Bitcoin Corrects After Reaching Highs above $16,000 in Epic Four-week Rally: Week in Review Dec 11
Another week, another all-time high for the price of bitcoin. On Friday, December 8, the average price of bitcoin exceeded $18,275 and was reportedly trading as high as $20,000 on some exchanges as investors are preparing for the launch of futures trading on the Chicago Mercantile Exchange on December 18, which could give the digital currency another boost as more institutional investors will then be able to enter the asset class. The CBOE futures launched on December 10, with interest stronger than anticipated.
Last weeks price rally, which saw the price of bitcoin jump from $11,000 to over $18,000, was too much for some exchanges, such as Coinbase, which couldn’t handle the new trading volumes that the latest bitcoin gold rush has caused, causing it to temporarily go offline.
Exchanges struggling with buy orders, however, was not the only challenge that bitcoin faced in the past seven days. The mempool is overflowing and there are currently over 200,000 unconfirmed transactions waiting to to be processed by bitcoin miners. This creates a situation where transaction take much longer to confirm and has transaction fees spiking.
Currently, if you want your bitcoin transaction to be confirmed and completed within 30 minutes you are looking at paying between $15 to $20 transaction fees. This, of course, renders bitcoin largely useless as a spending currency and is turning the world’s most popular digital currency into a pure investment asset and a store of wealth.
Some believe that the flood of unconfirmed transactions is actually a spam attack on the bitcoin network by competing cryptocurrency projects while other see this as a clear indication that bitcoin is failing as a currency and are moving their funds into litecoin and other low transaction fee cryptocurrencies that will benefit from bitcoin’s decline as a spending currency.
Popular online gaming platform Steam has decided to drop bitcoin as a payment method due to the rising fees that make it unfeasible for them to accept the digital currency.
The price of bitcoin did correct towards the end of the week to trade at around $13,000 on Sunday as markets are calming down ahead of the potential futures trading storm.
This week’s review is compiled from contributions by Christoph Bergmann, Gil Davis, Jamie Holmes, Julia Travers, Priyeshu Garg, Robert DeVoe, and Tabassum Naiz.
On December 6, 2017, Lightning Developers, a medium.com publisher representing the three main parties (ACINQ, Blockstream, and Lightning Labs) that together are building the Lightning Network protocol, announced that Lightning Protocol 1.0 is operational. All tests were passed, and the first multi-client Lightning transactions was successfully completed on the Bitcoin mainchain.
Following the announcement by the CME Group Inc and CBOE to begin trading bitcoin futures, Nasdaq has also proposed a trading launch as early as the second quarter of 2018. The hopes of trading the digital currency along more traditional lines are to attract equally traditional investors.
However, as money pours in, so have respective regulatory bodies. Typical features of tax evasion are a high concern in the united states with a proposed bill by the Trump administration that would require all US citizens to declare all crypto holdings. Bill S.1241 goes as far as recommending imprisonment for those who conceal their bitcoin ownership.
Ultimately, politicians face the same problems as many others in the midst of such new technology. These misunderstandings could have significant effects on both a federal and state level, especially from a tax perspective.
Ethereum has broken another record; it traded more than one million Kitties – and reached a new transaction peak of 700,000 a day. Ethereum is knocking on capacity limits, and scaling solutions are desperately needed. The world’s first successful non-monetary blockchain application was born recently; it is about buying, breeding, and trading kitties.
CryptoKitties is a game with a cute design on the surface. Inside, it succeeds in merging a web-interface with Ethereum’s smart contracts. As it does this in an unprecedented usable way, it has become a huge success. It created 25 percent of all transactions on Ethereum made in the past few days and pushed the daily transaction volume to a new all-time high with more than 700,000.
America’s second-largest bank (with assets totaling $2.17 trillion) has been successful in its recent patent application for a “Cryptocurrency Transformation System.” View the full details of the patent here.
Through the cryptocurrency exchange that it has proposed, the BoA would own all rights to an automated platform which converts funds between digital currencies – based on data sources externally located from the bank.
On December 4, new research showed that zcash transactions are largely unshielded and linkable. The paper sparked interesting discussions in the Twittersphere between monero and zcash advocates. While known for a long time by many, the research quantified the risk borne by users due to the opt-in nature of zcash’s privacy.
The research notes that no exchanges or web wallet support shielded transactions, which opens up the potential for linkability:
“Since no exchanges or web wallets support z-addrs, users are forced to operate mainly through t-addrs if they want to use their coins. However, if they wish to obscure the source of these coins, they may pass them through the shielded pool. But, if they are not careful and make the amounts identical, the transaction may not be as private as they thought.”
For the first quarter of 2017, litecoin remained stable, trading in the $3-$4 range. However, during April, the altcoin started to rally as the scaling upgrade SegWit was anticipated and reached a high near $40 in May 2017. During August, bulls exerted dominance again bringing the altcoin close to $100. LTC-USD finally broke this psychological level in the past few weeks.
The altcoin reached a fresh high on December 9, exceeding the $150 handle. The bullish run has continued for LTC-USD, which has taken an attempt at the $200 level on December 11.
In less than a week the likes of Chicago Board Options Exchange (CBOE) will launch their own Bitcoin derivatives futures products. But they’re not alone in the race.
Taking a cue from its US rivals, one of Japan’s largest financial exchanges, the Tokyo Financial Exchange (TFX), has decided that the time is ripe to offer its bitcoin futures.
On December 5, the Tokyo-based futures exchange announced that come January 2018, it would commission a working group to study cryptocurrencies including bitcoin. TFX CEO Shoza Ohta, in a conversation with the Press, said that the listing of bitcoin futures would require modifications in the country’s securities law.