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The Secret Behind What’s Driving Cryptocurrency Prices

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What’s been driving crypto prices? During a period roughly between May 23rd and last weekend, crypto prices were holding a steady course and then suddenly within a brief 24 hour period both bitcoin and Ethereum lost over 12% of their value.  During that same period virtually all of the 100 largest cryptos were also falling at double digit rates.

Weekend trading can sometimes be misleading but this time seemed different. First came the headline from Cointelegraph: “All of Top 100 Cryptocurrencies See Red Amidst CFTC Price Manipulation Probe”.  This was followed by “South Korean Exchange Suffers a Hack, Sending Crypto Markets Tumbling”  written by Hacked.com’s own Gerelyn Terzo.

As these observers so correctly pointed out, over the course of just 24 hours more than $20 billion in crypto value just evaporated.  How was that possible considering that prices were already depressed by over 60%? What was it in those two news headlines that was so damaging to the fortunes of crypto investors?

When you take a close look and the CFTC stuff or the South Korean hack, it is obvious that the headlines aren’t worth the loss of $10 billion in crypto value.  This is not to dispute the accuracy or the quality of these writers. It is just darn difficult to reconcile the impact of either event. Please stick with me while I explain.

The CFTC Is Your Friend

Government regulation over financial markets is a fact of life and if cryptocurrencies are ever going to reach mainstream acceptance, regulators will be involved.  By mainstream, we are talking about assets that can be used for something other than tax evasion or nefarious purposes. As an investor, having the CFTC looking to protect your interest is an absolute benefit.

Even though 100 of the top cryptocurrencies got hammered when the CFTC news came out, trading records related only to bitcoin are involved.  The focus on bitcoin of course stems from the fact that a futures market exists that offers crypto investors the opportunity to hedge their risks.  This is a big plus.

Perhaps the most absurd part of the market’s reaction is how little is new or even surprising. The four exchanges in question, Bitstamp, Coinbase, itBit and Kraken, have been providing data to the CFTC as part of the original futures listing agreement.  For whatever reason, that agreement was not highly specific and thus the various parties are jockeying over legal issues. In the end, the CFTC will prevail because they have to power to do so.  End of story.

Korean Exchange Hack

Over the weekend Bloomberg reported the South Korean crypto exchange Coinrail had uncovered evidence of a hacking attempt.  Obviously, this is never a welcome event but is it enough to significantly affect the overall market by $10 billion? Well, consider this.

Coinrail is a tiny exchange that barely makes the list of top 100 doing only about $2.5-$3.0 million in daily trading in a market worth over $300 billion. Of the three affected coins – NPXS, NPER and ATX – only the later held any real value at $46 million according to CoinGecko.  NPER is worth less than $6 million while NPXS is quoted a zero. Is this the sign of a major Eastern European hacking ring destine to disrupt the crypto investment world or a couple of college kids on summer vacation?

The Secret Behind What Is Driving Crypto Prices

Hats off to Cointelegraph for citing the so-called bitcoin evangelist Alistar Milne survey of his Twitter followers on what caused the weekend price calamity.  Only 9% blamed in on the Coinrail hack. Something like 10% pinned it on the CFTC subpoenas. The overwhelming 81% majority checked the box “Crypto iz ded” or “Aliens”.  We are going to assume that Alistar’s followers are above average in the knowledge of crypto.

Clear Signs Of An Oversold Market

When investors dump securities out of fear or frustration, it is a sign of capitulation.  Back in March a similar sell-off lead to the surge in prices during April. This is the sort of thing that appears to be happening all over again.  Sometimes capitulation occurs during a fundamentally scary period like the financial crisis of 2008. Other times capitulation takes place with less drama when investors simply throw in the towel and sell from fatigue.  My guess is this is what is happening these days. Only the Aliens know with certainty. As for the rest of us, I am a buyer.

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 96 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Why Investors Should Keep an Eye on DigiByte (DGB)

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DigiByte (DGB) has been around since early 2014 but like many altcoins only came to public and commercial prominence during the market ramp-up of 2017. In fact, between January of last year and now, DGB coins have grown over 9,400% in value – a figure that holds up even now in the midst of a market downturn.

Any coin price recorded during January’s spike shouldn’t be relied upon as an indicator of future performance, but the +50,000% growth recorded during the peak of January 7th is surely worthy of a mention.

DigiByte is self-described as the “Fastest, longest, most decentralized & secure UTXO blockchain in the world today.” Bold claims indeed, but do they stand up?

The Blockchain

DigiByte’s claims on being the longest blockchain might have something to do with the block times. DigiByte blocks come along every fifteen seconds, and for a blockchain that has been mined since 2014 this adds up to a very long chain of blocks – outnumbering the older but slower Bitcoin blockchain which produces blocks every ten minutes.

What about its claims on being the fastest? Well right now DigiByte can handle 560 transactions per second, which vastly outnumbers the seven and fifteen transactions per second handled by Bitcoin and Ethereum respectively. DigiByte intend for that number to rise, with a projected 280,000 tps targeted for 2035.

Placing future projections to one side, even the current tps rate of 560 is enough to grab attention. The speeds on the network are helped in no small part by the large number of node operators on the blockchain, with 70,000 at the time of writing.

Hence when DigiByte claim to be the most decentralized blockchain, they might once again have a point. Compare the DGB node count to Bitcoin’s 9,000 or Ethereum’s 16,000 and you see the difference.

As for its claims on being the most secure…

Multi-Algo

Miners of all stripes and colors can find something to do on DigiByte with five different mining algorithms employed in the production of DGB. ASIC miners are catered to with the presence of SHA256 and Scrypt mining; and Skein, Groestl and Qubit make up the CPU and GPU end of the spectrum.

Each of the five algorithms take a 20% share of the block rewards, with each algo having its difficulty adjusted automatically in relation to the strength of its respective mining pool. The splitting of the mining duties also helps secure the network against 51% attacks, since any attacker would have to control a majority of at least three of the algorithm groups.

The fifteen second block times mentioned above are achieved by having each of the five algorithms produce a block in constant succession. Thus, each of the five algorithms are cycled every minute and a half.

A Brief History

This all sounds well and good, and has been enough to carry DigiByte to within the top thirty ranked cryptocurrencies in the world, but this weren’t always so rosy for Jared Tate’s project.

In fact, when Tate launched DigiByte it was also intended to be used as a transactional currency within the gaming industry. If necessity is the mother of invention, then perhaps it was the hungry demands of a large-scale gaming industry which pushed DigiByte’s back-end evolution.

Ultimately the gaming focus failed. After finding integration on popular games such as Minecraft and League of Legends, the project collapsed in spring of 2017 due to ongoing technical issues and denial-of-service attacks.

A detailed history of DigiByte’s development can be viewed on their website, but the development team were instrumental in introducing the DigiShield technology which was eventually adopted by a host of other mainstream blockchains as a defence against mining attacks.

The blockchain has undergone four hardforks since its inception, with each introducing new updates in the form of the fairly self-describing Multi-Algo, Multi-Shield, DigiSpeed and the aforementioned DigiShield.

SegWit was also implemented on DigiByte in early 2017, via one of three softforks enacted on the blockchain thus far.

Notable Partners

Well, getting anywhere close to becoming bedfellows with the likes of Minecraft and League of Legends is no small feat, even if the association seems to have ended. But DigiByte also brushed shoulders with the likes of Microsoft when it was added to Azure back in 2016, although news from that front has been quieter in 2018.

In recent times DigiByte partnered up with Investa – a financial services provider which aims to incorporate DGB onto its ATM machines and debit cards.

Recent Performance

DigiByte is one of the few coins to have recorded higher lows and (almost) higher highs since January. Look at the chart below and see one of the few altcoins not to have completely disintegrated amid the bear market of the last eight months.

DigiByte sets itself up as a competitor to Bitcoin, not to other altcoins. It took a while for DGB to get going (possibly due to the purposeful lack of an ICO or whitepaper) but when it did it fired full-steam ahead almost immediately.

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 38 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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Why Investors Should Pay Attention to Golem

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Did you know most of us only use a fraction of our computers’ capacity? Thinking about it, you wouldn’t expect most of the tasks we do on a daily basis to take up much computing power. So what do you think happens to the rest of your capacity?

It sits idle, and nothing is done with it. Your computer is still on and consuming electricity and this power goes to waste. Based on this exact “problem” Golem has come up with a solution that ends up being a lot like AirBnb for your computer.

Golem has created a peer-to-peer system for sharing computing power across the network. The result is a flexible, scalable solution that aggregates idle resources and democratizes the payout to the millions of people on the network.

Golem’s Long Road to an ICO

It took 3 years, but Golem finally completed the sale of their GNT token in early April 2018. The platform is built on ETH and utilizes smart contracts to drastically bring down the cost of distributed computing. The sale was completed in under 20 minutes and raised 820,000 ETH ($340 million).

How it works is that suppliers have extra computing power and are willing to be paid GNT in exchange for their computers performing tasks for requesters.

The app is 100% secure and operates in the background, and you can also choose what fraction of your computing power to use, so there’s no worry about getting slowed down by its operation. Ideally, the only time you would notice it is when you earn some ETH for performing tasks for other users.

Golem’s Economics

The mechanics of the market are pretty simple. There is demand (requesters) and supply (providers). The supply is essential, because there are no central servers that are able to perform computations. Providers will come to the network with the goal of earning a few dollars a month in ETH, at virtually no cost to themselves.

On the demand side, you have users who buy GNT tokens in order to pay for providers to perform tasks for them. Requesters generally join the network because of its lower cost. They are able to set the maximum they will pay (their bid) and Golem distributes the tasks appropriately.

A final party to consider are the software developers who enjoy access to a distribution channel that helps them depoy and monetize new software. Golem has a store that enables this function and adds much more value to the network.

The obvious competitors to Golem are big cloud services like Amazon Web Services and Microsoft Azure. The fact is that these services are grossly overpriced because the companies have developed an oligopoly that allows them to collect high margins. This is crazy because computing power is not actually a scarce resource and this is the market inefficiency Golem aims to fix.

Golem’s Long Game

Golem is currently trading at a fraction of a dollar ($0.145) and is down from a high above $1.00. The same downturn has affected many companies in the blockchain space, and Golem has received extra flak for taking so long to release their product. At the same time, another way to look at this is as a major buying opportunity.

Most of this has to do not with ineptitude, but a complex framework (Ethereum) that isn’t perfectly designed for integration yet. However, in the long-run Golem still has huge potential. As more features are released (Clay Golem is next) and they scale to be able to help data centres, there is no limit to how far they can go. The size of the market has been proven by Amazon and Microsoft, and now it is up to Golem to see if they can get a piece of the pie.

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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Lisk Mainnet Launch Triggers 32% Surge with Bitcoin Trades Dominant

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The Lisk (LSK) team announced the imminent launch of their mainnet migration earlier today, as the coin price bounced to 32% gains in less than twelve hours. An official block date has been set for the migration, expected to arrive on August 29th.

Since the surge, Lisk’s momentum has begin to cool, and with nearly two weeks before the mainnet goes live, it will be interesting to see how long the bounce lasts.

Mainnet Triggers Lisk Surge

Late last night LSK was trading at a price of $2.73, before the surge took the coin to $3.62. For some context, the coin hadn’t found itself at a valuation in the $2.70 range since August of 2017.

After being saved from a yearly low the coin’s push evened out for a few hours but has just spiked again shortly before publication. The latest surge just saw 9.6% gains within the space of forty minutes, as the coin jumped from a valuation of $3.30 to $3.62, where it now stands.

The Lisk mainnet launch was announced earlier on Thursday, August 16th, with anticipation building in the days leading up. Looking back, the descent to the yearly low seems like a game of chicken, as investors waited for the opportune moment to ride the hype wave to the mainnet release.

Regardless, the team set out the date for the migration:

“#Lisk Core 1.0 is going to Mainnet! The migration will take place when we reach block height 6,901,027 at the end of round 68327. We expect this block height to arrive on Wednesday, August 29, no sooner than 11:00 AM CEST.”

The team reminded holders not to transact LSK within 24 hours of this time period, but conceded they couldn’t enforce such a rule:

“Please avoid making any transactions during the 24 hours prior to and after the migration. For exchanges, we also recommend not accepting withdrawals/deposits 24 hours prior to and after the migration as well. However, we cannot enforce this, as Lisk Network is fully decentralized and everyone in the community is free to post any transactions that they wish to at anytime.”

Bitcoin Dominance

BTC finds itself the prime mover in the majority of LSK’s market movements today, with over 90% of Lisk’s daily volume coming in the form of LSK/BTC trades.

Global Bitcoin dominance has been stuck on 53% for the last two days, after hitting 54.4% on August 14th. Despite fluctuations today which have seen BTC/USD valuations oscillate between daily peaks of $6,580 and daily lows of $6,270, Bitcoin is still in a stronger position relative to its digital competition, and finds itself represented on exchanges in proportion to its dominance.

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 38 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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