About the author

Shawn Dexter

Shawn is a blockchain & distributed ledger technology enthusiast with a strong background in Computer Science, Product Management and Entrepreneurship.

Weekly Bitcoin Price Prediction & Analysis – January 2019

DisclaimerThe ideas presented in this article should not be taken for investment advice, and are simply the views and opinions of the authors. 

January 21st Bitcoin Ethereum Price Update 2019

This is the second weekly collaboration between Eric Crown & Mango Research. Eric is, by far, one of the few technical traders in the space that really knows what he’s doing. He has over 10 years of experience trading traditional markets and market-making for equities. 
What we like about Eric the most is that he doesn’t simply trade technicals – he trades the crowd psychology & behaviour derived from the technicals. We’re excited about this collaboration and will hope you enjoy & learn as much as I have from Eric.

Quick Summary

Our overall bearish bias remains intact. The weekend displayed a glimmer of hope with Bitcoin rallying to nearly $3800. But the quick sell off that ensued only served to strengthen the bearish case. The sell off lined up perfectly with a retest & rejection of both: the daily 21 EMA & 3-Day M-formation neckline.

Furthermore, this also confluences with the breakdown of the larger symmetrical triangle on Bitcoin. All signs point toward a retest of the $3250 area.  But will that be the bottom? We discuss our opinions on this matter and the rest in this report.

Weekend Roller Coaster – Key Rejection of 21 EMA

It’s been a roller coaster of a weekend. Bitcoin price witnessed a sudden $200 move in both directions within a matter of hours.

Saturday started strong with Bitcoin making a quick move from the $3600 to $3775 – almost a $200 move to the upside. Could we have foreseen this move? Perhaps.

Bitcoin formed a smaller Symmetrical Triangle over the week. Eric Crown has emphasised that symmetrical triangles have an equal opportunity to break to either side.  However, in a overall bearish trend – we tend to lean toward the downside.

“ Symmetrical Triangles have an equal opportunity to play out to either side
Eric Krown

Surprisingly, Saturday saw Bitcoin break the smaller Symmetrical Triangle to the upside. The breakout hit the measured move perfectly. Although Eric himself leaned to the downside, he demonstrated his professional skills by responding to market action and trading the breakout perfectly.

Rollercoaster action: Upward break of the triangle and promptly sold into..

The break to the upside had many people feeling bullish about the markets once again. But the anticipated follow up simply failed to arrive.

Instead, sellers stepped in promptly and sold heavily into the $3775 level. The price quickly retreated to $3700 which resulted in a successful rejection of the daily 21EMA break. And this was key! (we’ll discuss why in the next sections)

BTC Price prediction January 2019

Rejection of the 21-Ema on the daily.

Sunday showed a powerful response to the rejection of the 21 EMA. With rejuvenated confidence sellers were able to push the price of Bitcoin all the way down to $3500. A $200 move to the downside this time.

Interestingly enough, the rejected 21 EMA lined up with $3700. The $3700 was also the neckline for the  3-Day M-For-Murder formation (double top) that we also discussed in the previous post.

Incoming Murder? M-Formation Retest

As Krown would say: “M” stands for Murder!”. If you’re forming an M-like formation, you don’t want to break that neckline. And Bitcoin did just that when it closed a three-day candle under $3695. This neckline break has a high degree of playing out to the downside – especially on the higher time frames.

However, these formations may occasionally show a false breakout to trap people. A re-test of the neckline isn’t uncommon. But a rejection of the retest adds further probability of it playing out.

Notice the weekend rejection of the 21-EMA lined up beautifully with this neckline (as displayed in the image below).  This is very likely to increase seller confidence, as they begin to target the measured move for this break.

“ Rejection of the neckline retest on the 3 Day

Bitcoin 3 Day Price Analysis - January 2019

Double top (M-formation) break and retest of the neckline.

The measured move for this is typically the length between the neck and the top. This points to a move downward to around $3200 level area.  

And this is where things get even more interesting. We’re already seeing confluence with the Daily 21 EMA rejection and the 3-Day M-Formation rejection. These also line up perfectly with Bitcoin’s Symmetrical Triangle formation and the 200 Simple Moving Average.

Confluence Galore.. Bitcoin's Symmetrical Triangle

BTC toiled away on a larger symmetrical triangle for around 2 weeks. We first discussed this in our previous post. The projected measured move on the triangle pointed us down to the $3200 level.

The triangle broke down on January 10th – with volume confirmation. What do we mean by volume confirmation? Simply that there was high enough volume on that break down, to justify our conviction in the break. Essentially, a lot of sellers stepped in for that move.

“ As long price lives below $3850, the symmetrical triangle is still in play
Eric Krown

Break of the symmatrical triangle – pointing to $3250 range

The 200 MA's

The 200 Moving Average is typically a strong level that draws in a lot of attention.  It gets even stronger on the higher time-frames such as the weekly chart. Currently, BTC has been ranging between the weekly 200 Simple Moving Average and the 200 Exponential Moving average.

After breaking the 200 Exponential on its first pass, Bitcoin went on to test the  200 Simple Moving Average which proved as strong support. Bitcoin then went on to test the 200 Exponential a few times and was rejected each time. This leads us to believe that a test of the 200 Simple Moving average is imminent.

Weekly 200 SMA (red) proving strong support. And 200 EMA (purple) proving resistance.

The 200 Simple Moving Average is currently sitting at the  $3250 range which has perfect confluence with:

  1. M-formation breakdown
  2. Symmetrical Triangle breakdown

Both of the patterns above have a measured move to the $3250 range as well. The big question now, however, is: 

“ Is $3250 the low of the market?

Many seem to believe that we have seen the lows. However, we strongly believe that the lows are not in just yet.

Volume....Where Art Thou?

Unlike most other cryptocurrencies, BTC has ample price cycle history to draw some clues from. One of the clues left behind is the Volume Signature during the 2014-2015 bear cycle.

Volume – while often misused – is one of the best ways to understand the overall crowd behaviour on a particular asset. Remember, we aren’t simply trading the indicators. Instead, we are trying to derive information about the mindset of the crowd.

“ Volume allows you to pinpoint the footprints left by the big market players
Eric Krown

Let’s take a look at the low of the 2014-2015. BTC saw a devastating weekly price drop of 45%. This was accompanied with volume doubled that of the preceding weeks of price action. Below is the 2015 BTC weekly chart:

Bitcoin Price Prediction January 2019 in relation to 2015

Volume indicating massive participation during the 2014-2015 bear cycle.

A closer look at the current volume profile indicates low participation. What does that mean? Essentially, we aren’t seeing the same anxious/exuberant selling & buying behaviour that we saw in 2014.  Does that mean we are looking for the exact percentage drop & volume profile repeat once more? No, absolutely not.

Volume in the current conditions showing corrective behaviour.

However, the historic data does give us an idea of the behaviour we would like to see. If we see data that indicates a certain behaviour, then we may conclude that there are signs of a bottoming. As of now, however, we are not seeing any clues that point toward a bottom being in.

Do we believe that we will blow past the bottom right away? No – these things take time. In fact, Bitcoin is showing characteristics that are very reminiscent of it’s consolidation during the $6000 region. It may very well be that Bitcoin consolidates in a very similar way before finally break the $3k region.

That being said, there is one factor that may lead Bitcoin to it’s lows quicker than anticipated – Ethereum.

Ethereum H&S - Breaking It or Faking It?

As mentioned in the previous report, Ethereum does seem to be leading the market. The event-driven rally was followed up with the much expected dump in price. Typical event-driven-market-behaviour:

  1. Event is announced weeks in advance.
  2. Price begins to rally closer to event.
  3. Sell-off begins just before the event.

And this is precisely how Ethereum’s price action has played out over the past month. It rallied closer to the event date, and then the price began to reverse. Additionally, Ethereum seems to be putting together a bearish reversal pattern that points to possible new lows as well.

Typical event-driven market behaviour: Ethereum rallies & dumps.

We typically do not like to point out a Head & Shoulders pattern prematurely – especially since it’s one of the patterns that is most often acted upon far too early. However, Ethereum has all the underpinnings of a Head & Shoulders (H&S) pattern. Eric Crown agrees with the likelihood of Ethereum forming a reversal H&S pattern as well, stating:

  1. Correct shape
  2. Correct Volume characteristics
  3. Correct Price Action characteristics.
  4. Well defined neckline.

“ However, and this is a big “however”... We do not have the break of the neckline yet.

And until the neckline is broken with Volume Confirmation, we cannot call this a fully formed H&S. For now, we can say that Ethereum has all the makings of a Head & Shoulders – but it’s missing the final element: The neckline break

Ethereum Price prediction January 2019

Ethereum shaping a H&S formation – but wait for the neckline break.

So what happens if we do get the neckline break? Well, this is where things get interesting (or scary, depending on your disposition) The measured move for this neckline break points to a price of approximately $70.

While this may surprise people, it’ll be prudent to remember the following points:

  1. Ethereum has already visited the $80 region
  2. If Bitcoin were to make new lows, it’s not far fetched to point Ethereum to new lows as well.

But again, we must emphasize that this thesis is only valid if the H&S neckline breaks. Ethereum is currently sitting at a strong support level. And If the neckline doesn’t break relatively soon, then we could possibly consider the H&S thesis invalidated

Weekly Bitcoin Price Prediction: Summary

Overall trend still remains bearish, and multiple signs point to Bitcoin visiting the $3250 region. While we do believe that Bitcoin will eventually make new lows, we don’t believe that we are likely to break the $3k region just yet. However, Ethereum is putting together a bearish reversal pattern that points Ethereum to new lows. Since Ethereum has been likely leading the market recently, we wonder if it could be the impetus for Bitcoin visiting new lows as well. That being said, all of this is predicated on Ethereum breaking it’s neckline – which it hasn’t done just yet.

Interesting times ahead of us. Interesting, indeed.

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Constantinople & Reentrancy Attack Explained

By Shawn Dexter / January 16, 2019

In this post Shawn Dexter explains why the Ethereum Constantinople Hard Fork was delayed. He states the reason for the delay and any actions you many need to take in response to the delay. Shawn also explains security vulnerability called a Reentrancy Attack and how it was also used in the DAO Attack of 2016.

Constantinople Hard Fork Delay

Unfortunately, the long-awaited Ethereum Constantinople Network Upgrade has been delayed. An auditing team discovered that the upgrade to Constantinople would introduce a security vulnerability.  Before we go over the security vulnerability, let’s quickly answer a couple of questions I’ve been getting.

What do You Need To do?

This depends on whether you’re simply an investor/trader or if you’re a miner or node operator.

  1. Do you need to do anything with your Ether?
    No – if you’re simply an investor, just sit tight. You do not have to do anything with your Trezor, Ledger, MyEthereumWallet (MEW).  So, watch out for scammers who may try to confuse you.

2.Do I need to upgrade my node?
    Yes – if you’re a miner or node operator you will have to upgrade to a new version of Geth or        Parity before approx. 4am Jan 17th GMT.

What was the Security Vulnerability in Constantinople?

Quick Answer: The security vulnerability arises from the update that introduces Cheaper Cost Of Storage [EIP1283] that we discussed in our Constantinople Simple Explanation post.

The cheaper gas costs allowed for an exploit in the Smart Contracts. This particular exploit is called a “Reentrancy Attack”.

What is being done about it?

It's already in the process of being fixed. The developers hoped that they could fix it before the network upgrade, but these things need time for proper analysis. They decided to err on the side of caution and postpone the hard fork until they fully investigate the extent of the vulnerability. 

What is a Reentrancy Attack?

I’ll give you guys a simplified explanation. A Smart Contract may communicate with an external Smart Contract by “calling it”. If the  external Smart Contract is malicious, it may be able to  take advantage of this and take over control flow of the first Smart Contract’s code.

This allows the attacker to make unexpected changes to the first Smart Contract’s code. For example, it may repeatedly withdraw Ether from the Smart Contract by “re-entering” at a particular spot in the code. (Essentially, it makes multiple invocations of the withdrawBalance() function)

ethereum reentrancy attack constantinople 2019

A Reentrancy Attack allows an attacker to take over control flow of the Smart Contract in concern.

Note: It’s important to note that this security vulnerability does not exist in the current Ethereum chain.  All Smart Contracts on the current chain are Reentrancy-Safe!

The introduction of cheaper gas costs allows for the reentrancy attacks to be viable. Since Ethereum has not made any software upgrades yet, the main Ethereum chain is not at risk in any manner. In fact, even if the upgrade to Constantinople occured, only a small number of Smart Contracts would have been vulnerable.

So – Is this a bad thing?

Yes, and no.  Yes – if you were making your investing/trading decisions solely based on this event. In a previous article we warned about how unpredictable price movement can be closer to events.

But overall this is a great thing for Ethereum – and for long term investors. Catching this security vulnerability right before the network upgrade is a gift. If Constantinople went live before  and if the security vulnerability was discovered by malicious attackers, then things could got far worse!

Let’s not forget the disaster of the 2016 DAO Attack – which was actually caused by attackers exploiting code that was vulnerable to a Reentrancy Attack!

Lest We Forget: The DAO Attack of 2016

Many of you may not be aware of the DAO Attack of 2016. Attackers used a combination of two types of Reentrancy Attacks: Single Function & Cross Function.

The attackers were able to siphon 3.6 Million Ether from the DAO Smart Contract to their own accounts. Fortunately, the Ethereum community decided to Hard Fork and restored all the funds to the original Smart Contract. However, this led to a lot of controversy and led to the infamous Ethereum and Ethereum Classic network split.

Up to today, Ethereum bears the stain of the DAO controversy – albeit fading with time. It would be a disaster if it were to happen all over again.

Overall – This Is A Good Thing

The fact that this vulnerability was detected by a third party team – ChainSecurity – speaks to the network strength that Ethereum has built over the years. Ethereum has a global development strength that made itself a powerhouse. Multiple teams across the world are working on finding improvements, flaws & vulnerabilities. These are flaws that could sink other projects if gone undetected. The Ethereum community, on the other hand, is showing its strength.

Sure, prices may take a hit for the short-term. But like I said, it could have been far worse. In the long run, this delay will be forgotten. A security breach (and possible contentious hardfork that would follow) would never be forgotten.

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Ethereum Roadmap Update [2019]: Casper & Sharding Release Date

By Shawn Dexter / January 15, 2019

In this post Shawn discusses the recent Ethereum Update in regard to their roadmap for Casper & Sharding. Casper FFG with the 1500 ETH minimum stake will be removed from the Ethereum Roadmap and replaced with Casper v2 implementing a beacon chain. Shawn also provides us with estimates for the updated Ethereum Casper release dates

Ethereum Roadmap 2019:  Updates, Changes & Release 

If it’s been awhile since you last checked the Ethereum Roadmap – then oh boy, you’re in for some surprises. A lot has changed since the beginning of 2018 and even 2019!. We've seen sudden delays, timelines  extended and priorities have shifted (rightfully so…).

The biggest one of date has been the postponing of Ethereum's Constantinople Update for 2019. However Ethereum has also unveiled a "new" roadmap called Ethereum 2.0.

The most recent Ethereum updates have a lot of people confused. I don’t blame them. Crucial updates are found buried in comment sections across various forums and news websites have been vague. It's hard to keep up. 

Ethereum Roadmap:  Updates & Delays!

The recent delays and roadmap changes have created some confusion. Several people are misunderstanding Ethereum 2.0 – and I don't really blame them.

In this post, we will clear out any confusion in regard Ethereum 2.0 roadmap update (Serenity), the Constantinople Delay, the expected ETH PoS date and any other updates on Ethereum's Serenity release.

NoteThis post has been updated as of January 17th 2019 – and a lot may change from now. In the beginning of this article we discuss the roadmap update for Ethereum – which includes the big Serenity Release. We then discuss a keystone of the roadmap & Serenity – the Constantinople update and its delay in 2019.

Further down in this article we discuss Ethereum's casper release date estimations and why the release of POS has been pushed back. 

Ethereum Roadmap: Ethereum 2.0,  Constantinople & Serenity

Ethereum 2.0

Ethereum unveiled their new roadmap and dubbed it "Ethereum 2.0". But everyone seems to be misunderstanding the concept behind Ethereum 2.0. In fact, the core team has been receiving criticism for changing their minds too often. In truth, plans haven't changed much at all – they are simply more defined.

Ethereum 2.0 won't be a single big update release. Instead, it will be a series of updates that will lead to a more efficient, faster & scalable Ethereum.

Ethereum 2.0: Solving The Trilemma

Some of the major updates that will be included in Ethereum 2.0 will be:

  1. Sharding 
  2.  Proof Of Stake & Beacon Chain
  3.  eWasm.
Ethereum Roadmap Update Ethereum 2.0 2019

Ethereum 2.0: Roadmap Update 2019

The combination of these releases will synergise with each other in order to tackle the Blockchain Trilemma problem (read my analogy: The Village Trilemma) In essence, the Blockchain Trilemma forces a blockchain to pick two of the following:  

  1. Security
  2. Decentralization 
  3.  Scalability

However, Vitalik Buterin and the rest of the Ethereum team sought to find the right balance between the three. This was no easy problem to tackle. However,  the release of Sharding, Proof Of Stake and eWasm achieves just that. Ethereum 2.0 will be a huge milestone in the Ethereum roadmap.

Constantinople: Pivotal In The Roadmap

Another pivotal and much awaited milestone on the Ethereum roadmap is the Constantinople Hard Fork.  I provide a simple breakdown of the Constantinople and its major updates in a separate post. But I'll give you guys a quick rundown over here as well.

The Ethereum team has had three major roadmap milestones laid out for them since 2016:

  • Byzantium 
  • Constantinople
  • Serenity

Each of these milestones laid the groundwork for eventually moving to Proof OF Stake (Serenity). Byzantium provided the much needed security. And Constantinople was going lay the pieces to allow the transition to Serenity (Casper V2).  Constantinople was originally supposed to include a hybrid PoW/PoS model. However, the Ethereum developers decided to scratch that idea and move forward with another plan. This led to a delay in roadmap – and Serenity (proof of stake) would have to be pushed back.

I explain the reasons for the change in plan and the delay of PoS later in this post.

Ethereum Roadmap Before Update 2018

Ethereum's Roadmap: Byzantium, Constantinople & Serenity

Constantinople plays an important role in Ethereum's transition to Ethereum 2.0. The update is going to include major improvements such as the block reward reduction, reduced transaction costs and compatibility for State Channels.

A description of Ethereum's Constantinople Roadmap Update in 2019

Constantinople was key in the Ethereum Roadmap

The hard fork was initially scheduled for for January 16th 2019 but was delayed at the last minute due to a  discovery of a security vulnerability.

Ethereum's Roadmap & Release Schedule 2019 - 2021

The Ethereum Roadmap will always be evolving. However, the major goals of achieving the right balance of scalability, security & decentralization have never changed – and will be unlikely to change in the future. Ethereum 2.0 is simply a new label to define those  goals in a clear & concise manner.

Ethereum Casper V2 – Still Part Of The Ethereum 2.0 Roadmap!

At this point, some of you may be asking:

"Wait – what happened to Ethereum's Casper?"

As can be seen from the image above, Ethereum 2.0 includes Proof Of Stake and Sharding as its major updates. Both of these updates are the two major components of Ethereum Casper V2.  So in truth, Casper V2 is  included in the Ethereum 2.0 roadmap. 

The image below shows the estimated release schedule and roadmap based on the new Ethereum Casper Updates.

Ethereum Casper Release Date Updated 2018 - Infographic & Illustration

Updated Ethereum Casper Release Dates (2019 Estimates]

As you can see, the expected dates for Ethereum PoS (test & release) is somewhere in mid 2019. The exact date for Ethereum's Casper Proof Of Stake is uncertain. If you are an ETH investor or interested in investing, I suggest you read up on the events leading up to these delays. In the next section I explain transition from the Initial Ethereum Roadmap and the Updated Ethereum Roadmap with Casper Version 2.

Ethereum PoS Date & ETH Roadmap - The Quick Read on ETH PoS

I know some of you are busy and  want a quick overview on the Ethereum Roadmap and pos date. So I wrote this section in that vein. This section will likely evolve with the updates on the Ethereum Casper release dates.

ETH holders are probably excited for the Ethereum PoS release date. The Proof of Stake update will allow them to stake their ETH and become validators on the Ethereum Network. However, the Ethereum roadmap changed since the beginning of 2018 which has caused a few delays. This pushes the new Ethereum PoS date back to mid 2019. But it's not all bad news. In fact, for most ETH holders the new ETH PoS date may be a blessing in disguise.

Ethereum PoS Date & Delay - Not All Bad News

Casper FFG has been discarded and we will be moving directly to Casper V2. This will allow ETH investors to become a validator with as little as 32 ETH. This is a huge win for a majority of ETH holders and will also keep the network decentralised.  Initially, Casper FFG would require a deposit of 1000 ETH into the Ethereum Proof Of Stake chain. And the plan was to reduce the 1000 ETH requirement when Sharding would finally be released. During this time, only large ETH investors would be able to take part in the PoS process – which leads to centralisation and lack of inclusivity.

However, they have now decided to skip a step, and build Casper on the same chain that will be used for Sharding. This called the "Beacon Chain" which will serve as the ETH PoS chain and also serve as the base layer for Sharding. I explain this in more detail over here:  Casper V2: Sharding & Beacon Chain Explained Simply.  This is the fundamental reason why the 32 ETH deposit will be feasible. 

Ethereum: The Initial Roadmap

First, let’s quickly go over what the road map was supposed to be last year. Again, I’m going to keep this simple.

As of last year, the roadmap included two major milestones: Metropolis & Serenity

Both of these milestones were efforts to move towards eventual scalability with Proof Of Stake & Sharding. 

Ethereum Roadmap Before Update  2018

Ethereum Roadmap Before Update

Metropolis was divided into two phases:

Phase 1: Byzantine
The Byzantium update would bring privacy improvements. It took place on the Ethereum chain last year.  

Phase 2: Constantinople  
PoW/PoS Hybrid (Casper FFG) and more.  Constantinople was supposed to happen earlier this year. But all priorities were shifted to rolling out Proof Of Stake & Sharding as soon as possible.

Up until June 2018, Constantinople’s Casper FFG was still in play. However, that plan is now being dropped as well – for something more clean and efficient. This brings us to the new release-date milestone on the Ethereum Roadmap for 2018:  Casper V2

Casper 2.0: The Initial Plan

The initial plan was to transition to Proof Of Stake with Casper FFG. Casper 2.0 was to be a Smart Contract that allowed you to become a validator with a deposit of 1500 ETH. The Ethereum estimated this release date to be somewhere in 2018.

Proof Of Stake was to be implemented first and the team would roll out Sharding after. There were separate deposit pools for Sharding and Casper.  

To Summarise:

  1. Casper FFG to be a Hybrid PoS and PoW chain
  2. 1500 Ether deposit required to become a validator
  3. Casper rolled out first, Sharding rolled out after

​​​​Casper 2.1: The Confusion over the Releases

Due to some misleading posts and misunderstood comments, several people are confused. These are the two primary impressions that people have in regard to the Casper update:

  1. Casper and Sharding will be combined and launched together.
  2. Sharding will now be prioritized over Proof Of Stake

This is not true at all. And it’s important that expectations are set right.

Casper 2.1: The Real Roadmap

The plan for Casper FFG requiring 1500 ETH deposits will be scrapped.  Casper V2 will be implementing a “beacon chain” – onto which Casper and Sharding will be merged (here is where people get confused).

This does not mean that Casper and Sharding will be launched on the beacon chain together. It simply means that Casper and Sharding will be implemented on the same chain.  So, Casper could come first, and Sharding be implemented much later. Or vice-versa. 

Ethereum Roadmap Casper FFG vs Casper V2 Ethereum Update

Casper FFG vs Casper V2 Ethereum Update

So to summarise:

  1. A Beacon Chain that will be used for both: Casper & PoS validators

  2. Sharding and Casper will be worked on concurrently – they are independent efforts

  3. Only 32 Ether minimum staking deposits

The beacon chain was originally supposed to be used only for the Sharding implementation.

An Analogy For The Casper V2 Update 

The Casper V2 Ethereum Update has been confusing a lot of people. I don’t blame you guys – the information has been all over the place. But maybe this analogy will help:

Think of the Casper and Sharding as two cars going to a family picnic. To get there, both cars have to merge onto Highway 10. We’re not sure which car will merge on first. We simply know that:

  1. Both cars are headed there (Casper and Sharding are the two cars)
  2. Both need the Highway to get there efficiently (Beacon chain)
  3. Everyone needs to eventually get to the family picnic (scalability)

Similarly, Casper and Sharding are two independent projects – either could be completed first.This unified approach will allow for a minimum staking requirement of 32 ETH deposits.

Casper will most likely be launched first, but we can’t rule out the possibility of Sharding going faster.

Ethereum 2.0 & Casper Release Date:  Conclusion & Summary

Ethereum's release date for Casper FFG was scheduled for 2018. However, the new version of Casper will have a release date somewhere in 2019-2021. Yes, the rather timeline for release is vague, but there's good reason for that. Let's recap quickly:

PoS Release Date Delay: FFG was Scrapped

As mentioned, the initial plan was to roll out Casper FFG as a hybrid PoS/PoW. Casper FFG would have Proof of Stake (PoS) but would not have Sharding. With the PoS release, Validators would be allowed to deposit ETH in order to stake. However, they would require to 1500 ETH in order to participate in the PoS consensus. This wasn't ideal because it would entail a lot of centralisation.

Ethereum Casper Release Date Updated 2018 - Infographic & Illustration

Updated Ethereum Casper Release Dates (2018 Estimates]

In 2018,  the need for scaling became increasingly urgent. The Ethereum team shifted all focus to the key releases that would move the needle toward scalability; namely, the PoS release and Sharding release.  Casper FFG was to be the first PoS release, but would still use the PoW chain. This release date was estimated to be somewhere in 2018. The team was to release Sharding after PoS.

Ethereum Shifted Focus to Releasing Casper & Sharding ASAP

Casper FFG allow Ethereum to release a PoS quicker. However, it would entail "double work". Since Ethereum would have to eventually release/migrate to a pure PoS chain. Because of this, they decided to scrap working on Casper FFG. They will now be working toward releasing Casper V2 – which will have PoS on the beacon chain as well. Since Sharding will be implemented on the beacon chain as well, it allows Ethereum to have a unified approach for their releases.

Unfortunately, this  pushes back the release date for Ethereum Casper V2 to around 2019-2020. Sharding will be released on the same beacon chain that will be used by the PoS release. This does not imply that Casper and PoS are coming together.  I would estimate it's release date to be in 2021. But there's a possibility that it may beat the PoS to the release finish-line. 

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Bitcoin Price Prediction & Update 2019

DisclaimerThis ideas presented in this article should not be taken for investment advice, and are simply the views and opinions of the author

Bitcoin Price Prediction 2019 Market Weekly

This report will be the first of the weekly collaborations between Eric Crown & MangoResearch. Eric is, by far, one of the few technical traders in the space that really knows what he’s doing. He has over 10 years of experience trading traditional markets and market-making for equities. 
What we like about Eric the most is that he doesn’t simply trade technicals – he trades the crowd psychology & behaviour derived from the technicals. We’re excited about this collaboration and will hope you enjoy & learn as much as I have from Eric.

Ethereum Leading The Way

Over the past month Ethereum saw a massive rally of nearly a 100% gain. But as we drew closer to the Constantinople upgrade, Ethereum price momentum began to show signs of exhaustion. This is typical event-psychology-behaviour:

  1. Event is announced weeks in advance.

  2. Price begins to rally closer to event.

  3. Sell-off begins just before the event.

We discussed this move & its similarities to the BCH in a previous post. We mentioned how Ethereum’s event-driven rally may have propped up the market, and how it may similarly lead the market back down after a full retrace.

After breaking down from the top, Ethereum began to form a perfect descending triangle. We discussed this as it was playing out in Krown’s Discord Channel. A bearish formation in a macro-bearish trend is very likely to play out to the downside. And it looks like it did.

Now, the question is – will it do a partial retrace or a full retrace? Ethereum is currently sitting at a key Fibonacci level 116.  This level is more likely to be supported for now. But a bounce from here may lead to an ugly H&S formation.

Bitcoins Reaction: Pointing to a Retrace to $3200

Bitcoin rallied to a local-high of around $4100 level. it was here when far too many people began to call an “inverted Head & shoulders” pattern. Krown, however, vehemently disagree citing the following reasons:

  1. Volume characteristics were wrong
  2. Descending neck line
  3. Overall shape wrong

Krown cautioned against playing this move early, and warned that it could be a trap.

The Golden Cross Feint 

As the price flirted with the $4100 region, the 50 EMA and the 200 EMA began to draw close on the 4hr charts.  When the 50 EMA crosses over the 200 EMA, it is considered very bullish and is referred to as the Golden Cross.

A Golden Cross is usually followed with upward/ bullish price action.  The move playing out would have had perfect synergy with the “inverse head & shoulders”.

However, as price action unfolded on the cusp of the golden cross, BTC witnessed heavy sell pressure. This quick turn to the downside prevented the golden cross from playing out, and instead resulted in a 50 - 200EMA “Kiss”. A clear depiction of the “Kiss” is presented in the image below

Krown had  something pretty profound to say about this:
“The massive dump told you something by NOT telling you something”

When you have heavy selling coming in to avert a bullish move, you know that the big players/bots are still on the sell-side of the market. This further confirmed that the Inverse H&S was more of a trap than an actual formation. With the rejection of the Golden Cross, Bitcoin seemed to follow Ethereum’s lead and swiftly retreated to $3600.

BTC Now Pointing To $3250

The heavy sell-off on BTC led to a clean break of the larger Symmetrical Triangle.  Symmetrical Triangles usually could break either way Why? Because it indicates that while sellers are stepping in at lower and lower prices – buyers are also stepping in at higher and higher prices.

However, since the overall trend is still bearish, we lean toward the downside – but always wait for confirmation of the break! The move to $3600 broke downward on the symmetrical triangle with high volume. This was a clear confirmation.

As can be seen above, the Symmetrical Triangle broke to the downside. The measured move for this symmetrical triangle points toward $3250 – which is really interesting. Why? Because there are a couple of key indicators that are currently showing strong confluence with the $3250.

Lets go over them:

3 Day: “M Stands For Murder!”

Patterns and Moving Averages on higher time frames have a much higher likelihood of playing out and being respected.  The three-day chart is indicating a double top or “M” formation. And as Krown likes to say: “M” stands for Murder! Bitcoin breaking through the $3600 region also coincides with the break of the neckline of the M-formation.

The target for this is typically the length between the neck and the top. Interestingly, this points to a move downward to around $3250 – which has confluence with the measured move of the symmetrical triangle.

Weekly 200 Simple Moving Average

The 200 Simple Moving Average (SMA)  on the weekly time frame has proved itself as strong resistance. The 200 SMA plays a key role in most time frames, but even more so on higher time frames like the weekly.

On Bitcoin’s last drive down, the 200 SMA stopped it in its tracks at around $3150.  The 200 MA is now sitting at the $3260 region. Will we be seeing a retest of this moving average? Overall trend does seem down.

It’s interesting to note that Bitcoin has never closed a weekly candle below the 200 Simple Moving Average. (This doesn’t mean that it won’t happen in the future. It simply means that it’s a key level to watch for a potential bounce. Remember, there’s a first time for everything.)

Pay Heed To Resistance

While we've presented a case of a measured move playing into the $3200s level, it must be noted that price action towards $3200 level may take time to play out, and is likely to encounter resistance on the way. 

As things stand, BTC price hovers around the 0.618 Fibonacci level at $3520, followed by 0.786 Fibonacci level at $3350. Hence, while the trend remains bearish, it'd be prudent to prepare for resistance on the way.

Quick Update: As price action unfolded last night, it turns out BTC met with resistance at the 0.618 Fibb level. Lets wait and watch for what happens next.

Overall Picture - Still Bearish

The trend is your friend until the end of the trend – and currently, the trend is down!

So how do we know when the trend is changing? Well, before we change our stance, we will be looking at a few key indicators to flag green:

  1. Make Higher High's on the daily chart
    So far Bitcoin has consistently been making lower highs on it’s daily chart. This is a strong indication that the trend is still down. This will be the first sign.

2. Open and Close a weekly candle above 200 EMA

Ever since we closed a week under the 200 Exponential Moving Average, we have not been able to break above it. We’ve tested it, but always closed the candle underneath it. Until we close a candle above the 200 EMA, we will stay bearish on the market.

A break above that level will have us reconsidering and looking small opportunities to the upside.

3. A break above the Ichimoku Cloud and/or Cloud Turning Green on 1Day

The Ichimoku Cloud is one of the easiest ways to get a birds eye view of the current trend. If the cloud is red, the trend is down. If the cloud is green, the trend is up.  If the price is under the cloud, trend is down – and vice versa.

Currently, the top of the cloud is sitting at around $5000 to $5200 range.  A break above that range will show a strong indication of trend reversal.

4. A break above the $6000 level!
Finally, a breaking above the $6000 level will confirm that the trend is no longer downward. We will be overall bullish on the market and will look for opportunities accordingly.

Have We Seen Our Lows?

While many people may disagree, we strongly believe that Bitcoin has not seen it’s low yet. There are multiple signals that usually indicate that a floor price has been made:

  1. High Volume Buying
  2. Volatility Index
  3. NVT Signal

None of these signals are flashing on – which makes us lean to newer lows. We will discuss these in greater detail in the next report. But at the moment for Bitcoin our eyes are on some key levels of support:

  1. $2450  zone
  2. $1900 zone

When will this happen? Well, time-analysis can be tricky. These things can take time to play out. It could take weeks, or months… or it may never happen. Remember, we need to first break the $3250 zone which is being supported by the weekly 200 SMA.

Bitcoin Price Prediction: Summary

Predicting price is impossible. We can only discuss what is more "probable". All it takes is one player to change everything. However, as things stand, Bitcoin looks like it wants to eventually trace back to the $3250 level. But since Ethereum is leading the way at the moment, we are expecting the Ethereum bounce to prop up Bitcoin as well.​​

Ethereum Price Prediction: Summary

As for Ethereum, the event-driven nature of the price action makes it rather unpredictable. It is currently sitting at a key support level of $116. And we expect a bounce here. But we also wouldn’t be surprised if it gave up all of it’s gains over the past month and revisits the $90 region.

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Ethereum Difficulty Bomb Explained Simply 2019

By Shawn Dexter / January 13, 2019

Ethereum's Difficulty Bomb is often misunderstood. Most explanations are convoluted and technical. This post is a simple & quick explanation of what is the Ethereum Difficulty Bomb. Shawn also explains it's relation to the block reward reduction in Ethereum and the Constantinople update!

What Is The Ethereum Difficulty Bomb?

With Ethereum's Constantinople update coming up on  January 16th 2019, there have been an increasing number of questions regarding Ethereum's "Difficulty Bomb".  Most other explanations out there are either far too complex are simply wrong.  In this post I will give you guys a simple and clear explanation of what Ethereum's Difficulty Bomb really is and why it was put in place.

Ethereum Difficulty Bomb: The Simple Explanation

The Ethereum Difficulty Bomb simply refers to a tool within Ethereum. This tool allows the core Ethereum developers to adjust how difficulty it is for a miner to win a reward. ​Miners win rewards each time they create a new block and add it to the blockchain.  

When the Ethereum Difficulty Bomb is set to "detonate", it will get exponentially difficult for miners to win rewards via mining. But why would the developers want this? Because eventually they will want miners to stop mining and start validating. Remember, Ethereum is set to transition from Proof of Work to Proof of Stake. There is no mining in Proof Of Stake. We will have validators instead.

Ethereum Difficulty Bomb: A Dis-Incentive For Miners

Even though Ethereum may switch to the Proof of Stake chain, the miners may  continue mining on the Proof Of Work chain if not properly incentivised. In order to avoid security issues (like a fork), the developers wanted to give the miners a little "nudge" to switch to Proof Of Stake. The Ethereum's Difficulty Bomb would reduce their rewards on the Proof Of Work chain, and thus incentivise them to switch to the Proof Of Stake Chain.

Why Was The Ethereum Difficulty Bomb Delayed

​Unfortunately, there was a delay in the upgrade to Proof Of Stake. And the entire point of the Difficulty Bomb was to incentivise miners to switch to Proof of Stake. So the Ethereum team decided to delay the difficulty bomb until Casper was ready.

ethereum-difficulty-bomb

Ethereum Difficulty Bomb Reduces Block Reward

Ethereum Inflation Rate & Difficulty Bomb

The delay, however, did not sit well with long term investors. Long term investors were looking forward to the difficulty bomb (and Proof of Stake). Why? Because lower Block Rewards would mean a lower Inflation Rate. This was going to be a very bullish update for long-term investors. Since people Difficulty Bomb was delayed, the Ethereum team decided to add a Block Reward Reduction to the Ethereum's Constantinople network upgrade!

Follow Up Reads:
Ethereum's Issuance & Inflation Rate Explained

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Ethereum Price Update 2019

By Shawn Dexter / January 12, 2019

In this post Shawn provides us a brief overview on the Ethereum Price Update for the beginning of 2019. He discusses Ethereum's rally and the sell off that ensued.

DISCLAIMER​: This ideas presented in this article should not be taken for investment advice, and are simply the views and opinions of the author 

Ethereum Price Rallies

The final quarter of 2018 was looking pretty grim for Ethereum. Between early September and mid December the price of Ether saw a decline from $280 to as low as $80.  Suddenly, however, Ethereum seem to have found new vigor and the price recovered to $160. This instilled a lot of new hope (and fomo?) in several people.

But just when price action took a turn for the better, Ether took another lurch downward back to $120. A lot of people who got bullish at the $150-$160 area saw staggering losses. The question is… Could this have been foreseen?

Perhaps.  There were a few red flags right from the beginning. In this weeks Ethereum Price Update we’ll go over some of the signs that pointed toward this move potentially playing out.

Ethereum’s Similarities to BCH

On November 14th 2018, Bitcoin Cash was to undergo a hard fork – a big event in the crypto world. Two weeks prior to the event, Bitcoin Cash began to rally. The price surged upward from around $410 to $630.  However, seven days before the actual date of the event – the price began to decline. And it do so rapidly! In the next seven days leading up to the event, Bitcoin Cash dropped all the way back down to $410. It literally gave back all it’s gains.

Ethereum, so far, seems to be following the same story line. Ethereum’s hard fork - Constantinople - is scheduled   Jan 16th, 2019. This hard fork has been long awaited by the community since it delivers the Block Reward Reduction that everyone wanted.

After seeing a decline from $280 to $80, Ethereum began to rally around December 15th (almost a month prior to the fork).  The price rallied all the way up to $160 and instilled excitement in the entire crypto community. Ethereum was leading the market, and the other coins (Bitcoin included) seemed to have been following suit.

But in an almost “deja-vu” sorta way, Ethereum lurched downward exactly one week before it’s long-awaited hard fork. Within a day the price of Ether declined from $150 to $120.

Apples to Apples: Events to Events

Now, a lot of people are going to say “No!  the Bitcoin Cash fork was contentious! The Ethereum fork is a bullish update!”

The truth is that it doesn’t matter what the event actually was. All that matters is the crowd-psychology and the emotions people go through leading up to the event. For example, these are a couple of possible mindsets:

Bitcoin Cash Fork:  “Omg, this is my chance to get free coins! I’ll buy and sell right after the fork”

Ethereum Fork: “Omg, this update is so bullish. I’ll buy before the update and sell when things get crazy!”

In both situations, ‘investors’ are being baited to buy the top – and then inevitably get dumped on.

Ethereum’s Retracement

Remember, BCH gave back 100% of what it gained in the seven days leading up to the fork. Now the question is: Will Ethereum also undergo the same retracement that BCH did?

Perhaps. It’s key to note, however, that the BCH rally spanned only one week. The Ethereum rally, on the other hand, spanned almost a month. Usually, these things come down as fast as they went up. So Ethereum may take a bit longer to see the same retracement.

  Things come down as fast as they went up!

That being said – all it takes is one big player to change things.  A big player with a large enough sell order can cause a quick retracement to the downside. Similarly, another big player with a large enough buy order can cause a real market turn around to the upside.

Yeah, I get it - this is probably not helpful. But this a probability game – and nothing is for certain. If you’re trading (or ‘investing’) in this market, you need to come to terms with that.

However, if you’re thinking about being a buyer at these prices there’s one more thing I’d like to discuss.

The Impetus to the Big Dump at 6k

Bitcoin was sitting around it’s major $6000 support at the time of the BCH fork event. Leading up to the event, bitcoin saw itself rally to $6500. Again, this instilled a lot of hope in the market. But the Bitcoin Cash dump seemed to have led the way for the rest of the market as well. Bitcoin was rejected at $6500, and went on to break the key $6000 level that it was being supported at for a long time.

The Bitcoin Cash fork & dump seemed to have been the impetus for the major 6k break. Today the major level everyone is eyeing is the $3000-$3200 region.

Will the Ethereum fork prove to be next impetus for the major break? It will be interesting to see how things play out .

Until then, just remember: The Trend Is Your Friend. Going against the trend is like trying skiing uphill. Protect yourself.

(None of this is financial advice.)

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Ethereum Update 2019: Constantinople Hard Fork

Introduction

In a previous post we discussed the Ethereum Roadmap for the coming year. One of the key milestones on the roadmap update was the Constantinople hard fork. Constantinople was initially scheduled for 2018. However, due to inevitable software development delays, Constantinople was pushed to early 2019. That being said, the wait has definitely been worth it.

Ethereum Roadmap 2019

Ethereum Roadmap: Byzantium, Constantinople, Serenity

Constantinople has been much awaited by the community primarily because of the Block Reward reduction. The Block Reward reduction effectively reduces the inflation rate of Ethereum. I explain how in a simply post here: Ethereum Inflation Rate & Difficulty Bomb  However, aside from the Block Reward reduction, there are few other exciting improvement updates in Constantinople which is scheduled for Jan 16th 2019.

In this post I will explain these updates simply and briefly! 🙂

Ethereum Constantinople: What Is It?

So what exactly is Constantinople? Is it a Hard fork? If so, will you be getting two coins? (like all the other hard fork fiascos?)  Yes, Constantinople is a Hard fork - but you won’t be getting two coins. Unlike the other fiascos, this isn’t a “contentious” fork. To understand this, let’s go over a couple of terms quickly & simply:

What is a “Hard Fork”?

A “fork” is simply when the blockchain undergoes a software update. The fork may require all participants (primarily nodes & miners) to update their software to be part of the same network. This is because the software update is not compatible with the older version. This is called a “hard fork”

What is a “Contentious Fork”?

A contentious fork is when participants do not agree with software updates. In this case, they may choose to either stay with the old software or implement their own updates. Essentially, they choose to go their own way because they don’t agree with the direction of the core team (yay, democracy!)  This causes a “fork” in the original chain, and two new chains will begin to exist independent of each other.

Constantinople: Not A Contentious Fork

Fortunately, Constantinople is not a contentious fork. Everyone (for the most part) is on the same page with the proposed software updates on the Ethereum Blockchain. So what are the updates? In the next section I will provide a simple overview of the Ethereum Constantinople 2019 Hard fork!

Constantinople:  A Quick Overview

The Ethereum Constantinople 2019 hard fork marks an important milestone in Ethereum’s transition from Proof of Work to Proof Of Stake (Casper).

As mentioned in the previous section, the Constantinople hard fork is simply a software update. The software update will have improvements that have been accepted by the community. These improvements were proposed ahead of time and are simply called “Ethereum Improvement Proposals” (EIP).  There are five of these Ethereum Improvement Proposals that will be included in the Constantinople Update for Jan 16th 2019.

Ethereum Constantinople Update 2019

Ethereum Constantinople: EIP1234, EIP145, EIP1052, EIP1014, EIP1283

Performance Improvements:

  1. Block Reward Reduction ← A BIG ONE!

  2. Cheaper Smart Contract Execution

  3. Increased Efficiency on Verification of External Smart Contracts

  4. State Channels!

  5. Storage Cost Improvements

[EIP 1234] Block Reward Reduction: “The Thirdening”

This is the big one that everyone was waiting for all of 2018. The update falls under the EIP1234 proposal and will have two major changes:

  1. Block Reward Reduction
  2. Delaying The Difficulty Bomb

I explain both of these in more detail (with simple analogies) in this post, but I’ll go over them quickly here as well.

Ethereum-inflation-rate

Block Reward Reduction: Constantinople will officially mark the reduction of the rewards issued to miners from 3 ether to 2 ether. This effectively reduces miner rewards by ⅓  and is often referred to as “The Thirdening“. This reduction in Block Rewards will significantly reduce the inflation rate of Ethereum.

Ethereum Inflation Rate Definition (Quick'n'Dirty)
 The speed at which each Ether loses it's purchasing power/value.

Difficulty Bomb:  Miners are issued rewards each time they successfully add a new block onto the chain. The Difficulty Bomb is a tool within the EVM that the developers can use to adjust how difficult it is for the miners to do this.  If the bomb “detonates”, it will get exponentially harder everyday for miners to find blocks. This was put in place to incentivise miners to transition from the Proof Of Work Chain to the Proof Of Stake Chain.

So why delay? Well, two reasons:

  1. Ethereum is not moving to Casper just yet - so there’s no reason to incentivise the miners to stop mining here just yet.

  2. The inflation rate has already been reduced by decreasing the issuance rate.

[EIP145] Cheaper Smart Contract Execution: 

Constantinople will include the EIP145 proposal which will introduce “Shifting operators” to the Ethereum Virtual Machine. Put simply, this will allow Smart Contracts to initiate certain instructions for only 3 GAS compared to the 35 GAS it would have costed without the Shifting Operators.

This is a drastic reduction in the cost of these operations and contributes to Ethereum’s efficiency improvements.

[EIP1052] Increased Efficiency on Verification of External Smart Contracts

This is another key efficiency improvement in the 2019 Constantinople update. Smart Contracts often need to perform verification checks on other Smart Contracts. Currently this is done by copying the bytecode of the external Smart Contract and then performing the needed verification. However, this can unnecessarily expensive when dealing with large Smart Contracts.  EIP 1052 tackles this problem by introducing a new function that will allow the Smart Contract to pull a hash of the bytecode instead.  This will make verifications far more efficient.

[EIP1014] State Channels!

The Ethereum Constantinople 2019 Update will also include a keystone update for State Channels in Ethereum. EIP 1014 will allow interactions be made with addresses on the main chain that don’t exist yet .  This may sound confusing but is a key milestone for the implementation of State Channels. The goal of State Channels is to have as little load on the main chain as possible while still remaining secure. Unnecessary calculations and processes will take place off chain – thereby increasing the efficiency of the main Ethereum chain.

[EIP1283] Cheaper Cost Of Storage

Constantinople will also include an update that will reduce the storage costs in Ethereum. EIP 1283  proposes a change to how gas is charged for EVM storage operations. The primary initiative of this proposal is to reduce excessive gas costs where unwarranted. And to enable new use-cases for contract storage.

With this, transactions that are making multiple updates to the same storage slot will cost significantly less!

Ethereum Constantinople Update 2019: Conclusion

Ethereum’s soon approaching Constantinople hard fork, while significant, is still only a piece of the larger puzzle that is Serenity – Ethereum’s transition to Proof of Stake. 

Ethereum Casper Release Date Updated 2018 - Infographic & Illustration

Updated Ethereum Casper Release Dates (2018 Estimates]

While Constantinople brings about a reduction in miner block rewards (EIP 1234), it must be noted that the hard fork is not a Contentious Fork.  All 5 EIPs within Constantinople gained majority approval across the Ethereum community as a whole, thus will not result in two coins after the hard fork on January 16, 2019.

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The Animal Spirits in Crypto – Irrational Exuberance & Crypto Bubbles

By Shawn Dexter / October 28, 2018

Three times.

Three times this week I was asked the following question:

“Why are the prices still low when the fundamentals seem so strong?”

Fortunately, there’s a two-worded answer:  Animal Spirits 

It’s not a simple answer – not by a long shot. But it is, indeed, a short answer that encompasses the intricacies of greed, fear and human behaviour.

To understand this, let’s first question if prices are really low? Or are we simply benchmarking prices at their all time high  –  prices that were guided by the animal spirits of crypto investors.

John Maynard Keynes, a famous economist, used the term “Animal Spirits” to describe the irrational decisions investors make in an uncertain environment.

But today the phrase “Animal Spirits” seems to be used primarily in environments of high confidence.  Confidence & optimism, however, aren’t the only byproducts of Animal Spirits. Fear & pessimism play an equal share in the phenomenon.

Irrational Exuberrance. Irrational Anxiety

Should it not then make sense that irrational confidence be followed by equally irrational fear? Optimism that drove prices to exuberant highs should follow with a similar anxiety that would drive prices to irrational lows. For if it does not follow, eventually at least, then perhaps the optimism was not irrational after all. In a way, this explains the driving mechanism of “bubbles” (and also why it’s claimed impossible to forecast)

Nobel Laureate winner Robert Shiller defines a ‘speculative bubble’ in his book ‘Irrational Exuberance’ as follows:

 I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, and, in the process, amplifies stories that might justify the price increase…”

Shiller akins a bubble to that of an epidemic virus – something that can “catch” and get out of control very easily. Similar to their virus counterparts, speculative epidemics can result in massive losses when culminated with doubt, fear and anxiety.

But the key question here is: Are we already past the irrational anxiety?  Or is it yet to play out?

Recurrence of Epidemics . Reflating of Bubbles.

Interestingly, Robert Shiller makes sure to emphasise that “speculative bubbles” don’t simply burst and disappear. Rather, they tend to inflate and deflate in accordance to the accepted narrative.

A viral epidemic can reappear if a new environmental factor reignites the contagion rate.

Similarly, a deflated speculative bubble can “re-inflate” if a new narrative is strong enough to ignite the animal spirits of investors.

Ah, but this poses yet another tricky question for the crypto space.  Have we already “re-inflated”? After all, prices did surge to an all-time-high of $1000 before deflating to $200.

Have we already re-inflated?!

Is it possible that we see another epidemic spark the animal spirits to a point irrational confidence?

A Great Time To Be Alive

A strong argument can be made in favour of another speculative bubble – a larger one. In his definition of a “speculative bubble”, Shiller goes on to explain what follows the price increase in a speculative bubble:

...The price increase brings in a larger and larger class of investors, who, despite doubts about the real value of the investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement”

The crypto market allowed for a new class of investors to be first entrants. They consisted mostly of people who were young & technologically sophisticated. But they were by no means the “large class of investors”. Those are yet to come in mass.

Already we hear  reports of new & larger entrants into the market. Will their success draw the envy of other institutions? And will that, in turn, lead to an environment of overconfident gambling and exuberance that we have seen in the past?

Only time will tell. But one thing is certain, never before have we seen events play out at this rapid of a pace. Ahh, what a time to be alive.

Related Readings:


The Myth Of The Rational Market - A history of risk, reward & delusion by Justin Fox

Irrational Exuberance by Robert J Shiller

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Radix Coin – Relatively Stable, Infinitely Scalable

In this post Shawn breaks down the Radix Coin (RDX) as a stable and scalable cryptocurrency. He discusses Radixs' novel economic approach to solving the pain point of crypto price stability for consumers and businesses.

Radix Coin – An Intensively Scalable & Stable CryptoCurrency

Radix DLT is beginning to garner increasing attention in the crypto-space. Radix rose from an obscure and exotic "coin" in 2017 to one of the most discussed technologies in 2018. Every week, I receive several questions on Radix’s Scalability & Sharding or on their Tempo Consensus Method.  But one of the more common questions goes something like this:

"Hey, what are your thoughts on the Radix Coin ? "

It recently dawned upon me that while I’ve discussed Radix’s infrastructure, I haven’t really delved into the “Radix Coin”.  While Radix does indeed sport a crypto coin, it is so much more than that. Radix DLT is a fully fledged distributed ledger technology platform. The platform will feature decentralised applications, mass scalability, and of course, the Radix Coin as well – 'RDX'.

In this post, however, we focus our discussion on the Radix Coin (RDX) and its purpose in revolutionizing the digital economy. If you’re interested in the Radix  DLT Infrastructure – mainly its Consensus and Sharding approach, then you can read the following introductory & simple explanations:

The following sections will discuss how the Radix Coin will serve and benefit from the Radix DLT infrastructure.

Radix (RDX) As A Stable Coin

The Radix Coin will be the token used on the Radix DLT platform to fuel various operations. However, the coin and the platform have special features that make the dynamic rather interesting. The Radix coin will be a relatively stable coin. Notice the word "relatively" – this is key. Several people mistaken the Radix Coin to be a stable coin. This can lead to confusion – especially for interested investors. 

Radix DLT designed the RDX token so as to have low-volatility. In that vein, the Radix Coin will initially be pegged against the US Dollar where 1 Radix Coin will be equivalent to $1 USD. However, after a certain period, the price of the Radix coin will float free.  Low-volatility and relative stability will be maintained by increasing the supply of the coins. 

“Wait, what the… what do you mean by ‘increasing’ supply of the coins? “

Don’t worry – we’re not talking about ‘Supply inflation’ here. Radix DLT will be using an algorithmic model that will monitor demand and accordingly increase as well as decrease the total supply of the Radix Coin at regular periods. The low volatility of the Radix Coin will help facilitate mass adoption. And the flexible supply should satisfy investor needs as well.

In the following sections, we will discuss how investors and merchants both benefit from this flexible supply system.

Radix Coin for Investors - Should Investors Worry?

Upon first hearing “stable coin”, cryptocurrency investors are immediately skeptical. After all, why invest in something if it’s going to be stable in value? This is an understandable concern since we’re conditioned to the volatility of cryptocurrencies. The Radix Coin, however, functions sort of like a Bond with a variable interest rate.  The value of each Radix Coin may not rise and fall substantially. But the investor will receive more RDX at regular intervals which should increase his total amount of RDX.

For example, let’s say John has  2000 RDX. At the time, each RDX is valued at around $1.10.

  • No. of RDX: 2000   
  • Value of each RDX:  $1.10
  • Total Value: $2200

In the coming months/years, the demand for the Radix Coin skyrockets! Now, each of John’s RDX will not increase drastically in value. Instead, the total number of RDX he has will increase.  His total Radix Coins will increase to 6000 RDX and each RDX will be worth $1.15 (Remember – the Radix Coin will be relatively stable.)

  • No. of RDX: 6000  
  • Value of each RDX:  $1.15
  • Total Value: $6900

Note: This is just an example – as details on the calculations have yet to be released.

On the flip side – if the demand for the Radix Coin reduces, the platform has mechanisms in place that will perform a token-burn process to reduce the total supply of the Radix Coin. Again, details on how this process is yet to be revealed. We will all have to wait for the economic white paper that should be released closer to their mainnet launch.

However, we can rest assured that investors don’t have to worry about their investments being “stale”.

Radix Coin for Mass Adoption

Relative Price Stability

One of the biggest reasons the Radix Coin features relative stability is to facilitate mass adoption. Without stability, mass adoption across the world will be near impossible.

As things stand, the general public find it troublesome to hold cryptocurrencies for anything other than a speculative investment. You may hear increasingly more reports of merchants accepting cryptocurrencies as a form of payment. However, most of these merchants are immediately converting their cryptocurrency back into regular FIAT.  Why? Well, simply because merchants need to be able to rely on their revenue holding value in the months that follow. Cryptocurrencies are far too volatile to offer the level of reliability that merchants need in order to run an efficient and sustaining business.

Similarly, regular consumers will only hold a fraction of their purchasing power in cryptocurrencies for similar reasons. With the current state of the market, it’s a serious gamble to rely solely on your holdings of cryptocurrencies to pay your rent or mortgage. The Radix coin will safeguard against violent price swings using an elastic-supply. This will allow merchants and consumers to hold their Radix Coins with reduced risk.

Decentralized Transaction Scalability

Scalability has been one of the biggest limitations of current blockchain solutions. Most DLT consensus models have to make the tradeoff between throughput and decentralization. Radix, however, achieves high throughput, security and decentralization using a unique approach to Sharding along with their Consensus Method – Tempo .   The Radix DLT platform ensures that every single device can be part of the network and use the Radix Coin to transact with high speed across the globe.

Radix Coin - Conclusion

With "Stable Coins", like the Radix Coin, being the latest talk of the town, its no surprise that investors and enthusiasts alike are blazing with questions on how to seize opportunity on this relatively new crypto class.

The concept of price stability around the radix coin will be primarily based on elastic supply. Depending on the demand of RDX, there will either be a coin issuance to each RDX holder, or a coin burn. While much of the economic structure behind the Radix coin is yet to be unveiled, their scaling solution - Radix Sharding & Tempo Consensus – has been fully implemented and tested. 

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Ethereum Casper V2: Beacon Chain & Sharding Explained Simply

In this post Shawn breaks down the Ethereum Casper V2 update. He discusses ethereum's transition to Proof of Stake, and how beacon chain fits into ethereum sharding.

Casper V2: Beacon Chain , PoS , Sharding

There’s been a great deal of confusion in regard to Ethereum’s new approach to Casper. Part of the confusion stems from the updated timeline for Ethereum’s PoS (proof of stake). And the other part of the confusion stems from this new “Beacon Chain” thingy.  Yes, I said ‘thingy’.

So, in this post I’m going to try to break things down in an easy manner for you guys. What exactly is the Beacon chain? And what role does it play in Proof Of Stake and Sharding

As usual, I’ll keep it simple – and avoid the unnecessary details.

Ethereum: The Initial Roadmap

Before we go any further, allow me to break down the structure of Ethereum’s Casper V2.  There will be three chains that we are concerned with:

  1. The Ethereum PoW Chain
  2. The Beacon Chain
  3. The Sharding Chain(s).

All three of which will be linked together in Casper V2.

Ethereum Casper: 3 Types of Chains

Ethereum PoW Chain

This is the chain that Ethereum is currently using. It’s using the traditional Proof Of Work (PoW) consensus method. In Ethereum’s Proof Of Work chain, miners currently validate blocks by running the PoW Cryptographic Puzzle.

However, Ethereum will be using Proof Of Stake in Casper. Miners will have to transition to the Proof of Stake chain if they want to keep validating blocks for the Ethereum Network.  To do so, they will have to deposit 32 Ether into the Beacon Chain. Once they do that, they will become Validators on the Beacon Chain.

Important:  Miners are not the only ones who can become validators. Anyone can deposit 32 Ether from the Ethereum PoW Chain to the Beacon chain to become a validator

Ethereum Casper: PoW to PoS

The Beacon Chain

Alright, so the Beacon Chain is where all the confusion stems from. But it’s actually quite simple. The Beacon Chain serves two primary roles

  1. The main Proof Of Stake chain

  2. The base layer of the Sharding solution


  3. To Simplify: The Beacon Chain will link to the Shard Chains and “signal” which blocks from the Shards should be added onto the main chain. The main chain will be validated & finalized using Proof Of Stake. The main chain also resides on the Beacon Chain. The Beacon Chain will also play a crucial role with the Shard Chains. It links up to the Shard Chains to listen for blocks that will be included onto the beacon chain (the PoS chain).

The Sharding Chain(s)

Yes, there are going to be multiple Shard Chains. Remember, Sharding is an attempt to avoid having “every single node validate every single transaction”. This will allow for more scalability.  In order to do so, instead of having one single chain, we will have multiple shard chains. I explain Sharding in more detail in this article: Ethereum Sharding Explained Using An Analogy.

Essentially, you can think of the Shard Chain as a group/block of multiple chains. All the transactions will take place on these Shard Chains – and will be split between each shard.  The account data will also be stored on these shard chains.

Above, I mentioned the Beacon Chain links up to a Shard. Well, there’s also a link from the Shards to the Beacon chain. This link needs to be attested/signed-off by a sub-group of Validators that will be pseudo-randomly picked.

Ethereum Casper: PoW to PoS

Ethereum Casper: Validators vs Miners

Casper will be using Proof Of Stake which does not require “mining” to validate blocks. If a miner wants to continue validating blocks on Casper, he will have to deposit 32 Ether into the Beacon Chain like everybody else.

Once 32 Ether is deposited, the person will go into the “Queued Validator” pool and eventually get added to the “Active Validator” pool. Active Validators will be responsible for producing blocks, sign off on blocks and sign off on links (to shards).

Why “Beacon Chain”?

You may be wondering why the Ethereum team chose the term “Beacon Chain?”.  The Beacon Chain was originally only part of the Sharding spec. It’s role was (and still is)  to link up to Shard Chains and signal which blocks should be added to the main chain. 

The Validators utilize the crosslinks between the two chains to “listen” for new blocks on the shard chains. They then sign off on the block and the crosslink if it is to be included on the main chain.

Beacon essentially means “Lighthouse/signal” – and that’s precisely what the role that the Beacon Chain serves.

Disclaimer: I’m sort of taking an educated-guess at this one. To be honest, a lot of the terminology in Sharding & Casper PoS is sorta...confusing (e.g: proposer, collator, validator, committee...come on Vitalik!)

Conclusion

As you can see, the Beacon Chain in the new Casper implementation isn't all that complicated. All you need to know is that it will serve as the foundation for the Proof Of Stake and facilitate the communication via the Shard Chains (via cross-links).  You can become a Validator on the Beacon Chain if you deposit 32 Ether from the current PoW Chain. Once you do that, you can take part in the Proof Of Stake consensus process as well. ValidationFinality  will take place on the Beacon Chain. Transactions & Account Data will be on the Shard Chain.

Simple, eh? Tbh, maybe all you need to read is the conclusion of this post. Damn. Oh well.

Follow up Reads:
1. Casper Roadmap Update Explained
2. ​Ethereum Sharding - A Simple Analogy
3. Finality: Understanding Settlement & Finality

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