Spy Games

Hi Everyone,

An article released yesterday seems to have everyone in a tizzy…

Needless to say, a lot of tech stocks took a hit on this. Especially Apple and Amazon who were reported to have worked with the supplier of these tainted microprocessors.

Even though just about everything in the article seems to be several years old and is most likely over and done with by now, it’s scary to think that our own technology can now be used to spy on every text message and conversation……. oh wait!!

We’ve known conclusively since the revelations of Edward Snowden in 2013 that privacy on the internet is an illusion.

However, this whole story does tie in quite well to the narrative that Donald Trump has been pushing lately and will likely be a big part of the next phase of the trade war.

Stocks are at their highs, so personally, I wouldn’t be running into any buy-the-dip trades just yet but it also shouldn’t be a reason to panic dump.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Covert Markets
  • Jobs Report
  • Spy Mining

Please note: All data, figures & graphs are valid as of October 5th. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

Thursday was pretty calm compared to Wednesday. Bond markets kept their cool and so did stocks for the most part. There’s a bit of selling pressure in Asia and Europe this morning but nothing out of the ordinary.

The US Dollar seems pretty steady as well but the Emerging Market currencies do seem to be sliding again over the last few days.

Jobs Report

Today is the first Friday of the month, and you know what that means

The last few monthly reports have shown us that the job market is showing some signs of over-heating. Fed Chairman Jerome Powell says that we’re in extraordinary times. However, pundits are saying that if the job market gets any better, it’ll likely encourage the Fed to raise their interest rates faster… and you know what that means

Stronger rate hikes would likely lead to a stronger Dollar at the expense of the rest of the world that relies on the Greenback for all their global reserve needs.

Spy Mining on Ethereum

Certainly, the last thing I want to do is start a panic. However, there is a bit of a situation that’s gaining attention in the crypto community and I’d like to outline it for our investors before people start to lose their heads.

It all seems to have started with this

Now, empty blocks are nothing new. They occur quite frequently in Bitcoin, Bitcoin Cash, Litecoin, and Ethereum since the very beginning and it should very much be seen as “part of the game.”

However, it does seem that since Alex’s report, there’s been a lot of stories propagating about Spy mining and SPV mining that we won’t get into. All we need to know is that there is a debate as to the ethics involved for miners to create these empty blocks.

This tweet, from Bitmain’s CEO Jihan Wu, from March 2016 demonstrates that they have every incentive to continue.

However, according to this fascinating article from Decryptmedia, it is becoming a problem in the Ethereum network. The author, Tim Copeland, identifies a mining pool called Etherdig that has mined hundreds of empty blocks in a row and thereby “making over $850,000 without contributing to the network.”

As usual, we can find the answer in the video archives of the great Andreas Antonopoulos. So as far as Bitcoin is concerned “empty blocks are not a bad thing, they’re part of the protocol.”

With this in mind, the total amount of empty blocks on the network, according to Alex’s research, is still only about 3%.

Though the percentage is up sharply, this is still a rather normal level when compared with other blockchains and even incredibly low according to historic levels for Ethereum.

All in all, even though I love Tim’s writing, I’m inclined to classify this story as FUD. According to my understanding, if the Ethereum developer community does decide to do something about Etherdig’s tactics, it should be as easy as submitting an EIP and slipping it into the next hard-fork.

Have an amazing weekend!!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,
Mati Greenspan
Senior Market Analyst

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