“Thor allows people to connect to the lightning network whether they have bitcoin or not. All you have to do is download one of the supported wallet apps, install it, and then either you or a friend can come to Bitrefill and purchase a channel opening.”Typically, this is how lightning works: Someone has to set up a channel between two parties and deposit enough bitcoin to hold it open. Users can only send as much money as the channel’s capacity supports. What Thor allows users to do is outsource the technical work for opening a channel, which can be paid for with bitcoin, litecoin, ethereum, dash or dogecoin. Bitrefill will then maintain active channels for 30 days. “The idea here is to be able to allow everyone to get on the lightning network and running a hot wallet,” Carvalho said. “There’s still a lot of lightning development left to go and a lot of convenience that is needed so it’s not so intimidating to get onto lightning.” After more than a year of experimenting with lightning payments, this 12-person startup has allowed people to pay phone and cable bills and use the network for a variety of other transactions, totaling 3,760 completed orders. The first week of 2019 alone saw 105 new orders, the company says. According to 1ML.com, Bitrefill is one of the top five organizations increasing global lightning channel capacity, which now hovers above $2 million across the network. Carvalho said overall lightning usage is growing steadily, adding:
“As far as giving bitcoin enthusiasts a way to onboard other people and teach them about lightning, I think [Thor] will be a good tool.”Thor works with several free wallet apps such as the LND wallet. Users scan the QR code on the Thor page provided while paying for the service, then copy and paste script – all without needing to deal with the raw command line themselves. Anton Kumaigorodskiy, a developer for the Bitcoin Lightning Wallet that also integrated directly with Thor, told CoinDesk this service could help boost lightning usage. He said at least 3,204 users have installed the Bitcoin Lightning Wallet app on their phones so far.
New possibilities“Opening an incoming payment channel is something which was not possible for mobile [lightning network] users before,” Kumaigorodskiy said. “But now anyone can install a fresh wallet, order an incoming channel and start receiving lightning payments right away.” All things considered, lightning usage is poised to continue growing in 2019. This bitcoin scaling solution burst onto the scene with user-ready beta software less than one year ago. And yet already a comparison of 1ML.com statistics to Ethernodes.org, which tallies nodes for the second largest cryptocurrency network, reveals there are roughly half as many lightning nodes as there are unique ethereum nodes, more than 5,215. However, when it comes to lightning-enabled payments competing with traditional fiat methods, Kumaigorodskiy said he is “a bit skeptical.” For now, Kumaigorodskiy said he still thinks professional traders have the most to benefit from using this nascent technology. It will take quite a bit of experimentation before lightning services are ready for a high volume of low-value payments from mainstream users. Speaking of his own hopes for lightning growth in 2019, Carvalho added:
“The more these services are working, live and tested, the more this will become a majorly used network that people can transact on.”Source: www.coindesk.com
“The EBA’s warnings to consumers and institutions on virtual currencies remain valid. The EBA calls on the European Commission to assess whether regulatory action is needed to achieve a common EU approach to crypto-assets. The EBA continues to monitor market developments from a prudential and consumer perspective.”The EBA also advised the commission to take into account recommendations to be issued by the Financial Action Task Force (FATF), the global money-laundering watchdog, in June of this year. The FATF is expected to issue guidance for international cryptocurrency regulation covering crypto exchanges, digital wallet providers and initial coin offerings (ICOs). Meanwhile, throughout 2019, the EBA said it will take a number of steps to monitor the crypto sector, such as developing a common monitoring template for crypto activities, assessing business practices regarding advertisements in the industry, determining the treatment of banks’ holdings or exposures to crypto assets, and more. A second regulatory agency in the economic bloc, the European Securities and Markets Authority (ESMA), also published a report on crypto assets and ICOs today. It advises the EU’s Commission, Council and Parliament on the existing rules that could be applied to crypto assets and further sets out any regulatory gaps to consider for policymakers. Notably, it says that some crypto assets could fall under the EU’s MiFID financial framework and be classed as financial instruments, although some adjustments may be required. Steven Maijoor, ESMA chair, said:
“Our survey of NCAs highlighted that some crypto-assets may qualify as MiFID financial instruments, in which case the full set of EU financial rules would apply. However, because the existing rules were not designed with these instruments in mind, NCAs face challenges in interpreting the existing requirements and certain requirements are not adapted to the specific characteristics of crypto-assets.Another category of cryptos would not fall under MiFID, but should still have to comply with anti-money laundering rules. Additionally, risk disclosure should also be enforced, to alert consumers to potential risks when investing in crypto assets, it said. “In order to have a level playing field and to ensure adequate investor protection across the EU, we consider that the gaps and issues identified would best be addressed at the European level,” Maijoor concluded. Source: www.coindesk.com
Since the end of 2018, price action has been demonstrably negative, which surprised many expecting the end of Q4 historical “pump” in prices.
The price plummet appears largely driven by negative sentiment and swathes of selling pressure after the 2018 support level of $6,000 finally broke (dashed black line). This selling pressure kept prices well into the oversold range (using RSI and SWTO) for several weeks.
Only recently, has price begun to rebound. Even so, RSI and SWTO are still trending downward (black arrows), which may point to further price weakness at the beginning of Q1 2019 while bitcoin searches for a sustainable bottom.
Charts via Tradingview.com
Volatility ≠ Price Growth
As mentioned prior, many market commentators and participants assumed, incorrectly, that Q4 was always a strong period for market price growth, specifically from mid-November to the end of December. However, what many viewed as historically consistent price growth during this period, was in fact historically consistent volatility growth.
The graphic below shows historical daily volatility trends of bitcoin on a yearly basis since 2013. Thus, the supposition that many bulls were wrongly betting on was that higher volatility always equates to higher prices.
As the volatility chart illustrates, the volatility trends of BTC, since 2013, do follow predictable patterns, culminating in higher volatility during Q4. This dynamic unfolded again in 2018 as price volatility compressed from October to mid-November (black lines), which typically precedes a breakout in price action. However, this time, volatility broke out to the downside for bitcoin.
After analyzing the overall trend in 2018 (demonstrably bearish), price volatility compression, historical volatility patterns, and fundamental indicators, it should have been more clear to market participants that the probability of a negative price breakout was far higher than to the upside.
Fundamental indicators can be quite useful for ascertaining a “narrative” of price movements and patterns, as long as the narrative is rooted in non-subjective data exploration. However, given the small sample size of bitcoin market cycles (n=10), each indicators output and predictive ability should be taken with a “grain of salt”.
Nic Carter from Castle Island Ventures / CoinMetrics and Antoine Le Calvez fromrecently pioneered a new concept called realized cap (capitalization). The differentiation between realized cap and market cap being “instead of counting all of the mined coins at equal, current price, the UTXOs are aggregated and assigned a price based on the BTC/USD market price at the time when said UTXOs last moved.”
David Puell and Murad Mahmudov do an excellent job explaining these terms and significance further in their article.
Using data from CoinMetrics, the significance of realized cap compared to market cap can be visualized quite dramatically, albeit via a small sample size. The crossover points between market cap and realized cap can be viewed almost similar to golden crosses, whereby market cap breaching above realized cap is a re-ignition of a bull cycle, while a cross beneath may indicate the final stretch of a bear cycle. Beyond the aforementioned, this comparison offers lessons which may bear out or “repeat” in 2019.
Looking at the graphic, market cap went beneath realized cap on December 28, 2014, and stayed beneath realized cap until October 28, 2015, which coincides with the data-validated, high volatility period for bitcoin.
In this case, volatility coincided with price growth for bitcoin and kicked off the start of an amazing two-year bull run for bitcoin. This time around, market cap fell beneath realized cap on November 20, 2018. So, if history repeats itself (which is a tepid assertion), an investor might expect further price declines in 2019 followed by sideways trading, until a reignition of a new bull cycle at the end of Q4 2019 (November to December 2019).
Correlation to Δprice of 0.19
Additionally, using realized cap, an additional ratio or oscillator can be created that further explains bitcoin’s market cycles, market cap to realized cap (MVRM). The MVRM provides a useful indicator that visualizes the above dynamic via one ratio.
For example, historically, a value beneath 1.0 is undervalued while a value above 3.0 is overvalued; and above 4.0 is a negative inflection for prices. Currently, MVRM is 0.82 and the all-time low is 0.56. So, despite bitcoin being in undervalued territory, MVRM still possibly has further room to fall, which is consistent with the end of Q4 2019 narrative.
Further support of the significance of MVRM for price movements can be seen by the correlation between price and MVRM of 0.19, and correlation between price and MVRM of 0.98, which is extraordinarily high.
Network transaction volume to active addresses ratio (TAAR)
This ratio acts as an “equilibrium” gauge of bitcoin’s price to fundamentals valuation, where transaction volume and active addresses both represent “quantity and quality” growth of the bitcoin network; validated by 0.15 and 0.07 correlation between price, respectively.
For example, when TAAR and price are closely distributed, price (valuation) and fundamentals are aligned in equilibrium; and when either TAAR or price deviate substantially from each other, price is out of equilibrium which has historically resulted in price devaluation (albeit small sample size). The market’s recent selloff has helped reduce the gap between price and TAAR, which has persisted since Q4 2017.
Correlation to Δprice of 0.13
The 30 day moving average of TAAR is ~$2500 while TAAR daily is ~$2000, thus an “equilibrium” range for price appears between $2,000 and $3,000. *Note: prices seldom mean revert directly to their equilibrium level, they typically over-correct, which makes further price depreciation beyond the stated levels possible. Additionally, as can be seen on the logarithmic chart, price has bounced off TAAR’s 30-day MA twice in 2018 (black boxes), and has most recently rebounded momentarily.
The final price flush before finding a stable bottom will likely coincide with price falling beneath the TAAR 30 day MA, price recovering that level, and then TAAR beginning to trend upward once more.
Similar to MVRM, the TAAR to price ratio is an oscillator that visualizes the same dynamic via one ratio. Historically, a ratio of 1.5 and above is undervalued, 1.0 to 2.0 is “safe”, and beneath 1.0 (“equilibrium”) is overvalued. Currently, the oscillator is ~0.70 which still indicates overvaluation, but the overall trend back towards 1.0 is positive.
While the recent price action for bitcoin has been harshly negative, these market clearing events have begun the normalization process for bitcoin’s price valuation, which can be seen in several indicators. Per the MVRM analysis above, if history repeats itself, price will likely fall further, then trade sideways until the end of Q4, then reignite a new bull market.
An additional verification of this narrative will be if the TAAR to price oscillator enters undervalued territory above 1.50 in 2019, especially, prior to Q4.*Disclaimer: this article is for educational purposes only and should not be considered investment or trading advice. Source: www.coindesk.com
"Today we are calling upon the ethereum developers to publish rules and requirements for what constitutes a good ProgPoW ASIC maker."Elaborating on the statement in an email to CoinDesk, director of operations Wolfgang Spraul said that such rules could include more transparency, or even monthly audits of hardware companies by ethereum developers. "The rules should probably include defining better relationships between hardware makers, miners, and developers,” Spraul said, “That’s up to the ethereum developers to define, we think." Following the meeting on Friday at which the developers approved the proposal, discussion regarding ProgPoW has escalated, with several prominent community members coming forward to argue against the change.
ASICs for ProgPoW?Linzhi is currently designing a chip for ethereum’s current mining algorithm, Ethash. Having expended $4 million on its production, the upcoming miner claims significant advantages over former ethereum ASIC designs. In conversation with CoinDesk, Spraul also said that pending its implementation into ethereum, the company will research the feasibility of building specialized ASIC hardware for ProgPoW. "I can publicly confirm today that we intend to study the feasibility, and then build, ProgPoW ASICs," Spraul said. Because ProgPoW changes ethereum’s underlying mining algorithm, Ethash, to be more memory-heavy, the code switch is said to make GPU hardware competitive with ASICs. Proponents of ProgPoW say that if hardware designers try to build ProgPoW ASICs – which is to say a specialized chip with the sole function of computing ProgPoW – it would just end up resembling GPU hardware. Still, Spraul denied this, stating that “Hardware innovation is non-linear,” and “We can accelerate ProgPoW by a factor of 3x to 8x.” Yesterday, ethereum classic underwent a 51 percent attack – something that the cryptocurrency’s Twitter account claimed may have come from Linzhi. Spraul pushed back on such claims, saying “They are entirely baseless.” Source: www.coindesk.com
“To embrace a more mainstream adoption, we need to turn something that appears professional into something that’s very ordinary.”To be sure, the water purifier is far from a mass-market product. Right now, it is available only through a one-month crowdfunding campaign on Chinese e-commerce giant , with a goal to raise 200,000 yuan or $30,000 by Jan. 21. (Buyers will receive only the device; the tokens must be earned by using it.) The sale is being conducted by Chain Infinity, a company based in Guangzhou that was jointly created by China Mobile’s IoT division, as well as Jingtum and MOAC, two China-based blockchain startups. The project was initiated around the end of 2017. Aside from incentivizing user participation with tokens, Xiao said a key purpose for China Mobile IoT to move into blockchain is the technology’s unique feature of recording data in a tamper-proof fashion. The devices feature both computing chips and IoT modules so that they’re connected to the internet without relying on wi-fi, and can run as individual nodes so that consumers’ usage information can be transacted and recorded on a distributed network. According to Xiao, this data will be recorded on SWTC, a public blockchain built on the byzantine fault tolerance consensus algorithm launched by China Mobile’s technical partner Jingtum.
But wait, there’s more…The water purifiers follow a line of blockchain-enabled televisions that China Mobile rolled out for sale via Chain Infinity on Nov. 11, China’s equivalent to the U.S. Thanksgiving Black Friday sale. Similarly, the TVs incorporate IoT modules and computing chips that connect to the SWTC network as individual nodes for recording information about user behavior. Further, by setting up the TVs, consumers activate a cloud mining contract for the bitcoin network that Chain Infinity has signed with mining farms. Depending on the models, the contract period could last from two to three years, after which a certain amount of bitcoin are promised to the TV owner as a return. And since all the assets will be stored in crypto wallets created by accounts registered on Chain Infinity, Xiao said they can be used either for buying other consumer goods available on the store or to be exchanged against each other. “Based on existing laws, exchanging tokens for tokens or for tangible goods is not illegal, so long as you don’t exchange those into money,” Xiao said. “And China Mobile has SIM cards, pre-paid packages and other consumer stuff. You can either use the tokens directly, or participate in a flexible and yet compliant barter.” In September 2017, the People’s Bank of China notably issued a ban on initial coin offering activities as well as fiat-t-crypto spot trading. Yet since then, over-the-counter and crypto-to-crypto trading have still been accessible to Chinese investors. China Mobile is one of the three large state-owned telecommunications companies in China. Founded in 2006, China Mobile IoT is a fully owned subsidiary that has rolled out various consumer modules and enterprise solutions to enable mobile connectivity for houseware products such as cars and cameras. Xiao said the water purifier and the TV are the first steps of its blockchain experiment. Further, China Mobile has also signed a partnership agreement with MOAC, another public blockchain project that launched its network in April 2018, to launch a standardized enterprise solution for combining IoT modules and blockchain computing chips. The goal, according to Xiao, would be licensing such technology to other enterprises that are interested in rolling out similar blockchain-enabled IoT products. That said, he added that, depending on the general user’s habits, this concept may not apply to every type of IoT device. Xiao concluded:
“In general, it’s more suitable for larger houseware stuff that have higher and continuous usage demand on a daily and regularly basis.”Source: www.coindesk.com