A Fork of a Fork - Unqualified Opinions

of course, of course

TL;DR:

  • The Bitcoin Cash hard fork happened, and we’ll be keeping a close eye on things as the dust settles over the weekend. We assembled a BCH Resource page to help you come up to speed on the saga, and split our Agora profiles accordingly. One for ABC, and one for SV.

  • We usually don’t talk about price movements, but last night’s were hard to ignore. Some thoughts of mine below on what these swings actually mean.

A Fork of a Fork - Part 2

The Bitcoin Cash hard fork just officially happened, and we have an hour of transactions and mined blocks in the books.

Bitcoin Cash ABC (backed by Roger Ver and Jihan Wu) is out to an early lead…mining new network blocks with about twice the hash power of Bitcoin Cash SV (backed by Craig Wright). We’ll keep an eye on that over the weekend, as well as the wild swings in price between the two.

At 11:30pm ET, BCHSV was at $178 to BCHABC’s $210 on Poloniex.

At 3:00pm ET, that’s now $81 for BCHSV, and $318 for BCHABC.

Price. Price. Price.

Although we generally shy away from “price went up, price went down” commentary, it was hard to ignore the correlation between the BCH fork, and the sharp correction that brought BTC, the big daddy bitcoin, to its lowest level of the year.

Here was some good, totally warranted feedback on my post from last night:

“Longtime reader. Just wanted to say that I really hoped, considering the timing of the delivery of this newsletter, that there would be commentary on the BTC price dive. 
As much as I appreciate the daily reading, updates, and intelligence, if you want to really make me treasure this as something more than saving me a trip to my RSS reader, then I'd expect to see some thoughts, even if its "I don't know yet this is weird!". But it wasn't even mentioned.”

I’m sure this wasn’t a unique critique.

  • Bitcoin dropped below $6,000, and below $100 billion in market cap (both arbitrary, but psychologically important thresholds) for the first time in quite a while. And the markets were a blood bath across the board, not just in BCH.

  • Even fundamentals-oriented investors were talking about the dislocation and saying things like “What was support is now resistance, as $BTC will look again for a bottom.

  • It happened with the backdrop of Craig Wright very vocally threatening to “crash the bitcoin price to 2014 levels” by starting a hash power war with two other deep pocketed BTC whales, Jihan and Ver. The tweets did coincide with a sizable dump, and blogger Chepicap captured some of the most relevant in a series of threatening tweets and social media chatter.

So is it freak out time?

Meh, probably not.

If warring BCH whales temporarily drop the BTC price as part of a pissing contest for an increasingly irrelevant asset, so be it!

That’s a wealth transfer to the smart money investors who’ve been accumulating all year long, and it’s a sturdier base of HODLers on which to build. I’m not losing sleep. (Remember the same thing happened during weekends last November during the BCH<>BTC hash wars.)

But it will become disconcerting if the price continues to plummet over the holiday weekend. For two reasons:

1) If the intention of yesterday’s selling was in fact to spook and/or bankrupt the other side, then you’d go for maximum effect and sell at the most illiquid times you could.

2) If the selling pressure persists, and one vocal person is able to signal his intent to tank the market AND does so successfully, I find it hard to believe the SEC would look favorably on that when reviewing the outstanding ETF proposals, the next review deadline seems to be December 29.

***

Still feel like you don’t know what’s going on with the industry’s fourth largest cryptoasset? We didn’t either, which is why we pulled together a list of posts and tools that could help us (and you) gain better insights and context surrounding this event, and what it means for the future of the Bitcoin Cash community.

The Bitcoin Cash Resource Page

For now, we’re aggregating the highest signal research on the asset. In the future, we’ll synthesize the very best, most relevant info from these resource links into our own comprehensive reports.

(Interested in trying out the beta of our new market intelligence tool for crypto professionals? Reply to this email.)

- TBI

P.S. Chill out, homies. I was trolling you last night when I insinuated I believed Craig Wright was actually Satoshi Nakamoto. Although if we go to $4,000, I’ll be a believer.

P.P.S. Share. Subscribe. Spread the (rational) crypto love. Tweet at Messari for requests, feedback, comments, or questions.


News & Analyses

Messari Compression Algorithm

Content and thoughts from around the web as summarized by the Messari team.

🥶 [Analysis] The business of Bitcoin cold storage – Nik Bhatia

Nik argues that while vaults storing Bitcoin private keys have been around for years, Fidelity recently set an asset management industry precedent that could redefine bitcoin’s custodial infrastructure landscape, regulated crypto custody. Bitcoin doesn’t need Fidelity to become legitimate, but Fidelity launched bitcoin custodial services because the asset has already achieved legitimacy. Many other custody firms will follow suit and ETFs will be approved, he says. This is the first step down the path for institutional investors to trust that putting funds into this new frontier is safe and sound. (Messari | Source)

💸 [Analysis] Fiatcoins want to be aggregators, aggregators centralize power – Tony Sheng

If a “fiatcoin” is successful, it aggregates user demand (aggregation theory) for the applications of public blockchains. That’s because users must visit the issuer in order to go from fiat to crypto. The dominance of any given fiatcoin leads to a feedback loop which further increases the dominance of that fiatcoin, giving the issuer a growing database of identity-verified individuals. Though fiatcoins drastically increase the user-base for crypto, it also comes with the great cost of censorship. Due to existing incentive and power structures, it’s unlikely fiatcoin issuers will eventually swap out a fiatcoin for a censorship-resistant crypto. (Messari | Source)

Quick Bits (Don't read that, I read it for you)

Choke Points (Exchange News)

  • 💸 Singapore based cryptoasset exchange KuCoin has announced a $20 million Series A round backed by IDG Capital, Matrix Partners, and Neo Global Capital. The funds will be used to launch new exchange features in addition to hiring more support staff and expanding to new countries. (Messari | Source)

  • 📌 BitGo has has announced support for Gemini dollar and Circle’s Circle USD bringing the total number of supported assets to over 100. In addition to these two stablecoins the custodian has also added MakerDAO’s DAI, Paxos Standard and TrueUSD over the past six months. (Messari | Source)

Startup Signals (ICOs, Cryptos, and Startups)

  • 💰 Bitcoin rewards platform Lolli has raised $2.25 million in seed funding from investors including Bain Capital Ventures and Digital Currency Group. Lolli is a rewards platform that allows users to earn bitcoin when they shop at the company’s partner brands. (Messari | Source)

  • ✅ The New York Department of Financial Services has issued a BitLicense to New York Digital Investment Group LLC subsidiary NYDIG Execution. The BitLicense entitles a holder to use cryptocurrencies and obliges them to comply with a number of rules covering cryptocurrencies’ control, administration, maintenance, storing, and issuance. (Messari | Source)

The Powers That Be (Legal/Reg/Policy)

  • 🔍 Cryptocurrency mining operations in the Chinese provinces of Xinjiang and Guizhou were suspended so the government could conduct “very strict” tax inspections and real-name registration checks. Power to the mining farms was shut off on Nov. 5, sources told local daily Cong News. (Messari | Source)

  • 👨‍⚖️ Bitmain has filed suit against an anonymous thief in a US federal court. In a complaint submitted to the U.S. District Court, Western District of Washington at Seattle, Bitmain alleges that the unidentified thief stole 617 bitcoin from an account it holds at crypto exchange Binance, and is seeking a jury trial for damages. (Messari | Source)

Did I miss something?

Send me the link, your twitter handle and your best imitation compression algorithm write up. If I like it, I’ll include your bit next issue (with attribution).


Podcast Recap

🎧 ICYMI on the Messari podcast, Katherine breaks down the latest SEC order against EtherDelta’s founder, and what its implications are for DEX broadly (more in the Quick Bits as well). We also talk to Simon Taylor, founder of Global Digital Finance, about the importance of building a knowledge base and setting best practices for the crypto industry. (Ryan is an advisory board member, and Messari is a big supporter.)  (17 min for your evening commute.)

Listen and subscribe to all of our podcasts— on Apple Podcasts here, Spotify here, and Google play here.

Some other great episodes are #12 (Erik Voorhees & Ari Paul at DevCon), #10 (Spencer Bogart on fund performance and tokenization), #9 (Tony Sheng on his writing process), #6 (Jake Chervinsky’s primer on federal & state crypto regulators), #4 (Nic Carter on data integrity in crypto), and #8 (Conversations on the ground at CryptoSprings).

Find our podcast series on Apple here, Google Play here, and Spotify here.

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