Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | To fork or not to fork. If, every now and then, you forget that cryptocurrency is pretty weird, there’s nothing like a contentious hard fork to serve as a reminder. If there is disagreement within a blockchain network about a software upgrade, those who object can keep running the old chain after the upgrade, creating two separate currencies. But as weird as it is, it somehow seems appropriate that Bitcoin Cash, the product of last year’s most high-profile Bitcoin hard fork, is now facing a potential hard fork of its own. The real prospect of a blockchain split, which would happen November 15, has major players in the Bitcoin Cash ecosystem taking sides.
Bitcoin Cash was born just over a year ago thanks to an irreconcilable disagreement between factions in the Bitcoin community over whether and how the network should make technical changes that would make it better at handling large transaction volumes. As part of its roadmap, Bitcoin Cash has scheduled software upgrades every six months. That went fine back in May, but this time it appears the community may have its own irreconcilable disagreement on its hands. Essentially, the developers of the most popular Bitcoin Cash software client, called Bitcoin ABC, have proposed a series of upgrades, including smart contract capability—but have been met with vehement opposition from a small but vocal segment of the community that has the support of one of Bitcoin Cash’s biggest mining pools.
The opposition to Bitcoin ABC’s proposed upgrades is led by Craig Wright, a cryptographer and controversial figure who has claimed (without proof) to be Bitcoin’s creator Satoshi Nakamoto. Wright’s company nChain has joined with mining pool CoinGeek, which controls more than 15 percent of all Bitcoin Cash mining, to develop an alternative upgrade to Bitcoin ABC’s called Bitcoin SV (for Satoshi’s vision), calling ABC’s proposed changes “unnecessary.” Jihan Wu, cofounder of Chinese mining chip maker Bitmain, which holds a substantial stash of Bitcoin Cash, has expressed his support for Bitcoin ABC, lashing out at “Fake Satoshi” Wright on Twitter.
If the two sides end up going their separate ways, Bitcoin Cash holders will suddenly hold the same value in the new coin as they hold in Bitcoin Cash. In preparation, many of the popular exchanges have gone out of their way to clarify their plans in case of the split, in particular how they will make sure their users get their new coins. Yes, it bears repeating: cryptocurrency is weird. | | China appears to be stamping out ICO loopholes. The People’s Bank of China has released a new report on financial stability, in which it has identified what it calls a growing crypto-related problem: “disguised” initial coin offerings. To get around the government’s ban on token sales, some firms have moved their projects to other countries, where they use agents to invest on behalf of people in China, the report said. Others are simply giving tokens away, it said.
The tactic, often called an airdrop, is popular in the US as well. Getting tokens into the hands of people actually interested in using blockchain networks can be a challenge, and the idea is that that giving them away for free, usually to a targeted audience, is one way to bootstrap a new blockchain network and grow a community. Stellar, the sixth largest cryptocurrency by market value, announced Tuesday that it plans to airdrop $125 million worth of its cryptocurrency, called lumens, to users of a popular wallet service called Blockchain. Though Stellar is established among speculators, it wants more people to use its smart contract platform.
But airdrops face the same big question that all ICOs in the US face right now: are they securities offerings? So far the SEC has only weighed in once, making it clear via a ruling in August that just because the recipients of airdropped tokens didn’t pay money for them doesn’t mean the tokens aren’t securities. | | Loose Change Fill your pockets with these newsy tidbits. | | | Spanish bank BBVA and two partners have used a blockchain to complete a $150 million syndicated loan, a type offered by a group of lenders to a single borrower. The demo shows how the complex process—which still relies on fax machines—can be made faster and cheaper with blockchain. (Financial Times $$) | | | | Bitcoin’s price volatility is the lowest it has been in two years, but who knows what that means. (Reuters) | | | | Consumers in Singapore can now trade renewable energy credits using a blockchain-based platform. (CNBC) | | | | William Shatner defended Vitalik Buterin against a Twitter troll yesterday. (CoinDesk) | | | | The US cryptocurrency exchange Poloniex will let users trade both versions of the Bitcoin Cash fork—even before the fork happens. (Finance Magnates) | | | The Money Quote “The networks that are live or under development vary greatly and frequently lack key characteristics that many regard as essential components of a blockchain.” —A new report from Forrester sizes up the landscape of “blockchain” projects, unsurprisingly finding lots of hype and “blockchain washing.” (Fortune) | | | |
