Bitcoin’s scalability debate is once again in full swing as the SegWit2X fork scheduled for November is slowly approaching. The community’s opposition movement named NO2X, started by Litecoin founder Charlie Lee, is gaining momentum and more signatories of the New York Agreement are reneging on the agreement as the controversy around the SegWit2X fork grows.
In the talks that involved numerous leading bitcoin companies and miners that have substantial influence over the bitcoin ecosystem, it was decided that miners would activate Segregated Witness and that the block size would be increased to 2MB. These talks culminated in the signing of the so-called New York Agreement, signed by companies such as Coinbase, Bitwala, Bitmain, Genesis Mining, and F2Pool, among 53 others.
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As the Bitcoin scaling debate continued after the SegWit upgrade on August 1 and the fork that lead to the creation of Bitcoin Cash (BCH), several signatories of the NYA have announced that they are pulling out of the agreement. In the past three months, BitOasis, Bitwala, Crypto Facilities, F2Pool, Unocoin, Vaultoro, and Wayniloans, among others have withdrawn their support.
In the past seven days, Finland-based MONI and Hong Kong-based ANX also withdrew their support of the New York Agreement, suggesting that the upcoming SegWit2X hard fork will likely lead to another altcoin like bitcoin cash. A full list of bitcoin companies that are opposing SegWit2X can be found here, and an updated list of NYA signatories that have withdrawn their support can be found here.
In the past week, a minor fork of the bitcoin blockchain took place on October 24 that created the new altcoin Bitcoin Gold (BTG). Bitcoin Gold was launched to make bitcoin mining more decentralized again. The project has so far been met with a lot of skepticism and criticism and has received little support from the bitcoin community. Since its launch, the price of Bitcoin Gold (BTG) has been trending between $150 and $100.
In the midst of all this, bitcoin had a volatile week dropping from $6,187 down to $5,404 on October 25 before regaining the $6,000 mark over the weekend of October 28-29.
This week’s review is compiled from contributions by Joseph Young, Liam Kelly, and Nuno Menezes.
At the Futures Industry Association annual conference held in Chicago over October 17-19, US-based trading powerhouse DRW Holdings founder Don Wilson told reporters that the emergence of bitcoin derivatives and options trading platforms would inevitably lead to the approval of a bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC).
As Wilson suggested, the probability of the emergence of bitcoin futures, options, and derivatives trading platforms leading to the approval of a bitcoin ETF is significantly high, because exchanges and clearing houses such as LedgerX are strictly regulated and overseen by financial regulators. All of its trades are protected, insured, and guaranteed, with regulatory oversight and trade surveillance.
The Bitcoin scaling debate is far from being while it seems that a new cryptocurrency is coming out of the new Bitcoin fork that took place on October 24, which aims to address miner centralization. However, users will have to wait for the software and comes with a premine of 200,000 Bitcoin Gold coins.
At the predetermined block height, Bitcoin Gold miners will begin creating blocks with a new proof-of-work algorithm, and this will cause a bifurcation of the Bitcoin blockchain. The original Bitcoin blockchain will continue unaltered, but a new branch of the blockchain will split off from the original chain. The new branch is a distinct blockchain with the same transaction history as Bitcoin up until the fork but then diverges from it. As a result of this process, a new cryptocurrency will be born.
According to the project’s site, “the purpose of Bitcoin Gold is to make Bitcoin mining decentralized again. Satoshi Nakamoto’s idealistic vision of one CPU one vote has been superseded by a reality where the manufacture and distribution of mining equipment has become dominated by a very small number of entities, some of which have engaged in abusive practices against individual miners and the Bitcoin network as a whole. By changing Bitcoin’s proof-of-work algorithm from SHA256 to Equihash, all of the specialized SHA256 mining equipment will be obsolete for mining the Bitcoin Gold blockchain.”
A handful of Australian startups have pushed along use-cases to the government’s FinTech Advisory Group in order to promote a digital Australian Dollar.
A need for a government-backed digital currency is becoming more and more prevalent in Australia. The combination of a thriving economy, an innovative startup culture, and the growing interest in blockchain technologies places the country in a unique position to explore innovations. Moreover, the country has experienced a handful of legislative actions that have helped to usher cryptocurrencies into the mainstream. The Australian treasurer, Scott Morrison, for instance, removed Goods and Services Taxes on digital currencies. This effectively treats currencies like bitcoin as physical money in regards to taxation in Australia.
Leading public and permissioned blockchain networks including Ethereum and JPMorgan’s Quorum have integrated anonymous cryptocurrency Zcash’s zk-SNARKs cryptography system to enhance privacy measures for the benefit of users, businesses, and developers.
In October, Ethereum began to integrate zk-SNARKs, the core cryptographic system behind Zcash, as a part of the Byzantium hard fork, a protocol update that is expected to provide significant improvements to the Ethereum blockchain network regarding transaction efficiency and privacy.
On October 17, JPMorgan’s blockchain platform Quorum also integrated zk-SNARKs, to facilitate protected and auditable transfers of ownership through the Quorum blockchain. Zcash CEO Zooko Wilcox said in an interview: “What we have now done through our partnership with JPMorgan is use zcash technology previously pioneered in the open zcash cryptocurrency to create protected and auditable transfer of token ownership on the JPMorgan blockchain.”
Donald McIntyre, the founder of Etherplan and highly regarded Ethereum analyst, revealed on October 19 that the Ethereum network has begun to process more transactions than Bitcoin after the Byzantium hard fork.
At the time of reporting, the Ethereum network is processing around 540,000 transactions on a daily basis, nearly twice as that of the Bitcoin blockchain. According to Bitcoin data providers such as Blockchain, the Bitcoin blockchain is processing around 323,000 transactions per day, a daily volume that is substantially smaller than that of Ethereum.
As scaling solutions and second-layer applications like Plasma become integrated to the Ethereum network, in the next few years, the Ethereum blockchain will be able to process significantly more transactions than most public blockchains. But, Buterin emphasized in an interview with Joong Ang, a major business and financial news publication in South Korea, that it could take three to five years to reach that level of scalability.