Saturday, December 30, 2017

High Fees Is An Extinction Event

Make no mistake. The rats are scrambling off this BTC sinking ship. High Fees is an extinction event. Like all extinction events there is always a group of loutish and very vocal band of hard core deniers. Their arguments are hypocritical, and their reasoning always seem incomplete.

BTC dominance below 40%

Today BTC dominance dropped to 38.4%. Total Market Cap is still 600 billion. This means that value have flowed to other currencies this time to Ripple. Value flows to crypto through BTC because it is the main bridge with all fiat currencies.

This happened before when value flowed to Ethereum. That was stopped in its' track because Ethereum encountered several major problems. ( DAO, more hacks and scaling issues )

Will Ripple become the new No 1 crypto coin?

Possible but it will be temporary, until BCH takes over. This upsurge is a pump and FOMO event, timely as many investors are looking to exit BTC. The fact that bankers like it strengthens their believe that this could be a major crypto coin. Again do not be fooled. Ripple is nothing but a token. Issued by a central authority. 38 billion are in circulation and 62 billion is in reserve.

It is not a mineable coin ( POW or POS) It is just issued (printed) out of thin air. Its value is in saving banks and financial institutions billions in interbank transfer fees. For this system to work it needs a large market cap. It certainly has that now. Banking transfer systems like SWIFT will not be silent in the face of this development eating into their business model.

It will be an intermediary token for financial institutions to move value among themselves. In short Ripple is not an everyday currency to be used by common folks. I don't think there is even a wallet for it. I suspect that most are held on exchanges and by the banks.

High fees is an extinction event.

Anybody who has a sizeable BTC holding is certainly now worried that their "store of value" may be in jeopardy. As we can see most of this value is moving to Ripple. When they realise that Ripple cannot be a store of value, much of that value will look for a new home - Bitcoin Cash.

Bitcoin Cash is the real bitcoin. It always was. The fork was BTC which added Segwit. Bitcoin Cash is still the same Bitcoin that I knew and loved in 2013. More and more people are beginning to realise this, as they find that they can no longer use their bitcoin to transact. All businesses that use to accept bitcoin have stopped accepting it.

The only argument left is for it to be a "store of value" and that is gone too, now that value have moved to Ripple! of all things. I guess people still want to trust banks. But they have to realise that banks do not own Ripple, and Ripple does not represent shares in the banking system.

Bitcoin will still achieve valuation of 100,000 and even 1 million a coin.

However that is in reference to Bitcoin Cash. This will happen when BTC is booted off the bitcoin mining algorithm. For me this can't happen soon enough. Bring on the Chain Death Spiral.

What are miners are waiting for? They are in control of BTC's fate.

What do you know. BTC's hashrate just plummeted 6EH from 18 to 12 and still dropping. Maybe this is the flippening happening now. Watch BCH price action to confirm.

Wednesday, December 20, 2017

Merry Christmas From Bitcoin Cash - It Is The Flippening

Woo-we. What a day we had yesterday. This was my post yesterday when Bitcoin Cash was at 0.11. It has double to .22 in less than 24 hours. Was it prescient? No. It is the same story line that I have been pushing these last few months. Let us recap.

Update 23/12/2017 : The reason BTC price is going down is because people are exiting. Proof BCH is going up. The flippening is happening. Enterprise are leaving BTC because fees and confirmation times are too high. BCH transactions and hashrate increasing. Value flows to Alts through BTC, and as it does BTC dominance reduces, now down to 44%. When Viabtc leads the way with Coinex, BCH will take over this function.

    
     Of course it does not matter if CSW is Satoshi, but if you did think or believe he was, you would have bought into Bitcoin Cash, and look at how much you would have benefited financially. Blind faith? Not really. 
   
     CSW is the most fertile mind in the crypto space. Not just technically but economically and philosophically as well. If he is leading an equally competent team at nChain and putting his support behind Bitcoin Cash then you should take notice. CSW through nChain have openly said that they will give free access to Bitcoin Cash for some patents owned by nChain. This is a huge endorsement for Bitcoin Cash.

Bitcoin was hijacked.

    Those of us who have been long enough in this space, live through the scorn, ridicule, and pain in promoting a nascent technology which we know in our hearts then will change the world. Bitcoin would not be where it is if not for people like Gavin Andresen, Roger Ver, Rick Falkinge, and many more like them who promoted the idea of Bitcoin with a passion. 

     The cracks appeared with the scaling debated though the stage was set with the funding for developers when bitcoin was worth only $200. The Bitcoin Foundation fell to the wayside and the /money men moved in with Blockstream. Bitcoin Reddit was heavily censored, Gavin was pushed out of Bitcoin Core and the early evangelist were demonised, to be replaced by developers who presumably knows what is best for the rest of us.

       Fortunately Bitcoin by design is anti-fragile. If a chasm appear that is deep enough and consensus cannot be reached, the community will fork. This is freedom at its' very best. Bitcoin Cash was just such a fork. It represents the hearts and minds and aspirations of the early adopters and evangelists who harbored Satoshi's vision.

       The people supporting Bitcoin Core pushed the narrative that Bitcoin Cash is an alt coin fork like Bitcoin Gold, Bitcoin Diamond and countless others coming up. It is not. It can be and will be the original bitcoin because it has the same mining algorithm. The other forks are just alt coin clones, because they cannot exist on the same mining algorithm as BTC and BCH even if they contain the genesis block. Do not be fooled.

       Core has been very successful in pushing forward their agenda convincing the majority of the community on all the social media forums, in pushing their narrative, and they do it to a point of incredulity that you would not expect from smart and intelligent people. My only explanation is that these people were seduced by the technology. 

       It is sad that they of all people should know that the computer field has always been seduced by people pushing vapor ware and we always move forward with what we got, and what we have now was a simple blocksize increase to solve the transaction backlog issue. That such an easy solution was resisted should have raised flags among these people. I can only surmise that this is a symptom of cultist behavior. The tide is turning and most of these people will come to their senses. When you are so used to the dark, your eyes have to adjust to the dawn.

The Consequences Of Bitcoin going to zero.
    
     Bitcoin (BTC) and Bitcoin Cash (BCH) are like 2 Siamese twins on the same body. When we look at the price of Bitcoin now, we should add the price of both coins. This situation is precarious and unstable for BTC because without the Emergency Difficulty Adjustor it cannot survive on the same mining algorithm as BCH. BTC is forever just one price crash away from oblivion through the Chain Death Spiral.

     My greatest worry in the consequences of BTC going to zero was that innocent people will be hurt. Many who owned BTC before the 1 August fork have heeded Core supporters call and sold their BCH as dividends. Some purchase BTC after the fork at prices as high as $19,000. They are now left with BTC that they can't move. I feel nothing but sorrow for their plight. I am truly sorry. Our voices were too small to counter the censorship and the vast and extensive social media propaganda of Core supporters.

      Just last week Xapo sold the last of their Bitcoin Cash and converted all their customers accounts to BTC. I warned in the article BTC is dead long live BTC ELI5 that as custodians these people have a fiduciary duty of care to not put funds entrusted to them at a non zero existential risk. If Wences Cesares, a smart and early promoter of Bitcoin can fall into this trap shows the depth of deception that have occurred. Wences will pay a very heavy price for this decision. Xapo as a company may not survive BTC fall to zero which can happen very quickly, perhaps even before the New Year. The losses and coming litigations will be insurmountable.

BTC as a store of value coin

    BTC cannot be a store of value if its' price can drop by 30 - 50%. I find it difficult to understand the reasoning of core supporters when they accept this reality and at the same time argue that it is a store of value. The same logic is at odds when they argue that a store of value coin need not be useful for everyday transactions. It is its' usefulness as a currency that gives it its' store of value property. Not the other way round.

    Most of these people are smart, intelligent and have foresight, or they would not have been early adopters. Yet in many cases these same people have acted against their own self interest. If BTC goes to zero many stand to lose all they have worked for in storing their wealth as BTC.

How soon to the flippening.
    It can' be too far off. The last time BCH reached .22 the flippening nearly happened. This time the majority of hashrate is still with BTC holding off the Chain Death Spiral, but for how long? some of the factors slowing the inevitable are ;

a) Large holders of BTC know that they have to support BTC price and sell down the price of BCH. Most of these whales have already sold off their BCH and so their ability to sell down the price of BCH is limited. In any case they will find a huge buy wall that will eat up anything they throw at it. 

Buying up the price of BTC is an admission that they have made the wrong choice and they are doing it just to buy time for disposing off their BTC in an orderly manner and limiting their loss.

b) Miners have not moved wholesale to BCH because the fees in BTC are higher than the coin subsidy from mining. It is estimated that the fee back log is as high as 1000 BTC. As long as fees are high and as long as the price of BTC holds up they will keep mining BTC. This equation is changing fast.

c) As the price of BTC drops the price of BCH increases. More and more people will make this connection. Already those holding BCH feel secure while those holding BTC are increasing insecure. At .25 the tide has changed and my guess is that at .33 the flippening will really get on it's way, and at .50 it is THE END. 






    
    

Tuesday, December 19, 2017

Back To The Future With Bitcoin Cash & The Shape Of Things To Come.



Non activation of Segwit2X was intentional, dishonest and a fraud

This half confession and analysis by Two Bit Idiot (Politics Religion and Bitcoin) is an honest and candid appraisal of the mindset and thinking of people on both side of the divide.

Segwit2X was never meant to be activated. It was a ruse to get miners agreement for activating Segwit. They were not told that btc1 had faulty code until the cancellation of Segwit2X. The 93% who were warned took action to prevent activation but the 7% that ran the code got their "surprise".

Big block miners were fooled once, ( Hong Kong Conference ) fooled twice, ( NYA Agreement ) and finally F**#ed over with intentionally buggy code. Coders of Jeff Garzick caliber do not write rookie error buggy code unintentionally. It is a wonder how some seemingly incorrigible people we look up to, are willing to prostitute themselves. This guy no longer has any credibility. He is making another attempt with United Bitcoin. Don't get caught in this scam. Avoid anything he does like the plague.

The Chain Death Spiral hangs over BTC like the "Sword Of Damocles"

As long as BTC is on the same mining algorithmn as BCH, BTC is always in danger of annihilation.

1) Price Action.

The new CBOE and CME futures market increases the likelihood of BTC price being shorted. Such a drop in price for BTC, will lead to miners moving to the BCH chain and putting BTC in danger of the Chan Death Spiral.

2) BTC is a Ponzi scheme

BTC is progressively losing users mainly to BCH as fees go higher and confirmation times gets longer. Erosion of existing user base makes it reliant on uninformed new users to prop up its' value. The system will collapse when this flow of new money stops, making it a Ponzi scheme.

BTC have not had a major price correction since the last correction from 8,000 to 5000 when Segwit2X was cancelled. That event very nearly caused the flippening. It is finally correcting now. If it gets caught in the Death Spiral again, this time it will not get out.

3) Store Of Value

The proposal that BTC be use only as a store of value and not as a transactional currency does not fly. The first ever recorded use of BTC was the purchase of a pizza. Today the transaction fees are in excess of the price of a pizza. A coin that is not useful cannot maintain a value.

The stated purpose for high fees is to push users towards off chain solutions like the lightning network. However BTC no longer have a monopoly in this space and must compete for users. Gaining adoption is hard, and there are not many users left to use the lightning network if and when it is released. After 5 months Segwit is hardly used. Core has to react to the market and not attempt to drive the market. Governments do that. ( Picking winners and losers)

Is Bitcoin A Bubble 

Bitcoin is an asset class that undergoes periodic bubbles. meaning that after each crash it will recover to make higher highs. The last Mt Gox crash took three years to recover its' previous high. Today BTC is in another periodic bubble. However this time things could be different. This time it could really crash to zero and never recover.

Core have turned BTC into a Ponzi scheme and like all ponzi schemes when the participants realise that there is really no economic value produced in the scheme, it will collapse dramatically.

When this BTC bubble burst, Bitcoin Cash will be the new Bitcoin. There will be no other forks of bitcoin because none can compete on the same mining algorithm.

A Generational Wealth Transfer Of Epic Proportions.

What we are witnessing is a transfer of wealth accumulated over generations currently in the hands of a small elite, to a new generation of  libertarians, anarchist and crypto savy nerds. Young computer savy kids not even out of their teens are becoming millionaires overnight.

Wall Street is terrified. Never have they seen so much money flow so quickly into a sector that they don't understand, don't control, and are unable to react to effectively.

Scaling - The next big challenge for cryptos

Both BTC and Ethereum networks are clogged up because they are unable to scale to the unexpected demand for transaction. To this extent even Litecoin is being co-opted to fill this demand and as a result the price of Litecoin have increased tremendously over the last week.

It is not inconceivable that even Litecoin will reach its' transaction limit. Bitcoin Cash has shown that with block size of 8MB and increasing to 32MB it can handle the transaction demand now. A massive negative campaign launch against it by the BTC supporters and having to rebuilt its' whole infrastructure means that it is virtually unknown among new crypto investors.

These barriers are quickly coming down. Already OKex and soon CoinEX will be trading BCH based trading pairs. Bitcoin.com will soon offer a Bitcoin Cash Visa debit card. Businesses are changing to Bitcoin Cash for faster and cheaper transaction. These developments in Bitcoin Cash will erode BTC's user base over time. The day is not far off when BTC will succumb to the Chain Death Spiral.

The Shape Of Things To Come.

There will be many token each specialising in different use cases and segments of the industry. This is my analysis on how the crypto market will shape out.

Currency, Store Of value, Smart Contract : Bitcoin Cash ( BTC will go to zero )
Privacy : Zcash  ( No Premine )
Tokenisation, ICOs : Ethereum ( Already the best use case )
Data Access, Web Pages : EOS ( Unlimited free transactions )

1) Social Media

The future of the World Wide Web is the blockchain. All the web pages on Steemit, is stored on the Steemit blockchain. Steemit already handles more transactions than BTC, Ethereum and BCH combined and it is free to access.

There was a time when I thought that micro transactions was the killer app for cryptos. However I now believe that micro transaction may be suitable for the internet of things, but for social networks, it introduces friction. Facebook could never scale if users had to pay fees to access it.

2) Decentralised Marketplace

The future of the market is peer to peer and decentralised. Bitsquare, Open Bazaar, Bitshares. Centralised exchanges will be dominant for years to come but look out for peer to peer to improve and gain dominance in the coming years.

3) Collapse of BTC

As BTC's valuation goes higher its' user base actually gets smaller as less people can afford to hold and use it. BTC's position on the same mining algorithm as BCH is unstable. Collapse is inevitable. The risk of putting your money in Bitcoin is high.

People who still support BTC and claim that it will become a reserve currency for international transactions are deceiving themselves. Without the power of the open source development community, it is noting but a FED COIN.

Wednesday, November 15, 2017

The Flippening - 120 Billion Reasons Why They Won't Let It, plus Innocent BTC holders will be harmed




                     27/10       27/10    30/10      10/11      11/11     12/11      13/11      13/11
                         A             B           C              D            E              X           F            G
BTC  Hash    14.00       6.50     11.04       12.51      6.21      5.85         3.43       10.13
BCH Hash       0.46      3.26       1.08       0.80       3.80      5.11        6.84        0.92
BTC               5910      5866      6199        7198       6491     5402       5799      6257
BCH                360         351       464         863       1622      2863       1391       1188
BTC Diff        12.00     14.50     14.50     14.50      13.60    13.60       13.60     13.60
BCH Diff         0.67      0.67        2.70       1.13        1.30      1.30         5.22        5.22

1) A - B
    7.5 EHash left BTC.
    2.8 EHash migrated to BCH.
    4.7 EHash left system

2) B - C
     2.18 EHash moved from BCH to BTC
     1.74 EHash returned
     3.00 EHash still out

From A to C mining profitability is affected by difficulty adjustment only. BTC (B) and BCH (C). Prices were largely unaffected.

____________________________________

3) D - E  ( BCH Price Push )
     6.3 EHash left BTC
     3.0 EHash migrated to BCH
     1.0 EHash more left System
     4.0 EHash in total now withheld from system

4) D - E - X ( November 12  Hash Rate Crossover )
     0.3 EHash migrated from BTC to BCH  leaving 5.85 EHash
     1.0 EHash returned to mine BCH  increasing to  5.11 EHash
     3.0 EHash Still off the system

5) X - F  ( Hash Rate Flipped )
     2.42 EHash taken off BTC  leaving only 3.43 EHash
     1.73 EHash  added to BCH to max of    6.84 EHash
     Additional 1.0 EHash taken off system

6) F - G ( Hash Rate Returned )
     6.0  EHash migrated back to BTC and order was returned to the system
     3.0 EHash still off the system

Bithumb servers went offline for several hours

On the 11 of November there was a 100% price movement in BCH from $863 to $1622 and a sell off of BTC from $7198 to $6491. This resulted in a "Black Swan" event driving the price of BCH to a high of $2863 and BTC to a low of $5402 at 6.00 am on 12 November (Bitfinex).

For yet unexplained reasons when BCH price peaked at 6.00 am, Bithumb  servers crashed. This took out most of the demand out of the market and sell pressure from the remaining exchanges was able to bring the price of BCH down to around $1400 by 10.00 am. All this while Bithumb was off-line.

This massive increase in mining profitability on BCH caused miners to switch and the hash rates on the two chain crossed (X). Had this carried on the BTC chain would have succumb to the Chain Death Spiral as the hash rate between the two chains did flip (F).

My guess on what happened.

I believe nobody was prepared for this. It was a "Black Swan" event. Bitcoin markets are unregulated and there are no trip mechanism built in. More than likely the major players realised what a disaster this would be if the Bitcoin market crashed and maybe even go to zero as the hash rate was rapidly exiting the BTC chain.

The decision must have been to "turn off" Bithumb servers to kill the demand. At the same time they borrowed BCH on margins to sell BCH down. Those who bought at peak on Bithumb and were unable to liquidate lost big time. Many would have been bankrupted. Still facing limited number of lawsuits is better than having the whole BTC market collapse with total wealth transfer from BTC to BCH.

So we now have a trip mechanism in the crypto markets. We turn servers off. May this be a warning to all those who trade in this market.

BTC Recovery

Over the next few days the price of BTC recovered and as of today 15 November is over $7100. Here is the problem. How can anybody put money into a coin that has a non existential possibility of going to zero because it does not have the protection of an Emergency Difficulty Adjuster (EDA) like in BCH.

On top of that it is practically useless because of extremely high fees and long confirmation times. I sent some BTC over 10 days ago with 0.0002 BTC in fees and that transaction is still in limbo. I tried to send $500 out of my Blockchain.info wallet with priority fees and the fees was calculated at over $200. This coin has turned out to be a joke so why does anybody want to support it?

Of course there are 120 billion reasons that it must be supported. And think of all the people who bought into BTC since 1 August. What can we tell these people if BTC went to zero and BCH became the new Bitcoin. Something has to be done. If the problem is bad at $7000 how much worse at $10,000 or $100,000 per coin.

It is very simple. The coin without EDA (BTC) cannot share the same POW algorithm as one with EDA (BCH) and expect to survive without intervention. Another "Black Swan" event is just around the corner. If we want to protect innocent people who have purchased BTC since 1 August we have to hard fork EDA into BTC. This way both coins can compete for mining hash power on their respective merits.

Segwit2X Solution

It is possible that there may be a solution round the corner. In less than a day the "cancelled" Segwit2X will activate. 3.0 Exa Hashes of mining power is still unaccounted for and did not play a part in the last crisis.

What if Bitpico is real and they really do control 30% of total hashpower. They could hard fork Segwit2X with EDA built in and this could replace Segwit1X as the new BTC. Segwit1X would of course die without EDA in this tussle. This way all BTC holders are protected and both chains can co-exist. The value between BTC and BCH will depend on their merits, usefulness and adoption. It also allows for orderly transfer of values between the two chains.

Here is another link that say Bitpico retracted. We are kept guessing.

WE SHALL SEE


   




Monday, November 13, 2017

The Flippening, BTC to BCH The Last Mile

We had a glimpse of the flippening on 12 November when the ATH for BCH reached $2800. There were many people who truly believe that the flippening was actually going to eventuate. You could smell the fear. Well as they say " You ain't seen nothing yet". To explain it all we have to enlist the help of some chartist. Like me, most of you, are not day traders so will have very little understanding of Elliot wave theory, but would just like some inkling of how events are going to play out in the next few days.

1) What we know

a) BCH upgraded to a new EDA which just activated at block 504031. The wild gyrations in difficulty should be a thing of the past and miners will be more incentivise to stay mining on the BCH chain. This time, once the BTC chain come into the orbit, of the death grip, of the Chain Death Spiral, they will not be "rescued" by a BCH difficulty adjustment.

b) Many people wanting to sell BTC to purchase BCH have their transactions stuck in the huge mempool backlog now at 114 MB. God only knows how much sell pressure is locked up in the mempool. Just means that when the next wave hits it will be stronger than the last which was already a record at about 8 Billion dollars. It was a third of BCH market cap.

c) Segwit2X activation is scheduled at block 494784, another 543 blocks or in just under 4 days. Will Bitpico carry out their promise to start mining the Segwit2X chain? Thus far, out of the 14.5 Exa hashes of mining power available, only 10.5 EH is mining on the BCH and BTC chain combined. These 4 EH when they are deployed will be the final thrust sending BTC into the CDS and effectively evicting it from the Bitcoin mining ecosystem.

d) BTC still needs 1690 blocks for the next difficulty adjustment. BTC may never see another difficulty adjustment and they will most probably fork off the current Proof Of Work, as proposed by Cobra. This in an attempt to keep the Bitcoin name. However it is futile, as Bitcoin can refer to any particular blockchain. It is Generic.

Even the BTC handle can be change by exchanges and wallets. Bitcoin Cash was referred to as either BCH or BCC by exchanges and wallets but we all know they mean Bitcoin Cash. There is no register to claim a name. It is just naming by consensus. If BCH is the only coin left on the current POW, it will be referred to as Bitcoin. It contains the Genesis block and all the properties that we know, love and accept as Bitcoin.

e) BCH transaction volume is fast catching up with BTC. This means that a large chunk of institutional players have and are moving over to Bitcoin Cash. It is just impossible to use BTC for any kind of  "normal business" transaction. What the small blockers should honestly admit is that if a coin is not being used it has no value.


2) The Juicy Parts

If you have followed this blog you probably also believe that BCH will take over BTC as the real bitcoin. To have an idea on when and how this will play out we refer to some chartist predictions. I do not follow chartist or day trade but taken in totality with what we know we can derive trends and gain some idea of time horizons.



His last video correctly predicted the ATH of $2800 on 12 November. Then came the correction. His long term prediction based on Elliot wave theory, predicts a third wave peak at $3300 and a fifth wave peak at $4500.

Taken with what we know, in 4 days Segwit2X activates and Bitpico may start mining the chain. This may be the third wave pushing BCH price to $3300 close to 1.0 BTC (50% BTC market cap). This will panic hard core holders to defend BTC by pushing up BTC price and selling down BCH. That will be the expected Elliot wave correction leading into the 5 wave push to $4500 or about 1.25 BTC. If this happens it is game over for BTC.

I don't sadvice trading into any of these predictions. Basically holding on to your BCH is the safest and best policy. The above scenario may be all done and dusted within 2 weeks. I will not want to miss any part of this exciting phase of Bitcoin history "for all the tea in China". The last run was memorable, was it not?

           ______________________________________________

You can read about the process on Segwit2X hard fork effect on the flippening here.

Segwit2X Still Go - Complete Wealth Transfer

Wealth Transfer In Progress

You can read about the Chain Death Spiral Here

Chain Death Spiral

Elliot Wave. - In my very limited understanding, they are basically fractals pattern and are all nested within each other. So if you look deeper into smaller time frame on the charts you see the same 5 wave pattern. On the long time scale the third wave is at $3300 and 5th wave at $4500. From our knowledge of what is happening we narrow the time frame to within the next 2 weeks for the fifth wave to play out. Let us see if it is as we expect.