Monday, April 19th, 2021
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Crypto Gets a Boost From Where it Expected the Least
While many senior US government officials continue to issue public warnings about Bitcoin’s alleged use by criminals, the former acting director of the CIA, Michael Morell, refuted such sweeping generalizations against Bitcoin as a facilitator of illicit finance. Not only did Morell reject the bias against Bitcoin, but he also went on to endorse blockchain analysis as a prudent crime-fighting intelligence-gathering tool.

Morell’s Opinion in Detail
In an independent paper titled ‘An Analysis of Bitcoin’s Use in Illicit Finance’, Morell opined that the generalizations about Bitcoin’s illicit use are grossly overstated. He compared these unnecessary generalizations with the act of chasing a ghost. Morell said that instead of a witch hunt, the economies like the US or China should leverage open-source blockchains to gather intelligence.

Morell’s endorsement of Bitcoin stands in sharp contrast to the views of Treasury Secretary Janet Yellen or Christine Lagarde, the President of the European Central Bank. Morrell, in his study, found out that the percentage of illicit transactions in crypto is minimal (less than 1%) and falling. These findings were corroborated by a report by Chanalysis in 2020. To put this number into context, the volume of illicit activity conducted through US dollars ranges between 2-4 percent of global GDP.

Moreover, Morell endorsed the work done by blockchain analytic firms such as Chainalysis, CipherTrace, and Elliptic. Their deployment of forensic and artificial intelligence tools to locate illicit actors and activity on blockchains is nothing short of "great intelligence work," according to Morrel.

Allies in Power
While there are still many in Washington who are opposed to cryptocurrencies, every passing day seems to bring new allies to the space that are willing to advocate on behalf of the asset class. Those in power and opposed to change will always try to spin narratives in their favour, however, it is people like Morrell who are willing to speak up for what is right, that are going to be the difference in helping us build the decentralized world of the future.
Ethereum’s Berlin Hard Fork Goes Live With Initial Glitches
The Berlin Hardfork, Ethereum’s latest network upgrade, went live at block 12,244,000 on Thursday, 15th April 2021. This upgrade is considered to be a precursor to the crucial London hardfork slated for July. The Berlin upgrade, however, incorporates four EIPs, or Ethereum Improvement Proposals, most of which have to do with modifications in the gas costs.

The Ethereum Improvement Plans (EIPs) in Detail
  • EIP-2565 reduces gas cost for a specific transaction type that uses modular exponentiation
  • EIP-2718 makes all transaction types “backward compatible.” The backward compatibility allows the addition of new transaction logic into Ethereum.
  • EIP-2929 aims at increasing gas costs for “op-code” transactions that, for a long time, have been a pain point for denial of service attacks on Ethereum.
  • EIP-2930 introduces a new transaction type that allows its users to create templates to reduce gas costs for complex transactions in the future.

However, the upgrade did not go off without a hitch. Block production - for a few hours after the hardfork was disrupted. Exchanges had to pause ETH withdrawals and transactions were not able to validate on Open Ethereum nodes. That said, the Open Ethereum team was prompt in discovering a consensus issue and fixed the flaw within a few hours.

The Significance of the Berlin Hard Fork
Berlin hard fork comes as one of the many roads that the network will have to travel to complete its journey from Ethereum to Ethereum 2.0. Ethereum to Ethereum 2.0 is a vital journey for the network as the Ethereum consensus mechanism will move from proof-of-work to proof-of-stake.

The name of this hard fork stemmed from the capital city of Germany, which hosted the first-ever Ethereum DevCon. Scheduled for June or July 2020, the launch of the Berlin hard fork got delayed. There were centralization concerns around the Geth client. Most of the Ethereum nodes operate on the Geth client. Berlin hard fork is also significant for the network as a precursor to the much anticipated London fork, expected to happen in July 2021.

What is London Hard Fork?
The London hardfork has been one of the most contentious issues in the Ethereum community over the past year. It will incorporate EIP-1559, an improvement proposal that recommends a reduction in the supply of Ether. This implementation would allow the network to set the fee itself instead of a user sending a gas fee to the miner for adding a transaction to the blockchain.

There are opposing views on the benefits of EIP-1559 and whether it should be implemented or not. While miners are concerned about this step will drastically diminish their revenue, developers feel it will enhance the value of the ETH token as it will become a deflationary currency. The supporters of EIP-1559 see it as a single solution to multiple issues faced by the network.

In our opinion, both the Berlin hardfork and the London Hardfork are welcome upgrades. Ethereum is in dire need of a protocol upgrade as the original "proof of concept" they have built is no longer feasible given the number of people trying to use the network. Berlin will drastically reduce fees, and London will increase the token price. These two features alone will go a long way in helping Etheruem to keep its dominance over the smart-contract market.
Mina Protocol Closes $18.75M Community Token Sale
On April 13th, Mina Protocol hosted a Coinlist community sale which raised $18.75M in under 4 hours. The initial max allocation was $1000 per investor, placing it at a theoretical max of 18,750 participants. On April 9th, Mina announced a $500 allocation cap, increasing it's capacity for community participation to 37,500. In total, over 40,000 investors took part with another 200,000 not making the cut.

Founded in June 2017 by 0(1) Labs, Mina Protocol is a new, ambitious open-source POS layer one blockchain that will only ever be about 22kb in size, the same as a couple of tweets. Instead of using "brute force" computational power, Mina deploys advanced cryptography and zk-SNARKS to build the world's lightest blockchain.

But how is Mina Protocol so small? Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge (zk-SNARKS) are the breakthrough powering Mina. Think of them as tiny cryptographic certificates, or snapshots, that verify the network without revealing the chain's contents. Each block of Mina is snarked into a snapshot and then each snapshot is snarked into a fractional meta-image of the whole chain, compressing hundreds of gigabytes into a 20kb zk-SNARK.

The result? A fixed-size, energy-efficient blockchain powered by the most diverse set of participants giving users unparalleled censorship resistance money and permissionless apps. Thanks to its size, runnings nodes on Mina is simple and doesn't require expensive hardware or unsustainable energy. Seeking to put an end to congestion and high transaction fees, Mina has developed snapps, a new form of SNARK-powered decentralized applications (dapp) that allow off-chain bandwidth and scalability. Mina connects with every website and developers can easily integrate stablecoin payments into their snapps, bridging the real world with crypto.

After 3 years and several testnets, the Mina Mainnet is launched and the protocol has an exciting roadmap ahead, including an Ethereum bridge and dapp to snapp conversion. To our knowledge, there is no exchange listing date announced. However, Mina (MINA) IOU's are trading above $100 on BitZ. If your looking to gain exposure, veteran and first-time miners alike can head over to their docs to learn how to start running a node.
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Bitcoin: Chinese Power Outage Causes Bitcoin Flash Crash
Last week, after breaking through horizontal support at $61K and charting new all-time highs, Bitcoin's price took a harsh turn when it crashed over 17% on Saturday alone. The sudden crash also cascaded through the entire crypto market, wiping out over $400B in value from the cryptocurrency market in less than one day. The freefall left many scratching their head as there was no major FUD circulating or sense that the market was ready to fall.

One of the leading explanations of this crash comes from the major power outages experienced in Xinjiang, China over the weekend. Xinjiang is a cryptocurrency mining hotspot due to its access to abundant inexpensive renewable energy sources. Upon further investigation, it turns out that the blackout in China’s Xinjiang region caused almost half of the Bitcoin network to go offline in 48 hours.

A general rule for Bitcoin is that "price follows hash rate," so when almost half of the hash rate of the Bitcoin network was shut down, it stands to reason that the price would collapse with it. Since the correction, metrics from Glassnode show that the hash rate has almost been completely recovered on the 6hr MA.

While this sudden correction may have been a great dip-buying opportunity, it also illuminated a concerning issue with Bitcoin. Almost half the mining power for Bitcoin is located in China. This flash-crash should be a warning sign to nation-states around the world that they need their own national strategy to distribute the mining power of Bitcoin around the world.

View the chart here.
Alt-Coins Gain Dominance Despite Flash-Crash
Last week the alt-coin market continued its tear as it pushed to levels not seen since April of 2019. While the Bitcoin flash crash did cause most of the crypto market to fall substantially, the gains made by altcoins early in the week were enough to weather the storm and retain their upwards trajectory.

With that said, the 500% pump of Dogecoin last week should be enough to cause any trader to get nervous. With some much retail excitement flooding into the market, many have speculated that the market is overheated and do for a more sustained correction. Only time will tell if this theory plays out, but in the sage words of Warren Buffet, "you'll never go broke taking a profit."

View the chart here.
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Synthetix (SNX)
Synthetix is the backbone for derivatives trading in DeFi, allowing anyone, anywhere to gain on-chain exposure to a vast range of assets. Synthetix supports synthetic commodities like gold and silver, synthetic cryptocurrencies, synthetic inverse cryptocurrencies, synthetic cryptocurrency indexes, and synthetic fiat currencies. They are the leader in the deployment of synthetic assets and one of the largest blue-chip bets in the Defi space.

Synthetix is over 50% down from its all-time high versus Bitcoin but is finding support on an ascending trend line. If SNX can hold this trend and push back towards its all-time high range, it would form an ascending triangle, which is a very bullish pattern and often results in breakouts to the upside.

View the chart here.
Litecoin (LTC)
Litecoin is one of the oldest cryptocurrencies and a direct descendant of Bitcoin. It is a direct fork from the Bitcoin blockchain with faster block times, which allow for quicker settlements. Litecoin was invented by developer Charlie Lee as a blockchain to use for everyday payments.

For the last two years, Litecoin has been a sleeping giant, however, it has now awakened from its slumber and looks ready for a sustained rally. LTC has broken out of its 2 year-long descending wedge pattern, a pattern seen once before in its history from 2015 to 2017. After the previous breakout, Litecoin rallied over 600% versus Bitcoin. We shall wait and see if this breakout will rhyme with history.

View the chart here.
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