Daily Archives: August 3, 2017

Bitcoin cash, the offshoot of cryptocurrency bitcoin that was created yesterday, is now worth $7.6 billion, according to data provider Coin Marketcap. That pegs the value of all the bitcoin cash in circulation at 17% of bitcoins total market value of $44.4 billion. This makes bitcoin cash the third most valuable cryptocurrency, behind bitcoin and ethereum. It trades under the BCH symbol on most exchanges, while bitcoin retains BTC.

Bitcoin cashs vault up the valuation charts can be explained by its provenance as a fork of bitcointhink of it like the splitting of an amoeba in two. The market value of all the coins in circulationusually referred to as the market cap in cryptocurrency jargonis calculated by multiplying a coins price by the total supply of coins in circulation. When bitcoin cash splintered off from bitcoin, it also inherited the supply of coins in circulation. In other words, there is roughly the same amount of bitcoin cash in circulation as bitcoin, and both cryptocurrencies each currently have 16.5 million units in circulation.

There are slightly more bitcoins in circulation than bitcoin casha difference of 474 coinsbecause when bitcoin cash forked, there was a period of several hours when no new bitcoin cash blocks were mined. In the meantime, bitcoin miners continued to find blocks, introducing new coins to the circulating supply.

A chain split is a slow and confusing event, even with a deadline. Bitcoin cash had a much publicized deadline of Aug 1, 12:20 UTC (or 8:20am US Eastern time) for the split to occur. Yet it wasnt until hours later that the split actually took place.

The reason for this confusing state of affairs is as much about semantics as technicalities. Firstly, the bitcoin cash software uses a particular calculation for time called median time past thats based not on clock time but on the number of blocks mined after the 12:20 deadline. Since there is an element of chance that determines when exactly a block is mined, experts could only estimate when the bitcoin cash software would kick in. In practice, this meant that the bitcoin cash software would only activate about an hour after 12:20 UTC, which was the case.

Once bitcoin cash was activated, the bitcoin cash blockchain stopped growing for several hours, while the bitcoin blockchain continued to add new blocks as normal. This activation happened at 12:37 UTC when both blockchains had just mined block number 478,558this would be the last common block shared between bitcoin and bitcoin cash. All future blocks would send the coins on their independent trajectories.

There was confusion as the bitcoin cash blockchain stalled at block 478,558. What would normally happen is that a new block would have been mined478,559in about 10 minutes. But as hours went by, it became clear that not enough miners were committing processing power to the new blockchain to discover a new block. This was because the new chain also inherited the difficulty threshold for finding a new block from the bitcoin blockchain, meaning a massive amount of processing power would be required.

At this stage, although the chains have split, the new chain didnt yet have any new blocks, so was technically simply a stalled version of the bitcoin blockchain. Most observers in the bitcoin world thought it would take hours, or even days, for miners to devote enough processing power to the bitcoin cash blockchain to discover a block.

But around six hours later, ViaBTC, a Chinese mining pool based in Shenzhen that has vocally supported bitcoin cash, added block number 478,559 to the bitcoin cash blockchain. This block was 1.9 megabytes in sizenearly double the maximum size allowed on the bitcoin blockchain. Compare this to the same block on the bitcoin blockchain, which coincidentally was also mined by ViaBTC, but was only 272 kilobytes in size. Subsequent blocks, however, have been well below 1 MB, reflecting the small number of transactions on the new blockchain.

Two metaphors from the traditional equity markets have been used to describe the creation of bitcoin cash: a stock split or a dividend. But there are good reasons to think that bitcoins split is not like a stock split at all, as this CoinDesk piece suggests. For starters, a stock split doesnt change the assets value; it simply adjusts the quantity and therefore price of the stock on the market. An increase in the number of stocks leads to a commensurate drop in price, without changing the fundamentals of the company in question.

Bitcoins fork doesnt split existing units of bitcoinin fact, the bitcoin price has remained more or less the same throughout (which could be seen as a bullish vote of confidence in the cryptocurrencys continued supremacy). Neither have any new units of bitcoin been created by the fork.

Instead, what happened is more like cloning. Thats because anyone who held bitcoin before the split would now also hold the equivalent amount of bitcoin cash. This makes the bitcoin fork more like a dividend: investors who held on to bitcoin and werent scared off by the fork were now credited with an equal amount of bitcoin cash.

A major cryptocurrency forking, and the market supporting both resulting coins, isnt as weird as it sounds. This already happened with ethereum in July 2016, when a philosophical disagreement among ethereum holders led to a hard fork, creating ethereum and ethereum classic.

Ethereum classic has gained influential backers, such as venture capitalist Barry Silbert. Ethereum classic is traded on a handful of major exchanges. It has a market value of $1.3 billion, or 6% of ethereums $21 billion. As ethereum went on a dizzying rally this year, so did ethereum classic, rising by 16-fold from the start of the year to a peak of nearly $22 per unit in June.

But ethereum classics rally was muted compared to ethereums 40-fold increase over the same period. Nevertheless, its price trades well below that of ethereum, with each unit of ethereum classic trading for just over 0.05 ether.

While the ethereum and bitcoin splits share some similarities such as a contentious dispute over the fundamentals of each protocol, bitcoins split is more significant. Whereas ethereum classic has maintained all the features of ethereum when it splitincluding preserving the transactions that allowed funds to be stolen from the Decentralized Autonomous Organization last summer, which was the root of the disagreementbitcoin cash has significant differences in its underlying programming.

Chief among them is an eight-fold increase in the block size limit, allowing bitcoin cash miners to handle eight-megabyte blocks compared to bitcoins one megabyte. Being able to handle more transactions helps bitcoin cash act more like a payment channel, which is what its proponents are advocating.

One way to get bitcoin cash is to buy it. Its now trading on several major exchanges (heres a list), with the bulk of trading volume taking place on Kraken and Bittrex, according to Crypto Compare.

The other way to get bitcoin cash is to claim it from any bitcoin holdings you owned before the fork. In theory, its simple: All private keysbasically the password to unlocking bitcoin holdingsare identical on both the bitcoin and bitcoin cash blockchains. This means you use the same private key to access funds on both chains. But in practice, this can be tricky.

The most reliable, though fiddly, method is to run a bitcoin cash full node. This is software that downloads the entire bitcoin cash blockchain , which is around 126 gigabytes, and also checks the validity of live transactions on the bitcoin cash network. Import the private keys from your existing bitcoin wallet to the wallet linked to the bitcoin cash full-node. You should then be able to access the new bitcoin cash funds. Check out the detailed instructions, and several other methods, including hardware wallets and paper wallets, in this Bitcoin Magazine piece.

Some exchanges also automatically credit pre-fork bitcoin holders with bitcoin cash. These include Kraken, Bittrex, and Bitfinex. This seems simple, but there can be several drawbacks. You must rely on the exchange to credit the new coins, which can be a slow process, and you may be unable to withdraw the new funds immediately, as Kraken users are currently experiencing.

Some exchanges also apply a discount to the amount of bitcoin cash thats credited, like Bitfinex, which offers 0.85 bitcoin cash for every bitcoin. The discount was applied because the exchange claimed customers were manipulating its peer-to-peer margin financing system to inflate the amount of bitcoin cash they would receive.

Bitcoin cash is now, for all intents and purposes, an asset independent of bitcoin. It must develop its own ecosystem of developers, exchanges, and startups in order to flourish.

Bitcoin cashs price will be an important indicator of its future potential. If it is indeed what bitcoin ought to bea payment system with a large transaction capacity, as its advocates arguethe market should value it above bitcoin at some point in the future.

Another important indicator will be the amount of hash rate or processing power that miners commit to bitcoin cash. There isnt a data source for the hashrate on the bitcoin cash network yet, but we know that miners are crunching 6.4 million terahashes per second on the bitcoin network. That consumes an estimated 15 terawatt hours of electricity a year, putting the bitcoin networks consumption between Turkmenistan and North Korea, if it were ranked with countries.

If miners abandon bitcoin cash because mining it turns out not to be profitable, then bitcoin cash could wither away. As one expert observer of the fork, Andrew Chow, who developed the widely watched BTC Fork Monitor, told me, if that happened, the new chain would simply be dead.

Read more from the original source:
Bitcoin cash is already the third most valuable cryptocurrency - Quartz

The Chicago Board Options Exchange (CBOE) has partnered with Gemini, the bitcoin exchange backed by investors Cameron and Tyler Winklevoss, as part of a bid to launch cryptocurrency derivatives trading.

According to the Wall Street Journal, the agreement will find the CBOE leveraging Gemini's data for the launch of dedicated product listings in 2017. Opened to traders in 2015, Gemini is a New York-based exchange offering bitcoin and ether markets, as well as daily auctions of the cryptocurrencies.

The CBOE is still waiting for regulatory approval on the move, the report said, which would provide institutional investors with an avenue to hedge against volatility in the fast-growing cryptocurrency markets. Already, the total value of all cryptocurrencies from just over $10 billion at the start of the year, to a high of $115 billion in June.

Further, the announcement comes at a time when institutional investors are increasingly taking note of this price appreciation, and are seeking to determine opportunities for the technology that fit into their existing business models.

Most notably, it follows a decision by the Commodities Futures Trading Commission to grant a license to LedgerX last week that would allow it to clear and custody cryptocurrency derivatives for assets like bitcoin and ether.

Markets trading image via Shutterstock

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Options Exchange CBOE to Launch Cryptocurrency Derivatives in ... - CoinDesk

Cryptocurrency news has been hot of late, thanks in no small part to the skyrocketing prices of Bitcoin and Ethereum, the two largest cryptocurrencies right now. Litecoin and other cryptocurrencies are also up in value, and given the prices on graphics cards that are supposed to be useful for gaming, some of you will inevitably wonder: should I get into the mining business?

That's a big, open-ended question, and the answer depends on many factors. I'm not going to try and cover every aspect, because Google is your friend, but let's quickly go over the basics of what you would need to get started, and I'll include some rough estimates of how much money you can make at the end.

The core of mining is the idea of block rewards. For most coins, these are given to the person/group that finds a valid solution to the cryptographic hashing algorithm. This solution is a mathematical calculation that uses the results of previous block solutions, so there's no way to pre-calculate answers for a future block without knowing the solution to the previous block. This history of block solutions and transactions constitutes the blockchain, a sort of public ledger.

What is a block, though? A single block contains cryptographic signatures for the block and the transactions within the block. The transactions are collected from the network, typically with a small fee attached, which also becomes part of the block reward. There's a difficulty value attached to the solution for a block as well, which can scale up/down over time, the goal being to keep the rate of generation of new blocks relatively constant.

For Bitcoin, the target is to generate a block solution every 10 minutes on average. For Ethereum, block solutions should come every 16 seconds. That's obviously a huge difference in approach, and the shorter block time is one reason some people favor Ethereum (though there are others I won't get into). Simplistically, the number solution has to be less than some value, and with 256-bit numbers that gives a huge range of possibilities. The solution includes the wallet address for the solving system, which then receives all the transaction fees along with the block reward, and the block gets written to the blockchain of all participating systems.

Think of it as panning for gold in a streamyou might get lucky and find a huge gold nugget, you might end up with lots of flakes of dust, or you might find nothing. If the stream is in a good location, you make money more quickly. The difference is that with cryptocurrencies, the 'good location' aspect is replaced by 'good hardware.'

There are many options for cryptocurrency mining. Some algorithms can still be run more or less 'effectively' on CPUs (eg, Cryptonight), others work best on GPUs (Ethereum, Zcash, Vertcoin), and still others are the domain of custom ASICs (Bitcoin, Litecoin). But besides having the hardware, there are other steps to take to get started with mining.

In the early days of Bitcoin and some other cryptocurrencies, you could effectively solo-mine the algorithms. That meant downloading (or even compiling) the wallet for a particular coin and the correct mining software. Then configure the mining software to join the cryptocurrency network of your choosing, and dedicate your CPU/GPU/ASIC to the task of running calculations. The hope was to find a valid block solution before anyone else. Each time a block is found, the calculations restart, so having hardware that can search potential solutions more quickly is beneficial.

These days, a lot of people forego running the wallet software. It takes up disk space, network bandwidth, and isn't even required for mining. Just downloading the full Bitcoin blockchain currently requires over 45GB of disk space, and it can take a while to get synced up. There are websites that take care of that part of things, assuming you trust the host.

In theory, over time the law of averages comes into play. If you provide one percent of the total computational power for a coin, you should typically find one percent of all blocks. But as Bitcoin and its descendants increased in popularity, difficulty shot up, and eventually solo-mining became an impractical endeavor. When you're only able to provide 0.00001 percent of the mining power, and that value keeps decreasing over time, your chance of finding a valid block solution becomes effectively zero. Enter the mining pools.

If solo mining is like solo gaming in an MMO, block rewards have become the domain of large mining guilds, called mining pools. For blockchain security reasons, you don't want any single groupa mining pool or an individualto control more than 50 percent of the computational power (hashrate) for the coin network, but for mining purposes, being in a bigger pool is almost always better.

The reason is that, unlike block rewards where everything goes to the winning system, mining pools work together and distribute the rewards among all participants, usually based on a percentage of the mining pool hashrate. Your hardware gets smaller portions of work from the pool, and submits those as shares of work. Even if you only contribute 0.00001 percent of the hashrate, you still get that percentage of every block the pool solves.

To give a specific example, suppose a coin has a total network hashrate of 1Phash/s (peta-hash), but you only provide 0.1Ghash/s. Your chance of mining a block solo is about as good as your chance of winning the lottery. If you join a pool that does 25 percent of the network hashrate, the pool should find 25 percent of blocks, and you'll end up with 0.00004 percent of the block rewards. If a block is worth 50 coins, that's 0.0002 coins from each block the pool findsoften minus a small (1-3) percentage for the pool operators. That might sound like a pittance, but when coins are worth hundreds or even thousands of dollars, it can add up quickly.

There are many places that will provide calculators for cryptocurrencies, so you can see how much you could potentially earn from mining. But ultimately, you'll want to join a mining pool. As a side note, I'd recommend using a new email address for such purposes, and then I'd create a unique password for every pool you happen to joinbecause cryptocurrency thefts are far too common if you're lax with passwords. #experience

If you want to actually collect a coin, like Ethereum, you'll need to take the additional steps of downloading the Ethereum client, syncing up to the blockchain, and setting up the mining pool to pay out to your wallet. It's possible to have pools deposit directly to a wallet address at a cryptocurrency exchange, but again, there are risks there and long-term I wouldn't recommend storing things on someone else's servers/drives.

If all this sounds time consuming, it can beand the people who are really into cryptocurrency often do this as a full-time job. And the real money often ends up in the hands of the pool operators and exchanges, but I digress.

You've got your hardware, you've joined a mining pool, and you're ready to rock the cryptocurrency world. All that's needed now is to download the appropriate software, give it the correct settings for your hardware and the pool, and then away you go. Sort of.

Most pools will provide basic instructions on how to get set up for mining, including where to download the software. But all software isn't created equal, and even things like drivers, firmware revisions, and memory clockspeeds can affect your mining speed. So if you're serious about mining, get friendly with scouring places like Bitcointalk, Github, and other forums.

The easiest way to mine a coin is to just point all your mining rigs at the appropriate pool and load up the necessary software. The problem is that the 'best' coin for mining is often a fleeting, ethereal thingEthereum's real value came because other market forces pushed it from $5-$10 per ETH up to $200+ per ETH during the past several months. Prior to that, it was only one of many coins that were potentially profitable to mine. But switching between coins can take a lot of time, so there's other software that will help offload some of that complexity.

One popular solution is Nicehash, which will lease hashing power to others that will pay for it in Bitcoin. In effect, it transfers the job of figuring out which coin/algorithm to mine to others, though again there are fees involved and the going rates on Nicehash are lower than mining coins directly. The benefit is that you don't end up holding a bunch of some coin that has become worthless.

A more complex solution is to set up multi-algorithm mining software on your own. To do this, you would typically have accounts for all the coins you're interested in mining, and then create rules to determine which coin is best at any given time. Sites like WhatToMine can help figure out what the currently best paying option is, but naturally others would be seeing the same data.

The thing you need to know with cryptocurrency mining is that beyond the initial cost of the hardware, power and hardware longevity are ongoing concerns. The lower your power costs, the easier it is to make mining a profitable endeavor. Conversely, if you live in an area with relatively expensive power costs, mining can seem like a terrible idea.

When many people think about cryptocurrency mining, the first thought is to look at Bitcoin itself. Now the domain of custom ASICs (Application Specific Integrated Circuits), Bitcoin isn't worth mining using GPUs. Where a fast CPU can do perhaps 40MH/s and a good GPU might even hit 1GH/s or more, the fastest ASICs like the Antminer S9 can do 14TH/s. But the Antminer S9 costs $2,100 or more, and still uses around 1350W of power (so you need to add your own 1500W PSU)and you'll net about $8 per day.

Can you do better with mining using graphics cards? As you might have guessed given the current prices of RX 570/580 and GTX 1060/1070, the answer is yes, though not necessarily at the currently inflated GPU prices. But let's start with a basic system cost. You'll need a cheap CPU, motherboard with six PCIe slots, 4GB DDR4 RAM (maybe 8GB if you want), budget hard drive, six PCIe riser adapters, and 1350W 80 Plus Platinum PSU. For the case, you're usually best off building a mining rig using wire shelving and zip ties or something similar. Add all of that up and it will cost around $560 (with 4GB RAM).

The sticking point is the graphics cards. If you could buy RX 580 at the original MSRP of $230 for the 8GB card, $200 for the 4GB model, or $170 each for the RX 570 4GByeah, those are the actual launch prices!that would be $1,380, $1,200, or $1,020. With prices skyrocketing on the RX cards, GTX 1070 became the next logical target, with prices increasing from $350 per 1070 a few months ago to $450+ per card today.

I've got good news for gamers, as I've put together a table showing expected returns using various forms of mining, using current graphics card and ASIC prices. Some of these (like the Antminer L3+) are difficult to find or are still pre-order, but you can sometimes pay a significantly higher price to get one. Here's what things currently look like:

Is there still money to be made as a cryptocurrency miner? I think a lot of this goes back to what happened with Ethereum this past year, with the value going from under $10 per ETH to a peak of nearly $400 per ETH. Selling all the coins you mine can earn money, but if you had the foresight to mine and hold ETH and sold near the peak value, you literally just hit the jackpot. Or if you prefer mining slang, you hit the motherload.

Ethereum prices have since dropped down to $200 (give or take), but there's this hope that eventually another bubble will occur, driving prices up into the thousands of dollars per ETH. Sound like fantasy land? Tell that to all the Bitcoin miners and investors who got in for hundreds of dollars. But without a price spikeand with the potential for the price to drop instead of going upthe above table is something of an optimistic view of the cryptocurrency market.

Price volatility combined with increasing difficulty could radically change things over the span of months. Instead of 200-400 days to recover your hardware investment, it might take several years. Or it could go the other way and take 3-6 months. I wouldn't count on most GPUs surviving 24/7 mining for several years, however.

The bottom line is that at current GPU prices, which remain supply constrained, it's no longer a 'safe' investment to put tons of money into new mining rigs. So the bubble has burst and things should be settling down again.

Perhaps even better (for gamers), early estimates of mining performance using the Vega Frontier Edition suggest it won't be substantially faster than current AMD cards, and with higher power draw it won't be particularly attractive either. But be warned that software optimizations could shake things up. If someone figures out a way to get twice the performance out of a Vega card, it could become the new mining wunderkind.

Should you quit gaming and start mining, then? I wouldn't recommend itbecause if you haven't gotten started already, you're already behind the bubble and will may end up taking a loss. Besides, playing games is more fun, and doesn't serve to heat up your office. That unfortunately won't stop miners from continuing to buy graphics cards, so long as they see a potential profit in it.

Continued here:
What you need to know about cryptocurrency mining - PC Gamer

A South Korean lawmaker has proposed amending the country's Electronic Financial Transaction Act to more closely regulatecryptocurrencies.

According to several South Korean media outlets, including theFinancial NewsandSeoul Economic Daily, the proposal was put forth this week by Park Yong-Jin, a representative from theDemocratic Party who has been at the center of recent regulatory deliberations.

The amendments would seek todefine digital currency businesses and classify different partiesas digital currency traders, brokers, issuers and managers.

Itfurther mandates businesses hold deposits or provide insurance to hedge against potential cybercrime incidents, and aims toapply a 500 million South Korean won ($450,000) capital reserve threshold for any business that operates cryptocurrency trading service prior to seeking an approval from the authority.

Provisions for preventingmarket manipulation and money laundering usingdigital currencies are also included in the changes.

Parkis seeking a moreregulated environment amid recent surging prices of major cryptocurrencies like bitcoin and ethereum. Theproposalfollowsa recent panel hosted by the politicianat a public hearing to argue for regulations coveringdigital currency.

As for a next step, the bill is expected to be presented to the regular session of the National Assembly in September, at which point, it needs the approval of the country's Financial Services Commission.

As reported by CoinDesk, the financial regulator convened its first initiative last November to launcha regulatory policy on cryptocurrency. However, as of today, its policy plans still remain unclear.

Seoul, South Korea image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [emailprotected].

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South Korean Lawmaker Seeks to Tighten Cryptocurrency Rules - CoinDesk