The Crypto-valuation roller coaster

New Domain announcement: The past 2 weeks for me were a vacation from posting, before I launched my blog http://www.notesnewtech.com. My old domain is hemangcs.com and will resume posts on purely academic work e.g. big data analysis, commentaries on my own research, math models, and course teaching activities.

Crypto-valuation roller coaster

In the past two weeks though we’ve seen an amazing amount of bad press, and pretty bad speculations about everything crypto currencies. A lot of hype around Bitcoin’s scalability approaches too followed i.e. Segwit, Segwit2X, Bitcoin-Unlimited. Consensus 2017 was the meet up wherein the entire ecosystem (i.e. miners, developers, and exchanges) worked hard to arrive at an agreement to back Segwit. Over time though in 4 months wedges developed amongst the miners and othe development community that led to an assumption about a Bitcoin hard-fork and the birth of 2 coins on August 1st, and a prolonged battle amongst exchanges for who would own the BTC symbol. As of date, though, there is a beautiful agreement that will roll forward as a compromise called Segwit2X that will accomplish a doubling of block-size to 2MB and an optimization of storage networks will take shape. As of NOW (8:29 am) at least 55% of the network has already migrated to Segwit2X. Coin.dance has an amazing visual about this real-time transition to segwit2x.  The market tanked about 40% in the past two weeks to recover 20% after the announcement that consensus around Segwit2X is a given and a split if at all happens will survive the larger market.

This market is proving to be information efficient. As sentiments shift (bad press coverage to good press coverage), backed by developer action (arriving at a consensus around Segwit2X  to no consensus) and engineering enhancements (Ethereum scaling) we see the shift in prices. The roller coaster in price movements is captured by the shift in sentiments amongst the crypto-ecosystem participants.

What we’ll see after migration to Segwit2X?

  1. Transactions will become significantly faster on the Bitcoin network. Block validation times (that today) translates to 40 minutes sometimes will reduce to a few minutes (if not seconds).
  2. Similarly, transaction confirmation times (that need at least 6 blocks validated) will take much shorter.
  3. This will make buying, selling, and trading with Bitcoin more common and we will see in the short term people using Bitcoin as money – till the 2MB size limit is hit.
  4. In the long term, however, Bitcoin – the main asset through which all other crypto currencies flow will see a huge upside.

In addition what we’re seeing is a large number of Global Initial coin offers. All kinds of ideas from prediction markets to sports analytics coins are being released and promoted. Even Daimler the parent company of the Mercedes Benz released a 100 million Euro bond modeled on Ethereum!!