The fall of Constantinople

Market Report: 14th Jan. 2019 — Subscribe to our newsletter. 👈

OUR TWO SATOSHIS

New year, new takes on Britain’s strangest news

To prove the non-believers wrong, the flat earth society has booked a cruise to circumnavigate the globe. Expect a performance from B.o.B and a lecture with Freddie Flintoff. Meanwhile, in Vietnam, doctors administered a dose of 15 cans of beer to this partygoer who was suffering from… alcohol poisoning. Counterproductive or genius? Genius. Like drinking wine from a Pringles can.

BAKKT TO BLACK

Markets continue trading sideways, meaning they are susceptible to bears

We’re ten days away from the supposed launch of Bakkt, a Bitcoin-focused cryptoasset exchange backed by the owner of the NYSE. But that 24th of January date is pending a review following comments from US regulators. So, despite the boring weekend — which only saw a 3% dump yesterday afternoon without any particular backdrop — the week ahead might be influenced by bears capitalising on such uncertainty.

Meanwhile, the drama surrounding the 51% attack of Ethereum Classic — a surviving chain from when the Ethereum community split back in 2016, following the infamous DAO hack — continues. The new narrative surrounding the attack, put forward by Ben DiFrancesco, is that it’s a eerie message from miners to the wider ETH community. Why? Due to two major changes happening to its protocol explained in the next section.

THE FALL OF CONSTANTINOPLE

Could a seemingly unrelated attack to ETC spell danger for ETH?

On the one hand, the consensual Constantinople hard fork is kicking in on Wednesday. Among four other reforms, this major update to the popular decentralised applications blockchain will reduce miner rewards from 3 to 2 ETH per block. While that’s been known for a while, and most expect a seamless transition on the part of exchanges and some mining pools, it seems small miners are worried — and we’re just 67 hours away from the deadline.

That feeling might seem irrelevant in the grand scheme of things, but note that as incentives change, a system that was in equilibrium might face instability. And here is where that eerie message comes in. Because the hackers of the Ethereum Classic 51% attack have already returned around 25% of the total funds stolen from exchanges — meaning they weren’t likely pursuing profit. So, some believe such an attack was a sign.

Why so? Because last week, ETH’s core developers put forward a new suggestion to be implemented independently from Constantinople. Which would change ETH’s hashing algorithm, with the goal of protecting the blockchain from miners who use more efficient, specialised chips to process its blockchain transactions. Called Programmatic Proof-of-Work, or ProgPoW, this measure would hurt large mining operations who invested in dedicated hardware to gain a hedge. Is this an incentive to attack Ethereum?

WHAT YOU CAN’T MISS TODAY

Don’t leave for the weekend what you should read today

▪ If you want to know more about the state of Ethereum’s network fundamentals and ether’s price technicals, we recommend Josh Olszewicz’s latest outlook on BNC.

▪ If you want to know more about how 2014–2015 crypto bear market’s capitulative moments can be compared with the 2018–2019, check Murad Mahmudov’s new charts.

▪ If you want to know more about Bitcoin Maximalism and why gold bugs love its digital pair, then read this “narcissistic collection of Pierre Rochard’s favourite tweets”.

▪ If you want to know when to apply blockchain technology to your business, follow McKinsey’s well-argued advice: “only when it is the simplest solution available

▪ If you want to know how Bitcoin provides assurance to our society in a similar way auditors provide assurance to the markets, then you must read Nic Carter’s new post.

QUOTE OF THE DAY

Trading is not about reading quotes — it’s about writing quotes

“Beware of trading quotes”

By Andreas Clenow