In the past seven days, we witnessed a stabilization of the price of bitcoin in the $4,150 to $4,500 range despite the debate around the contentious SegWit2X upgrade to the Bitcoin network, which will likely lead to another split of the Bitcoin blockchain.
As part of the so-called New York Agreement, which led to the implementation of the scaling solution SegWit in August, it was also agreed by those who signed the agreement that following the SegWit upgrade that there would be a Bitcoin block size increase to 2MB from 1MB. This was considered a middle ground between the SegWit camp and the block size increase camp in the height of the Bitcoin scaling debate earlier this year.
The SegWit2X Bitcoin network upgrade is scheduled for next month. However, its proponents and opponents are already heavily discussing the hard fork on social media and in other forums.
Proponents of SegWit2X want this update to the Bitcoin blockchain as it will lower transaction fees and increase confirmation times, which will help to scale the Bitcoin network and allow the digital currency to be used as exactly that, currency. SegWit2X proponents also want to take away the perceived power of Bitcoin Core by having the Bitcoin network adopt their BTC1 client as opposed to the Bitcoin Core clients to run the network.
Opponents of SegWit2X, on the other hand, are against more power being given to large miners, which would be a likely result of SegWit2X. An increase in centralization is a key concern as running full nodes would become more cumbersome with higher block sizes and, hence, more difficult for individuals. Effectively, the “NO2X” camp does not want the Bitcoin network to be controlled by a few affluent individuals and large companies as this goes against the very ethos of bitcoin.
Outspoken former Coinbase engineer and Litecoin founder Charlie Lee, for example, opposes SegWit2X cited a lack of urgent need, lack of replay protection, and a lack of consensus as his three main reasons. He also went ahead to enter into a bet with Roger Ver, a proponent of the SegWit2X, to exchange 250 BTC one-to-one for 250 SegWit2X “bitcoin.”
SegWit2X will likely bring back volatility in the coming weeks as discussions about the right way to scale bitcoin are reignited.
This week’s review is compiled from contributions by Liam Kelly, Joseph Young, and Samuel Town.
On October 3, Litecoin creator and former Coinbase executive Charlie Lee revealed that he has officially advised the Coinbase development team to maintain the “BTC” and “Bitcoin” moniker for the original Bitcoin blockchain in case the SegWit2x hard fork occurs in November as planned.
For cryptocurrency exchanges including Coinbase and GDAX, the November SegWit2x hard fork, a proposal to increase the Bitcoin block size to 2MB, is specifically difficult to handle because unlike the Bitcoin Cash and Ethereum Classic hard forks, Segwit2x is an upgrade to the current codebase of Bitcoin.
If SegWit2x had not been a contentious hard fork and the entire Bitcoin ecosystem ranging from developers to users agreed on the update, SegWit2x would not lead to the emergence of yet another fork of the cryptocurrency. But, because users, miners, developers, and businesses disagree on the necessity and implication of the SegWit2x hard fork, if the fork is executed in November, it would inevitably lead to the creation of the SegWit2x bitcoin.
On October 2, Etherparty officially began its ICO for its application which enables individuals and businesses to create multichain smart contracts without programming or coding. But, a few hours after the FUEL ICO was initiated, an unknown group of hackers gained access to the website of Etherparty and changed the deposit address, allocating ICO funds to a separate Ethereum wallet address.
According to BleepingComputer, the Etherparty development team detected the hack in less than 15 minutes and immediately shut down their website. Subsequent to a brief investigation and analysis of the hack, Etherparty developers restored the website after 95 minutes.
Kevin Hobbs, the CEO of Etherparty, reassured investors that investors would be fully compensated for the stolen funds.
The Dust solution picks up where popular cryptocurrency investment app Lawnmower left off in March this year, when they removed their highly popular “spare change” feature. Setting up Dust is extremely simple— users connect the app to their bank account, which allows it to see transactions. The app then rounds each transaction up to the nearest dollar, collecting spare change.
When the Dust app has collected around $10 of change, it uses this capital to invest in a spread of cryptocurrencies. These cryptocurrencies include bitcoin, ether, and litecoin, and can be diversified according to user-set parameters. To order these cryptocurrencies, Dust integrates with Coinbase, which is one of the largest crypto exchanges online. Dust claims to work with “most high street banks,” as well as over 9,000 different financial institutions in the United States.
The Dubai Government has recently announced plans to launch the first-ever government-backed cryptocurrency, according to an statement released by Dubai state news agency WAM. The state-sponsored digital token, called emCash, will be available to pay for both governmental and non-governmental services.
The launch of the state-sponsored cryptocurrency is a historic first, with the Dubai government stepping in ahead of other forward-leaning states such as Russia and Estonia. The digital currency will be developed between emCredit, a subsidiary of the Dubai Economy, and UK-based blockchain developer Object Tech Group Ltd.
On September 29, the acting Manhattan US Attorney announced that Ross Ulbricht forfeited the $48 million proceeds from the sale of bitcoin seized from the computers and devices of the Silk Road operator.
While the auction of 144,336 bitcoin (worth $608.5 million at the time of writing) was conducted in 2014, the US Justice Department were not able to seize the funds from the auction due to the challenge Ulbricht had made on the legality of the forfeiture. But, last week, Ulbricht dropped the claim against the government.
For the US government, the decision to essentially pre-sell seized bitcoin funds from the Silk Road case in 2014 has been poor, as the price of bitcoin has increased by over 13-fold in the past three years. If the US government had sold bitcoin from the Silk Road case in 2017, after Ulbricht dropped his claim, it would have obtained an additional $500 million (or thereabouts) on top of the $48 million it had secured from the initial auction.
Two companies, a real-estate and diamond ICO, run by businessman Maksim Zaslavskiy blew up in smoke as SEC exposed fraudulent claims and unregistered Securities.
Zaslavskiy provided investors with the world’s “First Ever Cryptocurrency Backed by Real Estate” in which he allegedly reinvested investor’s contributions into different properties.
DRC World, or Diamond Reserve Club, similarly promised investors access to discounted diamonds if they bought a “membership.” When the SEC reviewed the company, there was no evidence of diamonds being purchased or business operations with diamond dealers record.
After freezing Zaslavskiy’s assets and companies, the SEC charged him with violations of the antifraud and registration provisions of the federal securities laws. They have also pressed for a complete barring from participation in any future participation in initial coin offerings.