RISE IN BITCOIN: WHAT FUTURE PROSPECTS?

Should you buy Bitcoin?


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Bitcoin, the big winner of the crisis, has gained nearly 85% since January 1. As the price of the most famous cryptocurrency hits key thresholds, major long-term dynamics appear to be emerging. All this despite some sensitive points in the medium term.

In addition, many crypto currencies should be subject to variations soon. Discover our analysis of Bitcoin and other virtual currencies to follow for your investments.

BITCOIN PRICE: EXCEEDING STRATEGIC LEVELS

Bitcoin price comparison, Dow Jones price and gold price

Bitcoin price chart, the Dow Jones index and the gold price

Source: Tradingview

Bitcoin has started a new strongly bullish momentum in recent weeks, going from nearly $ 10,000 at the start of September to more than $ 13,000 by the end of October, i.e. a price almost doubled (+ 85%) since January 1 . For its part, gold gained nearly 26% while the performance of the Dow Jones and equities in general remained negative or almost zero.

As massive liquidity injections have largely slowed down and many assets stagnate due to lack of visibility, Bitcoin is outperforming.

The price of Bitcoin at psychological and historical levels

These price levels are strategic for Bitcoin . We come to the resistance of $ 13,150 / $ 13,200 which was tested for the first time in 2019. First of all, the fact that Bitcoin seems to insert itself durably above $ 10,000 gives Bitcoin some attention. very particular on the part of the markets… Strategic threshold for a new speculative bubble? Strategic threshold to trigger a wave of democratization and development?

Bitcoin is a very young asset, which may explain its relatively high volatility . The link with economic fundamentals tends to show that Bitcoin is halfway between stocks and precious metals. It obeys both a logic of security research and innovation research. The fact that Bitcoin is taking a major place in the financial landscape also reinforces its dependence on short-term liquidity logic. This bullish movement, in the midst of an extremely troubled period, sets off an interesting long-term dynamic.

Finally, Bitcoin is distinguished by the presence of a gradually limited supply. If to this we add a form of Bitcoin hoarding of agents and a maintenance (or even a strengthening) of demand, this only reaffirms the security and innovative nature of cryptocurrency. The recent rise in Bitcoin is done in the context of fairly high buying volumes. Since this increase, the volumes traded tend to decrease, which may show the security interest of previous buyers. All this while the classic monetary system is threatened by hyper-expansionist policies.

BITCOIN: THE POSSIBLE PERSPECTIVES

Strengthening Bitcoin in the Financial Landscape

According to a study by the University of Cambridge , there would be nearly 100 million crypto holders in the world in the first half of 2020. They were estimated at 35 million in 2018. This presence in portfolios is essentially true in Europe and in the United States, as well as in certain Asian countries like China and South Korea with a very strong support of the population.

Although Bitcoin is still very highly concentrated and owned by only a few agents (0.5% of addresses hold 85% of BTC wealth), the fact remains that the democratization of Bitcoin is intensifying. PayPal recently announced that it will add Bitcoin to its platform for 2021, which has been a major bullish factor. More than democratization as an investment tool, it is democratization as a tool of exchange. We better understand the fact that the financialization of many virtual currencies is an essential step in the success of populations.

Bitcoin: prices pulled between risk and liquidity

The current situation involves the degradation of many currencies, mainly the dollar, which has undoubtedly contributed to a rise in many assets. In addition to benefiting from this phenomenon, Bitcoin feeds on monetary fears and the resulting long-term economic effects.

Bitcoin price graph and financial stress index

This graph, which uses the financial stress index established by the Federal Reserve Economic Data (blue curve) and the price of Bitcoin, tends to show that Bitcoin begins a bullish rally after each relaxation of financial stress. This was the case after the economic slowdown (decrease in growth rate) of 2015/2016, and again from the slowdown of 2018/2019, and partly after the - less notable - of 2012/2013.

With regard to current indicators, we could see a deterioration of the situation (lack of visibility) until spring 2021. The increase in economic tensions could generate financial tensions, hence a possible risk of short-term liquidity. which remains to be watched for Bitcoin. However, in the long term, such a situation would mean economic tensions and an amplification of the observed monetary and budgetary trends. In fact, interest in Bitcoin could be greatly enhanced in the long term. This situation also tends to confirm that a probable reduction in financial stress in the coming years would be an obvious long-term signal.


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WHAT ARE THE BEST TIMES TO INVEST IN BITCOIN?

Investing in Bitcoin for the Long Term

Although Bitcoin is still very young and still has little fundamental visibility, there is still a strong link with perceived financial stress. In the long term, investing in Bitcoin should statistically be done in periods of high market stress, stress directly linked to the economic cycle. Between each high and low of stress, the price of Bitcoin has been clearly bullish, which confirms both the safe (rise of Bitcoin despite relatively high stress) and innovative (takes advantage of periods of economic prosperity) character of BTC. .

Investing in Bitcoin for the Medium Term

Seasonality of Bitcoin between 2016 and 2019

This graph shows the seasonality of Bitcoin over 4 years (2016-2019). It tends to show that the strongest corrections can, if they occur, concentrate around the months of November, March or January. On the contrary, the months which are generally strongly bullish are those of April, partly May or October (even December and February).

Statistically, we must therefore remain cautious in the coming months and at the start of 2021, even if the unprecedented situation may involve reverse movements. It is therefore possible that the next few months will reveal long-term opportunities.

SHOULD YOU INVEST IN BITCOIN OR IN OTHER CRYPTO CURRENCIES?

What are the crypto currencies to follow at the end of the year and in 2021?

Medium-term cryptocurrency investment opportunities

As we have seen, apart from the new liquidity risk which cannot be ruled out, the trend remains upward. A correction in the coming months would be a probable sign of a positioning opportunity. We can quote here some cryptocurrencies which retain a good consideration of the market: Bitcoin; Ethereum (its Blockchain is used more than Bitcoin); Binance Coin; Basic Attention Token (BAT); Enjin Coin (ENJ, which remains more volatile); Nexo, etc ...

Ethereum remains an interesting alternative and has an even more innovative character than Bitcoin.

Long-term cryptocurrency investment opportunities

The fundamental economic and financial situation is likely to fuel Bitcoin, and probably other cryptocurrencies on the rise (financial stress, search for security, innovation, democratization, institutionalization, etc.). In the long term, therefore, it seems wise to us to invest in crypto-currencies in view of the current situation, which is still interesting.

HOW TO FIND OTHER EMERGING CRYPTO CURRENCIES?

Distinguish between crypto currencies

There are several thousand cryptocurrencies. They are all different. The smallest have a high risk and are more like a bet than an investment. Mid-sized cryptocurrencies (in the top 100, for example) remain very attractive in relative potential, being able to quickly outpace the performance of larger cryptocurrencies like Ripple , Bitcoin or Ethereum.

Crypto currencies with specific objectives

The massive democratization of crypto-currencies also implies the emergence of companies specializing in the matter, which is reflected in the creation of many "tokens". Tokens are particular crypto-currencies, generally issued by a company specializing in cryptos, which are at the heart of the ICO (Initial Coin Offerings) system., this system for raising funds in the crypto industry. A sort of “crypto firm share” which is then traded and listed. The democratization of cryptos thus benefits many tokens. We can cite the example of SwissBorg, which is maintaining its development after raising CHF 50 million in 2017 (CHSB). There are many developing ecosystems around cryptocurrencies which, for some, are already international. The key element will be to measure the seriousness of the shared ambitions and the means implemented to achieve them.

If crypto democratization intensifies, then it is obvious that some cryptocurrencies affiliated with specialist companies will benefit in the long run.

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Bitcoin Cash

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Bitcoin Cash




Ticker symbol

BCH[1]

Precision

10−8

Development


Implementation(s)

Bitcoin ABC, Bitcoin Unlimited

Latest release

0.22.1 / 1 September 2020 (5 months ago)[2]

Development status

Active

Project fork of

Bitcoin

Website

bitcoincash.org[citation needed]

Ledger


Ledger start

3 January 2009 (12 years ago)[3][4]:ch. 35

Split height

#478559 / 1 August 2017 (3 years ago)

Split from

Bitcoin

Split ratio

1:1

Timestamping scheme

Proof-of-work (partial hash inversion)

Hash function

SHA-256

Issuance schedule

Initially 50 BCH per block, halved every 210,000 blocks

Block reward

6.25 BCH [a]

Block time

10 minutes

Block explorer

blockchair.com/bitcoin-cash/blocks

Supply limit

21,000,000 BCH[b]

  • ^ As of April 2020; halved approximately every four years.

  • ^ The supply will approach, but never reach, 21 million BCH. Issuance will permanently halt around 2140 at 20,999,999.9769 BCH.


Bitcoin Cash is a cryptocurrency that is a fork of Bitcoin.[5][6] Bitcoin Cash is a spin-off or altcoin that was created in 2017.[7][8][5]

In November 2018, Bitcoin Cash split into two cryptocurrencies: Bitcoin Cash and Bitcoin SV.[9]

Bitcoin Cash is sometimes also referred to as Bcash.[10][disputeddiscuss]

History

The need to accommodate an increasing count of transactions per second contributed to a push by some in the community to create a hard fork to increase the block size limit.[11] This push came to a head in July 2017 when some members of the bitcoin community including Roger Ver felt that adopting BIP 91 without increasing the block-size limit favored people who wanted to treat bitcoin as a digital investment rather than as a transactional currency.[12][13] Bitcoin Cash supporters, compared to Bitcoin, were more committed to a medium of exchange function.[14] This push by some to increase the block size met a resistance. Since its inception up to July 2017, Bitcoin users had maintained a common set of rules for the cryptocurrency.[12] Eventually, a group of bitcoin activists,[15] investors, entrepreneurs, developers[12] and largely China-based miners were unhappy with Bitcoin's proposed SegWit improvement plans meant to increase capacity and pushed forward alternative plans for a split which created Bitcoin Cash.[16] Segwit controversially would later enable second layer solutions on bitcoin such as the Lightning Network, and this controversy led to the split that created Bitcoin Cash.[14] The proposed split included a plan to increase the number of transactions its ledger can process by increasing the block size limit to eight megabytes.[12][13]

In June 2017, hardware manufacturer Bitmain, described the would-be hard fork with the increased block size as a "contingency plan", should the bitcoin community decide to fork implementing SegWit. The first implementation of the software was proposed under the name Bitcoin ABC at a conference that month. In July 2017, mining pool ViaBTC proposed the name Bitcoin Cash. The change, called a fork, took effect on 1 August 2017. As a result, the bitcoin ledger called the blockchain and the cryptocurrency split in two.[17]

A Hong Kong newspaper likened this to a new version of word processing software saying:[18]

Bitcoin cash is like a new version of Microsoft Word, which generates documents that can no longer be opened via the older versions.

Bryan Kelly, a stock analyst likened it to a software upgrade:[19]

Bitcoin cash is doing a “hard fork” or “effectively a software upgrade”, Kelly said on “Fast Money”. “When you do a software upgrade, everybody usually agrees. But in this particular case, everybody is not agreeing.”

At the time of the software upgrade (also known as a fork) anyone owning bitcoin came into possession of the same number of Bitcoin Cash units.[20][17] The technical difference between Bitcoin Cash and Bitcoin is that Bitcoin Cash allows larger blocks in its blockchain than Bitcoin which, in theory, allows it to process more transactions per second.[21] Bitcoin Cash was the first of the Bitcoin forks, in which software-development teams modified the original Bitcoin computer code and released coins with “Bitcoin" in their names, with "the goal of creating money out of thin air".[22] In relation to Bitcoin it is characterized variously as a spin-off,[5] a strand,[23] a product of a hard fork,[24] an offshoot,[25] a clone,[16] a second version[15] or an altcoin. On 1 August 2017 Bitcoin Cash began trading at about $240, while bitcoin traded at about $2,700.[17]

A key difference of opinion between Bitcoin Cash and Bitcoin camps was over the running of nodes. Bitcoin supporters wanted to keep blocks small so that nodes could be operated with less resources, while some Bitcoin Cash supporters find it acceptable that (due to large block sizes), nodes might only be run by universities, private companies and nonprofits.[26]

In 2018 Bitcoin Core developer Cory Fields found a bug in the Bitcoin ABC software that would have allowed an attacker to create a block causing a chain split. Fields notified the development team about it, and the bug was fixed.[27]

Controversy

Controversy

The arguments have devolved over three or four years of bitter debate, the principles are real and they are important to preserve, but a lot of the drama has nothing to do with principles anymore. A lot of this debate is now more about hurt feelings. It’s about bruised egos. It’s about things that were said that can’t be unsaid, insults that were exchanged, and personalities and ego.

Andreas Antonopoulos, "The Verge"

In 2017 there were two factions of Bitcoin supporters: those that supported large blocks and those who preferred small blocks.[21] The Bitcoin Cash faction favors the use of its currency as a medium of exchange for commerce, while the Bitcoin-supporting faction view Bitcoin's primary use as that of a store of value.[21] Bitcoin Cash detractors call the cryptocurrency "Bcash", "Btrash", or "a scam", while its supporters maintain that "it is the pure form of Bitcoin".[21]

Samson Mow of Blockstream pointed to Bitcoin Cash's use of the "Bitcoin" name as a source of animosity between the Bitcoin and Bitcoin Cash camps.[21] Emin Gün Sirer, a professor at Cornell stated that Bitcoin Cash was focused on use and Bitcoin was "enormously" focused on store of value.[21]

Trading and usage

Number of Bitcoin Cash transactions per month (logarithmic scale)[28]

Bitcoin Cash trades on digital currency exchanges including Bitstamp,[29] Coinbase,[30] Gemini,[31] Kraken,[32] Bitfinex, and ShapeShift using the Bitcoin Cash name and the BCH ticker symbol for the cryptocurrency. On 26 March 2018, OKEx removed all Bitcoin Cash trading pairs except for BCH/BTC, BCH/ETH and BCH/USDT due to "inadequate liquidity".[5] As of May 2018, daily transaction numbers for Bitcoin Cash are about one-tenth of those of bitcoin.[5] Coinbase listed Bitcoin Cash on December 19, 2017 and the coinbase platform experienced price abnormalities that led to an insider trading investigation.[33]

By November 2017 the value of Bitcoin Cash, which had been as high as $900, had fallen to around $300, much of that due to people who had originally held Bitcoin selling off the Bitcoin Cash they received at the hard fork.[11] On 20 December 2017 it reached an intraday high of $4,355.62 and then fell 88% to $519.12 on 23 August 2018.[34]

As of August 2018, Bitcoin Cash payments are supported by payment service providers such as BitPay, Coinify and GoCoin.[35]

Difficulty adjustment algorithm

Both Bitcoin, as well as Bitcoin Cash, use a proof-of-work algorithm to timestamp every new block. The proof of work algorithm used is the same in both cases. It can be described as a partial inversion of a hash function. Additionally, both Bitcoin and Bitcoin Cash target a new block to be generated every ten minutes on average. The time needed to calculate a new block is influenced by a parameter called the mining difficulty. If the total amount of mining power increases, an increase of the mining difficulty can keep the block time roughly constant. Vice versa, if the mining power decreases, a decrease of the mining difficulty can keep the block time roughly constant.[36]

To keep the block generation time equal to ten minutes on average, both Bitcoin and Bitcoin Cash use an algorithm adjusting the mining difficulty parameter. This algorithm is called the difficulty adjustment algorithm (DAA). Originally, both Bitcoin and Bitcoin Cash used the same difficulty adjustment algorithm, adjusting the mining difficulty parameter every 2016 blocks. Since 1 August 2017, Bitcoin Cash also used an addition to the DAA, called an Emergency Difficulty Adjustment (EDA) algorithm. EDA was used alongside the original DAA and it was designed to decrease the mining difficulty of Bitcoin Cash by 20%, if the time difference between 6 successive blocks was greater than 12 hours.[36]

EDA adjustments caused instabilities in mining difficulty of the Bitcoin Cash system, resulting in Bitcoin Cash being thousands of blocks ahead of Bitcoin. To address the problem with stability, a change of the Bitcoin Cash DAA was implemented and the EDA canceled. The change took effect on 13 November 2017. After the change, the Bitcoin Cash DAA adjusts the mining difficulty after each block. To calculate the difficulty for a new block, the Bitcoin Cash DAA uses a moving window of last 144 blocks.[36]

A group of researchers demonstrated that, as of June 2019, Bitcoin DAA fails to generate new blocks at a constant rate as long as the hash supply is elastic. In contrast to that, the group demonstrated that Bitcoin Cash DAA is stable even when the cryptocurrency price is volatile and the supply of hash power is highly elastic.[37]

2018 split to create Bitcoin SV

Number of Bitcoin SV transactions per month (logarithmic scale)[28]

On 15 November 2018, a hard fork chain split of Bitcoin Cash occurred between two rival factions called Bitcoin Cash and Bitcoin SV.[38][39] On 15 November 2018 Bitcoin Cash traded at about $289, and Bitcoin SV traded at about $96.50, down from $425.01 on 14 November for the un-split Bitcoin Cash.[40]

The split originated from what was described as a "civil war" in two competing bitcoin cash camps.[19][41] The first camp, supported by entrepreneur Roger Ver and Jihan Wu of Bitmain, promoted the software entitled Bitcoin ABC (short for Adjustable Blocksize Cap), which would maintain the block size at 32 MB.[41] The second camp led by Craig Steven Wright and billionaire Calvin Ayre put forth a competing software version Bitcoin SV, short for "Bitcoin Satoshi Vision", which would increase the block size limit to 128 MB.[38][41]

See also

References

External links


Wikimedia Commons has media related to Bitcoin Cash.

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From Wikipedia, the free encyclopedia



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