Altcoin Bitcoin Cash (BCH) faced fresh criticism this week after one of its lead developers appeared to admit its network was unable to process its larger blocks.
In a Reddit exchange on Sept. 2, Amaury Séchet, via his account known as u/deadalnix, responded to criticism of some miners by another pro-BCH user. In the response, the developer suggested a BCH node would not be able to process a block of transactions 2 megabytes or larger.
Séchet is the lead developer of Bitcoin ABC, the first incarnation of the Bitcoin Cash network client.
Large blocks would make nodes “trip over themselves”
“Sure or we can mine large block, so we move the problem from the mempool to indexing node that fill trip over themselves bsv style as they are not optimized to handle 100x the usual demand. Or we can solve the problem rather than trading it against another,” the response reads.
Larger blocks were a central tenet of BCH when it came into being in 2017. Its main proponent, Roger Ver, frequently champions bigger blocks as a cure-all for capacity problems which have faced Bitcoin (BTC) in the past.
Admitting the network cannot in fact process them, therefore, did not go unnoticed by BTC figures.
“No big deal. Just the main developer for #bitcoincash saying it can’t currently handle bigger than 2MB blocks,” Blockstream engineer Grubles commented retweeting Séchet’s post.
Grubles additionally referenced another Reddit comment which shows another user asking Ver to manipulate BCH mining practises.
An admission of failure?
Others advised caution, noting Séchet had not specifically stated the bigger blocks narrative was redundant.
“He didn’t said it directly but didn’t denied the premise. But it is something I have suspected and talked about for a year. As they never have had a 30 days constant blocksize of even 1MB,” Bitcoinated forum moderator AvatarX added.
Like the majority of major altcoins, BCH has fallen fast against both BTC and most fiat currencies in recent times. Controversial from the outset, an ongoing war between the coin and its hard fork, Bitcoin Cash SV (BSV), continues.
The latter, since diverging from BCH in Nov. 2018, has faced even more technical difficulties, leading to critics panning its security credentials and purported use cases.
Bitcoin SV Splits Into Three Chains Following 210 MB Block
As reported by BitMEX Research on Aug. 3, Bitcoin SV nodes divided into three groups on Saturday, making the network to split into three separate chains. According to the report, 65% of nodes were located on the current tip, while 17% were stuck on the 210 MB block and 19% had not even upgraded and were on the old pre-hard fork chain.
According to data from Coin Dance, the 210 MB block was mined on Aug. 3 by CoinGeek miner and involved 808,633 transactions.
Bitcoin SV, a hard fork of Bitcoin Cash (BCH), which is in turn a fork of the major cryptocurrency Bitcoin (BTC), successfully ran its own scheduled hard fork on July 24 as part of plans to increase its block size from the previously set limit of 128 MB up to 2 gigabytes.
Bitcoin SV nodes are getting expensive
Prior to the three-chain split, Ryan X. Charles, a BSV supporter and CEO of BSV-powered payment system MoneyButton, published a post on the Money Button blog about his issues running a BSV node. Specifically, Charles stated that Money Button went down for three hours because their Bitcoin SV node ran out of memory and crashed during a stress test. He wrote:
“Running a node is expensive. Our new instance will cost thousands of dollars per month to operate. As blocks continue to get larger and we have to upgrade the instance many times, this cost will balloon. Since we do not earn money from transaction fees like miners, it will be too expensive for us to run a node.”
According to tech news outlet TrustNodes, Coin Dance service is now on the new Bitcoin SV chain, while the older chain will likely be discarded. According to the report, this could mean that miners who got stuck on the old chain may have lost some money as those blocks could now be discarded. The report notes that, while the recent split appears to be the first of its kind, giga-sized blocks may generate splits with more than three forks.
Bitcoin SV has previously experienced problems due to what some consider to be an unwieldy blockchain size. In April, the coin’s blockchain underwent a series of block reorganizations — a situation in which two miners discover a block simultaneously in a blockchain, which causes a temporary forking in the network. In general, block reorganization happens when a network is too slow to reproduce blocks efficiently.
Bitcoin Dominance Hits 70% as Keiser Warns Altcoins ‘Not Coming Back’
According to data from major monitoring resource CoinMarketCap, Bitcoin now accounts for 70.5% of the total cryptocurrency market cap as of Sept. 3.
Bitcoin market cap hits pre-$20K high
That figure has not been seen since March 2017, and comes as BTC/USD makes gains at altcoins’ expense.
As Cointelegraph reported, continued underperformance in cryptocurrencies other than Bitcoin has triggered warnings from traders and analysts alike.
Among them are Peter Brandt and RT host Max Keiser, the latter again claiming this week that altcoins would never recover from this downturn.
“When will altcoin junkies understand that $BTC is the crypto with real and lasting value,” wrote Brandt, who added:
“Altcoins are to Bitcoin what lead is to Gold.”
Some sources had reported Bitcoin hitting the 70% mark as early as last week.
Market cap readings set highs across the board
Bitcoin itself delivered a sudden return to form late on Monday, having previously dropped to just $9,350. At press time Tuesday, BTC/USD was circling $10,360, bringing 24-hour gains to 6.2%.
Altcoins in the top twenty, however, mostly failed to achieve more than 4%, meaning they, in fact, lost value in Bitcoin terms.
Some commentators voiced caution about placing faith in Bitcoin’s strength. Market cap, they argued, is a poor measure of performance, as it includes many altcoins which do not even have any trading volume.
Earlier, Cointelegraph reported on the phenomenon of Realized Market Cap, a metric designed to solve those inconsistencies which has also set new records in recent weeks.
No ‘AltSeason’ Until Bitcoin Breaks $20K, Says Hedge Fund Manager
The worst is yet to come for altcoins, says Cantering Clark’s Ryan Sperin
“When AltSeason 2?” has been on the minds of many investors for some time now. The average retail Joe Schmoe investor most likely draws some insight from crypto-sector leaders and Crypto-Twitter influencers who often post compelling charts of various digital assets with a captioned explanation of why or why not certain price action could lead to a particular outcome.
To review, here what many investors may have internalized as truth:
- When Bitcoin (BTC) price consolidates (trades sideways) traders will take their profits and begin to play larger-cap altcoins, this catalyzes similar movement across other altcoins and could spark an altcoin rally.
- As Bitcoin price notches new 2019 highs, larger cap altcoins from the top-10 will move in tandem.
- A significant drop in Bitcoin market cap dominance will put the ball in altcoins’ court.
So far, none of these things have happened. In fact, the situation for the majority of altcoins has gotten even worse.
To gain more clarity on this situation, Cointelegraph decided to ask a professional fund manager to explain what is going on with the crypto sector and why altcoins haven’t followed Bitcoin as they did in the past.
Cointelegraph: Bitcoin has had some periods of range-bound trading since topping out at $13,800. In your opinion, why haven’t we seen traders take advantage of this consolidation to jump into altcoins? Also, what exactly is “altseason” in your opinion?
Cantering Clark: Altseason was essentially a bunch of new investors entering the crypto space, drawn in by Bitcoin. They saw Bitcoin as being very expensive and the perception at the time was cheaper altcoins are going to be future Bitcoins in the making.
Newer investors were relatively ignorant of market cap and multiplier effects, they just saw the smaller price and equated a cheaper price to a better deal.
In my opinion, altcoins were the epitome of the bubble for 2017 and the process closely mirrored the Gartner Hype Cycle.
Bitcoin is essentially the chosen asset by the industry and it has become the haven of crypto. When Bitcoin does well there are flows that can be capitalized on but this flow cycle has begun to untether and fall apart.
The inverse correlation and positive correlation is no longer a conventional occurrence that investors can consistently rely on.
“Bitcoin price hasn’t broken it’s all-time high, and the next altseason is unlikely to occur until this all-time high is broken.”
CT: Shouldn’t a drop in Bitcoin dominance lead altcoins to surge?
CC: If Bitcoin’s dominance rate dropped to 40% this would probably bring on an altseason but it’s unlikely that this sort of dominance shift is in the cards at the moment.
CT: Do you think investors’ confirmation bias impacts Bitcoin price action? For example, many investors believe that if Bitcoin must drop below the 61.8% Fibonacci retracement level before a real bull market begins.
CC: Bitcoin is so volatile and it has been through every asset scenario possible. Moving averages are useful because traders make them useful.
The collective effort of traders makes the necessity of Bitcoin revisiting any price more “likely” thanks to the groupthink. Fibonacci retracements work because we make them work and we place bids and asks on the order book accordingly. Basically, nearly all resistances and supports are based on this thinking.
A revisit to the 61.8 Fib level diminishes the likelihood of us going way back up because it demonstrates that buyers are reluctant to step in and purchase at a higher price, or before that price is reached.
As for Crypto-Twitter, there is a deluge of cognitive biases to be found there every day. We should work to avoid confirmation bias and this is why I suggest reading Thinking Fast and Slow by Daniel Kahneman.
CT: Tell us about what led you to invest in cryptocurrency.
CC: I was drawn to crypto primarily because of the volatility.
CT: Give us your best explanation of how leveraged trading works and how one can use it to their advantage.
CC: In crypto, people use leverage to amplify gains through greater capital exposure. More often than not, traders take on losses because they don’t truly understand how margin works and what it is truly designed for.
Margin/leverage mitigates counterparty risk, and this is especially beneficial for crypto. With leverage, if I own 1 BTC, I can keep 90% of my BTC in a cold wallet and just put 10% of the BTC on exchange and protect myself from counterparty risk.
Leverage also gives the opportunity to trade both sides of the market. Frequently, traders use too much leverage and get liquidated as the market moves against them but a healthy amount of leverage gives the opportunity to take advantage of market trends.
2x and 3x leverage allows one to play the trend, especially when Bitcoin is in a strong trend with clear support and resistance levels.
CT: Tell us a little about Blockroots?
CC: Our main objective is to educate new traders and separate the truth from the noise. There are a ton of paid groups and these are not always the best way for new traders to learn how to understand the basics of investing.
One of the troubling aspects of the cryptocurrency market is there are so many trading groups and newbies who copy the trading systems proposed in paid groups a kind of taking a shot in the dark. New traders really aren’t fully aware of how effective these trading systems are they don’t have transparency regarding the trader’s success rate. Blockroots provides an academic, base-level trading approach to help new traders find their way.
Venture Capitalist Fred Wilson Revises His Bullish Opinion on Ether
Fred Wilson, a financier and co-founder of venture capital firm Union Square Ventures, has revised his bullish opinion on Ether (ETH).
Back in 2017, Wilson had suggested the market capitalization of Ether will bypass the market capitalization of Bitcoin (BTC) and eventually be worth more per coin. However, in a Sept. 4 blog post, Wilson acknowledged ETH has fallen short of this — and that the underlying Ethereum network is experiencing problems. He wrote:
“Ethereum, as many of you know, confounds me. It has shown the way to so many important things; smart contracts, programmable trust-free computing, potentially proof of stake, and a lot more. But it remains hard to build on, scaling issues abound, and many developers are looking elsewhere.”
Last month, Ethereum co-founder Vitalik Buterin himself admitted that the Ethereum blockchain is almost full. Buterin said at the time:
“If you’re a bigger organization, the calculus is that if we join, it will not only be more full but we will be competing with everyone for transaction space. It’s already expensive and it will be even five times more expensive because of us.”
Ether is no match for Bitcoin
Referring to Bitcoin, Wilson said there is still nothing on the market that comes close to the leading digital currency, adding:
“There are some protocols, like the privacy-focused ones, that offer similar and in some cases better use cases. But for the most part, Bitcoin is our digital gold.”
The venture capitalist also touched on the issue of Facebook’s yet-to-be-released Libra stablecoin, calling it a bright spot. In Wilson’s opinion, the industry will see more innovation, including a stable programmable crypto asset.
In January, Wilson had warned cryptocurrency will not be a safe haven in 2019 amid a weakening economy and a bear market in stocks, although he noted that “there will be signs of life in crypto land in 2019.” As for the impetus for the next bullish phase, Wilson listed a number of promises made back in 2017, including a number of smart contract platforms that can compete with Ethereum.
Cryptocurrency investor and Placeholder partner Chris Burniske argued in late August that Ether is enduring its first mainstream bear market, just as Bitcoin did back in 2014–15.