pools have indicated their support. Miners themselves won’t necessarily follow the public statements of their pools.
Bitcoin Cash ABC and Bitcoin SV Explained
Bitcoin Cash ABC – Lays the groundwork for enormous scaling in the future. Keeps the block size the same, while building functionality for new features like atomic contracts. Backed by Roger Ver, Bitmain, and supported by Coinbase, Binance, and other large third-parties.
Bitcoin Cash SV – Claims to be the true Bitcoin vision (or “Satoshi Vision”). Technical updates include a larger block size to improve transaction speed. Backed by Craig Wright, nChain, CoinGeek and a large portion of BCH mining pools.