Hi Everyone,
This week markets dipped from $505/BTC to $480/BTC before rebounding to $495/BTC and then back down to $480/BTC. Trading volume has been average and volatility remains fairly low.
News
- DigitalTangible, a services which allows you to buy gold with cash or BTC and trade it against BTC using virtual gold tokens, launches: http://bit.ly/1tzOv2S.
- This version of virtual gold will actually work since the gold tokens are fully redeemable for cash or physical delivery. Contrast this with bitGold from BitsharesX which has no redeemability and is thus unlikely to maintain a peg to actual gold.
- Asset ownership is bound to a bitcoin address. Claims on the asset can be traded on Counterparty, Poloniex, and Melotic.
- The physical gold is held at depository institutions like International Depository Services of Delaware.
- My initial impression of this system is a strongly favorable one.
- Charlie Shrem reaches plea deal to forfeit $950k to the US government: http://bit.ly/1CA8DVj.
- NYU and Duke begin offering courses on bitcoin and cryptocurrencies: http://bit.ly/1lJrqZp.
- Ripple published a white paper on their consensus mechanism: http://bit.ly/1qAqBlx.
- Although I've had my doubts about Ripple's consensus mechanism in the past, after carefully reading the paper, I'm becoming more convinced that it does and will work properly.
- Remaining questions:
- Given that Ripple is susceptible to a 21% attack, are the UNL lists sufficiently diverse such that more than 1/5th of the nodes colluding is unlikely? The weak point here is the default UNL list, as brought to my attention by Vitalik.
- Will connectivity in the network always remain high enough such that large, loosely connected cliques don't form. If they do, forks will be possible.
- In a somewhat unrelated thought, I think Ripple should implement the ability for user's to price debt from the various gateways they trust. For example, to me, $1 Citibank USD is worth $.90 Bill and Ted's USD. This way, Ripple's seek-least-price path-finding algorithm would work better by pricing in the user-perceived risk of default. Compare this with their current system of gateways being either trusted or not trusted (i.e. 0 or 1). Least-price path-finding will often also be highest-default-risk path-finding.
- Nxt asset, Nxttycoin up 53% against BTC this week. It is the official cryptocurrency of a mobile encrypted-messaging app: http://bit.ly/1AgFYAs.
- I'm concerned that this is a pump and dump scheme since Nxttycoin does not actually represent equity in the company.
- Viacoin up 70% largely due to their recent update: http://bit.ly/1CA5EMx.
- Also due to Peter Todd's OP_CHECKLOCKTIMEVERIFY coming out soon which allows payments to be locked until a certain time before being spent.
- Also interesting is that an Ethereum dev has been committing to CleariningHouse github: http://bit.ly/1nBpVaL.
The Monero (XMR) was forked this week in a complex, well-thought-out, well-planned attack. You can read about it here: http://bit.ly/1okelRs.
Basically, for a few days the attackers sent out a lot of spam transactions into the network designed to look like mining pool payouts. This was to increase the median block size without raising suspicion. Once the median block size was large enough (which this attack requires), the attackers were able to start the attack. The attack left half the network on one blockchain and the other half on another. And due to how the Merkle tree code was flawed, the both halves of the network believed that they were all on the same blockchain. In other words, there was a fork created without anyone knowing that there was a fork because it seemed like everyone was on the same ledger. A two blocks later, the coins from the actual differences in the two ledgers are spent causing half the network to reject the transaction and half the network to accept. Here the fork becomes visible.
Trading was immediately halted on most of the altcoin exchanges. The Monero devs quickly fixed the issue and trading then resumed. The price surprisingly did not suffer. It seems the community consensus is that the devs handled the situation very well.
Interestingly enough, this attack does not seem to have been done for monetary gain nor to permanently cripple the XMR network. The conflicting transactions which caused the fork were for negligible amounts of XMR (4 XMR total or about $8). Also, since the attacker revealed the fork only two blocks later, the network was only forked for a very short amount of time. Compare this to if the attacker forked the network but allowed the network to think it was on the same ledger for a long period of time before revealing the fork.
Besides Monero, another CryptoNote currency that's been gaining momentum is Boolberry (BBR). Over the past week and a half, it's gone up over 500% in price.
It makes a number of improvements to the CryptoNote reference implementation. From what I understand, it has the most changes of any CryptoNote currency from the reference code. According to Peter Todd, this would be a good thing (http://bit.ly/ZeTsl5; credit to Tim Swanson for sharing the link).
Links:
- Wild Keccak over CryptoNight as the PoW hashing function: http://bit.ly/1w8yn9I.
- Unlinkability improvement: .
- Reduced blockchain bloat: .
Overall, the changes make sense and seem to be good improvements to CryptoNote.
Given the innovations in the altcoin space, I think now is a great time for altcoin speculation. A year ago, the altcoin space was filled with various clones of bitcoin which just altered things like the block times and the coin supply (not real innovations) but now these new altcoins are making serious contentions to their utility and necessity through real innovation. Most of the early altcoins have no good justification for their existence but many of these new ones make compelling cases.
With that, I also expect some of the older but smaller altcoins like Feathercoin, Megacoin, Quark, Novacoin, Ixcoin, IOcoin, HoboNickels to die off if they haven't already. Megacoin's main innovation was the Kimoto Gravity Well which nearly all new altcoins have adopted rendering Megacoin nonunique. Quark's main innovation of using multiple, chained hashing functions was adopted by a plethora of X11, X13, and X15 coins (e.g. Darkcoin, XCurrency, etc.). Neither were able to generate enough user adoption as first movers to compensate themselves for the new features their successors developed (e.g. Quark's "X6" compared to Darkcoin's DarkSend/CoinJoin plus X11 ).
In the same vein, it is likely that new altcoins in the future will come to supplant the top coins today. Already Halcyon (CoinShuffle) is steadily making it's way up coinmarketcap.com to challenge Darkcoin (CoinJoin).
The altcoin space does about a quarter of the trading volume of bitcoin and this proportion is rising with each passing week. At a time when bitcoin market activity is low, it may be the perfect time to play the growing altcoin market.
Cheers,
Kevin & Team Buttercoin
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