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Segwit2x: The Hard Fork That Failed to Activate

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After a tumultuous two weeks, Segwit2x appears to be more like a distant memory. Industry sources have uncovered that as many as 150 nodes running the algorithm have stopped accepting transaction blocks. Although it’s impossible to declare a project like Segwit2x formally dead, the avenues for its implementation have quickly narrowed.

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The stoppage limits miners from actually producing transaction blocks larger than the 1 MB standard. One Segwit2x developer implemented a patch to make it easier to create bigger transaction blocks, but this doesn’t appear to have motivated wider industry adoption. At this point, it seems like the proposed fork has run out of leg room – and the necessary support from the community.

Lack of Consensus

Backers of the protocol, which included miners, startups and other market participants, cancelled the fork on Nov. 8, citing a lack of consensus. The 2x upgrade was supposed to boost bitcoin’s transaction capacity, thereby making it more attractive for consumers. This was part of a broader initiative to make cryptocurrency more relevant from an payments perspective.

The Segwit2x protocol emerged from the so-called New York Agreement, a comprehensive scaling proposal that was signed back in May by a long list of market players. The agreement was followed by months of infighting, including a heated debate about which cryptocurrency would get the coveted BTC symbol.

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Fork day was supposed to happen on or about Nov. 16. Not a single Segwit2x block has been mined since the anticipated fork date – at least, none that we know of so far.

Analysts have also noted that software bugs made the new algorithm’s implementation difficult to pull off well before expected fork day. This was especially the case for btc1, a Segwit note designed to diverge from the original blockchain.

That being said, the activation of Segwit2x in the future isn’t impossible, no matter how unlikely it may appear now. Some analysts think the fork’s backers could file their grievances by supporting another project with similar goals (those aren’t difficult to find, given the increasing demand for scalable bitcoin solutions).

The following chart provides a simple breakdown of what the fork proposed to achieve relative to bitcoin and Bitcoin Cash. A more detailed discussion on the matter can be found here.

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

 

Market Response

The cryptocurrency market hasn’t taken the Segwit cancellation lightly. The decision to abandon the fork triggered heavy buying interest in bitcoin and its newly created alternative, Bitcoin Cash (BCH). Over the past two weeks, these coins have demonstrated inverse trading patterns, with BCH surging to levels that would have seemed highly improbable just a few weeks ago.

Both cryptos appeared more in tandem this week, although Bitcoin Cash traded at less than half of its record levels. Bitcoin, on the other hand, touched $8,000 on at least two occasions.

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

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Companies are Lining Up to Launch Bitcoin ETF, According to SEC

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Two companies have stepped forward with applications to the U.S. Securities and Exchange Commission (SEC) to launch a bitcoin exchange-traded fund (ETF), according to a recent report from CCN. The renewed push toward ETFs comes as more institutional investors look to enter the burgeoning cryptocurrency market.

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Bitcoin ETF

According to the SEC’s public filing system, regulators received new applications for the REX Bitcoin Strategy ETF and Rex Short Bitcoin Strategy ETF, as well as the VanEck Vectors Bitcoin Strategy ETF.

REX, which is based in Connecticut, filed its application on Dec. 8. The New York-based VanEck filed its application on Dec. 11.

VanEck had previously filed to create a bitcoin ETF before the SEC struck down a similar proposal. That being said, VanEck will reportedly provide the pricing data for an upcoming bitcoin futures contract to be made available via the Nasdaq exchange. Unlike the CBOE and CME futures contract, the Nasdaq version will pull pricing information from 50 sources provided by VanEck.

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A bitcoin ETF would make the digital currency widely available to millions of investors through common retirement accounts, such as IRAs and 401(k)s.

The highly coveted but elusive bitcoin ETF has been tried before by the Tyler and Cameron Winklevoss, who failed to earn SEC approval earlier this year. Regulators disapproved the ETF on several grounds, including lack of regulation and a general inability to enter necessary surveillance-sharing agreements.

The SEC’s ruling on the Winklevoss ETF puts considerable doubt over whether the new products will ever get approved. Analysts say that ETFs could spark an even bigger rally for an asset class that has already added hundreds of billions of dollars to its value this year alone.

Bitcoin Trade Volumes

Bitcoin’s market cap surged past $290 billion on Monday as institutional money flowed into the asset class following the launch of the CBOE futures contract. Trade volumes over the past 24 hours reached $12.6 billion, according to CoinMarketCap.

Bitcoin-dollar transactions on Bitfinex accounted for 11.6% of the daily transaction. South Kore’as Bithumb accounted for nearly 11% of the daily turnover. Coinbase’s GDAX also saw 6.5% of the daily turnover.

At press time, BTC/USD was trading north of $17,100.

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. 

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“Buy Bitcoin” Is Lighting Up Google as Cryptocurrency Outshines Gold

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The Google search engine has been turning up a lot of bitcoin as of late, a sign of growing interest in the cryptocurrency. In fact, searches for how to buy bitcoin have far outpaced similar searches about gold, according to a recent report.

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Bitcoin Search Results

According to The Telegraph, the search term “buy bitcoin” first outstripped “buy gold” on Google in May. Its popularity has since grown manifold. In fact, “buy bitcoin” is now three times more popular than the search term “buy gold” during the 2008-09 financial crisis.

The financial crisis triggered the most protracted recession since the 1930s, making gold the rational choice for risk-averse investors. Gold prices would later surge to record highs, eventually maxing out above $1,900 a troy ounce in 2011.

Bitcoin is often referred to as digital gold for its perceived haven-like status. Although many would disagree with that assertion, bitcoin and gold share some important similarities. Both are finite resources and reflect a general distrust in governments and traditional financial institutions. Apparently, bitcoin has also been used to shield against growing economic, financial and geopolitical risks, although we don’t have enough data to draw definitive conclusions about its risk-hedging capability.

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Bitcoin set another milestone on Thursday by smashing through $14,000. The world’s foremost digital currency has added a jaw-dropping 42% over the past five days, which is equivalent to more than $4,000.

Google search trends tell us that interest in the digital currency skyrocketed once more after prices rose above $10,000 for the first time. As bitcoin crossed the five-digit mark, Google search interest for the coin rose from 26 to 100. According to Google, these numbers represent “search interest relative to the highest point on the chart for the given region and time.” As you might expect, 100 is considered peak popularity for a search term.

Demand Rising

Google search results are a proxy for underlying demand in the cryptocurrency market. Higher search density suggest greater buyer interest and trading volumes for bitcoin. A simple look at the latest trade volume data corroborates this point.

Bitcoin’s 24-hour trading volumes surpassed $13.2 billion on Thursday, according to CoinMarketCap. That’s more than double the previous day’s volumes. Considering that BTC/USD has more than doubled since October, it’s reasonable to assume that higher search results have been associated with increased trading activity.

South Korea’s Bithumb is turning over the most bitcoin trades at the moment. The exchange is responsible for 10% of daily transactions, which is equivalent to roughly $1.3 billion. Bitfinex is a close second at around 9.4% of the total market.

With volume like this, it’s little wonder why bitcoin controls nearly 60% of the cryptocurrency market. Its growth has also triggered a buying frenzy in other cryptocurrencies, commonly referred to as altcoins.

Growing demand for cryptocurrency is also reflected in another key metric – the number of account registrations. For that, we look not further than Coinbase, which is America’s largest cryptocurrency exchange. The platform recently reported 13.3 million accounts, including 100,000 new signups over Thanksgiving weekend.

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. 

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Global Cryptocurrency Market Now Worth More Than J.P. Morgan

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Cryptocurrencies

The cryptocurrency market notched new all-time highs Wednesday, overtaking America’s largest bank in the process.

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Cryptos Overtake J.P. Morgan

The total value of all cryptocurrencies in existence surpassed $370 billion in mid-week trade, according to CoinMarketCap. The gains were inspired by another record-setting surge in bitcoin, IOTA and Monero. Combined, the crypto market’s value overtook that of J.P. Morgan Chase & Co, which is worth roughly $367 billion.

J.P. Morgan is the stomping ground of Jamie Dimon, one of bitcoin’s most outspoken critic. Dimon has called the digital asset a “scam” that is destined to “blow up.” Interestingly, his firm has facilitated cryptocurrency transactions, putting Dimon in the crosshairs of some interesting banter.

J.P. Morgan, which is a member of the prestigious Dow 30, saw its share prices decline slightly on Wednesday. The stock has returned 22% this year in a rally that has been largely inspired by Donald Trump’s electoral victory.

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Cryptocurrencies have been on an tear all year long, but a decision by China in September to ban trading triggered a massive correction in the market. It didn’t take long for money to flow back into cryptocurrencies as investors quickly bought the dip.

China remains largely on the outs of the cryptocurrency arena, but other nations have taken the reigns. Japan and South Korea have quickly emerged as hotbeds for all things cryptocurrency. South Korean exchanges have been at the center of large rallies in bitcoin and altcoins in recent months.

Bitcoin Continues Higher

Bitcoin prices broke above $12,000 earlier this week as investors awaited the launch of the first cryptocurrency futures contract on Sunday. CBOE made a surprise announcement earlier this week that it aims to become the first major exchange to initiate bitcoin futures. That honor was expected to go to the rival CME Group, which plans to launch its bitcoin derivatives product Dec. 18.

Nasdaq is also reportedly working toward a bitcoin derivatives product for sometime next year.

At last check, bitcoin was trading north of $13,000. The digital currency system has added a staggering 28% in the last five days. It was responsible for nearly 48% of daily turnover on Wednesday. IOTA was second at nearly 9% and Ethereum third at 8%.

Bitcoin’s relentless surge has rubbed off on other cryptocurrencies. Currently, there are 20 altcoins valued at $900 million or greater.

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 money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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