Tuesday, August 22, 2017

Till Death Do Us Part - The Partening



BTC : " Where should I go? What should I do?"
BCH : " Frankly my dear, I don't give a damm "
             
This big block/small block saga like the story above, started well. So what happened? And as the question begs. Where should BTC go? What can BTC do?

Sadly, for BTC there are no good outcomes. The Chain Death Spiral has set in and it can only have one ending. The BTC chain will come to a grinding halt, because the little hashing that is left, will not be enough to take it past the next difficulty adjustment, if it makes it past the one coming up.

At the very core,(pun intended) the real difference between BCH and BTC is that people embracing BCH believe in the protocol while people embracing BTC believe in the development team. Because the protocol was held hostage by the development team, this current state of affair arose. Never again should we allow, or even make it possible for any faction, not even miners, hold the protocol hostage.

We are now watching the end game play out. The value of BTC is crumbling. The parties holding the price up will soon give up completely. It is futile, When the chain in question is impossible to use, it does not have a value. Already 38.95% of the hashrate have migrated to BCH and they are never going back, despite wishful assurance that they will, arguably to chase better profits. In reality, for a large majority of miners, the bitter experience of the past have been too painful. In addition it also does not make any sense to be mining on both chains.

A miner now earns 83% less, mining on the BTC chain. In addition he wont be able to cash out for at least 2 days and by then the prices could have fallen further. No commercial miner can absorb these losses for long, no matter how strongly he supports the losing chain. His losses are uncapped, unknown and uncontrollable. Contrast this situation to that of the initial early BCH miner. He could allocate and budget for a cash burn until the project succeeds. His losses are capped, known and controllable.

BTC price may never recover. It will slide downwards with decreasing usability, The BTC chain may never be profitable to mine on again. On the other hand the price of BCH will trend upwards with increasing hashrate migration.

The End

Soon, BCH block height will surpass BCT to become the longest chain. By then it may even have the higher amount of hashing power. The BTC chain will just grind to a halt. It may not even see the next difficulty adjustment. The core team can move their agenda to Litecoin. The natural order and balance of the crypto universe will be restored. 


Related Articles

Chain Death Spiral - Watch In Real Time - Here

Will the real Bitcoin Please Stand Up - Here

A Tale Of Two Coins - Here

Bitcoin Cash Will Regain The Mantle To Be Bitcoin - Here

Chain Death Spiral - Here






Sunday, August 20, 2017

Chain Death Spiral - Watch It In Real Time

You can watch the progress of the Chain Death Spiral in real time. Watch the progress of the orange line. Hover over it to follow the current block time. Normal block time is 10 minutes. It is already at 13 minutes and increasing as more hashrate migrates towards the BCH chain. The graph is changed so average is 6 blocks per hour look to see BTC going towards zero.

                                              Chain Death Spiral Real Time Monitor

                                                       Check above data here  ( block time and hash rate )

This graph will show you how much hashrate have migrated to the BCH chain, also in real time. As I write it is approaching 23%

                                                BTC to BCH Hashrate migration


The BCH chain is curently 1125 blocks behind the BTC chain. Click on the link for an update.  This next graph will give you the speed at which blocks are being found. If you divide 10 minutes by the speed you get the block time. So 10/3.6 equals 2.77 minutes for BCH and 10/0.87 equals 11.49 minutes for BTC. It will take 1125*2.77/60/24 = 2.16 days to find those 1125 blocks

                                                          Block Speed Monitor

At this rate the BCH chain will be longer than the BTC chain by Wednesday. Earlier if the hashrate migration is faster.

Another graph of interest is the difficulty retargeting.

                                                         Difficulty Retargeting Monitor

At this point  BTC will retarget in 2.49 days. The next difficulty can be seen here. Even when the difficulty adjust it will not be very different from the difficulty now as it is very close to the end of the 2016 blocks readjustment period. The problem for the BTC chain is that it must now keep this difficulty for another 2016 blocks with ever lengthening block times creeping in.

The BCH chain is set to retarget in 2.8 days. This next difficulty adjustment will still be well below that of the BTC chain. By this time the BCH chain is already longer and racing ahead.

In all likelihood if the BTC chain makes it to the next difficulty adjustment, it will never see another difficulty adjustment ever again.

How you process this data and understand the economics of what gives the blockchain value will determine if you make or lose money.

The next link will give you real time price action for Bitcoin Cash. Just look at the fiat exchange pairs as the BTC pairs will become meaningless. The Korean exchanges of Bitthumb, Korbit and Coinone. make up 60% of the market and are in fiat. Outside of Korean exchanges you can follow Bitfinex, Kraken and CEXio. Unfortunately the main exchanges of Gdax, Bitstamp, BTCC and Itbit have ignored Bitcoin Cash.



Conclusion and Possible Outcomes.

BTC price at the moment is unrealistic. Someone is supporting the market at great cost in order to keep the price up as a drop in price will mean that BTC is less profitable to mine leading to more miners migrating.  The action is pointless and untenable. Miners will not want to mine a coin that they percieve will lose value by the time they come to sell. The hashrate migration to BCH will not be slowing down either.

So how much is a blockchain that becomes impossible to transact worth? I am afraid the answer must be zero. So these are the possible position and outcomes.

1) Hold BTC and BCH in equal amounts. This is the position you are in if you have not sold your BCH. So Coinbase did their customers a big favor by holding on to their tokens for them.

2) Sell your BTC and buy BCH or any other coin. The time window in which you can do this will shrink very quickly.

3) Buy BCH. Again one where the window of opportunity is closing rapidly. The speed of hashrate migration is the determining factor.

What can anybody do? I am afraid nothing really as we must now let events run its' course. Appealing to miners for support is not what Bitcoin is about. Bitcoin is strong only if the pure economic forces of individual profit is the motivator. Consensus by agreements is unnatural and will not work. The invisible hand of the market must be allowed to function without intervention.

BCH and BTC price will trend lower. How low is unknown but hold. The position will settle and reverse. This period of uncertainty will end and we will learn from it. Bitcoin will continue the journey and we will sail past 5000 again.

These are my opinions and not financial advise so use your own judgement. I have just given you the tools and told you how to use and interpret the result. I hope I am wrong. I pray I am wrong. We are in this position now. If you have another scenario let us hear it. You can't suggest burying you head in the sand!

Segwit would not help much. Very few people would use it. It takes time to gain acceptance and adoption. The same with lightning.


Related Articles

Will the real Bitcoin Please Stand Up - Here

A Tale Of Two Coins - Here

Bitcoin Cash Will Regain The Mantle To Be Bitcoin - Here

Chain Death Spiral - Here



Will The Real Bitcoin Please Stand Up. Please Stand Up.

Over 2600 years ago, far away in the mist of time, in ancient Turkey, the Lydians and the Medes had been at war for 5 years. According to the Greek philosopher Herodotus, in the year 585 BCE, in the midst of battle, there was a solar eclipse and day was turned into night. The Lydians and the Medes took it as an omen that the gods wanted them to stop fighting and so peace ensued.

Tomorrow 21 August 2017 there will be solar eclipse over large swathe of the USA. On this day the Big Blockers and Small Blockers who have been at war for nearly 5 years decided to lay down their keyboards and peace came upon us and the community was once again united.....LOL NOT.

Back to reality

Over the last 3 days the whole of crypto and mainstream media was ablaze with the news of the nearly five fold increase in BCH price to over 1000 USD, sweeping aside all predictions of its' early demise. Of course to those of us who are of the opinion that the BCH fork was a fork back to the original bitcoin, we are not at all surprised. It was rather expected and with the anticipation of more to come, until the Cashening.


Fitting in the pieces

Looking back, we learn that 55% of the trading volume over the last 24 hours amounting to 1.7 Billion USD, yes billion with a "B" was transacted on 3 South Korean exchanges. To put this in context, the total worldwide 24 hour trading volume for BTC was only 2.6 billion. More important was that the 1.7 billion was in fiat. Not BTC. It is clear now that BCH explosive price rise was a result of heavy buying from South Korea with "new money".

So why only South Korea and for BCH? There was no buying pressure from China or Japan. China played a huge part in BTC trade volume until the Chinese government clamp down on the exchanges. The slack was later picked up by Japan when the Japanese Government legalise Bitcoin on 1 April this year. Then on 24 July South Korea made bitcoin payments legal.

South Korea the world's 12 largest GDP and a East Asian Tiger economy made its' mark in the crypto world with a huge play in BCH. South Korea the home of Samsung with 17% share of the world mobile phone market is now officially in the crypto business, and they selected BCH as their vehicle.

This is significant and mark the difference in philosophy and approach by these 3 East Asian economic competitors. China chose to develop their own national digital currency. Japan decided to go with BTC and South Korea have chosen BCH. Who will be right?

Coming back to the 1.7 billion USD 24 hour trade in BCH. This amount of money cannot come from just ordinary citizens. Large institutions and perhaps even banks are involved. This play is not over. Not by a long shot. Expect to see higher and quicker price rises in BCH, especially when the rest of the world catches on to what is really happening.

Will the real Bitcoin please stand up.

Yesterday for the first time it became more profitable to mine BCH than BTC. Today at block 479808 BCH had its' first standard difficulty adjustment and is now only 7% the mining difficulty of BTC. These are watershed moments and marks the point at which miners will choose to mine the more profitable BCH chain, and initiating the dreaded Chain Death Spiral for BTC. So when will BCH replace BTC as the real Bitcoin?


In a Twitter post, Gavin Andresen said that he will refer to BCH as Bitcoin if it has the longest chain and his view is echoed throughout the community. Over the last 24 hours 139 BTC blocks and 263 BCH blocks were found respectively. This is a difference of 124 blocks. As of now the BCH chain is 1452 blocks behind  BTC. This means that in as little as 11 days and most probably earlier the BCH chain will overtake the BTC chain to become the longer chain. Will we then call BCH Bitcoin?

Another twist. Ryan Charles in his latest Youtube post suggested that BCH should just be called CASH. Wow. What a great idea. A totally left field proposition and yet on reflection its' simplicity is indeed powerful. BCH is exactly that - CASH - Spending Money.

So now we come back to the question of  between China, Japan and South Korea, which country chose correctly. My money is on South Korea. What's yours?



Related Articles

A Tale Of Two Coins - Here

Bitcoin Cash Will Regain The Mantle To Be Bitcoin - Here

Chain Death Spiral - Here


Saturday, August 19, 2017

A tale of Two Coins

In 2005 Michael Burry discovered that the mortgage back securities that banks were selling to investors had included in them mortgages that were delinquent. This he recognised to be a fatal flaw and as history would record, he successfully engineered a long term bet against those securities in what we know today as "The Big Short".

That there were delinquent mortgages in a package of securities was not unknown. The idea was that returns from the good mortgages easily covered the small losses from the bad. The problem however was that there was an insatiable appetite for these products and investors were willing to accept ever higher level of risky mortgages in their basket, to the point where these sub-prime mortgages were "manufactured" to supply the demand. Investors drew comfort from the widely held but faulty notion that house prices will keep rising and the property market will never collapse. They were wrong, and we are still living the result of that folly, with nearly 10 years of recession/depression.

How is this relevant to Bitcoin?

In a previous article I pointed out that as a result of Bitcoin Cash, miners now have the option to mine BTC or BCH. Bitcoin without the Emergency Difficulty Adjuster (EDA) is vulnerable to a massive drop in hashing power which would lengthen the time between blocks to hours such as happen to BCH at the time of the fork. This is a disaster that BTC would never recover from because it does not have the protection of EDA.

The Bitcoin mainstream refused to acknowledge this, postulating that it would never happen and that miners will never do that. But that is not the point. The question is not if miners will or won't but if they can or could, and if it is the latter, then there is a non zero existential threat to the universally held notion of the indestructibility of Bitcoin. Investors who hold bitcoins as a store of value can wake up one morning to a black swan event that renders the value of their nest egg to zero. Projects and start-ups dependent on BTC holding value will collapse and fail.

To make matters worse BTC is also limited to 1MB blocks. This means that if only a fraction of mining power is lost to the bitcoin network, block time lengthens and the mempool bloats. Without the benefit of big blocks to clear the backlog, transaction fees increases to the point where the bitcoin blockchain becomes unusable, except to those willing to pay usurious fees.

Long block and block maturity time will drive miners to mine the BCH chain which is already more profitable. This causes a feedback loop which will inevitably lead to the dreaded Chain Death Spiral, and the collapse of the Bitcoin blockchain.

To argue that the BTC blockchain is more profitable to mine if higher fee rewards are taken into account, is oxymoronic to the extreme. It is the argument of a bias and disingenuous supporter or a greater fool. The fees are high precisely because blocks are small. Pinning their hopes on Segwit and/or 2MB is hopelessly inadequate and unrealistic for a technology that is on the cusp of explosive growth and mainstream adoption.

The time for action is now.

We must now confront the reality that Bitcoin has not 1 but 2 fatal flaws. EDA and 1MB blocks. The effects of the 1MB block is already evident with the mempool consistently over 45MB and a blockchain that is becoming increasingly unusable. In all probability, the Bitcoin blockchain is kept alive only by the good graces of miners honoring their increasingly untenable NYA agreement.

Why has there been no discussions of these fundamentally important and critical issues? The answer must be fear and greed. Fear that any such discussions will lead to the fall in the bitcoin price or a move to Bitcoin Cash. However, censoring and avoiding discussions purely out of greed is downright fraudulent. We have already seen what happens as a result of greed replacing reason in the sub-prime disaster. Not to address this "elephant in the room" may lead to a total loss of confidence by the public and ridicule by governments and banks, eager and waiting to regulate and control.


A new market quoted pair for Bitcoin Cash.

The market capitalisation of Bitcoin Cash is in excess of 10 Billion and rising. Many investors are now aware of the problems inherent in Bitcoin and have opted to move or hedge their position with Bicoin Cash. Herein lies a problem. The value of Bitcoin Cash is pegged to Bitcoin. What happens if the price of Bitcoin goes to zero? We need a contingency plan now. Bitcoin Cash should be traded and reported as currency pairs side by side against BTC. We must demand and insist this of the exchanges. This way if BTC fails the process of transition is seamless.

Contrary to popular misconception, Bitcoin Cash is the real bitcoin, and it was not a new fork, but a fork back to the original. In just two weeks it has taken the number three spot in market capitalisation and will soon replace Ethereum at number two. In the process it has eroded the value of all alt coins that have gained prominence because they were allowed to exploit their specific niches by eroding use and value from Bitcoin. The community is sending a message. Loud and Clear.

It is high time to put BCH back where it belongs.


Related Articles

Bitcoin Cash Will Regain The Mantle To Be Bitcoin - Here

Why is Bitcoin Price Rising - It May Not Be What You Think - Here

Bitcoin Fork - Smoke. Mirrors and a good game of Poker - Here

Chain Death Spiral - Here



Thursday, August 17, 2017

Bitcoin Cash (BCH) Will Regain The Mantle To Be Bitcoin


Here Is Why

                          BTC      BCH       TOT        BTC     BCH         BTC       BCH         BTC
                           ( Hash Power )                   ( Difficulty)           ( Block Time )    (mempool)

11 August            6600      338       6938         923        115       10.00         21            55
12 August            6199      416       6615         923        115       10.66         20            15
13 August            6808      440       7248         923        115         9.73         18.46       27
14 August            5951      522       6473         923        115        11.07        15.82       47
15 August            6966      647       7591         923        115          9.47        12.85       53
16 August            5984      484       6468         923        115        11.07        17.14       50

  • Since 11 August Hash Power on the BCH chain has increased daily.
  • Hash power on BTC chain on the other hand fluctuates from day to day, by up to 1000 PH and the mempool continues to grow.

The table above are snapshots taken at a point in time each day. Their individual states can be monitored in real time here*.  Scroll down to the hash rate. BTC hash rate is down to 4853 PH. This is more than 2000 PH below the table above and the mempool has now exceeded 65MB. I truly believe that the dreaded Chain Death Spiral has set in but is being "managed".

This large fluctuation of BTC hash rate could be the miners preventing difficulty from adjusting downwards, and at the same time growing the mempool. It is also possible that with over 1000 blocks to the next difficulty recalculation, we may not see another difficulty adjustment on BTC anytime soon.

It is uncanny that we see very little discussion and debate at the very top. It is as though the NYA agreement have settled everything. However make no mistake. What seem calm belies what is happening in the background. Like a duck on the water paddling furiously underneath.

Over at r/bitcoin talk seems to center around price and technology. Nothing about any negativity, usability or the growing mempool. Censorship of robust discussions is just downright deceitful. Especially if it is the de facto forum. It must quit being a propaganda organ. There will be consequences.

Undoubtedly the people around Segwit must be frantically on the phone, fax and email arguing and pleading with the miners. They can see the writing on the wall. Only 124 blocks were found in the last 24 hours. Block time have increased to 11 minutes and the mempool is in excess of 70MB. It is "too little too late". For many of the miners "Revenge is a dish best eaten cold".

Here is why Bitcoin Cash (BCH) Is The Real Bitcoin

It is the original bitcoin
It was hijacked from Gavin Andresen very surreptitiously by Adam Back with his Sidechain proposal. It was a "Trojan Horse" and together with the help of Blockstream, Theymos and the Core developers the process was completed. We the original community have finally regained control of the Bitcoin project, except that we have lost control of the name. This position is about to be redressed.

It does not have Segwit.
If you look at a Bitcoin file as AD. A being the address and D being the data, Segwit removes the address portion A, It is reduced to a hash and the original signature is discarded after it is verified. So if your "fingerprint" is the hash of all your signatures, the signatures are discarded after being checked, and only the "fingerprint" is kept. This is in effect what Segwit does.

The signatures are stored on another chain, but not the main chain. Some nodes will keep signatures, some only keep partial records, some will discard them entirely. If you ever need to refer back to the transaction to check on the signatures all you have is the hash. "The fingerprint". Satoshi's original design of bitcoin being an unbroken record of signatures is violated.

It allows for unlimited on-chain scaling.
A clear example of the disastrous effect of limiting the blocksize is the state of BTC now. The mempool is huge and getting bigger, fees are "over the top". Their intention is to push low fee transactions to side chains and the lightning network. These solutions don't exist yet.

The Core developers bought themselves over 2 years delaying and obfuscating on chain scaling, and yet have no working solutions. Meanwhile the user experience gets so bad that many users have sought other alternatives to transact. BCH in the meantime have mined an 8MB block.

It has more client implementations
BCH will have Bitcoin XT, Bitcoin Classic, Bitcoin Unlimited, Bitcoin ABC and more. Each with their own development team but all operating on the same chain. This diversity increases security, innovation and development of the whole ecosystem.

The part played by nChain in this saga should not be discounted. Without a doubt the most interesting improvements in Bitcoin is coming from nChain. Split Keys, Turing completeness are major developments. Whether you believe Craig Wright is Satoshi or not, there is no doubt he is the brightest and most fertile mind in the Bitcoin space, and he does not support Core and Segwit.



BCH survived, and that is all it needed to do




Bitcoin price is at an all time high, but it is not reflective of its' true value. Many people have been duped to sell their BCH without knowing the true state of affairs between BCH and BTC. Newbies entering the ecosystem have no choice but to enter through BTC. The price increase and media hype also drives more people to buy in at any price because of the fear of missing out. Please share this information to give everyone as much true information as they can before they part with their hard earned savings. For those who have missed out on $300 bitcoin, this is a second chance. BCH now has half the transaction volume of BTC but less than one tenth the price. BCH will be worth what BTC is now and more. I do not think the public will turn away from bitcoin if BTC crashes and BCH took over. Bitcoin will change the world and it is here to stay. We are only at 1 million and there is still 6 billion to onboard.

* Unsure of the accuracy of this but can be double checked on Blockchain.info

Related Articles

Why is Bitcoin Price Rising - It May Not Be What You Think - Here

Bitcoin Fork - Smoke. Mirrors and a good game of Poker - Here

Chain Death Spiral - Here

BTC is Dead - Long Live BTC - Here

BTC is Dead - Long Live BTC Updated and Explained ELI5 - Here