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Top 5 Crypto Performers: XMR, BTC, BNB, ETC, XRP

Monero is a top performing cryptocurrency this week, showing gains over 8%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.

The market data is provided by the HitBTC exchange.

The current hot debate is whether bitcoin will continue to rally while altcoins languish. Many have been outspoken in support of the largest cryptocurrency as it maintains its market dominance above 62%. Though bitcoin is the undisputed leader, it is unlikely that it will remain the only cryptocurrency that will see a sharp increase in price. 

We believe that after the recent rally, bitcoin will take a breather while traders shift their attention to altcoins. However, unlike the previous bull market, this time, the market will differentiate between altcoins depending on their use cases. Therefore, a few altcoins might outperform while others continue to struggle to move up.

Traders should not buy tokens that have corrected sharply from their highs in hopes that their price will also recover. Their prices are near the lows for a reason. A better approach is to buy cryptocurrencies that have started to move up as it shows trader’s interest in them. Let’s look at the top five performers of the past seven days and analyze their charts.  

XMR/USD

Monero (XMR) has risen by 8% in the past seven days and is the best performer among the top 20 cryptocurrencies by market capitalization. If the market sentiment improves, can it continue its outperformance in the next few days? Let’s look at the charts.

XMR/USD

The sharp fall in the XMR/USD pair from close to $120 in the week before found buyers at the critical support of $81. This is a positive sign because it shows that bulls are keen to buy on dips. This is the third time that $81 has held since mid-May, hence, this now becomes the new floor for the pair.

Both the moving averages are on the verge of a bullish crossover on the weekly charts. This shows that the trend is changing and traders should utilize dips to buy.

The cryptocurrency is likely to trade between $81 and $150 for the next few weeks. As the range is large, traders can initiate long positions at the current levels and keep a close stop loss just below $78. The target objective is a rally to $150. Though there is a minor resistance at $120, we expect it to be crossed. This trade has an attractive risk to reward ratio. Our view will be invalidated if bears sink the price below $81. The next support on the downside is at $60.

BTC/USD

With the recovery in prices, bitcoin (BTC) bulls are getting confident again. Sky-high targets are back on the table. Anthony Pompliano, co-founder of crypto asset management firm Morgan Creek Digital Assets, expects bitcoin to hit $100,000 by the end of 2021. Pompliano has walked the talk and has invested 50% of his wealth in bitcoin. 

A report by Binance shows that the correlation between bitcoin and altcoins has decreased from 0.73 in Q1 2019 to 0.61 in Q2 2019. In the current leg of the up-move, bitcoin futures volumes have spurted. This shows that large traders are investing in the cryptocurrency. However, institutional traders are unlikely to continue their buying spree as prices skyrocket higher. Therefore, we do not expect the rally to sustain. What is a good level to buy? Let’s analyze the charts.

BTC/USD

The uptrend from the lows ended with the BTC/USD pair forming a gravestone doji in the week before. Though buying was seen below $10,000, as suggested by us in the previous analysis, failure of bulls to sustain highs of the week shows that traders stuck at higher levels are bailing out of their positions closer to $12,000. If buyers fail to break out and sustain the price above $12,000 in the next week, it will attract further profit booking that can drag the price below $10,000 levels once again.

If bears plummet the price below the 38.2% Fibonacci retracement level of $9,965.48, the price can extend the correction to $8,727.40, which is the 50% retracement of the recent rally. A breakdown of this level can drag the price to the uptrend line. The upsloping 20-week EMA is also just below this line. Hence, we anticipate strong buying if the cryptocurrency corrects to this level. As the trend has changed from down to up, traders should use these dips to buy.

Contrary to our assumption, if the bulls propel the price above $12,000, the digital currency can retest $14,000. A breakout of $14,000 will resume the uptrend but we give it a low probability of occurring in the short term. We believe traders should wait and buy on dips instead of chasing the price higher.

BNB/USD

Binance is planning to launch futures trading in bitcoin with leverage of up to 20x. While leverage can be useful to an experienced trader, it can easily destroy a novice trader, so use it judiciously. The leading cryptocurrency exchange has switched tether deposit and withdrawal addresses from Omni-based addresses to ERC-20-based addresses, which will be the standard going forward. Dogecoin (DOGE) prices spurted higher on the announcement that Binance will list it. With fundamentals remaining strong, can Binance Coin (BNB) resume its uptrend?

BNB/USD

While most cryptocurrencies are still struggling well below their lifetime highs made in the previous bull market, the BNB/USD pair continues to trade close to its lifetime highs.  The 20-week EMA is sloping up and the 50-week SMA is also turning up gradually. This is a positive sign and shows that the pair is in a strong uptrend.

Any dip to strong support levels offers a low-risk buying opportunity to traders. The first support on the downside is $28.7168. If this support breaks, the fall can extend to the uptrend line. The 20-week EMA is also close to this line, hence, we anticipate strong buying at this support. Traders can watch the price action at the above-mentioned levels and buy in a phased manner.

After the sharp up-move from the lows, the digital currency is likely to remain range-bound for a few weeks and consolidate the gains. The next leg of the up move will start on a breakout and close (UTC time frame) above $40.

ETC/USD

Recently, the Atlantis hard fork entered its testing stage. The update is scheduled for September. ETC Labs and Metronome also announced that chainhop functionality had been enabled between Ethereum and Ethereum Classic (ETC) blockchains. Though the cryptocurrency was backed by positive news on the fundamental front, how does its chart look?

ETC/USD

The recovery in the ETC/USD pair hit a wall close to $10.040. This shows profit-booking at higher levels. However, a minor positive is that bulls have kept the price above the 20-week EMA during the pullback.

If the price rebounds off the 20-week EMA, bulls will again try to push the price above the $10.040–$11.880 resistance zone. This is likely to start a new uptrend that can carry the price to $15 and above it to $20. Traders can buy part of their intended position size above $10.040 and add the rest on a breakout above $11.880.

Conversely, if the bears sink the price below the 20-week EMA, the pair can slip to $5.22. Therefore, we suggest traders wait for the price to break out before initiating fresh positions.

XRP/USD

Xpring, Ripple’s ecosystem initiative, claims to have committed $500 million on XRP projects to over 20 companies since May of last year. The goal is to support projects that create use cases for Ripple’s XRP token. Let’s see what its chart projects.

XRP/USD

The XRP/USD pair has been a laggard during the recent recovery in crypto prices.  The bulls have repeatedly failed to sustain the price above $0.450, which shows a lack of demand at higher levels. Currently, the pair is taking support closer to $0.370. Both the moving averages are also located at this level. Hence, this is an important support to watch out for. 

If the price bounces off this support, bulls will again attempt to scale above the overhead resistance zone of $0.450 to $0.5050. We anticipate the digital currency to start a new uptrend and pick up momentum after it sustains above $0.5050. 

However, if the price breaks below the moving averages, it can slide to $0.27795. A breakdown of the $0.27795–$0.24508 support zone will be hugely negative for the cryptocurrency. As the price is stuck inside the range, we believe that the best approach is to stay neutral on it until it starts a new uptrend. Notwithstanding, for traders who want to trade it, the best strategy would be to buy closer to the support and sell near the resistance. 

The market data is provided by the HitBTC exchange. 

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Discovering Atlantis: Ethereum Classic Hard Fork and What Will Change

Ethereum Classic is set to undergo an Atlantis hard fork in September 2019, which will bring interoperability between sibling blockchains

On June 19, the Ethereum Classic (ETC) community announced that the Atlantis hard fork is now in its testing stage. As Cointelegraph previously reported, the update is scheduled for Sept. and will take place on the block 8.75 million. 

Also, as Cointelegraph reported, ETC Labs, which actively contributed to the Atlantis project, will soon introduce another solution for Ether (ETH)/ETC interoperability being part of Metronome Validator Network. This move brings transparency on certain aspects of the upcoming upgrade. 

ETC itself was introduced after the DAO attack back in 2016, when 3.6 million ETH had been stolen within the first few hours. At the time, it was equal to $70 million. To reverse the malicious transactions, Ethereum hard forked and thus gave birth to Ethereum Classic. At present, ETC is the 19th-biggest cryptocurrency, as its market capitalization of over $883 million, according to coin360.com. However, let’s take a deeper look at the motivations, technicalities and potential consequences of the hard fork. 

Why the hard forking?

A hard fork is a radical change to a protocol of a blockchain, which can be carried out to reverse transactions, add new functionality or fix security risks. Unlike the previous time when the DAO was attacked, the hard fork is more of a beneficial renewal rather than a necessary measure. According to the blog post of Ethereum Classic Labs, the upcoming hard fork is aimed at presenting secure high-quality blockchain software while taking into account the community’s concerns. 

Atlantis is a consistent, no-rush update that would ensure compatibility of ETC with Ethereum, leading to an easier collaboration of sibling blockchains. The team also intends to improve the functionality and stability of ETC. The last point is especially relevant, as the network had experienced a “51% attack” last January. 

Who is involved? 

In order to complete the technical development of the main client, Classic Geth (which 68% of the network uses), ETC Labs has collaborated with ChainSafe Systems and cooperated with ECC, Parity and IOHK. A team of developers, ETC Labs Core, who are believed to be among the most skillful, has actively contributed to Multi-Geth preparation. As for ETC Labs’ blog post, “The ETC community has shown great attention to and support” for the hard fork. “All stakeholders have fully participated in the discussions on the details, scope, and timing of the hard fork,” the developers said.

ETC Labs and Metronome will issue a cryptocurrency named MET, which will be transferable between the blockchains. This is possible because “chainhopping” is a property of the blockchain asset and can be transferred from one chain to another. According to the blog post, “ETC Labs will support Metronome’s Validator Network to ensure reliable and secure transaction verification that guards against double-spend attacks and provides fluid cross-chain transactions.”

Reaching consensus on schedule 

On June 11, after an intermediate scheduling call, stakeholders from North America, Europe, and Asia agreed upon the hard fork’s timetable: It was decided that ETC Kotti and ETC Morden testnets would be activated at blocks number 716,617 and 4,729,274 respectively, and finally the hard fork would be implemented at block 8,500,000.

Ethereum Classic

However, bearing in mind that the chosen block would run on a Sunday, ETC Labs adjusted the schedule during Ethereum Classic Improvement Protocol (ECIP) finalization call on June 20. ETC Labs announced that the hard fork would then be set to occur on block height number 8,772,000 (which will be hit on Tuesday, Sept. 17, around noon UCT) to have more parties involved in implementation. 

The decision was unanimous, and the deadline of the release seems rock-solid, according to a statement form ETC Labs to Cointelegraph: 

“The community has had a number of meetings to discuss timing, scope and involvement, and we have decided on the direction and timing of the Atlantis release. So, the decision was made and the community and stakeholders are all moving forward.” 

What do we know about Atlantis?

Atlantis is there to incorporate multiple Ethereum Improvement Proposals (EIPs) that have been around on Ethereum for some years already. The mission of the hard fork is to pull ETC up to ETH’s latest protocol enabling easier interoperability between them. 

ETC Labs Core described some of the features of ECIP-1054 (Atlantis) in their blog post, explaining what exactly the community should be expecting. 

Overall, the update consists of 10 improvement proposals including improvements to stability, op-code upgrades, precompiled contracts to improve zkSNARKs, performance-related improvements and enhanced security. 

Zero-Knowledge Succinct Non-Interactive Argument of Knowledge (zkSNARK) is the core of ECIP-1054. What hides behind the spooky title is a familiar zero-knowledge proof. It implies that no interaction between prover and verifier is needed, which “allows one to prove x without having to convey any information to the verifier other than they know x.” 

Сustomary encryption schemes efficiently secure data but need to be decrypted before computation. To change that, zkSNARK uses the Homomorphic Encryption technology that allows computations on encrypted data requiring no special access: The prover and verifier only share a dataset or parameters of the encryption. 

Further, by updating to zkSNARK, users obtain increased privacy necessary for data such as identity or location, which is now totally transparent on the blockchain. This feature is based on EIP-196. As for its description, zkSNARKs could in theory be implemented by Ethereum Virtual Machine, yet they would not fit the block gas limit due to the cost. 

EIP-196, for its part, suggests to adjust certain parameters of znSNARK so that the technology would perform effectively at a reduced gas cost. Meanwhile, EIP-197 ensures the verification of zkSNARK contracts on the Ethereum Classic blockchain. The EIPs make the technology flexible enough to be further improved and advanced without another hard fork.

Among the benefits that the update poses, there will be a more predictable ETC issuance rate. The current formula lacks the “uncle rate,” which will be fixed by EIP-100 (“Change difficulty adjustment to target mean block time including uncles”). Furthermore, deployment of a decentralized application (DApp) after the hard fork, as well as migration of DApps between Ethereum and Ethereum Classic, will become easier and more efficient. 

The community can also expect a better performance of Ethereum Classic, as EIP-161 will optimize it by removing empty accounts. This will “debloat” the network and speed up sync times. Another improvement proposal is to change the contract-code size limit to 24,576 bytes. 

The last proposal happened to be the stumbling block within the ETC community: Initially, co-founder of Ethereum Vitalik Buterin introduced EIP-170 to prevent an attack scenario. But, if implemented in ETC, it would put a fixed cap on the size of smart contract code that could be run in a single transaction, and this creates a point of contention among the Ethereum Classic community. Some of the developers hesitated whether it was right to include the EIP in the upgrade, as it can be applied to a transaction validation instead of a block validation, which makes it a soft fork. According to ETC developer Anthony Lusardi:

“These rules can simply be applied to transaction validation rather than block validation, making it a soft fork rather than a hard fork. […] It’s vitally important to stick to pre-agreed rules when they’re defined.” 

Chasing interoperability between two blockchains 

The Atlantis hard fork proposal on GitHub points out that “establishing and maintaining interoperable behavior between Ethereum clients is essential for developers and end-user adoption, yielding benefits for all participating chains (e.g., ETH and ETC, Ropsten and Morden, Görli and Kotti).”

Atlantis should provide wider capabilities for interoperability between the blockchains and off-chain scaling protocols. The faster interoperability is implemented, the sooner the traditional methods of payment and banking will be disrupted, and this is where cooperation matters. 

Stevan Lohja, technology coordinator at ETC Labs Core, explained in a Discord discussion why compatibility matters, while calling Ethereum Classic a “sanctuary”: 

“EF has publicly stated the intention to deprecate ETH and ETH 2.0 is not actually a 2.0. It is a separate project and EF has legal privileges to force their brand. So everything that has been invested into ETH will be deprecated or forced to move to this entirely separate network at the cost of all the users. If ETC is compatible with ETH while respecting ETC value proposition, then ETC is a sanctuary for ETH refugees.”

The teams contributing to Atlantis and Metronome are chasing a mutual goal: to enable “cross-chain transactions to quickly, easily, and securely occur between ETH and ETC.” 

To split or not to split 

Taking into consideration all of the changes that the Atlantis hard fork will bring to the ecosystem, a rather successful adoption of the update can be expected. It’s been positively accepted by the stakeholders, as the calls demonstrate. “The community found consensus, this will not split the chain,” a user named BabySocrates claimed in the Discord chat. 

Commenting on the origin of the proposed features, executive director at ETCC, Bob Summerwill, stressed that “all of the Atlantis changes are from ETH, […] rather than being anything new specific to ETC.” He also confirmed the proposed date of hard fork, Sept. 17: “Yes, the deadline is realistic.”

Ethereum Classic is on the verge of a new stage of technological advancement, and the community has big expectations regarding changes proposed by the Atlantis hard fork.

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ETC Labs Unveils ETC-ETH Interoperability Solution Backed by Metronome

ETC Labs announces partnership with Metronome to enable interoperability between the Ethereum and Ethereum Classic blockchains.

San Francisco-based incubator for the blockchain Ethereum Classic (ETC), ETC Labs, has announced that it has partnered with cryptocurrency firm Metronome to create a solution for Ethereum (ETH)/ETC interoperability, in an official blog post on June 27.

Per the announcement, blockchain interoperability—also referred to as “chainhopping”—is a property of a blockchain asset meaning that it can be transferred between separate blockchains. In this case, the cryptocurrency Metronome (MET) will be transferable between the ETH and ETC blockchains.

The ETH and ETC blockchains initially split in the summer of 2016 after a contentious vote to return money lost when The DAO collapsed in 2016. 

According to the announcement, MET is the first cryptocurrency to have the property of blockchain interoperability. Metronome’s website also makes this claim and expounds on its further plans for interoperability, saying:

“As the first cryptocurrency capable of being exported and imported across chains, Metronome will be initially issued on Ethereum with Ethereum Classic, Rootstock on Bitcoin, and Qtum support expected to follow. Such portability will allow users to select the chain that suits their requirements for management and security, or even upgrade the MET contract if needed.”

Another aspect of the partnership, as noted in the announcement, is that ETC Labs will provide support for Metronome’s Validator Network, a set of at least 5 decentralized, off-chain validators who will verify the validity of Metronome transactions. By doing so, this network will reportedly ensure that Metronome transactions are reliable and secure, and less prone to double-spend attacks.

As previously reported by Cointelegraph, Metronome was initially announced by veteran bitcoin (BTC) dev and blockchain wallet Bloq co-founder Jeff Garzik back in 2017, with the aim of it being the first chain-hopping cryptocurrency.

One of the recent upgrades planned for ETC, the Atlantis ECIP 1054 hard fork, has recently been confirmed for block 8,772,000, which is set for an intended launch date of September 17. In the meantime, cooperating developers are running the new ETC iteration on testnets to try and eliminate as many bugs as possible before the protocol goes lives.

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Atlantis Hard Fork for Ethereum Scheduled for September 17 Launch

Ethereum Classic developers and contributors recently decided that the Atlantis hard fork will occur on block 8,772,000, estimated for September 17.

The Atlantis hard fork for Ethereum Classic (ETC) has been officially set to occur at block 8,772,000 on the blockchain, according to the Ethereum Classic Improvement Protocol (ECIP) finalization call via Discord on June 20.

As per the discussions in the call, the developers and contributors had previously considered putting the hard fork at block number 8.75 million, which is predicted to run on September 15.

However, since the 15th is a Sunday, ETC Labs moved to increase the block number in order to have the projected update during the week, when more involved parties, such as exchanges and developers, are more likely be present to discover and deal with any issues that may arise.

Since the release is still several months away, the block number is an imperfect estimate of date; nonetheless, the number has been moved up with the aim of the hardfork arriving on Tuesday, September 17, around noon UST.

The decision appeared to be unanimous.

An official ETC blog post proposed this shift on June 19, which noted block 8.772 million for an intended fork date of approximately September 17. Today’s discussion further solidifies that number.

The post also notes that Atlantis is currently undergoing testing to weed out any bugs or other unwelcome consequences from introducing the new hard fork code to ETC’s original scheme.

The post also notes the following as main priorities of the upcoming hardfork:

“(1) develop high-quality blockchain software that preserves the security of the network

(2) consider the opinions and concerns of the community.”

ETC itself is the original Ethereum blockchain, which is named Classic in response to Ethereum carrying out a hard fork in 2016. This happened amid the collapse of Ethereum-based project “The DAO” after a major hack exploited its security flaws.

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United States Residents Will Lose Access to Many Altcoins Starting in September

Many cryptocurrencies will be unavailable for trade in U.S. after Binance updates scheduled for September.

Crypto enthusiasts living in the United States will have no trading options for a many cryptocurrencies when the major crypto exchange Binance becomes unavailable for them in September, according to a report by CryptoPotato on June 14.

The report draws this conclusion based on the following table, which shows which cryptocurrencies will still available for U.S.-based traders after Binance discontinues its U.S. service:

Former Binance options in the U.S. on other crypto exchanges

Former Binance options in the U.S. on other crypto exchanges. Source: Goomba’s Twitter

The foregoing exchanges listed are Coinbase, Bittrex, Poloniex, Kraken, HuobiUS, and eToro.

The report also highlights that, in addition to the cryptocurrencies with no trading outlet in the U.S.—the all-white rows—there are also a number of tokens listed on only one exchange after Binance drops off, including ARK, BTT, IOTA, PIVX, and ZIL.

These “endangered” exchange tokens, as well as the (temporarily) extinct tokens, will likely witness a large drop in volume, according to the report.

However, veteran cryptocurrencies such as XRP, DASH, XLM, ETC, ZRX, and ZEN should survive Binance’s departure with little issue, since they are listed on four or more of the aforementioned exchanges.

As recently reported by Cointelegraph, Binance updated its terms of use on June 14 to exclude trading on the platform in the U.S., which comes shortly after its announcement of a U.S.-exclusive fiat-to-crypto exchange.

Binance CEO Changpeng Zhao (CZ) remarked on the recent changes, implying that the restructuring will be useful in the long run:

“Some short term pains may be necessary for long term gains. And we always work hard to turn every short term pain into a long term gain.”

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Ethereum Classic to Test Code for ‘Atlantis’ Upgrade This Month

Ethereum classic developers discussed during a call today the possibility of speeding up mainnet activation of system-wide upgrade, Atlantis. In compromise, a slightly adjusted test network activation timeline for June 19 was collectively agreed upon.

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Bitcoin Reclaims $8K as Coins See Green, Experts Warn of Ominous Stock Market Volatility

The crypto markets are today back firmly in the green, with bitcoin (BTC) breaking back above the $8,000 mark.

Friday, June 7 —  after recent shaky sentiment, the crypto markets are today back firmly in the green, with bitcoin (BTC) breaking back above the $8,000 mark, as Coin360 data shows.

Market visualization courtesy of Coin360

Market visualization courtesy of Coin360

Having bullishly surged above the psychological price point of $9,000 in May, bitcoin has since seen significant corrections — briefly trading below $7.600 on June 6. To press time, the top coin is seeing solid green, breaking back above $8,000 to trade at $7,003 — up roughly 1.8% own on the day, according to CoinMarketCap data.

On the week, the cryptocurrency’s losses remain at 3.9%.

Bitcoin 24-hour price chart

Bitcoin 24-hour price chart. Source: CoinMarketCap

Largest altcoin by market cap ether (ETH) has seen a gain of 1.21% on the day to press time to trade around $250. Having traded above $270 on June 1, ether has corrected downwards and remained range-bound in the $240-50 range in recent days.

The altcoin is reporting a mild 2.66% loss on the week.

Ether 7-day price chart

Ether 7-day price chart. Source: CoinMarketCap

XRP has reported a solid 4.36% gain on the day to trade at $0.42 by press time. The asset hit its intraweek price peak on June 3, when it traded close to $0.46. On the week, XRP’s losses stand at a slight 0.6%.

 

XRP 7-day price chartXRP 7-day price chart. Source: CoinMarketCap

Among the top ten cryptocurrencies at press time, all are in the green except for eighth-largest coin bitcoin sv (BSV), which has reported a 1.26% loss on the day to trade around $198.

The highest 24-hour gain has been sealed by fifth largest crypto litecoin (LTC), which has surged 8.45% to trade at $113.50. Other top ten coins such as bitcoin cash (BCH), stellar (XLM) and eos (EOS) are seeing milder gains of between 1 and 3%.

Widening out to the top twenty, virtually all coins are green, with the exception of ethereum classic (ETC), which is down a slight 0.8% to trade at $7.94 by press time.

17th largest coin tezos (XTZ) has seen the highest gain, growing 12.65% to trade at $1.34 by press time. Cosmos (ATOM) is reporting a 5.25% gain on the day, with cardano (ADA), neo (NEO) and nem (XEM) seeing more typical gains of between 3.5 and 4% on the day.

To press time, the total market capitalization of all cryptocurrencies is at around $255.78 billion — as compared with an intraweek high of $276.56 billion on June 2. Bitcoin dominance is at 55.5%.

Total market capitalization of all cryptocurrencies

Total market capitalization of all cryptocurrencies. Source: CoinMarketCap

In crypto market news, margin lenders on American cryptocurrency exchange Poloniex reportedly lost around $13.5 million due to a flash crash on May 26. A blog post from the exchange outlined that a severe price crash in the clams (CLAM) market had led to margin loans losses amounting to roughly 1,800 bitcoin — approximately $13.5 million at the time.  

Meanwhile, further alleged details continue to surface in regard to Facebook’s much-anticipated crypto project, with fresh reports claiming that there are now 100 people known to be working on the project according to profiles on the professional networking platform LinkedIn.

In traditional markets, CNN Business has reported that Masanari Takada, a strategist at Japanese financial holding company Nomura, has warned that recent swings on Wall Street are becoming ominously similar to the market sentiment that preceded the 2008 Lehman crash and subsequent financial crisis.

Today’s early stock markets have nonetheless shown strong openings. As of 6:21 AM (EDT) the Stoxx Europe 600 Index increased 0.8% — its reported highest in over 2 weeks, Bloomberg reported. Futures on the S&P 500 Index also saw their reportedly largest increase in the same time period, rising 0.3%, while the United Kingdom’s FTSE 100 Index increased 0.7% — its largest hike in over three weeks.

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Bitcoin Holds Over $7,800 as US Stock Market Sees Minor Uptrend

Most of the top 20 cryptocurrencies are reporting moderate losses on the day as bitcoin holds over the $7,800 mark.

Wednesday, June 5 — most of the top 20 cryptocurrencies are reporting moderate losses on the day by press time, as bitcoin (BTC) holds over the $7,800 mark.

Market visualization courtesy of Coin360

Market visualization courtesy of Coin360

Bitcoin is down over 2% on the day, trading at $7,820 at press time, according to CoinMarketCap. Looking at its weekly chart, the coin is down over 10.6%.

Bitcoin 7-day price chart. Source: CoinMarketCap

Bitcoin 7-day price chart. Source: CoinMarketCap

Bloomberg reported yesterday that bitcoin could be currently showing signs of an incoming reversal.

Ether (ETH) is holding onto its position as the largest altcoin by market cap, which currently stands at $26 billion. The second-largest altcoin, Ripple’s XRP, has a market cap of $16.9 billion at press time.

CoinMarketCap data shows that ETH has also seen its value decrease by about 1.8% over the last 24 hours. At press time, ETH is trading around $244. On the week, the coin has also seen its value decrease about 10%.

Ether 7-day price chart. Source: CoinMarketCap

Ether 7-day price chart. Source: CoinMarketCap

XRP is down about 3.5% over the last 24 hours and is currently trading at around $0.401. On the week, the coin is up almost 12.5%.

XRP 7-day price chart. Source: CoinMarketCap

XRP 7-day price chart. Source: CoinMarketCap

As Cointelegraph reported earlier today, Ripple, the company behind settlement-oriented crypto asset XRP, promised a higher degree of accuracy for XRP volumes and sales.

Among the top 20 cryptocurrencies, the only one reporting double digit losses is ethereum classic (ETC), which is down over 10%.

At press time, the total market capitalization of all cryptocurrencies is $249 billion, nearly 10% lower than the value it reported a week ago.

Total market capitalization 7-day chart. Source: CoinMarketCap

Total market capitalization 7-day chart. Source: CoinMarketCap

In traditional markets, the United States stock market is seeing discrete gains so far today, with the S&P 500 up 0.5% and the Nasdaq up 0.68% at press time. The CBOE Volatility Index (VIX), on the other hand, has lost 0.48% on the day at press time.

Major oil futures and indexes are seeing mixed movements today, with WTI Crude down 1.25%, Brent Crude down 0.65% and Mars US up 0.4% at press time. The OPEC Basket is up 2.11% and the Canadian Crude Index has seen its value decrease by 2.2% in the 24 hours by press time, according to OilPrice.

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The Land of the Free: Why Decentralization Matters in the Crypto Republic

The success of Tezos’ self-amendment process and other recent events stress the relevance of the topic of governance in the crypto community.

On May 30, Tezos implemented the amendment Athens A, as the result of a voting process that involved its baker nodes (the Tezos equivalent of “miners”) from Feb. 28 to May 30.

Although the actual relevance of the upgrade was quite small (see below), the Tezos community underlines that the test was a milestone. The smooth shift to Athens A indeed demonstrated the capability of Tezos to evolve without forking, thanks to the features of proposal/selection/voting/test/implementation this blockchain itself encompasses.

On the very same day, another fast-growing young company backed by a cryptocurrency, Iota, announced an important step toward total decentralization, substituting its Coordinator mechanism with the new Coordicide tool.

Coordicide will perform the same functions of its predecessor, ensuring transaction security and preventing double spending. However, the new protocol will allow the peculiar Iota block creation process to work in a fully decentralized and permissionless manner.

The debate over what constitutes the most suitable approach to the exchange business and the declarations of some big companies about decentralized exchanges (DEX) — both for or against it — only add to the fact that the topic of decentralization is still a paramount concern as crypto involves more people and use cases.

The evolution of cryptocurrencies as a business increases the amount of interest it generates. As in any business, this involves issues relating to power distribution. But such questions are difficult to answer in a simplistic way.

Benevolent dictators

Bitcoin (BTC) defines itself as a peer-to-peer (p2p) network, as per the title of its white paper; the new electronic cash would work in a trustless manner — the 2008’s foundation document states — thanks to the consensus of the honest nodes that “control a majority of CPU power.”

The dream of money created by the people and for the people, freely circulating across the national borders, and untouchable by the rapacious economic monopolies was very appealing during the years following a dramatic financial crisis, which some may argue left the world suspicious toward governments and traditional financial actors.

However, while Bitcoin evolved from being a “cypherpunk” plaything to a relevant business entity, many concerns about its actual decentralization and “internal democracy” arose. In autumn 2016, for instance, two researchers — De Filippi from Harvard University and Loveluck from Université Paris-Saclay — published a paper that criticized the “highly centralized and undemocratic” technocratic approach to governance that, in their opinion, characterizes Bitcoin core developers.

Defining the small number of individuals in charge to decide which changes shall be incorporated into Bitcoin as a sort of “benevolent dictator,” the two researchers noticed:

“There exists, therefore, an obvious discrepancy between the libertarian vision of Bitcoin as a decentralised infrastructure that cannot be regulated by any third party institution, and the actual governance structure that dictates the technological development. […] While the (a)political dimension of the former has been praised or at least acknowledged by many, the latter has remained, for a long time, invisible to the public: the technical decisions to be taken by the Bitcoin developers were not presented as political decisions, and were therefore never debated as such.”

Additionally, Vitalik Buterin and Ethereum’s core team were labeled with the same title of “dictator” as a consequence of the decision to alter the mainchain to refund the victims of the DAO hack on June 2016.

The hack itself and the following debate between the supporters of Vitalik’s choice and the defenders of the inviolability of the blockchain stressed, as an article on Wired noticed then, how much human weaknesses were still influencing processes that, theoretically, are managed only by the impersonal rules of mathematics.

A similar dispute emerged once again in 2018 about the vote on the Ethereum Improvement Proposal (EIP-999), which aimed to unfreeze 587 multisig wallets attacked during the July 2017 Parity hack.

It is worth noting that the internal debates inside both the Bitcoin and Ethereum communities brought the first relevant cases of a direct democracy instrument being applied, which is allowed by the blockchain architecture itself.

Even if the process of development and amendment of the core software remains the privilege of a qualified technical elite, all the nodes taking part in the network can veto a piece of code, refusing to upgrade and forking the blockchain. Therefore, every miner has voting rights that are equal to the hashing power and, if a new alternative blockchain is born, the free and democratic rules of the market would determine which is the more successful coin.

This happened, for instance, in July 2016, when the integrity supporters divorced from the amended Ethereum mainchain, giving birth to Ethereum Classic (as well as a new coin, ETC). Similarly, in August and October 2017, when people became unsatisfied with the introduction of SegWit on the Bitcoin network, they tried to find a solution to the block’s dimensions issue, creating, respectively, Bitcoin Cash (BCH) and Bitcoin Gold (BTG).

Voting, pickaxe in hand

This dream made of equal rights and free competition, however, is troubled by severe concerns over the actual distribution of mining power that sustains the different blockchains based on proof-of-work (PoW).

When considering Bitcoin, for instance, it’s easy to understand the distance from its pioneer days and the present: On May 22, 2010, on the legendary first Pizza Day, the hash rate required to feed the whole network was about 109 MegaHash/s (MH/s), while eleven years after, on BTC Pizza Day 2019, the required computing power reached almost 52 ExaHash/s (51,934,800,000,000 MH/s).

Average daily hash rate on Pizza Day

While mining shifted from an amateurish activity to a capital-intensive business, the community has lost its role as a validator, which became much more of an exclusive prerogative of the giant mining pools that formed an oligopoly.

The data published by one of them show that, since April 2013, the three largest mining companies produced more than 50% of the blocks of the system (BTC Guild with 37.83%, SlushPool 11.54% and BitMinter 7.09%). The situation changed very little during the following years, despite the swirling turnover among the companies leading the industry.

The dynamic only seems to have scaled down in the very last few months; however, the dominance of the first three players (presently BTC.com, F2Pool and Poolin) is still above 40% of the blocks.

BTC Pool

Ethereum was born with specific features preventing ASIC-based mining. However, its algorithm could do nothing to limit a concentration of power, which is even more accentuated than in Bitcoin’s blockchain: Since the summer of 2017, two pools alone — Ethermine and SparkPool — produced over 50% of the new blocks almost continuously every month.

ETH Pool

Even if vicious behavior that could undermine the whole crypto economy is rather unlikely in the two leading blockchains, recent events involving the smaller ETC demonstrated that the possibility of a 51% attack is far from theoretical. Last January, the exchange Coinbase revealed evidence of an ETC blockchain reorganization, which included double spending worth over $1.1 million.

Give me liberty or give me scalability

Proof-of-stake (PoS) could contribute to answering the concerns surrounding the rise in concentration of power within the mining industry and the risk that a malicious super-miner could hijack a whole blockchain.

The critical feature of PoS is to bond the rights to validate the new blocks — to “vote” in cases of a fork — to facilitating a “lottery” influenced by the dimension of the stakes “frozen” in the nodes, instead of asking the validators to compete through computing power.

This would bring some advantages — considering the fee levels, transaction speed and ecological footprint — as PoS forging is less demanding than PoW mining in terms of fixed capital and energy involved. Besides, the broader adoption of PoS would disrupt the mining business model, undermining the oligopolistic position of the pools that are dominating the market now.

However, even if the shift toward PoS would theoretically bring immediate democratization in the way blockchain is being run, in a long-term perspective, it is somewhat unclear if and how forging business would avoid spiralling toward concentration and bringing it from individual geeks to giant multinational companies.

Delegate proof-of-stake (DPoS), on the other hand, makes even more explicit the issue of the internal governance and the trade-off existing between scalability and decentralization. This consensus algorithm began to work for the first time in Bitshares, the first blockchain project designed between 2014 and 2015 by Daniel Larimer, also the creator of Steemit and EOS.

Since then, the crypto community divided itself between those who equate Larimer to Satoshi Nakamoto and those who see DPoS as an unforgivable sin against the very nature of the blockchain.

Cryptocurrencies must rely on blockchains that could guarantee that transactions will be unique and irreversible. However, to reach this advisable degree of security, it seems inevitable that a choice has to be made between either a time-consuming solution that implies a broad and distributed consensus or more effective architectures, which achieve efficiency while harming system decentralization.

The so-called “scalability trilemma” was first coined by Buterin and Trent McConaghy to explain how difficult — if not impossible — it would be to attain scalability, decentralization and security, all at the same time.

Since security is a sine qua non for every blockchain and scalability is a goal determining the success of a cryptocurrency, decentralization looks to be the odd one out.

Scalability Trilemma

In DPoS, limiting the validation process to an elite group of nodes — empowered also by the stakes delegated by other members — would enhance the performance, guaranteeing both security (as malicious nodes would be sanctioned economically) and preventing unchallengeable power positions (as delegators could revoke their sustain if they disagree with the delegate’s policy).

The effectiveness and the actual match between this ideal model and its application could vary enormously from case to case, as everyone who lives in a country ruled by a representative parliamentary system would know.

Like in politics, criticism and scandals are commonplace in DPoS. Since its launch in June 2018, the largest DPoS/PoS currency existing on the market, EOS, has been plagued by recurrent embarrassments revolving around its governance model.

Decentralization doesn’t seem to be a top priority for many DPoS supporters, indeed. For instance, last May, Neo founder Da Hongfei declared in an interview during Consensus 2019 that the high level of centralization of his blockchain is part of a strategy to compete against Bitcoin and Ethereum, in terms of superior performance. Despite some openings to decentralization during the summer of 2018, the Neo Foundation is still controlling half of the supply of NEO coins and the majority of the nodes running the network. “That’s intentional. We want to keep it more efficient,” the Chinese entrepreneur said.

It’s then easy to understand why Buterin himself bluntly criticized EOS, Neo and other DPoS projects during his keynote at the last Blockchain Connect Conference in San Francisco on Jan. 11, 2019. In the same speech, Ethereum’s co-founder stated his support for options he defined as “good, legitimate ways to make a blockchain fast,” without harming decentralization.  

One possible solution to the problem of scalability would be the creation of a “second layer” network, that allows transactions to occur off-chain and then ultimately settle on-chain.

Only, this secondary network would require some forms of centralization or trusted players to keep the mainnet both safe and decentralized, despite a significant growth in the number and speed of the performed transactions.

This is the path by which the Lightning Network is experimenting on Bitcoin’s blockchain and what projects such as Plasma, Raiden, Counterfactual and Truebits aim to introduce into the Ethereum ecosystem.

Considering the “first layer,” Ethereum core developers have been working for a long time toward a more sophisticated solution. It encompasses both a new approach to PoS block validation, known as Casper, and the possibility for the network to operate through segmentation — called sharding — that allows every “island” of Ethereum to act as parallel blockchains, multiplying the performance of the system as a whole. The two development paths are presently joined under the label of Ethereum 2.0, the new spec of the cryptocurrency that is set to begin operating between 2020 and 2021.

Athenian democracy

Proof-of-stake is indeed quite similar to the original form of democracy deployed in Athens during the fifth century B.C. This form of government was based, in fact, not on a free election but on a draw that could appoint randomly selected citizen as magistrate or as delegates of the “people.” Fate was therefore the guarantor of equality (however, the city denied civil rights to women, slaves and foreigners).

Tezos’ blockchain defines its distinctive feature as the ability to self-amend and self-govern its code evolution. However, is it unclear if the choice to label its first amendment as “Athens” was referring more to the random, PoS-ish nature of the historical Greek democracy or to the allure of participating in a free debate, which the ancient republic earned in collective consciousness.

On Feb. 28, Paris-based developer team Nomadic Labs proposed the migration from the original protocol “alpha” to “Athens,” injecting the network with the hashes referring to two alternative code updates.

The reform marked a milestone when considering the process rather than the content: Athens A aimed to reduce the number of Tezos’ native tokens (XTZ) accounted in one “roll” (the unit of account for Tezos’ proof-of-stake) and to increase the gas limit for each block, while the Athens B proposal contained only the gas limit increase amendment.

As every new piece of code aiming to upgrade Tezos protocol, Athens charged a reward for the developers, if approved: The request was a symbolic amount, sufficient to pay for a round of beers for the team (100 XTZ, less than $150).

The Tezos Foundation explicitly chose not to vote or to vote “Pass” during the different phases of the pool, to avoid influencing the results.

During the first phase of the process, aiming to choose which proposal should undergo the voting, 170 bakers representing almost half of the XTZ on stake, decided to bring Athens A to the “Exploration Period.”

An even more significant number of participants (194 bakers, 87% of the stake) then expressed their opinion on the amendment, approving it and choosing to test Athens A in a sort of a “48-hours fork,” on a temporary parallel mainnet.  

A final round of voting was required after the test (involving 216 bakers, representing 84.3% of the stake) to allow for an automatic update to the new code for all the nodes, which activated Athens A after 12:40 a.m. UTC on May 30.

Tezos' voting breakdown

The high level of participation in the vote among the Tezos community is even more remarkable considering the recent failure of another experiment on direct involvement of token holders.

Jacob Arluck from Tocqueville Group explained in a post on Medium the significance of Athens and stressed that the voting was indeed just a part of a more comprehensive process aiming to activate the Tezos community as a whole:

“It’s really exciting because it’s the first step towards this idea of self-upgrading, decentralized, internet-native economic infrastructure.”

Social networks, web-based platforms, on-chain signaling tools and baker-promoted pools are some of the instruments that guaranteed — in a somewhat unplanned and “decentralized” fashion — the debate among bakers and the delegator token holders.

People opposed to the governance architecture seemed to have been the decisive factor and Tezos’ co-founder, Arthur Breitman, confirmed to Cointelegraph that the success of Athens relied on a mix of direct participation and the delegation mechanism:

“The fear of ‘voter apathy’ has permeated most discussions of on chain governance. Tezos guards against that issue by borrowing ideas from Gordon Tullock’s concept of liquid democracy. The massive participation in the Athens vote and high degree of engagement from the community shows that this approach seems to be working.”

With great power comes great responsibility

The case of Tezos’ amendment helps to focalize on the strong similarities between the debate about decentralization in blockchain and some well-established topics in sociology, economics and political science.

The dilemma of performance vs. decentralization, for instance, has strong analogies with the debate regarding the relationship between political freedom and economic development. Considering the diverging paths of different developing countries (recently, India and China), argue that autocracy could achieve higher performance than democracy, because it is not impaired by the need to mediate with the public opinion and different groups of interests.

Others, for instance, such as Nobel Prize winner Amartya Sen, believe that freedom is a part of the development process as its final aim, as an instrument to check its advancement and as a guiding light to define its direction. Professor Sen also recognizes, however, that real freedom means more than regular formal pools, and it is possible to transfer his concern for genuine political participation to the blockchain-related issues presented above.

The effort that the Tezos community demonstrated in its first election is indeed quite similar to that of many opinion groups that try to resist “political laziness,” which affects many large democratic countries nowadays (Breitman reference to Tullock’s article was not accidental).

It is, however, unpredictable if it would be possible to reach such a high degree of involvement in a broader and more mature network. Bitcoin PoW mining too was somehow a democratic activity when nodes were in the hundreds; the real issue arises when the number of users surpasses the number of people directly involved in system development.

Widespread adoption is likely to flood the system with users who are more concerned with issues like transaction cost and speed, user-friendly applications and global acceptance as a means of payment rather than obscure topics like 51% attacks or the scalability trilemma.

It is even possible that the average user could freely choose to renounce a significant amount of the libertarian features that have defined cryptocurrencies since their origin, for the sake of more comfortable handling.

In 1576, the French political philosopher Étienne de La Boétie clandestinely published his “Discourse on Voluntary Servitude.” The text explained that tyrants (La Boétie also put elected governors among them) could retain their overwhelming power over their subjects because the people themselves forfeit their original freedom.

More than violence and intimidation, the French thinker argued that the real causes that brought the majority to accept servitude were the desire for profit and the custom of servitude itself.

Even without calling it real “servitude,” nowadays, we are still undoubtedly living in a centralized world, among centralized institutions and using everyday centralized technologies we don’t completely understand. It is therefore quite hard that a new frame of mind, more suited to handle the power and the responsibility coming with decentralization, could arise overnight.

It is almost impossible to design a perfect voting system that, just using a set of rules, could force people to take responsibility for their freedom, limit media brainwash and prevent bribery. So, it seems quite unlikely that technology alone could assure the cryptocurrencies reach true decentralization under every possible scenario.

It is impossible to know which answer to the issue of blockchain governance will become dominant in the future; however, it is plausible that the fundamentals of human behavior will be part of it, alongside mathematics.