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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.

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.

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.

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 553 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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UK-Based Blockchain “Minnows” Face Rip Current

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The bitcoin price has turned positive, taking many correlated altcoins higher with it after being punished for much of the weekend amid BTC’s modest declines. The recovery in the broader crypto market, meanwhile, appears to also be lifting the boats of a handful of UK-based blockchain startups, which the Financial Times refers to as “minnows”, or companies that were launched during the hype but have since had to face a strong current of selling pressure. Among these “minnows” are Argo Blockchain and On-Line Blockchain, both of which have decided to dive into crypto’s high tide.

Argo Blockchain

London-based Argo Blockchain, whose crypto mining operation is based in Quebec, just listed its shares on the London Stock Exchange (LSE). Argo operates a cryptocurrency mining pool, giving users the ability to “share computing power” to mine Bitcoin Gold, Ethereum, Ethereum Classic and Zcash via a smartphone, for instance.

Argo attracted $32 million to its coffers, attaching a $61 million valuation to the company and the status as the maiden crypto mining company to go public on the LSE. But with the stature comes the whims of cryptocurrency prices, which has seemingly made Argo’s stock a target in the equity market, as evidenced by the stock’s near 30% decline since its IPO earlier this month from $13.05 to $9.25. It’s not the response any listed company is looking for and could explain why crypto mining giant Bitmain is reportedly waiting until after the summer for its expected Hong Kong IPO filing, which is when some market veterans are predicting the bull run to begin.

Source: Yahoo Finance

Argo isn’t the only mining-fueled startup facing the undertow. As Hacked.com previously reported, Genesis Mining recently referenced the challenging environment for cryptocurrency miners, revising its contract terms amid “reduced mining outputs.” Argo Blockchain’s (ARB.L) stock added 1% on Friday when the bitcoin price was on the rise.

On-Line Blockchain

UK-based blockchain R&D firm On-Line Blockchain took a page out the book of Long Island Blockchain when it pursued a makeover in an attempt to capitalize on bitcoin fever. The company shifted its focus from backing “internet and information businesses” to incubating crypto startups. On-Line had a good run from year-end 2017 to the new year, but once the downtrend in cryptocurrency prices hit, it spilled over into the performance of this company.

On-Line Blockchain’s soared nearly 400% last October on the heels of the name change, but year-to-date the stock has been slashed from $87 to $39.50. Investors have had little to cheer about the company, which has announced a few blockchain-fueled developments since the restructuring, including a crypto-mining pool and a new digital currency dubbed PlusOneCoin, but neither appear to have taken off. Most recently On-Line backed crypto-gaming company Encryptid Gaming with a $100,000 investment, the FT reported. Meanwhile, On-Line Blockchain (OBC.L) gained 5% on Friday alongside the gains in the bitcoin price.

The recovery in crypto prices has been comprised of fits and starts, one that most recently is showing a lot of green. Bitcoin, with more than 51% dominance, is calling the shots as correlated altcoins — similar to the UK’s “minnows” — wait on its every whim.

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 40 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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2018 Crypto Exchange Trading Revenue Poised to Double to $4 Billion: Bernstein

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For the most part, the cryptocurrency markets have been operating on all cylinders year-to-date with the exception of one very important metric — price. And now that the bitcoin price appears to have found its footing, today’s slip to $6,410 notwithstanding, that component of the market appears to be cooperating, too. Wall Street research firm Bernstein is acknowledging the industry’s impact, predicting that cryptocurrency exchange revenue may grow more than twofold versus year-ago levels to some $4 billion.

The Bernstein report, as cited in Bloomberg, is entitled: “Crypto Trading — The Next Big Thing Is Here?” The title alone reflects a more open-minded if not sanguine take on the cryptocurrency market, more specifically speculative trading. Last year, leading crypto exchanges generated $1.8 billion in transaction fees, which according to the Sanford analysts is 8% of what Wall Street exchanges made. Based on this metric of transaction fees, cryptocurrency trading was second only to global cash equities.

Courtesy: Bloomberg

The outlook may seem shocking, considering that the bitcoin price is down more than 60% from last year’s peak. But leading cryptocurrency exchange by trading volume Binance, which boasts millions of users, tipped its hand to balance sheet strength. The exchange’s CEO CZ recently provided an outlook, saying the company was on track to deliver record profits this year of as much as $1 billion, as CCN previously reported.  On the low end of its range, Binance is looking at $500 million.

Advantage Goes to Coinbase

Meanwhile, Bernstein analysts are quick to point out that Wall Street banks have largely been on the sidelines of crypto, Goldman Sachs and JPMorgan’s crypto trading and blockchain investments notwithstanding. As a result, the could find themselves in an unusual competitive position where crypto exchanges like Coinbase dominate market share. Coinbase already boasts some “50% of the transaction revenue pool,” according to Bloomberg, and fears of fraud coupled with a murky regulatory climate hold the big banks at bay.

“As the crypto-asset class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms,” according to Bernstein analysts, who then pointed to examples across custody, portfolio management and making markets, for instance.

Indeed, the persistent downturn in the cryptocurrency market, particularly in the bitcoin price, has had observers wondering how crypto exchanges could offset the damage. After all, they generate revenue based on trading volume.

Exchanges like Coinbase have been adding coins, most recently Ethereum Classic (ETC) but they’ve got several more altcoins waiting in the wings that they’re looking to support. While Coinbase officials have stated that these new altcoin additions are in response to trader demand, it’s also a way for them to continue to collect trading revenues while the bitcoin price has been stalled. Binance, meanwhile, whose trading volume hovers at approximately $1.4 billion in the last 24 hours, supports hundreds of altcoins.

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 40 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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Pornhub Partner Site Tube8 Announces Partnership With Vice Industry Token

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Tube8, a Pornhub subsidiary with over 150 million page visits every month, wants to incentivize consumers’ porn-watching habits with cryptocurrency.

The company revealed it has entered an agreement with Vice Industry Token (VIT) that will see its entire platform tokenized. The collaboration will enable users to earn VIT tokens for streaming and interacting with Tube8 videos.

The token implementation is planned to begin at some point before the end of the year. The announcement makes Tube8 the first major adult platform to adopt token-based rewards and actually pay its users for interacting with the content.

Some context first:

The adult entertainment industry has long been known as pioneers of early technology. This goes back to porn studios first emerging as a legal workaround to enable sex work—as long as there’s a camera.

This announcement is notable for the sheer number of users who actively use the site. It’s the first major test that will actually yield important data about whether this time of crypto business model works in practice.

According to Tube8 spokesperson Robin Turner, “For as long as I can remember, getting paid to watch porn was always a pipedream; one that was always dreamed about, but never fully realized. Now however, with the introduction of VIT, we are marking a paradigm shift in how people consume adult entertainment.

As opposed to having to fork over money to consume content, which some sites require, our users will get paid to consume our free content,” he continued. The more they interact with our videos, the more money they earn.”

Tube8 did not elaborate on how its crypto-rewards will be calculated, but odds are the platform will set certain reward limits to prevent users from gaming the system for profits.

One thing users won’t have to stress about is paying extra fees to use their tokens. Turner emphasized this fact repeatedly when he said, “There are no fees but [Tube8 and Vice Industry Token] will hopefully benefit mutually by expanding their user bases and increasing engagement with their respective products through this collaboration.”

The choice for Tube8 to alter its platform with a fresh user engagement model makes sense, but the rationale for partnering with Vice Industry Token begs some important questions – especially when one considers in the heated controversy the token distributor itself was recently embroiled in with Tube8 parent company pornhub.

Rober Turner spoke on this matter when he said, “VIT offers Tube8 a way to reward their viewers by monetizing content through the VIT protocol. Whereas before, users would log in, watch a few videos and leave, VIT incentivizes them to create an account and interact with the content to generate Vice Tokens.

It is the only cryptocurrency that is designed specifically for tokenizing and rewarding viewers of free content on tube sites,” the Tube8 spokesperson continued. Anyone can earn VIT and anyone can buy VIT.”

Despite Tube8’s insistence that Vice Industry Token is the only solution specifically built for integrating token-based rewards, there are tons of other blockchain startups providing similar services – though not all of them are fully centralized (which nullifies some of the biggest advantages of using blockchain in the first place).

That said, Vice Industry Token has managed to strike deals with a number of adult industry household names, including a collaboration with Donald Trump whistleblower Stormy Daniels. So there is clearly something that is making the offering attractive to industry insiders (and hopefully that is not Vice Industry Token’s sales team).

Although this is mere speculation, one theory is that since VIT originated from the executives behind adult industry behemoth Hustler, it is possible that they have connections with alot of industry figures that eased the transition to a blockchain based business model. If you’ve done business with someone before, it’s easier to take a leap of faith.

There’s also the fact that cryptocurrency and blockchain technology in general is so “in” right now.

According to Turner, “Tube8 has over 10 million registered users who frequent the platform regularly Considering the popularity of cryptocurrency right now, it only made sense to pay them for watching, and interacting with, our videos. We value their attention and want to keep them coming back for more!”

There’s no doubt that rewarding users for their kinks is an offering likely to arouse the interest of many consumers across the globe. But given their ambitious goals and user base, Tube8 and Vice Industry Token have got some equally hefty technological hurdles ahead of themselves if they want to succeed.

The first of these undoubtedly is scalability.

While tokenizing a platform with a 10 million-strong user base and 150 million monthly visits sounds good, it is by no means an easy task. In fact, this would be nearly impossible on common blockchain networks like Ethereum, and this is according to co-founder Vitalik Buterin himself.

At present, Ethereum can handle roughly 15 transactions per second – far less than Tube8 would need to keep its millions of horny users properly rewarded consistently.

While Vice Industry Token has announced plans to migrate to a forked version of the Steem blockchain (which is more commonly known as Graphene) that purportedly can handle a throughput of 100,000 transactions per second, its VIT token is still based on Ethereum. The company ran an initial coin offering (ICO) on the Ethereum network, offering VIT as an ERC20 token.

Given that (as an ERC20 token) VIT suffers from the same problems that Ethereum does, the only way to fully tokenize Tube8 without clogging the entire blockchain would be by giving up decentralization – and running the VIT reward-based integration on Tube8 through a centralized server. This would completely defeat the point of moving the platform to a blockchain in the first place.

That said, these workarounds have arguably served as experiments in blockchain technology; and some companies may find this worth the risk if it means they will be on the bleeding edge of technological progress.

When asked about its plans to deal with the Ethereum-specific technological obstacles of its Vice Token integration, Tube8 suggested VIT has successfully transitioned to Graphene, and is no longer running on Ethereum.

Robert Turner further elaborated upon this as well, saying, “VIT’s blockchain, based on Graphene, can indeed handle the number of transactions required with no fee unlike Ethereum. VIT uses DPoS [Delegated Proof-of-Stake] and is fully decentralized. It is the only true working fork of Steem in existence.”

But according to Vice Industry Token reps on Telegram, VIT still operates on the ERC20 protocol. Even VICE CEO Stuart Duncan seems to agree on this point. “Everyone needs to understand there are a lot of moving parts to get Graphene as a software fork of Steem to run our platforms”, Duncan told VIT holders back in July.

Among other things, Duncan admitted on Telegram that one of the main roadblocks ahead of the Graphene migration is making sure the VIT-powered fork of Steem is completely bug-free. He also added the company is working hard on fixing so called “minor” bugs in a blog post from last month.

It goes without saying that this job might need more then a well-endowed pizza man knocking at the front door.

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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