The Skim for May 30th to June 5th

Demand for Bitcoin is still spreading. This week we saw more evidence of interest in bitcoin coming out of Russia, Asia, and Sweden. This is a good sign of a healthy market taking hold and putting down roots all around the globe. Daniel Masters, a director at Global Advisors said, “The interest is just going stratospheric,” regarding bitcoin at Sweden’s  NASDAQ OMX exchange. Sweden is not the only place regular people are flocking to the digital currency either. People of Japan are worried that their country’s monetary policy has led to the realization where they cannot count on their pensions going into the future. The article also notes that the elevated interest in cryptocurrecies in the last two weeks may also be from the recent passage of a bill that accepts digital currencies as real money in Japan. Russian exchange BTC E also just made it easier for Russians to buy BTC.  Adding to the positive news in Russia, it seems Vladimir Putin has had a private meeting with Vitalik Buterin, the founder of Ethereum. These are all positive signs for bitcoin and cryptocurrencies in general. If we keep seeing this type of trickle-in mainstream adoption as well as major leaders endorsing these technologies, expect market caps and user adoption to keep going up.

Next, I would like to bring to your attention the latest on the block size debate. You may have heard by now the term “User Activated Soft Fork” or (UASF) or even BIP148. This is the latest in the high profile drama of proposals to help Bitcoin scale so more users can use it and have reasonable fees again. Here is how BIP148 is supposed to Work. On August 1st, 2017, miners are required to signal readiness for SegWit by creating blocks with the version number changed to the number 1. This will cause all SegWit ready nodes, which make up over 80% of the network, to activate and begin enforcing these new consensus rules. Here is the UASF + SegWit known as BIP148 GitHub if you would like to take a look. The possibility of a chain and coin split creating two different bitcoin types is becoming more real. No one wants to see two different bitcoins, because this would create confusion on exchanges and possibly lead to some exchanges to go bankrupt covering all their customers double balances of these new coins. I will give a more thorough explanation of this in the next month or so, but at this time I would recommend people look into taking ownership of their private keys. This means start looking for a good solution to move your coins off of exchanges and online wallets and onto either a hardware wallet or a paper wallet. Yes, this even means Coinbase. Now I’m not sure it will come to that, but NOW is a good time to get these things in place so that if the time comes for a coin split, you can quickly move your coins onto either a paper wallet or a hardware device.

I would like to wrap up with one interesting project on the horizon. CryptoPing Bot is a new tool for traders to identify pump and dumps. The project is in beta as we speak and can be tried for free. When the beta phase is over, CryptoBot will work by spending tokens on a subscription based system. The ICO is live now. If you would like more information about this ICO you can find that here. I hope every one is having a great week, and look forward to the week ahead! Stay safe out there folks.

 

 

15 thoughts on “The Skim for May 30th to June 5th

  1. Hi Brandon!
    Thanks for all of your great work here and for helping us to better understand cryptocurrecies!

    Cryptocurrency is like a foreign language to me that I am slowly learning. Your detailed posts really bring us up to speed and helps decipher this difficult and highly confusing program. So again many thanks!

    With that being said I am still confused on BIP148 / (UASF)
    If this does go into effect on August 1st, and we have secured ownership for our private keys in paper or hardware wallets, will these coins be considered old coins after the hard fork? If there will be two different coins after the update, will these older bitcoins lose their value like what happened to Ethereum after their hard fork? Any further clarification you can provide would be greatly appreciated! Keep up the great work!

    • Jim,

      Thanks buddy for the kind words! We are all learning every day, sometimes the more I learn in this space, the less I think I know, lol. Let me try and answer your question the best I can with what info I have right now. BIP148 will go into effect on Aug 1st 2017. Now if you have control of your private keys, then I belive after all this fork business shakes out, you will decide which fork to move forward on. Meaning, if you hold your private keys even upto a minute before the possibility of a fork, then you still have a choice of which road to go down. So lets say you have your coins on a paper wallet or a hardware wallet like the Trezor or Ledger, IF there is a coin split, then you can create a new address on the chain you want to be a part of and move your coins to that new address. Now lets say you leave your coins on an exchange, then THEY have the choice which road your coins will go down in the future. Assuming worst case scenario of a coin spilt, most likely both types of bitcoins old and new, will have a lesser value than just prior to the fork. This is exactly what happened in the case of Ethereum. Now of course Ethereum has recovered with both ETH and ETC being at much higher prices today, but we cannot assume that is how it will be with bitcoin. This is new territory for the most part so some of this we will have to wait and see what happens. What is going on is a little like a game of chicken where 1 side has taken off the steering wheel and thrown it out the window, forcing a conflict and or collision. I believe most likely, this will be resolved without much injury because of everything that all parties have at stake. But this is a new frontier so get your popcorn ready. As to what each “bitcoin” will be worth if there is a coin split? Who knows, no way to guage how the market would receive this at this point. I would just assume that IF a coin split does occur, it would cause uncertainty at least for a little while creating a flight into other things for a time. But just the opposite could happen as well, no one knows. As of now as things stand, I will be on the sidelines and keep my cold storage out of exchanges until we get past the possibility of this fork. Hope this help Jim.

  2. Taking control of your private keys was what I was really trying to get across to the audience during my interview with Jack. I can’t recommend jaxx.io and the Ledger Nano S highly enough.

  3. Taking control of your private keys was what I was desperately trying to get across to the audience in my interview with Jack. Jaxx.io and the Ledger Nano S are my choices in that realm.

  4. Taking control of your private keys was what I was desperately trying to get across to the audience in my interview with Jack. Jaxx and the Ledger Nano S are my choices in that realm.

  5. Other than the possibility of the exchange going belly up. Wouldn’t having both sides of the fork be a benefit? When Etherium split I ended up with an equal amount of ETH and ETC.

    • CHop,

      As a whole I would say no we would not benefit. I too had a double balance of ETH and ETC on an exchange. I can tell you that before the DAO ETH was sitting at about $25/coin, after the fork it went as low as $7 and ETC was traded between .50 and $1 for quite a while. Because of the low cost associated with the coins before and after the split, exchanges were able to keep customers whole. With BTC we are talking magnitudes x100 that associated cost, may exchanges would go bellly up if they were to try and make everyone whole, which they simply would not. They would have no choice but to keep your coins. I would guess that this time around if your coins did split on an exchange, then you would not be able to retrieve them, meaning you would lose all of them on that exchange. So I dont think it would be good for exchanges or users. I would not expect what happened as far as exchange interactions to be the same this time around with BTC in the event of a coin split.

  6. Thanks Brandon. That makes sense. Will I be safe with a Trezor? As the Trezor does not actually store the BTC only the proof of ownership in the blockchain. I do have my private keys to restore my Trezor is that the same thing you mean by private keys for your BTC? I just want to make sure I am not missing something here. As it sits all of our BTC is off coinbase and safe in the blockchain offline on my Trezor.
    As mentioned I really don’t understand all of this so if I am stating this wrong please correct me

    Thanks!

  7. Ok now I understand! Trezor will be safe. They only small detail I will need help on is creating a new address on the chain I want to be a part of and moving my coins to that new address. So once we get to that point, I will ask for your help my friend

    Thanks!

    • You got it! Yep Trezor is safe, and yes will be just moving the coins whenever you want to later on, probably back into Coinbase or some other exchange if you want to sell or trade or whatever you might want to do with your coins in the future.

    • James,
      Thanks for the update. Yeah this is a classic case of security vs convenience, they are at odds with each other. Here is what Nilang Vyas, CTO of Jaxx & Decentral has to say on this matter…
      I’d like to take this opportunity to describe and explain the major points of Jaxx security model and how this model provides a strong balance between securing users assets, and providing the best user experience that allows for easy pairing across any device without the need for servers and user accounts.

      Jaxx is a hot wallet suitable for small amounts (similar to your regular wallet in your pocket) that connects to the internet in order to push transactions and show balances.
      As a hot wallet we believe we have found an appropriate balance between ease-of- use, portability, and security.
      Jaxx IS NOT cold storage. For large amounts we recommend hardware wallets.
      Jaxx master backup seed is created, encrypted, stored client-side and never sent to any servers.
      Jaxx allows for easy pairing across all devices (thus seed can not be encrypted by a secondary pin or password when pairing as it wouldn’t be portable / pairable without account / servers)
      We expect Users to maintain control of their devices, and we strongly encourage the use of on- device security (ie pin, fingerprint, retina, etc.) in order to secure your ENTIRE device.
      Jaxx offers a the option of a 4 digit PIN to further secure your wallet. If activated this PIN will be required when sending, changing PIN, and when displaying the master seed.
      Should someone get access to your device your lines of defence are a) on-board device features b) encrypted master seed c) Jaxx PIN

      We are very comfortable with this security model for hotwallets. The fact is there will always be tradeoffs between user experience, portability and security and we believe we’ve struck a great balance. Since 2013 over 750,000 Jaxx and (our former company) Kryptokit wallets have been created. Never have funds been lost on any of our productions versions due to an issue on our end. We stand by that amazing record.

      Please please please, if you do not feel comfortable with our security model do not use our products. We’re are creating for the masses a multi-platform, multi-coin interface for the blockchain ecosystem where users are in full control of their digital lives.

      In the future users will be able to secure their Jaxx wallet with both Trezor, Ledger and our own hardware wallets. Until that time, please use Jaxx as a hot wallet for small amounts, and use hardware wallets for larger amounts.

      Happy to answer any questions when I’m back in the office after the weekend.

      Cheers and have a great weekend! Nilang Vyas, Chief Technology Officer Jaxx & Decentral.

      I would agree to remind folks Jaxx.io is a HOT wallet. But like Nilang said, a bigger implementation of Jaxx with cold wallet options is coming. I believe i saw an article on just that about 2 weeks ago. Looks like they are doing a funding round with some substantial dollar figures. Looks like Jaxx is continuing to grow. I remember thinking to myself, “i hope they scale the security with the scope and reach of its user base.” With projects growth comes with them more incentive for hacks because they become bigger and bigger honeypots. Also remember to use base security with your phones in the 1st place, whether that be implementing your phone’s pin options, or encrypt when closed or whatever. Thanks again James for this. Stay safe out there.

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