This week on Planet Bitcoin - 11 September 2015

Friday 11 September 2015

Weekly market report and news from Dynacoins, first community-supervised mutual bitcoin fund.

This week has seen a moderate degree of activity on the bitcoin markets, after the unusually calm start to August and the unusually volatile end to the month. From its base in the mid-$220s – the point to which bitcoin rebounded from a low of $200, prompted by XT-related uncertainty and quite probably China-related woes, too – it rose to $240, where it has remained for most of the past week. There has been some oscillation around the $240 mark, with a dip just below and a brief rise to the mid-$240s, but certainly nothing out of the ordinary for bitcoin.


This is much the same behaviour that has characterised the markets for most of this year – a brief flurry of activity, followed by a plateau for some days and occasionally longer, before the next significant movement. We are broadly back to where we were before the crash to $200, which came after a long, slow decline from just below $300 that occurred over the course of around a month. Whatever confidence was lost, leading to that surprise fall, has apparently been regained.

Around the Bitworld

The release of Bitcoin XT was the apparent trigger for the crash two weeks ago. XT, the blocksize ‘fix’ pushed by Gavin Andresen, has proved immensely divisive in the community. Although it appears to be a sensible solution and was formulated after consultation with a cartel of Chinese mining pools, who control 60 percent of hashrate, it has not been widely taken up. At present, only 12 percent of blocks are mined by nodes supporting XT – down slightly over the past month. (You can see the miners’ support for different approaches at Critically, the Chinese pools have not opted to back XT. This appears to be because they want a consensus established among the bitcoin core devs, rather than a unilateral fix that is adopted in what is, essentially, a game of chicken.

Instead, there is substantial support for BIP100, the Bitcoin Improvement Proposal suggested by core developer Jeff Garzik. This also raises the blocksize, but the increase is determined by a voting mechanism undertaken by miners. It is therefore seen as far more democratic. Although the final form has not yet been decided, it seems that for every 12,000 blocks (around 3 months’ worth) the bottom 20 percent of votes will be discarded, after which the blocksize will be updated to the lowest of the remaining values. Blocksize can only be halved or doubled at most, and there is a hard cap of 32MB – a far cry from the ultimate 32GB blocksize intended by XT, some years in the future. BIP100 has its issues – including the supposed possibility of a ‘21 percent’ attack, due to the fact that anyone who mines 21 percent of blocks can effectively set block size, and the likely inadequate 32MB cap if bitcoin is to scale – but it’s proving far more popular. Agreement is critical if confidence is to be maintained.

‘Stress test’

Feeding into the blocksize debate, CoinWallet is undertaking another so-called stress test – really an attack on the bitcoin network. In this instance they are publishing a large number of private keys, leading many bitcoiners to try to claim the same funds at the same time. This DDoS attack has the potential to slow transaction times markedly; CoinWallet previously stated their intention or hope that a 30-day backlog would result.

Finally, in a development that will surprise nobody, Japanese prosecutors have charged MtGox CEO Mark Karpeles with embezzlement after holding him for six weeks.

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