Weekly Roundup: Bitcoin Stalls, SegWit Pushes Ahead, China Embraces Smart Contracts
In this edition, we cover some of the compelling but ultimately fruitless volatility in the price of bitcoin last week, the reasoning behind it, and the solutions for bitcoin scaling currently presented before the community. We explain what SegWit hopes to accomplish, how SegWit 2.0 may undercut its success, and take a peek at the craze behind NEO, China’s answer to Ethereum.
Price Zags, Fork Worries Resurface
The last week has been something of a tumultuous one for bitcoin, with prices going on a rollercoaster ride between $2300 and $2500, ending up about 2% lower over the last 7 days. The result is a loss of $6 billion in the market capitalization of bitcoin – not a number to sneeze at. Fortune Magazine described bitcoin as potentially entering bear market territory, meaning the selloff could continue – if at a slower rate – in the case that there wasn’t some other stimulating factor to reverse the downward trend.
Two main reasons driving the recent decline in price include a general price correction, aka investors locking in profits by selling off bitcoin bought at a lower price, and the remaining threats of a bitcoin fork, which will eventually come in the form of a hard or soft fork. The leading contender for the hard fork remains Bitcoin Unlimited, although miner support has been waning in the past few weeks. The leading contender for the soft fork is SegWit, which contrastingly reached an all-time high in miner support last week. Even major publications like the Wall Street Journal are weighing in on the issue of high transaction fees, which point out that an average traction fee of one dollar or more makes it prohibitively expensive to use bitcoin for every-day transactions, like buying a cup of coffee.
SegWit 2.0 to be Launched Soon
For the bitcoin nerd out there who is partial to all the drama that has been going on with respect to the great scaling debate (re: how to change bitcoin in order to reduce fees and “blockchain bloat”), an impactful new development took place this week. Jeff Garzik, bitcoin Core developer and entrepreneur announced plans to release a new version of SegWit (known in full as Segregated Witness) last month, which was made available for download on June 30th.
At the moment, it requires a mining fee of at least 181 satoshis per byte for your transaction to have a chance of being included in the next block, and with an average transaction size around 540 bytes, this adds up to a whopping 97,740 satoshis, or almost 0.001 BTC. As of the writing of this article, that comes out to about $2.45 per transaction, pricing bitcoin out of competition with some of the companies it was designed to supplant.
The original SegWit proposed to cut down on the size of blocks by removing data from each transaction that is not completely necessary for proper maintenance of the record of transactions kept by the blockchain. The idea is that by removing just a little bit of data from each transaction, more transactions could fit in one block, and thus people wouldn’t have to shell out relatively big cash to have their transaction be confirmed in a speedy manner.
Although SegWit inched passed Bitcoin Unlimited in miner support for the first time ever last week, Garzik’s SegWit 2.0 could potentially take away support from the original SegWit, even though the deadline for activation of SegWit 1.0 is fast approaching. Regardless of which Bitcoin Improvement Protocol (BIP) will win out by August 1st, the markets are decidedly not happy with any sort of change.
“Chinese Ethereum” Blasts Off to Moon
AntShares (ANC), better known China’s first blockchain-based and investor-funded company, recently announced that they will be rebranding themselves as NEO, in the wake of a massive price gain from less than a dollar to over $10 in the last 3 months. Promising to unveil the beginnings of a new, digitally-driven “Smart Economy,” CEO Da Hongfei has big plans for restructuring the way that Chinese companies conduct business online. Hongfei has been involved in the application of blockchain technology to business in China since 2014, with AntShares launching in 2016 under the mission statement of making digital assets available to anyone.
AntShares (now NEO) has often been compared to Ethereum due to its use of tokens and smart contract features. While it borrows from Ethereum by using its own Virtual Machine and developer API, it also includes elements from other blockchain-based projects, like Stellar and Hyperledger. While ANC is currently tradeable on a number of cryptocurrency exchanges worldwide, its trading symbol is soon to be changed to GAS (another nod to Ethereum, which refers to ether (ETH) as “gas” for the Ethereum Virtual Machine). Though NEO may be little more than an Ethereum clone written in Chinese instead of English, investors have high hopes in its potential to transform the financial landscape of the country with the second biggest GDP on the planet.
Also in the News
- The aerospace industry is joining the ranks of others by announcing an upcoming attempt to use the blockchain to streamline replacement part delivery and general maintenance.
- An economics professor in England who co-authored a study on the use of digital currencies by central banks recently suggested that governments of the future should consider issuing their own free digital currencies to make the digital conversion of money easier as a service to its citizens.
- Another record-breaking ICO, TenX, raised $34 million in seven minutes on June 27th, with the stated goal of making it easier for small companies to accept cryptocurrency as payment, as most businesses are still turned off by the idea of having to deal with this befuddling new technology.
- One of the most respected and anonymous coins on the market, developers at DASH recently announced plans to create their own payment platform that could potentially undercut the likes of popular money transfer services PayPal and Venmo.