This week in crypto. June 28 - July 4: Bitcoin forks, NFTs and more
Crypto news
Bitcoin and its forks
Bitcoin is not only the creation of a certain Satoshi Nakamoto, whoever he or she may be. It is also the product of its community, who implemented the updates necessary for Bitcoin development after Satoshi took distance from it. However, Bitcoin community being as decentralized as Bitcoin itself, it’s not always easy to agree on the updates, and sometimes disagreements lead to the creation of new blockchains forked off Bitcoin.
Litecoin and Bitcoin Cash
Litecoin and Bitcoin Cash are probably the most famous among Bitcoin forks. Both aimed at increasing Bitcoin scalability by changing the basic rules of its blockchain (blocktime 10 min, block size 1 MB), and both raised their concerns.
Created in 2011, Litecoin proposed x4 faster blocktime, and therefore x4 bigger coin supply. However, as it takes around 12 seconds for the new blocks to propagate within the network, faster blocktime means that the node who mined the previous block has more chances of finding the PoW for the following - a difference much more important with a blocktime of 2.5 min. It also increases the chances of unintentional forks.
Created in 2017 by a part of the community led by Roger Ver, Bitcoin Cash proposed to increase block size x32. However, bigger blocks would need more time to process and propagate within the network, potentially causing asynchronized situation. Furthermore, heavy blocks mean heavy blockchain, which would make it more difficult for an average node to download, which in turn would lead to network centralization.
Bitcoin Cash and Litecoin are currently the 12th and 13th cryptocurrencies, with market caps around $10 Bn (Bitcoin is $665 Bn) and their respective communities that develop alongside Bitcoin without challenging it.
Bitcoin SV
Another Bitcoin fork is somewhat more provocative. Bitcoin SV was led by an Australian IT scientist by the name of Craig Wright who has been claiming to be Satoshi since 2016. “SV” stands for Satoshi Vision, although Mr Wright has a very curious interpretation of what that might be: Bitcoin SV intends to come back to the initial protocol version, but with an improbable increase of block size to 2GB (i.e. x2000 of Bitcoin). Of course, such extremism could only exacerbate the danger of centralization, and even undermine the whole scalability purpose: super-heavy blocks take a lot of time to propagate across the network, which can lead to bottlenecks.
Created in 2018, Bitcoin SV has only 200 nodes running it, but it is the 35th crypto with $2.8 Bn market cap. That might be thanks to Mr Wright’s continuous media exposure: claiming to be Satoshi, he talks to whoever might listen, although failing to give proof.
This week Mr Wright has once again ridiculed himself by going to the UK court against bitcoin.org – the first website to publish Bitcoin Core software. He demanded Bitcoin Whitepaper to be removed from the website for “copyright infringement”. Its webmaster known as Cobra attended the remote hearing, but refused to mount a defence, which led the court to award a default judgement in Mr Wright’s favour – the Whitepaper will not be available to the website’s UK visitors. Bad news for Mr Wright though – Bitcoin Whitepaper copies are published by thousands of websites, including D.Center.
This farce only showed the importance of decentralization and open source. A decentralized system cannot be shut down by a court order, and Bitcoin is the perfect example. As to the scalability, layer-2 solutions such as Lightning network can increase transaction throughput dramatically without compromising the basic principles of Bitcoin mechanism. So as much as we love diversity, Bitcoin might still be the best version of itself.
Art and NFT
NFT business continues to explore unusual collectibles. The inventor of World Wide Web Tim Berners-Lee sold for $5.34 M an NFT of artistic representation of HTML, HTTP and URL - 3 protocols he wrote in the 90s.
On the art side, famous surrealist artist FEWOCiOUS sold a collection of NFTs representing his formative years as a transgender teen. 5 artworks created by FEWOCiOUS from the age of 14 through 18 were auctioned off at Christie’s for $2.1M.
Markets
Bitcoin
Bitcoin traded sideways this week, ending approximately at the same level it started, i.e. around $35k.
In the meantime the drop in hashrate following Chinese crackdown on miners lead to Bitcoin difficulty adjustment that took effect on Saturday morning. It is now 28% easier to mine a block for miners who continue working.
Ethereum
Ethereum price has been showing positive signs this week, rising 13% to around $2400.
With an unknown whale who deposited the equivalent of $500 M into ETH 2.0 staking wallet, and JPMorgan estimating the staking business grow to $20-40 Bn following Eth2.0 merge, Ethereum is still full of high hopes.
Quote of the week
“All your fiat-based assets are ultimately secured by the same legal system that today made it illegal for me to host the Bitcoin whitepaper because a notorious liar swore before a judge that he's Satoshi. A system where 'justice' depends on who's got the bigger wallet”,
Bitcoin.org webmaster known as Cobra, on UK court’s ruling in favour of Craig Wright