Bitcoin News Roundup for June 23, 2020
Jun 23, 2020 at 16:00 UTC
Author: The Last Cryptocurency
- Bitcoin Is at the Apex of a Key Pattern — the Breakout Will Decide BTC's Trend
- Balancer Echoes Compound With 235% Spike on First Day
- Proof-of-Work vs. Proof-of-Stake for Scaling Blockchains
- HIVE Blockchain Announces Successful Installation of Next Generation Miners at Green Energy-Powered Quebec Bitcoin Mining Facility
- Lex Sokolin: DeFi Protocols Need to Act More Like Fiduciaries
Bitcoin Is at the Apex of a Key Pattern — the Breakout Will Decide BTC's Trend
Bitcoin’s price action has been rather volatile over the past two weeks, with the asset whipsawing between the $8,000s and $10,000s.
In the past week alone there was approximately $250 million worth of position liquidations on BitMEX alone due to the volatility, according to data shared by crypto derivatives tracker Skew.com.
Yet the price action has actually been consolidation from a macro perspective. Bitcoin is now approaching the apex of a crucial triangle pattern that has contained Bitcoin’s price action for the past few months.
Its breakout will most likely decide the trend for the next few months, maybe even lower. That’s to say, should BTC break higher, it could be at the start of a full-blown bull run.
A cryptocurrency trader recently shared the chart below, noting that Bitcoin is currently consolidating around the apex of two converging technical levels:
- 1) the horizontal resistance at ~$10,500,
- and 2) an ascending trendline that has supported BTC since the March lows.
Due to the importance of these two levels and this triangle as a whole, the breakout will be important in determining in what direction the crypto market heads in the medium term.
“I’m still waiting for a HTF move before making a trade. Both sides have been tapped multiple times. I wouldn’t want to guess which one breaks first,” the analyst that shared the chart wrote in reference to its importance.
Should Bitcoin attempt to break out of the triangle, it will happen within the next few days and weeks as the price continues to tighten ahead of expanding either higher or lower.
Analysts are currently betting that Bitcoin breaks upward from this formation, citing a confluence of technical factors.
As reported by NewsBTC previously, Bitfinex order book data is showing that there is clear buying pressure at the $9,500 range.
This is important because order book data has been extremely accurate in predicting Bitcoin price trends over the past few months. As can be seen in the chart above, the order book data called four previous attempts at taking $10,500, while also suggesting BTC would rally higher after March’s lows.
On-chain indicators are also bullish, with blockchain analytics firm Santiment noting that the Bitcoin bear trend that began after March’s crash just ended according to a profitability metric.
Balancer Echoes Compound With 235% Spike on First Day
Decentralized finance (DeFi) tokens from Balancer, Ben, Aave and Swissborg have all made huge gains, in the wake of excitement generated by the distribution of Compound’s governance token.
Less than twelve hours after Balancer announced its protocol governance token BAL was live on the Ethereum mainnet, and the price jumped from $6.65 to $22.28. At the time of writing, the DeFi token was trading at $15.60, with a little over 6 million BAL tokens in the circulating supply.
It’s following in the footsteps of COMP which more than tripled in value this week. Even after today’s price crash, it’s still up by 135%.
According to data from CoinMarketCap, altcoins Aave (LEND), Ren (REN), and Synthetix (SNX) also had strong rallies this week.
LEND, a token from London-based DeFi lending platform Aave, has seen a 3,900% increase in price since trading under $0.01 for almost a year from November 2018 onwards. The token first rallied to $0.05 in May, then surged to $0.16 on June 21.
Synthetix, a Australian leader in DeFi derivatives, and the newly launched REN, saw new all-time highs today. The price of SNX rose 40% this week continuing its bullish trend of a 100% increase over the last 30 days to reach an ATH of $1.61.
Both tokens have been looking bullish since late March following the crypto bloodbath. On June 23, the price of REN reached $0.16, respectively, an increase of more than 400%.
Decentralized wealth management platform Swissborg’s CHSB token is currently trading at $0.14, having reached a new all-time high of just over $0.16 on June 17. For much of 2020, the price of the DeFi token was hovering around $0.02.
Cointelegraph has reported many DeFi tokens have consistently been outperforming Bitcoin (BTC) in 2020. The adoption of these coins backed by DeFi projects may have been spurred by the launch of COMP, which recently started trading on Coinbase.
These significant rallies—from LEND in particular, rising 3,900%—may be the result of the number of DeFi users reaching 600,000 and the hype surrounding ‘yield farming’.
Traders could be moving on to new DeFi assets after seeing the potential in COMP, whose price doubled to more than $400 a few days after first trading between $140-$180 on June 18. In addition, some publications including Forbes have touted DeFi ‘yield farming’ as a means to get a 100% return on an annualized basis.
As these tokens operate on the Ethereum mainnet, the expected introduction of Ethereum 2.0 later this year may continue to mean bullish sentiment for some DeFi projects rivaling that of the ICO boom in 2017, or it could all be just another bubble waiting to pop.
Proof-of-Work vs. Proof-of-Stake for Scaling Blockchains
Most people in the cryptocurrency world are aware that network validation often comes in one of two forms: proof-of-work or proof-of-stake. There are others, but these systems are common and power many of the most popular blockchains. They take the same basic problem — verifying transactions — and solve it in unique ways. However, both offer different solutions to the ongoing debate over scaling. Does one have a true advantage over the other, or are they just different philosophies? We’ll take a look at both.
Most people have heard of Bitcoin (BTC) “miners,” but just what do they do? In essence, miners work competitively to solve complex math problems in order to secure transactions on the network. See, one of the biggest risks to a blockchain is something called a “double-spend” attack. This is when someone spends the same money twice. This isn’t often a problem with traditional currencies, but with digital currencies, a system is needed to make sure someone can’t send the same Bitcoin to multiple parties.
This is where miners come in. As mentioned, they use powerful processors in order to validate each block on the chain with elaborate cryptographic functions, ensuring that invalid transactions, such as double-spends, are removed. Using the distributed consensus, all the other miners and nodes on the network then “agree” that these transactions are valid. This process is known as proof-of-work, or PoW.
The main threat to this system comes from the possibility of what is known as a 51% attack. This is where one attacker gains over half of the total computing power on the network, which now means that the “consensus” is whatever it says it is. This has happened before and remains a concern for many blockchains to this day.
With PoW, security is achieved not only due to the complex nature of the cryptographic functions being processed but also by the relatively high cost that it takes in terms of energy. This makes attacking the network expensive. The upside is that taking over the whole thing would require 51% of all processing power associated with the blockchain, which is unfeasible for larger chains such as Bitcoin. The downside, however, is that it takes massive amounts of energy to protect the network, making the whole thing grossly less efficient than a centralized alternative. This also only stands to be a bigger issue as cryptocurrency brings in more users.
For years now, developers have been looking for ways to make blockchain technology faster, more efficient and scalable. If Bitcoin, or any project, is ever going to see global adoption, solutions to these problems must be found. Ideas have included making blocks bigger or splitting them up into “shards,” as well as various multiple-layer solutions such as sidechains. We’ll look at all of these in a moment, but first let’s look at proof-of-stake, which is itself one possible answer to the scaling solution.
Proof-of-stake, or PoS, gets rid of miners altogether and instead has “validators.” Validators don’t use processing power to secure blocks, instead they literally “stake” their funds on the blocks that they believe are valid. A validator can generally be anyone willing to stake coins on the network, and an algorithm determines which validators will be chosen for each block. Whereas miners want to increase their chances of solving the complex math problem by throwing more processing power at it, validators increase their chances of being selected to validate a block by throwing more money at it. Miners are incentivized with the reward of new coins, but validators often only receive a cut of the fees included in the block, proportional to the amount they had previously staked.
Should an attacker try to validate a bad block, the attacker will lose its stake and be barred from further validation privileges. As for the 51% problem, now a malevolent party seeking to hijack the network wouldn’t need over half of the processing power — it would need over half of all the coins in circulation. This is obviously very unlikely, as no cryptocurrency community would have much faith in any coin where this was even remotely possible to begin with. Lastly, this fixes the energy consumption issue present with PoW, as now there is no need for large numbers of powerful computers running 24/7.
One of the criticisms of PoS is that it still allows for a form of centralization. Basically, having more of an asset means you have more weight for validating, which earns you more rewards for staking, which means you now have even more weight, etc. Others have pointed out the “nothing-to-stake” problem, where validators could arguably stake funds across multiple different blockchain histories. Lastly, having too many validators still slows down the network, as it makes consensus take longer to reach relative to the number of validators. Fortunately, ways to address all these problems are being explored.
A potential solution to the shortcomings of the original PoS design is called delegated proof-of-stake, or DPoS. The DPoS model is different because instead of every user staking resources in order to be a validator, users vote on which parties should be the validators of the next block. Staking more resources gives more weight to your vote, but only a limited number of validators are actually used, and they can be voted out or back in with each block.
As all users are able to stake and vote, the community should retain control if it feels a validator is not acting in its best interest. Validators obviously have an incentive to work with the community because being elected to the position enables you to receive block rewards. Lastly, by limiting the number of parties involved, consensus can be reached much quicker, which potentially could enable a notable boost to network speed. Some of the biggest projects implementing this system include EOS and Tron.
Of course, centralization is a concern here, as there is still a chance for those with massive resources to manipulate the vote. This is a fair concern, but in general, the larger community should still retain greater voting power than any single entity could have, and an elected validator is still only one of many, thus limiting its real power.
Not everyone is convinced that PoS is the future, hence there are still a few viable avenues being explored for scaling PoW. As mentioned, one of the systems on the table is simply to make the blocks themselves hold more transactions. In the short term, this actually does sound pretty reasonable. Larger blocks are a good way to increase network throughput pretty quickly, but they can come with some caveats. For one, on their own, bigger blocks aren’t necessarily a fix-all solution. In the long term, you can’t just keep making blocks bigger and bigger indefinitely. Switching from 1-megabyte blocks to 2-MB or 4-MB blocks isn’t really a big deal, but where does it end? 1 gigabyte? 10 GB? At least for blockchains designed like Bitcoin, the added size of the blocks would begin to make storing the whole chain exceedingly burdensome. Of course, if transaction speed is less of a priority than storing data on the blockchain, then large blocks again become useful, and it is really making sure that they are synchronized, which becomes the most important aspect.
A different philosophy that some projects are looking into is a technique called “sharding.” Sharding works by dividing up blocks into “shards,” which then get processed on the network — only not every miner has to process every shard. This means each block is only partially mined by each miner, which means that less power needs to be used and the block can be validated faster as well. The same logic can also be applied to a PoS system, only instead of miners, it would be validators. In either sense, the plan is to increase overall latency by not making every player on the network have to process the full extent of every block.
Sharding does come with some drawbacks that have yet to be sufficiently addressed, however. For one, after breaking up the blockchain into shards, these shards cannot communicate with each other. This could be problematic for applications that rely on multiple shards. While a system for hard communication could be developed, it would be exceedingly complex and be at risk for a plethora of potentially devastating data errors.
In a similar vein, sharding also opens up a new security risk. In theory, hackers now could attack the network by focusing on just a single shard, which would take far fewer resources than trying to take over an entire block. They could then craft seemingly valid transactions into the shard and submit it back to the main chain. An attack such as this makes no sense if blocks are kept whole, so it remains a valid risk to user funds.
One more important area researchers are looking into is something known as “sidechains” or “second-layer solutions.” In a nutshell, this is generally a separate network that sits on top of a blockchain and handles transactions “off-chain.” Users can open up “channels” between each other and transact however they see fit, and only when they close this channel does the data get batched and written onto the main chain to create the immutable record. Multiple channels can be linked together in order to form a global payment network that is backed up by the blockchain but can move much faster in real time. This is especially ideal for frequent and smaller transactions and could provide a road to seeing cryptocurrency used as cash.
There are some downsides, as in the current form channels generally need to be “collateralized.” This means money has to be put into the channel before it can be used. Combined with the fact that not all of the bugs have been worked out, this can certainly mean serious risk to funds should something go wrong before it is recorded on the blockchain. Generally, there needs to be very precise work in these protocols to make sure that the sidechains and main chain stay in perfect sync, but so far, results are optimistic.
Some of the most popular versions of this technology include the Lightning Network for Bitcoin and the Raiden Network for Ethereum. These projects are certainly still early on, and there are in fact multiple versions of the lightning network being developed. It is as of yet unclear which version will become the standard, if any. Another example of a second-layer solution project for Ethereum is called Plasma and would see smart contracts used to build sidechains of transaction data that would, again, only occasionally write to the main layer. Similarly, Charles Hoskinson, the creator of Cardano, has discussed the project’s upcoming technology Hydra, which introduces elements of a second layer as well as sharding in the hopes of reaching upward of “1 million transactions per second.”
One other project that is taking elements of many of these different solutions and bringing them together is ILCoin. ILCoin uses something called the RIFT protocol, and it approaches the blockchain in a slightly different way to create a “Decentralized Hybrid Blockchain System,” or DHCB. This is a multilayered system still based upon the PoW SHA-256 algorithm that Bitcoin uses, but here the chain is composed of blocks that are filled with “mini-blocks.” Mini-blocks are fixed at 25 MB, however the amount of them that can fit inside of a regular block has, theoretically, no limit. The team declares it has successfully created blocks of up to 5 GB, and according to its documentation:
“Assuming each transaction is occupying the minimum number of bytes possible, each block may contain up to a maximum of 21551724 transactions. With an average block mining time of 3 – 5 minutes, that equates to between 71839 and 119731 transactions per second using a 5 GB block.”
Thanks to the RIFT protocol, 5 GB blocks and the mini-block architecture, ILCoin has scheduled the launch of its Decentralized Cloud Blockchain, or DCB, for this year. The team says that DCB will allow for on-chain storage of a wide array of digital content, including images, videos and more. Until now, storing large amounts of data on-chain was not possible due to blockchain bloating.
The reality could be that there isn’t just one correct solution for scaling. Each project may need to look at how it is being used and ask what path or paths are best for it. Not to mention new strategies and technologies are constantly emerging that could shake up the whole game at any time. While all of the ideas here show immense promise, the book is still not yet written on how to scale blockchains. Likely a combination of many of these ideas and more will ultimately shape how cryptocurrency reaches a mass audience, but the problem needs to be solved before it does. Otherwise, it is possible that a centralized, permissioned chain will be the only kind that is accessible to a global population.
Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.
HIVE Blockchain Announces Successful Installation of Next Generation Miners at Green Energy-Powered Quebec Bitcoin Mining Facility
VANCOUVER, BC, June 23, 2020 /CNW/ – HIVE Blockchain Technologies Ltd. (TSXV: HIVE) (OTCQX: HVBTF) (FSE: HBF) (the “Company” or “HIVE”) is pleased to announce that it has put into operation its recently acquired 1,090 Bitmain Antminer T17+ 58 Terahash per second (TH/s) SHA 256 mining machines at its green energy-powered bitcoin mining operation in Quebec.
Combined with the recently installed 750 Bitmain Antminer S17+ 73 TH/s machines operational at its Quebec facility, HIVE’s aggregate operating hash rate from this next generation mining equipment is approximately 118 PH/s and is estimated to be operating at a gross mining margin above 40%i. These recent investments are among several steps the Company is undertaking to maximize the capacity and efficiency of its 30-megawatt (MW) facility.
In preparation for the halving of Bitcoin block rewards for miners, which occurred in mid-May, HIVE acquired in April a Bitcoin mining operation in Quebec with access to low cost, renewable electricity, 30 MW of HVAC and electrical infrastructure that is unique to cryptocurrency mining, triple redundancy systems for power and internet connectivity and operational staff. HIVE has subsequently been investing in next generation mining equipment that can provide positive gross mining margins post the recent halving of Bitcoin rewards; the next halving is scheduled to occur in four years.
About HIVE Blockchain Technologies Ltd.
HIVE Blockchain Technologies Ltd. is a growth oriented, TSX.V-listed company building a bridge from the blockchain sector to traditional capital markets. HIVE owns state-of-the-art digital currency mining facilities in Canada, Sweden, and Iceland which produce newly minted igital currencies like Bitcoin and Ethereum continuously. Our deployments provide shareholders with exposure to the operating margins of digital currency mining as well as a growing portfolio of crypto-coins.
For more information and to register to HIVE’s mailing list, please visit www.HIVEblockchain.com. Follow @HIVEblockchain on Twitter and subscribe to HIVE’s YouTube channel.
On Behalf of HIVE Blockchain Technologies Ltd.
Interim Executive Chairman
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Except for the statements of historical fact, this news release contains “forward-looking information” within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates and projections as at the date of this news release. The information in this news release that are forward-looking information include: the Company’s estimated aggregate operating hash rate and gross mining margin profitability; and the intentions, plans and future actions of the Company. This forward-looking information is based on reasonable assumptions and estimates of management of the Company at the time it was made, and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others: the COVID 19 crisis; the Company may not achieve operating hash rate, efficiencies or profitability as currently anticipated, or at all; the digital currency market; the ability to successfully mine digital currency; revenue may not increase as currently anticipated, or at all; it may not be possible to profitably liquidate the current digital currency inventory, or at all; a decline in digital currency prices may have a significant negative impact on operations; the volatility of digital currency prices; the Company may never realize more efficient operations, a lower cost structure, or greater flexibility in operation; risks relating to the global economic climate; dilution; and other related risks as more fully set out in the Company’s continuous disclosure record filed at www.sedar.com. The Company has also assumed that operation of recently delivered equipment will occur as expected, and no significant events occur outside of the Company’s normal course of business. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.
i Estimated based on current operating and maintenance expenses, notably electricity, staffing and lease, of approximately $0.04 per kWh, and under current Bitcoin mining network factors, including Bitcoin price of approximately $9,358, difficulty of 15.78 trillion and a network hash rate of 105.88 exahashes per second (EH/s). Gross mining margin equates to income from digital mining less operating and maintenance costs, and is before depreciation, general and administrative, financial, income tax, and other expenses or income; it is a non-IFRS measure.
SOURCE HIVE Blockchain Technologies Ltd.
[ Back To TMCnet.com’s Homepage ]
Lex Sokolin: DeFi Protocols Need to Act More Like Fiduciaries
A regular person wants to see that their money is FDIC-insured, not Lloyds of London- or Nexus Mutual-insured.
Let’s not make the same mistake again by assuming technology protocols are immune from default risk and black swan events.