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SCALING SEGWIT: It's been over a year since the scaling upgrade known as segregated witness, or SegWit, was activated on the bitcoin network. Yet, only an estimated 36 percent of all bitcoin transactions are actually using it.
Why the minimal adoption rate? It’s largely because, like any backward-compatible upgrade (otherwise called a soft fork), SegWit ensures participants in the bitcoin network that haven’t upgraded to the same software can still follow the same network, only under a slightly less-restricted ruleset.
As a result, some bitcoin businesses and exchanges have put off making the switch to enable SegWit transactions despite the low-fee advantage that it presents when sending bitcoin payments.
“Some of the [venture capital]-backed companies don’t care about paying bitcoin fees,” said Rusty Russell, a developer for blockchain technology firm Blockstream. “They can burn a million dollars a week on bitcoin fees and nobody really cares because what they care about is user adoption numbers.”
Still, Russell and Aaron Lasher, chief strategy officer at bitcoin wallet company BRD, suspect that pressure for SegWit adoption will increase for businesses in the event of a bitcoin price increase. Full Story
CANADIAN CONCERNS: More than a month after Canadian crypto exchange QuadrigaCX won a legal dispute with a banking partner, users are still complaining about delayed withdrawals, concerns only exacerbated by a recent announcement that the exchange's founder and CEO, Gerald Cotten, died of Crohn's disease in early December.
A number of users have been complaining about long-delayed funds on social media platforms such as Reddit and Twitter. One user, Canadian resident Xitong Zou, told CoinDesk that these concerns come from QuadrigaCX’s poor communication with its customers. Though the company is active on social media, its team does not answer questions which may reassure clients, he said.
Part of the problem in approving withdrawals comes from the legal dispute, said José Reyes, managing director and owner of Billerfy, QuadrigaCX's payment processor. He told CoinDesk that his company was having issues finding a banking partner to issue funds, and that delays may continue for the foreseeable future.
In contrast, interim president and CEO Aaron Matthews wrote in a letter to customers that “our goal was to resolve this issue within the next two weeks and we remain committed to that goal.” Full Story
EXPENSIVE GRIN: Grin, a new privacy-oriented cryptocurrency, has long drawn the interest of cypherpunks. But another more surprising group turned out in force to mine the coin that formally went live on Tuesday: investment firms.
“We have been watching the whole show today. With maybe the most expensive genesis block one in history,” Dovey Wan of Primitive Ventures told CoinDesk of the launch.
Wan’s partner at Primitive, Eric Meltzer, also commented on the event in his newsletter “Proof of Work” this week, noting: “There is (by our conservative estimates) 100 million dollars of mostly VC money invested into special-purpose investment vehicles to mine Grin. This does a lot of weird things: it turns a bunch of people who would have been buyers of grin into sellers of it, it changes the composition of the early holder roster, and it means the chain will launch with an extremely high degree of security via high PoW hashrate.”
Chris Dannen of Iterative Capital, a fund with a strong focus on mining, said that “a plurality of Chinese GPU farms are already hashing” on Grin.
So why the demand? “This is the thing that comes closest to bitcoin,” said a partner at a crypto investment firm who spoke on the condition of anonymity. “In a lot of investors’ minds it kind of pattern-matches to ‘bitcoin 2.0.’” Full Story |
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 CoinDesk’s Crypto-Economics Explorer aggregates data points across the industry to measure the size and opportunity of crypto markets. In addition to price and market cap, CoinDesk’s explorer provides users with a comprehensive way to view the crypto-economic forces that shape an asset’s market maturity, growth and potential. Network interest is important in determining the activity occurring within a blockchain’s internal ecosystem. Exchange interest is also valuable to understand the trading dynamics. Today, Jan. 17, we observed two key metrics from each category: OnChain Volume and Exchange Volume (OffChain Volume). We then measured the ratio between those values, which is called the On-Off Ratio, for the top five coins by market cap going back six months. This simply tells us how many dollars moved on the blockchain for every dollar moved on exchanges. A ratio above 1 would indicate higher OnChain Volume relative to exchange, and vice versa. This should be used to evaluate the utilization of a blockchain compared to its coin’s usage as a trading asset. The graph shows EOS, ETH, and XRP typically performing below 1 (indicating more exchange volume in relation to OnChain volume), with XRP having a few blips above 1. XRP has the highest standard deviation, at 8.22, indicating that there are events that swing either exchange volume or OnChain volume in a rapid unilateral fashion. While BTC usually hovers around 1, in mid-November we observed it starting to trend consistently below 1 with an average of .80 and median of .86. BCH had taken the opposite trend around the same time with an average of 2.58 but with a median of .50. Check out the CoinDesk Crypto-Economic Explorer to learn more.
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| VOLATILITY DROP: Bitcoin's price volatility has dropped 98 percent year-over-year. The world's largest cryptocurrency by market cap saw its price spread nearly $3,500 on Jan. 16, 2018, but this range was only $61, a full 365 days later. The volatility drop accompanies a 74 percent price drop year-over-year as well. Full Story |
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BEST OF THE BEST CREDIT KARMA: With the fall in the price of bitcoin last year, U.S. investors apparently lost a combined $1.7 billion after selling their holdings – that's $718 each. However, many won't claim the loss with the IRS, and that’s a mistake, says Credit Karma. In a new survey, the website found that just 53 percent of U.S. bitcoin investors plan to report bitcoin gains or losses on their tax returns, while 19 percent are undecided. Of those who sold at a loss, over a third don’t plan to report it. As the site points out, investors can claim a tax deduction on capital losses and offset any gains made during the tax year to a limit of $3,000. So why are investors not making the most of the tax break? The survey suggests a lack of knowledge is key, with a majority thinking they did not have to report gains or losses and others (22 percent) not knowing how to. THE REST ROLL CALL: The Virtual Commodity Association, a crypto consortium looking to form a registered self-regulatory organization, is making strides amid a broader push to pre-empt government oversight, says this profile in Roll Call. So far, the group is composed of Bitstamp Inc., bitFlyer USA Inc., Bittrex Inc. and the Gemini Trust Company LLC. The four firms hope to oversee virtual commodity markets, similarly to how self-regulatory groups in the stock market police their own space. If successful, the push could streamline approval for the trading of digital assets and related products, Roll Call explains, citing bitcoin exchange-traded funds (ETFs) as one example. The VCA is in an early stage, however, and it is not yet clear how quickly the group will proceed. FORBES: The " genius” idea at the heart of bitcoin, according to a piece from Forbes, is the way miners make it possible to have a digital currency that users can trust, but not issued by any single authority. Not only that, but they manage and create the currency too. The solution neatly sidesteps this issue we see today with "huge government authorities issuing and controlling abstract and paper currency at will, manipulating it to meet political goals," says the contributing author, David Black. At the core of the issue that bitcoin solved is money supply and the way central authorities manipulate it with policies that "shift with the political winds." Bitcoin is run by volunteer miners who are governed by the rules of the protocol and incentivised to be honest. As the cherry on the cake, says Black, while they record every transaction, they can’t see who is making them, so there’s no “snooping.” As a result, bitcoin “deserves the attention and credit it’s gotten.” |
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