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Bitcoin Hard Fork: The Game Plan

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Bitcoin’s upcoming fork is arguably its most divisive one yet. Clear battle lines have been drawn, setting the stage for a potentially Lutheran-style schism in the blockchain community. (Note: the author is being a bit dramatic, but all signs seem to show that a serious divergence is building momentum.)

By looking at bitcoin’s price, one would hardly conclude that the original blockchain currency is facing turmoil. Bitcoin added a staggering 24% last week en route to fresh record highs. However, one of the motivations for buying bitcoin is the hard fork itself. If you own bitcoin on fork day, you will also receive equal value of the newly minted digital currency. (If your cryptocurrency exchange doesn’t support the new coin, you can always threaten to sue it like the backers of Bitcoin Cash did to Coinbase.)

SegWit2x

The upcoming hard fork, which is scheduled sometime in mid-November, will create two competing versions of bitcoin. We speculated recently that the new coin is unlikely to create controversy over the “real” bitcoin, but as Jeff John Roberts of Fortune argues, this disagreement is already under way.

Like the hard forks before it, the main crux of the debate is how to best optimize the Bitcoin network. Backers of SegWit2x want to double the size of bitcoin blocks to boost transaction capability.

Backers of the new protocol include bitcoin miners who use advanced computers to compile transactions. In their view, bigger blocks are desperately needed to accommodate the massive growth in the blockchain network, as well as to reduce transaction fees. As Roberts also notes, these miners are part of a consortia that includes “certain exchanges, wallet providers, market makers, and storage vaults.” On the opposite side of the spectrum are those who maintain the core protocol that comprises the Bitcoin network.

Below is a rundown of interplay between bitcoin, Bitcoin Cash and the upcoming SegWit2X hard fork.

Bitcoin (BTC) SegWit Activated No Increase in Block Size
Bitcoin Cash (BCH) No SegWit Activated Increased Block Size to 8MB
SegWi2x (B2X) SegWit Activated Increase Block Size

The Game Plan

As one might expect, the broader implications of SegWit2x likely won’t be known until fork day. But that shouldn’t stop you from formulating a game plan. The big question mark right now is which version of bitcoin will get the much coveted BTC ticker name. As it currently stands, exchanges have not opined about which version of bitcoin they will support, although Bitfinex will run the SegWit2x chain as B2X.

On the GDAX, hash power will decide which chain gets the BTC ticker. So far, there is no news on what Bitstamp, bitFlyer and Kraken aim to do.

Rather than track a couple dozen bitcoin exchanges, investors may want to focus on Coinbase. The San Francisco-based platform has long been viewed as the industry’s proxy; how it chooses to handle the fork (and potential split) will have direct implications on the market.

A hard fork is a software change that runs the risk of splitting the blockchain into two, particularly if the community disagrees about it. (Laura Shin, Forbes)

When it comes time to fork, market participants need to be clear about their intentions. The first question you need to ask is: Do I plan on transacting with the various bitcoin chains anytime soon, or am I keen on holding the coins as long-term investments? If you prefer the latter, then you should be thinking about storing your coins in a wallet. (Note: paper and hardware wallets offer more security.)

Those of us who are speculating in bitcoin need to be aware that the upcoming fork could get very messy. It is unclear which chain the exchanges will list as BTC, which means the price of BTC could differ vastly across the brokerage community. (Note: if you observe vastly different prices for BTC, it means you’re looking at two different coins.)

Adding more confusion is the fact that the SegWit2x protocol will fork without adequate replay protection. This means BTC and B2X transactions will appear identical after the fork. To avoid accidentally spending the new coins, you should avoid exchanging from your wallet all together after the fork. This also includes not accepting payments via mobile wallets, since BTC will mirror whichever coin has more hash power.

Furthermore, claiming your coins will prove difficult until well after the fork when dedicated wallets for both blockchains emerge.

If you’re a trader, there’s even more confusion about whether BTC and B2X will have any price correlation. Following the Bitcoin Cash hard fork, BTH and BTC appeared to be inversely correlated for a while. However, lately, anything named bitcoin has moved in the same direction: Up.

The conclusions that we’ve drawn in this section may annoy some of our members, but complex situations usually call for measured steps. In this case, staying on the sidelines until the dust settles might be the best approach.

Altcoin Advantage?

Altcoins have largely benefited from bitcoin’s meteoric rise – that is, until recently. The latest surge in bitcoin has largely failed to take altcoins along for the ride. This has led to speculation that the altcoin universe is undervalued. An exit from the bitcoin asset class could therefore be a tailwind for altcoins pre- and post-fork.

Currently, the original bitcoin controls roughly 63% of the cryptocurrency market. This figure fell below half earlier in the year as investors diversified away from bitcoin while others became more annoyed by bitcoin’s slow transaction process. If diversification is part of your strategy, now might be the top to consider altcoins. The author sees no reason why the altcoin universe cannot control at least half of the cryptocurrency market, especially if we witness a long-anticipated correction in BTC.

Total Cryptocurrency Market Cap With Bitcoin

Total Cryptocurrency Market Cap Without Bitcoin

 

Final Considerations

There’s no guarantee that bitcoin prices will plunge after the hard fork. Regardless of which blockchain emerges as the BTC candidate, bitcoin is enjoying plenty of upside thanks to growing institutional support from the major exchanges. Both CME Group and CBOE have announced plans for bitcoin futures relatively shortly. a strong sign that institutional capital will flow like never before.

To recap:

  1. Secure your coins in a paper or hard wallet for extra safety.
  2. Avoid transacting the BTC symbol before and after fork day.
  3. After fork day, access your coins only when you see dedicated wallets for both blockchains.
  4. Take advantage of the undervalued altcoin universe if bitcoin becomes volatile.

As fork day looms, keep your wits (and coins) about you and stay out of trouble.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 498 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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  1. benb

    November 5, 2017 at 10:25 pm

    Well written, thank you for the write up. Do you think the exchanges will still allow trading while the wallets are locked for deposits and withdrawals?

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Altcoins

Altcoins ADA, BAT, XLM, ZEC and ZRX Enjoy a Coinbase Pop

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The Ethereum price wasn’t able to hold onto its gains today despite seemingly marching toward the $500 level on Monday, as market technicians have predicted that the downward trend remains intact despite yesterday’s rally. Meanwhile, daily trading volume in the cryptocurrency market is hovering at about $13.8 billion compared to its 2017 peak of more than $50 billion, as per CoinMarketCap data cited in reports.

The more trading in digital currencies, the higher the revenue of bitcoin exchanges like U.S.-based Coinbase, which incidentally is in the process of adding a handful of altcoins. While it may seem that Coinbase’s answer to the weaker average trading volume these days is to bolster its platform with more coins, a leading exchange executive said that’s not the case. Coinbase Vice President and General Manager Adam White told CNBC that customer demand fueled the decision.

“Certainly volumes today are lower than they were at the end of Q4 and January. The idea behind adding new assets is very simple: our customers want it,” White said, adding that more than 20 million individuals are signed up on the exchange in addition to institutional investors, the latter of whom are demonstrating “unprecedented” interest in the space.

The assets that Coinbase is moving toward adding include Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC) and 0x (ZRX). And while these coins are likely to be directed to the exchanges indexes, their presence does not reflect a bullish position on the part of Coinbase, White noted. Nonetheless, let’s take a look at each of them.

Cardano (ADA)

eToro exchange just published a report focused on Cardano, referring to the smart-contract-fueled platform as “Blockchain 3.0.” Cardano remains in the nascent stages but it’s designed to pick up where the Bitcoin and Ethereum networks fall short on scalability. ADA has advanced about 13% since Coinbase’s Friday announcement. But Cardano has shed more than three-quarters of its value since the beginning of the year.

Basic Attention Token (BAT)

Basic Attention Token describes itself as a “blockchain-based digital asset” startup. BAT is advancing more than 4% today and has been among the top performers since Coinbase announced plans to add the coin. BAT has added 33% to its value since the Coinbase announcement.

Stellar Lumens (XLM)

Stellar is advancing about 1% today and has tacked on about 28% since the Coinbase announcement. The coin also got a boost when the SEC Thailand said that Stellar would be an acceptable form of payment by iPO issuers. A Stellar follower on Twitter joked that soon XLM would be accepted at every McDonald’s.

Zcash (ZEC)

Privacy coin Zcash is up almost 2% today and its value has ballooned by 22% since the Coinbase announcement. ZEC was also added by fellow U.S.-based cryptocurrency exchange Gemini in recent weeks, so it has the tailwind of both listings.

0x (ZRX)

The thing about 0x is that it already had a relationship with Coinbase ahead of the listing announcement. So much of the enthusiasm for a listing may have already been baked into the price. ZRX is shedding some ground today, down about 1%, but it’s up about 48% since last week.

Disgruntled XRP Investors

Coinbase was accused by some XRP investors, a community that has been waiting for their Coinbase day in the sun, of price manipulation in the altcoin the exchange announced it’s exploring now.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 23 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Dogecoin Price Surges 20% After Robinhood Listing

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Dogecoin has been one of the day’s biggest movers, climbing 20.8% and trebling its daily volume in the process.

Given that we’re dealing with DOGE, we’re going to have to make full use of our decimal places. This time last night one DOGE coin was trading at a price of $0.0024. Fast forward 24 hours and its value now stands at $0.0029 – that’s a 20.8% growth which has come fairly steadily over the last day, except for the brief spike which sent it to $0.0027 at 6pm (UTC) last night.

Today’s movement puts Dogecoin at 31.8% gains for the week, based on the $0.0022 starting point seven days ago.

Looking at DOGE’s monthly numbers, we see that it has now returned to the monthly high with its breach of the $0.0029 mark today. But as is always the case at this stage of a market downturn, such numbers require to be placed in the larger context. Three months ago, during the mild peak of April, one DOGE was worth $0.0058, meaning that even with today’s growth factored in, Dogecoin is still down 50% over the last 90 days.

Robinhood and DOGE

Recently launched crypto exchange, Robinhood, added Bitcoin Cash and Litecoin just last week, and now a press release has dropped which signals Dogecoin’s integration onto the Robinhood platform. As stated in the release:

“Starting today, you can invest in Dogecoin on Robinhood Crypto, commission-free. With last week’s announcement of Litecoin and Bitcoin Cash, you can now invest in five different cryptocurrencies on Robinhood.”

Robinhood is a U.S based exchange which offers compatibility with stocks and ETF trading, as well as cryptocurrencies. The service is only available in the U.S at the moment, but has not yet been rolled out across all states. According to Robinhood they are currently working on extending their reach beyond the current 17 states they have already.

“We’re working hard to make Robinhood Crypto available to everyone, and it’s currently available in 17 states: AZ, CA, CO, FL, IN, MA, MI, MS, MO, MT, NJ, NM, PA, TX, UT, VA, and WI.”

Beyond the Meme

Everyone will be somewhat familiar with DOGE’s humble beginnings in the crypto space, and many initially derided it for its seeming silliness and triviality.

Yet the community at large thought differently, and eventually DOGE grew in stature to become a regular fixture in the top-100 coins, and has taken its position just in front of the fire in the cryptocurrency living room.

During January’s peak DOGE reached a market cap of over $2 billion and a price of $0.0178. DOGE’s 11 billion circulating supply contributes to keeping its relative value down, but Dogecoin has often popped up as the most transacted cryptocurrency in existence at certain times, although not necessarily the most valuable.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 23 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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TenX Price Up 47%; Anomaly Detected on Bithumb Crypto Exchange

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TenX (PAY) was at the nice round number of one dollar last night before triggering a run which saw it spike to $1.47 by 2am (UTC). Since then the price has dropped back down to the $1.30 mark, but that still represents 30% gains for the day.

Just last week, TenX was priced at a value of $0.58 per token, with a market cap of $60 million. But in the last few days the PAY token has soared into the market cap top-100 and has hit 153% growth for the week. A daily volume of around $4 million at the start of the week has been replaced by peak volumes of $70 million over the last 24 hours.

The price may have dipped in the last few hours, but a glance at the daily volumes actually shows an increase, suggesting that TenX’s movements for the day aren’t over yet.

Bithumb Anomaly

PAY tokens were temporarily unable to be withdrawn on the Korean exchange Bithumb in the early hours of this morning. The lack of influx of new funds created a supply shortage on the platform, thus pushing the value of PAY tokens to a value of $7.32 – that’s a 632% growth in value, purely because of a temporarily disabled withdrawal system.

The volumes being traded on Bithumb amount to $200 million, and predictably all come in the form of direct trades between PAY and KRW (South Korean Won). That volume alone in 11 times the total recorded by CoinMarketCap at this given time.

Besides Bithumb, the most active exchange for TenX has been Upbit, followed closely by Bittrex, where BTC trades make up the vast majority. In fact, if we exclude the KRW trades from Bithumb (which we officially should) then we see that PAY/BTC trades make up over 75% of the total daily volume.

A History of Volatility

TenX’s overall charts make interesting reading. The ATH for PAY tokens was not in December-January as one might expect, but in August 2017 when one token was worth $5.33 and TenX had a market capitalization of half a billion. December’s peak, by comparison, only took PAY to a value of $5.00, but with the same market cap.

Barring a surge in April, TenX has been falling since January. Although the movements of the last two days may suggest a sudden change of sentiment. On July 16th, less than 48 hours ago, TenX was sitting at a price of $0.72. That means that it has grown by 104% since Monday.

Such movements usually trigger calls of the dreaded pump and dump, but TenX’s history shows a tendency for such dramatic movements, and this might just be par for the course. You can read more about TenX’s features here in this comparison against ICON.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 23 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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