BitDigest - Monday August 21, 2017
Bitcoin Cash‘s (BCH) network difficulty reset and it is now 93% more difficult to mine Bitcoin (BTC) than BCH; this has caused miners to divert their efforts and temporarily support BCH.
BCH’s hash rate (network processing power) is now 2.0 Ehash/s, four times the typical Asian day support level. BCH miners are creating 25 new blocks an hour (2 minute 11 second average block time) compared to their historic average of 3/hour. These changes have made BCH more profitable to mine, because of the lower energy cost to mine Bitcoins at the reduced BCH difficulty level. An additional positive for BCH is that the unknown group who had recently mined up to 90% of new blocks will now be facing increased competition from other mining pools. BTC’s pricing rose to a new high of $996 over the weekend, but has declined and is now $639.
I still believe interest is being driven by speculators and miners seeking a short term reward, not users of the BCH network. Technically, this blockchain is not operating as designed and although new blocks are being created at an increasing rate, over the past 18 hours only two blocks were larger than 250,000 bytes (averaging 370kb); BCH was designed to support 8MB blocks. As more miners support BCH, difficulty will be adjusted back-upwards making mining more difficult, but for the next week I expect to see continued interest and support for BCH.
News
ShapeShift to Revise Tokens Policies
Peer-to-peer digital exchange ShapeShift is responding to the recent SEC statement on initial coin offerings (ICOs) by saying it may delist certain tokens to avoid being characterized as a securities exchange. Actions by ShapeShift could have a major impact on new ICOs as ShapeShift provides an early marketplace for many token offerings. The company has announced these changes may only impact US customers.
Tom Lee sees bitcoin jumping to $6,000 next year
Driven by an expected 50% increase in user accounts (currently 16.1 million) and a subsequent 30% increase in activity per user, former JPM chief US equity strategist, Tom Lee, believes Bitcoin (BTC) could reach $6,000 by mid 2018. If better platforms are created and increased institutional and public adoption continues, Lee sees BTC reaching $25,000 by 2022
Congress Considering Validating Bitcoin Exchanges with AML Procedures
Members of Congress are working on legislation that would provide protection to digital marketplaces that meet conditions preventing digital currencies from being used in unlawful ways. The bill is expected to focus including digital currencies into mainstream payments system. The authors of this bill have not been identified, but it is likely to be members of the Blockchain Caucus.
A Look Inside One of the World's Biggest Bitcoin Mines
China hosts some of the biggest digital currency exchanges and dominates the mining of new Bitcoins (BTC). This Bloomberg video provides a short look at Chinese miner Bitmain’s operations in Inner Mongolia. It notes that Bitmain is looking to build mining operations in the US; this action could be part of miners’ efforts to move operations outside of the reach of the Chinese government.
Chart of the Day
BCH pricing since Thursday, August 17th
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BitDigest is a weekday news update on digital currencies and blockchain technology for friends and partners of Parsons & Whittemore, a single family office based in Rye Brook, New York. Receipt of BitDigest is by approval of the Author. The commentary, analysis, opinions and recommendations in this newsletter represent the personal and subjective views of the Author, and are subject to change at any time without notice. The information provided in this newsletter is obtained from sources which the Author believes to be reliable. However, the Author has not independently verified or otherwise investigated all such information. Neither the Author nor any of the Author's affiliates make any guarantee or other promise as to any results that may be obtained from reading this newsletter. While past performance may be analyzed in this newsletter, past performance should not be considered indicative of future performance. No reader should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. The Author is not making a solicitation or offer to buy or sell any securities of any kind.