forking Archives

Cryptocurrency prices soar in the first week of May; Will Seasonality influence Bitcoin’s prices again?

Posted on May 3, 2017 | by [email protected] | Leave a Comment

Bitcoin and Ethereum, the leading cryptocurrencies had a strong finish at the end of April by marking their respective all-time high prices. The start of 2017 has been staggering for Bitcoin as negative fundamentals have hampered its price growth consistently in phases. Just when the currency was set for a Bull Run, one or the other problem would impact the prices turning the market bullish on a short term scale. Ethereum on the other hand has had a smooth run and gained good momentum during the scalability debate of Bitcoin. Investors proactively transferred their investments from Bitcoin to Ethereum to shield themselves from the price fluctuations during this phase boosting Ethereum’s prices. As we enter the 5^th month of the year, the prices of the cryptocurrencies are going up and we believe seasonality is playing a strong role in this. Let’s dive deep into the internal dynamics of each of the cryptocurrency and what is in store for them:

Bitcoin went through threatening times:

Bitcoin had to overcome hurdles that could have ended the digital currency’s existence if the community didn’t reach consensus. The Blocksize debate or the scalability debate brought bearish clouds to the crytpocurrency’s price domain making it extremely difficult for the prices to recover in a quick time. The issue came as an insult to injury post Winklevoss ETF rejection and Chinese exchanges ban on withdrawals. Nevertheless Bitcoin has recovered in a fine fashion to break the all-time highs and register a new high for the cryptocurrency. With the scalability debate now resolved, Bitcoin is looking stronger than ever while trading around all-time highs. What remains to be seen is whether the trend will receive an unexpected boost due to seasonality or just continue to grow/dull down without any influence.

Ethereum sees unexpected boost:

Ethereum has been the cryptocurrency that tackled scalability issues in its formative stages to bounce back strongly into cryptocurrency sphere. Owing to its executable smart contracts on blockchain and applications in various verticals Ethereum has found solid ground to grow without inhibitions. With Bitcoin’s scalability issue surfacing, Ethereum’s prices have sky rocketed to over $40 in the past month. With the talks of a possible Ethereum ETF, the prices further pushed higher making an all time high of $80.

Will the Seasonality Kick in?

We have observed that especially for Bitcoin, the markets have followed a good deal of seasonality with the prices going higher towards the end of the semester. This half yearly pattern may reflect a periodic activity on the part of institutional investors or swift moving of funds from one asset to other in sync with their seasonal cycles. Whatever it may be, the seasonality is a pattern that has been holding for the cryptocurrencies and we can surely expect a sudden spike owing to these factors in the near future.

Week in Review: Bitcoin has Positive Start for the Month, Scalability Tackled

Posted on April 5, 2017 | by [email protected]

The last couple of weeks towards March’s end saw Bitcoin fighting off scalability issues and ETF rejections that staggered prices. Just when things picked up from the Winklevoss ETF rejection and prices were looking optimistic, the blocksize debate has slipped up the prices again bringing the price to just under $1000 levels. However, in the first week of April, things look very optimistic for the cryptocurrency as Bitcoin prices have increased by 8% with the digital asset trading over $1,100. (Read more reviews about Bitcoin investments here.) Fundamentally there have been many positive re-enforcers during the week for the change in the winds. Let’s dive deep into the most significant positives for the week.

Mexico recognizes Bitcoin as a digital asset

Mexico has had problems arising due to unstructured economic planning. Added to that, it is also the 4^th highest country for inflow of remittances. These characteristics have created an ideal environment for Bitcoin to step up and thrive constructively on these positives. While the idea is certainly positive, the Mexican Government has signed a bill that classifies Bitcoin as a ‘Digital Asset’ and sets forth rules for Bitcoin exchanges. The wide consensus has been noticed in support of the bill among disparate political parties with an eye towards benefits for the economy triggering more foreign investment to help local industries and businesses grow.

Bitfinex redeems its tokens

On August 2nd, 2016, the leading bitcoin exchange by USD volume Bitfinex has suffered a major hack where 119,756 bitcoins were stolen. This forced the exchange to issue “Recovery Rights Tokens” as an IOU to customers. These tokens were set to be traded as BFX tokens and are to be paid back as soon as they hit $1 which is their underlying value. Bitfinex has made good on their promise and as of 4^th of April, the exchange announced that it is now paying off debts in full. Redemption started late last year with BFX tokens trading well below the $1 value and being termed as a scam to buy more time. However, the exchange intermittently reimbursed hacked customers, proving their commitment towards the services they provide.

Forking has reached consensus

After two years of heavy debating, the scalability issue that has plagued Bitcoin in phases has finally found a solution. Bitcoin developers both from Core and Unlimited will merge within two weeks to a maximum block size increase to 4MB. This will then further increase by 25% yearly until 32MB. 4^th of July is the designated date on which Bitcoin will hard fork and any node left on the original Bitcoin network would be cut off. All the nodes are expected to upgrade by this date with the requisite hardware that makes this possible set in place. Since the debate has now become harmless, bitcoin prices are now soaring high and look good for weeks to come.

How Bitcoin exchanges are planning to tackle the Bitcoin Hard Fork

Posted on March 20, 2017 | by [email protected]

With the Bitcoin markets fixated on slowly making the switch to bigger blocksize, speculation has taken over the Bitcoin market prices. The number of outstanding transactions to be processed on the Bitcoin Network has been piling up due to the limit on the Blocksize of the Bitcoin network. With piling transactions, there has been a delay in the validation of the exchange. This has defeated the unique selling point of the cryptocurrency and the Bitcoin community has concentrated their efforts towards tackling the problem. Let’s dive deep into how proposed alternative for Bitcoin fork will be impacting the exchanges and how they plan to handle the ordeal of fork in the days to come:

Speeding up transactions:

The Bitcoin community has resolved to speed up the transaction by increasing the block size in which the transactions are produced and stored per every ten minutes. This would mean by proposed terms the blocksize would increase from 2 M.B to 8 M.B being able to process more transactions per 10 minutes and thereby delivering on the transaction speed. These bigger blocks would be on the blockchain labelled as Bitcoin Unlimited and already 11% of the nodes are running on Bitcoin Unlimited. But this would mean exchanges also have to shift to the agreed upon currency depending on the final decision.

Exchange’s plan:

According to the statement released by a group of 20 exchanges, their plan for tackling the hard forking would be to list Bitcoin Unlimited as a separate currency. Since the digital currency would be splitting up into two currencies, Bitcoin Core and Bitcoin Unlimited would be the two blockchains on which the currency would be splitting up depending on the Block sizes. Bitcoin Unlimited would now be listed as an alternative cryptocurrency under the BTU or XBU tickers in the event of a network split.

The exchanges said:

“As exchanges, we have a responsibility to maintain orderly markets that trade continuously 24/7/365. It is incumbent upon us to support a coherent, orderly and industry-wide approach to preparing for and responding to a contentious hard fork. In the case of a bitcoin hard fork, we cannot suspend operations and wait for a winner to emerge.”

Why it becomes necessary:

The statement signed by Bitfinex, Bitstamp, BTCC, Bitso, Bitsquare, Bitonic, Bitbank, Coinfloor, Coincheck, itBit, QuadrigaCX, Bitt, Bittrex, Kraken, Ripio, ShapeShift, The Rock Trading and Zaif – the exchanges, clearly stated that the exchanges would be listing BU since the fork seems inevitable. The exchanges feel that with the advantages and integrity of the cryptocurrency being questioned, this would indeed be the right move to give the users of the company best service.

Bitcoin loses $2 Billion in Market Cap due to forking; Ethereum capitalizes on Bitcoin’s Loss

Posted on March 17, 2017 | by [email protected]

In the past three days, Bitcoin prices have plummeted from over $1,200 to $1,100 with clear signs of onset of bearish behavior owing to a strong fundamental factor. The market cap of the cryptocurrency dropped from over $20 Billion to $18 Billion in the past three days owing to the drastic fall in prices. While the market is in a strong uptrend on a long term time frame, this might very well be a major blow to the trend and might shadow the Bitcoin markets with bearishness. The influencing fundamental is the Bitcoin forking problem that has had negative impact on the prices in the past. Let’s dive deep into what exactly the problem and will forking really solve it:

The issue at hand:

During the processing of Bitcoin transactions, the processed transactions are stored in ‘blocks’ which is turned into a complex math problem. Bitcoin miners, owing to their high hashing power (processing power), calculate the solutions of these problems to determine if the transaction is possible. The solutions are then validated by the other minors and are added to the ledger as complete blocks. This would result in reward generation for miners. However, it has been observed recently that the number of outstanding transactions to be processed has been piling up and is defeating the purpose of the cryptocurrency which promises quick transactions.

The solution and attaining consensus:

Due to the piled up transactions, Bitcoin unlimited has emerged which suggested that to tackle this problem, we can increase the block size. Major Bitcoin industry players like Roger Ver have backed the idea but many in the community are of the opinion that the method might not be totally safe and might lead to disruption in the blockchain ecosystem. Currently about 11% of the nodes run Bitcoin Unlimited and the rest of them run Bitcoin Core(The original block size). The idea is that the nodes can run Blockchain Unlimited software which would indicate their support for increasing the block size. If 50 percent of bitcoin miners adopted Bitcoin Unlimited, there would then be two major blockchains. This would result in a “fork” between Bitcoin Core and Bitcoin Unlimited.

Both blockchains would be operational with their respective nodes but there would then be essentially two different coins – Bitcoin and Bitcoin Unlimited.

The impact on the price and the boost to Ethereum:

The Bitcoin community is yet to hit consensus on what would be the next move – a plausible scaling or a forked blockchain. Both the events are expected to have adverse effects on the prices and would take some time to settle down from the impending volatility. Hence Bitcoin traders and investors are offsetting their exposure to altcoins like Ethereum. Hence there was a sudden rise in the prices of Ethereum that has made the cryptocurrency reach all-time highs for the year. How the forking would impact prices further is to be seen.