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Hard Forks and Crypto Prices

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Right now, there is no measure of “intrinsic value” in the crypto world. And even if there is a measure for a specific protocol, investor sentiment tends to overshadow it by a significant amount. The lack of certainty in this space creates a high level of volatility that naturally plays out in the prices and makes it difficult to determine a fair value for cryptocurrencies. By understanding hard forks better, you can properly make a decision ahead of time in order to protect your investment.

Past Forks

First thing’s first: let’s get the definitions straight. A hard fork is a change to a cryptocurrency’s protocol that creates two different versions of a cryptocurrency. Soft forks, on the other hand, stick to just one cryptocurrency (and one blockchain). Segwit was an example of a soft fork, and Bitcoin Cash is the most well-known example of a hard fork.

Hard forks can signify upgrades to security or new functionality, or they can be designed with the express purpose of reversing past transactions. However, the most well-known function of a hard fork is to split a cryptocurrency into two. A new version and old version result, and it turns into somewhat of a battle between the two for dominance of the aggregate community.

We have seen this play out most notably with Bitcoin Cash, but Bitcoin Gold and Setwit2x were also cases where this occurred.

Likely Outcomes

There are three outcomes that can occur when a hard fork is executed. Either one blockchain becomes dominant and the other one fades into obscurity, both achieve similar adoption and are able to act independently of each other, or both remain successful with one outshining the other. The third case is the most common, as network effects often lead to compounding success within a single domain.

With Bitcoin Cash, we have seen a very active community attempt to push the cryptocurrency to dominance over Bitcoin, but BTC is so entrenched that this is nearly impossible. When a cryptocurrency forks into two separate coins, there end up being two ledgers and two sets of code, all with the same original blockchain.

Secondary Concerns

Even if you’re not worried about the future of the space, hard forks have created some question of how the overall ecosystem can adapt to them. The complications involved in managing a hard fork and distributing the private keys to the newly minted cryptocurrency can be significant. Generally, issues arise from the fact there is no “standard” method of handling an event such as this, and it becomes a question of each exchange’s policy. As we have seen with lawsuits such as OKCoin’s, sometimes the lack of clear guidelines and announcements can create confusion in the space.

An additional reason why investor confidence comes into play are the intense debates that ensue during a hard fork. Nodes are forced to choose between upgrading to the new version of the protocol software or maintaining the old one. This sort of divisive choice can be seen as “democratic”, but it also foments instability in the way that unrest within a country would hurt its currency.

From an investing perspective, the value of your cryptocurrency pre-hard fork should be the same as the aggregate value of your cryptocurrencies post-hard fork. This would be the case in an ideal world, however things seldom work out this perfectly. What it does do is create a betting-type market where you can sell the cryptocurrency you think is most likely to disappear, and still maintain your investment in the other cryptocurrency.

The key point here is that hard forks create additional volatility in an already volatile market. Whenever a hard fork is on the horizon, it helps to have a plan and know whether you are going to “make a bet” on one currency or the other, or sell before the hard fork occurs.

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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Cryptocurrencies

Ethereum-Based Wax (WAX) Hits 52% Growth During Week as Most Active Blockchain

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Rise

Wax (WAX) chalked up 52% growth for the week leading up to November 11th, coinciding with its week-long reign as the most active blockchain, according to data provided by Blocktivity.info.

The Ethereum-based token is ranked 60th by market cap, and aims to create a gaming collectibles marketplace on the blockchain. More on Wax below…

WAX/USD

The altcoin traded at a price of $0.083560 seven days ago, and despite some heavy dips managed to climb to a valuation of $0.127022 by Sunday morning, marking 52% growth. By that evening the price had settled around the $0.123 range, still leaving Wax as the strongest performer out of the top hundred in the past week.

On Sunday alone WAX volumes rose 400% from $500,000 to $2.5 million, with 82% of that figure coming from BTC trades across various exchanges. The $2.9 million worth of trades recorded on Nov 9th was the highest WAX volume seen since mid-July, nearly four months ago.

No huge fundamental developments have recently arrived for Wax, although the social media team has been very active of late, launching cash prizes for various activities by users and developers.

That flurry of activity may have something to do with Blocktivity.info’s ranking of Wax of this week’s most active blockchain.

Wax Most Active Blockchain?

As you can see below, Wax has been busier than both Tron (TRX) and EOS (EOS) this week, despite all the news being about Tron’s sudden growth in transactions.

To be clear, Blocktivity takes several factors into consideration when making these rankings. They take into account ‘operations’ on the blockchain, rather than just transactions. Blockchains are also ranked by their activity in relation to their market cap, thus a small-cap coin with a lot of activity would be weighted higher. They are also ranked by activity in relation to capacity.

Given that Wax involves users creating and selling gaming collectibles, it could be feasible to assume that the flurry of activity, fuelled by seemingly daily paid contests from the Wax twitter feed, could be contributing to Blocktivity’s ranking.

What is Wax?

Wax is founded by OPSkins Group Inc, the same OPSkins which Counter Strike players may remember as the site which was effectively shut down by Steam/Valve for violating their terms of service.

OPSkins involved the cash-trading of in-game items which were normally subject to a seven-day embargo period, according to Valve and Steam rules. When Valve shut down the operation by demanding the removal of their IP, OPSkins popped up on the blockchain as Wax.

On Wax, the same collectibles can be bought, sold and owned independent of a centralized authority, although they are not integratable with CS:GO, or any other Steam game.

The stated aim of Wax is to become integrated into multiple games, with the aim of becoming a hub for cross-game collectibles trading. One partnership has been lined up with upcoming game, The Forge Arena, but skepticism remains around the project, perhaps because of the five-figure prices on some of the collectibles – which at this point have no use beyond Crypto-Kitties style speculation.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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 88 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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Cryptocurrencies

Crypto Downturn Shows Signs of Bottoming Ahead of Pivotal Week

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Cryptocurrencies drifted lower on Sunday, with leading altcoins extending a recent pullback from overbought levels ahead of what’s expected to be an active week for the market. The upcoming bitcoin cash hard fork, timelines for Ethereum 2.0 and increased federal scrutiny are likely to dominate the headlines.

Market Update

A majority of cryptoassets in the top-20 reported losses on Sunday, though downside pressure was relatively subdued as investors turned their attention to the news ticker. The combined crypto market cap bottomed near $210 billion on Sunday and was last seen hovering north of $212.6 billion.

Bitcoin consolidated just above $6,400 after seeing little upside during the weekend. Ethereum is down 0.5% at $211. Losses in XRP were contained to just 0.3% and the currency was last trading at $0.5057. Bitcoin cash fell 3.9% to $533, as prices continued to retreat from last week’s exorbitant highs.

On the opposite side of the spectrum, Stellar Lumens booked a solid session, gaining 5.5% to $0.2739, ahead of a large airdrop of XLM tokens by crypto wallet platform Blockchain. Cardano also rose 1.9% on Coinbase listing speculation. ADA is currently trading at $0.0765.

Market-Moving Headlines

Crypto traders are keeping tabs on several high-profile developments that could influence the market’s performance in the near term.

Bitcoin Cash Hard Fork

Bitcoin cash’s keenly awaited upgrade is scheduled to take place Nov. 15, placing markets on high alert for excess volatility. While most movers and shakers are expected to back the Bitcoin ABC implementation,  a contingency led by Craig Steven Wright is planning to part ways via Bitcoin SV.

As Hacked recently reported, BitPay has become the latest entity to back Bitcoin ABC. Crypto exchanges Binance and Coinbase, which also back Bitcoin ABC, will implement mandatory downtime leading up to the hard fork. As we saw last week, BCH price volatility could influence the broader market.

Ethereum Development Timeline

Ethereum’s core developers have laid out a new timeline for the much anticipated Constantinople upgrade. The timeline was communicated via meeting minutes of the latest developer meeting that took place on Friday. Those minutes, which are available on Github, show two possible dates for the proposed implementation of Constantinople: Jan. 16, 2018 and Jan. 12. The Jan. 16 date is the one preferred by most core developers.

The core developers also provided an update on the so-called difficulty bomb, which refers to the ever increasing difficulty level of the mining algorithm used to reward miners. According to the minutes, block times will begin increasing in January, with key milestones anticipated for April at the earliest.

SEC Crackdown

Crypto markets are on high alert after the founder of EtherDelta was charged by the U.S. Securities and Exchange Commission (SEC) for operating an unregistered securities platform. Zachary Coburn, the executive in question, has agreed to pay $388,000 in penalties, disgorgement charges and prejudgement interest.

The decision rattled investor confidence because it was the first time the securities regulator took action against a decentralized exchange. This likely stems from the sheer quantity of ERC-20 tokens currently available on EtherDelta. The SEC has stated before that it makes no distinction between security tokens and those that claim to have a “utility” function.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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 660 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Altcoins

BCH Price Resumes Downward Consolidation as BitPay Backs Bitcoin ABC in Upcoming Hard Fork

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After an explosive rally, bitcoin cash has entered a period of consolidation ahead of a highly anticipated hard fork in just four days. On Saturday, crypto payment processor BitPay announced it will back the primary upgrade of Bitcoin Cash, joining a growing list of entities that are sticking with the so-called “Satoshi Vision” chain.

BCH/USD Update

After a positive start to the weekend, bitcoin cash reversed course on Sunday, falling 5.1% to $530. With the decline, the digital currency is down nearly $120 from last week’s swing high.

Trade volumes have declined sharply since Wednesday, when daily turnover reached $1.2 billion on virtual exchanges. As of Sunday, BCH trade volumes had fallen to $678 million, according to CoinMarketCap. BitForex, OKEx and DigiFinex are the largest markets for BCH trades, based on daily turnover.

The 4-hour chart shows a large drop in momentum for the BCH/USD trade, with the relative strength index (RSI) approaching oversold territory. The MACD is equally bearish.

BCH also traded firmly lower against bitcoin. At last check, bitcoin cash was worth 0.08286396 BTC, down 4% compared with Saturday.

At current values, bitcoin cash has a total market capitalization of $9.2 billion, placing it fourth among active cryptocurrencies. At the height of the most recent value, bitcoin cash’ market capitalization rose above $11 billion.

BitPay Will Not Implement Bitcoin SV

BitPay, one of the world’s leading crypto processing companies, announced Saturday it will support the Bitcoin ABC implementation of the upcoming bitcoin cash hard fork. In doing so, the payment processor said it has no plans to implement Bitcoin SV, the hard fork protocol promoted by Craig Steven Wright, CoinGeek and Calvin Ayre, a well-known casino mogul.

“BitPay has not made any plans to migrate from the Bitcoin ABC implementation of Bitcoin Cash to a different implementation,” the company said in a blog post. “BitPay will closely monitor network conditions and the chains resulting from a chain split. We will send you another notification when we determine that payment risks have passed.”

The payment processor has recommended that users avoid sending transactions leading up to the hard fork, which is scheduled to take place Nov. 15.

As Hacked recently reported, the Bitcoin SV implementation promoted by Wright and others is being rejected by the BCH community. Bitmain founder Jihan Wu has also confirmed that BCH developers are “working together” to remove Wright from the community.

In addition to BitPay, market heavyweights Coinbase and Binance have also announced support for Bitcoin ABC. Individual miners are likely to follow suit should outright support for one version of the hard fork continue to build.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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 660 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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