Bitcoin (BTC) Privacy Upgrades in 2019, Ontology & EOS Post Gains
In this week’s news roundup, we take a look at BTC’s curious price action, why a lagging technical analysis indicator suggests the bear market bottom may be in, how technology is changing views on the level of privacy that can obtained in bitcoin transaction and discuss two high-flying coins that managed to post spectacular returns in a week that most others ended flat.
BTC Breaks the $4,000 Mark, Only to Go Back Down
It was a week of ups-and-downs for most coins, as the price of bitcoin rose up to $4,200 on some exchanges before sliding back down to its present price of $3,780. Interestingly, the largest futures order ever for BTC contracts was placed on the Chicago Mercantile Exchange, suggesting that at least one trader (or investment group) was extremely bullish on bitcoin going into the near future. The dump that characterized the 24th is rumored to have been caused by a novice trader who immediately sold 2500 BTC on Bitfinex at bidding prices, which had a rippling effect across other exchanges and instantly dropping the average price.
A long-term price indicator that had not been seen since April 2015 took place between the 100 and 50 day moving averages, in which the 50 day average crossed below the 100 day average, indicating that the bottom of the bear market was perhaps in. The absolute bottom was established on December 16th of last year when prices dropped all the way to $3122 per BTC. The price has since recovered some 21% since this date, and if luck would have it, sentiment is finally shifting from bearish to bullish territory, meaning bitcoin (and the rest of the crypto market) may be gearing up for its next bull run.
If #BTC sustains a break above $4,140 and then above $4,400 both key Fib targets the rounding bottom reversal pattern in #bitcoin is to test the EMA 100 at $5,450. This would be above the 200 Day MA and a early indication that the market bottom is in. @tradingview #Crypto #CT pic.twitter.com/ocRsKHoF2j
— Bobby Atkins (@WolfpackCrypto) February 23, 2019
Not all coins weathered last week well. Even though BTC ended up about 2%, Ethereum (ETH) was down slightly, Ripple (XRP) was down just over 2%, and the top 20’s most recent addition, Bitcoin SV (BSV), was down some 4.5%. BSV is the Craig Wright-backed Bitcoin Cash (BCH) fork which has thus far failed to find a niche or grab the attention of the wider crypto community now 100 days into its existence. Despite Wright’s ability to continue to make headlines in the crypto world week after week, his coin has not enjoyed a visibility boost manifested in the form of a price increase and is currently hovering just above its 2019 lows.
Rethinking Bitcoin Privacy in 2019
The idea of anonymity in bitcoin has been a matter of some contention over the years. Even though the blockchain is a public ledger of every transaction that has ever taken place, it is relatively private until the owner of a bitcoin address has been revealed. At this point, their activity can be thoroughly examined and connected to other parties if their addresses are also publicly identifiable. For this reason, bitcoin should not be regarded as anonymous but pseudonymous, though user privacy can be maintained when transacting in a precautionary manner.
Over the years, those looking to evade law enforcement by using bitcoin have been stymied by blockchain forensics experts who, when provided with records from exchanges which identify their customers, are able to prove with near certainty that an individual was involved in the purchase or sale of illicit goods or services. However, certain developments in software and blockchain-related technology have added new ways of anonymizing bitcoin use to a greater degree than in years past.
Two of these developments include CoinJoin and the Lightning Network. CoinJoin is a way to combine and shuffle unconfirmed bitcoin transactions so that even though a recipient receives the intended amount of coins, they are not the same coins as sent by the sender. The Lightning Network (as we’ve previously explored at length on Coin Clarity) is an off-chain solution for bitcoin transactions which does not store any transaction information, and similar to CoinJoin, only transaction amount information is retained.
A new writeup of privacy and bitcoin on the unofficial Bitcoin Wiki provides a comprehensive guide to maintaining privacy in the age of CoinJoin and the Lightning Network, with instructions on how to leverage these utilities to their maximum potential. For those who would rather not read the whole article but want to improve their privacy practices when bitcoin, here is a summary of the points which it illustrates:
Think about what you’re hiding from, what is your threat model and what is your adversary. Note that transaction surveillance companies exist which do large-scale surveillance of the bitcoin ecosystem.
Do not reuse addresses. Addresses should be shown to one entity to receive money, and never used again after the money is spent from them.
Try to reveal as little information as possible about yourself when transacting, for example avoid AML/KYC checks and be careful when giving your real life mail address.
Use a wallet backed by your own full node or client-side block filtering, definitely not a web wallet.
Broadcast on-chain transactions over Tor, if your wallet doesn’t support it then copy-paste the transaction hex data into a web broadcasting form over Tor browser.
Use Lightning Network as much as possible.
If Lightning is unavailable, use a wallet which correctly implements CoinJoin.
Try to avoid creating change addresses, for example when funding a lightning channel spend an entire UTXO into it without any change (assuming the amount is not too large to be safe).
If digital forensics are a concern then use a solution like Tails Operating System.
Coins Bucking the Trend
As mentioned earlier, it was just a mildly positive week for the price of BTC and most others, but there were a few coins that enjoyed surprisingly massive gains. We review these coins for you here in our off-and-on again segment to get a better understanding of what helps them succeed in a market with an otherwise unclear direction.
Using our proprietary Goodness Index (GI) score, which is a score comparing a coin’s weekly performance and volume to that of BTC’s, we identified a total of four coins that fared substantially better than all the rest of the top 100 by market cap. It should be noted that with a median GI score of -0.53, most of these coins fared just slightly worse than bitcoin. Two of the four identified had GI scores higher than 2 standard deviations above the average.
Ontology (ONT) (GI = 247). In 2019, Ontology has been on fire, doubling in value over the course of February. Launched in March 2018, Ontology was one of the fastest rising coins of the year, obtaining a billion dollar plus market cap in less than 3 months’ time. Ontology started with the goal of creating a “distributed trust collaboration platform” that allows different blockchains to interact with one another. After moving off the NEO platform and onto its own blockchain, it is well on its way to building a system of high-performance blockchains that include a series of distributed ledgers and smart contract systems, similar to Ethereum and other token-hosting platforms
What has caused this sleeping giant to begin to regain some of its old glory? For one, after much anticipation, the Ontology Development Platform was finally released on the Google Cloud Platform Marketplace on February 23th, which makes the project one of the first public blockchains to have a development platform on leading cloud provider marketplaces (these include Google Cloud, Amazon Web Services, and Microsoft Azure). This will also allow it to collaborate with Google in marketing activities, giving ONT a leg up among other mid-tier altcoins looking to differentiate themselves from the pack.
EOS (EOS) (GI = 85). For the last year, this platform coin on a mission to “decentralize everything,” has been a powerhouse, working its way up to a $17.66 billion market cap at its peak, in April 2018. Whatever bitcoin and Ethereum didn’t have, EOS has plans to solve it: speed, scalability and low-cost (or free) transactions. The project was not without its controversy: due to the delayed release of the coin’s platform and the extravagant sum of money it raised during its ICO (approximately $4 billion), some began to wonder whether EOS was the real deal. The launch of EOSIO’s Dawn 1.0 in June put fears to rest, and the coin has enjoyed a spot comfortably in the top 10 since.
The project’s market cap has come down several billion since its peak, but the price of EOS has been on a steady climb since mid-December. With a stream of steady project developments and releases, EOS may be one of those cases of a coin that was truly oversold and ready for a tremendous rebound – even though it already sits in the #4 spot of coins by market cap. It has an ever-expanding array of DApps and real world use cases that will help it to soon rival Ethereum, if its current momentum continues. Most recently, they announced a partnership with an artificial intelligence development company that will host its DApp on EOS:
Rumor finally confirmed! We're excited to announce that https://t.co/Zp35M5kT00 will build The Effect Network on EOS; a necessary step in our quest for Decentralized Artificial Intelligence. Read more: https://t.co/eOhFHNdOxS#EFX #EOS #EOSIO #EOSVC @block_one_ @Liquid_dApps
— Effect.AI (@effectaix) February 21, 2019
Also in the News
- In other Lightning Network news, the Lightning Network Torch has been passed to the Fidelity Investments Crypto Division. Fidelity manages over a trillion dollars in investor assets and is the first financial institution to take the torch, after a string of Lightning developers and crypto celebrities. Previous torch bearers include Litecoin’s Charlie Lee and Tesla Motors’ Elon Musk.
- Speaking of Elon Musk, the eccentric billionaire recently revealed some more thoughts he had about bitcoin, chiefly that he thought it was “brilliant” but had one crucial flaw: its overbearing consumption of electricity. Musk believes that in order for a cryptocurrency to truly be successful and stand the test of time, it must not be so energy-dependent.
- Following a 2016 Bitfinex heist which put over 5,000 customers out of their bitcoins, the U.S. federal government returned about 32 BTC, or $110,000 to the exchange, which it had confiscated from parties known to be involve in the theft. This is barely a dent in the $72 million total stolen but is one of the first cases of its kind, paving a positive future precedent regarding the actions of law enforcement in such scenarios.
- A startup company with a sense of humor has developed an app that can sign a message in bitcoin’s genesis block, spoofing Craig Wright’s claim that he had signed a similar message in his attempts to prove to the world (or at least Gavin Andresen) that he was Satoshi. In its app, the company is not shy to call Wright by his nickname “Faketoshi,” which he has been referred to in the years after his infamous forgery.