Chat with us, powered by LiveChat

The blockchain is vulnerable. Cryptocurrencies are losing their spots.

Jan 14, 2019

The second week of 2019 ended with a decline in all 11 cryptocurrencies with a capitalization of more than $1 billion. Bitcoin (BTC), Ripple (XRP) and Ethereum (ETH) remain the top three cryptocurrencies.  Having lost more than 23%, Ethereum became the decline leader. Moreover, the pressure on Ethereum increases the risks associated with the upcoming Constantinople hard forks.

A major ETH upgrade will be released on Wednesday, January 16. Until this moment, the pressure on the ETH may remain elevated.

Ethereum developers are worried due to Constantinople hard forks.

The head of public relations at Ethereum Foundation, Hudson Jameson, highlights that developers’ intentions before the upcoming activation of the fifth largest upgrade are optimistic but restrained.

There is a risk of network separation, although it is not high.

It may happen only if there is a sufficient number of users. However,  Parity release manager, Afri Shoedon stresses that the probability of network separation remains low. His statements are based on the fact that in most cases, most of the leading mining pools support this upgrade.

It is noteworthy that by January 13, less than 20% of the large mining pools confirmed the support of this upgrade. The head of Ethermine mining pool and creator of the resource where the survey was conducted  – Peter Pratscher – said that most of the ecosystem participants have already accepted the changes.

The presence of additional risks not related to network separation should also be taken into account. These risks related to bugs in the code, incorrect operation of algorithms, and so on. These factors increase the pressure on ETH, which may remain elevated until Wednesday, January 16th.

Activity growth

Referring to the analytical company Flipside Crypto, Bloomberg noted an increase in the activity of Bitcoin wallets, which have been in sleep mode for a long time. 60% of issued bitcoins are currently located on active wallets. This happened as a result of an increase in activity on wallets, including those which had no transactions from 6 to 30 months. According to published Flipside Crypto data, over the past 6-8 months, the number of active wallets increased by 40%.

Bloomberg noted that a similar increase in active wallets was observed in 2015 and 2017. However, in  2015 and 2017, the increase in active wallets was accompanied by an increase in the BTC price. The activity consisted in receiving additional BTC, but now there is a decrease in cryptocurrency prices. Therefore, it can be assumed that the observed activity is due to selling of previously accumulated BTC, and not buying.

51% attacks on Ethereum Classic

Earlier, the Bitcoin exchange Gate.io reported a “51% attack”, as a result of which its users lost about 40,000 ETC. Representatives of the exchange reported on the compensation of all losses of users at the expense of the exchange. However, on January 12, it was reported that Gate.io received $100,000 in ETC.

This payment came from the organizer of the “51% attack” on the cryptocurrency network Ethereum Classic. If so, then the organizer of this attack did not seek to enrich himself, but only to show the vulnerability of the blockchain. Such reminders of the existing risks are useful because they contribute to the development and subsequent increase in the security of the cryptocurrency market and the blockchain technology in general.

Mining becomes unprofitable

The largest mining companies are forced to significantly reduce their staff. Bitmain, one of the leading manufacturers of equipment for bitcoin mining and the operator of the largest pools, suspended work in Texas. All employees, with the exception of two engineers and the director of personnel policy, are dismissed. One of the reasons for making this decision is the price of BTC. Therefore, a further decline in cryptocurrency prices will contribute to the dismissal of employees and most probably bankruptcies. Therefore, only an increase in prices to $6000 BTC can stabilize the situation, because this price allowed absolutely all miners to earn.

Recents posts

ADA/BTC Is Accumulating Its Growth Potential
Uncertainty On The Market Affects Its Volatility
Fiat: to the crypto and back
Load more