Chinese miners still haven’t reached consensus on their support for either Bitcoin Classic or Core, and the PBOC wants to issue its own virtual currency. Here are the cryptocurrency highlights of week 3:
- Are Chinese miners supporting Bitcoin Classic or Bitcoin Core? According to Chinese Bitcoin exchange Huobi the matter is still undecided, despite earlier reports that Chinese miners had chosen to stick with Bitcoin Core. Bitcoin Classic gained significant support after developer Mike Hearn departed from the Bitcoin project last week, calling Bitcoin a “failure” in his announcement as a result of the digital currency reaching its limit (among other reasons). Bitcoin Classic intends to raise Bitcoin’s block size limit to 2MB from 1MB currently via a hard fork, while Bitcoin Core (currently the dominant chain) is planning on implementing Segregated Witness via soft fork. Segregated Witness fixes transactions malleability, while also reducing the block space used per transaction. Chinese miners have indicated they prefer the hard fork method, but not whether they are willing to switch from Core to Classic in order to make this happen. Based on Huobi’s statement, continued support for Bitcoin Core remains uncertain for now.
- R3 CEV and the consortium of 42 of the world’s largest banks that joined the project have completed their first experiment with blockchain technology. R3 connected 11 of its members to a distributed ledger using Ethereum and Microsoft Azure’s Blockchain-as-a-Service. The experiment marks an important step for R3, as it concerns the “the transition from vision and hypothesis to application and execution” according to CEO David Rutter.
- The People’s Bank of China (PBOC) is working on its own virtual currency. The PBOC revealed that it has a research team working on this idea since 2014, and that the team now should “set up clearer strategic objectives for launching digital currencies, overcome the technological barriers … and aim for an launch of the central bank’s digital currencies”. One purpose of creating an own virtual currency may be that it could allow the government to prevent a capital flight via Bitcoin and other borderless altcoins. This capital flight already started due to falling stock markets and a weakening Yuan, turning Bitcoin into the ideal way out as it cannot be restricted.
- The United Kingdom (UK) may also adopt blockchain technology, as its Chief Scientific Adviser has submitted a new report making multiple recommendations such as “establishing a platform for blockchain technology within the government” and “establishing trials of distributed ledgers to see first-hand the usability of the technology within the public sector”. The report also included a note on Bitcoin’s reputation of being “intrinsically linked to money laundering and terrorists” and added that this is a “misconception”. It remains to be seen to what extend the UK government will implement the recommendations.
- The price of Bitcoin recovered partially this week from last week’s crash triggered by Mike Hearn. The price is up 5 percent, or $21 to a current exchange rate of about $390 per coin. The biggest winner of the week, however, was Ethereum as its price increase by more than 40 percent. The digital currency has now taken over Litecoin’s place as the second largest altcoin by market capitalization. The latest rally appears to be largely driven by R3’s announcement that it was using Ethereum. In just two weeks’ time, the value of Ethereum has almost doubled, increasing by 90 percent over this period. The current exchange rate is roughly $1.90 per ETH.
