Cryptos Snap Higher As Bitcoin Cash Miner Accused Of Artificially Boosting Prices Posted By: ZeroHedge April 23, 2018
The last two weeks have seen cryptocurrencies surge across the board, as tax-driven selling pressure appears to have abated, but while most are doing very well, Bitcoin Cash stands out – up over 120% – amid accusations of miners artificially boosting prices .
The last hour or so has seen a notable jump in prices across the entire crypto space, but as is evident, Bitcoin Cash has been on fire the last few days…
While some have attributed the notable outperformance to an announcement of a scheduled May 15 hard fork network upgrade that will increase the maximum blocksize to 32MB (and crypto payment processor BitPay’s update announcement today that allows BCH to be accepted on their BitPay Checkout app could also have contributed to BCH’s price rise), there appears to another more obvious driver of Bitcoin Cash’s outperformance, as Bloomberg reports Antpool, one of the largest mining groups, is “burning” a portion of the coins it receives, potentially reducing supply and driving up the value…
Antpool, whose users’ computers confirm 8.2 percent of all Bitcoin Cash transactions, announced April 20 on Twitter and Facebook that it will voluntarily “burn” 12 percent of the coins it receives.
The mining outfit is sending a portion of the fees it receives “to a black hole address.”
This is voluntary and we want to explain why this burning might be good for BCH as a whole.
The Bitcoin Cash blockchain is at the tipping point of becoming a widely used public blockchain.
A very good example of the innovation happening on BCH is memo.cash. After the May 15th planned hard fork, more and more useful applications will be enabled on BCH, using re-enabled OP_codes and enlarged OP_RETURN spaces. Furthermore, the increased block size cap will prevent the risk of network congestion from deterring such apps to be built.
During the forthcoming wave of innovation, we believe that on-chain transaction volume will experience significant growth. The crypto economy is not only about BCH though, nor is it only about money.
It is also about protecting freedom of speech and freedom of association. BCH should embrace innovations and the free market, and be supportive and inviting of all kinds of applications being deployed on the BCH blockchain.
The Bitcoin Cash community should embrace the entrepreneurial spirit and treat any fee paying transaction as a customer.
Even if those transactions are non-BCH tokens, and even if those transactions are not about the transfer of money.
The move is just the latest in an escalating war of words (and deeds) between backers of the original Bitcoin and its forked partner Bitcoin Cash, and not everyone sees this as honorable…
“Antpool has burned $12 worth” of Bitcoin Cash a day, said Kyle Samani, managing partner at the Austin, Texas-based crypto hedge fund Multicoin Capital, in an email.
“This was purely a PR game so they could say ‘reducing supply’.”
Lucas Nuzzi, a senior analyst at Digital Asset Research, said in an email: “Now, projects like Bitcoin Cash are struggling to remain relevant, which is hard when very few users are using the network,” Nuzzi said.
“Miners have to liquidate their holdings regularly to pay for their expenses.
The move from Antpool is intended to slow down further price depreciation, by attempting to increase the perception of scarcity. Whether the move will be successful remains to be seen.”
As Bloomberg concludes, whether the burning really makes a cryptocurrency more valuable in the long-term is unclear since the “limited” nature of supply is questionable at best (think Bitcoin forks for one).
“Cryptocurrencies have a bewildering variety of mechanisms for determining quantity — of course, ever since we left the gold standard, traditional currencies are even more bewildering,” Aaron Brown, a business author who writes for Bloomberg Prophets, said in an email.
“Who knows what would happen if Jeff Bezos converted all his wealth to $100 bills and burned them? So it will be an interesting experiment.”
But for now it’s working, as is wildly obvious from the chart below, Bitcoin Cash has exploded relative to Bitcoin in the last few days.
From a near record-low around 9% of Bitcoin’s price, Bitcoin Cash is now over 16% of Bitcoin’s price…
But for now, the entire space is surging with Crypto market cap now back above $400 billion….
