| May 13, 2019 | View in browser |
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Today's top reads
- Bitcoin has "reorged" before
- The pump heard around the world
- Sherman's real fear of crypto
- Facebook's next frontier
This week's poll: Do you hodl Bitcoin forks?
Click to answer:
Nope, don't need them
Yes, got my stack
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Market update
| COIN | PRICE | 7-DAY |
| BTC | $7,318.98 | + 29.68% |
| ETH | $193.03 | + 17.19% |
| XRP | $0.322 | + 7.67% |
| LTC | $87.64 | + 18.04% |
| EOS | $5.47 | + 12.30% |
1. Bitcoin has "reorged" before
Last week, Binance announced that it had lost 7,000 bitcoin from a massive phishing attack that took control of users' API keys to withdraw the coins in a single transaction.
Following the breach, Binance CEO Changpeng "CZ" Zhao took to Twitter to alert his 350,000 followers about the incident. While worried replies rolled in, one MIT developer, @JeremyRubin, suggested that CZ could recoup his $40 million loss with a blockchain "reorg."
Put simply, a reorg is like having an undo button for the blockchain - an action that makes an immutable ledger, well, mutable.
Though Binance's security update did say that all of the 7,000 BTC stolen would be returned out of an emergency fund (meaning funds are, in fact, #safu), CZ did say he would be exploring all options - including replaying transactions or reorging the blockchain to recoup the lost funds.
The response? Not great. Crypto Twitter erupted as users debated the morality of reverting the hacker's transaction back to Binance. Some pondered whether or not this action would even be possible.
But it's actually been done before. Twice.
- 2010: A bug in the code was discovered after it caused the software to read transactions wrong. To correct it, a new version was published, the blockchain was forked, and the new chain eventually took over - 53 blocks later.
- 2013: Once bitcoin was upgraded from version 0.7 to 0.8, the chain incidentally split in two and developers settled on reverting the blockchain back to version 0.7. Mining pools were quickly notified and the blockchain reorg took place.
That was back then though. Since, Bitfinex's 2016 hack was the only event that came close to causing a reorg but the idea was quickly dismissed.
Regardless, it's a wake-up call: A social consensus can trump Bitcoin's immutability...it just takes a lot of agreement.
2. The pump heard around the world
Bitcoin is back. Or rather, it's showing signs of life after returning to over $7,000 a pop - a benchmark not seen since September of last year.
Here's what happened: Putting it lightly, shorts got pummeled. Specifically, on BitMEX, a popular crypto exchange where users can use leverage, short positions began liquidating soon after bitcoin jumped close to the $7,000 mark.
The result? Liquidated shorts had to buy bitcoin back at market prices - creating instant buy pressure - which sent the cryptocurrency flying a few hundred dollars higher.
But besides price movements, here are a few important stats from this weekend's pump:
- Trading volume spiked. Notably, volume on BitMEX hit a record $10 billion - a number that surpassed previous highs set in bitcoin's 2017-2018 boom.
- Dominance gained 4%. While cryptocurrencies across the board mirrored bitcoin's gains, they couldn't keep up. Following the pump, bitcoin's market dominance surged from 55 to 59%.
- BNB is the outlier. Looking at the top 10 cryptocurrencies by market cap, only Binance's BNB token was left without gains due to the exchange's recent 7,000 bitcoin hack.
The bottom line: Bitcoin's price movements have since taken a breather, but zooming out, May has historically been pretty good to the coin with only three monthly candles closing in the red.
3. Sherman's real fear of crypto
Finally, someone in D.C. gets it. On Thursday, Coincenter tweeted a video of Congress representative Brad Sherman asking to ban cryptocurrencies. The video, which garnered more than 600,000 views from the tweet, left the crypto community with a sour taste.
But Sherman's reasoning wasn't just the typical "terrorists and criminals" bit. Actually, Sherman explained that cryptocurrencies look to undermine the power of the United States dollar internationally.
And they could. That's why China has already banned bitcoin and why it wouldn't be unreasonable for other governments to follow suit.
In March, Coinmetrics' Nic Carter predicted that within the next 12 months, a "high-profile, western" government will criminalize bitcoin ownership specifically because cryptocurrencies are:
- Used for terrorism.
- Owned by regimes like North Korea.
- Transacted on darknets.
Now, with Sherman's recent proposal, Carter's prediction might not be that far off the mark.
The only difference? Sherman's fear is fueled by the power of cryptocurrencies, not their weaknesses.
4. Facebook's next frontier
The company that conquered social media now wants to disrupt finance. While we've known that Facebook has been recruiting for its blockchain division heavily, we still don't know what for exactly.
However, that doesn't mean the project isn't chugging along. According to New York Times reporter Nathaniel Popper, the social media giant is now looking for venture capital investors to get a piece of the pie. Big pieces. Like pieces worth $1 billion.
That may seem like a lot, but for a company that has over 2 billion users under one roof, it might be a steal.
It's also probably quite scary to some. Spencer Bogart of Blockchain Capital told Bloomberg that the rumors have "lit a fire in the pants of every major [financial technology] and financial institution in the U.S."
More than that, the project has the United States Senate frazzled about consumer protections if the tech giant - who doesn't have the best privacy reputation on the block - will be handling finances.
5. You should also know
6. Shout out #SatStackers
From last week's poll, 76% of respondents answered that they are actively #stackingsats.
That's pretty good. But we can do better. If you want to learn about three passive ways to earn bitcoin, check out our latest exclusive here.
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