From a Ripple to a Wave, EOS vs ETH, and Palestinian Bitcoin

Tuesday, September 18th

🕍 Good Tuesday everyone. We’ll be taking tomorrow off for Yom Kippur, but will be back with you Thursday morning!

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3 things you need to know:

One: Ripple jumps 20% after an executive hints that that their xRapid product will go live soon. This is a large development for Ripple, as most of their current partnerships from from their xCurrent product, which does not use XRP. xRapid is the Ripple product which requires the actual XRP token for sure, so any new partnerships or trials of the xRapid product should theoretically drive up the price of XRP.

  • xRapid is a very different product than xCurrent. Both products are meant to improve international money transfers, but take different approaches. xCurrent is a software that allows banks to track international transfers. xRapid is a product that integrates XRP, and allows banks to use the cryptocurrency to more more efficiently transfer value across the world. For example, if Bank of American wanted to transfer money to the the Bank of China, it would send USD which would then be converted to XRP. XRP would be sent to China, and then converted into the Yuan. Since XRP near instantaneously, the transaction times are see large cuts.

  • The money quote:

    "I am very confident that in the next one month or so you will see some good news coming in where we launch the product live in production," Sarbhai said of xRapid in an interview with CNBC's Arjun Kharpal.

  • The clickbait headline was warranted. When I checked the charts, it was clear the release of this video coincided with the beginning of substantial price appreciation.

  • Read more…

Two: Bancor is expanding it’s functionalities to the EOS platform. Bancor, a decentralized liquidity network that allows users to trade a range of ERC tokens without depositing funding into an exchange or using an order book. They just announced that they will be implementing functionality to allow the trading of EOS tokens on a new platform, called BancorX.

  • Bancor suggested that faster transactions, zero fees, and resistance to front running were the main reasons for this shift. One thing to note is that EOS However, some members of the community believe that the block producers’ ability to essentially reverse transactions by forcibly moving funds was another motive. This capability provides a layer of safety in the event of a hack or an attack, and it may very well be an influencing factor in this decision.

  • Bancor is infamous for its ability to freeze or reverse certain transactions into its smart contracts. After a breach in July it froze 2.5mm BNT tokens, worth around $10mm at the time.

    “Eyal Hertzog, Bancor's co-founder and product architect, defended these design choices, citing the infamous DAO hack, which saw millions in funds siphoned away from smart contracts with no way to stop the theft. The incident eventually led the ethereum community to hard-fork the chain in order to reverse the damage.”

  • EOS is slowly becoming a real competitor to Ethereum. It took Ethereum a solid 2 years from mainnet launch to get where it is today in terms of scale and reach. EOS just launched a few months back, but is already making significant inroads when it comes to capturing new applications. This is the first time we are seeing a true competitor to Ethereum. Soon projects like Zilliqa, Rchain, Cardano and more will go live. The smart contract wars are coming. Are you ready?

  • Read more…

Three: According to Coindesk, some Palestinians are using Bitcoin as a way to circumvent banks. Ahmed Ismail, a financial analyst in Gaza, estimated there are at least 20 unofficial "exchange" offices there dealing cryptocurrency to local users. Ismail claims he helps 30 clients use bitcoin to purchase investments abroad, such as stocks, since there aren't any local alternatives for putting money to work.

  • Bitcoins real use case shines through in countries where trust in the government is low. We’ve seen this play out in Venezeula, Argentina, Turkey, and Cyprus in 2013.

    “Bitcoin, in their opinion, is cheaper, safer, and quicker. Nothing works with Palestinian banks. Bitcoin wallets are alternative banks.”

Also in the news:

Market Outlook:

Quick Take

Direction: We saw a slight bounce from yesterday, before we retraced back to our current positions. The longer BTC holds steady above the 6280 level, the better chances we see of running to 6.4k. Right now, both of the directions I see start with a leg down toward 6280. I’m leaning towards the bull case, as the market seems to be overly fearful right now.

Key Support:  6280, 6200, 6180

Key Resistance: 6390, 6580, 6700

Actions: I’m shorting altcoin breakouts here. While select altcoins may see large moves (like Ripples 20% move today), they will likely retrace against BTC. Personally, those are the only trades I’m comfortable taking right now. I’m flat on BTC, because while I lean to the bullish case, there is no clear trend, and volatility is low indicating a big move may be coming soon.

Fear & Greed

Here’s a reminder of what these criteria mean

Around the corner:

What I’m reading today:

Borderless Bitcoin: A Dangerous Myth

This article is a well written take on the flaws of the Proof of Work security model employed by Bitcoin.

It focuses on the incentives of miners, external politics and the geographic distribution of Bitcoin users and miners to show that there are misaligned incentives, which could potentially lead to ruin.

The main argument is the use of electricity to secure the network has caused the two groups of users and miners to diverge, with most miners being geographically concentrated where electricity is cheap, which is China. This leaves miners susceptible to political interference.

“As the geographic diversity of Bitcoin’s hashrate decreases, the network grows more vulnerable to sovereign censorship by its miners’ resident jurisdictions.”

Tl;dr from the source itself: Bitcoin maximalists argue that the energy consumption of Proof-of-Work provides the network with a security moat. In reality, it introduces political risk because of the highly centralized nature of energy infrastructure and markets. Evidence points to Bitcoin being susceptible to sovereign censorship in the future as its network growth continues along existing geopolitical fault lines. Alternatives to completely miner-driven blockchains, like Lightning Network or Proof-of-Stake, reduce or avoid this issue by relying on endogenous factors (i.e. the native currency) for transaction validation.

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