Looming Crypto ‘Civil War’ Sends Virtual Currencies Crashing, Ethereum Below $200

Chaos is back in cryptocurrencies with both Ethereum and Bitcoin collapsing in the last few hours as it appears concerns over the so-called ‘Bitcoin civil war’ are coming to a head.

As Bloomberg reports, it’s time for bitcoin traders to batten down the hatches.

The notoriously volatile cryptocurrency, whose 160 percent surge this year has captivated everyone from Wall Street bankers to Chinese grandmothers, could be headed for one of its most turbulent stretches yet.

 

Blame the bitcoin civil war. After two years of largely behind-the-scenes bickering, rival factions of computer whizzes who play key roles in bitcoin’s upkeep are poised to adopt two competing software updates at the end of the month. That has raised the possibility that bitcoin will split in two, an unprecedented event that would send shockwaves through the $41 billion market.

 

While both sides have big incentives to reach a consensus, bitcoin’s lack of a central authority has made compromise difficult. Even professional traders who’ve followed the dispute’s twists and turns aren’t sure how it will all pan out. Their advice: brace for volatility and be ready to act fast once a clear outcome emerges.

 

“It’s a high-stakes game of chicken,” said Arthur Hayes, a former market maker at Citigroup Inc. who now runs BitMEX, a bitcoin derivatives venue in Hong Kong. “If you’re a trader, there’s a lot of uncertainty as to what happens. Once there’s a definitive signal about what will be done, the price could move very quickly.”

All the largest market cap coins are getting slammed…

 

Ethereum plunged to as low as $189 before ripping back above $200…

 

Aside from Ether’s flash-crash, these are the lowest levels since May…

 

Bitcoin was battered below $2300 – its lowest since June 15th…

 

Bloomberg points out that behind the conflict is an ideological split about bitcoin’s rightful identity…

The community has bitterly argued whether the cryptocurrency should evolve to appeal to mainstream corporations and become more attractive to traditional capital, or fortify its position as a libertarian beacon; whether it should act more as an asset like gold, or as a payment system.

 

The seeds of the debate were planted years ago: To protect from cyber attacks, bitcoin by design caps the amount of information on its network, called the blockchain. That puts a ceiling on how many transactions it can process — the so-called block size limit — just as the currency’s growing popularity is boosting activity. As a result, transaction times and processing fees have soared to record levels this year, curtailing bitcoin’s ability to process payments with the same efficiency as services like Visa Inc.

 

To address this problem, two main schools of thought emerged.

  • On one side are miners, who deploy costly computers to verify transactions and act as the backbone of the blockchain. They’re proposing a straightforward increase to the block size limit.
  • On the other is Core, a group of developers instrumental in upholding bitcoin’s bug-proof software. They insist that to ease blockchain’s traffic jam, some of its data must be managed outside the main network. They claim that not only would it reduce congestion, but also allow other projects including smart contracts to be built on top of bitcoin.

 

But moving data off the blockchain effectively diminishes the influence of miners, the majority of whom are based in China and who have invested millions on giant server farms. Not surprisingly, Core’s proposal, called SegWit, has garnered resistance from miners, the most vocal being Wu Jihan, co-founder of the world’s largest mining organization Antpool.

 

“SegWit is itself a great technology, but the reason it hasn’t taken off is because its interest doesn’t align with miners,” Wu said.

Still, after previous counter-proposals championed by Wu fell through, miners last month agreed to compromise and support SegWit, in exchange for increasing the block size. Wu says the plan will alleviate short-to-medium term congestion and give Core enough time to flesh out a long-term solution. That proposal is what is known as SegWit2x, which implements SegWit and doubles the block size limit.

“You can think of the SegWit2x proposal as an olive branch,” said Wu.

 

Support for SegWit2x has reached levels unseen for previous solutions. About 85 percent of miners have signaled they are willing to run the software once it’s released on July 21, and some of bitcoin’s largest companies have also jumped on board. The unprecedented level of endorsement is partly prompted by anxiety of bitcoin losing its dominant status to ethereum, a newer cryptocurrency whose popularity has soared thanks to its ability to run smart contracts and its more corporate-friendly approach.

Below is an outline of the main events that could unify or divide bitcoin:

By July 21: SegWit2x software is released and supporters begin using it.

July 21 to July 31: The community monitors how many miners deploy SegWit2x:

If more than 80 percent deploy it consistently, that should signal community-wide adoption of SegWit and the avoidance of a split, at least for now.

 

But if a majority do not deploy, expect anxiety within the community to grow as the focus shifts to the Aug. 1 deadline.

Aug. 1: UASF is deployed by its supporters, who begin checking if bitcoin transactions are compliant with SegWit.

If a majority of miners still do not deploy SegWit2x or otherwise accept SegWit, and if UASF supporters do not back down, then two versions of bitcoin’s blockchain could come into existence: a UASF-backed one where only SegWit transactions are recognized, and another where all trades — SegWit and non-SegWit — are recognized.

 

If a split occurs, bitcoin will likely begin existing on both blockchains in parallel, resulting in two versions of the cryptocurrency. Expect traders to quickly re-price the value of both, likely leading to massive volatility.

“It’s moderates versus extremists,” said Atlanta-based Stephen Pair, chief executive officer of BitPay, one of the world’s largest bitcoin wallets. “It depends on how much a person values the majority of people staying on one chain at least for a little while longer, versus splitting and allowing each pursuing their own vision for scaling.”

As a reminder, investing legend Michgael Novogratz recently noted, that he’s looking to add more ether if it falls between $200 and $150… and more bitcoin if it falls to $2,000.

The post Looming Crypto ‘Civil War’ Sends Virtual Currencies Crashing, Ethereum Below $200 appeared first on crude-oil.news.

Tillerson Flies To Gulf To Resolve Qatar Crisis As Ties Emerge Between Kushner And Qatar’s Richest Man

In the latest US attempt to mediate and resolve the Qatar crisis, Secretary of State Rex Tillerson flew to the Gulf on Monday for talks aimed at ending the standoff between a coalition of Arab states led by Saudi Arabia and the wealthy nat gas exporter, which has led to more than a month of economic, financial and naval blockade. The State Department said Tillerson, who forged extensive ties in the Gulf as CEO of ExxonMobil, would hold talks with leaders in Kuwait, Qatar and Saudi Arabia. He was flying from Istanbul where he attended an international petroleum conference. R.C. Hammond, a senior adviser to Tillerson, added that the former Exxon CEO would explore ways to end a stalemate following Qatar’s rejection of 13 demands issued as condition for ending sanctions.

Following Qatar’s refusal to comply with the ultimatum, which included the closure of Al Jazeera and a Turkish militarybase in Qatar, Saudi Arabia and its backers have threatened further sanctions against the emirate.

In Doha, a Western diplomat told Reuters that the creation of a “terror finance monitoring mechanism” would feature in the talks without elaborating. As a reminder, on June 5th Saudi Arabia, Bahrain, UAE and Egypt imposed sanctions on Qatar, accusing Doha of aiding terrorism, something it denies.

“The trips to Saudi Arabia and Qatar are about the art of the possible,” said Hammond, who added that the 13 demands “are done” and “are not worth revisiting as a package. Individually there are things in there that could work.”

The crisis has hit travel, food imports to Qatar, ratcheted up tensions in the Gulf and sown confusion among businesses, while pushing Qatar closer to Iran and Turkey which have offered support. Furthermore, the US is worried that the crisis in Qatar – which hosts Udeid Air Base, the largest U.S. military facility in the
Middle East – could affect its military and counter-terrorism operations and increase the regional influence of Tehran, which has been supporting Qatar by allowing it to use air and sea links through its territory.

Meanwhile, President Donald Trump has expressed support for Saudi Arabia in the dispute, which may emerge as a new potential scandal for the presidency. 

Earlier on Monday, the Intercept reported that in what may be seen as a conflict of interest, Trump’s son in law Jared Kushner tried, and failed, to obtain a $500 million investment to refinance and fund the expansion of his 666 Fifth Avenue property, where the family is severely underwater, from one of Qatar’s richest men, the former prime minister and former head of the local sovereign wealth fund, Sheikh Hamad bin Jassim al-Thani.

Throughout 2015 and 2016, Jared Kushner and his father, Charles, negotiated directly with a major investor in Qatar, Sheikh Hamad bin Jassim al-Thani, known as HBJ for short, in an effort to refinance the property on Fifth Avenue, the sources said.

 

HBJ ultimately agreed to invest at least $500 million through Al Mirqab, on the condition that Kushner Companies could raise the rest of a multibillion refinancing elsewhere. The negotiations continued long after the election, carried out as recently as this spring by Charles Kushner. “HBJ basically told them, we’re good for 500, subject to a lot of things, but mainly subject to you being able to raise the rest,” said one source in the region with knowledge of the deal. The talks were confirmed by two additional sources with knowledge of the talks. One of those sources claimed that the potential deal was not contingent on the rest of the money being raised and that the HBJ investment was on hold as the overall structure of the financing was reconsidered.

The deal ultimately died when Anbang, which was supposed to be the major partner, and co-investor, as well as provide a $4 billion loan, pulled out, after the deal was critized as a conflict of interest, although there is now the implicit speculation that Trump’s greenlighting of the blockade of Qatar was in retaliation for the collapse of the 666 Fifth investment.

Of course, it is worth recalling that in addition to seeking to cooperate with Trump, Sheih Hamad Bin Jassim Jabr Al-Thani was also one of the most prominent Clinton Foundation donors.

Taking a more diplomatic stance, Hammond said it was critical that not only Qatar, but Riyadh and its allies take steps to halt any financial support flowing to extremists groups, especially following the defeat of Islamic State in the northern Iraqi city of Mosul. “It’s a two-way street,” he said. “There are no clean hands here.”

“We want progress on terrorism financing. The president strongly believes that if you cut off financing, you cut off the ability of terror to take hold in new areas,” Hammond said.

Moreover, he said, “the longer that this struggle is in place, the more opportunity there is for Iran.” Yet, ultimately, behind the facade of a united front behind “the war on terrorism”, it now appears that the motive behind the Qatar crisis may have once again been nothing more than settling of old financial scores.

The post Tillerson Flies To Gulf To Resolve Qatar Crisis As Ties Emerge Between Kushner And Qatar’s Richest Man appeared first on crude-oil.news.

Why Wall Street mistrusts the bull market

Jim Cramer explains why so many investors are bearish on the market, citing the lengthy rally, the Fed, and President Donald Trump.

crude oilThe post Why Wall Street mistrusts the bull market appeared first on crude-oil.news.

China’s Richest Man Forced To Sell World’s Largest Indoor Ski Resort 2 Weeks After It Opened

The man who declared war on Disneyland just opened the world’s largest indoor ski resort. And now he’s being forced to sell it.
As the South China Morning Post reports, Wanda City, the $6 billion resort development built by China’s we…

The post China’s Richest Man Forced To Sell World’s Largest Indoor Ski Resort 2 Weeks After It Opened appeared first on crude-oil.news.