Weekly Roundup: Bitcoin Bullish, Lightning Network Reviewed, McAfee Wallet Hacked (Again)
In this week’s edition, we break down several of the latest news events in crypto to get you up-to-date with the most important stories of the last 7 days.
BTC Ends Week Up, Boosts Total Market Cap
It was another decided positive week for bitcoin as it ended up close to 8%, lifting the entire market by some $8 billion in total capitalization value along with it. Several top coins were lucky enough to experience double-digit gains (BCH, EOS, LTC, XMR, MIOTA, DASH) thanks to a renewed investor confidence in the cryptocurrency markets. The price action of the past two weeks has undoubtedly been encouraging and may signal a long-awaited reversal into bull market territory, with talking heads on CNBC proclaiming that more traders may follow suit if bitcoin can continue to hold the $7000+ mark for the next few weeks.
Lightning Network Contributing to Scalability of Bitcoin
The Lightning Network, bitcoin’s #1 solution to its scalability program, is gaining more and more traction with each passing day, currently creating 12,000 open channels for transactions and handling more than 100 BTC of transactions in any given block. The premise of the Lightning Network is that not all bitcoin transactions necessarily need to be individually added to the blockchain if they are overseen and added by a specific source that groups them together and processes them off-chain and all at once. By doing so, transaction fees can be greatly reduced to sums that are virtually nonexistent, along with confirmation times as well.
So far the deployment of the Lightning Network has been a tremendous success, proving that bitcoin can scale exponentially to meet the demands of a user base that is increasing in size. As more nodes are added to the Lightning Network, bitcoin’s potential to process billions of transactions per day becomes more and more of a reality. The number of participating nodes within the network has increased 5-fold in the last 6 months with an ever-growing number of new participants, meaning one bitcoin’s most innovative developments has been astoundingly successful, even if its existence is still largely under the radar of the media and many investors.
McAfee Bitfi Wallet Withdraws Claim of Being “Unhackable”
John McAfee, creator of the world’s first commercially-available antivirus software and full-time cryptocurrency enthusiast for the last year, made some head-scratching claims in July that his new bitcoin wallet, Bitfi, was completely unhackable, offering a $100,000 reward to anybody who could successfully hack his wallet. Since then, his wallet has been hacked twice, though the reward was never given as the terms for its issuance stated that bitcoin must actually be moved from the wallet, which it was not. Even though heavy criticism of the reward’s conditions has since caused Bitfi to withdraw their bounty, McAfee decided to double-down on his dare, offering $20 million to one hacker in particular if they could successfully transfer bitcoin out of a Bitfi wallet.
BitFi offered $100,000 to anyone who could take the coins from its factory wallet. Hackers complained it was too little, and why should they have to buy the wallet. It increased to $250,000. No takers. I'm now offering $20 mil to one fraudulent hacker – @cybergibbons He refused.
— John McAfee (@officialmcafee) September 1, 2018
So far there have been no new takers on the bounty, though McAfee’s highly public goading has insured chances that there are hackers everywhere currently devising a way to empty the contents of a Bitfi wallet.
— David Wachtfogel (@dwfogel) August 30, 2018
Washington State Increases Electric Prices for Bitcoin Miners
In the past couple years, the state of Washington has seen a steady influx of bitcoin mining farm operators who have flocked to the state because of its cheap, plentiful supply of hydroelectric power. Officials in Grant County, home of the U.S.’s biggest hydroelectric dam, have decided to re-categorize bitcoin mining operations under a new class of energy users called “evolving-industry” customers, increasing their electricity rates in the process. The rationale behind the increase was that bitcoin miners posed extra “risk” to the county’s power supply, and that as newcomers, such operations should also contribute to the welfare of the surrounding community.
“The new rate compensates Grant PUD for extra risk and obliges evolving-industry customers to pay more than the cost to supply their power — just as Grant PUD’s other big power-users do — to subsidize sustainable below-cost rates for residential, irrigation and small and medium-sized business customers.” – Grant County PUD
Regardless of the recent rate hikes, power costs still remain significantly lower than in many other parts of the nation, meaning the miners aren’t likely to pick up and move shop elsewhere any time soon.
Nouriel “Dr. Doom” Roubini Squares Off With Bitcoin Positivist Tone Vays in Debate
In a rather heated exchange, acclaimed economics profession Nouriel Roubini, who became famous after his accurate prediction of the housing bubble and its collapse in 2007/2008, sat down at a debate with Wall Street consultant and financial analyst, Tone Vays, as part of a conference in Las Vegas organized by BlockShow. Roubini, who has been decidedly anti-cryptocurrency from the beginning, opened by stating his credentials in the blockchain industry are derived from his ability to accurately spot a bubble, which he said that bitcoin was still in. Vays’ viewpoint about cryptocurrency only strayed from Roubini’s in that he saw potential for bitcoin, but little-to-no use for any other coins, also likening bitcoin to “nuclear waste” in that it can be dangerous if not stored properly.
Highlights of my head to head w/ @Nouriel at #BlockShow @BlockShowcom #Vegas event. I agree w/ him on everything being a #Scam except #Bitcoin which competes w/ $USD & $Gold on:
2. Moneytary Policy
3. Censorship Resistance Paymentshttps://t.co/ejUemYZBOu
— Tone Vays [@Bitcoin] (@ToneVays) August 31, 2018
According to Roubini, bitcoin goes against “every security law,” meaning it will indefinitely remain unappetizing to most serious, big-monied investors, perhaps forever excluded by the SEC as a recognized security. The main points of contention to arise were bitcoin’s centralization, the problem of relatively few wallets containing most of the bitcoin supply, and the usefulness of the blockchain, which Roubini repeatedly asserted as non-existent.
Iran Announces State-Backed Cryptocurrency
Despite the limited success of Venezuela with its own, state-backed cryptocurrency, another country undergoing considerable economic strife, Iran, cemented plans for the release of its own cryptocurrency last week, as a means to circumvent crippling sanctions placed on it by the United States. Hopefully for Iran, they can learn from Venezuela’s mistakes and find a way to actually distribute its new coin to its population (which Venezuela, to date, has failed to do). Though Iran had been anything but cryptocurrency-friendly in the past, cracking down on exchanges and financial institutions in the country that dabbled in coin trading, it recently has been exploring the use of blockchain technology in its banking industry, now concluding that perhaps a state-backed cryptocurrency could be widely used by the public in the not-so-distant future.