Bitfinex Enables Bitcoin Cash Margin Trading
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In this piece we present data displaying the proportion of empty blocks blocks containing only the coinbase transaction produced by the different mining pools, over time. We look at the mining methodologies pools could choose and how these policies could impact the proportion of empty blocks. Some claim that circumstantial evidence supporting this allegation, is that some mining pools produce more empty blocks or more smaller blocks than other mining pools.
Readers have asked us for data backing up this assertion, as only limited data has been published on this specific topic, as far as we are aware. We are not going to draw any firm conclusions from the data on the prevalence of empty blocks, however we present it for your the basics of margin trading explained using the new bitcoin cash bcc or bch as an example. Figure 1 — Summary chart — Rolling average percentage of empty blocks over 1, block period by pool. Data up to 25th August Due to the different frequency with which different pools find blocks, the same dates on the chart could reflect different periods.
Figure 2 — Percentage of empty blocks by pool — YTD. Data up to 22nd October Figure 3 — Percentage of empty blocks by pool — Figure 4 — Percentage of empty blocks by pool — Figure 5 — Percentage of empty blocks by pool — Figure 6 — All time percentage of empty blocks by pool — Monthly data.
Data only included if the pool found blocks or more within the month, Data up to 22nd October Figure 7 — onwards — percentage of empty blocks by pool — Monthly data. Figure 8 — The basics of margin trading explained using the new bitcoin cash bcc or bch as an example — percentage of empty blocks by pool — Monthly data. Summary statistics by year top 11 pools ranked by the last 12 months. Figure 9 — Summary table for to 25th August.
Figure 10 — Summary table for Figure 11 — Summary table for In order to build on top of the previous block and extend the chain, mining pools need the hash of the previous block, but not necessarily the full block with all the transaction data. Mining pools are in a rush to make the chain as long as they can as fast as possible to increase profits.
Therefore miners often have a policy of trying to find the next block before they have even had time to download and verify the previous block. If this occurs, a miner typically avoids putting any transactions in the block apart from the coinbase transactionas the miner may not know which transactions the basics of margin trading explained using the new bitcoin cash bcc or bch as an example in the previous block and including any transactions could result in a double spend, resulting in an invalid block rejected by the network.
The efficacy of SPV mining is debated in the Bitcoin community, with advocates claiming this is legitimate profit maximising activity. While opponents of this policy claim it reduces the transaction capacity of the network since empty blocks still keep the mining difficulty up and that it increases the probability of an invalid block receiving more confirmations, ensuring the network is less reliable for payments as double spends are more likely.
Different mining pools are said to have different policies. As figure 9 shows, Bifury produced 0. SPV mining is believed to be the primary cause of this difference.
For example figure 8 could be said to demonstrate the following:. In our view this hypothesis is certainly possible, but also reasonably weak. Further evidence may be required to draw any firm conclusions. Another factor to consider is timing. SPV mining occurs because miners are keen to get to work on the next block quickly, before they have had time to validate the previous block. Therefore, in the majority of cases where miners do not quickly find the next block, say within 30 seconds, the impact of SPV mining should be limited, since miners do have time to validate.
Figure 12 below is a repeat of figure 3 above, except this time we have excluded the empty blocks which occurred within 30 the basics of margin trading explained using the new bitcoin cash bcc or bch as an example of the previous block being found.
This may partially remove the impact of SPV mining. Although the data with respect to timing may not be reliable. Figure 12 — Percentage of empty blocks by pool — 30 second gap or more from the previous block Source: The time gap may not be reliable. The analysis in this piece only looks at empty blocks. In a later piece we plan to look at the proportion of these smaller blocks in more detail. In the below analysis we compared the timing between the previous blocks and the blocksize, for two particular pools.
The charts illustrate that the variations between pools are not just about empty blocks, but also smaller blocks. The y-axis is the time gap from the previous block in seconds, the x-axis is the blocksize in bytes. It is difficult to draw any firm conclusions from these charts. However one ironic thing stands out to us, from this analysis. The pools arguing most vigorously for larger blocks, tend on average, to produce smaller blocks. In this piece we look at the ten different chain split tokens that could exist on the Bitfinex platform in and some of the complexities and challenges involved.
There are circumstances in which the policies Bitfinex has chosen are unfair and place a burden on customers, however perhaps this could not be avoided. It is not known if the Bitcoin Unlimited chain will exist as a different coin to Bitcoin at the time the contract is due to settle in December The above diagram illustrates the 10 chain split tokens which could exist on the Bitfinex platform in During the year various groups created spin-off coins of Bitcoin and Bitfinex provided its customers the opportunity to trade these tokens.
Typically each spin-off can result in three new tokens. For example SegWit2x resulted in:. However, avoiding any of these issues is difficult and perhaps potentially impossible, given the complexities involved.
In many ways Bitfinex has done a service to the community by rising to the challenge and supporting these tokens. A full timeline of the events related to the 10 chain split tokens is provided in the table below. As we mentioned in our previous piece on the SegWit2x hardfork, the spin-off token distribution decision for financial platforms is not straight forward.
There are essentially four options:. Potential financial platform policies regarding the distribution of spin-off tokens. It is also possible to have a different policy with respect to Bitcoin lending and Bitcoin margin positions, which is not illustrated in the above chart.
Supporting additional tokens can not only put additional burdens on the exchange, but also on customers, as the situation with Bitcoin Gold below illustrates.
Bitfinex clients who were short BTC on margin at the time of the fork had a BTG liability added to their account when the basics of margin trading explained using the new bitcoin cash bcc or bch as an example fork occurred. This needed to be done to balance out the impact of users who were long BTC on margin at the time of the fork and benefited by receiving BTG. This places a burden on customers who were short, as they now have to go into the market and buy BTG to cover their positions, despite potentially having no interest or knowledge in BTG.
This may frustrate some customers as they were not given much notice in this particular case perhaps under 24 hours. Anyone with a negative balance resulting from being a BTC borrower at the time of the fork will need to buy back into BTG within 3 days or risk having the system do it for them.
The issue may be of particular concern to Bitfinex customers, since the BTG token does not exist yet, nor is the client ready to be released, as further development work may be required. The date Bitfinex enabled trading, 24th October, was only the date of the snapshot of Bitcoin balances, not when the token actually launched. Therefore Bitfinex customers who were short BTC at the time of the snapshot will not be able to deposit BTG to the platform to cover their short positions, as the token does not yet exist and instead they appear to be forced to buy it on the market at Bitfinex.
There may be insufficient liquidity, which could cause problems. The chain split tokens do not consider the impact of the other chain split tokens. The above contracts do not fairly reflect each other.
This problem is illustrated by the overlapping nature of the contracts in the chart above. If Bitfinex wants to increase the complexity of the above even further, the following additional distributions could be conducted:.
Bitfinex may actually make adjustments for these events and even eluded to this possibility in a recent post. It would be interesting to see if any of their customers actually demand this. And heads of large banking institutions called Bitcoin a fraud. Where to from here? How high can Bitcoin go? Is this just a flash of greatness to be followed by a century of misery?
The clues to the future of Bitcoin lie in the global currency and debt markets. The money printing orgy that allows central banks to monetise the debt of governments and large corporates created the environment for Bitcoin to thrive. Therefore, an examination of the total stock of money and government debt could give clues to the future price of Bitcoin.
The data is as of 30 June Money is not just M2, but in our financialised world, sovereign-credit acts as a very important monetary instrument. It is why many economists label the currency system a debt-based monetary system. Other debt instruments such as corporate debt, provincial or municipal debt also function as money. Each country is different in the ways in which other types of debt function as money. To remain consistent I only considered government issued debt.
Bitcoin XBT appears to be the digital version. For gold and Bitcoin I used the current value of the total supply of each currency as its M2 value.
For government debt, each has a value of 0. Debt must be paid back at some point with base money, M2. Therefore the more debt a country has vs. However, when the market refuses to roll over debt an affordable interest rate, debt must be extinguished. The more likely scenario is that inflation sensitive investors will tender their debt-money for a relatively cheap real digital monetary instrument such as Bitcoin.
