Bitcoin community resilient amid confusion surrounding BTC’s whitepaper
CryptoCompare data shows the price of Bitcoin (BTC) moved from around $36,000 to a low under the $30,000 mark before the cryptocurrency’s price recovered. It’s now trading at $33,000 and appears to be within a tight range with support at $31,000.
Ether (ETH), the second-largest cryptocurrency by market capitalization, kept on moving up throughout the week, but plunged when BTC’s price dropped as well. After hitting a $1,050 low, ether moved up to a new all-time high over $1,450 before correcting to $1,400 at press time.
This week Bitcoin community proved resilient as it dealt with confusion and fear surrounding the flagship cryptocurrency’s whitepaper and the way its network works. The cryptocurrency’s plunge below $30,000 was seemingly a reaction from investors to a report suggesting a double-spend occurred on the Bitcoin network.
Bitcoin solves the Byzantine Generals problem to ensure trustless consensus and stood out among previous attempts to launch a digital currency by solving the double-spend problem: ensuring no more than 21 million BTC will ever exist and preventing someone from simply copy and pasting BTC to have more funds.
The supposedly detected double-spend was for 0.00062063 BTC, about $22 at the time, and it was suggested the same double-spend could have been made using $22 million. If a double-spend did occur, trust in the cryptocurrency was broken and BTC itself was, as such, worthless.
Andreas Antonopoulos, the author of “Mastering Bitcoin” clarified on social media what happened. Over a series of tweets, Antonopoulos revealed it was indeed a chain reorganization from the Bitcoin blockchain, a “common occurrence that is part of Bitcoin’s normal operation.”
These reorganizations, he said, are common on Proof-of-Work (PoW) blockchains when two blocks are mined “almost simultaneously” and compete for the same height. Eventually, another block is mined and adopts one of these two blocks as its parent block, and the other one is discarded.
The situation that occurred was described in Satoshi Nakamoto’s Bitcoin whitepaper, on page 8. It’s the only math equation in the paper and describer the declining probability of such a reorganization – in which a block is discarded and the transactions in it may go back to the mempool – and shows how increased network confirmations are more secure.
Hosting the Bitcoin Whitepaper
The Bitcoin whitepaper was, this week, a cause for controversy as nChain Chief Scientist Craig Wright sent legal threats to the website created by satoshis Nakamoto, Bitcoin.org, and to the website hosting the software that underpins the Bitcoin network, Bitcoincore.org, for them to remove the whitepaper.
Wright claims to be the cryptocurrency’s pseudonymous creator and as such made claims he owns the copyright to the whitepaper. The move saw several companies move in to host the whitepaper, including Square Crypto, Chaincode Labs, CryptoCompare, NYDIG, Casa, and Facebook subsidiary Novi.
The crypto community’s battles may have scared off some investors, but seemingly did not have a major impact. The world’s largest asset manager BlackRock, with $7.8 trillion in assets under management has granted at least two of its funds the ability to invest in Bitcoin futures.
Digital asset management firm CoinShares has over the week also launched a bitcoin exchange-traded product (ETP) on the Swiss stock exchange SIX. The ETP, listed under the ticker BITC, allows investors to gain exposure to BTC as a regulated class, without having to buy the cryptocurrency itself or managing private keys.
Altcoins Rise as ETH Hits New All-Time High
Bitcoin’s price volatility over the last few weeks is believed to have helped the price of Ethereum’s ether hit a new all-time high. The comparative calm seen after BTC dropped from its $42,000 high likely encouraged investors to chase momentum coins, with ETH being the second-largest crypto by market cap.
Binance’s BNB token also made headlines after the cryptocurrency exchange burned $165 million worth of BNB in its largest-ever token burn. Every quarter, the exchange burns BNB using a part of its profits until the crypto’s supply is reduced to 100 million tokens.
In an announcement, Binance detailed that the speed of the burns, associated with its trading volumes, is taking longer than the firm originally anticipated because of BNB’s price rise. The exchange is looking to speed up its token burn rate but is “not 100% sure” how to accelerate the burns.
The decentralized finance (Defi) space has meanwhile kept on growing and now has over $26.2 billion in total value locked. Tokens associated with leading projects – including UNI, AAVE, SUSHI, and CRV – have been booming as demand keeps on growing.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various Cryptocurrencies but has no bias in his writing.
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